Archives: Quiz

The aggregate demand curve will shift to the right ________ the initial decrease in taxes. A) by less than B) by more than C) by the same amount as D) sometimes by more than and other times by less than […]

________ is/are the payment for the factor of production ________. A) Wages; capital B) Interest; labor C) Profit; entrepreneurship D) Rent; capital When Ford increases the production of cars in Australia, which of the following occurs? A) GDP in the […]

Which of the following accurately describes growth rates in the United States from 1900 to the present? A) Growth rates rose until the 1970s and then fell until the present. B) Growth rates have risen continuously from 1900 to the […]

When the government runs a deficit, which of the following is true? A) T > TR – G B) G > T + TR C) G > TR – T D) T < G + TR As a percentage of […]

Table 1-2 Julius runs a small tailor shop in the city of Bloomfield. He is debating whether he should extend his hours of operation. Julius figures that his sales revenue will depend on the number of hours the tailor shop […]

What is the term that describes a situation in which one party to an economic transaction has less information than the other party? A) inefficient market hypothesis B) asymmetric information C) unequal market structure D) monopsony If your nominal wage […]

Payments by a corporation to its shareholders are known as A) stocks. B) bonds. C) coupons. D) dividends. Table 7-6 Production and Consumption Production Without Trade With Trade Estonia and Morocco can produce both swords and belts. Table 7-6 shows […]

If the U.S. dollar increases in value relative to other currencies, how does this affect the aggregate demand curve? A) This will move the economy up along a stationary aggregate demand curve. B) This will move the economy down along […]

The long-run aggregate supply curve will shift to the right if A) the economy experiences technological change. B) there is a decrease in population. C) the economy experiences high levels of inflation. D) net exports decrease. If, between 2003 and […]

A decrease in the real interest rate will A) cause consumers to spend less and save more. B) most likely increase consumer’s purchases of durable goods. C) most likely increase the reward to savings. D) most likely increase the cost […]

Which of the following could explain why there is an increase in potential GDP but the equilibrium level of GDP falls? A) SRAS shifted to the right by more than LRAS. B) AD shifted to the right by more than […]

________ behavioral assumption about humans was that people usually act in a rational, self-interested way. A) Thomas Malthus’s B) Adam Smith’s C) Karl Marx’s D) Ben Bernanke’s Suppose that an increase in capital per hour worked from $15,000 to $20,000 […]

Protectionism is the use of ________ to protect domestic firms from foreign competition. A) military force B) trade barriers C) cheap labor D) dumping When the U.S. government places a tariff on a product, such as the tariff on tires […]

Figure 3-4 Refer to Figure 3-4. At a price of $20, how many units will be supplied? A) 400 B) 500 C) 600 D) 800 The economic growth model predicts that A) GDP per capita of rich countries will grow […]

During which of the following time periods did inflation remain above 5 percent every year? A) 1990 through 1999 B) 1973 through 1982 C) 1968 through 1971 D) 1958 through 1962 In preparing their estimates of the stimulus package’s effect […]

The United States A) currently is one of the most corrupt countries. B) has never had a significant problem with corruption. C) had a significant problem with corruption in the 1930s. D) currently ranks among the least corrupt countries. Which […]

Which of the following is an example of foreign direct investment in China? A) U.S. auto entrepreneur Elon Musk buys stock in Tata Motors of Mumbai, India. B) Chinese Shenzen Airlines company buys a small U.S. midwest airline company, Air […]

Monetary policy refers to the actions the A) President and Congress take to manage the money supply and interest rates to pursue their economic objectives. B) Federal Reserve takes to manage the money supply and interest rates to pursue its […]

Which of the following is not directly counted in GDP? A) investment expenditures B) government purchases C) intermediate goods D) consumer goods Equations for C, I, G, and NX are given below. If the equilibrium level of GDP is $32,000, […]

Firms that participate in regular open market transactions with the Federal Reserve are called A) secondary market banks. B) Treasury banks. C) primary dealers. D) Federal Reserve partners. If the required reserve ratio is 5 percent, then the simple deposit […]

Suppose a positive technological change in the production of disease-resistant corn caused the price of corn to fall. Holding everything else constant, how would this affect the market for wheat (a substitute for corn)? A) The supply of wheat would […]

Table 7-6 Production and Consumption Production Without Trade With Trade Estonia and Morocco can produce both swords and belts. Table 7-6 shows the production and consumption quantities without trade, and the production numbers with trade. Refer to Table 7-6. If […]

Which of the following is not a reason why low-income countries might experience low economic growth? A) The country has endured extended periods of war. B) The country fails to enforce a rule of law. C) The country has a […]

Figure 19-6 Refer to Figure 19-6. Which of the following would cause the change depicted in the figure above? A) Lack of investment in infrastructure causes Mexican productivity to fall relative to American productivity. B) A possibility of diseased poultry […]

Why do corporations want to keep the price of their stock high? A) A higher stock price increases the funds the firm can raise when it sells a given amount of stock. B) Corporations can pay their managers lower salaries […]

