Macroeconomics

Ch7 Suppose a country had $3.5 billion of net exports and bought $6.8 billion of goods and services from foreign countries. This country would have a. $10.3 billion of exports and $6.8 billion of imports. b. $10.3 billion of imports and $6.8 billion of exports. c. $6.8 billion of exports and $3.5 billion of imports. d. $6.8 billion of imports and $3.5 billion of exports.

a. $10.3 billion of exports and $6.8 billion of imports.

Ch14 Suppose the economy is in long-run equilibrium at the level of potential output. What will be the long-run effect of an expansionary monetary policy? a. A higher price level b. A higher level of real output c. Both a higher price level and a higher level of real output d. A lower price level e. A lower level of real output

a. A higher price level

Ch14 If the Federal Reserve increases its bond purchases, the short-run effects will be a. An increase in the money supply and lower real interest rates b. A decrease in the money supply and lower real interest rates c. An increase in the money supply and higher real interest rates d. A decrease in the money supply and higher real interest rates

a. An increase in the money supply and lower real interest rates

Ch12 According to non-Keynesians, how will an increase in government spending financed by borrowing during an recession affect recovery? a. Higher future taxes and interest rates will be required to finance the larger debt and this will weaken the recovery b. Repayment of the debt can always be shifted to the future, making it possible to keep tax rates low and thereby strengthen the recovery c. Higher interest payments will increase future government spending, and thereby promote a stronger recovery d. The increase in government spending will exert a multiplier effect on the economy, leading to a stronger recovery

a. Higher future taxes and interest rates will be required to finance the larger debt and this will weaken the recovery

Ch2 Noah values his car at $10,000, and Emily values it at $14,000. If Emily buys it from Noah for $11,000, which of the following is true? a. Noah gains $1,000 of value, and Emily gains $3,000 of value. b. Noah gains $11,000 of value, and Emily loses $11,000 of value. c. Noah gains $10,000 of value, and Emily loses $14,000 of value. d. Noah and Emily both gain $11,000 of value.

a. Noah gains $1,000 of value, and Emily gains $3,000 of value.

Ch6 Which of the following is true? a. The incentives to engage in rent-seeking activities increase with the ease with which the political process can provide personal gain at the expense of others. b. The amount of resources devoted toward rent seeking generally has no impact on the economic prosperity of a nation. c. Income transfers directed toward the poor constitute about half of all income transfers in the United States. d. All of the above are correct.

a. The incentives to engage in rent-seeking activities increase with the ease with which the political process can provide personal gain at the expense of others.

Ch13 Supposed you withdraw $1,000 from your checking account. If the reserve requirement is 20%, how does this transaction affect the supply of money and the excess reserves of your bank? a. There is initially no change in the supply of money; your bank's excess reserves are reduced by $800 b. There is initially no change in the supply of money; your bank's excess reserves are reduced by $200 c. The money supply immediately increases by $1,000, and the excess reserves of your bank are reduced by $800 d. The money supply immediately increases by $1,000, and the excess reserves of your bank are reduced by $200

a. There is initially no change in the supply of money; your bank's excess reserves are reduced by $800

Ch8 Suppose the population (age 16 and over) of France is 50 million; 4 million are unemployed, and 36 million hold jobs. What are the rates of unemployment and labor force participation of France? a. Unemployment is 10 percent, and labor force participation is 80 percent. b. Unemployment is 10 percent, and labor force participation is 75 percent. c. Unemployment is 11 percent, and labor force participation is 80 percent. d. Unemployment is 11 percent, and labor force participation is 90 percent.

a. Unemployment is 10 percent, and labor force participation is 80 percent.

Random Which of the following is true of economic rules and institutions? a. When the rules and institutions of a country encourage productive actions, investment will be attracted and incomes will grow. b. When the rules and institutions of a country discourage productive actions, investment will be attracted and incomes will grow. c. Economic analysis indicates that rules and institutions do not exert much impact on investment and the growth of income. d. Rules and institutions influence high-income economies, but there is no evidence that they exert an impact on investment, growth, and the overall performance of low-income economies.

a. When the rules and institutions of a country encourage productive actions, investment will be attracted and incomes will grow.

