FINAL EXAM MACROECONOMICS
$47,000
Measured in 2010 dollars, real GDP per person in the United States in 2010 was about Select one: a. $47,000. b. $57,000. c. $37,000. d. $67,000.
b. unemployment benefits.
An example of an automatic stabilizer is Select one: a. a decrease in tax rates in response to a recession. b. unemployment benefits. c. a decrease in money demand. d. a lowering of interest rates by the Fed.
d. less wealthy, so the quantity of goods and services demanded falls
Other things the same, an increase in the price level makes consumers feel Select one: a. less wealthy, so the quantity of goods and services demanded rises. b. more wealthy, so the quantity of goods and services demanded rises. c. more wealthy, so the quantity of goods and services demanded falls. d. less wealthy, so the quantity of goods and services demanded falls.
c. structural unemployment.
Unions contribute to Select one: a. cyclical unemployment. b. frictional unemployment. c. structural unemployment. d. seasonal unemployment.
a. decreases taxes
Aggregate demand shifts right when the government Select one: a. decreases taxes. b. None are correct. c. cuts military expenditures. d. repeals an investment tax credit.
d. rational expectations.
The theory by which people optimally use all available information when forecasting the future is known as Select one: a. credible expectations. b. predictive expectations. c. perfect expectations. d. rational expectations.
c. divided by the labor force, all times 100
The unemployment rate is computed as the number of unemployed Select one: a. times the labor-force participation rate, all times 100. b. divided by the adult population, all times 100. c. divided by the labor force, all times 100. d. divided by the number of employed, all times 100.
c. $500.
A bank's reserve ratio is 10 percent and the bank has $5,000 in deposits. Its reserves amount to Select one: a. $4,500. b. $4,950. c. $500. d. $50.
c. certificate of indebtedness
A bond is a Select one: a. certificate of partial ownership in an enterprise. b. financial intermediary. c. certificate of indebtedness. d. None are correct.
b. raises the interest rate and reduces investment
A larger budget deficit Select one: a. reduces the interest rate and raises investment. b. raises the interest rate and reduces investment. c. raises the interest rate and investment. d. reduces the interest rate and investment.
d. issued by state and local governments
A municipal bond is Select one: a. issued by households. b. issued by corporations. c. issued by the federal government. d. issued by state and local governments.
a. All of these are correct
A mutual fund Select one: a. All of these are correct. b. is a financial intermediary. c. is a financial institution that stands between savers and borrowers. d. allows people with small amounts of money to diversify their holdings.
c. real GDP per person
A nation's standard of living is best measured by its Select one: a. nominal GDP. b. nominal GDP per person. c. real GDP per person. d. real GDP.
b. recession.
A relatively mild period of falling incomes and rising unemployment is called a(n) Select one: a. business cycle. b. recession. c. depression. d. expansion.
d. an average of a group of stock prices
A stock index is Select one: a. a report in a newspaper or other media outlet on the price of the stock and earnings of the corporation that issued the stock. b. a measure of the risk relative to the profitability of corporations. c. an average of a group of stock yields. d. an average of a group of stock prices.
c. the price level, but not real GDP
According to classical macroeconomic theory, changes in the money supply affect Select one: a. real GDP but not the price level. b. real GDP and the price level. c. the price level, but not real GDP. d. neither the price level nor real GDP.
d. the nominal interest rate.
According to the classical dichotomy, which of the following is influenced by monetary factors? Select one: a. the real interest rate. b. the real wage. c. All of these are correct. d. the nominal interest rate.
b. Adam's production is higher than Doug's, but Doug's productivity is higher than Adam's
Adam and Doug both build birdhouses. Adam works 30 hours a week and produces 15 bird houses. Doug works 20 hours a week and produces 12 bird houses. Which of the following is correct? Select one: a. Adam's production and productivity are higher than Doug's. b. Adam's production is higher than Doug's, but Doug's productivity is higher than Adam's. c. Doug's production is higher than Adam's, but Adam's productivity is higher than Doug's. d. Doug's production and productivity are higher than Adam's.
d. increases.
As the reserve ratio decreases, the money multiplier Select one: a. could do any of these. b. decreases. c. does not change. d. increases.
b. relatively low inflation and unemployment rates.
