midterm 3, Midterm 2, Midterm 1, HW 6, Homework 5, homework 4, homework 1, homework 3, homework 2

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26) The current exchange rate system in the United States is best described as a A) silver standard. B) fixed exchange rate system. C) managed float exchange rate system. D) gold standard.

28) If in the market for apples the supply has decreased, then A) there has been a movement upwards along the supply curve for apples. B) the supply curve for apples has shifted to the right. C) the supply curve for apples has shifted to the left. D) there has been a movement downwards along the supply curve for apples.

33) Which of the following describes a characteristic of a perfectly competitive market? A) There are many sellers but few buyers. B) There are many buyers but few sellers. C) There are many buyers and sellers. D) Equilibrium is achieved when demand for the product sold in the market equals the supply.

Consider the following data for a closed economy: Y = $12 trillion C = $8 trillion I = $2 trillion G = $2 trillion TR = $2 trillion T = $3 trillion Based on the information above, what is the level of private saving in the economy?

$3 trillion

If the minimum wage is set above the market wage A) unemployment will rise. B) highly-skilled workers will have a harder time finding jobs. C) the quantity of labor supplied will be below the quantity of labor demanded. D) All of the above are correct.

If the price level rose in three consecutive years from 100 to 120 to 140, then the annual inflation rate over those years would A) decrease. B) equal 20%. C) increase. D) remain the same.

If whole tomatoes were money, which of the following functions of money would be the hardest for tomatoes to satisfy? A) medium of exchange B) certificate of gold C) unit of account D) store of value

19) Which of the following is the best example of a tariff? A) a $150 fee imposed on all imported residential air conditioners B) a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers C) a limit on the quantity of residential air conditioners that can be imported from a foreign country D) a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment

7) An increase in the demand for loanable funds will occur if there is A) an increase in expected profits from firm investment projects. B) an increase in the nominal interest rate accompanied by an equal increase in inflation. C) an increase in the real interest rate. D) a decrease in the real interest rate.

A decrease in the discount rate ________ bank reserves and ________ the money supply if banks respond appropriately to the change in the rate. A) increases; increases B) decreases; decreases C) increases; decreases D) decreases; increases

A farm worker gets paid today in money, but plans to spend the money next week. This illustrates which function of money? A) store of value B) unit of account C) medium of exchange D) standard of deferred payment

A financial intermediary's main function is to match ________ with excess funds to ________ with a shortage of funds. A) savers; borrower B) firms; insurance companies C) governments; households D) borrower; savers

A(n) ________ is represented by a rightward shift of the demand curve while a(n) ________ is represented by a movement along a given demand curve. A) increase in demand; increase in quantity demanded B) increase in quantity demanded; increase in demand C) decrease in demand; decrease in quantity demanded D) increase in demand; decrease in demand

According to the quantity theory of money, if the money supply grows at 20 percent and real GDP grows at 5 percent, then the inflation rate will be A) 15 percent. B) 20 percent. C) 25 percent. D) 100 percent.

According to the text, economists consider full employment to occur when A) the unemployment rate consists of only frictional and structural unemployment. B) the sum of frictional unemployment and structural unemployment equals zero. C) everyone who wants a job has a job. D) frictional unemployment equals zero.

All of the following are sources of comparative advantage except... a. a strong foreign currency exchange rate b. technology c. climate and natural resources d. relative abundance of labor and capital

An advantage of the establishment survey over the household survey of the labor market is that the establishment survey A) is based on actual payrolls, rather than on unverified answers. B) includes persons employed at newly opened firms. C) includes the number of self-employed persons. D) provides an estimate of the number of persons unemployed.

An increase in unemployment insurance payments would, in effect, ________ the amount of time spent searching for a job, which would increase ________ unemployment. A) increase; frictional B) decrease; cyclical C) decrease; frictional D) increase; cyclical

Autarky is a situation in which a country... a. doesn't Tade with other countries b. only exports products c. only imports products d. has no absolute advantage in any production

Cassie's Quilts alters, reconstructs, and restores heirloom quilts. Cassie has just spent $800 purchasing, cleaning, and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task. Alternatively, she can sell the quilt "as is" now for $900. What is her marginal benefit if she sells the quilt "as is" now? A) $900 B) $100 C) She makes a marginal loss of $600, not a marginal benefit. D) The marginal benefit cannot be determined.

Ceteris paribus, a rise in interest rates in the United States will cause the yen price of the dollar in international exchange markets to ________; i.e., the dollar ________ in value against the yen. A) increase; appreciates B) increase; depreciates C) decrease; depreciates D) decrease; appreciates

China has developed a comparative advantage in the production of children's toys. The source of this comparative advantage is A) a large supply of unskilled workers and relatively little capital. B) superior process technology. C) a large supply of natural resources. D) investment in capital used to produce toys.

Destabilizing speculation refers to a. actions taken by investors who sell a country's currency in anticipation of buying it back later at a lower price. b. any depreciation of a country's currency as a result of long-run adjustments to purchasing power parity. c. actions taken by the International Monetary Fund that increase lending to countries who have pegged their currencies against the dollar. d. actions taken by currency traders to sell a currency that is undervalued.

During a deflationary period A) the nominal interest rate is less than the real interest rate. B) the real interest rate is less than the nominal interest rate. C) the nominal interest rate does not change. D) the price level rises.

Economics is the study of the ________ people make to attain their goals, given their ________ resources. A) choices; scarce B) decisions; household C) purchases; unlimited D) income; available

Economist Steve Landsburg has pointed out that Ebenezer Scrooge's change in behavior from miser to spender might actually be detrimental to the economy because A) Scrooge's miserly saving helped contribute to the production of investment goods rather than consumption goods. B) Scrooge was happiest when he was saving money, and happiness is the key to economic growth. C) Scrooge's consumption habits were more detrimental to the environment than were his earlier saving habits. D) saving has to be greater than consumption for the economy to grow.

GDP is not a perfect measure of well-being because A) GDP is not adjusted for pollution. B) GDP is adjusted for increases in drug addiction. C) GDP is adjusted for changes in crime rates. D) the value of leisure is included in GDP.

Higher personal income taxes a. decrease aggregate demand. b. both b and c c. increase disposable income. d. increase aggregate demand.

How do lower taxes affect aggregate demand? a. They increase disposable income, consumption, and aggregate demand. b. They increase corporate investment and aggregate demand. c. They increase aggregate supply and thus increase aggregate demand as well. d. They reduce disposable income, consumption, and aggregate demand.

How were countries whose industries competed with Chinese industry affected by a yuan that was pegged to the dollar? a. Because the yuan was undervalued at the pegged exchange rate, the level of Chinese exports remained higher than they would have been if the exchange rate was allowed to float freely. b. Competitors feared that the declining value of the dollar would continue to make Chinese goods more expensive. c. Because the yuan was overvalued at the pegged exchange rate, competing firms from other countries feared that abandoning the peg would lead to an increase in Chinese exports. d. Because China's population is so large relative to other countries, the pegged exchange rate made the goods of foreign competing firms much less expensive than domestic Chinese goods.

Hurricane Katrina damaged a large portion of refining and pipeline capacity when it swept through the Gulf coast states in August 2005. As a result of this, many gasoline distributors were not able to maintain normal deliveries. At the pre-hurricane equilibrium price (i.e., at the initial equilibrium price), we would expect to see A) a shortage of gasoline. B) a surplus of gasoline. C) an increase in the demand for gasoline. D) the quantity demanded equal to the quantity supplied.

Hyperinflation is caused by A) a high rate of growth in the money supply. B) real GDP growing more rapidly than the money supply. C) a constant increase in the money supply. D) the money supply growing more slowly than GDP.

If Sweden exports cell phones to Denmark and Denmark exports butter to Sweden, which of the following would explain this pattern of trade? A) Sweden has a lower opportunity cost of producing cell phones than Denmark and Denmark has a comparative advantage in producing butter. B) Sweden has a higher opportunity cost of producing cell phones than Denmark, and Denmark has a higher opportunity cost of producing butter. C) Sweden must have an absolute advantage in producing cell phones and Denmark must have an absolute advantage in producing butter. D) The opportunity cost of producing butter in Denmark is higher than the opportunity cost of producing butter in Sweden.

If a bank receives a $1 million discount loan from the Federal Reserve, then the bank's reserves will A) increase by $1 million. B) increase by more than $1 million. C) increase by less than $1 million. D) not change.

If a person withdraws $500 from his/her savings account and puts it in his/her checking account, then M1 will ________ and M2 will ________. A) increase; not change B) increase; decrease C) not change; increase D) not change; not change

If a vineyard wants to raise funds to purchase a new bottling machine, it does so in the A) factor market. B) alcoholic beverages market C) product market D) output market

If advances in robotics, automation, and artificial intelligence lead to the elimination of jobs, and the people who held those jobs need to learn new skills to find new jobs, those people would be considered A) structurally unemployed. B) seasonally unemployed. C) cyclically unemployed. D) frictionally unemployed.

If cyclical unemployment is eliminated in the economy, then A) the economy is considered to be at full employment. B) the unemployment rate is above the natural rate of unemployment. C) the economy is at less than full employment. D) the unemployment rate is below the natural rate of unemployment.

If stricter immigration laws are imposed and many foreign workers in the United States are forced to go back to their home countries a. the long-run aggregate supply curve will shift to the left. b. we will move down along the long-run aggregate supply curve. c. the long-run aggregate supply curve will shift to the right. d. we will move up along the long-run aggregate supply curve.

