Econ 110 Homeworks

Table 29-2. An economy starts with $10,000 in currency. All of this currency is deposited into a single bank, and the bank then makes loans totaling $9,000. The balance sheet of the bank is shown below. Assets Liabilities Reserves $1,000 Deposits $10,000 Loans $9,000 Refer to Table 29-2. If all banks in the economy have the same reserve ratio as this bank, then an increase in reserves of $100 for this bank has the potential to increase deposits for all banks by

$1,000

If the reserve ratio is 20 percent, then $2,500 of additional reserves can create up to ____ of new money

$12,500

Refer to Figure 6-26. The price paid by buyers after the tax is imposed is

$16

Fine Edge manufactures lawn mowers. In 2014 it had $4 million worth of lawn mowers in inventory. In 2015 it sold $20 million worth of lawn mowers to consumers and had $2 million work of lawn mowers in inventory. How much did the lawn mowers produced by Fine Edge add to GDP in 2015?

$18 million

A country produces only ice cream and pie. Quantities and prices of these goods for the last several years are shown below. The base year is 2008. Refer to table 23-9. In 2009, this country's Real GDP was

$250 = 2.5*50 + 6*25

Suppose a country has government expenditures of $7,000, taxes of $4,400, consumption of $18,000, exports of $5,000, imports of $5,400, transfer payments of $1,500, capital depreciation of $1,600, and investment of $6,000. GDP equals

$30,600 GDP = consumption + gov. expenditures + investment + (exports - imports)

A country has $3 billion of domestic investment and net exports of $2 billion. What is its saving?

$5 billion

Allied Business Consultants employs five researchers that each work 8 hour days. In one day the researchers prepared 10 reports for its 2 largest clients. What was Allied Business Consultants' productivity?

1/4 report per hour

Refer to Table 29-6. If Blue River Bank has lent out all the money it can given its level of deposits, then what is the reserve requirement?

10 percent

Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. In 2012, the basket's cost was $50; in 2014 the basket's cost was $51; and in 2016 the basket's cost was $52. The value of the CPI in 2014 was

102 = (Cost of basket in 2014/ cost of basket in base year) * 100

\Refer to Table 28-2. The unemployment rate of Aridia in 2010 was

12.5%

Consider the same table as above. In 2009, the GDP deflator was

120 = (300/250) x 100 GDP deflator = (nominal GDP / Real GDP) *100

If the exchange rate is 5 Egyptian pounds per U.S. dollar, a watch that costs $25 US dollars costs

125 Egyptian pounds = 5*25

If a U.S. dollar purchases 4 Argentinean pesos, and a gallon of milk costs $3 in the U.S. and 6 pesos in Argentina what is the real exchange rate?

2

Refer to Table 3-34. At which of the following prices (in terms of units of bananas per units of rice), if any, can India and Indonesia both gain from trade?

2 units of banana per unit of rice

Refer to Figure 3-18. The opportunity cost of 1 cup for Juba is

2/3 bowls

The table below pertains to Studious, an economy in which the typical consumer's basket consists of 5 books and 10 calculators. 2012 $24 $9 2013 $30 $11 2014 $32 $12 Refer to table 24-4. The inflation rate was

23.8% in 2013 and 7.7% in 2014

The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. Refer to table 23-6. From 2012 to 2013, this country's output (Real GDP) grew by

29 % = (Real GDP 2013 - Real GDP 2012) / Real GDP 2012

A farmer owns five acres of land. Each acre can produce either rice or beans. The output of each acre in terms of units of rice or units of beans is given in the table below. The farmer efficiently uses all 5 acres. ​Suppose one acre is used to produce rice. The opportunity cost of increasing the number of acres devoted to rice by one would be ____________ units of beans per unit of rice.

3/10

Assets Liabilities Reserves $50,000 Deposits $200,000 Loans $150,000 Refer to table 16-2. If the required ratio is .1, Blue River Bank has $ ____ in excess reserves

30,000

Based on the quantity equation, if M = 150, P = 2, and Y = 300, then V =

4

Refer to Figure 28-3. If the government imposes a minimum wage of $8, then how many workers will be unemployed?

