Quiz 5 final practice
Figure 4-1 shows Kendra's demand curve for ice cream cones.Refer to Figure 4-1. What is the total amount that Kendra is willing to pay for 3 ice cream cones? $13.50 $2.50 $7.50 $9.00
$9.00
Table 2-6 shows the output per week of two people, James and Lucy. They can either devote their time to making wagons or making tricycles.Refer to Table 2-6. What is James's opportunity cost of making a wagon? 1/2 of a tricycle 1/2 of a wagon 3/4 of a wagon 2 tricycles
2 tricycles
Refer to Figure 2-11. In the circular flow diagram, who are economic agents A and who are economic agents B? A= firms; B = product markets A = households; B = firms A = firms; B = households A = households; B = factor markets
A = households; B = firms
If taxes are less than transfers plus government spending, then there is a balanced budget. there is positive saving. there is a budget surplus. there is public dissaving.
there is public dissaving.
Refer to Figure 12-2. If the U.S. economy is currently at point K, which of the following could cause it to move to point N? Household wealth declines. Congress passes investment tax incentives. The interest rate rises. The price level in the United States rises relative to the price level in other countries.
Congress passes investment tax incentives. The interest rate rises.
The passage of the ________ in 1930 sparked a trade war that caused net exports to decrease and real GDP to decrease. Smoot-Hawley Tariff Act Clayton Act Cellar-Kefauver Act Sherman Antitrust Act
Smoot-Hawley Tariff Act
If inflation is positive and is perfectly anticipated those that borrow money lose. no one in the economy loses. those that lend money lose. those that hold paper money lose.
those that hold paper money lose.
Table 8-4 Consumption expenditures $800 Investment expenditures 300 Government purchases 300 Government transfer payments 400 Exports 300 Imports 100 Refer to Table 8-4. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals $2,100. $1,600. $1,400. $2,200.
$1,600.
If the nominal interest rate is 6% and the inflation rate is 2%, then the real interest rate is 3%. 8%. 4%. 2%.
4%.
Refer to Figure 2-5. If the economy is currently producing at point Y, what is the gain in production if the economy moves to point X? 19 million tons of steel 9 million tons of paper 5 million tons of steel 5 million tons of paper
5 million tons of steel
Table 9-2 Total population 125,000 Working-age population 75,000 Employed 60,000 Unemployed 7,500 Consider the data above for a simple economy. Refer to Table 9-2. The labor force participation rate for this simple economy equals 54.0 percent. 88.8 percent. 80.0 percent. 90.0 percent.
90.0 percent.
Refer to Figure 3-2. A decrease in the number of firms in the market would be represented by a movement from A to B. S1 to S2. S2 to S1. B to A.
S2 to S1.
If GDP is currently $13 trillion and is growing at a rate of 2.3% per year, how long will it take GDP to reach $26 trillion? about 30 years about 25 years about 15 years about 17 years
about 30 years
Workers in high-income countries have ________ to work with than do workers in low-income countries. more labor more labor and less physical capital less physical capital more physical capital
more physical capital
Figure 4-9 shows the market for cigarettes. The government plans to impose a per-unit tax in this market.Refer to Figure 4-9. How much of the tax is paid by producers? $3 $45 $8 $2
$2
Zane's Vanes is a service that restores old weather vanes. Zane has just spent $125 purchasing a 1920s-era weather vane which he expects to restore and sell for $500 once the work is completed. After having spent $125, Zane realizes that he will need to spend an additional $200 on materials to complete the restoration. Alternatively, he can sell the weather vane without restoring it for $200. What is his marginal cost to complete the restoration? $125 $200 $75 $300
$200
Eva runs a small bakery in the village of Roggerli. She is debating whether she should extend her hours of operation. Eva figures that her sales revenue will depend on the number of additional hours the bakery is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $12 per hour. Refer to Table 1-1. What is Eva's marginal benefit if she decides to stay open for two hours instead of one hour? $25 $60 $95 $36
$25
Ivan runs a custom jewelry shop in Sparkle City. He is debating whether he should extend his hours of operation. Ivan figures that his sales revenue will depend on the number of additional hours the jewelry shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $25 per hour. Refer to Table 1-3. What is Ivan's marginal cost if he decides to stay open for six hours instead of five hours? $25 $20 $10 $91.67
$25
Consumption spending is $5 million, planned investment spending is $8 million, unplanned investment spending is $2 million, government purchases are $10 million, and net export spending is $2 million. What is aggregate expenditure? $25 million $15 million $27 million $23 million
$25 million
Suppose a bank has $100 million in checking account deposits with no excess reserves and the required reserve ratio is 20 percent. If the Federal Reserve reduces the required reserve ratio to 15 percent, then the bank will now have excess reserves of $5 million. $20 million. $0. $15 million.