Ch10 Which of the following will most likely increase long-run aggregate supply? a. an increase in the rate of investment b. an increase in resource prices c. an increase in the minimum wage d. an increase in the expected inflation rate

a. an increase in the rate of investment

Ch7 In computing GDP, market prices are used to value final goods and services because a. market prices reflect the values of goods and services to the buyer. b. market prices do not change much over time, so it is easy to make comparisons between years. c. if market prices are out of line with how people value goods, the government sets price ceilings and price floors. d. None of the above is correct; market prices are not used in computing GDP.

a. market prices reflect the values of goods and services to the buyer.

Ch1 The basic ingredients in any economic decision are a. scarcity and choice. b. surpluses and shortages. c. market prices and the use of efficient production methods. d. needs and wants.

a. scarcity and choice.

Random A tariff can be defined simply as a a. tax on imports. b. tax on exports. c. legal limit on imports. d. legal limit on exports.

a. tax on imports.

Ch9 The actual rate of unemployment will be greater than the natural rate of unemployment when a. the actual output is less than the economy's potential output. b. the actual output is greater than the economy's potential output. c. the actual output is equal to the economy's potential output. d. the inflation rate has been relatively constant for several years.

a. the actual output is less than the economy's potential output.

Ch3 Suppose prices for new homes have risen and sales of new homes have also risen. We can conclude that a. the demand for new homes has risen. b. the law of demand has been violated. c. new firms have entered the construction industry. d. construction firms must be facing higher costs.

a. the demand for new homes has risen.

Ch3 When economists say the supply of a product has decreased, they mean that a. the supply curve has shifted to the left. b. the product price has decreased, and as a consequence, suppliers are producing less of the product. c. producers are now willing to sell more of this product at each possible price. d. the supply curve has shifted to the right.

a. the supply curve has shifted to the left.

Ch3 The price of a good will tend to rise when a. there is excess demand for the good. b. there is excess supply of the good. c. demand for the good decreases. d. the supply of the good increases.

a. there is excess demand for the good.

Ch8 Suppose the population (age 16 and over) of Vietnam is 10 million; 500,000 are unemployed, and 4 million hold jobs. The labor force participation rate in Vietnam is a. 10 percent. b. 45 percent. c. 50 percent. d. 90 percent.

b. 45 percent.

Ch18 Trade restrictions that limit the sale of low-price foreign goods in the US market a. Increase the real income of Americans b. Benefit domestic producers in the protected industries at the expense of consumers and domestic producers in export industries c. Help channel more of our resources into producing goods for which we are low-cost producer d. Reduce unemployment and increase the productivity of American workers

b. Benefit domestic producers in the protected industries at the expense of consumers and domestic producers in export industries

Ch14 If the Federal Reserve wanted to expand the money supply in order to increase output, it should a. Sell government bonds, which will increase the money supply; this will cause interest rates to fall and aggregate demand to rise b. Buy government bonds, which will increase the money supply; this will cause interest rates to fall and aggregate demand to rise c. Increase the discount rate, which will raise the market rate of interest; this will cause both costs and prices to rise d. Decrease taxes, which will reduce costs and cause prices to fall

b. Buy government bonds, which will increase the money supply; this will cause interest rates to fall and aggregate demand to rise

Ch13 (mult choice) When the Fed sells Treasury Bonds on the open market, it will tend to a. Increase the money supply b. Decrease the money supply c. Increase interest rates d. Decrease interest rates

b. Decrease the money supply c. Increase interest rates

Ch3 Assume that supply decreases greatly and demand decreases slightly. Which of the following will happen? a. Equilibrium price will fall and equilibrium quantity will rise. b. Equilibrium price will rise and equilibrium quantity will fall. c. Equilibrium price will rise and equilibrium quantity will rise. d. Equilibrium price will fall and equilibrium quantity will fall. e. Neither equilibrium price nor equilibrium quantity will change.

b. Equilibrium price will rise and equilibrium quantity will fall.

Ch12 The crowding-out model implies that a a. Budget surplus will be highly effective against inflation b. Budget deficit is likely to stimulate aggregate demand and cause inflation c. Budget deficit will increase real interest rates and thereby, reduce private spending d. Budget surplus will reduce aggregate demand and throw the economy into a downward spiral

c. Budget deficit will increase real interest rates and thereby, reduce private spending

Ch6 Government decisions tend to be biased against actions that have a. current costs and future benefits that are both easily observable. b. future costs that are difficult to identify and current benefits that are easily observable. c. future costs and future benefits that are both difficult to identify. d. current costs that are easily observable and future benefits that are difficult to identify.

d. current costs that are easily observable and future benefits that are difficult to identify.