4,000

Suppose that in a closed economy GDP is equal to 40,000, consumption equal to 30,000, government purchases equal to 8,000, and taxes equal to 6,000. What are private saving, public saving, and national saving

4,000, -2,000, and 2,000 respectively

A farmer owns five acres of land. Each acre can produce either rice or beans. The output of each acre in terms of units of rice or units of beans is given in the table below. The farmer efficiently uses all 5 acres. ​If three acres are used to produce beans, how many units of rice are produced?

45

The First Bank of Roswell Assets Liabilities Reserves $10 Deposits $30 Loans $35 Debt $10 Securities $5 Capital ____ Refer to Table 16-1. For the First Bank of Roswell, the leverage ratio is

5

The table below pertains to Studious, an economy in which the typical consumer's basket consists of 5 books and 10 calculators. Refer to table 24-4. If 2014 is the base year, then the consumer price index was

75 in 2012, 92.8 in 2013, and 100 in 2014 CPI = cost of basket in given year / cost of basket in base year

Refer to Figure 33-1. The short run effect of an appreciation of the U.S. dollar (the dollar gains value relative to other currencies) can be shown as a movement from ____ to ______.

A, D (movement to the left along the SRAS curve_

Consider Mandy's decision to go to college. If she goes to college, she will spend $20,000 on tuition, $10,000 on room and board, and $2,000 on books. If she does not go to college, she will earn $18,000 working in a store and spend $8,000 on room and board. Mandy's cost of going to college is

A. $42,000

At any meeting of the Federal Open Market Committee, that committee's voting members consist of A. 5 Federal Reserve Regional Bank Presidents and all the members of the Board of Governors. B. 5 Federal Reserve Regional Bank Presidents and 5 members of the Board of Governors. C. 12 Federal Reserve Regional Bank Presidents and all the members of the Board of Governors. D. 12 Federal Reserve Regional Bank Presidents and 5 members of the Board of Governors.

A. 5 Federal Reserve Regional Bank Presidents and all the members of the Board of Governors

In the AD/AS framework developed in class, two ways out of a recession, where output is below the natural rate of output, are to use monetary and fiscal policy to shift the ___ curve or to let eventual labor market clearing shift the ____ A. AD right, AS right B. AD left, AS right C. AS right, AD right D. AS left, AD left

A. AD right, AS right

Which of the following would make the money supply bigger? A. The Fed decreases the required reserve ratio. B. The Fed increases the discount rate. C. The Fed increases the rate it pays on reserves. D. The Fed sells bonds in open market operations.

A. The Fed decreases the required reserve ratio

In which of the following instances is the present value of the future payment the largest? A. You will receive $1,000 in 5 years and the annual interest rate is 5 percent. B. You will receive $1,000 in 10 years and the annual interest rate is 3 percent. C. You will receive $2,000 in 10 years and the annual interest rate is 10 percent. D. You will receive $2,400 in 15 years and the annual interest rate is 8 percent.

A. You will receive $1000 in 5 years and the annual interest rate is 5%

The long-run effects of an increase in the saving rate include A. a higher level of productivity. B. a higher growth rate of productivity. C. a higher growth rate of income. D. All of the above are correct.

A. a higher level of productivity

If Alan is risk-averse, then he will always A. choose not to play a game where he has a 50 percent chance of winning $5 and a 50 percent chance of losing $5. B. choose not to play a game where he has a 75 percent chance of winning $5 and a 25 percent chance of losing $5. C. choose to play a game where he has a 55 percent chance of winning $5 and a 45 percent chance of losing $5. D. choose to play a game where he has a 25 percent chance of winning $5 and a 75 percent chance of losing $5.

A. choose not to play a game where he has 50% chance of winning $5 and a 50% chance of losing $5.

Economists are particularly adept at understanding that people respond to A. incentives. B. laws. C. punishments more than rewards. D. rewards more than punishments.

A. incentives

One reason the aggregate demand curve is downward slopping is that a lower price level A. increases the real value of wealth. B. increases the interest rate. C. causes our currency to appreciate. D. leads to lowers wages.

A. increases the real value of wealth

Frictional unemployment results from A. job searching. It is often thought to explain relatively short spells of unemployment. B. job searching. It is often thought to explain relatively long spells of unemployment C. a surplus in the some labor markets. It is often thought to explain relatively short spells of unemployment. D. a surplus in some labor markets. It is often thought to explain relatively long spells of unemployment.

