Archives: Quiz

How does a decrease in value of a country’s currency relative to other currencies affect its balance of trade? A) A decrease in value of a country’s currency relative to other currencies raises imports, reduces exports, and reduces the balance […]

If a country sets a pegged exchange rate that is above the equilibrium exchange rate, how can the country maintain the peg? A) by purchasing surplus domestic currency at the pegged rate B) by selling surplus domestic currency at the […]

In the long run, most economists agree that a permanent increase in government spending leads to A) no decrease in private spending. B) a decrease in private spending by less than the amount that government spending increased. C) a decrease […]

An efficient tax is A) a tax that imposes an equal tax burden on buyers and sellers. B) a tax that raises a maximum amount of revenue. C) a tax that imposes a small excess burden relative to the tax […]

The Stogie Shop, a cigar store in the mall, sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each. What is the opportunity cost of buying a hand-rolled cigar? A) 4 machine-made cigars B) one-quarter of a machine-made cigar […]

An unplanned increase in inventories results from A) an increase in planned investment. B) a decrease in planned investment. C) actual investment that is greater than planned investment. D) actual investment that is less than planned investment. The marginal propensity […]

Holding everything else constant, a decrease in the price of GPS systems will result in A) an decrease in the quantity of GPS systems demanded. B) an increase in the demand for GPS systems. C) a decrease in the supply […]

An increase in public saving has what impact on the market for loanable funds? A) The supply of loanable funds increases. B) The demand for loanable funds increases. C) The supply of loanable funds decreases. D) The demand for loanable […]

In a market economy, who decides what goods and services will be produced? A) only the producers B) only consumers C) consumers and producers D) the government Under a floating exchange rate, the exchange rate A) will change whenever the […]

A sole proprietorship is A) the easiest type of business to set up. B) the most difficult type of business to set up. C) the most expensive type of business to set up. D) the least profitable type of business […]

Which of the following would you expect to result in faster economic growth? A) the invention of new computers that increase labor productivity B) a decrease in the average level of education in the economy C) a decrease in the […]

Which type of business has the least government rules and regulations affecting it? A) sole proprietorship B) partnership C) corporation D) They all have the same set of rules and regulations affecting them. Figure 11-1 Refer to Figure 11-1. Diminishing […]

National income equals gross national product minus A) imports. B) depreciation. C) inventories. D) changes in inventories. A bond’s coupon payment divided by the bond’s current price is equal to the bond’s A) dividend yield. B) current yield. C) price-earnings […]

In an attempt to bring lenders and borrowers together following the financial crisis of 2008, the Federal Reserve made a large amount of new funds available to financial markets. Any of these new funds that are loaned out by banks […]

Table 3-1 Refer to Table 3-1. The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi) and the rest of the market. If the price of Kona coffee rises from $4 to $5, the […]

If opportunity costs are ________, the production possibilities frontier would be graphed as a negatively sloped straight line. A) decreasing B) increasing C) negative D) constant Pakistan has developed a comparative advantage in the production of clothing. The source of […]

What is economic profit? A) gross revenue minus explicit costs B) gross revenue minus implicit costs C) gross revenue minus explicit and implicit costs D) the same as accounting profit Which of the following would explain why accounting profit might […]

When the Federal Reserve decreases the money supply, at the previous equilibrium interest rate households and firms will now want to A) buy Treasury bills. B) sell Treasury bills. C) neither buy nor sell Treasury bills. D) hold less money. […]

________ describes the relationship between consumption spending and disposable income. A) Household wealth B) The liquidity trap C) The consumption function D) The paradox of thrift A cash withdrawal from the banking system A) decreases reserves. B) decreases deposits. C) […]

Table 4-6 Refer to Table 4-6. The equations above describe the demand and supply for Aunt Maud’s Premium Hand Lotion. The equilibrium price and quantity for Aunt Maud’s lotion are $20 and 30 thousand units. What is the value of […]

Which of the following is a macroeconomics question? A) What determines the unemployment rate? B) How is the production quantity of digital cameras determined? C) What factors determine the price of iPhones? D) What determines the wages and benefits of […]

Table 8-11 Consider the following data for Tyrovia, a country that produces only two products: guns and butter. Refer to Table 8-11. Real GDP for Tyrovia for 2013 using 2005 as the base year equals A) $1,140. B) $880. C) […]

Suppose that when the price of ice cream increases, Liza decreases her purchase of hot fudge. To Liza, A) ice cream and hot fudge are complements. B) ice cream and hot fudge and substitutes. C) ice cream and hot fudge […]

On the 45-degree line diagram, for points that lie below the 45-degree line, A) planned aggregate expenditure is greater than GDP. B) planned aggregate expenditure is less than GDP. C) planned aggregate expenditure is equal to GDP. D) planned aggregate […]

You earn $500 a month, currently have $200 in currency, $100 in your checking account, $2,000 in your savings accounts, $3,000 worth of illiquid assets and $1,000 of debt. You have A) money = $2,300, annual income = $6,000, and […]

