Archives: Quiz

Which of the following is included in M1 and M2? a. traveler’s checks b. savings deposits c. money market mutual funds d. small time deposits Sheri, a U.S. citizen, builds and operates a bookstore in Spain. This action is an […]

Food and clothing tend to have a. small income elasticities because consumers, regardless of their incomes, choose to buy relatively constant quantities of these goods. b. small income elasticities because consumers buy proportionately more of both goods at higher income […]

Other things the same, a higher real interest rate raises the quantity of a. domestic investment. b. net capital outflow. c. loanable funds demanded. d. loanable funds supplied. The Earned Income Tax Credit is an example of a a. minimum-wage […]

Which of the following is correct concerning recessions? a. They come at fairly regular and predictable intervals. b. They are associated with comparatively large declines in investment spending. c. They are any period when real GDP growth is less than […]

Permanent tax cuts shift the AD curve a. farther to the right than do temporary tax cuts. b. not as far to the right as do temporary tax cuts. c. farther to the left than do temporary tax cuts. d. […]

The property of society getting the most it can from its scarce resources is called a. equity. b. efficiency. c. equality. d. efficacy. Figure 7-2 Refer to Figure 7-2. When the price rises from P1 to P2, consumer surplus a. […]

Figure 4-22 Panel (a) Panel (b) Panel (c) Panel (d) Refer to Figure 4-22 Which of the four panels represents the market for winter coats as we progress from winter to spring? a. Panel (a) b. Panel (b) c. Panel […]

Economists have helped modify the debate over the environment a. by pointing out that nature is invaluable. b. by focusing discussion on issues of resource allocation. c. by lobbying Congress for acid rain legislation. d. by arguing against tradeable permits […]

Figure 9-11 Refer to Figure 9-11. The change in total surplus in this market because of trade is a. A, and this area represents a loss of total surplus. b. B, and this area represents a gain in total surplus. […]

Phillips found a a. positive relation between unemployment and inflation in the United Kingdom. b. positive relation between unemployment and inflation in the United States. c. negative relation between unemployment and inflation in the United States. d. negative relation between […]

If the quality of a good improves while its price remains the same, then the value of a dollar a. rises and the cost of living increases. b. rises and the cost of living decreases. c. falls and the cost […]

Which of the following statements is correct for the short run? a. Output is determined by the amount of capital, labor, and technology; the interest rate adjusts to balance the supply and demand for money; the price level adjusts to […]

Sometimes On Time (SOT) Airlines is considering buying a new jet. SOT would be more likely to buy a new jet if there were either a. a decrease in the price of a new jet or a decrease in the […]

Suppose that the demand for lava lamps is elastic, and the supply of lava lamps is inelastic. A tax of $2 per lamp levied on lava lamps will increase the price paid by buyers of lava lamps by a. less […]

According to the theory of liquidity preference, if the interest rate rises a. people want to hold more money. This response is shown by moving to the right along the money demand curve. b. people want to hold more money. […]

Figure 19-1 Refer to Figure 19-1. In the Figure shown, if the real interest rate is 2 percent, there will be a a. surplus of $20 billion. b. surplus of $40 billion. c. shortage of $20 billion. d. shortage of […]

When the price of a good is $5, the quantity demanded is 100 units per month; when the price is $7, the quantity demanded is 80 units per month. Using the midpoint method, the price elasticity of demand is about […]

Figure 21-2. On the left-hand graph, MS represents the supply of money and MD represents the demand for money; on the right-hand graph, AD represents aggregate demand. The usual quantities are measured along the axes of both graphs. . Refer […]

The Federal Funds rate is the interest rate a. banks charge each other for short-term loans. b. the Fed charges depository institutions for short-term loans. c. the Fed pays on deposits. d. interest rate on 3 month Treasury bills. According […]

One bag of flour is sold for $1.00 to a bakery, which uses the flour to bake bread that is sold for $3.00 to consumers. A second bag of flour is sold for $1 to a grocery store who sells […]

In which of the following cases is it most likely that an increase in the size of a tax will decrease tax revenue? a. The price elasticity of demand is small, and the price elasticity of supply is large. b. […]

Suppose that the country of Aquilonia has an inflation rate of about 5 percent per year and a real growth rate of about 5 percent per year. Suppose also that it has nominal GDP of about 200 billion units of […]

Economists have found that union workers earn what percent more than similar nonunion workers? a. 0 to 5 b. 5 to 10 c. 10 to 20 d. 20 to 30 Which of the following agencies calculates the CPI? a. the […]

A U.S. firm buys sardines from Morocco and pays for them with U.S. dollars. Other things the same, U.S. net exports a. increase, and U.S. net capital outflow increases. b. increase, and U.S. net capital outflow decreases. c. decrease, and […]

According to the classical dichotomy, which of the following is not influenced by monetary factors? a. the price level b. real GDP c. nominal interest rates d. All of the above are correct. If the dollar appreciates, perhaps because of […]

Figure 22-8. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the right-hand diagram, “Inf Rate” means “Inflation Rate.” Refer to Figure 22-8. A significant increase in the world price of oil could explain […]