If the GDP deflator is less than 100, then for that year, nominal GDP ________ real GDP. A) is less than B) is greater than C) equals D) may be greater than or less than

If the dollar appreciates against the Mexican peso A) U.S. exports to Mexico become more expensive. B) Mexican imports to the U.S. become more expensive. C) U.S. exports to Mexico become less expensive. D) The value of Mexican imports to the United States does not change.

If the marginal cost for the U.S. Postal Service to deliver packages for Amazon on Sundays is estimated to be $250,000 per Sunday, then the U.S. Postal Service should make these Sunday deliveries A) as long as the marginal benefit received each Sunday is just equal to or greater than $250,000 B) until the marginal benefit received falls to zero. C) as long as the marginal cost each Sunday is lower than it had been before the Sunday deliveries. D) only if the marginal benefit received each Sunday is less than $250,000.

If the marginal cost of producing a television is constant at $200, then a firm should produce this item A) as long as the marginal benefit it receives is just equal to or greater than $200. B) until the marginal benefit it receives reaches zero. C) as long as its marginal cost does not rise. D) only if the marginal benefit it receives is greater than $200 plus an acceptable profit margin.

Imagine that you borrow $5,000 for one year and at the end of the year you repay the $5,000 plus $600 of interest. If the inflation rate was 4%, what was the real interest rate you paid? A) 8 percent B) 16 percent C) 6 percent D) 12 percent

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 a. shift the short-run aggregate supply curve to the right. b. shift the short-run aggregate supply curve to the left. c. move the economy down along a stationary short-run aggregate supply curve. d. move the economy up along a stationary short-run aggregate supply curve.

In July, market analysts predict that the price of gold will rise in August. What happens in the gold market in July, holding everything else constant? A) The supply curve shifts to the left. B) The quantity demanded and the quantity supplied increase. C) The supply curve shifts to the right. D) The demand curve shifts to the left.

In an economy with ________, there are more prices than in an economy with ________. A) barter; money B) fiat money; commodity money C) money; barter D) fiat money; barter

In order to avoid the imposition of other types of trade barriers, foreign producers will sometimes agree to limit their exports to a country. What are these types of agreements called? A) voluntary export restraints B) implicit quotas C) sanctions D) involuntary export restraints

International trade... a. helps consumers but hurts firms that are less efficient than their foreign competitors. b. helps consumers but harms exporting firms and their workers. c. helps consumers and firms that compete with their foreign competitors. d. harms consumers but helps exporting firms.

Lionel's Lawn Care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, and he charges $25 for this service. For a total price of $40, Lionel will also trim shrubs, a service that adds an additional $10 to the total cost of the standard package. What is Lionel's marginal benefit if he sells the standard package? A) 25 B) 40 C) 15 D) 10

One would speak of a movement along a supply curve for a good, rather than a change in supply, if A) the price of the good changes. B) prices of substitutes in production change. C) the cost of producing the good changes. D) supplier expectations about future prices change.

Over the past several decades there has been rapid growth in international trade. This growth has been due to all but one of the following factors. Which factor has not contributed to the growth of international trade? A) an increase in the tariffs charged on many goods B) a reduction in shipping costs C) favorable changes in government policies D) the spread of reliable communications

Scarcity refers to the situation in which A) unlimited wants exceed limited resources. B) a country's population is larger than its resource base. C) a nation's poverty level increases faster than its population. D) unlimited resources exceed limited wants.

Spending on the war in Afghanistan is essentially categorized as government purchases. How do increases in spending on the war in Afghanistan affect the aggregate demand curve? a. They will shift the aggregate demand curve to the right. b. They will move the economy up along a stationary aggregate demand curve. c. They will shift the aggregate demand curve to the left. d. They will move the economy down along a stationary aggregate demand curve.

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 A) $5 million. B) $0. C) $20 million. D) $15 million.

Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy. As a result A) the long-run aggregate supply curve will shift to the right. B) the economy will move up along the long-run aggregate supply curve. C) the economy will move down along the long-run aggregate supply curve. D) the long-run aggregate supply curve will shift to the left.

Suppose an economy's exchange rate system is the gold standard and vast tracks of gold are discovered, as is what happened in the United States in 1849. If the economy is at full employment, what should this discovery do? a. It should raise the money supply and cause inflation. b. It should lower the money supply and cause deflation. c. It should raise the money supply and cause disinflation. d. It should raise the money supply but have no impact on the price level.

Suppose you borrow $1,000 at an interest rate of 12 percent. If the expected real interest rate is 5 percent, then the rate of inflation over the upcoming year that would be most beneficial to you would be a rate of inflation A) greater than 7 percent. B) equal to 7 percent. C) less than 7 percent. D) equal to 0 percent.

The Federal Open Market Committee consists of the seven members of the ________, the president of the Federal Reserve Bank of New York, and ________. A) Federal Reserve's Board of Governors; four presidents from the other 11 Federal Reserve banks B) Federal Reserve's Board of Governors; four members of the Council of Economic Advisors C) Council of Economic Advisors; four presidents from the 11 Federal Reserve banks D) Council of Economic Advisors; four members of the U.S. Banking Committee

The GDP deflator is the A) ratio of nominal GDP to real GDP multiplied by 100. B) ratio of real GDP to nominal GDP multiplied by 100. C) difference between nominal GDP and real GDP divided by 100. D) difference between real GDP and nominal GDP multiplied by 100.

The German Hyperinflation of the early 1920s was caused by A) the German government raising funds for expenditures by selling bonds to the central bank. B) an overly aggressive monetary policy implemented to combat a severe recession. C) large deficits resulting from the high levels of war spending and falling taxes. D) rising oil prices after World War I caused a severe stagflation and hyperinflation.

The U.S. work week has declined from 60 hours in 1890 to fewer than 40 hours today. The impact of the decline in working hours A) decreases U.S. GDP and increases the well-being of a typical working person in the U.S. B) increases U.S. GDP and increases the well-being of a typical working person in the U.S. C) decreases U.S. GDP and decreases the well-being of a typical working person in the U.S. D) increases U.S. GDP and decreases the well-being of a typical working person in the U.S.

The United States has developed a comparative advantage in digital computers, airliners, and many prescription drugs. The source of its comparative advantage in these products is... a. technology. b. abundant supplies of natural resources. c. a strong central government. d. a favorable climate.

The current exchange rate system in the United States is best described as a a. managed float exchange rate system. b. fixed exchange rate system. c. silver standard. d. gold standard.

The deflation of the 1930s impacted the U.S. economy because it led some consumers to ________ and because it ________. A) postpone purchases while they waited for prices to fall even lower; increased the burden on borrowers B) demand higher wages in anticipation of prices eventually rising again; increased manufacturing since firms could afford to hire more labor C) increase purchases to take advantage of the falling prices; increased the burden on lenders D) borrow more money since money was now cheap; reduced the amount of money consumers would have to pay back on their outstanding loans

The demand for loanable funds is downward sloping because the ________ the interest rate, the ________ the number of profitable investment projects a firm can undertake, and the ________ the quantity demanded of loanable funds. A) lower; greater; greater B) lower; smaller; greater C) greater; smaller; greater D) greater; greater; greater

The income effect of a price change results in a A) movement along the demand curve due to a change in purchasing power brought about by the price change. B) shift of the demand curve due to a change in purchasing power brought about by the price change. C) shift of the demand curve when income changes. D) movement along the demand curve due to a change in relative prices.

The study of economics arises due to a) scarcity B) resources C) greed D) money

To examine how the total production of an economy has changed over time, it would be better to examine A) real GDP. B) nominal GDP. C) the GDP deflator. D) GDP at current prices.

Trade-offs force society to make choices when answering what three fundamental questions? A) What goods and services to produce; how will these goods and services be produced; and who receives them? B) What will be the prices of goods and services; how will these goods and services be produced; and who will receive them? C) Who gets jobs; what wages do workers earn; and who owns what property? D) How much will be saved; what will be produced; and how can these goods and services be fairly distributed?

When Americans increase their demand for Japanese goods a. the supply of dollars will rise, and the demand for yen will rise. b. the demand for dollars will rise, and the demand for yen will rise. c. the demand for dollars will fall, and the demand for yen will rise. d. the supply of dollars will fall, and the demand for yen will fall.

When the price level in the United States falls relative to the price level of other countries, ________ will fall, ________ will rise, and ________ will rise. a. imports; exports; net exports b. exports; imports; net exports c. net exports; exports; imports d. net exports; imports; exports

Whenever a buyer and a seller agree to trade, both must believe they will be made better off A) whether the buyer and seller live in the same (or different) city or country. B) only if the buyer and seller live in countries with market economies. C) unless the buyer resides in a different country than the seller. International trade may make the buyer or seller worse off. D) unless one party is richer than the other.

Which of the following could cause nominal GDP to increase next year, but real GDP to decrease? A) The price level rises and the quantity of final goods and services produced falls. B) The price level falls and the quantity of final goods and services produced falls. C) The price level rises and the quantity of final goods and services produced rises. D) The price level falls and the quantity of final goods and services produced rises.

Which of the following is a macroeconomic question? A) What determines the unemployment rate? B) How is the production quantity of digital cameras determined? C) What determines the wages and benefits of flight attendants? D) What factors determine the price of iPhones?