Between 1993 and 2001 the U.S. economy experienced Select one: a. relatively high inflation rates and relatively low unemployment rates. b. relatively low inflation and unemployment rates. c. relatively low inflation rates and relatively high unemployment rates. d. relatively high inflation and unemployment rates.
physical capital
The equipment and structures available to produce goods and services are called Select one: a. human capital. b. the production function. c. physical capital. d. technology.
c. checking account.
Demand deposits are a type of Select one: a. time deposit. b. savings deposit. c. checking account. d. money market mutual fund.
c. None of these are correct
Discouraged workers are included in Select one: a. the number of unemployed. b. the labor force. c. None of these are correct. d. frictional unemployment.
a. reduction in the rate of inflation.
Disinflation is defined as a Select one: a. reduction in the rate of inflation. b. constant rate of inflation. c. zero rate of inflation. d. negative rate of inflation.
c. sales and profits fall
During recessions Select one: a. profits fall, sales rise. b. sales and profits rise. c. sales and profits fall. d. sales rise, profits fall.
c. $10,000 of new money.
If the reserve ratio is 5 percent, then $500 of additional reserves can create up to Select one: a. $2,500 of new money. b. $9,500 of new money. c. $10,000 of new money. d. $10,500 of new money.
a. increased real GDP.
In 2008, the United States was in recession. Which of the following things would you not expect to have happened? Select one: a. increased real GDP. b. increased claims for unemployment insurance. c. increased layoffs and firings. d. a higher rate of bankruptcy
d. All of these are correct
In a closed economy, national saving equals Select one: a. private saving plus public saving. b. investment. c. income minus the sum of consumption and government purchases. d. All of these are correct.
c. private saving
In a closed economy, what does (Y - T - C) represent? Select one: a. national saving b. government tax revenue c. private saving d. public saving
b. the federal funds rate.
In recent years, the Federal Reserve has conducted policy by setting a target for Select one: a. the monetary growth rate. b. the federal funds rate. c. the exchange rate. d. bank reserves.
c. the purchase of new capital
In the language of macroeconomics, investment refers to Select one: a. the purchase of stocks, bonds, or mutual funds. b. saving. c. the purchase of new capital. d. All of these are correct.
c. below the natural rate, so real GDP growth was likely high.
In the last half of 1999, the U.S. unemployment rate was about 4 percent. Historical experience suggests that this is Select one: a. below the natural rate, so real GDP growth was likely low. b. above the natural rate, so real GDP growth was likely high. c. below the natural rate, so real GDP growth was likely high. d. above the natural rate, so real GDP growth was likely low.
b. the natural rate of unemployment
In the long run the unemployment rate equals Select one: a. the sum of the cyclical and natural rate of unemployment. b. the natural rate of unemployment. c. the cyclical rate of unemployment. d. zero.
c. financial system
Institutions that help to match one person's saving with another person's investment are collectively called the Select one: a. monetary system. b. banking system. c. financial system. d. Federal Reserve system.
b. include imposing tariffs and other trade restrictions
Inward-oriented policies Select one: a. All of these are correct. b. include imposing tariffs and other trade restrictions. c. have generally increased productivity and growth in the countries that pursued them. d. promote the production of goods and services that the country produces most efficiently.
c. increased consumption, which shifts the aggregate-demand curve right.
Suppose a stock market boom makes people feel wealthier. The increase in wealth would cause people to desire Select one: a. decreased consumption, which shifts the aggregate-demand curve left. b. increased consumption, which shifts the aggregate-demand curve left. c. increased consumption, which shifts the aggregate-demand curve right. d. decreased consumption, which shifts the aggregate-demand curve right.
c. 29%
Suppose that the adult population in the town of Springfield is 225 million. If 40 million are unemployed and 100 million are employed, then the unemployment rate is approximately Select one: a. 18%. b. 6%. c. 29%. d. 24%.
c. 30 major U.S. corporations
The Dow Jones Industrial Average is now based on the prices of the stocks of Select one: a. 500 representative U.S. corporations. b. 1,000 representative U.S. corporations. c. 30 major U.S. corporations. d. 100 major U.S. corporations.
c. All of the above are correct.
The Fed can influence the money supply by Select one: a. changing how much it lends to banks. b. using open-market operations. c. All of the above are correct. d. changing the interest rate it pays banks on the reserves they are holding.
c. protects depositors in the event of bank failures.
