Accounting
Anthropology
Archaeology
Art History
Banking
Biology & Life Science
Business
Business Communication
Business Development
Business Ethics
Business Law
Chemistry
Communication
Computer Science
Counseling
Criminal Law
Curriculum & Instruction
Design
Earth Science
Economic
Education
Engineering
Finance
History & Theory
Humanities
Human Resource
International Business
Investments & Securities
Journalism
Law
Management
Marketing
Medicine
Medicine & Health Science
Nursing
Philosophy
Physic
Psychology
Real Estate
Science
Social Science
Sociology
Special Education
Speech
Visual Arts
Economic
Q:
A good goes through three stages of production. The value added at stage 1 is $3; the value added at stage 2 is $5; the value added at stage 3 is $2. What is the retail price of the good?A) $2B) $10C) $20D) Cannot be determined based on the information given.
Q:
Throughout U.S. history, inflation has been highestA) right after a recession. B) right before a recession.C) during periods of war. D) during Republican administrations.
Q:
If the U.S. economy enters a recession, theA) economy experiences full employment.B) unemployment rate tends to increase. C) labor force tends to increase.D) entire population will be partially unemployed.
Q:
Population growth is more likely to contribute to economic growth whenA) economic freedom is present.B) capital accumulation is limited. C) technological progress is limited.D) the labor force participation rate does not increase.
Q:
Refer to the above figure. Unexpected contractionary monetary policy has caused the aggregate demand curve to shift to AD2. In the long run,A) real GDP will be Y1, and the price level will be P1. B) real GDP will be Y2, and the price level will be P2.C) real GDP will be between Y1 and Y2, and the price level will be above P1. D) real GDP will be between Y1, and the price level will be below P2.
Q:
Why is it more difficult for the Fed to control the money supply today than it was fifty years ago?
Q:
According to the text, the actual M2 multiplier in the United States today is A) about 5. B) between 1.0 and 2.0.C) negative. D) over 10.
Q:
The M2 measure of money is suggested by the approach to measuring money.A) investment B) liquidity C) transactions D) security
Q:
Which of the following statements has usually held true about the relationship between the trade deficits and government budget deficits?A) There is no relationship between trade deficits and budget deficits.B) There is a positive relationship between trade deficits and budget deficits. C) There is a negative relationship between trade deficits and budget deficits. D) A relationship exists only when there is a balanced budget.
Q:
Three candidates for political office disagree over the benefits of enlarging the federal budget deficit. Candidate C says the stimulation package is needed to increase employment and real GDP; Candidate D says it will only cause higher prices; and Candidate F says it will have no effect on either real GDP or the price level. How do the three candidates differ with respect to the condition of the economy and the effects of fiscal policy?
A) Candidate C thinks the simple Keynesian model is applicable, while D thinks the expansionary policy will fully crowd out private investment. F believes the economy is experiencing a recessionary gap.
B) Candidate C thinks the simple Keynesian model is applicable; D thinks the short -run aggregate supply curve is horizontal; and F thinks the expansionary policy will generate lower interest rates.
C) Candidate C thinks the economy is below the full -employment real GDP and that the short-run aggregate supply curve is horizontal. Candidate D believes the economy is at full employment. Candidate F believes the expansionary policy will result only in direct fiscal offsets.
D) Candidate C thinks the short-run aggregate supply curve is upward sloping; D thinks interest rates will rise; and F thinks the economy is at full employment.
Q:
Refer to the above figure. Which variable is autonomous with respect to real GDP?A) Real savingB) Real investment spendingC) Real consumption spendingD) The sum of real consumption and real saving
Q:
Suppose that when disposable income decreases by $2,000, consumption spending increases by $1500. Given this information, we know that the marginal propensity to consume (MPC) isA) .25. B) .75.C) $1,000/$750 = 1.33. D) 1/.25 = 4.
Q:
The Keynesian short-run aggregate supply (SRAS) curve isA) upward sloping. B) vertical.C) horizontal. D) downward sloping.
Q:
What information is provided by the aggregate demand curve?
Q:
Innovation isA) always financed by the government.B) an invention financed by the sale of bonds.C) the transformation of an invention into something useful. D) an invention financed by the sale of stock certificates.
