In the long run, supply shocks
a. are of no concern
b. are automatically offset so that the full-employment level of output is restored
c. cause the long-run AS curve to shift
d. have no effect on the wage rate
e. are automatically offset so that output and the price level return to their original
values
Which of the following would be most likely to increase consumption spending?
a. A higher interest rate
b. A drop in stock prices
c. A reduction in consumer credit card debt
d. The expectation of lower future prices
e. An increase in the income tax rate.
Suppose your friends take you out for dinner on your birthday and you have a much
better time than you would have had doing anything else. There is still an opportunity
cost, even though they will not let you pay for anything.
The marginal propensity to consume (MPC) is
a. the change in consumption divided by the change in disposable income
b. total consumption divided by total disposable income
c. the change in disposable income divided by the change in consumption
d. total disposable income divided by total consumption
e. the change in disposable income minus the change in consumption
Which of the following is an economic cost of unemployment?
a. The extra leisure time available
b. The increase in short-run output that results in higher unemployment
c. The psychological cost of not having a job
d. The cost of having to count the unemployed
e. The opportunity cost of lost output
Many economists thought the Fed should have lowered the federal funds rate less
aggressively in late 2007 and throughout 2008.
The classical model fails to recognize that
a. labor markets always clear
b. managers develop paternalistic feelings toward their workers
c. labor markets do not always clear
d. what was true yesterday might not be true today
e. search costs are low during recessions
Jenni can change a car’s oil in 10 minutes and clean a bathroom in 20 minutes. Rob can
change a car’s oil in 20 minutes and clean a bathroom in 10 minutes. Therefore,
a. Jenni should clean the bathroom and Rob should change the car’s oil
b. Rob should clean the bathroom and Jenni should change the car’s oil
c. there are no gains from specialization
d. Rob has an absolute advantage in both activities
e. Jenni has an absolute advantage in cleaning the bathroom
Which of the following is true?
a. The federal budget deficit is a flow and so is the national debt.
b. The national debt is both a stock and a flow.
c. The federal budget deficit is a stock and the national debt is a flow.
d. The federal budget deficit is a flow and the national debt is a stock.
e. The federal budget deficit is a stock and so is the national debt.
The law of increasing opportunity cost is based on the idea that
a. wages tend to increase with the level of employment
b. interest rates tend to rise with increasing inflation
c. labor costs for a typical firm are a large and growing proportion of total cost
d. most resources are better suited to producing some goods than others
e. the less of something we produce, the greater is the opportunity cost of producing
still more
An increase in the capital stock causes labor productivity to
a. decrease and the standard of living to increase
b. increase and the standard of living to decrease
c. decrease and the standard of living to decrease
d. increase while the standard of living remains constant
e. increase and the standard of living to increase
All the problems studied in economics arise from
a. the unequal distribution of income
b. overpopulation
c. the scarcity of resources
d. inappropriate government action
e. war
As a society produces more and more of one good, it must give up increasing amounts
of the alternative good. This demonstrates the
a. law of demand
b. convexity of the production possibilities frontier
c. law of increasing opportunity cost
d. principle of productive inefficiency
e. effects of shifts in the level of technology
Which of the following is the relationship among excess reserves, required reserves,
and total reserves?
a. total reserves = required reserves – excess reserves
b. excess reserves = total reserves/required reserves
c. total reserves = excess reserves + required reserves
d. total reserves = excess reserves – required reserves
e. excess reserves = required reserves – total reserves
When the Fed increases or decreases the money supply, these actions are called
a. discounting
b. money printing
c. moral suasion
d. open market operations
e. interest payments
Economists generally conclude that because GDP rose as a result of the response to the
2005 Hurricanes, they were really a good thing.
The recession of 1982 was largely caused
a. on purpose by the Federal Reserve’s decision to raise interest rates to combat
inflation.
b. on purpose by the Federal Reserve’s decision to cut interest rates to combat inflation.
c. by accident as a result of the Reagan era tax cuts.
d. by dramatically rising oil prices.
e. on purpose by the Reagan Administration’s decision to raise interest rates to combat
inflation.
Which of the following impacts of the terrorist attacks of September 11, 2001, would
not show up as a direct loss to GDP?
a. The loss of jobs in the WTC
b. The loss of restaurant income near ground zero
c. The loss of WTC itself
d. The loss of rental income to landlords for buildings near ground zero
e. The loss of jobs in the surrounding area.