Archives: Quiz

Figure 3-15 RefertoFigure3-15. The opportunity cost of 1 poem for Perry is a. 1/12 novel. b. 1/6 novel. c. 2 novels. d. 6 novels. Figure27-2. The figure shows a utility function for Britney. RefertoFigure27-2. From the appearance of the utility […]

U.S. exports are $300 billion, U.S. imports are $500 billion. Which of the following are consistent with the level of net exports? a. The U.S has a trade surplus. The U.S. purchases $800 billion worth of foreign assets and foreign […]

Otherwise legal transactions that go unreported or unrecorded are called a. the underground economy. b. the shadow economy. c. the informal economy. d. All of the above are correct. What actions could be taken to stabilize output in response to […]

The risk of a portfolio a. increases as the number of stocks in the portfolio increases. b. is usually measured using a statistic called the standarddiversification. c. is positively related to the average return of the portfolio. d. bears no […]

Figure 4-23 RefertoFigure4-23.In this market for watermelons, a severe drought occurs which affects the watermelon crop. The equilibrium price a. increases and the equilibrium quantity decreases. b. decreases and the equilibrium quantity is ambiguous. c. and quantity both increase. d. […]

If a U.S. citizen buys a dress made in Nepal by a Nepalese firm, then a. U.S. consumption increases, U.S. net exports decrease, and U.S. GDP decreases. b. U.S. consumption increases, U.S. net exports decrease, and U.S. GDP is unaffected. […]

Sectoral shifts contribute to structural unemployment. a. True b. False In 1972, one could buy a bag of chips, a pound of hamburger, a package of buns, and a small bag of charcoal for about $2.50. If the same goods […]

In the late summer of 2005 some regions of the country were suffering from drought. What effect would we expect this to have on the stock of companies such as John Deere that manufacture farm equipment? a. raise the demand […]

Which of the following is notalways correct for a closed economy? a. National saving equals private saving plus public saving. b. Net exports equal zero. c. Real GDP measures both income and expenditures. d. Private saving equals investment. Table24-7.The table […]

Figure 3-5 Refer to Figure3-5. If the production possibilities frontier shown for Merve is for 8 hours of work, then how long does it take Merve to make one purse? a. 1/2 hour b. 2 hours c. 4 hours d. […]

According to purchasing-power parity, when a country’s central bank decreases the money supply, a unit of money a. gains value both in terms of the domestic goods and services it can buy and in terms of the foreign currency it […]

If not all prices adjust instantly to changing economic circumstances, an unexpected fall in the price level leaves some firms with higher-than-desired prices, and these higher-than-desired prices depress sales and induce firms to reduce the quantity of goods and services […]

If you are faced with the choice of receiving $500 today or $800 6 years from today, you will be indifferent between the two possibilities if the interest rate is 8.148 percent. a. True b. False Which of the following […]

Rational people make decisions at the margin by a. following marginal traditions. b. behaving in a random fashion. c. thinking in black-and-white terms. d. comparing marginal costs and marginal benefits. According to purchasing-power parity, if the Federal Reserve increased the […]

The slope of an upward-sloping line is positive, and the slope of a downward-sloping line is negative. a. True b. False Which of the following is correct? a. There is consensus among economists that unions are good for the economy. […]

People who provide you with goods and services a. are acting out of generosity. b. do so because they get something in return. c. have chosen not to become interdependent. d. are required to do so by the government. Which […]

The nominal interest rate is the a. interest rate corrected for inflation. b. interest rate as usually reported by banks. c. real rate of return to the lender. d. real cost of borrowing to the borrower. An increase in the […]

Economists use the word “money” to refer to a. income generated by the production of goods and services. b. those assets regularly used to buy goods and services. c. financial assets such as stocks and bonds. d. any type of […]

Suppose that U.S. citizens purchase more cars made in Korea, and Koreans purchase more bonds issued by U.S. corporations. Other things the same, these actions a. raise both U.S. net exports and U.S. net capital outflows. b. raise U.S. net […]

Figure 3-23 The graph below represents the various combinations of ham and cheese (in pounds) that the nation of Bonovia could produce in a given month. Refer to Figure3-23. Whenever Bonovia increases its production of ham by 1 pound per […]

When the price level falls, people want to a. hold more money and the quantity of aggregate goods and services demanded increases. b. hold more money and the quantity of aggregate goods and services demanded decreases. c. hold less money […]

Figure 3-21 Refer to Figure3-21. Without trade, Uzbekistan produced and consumed 12 bolts and 36 nails and Azerbaijan produced and consumed 14 bolts and 24 nails. Then, each country agreed to specialize in the production of the good in which […]

Fractional reserve banking is a system where banks must hold an amount of cash based on a percentage of its loans. a. True b. False Which of the following statements about GDP is correct? a. GDP measures two things at […]

