Final Amani 102 MC
46) The data in the table above are the U.S. balance of payments. The current account balance is
A) $140 billion.
23) If imports are $100 million less than exports, government expenditures are $500 million, consumer expenditures are $1 billion, and gross investment spending is $500 million, then GDP is
A) $2.1 billion.
35) If the CPI was 122.3 at the end of last year and 124.5 at the end of this year, the inflation rate over these two years was
A) 1.8 percent.
41) Of the following sequences of price levels, which CORRECTLY represents a 5 percent inflation rate?
A) 100, 105, 110.25, 115.76
15) Which of the following is NOT a factor of production?
A) 175 shares of Microsoft stock
Ch 2 1) At one point along a PPF, 50 tons of coffee and 100 tons of bananas are produced. At another point along the same PPF, 30 tons of coffee and 140 tons of bananas are produced. The opportunity cost of a ton of coffee between these points is
A) 2 tons of bananas per ton of coffee.
19) The above table presents the balance sheet of the TBK commercial bank. What is this bank's actual reserve ratio?
A) 20 percent
29) When the monetary base increases by $2 billion, the quantity of money increases by $10 billion. Thus, the money multiplier equals
A) 5.
35) If the price level in the U.S. is 120, the price level in South Africa is 140, and the nominal exchange rate is 7 South African rands per dollar, then the real exchange rate is
A) 6 South African goods per U.S. good
9) Using the Rule of 70, if the country of Huttodom's current growth rate of real GDP per person was 10 percent a year, how long would it take the country's real GDP per person to double?
A) 7 years
ch5 1) In an economy, 23 million people are employed and 2 million are unemployed, and there are 5 million part-time workers who would prefer full-time work. What is the unemployment rate?
A) 8 percent
33) Which graph shows the impact of scientists developing a more powerful fertilizer?
A) Figure A
41) The above figure shows the market for pizza. Which figure shows the effect of a new report by the U.S. Surgeon General that eating pizza lowers cholesterol levels, an outcome many people want?
A) Figure A
13) Choose the best statement.
A) GDP equals aggregate expenditure and equals aggregate income.
47) Which of the following is an example of a positive statement?
A) Households are the primary source of saving.
32) Which of the following can be said about economic growth?
A) I only I. Economic growth is the result of increases in long-run aggregate supply.
49) Which of the following statements is CORRECT?
A) I only I. Higher savings rates can stimulate economic growth.
ch7 1) Which of the following items are considered physical capital?
A) II and III II. the Taco Bell store nearest you III. the rental cars owned by Hertz Rental-A-Car
ch6 1) According to the Economic Times (09/2012), Standard & Poor's forecast for India's GDP growth rate was cut by 1 percentage point to 5.5 percent as the entire Asia Pacific region feels the pressure of ongoing economic uncertainty. India has averaged 7 percent growth in GDP since 1997. Which of the following is TRUE?
A) India's PPF has been shifting rightward since 1997.
21) In the U.S. economy, which of the following statements is TRUE?
A) More services are produced than goods.
11) Which of the following statements regarding the production possibilities frontier is TRUE?
A) Points inside the frontier are attainable.
31) In the above figure, as the economy adjusts toward equilibrium, the
A) SAS curve will shift leftward.
49) Which of the following is a normative statement?
A) The main reason why the United States has a trade deficit with China is because China's trade practices are unfair.
39) In the above figure, the economy is at the equilibrium point on the supply of loanable funds curve SLF and demand for loanable funds curve DLF. What happens if disposable income decreases?
A) The supply of loanable funds curve would shift leftward.
37) As a result of the recession in 2008, the default risk increased. How did this change affect the loanable funds market?
A) There was a leftward shift in the supply of loanable funds curve
33) Suppose a deposit in New York earns 6 percent a year and a deposit in London earns 4 percent a year. Interest rate parity holds if the
A) U.S. dollar depreciates by 2 percent a year.
Differences in income are most directly related to which of the following economic question?
A) Who consumes the goods and services that are produced?
27) Which of the following shifts the supply curve rightward?
A) a decrease in the price of a factor of production used to produce the good
7) Joe pays $8,000.00 in tuition. The 8,000 dollar tuition Joe pays is an example of what economists call
A) a money price.
3) The best definition for economic growth is
A) a sustained expansion of production possibilities measured as the increase in potential GDP over a given period.
39) The use of purchasing power parity prices
A) accounts for differences in the prices of the same goods in different countries when measuring real GDP.
34) According to purchasing power parity, a rise in inflation in the United States relative to the rest of the world will lead to
A) an exchange rate depreciation.
41) In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight-hour day, Bob can produce either 8 loaves of bread or 8 pounds of butter. Andy has a comparative advantage in the production of
A) bread, while Bob has a comparative advantage in the production of butter.
41) Which of the following exchange rate policies uses a target exchange rate, but allows the target to change?