Q:
Between two years, GDP at constant prices increased by 5 percent while GDP at current prices increased by 8 percent. Based on this information, the price levelA) increased by 3 percent. B) increased by 13 percent. C) decreased by 3 percent. D) decreased by 13 percent.
Q:
A farmer buys seed for 15 cents that is used to grow wheat. The farmer sells the wheat to the miller for 30 cents, who makes flour. The flour is sold to the baker for 60 cents and the baker makes bread, which is sold to the grocer for 90 cents. The grocer sells the bread for $1.25. What is the value added for the grocer?A) 15 cents B) 30 cents C) 35 centsD) $1.25
Q:
Which of the following is NOT a criticism of the CPI?A) The CPI does not account for the way consumer substitute less expensive items for higher priced items.B) The CPI ignores changes in consumption patterns that occur between years in which it revises the index.C) The CPI ignores successful new products until long after they have been introduced.D) The CPI ignores the changes of prices of goods that firms produce and sell to each other.
Q:
When Joe, who is among the highest-paid workers in a field in which there are numerous job openings across the nation, recently became unemployed, his opportunity cost of job search isA) average, so the length of his period of unemployment is likely to be long.B) relatively high, so the length of his period of unemployment is likely to be short. C) relatively low, so the length of his period of unemployment is likely to be long. D) relatively high, so the length of his period of unemployment is likely to be long.
Q:
Which of the following statements is true about the relationship between high birthrates and real GDP growth?
A) High birthrates in countries with little economic freedom will lead to higher labor force participation rates that in turn lead to higher growth of real GDP.
B) High birthrates reduce per capita incomes, and a lack of economic freedom inhibits real
GDP growth.
C) There is no relationship between birthrates and real GDP growth.
D) The influence that birthrates have on real GDP growth is the same in countries whether or not economic freedom exits.
Q:
Refer to the above figure. Unexpected contractionary monetary policy has caused the aggregate demand curve to shift to AD2. In the short run,A) real GDP will be Y1, and the price level will be P1. B) real GDP will be Y2, and the price level will be P2.C) real GDP will be between Y1 and Y2, and the price level will be above P1. D) real GDP will be between Y1, and the price level will be below P2.
Q:
As global financial markets become more intertwined, the Fed hasA) less control over monetary policy. B) more control over monetary policy.C) more control over fiscal policy. D) more control over fiscal policy.
Q:
According to the text, the actual M1 multiplier in the U.S. today isA) between 0 and 1. B) between 1.5 and 2.0.C) negative. D) over 10.
Q:
The M1 measure of money is suggested by the approach to measuring money.A) investment B) liquidity C) transactions D) security
Q:
Are federal budget deficits related to trade deficits?
A) Yes. If U.S. consumers buy too many imported goods they donʹt have money to save and a budget deficit results.
B) No. The budget deficit is entirely a domestic matter while the trade deficit only affects U.S. citizens who travel abroad.
C) Yes. As deficit spending goes up, it is likely government borrowing will, too. Then foreign residents who lend funds to the U.S. government have less to spend on our goods, so U.S. exports will fall.
D) Yes, but only if the quality of U.S. goods and services is deteriorating.
Q:
Expansionary fiscal policy falls short of its goal. Some economists claim it is due to indirect crowding out. What evidence would be consistent with this claim?A) An increase in consumer spending occurred. B) The interest rate increased.C) Saving decreased.D) The price level decreased.
Q:
The investment function intersects the saving schedule at an interest rate of 8 percent and a level of investment of $1.2 trillion a year. If the consumption curve intersects the 45 -degree reference line at $3 trillion, thenA) the C + I curve will intersect the 45-degree reference line at $1.2 trillion. B) the C + I curve will intersect the 45-degree line at $1.8 trillion.C) the equilibrium level of real GDP is $1.8 trillion.D) the equilibrium level of real GDP is $4.2 trillion.
Q:
Suppose that when disposable income increases by $1,000, consumption spending increases by $750. Given this information, we know that the marginal propensity to consume (MPC) isA) .25. B) .75.C) $1,000/$750 = 1.33. D) 1/.25 = 4.