Which of the following is an argument in favor of a balanced budget rule? a. Some economists believe that rules are better than discretion. b. Per-capita debt is small relative to lifetime income. c. The effect of deficit spending on […]

Table 28-4 2010 Labor Data for Adults (ages 16 and older) in Meditor RefetoTable28-4. What is the adult female labor force in Meditor? a. 40 million b. 65 million c. 70 million d. 100 million A firm might offer efficiency […]

Microeconomics is the study of a. how money affects the economy. b. how individual households and firms make decisions. c. how government affects the economy. d. how the economy as a whole works. A basic principle of economics is that […]

More than 3 percent of U.S. workers leave their jobs in a typical month. a. True b. False An example of a perfectly competitive market would be the market for a. tennis racquets. b. pizza. c. garbage collection. d. wheat. […]

If the number of sellers in a market increases, then the a. demand in that market will increase. b. supply in that market will increase. c. supply in that market will decrease. d. demand in that market will decrease. The […]

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

When the real exchange rate for the dollar appreciates, U.S. goods become a. less expensive relative to foreign goods, which makes exports rise and imports fall. b. less expensive relative to foreign goods, which makes exports fall and imports rise. […]

Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level. Which country can benefit? a. only the one with a low level of output per person. […]

A firm has three different investment options. Option A will give the firm $10 million at the end of one year, $10 million at the end of two years, and $10 million at the end of three years. Option B […]

Figure 3-15 RefertoFigure3-15.Jordan should specialize in the production of a. novels. b. poems. c. both goods. d. neither good. If at a given exchange rate U.S. citizens wanted to buy more foreign bonds a. the demand for dollars in the […]

Disinflation is like a. slowing a car down, whereas deflation is like putting the car into reverse gear. b. maintaining a car’s speed, whereas deflation is like slowing the car down. c. putting a car into reverse gear, whereas deflation […]

If people in countries that have had persistently high inflation are skeptical about efforts to reduce inflation, the short- run Phillips curve will remain far to the a. left, and the sacrifice ratio will be low. b. left, and the […]

In the ordered pair (5, 3), 3 is the a. horizontal location of the point. b. the slope. c. the x-coordinate. d. the y-coordinate. Which of the following is nota reason the aggregate-demand curve slopes downward? As the price level […]

If the stock market booms, then a. aggregate demand increases, which the Fed could offset by increasing the money supply. b. aggregate supply increases, which the Fed could offset by increasing the money supply. c. aggregate demand increases, which the […]

Other things the same, continued technological progress and continued increases in the money supply would unambiguously lead to a. rising prices only. b. rising real GDP only. c. rising prices and rising real GDP. d. neither rising prices nor rising […]

A bank has a 5 percent reserve requirement, $5,000 in deposits, and has loaned out all it can given the reserve requirement. a. It has $25 in reserves and $4,975 in loans. b. It has $250 in reserves and $4,750 […]

The CPI differs from the GDP deflator in that a. the CPI is an inflation index, while the GDP deflator is a price index. b. substitution bias is not a problem with the CPI, but it is a problem with […]

A production possibilities frontier is a graph that shows the combination of outputs that an economy should produce. a. True b. False The supply of loanable funds would shift to the right if either a. tax reforms encouraged greater saving […]

Open-market purchases by the Fed a. make the price level and value of money fall. b. make the price level rise, and make the value of money fall. c. make the price level and make the value of money rise. […]

In June of 2010, the government had a debt of about $8.6 trillion. Over the next year real GDP grew by about 1.6% and inflation was about 2%. What is the largest deficit the government could have run over this […]

In the long run, a decrease in the money supply growth rate a. shifts both the long-run and the short-run Phillips curves right. b. shifts the long-run Phillips curve left and the short-run Phillips curve right. c. shifts the long-run […]

By definition, imports are a. people who work in foreign countries. b. goods in which a country has an absolute advantage. c. limits placed on the quantity of goods leaving a country. d. goods produced abroad and sold domestically. Unemployment […]

The inflation rate is the absolute change in the price level from the previous period. a. True b. False Which of the following is included in the investment component of GDP? a. spending to build new houses b. spending to […]

When computing the cost of the basket of goods and services purchased by a typical consumer, which of the following changes from year to year? a. the quantities of the goods and services purchased b. the prices of the goods […]

If Congress instituted an investment tax credit, the interest rate would a. rise and saving would rise. b. fall and saving would fall. c. rise and saving would fall. d. fall and saving would rise. A car salesperson gives you […]

When making investment decisions, investors a. compare the real interest rates offered on different bonds. b. compare the nominal, but not the real, interest rates offered on different bonds. c. purchase the highest-priced bond available. d. All of the above […]

The classical dichotomy refers to the idea that the supply of money a. is irrelevant for understanding the determinants of nominal and real variables. b. determines nominal variables, but not real variables. c. determines real variables, but not nominal variables. […]