A) crawling peg
29) The unemployment rate is at the natural unemployment rate when
A) cyclical unemployment equals zer
25) The U.S. monetary policy implemented in 2008 was an attempt to
A) decrease interest rates in order to stimulate business investment and consumption expenditure, thereby increasing AD.
41) If capital per hour of labor decreases, real GDP per hour of labor
A) decreases for a given level of technology.
17) Suppose real GDP for a country is $13 trillion in 2015, $14 trillion in 2016, $15 trillion in 2017, and $16 trillion in 2018. Over this time period, the real GDP growth rate is
A) decreasing
18) When a good is imported into the United States, a ________is created.
A) demand for foreign currencies and a supply of dollars
44) Suppose a British bank offers a 3 percent interest rate while a U.S. bank offers a 7 percent interest rate. People must expect the U.S. dollar will
A) depreciate 4 percent.
ch4 1) Gross domestic product can be calculated
A) either by valuing the nation's output of goods and services or by valuing the income generated in the production process
25) When a person reenters the labor force and looks for a job after spending time at home raising a child
A) frictional unemployment increases.
23) Catherine quit her job in order to look for a new one; therefore, she is best considered as
A) frictionally unemployed.
9) As residents of developing countries increase their chocolate consumption, the increased production of cocoa results in
A) increased opportunity cost of cocoa production.
39) Suppose the economy was initially in a long-run equilibrium. Then the world economy expands so that foreign incomes rise. U.S. aggregate demand ________ and eventually the money wage rate ________.
A) increases; rises
5) With everything else the same, in the foreign exchange market the
A) larger the value of U.S. exports, the greater is the quantity of dollars demanded
2) In the above figure, the economy is at point A and the money wage rate rises by 10 percent. If the price level is constant, firms will be willing to supply output equal to
A) less than $16.0 trillion.
25) In the equation, GDP = C + I + G + X - M, G refers to
A) local, state, and federal government expenditure on goods and services, but does not include transfer payments.
35) The country of Kemper is on its aggregate production function at point W in the above figure. The government of Kemper passes a law that makes 4 years of college mandatory for all citizens. After all citizens have their education, the economy will
A) move to point such as Z.
3) Gross investment equals
A) net investment + depreciation.
23) In the figure above, an increase in the quantity of oil supplied but NOT an increase in the supply of oil is shown by a movement from
A) point a to point e.
42) Arbitrage in the foreign exchange market, international loans markets, and goods markets results in
A) purchasing power parity, interest rate parity and law of one price.
45) In the short-run macroeconomic equilibrium
A) real GDP and the price level are determined by short-run aggregate supply and aggregate demand.
12) We distinguish between the long-run aggregate supply curve and the short-run aggregate supply curve. In the long run
A) real GDP equals potential GDP.
27) The larger the public's currency drain from the banking system, the
A) smaller is the money multiplier.
16) The demand for Mexican tomatoes by an American food grocery chain creates a
A) supply of U.S. dollars.
33) From 8 P.M. to 10 P.M., Susan can attend a movie, study, or talk with friends. Suppose that Susan decides to go to the movie but thinks that, if she hadn't, she would otherwise have talked with friends. The opportunity cost of attending the movie is
A) talking with friends.
30) In the figure above, the shift in the supply curve for U.S. dollars from S0 to S1 could occur when
A) the expected future exchange rate rises.
45) A country's balance of payments accounts records
A) the international trading, borrowing, and lending positions of a country over a period of time.
7) Moving along the short-run aggregate supply curve, ________.
A) the money wage rate, the prices of other resources, and potential GDP remain constant
10) An aggregate supply curve depicts the relationship between
A) the price level and the aggregate quantity supplied.
27) The PPF shifts if
A) the resources available to the nation change.
11) The circular flow diagram shows that
A) the total amount of income generated by the economy equals the total purchases of final goods and services.
7) Which labor market statistic tends to rise during recessions and fall during expansions?
A) the unemployment rate
34) Based on the data in the table above, at the short-run equilibrium
A) the unemployment rate is greater than the natural unemployment rate.
31) In the figure above, point A is undesirable because
A) there is an inefficient use of resources.
3) Frank spends Saturday afternoon at the Dodge dealership looking at new trucks. The model that he is interested in has a sticker price of $29,000. The fact that the price is quoted in dollars is an example of money used as a
A) unit of account
37) On Saturday morning, you rank your choices for activities in the following order: go to the library, work out at the gym, have breakfast with friends, and sleep late. Suppose you decide to go to the library. Your opportunity cost is
A) working out at the gym.
25) Suppose Bank A holds $200 of reserves, has deposits of $1000, and the desired reserve ratio is 20 percent. How many deposits can Bank A create?
A) zero, because Bank A has no excess reserves
11) In 2011, Armenia had a real GDP of approximately $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. Armenia's real GDP per person in 2012 was
B) $1,545.