Ch10 The situation in which actual output exceeds potential output a. is impossible because all resources are employed to produce potential output b. is possible only in times of high unemployment c. is possible only if the unemployment rate is negative d. is possible only in the long run e. creates pressure for inflation

e. creates pressure for inflation

Ch18 Which of the following will most likely occur if import restrictions prohibit foreigners from selling various goods in the US market? a. The united states will be able to export more goods abroad b. Foreigners will have fewer US dollars with which to buy goods from Americans c. The united states will be able to produce a larger output than would otherwise be the case d. The domestic producers in the protected industries will supply goods to US consumers at lower prices than would otherwise be the case

b. Foreigners will have fewer US dollars with which to buy goods from Americans

Ch18 Opportunity costs differ among nations primarily because a. Nations employ different currencies b. Nations have difference endowments of land, labor skills, capital and technology c. Nations have difference political institutions d. Work-leisure preferences vary considerably form one cation to another

b. Nations have difference endowments of land, labor skills, capital and technology

Ch16 A legal system that protects private property and enforces contracts in an even-handed manner helps promote economic growth because it a. Makes it possible for individuals to generate large incomes and get ahead without cooperating with others b. Provides people with a strong incentive to supply others with things that they value at an economical price c. Encourages people to use resources now rather than conserving them for the future d. Keeps the real wages of workers low and thereby makes it possible for business firms to supply goods and services economically

b. Provides people with a strong incentive to supply others with things that they value at an economical price

Ch16 When the residents of a nation are free to trade with foreigners, domestic producers will be able to a. Export more goods for which they are a high-cost supplier b. Supply a larger quantity of goods they can produce at a relatively low cost c. Charge higher prices then would otherwise be the case d. Survive in the marketplace even if they do not produce efficiently

b. Supply a larger quantity of goods they can produce at a relatively low cost

Ch8 Which of the following about business cycles is true? a. A "depression" is a recession that is mild and relatively brief. b. The expansions and contractions of business cycles last varying lengths of time. c. The timing of business fluctuations is regular and, therefore, easily predictable. d. During the recessionary phase of the business cycle, the rate of unemployment is generally quite low.

b. The expansions and contractions of business cycles last varying lengths of time.

Ch13 (mult choice) Suppose you receive $1,000 cash form your uncle then deposit it into your checking account. If the reserve requirement is 10%, what impact does this transaction have? a. The money supply increases b. The money supply remains the same c. The bank's required reserves increase by $100 d. The bank's required reserves decrease by $100 e. The bank's required reserves increase by $900 f. The bank can make new loans of $900 g. The bank can make new loans of $1,000

b. The money supply remains the same c. The bank's required reserves increase by $100 f. The bank can make new loans of $900

Ch2 Land used to grow corn could also be used to grow soybeans. Which of the following is true when the farmer plants soybeans and the market price of corn rises? a. The opportunity cost of producing soybeans decreases. b. The opportunity cost of producing soybeans increases. c. There will be no change in the opportunity cost of producing soybeans. d. The opportunity cost of producing corn increases.

b. The opportunity cost of producing soybeans increases.

Ch18 Which of the following would be expected if the tariff on foreign-produced automobiles were increased? a. The domestic price of automobiles would fall b. The supply of foreign automobiles to the domestic market would decline, causing auto prices to rise c. The number of unemployed workers in the domestic automobile industry would rise d. The demand for foreign-produced automobiles would increase, causing the price of automobiles to increase in other nations

b. The supply of foreign automobiles to the domestic market would decline, causing auto prices to rise

Ch3 Which of the following would most likely cause the supply of wheat to increase? a. a decrease in the price of corn, a substitute for wheat b. a technological advance that lowers the cost of producing wheat c. an increase in the cost of producing wheat d. a change in consumer preferences, causing them to prefer plain white bread to whole-wheat bread

b. a technological advance that lowers the cost of producing wheat

Ch1 "There is no such thing as a free lunch." This statement best reflects the fact that a. consumers are unwilling to pay for a good unless it provides them with value. b. an opportunity cost is always present when scarce resources are used to produce a good. c. it generally requires enormous effort to search out the best place to eat lunch. d. the value of a good to consumers will decrease as they have more of it.

b. an opportunity cost is always present when scarce resources are used to produce a good.