The Federal Deposit Insurance Corporation Select one: a. has become insolvent in recent years due to a large number of bank failures. b. is part of the Federal Reserve System. c. protects depositors in the event of bank failures. d. in practice has seldom been of much use.
c. banks charge each other for short-term loans.
The Federal Funds rate is the interest rate Select one: a. the Fed charges depository institutions for short-term loans. b. the Fed pays on deposits. c. banks charge each other for short-term loans. d. interest rate on 3 month Treasury bills.
b. serves as a lender of last resort.
The Federal Reserve Select one: a. was created to facilitate the federal government's collection of taxes as well as its expenditures. b. serves as a lender of last resort. c. was created in 1836. d. All of these are correct.
b. the short run, but not the long run
The aggregate supply curve is upward sloping in Select one: a. the short and long run. b. the short run, but not the long run. c. the long run, but not the short run. d. neither the short nor long run
c. natural rate of unemployment
The amount of unemployment that an economy normally experiences is called the Select one: a. cyclical rate of unemployment. b. typical rate of unemployment. c. natural rate of unemployment. d. average rate of unemployment.
C. it is easier for a country to grow fast and so catch-up if it starts out relatively poo
The catch-up effect refers to the idea that a. saving will always catch-up with investment spending. b. population eventually catches-up with increased output. c. it is easier for a country to grow fast and so catch-up if it starts out relatively poor. d. if investment spending is low, increased saving will help investment to "catch-up."
d. real and nominal variables.
The classical dichotomy refers to the separation of Select one: a. decisions made by the public and decisions made by the government. b. prices and nominal interest rates. c. taxes and government spending. d. real and nominal variables.
b. makes trade easier.
The existence of money Select one: a. hinders production. b. makes trade easier. c. reduces specialization. d. allows for barter.
b. credit risk
The fact that borrowers sometimes default on their loans by declaring bankruptcy is directly related to the characteristic of a bond called Select one: a. interest risk. b. credit risk. c. term risk. d. private risk.
b. offset shifts in aggregate demand and thereby stabilize the economy.
The goal of monetary policy and fiscal policy is to Select one: a. enhance the shifts in aggregate demand and thereby increase economic growth b. offset shifts in aggregate demand and thereby stabilize the economy. c. offset the shifts in aggregate demand and thereby eliminate unemployment. d. enhance the shifts in aggregate demand and thereby create fluctuations in output and employment.
a. Y = C + I + G + NX
The identity that shows that total income and total expenditure are equal is Select one: a. Y = C + I + G + NX. b. GDP = Y. c. GDP = GNP - NX. d. Y = DI + T + NX.
b. increases income and thereby increases consumer spending.
The multiplier effect states that there are additional shifts in aggregate demand from fiscal policy, because it Select one: a. reduces investment and thereby increases consumer spending. b. increases income and thereby increases consumer spending. c. decreases income and thereby increases consumer spending. d. increases the money supply and thereby reduces interest rates
c. 3 percent
The nominal interest rate is 6 percent and the inflation rate is 3 percent. What is the real interest rate? Select one: a. 2 percent b. 9 percent c. 3 percent d. 18 percent
b. "Diversify."
The old adage, "Don't put all your eggs in one basket," is very similar to a modern bit of advice concerning financial matters: Select one: a. "Buy low-risk bonds." b. "Diversify." c. "Use a medium of exchange." d. "Intermediate."
d. All of the above are correct.
The ratio of debt to GDP in the United States Select one: a. fell during the late 1990s. b. tends to rise during wars. c. rose during the decade that began in 2001. d. All of the above are correct.
b. number of percentage points annual output falls for each percentage point reduction in inflation.
The sacrifice ratio is the Select one: a. inflation rate divided by the unemployment rate. b. number of percentage points annual output falls for each percentage point reduction in inflation. c. number of percentage points unemployment rises for each percentage point reduction in inflation. d. sum of the inflation and unemployment rates.
b. the Phillips curve.
The short-run relationship between inflation and unemployment is often called Select one: a. None of the above is correct. b. the Phillips curve. c. the Classical Dichotomy. d. Money Neutrality.
c. the price level and real output.
The variables on the vertical and horizontal axes of the aggregate demand and supply graph are Select one: a. employment and the inflation rate. b. the value of money and the price level. c. the price level and real output. d. real output and employment.
c. the slope of the aggregate-demand curve.
