Impera PDF

Study GUIDE 1
Question 1
10 out of 10 points
The issue of scarcity exists:

Selected a.
Answer:
always in all economies
Answers: a.
always in all economies
b.
only in the past but not anymore
c.
now and in the past, but will be eliminated at some point in the future
because of economic growth
d.
only in very poor economies
Question 2
10 out of 10 points
A positive statement is:
Selected Answer: c.
about what is
Answers: a.
one that does not use the ceteris paribus clause
b.
about what ought to be
c.
about what is
d.
always true
Question 3
0 out of 10 points
Which of the following principles refers to how the economy works as a whole?
Selected Answer: d.
The Cost of Something is What You Give Up to Get It
Answers: a.
Markets Are Usually a Good Way to Organize Economic Activity
b.
Prices Rise When the Government Prints Too Much Money
c.
People Respond to Incentives
d.
Question 4
10 out of 10 points
From 9 to 10 A.M., Fred can sleep in, go to his economics lecture, or play tennis.
Suppose that Fred decides to go to the lecture but thinks that, if he hadnt, he would
otherwise have slept in. The opportunity cost of attending the lecture is
Selected Answer: a.
sleeping in
Answers: a.
sleeping in
b.
one hour of time
c.
playing tennis
d.
sleeping in and playing tennis
Question 5
0 out of 10 points
Which of the following principles refers to how people make decisions?
Selected a.
Answer: Trade Can Make Everyone Better Off
Answers: a.
Trade Can Make Everyone Better Off
b.
c.
d.
A Country's Standard of Living Depends on Its Ability to Produce Goods
and Services
Question 6
10 out of 10 points
Which of the following is a positive statement?

Selected d.
Answer:
An increase in college tuition will cause fewer students to apply to
college
Answers: a.
My economics class should last for two terms because it is my
favorite class
b.
The best level of taxation is zero percent because then people get to
keep everything they earn
c.
The government must lower the price of a pizza so that more students
can afford to buy it
d.
An increase in college tuition will cause fewer students to apply to
college
Question 7
10 out of 10 points
The bowed-outward shape of a PPF:
Selected a.
Answer:
is due to the existence of increasing opportunity cost
Answers: a.
b.
is due to capital accumulation
c.
illustrates the fact that no opportunity cost is incurred for increasing the
production of the good measured on the horizontal axis but it is incurred
to increase production of the good measured along the vertical axis
d.
reflects the unequal application of technology in production
Question 8
10 out of 10 points
In the circular flow goods markets:
Selected Answer: d.
firms sell to households. In resource markets households sell to firms.
Answers: a.
and in resource markets households sell to firms.
b.
and in resource markets firms sell to households.
c.
households sell to firms. In resource markets firms sell to households.
d.
firms sell to households. In resource markets households sell to firms.
Question 9
10 out of 10 points
The PPF shifts if:

Selected Answer: c.
the resources available to the nation change
Answers: a.
the unemployment rate falls
b.
people decide they want more of one good and less of another
c.
the resources available to the nation change
d.
the prices of the goods and services produced rise
Question 10
10 out of 10 points
Jane produces only corn and cloth. Taking account of her preferences for corn and cloth:
Selected Answer: d.
does not affect her production possibility frontier
Answers: a.
makes her production possibility frontier straighter
b.
makes her production possibility frontier flatter
c.
makes her production possibility frontier steeper
d.
does not affect her production possibility frontier
Study guide 2
Question 1
5 out of 5 points
If the quantity supplied exceeds the quantity demanded, then there is:
Selected Answer: c.
a surplus and the price is above the equilibrium price
Answers: a.
a surplus and the price is below the equilibrium price.
b.
a shortage and the price is above the equilibrium price
c.
a surplus and the price is above the equilibrium price
d.
a shortage and the price is below the equilibrium price
Question 2
5 out of 5 points
The price of a good will tend to fall if
Selected Answer: a.
there is a surplus at the current price
Answers: a.
there is a surplus at the current price
b.
the price of a complement falls
c.
the current price is less than the equilibrium price
d.
the quantity demanded exceeds the quantity supplied
Question 3
5 out of 5 points
A drop in the price of a compact disc shifts the demand curve for prerecorded tapes leftward.