Other things the same, as the price level rises, a. the dollar depreciates. b. the interest rate falls. c. people feel less wealthy. d. All of the above are correct. Figure 3-4 Perry’s Production Possibilities Frontier Jordan’s Production Possibilities Frontier […]

If a country has negative net capital outflows, then its net exports are a. positive and its saving is larger than its domestic investment. b. positive and its saving is smaller than its domestic investment. c. negative and its saving […]

Other things the same, if the capital stock increases, then in the long run a. both output and prices are higher. b. output is higher and prices are lower. c. output is lower and prices are higher. d. both output […]

Suppose a country increases trade restrictions. This country would be pursing an a. inward policy, which most economists believe has beneficial effects on the economy. b. inward policy, which most economists believe has adverse effects on the economy. c. outward […]

The supply curve for a good is a line that relates a. profit and quantity supplied. b. quantity supplied and quantity demanded. c. price and quantity supplied. d. price and profit. Figure 5-12 Refer to Figure 5-12. Total revenue when […]

Figure 7-18 Refer to Figure 7-18. At the equilibrium price, consumer surplus is a. $480. b. $640. c. $1,120. d. $1,280. A rational decisionmaker a. ignores marginal changes and focuses instead on “the big picture.” b. ignores the likely effects […]

What does the Fed auction at the Term-Auction Facility? a. government bonds of a quantity it sets b. government bonds with the quantity determined at the auction c. loans of a quantity it sets d. loans with the quantity determined […]

Figure 9-4. The domestic country is Nicaragua. Refer to Figure 9-4. With trade, Nicaragua a. imports 150 calculators. b. imports 250 calculators. c. exports 100 calculators. d. exports 250 calculators. Figure 8-3 The vertical distance between points A and C […]

When a country experiences capital flight, the interest rate a. falls because the demand for loanable funds shifts left. b. falls because the supply for loanable funds shifts right. c. rises because the demand for loanable funds shifts right. d. […]

In the open-economy macroeconomic model, the supply of loanable funds comes from a. national saving. b. private saving. c. domestic investment. d. the sum of domestic investment and net capital outflow. Which of the following is consistent with moving from […]

Macroeconomics is the study of a. individual decision makers. b. international trade. c. economy-wide phenomena. d. markets for large products. The theory of efficiency wages provides a possible explanation as to why a. workers form unions. b. firms should try […]

Babe Ruth, the famous baseball player, earned $80,000 in 193 Today, the best baseball players can earn more than 400 times as much as Babe Ruth earned in 193 However, prices have also risen since 193 We can conclude that […]

Figure 4-12 Refer to Figure 4-12. If Producer A and Producer B are the only producers in the market, then the market quantity supplied when the price is $4 is a. 4 units. b. 8 units. c. 12 units. d. […]

You put money into an account that earns a 5 percent nominal interest rate. The inflation rate is 3 percent, and your marginal tax rate is 20 percent. What is your after-tax real rate of interest? a. 3.4 percent b. […]

Figure 8-1 Refer to Figure 8-1. Suppose the government imposes a tax of P’ – P”’. The area measured by J represents a. consumer surplus after the tax. b. consumer surplus before the tax. c. producer surplus after the tax. […]

Two of the economy’s most important financial intermediaries are a. suppliers of funds and demanders of funds. b. banks and the bond market. c. the stock market and the bond market. d. banks and mutual funds. A roll of duct […]

Right-to-work laws a. guarantee workers the right to form unions. b. give workers in a unionized firm the right to choose whether to join the union. c. prevent employers from hiring permanent replacements for workers who are on strike. d. […]

Which of the following accounts for about two-thirds of the decline in output during a recession? a. the decline in consumption expenditures on consumer durables alone b. the decline in total consumption spending alone c. the decline in investment spending […]

Cleo promises to pay Jacques $1,000 in two years. If the interest rate is 6 percent, how much is this future payment worth today? a. $883.60 b. $887.97 c. $890.00 d. None of the above are correct to the nearest […]

Figure 4-5 Refer to Figure 4-5. Suppose that the federal government is concerned about obesity in the United States. Congress is considering two plans. One would require “junk food” producers to include warning labels on all junk food. The other […]

Sari puts $100 into an account with an interest rate of 10 percent. According to the rule of 70, about how much does she have at the end of 21 years? a. $210 b. $300 c. $800 d. $1,010 When […]

Unemployment data are collected a. from unemployment insurance claims. b. through a regular survey of about 60,000 households. c. through a regular survey of about 200,000 firms. d. using all of the above. In the long run a reduction in […]

The argument that purchases of minivans cause large families is an example of a. omitted variables. b. normative statements. c. reverse causality. d. bias. Figure 3-9 Uzbekistan’s Production Possibilities Frontier Azerbaijan’s Production Possibilities Frontier Refer to Figure 3-9. Suppose Uzbekistan […]

Suppose that monetary neutrality and the Fisher effect both hold. An increase in the money supply growth rate increases a. the inflation rate and growth of real GDP. b. the inflation rate but not the growth rate of real GDP. […]