$5 million.
Table 8-2 Product Quantity Price Shoes 40 $60.00 DVDs 100 18.00 Tomatoes 2,00. 1.00 Ketchup 300 4.00 Refer to Table 8-2. Suppose that a simple economy produces only four goods and services: shoes, DVDs, tomatoes, and ketchup. Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households. Using the information in the above table, nominal GDP for this simple economy equals $5,800. $7,400. 2,440 units. $6,400.
$6,400.
Table 9-2 Total population 125,000 Working-age population 75,000 Employed 60,000 Unemployed 7,500 Consider the data above for a simple economy. Refer to Table 9-2. The unemployment rate for this simple economy equals (7,500/60,000) × 100. (7,500/75,000) × 100. (7,500/125,000) × 100. (7,500/67,500) × 100.
(7,500/67,500) × 100.
If the nominal interest rate is 6% and the inflation rate is 9%, then the real interest rate is 6.67%. 15%. 3%. -3%.
-3%.
Table 7-6 Output per hour Production and Production of work Consumption without Trade with Trade Swords Belts Swords Belts Swords Belts Estonia 5 3 100 40 200 0 Morocco 2 2 60 60 0 120 Estonia and Morocco can produce both swords and belts. Each country has a total of 40 available labor hours for the production of swords and belts. Table 7-6 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade. Refer to Table 7-6. What is the opportunity cost to produce 1 sword in Morocco? 1.5 belts 2 belts 1/2 of a belt 1 belt
1 belt
Table 7-6 Output per hour Production and Production of work Consumption without Trade with Trade Swords Belts Swords Belts Swords Belts Estonia 5 3 100 40 200 0 Morocco 2 2 60 60 0 120 Estonia and Morocco can produce both swords and belts. Each country has a total of 40 available labor hours for the production of swords and belts. Table 7-6 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade. Refer to Table 7-6. What is the opportunity cost to produce 1 belt in Morocco? 1 sword 1/2 of a sword 1.5 swords 2 swords
1 sword
Table 8-19 2021 2022 Nominal GDP $10,000 $12,000 Real GDP 9,500 10,500 Refer to Table 8-19. Given the information above, calculate the GDP deflator in 2021. 95 105 87 114
105
Table 8-19 2021 2022 Nominal GDP $10,000 $12,000 Real GDP 9,500 10,500 Refer to Table 8-19. Given the information above, calculate the GDP deflator in 2022. 87 95 114 105
114
Table 9-10 Year CPI 2021 100 2022 113 Refer to Table 9-10. Suppose that the data in the table above reflect the price levels in the economy. Given that data, we can say that the cost of living rose by ________ between 2021 and 2022? 13% 2% 5% 11%
13%
Forecasts by the Congressional Budget Office show spending on Social Security, Medicare, and Medicaid rising from 10.2 percent of GDP in 2019 to ________ percent of GDP in 2092, and by 2092 the federal government will be spending, as a fraction of GDP, ________ on these three programs as it currently spends on all programs combined. 19.7 percent; half as much 16.2 percent; nearly as much 16.2 percent; half as much 19.7 percent; nearly as much
19.7 percent; nearly as much
The National Restaurant Association states that the restaurant industry has an economic effect of more than $1.7 trillion annually in the United States, with every dollar spent in restaurants generating an estimated total of $2.05 in spending in the economy. This indicates that the spending multiplier for the restaurant industry is equal to 4.25. 1.70. 1.21. 2.05.
2.05.