Which of the following is an example of a worker experiencing frictional unemployment? A) A worker quits his job at the U.S. Post Office to find more interesting work. B) An employee is laid off because the economy is suffering a recession. C) A computer programmer loses her job because it is outsourced to India. D) A United Airlines pilot loses her job because of lack of demand for air travel.

Which of the following is not a durable good? A) clothing B) furniture C) refrigerator D) automobile

Which of the following will not occur as the result of a decrease in net taxes? a. decreased household saving b. decreased government saving c. a shift to the left of the supply curve for loanable funds d. all of the above

Which of the following would cause an increase in the supply of cheese? A) an increase in the number of firms that produce cheese B) a decrease in the price of wine (assuming that cheese and wine are complements) C) an increase the price of a product that producers sell instead of cheese D) an increase in the price of cheese

Which of the following would cause both the equilibrium price and equilibrium quantity of barley (assume that barley is an inferior good) to increase? A) a decrease in consumer income B) an increase in consumer income C) a drought that sharply reduces barley output D) unusually good weather that results in a bumper crop of barley

You're traveling in Ireland and are thinking about buying a new digital camera. You've decided you'd be willing to pay $125 for a new camera, but cameras in Ireland are all priced in euros. If the exchange rate is 0.85 euros per dollar, what's the highest price in euros you'd be willing to pay for a camera? a. 106.25 euros b. 105 euros c. 110.15 euros d. 147 euros

Assuming the United States is the "domestic" country, if the real exchange rate between the United States and France increases from 1.5 to 1.8 a. the prices of U.S. goods and services have decreased by 16% relative to France. b. the prices of U.S. goods and services have increased by 20% relative to France. c. the prices of U.S. goods and services have increased by 3% relative to France. d. the prices of U.S. goods and services have increased by 53% relative to France.

Because of the slope of the aggregate demand curve, we can say that a. an increase in the price level leads to no change in the level of real GDP demanded. b. a decrease in the price level leads to a higher level of real GDP demanded. c. an increase in the price level leads to a higher level of real GDP demanded. d. a decrease in the price level leads to a lower level of real GDP demanded.

Fiat money has A) little to no intrinsic value but is backed by the quantity of gold held by the central bank. B) little to no intrinsic value and is authorized by the central bank or governmental body. c) a great intrinsic value that is independent of its use as money. D) value, because it can be redeemed for gold by the central bank.

22) Holding everything else constant, a decrease in the price of dashboard cameras will result in A) an increase in the demand for dashboard cameras. B) an increase in the quantity of dashboard cameras demanded. C) an decrease in the quantity of dashboard cameras demanded. D) a decrease in the supply of dashboard cameras.

23) index refers to the idea that price increases in the CPI reflect pure inflation, but ________ quality increases. This causes the CPI to ________ the cost of the market basket. A) also; overstate B) not; overstate C) not; understate D) also; understate

36) Which of the following would cause both the equilibrium price and equilibrium quantity of barley (assume that barley is an inferior good) to increase? A) a drought that sharply reduces barley output B) a decrease in consumer income C) unusually good weather that results in a bumper crop of barley D) an increase in consumer income

40) What does the term "marginal" mean in economics? A) the edge of a market B) an additional or extra C) secondary D) illegal

A central bank like the Federal Reserve in the United States can help banks survive a bank run by A) printing money. B) acting as a lender of last resort. C) raising the discount rate. D) increasing the required reserve ratio.

A sharp increase in the number of medical errors increases the number of lawyers hired to determine medical malpractice settlements. This will A) decrease GDP and increase well-being in the economy. B) increase GDP and decrease well-being in the economy. C) increase GDP and increase well-being in the economy. D) decrease GDP and decrease well-being in the economy.

All of the following are reasons why the wages of workers and the prices of inputs rise more slowly than the prices of final goods and services except a. contracts make prices and wages sticky. b. unions are successful in pushing up wages. c. menu costs make some prices sticky. d. firms are often slow to adjust wages.

An example of an intermediate good would be A) a used car. B) the rims on a new car. C) new rims to replace old rims on a used car. D) a new car.

An increase in public saving has what impact on the market for loanable funds? a. The demand for loanable funds increases. b. The supply of loanable funds increases. c. The demand for loanable funds decreases. d. The supply of loanable funds decreases.

As was demonstrated in 2007, firms in the shadow banking system A) were protected from financial ruin by federal deposit insurance. B) were very vulnerable to bank runs. C) were well insulated from bank runs. D) were more insulated from the financial crisis than were commercial banks.

Assume that smartphones are a normal good, and that the prices of smartphones have fallen in recent years. Over this same period, the price of the components used to produce smartphones has also fallen and consumer incomes have risen. Which of the following best explains the falling prices of smartphones? A) The demand curve for smartphones has shifted to the right more than the supply curve has shifted to the right. B) The supply curve for smartphones has shifted to the right more than the demand curve has shifted to the right. C) The supply curve for smartphones has shifted to the right while the demand curve for smartphones has shifted to the left. D) The demand curve and the supply curve for smartphones have both shifted to the left.

How do lower taxes affect aggregate demand? A) They reduce disposable income, consumption, and aggregate demand. B) They increase disposable income, consumption, and aggregate demand. C) They increase corporate investment and aggregate demand. D) They increase aggregate supply and thus increase aggregate demand as well.

If Ebenezer Scrooge spends rather than saves his vast wealth, he will A) promote economic growth because he is increasing the amount of funds available for investment. B) slow economic growth because he is reducing the amount of funds available for investment. C) slow economic growth because he is increasing the amount of funds available for investment. D) promote economic growth because he is decreasing the amount of funds available for investment.

If a country sets a pegged exchange rate that is below the equilibrium exchange rate, how can the country maintain the peg? a. by decreasing the pegged exchange rate b. by selling surplus domestic currency at the pegged rate c. by purchasing surplus domestic currency at the equilibrium exchange rate d. by purchasing surplus domestic currency at the pegged rate

If an increase in income leads to a decrease in the demand for salami, then salami is A) a necessity. B) an inferior good. C) a normal good. D) a neutral good.

If technological change occurs in the economy a. we will move up along the long-run aggregate supply curve. b. the long-run aggregate supply curve will shift to the right. c. the long-run aggregate supply curve will shift to the left. d. we will move down along the long-run aggregate supply curve.

If the Chinese yuan was declining in value relative to other currencies, this would cause a ________ for the Chinese economy. A) movement to the right along the aggregate demand curve B) a shift to the right of the aggregate demand curve C) a shift to the left of the aggregate demand curve D) movement to the left along the aggregate demand curve

If the demand for letters written by Abraham Lincoln is higher than the demand for letters written by John Wilkes Booth, what would have to be true for the market equilibrium prices for these letters to be equal? A) If the demand for Lincoln letters is greater than the demand for Booth letters, the market equilibrium price for Lincoln letters will always be greater than the market equilibrium price for Booth letters. B) The supply of Booth letters would have to be less than the supply of Lincoln letters. C) The supply of Lincoln letters would have to be less than the supply of Booth letters. D) The supply of Lincoln letters and the supply of Booth letters would have to be equal.

If the exchange rate changes from $2.00 = £1 to $2.01 = £1 then ______ A) the British pound has depreciated. B) the dollar has depreciated. C) the dollar has appreciated. D) the British pound has stayed constant in value.

If the value of the U.S. dollar declined relative to the currencies of most of its major trading partners in the second half of 2021, this fall in the price of the dollar against the other currencies was ________ for companies that exported to the United States and ________ for U.S. companies that exported to other countries. A) bad; bad B) bad; good C) good; bad D) good; good

If your nominal wage rises faster than the price level, we can say your real wage has ________ and the purchasing power of your income has ________. A) fallen; fallen B) risen; risen C) fallen; risen D) risen; fallen

In 2018, two members of Congress introduced the Stop Bad Employers by Zeroing Out Subsidies Act, legislation they hoped would increase wages of employees who were receiving government assistance. These members of Congress thought this legislation would give firms a reason to raise employee wages so fewer employees would receive the government assistance. Under the act, firms whose employees received assistance from government programs such as Medicaid and SNAP would be required to A) offer these employees comprehensive health insurance coverage for everyone in their immediate families. B) pay a tax equal to the cost of the assistance C) pay a minimum wage equal to twice the federal minimum wage. D) all of the above

In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA A) simply counts the total number of goods and services produced in the marketplace and then adds them up. B) values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up. C) simply counts the total number of goods produced in the market place and then adds them up. D) values goods at their market prices, multiplies them by the quantity produced, and then adds them up.

In order to avoid the imposition of other types of trade barriers, foreign producers will sometimes agree to limit their exports to a country. What are these types of agreements called? A) involuntary export restraints B) voluntary export restraints C) sanctions D) implicit quotas

In the circular flow model, households A) sell goods and services in the input market. B) spend earnings from resource sales on goods and services in the product market. C) and firms spend earnings from resource sales on goods and services in the factor market. D) hire resources sold by firms in the factor market.

In the circular flow model, the value of total income for an economy ________ the value of total production. A) is greater than B) equals C) is less than D) may be greater than or less than

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens in the market for solar panels if the government offers tax breaks to encourage manufacturers to produce more solar panels? A) D no change, S increases, P decreases, Q decreases. B) S increases, D no change, P decreases, Q increases. C) D and S increase, P and Q decrease. D) D increases, S no change, P and Q increase.

