In which of the following cases would there be an effect on the value of the U.S.
consumer price index, but not on the value of the U.S. GDP deflator?
a. All of the truck tires that are produced by a certain company in South Korea are sold
to the U.S. military, and the price of these tires decreases.
b. All of the truck tires that are produced by a certain company in California are sold to
the U.S. military, and the price of these tires decreases.
c. Most of the bananas that are produced by a certain company in Honduras end up in
U.S. grocery stores, and the price of these bananas increases.
d. Most of the earth-moving machines that are produced by a certain company in
Illinois are exported to other countries, and the price of these machines increases.
Which of the following would increase in response to a decrease in the price of ironing
boards?
a. the quantity of irons demanded at each possible price of irons
b. the equilibrium quantity of irons
c. the equilibrium price of irons
d. All of the above are correct.
Figure 3-16
Refer to Figure3-16. If Hosne and Merve switch from each person dividing her time
equally between the production of purses and wallets to each person spending all of her
time producing the good in which she has a comparative advantage, then total
production of purses will increase by
a. 2.
b. 3.
c. 5.
d. 10.
Which of the following is a financial-market transaction?
a. A saver buys shares in a mutual fund.
b. A saver deposits money into a credit union.
c. A saver buys a bond a corporation has just issued so it can purchase capital.
d. None of the above is correct.
If there is a surplus in the U.S. loanable funds market, then
a. NCO > I.
b. NCO < I.
c. NCO + I > S.
d. NCO + I < S.
If there is an adverse supply shock, then
a. unemployment rises and the short-run Phillips curve shifts right.
b. unemployment rises and the short-run Phillips curve shifts left.
c. unemployment falls and the short-run Phillips curve shifts right.
d. unemployment falls and the short-run Phillips curve shifts left.
During recessions
a. workers are laid off.
b. factories are idle.
c. firms may find they are unable to sell all they produce.
d. All of the above are correct.
A Turkish company exchanges liras for dollars and then uses the dollars to purchase
medical equipment from a U.S. company. These transactions
a. increase U.S. net exports, and increase Turkish net capital outflow.
b. increase U.S. net exports, and decrease Turkish net capital outflow.
c. decrease U.S. net exports, and increase Turkish net capital outflow.
d. decrease U.S. net exports, and decrease Turkish net capital outflow.
A Texas household receives a Social Security check for $1500, which it uses to
purchase a $40 pair of shoes made in Thailand by a Thai firm, a $1240 television made
by a Korean firm in Korea, and $220 on groceries from a local store. As a result, U.S.
GDP
a. increases by $40.
b. increases by $220.
c. increases by $280.
d. increases by $1500.
U.S. exports make up less than 20 percent of GDP.
a. True
b. False
Figure 4-26
RefertoFigure4-26.Which of the following movements would illustrate the effect in the
market for orange juice of an announcement by the American Dental Association that
orange juice erodes tooth enamel?
a. Point A to Point B
b. Point C to Point B
c. Point C to Point D
d. Point A to Point D
In any economic system, scarce resources have to be allocated among competing uses.
Market economies harness the forces of
a. government to allocate scarce resources.
b. supply and demand to allocate scarce resources.
c. credit cards to allocate scarce resources.
d. nature to allocate scarce resources.
Consider five individuals with different occupations.
In a barter system which of the following pairs has a double coincidence of wants?
a. Allen and Eric
b. Diedre and Calvin
c. Both A and B are correct.
d. None of the above are correct.
Table29-6.
RefetoTable29-6. If the Fed’s reserve requirement is 5 percent, then what quantity of
excess reserves does the Bank of Pleasantville now hold?
a. $500
b. $250
c. $2,000
d. $3,600
Unemployment insurance
a. reduces search effort which raises unemployment.
b. reduces search effort which lowers unemployment.
c. increases search effort which raises unemployment.
d. increases search effort which decreases unemployment.
What is the future value of $800 one year from today if the interest rate is 7 percent?
a. $747.66
b. $756.00
c. $856.00
d. None of the above are correct to the nearest cent.
If nominal GDP is $10 trillion and real GDP is $12 trillion, then the GDP deflator is
a. 83.33, and this indicates that the price level has decreased by 16.67 percent since the
base year.
b. 83.33, and this indicates that the price level has increased by 83.33 percent since the
base year.
c. 120, and this indicates that the price level has increased by 20 percent since the base
year.
d. 120, and this indicates that the price level has increased by 120 percent since the base
year.