21) The above table shows some (but not all) national income accounting data for a hypothetical country. According to these data, the value of GDP is ________ billion.
B) $2100
21) The above table gives the initial balance sheet for Mini Bank. If the bank's desired reserve ratio is 10 percent, how much does this bank have in excess reserves?
B) $60
5) According to the table above, the value of M1 is ________ and the value of M2 is ________.
B) $910 billion; $3,660 billion
5) In January 2015, Tim's Gyms, Inc. owned machines valued at $1 million. During the year, the market value of the equipment fell by 30 percent. During 2015, Tim spent $200,000 on new machines. During 2015, Tim's net investment totaled
B) -$100,000.
37) At the end of last year, the CPI equaled 120. At the end of this year, the CPI equals 132. What is the inflation rate over this year?
B) 10 percent
49) If the basket of goods and services used to calculate the CPI cost $200 in the reference base period and $450 in a later year, the CPI for the latter year equals
B) 225.
13) Suppose a nation's population grows by 2 percent and, at the same time, its GDP grows by 5 percent. Approximately how fast will real GDP per person increase?
B) 3 percent per year
23) If the nominal interest rate is 8 percent and the inflation rate is 2 percent, the real interest rate is approximately
B) 6 percent.
25) Which of the following explains why the demand for loanable funds is negatively related to the real interest rate?
B) A lower real interest rate makes more investment projects profitable
33) If the price level increases and workers' money wage rates remain constant,which of the following will occur?
B) I and II I. The quantity of labor supplied will decrease. II. The real wage rate will decrease.
48) In 2009, just after taking office, President Obama approved an $800 billion stimulus package of tax cuts and increased government spending to combat the recession brought on by the financial crisis of 2007. Which group of economists most approved of President Obama's actions?
B) Keynesian economists
49) Which school of thought believes that recessions are the result of inappropriate monetary policy?
B) Monetarist
37) In the above figure, suppose the economy is initially on the demand for money curve MD1. What is the effect of an increase in the use of credit cards
B) The demand for money curve would shift leftward to MD0.
49) What is the effect on the price and quantity of wooden desks of a rise in the price of wood?
B) The equilibrium quantity of wooden desks decreases and the equilibrium price rises.
21) Suppose that you took out a $1000 loan in January and had to pay $75 in annual interest. During the year, inflation was 6 percent. Which of the following statements is CORRECT?
B) The nominal interest rate is 7.5 percent and the real interest rate is 1.5 percent
15) Suppose the United States spends more on foreign goods and services than foreigners spend on our goods and services and the United States sells no foreign assets. Then the
B) United States must borrow an amount equal to imports minus exports.
45) An economic model is
B) a description of some aspect of the economic world that includes only those features of the world that are needed for the purpose at hand.
28) In the above figure, the movement from point B to point A might be the result of
B) a fall in the price level.
39) If a nation's central bank increased domestic interest rates, the nation's exchange rate would change if the country's exchange rate was a
B) a flexible exchange rate.
27) A cost due to an increase in activity is called
B) a marginal cost.
9) Which of the following is NOT a final good?
B) a new car sold to Avis for use in their fleet of rental cars
37) Inflation occurs over time as a result of
B) aggregate demand increasing faster than long-run aggregate supply
14) Using the table above, if the current market value of the dollar is 70 francs
B) all three investors hold dollars.
13) Using the table above, if the current market value of the dollar is 125 francs
B) all three investors hold francs
18) Moving along the aggregate demand curve, a decrease in the quantity of real GDP demanded is a result of
B) an increase in the price level.
15) The sale of $1 billion of securities to a bank or some other business by the Fed is an example of
B) an open market operation
13) Suppose the price level, the money wage, and the price of all other resources rise by 10 percent. This set of changes leads to
B) an upward movement along the LAS curve.
20) Suppose the peso-dollar foreign exchange rate changes from 50 pesos per dollar to 30 pesos per dollar. Then the peso has ________ against the dollar and the dollar has ________ against the peso.
B) appreciated; depreciated
3) The labor force is defined as the number of people who
B) are employed plus the number of people who are unemployed.
12) Suppose Mitsubishi Bank (a Japanese bank) expects the exchange rate to be 125 yen per U.S. dollar at the end of the year. If today's exchange rate is 120 yen per U.S. dollar, Mitsubishi bank
B) buys U.S. dollars today because it expects profit from buying U.S. dollars and holding them.
43) In the figure above, suppose the demand for dollars temporarily decreases so that the demand curve shifts to D2. To maintain the target exchange rate, the Fed
B) can buy dollars.
38) In the above figure, suppose the demand for dollars temporarily increases so that the demand curve shifts to D1. To maintain the target exchange rate, the Fed
B) can sell dollars.
39) The consumer price index (CPI)
B) compares the cost in the current period to the cost in a reference base period of a basket of goods typically consumed in the base period.
