Productive efficiency implies
a. the possibility of gains in one area without losses in another.
b. that more output has been produced.
c. the impossibility of gains in one area without losses in another.
d. that prices are stable.
e. c and d
Exhibit 16-2
The Policy Ineffectiveness Proposition could be illustrated by a movement between
points A and
a. D.
b. B.
c. C.
d. F.
Exhibit 4-1
The number of units exchanged at the price ceiling is
a. 75.
b. 125.
c. 175.
d. 100.
Exhibit 2-2
If PPF2 is the relevant production possibilities frontier, then point __________
illustrates productive inefficiency.
a. A
b. B
c. C
d. J
e. a, b, or c
Suppose aggregate demand is too low to bring about the Natural Real GDP level. A
Keynesian policy prescription would call for a(n) _____________________ to close
this recessionary gap.
a. increase in government spending
b. decrease in government spending
c. increase in taxes
d. decrease in taxes
e. a or d
If the CPI was 196.5 in 2005 and 172.2 in 2000, by what percentage did prices rise
during the period 2000-2005?
a. 0.10 percent
b. 6.43 percent
c. 10 percent
d. 14.1 percent
Exhibit 34-1
The opportunity cost of one unit of Y in country B is
a. 0.5 units of X.
b. 1 unit of X.
c. 2 units of X.
d. 20 units of X.
If there are no excess reserves in the banking system and the Fed lowers the required
reserve ratio, it follows that banks will now have __________, which they can use to
extend loans and create new __________.
a. positive excess reserves; checkable deposits
b. negative excess reserves; currency
c. positive excess reserves; currency
d. more vault cash; checkable deposits
e. none of the above
The transmission lag is the time between
a. the implementation of a policy and when the impact of the policy is felt.
b. the enactment of a policy (getting a policy passed by Congress with the president’s
approval) and the implementation of the policy (putting a policy into effect).
c. realizing a policy is needed and enacting the policy.
d. the occurrence of an event and policymakers realizing the event has occurred.
The coupon rate is the percentage of
a. profits distributed to bondholders.
b. profits distributed to stockholders.
c. the face value of the bond that is paid out regularly to the bondholder.
d. the assets of the corporation that is paid out regularly to each stockholder.
New Keynesian theory differs from new classical theory in that New Keynesian theory
assumes that wages and prices are not completely flexible in the short-run, while fully
flexible wages and prices are an assumption of new classical theory.
a. True
b. False
Exhibit 2-8
Who has the comparative advantage in the production of good X?
a. Maria
b. Maya
c. Both Maria and Maya
d. Neither Maria nor Maya
Producers’ surplus is
a. the difference between the price a buyer pays for a good and the highest price he
would have paid for the good.
b. the difference between the price a seller receives for a good and the minimum price
for which he would have sold the good.
c. the difference between the price a seller receives for a good and the price a buyer
pays for the good.
d. equal to price times quantity sold.
e. equal to the seller’s minimum price and the buyer’s maximum price.
Consumers’ surplus is the difference between the maximum price the buyer is willing
and able to pay for a good and the actual price paid.
a. True
b. False