Consumption spending is $5 million, planned investment spending is $8 million, actual investment spending is $8 million, government purchases are $10 million, and net export spending is $2 million. Based on this information, which of the following is true? Aggregate expenditure is equal to GDP. Aggregate expenditure is less than GDP. Aggregate expenditure is greater than GDP. There was an unplanned change in inventories.
Aggregate expenditure is equal to GDP.
Assume that Australia has a comparative advantage in producing surfboards and New Zealand imports surfboards from Australia. We can conclude that Labor costs are higher for surfboard producers in New Zealand than in Australia. New Zealand has an absolute disadvantage in producing surfboards relative to Australia. Australia has a lower opportunity cost of producing surfboards relative to New Zealand. Australia also has an absolute advantage in producing surfboards relative to New Zealand.
Australia has a lower opportunity cost of producing surfboards relative to New Zealand.
Figure 4-5 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R0.Refer to Figure 4-5. Suppose that instead of a price ceiling, the government imposed a price floor of R1. What area represents the deadweight loss after the imposition of the price floor? C + E + J + H G + H J + H C + E
C + E
Which of the following describes the accuracy of the Consumer Price Index? Changes in the CPI accurately reflect the true rate of inflation. Changes in the CPI understate the true rate of inflation. Changes in the CPI overstate the true rate of inflation. Changes in the CPI are unrelated to the true rate of inflation.
Changes in the CPI overstate the true rate of inflation.
When the Chinese yuan falls in value relative to other currencies, Imports to China and Chinese exports both become less competitive. Imports to China become more competitive. Chinese exports become more competitive. Chinese exports become less competitive.
Chinese exports become more competitive.
Which of the following is considered expansionary fiscal policy? Legislation increases a college tuition deduction from federal income taxes. The Arizona legislature cuts highway spending to balance its budget. Congress increases defense spending. Congress decreases the income tax rate.
Congress decreases the income tax rate.
________ is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production, and in which the sum of consumer surplus and producer surplus is at a maximum. Producer efficiency Consumer efficiency Economic efficiency Deadweight efficiency
Economic efficiency
Which of the following statements about the underground economy is true? Most transactions that occur in the underground economy are included in the calculation of GDP. The underground economy in developing countries amounts to less than 10% of measured GDP. Income that is earned but not reported as income for tax purposes is included in the calculation of GDP. Excluding underground economy production from measured GDP causes errors in GDP growth estimates in the long run.
Excluding underground economy production from measured GDP causes errors in GDP growth estimates in the long run.
Which of the following statements is false? Exports benefit trading countries because exports create jobs. Imports do not benefit trading countries because they result in a loss of jobs. Each year the United States exports about 50 percent of its wheat crop and 20 percent of its corn crop. Most of the leading exporting countries are large, high-income countries. Not all sectors of the U.S. economy are affected equally by international trade.
Exports benefit trading countries because exports create jobs. Imports do not benefit trading countries because they result in a loss of jobs.
To reassure investors who were unwilling to buy mortgages in the secondary market, the U.S. Congress used two government sponsored enterprises, ________, to sell bonds to investors and use the funds to purchase mortgages from banks. Fannie Mae and Freddie Mac the Fed and the Treasury Department the Securities and Exchange Commission (SEC) and the Federal Trade Commission (FTC) ACORN and the Federal Housing Administration (FHA)
Fannie Mae and Freddie Mac
Figure 2-8 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts.Refer to Figure 2-8. Which country has a comparative advantage in the production of coconuts? Guatemala They have equal productive abilities. Costa Rica neither country
Guatemala
Assume that Honduras has a comparative advantage in producing bananas and exports bananas to Brazil. We can conclude that Honduras also has an absolute advantage in producing bananas relative to Brazil. Brazil has an absolute disadvantage in producing bananas relative to Honduras. Labor costs are higher for banana producers in Brazil than in Honduras. Honduras has a lower opportunity cost of producing bananas relative to Brazil.
Honduras has a lower opportunity cost of producing bananas relative to Brazil.