Random Democracy tends to best promote freedom when there is a. unrestrained executive and legislative majority power. b. constitutional protection of private property rights. c. a large and centralized government sector. d. all of the above.

b. constitutional protection of private property rights.

Ch2 When property rights are clearly defined and enforced, private owners will a. use their property for selfish ends because they have little or no incentive to consider the desires of others. b. develop and direct their property toward uses that others value highly because the market will generally reward them for doing so. c. have little or no incentive to take care of their property or conserve it for the future. d. be unable to derive personal gain if they are sensitive to the desires of others when deciding how to use their property.

b. develop and direct their property toward uses that others value highly because the market will generally reward them for doing so.

Ch14 When continued for several years, rapid growth in the money supply relative to the growth of real output will likely lead to an extended period of a. low unemployment. b. high inflation. c. low nominal interest rates. d. high rates of real economic growth.

b. high inflation.

Ch7 If a local shop buys a used motorcycle for $1,000, makes repairs and refurbishes it, then resells it for $2,500, the a. shop contributes value added equal to $1,500, but nothing is added to GDP. b. shop contributes value added equal to $1,500, and consequently $1,500 is added to GDP. c. shop contributes nothing to production because only existing goods are involved. d. shop contributes value added equal to $2,500, but only $1,500 is added to GDP.

b. shop contributes value added equal to $1,500, and consequently $1,500 is added to GDP.

Ch1 "If Tom had twice as much money, he could consume twice as much. If everyone had twice as much money, they could consume twice as much." This quote illustrates a. the difference between positive and normative economics. b. the fallacy of composition. c. that association is not causation. d. the law of unintended consequences.

b. the fallacy of composition.

Ch2 According to the law of comparative advantage, both individuals and nations will be able to produce a larger joint output if each productive activity is undertaken by a. the high opportunity cost producer. b. the low opportunity cost producer. c. the producer who is able to hire workers at the lowest wage. d. the party that can complete the productive activity most rapidly.

b. the low opportunity cost producer.

Ch1 The opportunity cost of going to college is a. the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses. b. the value of the best opportunity a student gives up to attend college. c. zero for students who are fortunate enough to have all of their college expenses paid by someone else. d. zero, since a college education will allow a student to earn a larger income after graduation.

b. the value of the best opportunity a student gives up to attend college.

Ch11 According to Keynesian theory, which of the following would most likely stimulate an expansion in real output if the economy were in recession? a. An increase in tax rates b. A balanced budget c. A budget deficit d. A budget surplus

c. A budget deficit

Ch13 If you have a checking account at a local bank, your bank account there is a. An asset to the bank and an asset to you b. A liability of the bank and a liability of yours c. A liability of the bank and an asset to you d. An asset to the bank and a liability of yours

c. A liability of the bank and an asset to you

Ch12 Historically, Keynesian economists have argued that government spending will stimulate aggregate demand more than tax cuts because a. Government spending will stimulate aggregate demand more quickly than a tax cut b. There are fewer adverse side effects to an increase in government spending c. All of the spending will add to aggregate demand, but a portion of the tax cut will be saved d. An increase in government spending can quickly be reversed once the economy has recovered

c. All of the spending will add to aggregate demand, but a portion of the tax cut will be saved

Ch17 On average, countries that have a larger degree of economic freedom tend to have a. Higher per capita income levels but slower rates of economic growth than countries with less economic freedom b. Lower per capita income levels but more rapid rates of economic growth than countries with less economic freedom c. Both higher per capita income levels and more rapid growth rates than countries with less economic freedom d. Both lower income levels and slower growth rates than countries with less economic freedom

c. Both higher per capita income levels and more rapid growth rates than countries with less economic freedom

Ch3 Which of the following most accurately describes the invisible hand concept? a. Wise central planning by government is necessary for the efficient use of resources. b. In a democratic setting, majority rule will result in the efficient use of resources. c. In a market setting, when individuals pursue their own interests, they simultaneously tend to promote the public interest. d. In a market setting, when individuals pursue their own interests, they tend to engage in activities that lower the overall economic welfare of society.

c. In a market setting, when individuals pursue their own interests, they simultaneously tend to promote the public interest.