7) A point inside a production possibilities frontier
B) could indicate that some resources are unemployed.
9) Depository institutions do all the following EXCEPT
B) create required reserve ratios.
13) The monetary base is the sum of
B) currency and reserves of depository institutions.
27) Auto and steel workers commonly experience this type of unemployment in a recession.
B) cyclical unemployment
40) The government increases taxes. As a result, in the short run, real GDP ________ and the price level ________.
B) decreases; falls
4) When people who are holding the money of some other country want to exchange it for U.S. dollars, they ________ U.S. dollars and ________ that other country's money.
B) demand; supply
23) The decreasing slope of a production function reflects
B) diminishing returns.
47) A small country is an international borrower and its domestic supply of loanable funds increases. Consequently, the equilibrium quantity of loanable funds used in the country ________ and the country's international borrowing ________.
B) does not change; decreases
45) Crude oil can be refined into home heating oil or gasoline. If very cold weather caused the price of home heating oil to increase then, the
B) equilibrium price of gasoline would rise.
19) A factor determining the supply of U.S. dollars in the foreign exchange market is the
B) expected future exchange rate.
35) Suppose the economy is experiencing a recessionary gap. In the long run, if aggregate demand does not change, the following events happen: the money wage rate ________, unemployment ________, and the price level ________.
B) falls; falls; falls
31) The relationship between the unemployment rate and the natural unemployment rate is that the unemployment rate
B) fluctuates about the natural rate.
37) In one day, Brandon can either plow 10 acres or plant 20 acres. In one day, Christopher can either plow 14 acres or plant 14 acres. Brandon and Christopher can
B) gain from exchange if Brandon specializes in planting and Christopher specializes in plowing.
39) From 8 to 11 p.m., Sam can either attend a basketball game, a hockey match or the symphony. Suppose that Sam decides to attend the hockey match and thinks to herself that if she did not go to the match she would go to the symphony. Then the opportunity cost of attending the hockey match is
B) going to the symphony.
Ch.1 1) Which of the following is a macroeconomic issue?
B) how federal government budget deficits affect interest rates
38) The reason that it is possible for the economy in the above figure to be at equilibrium point E2 rather than at equilibrium point E1 is that
B) in the short run the economy can produce more than it can in a long-run situation.
31) The approach to GDP that sums compensation of employees, rental income, corporate profits, net interest, proprietors' income, depreciation, and indirect taxes and subtracts subsidies is the
B) income approach.
26) In the figure above, suppose the economy is initially at point B. Then the interest rate in Japan rises relative to the interest rate in the United States. This change ________ the supply of dollars and the market moves to a point such as ________.
B) increases; C
47) In the absence of a Ricardo-Barro effect, a government budget deficit ________ the demand for loanable funds and ________ investment.
B) increases; decreases
44) The data in the above table indicate that when the price level is 100
B) inventories fall and the price level rises.
45) An expansion
B) is defined as a period of real GDP increases.
39) The initial supply and demand curves for a good are illustrated in the above figure. If there is a rise in the price of a factor of production used to produce the good, then the new equilibrium price
B) is more than $6.
15) When the U.S. exchange rate rises, foreign goods become ________ and U.S. imports ________.
B) less expensive; increase
39) In the figure above, suppose that Mac and Izzie trade and reach point c. Then
B) neither Mac nor Izzie produce outside their production possibilities frontiers.
27) Personal consumption expenditures include all of the following EXCEPT spending on
B) new housing.
46) Which school of thought believes that real GDP always equals potential GDP?
B) only classical
35) When the government hires people to serve in the army, these people are no longer available to do other work. This choice illustrates the concept of
B) opportunity cost.
25) Entrepreneurs do all of the following EXCEPT
B) own all the other resources used in the production process.
24) In the figure above, the shift in the demand curve for U.S. dollars from D0 to D2 could occur when
B) people expect that the dollar will depreciate.
45) The term "crowding out" relates to the decrease in
B) private investment from a government budget deficit.
41) In the post-World War II period, considerable growth in total production took place in the United States. But at the same time, businesses were dumping their waste into the Great Lakes with minimal cost to themselves, significantly polluting the bodies of water as a result. This occurrence is an example where
B) real GDP gives an overly positive view of economic welfare.
19) Which of the following is used to calculate the standard of living?
B) real GDP/population
33) The above table shows the demand schedule and supply schedule for chocolate chip cookies. If the price is $4.00 per pound, there is a
B) shortage of 3 pounds of chocolate chip cookies
50) The table above gives some of the entries in the national income and product accounts. The government sector has a ________, and the private sector has a ________.
B) surplus of $50 billion; surplus of $25 billion
5) The curve labeled A in the above figure will shift rightward when
B) technology increases or the quantity of capital increases
31) In the figure above, the shift in the supply curve for U.S. dollars from S0 to S2 could occur when
B) the expected future exchange rate falls.
