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If a ship-building company purchases $250 million worth of steel in one year but does
not use it, this is considered investment spending.
Which of the following is a weakness in trying to get the wealthy to bear more of the
burden of increasing growth in a less developed country?
a. The wealthy do not have significant political power.
b. The wealthy can move their savings to other countries.
c. The wealthy do not have much money to tax.
d. The wealthy have large homes in their country and so are less likely to leave.
e. The wealthy have powerful businesses that they are unable to relocate.
If the price of jelly (a complement with peanut butter) decreases, both the demand and
supply curves of peanut butter will shift rightward.
What is creeping inflation?
a. Inflation that continues to rise but slowly.
b. Inflation that suddenly appears without warning.
c. Price levels that suddenly rise without warning.
d. Price levels that continue to rise but slowly.
e. Inflation that suddenly appears and creates panic.
Suppose the same basket of goods costs $100 in the U.S. and 50 pounds in Britain.
According to purchasing power parity, if the two countries' price levels do not change,
what will be the exchange rate?
a. 2 dollars/pound
b. 4 dollars/pound
c. 5 dollars/pound
d. 0.50 dollars/pound
e. 50 dollars/pound
Economics is
a. exclusively the study of the markets for stocks and bonds
b. the study of choice under conditions of scarcity
c. exclusively the study of business firms
d. fundamentally the same as sociology
e. applicable only when scarcity is not a problem
Which of the following would be included in the Consumer Price Index but not in the
GDP Price Index?
a. The price of a used automobile
b. The price of a dinner in a U.S. restaurant
c. The price of a U.S.-manufactured stereo system
d. The price of an IBM computer
e. The price of a new Ford automobile
If the U.S. interest rate falls relative to the British interest rate,
a. the U.S. demand for pounds will not change
b. the U.S. demand for pounds will decrease
c. the U.S. demand for pounds will increase
d. there will be a rightward movement along the U.S. demand curve for pounds
e. there will be a leftward movement along the U.S. demand curve for pounds
An upward shift of the consumption function could be caused by a(n)
a. increase in the interest rate
b. decrease in the interest rate
c. decrease in wealth
d. increase in the autonomous production
e. increase in disposable income
If newspaper headlines detailed an increased American interest in British goods, which
of the following would we expect to observe in the market for pounds?
a. An increase in supply, a depreciation of the pound, and a larger number of pounds
traded
b. An increase in demand, a depreciation of the pound, and a smaller number of pounds
traded
c. An increase in demand, an appreciation of the pound, and a larger number of pounds
traded
d. A decrease in demand, a depreciation of the pound, and a smaller number of pounds
traded
e. A decrease in supply, an appreciation of the pound, and a smaller number of pounds
traded.
Higher productivity is the most direct route to higher living standards.
Which of the following is most closely associated with positive economics?
a. determining the impact of government spending on the actual level of total
employment
b. determining the best level of immigration into the country
c. determining whether too many luxury goods are being produced
d. determining whether the government should reduce poverty
e. determining whether the government should alter income taxes in order to increase
total employment
A statement of fact that can be verified by observation is
a. an abstraction
b. a positive statement
c. a normative statement
d. a philosophical conundrum
e. the basis of an assumption
Examples of Fed actions that could decrease money supply are making open market
a. purchases, increasing the required reserve ratio, and increasing the discount rate
b. sales, decreasing the required reserve ratio, and increasing the discount rate
c. sales, increasing the required reserve ratio, and decreasing the discount rate
d. sales, increasing the required reserve ratio, and increasing the discount rate
e. purchases, decreasing the required reserve ratio, and decreasing the discount rate
An increasing percentage of women are in the work force. Which variable does this
directly affect?
a. The employment-population ratio
b. Productivity
c. Average hours
d. Population
e. Technology
All of the following are examples of demand shocks, except one. Which is the
exception?
a. A spontaneous decrease in money demand
b. A tax increase
c. A contraction of the money supply by the Fed
d. An increase in the price level
e. A reduction in government spending.
