Archives: Quiz

The quantity demanded of money decreases as the supply of money increases. a. True b. False The space on the freeway is fixed at any instant of time. A supply curve that shows this is a. perfectly horizontal. b. upward […]

Suppose the market basket consists of 100X, 200Y, and 300Z. Current-year prices are $5 for each unit of X, $2 for each unit of Y, and $3 for each unit of Z. Base-year prices are $2 for each unit of […]

Exhibit 2-5 “In order to produce one more television set, we must forfeit the production of one fax machine.” This statement describes a movement from a. point C to point D. b. point D to point E. c. point E […]

According to the textbook, L. Frank Baum, the author of The Wonderful Wizard of Oz, blamed ____________________ for the economic depression of 1893 and the related hardships faced by farmers and workers. a. the gold standard b. the silver standard […]

Efficiency wage models imply that workers are more productive when they are paid a higher wage, as compared to when they are paid a lower wage. a. True b. False In an economy with 100 million people, 70 million hold […]

Situation 32-1 In the early 1980s, the U.S. automobile industry managed to influence the government to negotiate a voluntary export restraint agreement with Japan that was in effect from 1981 until 1985. The predictable result was an average increase in […]

Which of the following statements is false? a. In recent years, the Chinese government has bought U.S. government bonds, raising interest rates in the United States. b. Among the key features of globalization is the growing integration of the national […]

The ability to produce a good at a lower opportunity cost than others is called a(n) __________ advantage. a. complementary b. comparative c. natural d. indigenous Starting from short-run equilibrium, the following occurs: the U.S. dollar depreciates and wage rates […]

If an international currency speculator expects that country A will soon be forced to devalue its currency, the speculator will a. buy as much of that currency as possible. b. sell all of his holdings of that currency. c. not […]

Exhibit 39-3 If P3 is a target price, the deficiency payment per unit is a. P1. b. P2. c. P3. d. P3 – P1. e. P3 – P2. Exhibit 3-2 Answer: d Good X Suppose equilibrium is at point A. […]

If goods are not rationed according to price, if follows that a. they won’t get rationed at all. b. some non-price rationing device will be used to ration the goods. c. first-come-first-served will necessarily be the rationing device used in […]

Suppose the dollar appreciates in the foreign exchange markets.What is the impact on U.S. Real GDP? a. It must rise because dollar appreciation shifts the U.S. AD curve leftward. b. It must fall because dollar appreciation shifts the U.S. SRAS […]

Which of the following combinations of factors comes closest to describing the situation in agriculture? a. elastic demand for agricultural products and large swings in supply b. elastic demand for agricultural products and small swings in supply c. inelastic demand […]

The proponents of fixed exchange rates argue that flexible exchange rates a. hamper international trade because of uncertainty over what the exchange rate will be. b. force a nation to use its domestic macroeconomic policies to maintain an exchange rate. […]

When interest rates in a given economy are reduced, it causes firms to employ __________ capital goods.In terms of the production function (graphed with labor on the horizontal axis and Real GDP on the vertical axis), this then causes____________________ . […]

Exhibit 9-5 Imagine an AD curve intersecting an SRAS curve at Point L on graph (1).Which point(s) would this correspond to on graph (2)? a. A or B b. C c. D or E d. F e. G When the […]

Exhibit 11-5 Assume that the farmer grows wheat and sells it to the miller, the miller turns the wheat into flour and sells it to the baker, and the baker turns the flour into bread and sells it to the […]

Suppose the economy is experiencing an inflationary gap. Based on available data, the Fed starts implementing contractionary monetary policy, but this moves the economy into a recessionary gap. The most probable explanation is that, because of the total lag in […]

If the minimum wage law sets a price floor above the equilibrium wage in the market for unskilled labor, then the a. minimum wage will create a surplus of unskilled labor. b. minimum wage will create a shortage of unskilled […]

If the demand for agricultural products is price inelastic and the supply is dependent upon weather conditions, then a. price changes are likely to be small, and farm revenues are likely to be highly volatile. b. price changes are likely […]

In year 1 the CPI is 181, and in year 2 the CPI is 195. If Dennis’s salary was $95,000 in year 1, what is the minimum salary he must earn in year 2 to “keep up with inflation”? a. […]

Exhibit 38-2 If the closing price of Dancer’s stock on the previous day was $34.25, what value goes in blank (B)? a. 34.85 b. 34.00 c. 34.75 d. 34.50 e. There is not enough information given to answer this question. […]

Which of the following is an example of crowding out? a. A decrease in the rate of growth of the money supply which causes a decrease in Real GDP. b. A budget deficit causes an increase in interest rates, which […]

Which of the following statements is true? a. National income accountants consider the portion of corporate profits that is used to pay corporate profits taxes to be income earned by households but not received. b. Net domestic product (NDP) is […]

Real GDP is GDP a. in current-year prices. b. in base-year prices. c. in GDP-prices. d. in that year’s prices. A candidate who understands that in a two-person race the person closer to the center of the voter distribution will […]