A. job searching. It is often thought to explain relatively short spells of unemployment

Which of the following can explain the upward slope of the short-run aggregate supply curve? A. nominal wages are slow to adjust to changing economic conditions B. as the price level falls, the exchange rate falls C. an increase in the money supply lowers the interest rate D. an increase in the interest rate increases investment spending

A. nominal wages are slow to adjust to changing economic conditions

In the AS/AD framework developed in class, the horizontal axis shows A. real gdp B. nominal gdp C. the gdp deflator D. inflation

A. real GDP

An increase in quantity demanded A. results in a movement downward and to the right along a fixed demand curve. B. results in a movement upward and to the left along a fixed demand curve. C. results in a movement upward and to the right along a fixed demand curve. D. results in a movement downward and to the left along a fixed demand curve.

A. results in a movement downward and the the right along a fixed demand curve

If output is above its natural rate, there will be pressure for wages to ___ because unemployment is ___ A. rise, low B. rise, high C. fall, low D. fall, high

A. rise, low

Suppose the U.S. offered a tax credit to firms that built new factories in the U.S. Then A. the demand for loanable funds would shift rightward and the equilibrium interest rate would increase. B. the demand for loanable funds would shift rightward and the equilibrium interest rate would decrease. C. the demand for loanable funds would shift leftward and the equilibrium interest rate would increase. D. the demand for loanable funds would shift leftward and the equilibrium interest rate would increase.

A. the demand for loanable funds would shift rightward and the equilibrium interest rate would increase

The marginal benefit Kyra gets from eating a second sandwich is A. the total benefit Kyra gets from eating two sandwiches minus the total benefit she gets from eating one sandwich. B. the total benefit Kyra gets from eating three sandwiches minus the total benefit she gets from eating two sandwiches. C. the same as the total benefit she gets from eating two sandwiches. D. less than the marginal cost of eating the second sandwich since she chose to eat the second sandwich.

A. the total benefit Kyra gets from eating two sandwiches minus the total benefit she gets from eating one sandwich

The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to desirable market outcomes comes from whose 1776 book?

Adam Smith

Karena was laid off, but she is expecting to be recalled. She has not looked for work since being laid off. Nathan is not employed, nor was he laid off. Who is counted as "unemployed" in the U.S. labor force statistics? A. 1) Karena and 2) Nathan, even if Nathan has not looked for work during the previous four weeks B. 1) Karena and 2) Nathan, if Nathan has looked for work during the previous four weeks C. 1) not Karena but 2) Nathan, even if Nathan has not looked for work during the previous four weeks D. 1) not Karena but 2) Nathan, if Nathan has looked for work during the previous four weeks

B. 1) Karena and 2) Nathan, is Nathan has looked for worked during the previous four weeks

Suppose you win a small lottery and you are given the following choice: You can (1) receive an immediate payment of $10,000 or (2) three annual payments, each in the amount of $3,600, with the first payment coming one year from now, the second two years from now, and the third three years from now. You would choose to take the three annual payments if the interest rate is A. 2 percent, but not if the interest rate is 3 percent. B. 3 percent, but not if the interest rate is 4 percent. C. 4 percent, but not if the interest rate is 5 percent. D. 5 percent, but not if the interest rate is 6 percent.

B. 3%, but not if the interest rate is 4%

Suppose that consumers always drink Diet Pepsi with their pizza because they like the combination. If the price of pizza rises, the demand for A. ​Diet Pepsi will increase, leading to a higher equilibrium price for Diet Pepsi. B. ​Diet Pepsi will decrease, leading to a lower equilibrium price for Diet Pepsi. ​C. pizza will increase, leading to a higher equilibrium price for Diet Pepsi. ​D. pizza will decrease, leading to a lower equilibrium price for Diet Pepsi.

B. Diet Pepsi will decrease leading to a lower equilibrium price for Diet Pepsi

Refer to Figure 26-4. Which of the following events could explain a shift of the demand-for-loanable-funds curve from D(1) to D(2)? A. The tax code is reformed to encourage greater saving. B. The tax code is reformed to encourage greater investment. C. The government starts running a budget deficit. D. The government starts running a budget surplus.