The wealth effect, interest-rate effect, and exchange-rate effect are all explanations for Select one: a. the slope of long-run aggregate supply. b. everything that makes the aggregate-demand curve shift. c. the slope of the aggregate-demand curve. d. the slope of short-run aggregate supply.
b. their labor earnings
To maintain their standard of living, most people rely on Select one: a. government assistance. b. their labor earnings. c. rental income. d. their personal savings.
b. through a regular survey of about 60,000 households
Unemployment data are collected Select one: a. from unemployment insurance claims. b. through a regular survey of about 60,000 households. c. through a regular survey of about 200,000 firms. d. All of these are correct.
b. reduces search effort which raises unemployment
Unemployment insurance Select one: a. reduces search effort which lowers unemployment. b. reduces search effort which raises unemployment. c. increases search effort which raises unemployment. d. increases search effort which decreases unemployment.
d. because of contracts, social norms, and notions of fairness.
Wages tend to be sticky Select one: a. None are correct. b. because of social norms and notions of fairness, but not contracts. c. because of contracts, but not social norms or notions of fairness. d. because of contracts, social norms, and notions of fairness.
b. more capital and higher productivity
When a country saves a larger portion of its GDP than it did before, it will have Select one: a. less capital and higher productivity. b. more capital and higher productivity. c. less capital and lower productivity. d. more capital and lower productivity.
a. sells government bonds, and in so doing decreases the money supply.
When conducting an open-market sale, the Fed Select one: a. sells government bonds, and in so doing decreases the money supply. b. buys government bonds, and in so doing increases the money supply. c. sells government bonds, and in so doing increases the money supply. d. buys government bonds, and in so doing decreases the money supply.
a. capital investment
When opening a print shop you need to buy printers, computers, furniture, and similar items. Economists call these expenditures Select one: a. capital investment. b. investment in human capital. c. business consumption expenditures. d. personal saving.
b. deflation.
When prices are falling, economists say that there is Select one: a. disinflation. b. deflation. c. a contraction. d. an inverted inflation.
a. the short-run aggregate supply curve shifts to the left.
When production costs rise, Select one: a. the short-run aggregate supply curve shifts to the left. b. the short-run aggregate supply curve shifts to the right. c. the aggregate demand curve shifts to the left. d. the aggregate demand curve shifts to the right.
b. the supply of money increases and so aggregate demand shifts right.
When the Fed buys bonds Select one: a. the supply of money decreases and so aggregate demand shifts left. b. the supply of money increases and so aggregate demand shifts right. c. the supply of money increases and so aggregate demand shifts left. d. the supply of money decreases and so aggregate demand shifts right.
c. increase, so the money supply increases.
When the Fed buys government bonds, the reserves of the banking system Select one: a. decrease, so the money supply increases. b. increase, so the money supply decreases. c. increase, so the money supply increases. d. decrease, so the money supply decreases.
c. it buys Treasury securities, which increases the money supply.
When the Fed conducts open-market purchases, Select one: a. it borrows money from member banks, which increases the money supply. b. it buys Treasury securities, which decreases the money supply. c. it buys Treasury securities, which increases the money supply. d. it lends money to member banks, which decreases the money supply.
a. None of the above is correct.
When the government reduces taxes, which of the following decreases? Select one: a. None of the above is correct. b. household saving c. consumption d. take-home pay
a. currency, stocks, fine art
Which list ranks assets from most to least liquid? Select one: a. currency, stocks, fine art b. fine art, currency, stocks c. currency, fine art, stocks d. fine art, stocks, currency
d. All of these
Which of the following are residents of rich countries likely to have in greater quantities, or better quality, than residents of poor countries? Select one: a. healthcare b. life expectancy c. housing d. All of these
a. All of these are correct.
Which of the following costs of inflation can be significant even if actual inflation and expected inflation are the same? Select one: a. All of these are correct. b. inflation tax c. shoeleather costs d. menu costs
b. All of the answers are correct.
Which of the following explains why production rises in most years? Select one: a. increases in the labor force b. All of the answers are correct. c. advances in technological knowledge d. increases in the capital stock
c. All of these are correct.
Which of the following is a function of money? Select one: a. a store of value b. medium of exchange c. All of these are correct. d. a unit of account
b. A country's most highly educated workers emigrate to rich countries.