Ch14 In the long-run, the primary effect of rapid monetary growth is a. Lower nominal interest rates b. Reduced unemployment c. Inflation d. An increase in real output

c. Inflation

Ch11 Within the Keynesian model, the multiplier effect tends to a. Smooth out the up and down swings of the business cycle b. Promote price stability c. Magnify small changes in output and employment d. Reduce the impact of an increase in investment on output and employment

c. Magnify small changes in output and employment

Ch12 If the government cuts the tax rate, workers get to keep a. Less of each additional dollar they earn, so work effort increases, and aggregate supply shifts right b. Less of each additional dollar they earn, so work effort decreases, and aggregate supply shifts left c. More of each additional dollar they earn, so work effort increases, and aggregate supply shifts right d. More of each additional dollar they earn, so work effort decreases, and aggregate supply shifts left

c. More of each additional dollar they earn, so work effort increases, and aggregate supply shifts right

Random The agreement of the United States, Canada, and Mexico to eliminate tariffs on the shipment of most products among the three countries is called the a. General Agreement on Tariffs and Trade. b. Uruguay Round. c. North American Free Trade Agreement. d. Tariff Reduction Act of 1993.

c. North American Free Trade Agreement.

Ch17 Which of the following is a key characteristic of economic freedom? a. Subsidies and regulations that favor business. b. Central planning. c. Reliance on open markets. d. Import quotas that protect domestic businesses from rivals.

c. Reliance on open markets.

Ch9 Which of the following is necessarily true when an economy is in long-run equilibrium? a. Prices will be constant (that is, inflation will be zero). b. The actual output will be less than the full-employment (or potential) output. c. The actual rate of unemployment equals the natural rate of unemployment. d. The output of the economy will be greater than the full-employment output.

c. The actual rate of unemployment equals the natural rate of unemployment.

Ch3 How would a decrease in the price of the feed grains used to feed cattle affect the market for beef? a. The demand for beef would increase, increasing beef prices. b. The demand for beef would decrease, decreasing beef prices. c. The supply of beef would increase, decreasing beef prices. d. The supply of beef would decrease, increasing beef prices.

c. The supply of beef would increase, decreasing beef prices.

Ch2 Which of the following about trade is true? a. Trade does not produce anything new; therefore, it cannot create value. b. The value of a good is determined by the cost of the material resources required for its production. c. The value of a good generally depends on who uses it and circumstances such as when and where it is used. d. All of the above are true.

c. The value of a good generally depends on who uses it and circumstances such as when and where it is used.

Ch18 If domestic producers have a comparative advantage in producing a good, a. Trade restrictions will be required before the producers can benefit from their comparative advantage b. Trade restrictions will still be required before the domestic producers can compete with low-wage producers abroad c. They will be able to compete effectively in a competitive world market d. The government should subsidize production of the good so the domestic producers will be able to achieve a larger share of the world market

c. They will be able to compete effectively in a competitive world market

Ch16 When individuals and businesses are permitted to trade freely over a large market area, a. Wages will decline to the level of the poorest country in the region b. The monopoly power of business firms will increase c. They will be able to produce a larger output and consume a more diverse bundle of goods d. Businesses will be able to earn higher profits, but the income levels of individuals will decline

c. They will be able to produce a larger output and consume a more diverse bundle of goods

Ch7 Which of the following transactions would be included in this year's GDP for the United States? a. You buy a rug imported from Mexico. b. You buy stock in an American textile company. c. You purchase a table over the Internet from a North Carolina furniture manufacturer. d. You purchase a table over the Internet from a Mexican manufacturer.

c. You purchase a table over the Internet from a North Carolina furniture manufacturer.

Ch10 If the long-run equilibrium of an economy is disrupted by an unanticipated increase in aggregate demand (such as might result from unexpectedly strong demand for exports due to the rapid growth of incomes abroad), a. the price of resources will decrease. b. the natural rate of unemployment will decrease. c. actual unemployment will temporarily fall below the natural rate. d. prices will decrease.

c. actual unemployment will temporarily fall below the natural rate.

Ch10 Which of the following will most likely cause an increase in the long-run aggregate supply curve? a. a reduction in the general level of prices b. an increase in the general level of prices c. an improvement in technology that substantially reduces the cost of generating energy d. an increase in taxes that makes it more expensive for Americans to import crude oil

c. an improvement in technology that substantially reduces the cost of generating energy

Ch10 If Asian economies suffer a serious economic slump, U.S. net exports will a. increase and AD will shift rightward. b. increase and AD will shift leftward. c. decrease and AD will shift leftward. d. decrease and AD will shift rightward.

c. decrease and AD will shift leftward.