B. The tax code is reformed to encourage greater investment

Other things the same, which of the following would both make foreigners more willing to engage in U.S. portfolio investment? A. U.S. interest rates rise, the default risk of U.S. assets rise B. U.S. interest rates rise, the default risk of U.S. assets fall C. U.S. interest rates fall, the default risk of U.S. assets rise D. U.S. interest rates fall, the default risk of U.S. assets fall

B. U.S. interest rates rise, the default risk of U.S. assets fall

A result of a Fed purchase of bonds from a bank is a ____ in securities held by the bank and an ___ in reserves held by that bank A. a decrease, a decrease B. a decrease, an increase C. an increase, an increase D. an increase, a decrease

B. a decrease, an increase

If you believe that stock prices follow a random walk, then probably you A. do not believe that there is a positive relationship between risk and return. B. believe in the validity of the efficient market hypothesis C. do not believe that stock prices reflect all available information. D. believe that it is a good idea to conduct fundamental analysis

B. believe in the validity of the efficient market hypothesis

Suppose the FOMC decides that it would like to take action to increase the money supply, then it would ____ bonds which would put ____ pressure on the federal funds rate A. buy, upward B. buy, downward C. sell, downward D. sell, upward

B. buy, downward

An American brewery sells dollars to obtain euros. It then uses the euros to buy brewing equipment from a German company. These transactions A. increase U.S. net capital outflow because Germans obtain U.S. assets. B. decrease U.S. net capital outflow because Germans obtain U.S. assets. C. increase U.S. net capital outflow because the U.S. buys capital goods. D. decrease U.S. net capital outflow because the U.S. buys capital good

B. decrease U.S. net capital outflow because Germans obtain U.S. assets

Sheri, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included A. in both German GDP and U.S. GDP. B. in German GDP, but is not included in U.S. GDP. C. in U.S. GDP, but is not included in German GDP. D. in neither German GDP nor U.S. GDP.

B. in German GDP, but it is not included in U.S. GDP

By not taking into account the possibility of consumer substitution, the CPI A. understates the cost of living. B. overstates the cost of living. C. may overstate or understate the cost of living, depending on how quickly prices rise. D. may overstate or understate the cost of living, regardless of how quickly prices rise.

B. overstates the cost of living

Which of the following is an example of a normative, as opposed to positive, statement? A. If the price of a product decreases, people's willingness to buy that product will increase. B. Reducing tax rates on the wealthy would benefit the nation. C. If the national saving rate were to increase, so would the rate of economic growth. D. The elimination of trade restrictions would increase an economy's standard of living.

B. reducing tax rates on the wealthy would benefit the nation

A bond buyer is a A. saver. Bond buyers must hold their bonds until maturity. B. saver. Bond buyers may sell their bonds prior to maturity. C. borrower. Bond buyers must hold their bonds until maturity. D. borrower. Bond buyers may sell their bonds prior to maturity.

B. saver. Bond buyers may sell their bonds prior to maturity

Which of the following is included in the investment component of GDP? A. spending on new residential construction and spending on stocks and bonds B. spending on new residential construction but not spending on stocks and bonds C. spending on stocks and bonds but not spending on new residential construction D. neither spending on stocks and bonds nor spending on new residential construction

B. spending on new residential construction but not spending on stocks and bonds

When the Mexican peso gets "stronger" relative to the dollar, A. the U.S. trade deficit with Mexico rises. B. the U.S. trade deficit with Mexico falls. C. the U.S. trade deficit with Mexico is unchanged. D. None of the above necessarily happens.

B. the U.S. trade deficit with Mexico falls

Refer to Figure 33-1. The long run effect of an increase in the money supply can be shown as a movement from point __ to point ____

C, A (movement down LRAS curve)

Suppose that interest rates unexpectedly rise and that FineLine Corp announces that revenue from last quarter were down but not as much as the public had anticipated they would be down. According to the efficient markets hypothesis, which of the following makes the price of FineLine Corp Stock fall? A. Both the interest rate rising and the revenue announcement B. Neither the interest rate rising nor the revenue announcement C. Only the interest rate rising D. Only the revenue announcement

C. Only the interest rate raising

Tesla recently raised $5 billion by selling additional shares in Tesla on the stock market. General Motors did not issue new stock last night Friday but 15 million shares were bought and sold at around $30 a share. Which of the following is true? A. Both are an example of equity finance. B. Neither is an example of equity finance. C. The Tesla sale is an example of equity finance but the other is not. D. The GM sale is an example of equity finance but the other is not.