Q:
If a shift in aggregate demand only affects real Gross Domestic Product (GDP), then the short-run aggregate supply (SRAS) curve must beA) vertical. B) upward sloping.C) horizontal. D) downward sloping.
Q:
What is the interest rate effect of an increase in the price level?
Q:
Which of the following is most likely to reduce the rate of economic growth?A) a high domestic saving rate B) investment in human capitalC) subsidies for R&D activities D) slow technological progress
Q:
When GDP and other national income accounts are measured in nominal values, then theyA) are measured in current market prices.B) are measured in real values.C) are not comparable because they are not in real terms.D) should be converted into money values before comparing them over time.
Q:
The production of a certain good involves 5 stages. The value added after the first stage of production occurs is is $1.20. The sale price of the good is $2.50. What amount is used to measure GDP?A) $0.025 B) $1.20 C) $1.30 D) $2.50
Q:
The CPI tends to overstate the true inflation rate becauseA) we cannot know what the true inflation rate is.B) it fails to consider the effects of new products in the marketplace. C) the market basket actually selected is inappropriate.D) the market basket fails to weigh housing costs sufficiently.
Q:
Historically, the United States has experiencedA) continuous decreases in the unemployment rate since World War II.B) periods of both increases and decreases in the unemployment rate since World War II.C) continuous increases in the unemployment rate since World War II. D) no changes in the unemployment rate since World War II.
Q:
Which statement is true about a comparison of economic freedom with political freedom?
A) Economic freedom cannot exist without political freedom.
B) Economic freedom leads to positive economic growth while political freedom leads to negative economic growth.
C) Political freedom is more important than economic freedom when considering positive economic growth.
D) Economic freedom is more important than political freedom when considering positive economic growth.
Q:
Refer to the above figure. Unexpected expansionary monetary policy has caused the aggregate demand curve to shift to AD2. In the long run,A) the unemployment rate will be the same rate as before the expansionary monetary policy. B) the unemployment rate will be larger than the rate before the expansionary monetary policy.C) the unemployment rate will be smaller than the rate before the expansionary monetary policy.D) the unemployment rate can increase or decrease depending upon how much the LRAS will shift.
Q:
The net-export effect of contractionary monetary policy is a(n)A) depreciation of the value of the dollar and the increase of U.S. net exports.B) depreciation of the value of the dollar and the decrease of U.S. net exports. C) appreciation of the value of the dollar and the increase of U.S. net exports. D) appreciation of the value of the dollar and the decrease of U.S. net exports.
Q:
Which of the following would reduce the money multiplier?A) The purchase of bonds by the FedB) Lowering the reserve ratioC) Increases in the reserve ratioD) A flow of currency into the banking system
Q:
Which one of the following is true?A) Transaction deposits are counted in M2 but are not included in M1.B) Most of the U.S. currency in existence circulates outside U.S. borders.C) Travelerʹs checks are not considered to be money because they are not valid unless signed. D) Balances in money market deposit accounts are counted in M1 but are not included in M2.
Q:
In which decade did the United States begin experiencing large trade deficits?A) 1960s B) 1970s C) 1980s D) 1990s
Q:
According to the Ricardian equivalence theorem, budget deficits resulting from tax cutsA) increase aggregate demand. B) decrease aggregate demand.C) have no effect on aggregate demand. D) affect only aggregate supply.
Q:
Investment isA) a positive function of real GDP.B) a negative function of real GDP.C) autonomous with respect to real GDP. D) a positive function of interest rates.
Q:
Keynesian theory is based on the hypothesis that
A) saving and consumption are influenced primarily by real current disposable income.
B) saving is influenced primarily by the interest rate.
C) planned savings equal planned investment only at full employment.
D) full employment is automatically attained in any economy.
Q:
Involuntary unemploymentA) occurs when the wage rate is below the equilibrium wage rate.B) exists when there is an excess quantity of labor supplied. C) will increase as the wage rate falls.D) exists when there is a shortage of labor.
Q:
ʺThe aggregate demand curve slopes down for the same reason that the individual demand curve for a good slopes down.ʺ Do you agree or disagree with this statement? Why?