Ch12 According to the new classical view, budget deficits will a. cause real interest rates to rise, which will decrease aggregate demand, output, and employment. b. lead to an expansion in spending, which will stimulate both real output and employment. c. fail to stimulate aggregate demand because people will save more in order to pay the higher future taxes implied by the expansion in government debt. d. lead to inflation because the deficits expand the money supply.

c. fail to stimulate aggregate demand because people will save more in order to pay the higher future taxes implied by the expansion in government debt.

Ch9 People will spend more if the price level a. rises because rising prices increase the real value of the fixed quantity of money. b. rises because rising prices decrease the real value of a dollar. c. falls because falling prices increase the real value of a dollar. d. falls because falling prices decrease the real value of a dollar.

c. falls because falling prices increase the real value of a dollar.

Ch8 Ashley was being treated unfairly by her boss, so she stormed off the job and two days later found another position. For two days, Ashley experienced a. cyclical unemployment. b. structural unemployment. b. seasonal unemployment. c. frictional unemployment. d. being out of the labor force.

c. frictional unemployment.

Ch17 The empirical evidence indicates that compared to economies that are less free, countries with institutions and policies more consistent with economic freedom a. grow more rapidly, but experience higher poverty rates. b. achieve higher income levels per person but experience higher poverty rates. c. grow more rapidly and achieve larger poverty rate reductions. d. experience less rapid rates of economic growth and higher overall poverty rates.

c. grow more rapidly and achieve larger poverty rate reductions.

Ch9 In the short run, an unexpected increase in prices will a. reduce resource prices and increase the quantity of goods supplied. b. decrease the productive capacity of firms and decrease the quantity of goods supplied. c. increase the profits of firms, thereby leading them to expand output. d. increase the profits of firms, thereby leading them to reduce output.

c. increase the profits of firms, thereby leading them to expand output.

Ch11 A hail storm that breaks lots of windows in buildings is a. Good for the economy because the spending on repairs will expand net employment b. Good for the economy because spending on the repairs will drive up the general level of prices c. Bad for the economy because the damage from the storm will be subtracted from this year's GDP d. Bad for the economy because wealth was destroyed and more spending on repairs will result in less spending on other goods and services

d. Bad for the economy because wealth was destroyed and more spending on repairs will result in less spending on other goods and services

Ch16 Which of the following is a driving force underlying economic growth? a. Trade restrictions that protect domestic businesses from competition with foreign producers b. Regulations that require businesses to obtain permission from the government before starting a new business c. Tax increases that expand the revenues of the government d. Entrepreneurial discovery and production of improved products

d. Entrepreneurial discovery and production of improved products

Ch3 Suppose demand decreases and supply increases. Which of the following will happen? a. Equilibrium price will rise, fall, or stay the same while equilibrium quantity will decrease. b. Equilibrium price will rise, fall, or stay the same while equilibrium quantity will increase. c. Equilibrium quantity will rise, fall, or stay the same and equilibrium price will increase. d. Equilibrium quantity will rise, fall, or stay the same while equilibrium price will decrease. e. The change in equilibrium price and quantity cannot be determined.

d. Equilibrium quantity will rise, fall, or stay the same while equilibrium price will decrease.

Ch11 The government is pursuing an expansionary fiscal policy if it: a. Decreases government spending and/or increases taxes b. Increases government spending and/or increases taxes c. Decreases government spending and/or reduces taxes d. Increases government spending and/or reduces taxes

d. Increases government spending and/or reduces taxes

Ch17 Economic data suggest that the size of government will be a. Unrelated to economic growth b. Negatively related to economic growth at all possible sizes of government c. Positively related to economic growth at all possible sizes of government d. Positively related to economic growth at small levels of government but is negatively related to economic growth at large levels of government

d. Positively related to economic growth at small levels of government but is negatively related to economic growth at large levels of government