Which of the following is an example of the "brain drain?" Select one: a. A country steals patented technology from another country. b. A country's most highly educated workers emigrate to rich countries. c. A country has such a poor educational system that human capital falls over time. d. The population of a country grows so fast that the educational system can't keep up.
b. From 2002 to 2012, U.S. inflation averaged about 2.5 percent per year.
Which of the following is correct? Select one: a. A period of hyperinflation is a period of extraordinarily low inflation. b. From 2002 to 2012, U.S. inflation averaged about 2.5 percent per year. c. A period of deflation is any period during which the inflation rate is decreasing. d. All of these are correct.
c. Both a and b are correct
Which of the following is correct? Select one: a. The labor-force participation rate of women has increased in part due to smaller families. b. The labor-force participation rate of men has decreased in part due to men retiring C. younger and living longer. c. Both a and b are correct. d. Neither a nor b is correct.
a. the price level.
Which of the following is not a determinant of the long-run level of real GDP? Select one: a. the price level. b. the amount of capital used by firms. c. available technology d. available stock of human capital.
c. the knowledge of workers
Which of the following is not an example of physical capital? Select one: a. a new factory building b. a delivery van c. the knowledge of workers d. the office chair in a lawyer's office
All of these are correct
Which of the following items plays a role in determining productivity? Select one: a. technological knowledge b. physical capital c. All of these are correct d. natural resources
a. All of the above are correct.
Which of the following played a role in depressing aggregate demand in 2001? Select one: a. All of the above are correct. b. corporate accounting scandals c. the terrorist attacks on September 11 of that year d. the end of a stock-market bubble
d. All of the above are correct
Which of the following statements is correct? In 2010, Select one: a. the typical resident of India had less real income than the typical resident of England in 1870. b. real income per person in China was more than 2 times that in India. c. real income per person in the U.S. was about 6 times that in China. d. All of the above are correct.
c. wealth rises and interest rates fall.
Which of the following will both make people buy more? Select one: a. wealth falls and interest rates rise. b. wealth falls and interest rates fall. c. wealth rises and interest rates fall. d. wealth and interest rates rise.
a. All of the above are correct.
Which of the following would tend to shorten recessions associated with anti-inflation policies by central banks? Select one: a. All of the above are correct. b. The short-run Phillips shifts rapidly. c. People believe policy announcements made by central bank officials. d. People adjust their expectations of inflation rapidly.
a. Miguel, who is on temporary layoff
Who of the following would be included in the Bureau of Labor Statistics' "unemployed" category? Select one: a. Miguel, who is on temporary layoff b. Reta, who worked only 15 hours last week c. None of these are correct. d. Marisa, who neither has a job nor is looking for one
b. World Bank
An organization that tries to encourage the flow of investment to poor countries is the Select one: a. Organization of Less Developed Countries. b. World Bank. c. Alliance of Developing Countries. d. International Development Alliance.
b. 2.
Based on the quantity equation, if M = 100, V = 3, and Y = 150, then P = Select one: a. 4.5. b. 2. c. 1.5. d. 1.
d. buy bonds to lower the interest rate
Suppose that the Federal reserve is concerned about the effects of falling stock prices on the economy. What could it do? Select one: a. sell bonds to raise the interest rate b. buy bonds to raise the interest rate c. sell bonds to lower the interest rate d. buy bonds to lower the interest rate
d. Bureau of Labor Statistics.
Closely watched indicators such as the inflation rate and unemployment are released each month by the Select one: a. President's Council of Economic Advisors. b. Bureau of the Budget. c. Department of the Treasury. d. Bureau of Labor Statistics.
a. lower risk and lower potential return
Compared to stocks, bonds offer the holder Select one: a. lower risk and lower potential return. b. lower risk and higher potential return. c. higher risk and lower potential return. d. higher risk and higher potential return.
a. neither M1 nor M2.
Credit card limits are included in Select one: a. neither M1 nor M2. b. M2 but not M1. c. M1 and M2. d. M1 but not M2.
b. short-run fluctuations around the natural rate of unemployment.
Cyclical unemployment refers to Select one: a. the portion of unemployment created by wages set above the equilibrium level. b. short-run fluctuations around the natural rate of unemployment. c. the portion of unemployment created by job search. d. changes in unemployment due to changes in the natural rate of unemployment.
a. 8.3 percent.