Q:
A patent isA) a bond issued by the government. B) a bond issued by a state.C) the monopoly right given to a producer/company.D) an agreement between a union and management on certain labor issues.
Q:
YearNominal GDPPrice Deflator200750095.42008600100.02009700102.52010800103.1Refer to the above table. All real GDP numbers are expressed in terms of the purchasing power of dollars inA) 2007. B) 2008. C) 2009. D) 2010.
Q:
A farmer buys seed for 15 cents that is used to grow wheat. The farmer sells the wheat to the miller for 30 cents, who makes flour. The flour is sold to the baker for 60 cents and the baker makes bread, which is sold to the grocer for 90 cents. The grocer sells the bread for $1.25. What is the value added for the miller?A) 60 cents B) 45 cents C) 30 cents D) 90 cents
Q:
The indices that are based on a fixed market basket of goods and services areA) CPI and GDP deflator. B) PPI and GDP deflator.C) CPI and PPI. D) CPI, PPI and GDP deflator.
Q:
The official unemployment rate may understate the true rate of unemployment because ofA) workers who hold two jobs.B) increases in worker productivity. C) changes in wage rates.D) discouraged workers who no longer are actively seeking work and are excluded from the statistics.
Q:
The right to openly support and democratically select national leaders isA) capital freedom. B) population freedom.C) economic freedom. D) political freedom.
Q:
Refer to the above figure. Unexpected expansionary monetary policy has caused the aggregate demand curve to shift to AD2. In the short run,A) the unemployment rate will be the same rate as before the expansionary monetary policy. B) the unemployment rate will be larger than the rate before the expansionary monetary policy.C) the unemployment rate will be smaller than the rate before the expansionary monetary policy.D) the unemployment rate can increase or decrease depending upon how much the LRAS will shift.
Q:
The net-export effect of expansionary monetary policy is a(n)A) depreciation of the value of the dollar and the increase of U.S. net exports.B) depreciation of the value of the dollar and the decrease of U.S. net exports. C) appreciation of the value of the dollar and the increase of U.S. net exports. D) appreciation of the value of the dollar and the decrease of U.S. net exports.
Q:
Which of the following would reduce the money multiplier?A) Reducing the reserve ratioB) Bond purchases by the FedC) Cash drains from banksD) Bank reductions in desired reserve holdings
Q:
In defining money according to the transactions approach, you would want to includeA) those assets that are used as a store of value.B) those assets that are used as a medium of exchange.C) those assets that are used as a unit of account.D) those assets that are used as a standard of deferred payment.
Q:
Explain how deficit spending can benefit future generations.
Q:
The proposition that decreases in taxes that raise the government budget deficit has no effect on aggregate demand is called theA) open-economy effect. B) federalism effect.C) Ricardian equivalence theorem. D) interest-rate effect.
Q:
The 45-degree reference line indicates all points at whichA) planned real consumption expenditures and planned real saving are equal.B) planned real saving and planned real investment are equal.C) planned real consumption expenditures and real GDP are equal.D) planned real saving and planned real saving are equal.
Q:
Distinguish between saving and savings. How does investment relate to this distinction, if at all?
Q:
A decrease in aggregate demand will causeA) prices to fall according to classical economists, and unemployment to increase according to Keynes.B) prices to fall and unemployment to increase according to both classical economists and Keynes.C) aggregate supply to fall according to classical economists, and prices to fall according to Keynes.D) aggregate supply to fall according to Keynes, and unemployment to increase according to classical economists.
Q:
What is the aggregate demand curve and what does it represent?
Q:
All of the following unambiguously contribute to economic growth EXCEPTA) increase in human capital. B) increase in technology.C) increase in labor productivity. D) increase in government spending.
Q:
YearNominal GDPPrice Deflator200750095.42008600100.02009700102.52010800103.1Refer to the above table. Real GDP in 2010 isA) 103.1. B) 128.9. C) 775.9. D) 824.8.
Q:
Refer to the above table. The production of this good goes through 4 different stages of production. What does the total value added equal?A) $0.07B) $0.32C) $0.75D) Cannot be computed without more information.