C. The Tesla sale is an example of equity finance but the other is not

Thousands of people develop lung cancer from second-hand exposure to cigarette smoke. This is an example of A. a market failure caused by market power. B. There is no market failure in this case. C. a market failure caused by an externality. D. a market failure caused by equality.

C. a market failure caused by an externality

Figure 26-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. Refer to Figure 26-3. Which of the following movements shows the effects of the government going from a budget deficit to a budget surplus?

C. a movement from Point B to Point A (shift supply curve right)

Refer to Figure 3-24. Betty has A. an absolute and comparative advantage producing good x. B. a comparative but not an absolute advantage producing good x. C. an absolute but not a comparative advantage producing good x. D. neither a comparative nor an absolute advantage producing good x.

C. an absolute but not comparative advantage producing good x.

Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself this change has A. caused measured GDP to fall. B. not caused any change in measured GDP. C. caused measured GDP to rise. D. probably changed measured GDP, but in an uncertain direction; the direction of the change depends on the difference in the quality of the cleaning that has resulted.

C. caused measured GDP to rise

In the CPI, goods and services are weighted according to A. how long a market has existed for each good or service. B. the extent to which each good or service is regarded by the government as a necessity. C. how much consumers buy of each good or service. D. the number of firms that produce and sell each good or service.

C. how much consumers buy each good or service

Satchel loses his job and immediately begins looking for another. One things the same, the unemployment rate A. increases, and the labor-force participation rate decreases. B. and the labor-force participation rate both increase. C. increases, and the labor-force participation rate is unaffected. D. is unaffected, and the labor-force participation rate decreases.

C. increases, and the labor-force participation rate is unaffected.

According to the quantity theory of money, in the long run a 3 percent increase in the money supply. A. causes real output to rise by 3 percent. B. causes real output to rise by less than 3 percent. C. leaves real output unchanged. D. real output to fall by 3 percent.

C. leaves real output unchanged

The "invisible hand" works to promote general well-being in the economy primarily through A. the political process. B. government intervention. C. people's pursuit of self-interest. D. altruism.

C. people's pursuit of self-interest

Other things the same, the real exchange rate between American and Chinese goods would be higher if A. prices of Chinese goods were higher, or the number of yuan a dollar purchased was higher. B. prices of Chinese goods were higher, or the number of yuan a dollar purchased was lower. C. prices of Chinese goods were lower, or the number of yuan a dollar purchased was higher. D. prices of Chinese goods were lower, or the number of yuan a dollar purchased was lower.

C. prices of Chinese goods were lower, or the number of yuan a dollar purchased was higher

The overriding reason why households and societies face many decisions is that A. people, by nature, tend to disagree. B. goods and services are not scarce. C. resources are scarce. D. incomes fluctuate with business cycles.

C. resources are scarce

Other things the same, a country could move from having trade surplus to having a trade deficit if either A. saving rose or domestic investment rose. B. saving rose or domestic investment fell. C. saving fell or domestic investment rose. D. saving fell or domestic investment fell.

C. saving fell or domestic investment rose

In most societies, resources are allocated by A. a small number of central planners B. those firms that use resources to provide goods and services. C. the combined actions of millions of households and firms. D. a single central planner.

C. the combined actions of millions of households and firms

A rational decisionmaker takes an action if and only if A. the average benefit of the action exceeds the average cost. B. the average cost of the action exceeds the average benefit. C. the marginal benefit of the action exceeds the marginal cost. D. the marginal cost of the action exceeds the marginal benefit.

C. the marginal benefit of the action exceeds the marginal cost

If the purchasing-power parity holds, the price level in the U.S. is 140, and the price level in Canada is 120, which of the following is true? A. the real exchange rate is 120/140. B. the real exchange rate is 140/120. C. the nominal exchange rate is 120/140 D. the nominal exchange rate is 140/120

C. the nominal exchange rate is 120/140

Refer to Figure 27-2. Suppose Britney begins with $1,050 in wealth. Starting from A. she would be willing to accept a coin-flip bet that would result in her winning $300 if the result was "heads" or losing $300 if the result was "tails." B. the pain of losing $300 of her wealth would equal the pleasure of adding $300 to her wealth. C. the pain of losing $300 of her wealth would exceed the pleasure of adding $300 to her wealth. D. the pleasure of adding $300 to her wealth would exceed the pain of losing $300 of her wealth.

