Archives: Quiz

Daily Output of Japan and U.S. Table 18.2 Refer to Table 18.2. Japan has a comparative advantage in the production of: A) stereos. B) tractors. C) both stereos and tractors. D) neither stereos nor tractors. If the economy is experiencing […]

The nominal interest rate tells you: A) how fast the number of dollars in your bank account increases over time. B) how fast the purchasing power of your bank account increases over time. C) the number of dollars in your […]

If the Federal Reserve purchases newly issued government debt A) the effect is the same as borrowing from the public. B) existing money is destroyed. C) new money is created. D) the money supply decreases. Which one of the following […]

The multiplier in an open economy ________ the multiplier in a closed economy. A) is larger than B) equals C) is smaller than D) The multiplier can be smaller or larger, depending on the size of MPM and MPC. If […]

Replacing the personal income tax with a consumption tax would: A) favor wealthy and high income individuals. B) favor poor and low income individuals. C) increase overall federal revenues from taxation. D) favor all taxpayers equally, regardless of their personal […]

A(n) ________ in U.S. prices will cause an increase in the demand for U.S. dollars and a(n) ________ in the (per dollar) exchange rate. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease An increase in government […]

Table 11.1 Refer to Table 11.1. If exports decrease by 30, what is the new equilibrium level of output? A) 1,700 B) 2,300 C) 6,800 D) 9,200 Trade results from A) comparative advantage. B) absolute advantage. C) self-sufficiency. D) diminishing […]

Expected Real Rates of Interest for Five Countries Source: Trading Economics, September, 2010Table 12.1Refer to Table 12.1. The expected real rate of interest for Australia is A) -1.4%. B) 1.4%. C) 6.9%. D) cannot be determined from the information provided. […]

Assuming all excess reserves are loaned out, if the reserve ratio is 8 percent, the money multiplier will be equal to A) 2. B) 8. C) 12.5. D) 16.67. Figure 4.6 Figure 4.6 illustrates a set of supply and demand […]

The principle that “as one input increases while the other inputs are held fixed, output beyond some point will exhibit increases at a decreasing rate” is known as the: A) marginal principle. B) principle of opportunity cost. C) principle of […]

As more efficient capital equipment becomes available, the demand for labor will ________, the real wage will ________, and the quantity of labor hired will ________. A) increase; increase; increase B) increase; remain the same; increase C) increase; remain the […]

If you want to purchase a new sports car in four years for $75,000, how much would you need to have in your bank account now, so after four years you will have $75,000 to buy the car? Assume your […]

People are said to have rational expectations if they: A) use all available information in forming their expectations. B) assume that this year’s inflation rate will be equal to the average inflation rate over the past 10 years. C) merely […]

If GDP is above potential output, then we expect to see A) increasing wages, causing the short-run aggregate supply curve to shift up. B) increasing wages, causing the short-run aggregate supply curve to shift down. C) falling wages, causing the […]

The marginal benefit of a worker to a firm is the value of the extra output that results when A) some workers are laid off and the remaining workers become more productive. B) an additional worker is hired. C) workers […]

Suppose that real GDP starts at 200 and grows at a rate of 9 percent per year for two years. In the third year real GDP would be A) 183.49. B) 236. C) 237.62. D) 239.24. What was the U.S. […]

Prisoners in World War II POW camps traded products for other products, a process referred to as A) barter. B) rationing. C) central planning. D) advantage exchange. Refer to Figure 8A.1. Capital deepening occurs as long as A) total saving […]

The federal revenue source that generates a little revenue but generates a lot of controversy is the: A) estate and gift tax. B) medicare tax. C) social security tax. D) corporate tax. Table 2.3 Refer to Table 2.3. The marginal […]

A(n) ________ is a trade policy by which a nation agrees to limit its exports of a good in order to avoid more restrictive trade policies. A) tariff B) voluntary export restraint C) import quota D) import ban Suppose that […]

Another term for full-employment output is: A) potential output. B) maximum output. C) perfectly competitive output. D) actual output. If government spending is $6.2 trillion while government revenue is $6.2 trillion, the government is said to have a A) budget […]

During the late 1990s and early 2000s, the stock market and investment expenditure were linked through: A) the creation of over-the-counter stock markets, such as NASDAQ. B) the management of monetary policy, that guaranteed low interest rates. C) expectations, first […]

In order to reduce the high inflation of the late 1970s, Paul Volcker A) increased the growth of the money supply, thereby decreasing interest rates. B) decreased the growth of the money supply, thereby decreasing interest rates. C) decreased the […]

Recall Application 2, “The Confucius Curve?” to answer the following questions: According to the application, the central idea for the Laffer curve is: A) cutting tax rates may increase tax revenues. B) cutting tax rates may increase GDP growth. C) […]

Recall the Application about the behavior of prices in retail catalogs to answer the following question(s). Economist Anil Kashyap of the University of Chicago examined the prices of 12 selected goods from L.L. Bean, REI, and The Orvis Company, Inc. […]

Figure 4.5 illustrates a set of supply and demand curves for hamburgers. An increase in supply and an increase in demand are represented by a movement from A) point d to point . B) point d to point a. C) […]