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens in the market for sushi if the Surgeon General announces that a majority of the raw fish that is imported to make sushi contains high levels of toxic mercury? A) D no change, S increases, P decreases, Q decreases. B) D decreases, S no change, P and Q decrease. C) S decreases, D no change, P increases, Q decreases. D) D and S decrease, P and Q decrease.

Members of Congress promising to support each other's legislation is known as... a. explicit collusion. b. logrolling c. protectionism. d. implicit collusion.

Most of the unemployment that occurred during the Great Depression was A) frictional unemployment. B) cyclical unemployment. C) core unemployment. D) structural unemployment.

One reason some manufacturing companies began moving production to China in the early 2000s was due to lower wages that could be paid to Chinese workers. Moving manufacturing to China to take advantage of lower wages so goods could be produced at a lower cost than if produced in the United States exemplifies which key economic idea? A) The market system relies on the principle of voluntary exchange. B) People respond to economic incentives. C) People are rational. D) Optimal decisions are made at the margin.

People hold money as opposed to financial assets because money A) earns a higher return than other financial assets. B) is perfectly liquid. C) earns interest. D) earns no interest.

Refer to Figure 2-2. What is the opportunity cost of one dozen orchids? A) 0.4 dozen roses B) 2.5 dozen roses C) 7.25 dozen roses D) 16 dozen roses

Silver is an example of a A) commodity money. B) fiat money. C) barter money. D) representative money.

Suppose a bank has $100 million in checking account deposits with no excess reserves and the required reserve ratio is 10 percent. If the Federal Reserve reduces the required reserve ratio to 8 percent, then the bank can make a maximum loan of A) $0. B) $2 million. C) $8 million. D) $10 million.

Suppose that homemakers are included as employed in the labor force statistics, rather than being counted as out of the labor force. This would A) decrease the number of persons in the working-age population. B) increase the measured labor force participation rate. C) increase the measured unemployment rate. D) decrease the number of persons in the labor force.

Suppose that in 2020, all prices in the economy double and that all wages and salaries also double. In 2020 you A) are worse off than you were in 2021 as you can no longer afford to buy as many goods and services. B) are no better off or worse off than you were in 2021 as the purchasing power of your salary has remained the same. C) cannot determine whether you are better off or worse off than you were in 2021, because the purchasing power of your salary cannot be determined. D) are better off than you were in 2021 as your salary is higher than it was in 2021 and you can now buy more goods and services.

Suppose that when the price of hamburgers increases, the Ruiz family increases their purchases of hot dogs. To the Ruiz family A) hamburgers and hot dogs are inferior goods. B) hamburgers and hot dogs are substitutes. C) hamburgers and hot dogs are normal goods. D) hamburgers and hot dogs are complements.

Ted quits his $60,000-a-year job to be a stay-at-home dad. What is the opportunity cost of his decision? A) the value he attributes to the joy of parenting B) at least $60,000 C) zero, since he will no longer be earning a salary D) depends on the "going rate" for stay-at-home dads

The United States has ________ social insurance programs, and generally has a ________ unemployment rate, as compared to Canada and Western Europe. A) more generous; lower B) less generous; lower C) more generous; greater D) less generous; greater

The ________ production points on a production possibilities frontier are the points along and inside the production possibilities frontier. A) allocatively efficient B) attainable C) productively efficient D) unattainable

The advice to "keep searching, there are plenty of jobs around here for which you are qualified," would be most appropriate for which of the following types of unemployment? A) cyclical unemployment B) frictional unemployment C) seasonal unemployment D) structural unemployment

The broadest measure of the price level that includes all final goods and services is A) the producer price index. B) the GDP deflator. C) the consumer price index. D) the wholesale price index.

The level of aggregate supply in the long run is not affected by a. changes in the number of workers. b. changes in the price level. c. changes in technology. d. changes in the capital stock.

The percent increase in the CPI from one year to the next is a measure of the A) unemployment rate. B) inflation rate. C) real interest rate. D) GDP deflator.

The purchase by a household in China of an automobile produced in the United States is included in U.S. A) investment expenditures. B) net exports. C) consumption expenditures. D) government purchases.

The purchase of Treasury securities by the Federal Reserve will, in general A) not change the money supply. B) increase the quantity of reserves held by banks. C) not change the quantity of reserves held by banks. D) decrease the quantity of reserves held by banks.

The quantity theory of money predicts that, in the long run, inflation results from the A) velocity of money growing at a lower rate than real GDP. B) money supply growing at a faster rate than real GDP. C) money supply growing at a lower rate than real GDP. D) velocity of money growing at a faster rate than real GDP.

The response of investment spending to an increase in the government budget deficit is called... a. private dissavings b. crowding out c. expansionary investment d. income minus net taxes

The size of the underground economy would tend to increase if the government of a country A) decreased government regulations on businesses. B) increased income tax rates. C) legalized marijuana. D) legalized prostitution.

The term "market" in economics refers to A) a place where money changes hands. B) a group of buyers and sellers of a product and the arrangement by which they come together to trade. C) a legal institution where exchange can take place. D) an organization which sells goods and services.

The unemployment rate is an important economic statistic that can tell us about the health of the economy. If the unemployment rate turns out to be high or higher than anticipated, we would expect A) it is more likely that an incumbent president will be re-elected. B) that stock prices are more likely to fall. C) that investors will be more optimistic about the economy. D) that jobs are less difficult to find.

There is a government budget surplus if... a. tr<t b. t-tr>g c. g>tr d. g>t

Trade restrictions are often motivated by a desire to save domestic jobs threatened by competition from imports. Which of the following counter-arguments is made by economists who oppose trade restrictions? A) Trade restrictions benefit consumers in the short run but not in the long run. B) Consumers pay a high cost for jobs saved through trade restrictions. C) Trade restrictions have a limited impact because most Americans prefer domestic goods over imports. D) Statistics show that trade restrictions actually do not save jobs.

Under the Bretton Woods exchange rate system, set up in 1944, which of the following was true? a. Americans could sell their dollars to foreign central banks in exchange for gold. b. Foreign central banks could sell their dollars to the American government in exchange for gold. c. Americans could sell their dollars to the American government in exchange for silver. d. Americans could sell their dollars to the American government in exchange for gold.

When the economy enters into a recession, your employer is ________ to reduce your wages because ________. a. likely; aggregate demand is vertical in the long run b. unlikely; lower wages reduce productivity and morale c. unlikely; output and input prices generally fall during recession d. likely; output prices always fall during recession

Which of the following best describes the "wealth effect"? A) When the price level falls, the real value of household wealth falls. B) When the price level falls, the real value of household wealth rises. C) When the price level falls, the nominal value of household wealth rises. D) When the price level falls, the nominal value of household wealth falls.

Which of the following describes a characteristic of a perfectly competitive market? A) Equilibrium is achieved when demand for the product sold in the market equals the supply. B) There are many buyers and sellers. C) There are many sellers but few buyers. D) There are many buyers but few sellers.

Which of the following individuals would be most negatively affected by anticipated inflation? A) a union contractor whose pay is adjusted based on changes in the CPI B) a retired railroad engineer who receives a fixed income payment every month C) a student who borrows $10,000 at a nominal interest rate of 5% to finance educational expenses D) a full-time employee at a pizza parlor who makes more than the minimum wage

Which of the following is a macroeconomic question? A) What determines the salaries of college professors? B) What determines the minimum wage? C) What factors determine the price of Oreo cookies? D) What determines the production of video game consoles?

Which of the following is a microeconomic question? A) Why hasn't the federal government raised the minimum wage? B) How does Fiat decide on the price of the 500 Pop model? C) What determines the level of U.S. imports and exports? D) When will the government better secure the borders?

Which of the following is one of the most important benefits of money in an economy? A) Money encourages people to produce all of their own goods (self-sufficiency) and therefore increases economic stability. B) Money allows for the exchange of goods and services. C) Money makes exchange easier, leading to more specialization and higher productivity. D) Money allows for the accumulation of wealth.

Which of the following transactions would be included in the official calculation of GDP? A) You wash and wax your father's car as a favor to him. B) You buy a new iPod. C) A student buys a used textbook at the bookstore. D) Firestone sells $2 million worth of tires to General Motors.

Which of the following will not shift the demand for the euro to the right? a. an increase in incomes in countries that buy goods from the European Union b. a decrease in the demand for European goods c. expectations among speculators that the price of the euro will rise in the future d. an increase in interest rates in the European Union

Which of the following will shift the aggregate demand curve to the right, ceteris paribus? a. a decrease in expected profits for firms b. an increase in net exports c. an increase in interest rates d. a decrease in disposable income

Which of the following would cause the equilibrium price of apple juice to decrease and the equilibrium quantity of apple juice to increase? A) an increase in the price of orange juice, a substitute for apple juice B) a decrease in the price of apples C) a decrease in the price of granola bars, a complement for apple juice D) an increase in the price of apples

Which of the following would encourage economic growth through increases in the capital stock? a. an increase in the profitability of new investment due to technological change b. all of the above c. an increase in household saving d. a decrease in the government deficit

Which of the following would not be considered a positive addition to household wealth? A) 1,000 shares of Microsoft stock B) a credit card balance C) the balance in your checking account D) the equity in one's home

You agree to lend $1,000 for one year at a nominal interest rate of 10%. You anticipate that inflation will be 4% over that year. If inflation is instead 3% over that year, which of the following is true? A) The real interest rate you earn on your money is lower than you expected. B) The purchasing power of the money that will be repaid to you will be lower than you expected. C) The real interest rate you earn on your money will be negative. D) The person who borrowed the $1,000 will be worse off as a result of the unanticipated decrease in inflation.