C. the pain of losing $300 of her wealth would exceed the pleasure of adding $300 to her wealth

Over time both real GDP and the price level have tended upward. Which of these trends could be explained in the AD/AS framework by an upward trend in the money supply? A. both the upward trend in real GDP and the upward trend in the price level B. the upward trend in real GDP but not the upward trend in the price level C. the upward trend in the price level but not the upward trend in real GDP D. neither the upward trend in the price level nor the upward trend in real GDP

C. the upward trend in the price level but not the upward trend in the real GDP

The diagram below pertains to the demand for turkey in the United States. Refer to Figure 4-24. All else equal, a decrease in the price of chicken would cause a move from.

D(a) to D(b) - shift demand curve left

Refer to Figure 33-1. Starting at point C, an adverse supply shock will shift the economy to point ____ in the short run and ___ in the long run

D, C ( shift SRAS curve to the left)

Suppose interest is 5% each year for two years can be earned on $1,000 saved today with no risk. What is the least amount a person would need to have a 50% chance of winning to be willing to face a 50% chance of losing $1,000 today and be considered risk averse? A. $907.03 to be paid in two years B. $1,000.01 to be paid in two years C. $1,100.01 to be paid in two years D. $1,102.51 to be paid in two years

D. $1,102.51 to be paid in two years

From the appearance of Alex's utility function in the above graph, we know that A. if Alex owns a house, then he definitely would buy fire insurance provided the cost of the insurance was reasonable. B. Alex would voluntarily exchange a portfolio of stocks with a high average return and a high level of risk for a portfolio with a low average return and a low level of risk. C. Alex is risk averse. D. Alex is not risk averse.

D. Alex is not risk averse

Derek transfers $2,100 from his checking account to his savings account. As a result of this transfer by itself A. M1 increases and M2 stays the same. B. M1 increases by and M2 decreases. C. M1 decreases and M2 decreases. D. M1 decreases and M2 stays the same.

D. M1 decreases and M2 stays the same

The equilibrium price of a good has increased and the equilibrium quantity has decreased. This can be explained by ​A. a decrease in demand ​B. an increase in demand ​C. an increase in supply D. ​a decrease in supply

D. a decrease in supply

Which of the following actions best illustrates moral hazard? A. A person adds risky stock to his portfolio. B. A person who has narrowly avoided many accidents applies for automobile insurance. C. A person is unwilling to buy a stock when she believes its price has an equal chance of rising or falling $10. D. A person purchases homeowners insurance and then checks his smoke detector batteries less frequently.

D. a person purchases homeowners insurance and then checks his smoke detector batteries less frequently

Which of the following would cause price to increase? A. an increase in supply B. a decrease in demand C. a surplus of the good D. a shortage of the good

D. a shortage of the good

If the observed federal funds rate is below the target federal funds rate, the Fed will conclude that reserves are too ___ and will ____ bonds to correct this A. scarce, buy B. scarce, sell C. abundant, buy D. abundant, sell

D. abundant, sell

Refer to Figure 25-1. The shape of the curve is consistent with which of the following statements about the economy to which the curve applies? A. In the long run, a higher saving rate leads to a higher level of productivity B. In the long run, a higher saving rates leads to a higher level of income C. In the long run, a higher saving rate leads to neither a higher growth rate of productivity nor a higher growth rate of income D. all of the above

D. all of the above

We would expect the interest rate on Bond A to be higher than the interest rate on Bond B if the two bonds have identical characteristics expect that A. Bond A was issued by a financially weak corporation and Bond B was issued by a financially strong corporation B. Bond A was issued by the Exxon Mobil Corporation and Bond B was issued by the state of New York C. Bond A has a term of 20 years and Bond B has a term of 1 year D. all of the above

D. all of the above

Which of the following causes of unemployment is associated with a wage rate above the market equilibrium level? A. minimum-wage laws B. unions C. efficiency wages D. all of the above

D. all of the above

Which of the following would cause prices to fall and real GDP to rise in the short run? A. an increase in aggregate demand B. a decrease in aggregate demand C. a decrease in short run aggregate supply D. an increase in short run aggregate supply

D. an increase in short run aggregate supply

Suppose that a country has a high level of output per person agrees to trade with a country that has a low level of output per person. Which country can benefit? A. only the one with a high level of output per person. B. neither C. only the one with a low level of output per person. D. both

D. both

As people save for retirement, they are most likely to invest in A. neither stocks nor bonds B. stocks C. bonds. D. both stocks and bonds.