From that you know compact discs and prerecorded tapes are:
Selected Answer: c.
substitutes
Answers: a.
complements
b.
inferior goods
c.
substitutes
d.
normal goods
Question 4
5 out of 5 points
The price of a gallon of milk falls. Which of the following is a possible cause?
Selected c.
Answer: A discovery that milk cause diabetes
Answers: a.
A drought that reduces supplies of feed grains fed to cows that produce
milk
b.
An increase in the income of the average household, with milk being a
normal good
c.
A discovery that milk cause diabetes
d.
A decrease in the price of oatmeal, a complement to milk.
Question 5
5 out of 5 points
Over the past decade technological improvements that have lowered the cost of producing an
automobile have increased
Selected Answer: c.
the supply but not the demand for automobiles
Answers: a.
neither the supply nor the demand for automobiles
b.
the demand but not the supply of automobiles
c.
the supply but not the demand for automobiles
d.
both the supply and the demand for automobiles
Question 6
5 out of 5 points
Each point on a supply curve represents
Selected Answer: b.
the lowest price for which a supplier can profitably sell another unit
Answers: a.
the lowest price buyers will accept per unit of the good
b.
the lowest price for which a supplier can profitably sell another unit
c.
the highest price buyers will pay for the good
d.
the highest price sellers can get for each unit over time.
Question 7
5 out of 5 points
A fall in the price of a good causes producers to reduce the quantity of the good they are
willing to produce. This fact illustrates:
Selected Answer: a.
the law of supply.
Answers: a.
the law of supply.
b.
a change in supply.
c.
the nature of an inferior good.
d.
the law of demand.
Question 8
5 out of 5 points
Good A and good B are substitutes in production. The demand for good A increases so that the
price of good A rises. The increase in the price of good A shifts the:
Selected Answer: c.
supply curve of good B leftward
Answers: a.
supply curve of good B rightward
b.
demand curve for good B rightward
c.
supply curve of good B leftward
d.
demand curve for good B leftward
Question 9
5 out of 5 points
Which of the following will shift the supply curve for good X leftward?
Selected Answer: b.
An increase in the cost of the machinery used to produce X
Answers: a.
A decrease in the wages of workers employed to produce X.
b.
c.
A technological improvement in the production of X
d.
A situation in which quantity demanded exceeds quantity supplied
Question 10
5 out of 5 points
Refer to the table below. Suppose that in normal years demand is represented by Case 2 and
supply is represented by Case B. In a normal year the price of wapanzo beans will be:
The Market for Wapanzo Beans

Price
Quantity Demanded (millions of (dollars Quantity Supplied (millions of
pounds per year) per pounds per year)
pound)
Case Case Case Case Case Case
1 2 3 A B C
15 10 5 $1 1 2 3
12 8 4 $2 2 4 6
9 6 3 $3 3 6 9
6 3 2 $4 4 8 12
3 2 1 $5 5 10 15
Selected Answer: c.
$3 per pound
Answers: a.
$2 per pound
b.
$4 per pound
c.
$3 per pound
d.
$1 per pound
Question 11
5 out of 5 points
Assume that beef and pork are substitutes for consumers. There is a drought in the cattle
grazing areas. The drought will cause the
Selected Answer: b.
demand curve for pork to shift rightward
Answers: a.
supply curve for pork to shift leftward
b.
demand curve for pork to shift rightward
c.
supply curve for pork to shift rightward
d.
demand curve for pork to shift leftward
Question 12
5 out of 5 points
Each point on the demand curve reflects
Selected b.
Answer: the highest price consumers are willing and able to pay for that particular
unit of a good
Answers: a.
all the wants of a given household
b.
the highest price consumers are willing and able to pay for that particular
unit of a good
c.
the highest price sellers will accept for all units they are producing
d.
the lowest-cost technology available to produce a good.
Question 13
5 out of 5 points
Which of the following is consistent with the law of demand?
Selected c.
Answer: An increase in the price of a soda causes a decrease in the quantity of soda
demanded
Answers: a.
An increase in the price of a tape causes an increase in the quantity of tapes
demanded
b.