________ shows that if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good. A) Absolute advantage B) The production possibilities frontier model C) Comparative advantage D) The mixed market system

which of the following is most liquid? a. corporate bond b. dollar bill c. mutual fund share d. government bond

16) Examples of comparative advantage show how trade between two countries can make each better off. Compared to their pre-trade positions, trade makes both countries better off because in each country A) total welfare is greater. B) wages are higher. C) total consumption of goods is greater. D) total employment is greater.

11) When Tesla, a U.S. company, purchases Italian-made Pirelli tires for its automobiles, the purchase is A) both a U.S. and an Italian import. B) a U.S. export and an Italian import. C) a U.S. import and an Italian export. D) neither an export nor an import for either country.

15) Whenever a buyer and a seller agree to trade, both must believe they will be made better off A) unless the buyer resides in a different country than the seller. International trade may make the buyer or seller worse off. B) unless one party is richer than the other. C) whether the buyer and seller live in the same (or different) city or country. D) only if the buyer and seller live in countries with market economies.

Which of the following countries is not one of the top three exporting countries in the world? a. china b. germany c. south korea d. the united states

38) The recession of 2007-2009 made many consumers pessimistic about their future incomes. How does this increased pessimism affect the aggregate demand curve? A) This will move the economy down along a stationary aggregate demand curve. B) This will move the economy up along a stationary aggregate demand curve. C) This will shift the aggregate demand curve to the left. D) This will shift the aggregate demand curve to the right.

6) and Bob fall deeply in love, marry, and have eight children. Bob stops working for Mary in order to care for the children. What will be the effect on GDP? A) GDP will increase. B) GDP will not change. C) GDP will decrease. D) GDP may increase or may decrease depending on inflation.

9) What is one difference between stocks and bonds? A) Bonds are purchased at a bank, while stocks are purchased through the federal government. B) Stocks earn a higher rate of return than bonds. C) Stocks represent partial ownership in a firm, while bonds do not. D) Bonds earn a higher rate of return than stocks.

A change in which variable will change the market demand for a product? A) the price of the product B) the quantity of the product supplied C) expected future prices D) the number of firms in the market

A currency pegged at a value below the market equilibrium exchange rate is a. overvalued b. achieving purchasing power parity c. undervalued d. none of the above are correct

A lumberjack loses his job because timber cutting restrictions were imposed by the EPA to protect the spotted owl habitat. This lumberjack would be A) frictionally unemployed. B) seasonally unemployed. C) structurally unemployed. D) cyclically unemployed.

According to a recent study, "Stricter college alcohol policies, such as raising the price of alcohol, or banning alcohol on campus, decrease the number of students who use marijuana." On the basis of this information, how would you describe alcohol and marijuana? A) There is no relationship between the two goods. B) The two goods are substitutes in consumption. C) The two goods are complements in consumption. D) They are both luxury goods.

Allied soldiers in a World War II prisoner-of-war camp A) used cowrie shells as money. B) used gold as a fiat money. C) used cigarettes as money. D) used U.S. dollars as a commodity money.

An increase in the value of which of the following would not increase household wealth? a. 500 shares of Google stock. b. the balance in your savings account. c. a credit card balance. d. the equity in one's home.

As percentage of imports, the largest product category of U.S. imports from China is... a. machinery and transportation equipment. b. textiles, apparel, and footwear. c. electronic products. d. chemicals, minerals, and metals.

Buyers scrambled to secure stocks of Australian wool following a forecast of an 11 percent decline in wool production. What happens in the Australian wool market as a result of this announcement? A) The quantity of Australian wool demanded decreases in anticipation of lower quantities in the future. B) The quantity of Australian wool demanded increases in anticipation of higher prices in the future. C) The demand curve for Australian wool shifts to the right in anticipation of higher prices in the future. D) The demand curve for Australian wool shifts to the left in anticipation of higher prices in the future.

Changes in the price level A) decrease the level of aggregate supply in the long run. B) increase the level of aggregate supply in the long run only at very high levels of output. C) do not affect the level of aggregate supply in the long run. D) increase the level of aggregate supply in the long run.

China began pegging its currency, the yuan, to the dollar in 1994. Because the yuan has been ________ at the pegged exchange rate, the Chinese government ________ its reserves of dollars as the government purchased more ________ to maintain the pegged exchange rate. A) overvalued; increased; yuan B) overvalued; decreased; yuan C) undervalued; increased; dollars D) undervalued; decreased; yuan

China began pegging its currency, the yuan, to the dollar in 1994. Because the yuan was ________ at the pegged exchange rate, the Chinese government increased its reserves of ________ as the government purchased more ________ to maintain the pegged exchange rate. A) overvalued; yuan; yuan B) overvalued; dollars; dollars C) undervalued; dollars; dollars D) undervalued; yuan; yuan

Consumption expenditures do not include household purchases of A) durable goods. B) education. C) new houses. D) medical care.

Efficiency wages cause unemployment because A) firms pay wages that are below the market wage, causing the quantity of labor demanded to be greater than the quantity of labor supplied. B) firms pay wages that are above the market wage, causing the quantity of labor demanded to be greater than the quantity of labor supplied. C) firms pay wages that are above the market wage, causing the quantity of labor demanded to be less than the quantity of labor supplied. D) firms pay wages that are below the market wage, causing the quantity of labor demanded to be less than the quantity of labor supplied.

Farmers can plant either corn or soybeans in their fields. Which of the following would cause the supply of soybeans to increase? A) an increase in the demand for corn B) an increase in the price of soybean seeds C) a decrease in the price of corn D) an increase in the price of soybeans

Fast food restaurants produce a range of menu items such as hamburgers, chicken sandwiches, salads, and french fries. What fundamental economic question are they addressing by offering this range of items? A) Why produce a variety of menu items? B) How to produce goods that consumers want? C) What to produce? D) Who to produce the menu items for?

George Gnat subscribes to a monthly pest control service for his home. Last week, the owner of the service informed George that he will have to raise his monthly service fee because of increases in the price of gasoline used by his workers on their service trips. How is the market for pest control services affected by this? A) There is a decrease in the demand for pest control services. B) There is an increase in the supply of pest control services. C) There is a decrease in the supply of pest control services. D) There is a decrease in the quantity of pest control services supplied.

Governments sometimes erect barriers to trade other than tariffs and quotas. Which of the following is not an example of this type of trade barrier? a. a requirement that the U.S. government buy military uniforms only from U.S. manufacturers b. restrictions on imports for national security reasons c. a requirement that the employees of domestic firms that engage in foreign trade pay income taxes d. a requirement that imports meet health and safety requirements

Gross domestic product understates the total production of final goods and services because of the omission of A) inflation. B) intermediate goods. C) household production. D) exports.

How are the fundamental economic decisions determined in Cuba? A) These decisions are made by the country's elders who have had much experience in answering these questions. B) Individuals, firms, and the government interact in a market to make these economic decisions. C) The government decides because Cuba is a centrally planned economy D) The United Nations decides because Cuba is a developing economy

If a person withdraws $500 from his/her checking account and holds it as currency, then M1 will ________ and M2 will ________. A) increase; decrease B) decrease; increase C) not change; not change D) not change; increase

If consumers decide to be more frugal and save more out of their income, then this will cause A) a movement to the left along the supply curve for loanable funds. B) a shift in the supply curve for loanable funds to the left. C) a shift in the supply curve for loanable funds to the right. D) a movement to the right along the supply curve for loanable funds.

If inflation increases unexpectedly, then A) lenders gain and borrowers gain. B) neither borrowers nor lenders lose. C) lenders receive a lower real interest rate than they expected. D) borrowers pay a higher real interest rate than they expected.

If the price of beef jerky rises, then the substitution effect due to the price change will cause A) an increase in the quantity of beef jerky demanded. B) an increase in the demand for beef jerky. C) a decrease in the quantity of beef jerky demanded. D) an increase in the demand for hot sauce, a complement for beef jerky.

If the sales of high heel shoes continue to decline as more millennials switch to more comfortable athletic shoes, this will likely A) decrease the demand for athletic shoes, because athletic shoes are considered inferior goods and high heel shoes are considered normal goods B) decrease the demand for athletic shoes, because athletic shoes are considered normal goods and high heel shoes are considered inferior goods C) increase the demand for athletic shoes, because athletic shoes and high heel shoes are considered substitutes. D) increase the demand for athletic shoes, because athletic shoes and high heel shoes are considered complements.

If you want to earn a real interest rate of 4% on money you lend and you expect that inflation will be 4%, what nominal rate of interest should you charge? A) 4% B) -4% C) 8% D) 0%

In April, market analysts predict that the price of titanium will fall in May. What happens in the titanium market in April, holding everything else constant? A) The demand curve shifts to the right. B) The quantity demanded and the quantity supplied increase. C) The supply curve shifts to the right. D) The supply curve shifts to the left.

In a market economy, who decides what goods and services will be produced? A) only consumers B) only the producers C) consumers and producers D) the government

In recent years the cost of producing wines in the U.S. has increased largely due to rising rents for vineyards. At the same time, more and more Americans prefer wine over beer. Which of the following best explains the effect of these events in the wine market? A) The supply curve has shifted to the left and the demand curve has shifted to the right. As a result there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price. B) Both the supply and demand curves have shifted to the right. As a result, there has been an increase in both the equilibrium price and the equilibrium quantity. C) The supply curve has shifted to the left and the demand curve has shifted to the right. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity. D) Both the supply and demand curves have shifted to the right. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity.