If, in an economy experiencing inflation, the government decided to tax real interest income rather than nominal interest income, this change would cause the real interest rate to ________ and the equilibrium quantity of loanable funds to ________. A) fall; […]

If the Phillips curve represents a “________ relationship,” then the trade-off between unemployment and inflation is permanent. A) structural B) frictional C) cyclical D) dynamic An increase in the demand for peanuts due to changes in consumer tastes, accompanied by […]

Figure 3-1 Refer to Figure 3-1. A decrease population would be represented by a movement from A) A to B. B) B to A. C) D1 to D2. D) D2 to D1. An increase in the price level will A) […]

Table 12-13 Refer to Table 12-13. Using the table above, answer the following questions. The numbers in the table are in billions of dollars. a. What is the equilibrium level of real GDP? b. What is the MPC? c. If […]

How are the fundamental economic decisions determined in Canada? A) Individuals, firms, and the government interact in a market to make these economic decisions. B) These decisions are made by the country’s elders who have had much experience in answering […]

The long-run adjustment to a negative supply shock results in A) the short-run aggregate supply curve shifting to the right. B) the price level rising. C) unemployment rising. D) workers being willing to accept higher wages. The ________ effect of […]

The purchase by a foreign government of an airplane produced in the United States is included in U.S. A) consumption expenditures. B) investment expenditures. C) government purchases. D) net exports. If firms find that consumers are purchasing more than expected, […]

Market economies tend to grow more quickly than centrally-planned economies. If nominal GDP is less than real GDP, then the GDP deflator will be greater than 100. Answer: FALSE In face of a negative supply shock, the Fed may avoid […]

Market equilibrium occurs where the quantity supplied is equal to the quantity demanded. In the United States, domestic investment is greater than national saving. Answer: TRUE Potential GDP is always greater than real GDP in an economy. Answer: FALSE Expansionary […]

In the United States, health care spending as a percentage of GDP has declined since 1965. A person’s wealth is the same as his income. Answer: FALSE The marginal propensity to consume measures the average amount of wealth that a […]

An increase in the price level causes a movement down the aggregate demand curve. If the demand for a product decreases and the supply of the product does not change, equilibrium price and equilibrium quantity will both increase. Answer: FALSE […]

New classical macroeconomic theory emphasizes the role of ‘sticky” prices in the economy. GDP is not a complete measure of well-being. Answer: TRUE The Fed can simultaneously reduce the inflation rate and stimulate growth through lowering interest rates. Answer: FALSE […]

Inflation redistributes income to a greater extent when the inflation is unanticipated compared to when the inflation is anticipated. When Jack’s income increases by $1,000, he spends an additional $850 dollars. This implies that his marginal propensity to save is […]

According to Nobel laureate Douglass North, one reason why the Industrial Revolution occurred in England before many other countries was because the king in England consistently maintained control over the court system and the government. Price floors are illegal in […]

When Jack’s income increases by $1,000, he spends an additional $850 dollars. This implies that his marginal propensity to consume is 0.85. If the multiplier is 5, the marginal propensity to consume must be 0.8. Answer: TRUE According to new […]

Expansionary monetary policy enacted during a recession will cause the inflation rate to increase. Crowding out refers to a decrease in government purchases as a result of an increase in private expenditures. Answer: FALSE Most of the countries of Africa […]

“A decrease in the price of digital cameras will decrease the demand for camera film.” This statement is an example of a positive economic statement. Higher interest rates increase both consumption and investment spending. Answer: FALSE If the rate of […]

Paying efficiency wages are a way for a company to cut costs and become more efficient, and are therefore lower than market wages. Stagflation occurs when aggregate supply and aggregate demand both increase. Answer: FALSE The Bretton Woods system was […]

High-income countries such as the United States spend a greater amount on services as compared to goods. In reality, the Fed is unable to use monetary policy to keep real GDP exactly at its potential level. Answer: TRUE Marginal benefit […]

Consider the following T-account for a bank: If the required reserve ratio is 10 percent, the bank at this point can make no more loans. If the population increases and input prices increase, the equilibrium price of a product will […]

The lengths of the recession and expansion phases and which sectors of the economy are most affected will rarely be the same in any two business cycles. At a short-run macroeconomic equilibrium, real GDP is always equal to potential GDP. […]

An increase in imports increases aggregate demand. Accumulating a greater number of inputs will ensure that an economy will experience economic growth. Answer: FALSE Suppose the extra cost to a doctor of keeping her office open on Saturdays is $800. […]

In the United States, the average length of expansions from 1950 to 2009 was more than twice as long than they were from 1900 to 1950. Real business cycle models argue that fluctuations in real GDP are caused by unanticipated […]

In an economy with money, as opposed to barter, people are more likely to specialize in the production of goods and services. If gold is used as money in an economy, the money supply is easy to control. Answer: FALSE […]

One reason why many low-income countries experience low rates of growth is because of poor public education and health. If banks receive a greater amount of reserves and do not hold all of these reserves as excess reserves, the money […]