A decrease in the price of juice causes no change in the quantity of juice
demanded
c.
An increase in the price of a soda causes a decrease in the quantity of soda
demanded
d.
A decrease in the price of a gallon of milk causes a decrease in the quantity
of milk demanded
Question 14
5 out of 5 points
Demand is perfectly inelastic when
Selected Answer: d.
shifts of the supply curve cause no change in quantity demanded
Answers: a.
shifts in the supply curve cause no change in price
b.
shifts of the supply curve cause no change in the total revenue from sales
c.
the good in question has perfect substitutes
d.
shifts of the supply curve cause no change in quantity demanded
Question 15
5 out of 5 points
The price elasticity of demand equals
Selected d.
Answer: the percentage change in the quantity demanded divided by the percentage
change in the price
Answers: a.
the change in the quantity demanded divided by the change in price
b.
the percentage change in the price divided by the percentage change in the
quantity demanded
c.
the change in the price divided by the change in quantity demanded
d.
the percentage change in the quantity demanded divided by the percentage
change in the price
Question 16
5 out of 5 points
A good with a horizontal demand curve has a demand
Selected Answer: c.
with a price elasticity of demand of infinity
Answers: a.
with a price elasticity of demand of 0
b.
for which there are no substitute
c.
with a price elasticity of demand of infinity
d.
with an income elasticity of demand of 0
Question 17
5 out of 5 points
Supply is elastic if
Selected c.
Answer: a 1 percent change in price causes a larger percentage change in quantity
supplied
Answers: a.
the good in question is a normal good
b.
the slope of the supply curve is positive
c.
a 1 percent change in price causes a larger percentage change in quantity
supplied
d.
a 1 percent change in price causes a smaller percentage change in quantity
supplied
Question 18
5 out of 5 points
The demand for a good is elastic if
Selected Answer: d.
an increase in its price results in a decrease in total revenue
Answers: a.
a decrease in its price results in a decrease in total revenue
b.
the good is a necessity
c.
an increase in its price results in an increase in total revenue
d.
an increase in its price results in a decrease in total revenue
Question 19
5 out of 5 points
The price elasticity of demand measures
Selected Answer: c.
the responsiveness of the quantity demanded to changes in price
Answers: a.
how often the price of a good changes
b.
the slope of a demand curve
c.
d.
how sensitive the quantity demanded is to changes in demand
Question 20
0 out of 5 points
Of the following, demand is likely to be the least elastic for
Selected Answer: b.
diamonds
Answers: a.
insulin for diabetics
b.
diamonds
c.
pink grapefruit
d.
roman lettuce
STUDY GUIDE 3
Question 1
5 out of 5 points
Economic profit is the difference between total revenue and
Selected Answer: d.
opportunity costs of production
Answers: a.
explicit costs of production
b.
explicit costs minus implicit cost of production
c.
implicit costs of production
d.
opportunity costs of production
Question 2
5 out of 5 points
An implicit cost is an opportunity cost that
Selected Answer: c.
requires no actual payment of cash
Answers: a.
is actually part of the firms normal profit
b.
is measured by the amount of cash the firm actually pays out
c.
requires no actual payment of cash
d.
is adjusted for the rate of inflation
Question 3
5 out of 5 points
A firm that is technologically efficient
Selected c.
Answer: is not always economically efficient, but a firm that is economically efficient
must always be technologically efficient
Answers: a.
must be economically efficient, and a firm that is economically efficient
b.
must be economically efficient, but a firm that is economically efficient is
not always technologically efficient
c.
is not always economically efficient, but a firm that is economically efficient
d.
is not always economically efficient, and a firm that is economically efficient
is not always technologically efficient
Question 4
0 out of 5 points
A firms market constraints include the conditions under which it can
Selected Answer: c.
convert inputs into outputs
Answers: a.
buy its inputs and sell its outputs
b.
produce the inputs to production
c.
convert inputs into outputs
d.
issue stock
Question 5
5 out of 5 points
A firm that is maximizing its profits
Selected Answer: b.
is economically efficient and technologically efficient
Answers: a.
is technologically efficient but may not be economically efficient
b.
is economically efficient and technologically efficient
c.
may be neither economically efficient nor technologically efficient
d.
is economically efficient but may not be technologically efficient.