Your roommate, Serafina, a psychology major, said, "The problem with economics is that it assumes that consumers and firms always make the correct decision. But we know that everyone's human, and we all make mistakes." Do you agree with her comment? I disagree with her. If we cannot assume that decisions are correct, then we will not be able to examine the moral implications of these decisions. I disagree with her. Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave rationally, meaning they make the best decisions given their knowledge of the costs and benefits. Yes, I agree with her. Economic theory should allow for irrational behavior so that we can have more reliable predictions. Yes, I agree with her. One cannot make predictions about economic behavior because in reality people make incorrect choices in many situations.
I disagree with her. Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave rationally, meaning they make the best decisions given their knowledge of the costs and benefits.
Which of the following is a positive economic statement? Everyone should live at the same standard of living. The government should close income tax loopholes. U.S. firms should not be allowed to outsource production of goods and services. If the price of gasoline rises, a smaller quantity of it will be bought.
If the price of gasoline rises, a smaller quantity of it will be bought.
An unemployment insurance program has which of the following effects? It lowers the overall unemployment rate. It increases the severity of a recession because it makes it more difficult for the unemployed to find jobs. It increases the amount of time spent searching for a job. It decreases the amount of personal income of the unemployed.
It increases the amount of time spent searching for a job.
Scenario 1-2 Suppose a cigar manufacturer currently sells 1,500 cigars per week and makes a profit of $3,000 per week. The plant foreman observes, "Although the last 500 cigars we produced and sold increased our revenue by $7,500 and our costs by $7,000, we are only making an overall profit of $3,000 per week so I think we need to cut back on production. Refer to Scenario 1-2. Had the firm not produced and sold the last 500 cigars, would its profit be higher or lower, and if so by how much? Its profit would be $500 lower. Its profit would be $1,000 higher. Its profit would be $1,500 lower. Its profit would be $500 higher.
Its profit would be $500 lower.
If the quantity of tacos demanded is represented by the equation QD = 20 - 0.5P then the corresponding price of tacos is represented by the equation P = 40 - 2QD. P = 0.5QD + 10. P = QD + 40. P = 10 - 2QD.
P = 40 - 2QD.
If the price of toothpaste is represented by equation P = 40 - .5QD, then the corresponding quantity of toothpaste demanded is represented by the equation QD = 20 - .5P. QD = 80 - 2P. QD = 40 - P. QD = -20 + P.
QD = 80 - 2P.
Technological advancements have led to lower prices and an increase in the sale of color laser printers. How does this affect the market for laser printer ink cartridges? The demand curve for laser printer ink cartridges shifts to the right. The quantity of laser printer ink cartridges demanded decreases. The quantity of laser printer ink cartridges demanded increases. The demand curve for laser printer ink cartridges shifts to the left.
The demand curve for laser printer ink cartridges shifts to the right.
Between 2021 and 2022, the CPI of a small nation rose from 182 to 185. If household incomes rose by 3% during that period of time, which of the following is true? The purchasing power of household income remained constant between 2021 and 2022. The CPI cannot be used to determine how the purchasing power of household income changes over time. The purchasing power of household income fell between 2021 and 2022. The purchasing power of household income rose between 2021 and 2022.
The purchasing power of household income rose between 2021 and 2022.
The growing popularity of energy conservation has enticed large home improvement stores like Home Depot and Lowes to offer tankless water heaters. How does the fact that home improvement stores now offer these products affect the tankless water heater market? The supply curve for tankless water heaters shifts to the left. The demand curve for tankless water heaters shifts to the right. The demand curve for tankless water heaters shifts to the left. The supply curve for tankless water heaters shifts to the right.
The supply curve for tankless water heaters shifts to the right.
Suppose a drought resulted in a major reduction in the California lettuce crop. In the market for lettuce The supply curve shifted to the left resulting in an increase in the equilibrium price. the demand curve shifted to the right resulting in an increase in the equilibrium price. the demand curve shifted to the left resulting in a decrease in the equilibrium price. the supply curve shifted to the left resulting in a decrease in the equilibrium price.
The supply curve shifted to the left resulting in an increase in the equilibrium price.
If a U.S. firm produces cars in Mexico, that production should count towards U.S. GDP. U.S. GNP. It will not affect either U.S. GNP or U.S. GDP. Mexico's GNP.
U.S. GNP.
