Suppose that in some tax year you earned a nominal interest rate of 6 percent. During
the time you held these funds inflation was 1 percent. You compute that you made a real
after-tax interest rate of 3 percent. What was your tax rate?
a. 40 percent.
b. 33.3 percent.
c. 25 percent.
d. 50 percent.
In one day Portal Computer Company made 400 laptops with 1200 hours of labor. What
was its productivity?
a. 1/3 laptop per hour
b. 3 hours per laptop
c. 1200 laptops
d. 400 laptops
Table 28-2
Labor Data for Aridia
RefetoTable28-2.The labor force of Aridia in 2011 was
a. 1,300.
b. 1,900.
c. 2,400.
d. 3,000.
From 1970 to 1998 the U.S. dollar
a. gained value compared to the Italian lira because inflation was higher in the U.S.
b. gained value compared to the Italian lira because inflation was lower in the U.S.
c. lost value compared to the Italian lira because inflation was higher in the U.S.
d. lost value compared to the Italian lira because inflation was lower in the U.S.
When there is inflation, the number of dollars needed to buy a representative basket of
goods
a. increases, and so the value of money rises.
b. increases, and so the value of money falls.
c. decreases, and so the value of money rises.
d. decreases, and so the value of money falls
Within the U.S. population, women of prime working age (ages 25-54) have lower rates
of labor-force participation than men of prime working age (ages 25-54), regardless of
race.
a. True
b. False
Minimum-wage laws are one reason there is always some unemployment in the U.S.
economy.
a. True
b. False
Today, the four industries with the largest employment in the United States are autos,
aircraft, communications, and electrical components.
a. True
b. False
According to the classical dichotomy, which of the following is influenced by monetary
factors?
a. the real wage.
b. the real interest rate.
c. the nominal interest rate.
d. All of the above are correct.
When drawing a demand curve,
a. demand is measured along the vertical axis, and price is measured along the
horizontal axis.
b. quantity demanded is measured along the vertical axis, and price is measured along
the horizontal axis.
c. price is measured along the vertical axis, and demand is measured along the
horizontal axis.
d. price is measured along the vertical axis, and quantity demanded is measured along
the horizontal axis.
Figure 2-5
Refer to Figure2-5. The opportunity cost of obtaining 40 additional dryers by moving
from point D to point C is
a. 0 washers.
b. 20 washers.
c. 40 washers.
d. None of the above; the economy cannot move from point D to point C.
Because the statistic called the standarddeviatiomeasures the volatility of a variable, it
is used to measure the return of a portfolio.
a. True
b. False
The quantity of U.S. bonds foreigners want to buy is taken into account
a. in the U.S. supply of loanable funds and the supply of dollars in the market for
foreign-currency exchange.
b. in the U.S. supply of loanable funds and the demand for dollars in the market for
foreign-currency exchange.
c. in the U.S. demand for loanable funds and the supply of dollars in the market for
foreign-currency exchange.
d. in the U.S. demand for loanable funds and the demand for dollars in the market for
foreign-currency exchange.
Which of the following effects results from the change in the interest rate created by an
increase in government spending?
a. the investment accelerator and crowding out
b. the investment accelerator but not crowding out
c. crowding out but not the investment accelerator
d. neither crowding out nor the investment accelerator
Senator Jackson argues that replacing the federal income tax with a national sales tax
would increase the level of output. Senator Feldman objects that this policy would
benefit the rich at the expense of the poor.
a. Both senators’ arguments are primarily about equality.
b. Both senators’ arguments are primarily about efficiency.
c. Senator Jackson’s argument is primarily about equality, while Senator Feldman’s
argument is primarily about efficiency.
d. Senator Jackson’s argument is primarily about efficiency, while Senator Feldman’s
argument is primarily about equality.
You receive $2,000 today which you plan to save for 15 years. If the interest rate is 4
percent, what is the future value of this $2,000?
a. $3,494.40
b. $3,585.85
c. $3,601.89
d. $3,676.14
Rank the countries from highest to lowest based on underground economic activity as a
percentage of GDP.
a. Bolivia, Thailand, United States, Sweden.
b. Thailand, United States, Sweden, Bolivia.
c. United States, Bolivia, Sweden, Thailand.
d. Bolivia, Thailand, Sweden, United States.
Figure 2-23
RefertoFigure2-23. Points A, B, and D represent feasible outcomes for this economy.
a. True
b. False
Scenario34-1.Take the following information as given for a small, imaginary economy:
When income is $10,000, consumption spending is $6,500.