In the circular flow model, households A) sell goods and services in the input market. B) hire resources sold by firms in the factor market. C) spend earnings from resource sales on goods and services in the product market. D) and firms spend earnings from resource sales on goods and services in the factor market.

Inflation that is ________ than what is expected benefits ________ and hurts ________. A) greater; lenders; no one B) less; lenders; borrowers C) greater; lenders; borrowers D) less; borrowers; lenders

Investment, as defined by economists, would include the purchase of a A) government bond. B) share of stock in ExxonMobil. C) computer by an accounting firm. D) corporate bond.

Investment, as defined by economists, would include the purchase of a A) government bond. B) corporate bond. C) computer by an accounting firm. D) share of stock in ExxonMobil.

Jack just told his boss that he thinks his boss is an idiot. It is likely that Jack will be experiencing ________ unemployment in the near future. A) cyclical B) permanent C) frictional D) structural

Mike has been unemployed for over a year. He hasn't looked for a job in the last three months, but he's just started looking for work again. Because Mike started looking for a new job A) the working-age population increased. B) the unemployment rate decreased. C) the unemployment rate increased. D) the labor force participation rate decreased.

Since the end of World War II, each president running for reelection when the economy was growing has won, and each president running for reelection when the economy was contracting has lost. These presidents were experiencing the political effects of A) inflation. B) depreciation. C) the business cycle. D) the underground economy.

Suppose that homemakers are included as employed in the labor force statistics, rather than being counted as out of the labor force. This would A) decrease the number of persons in the labor force. B) increase the measured unemployment rate. C) increase the measured labor force participation rate. D) decrease the number of persons in the working-age population.

Suppose the government launches a successful advertising campaign that convinces workers with high school degrees to quit their jobs and become full time college students. This would cause A) the number of discouraged workers to increase. B) the unemployment rate to decrease. C) the labor force participation rate to decrease. D) no change in the unemployment rate.

Suppose the labor force stays constant, and the working-age population stays constant, but a greater number of persons who were unemployed become employed. The labor force participation rate will A) increase. B) decrease. C) remain constant. D) not change in a way that can be predicted.

Textbook examples of trade between two nations are simplified in order to show how two nations both benefit from trade. These examples are misleading because A) they do not account for the reduction in wages that occurs in both countries as a result of trade. B) in the real world, rich countries can take advantage of poor countries. C) some individuals in both countries may be made worse off because of trade. D) trade restrictions are likely to be imposed as trade grows over time.

The Congressional Budget Office reported that federal budget deficits in the United States were likely to increase during the next decade, and due to these higher deficits, "the nation's capital stock ultimately would be smaller, and productivity and income would be lower than would be the case if the debt was smaller." This higher budget deficit would be represented graphically by A) a movement to the left along the supply curve for loanable funds. B) a movement to the right along the supply curve for loanable funds. C) a shift in the supply curve for loanable funds to the left. D) a shift in the supply curve for loanable funds to the right.

The cost to firms of changing prices A) is small even when there is rapid inflation. B) does not exist if inflation is perfectly anticipated. C) is called a menu cost. D) all of the above

The currency adopted by most countries in Western Europe is referred to as the A) Eurodollar. B) pound. C) euro. D) yen.

The demand for loanable funds is downward sloping because the ________ the interest rate, the ________ the number of profitable investment projects a firm can undertake, and the ________ the quantity demanded of loanable funds. A) lower; smaller; greater B) greater; smaller; greater C) lower; greater; greater D) greater; greater; greater

The law of demand implies, holding everything else constant, that as the price of yogurt A) decreases, the demand for yogurt will increase. B) increases, the demand for yogurt will increase. C) increases, the quantity of yogurt demanded will decrease. D) decreases, the quantity of yogurt demanded will decrease.

The major shortcoming of a barter economy is A) that goods and services are not traded. B) that money loses value from inflation. C) the requirement of a double coincidence of wants. D) the requirement of specialization and exchange.

The purchase of a new house is included in A) government purchases. B) consumption expenditures. C) investment expenditures. D) net exports.

The quantity theory of money implies that the price level will be stable (no inflation or deflation) when the growth rate of the money supply equals A) 0. B) the growth rate of the velocity of money. C) the growth rate of real GDP. D) the growth rate of the price level.

The substitution effect of a price change refers to A) the shift of a demand curve when the price of a substitute good changes. B) the shift in the demand curve due to a change in purchasing power brought about by the price change. C) the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes. D) the movement along the demand curve due to a change in purchasing power brought about by the price change.

The supply curve for umbrellas A) is downward sloping. B) shows the relationship between the quantity of umbrellas firms are willing and able to supply and the quantity of umbrellas consumers are willing and able to purchase. C) shows the relationship between the price of umbrellas and the quantity of umbrellas supplied. D) shows the supply of umbrellas consumers are willing and able to buy at any given price.

To reduce the bias in the consumer price index, the Bureau of Labor Statistics A) incorporates substitutions by consumers when prices of specific products rise rapidly. B) incorporates substitutions by consumers when prices of specific products fall rapidly. C) updates the market basket every two years, rather than every 10 years. D) updates the market basket every 10 years, rather than every two years.

Using the quantity equation, if the velocity of money grows at 5 percent, the money supply grows at 10 percent, and real GDP grows at 4 percent, then the inflation rate will be A) 6 percent. B) 19 percent. C) 11 percent. D) 15 percent.

When the value of a currency is determined ________, the exchange rate system is defined as a floating exchange rate system. a. by its issuing government b. mostly by supply and demand, but with occasional government intervention c. only by supply and demand d. by its issuing government, with occasional readjustments in value

Which of the following best describes an assumption economists make about human behavior? A) They assume that individuals act rationally all the time in all circumstances. B) They assume that individuals act randomly C) They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time. D) They assume that people take into account the question of fairness in all decisions they make.

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to overstate the true extent of joblessness? A) inflation B) discouraged workers C) unemployed persons falsely report themselves to be actively looking for a job D) counting people as employed who are working part time, although they would prefer to be working full time

Which of the following explains why many European countries have unemployment rates that are higher than in the United States? A) Firms in European countries offer employees higher wages and higher benefits than do firms in the United States. B) The minimum wage in Europe is lower than it is in the United States. C) European countries offer higher unemployment benefits than the United States. D) Technological change occurs at a faster rate in Europe, so structural unemployment is higher in Europe.

Which of the following goods is directly counted in GDP? A) the plastic bags that Subway purchases to wrap its sandwiches B) the bread that Subway purchases for its sandwiches C) a 12-inch Subway sandwich purchased by a student D) the lettuce that Subway purchases for its sandwiches

Which of the following is a factor of production? A) $500 in cash B) a sofa produced by a furniture manufacturer C) the janitor at the local elementary school D) 20 shares of Microsoft stock

Which of the following is a microeconomic question? A) What determines the level of U.S. imports and exports? B) When will the government better secure the borders? C) How does Fiat decide on the price of the 500 Pop model? D) Why hasn't the federal government raised the minimum wage?

Which of the following is a problem inherent in centrally planned economies? A) There is too much production of low-cost, high-quality goods and services. B) There are no problems and everyone, including consumers, is satisfied. C) Production managers are more concerned with satisfying government's orders than with satisfying consumer wants. D) Unemployment is too high

Which of the following is an example of an economic trade-off that a firm has to make? A) whether or not consumers will buy its products B) deciding what profit margin it desires for its products C) whether it is cheaper to produce with more machines or with more workers D) deciding why consumers want its products

Which of the following is considered a durable good? A) food B) clothing C) a washing machine D) medical care

Which of the following is likely to increase measured GDP? A) A greater number of women decide to stay at home and provide day care for their children under age 5. B) Tax rates increase and more people attempt to underreport their income for tax purposes. C) Marijuana becomes legal to grow and sell. D) More people decide to do their own lawn maintenance and give up using a professional service.

Which of the following is not a consequence of hyperinflation? A) The price level grows in excess of hundreds of percentage points per year. B) It causes an economy to suffer slow growth. C) Money's function as a medium of exchange is enhanced. D) Money loses value so rapidly that firms and individuals stop holding it.

Which of the following is not a function of the Federal Reserve System, or the "Fed"? A) acting as a banker's bank B) insuring deposits in the banking system C) performing check clearing services D) acting as a lender of last resort

Which of the following is not an advantage to a country of choosing to fix its exchange rate against a major currency, rather than choosing a floating exchange rate? A) Pegging reduces the uncertainty caused by currency fluctuations and thereby simplifies business planning. B) Pegging insures that interest payments stemming from foreign loans do not fluctuate with the value of the currency. C) Pegging allows the country more flexibility in conducting monetary policy. D) Pegging helps avoid inflation in imported goods caused by currency depreciation for countries with significant levels of imports.