The "Buy American" provision in the 2009 stimulus package required that stimulus money be spent only on U.S.-made goods, effectively acting as a quota of zero imports when stimulus money was being spent. For the U.S. steel industry, a "Buy American" provision would create gains for all of the following except U.S. steel companies. U.S. steel workers. All of the above would gain from the provision. U.S. taxpayers.
U.S. taxpayers.
Table 4-5 shows the demand and supply schedules for the low-skilled labor market in the city of Westover.Refer to Table 4-5. Suppose that the quantity of labor supplied increases by 40,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor? W = $8.50; Q = 400,000 W = $9.00; Q = 410,000 W = $9.50; Q = 420,000 W = $8.00; Q = 390,000
W = $8.00; Q = 390,000
Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a concert ticket. If the price of one of the tickets is $36, Violet and Walter will each buy two tickets. Xavier, Yolanda, and Zachary will receive a total of $68 of consumer surplus since they will buy no tickets. Violet and Walter receive a total of $52 of consumer surplus from buying one ticket each. No one else will buy a ticket. Walter will receive $4 of consumer surplus from buying one ticket.
Walter will receive $4 of consumer surplus from buying one ticket.
The proponents of rational expectations and monetarism think that the Federal Reserve should adopt an inflation target. a constant monetary growth rule. a monetary aggregate target. an interest rate target.
a constant monetary growth rule.
Which of the following is an example of a worker experiencing cyclical unemployment? a lifeguard who was hired during the summer season is laid off after summer is over a freightliner employee that got laid off because of the recession of 2007-2009 a worker who changes jobs to move closer to her family an assembly line worker who loses his job because of automation
a freightliner employee that got laid off because of the recession of 2007-2009
Figure 2-4 shows various points on three different production possibilities frontiers for a nation.Refer to Figure 2-4. Consider the following events: a.a decrease in the unemployment rate b.general technological advancement c.an increase in consumer wealth Which of the events listed above could cause a movement from V to X? b and c only a only a, b, and c a and b only
a only
Refer to Table 2-2. Assume Nadia's Neckware only produces ascots and bowties. A combination of 8 ascots and 18 bowties would appear at the horizontal intercept of Nadia's production possibilities frontier. inside Nadia's production possibilities frontier. along Nadia's production possibilities frontier. outside Nadia's production possibilities frontier.
along Nadia's production possibilities frontier.
If a decrease in income leads to an increase in the demand for macaroni, then macaroni is a neutral good. a normal good. an inferior good. a necessity.
an inferior good.
If the marginal cost of producing television is constant at $200, then a firm should produce this item as long as its marginal cost does not rise. as long as the marginal benefit it receives is just equal to or greater than $200. until the marginal benefit it receives reaches zero. only if the marginal benefit it receives is greater than $200 plus an acceptable profit margin.
as long as the marginal benefit it receives is just equal to or greater than $200.
Equilibrium GDP is equal to autonomous expenditure times the marginal propensity to save. autonomous expenditure times the marginal propensity to consume. autonomous expenditure times the multiplier. autonomous expenditure.
autonomous expenditure times the multiplier.
When actual inflation is less than expected inflation borrowers lose and lenders gain. borrowers gain and lenders lose. borrowers and lenders both lose. borrowers and lenders both gain.
borrowers lose and lenders gain.
Economic efficiency is achieved when there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and the difference between consumer surplus and producer surplus is maximized. economic surplus is minimized. economic surplus plus consumer surplus equals producer surplus. consumer surplus plus producer surplus is maximized.
consumer surplus plus producer surplus is maximized.
From an initial long-run macroeconomic equilibrium, if the Federal Reserve anticipated that next year aggregate demand would grow significantly slower than long-run aggregate supply, then the Federal Reserve would most likely increase income tax rates. decrease income tax rates. decrease interest rates. increase interest rates.
decrease interest rates.