When income is $11,000, consumption spending is $7,250.
RefertoScenario34-1.The multiplier for this economy is
a. 2.85.
b. 1.53.
c. 4.00.
d. 7.00.
Suppose a country’s net capital outflow does not change, but its investment rises by
$250 billion.
a. Its saving must have risen by $250 billion so its net exports have risen.
b. Its saving must have risen by $250 billion, but its net exports are unchanged.
c. Its saving must have fallen by $250 billion, so its net exports have fallen.
d. Its saving must have fallen by $250 billion, but its net exports are unchanged.
If Walmart buys $50 million worth of consumer goods from China and sells them in the
U.S., and China uses the $50 million to purchase U.S. bonds, U.S. net exports and U.S.
net capital outflow both fall.
a. True
b. False
If the Fed increases the reserve ratio from 5 percent to 12.5 percent, then the money
multiplier
a. decreases from 20 to 8.
b. decreases from 12.5 to 5.
c. increases from 8 to 20.
d. increases from 5 to 12.5.
In the long run, a decrease in the money supply growth rate
a. shifts the short-run Phillips curve left so inflation returns to its original rate.
b. shifts the short-run Phillips curve left so unemployment returns to its natural rate.
c. Both A and B are correct.
d. None of the above is correct.
The CPI was 220 in 2012 and 231 in 2013. Phil borrowed money in 2012 and repaid the
loan in 2013. If the nominal interest rate on the loan was 10 percent, then the real
interest rate was
a. -5 percent.
b. -1 percent.
c. 5 percent.
d. 3.2 percent.
The Bureau of Labor Statistics’ U2 measure of joblessness includes job losers and job
leavers.
a. True
b. False
Assume the MPCis 0.8. Assuming only the multiplier effect matters, a decrease in
government purchases of $100 billion will shift the aggregate demand curve to the
a. left by $180 billion.
b. left by $500 billion.
c. right by $180 billion.
d. right by $400 billion.
Tyler and Camille both live in Oklahoma. A new-car dealer in Oklahoma bought a new
car from the manufacturer for $18,000 and sold it to Tyler for $22,000. Later that year,
Tyler sold the car to Camille for $17,000. By how much did these transactions
contribute to U.S. GDP for the year?
a. $18,000
b. $22,000
c. $39,000
d. $57,000
Points inside the production possibilities frontier represent feasible levels of production.
a. True
b. False
If it took as many dollars to buy goods in the United States as it did to buy enough
currency to buy the same goods in India, the real exchange rate would be computed as
how many Indian goods per U.S. goods?
a. one
b. the number of dollars needed to buy U.S. goods divided by the number of rupees
needed to buy Indian goods
c. the number of rupees needed to buy Indian goods divided by the number of dollars
needed to buy U.S. goods
d. None of the above is correct.
To state that public saving is equal to investment, for a closed economy, is to state an
accounting identity.
a. True
b. False
Other things the same, if the U.S. interest rate falls, then U.S. residents will want to
purchase
a. more foreign assets, which increases the quantity of loanable funds demanded.
b. fewer foreign assets, which decreases the quantity of loanable funds demanded.
c. more foreign assets, which increase the quantity of loanable funds supplied.
d. fewer foreign assets, which decreases the quantity of loanable funds supplied.
Figure 4-22
RefertoFigure4-22.At a price of $24, there is a
a. surplus of 4 units.
b. surplus of 8 units.
c. shortage of 4 units.
d. shortage of 8 units.
As the MPCgets close to 1, the value of the multiplier approaches
a. 0.
b. 1.
c. infinity.
d. None of the above is correct.
Meredith is looking for work as a computer programmer. Although her prospects are
good, she has not yet taken a job. Julie is looking for work in a steel mill. Every time
she shows up for an interview, there are more people looking for work than there are
openings. Someone waiting in line with her tells her it has been that way for a long
time.
a. Meredith and Julie are both frictionally unemployed.
b. Meredith and Julie are both structurally unemployed.
c. Meredith is frictionally unemployed, and Julie is structurally unemployed.
d. Meredith is structurally unemployed, and Julie is frictionally unemployed.
If the supply of a product decreases, then we would expect equilibrium price
a. to increase and equilibrium quantity to decrease.
b. to decrease and equilibrium quantity to increase.
c. and equilibrium quantity to both increase.
d. and equilibrium quantity to both decrease.