Thomas Malthus argued that population grows geometrically and the food supply grows
arithmetically.
The labor supply curve
a. slopes upward to illustrate that more people will want to work as the real wage
increases
b. slopes upward to illustrate that changes in the real wage are directly proportional to
changes in the nominal wage
c. may slope either upward or downward, depending upon the real wage
d. slopes downward to illustrate that a decrease in the real wage decreases the number
of individuals willing to work
e. slopes downward to illustrate that the availability of workers is directly proportional
to the real wage
Which of the following shocks is most likely to cause an expansion?
a. Defense spending falls
b. Defense spending rises
c. Defense spending rises and then falls
d. Oil prices surge upward
e. Oil prices rise slowly
In the classical model, we assume there is no ongoing inflation, so there is no need to
distinguish between the nominal interest rate and the real interest rate.
Which of the following is not an important macroeconomic goal?
a. Stable prices
b. Full employment
c. Rapid economic growth
d. Low interest rates
e. None of the above is an important macroeconomic goal
Suppose that over time, consumers used discount stores at an increasing rate, the CPI
would tend to be
a. accurate
b. underestimated because consumers would buy goods and services at lower prices
than those collected by the BLS
c. underestimated because consumers would buy goods and services at higher prices
than those collected by the BLS
d. overestimated because consumers would buy goods and services at lower prices than
those collected by the BLS
e. overestimated because consumers would buy goods and services at higher prices than
those collected by the BLS
The trend of shorter working days and longer vacations is expected to reversed in most
wealthy countries in the future.
Which of the following is the proper order of assets ranked from most to least liquid?
a. Demand deposits, cash in the hands of the public, large time deposits
b. Travelers’ checks, small time deposits, savings-type accounts
c. Small time deposits, large time deposits, demand deposits
d. Cash in the hands of the public, savings-type accounts, demand deposits
e. Cash in the hands of the public, money market mutual funds, small time deposits.
Macroeconomics focuses on the economy as a whole.
According to the law of increasing opportunity cost,
a. production points outside the production possibility frontier are unattainable
b. the production possibility frontier becomes flatter as production increases along the
horizontal axis
c. the opportunity cost of producing a good rises as production of that good falls
d. production points inside the production possibility frontier are unattainable
e. the opportunity cost of producing a good rises as production of that good rises
Which economic phenomenon is the short-run macro model most useful in explaining?
a. The sources of employment in the long run
b. The trend of output in the long run
c. The sources of cyclical unemployment
d. The reasons why some workers become discouraged
e. The sources of long-run economic growth
The classical model does a good job of explaining short-run fluctuations in the level of
economic activity.
Which of the following determines how much money an individual will decide to hold?
a. Investment spending
b. Income taxes
c. The price level
d. The supply of money
e. Real GDP
Suppose the required reserve ratio is 5 percent and the Fed buys a $10,000 bond. If
money is deposited into a commercial bank, what will initially happen to money
supply?
a. It will increase by $10,000.
b. It will increase by $5,000.
c. It will increase by 5 percent.
d. It will increase by $200,000.
A shock that could trigger a recession is a
a. large increase in oil prices
b. stock market bubble
c. sudden increase in military spending
d. large decrease in oil prices
e. sudden decrease in the interest rate
The Employment Act of 1946 directed the federal government to pursue the three
objectives of maximizing employment, production, and purchasing power.