An increase in the price level results in a(n) ________ in household consumption spending and a(n) ________ in investment spending. decrease; decrease increase; decrease increase; increase decrease; increase
decrease; decrease
Suppose that Reebok successfully implements 3D printing technology in several of its shoe models, and this investment in technology allows the company to reduce the number of employees used to manufacture these shoes. All else equal, this technological improvement would ________ the equilibrium price for its products and ________ the equilibrium quantity consumed. increase; increase decrease; increase decrease; decrease increase; decrease
decrease; increase
During 2008, oil price increases shifted the aggregate demand curve farther to the right than similar increases had 30 years earlier. shifted the short-run aggregate supply curve farther to the left than similar increases had 30 years earlier. did not shift the short-run aggregate supply curve as far to the left as similar increases had 30 years earlier. shifted the aggregate demand curve farther to the left than similar increases had 30 years earlier.
did not shift the short-run aggregate supply curve as far to the left as similar increases had 30 years earlier.
The difference between GDP and net taxes is actual investment spending. disposable income. personal income. unplanned investment spending.
disposable income.
Refer to the Article Summary. Implementing a negative interest rate policy, as is discussed in the article summary, would be an example of ________ monetary policy designed to ________ aggregate demand. contractionary; decrease contractionary; increase expansionary; increase expansionary; decrease
expansionary; increase
Domestically produced goods and services sold to other countries are referred to as capital outflow. exports. imports. transfer payments.
exports.
Table 9-16 Year Nominal Average Hourly Earnings CPI (2020 = 100) 2020 $10 100 2021 10 105 2022 12 110 Refer to Table 9-16. Looking at the table above, real wages ________ from 2020 to 2021, and real wages ________ from 2021 to 2022. rose; rose fell; fell rose; fell fell; rose
fell; rose
The Fed uses a "core" price index, one that excludes food and energy prices to measure inflation. It does so because it wants to avoid the blame for high gasoline prices causing inflation. food and energy have inelastic demand curves and consumers will buy them regardless of their price. food and energy prices have wide swings that are not related to the causes of general inflation. food and energy prices do not change all that much during the short run, so are irrelevant to the calculation of inflation.
food and energy prices have wide swings that are not related to the causes of general inflation.
The output of U.S. citizens who work in Canada would be included in the gross national product of Canada and the gross national product of the United States. gross domestic product of the United States. gross national product of Canada. gross domestic product of Canada.
gross domestic product of Canada.
Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 7-2 shows the impact of this tariff.Refer to Figure 7-2. With the tariff in place, the United States imports 30 million pounds of coffee. exports 36 million pounds of coffee. imports 24 million pounds of coffee. imports 12 million pounds of coffee.
imports 12 million pounds of coffee.
Domestic producers require time to gain experience and lower their unit costs; this will allow these producers to compete successfully in international markets. This statement describes the ________ argument for protectionism. infant industry diseconomies of scale protecting national security anti-dumping
infant industry
The cost incurred from the production of an additional unit of a product must be zero for a firm to be efficient. is called opportunity cost. is called a loss. is a marginal cost to the firm.
is a marginal cost to the firm.
When we graph consumption as a function of ________ rather than as a function of disposable income, the slope of this consumption function is ________. personal income; (MPC - MPS) national income; the MPS personal income; the MPS national income; the MPC
national income; the MPC
Presently, GDP is ________ to compensate for the costs of environmental damage. not adjusted adjusted on a chain-weight basis fully adjusted partially adjusted
not adjusted
If a person withdraws $500 from his/her checking account and holds it as currency, then M1 will ________ and M2 will ________. not change; not change decrease; increase increase; decrease not change; increase
not change; not change
Refer to Table 2-1. Assume Dina's Diner only produces sliders and hot wings. A combination of 50 sliders and 50 hot wings would appear inside Dina's production possibilities frontier. along Dina's production possibilities frontier. at the vertical intercept of Dina's production possibilities frontier. outside Dina's production possibilities frontier
outside Dina's production possibilities frontier
Assume that inventories declined by more than what analysts predicted. This implies that planned aggregate expenditure was less than real GDP. planned aggregate expenditure was equal to real GDP. planned aggregate expenditure is unrelated to real GDP. planned aggregate expenditure was greater than real GDP.
planned aggregate expenditure was greater than real GDP.
When the Federal Reserve System was established in 1913, its main policy goal was promoting price stability. encouraging strong economic growth. preventing bank panics. keeping employment high.
preventing bank panics.