15) If a rich country grows at a faster rate than a poor one, then
B) the gap in their standard of living will widen over time.
15) Comparing aggregate expenditure and aggregate incomes shows that
B) they are equal.
43) Recessions are commonly defined to occur
B) when growth in real GDP is negative for two consecutive quarters.
13) Resource use is allocatively efficient
B) when marginal benefit equals marginal cost.
3) Which of the following is NOT illustrated by a production possibilities frontier?
B) who gets the goods
19) When a textile company keeps track of its inventory using a computer and its competitor uses a pad of paper and a pencil, they are both answering the ________ part of one of the two big economic questions.
C) "how"
29) Using the data in the above table, gross domestic product as calculated by the income approach equals ________.
C) $2,925
42) The data in the above table show that the economy will be in a short-run macroeconomic equilibrium at a price level of
C) 120.
43) If the price level last year was 220 and this year is 250, what is the inflation rate between the two years?
C) 13.6 percent
13) In the above table, the number of marginally attached workers is
C) 15 million.
7) At the beginning of the year, Tom's Tubes had a capital stock of 5 tube inflating machines. During the year, Tom scrapped 2 old machines and purchased 3 new machines. Tom's gross investment for the year totaled
C) 3 machines.
15) In a country with a working-age population of 300 million, 230 million workers are employed and 40 million workers are unemployed. What is the labor force participation rate?
C) 90 percent
8) Suppose China Airlines wants to purchase a French Airbus. The price of the Airbus is 95 million Euro. If the exchange rate is 1 euro per 10 yuan, the price of this airplane to China Airlines is
C) 950 million yuan.
25) The figure above shows the production possibilities frontiers for four nations that have identical production possibilities frontiers in the present. The one that will grow most rapidly in the future is most likely to be producing at point
C) C.
31) Which of the following statements are CORRECT?
C) I and III I. The "highest-valued alternative given up to get something" is the opportunity cost. III. Scarcity creates opportunity costs.
43) In the figure above, suppose that Mac and Izzie trade and reach point c. Then
C) Mac should produce at point b and Izzie should produce at point d.
5) Which of the following decreases the official U-3 unemployment rate?
C) Workers leave the labor force.
22) Which of the following increases aggregate demand?
C) a decrease in taxes
31) Which of the following shifts the demand for loanable funds curve leftward?
C) a decrease in the expected profit
16) In the above figure, the economy is initially at point B. If the government decreases transfer payments, there is
C) a shift to AD2.
27) In the above figure, the economy is initially at point B. If taxes increase, there is
C) a shift to AD2.
35) A price below the equilibrium price results in
C) a shortage.
21) The principle of decreasing marginal benefit implies that the
C) additional benefit from obtaining one more of a good or service decreases as more is consumed.
29) The marginal benefit is the
C) additional gain from one more unit of an activity.
49) In markets, people's decisions are coordinated by
C) adjustments in prices.
45) Neoclassical growth theory predicts that
C) advances in technology increase the productivity of capital, which leads to an increase in investment and rising real GDP per person
24) Which of the following shifts the aggregate demand curve rightward?
C) an increase in government expenditure
41) An economy is at full employment. Which of the following events can create a recessionary gap?
C) an increase in taxes
21) Which of the following increases the quantity supplied of good X but does NOT increase the supply of good X?q
C) an increase in the price of X
26) Which of the following shifts the aggregate demand curve rightward?
C) an increase in the quantity of money
17) Which of the following increases aggregate demand and shifts the AD curve rightward?
C) an increase in the quantity of money and a resulting fall in the interest rate
19) Wants, as opposed to demands
C) are the unlimited desires of the consumer.
43) Refer to the table above. Suppose that in normal years demand is represented by Case 2 and supply is represented by Case B. If there is exceptionally good growing weather in the wapanzo bean growing region then supply will ________ and demand will ________.
C) become case C; stay at case 2
19) Which of the following is TRUE regarding the real interest rate?
C) both I and II
36) Suppose the Fed wants to fix the U.S. dollar/Mexican peso rate at 11 pesos per dollar under a fixed exchange rate policy. If the exchange rate falls to 10 pesos per dollar, the Fed can
C) buy dollars.
17) Which of the following pairs of goods are most likely substitutes?
C) cola and lemon lime soda
27) A rise in the real interest rate
C) creates a movement upward along the demand for loanable funds curve
35) In the above figure, suppose the economy is at point a. If there is an increase in real GDP, there is a movement to point such as
C) d.
15) The marginal benefit of a good or service
C) decreases as more is consumed
49) If the world real interest rate falls, then a country that is an international lender
C) decreases the amount of its lending
21) In the foreign exchange market, an increase in the world demand for U.S. exports shifts the
C) demand curve for U.S. dollars rightward
43) In the figure above, if the interest rate is 4 percent, there is a $0.1 trillion excess
C) demand for money and bond prices will fall.