If the price level increased from 120 to 130, then what was the inflation rate? Select one: a. 8.3 percent. b. 7.7 percent. c. 1.1 percent. d. 10.0 percent.
b. took the unusual step of using open-market operations to purchase mortgages and corporate debt.
During the economic downturn of 2008-2009, the Federal Reserve Select one: a. explicitly set its target rate of inflation well above zero. b. took the unusual step of using open-market operations to purchase mortgages and corporate debt. c. used open-market operations to purchase mortgages and corporate debt, just as it frequently does even when the economy is functioning normally. d. explicitly set its target rate of inflation at zero.
35 years
During the past century the average growth rate of U.S. real GDP per person implies that it doubled, on average, about every Select one: a. 35 years. b. 25 years. c. 100 years. d. 70 years.
d. a central bank.
Economists call an institution designed to oversee the banking system and regulate the quantity of money in the economy Select one: a. a state bank. b. a charter bank. c. a national bank. d. a central bank.
d. has no intrinsic value.
Fiat money Select one: a. is backed by gold. b. is a medium of exchange but not a unit of account. c. is any close substitute for currency such as checkable deposits. d. has no intrinsic value.
c. the president and Congress and involves changing government spending and taxation.
Fiscal policy is determined by Select one: a. the president and Congress and involves changing the money supply. b. the Federal Reserve and involves changing government spending and taxation. c. the president and Congress and involves changing government spending and taxation. d. the Federal Reserve and involves changing the money supply.
a. be available for work
For the Bureau of Labor Statistics to place someone in the "unemployed" category, that person must Select one: a. be available for work. b. have previously been employed. c. have tried to find employment during the previous week. d. All of these are correct.
d. saver or as a supplier of funds
Given that Monika's income exceeds her expenditures, Monika is best described as a Select one: a. borrower or as a demander of funds. b. borrower or as a supplier of funds. c. saver or as a demander of funds. d. saver or as a supplier of funds.
d. impedes the coordinating power of markets and discourages investment
Government corruption Select one: a. does not impede the coordinating power of markets, but does discourage investment. b. impedes the coordinating power of markets but does not discourage investment. c. can neither impede the coordinating power of markets nor discourage investment. d. impedes the coordinating power of markets and discourages investment.
c. 20 baseball bats per hour
Hit-It produces 320 baseball bats per day using 2 workers who each work 8 hours per day. What is Hit-It's productivity? Select one: a. 160 baseball bats per hour b. None are correct. c. 20 baseball bats per hour d. 320 baseball bats
a. knowledge and skills that workers acquire through education, training, and experience
Human capital is the Select one: a. knowledge and skills that workers acquire through education, training, and experience. b. same thing as technological knowledge. c. total number of hours worked in an economy. d. stock of equipment and structures that is used to produce goods and services.
c. the bank keeps 8 percent of its deposits as reserves and loans out the rest.
If a bank has a reserve ratio of 8 percent, then Select one: a. the bank keeps 8 percent of its assets as reserves and loans out the rest. b. government regulation requires the bank to use at least 8 percent of its deposits to make loans. c. the bank keeps 8 percent of its deposits as reserves and loans out the rest. d. the bank's ratio of loans to deposits is 8 percent.
a. the price and real GDP both fall.
If aggregate demand shifts left, then in the short run Select one: a. the price and real GDP both fall. b. the price level and real GDP both rise. c. the price level rises and real GDP falls. d. the price level falls and real GDP rises.
d. right, making inflation higher than otherwise.
If consumer confidence rises, then aggregate demand shifts Select one: a. right, making inflation lower than otherwise. b. left, making inflation lower than otherwise. c. left, making inflation higher than otherwise. d. right, making inflation higher than otherwise.
d. can exploit a tradeoff between inflation and unemployment in the short run but not in the long run.
If people eventually adjust their inflation expectations so that in the long run actual and expected inflation are the same, then policymakers Select one: a. can exploit a tradeoff between inflation and unemployment in both the short run and the long run. b. can exploit a tradeoff between inflation and unemployment in the long run, but not the short run. c. can not exploit a tradeoff between inflation and unemployment in either the short or long run. d. can exploit a tradeoff between inflation and unemployment in the short run but not in the long run.
d. increases, and so the value of money falls.
