Archives: Quiz

In the equation of exchange, GDP divided by the money supply is equal to a. M. b. V. c. P. d. Q. Suppose there are only two countries in the world, Mexico and the United States. In the foreign exchange […]

Exhibit 10-2 At M, a. TP = TE. b. TP > TE. c. TE > TP. d. the relationship between TP and TE cannot be determined. Between 1890 and 1914, the gold stock of the world _______________ and world prices […]

Exhibit 2-7 Which of the following statements is true? a. Points B and D are more efficient than points A and C. b. If the economy’s PPF is represented by PPF1, points A and B are productive efficient, while C […]

A farmer has 500 acres on which he has previously grown corn. His yield per acre is 100 bushels of corn. If his production flexibility contract payment is $21,250, then what is the corn payment rate? a. $0.45 b. $0.67 […]

In the short run following a depreciation of the dollar, the United States may move downward along the J-curve since it is likely that the United States a. spends more dollars on imports. b. spends fewer dollars on imports. c. […]

Suppose Congress increases income taxes. This is an example of a. expansionary fiscal policy. b. expansionary monetary policy. c. contractionary fiscal policy. d. contractionary monetary policy. When we speak of expansionary fiscal policy, we are talking about policymakers __________ government […]

Exhibit 3-13 —————————–Quantity Demanded————————————- Assume that Jose, Kaitlyn, Leah, and Maria are the only buyers in this market. Each individual consumer€s demand curve is ________________ sloping and the market demand curve is _________________ sloping. a. upward; also upward b. downward; […]

The major way that the government supports crop prices is by granting nonrecourse loans to farmers. a. True b. False Exhibit 39-2 Given a target price of P1, what is the total deficiency payment made by the government? a. (P1 […]

As the U.S. dollar appreciates and the Japanese yen depreciates, a. U.S.-produced goods become more expensive for the Japanese and Japanese-produced goods become cheaper for Americans. b. U.S.-produced goods become cheaper for the Japanese and Japanese-produced goods become more expensive […]

The simple deposit multiplier is a. the reciprocal of the required reserve ratio. b. always 1. c. the same as the required reserve ratio. d. different from bank to bank even if the required reserve ratio is the same for […]

When the government decides to increase income taxes, this is an example of contractionary fiscal policy. a. True b. False If the economy is in a recessionary gap, a. Real GDP is greater than Natural Real GDP. b. Real GDP […]

Exhibit 3-2 Good X Suppose equilibrium is at point B. Something then changes and equilibrium becomes point C. Which of the following is consistent with the change in equilibrium from point B to C (assuming that good X is a […]

If government removes two people from a prisoner’s dilemma setting (and, in the process, requires that the two persons pay taxes for the service that government provides), it holds that on net a. each of the two persons is better […]

Exhibit 3-9 A wave of immigrants who love to consume X enters the country. An economist would expect a movement in the market for X from a. S1 to S2. b. D2 to D1. c. D1 to D2. d. S2 […]

The demand for seats in 10 a.m. classes at the university is higher than the demand for seats in 8 a.m. classes. The supply of seats is fixed. If the university can only charge a single price and wishes to […]

The term after the bell means after the closing of the stock market. a. True b. False Can a change in the Japanese price level cause the United States to move downward along its J-curve? a. Yes, if the Japanese […]

A three-word synonym for the term ceteris paribus is a. “nothing else changes.” b. “in my opinion.” c. “it is proved.” d. “under this assumption.” Government can overcome the free rider problem by collecting taxes and using the funds to […]

Which of the following statements represents a correct and sequentially accurate economic explanation? a. Goods X and Y are substitutes. The price of X falls, the quantity demanded of X rises, and the demand for Y rises. b. Goods X […]

Exhibit 32-4 If producers of this good engage in rent seeking which results in the government imposing a price floor of P2, then consumers€ surplus ends up being area a. D + E b. A + B + C + […]

One reads the following in a newspaper: “Today the president and Congress agreed to impose new restrictive quotas on Japanese cars coming into the country.” As a result, an economist would predict that the a. supply of cars in the […]

Which of the following statements is true? a. A person who buys a bond always pays the face value for the bond. b. If a corporation issues a bond and Dennis buys it, Dennis becomes one of the owners of […]

Exhibit 14-2 The economy moves from point 1 to 2 to 3 to 4 to 5 to 6 to 7. What explains this? a. an initial decrease in SRAS, followed by alternating rises in AD and decreases in SRAS b. […]

Suppose the economy goes from a point on its production possibilities frontier (PPF) to a point directly to the left of it. Assuming that the PPF has not shifted, this could be due to a. a gain of resources. b. […]

The routes or channels that ripple effects created in the money market travel to impact the goods-and-services market are known as a. the transmission lag. b. monetary policy. c. the liquidity trap. d. the transmission mechanism. If GDP is $12,000 […]

Economist Charles Kindleberger (a proponent of fixed exchange rates mentioned in the text) would agree with which of the following statements? a. It is better to leave the international value of the domestic currency to the free market forces than […]