Which of the following is inconsistent with the burglary crime model presented in the textbook? a. The burglary rate rises during recessions. b. The burglary rate declines during recessions. c. The burglary rate remains does not change because of a […]

Suppose that a $4 billion increase in government spending increases Real GDP by $60 billion, and that a $3 billion tax reduction increases Real GDP by $68 billion.In this situation, the tax multiplier is _______________ the government spending multiplier. a. […]

In 2011, the top 50 percent of income earners in the U.S. paid about __________ percent of the total federal income taxes. a. 57.1 b. 67.1 c. 77.1 d. 87.1 e. 97.1 Simple majority voting will generate the same result […]

Most economists think that the Keynesian position is that a. the wage rate will never fall and the price level will never adjust downward if the economy is in a recessionary gap. b. the time required before wages and prices […]

Which of the following is false? a. It is impossible for a person to be uninformed on who is running for president, what the candidates stand for, and on everything else connected with presidential politics and still be rational. b. […]

If Germany’s Real GDP falls, this tends to ______________ United States exports, shifting the United States AD curve to the ________________. a. raise; right b. raise; left c. lower; right d. lower; left The interest rate that the Fed charges […]

The classical economists believed that wages, prices, and interest rates were flexible in both the upward and the downward direction. a. True b. False The U.S. real interest rate rises relative to Japan’s. As a result, a. the yen will […]

If checkable deposits rise, it follows that the a. required reserve ratio will fall. b. dollar amount of reserves will rise. c. dollar amount of vault cash will rise. d. required reserve ratio will rise. e. none of the above […]

As the dollar price of the Mexican peso falls, the __________ Mexican goods will be for Americans to purchase and the __________ Mexican goods Americans will buy; thus __________ pesos will be demanded. a. less expensive; more, more b. more […]

A decrease in Japanese real interest rates causes the dollar to _____________ which tends to _______________ U.S. Real GDP. a. appreciate; raise b. appreciate; lower c. depreciate; raise d. depreciate; lower Countries that engage in specialization and trade can consume […]

A worker is “underemployed” if she is working at a job for which her skills far exceed the requirements for the job. a. True b. False If scarcity didn’t exist, neither would a. rationing devices. b. competition. c. labor. d. […]

As income taxes rise, disposable income __________, causing __________ the AD curve. a. increases; movement down along b. increases; a rightward shift of c. decreases; movement up along d. decreases; a leftward shift of As interest rates rise, the____________ curve […]

Persons who choose not to become informed on political and governmental matters because they feel that the costs of becoming informed exceed the benefits of becoming informed are a. rationally ignorant. b. not acting in their own best interests. c. […]

When computing national income, which of the following is included in compensation of employees? a. wages and salaries paid to employees b. employers’ contributions to Social Security and employee benefit plans c. the monetary value of fringe benefits, tips, and […]

In the long run, the purchasing power parity theory predicts exchange rates accurately, particularly when there is a large difference in inflation rates across countries. a. True b. False If income tax rates are cut, the size of the budget […]

Exhibit 34-7 The world price of good X is $15. Under a policy of free trade, the U.S. production of good X would be a. 10 units. b. 20 units. c. 25 units. d. 50 units. e. none of the […]

An increase in the price of a nonlabor input such as oil will cause a. a movement down the SRAS curve. b. a movement up the SRAS curve. c. a leftward shift in the SRAS curve. d. a rightward shift […]

The economy is in a recessionary gap, wages are inflexible downward, and there is complete crowding out. Which of the following is consistent with this state of affairs? a. The economy will soon self-regulate and produce Natural Real GDP. b. […]

An “increase in demand” means that a. the demand curve has shifted to the left. b. price has declined and consumers want to purchase more of the good. c. the demand curve has shifted to the right. d. the price […]

If the money market is in the liquidity trap, it is operating in the __________ segment of the __________ demand curve. a. vertical; investment b. vertical; money c. horizontal; investment d. horizontal; money The price of X was $10 in […]

The law of increasing opportunity costs states that as a. less of a good is produced, the higher the opportunity costs of producing that good. b. more of a good is produced, the lower the opportunity costs of producing that […]

Between 1940 and 2000, income per person in China a. doubled. b. tripled. c. quadrupled. d. decreased by 5 percent. Here is a consumption function: C = C0 + MPC(Yd). If MPC is 0.80, then we know that a. as […]

Price serves as a a. rationing device. b. transmitter of information. c. means of determining who gets what of the available limited resources and goods. d. a and b e. all of the above When the Fed purchases securities from […]

If expectations are formed rationally, wages and prices are completely flexible in the short run and policy is correctly anticipated, increases in aggregate demand will a. cause lower short-run price level increases than a Keynesian would expect. b. cause higher […]

In moving along a demand curve, everything is held constant except buyers’ income. a. True b. False If the government legalizes the purchase and sale of marijuana, the equilibrium quantity would then _________ and the price would then ________ if […]