If the CPI rises, the number of dollars needed to buy a representative basket of goods Select one: a. decreases, and so the value of money falls b. decreases, and so the value of money rises. c. increases, and so the value of money rises. d. increases, and so the value of money falls.
a. .5 percent
If the nominal interest rate is 2.5 percent and the inflation rate is 2 percent, what is the real interest rate? Select one: a. .5 percent b. 4.5 percent c. 1.25 percent d. None of choices are correct.
d. riskier than short-term bonds, and so interest rates on long-term bonds are usually higher than interest rates on short-term bonds
Long-term bonds are Select one: a. riskier than short-term bonds, and so interest rates on long-term bonds are usually lower . than interest rates on short-term bonds. b. less risky than short-term bonds, and so interest rates on long-term bonds are usually lower than interest rates on short-term bonds. c. less risky than short-term bonds, and so interest rates on long-term bonds are usually higher than interest rates on short-term bonds. d. riskier than short-term bonds, and so interest rates on long-term bonds are usually higher than interest rates on short-term bonds.
d. All of these are correct.
M1 includes Select one: a. demand deposits. b. currency. c. traveler's checks. d. All of these are correct.
d. All of these are correct.
Many societies used gold as money, because Select one: a. it is durable. b. it is relatively rare. c. it has a relatively low melting point. d. All of these are correct.
d. Bureau of Labor Statistics.
Measuring unemployment is the job of the Select one: a. Department of Commerce. b. Congressional Budget Office. c. Council of Economic Advisers. d. Bureau of Labor Statistics.
b. create unemployment
Minimum-wage laws Select one: a. do not apply in states with right-to-work laws. b. create unemployment. c. cause labor shortages, which further raise wages above equilibrium. d. affect highly-educated workers more than high school dropouts.
a. the Federal Reserve and involves changing the money supply.
Monetary policy is determined by Select one: a. the Federal Reserve and involves changing the money supply. b. the Federal Reserve and involves changing government spending and taxation. c. the president and Congress and involves changing government spending and taxation. d. the president and Congress and involves changing the money supply.
a. occur with little advance warning.
Most recessions and depressions Select one: a. occur with little advance warning. b. are accurately forecasted. c. cause falling unemployment. d. usually occur with ample advance warning.
c. the dollar value of the economy's output of final goods and services.
Nominal GDP measures Select one: a. the total quantity of final goods and services produced. b. the overall level of prices. c. the dollar value of the economy's output of final goods and services. d. the total income received from producing final goods and services measured in constant dollars.
c. a junk bond
On which of these bonds is the prospect of default most likely? Select one: a. a corporate bond issued by Proctor & Gamble Corporation b. a municipal bond c. a junk bond d. a U.S. government bond
a. aggregate demand shifts right
Other things the same, when the government spends more, the initial effect is that Select one: a. aggregate demand shifts right. b. aggregate supply shifts right. c. aggregate demand shifts left. d. aggregate supply shifts left.
d. 3.6 percent per year.
Over the past 80 years, prices in the U.S. have risen on average about Select one: a. 4 percent per year. b. 6 percent per year. c. 2 percent per year. d. 3.6 percent per year.
b. 2 percent per year
Over the past century in the United States, real GDP per person has grown, on average, by about Select one: a. 5 percent per year. b. 2 percent per year. c. 3 percent per year. d. 1 percent per year.
c. are not required to pay federal income tax on the interest income
Owners of municipal bonds Select one: a. usually receive a higher interest rate compared to stock issued by corporations. b. pay taxes on the dividends earned from these bonds. c. are not required to pay federal income tax on the interest income. d. usually receive a higher interest rate compared to bonds issued by corporations.
b. frictional unemployment
People who are unemployed because they are in search of a job that suits their skills are included within Select one: a. cyclical unemployment. b. frictional unemployment. c. marginal unemployment. d. structural unemployment.
A. that is known or controlled only by the company that discovered it.
Proprietary technology is technology a. that is known or controlled only by the company that discovered it. b. conserves natural resources. c. that is useful while other types of technology are outdated. d. that the government prohibits firms from using.
$15,000
Scenario 26-1. Assume the following information for an imaginary, closed economy. GDP = $100,000; taxes = $22,000; government purchases = $25,000; national saving = $15,000 Refer to Scenario 26-1. For this economy, investment amounts to Select one: a. $15,000. b. $12,000. c. $38,000. d. $18,000.