Exhibit 34-1 Considering the data, which of the following terms of trade would both countries agree to? a. 1 unit of Y for 1 unit of X b. 1 unit of Y for 0.75 units of X c. 1 unit […]

A bank has $50,000 in excess reserves and the required reserve ratio is 10 percent. This means the bank could have __________ in checkable deposit liabilities and __________ in (total) reserves. a. $500,000; $90,000 b. $100,000; $20,000 c. $50,000; $25,000 […]

The tax multiplier is the number that, when multiplied by the a. budget deficit, gives us the change in total spending. b. budget deficit, gives us the change in the public debt. c. change in taxes, gives us the change […]

In 2013, the U.S. federal government spent approximately ___________ trillion. a. $4.9 b. $7.3 c. $3.7 d. $2.1 Suppose the real exchange rate of 115 Japanese yen to the dollar changes to 105 yen to the dollar. In this situation, […]

Underground activities are not counted in GDP because a. some underground activities are illegal and the government doesn’t want to place, for instance, drug dealers on an equal footing with small businesses. b. there are no written records of underground […]

Which of the following is not an aspect of Keynesian economics? a. Wages and prices tend to be inflexible downward. b. Supply does not necessarily generate its own demand. c. The interest rate is important in determining the level of […]

If an economy’s exports are $600 billion and its imports are $750 billion, its net exports are a. $1,550 billion b. $150 billion c. -$150 billion d. 1.07. The more institutional constraints that exist in a particular society, a. the […]

Suppose there are 200 million persons in the population, 120 million persons in the civilian labor force, and 90 million persons are employed.The number of persons unemployed is _______ million and the unemployment rate is ___________ percent. a. 30; 25 […]

At the time of Carol’s 10 year high school reunion she was earning $30,000 and the CPI was 90.Now that it is time for her to attend her 20 year high school reunion, Carol’s income has risen to $65,000 and […]

The federal government began issuing inflation-indexed Treasury bonds in a. 1913. b. 1989. c. 1997. d. 2001. Which of the following best describes how the international trade effect works? a. The price level in the U.S. falls relative to foreign […]

When a production function is graphed with Real GDP on the vertical axis and labor on the horizontal axis, a rise in capital________________________, and a rise in the technology coefficient __________________. a. shifts the production function upward; also shifts the […]

In a situation where two goods can be produced by two different people, it is possible for one person to have a comparative advantage in the production of both goods and the other person to have the comparative advantage in […]

The economy is in a recessionary gap and a Keynesian economist advocates expansionary fiscal policy. What is a likely reason this economist advocates expansionary fiscal policy? a. The economist believes the economy is stuck in a recessionary gap and crowding […]

If the economy is on the production possibilities frontier (PPF), the economy is a. productive inefficient. b. operating with no unemployed resources. c. productive efficient. d. b and c e. none of the above According to J-curve theory, imports initially […]

Exhibit 39-2 If P1 is a price support, the quantity of wheat purchased by the market would be equal to a. Q2. b. Q0. c. Q1. d. Q2 – Q1. e. Q1 – Q0. As discussed in the textbook, various […]

In February 2009, Congress passed (and President Obama signed) a $787 billion fiscal stimulus bill in an attempt to improve the economy. a. True b. False When the Federal Open Market Committee (FOMC) votes on policy, they do so a. […]

The movie “Return of the Jedi” earned $264 million in 1983 when it was released. The CPI in 1983 was 97.8 and the CPI in 2012 was 226.665. Approximately how much did the movie earn in 2012 dollars? a. $590 […]

Suppose that the exchange rate between the U.S. dollar and the Mexican peso starts out at $0.11 per peso.If the exchange rate then changes to $0.08 per peso, there will be a(n) __________ in the quantity demanded of dollars by […]

The Real GDP of country X doubled in 20 years. It follows that the annual growth rate in country X during this time period was a. 4.0 percent. b. 5.0 percent. c. 2.8 percent. d. 3.5 percent. Suppose government spending […]

Which of the following will decrease the money supply? a. an increase in the discount rate (relative to the federal funds rate) b. an increase in the required reserve ratio c. an open market purchase by the Fed d. a […]

Every time the Fed buys or sells on the open market, the __________ changes. a. budget deficit b. income tax rate c. money supply d. a and b e. a, b, and c A characteristic of a 45-degree line is […]

Which of the following statements is false? a. An upward-sloping supply curve graphically represents the law of supply. b. A vertical supply curve graphically represents the law of supply. c. If income rises and good X is a normal good, […]

An increase in supply is graphically represented by a leftward shift of the supply curve. a. True b. False If the demand for a particular agricultural product is highly elastic and bad weather causes the supply to decrease, then we […]

Which of the following statements is false? a. Consumers receive more consumers’ surplus when tariffs do not exist. b. Producers receive more producers’ surplus when tariffs do exist. c. A tariff results in a net loss to society. d. With […]

The economist who won the Nobel Prize in Economics in 1995, and whose name is closely connected with rational expectations theory, is a. Robert Solow. b. Paul Samuelson. c. Milton Friedman. d. Robert Lucas. e. John Maynard Keynes. The government […]