The price index was 120 in 2012 and 126 in 2013. What was the inflation rate?
a. 5.0 percent
b. 6.0 percent
c. 7.2 percent
d. 105 percent
Suppose that the MPCis 0.7, there is no investment accelerator, and there are no
crowding-out effects. If government expenditures increase by $30 billion, then
aggregate demand
a. shifts rightward by $100 billion.
b. shifts rightward by $51 billion.
c. shifts rightward by $170 billion.
d. shifts rightward by $72.8 billion.
Assume that consumers consider rice and potatoes to be substitutes, so that when the
price of rice rises, consumers purchase less rice and more potatoes. When the CPI is
computed following the increase in the price of rice, it takes into account
a. the increase in the price of rice.
b. the decrease in the quantity of rice purchased and the increase in the quantity of
potatoes purchased.
c. Both (a) and (b) are correct.
d. None of the above is correct.
Al’s Aluminum Company sells $1 million worth of aluminum to Shiny Foil Company,
which uses the aluminum to make aluminum foil. Shiny Foil Company sells $4 million
worth of aluminum foil to households. The transactions just described contribute how
much to GDP?
a. $1 million
b. $3 million
c. $4 million
d. $5 million
Which of the following make(s) insurance premiums higher than otherwise?
a. adverse selection and moral hazard
b. adverse selection, but not moral hazard
c. moral hazard, but not adverse selection
d. neither adverse selection nor moral hazard
Suppose the real exchange rate is 5/4 of a Canadian textbook per U.S. textbook , a U.S.
textbook costs $150, and a Canadian one costs 120 Canadian dollars. To the nearest
penny, what is the nominal exchange rate?
a. .64 Canadian dollars per U.S. dollar
b. 1 Canadian dollar per U.S. dollar
c. 1.56 Canadian dollars per U.S. dollar
d. None of the above is correct.
Investment is a
a. small part of real GDP, so it accounts for a small share of the fluctuation in real GDP.
b. small part of real GDP, yet it accounts for a large share of the fluctuation in real GDP.
c. large part of real GDP, so it accounts for a large share of the fluctuation in real GDP.
d. large part of real GDP, yet it accounts for a small share of the fluctuation in real GDP.
Table 23-3
The table below contains data for the country of Crete for the year 2010.
RefertoTable23-3.What were Crete’s government purchases in 2010?
a. $1130
b. $1601
c. $1837
d. $2544
Suppose each good costs $5 per unit and Megan holds $40. What is the real value of the
money she holds?
a. $40. If the price of goods rises, to maintain the real value of her money holdings she
needs to hold more dollars.
b. 8 units of goods. If the price of goods rises, to maintain the real value of her money
holdings she needs to hold more dollars.
c. $40. If the price of goods rises, to maintain the real value of her money holdings she
needs to hold fewer dollars.
d. 8 units of goods. If the price of goods rises, to maintain the real value of her money
holdings she needs to hold fewer dollars.
Normative statements are not
a. descriptive.
b. prescriptive.
c. claims about how the world should be.
d. made by economists speaking as policy advisers.
Table 28-11
2010 Labor Data for Tajnia
RefetoTable28-11.The labor-force participation rate of Tajnia in 2010 is about 40.8
percent.
a. True
b. False
A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its
inventory. In the second quarter of 2010 the firm sells the sweatshirts to consumers. In
which quarter(s) does(do) these transactions raise consumption?
a. the first and the second
b. the first but not the second
c. the second but not the first
d. neither the first nor the second
Most markets in the economy are highly competitive.
a. True
b. False
On a bank’s Taccount, which are part of the bank’s assets?
a. both deposits made by its customers and reserves
b. deposits made by its customers but not reserves
c. reserves but not deposits made by its customers
d. neither deposits made by its customers nor reserves
Table 3-23
Assume that the farmer and the rancher can switch between producing pork and
producing tomatoes at a constant rate.
Refer to Table3-23. Assume that the farmer and the rancher each has 24 labor hours
available. If each person spends all his time producing the good in which he has a
comparative advantage, then total production is
a. 4 pounds of pork and 6 pounds of tomatoes.
b. 6 pounds of pork and 8 pounds of tomatoes.
c. 4 pounds of pork and 8 pounds of tomatoes.
d. 6 pounds of pork and 6 pounds of tomatoes.