Q:
The index that is not based on a fixed market basket of goods and services is theA) CPI. B) PPI.C) Wholesale Price Index. D) GDP Price Deflator.
Q:
Official unemployment rates may underestimate the true rate of unemployment because the official rate
A) includes those workers who only work part time.
B) may include some individuals who are not actually in the labor force.
C) does not include individuals receiving any type of unemployment compensation.
D) fails to include discouraged workers.
Q:
It has been noted that a country that grants a considerable amount of economic freedom will experienceA) positive rates of per capita income growth.B) negative rates of per capita income growth. C) low levels of political freedom.D) dead capital.
Q:
Refer to the above figure. Unexpected expansionary monetary policy has caused the aggregate demand curve to shift to AD2. In the long run,A) real GDP will be Y1, and the price level will be P1. B) real GDP will be Y2, and the price level will be P2.C) real GDP will be Y1, and the price level will be above P2.D) real GDP will be between Y1 and Y2, and the price level will be between P1 and P2.
Q:
Which of the following would NOT be a result of a contractionary monetary policy?A) Interest rates would rise.B) Foreign goods would become more expensive to U.S. residents. C) Net exports would decline.D) Imports would rise.
Q:
If the Federal Reserve buys $500 of government securities when the required reserve ratio is 20 percent, the maximum potential change in the money supply is a(n)A) increase by $100. B) increase by $2,500. C) decrease by $100. D) decrease by $2,500.
Q:
Per capita real Gross Domestic Product (GDP) isA) real Gross Domestic Product (GDP) divided by the population. B) real Gross Domestic Product (GDP) divided by a price index.C) real Gross Domestic Product (GDP) minus depreciation.D) population divided by real Gross Domestic Product (GDP).
Q:
Value added isA) the price of an intermediate product.B) the amount of dollar value contributed to a product at each stage of its production. C) the sum of the prices of intermediate products.D) the dollar value contributed to a product at the last stage of its production.
Q:
The Consumer Price Index (CPI) is aA) statistical measure of a weighted average of prices of a specific set of goods and servicespurchased by consumers in urban areas.B) statistical measure of a weighted average of prices of commodities that firms produce and sell.C) price index measuring the changes in prices of all new goods and services produced in the economy.D) statistical measure of average prices using annually updated weights based on surveys of consumer spending.
Q:
Which federal agency publishes the United Statesʹ unemployment figures?
A) Health and Human Services
B) The Bureau of Labor Statistics
C) The Federal Reserve
D) The Senate Committee on Labor Relations
Q:
What will happen to the annual rate of growth of per capita real GDP if the annual rate of population growth increases and the annual rate of growth of real GDP goes down?
A) It will increase since an increase in population means an increase in labor that translates into an increase in real GDP.
B) It will increase since the annual rate of growth of real GDP does not influence the growth rate of per capita real GDP.
C) It will decrease since an increase in the growth rate of population and a decrease in the growth rate of real GDP both work to decrease the growth of per capita real GDP.
D) The effect will depend upon whether the rate of population growth is greater than or less than the rate of growth of real GDP.
Q:
Suppose the natural rate of unemployment is 5 percent. If the actual unemployment rate is 4 percent, then the cyclical unemployment rate isA) 9 percent. B) 1 percent. C) -1 percent.D) 0 percent as cyclical unemployment cannot be less than zero.
Q:
An appreciation of the U.S. dollarA) makes our exports more expensive in terms of foreign currency and imports cheaper in terms of the dollar, increasing net exports.B) makes our exports less expensive in terms of foreign currency and imports cheaper in terms of the dollar, increasing net exports.C) makes our exports less expensive in terms of foreign currency and imports cheaper in terms of the dollar, decreasing net exports.D) makes our exports more expensive in terms of foreign currency and imports cheaper in terms of the dollar, decreasing net exports.
Q:
By affecting the amount of reserves in the banking system, the Fed canA) affect the size of the money supply. B) change the marginal tax rates.C) increase government purchases. D) reduce government purchases.
Q:
Small-denomination time deposits are less thanA) $1 million. B) $100,000. C) $10,000. D) $1,000.