In recent years, each 1 percent drop in output is associated with the loss of more than
a. five million jobs
b. one million jobs
c. half a million jobs
d. two hundred thousand jobs
e. one hundred thousand jobs
If the Consumer Price Index (CPI) increases from 100 to 200 and the nominal wage
increases from $100 to $400, what is the change in the real wage in terms of the
beginning year’s dollars?
a. +$200
b. +$400
c. +$100
d. +$300
e. -$200
A 10 percent increase in buyers’ incomes results in a 5 percent drop in the quantity of
hot dogs demanded. In this range, the income elasticity of demand for hot dogs is
A supply shock
a. is usually caused by a change in the money supply
b. is any event that causes the aggregate supply curve to shift
c. is any event caused by a change in the price level
d. is usually good news for the economy
e. always leads to an increase in the interest rate
What is the main factor that explains why government spending typically exceeds
government purchases?
a. Imports exceed exports
b. Transfer payments
c. The federal debt
d. Government budget deficits
e. Construction of schools
In a command system, the decision about what should be produced is made by
The 2001-2007 economic expansion began when a change in Federal Reserve policy
and other global conditions caused interest rates to drop and stay low.
If the economy is producing a combination of goods inside its production possibilities
frontier, then
Frictional unemployment is joblessness
a. related to changes in weather and similar factors
b. arising from a mismatch between available jobs and workers’ skills
c. resulting from macroeconomic fluctuations
d. that is short-term and is experienced by people who are between jobs
e. that is caused by structural changes in the economy
Which of the following are examples of injections?
a. government purchases, net taxes and exports
b. government purchases, investment spending and exports
c. net taxes, imports and household saving
d. household saving, imports and government purchases
e. exports, imports and household saving
A firm’s implicit costs are
How many times in the last 80 years has the official unemployment rate in the United
States reached 0 percent?
a. 0
b. 1
c. 2
d. 3
e. 4
If countries begin to specialize according to comparative advantage, a more efficient
use of resources occurs. As a result, the world output of at least one good increases,
with no decrease in the output of any other good.
In the short run,
a. spending depends on income and income depends on spending
b. spending depends on income, but income does not depend on spending
c. income depends on spending, but spending does not depend on income
d. spending and income are independent of one another
e. spending is the only determinant of how much income an economy will produce