43) Normative economic statements
C) describe what ought to be
33) The five categories of income used in the income approach to the measurement of GDP are
C) employee compensation, net interest, rental income, corporate profits, and proprietor's income.
11) The percentage of the people of working age who have jobs is called the ________.
C) employment-to-population ratio
47) A system of property rights
C) encourages economic growth by creating incentives to invest in capital and to be innovative.
23) The opportunity cost of more capital goods today is
C) fewer consumer goods today.
5) Which of the following is a final good?
C) flour purchased at the store to bake cookies
17) The circular flow model shows that consumer goods and services produced by business firms are sold in the
C) goods market.
19) In the above figure, flow B represents ________.
C) household purchases of goods and services
5) Real GDP per person in the country of Flip is $10,000, and the growth rate is 10 percent a year. Real GDP per person in the country of Flap is $20,000 and the growth rate is 5 percent a year. When will real GDP per person be greater in Flip than in Flap?
C) in 15 years
37) If the Fed wants to depreciate the dollar against the yen, the Fed will
C) increase the supply of dollars by buying yen.
31) When price levels rise, the quantity of nominal money demanded will ________ and the quantity of real money demanded will ________.
C) increase; stay the same
39) Labor productivity increases with
C) increases in capital.
11) The "law of demand" states that, other things remaining the same, the quantity demanded of any good is
C) inversely related to its price.
19) The natural unemployment rate ________.
C) is the unemployment rate when there is no cyclical unemployment
23) A natural resource, such as fishing territories, is considered an example of
C) land only.
7) When the U.S. exchange rate falls, U.S. goods become ________ to foreign residents and U.S. exports ________.
C) less expensive; increase
ch8 1) Aside from being a means of payment, the other functions of money are
C) medium of exchange, unit of account, and store of value.
11) Controlling the quantity of money and interest rates to influence aggregate economic activity is called
C) monetary policy.
33) The data in the above table show that when the price level is 120, if aggregate demand does not change then the
C) money wage rate will fall in the future.
37) The country of Kemper is on its aggregate production function at point W in the above figure. If the population increases with no change in capital or technology, the economy will
C) move to point such as X.
31) If the price of a CD is equal to the equilibrium price, there will be ________ of CDs and the price will ________.
C) neither a shortage nor surplus; not change
7) Credit cards are
C) not part of money because they represent a loan of money to the user.
23) In the figure above, the shift in the demand curve for U.S. dollars from D0 to D1 could occur when
C) people expect that the dollar will appreciate.
27) An increase in labor productivity relates to
C) producing the same output with fewer labor hours.
49) According to the quantity theory of money, in the long run, changes in the price level are the result of changes in the
C) quantity of money.
ch3 1) The opportunity cost of a hot dog in terms of hamburgers is the
C) ratio of the slope of the demand curve for hot dogs to the slope of the demand curve for hamburgers.
19) In the above figure, if the economy is at point a, an increase in ________ will move the economy to ________.
C) real wealth from the fall in the price level; point c
3) Suppose the price of a football is $20.00 and the price of a basketball is $10.00. The ________ of a football is ________.
C) relative price; 2 basketballs per football
9) The price of a DVD rental is $2.50 and the price of a downloaded movie is $1.00. If the price of a DVD rental falls by $0.50, the relative price of a downloaded movie
C) rises
39) In the figure above, a decrease in the monetary base would create a change such as a
C) shift from the supply of money curve MS1 to the supply of money curve MS0.
33) In the above figure, technological progress that increases the expected profit will
C) shift the demand for loanable funds curve rightward.
29) Greater optimism about the expected profits from investment projects
C) shifts the demand for loanable funds curve rightward.
11) The higher the exchange rate today, the
C) smaller is the expected profit from buying U.S. dollars today and holding them
23) If you have $1,000 in wealth and the price level increases by 20 percent, then
C) the $1,000 will buy fewer goods and services.
4) If the money prices of resources changes
C) the SAS curve shifts.
27) In the figure above, the shift in the supply curve for U.S. dollars from S0 to S1 could occur when
C) the U.S. interest rate differential increases.
22) Airbus is a European jet airline producer. Indian Airlines wants to buy 23 Airbus planes from Airbus, due to increased demand for world travel. As a result
C) the demand curve for European euros and the supply curve for Indian rupees both shift rightward
9) An aggregate supply curve depicts the relationship between
C) the price level and the quantity of real GDP supplied.
17) When an economy produces more houses and fewer typewriters, it is answering the ________ part of one of the two big economic questions.
D) "what"
47) If velocity is 6 and the quantity of money is $2 trillion, what is nominal GDP?
D) $12 trillion
17) Use the information in the table above to calculate the value of private saving.
D) $25 million
31) The real wage rate equals
D) (money wage rate)/(price level).