Which of the following is not an example of a transfer payment? A) social security payments to disabled persons B) unemployment insurance payments C) health insurance payments to an army private D) social security payments to retirees

Which of the following is the best example of a tariff? a. a limit on the quantity of residential air conditioners that can be imported from a foreign country b. a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment c. a $150 fee imposed on all imported residential air conditioners d. a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers

Which of the following price indices comes closest to measuring the cost of living of the typical household? A) GDP deflator B) household price index C) consumer price index D) producer price index

Which of the following will increase investment spending in the economy, holding everything else constant? a. an increase in transfer payments b. an increase in the budget deficit c. an increase in the federal government surplus d. an increase in consumer dissavings

Which of the following would be a consequence of substitution bias in the CPI? A) Social Security payments would not adequately compensate retired workers for inflation. B) Judges would award child support payments that would not adequately keep up with the true cost of inflation. C) Businesses would overcompensate employees for inflation when giving cost of living raises. D) The inflation rate based on the CPI would underestimate the true level of inflation.

Which of the following would be directly counted in GDP in 2022? A) kitchen cabinets built in 1887, extracted from the 1887 home, and installed in a brand new country-style home B) kitchen cabinets built in 1887, extracted from the 1887 home, and installed in a farm house built in 1950 C) kitchen cabinets purchased from Home Depot in 2022 to be installed in a house built in 1997 D) none of the above

Workers and firms both expect that prices will be 2.5% higher next year than they are this year. As a result A) aggregate demand will increase by 2.5%. B) workers will be willing to take lower wages next year, but not lower than a 2.5 percent decrease. C) the short-run aggregate supply curve will shift to the left as wages increase. D) the purchasing power of wages will rise if wages increase by 2.5%.

Workers and firms both expect that prices will be 2.5% higher next year than they are this year. As a result a. the purchasing power of wages will rise if wages increase by 2.5%. b. workers will be willing to take lower wages next year, but not lower than a 2.5 percent decrease. c. the short-run aggregate supply curve will shift to the left as wages increase. d. aggregate demand will increase by 2.5%.

You earned $30,000 in 2015, and your salary rose to $80,000 in 2022. If the CPI rose from 82 to 202 between 2015 and 2022, which of the following is true? A) The purchasing power of your salary remained constant between 2015 and 2022. B) There was deflation between 2015 and 2022. C) The purchasing power of your salary fell between 2015 and 2022. D) The purchasing power of your salary increased between 2015 and 2022.

You're traveling in Ireland and are thinking about buying a new digital camera. You've decided you'd be willing to pay $125 for a new camera, but cameras in Ireland are all priced in euros. If the camera you're looking at costs 115 euros, under which of the following exchange rates would you be willing to purchase the camera? (Assume no taxes or duties are associated with the purchase.) A) 0.56 euros per dollar B) 0.89 euros per dollar C) 0.92 euros per dollar D) You would purchase the new camera at any of the above exchange rates.

You're traveling in Japan and are thinking about buying a new kimono. You've decided you'd be willing to pay $175 for a new kimono, but kimonos in Japan are all priced in yen. If the exchange rate is 89 yen per dollar, what is the highest price in yen you'd be willing to pay for a kimono? (Assume no taxes or duties are associated with the purchase.) a. 1.97 yen b. 19,425 yen c. 15,575 yen d. 330.75 yen

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? A) $75 B) $125 C) $200 D) $300

20) Which of the following is an example of spending on factors of production in the circular flow model? A) Yvette pays $50 to join a softball league. B) Laurence rents a car to drive to a wedding in San Diego. C) Tuan purchases a cappuccino at the student union. D) The "Lucky Ducky" casino buys a new craps table for the casino floor.

24) If the value of the dollar declined in the second half of 2021, this would have resulted in ________ dollar prices for goods imported into the United States and ________ prices in foreign currencies for U.S. goods exported to other countries. A) higher; higher B) lower; lower C) lower; higher D) higher; lower

27) Suppose that when the price of ice cream increases, Liza decreases her purchase of hot fudge. To Liza, A) ice cream and hot fudge are normal goods. B) ice cream is a normal good and hot fudge is an inferior good. C) ice cream and hot fudge and substitutes. D) ice cream and hot fudge are complements.

40) In 2005, Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico. This subsequently drove up natural gas, gasoline, and heating oil prices. As a result, this should A) shift the short-run aggregate supply curve to the right. B) move the economy up along a stationary short-run aggregate supply curve. C) move the economy down along a stationary short-run aggregate supply curve. D) shift the short-run aggregate supply curve to the left.

A person's wealth A) is a measure of how much money the person has. B) is a measure of only his or her current and expected future income. C) All of the above are correct. D) equals the value of the person's assets minus his or her liabilities.

An advantage of the household survey over the establishment survey of the labor market is that the household survey A) includes the number of discouraged workers. B) is based on actual payrolls, rather than on unverified answers. C) omits persons employed at newly opened firms. D) includes the number of self-employed persons.

An increase in the demand for loanable funds will occur if there is A) an increase in the real interest rate. B) a decrease in the real interest rate. C) an increase in the nominal interest rate accompanied by an equal increase in inflation. D) an increase in expected profits from firm investment projects.

An increase in the price level results in a(n) ________ in the quantity of real GDP demanded because ________. a. increase; a higher price level increases consumption, investment, and net exports b. increase; a higher price level reduces consumption, investment, and net exports c. decrease; a higher price level increases consumption, investment, and net exports d. decrease; a higher price level reduces consumption, investment, and net exports

An office supply store sells a ream of printer paper at a fixed price of $4.50. Which of the following is a term used by economists to describe the money received from the sale of an additional ream of paper? A) pure profit B) marginal costs C) gross earnings D) marginal revenue

Assume that airline tickets are a normal good. Prices of commercial airline tickets have fallen in recent months. Over this same period, the price of jet fuel has risen and consumer incomes have fallen. Which of the following best explains the falling prices of airline tickets? A) The supply curve for airline tickets has shifted to the left more than the demand curve has shifted to the left. B) The demand curve and the supply curve for airline tickets have both shifted to the right. C) The supply curve for airline tickets has shifted to the left while the demand curve for airline tickets has shifted to the right. D) The demand curve for airline tickets has shifted to the left more than the supply curve has shifted to the left.

Banks keep ________ of checking deposits as reserves because on a typical day withdrawals ________ deposits. A) exactly 100%; are much greater than B) exactly 100%; are about the same as C) more than 100%; are much greater than D) less than 100%; are about the same as

By offering training to workers whose firms laid them off because of competition from foreign firms, the federal government is attempting to reduce A) seasonal unemployment. B) frictional unemployment. C) cyclical unemployment. D) structural unemployment.

Consider the following statements: 1) Consumers rent more kayaks from a vendor that rents kayaks at a lower price than other rival kayak vendors along Waikiki beach. 2)Department stores take steps to increase security since they believe it is more costly to allow shoplifting than to install expensive security monitoring equipment. 3) Farmers produce more cotton when its selling price falls. Which of the above statements demonstrates that economic agents respond to incentives? A) a only B) b only C) c only D) a and b

Currency traders expect the value of the dollar to fall. What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market? a. Demand for dollars will increase, and supply of dollars will decrease. b. Demand for dollars will decrease, and supply of dollars will decrease. c. Demand for dollars will increase, and supply of dollars will increase. d. Demand for dollars will decrease, and supply of dollars will increase.

Discouraged workers are classified by the BLS as A) employed. B) unemployed. C) part-time employees. D) not in the labor force.

During the Chinese experience with pegging the yuan to the dollar, the yuan was ________. As a result, there was a ________ of dollars on the market, and the Chinese government had to purchase dollars to maintain the peg. A) overvalued; surplus B) overvalued; shortage C) undervalued; shortage D) undervalued; surplus

Financial securities that represent promises to repay a fixed amount of funds are known as A) insurance premiums. B) stocks. C) pension funds. D) bonds.

GDP is not a perfect measure of well-being because A) GDP is adjusted for increases in drug addiction. B) the value of leisure is included in GDP. C) GDP is adjusted for changes in crime rates. D) GDP is not adjusted for pollution.

Gross domestic product understates the total production of final goods and services because of the omission of A) inflation. B) exports. C) intermediate goods. D) the underground economy.

Holding everything else constant, an increase in the price of raisins will result in A) a decrease in the supply of raisins. B) an increase in the demand for raisins. C) an increase in the quantity of raisins demanded. D) a decrease in the quantity of raisins demanded.

How does an increase in a country's exchange rate affect its trade balance? a. An increase in the exchange rate reduces imports, raises exports, and reduces the trade balance. b. An increase in the exchange rate reduces imports, raises exports, and increases the trade balance. c. An increase in the exchange rate raises imports, reduces exports, and increases the trade balance. d. An increase in the exchange rate raises imports, reduces exports, and reduces the trade balance.

How does the increasing use of streaming video affect the market for DVDs? A) The demand curve for DVDs shifts to the right. B) The quantity of DVDs demanded increases. C) The quantity of DVDs demanded decreases. D) The demand curve for DVDs shifts to the left.

If a decrease in income leads to an increase in the demand for macaroni, then macaroni is A) a necessity. B) a normal good. C) a neutral good. D) an inferior good.

If in the market for bananas the supply curve has shifted to the right, then A) the quantity of bananas supplied has increased. B) the supply of bananas has decreases. C) the quantity of bananas supplied has decreased. D) the supply of bananas increased.

If inflation is completely anticipated, A) lenders lose in the economy. B) firms lose because they incur menu costs. C) no one loses in the economy. D) borrowers lose in the economy.

If the economy receives an influx of new workers from immigration, A) we will move up along the long-run aggregate supply curve. B) we will move down along the long-run aggregate supply curve. C) the long-run aggregate supply curve will shift to the left. D) the long-run aggregate supply curve will shift to the right.