Between 2013 and 2014, if an economy’s exports rise by $8 billion and its imports fall by $8 billion, by how much will GDP change between the two years, all else equal? A) Net exports will increase GDP by $8 […]

Table 3-2 Refer to Table 3-2. The table above shows the demand schedules for cashews of two individuals (Jordy and Amy) and the rest of the market. If the price of cashews rises from $4 to $6, the market quantity […]

The purchase or building by a corporation of a facility in a foreign country is called A) foreign direct investment. B) foreign portfolio investment. C) foreign capital depreciation. D) globally-directed investment. By the year 2013, health care spending on Medicare, […]

Table 2-2 Production choices for Nadia’s Neckware Refer to Table 2-2. Assume Nadia’s Neckware only produces ascots and bowties. A combination of 16 ascots and 6 bowties would appear A) along Nadia’s production possibilities frontier. B) inside Nadia’s production possibilities […]

In response to accounting scandals in 2002, the federal government passed legislation requiring that corporate directors have a certain level of expertise with financial information and mandating that chief executive officers personally certify the accuracy of financial statements. What is […]

The Soviet Union’s economy grew rapidly in terms of GDP per hour worked in the 1950s, but eventually this growth slowed. Why did this occur? A) Capital per hour worked grew rapidly from 1950 to 1980, but technological change occurred […]

The sum of public and private saving in an economy is equal to A) Y – C – T. B) T – TR – G. C) Y – C – G. D) I – C – G. Figure 12-2 Refer […]

Which of the following is included in both the U.S. GDP and U.S. GNP? A) the value of all cars produced by General Motors in the United States B) the value of all cars produced by Ford in Mexico C) […]

If the Federal Reserve targets the interest rate and the money demand curve shifts to the left, then the Fed A) cannot maintain the interest rate target. B) can maintain the interest rate target, but at a lower quantity of […]

Which of the following would you expect to increase both interest rates and exchange rates? A) expansionary monetary policy B) contractionary monetary policy C) expansionary fiscal policy D) Both B and C will increase both interest rates and exchange rates. […]

In a small Asian country, it is estimated that changing the level of capital from $8 million to $12 million will increase real GDP from $5 million to $6 million. If the number of hours worked in the labor force […]

Which of the following is part of an economic model? A) assumptions B) norms C) opinions D) preferences of economic agents In January, buyers of gold expect that the price of gold will fall in February. What happens in the […]

Contractionary monetary policy causes A) aggregate demand to rise and the price level to rise. B) aggregate demand to fall and the price level to fall. C) aggregate demand to rise and the price level to fall. D) aggregate demand […]

The seven members of the Board of Governors of the Federal Reserve are appointed by A) Congress. B) the President. C) the Governors of the States. D) leaders in the banking industry. E) the Treasury Department. The aggregate demand curve […]

An increase in the government budget deficit will shift the ________ curve for loanable funds to the ________ and the equilibrium real interest rate will ________. A) supply; right; fall B) supply; left; rise C) demand; right; rise D) demand; […]

Firms in a small economy planned that inventories would grow over the past year by $300,000. Over that year, inventories actually grew by $400,000. This implies that A) aggregate expenditure that year was less than GDP that year. B) there […]

Table 2-9 Table 2-9 shows the number of labor hours required to produce a wristwatch and a pound of rice in Japan and Thailand. Refer to Table 2-9. Thailand has a comparative advantage in the production of A) rice. B) […]

Calculate the government purchases multiplier if the marginal propensity to consume equals 0.8, the tax rate is 0.1, and the marginal propensity to import equals 0.2. A) 2.1 B) 1.9 C) 1.7 D) 1.4 How can economic growth help a […]

If a bank receives a $20 million discount loan from the Federal Reserve, then the bank’s reserves will A) not change. B) increase by $20 million. C) increase by less than $20 million. D) increase by more than $20 million. […]

Technological change will A) shift the per-worker production function up. B) shift the per-worker production function down. C) move the economy to a point beneath the per-worker production function. D) move the economy along a given per-worker production function. Your […]

Due to slowing growth in China and other developing countries, Caterpillar ________ the number of persons it employed in 2013 and this ________ the total number of persons unemployed in the economy. A) decreased; increased B) decreased; decreased C) increased; […]

The decline in the value of the yen after 2012 occurred as a result of the Japanese central bank, the Bank of Japan, following an expansionary monetary policy. Investors expected that the result would be lower nominal Japanese interest rates […]

Most of the pressure for a monetary growth rule has disappeared because since 1980, A) the relationship between movements in the money supply and movements in real GDP and the price level have become much stronger. B) the relationship between […]

If you have trouble finding a job because of a slowdown in the overall economy, we would say that you are A) frictionally unemployed. B) structurally unemployed. C) cyclically unemployed. D) seasonally unemployed. It is difficult to determine if foreign […]

A decrease in the price level will A) shift the aggregate demand curve to the left. B) shift the aggregate demand curve to the right. C) move the economy up along a stationary aggregate demand curve. D) move the economy […]