The World Trade Organization (WTO) promotes foreign trade and investment, or globalization. In recent years opposition to globalization has led to violent protests at meetings of the WTO. All of the following are reasons for these anti-globalization protests except protesters believe that free trade destroys the distinctive cultures of many countries. protestors believe the WTO favors the interests of high-income countries at the expense of lower-income countries. protesters believe that tariffs are needed to protect domestic firms from foreign competition. protesters object to the loss of intellectual property (such as software programs and movies) that results from foreign trade and investment.
protesters object to the loss of intellectual property (such as software programs and movies) that results from foreign trade and investment.
If the quantity demanded for a product exceeds the quantity supplied, the market price will rise until quantity demanded equals quantity supplied. The market price will then equal the equilibrium price. quantity demanded equals quantity supplied. The equilibrium price will then be greater than the market price. the quantity demanded equals the quantity supplied. The product will then no longer be scarce. only wealthy consumers will be able to afford the product.
quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.
A(n) ________ comes to an end with a business cycle ________. expansion; trough recession; peak recession; trough expansion; bubble
recession; trough
An increase in the real interest rate does which of the following? reduces saving reduces the demand for loanable funds increases the demand for loanable funds reduces consumption spending
reduces consumption spending
When banks gain ________, they can ________ their loans; and the money supply ________. withdrawals; increase; expands reserves; increase; expands withdrawals; decrease; expands reserves; increase; contracts
reserves; increase; expands
During the German hyperinflation of the 1920s, the large increases in the money supply were generated by the German government significantly lowering the required reserve ratio to enable German businesses to obtain loans. printing large quantities of German marks. selling large quantities of government bonds to the central bank, the Reichsbank. significantly raising the required reserve ratio to reduce business loans.
selling large quantities of government bonds to the central bank, the Reichsbank.
In 2005, Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico which subsequently drove up natural gas, gasoline, and heating oil prices. Three years later, once the refining capacity was restored, these prices came back down. The restoration of refining capacity should move the economy up along a stationary short-run aggregate supply curve. move the economy down along a stationary short-run aggregate supply curve. shift the short-run aggregate supply curve to the left. shift the short-run aggregate supply curve to the right.
shift the short-run aggregate supply curve to the right.
Which of the following functions of money would be violated if inflation were high? certificate of gold store of value unit of account medium of exchange
store of value
Long-run macroeconomic equilibrium occurs when structural and frictional unemployment equal zero. the aggregate demand and short-run aggregate supply curves intersect at a point on the long-run aggregate supply curve. output is above potential GDP. the aggregate demand curve intersects the short-run aggregate supply curve.
the aggregate demand and short-run aggregate supply curves intersect at a point on the long-run aggregate supply curve.
For the recessions in the United States since the 1950s deflation occurs. the inflation rate rises on average by about 2.5 percentage points 12 months after a recession begins. the inflation rate falls on average by about 2.5 percentage points 12 months after a recession begins. inflation has been nonexistent.
the inflation rate falls on average by about 2.5 percentage points 12 months after a recession begins.
We say that the economy is at full employment if the unemployment rate is equal to the natural rate of unemployment. zero. the sum of frictional and cyclical unemployment. the amount of cyclical unemployment.
the natural rate of unemployment. zero.
Refer to Figure 15-1. In the figure above, the money demand curve would move from Money demand1 to Money demand2 if real GDP decreased. the price level increased. the interest rate decreased. the Federal Reserve sold Treasury securities.
the price level increased.
Refer to Figure 3-4. If the price is $25 there is a shortage of 300 units. there is a shortage of 200 units. there is a surplus of 300 units. there is a surplus of 200 units.
there is a surplus of 300 units.
Why might firms pay wages that are above the equilibrium wage in a market? to reduce profit to increase the productivity of their workers to encourage workers to form labor unions to reduce the unemployment rate
to increase the productivity of their workers
Table 2-4 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens.Refer to Table 2-4. What is George's opportunity cost of cultivating a garden? one and a half lawns mowed one-half of a garden cultivated two lawns mowed two-thirds of a garden cultivated
two lawns mowed
Buyers will bear the entire burden of a unit tax if the demand curve for a product is vertical. horizontal. downward sloping. upward sloping.
vertical.