Figure 19.1 Referring to Figure 19.1, Mexican goods will become more expensive in the United States if the exchange rate goes from ________ to ________ pesos to the dollar. A) 12; 11 B) 12; 13 C) 11; 13 D) 10; […]

Recall Application 3, “The Financial System Under Stress: September 11, 2001,” to answer the following questions: To avoid a financial crisis after September 11, 2001, any policy by the implemented Fed must: A) be approved by the President of the […]

Suppose that a sporting goods store had $800 of golf balls on its shelves at the beginning of 2012 and $1,300 at the end of 2012. The amount of inventory investment included in GDP would be A) $500. B) $800. […]

If the capital stock remains fixed while the supply of labor increases, it is likely that: A) the new labor will be more productive than the old labor. B) the new labor will be less productive than the old labor. […]

Figure 2.3 In Figure 2.3, point A: A) implies unemployment of some resources. B) is the optimum. C) cannot be produced. D) all of the above. As the real interest rate ________, the real investment spending ________. A) increases; increases […]

The appreciation of the dollar will make U.S. goods ________ to foreigners and make imports ________ for U.S. residents. A) more expensive; more expensive B) cheaper; cheaper C) more expensive; cheaper D) cheaper; more expensive Which of the following individuals […]

A surplus is defined as A) the excess of total expenditures over total revenues. B) the excess of total revenues over total expenditures. C) government spending plus transfer payments. D) the sum of all past borrowing by the government. The […]

If the government collects taxes using a constant income tax rate t, then an increase in t will result in: A) a higher disposable income. B) no change to disposable income. C) a lower disposable income. D) an unknown change […]

When it comes to pollution, economists believe that the government must: A) allow firms to pollute as long as they bear the full cost of their pollution. B) never allow pollution to exist. C) allow firms to pollute as long […]

Additional Application MAKING THE FEDERAL RESERVE MORE TRANSPARENT What are the advantages and disadvantages of the Federal Reserve becoming more transparent about its actions and decisions and disclosing more information to the public? In recent years, the Fed has gradually […]

Table 2.5 Refer to the table above. By what percentage did the federal minimum wage increase from 1974 to 2011? A) 72.41 percent B) 262.5 percent C) 362.5 percent D) 525.0 percent Answer: B If the tariffs on the textiles, […]

If the number of wine producers decreases, A) the demand for wine increases. B) the demand for wine decreases. C) the supply of wine increases. D) the supply of wine decreases. Capital gains are the profit earned from the sale […]

The real-nominal principle can be stated as A) production generates income. B) only final goods and services should be counted in GDP. C) what matters to people is the purchasing power of money or income. D) only the manufacture of […]

If consumption is $25,000 when income is $26,000, and consumption increases to $25,900 when income increases to $28,000, the marginal propensity to consume is: A) 0.59. B) 0.65. C) 0.55. D) 0.45. Most econometric models predict that an interest rate […]

The main reason why the government enforces contracts and maintains a legal system that punishes those who violate contracts is: A) to facilitate exchange. B) to decrease imperfect competition. C) to decrease imperfect information. D) to increase uncertainty. Recall the […]

The production function is the mathematical representation of the technological relationship between: A) output and government policy. B) inputs and output. C) government policy changes and inflation. D) the rate of capital accumulation and national output. Discouraged workers are workers […]

When the economy slows down and national income falls, the government will have ________ tax revenue to fund programs. A) more B) less C) about the same D) a rapid increase in A movement along the consumption function is the […]

What is the motivation for individuals to hold money? A) to reduce risk B) to have liquidity C) to facilitate transactions D) all of the above Table 2.5 Comparing the minimum wages between 1974 and 2011 addresses the economic concept […]

Recall Application 3, “The Ends of Hyperinflations,” to answer the following questions: According to the Application, which of the following was Sargent’s explanation for why hyperinflations occurred? A) contractionary fiscal policy coupled with contractionary monetary policy. B) money creation and […]

In the United States there are some methods to save which reduce taxes on savings. These include A) commodity purchases. B) stock purchases. C) retirement plans like 401Ks and 403Bs. D) money market accounts. In the United States in recent […]

Education can contribute to economic growth through: A) a better integration of technology and workers’ skills. B) the faster discovery of new technologies. C) the faster adaptation of existing technologies. D) all of the above. Figure 19.3 Refer to Figure […]

Figure 18.1 Refer to Figure 18.1. After trade begins, ________ will specialize in the production of bicycles and ________ will specialize in the production of hang gliders. A) the United States.; the United States B) the United States; Canada C) […]

Refer to Figure 18.4. With a tariff or quota, what is the equilibrium price of gloves in Duckland? A) $8 B) $9 C) $10 D) $11 Inside lags associated with fiscal policy are due to all of the following, except: […]

Which is not a way in which the federal government can finance its expenditure? A) issuing bonds B) creating money C) buying federal government securities D) tax revenues A White House proposal to increase infrastructure spending on roads, rail lines […]

Full-employment output is: A) the level of output that is produced when the labor market is in equilibrium. B) the level of output that is produced when the unemployment rate is zero. C) the level of output that is produced […]