D. both stocks and bonds

Other things the same, if the exchange rate changes from 30 Thai bhat per dollar to 25 Thai bhat dollar, then the dollar has A. appreciated and so buys more Thai goods. B. appreciated and so buys fewer Thai goods. C. depreciated and so buys more Thai goods. D. depreciated and so buys fewer Thai goods.

D. depreciated and so buys fewer Thai goods

As the number of stocks in a person's portfolio increases, A. the risk of the portfolio increases, as indicated by the increasing value of the standard deviation of the portfolio. B. the risk of the portfolio increases, as indicated by the decreasing value of the standard deviation of the portfolio. C. the risk of the portfolio decreases, as indicated by the increasing value of the standard deviation of the portfolio. D. the risk of the portfolio decreases, as indicated by the decreasing value of the standard deviation of the portfolio.

D. the risk of the portfolio decreases, as indicated by the decreasing value of the standard deviation of the portfolio

Other things the same, an increase in the interest rate A. would shift the demand for loanable funds to the right. B. would shift the demand for loanable funds to the left. C. would increase the quantity of loanable funds demanded. D. would decrease the quantity of loanable funds demanded.

D. would decrease the quantity of loanable funds demanded

One bag of flour is sold for $2.00 to a bakery, which uses the flour to bake bread that is sold for $6.00 to consumers. A second bag of flour is sold for $2 to a grocery store who sells it to a consumer for $4.00. Taking these four transactions into account, what is the effect on GDP?

GDP increases by $10.00

Given the following information, what are the values of M1 and M2? Small time deposits $5 billion Demand deposits and other checkable deposits $4 billion Savings deposits $10 billion Money market mutual funds $10 billion Traveler's checks $1 billion Large time deposits $20 billion Currency $20 billion

M1 = $25 billion, M2 = $50 billion M1 = currency + traveler's checks + other checkable deposits M2 = M1 + savings deposits + money market funds + certificates of deposits + other time deposits

Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for bulletproof vests of a decrease in the price of Kevlar which is used in production of the vests?

Point A to Point B (shift supply curve to the right)

Inefficient production is represented by which point(s)

T (the one below the curve)

Scenario 26-1. Assume the following information for an imaginary, closed economy. GDP = $100,000; taxes = $28,000; government purchases = $25,000; national saving = $15,000. Refer to Scenario 26-1. This economy's government is running a

budget surplus of $3,000

The average income in a rich country, such as the United States or Japan, is more than A. 3 times, but less than 5 times, the average income in a poor country, such as Indonesia or Nigeria. B. 5 times, but less than 10 times, the average income in a poor country, such as Indonesia or Nigeria. C. 10 times, but less than 20 times, the average income in a poor country, such as Indonesia or Nigeria. D. more than 20 times the average income in a poor country, such as Indonesia or Nigeria.

c. 10 times, but less 20 times, the average income in a poor country, such as Indonesia or Nigeria

The Ford Bronco is a normal good. When income goes down, we would expect to see the equilibrium price of the Ford Bronco to _____ and the equilibrium quantity of the Ford Bronco to _____

decrease; decrease

Suppose that labor is part of the cost of producing apples. If the cost of labor decreases, the equilibrium price of apples will _____ and the equilibrium quantity of apples will ___

decrease; increase

Refer to Table 3-36. What is Barbuda's opportunity cost of one umbrella?

opportunity cost of one umbrella = # of towels/ # of umbrellas 3/2 towels

Suppose there are constant returns to scale. Now suppose that over time a country doubles its workers, its natural resources, its physical capital, and its human capital, but its technology is unchanged. Which of the following would double? A. both output and productivity B. output, but not productivity C. productivity, but not output D. neither productivity nor output

output, but not producivity

Refer to Figure 4-27. Which of the four panels illustrates a decrease in quantity supplied?

panel b ( a movement down and to the left along the supply curve, a shift left of demand curve)

Refer to Figure 3-15. Perry should specialize in the production of

poems

Assume that Carlos and Jill can switch between producing rice and bananas at a constant rate and each works 40 hours a week. Carlos has a comparative advantage in producing ____

rice (because his opportunity cost for producing rice is lower than Jill's)

Refer to Figure 4-17. At a price of $2 there is a ____ of _____ units

shortage, 6