45) The information in the table above gives the 2012 reference base period CPI basket and prices used to construct the CPI for a small nation. It also has the 2013 prices. What is the value of the CPI for 2013?
D) 140
17) If the number of people unemployed is 100, the number of people employed is 1000, and the working-age population is 1400, then the labor force participation rate is
D) 78.6 percent
9) Suppose China Airlines wants to purchase a French Airbus. The price of the Airbus is 95 million Euro. If the exchange rate is 1 euro per 9 yuan, the price of this airplane to China Airlines is
D) 855 million yuan.
50) Which of the following statements CORRECTLY describes the policy stance of a macroeconomist?
D) A classical macroeconomist believes that maintaining consistently low taxes will allow the economy to expand at an appropriate and rapid pace.
21) During the last 50 years, which of the following had the lowest level of real GDP per person?
D) Africa
36) In the above figure, the shift from AD1 to AD2 might have been the result of
D) All of the above answers are correct.
45) Markets
D) All of the above answers are correct.
23) When a bank has excess reserves
D) Both answers A and B are correct. A) it can make loans. B) it can create money
8) In the above figure, which part corresponds to a fall in the money wage rate?
D) Figure D
15) Which of the following is TRUE?
D) For an inferior good, when income increases, the demand curve shifts leftward.
47) Which of the following ideas apply to the neoclassical growth theory?
D) I, II and III The rate of technological change influences the rate of economic growth. II. Technological change promotes saving and investment. III. Convergence of economic growth rates across countries
Which of the following are considered factors of production used to produce goods and services?
D) I, II, III and IV
ch9 1) The term "foreign currency" refers to foreign
D) I, II, and III I. coins II. notes III. bank deposits
33) The best example of a frictionally unemployed individual is
D) Mary who quit her job to find work closer to her home.
47) ________ economists believe that the economy is self-regulating and will be at full employment as long as monetary policy is not erratic.
D) Monetarist
1) Which of the following statements regarding aggregate supply are CORRECT?
D) Moving along the long-run aggregate supply curve, both the price level and the money wage rate change by the same percentage.
29) In the figure above, how can the economy represented by the production possibilities frontier move from point C to point F?
D) Redistribute the existing resources to produce more apples and fewer oranges.
3) When the quantity of capital increases, then the
D) SAS curve shifts rightward and the LAS curve shifts rightw
17) The Fed buys $100 million of government securities from Bank A. What is the effect on Bank A's balance sheet?
D) Securities decrease by $100 million and reserves increase by $100 million.
6) Which of the following statements is TRUE?
D) The long-run aggregate supply curve is vertical.
25) Growers expect that the price of a bushel of wheat will increase in one month. This belief results in
D) a decrease in current supply of wheat.
35) One of the largest categories of exports from the United States is now pop culture: movies, music, TV programming, and videos. A direct conclusion from this information is that, compared to other countries, the United States has
D) a lower opportunity cost of producing pop culture
29) In the above figure, the economy is initially at point B. If the exchange rate falls, there is
D) a shift to AD1
21) An observer of the economy notices that over the past 12 months the unemployment rate has fallen from 7.0 percent to 6.5 percent. During the same time, the rate of growth in real GDP has been positive. From this information we might conclude that
D) an expansion is occurring in the economy.
An inducement to take a particular action is called
D) an incentive
32) Which of the following will lead to an appreciation of the U.S. dollar against the British pound?
D) an increase in British demand for U.S. imports
2) Last year the exchange rate between U.S. dollars and Mexican pesos was 10 pesos per dollar. Today is it 11 pesos per dollar. Here, the dollar ________ against the peso, and the peso ________ against the dollar
D) appreciated; depreciated
6) The demand curve for U.S. dollars slopes downward because as the dollar ________ U.S. goods become ________ expensive to foreign residents, so they purchase fewer U.S. goods, and the quantity of dollars demanded decreases.
D) appreciates; more
17) In the foreign exchange market, the supply curve for dollars slopes upwards because
D) as the exchange rate rises, imports become cheaper, and more dollars are supplied to pay for the increase in the quantity of imports.
45) In the short run, when the Fed decreases the quantity of money
D) bond prices fall and the interest rate rises.
37) The interaction of supply and demand explains
D) both the prices and the quantities of goods and services.
An incentive
D) could be either a reward or a penalty.
21) A decrease in government expenditure on goods and services
D) decreases aggregate demand.
3) If 100 Japanese yen buy more U.S. dollars today than yesterday, the dollar has ________ and the yen has ________.
D) depreciated; appreciated
48) A small country is an international lender and its domestic supply of loanable funds increases. Consequently, the equilibrium quantity of loanable funds used in the country ________ and the country's international lending ________.
D) does not change; increases
9) Suppose a bond promises to pay its holder $100 a year forever. The interest rate on the bond rises from 4 percent to 5 percent. The price of the bond
D) falls from $2,500 to $2,000.