If the exchange rate changes from $1.45 = 1 euro to $1.37 = 1 euro, then a. both the euro and dollar have appreciated. b. the euro has appreciated and the dollar has depreciated. c. both the euro and dollar have depreciated. d. the euro has depreciated and the dollar has appreciated.

If, in response to a decrease in the price of coffee, the quantity of coffee demanded increases, then economists would describe this as A) a change in consumer income. B) an increase in consumers' taste for coffee. C) an increase in demand. D) an increase in quantity demanded.

In a closed economy, public saving is equal to which of the following? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers) A) Y - C - T + TR B) Y - C - T C) Y - G - T D) T - G - TR

In economics, money is defined as A) the total value of one's assets in current prices. B) the total amount of salary, interest, and rental income earned during a year. C) the total value of one's assets minus the total value of one's debts, in current prices. D) any asset people generally accept in exchange for goods and services.

In the second half of 2019, automobile sales in the United States were lower than they were in the second half of 2018. The decrease in auto sales impacts GDP because new automobiles are counted as ________ when purchased by households and ________ when purchased by businesses. A) investment; consumption B) durable goods; nondurable goods C) nondurable goods; durable goods D) consumption; investment

Lower personal income taxes a. decrease disposable income. b. decrease aggregate demand. c. increase transfer payments. d. increase aggregate demand.

M1 does not include A) credit card balances. B) checking account deposits in banks. C) currency in circulation. D) coins held by households and firms.

Nominal GDP will increase A) only if the quantity of final goods and services produced rises. B) only if the price level rises. C) only if the price level falls. D) if either the price level or the quantity of goods and services produced rises.

One would speak of a movement along a supply curve for a good, rather than a change in supply, if A) the cost of producing the good changes. B) prices of substitutes in production change. C) supplier expectations about future prices change. D) the price of the good changes.

Over the past several decades there has been rapid growth in international trade. This growth has been due to all but one of the following factors. Which factor has not contributed to the growth of international trade? A) the spread of reliable communications B) favorable changes in government policies C) a reduction in shipping costs D) an increase in the tariffs charged on many goods

Refer to Figure 3-5. At a price of $5, A) there is a scarcity of 4 units. B) there is a surplus of 4 units. C) there is a shortage of 6 units. D) there is a shortage of 4 units.

Suppose in 2020, you purchase a house built in 2014. Which of the following would be included in the gross domestic product for 2020? A) the value of the house in 2020 minus depreciation B) the value of the house in 2014 C) the value of the house in 2020 D) the value of the services of the real estate agent

The "new product bias" in the consumer price index refers to the idea that A) consumers prefer new goods, even if they are worse in quality than old goods, and this causes the CPI to underestimate the cost to consumers. B) consumers switch to new goods when the prices of old goods increase, and the CPI overestimates the cost to consumers. C) consumers switch to old goods when the prices of new goods increase, and the CPI underestimates the cost to consumers. D) new products' prices often decrease after their initial introduction, and the CPI is adjusted infrequently and overestimates the cost to consumers.

The Bureau of Labor Statistics would categorize a retiree who is not working as A) a discouraged worker. B) employed. C) unemployed. D) out of the labor force.

The CPI is also referred to as A) the GDP deflator. B) the inflation-consumption index. C) the producer price index. D) the cost-of-living index.

The Federal Reserve's narrowest definition of the money supply is A) M2. B) M3. C) M0. D) M1.

The gold standard is an example of a. a floating exchange rate system. b. a managed float exchange rate system. c. a flexible exchange rate system. d. a fixed exchange rate system.

The real interest rate equals the nominal interest rate ________ the inflation rate. A) plus B) divided by C) times D) minus

The short-run aggregate supply curve has a(n) ________ slope because as prices of ________ rise, prices of ________ rise more slowly. a. positive; inputs; final goods and services b. infinite; final goods and services; inputs c. infinite; inputs; final goods and services d. positive; final goods and services; inputs

The statement, "My iPhone is worth $700" represents money's function as A) a store of value. B) a medium of exchange. C) a standard of deferred payment. D) a unit of account.

The substitution bias in the consumer price index refers to the idea that consumers ________ the quantity of products they buy in response to price, and the CPI does not reflect this and ________ the cost of the market basket. A) do not change; overestimates B) change; underestimates C) do not change; underestimates D) change; overestimates

To compete in the automobile market, Tesla must make many strategic decisions such as whether to introduce a new car model like the Model 3, how to sell and service its cars, and where to advertise. At Tesla's Fremont, California plant, managers must decide on the monthly production quantities of their S, X, and 3 models. In making this decision, the managers A) will choose to only produce the quantity of S, X , and 3 models where marginal cost equals zero. B) will always decide on production quantities in which revenues are maximized. C) face no trade-off because the Fremont plant only produces these three models of the many Tesla models produced worldwide. D) face a trade-off, because producing more of one model means producing less of the others.

Under the gold standard, the government must have enough gold to back up any A) foreign currency deposits in its central bank. B) change in its currency's exchange rate. C) increase in money demand. D) increase in the money supply.

Under which of the following circumstances would the government be running a deficit? A) G = $5 trillion T = $7 trillion TR = $1 trillion B) G = $7 trillion T = $7 trillion TR = $0 C) G = $7 trillion T = $10 trillion TR = $3 trillion D) G = $5 trillion T = $5 trillion TR = $1 trillion

What is the largest component of spending in the United States? A) net investment spending B) government purchases C) investment spending D) consumption spending

When Sophie, a French citizen, purchases a Dell computer in Paris, France that was produced in Texas, the purchase is... a. both a U.S. and a French import. b. a U.S. import and a French export. c. neither an export nor an import for either country. d. a U.S. export and a French import.

When the government runs a budget deficit, we would expect to see that A) public saving is positive. B) private saving will fall. C) G + TR < T. D) investment will fall.

When the market value of the dollar rises relative to other currencies around the world, we say that a. the demand for dollars has increased. b. the dollar has depreciated. c. the supply of dollars has increased. d. the dollar has appreciated.

Which of the following best describes an assumption economists make about human behavior? A) They assume that people take into account the question of fairness in all decisions they make. B) They assume that individuals act rationally all the time in all circumstances. C) They assume that individuals act randomly. D) They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time.

Which of the following is a factor of production? A) 20 shares of Microsoft stock B) a sofa produced by a furniture manufacturer C) $500 in cash D) the janitor at the local elementary school

Which of the following is not an example of inflation causing a redistribution of income because the inflation was unanticipated? A) A bank collects a lower amount of interest from a loan because inflation was under-predicted. B) A firm signs a 3-year contract with a union based on a 2 percent anticipated rate of inflation per year, and the actual rate of inflation ends up being 7 percent per year. C) Firms have to hire an extra worker to change prices in its store because of inflation. D) A worker receives a raise in salary that is less than the rate of inflation, because management under-predicted inflation.

Which of the following is the best example of a quota? a. a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers b. a $150 fee imposed on all imported residential air conditioners c. a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment d. a limit on the quantity of residential air conditioners that can be imported from a foreign country

Which of the following is true about the consumer price index? A) It filters out the part of price increases that occurs because of quality improvements in products. B) It accounts for people switching to goods whose prices have fallen. C) It frequently updates the price changes of new products added to the market basket, as these have a tendency to fall. D) It assumes that consumers purchase the same amount of each product in the market basket each month.

Which of the following would cause the dollar to appreciate? a. a decrease in the demand for dollars b. an increase in the supply of dollars c. an increase in the demand for imports from foreign countries d. an increase in the demand for dollars

Which of the following would cause the equilibrium price of ketchup to increase and the equilibrium quantity of ketchup to decrease? A) an increase in the price of french fries, a complement for ketchup B) a decrease in the price of tomatoes C) an increase in the price of mustard, a substitute for ketchup D) an increase in the price of tomatoes

Which of the following would cause the short-run aggregate supply curve to shift to the left? a. a technological advance b. a decrease in interest rates c. an increase in the price level d. an increase in inflation expectations

Which of the following would shift a nation's production possibilities frontier inward? A) an increase in the unemployment rate B) discovering a cheap way to convert sunshine into electricity C) producing more capital equipment D) a law requiring workers to retire at age 50

Your grandfather tells you that he earned $7,000/year in his first job in 1961. You earn $35,000/year in your first job in 2022. You know that average prices have risen steadily since 1961. You earn A) more than 5 times as much as your grandfather in terms of real income. B) 5 times as much as your grandfather in terms of real income. C) less than 5 times as much as your grandfather in terms of nominal income. D) less than 5 times as much as your grandfather in terms of real income.

in a closed economy, private saving is equal to which of the following? a. y-c-t b. y-g-t+tr c. y-g-t d. y+tr-c-t

one difference between stocks and bonds is that A) stocks are usually issued in electronic form, while bonds are usually issued in paper form. B) stocks are financial securities, while bonds are labor market securities. C) stocks represent ownership in companies, while bonds represent ownership in banks. D) stocks do not involve a promise to repay a purchaser of the stock, while bonds represent a promise to repay the purchase price of the bond.

negative $1 trillion (a deficit of $1 trillion)

Hyperinflations occur because governments want to spend more than they raise in taxes, and they pay for the extra purchases by printing money or selling large quantities of government bonds to the central bank. True False

true

In the United States, businesses are not required to accept cash as payment for goods or services. true false

true

The quantity equation becomes the basis for a theory when we assume that velocity of money is constant. True False

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