Economist Charles Kindleberger (a proponent of fixed exchange rates mentioned in the
text) would agree with which of the following statements?
a. It is better to leave the international value of the domestic currency to the free market
forces than to have to sacrifice domestic economic goals in order to support a certain
predetermined value of the currency.
b. There is too great a chance that the supported exchange rates will diverge
significantly from the equilibrium exchange rates, which would create persistent
problems and lead to an overall decrease in international trade.
c. With no certainty of what one nation’s currency will be worth in terms of other
nations’ currencies, international trade is held below what it could be.
d. a and b
As a bank approaches insolvency, it is likely to
a. decrease its lending activities.
b. increase its lending activities.
c. find that its capital is declining.
d. try to increase its liabilities
e. a and c
There is a rise in labor productivity in the economy. As a result, in the short run Real
GDP __________ and the price level __________.
a. rises; falls
b. falls; rises
c. falls; falls
d. rises; rises
e. remains constant; remains constant
Exhibit 15-5€
Assume that the economy starts out in short-run equilibrium. An economist who
believes that the economy is not self-regulating would assert that the government
should use _________________ fiscal policy to close the existing
___________________ gap.
a. expansionary; inflationary
b. expansionary; recessionary
c. contractionary; recessionary
d. contractionary; inflationary
In reading the stock market quotes in the newspaper, the column with the heading
“Ticker” gives the
a. number of shares of the stock traded that day.
b. the full name of the company whose stock is being studied.
c. stock symbol for the company.
d. highest price the stock has sold for in the past year.
Which of the following is not a function of the Federal Reserve System?
a. to clear checks
b. to supervise member banks
c. to serve as the lender of last resort
d. to handle the sale of U.S. Treasury securities
e. to serve as the government’s tax collector
Which of the following statements is true?
a. Nominal interest rate = real interest rate – expected inflation rate.
b. Nominal interest rate = real interest rate + expected inflation rate.
c. Real interest rate = nominal interest rate + expected inflation rate.
d. Expected inflation rate = nominal interest rate + real interest rate.
e. Expected inflation rate = real interest rate – nominal interest rate.
An increase in nominal GDP
a. is absolute real economic growth.
b. is per capita real economic growth.
c. is both per capita and absolute real economic growth.
d. does not necessarily mean either absolute or per capita real economic growth.
Which of the following is least likely to be an effect of scarcity?
a. rationing device
b. choice
c. opportunity cost
d. dollar price
e. utility
It usually takes less time to buy a six-pack of 7-Up, a loaf of bread, and a half-gallon of
ice cream at a small convenience store (such as a 7-Eleven) than at a large, full-service
grocery store. Which of the following persons is most likely to buy these items at a
convenience store?
a. a person with a high opportunity cost of time
b. a person with a low opportunity cost of time
c. a person who is out of work
d. a person who works at a full-service grocery store