11) The funds used to buy and operate physical capital are
D) financial capital.
49) Business cycles
D) follow a pattern of trough, expansion, peak and recession.
20) The U.S. fiscal policy implemented in 2008 was an attempt to
D) give billions of dollars to businesses and low- and middle-income Americans in order to stimulate business investment and consumption expenditure, and thereby increasing AD.
10) The lower the exchange rate today, ceteris paribus, the
D) greater is the expected profit from buying U.S. dollars today and holding them.
30) The aggregate demand curve shows that, if other factors are held constant, a
D) higher price level results in a decrease in the quantity of real GDP demanded.
7) We are interested in long-term growth primarily because it brings
D) higher standards of living
49) According to the Ricardo-Barro effect
D) households increase their personal saving when governments run budget deficits.
35) Proprietors' income is a component of which approach to measuring GDP?
D) incomes approach
43) The tables above show the labor market and the production function schedule for the country of Pickett. An increase in population changes the labor supply by 20 billion hours at each real wage rate. Potential GDP ________.
D) increases to $18 trillion
Samantha goes to college to become an engineer. This is an example of an
D) investment in human capital.
29) Moving along the aggregate production function shows the relationship between ________, holding all else constant
D) labor input and real GDP
14) The short-run aggregate supply curve is upward sloping because
D) money wage rates do not immediately change when the price level changes.
41) A store remains open from 8 a.m. to 4 p.m. each weekday. The store owner is deciding whether to stay open an extra hour each evening. The owner's marginal benefit
D) must be greater than or equal to the owner's marginal cost if the owner decides to stay open.
43) By using only the aggregate demand curve, we can determine
D) neither the price level nor the quantity of real GDP.
3) The capital stock increases whenever
D) net investment is positive.
9) Full-time students and prisoners are ________.
D) not in the labor force
17) Allocative efficiency occurs when it is
D) not possible to produce more of one good without giving up the production of some other good that is valued more highly.
41) The table above gives the quantity of money and money demand schedules. Suppose that the interest rate is equal to 3 percent. The effect of this interest rate in the money market is that
D) people sell bonds and the interest rate rises.
5) The above table shows production combinations on a country's production possibilities frontier. A movement from ________ involves the greatest opportunity cost of increasing the production of good Y.
D) point B to point A
25) In the above figure, suppose the economy is initially at point A. The interest rate in Japan rises relative to the interest rate in the United States. As a result, there will be a change from point A to a point such as ________.
D) point E
29) In the figure above, which movement could be the result of an increase in the wages paid to oil workers?
D) point a to point d
13) U.S. investment is financed from
D) private saving, government budget surpluses, and borrowing from the rest of the world.
25) Labor productivity is defined as
D) real GDP per hour of labor.
47) Which of the following are parts of the business cycles?
D) recession and expansion
5) If the price of a hot dog is $2 and the price of a hamburger is $4, then the
D) relative price of a hot dog is 1/2 of a hamburger per hot dog.
47) A technological improvement lowers the cost of producing coffee. At the same time, consumers' preferences for coffee increase. The equilibrium price of coffee will
D) rise, fall, or stay the same, depending on the relative size of the shifts in the demand and supply curves.
35) In the loanable funds market, the supply comes from
D) saving, the government budget surplus and international borrowing.
47) The first step in measuring the CPI is to
D) select the market basket.
41) In the above figure, the initial supply of loanable funds curve is SLF0 and the initial demand for loanable funds curve is DLF0. An economic expansion that raises disposable income and the expected profit would
D) shift the supply of loanable funds curve rightward to a curve such as SLF1, and shift the demand for loanable funds curve rightward to a curve such as DLF1.
13) For normal goods which of the following explains why demand curves slope downward?
D) substitution effect and income effect
43) If net taxes exceed government expenditures, the government sector has a budget ________ and government saving is ________.
D) surplus; positive
11) A fall in the money wage rate shifts
D) the SAS curve rightward but leaves the LAS curve unchanged
40) If the People's Bank of China adopted a flexible exchange rate policy
D) the U.S. dollar would depreciate.
29) If the European Central Bank increases interest rates
D) the demand curve for European euros shifts rightward and the supply curve of European euros shifts leftward.
28) If the Federal Reserve increases interest rates
D) the demand curve for U.S. dollars shifts rightward and the supply curve of U.S. dollars shifts leftward.
33) The opportunity cost of holding money refers to
D) the interest that could have been earned if the money balances had been changed into an interest-bearing asset.
15) A change in ________ results in a movement along the short-run aggregate supply curve but does not shift the short-run aggregate supply curve.
D) the price level
7) Net investment is the
D) total amount of gross investment minus depreciation.
Macroeconomic topics include
D) total, nationwide employment.
19) Marginal cost curves slope
D) upward because of increasing opportunity cost.
37) Which of the following is a component of the incomes approach to GDP?
D) wages and salaries