Multiple choice

A. True

Because the price level does not affect the long-run determinants of real GDP, the long-run aggregate-supply is vertical.

a. True

Changes in the consumer price index are useful in predicting changes in the producer price index.

a. surplus and so increase unemployment

Efficiency wages create a labor

a. surplus and so increase unemployment.

Efficiency wages create a labor

d. decreases, and U.S. net capital outflow decreases.

If U.S. citizens decide to save a smaller fraction of their incomes, U.S. domestic investment

b. doubles

If Y and M are constant and V doubles, the quantity equation implies that the price level

b. doubles

If Y and M are constant and V doubles, the quantity equation implies that the price level a. falls to half its original level.

True

If a firm that produces honey is facing elastic demand, then the firm would decrease price to increase revenue.

C. the real exchange rate would rise and the quantity of dollars exchanged in the market for foreign-currency would fall.

If for some reason Americans desired to decrease their purchases of foreign assets, then other things the same

False

If the government imposes a binding price ceiling in a market, then the producer surplus in that market will increase

b. it increases by $150,000

If the money multiplier is 3 and the Fed buys $50,000 worth of bonds, what happens to the money supply?

D. 11.1 percent inflation between years 1 and 2, and 5 percent deflation between years 2 and 3.

If the price index was 90 in year 1, 100 in year 2, and 95 in year 3, then the economy experienced

c. rises and the quantity of loanable funds falls.

If the supply for loanable funds shifts to the left, then the equilibrium interest rate

c. 2.2 percent

In 2012, the imaginary nation of Kanmiw had a population of 8,044 and real GDP of 36,198,000. In 2013 it had a population of 7,800 and real GDP of 35,880,000. What was the growth rate of real GDP per person in Kanmiw between 2012 and 2013?

a. the amount of income that households have left after paying for their taxes and consumption.

In a closed economy, private saving is

C. $700

In the economy of Talikastan in 2015, consumption was $3000, exports were $1200, GDP was $6300, government purchases were $1300, and investment was $1500. What were Talikastan's imports in 2015?

A. True

In the long run import quotas do not affect the size of net exports.

A. not being consumed by buyers who value it most highly.

Inefficiency exists in a market when a good is

a. is a way for poor countries to learn the state-of-the-art technologies developed and used in richer countries. b. is viewed by economists as a way to increase growth. c. often requires removing restrictions that governments have imposed on foreign ownership of domestic capital. **d. All of the above are correct**

Investment from abroad

c. what she's learned from experience but not her tractor

Janet is a farmer. Which of the following are included in her human capital?

A. the ease with which an asset is converted to the medium of exchange.

Liquidity refers to

b. 10

Metropolis National Bank is currently holding 2% of deposits as excess reserves. Assuming that all banks have the same required reserve ratio, and then none want to hold excess reserves what is the value of the money multiplier?

C. people would want to lend more, making the quantity of loanable funds supplied increase.

Other things the same, when the interest rate rises,

C. 3/2 cups

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

A. 1 sweater and 22 jackets

Refer to Figure 3-4. If the production possibilities frontiers shown are each for one year of working, then which of the following combinations of jackets and sweaters could Lisa and Bryce together produce in a given year?

c. demand for the good conforms to the law of demand.

Refer to Figure 4-1. It is apparent from the figure that the

D. $6

Refer to Figure 6-13. Which of the following price floors would be binding in this market?

A. $8

Refer to Figure 6-24. What is the amount of the tax per unit?

D. $4

Refer to Figure 8-18. Suppose the government imposes a $1 tax in each of the four markets represented by supply curves S1, S2, S3, and S4. The deadweight will be the largest in the market represented by

C. $170

Refer to Figure 8-4. The tax results in a loss of consumer surplus that amounts to

D. P2 and Q3.

Refer to Figure 9-15. With the tariff, the price paid and quantity demanded by domestic buyers are

b. export 1,500 units of rice.

Refer to Figure 9-20. With trade, Vietnam will

D. $2,700.

Refer to Figure 9-3. With trade, producer surplus in China is

c. $1.2 trillion

Refer to Scenario 26-2. For this economy, national saving is equal to

C. the price level is higher and real GDP is the same

Refer to Stock Market Boom 2015. How is the new long-run equilibrium different from the original one?

C. 100 in 2009, 120 in 2010, and 116 in 2011.

Refer to Table 24-6. If the base year is 2009, then the consumer price index was

B. 50

Refer to Table 29-8. This bank's leverage ratio is

b. 50.

Refer to Table 29-8. This bank's leverage ratio is

b. 10

Refer to Table 29-9. Metropolis National Bank is currently holding 2% of deposits as excess reserves. Assuming that all banks have the same required reserve ratio, and then none want to hold excess reserves what is the value of the money multiplier?

