If the U.S. inflation rate is 3 percent annually and the Japanese inflation rate is 1
percent annually, by what percent would the dollar price of the yen need to change
according to purchasing power parity?
a. Appreciate by 2 percent
b. Appreciate by 1 percent
c. Depreciate by 2 percent
d. Appreciate by 3 percent
e. Depreciate by 1 percent.
The slope of the consumption function can be determined by dividing the change in
a. real consumption spending by the change in real disposable income
b. nominal spending by the change in nominal disposable income
c. real disposable income by the change in real consumption spending
d. nominal disposable income by the change in nominal consumption spending
e. total consumption spending by the change in autonomous consumption spending
The marginal propensity to consume is always
a. a negative number
b. larger than 1.0
c. larger than 10
d. greater than zero and less than 0.5
e. greater than zero and less than 1.0
How many districts does the Federal Reserve System have?
a. 50
b. 1
c. 12
d. 51
e. 4
If net taxes increase by $100 billion and the marginal propensity to consume is 0.6, by
how much will GDP change?
a. -$250 billion
b. $150 billion
c. $250 billion
d. -$100 billion
e. -$150 billion
Which of the following would be classified as a government purchase?
a. Social security payments
b. Government purchases of computers
c. Unemployment insurance payments
d. Welfare payments
e. Veterans’ Administration payments.
If output exceeds its full-employment level, the wage rate will eventually fall, causing a
drop in the price level and a drop in real GDP until full employment is restored.
If the dollar price of a foreign currency increases, there will be a(n)
a. rightward movement along the supply of foreign exchange curve
b. leftward movement along the supply of foreign exchange curve
c. leftward shift of the supply of foreign exchange curve
d. rightward shift of the supply of foreign exchange curve
e. tendency for the supply of foreign exchange curve to become flatter
A good is said to be a normal good when
a. decreases in income lead to an increase in demand for the good
b. decreases in income lead to a decrease in demand for the good
c. increases in income lead to a decrease in demand for the good
d. increases in price lead to a decrease in the quantity demanded of the good
e. increases in price lead to a decrease in demand for the good
Which of the following is the best example of physical capital used to produce a
textbook?
a. the expertise and writing ability of the author
b. the ink used in the printing press
c. the printing press
d. the property on which the publisher’s office is located
e. the time spent by editors reviewing the textbook