Ch12 The crowding-out model implies that restrictive fiscal policy will a. Increase aggregate demand and employment b. Lead to a significant increase in the natural rate of unemployment c. Be highly effective against inflation d. Reduce real interest rates

d. Reduce real interest rates

Ch13 If the Fed lends to member banks, what happens to required reserves, excess reserves, and the money supply? a. All increase b. All decrease c. All remain the same d. Required reserves remain the same, excess reserves increase, and the money supply will increase e. Required reserves increase, excess reserves remain the same, and the money supply will increase f. Required and excess reserves increase but the money supply will remain the same

d. Required reserves remain the same, excess reserves increase, and the money supply will increase

Ch6 Which of the following about markets and collective action through government is true? a. Competitive behavior is present in the market sector but not in the public sector. b. Because candidates for public office represent a bundle of views, there is more ability for individuals to make their preferences count on specific issues than in the market sector. c. When decisions are made democratically, the economic and political power of all individuals will be equal unlike in the market sector. d. The reality of the aggregate consumption-aggregate payment link imposed by scarcity is present in both the market and public sectors.

d. The reality of the aggregate consumption-aggregate payment link imposed by scarcity is present in both the market and public sectors.

Ch3 How will an increase in lumber prices influence the home construction market? a. The demand for newly constructed homes will increase. b. The demand for newly constructed homes will decrease. c. The supply of newly constructed homes will increase. d. The supply of newly constructed homes will decrease.

d. The supply of newly constructed homes will decrease.

Ch18 The argument that import restrictions save jobs and promote prosperity fails to recognize that a. There are no secondary effects of import restrictions b. Import restrictions will lower prices in the protected industries c. Import restrictions cannot create jobs in any industries d. US imports provide people in other countries with the purchasing power required for the purchase of US exports

d. US imports provide people in other countries with the purchasing power required for the purchase of US exports

Ch8 Which of the following would be classified as unemployed? a. mothers who choose to stay at home with their preschool-age children b. retirees who are no longer working at a job c. students attending school full time d. a 20-year old looking for her first job

d. a 20-year old looking for her first job

Ch11 If the government increases its spending, which of the following would tend to reduce the size of the multiplier? a. higher taxes for the finance of the additional spending b. higher interest rates as the result of additional borrowing to finance the spending c. the flow of the spending into sectors where the unemployment rate is low d. all of the above

d. all of the above

Ch17 Democracy tends to best promote economic freedom when there is a. checks on the power of both the executive and legislative majorities. b. constitutional protection of private property rights. c. political decentralization. d. all of the above.

d. all of the above.

Ch3 Which of the following will most likely result from a destruction of half of the Florida orange crop due to a hard freeze? a. a decrease in the demand for oranges b. an increase in the supply of oranges c. an increase in the quantity of oranges bought and sold d. an increase in the price of oranges

d. an increase in the price of oranges

Ch1 Rational choice requires that opportunity cost be a. ignored in making a decision. b. considered for individual choices, but not for societal choices. c. computed, but not actually used in making a decision. d. considered as part of making a decision.

d. considered as part of making a decision.

Ch6 Public choice theory indicates that the behavior of people in government a. differs from the behavior of people in the private sector because they are motivated by the public interest rather than their own personal self-interest. b. differs from the behavior of people in the private sector because public sector decision roles do not allow people to pursue their own self-interests. c. is the same as people in the private sector only if decisions are made by majority vote. d. is best understood by applying the same principles we use to predict the behavior of people in the private sector.

d. is best understood by applying the same principles we use to predict the behavior of people in the private sector.

Ch9 Other things the same, an increase in the price level makes the dollars people hold worth a. more, so they are willing to spend more. b. more, so they are willing to spend less. c. less, so they are willing to spend more. d. less, so they are willing to spend less.

d. less, so they are willing to spend less.

Ch16 If real GDP is increasing more rapidly than population, a. population must be declining. b. the country will have to export more than it imports. c. the general level of prices must be increasing. d. per capita real GDP will be increasing.

d. per capita real GDP will be increasing.

Ch6 Economic theory indicates that the behavior of a. government employees differs from the behavior of employees in the private sector because government employees generally disregard their own personal self-interest when making decisions. b. elected public officials differs from the behavior of all other individuals in society because they are not influenced by private interests. c. individuals when they make decisions about who to vote for is very different from the behavior of these same individuals when they make other types of choices. d. voters, government employees, and public officials is best understood by applying the same basic principle we use to predict the behavior of people in the private sector--that incentives matter.

d. voters, government employees, and public officials is best understood by applying the same basic principle we use to predict the behavior of people in the private sector--that incentives matter.