B. beef and Theresa has a comparative advantage in the production of wheat.

Refer to Table 3-20. Brad has a comparative advantage in the production of

A. the rancher could produce 2.5 pounds of meat and 1.0 pound of potatoes

Refer to Table 3-31. In 10 hours,

A. both eggs and ham

Refer to Table 3-35. Which good(s) does Finland have an absolute advantage producing?

D. 5/3 towels

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

D. ​Nebraska has an absolute advantage in both corn and soybeans

Refer to Table 3-38. Iowa and Nebraska can both produce corn and soybeans, and can switch between the production of corn and soybeans at a constant rate. The table illustrates the amount of corn or soybeans each state can produce in one growing season. Based upon the information in the table, we can determine that

c. month.

Reports on the current consumer price index are released every

c. increase unemployment due to job search

Sectoral shifts in demand for output

c. increase unemployment due to job search.

Sectoral shifts in demand for output

B. 0.47

Skip's Sealcoating Service increased its total monthly revenue from $12,000 to $13,500 when it raised the price of driveway repairs from $600 to $750. The price elasticity of demand for Skip's Sealcoating Service is

c. The first fact tends to make the reported unemployment rate higher than otherwise, while the second fact tends to make the reported unemployment rate lower than otherwise.

Some people who are employed or who are not making serious effort to find employment will report themselves as unemployed. Some people who want to find work will be counted as out of the labor force.

A.$250

Suppose a tax of $5 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 200 units to 100 units. The tax decreases consumer surplus by $450 and decreases producer surplus by $300. The deadweight loss from the tax is

c. The demand for loanable funds would shift right.

Suppose that Congress were to institute an investment tax credit. What would happen in the market for loanable funds?

c. sell bonds to raise interest rates.

Suppose that businesses and consumers become much more optimistic about the future of the economy. To stabilize output, the Federal Reserve could

b. the inflation rate but not the growth rate of real GDP.

Suppose that monetary neutrality and the Fisher effect both hold. An increase in the money supply growth rate increases

a. both countries, as a whole, will be better off.

Suppose the U.S. and Japan both produce airplanes and televisions and the U.S. has a comparative advantage in the production of airplanes while Japan has a comparative advantage in the production of televisions. If the U.S. exports airplanes to Japan and imports televisions from Japan,

True

The housing shortages caused by rent control are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run.

d. are appointed by the president of the U.S. and confirmed by the U.S. Senate

The members of the Federal Reserve's Board of Governors

d. are appointed by the president of the U.S. and confirmed by the U.S. Senate.

The members of the Federal Reserve's Board of Governors

A. Farmland has a comparative advantage, relative to other countries, in producing beef.

The nation of Farmland forbids international trade. In Farmland, you can exchange 1 pound of beef for 2 pounds of pepper. In other countries, you can exchange 1 pound of beef for 4 pounds of pepper. These facts indicate that

b. less than 0.5 percent.

The price of milk increases dramatically, causing a 0.5 percent increase in the CPI. The price increase will most likely cause the GDP deflator to increase by

B. False

The sale of either stocks or bonds to raise money is known as equity finance.

C. 1.67

Using the midpoint method, what is the price elasticity of supply between point A and point B?

C. ​the total surplus for this good will increase as a result of opening up the market to international trade.

When a country opens up to trade in a good for which it has a comparative advantage, and the country begins to export the good, we can conclude that

b. raises the quantity of labor supplied and reduces the quantity of labor demanded compared to the equilibrium level

When a minimum-wage law forces the wage to remain above the equilibrium level, it

b. raises the quantity of labor supplied and reduces the quantity of labor demanded compared to the equilibrium level.

When a minimum-wage law forces the wage to remain above the equilibrium level, it

c. unemployment insurance

Which of the following does not help reduce frictional unemployment?

d. all of the above

Which of the following policies would be advocated by someone who wants the government to follow an active stabilization policy when the economy is experiencing severe unemployment?

c. price level ↓ ⇒ demand for money ↓ ⇒ equilibrium interest rate ↓ ⇒ quantity of goods and services demanded ↑

Which of the following sequences best explains the negative slope of the aggregate-demand curve?

C. input requirements per unit of output.

Absolute advantage is found by comparing different producers'

A. True

According to the open-economy macroeconomic model, if the U.S. government budget deficit decreases, then both U.S. domestic investment and net capital outflow increase

A. True

An increase in the U.S. interest rate discourages Americans from buying foreign assets and encourages foreigners to buy U.S. assets.

C. The deadweight loss of the tax is $12.50.

Assume the supply curve for diapers is a typical, upward-sloping straight line, and the demand curve for diapers is a typical, downward-sloping straight line. Suppose the equilibrium quantity in the market for diapers is 1,000 per month when there is no tax. Then a tax of $0.50 per diaper is imposed. The effective price paid by buyers increases from $1.50 to $1.90 and the effective price received by sellers falls from $1.50 to $1.40. The government's tax revenue amounts to $475 per month. Which of the following statements is correct?