Question 6
5 out of 5 points
In the long run, a firm can vary
Selected Answer: c.
both its labor and its capital inputs
Answers: a.
its capital input but not its labor input
b.
neither its labor nor its capital input
c.
both its labor and its capital inputs
d.
its labor input but not its capital input
Question 7
5 out of 5 points
Economies to scale refer to
Selected c.
Answer: the range of output over which the long-run average cost falls as output
increases
Answers: a.
a feature of short-run production functions but not long-run production
functions
b.
the fact that in the long run, fixed costs remain constant as output
increases
c.
the range of output over which the long-run average cost falls as output
increases
d.
the point at which marginal cost equals average cost
Question 8
5 out of 5 points
The marginal product of labor is the increase in total product from a
Selected a.
Answer: one unit increase in the quantity of labor, while holding the quantity of
capital constant
Answers: a.
one unit increase in the quantity of labor, while holding the quantity of
capital constant
b.
one dollar increase in the wage rate, while holding the price of capital
constant
c.
one unit increase in the quantity of labor, while also increasing the quantity
of capital by one unit
d.
one percent increase in the wage rate, while also increasing the price of
capital by one percent
Question 9
5 out of 5 points
A firms marginal cost is the increase in its total cost divided by the increase in its
Selected Answer: b.
output
Answers: a.
average revenue
b.
output
c.
quantity of labor
d.
average cost
Question 10
5 out of 5 points
If a firms marginal product of labor is less than its average product of labor, then an increase
in the quantity of labor it employs definitely will
Selected Answer: d.
decrease its average product of labor
Answers: a.
increase its marginal product of labor
b.
decrease its total product
c.
not change its average product of labor
d.
decrease its average product of labor
Question 11
5 out of 5 points
By using more labor to produce more output, a firm can always reduce its
Selected Answer: a.
average fixed cost
Answers: a.
average fixed cost
b.
average variable cost
c.
average total cost
d.
marginal cost
Question 12
5 out of 5 points
Diminishing marginal returns refer to a situation in which the
Selected a.
Answer: marginal product of the last worker hired is less than the marginal product
of the previous worker hired
Answers: a.
marginal product of the last worker hired is less than the marginal product
of the previous worker hired
b.
average cost of the last worker hired is less than the average cost of the
previous worker hired
c.
average product of the last worker hired is less than the average product of
the previous worker hired
d.
marginal cost of the last worker hired is less than the marginal cost of the
previous worker hired
Question 13
0 out of 5 points
The maximum marginal product is attained at the level of output at which
Selected Answer: b.
the minimum quantity of labor is employed
Answers: a.
the total product curve is at its maximum
b.
the minimum quantity of labor is employed
c.
the maximum quantity of labor is employed
d.
the slope of the total product curve begins to fall
Question 14
5 out of 5 points
A change in technology that shifts the firms total product curve upward without changing the
quantity of capital used
Selected Answer: b.
shifts the average total cost curve downward
Answers: a.
does not change the cost curves
b.
shifts the average total cost curve downward
c.
shifts the average total cost curve upward
d.
shifts the marginal cost curve upward
Question 15
5 out of 5 points
The short run is a period of time in which
Selected Answer: a.
the quantities of some inputs the firm uses are fixed
Answers: a.
the quantities of some inputs the firm uses are fixed
b.
the amount of output is fixed
c.
prices and wages are fixed
d.
nothing the firm does can be altered
Question 16
5 out of 5 points
The marginal cost (MC) curve intersects the
Selected c.
Answer: ATC (Average Total Cost) and AVC (Average Variable Cost) curves at
their minimum points
Answers: a.
AVC and AFC curves at their minimum points
b.
ATC (Average Total Cost) , AVC (Average Variable Cost) ,
and AFC (Average Fixed Cost) curves at their minimum points
c.
ATC (Average Total Cost) and AVC (Average Variable Cost) curves at
their minimum points
d.
ATC and AFC curves at their minimum points
Question 17
5 out of 5 points
A common source of diseconomies of scale is
Selected Answer: a.
growing complexity of management and organizational structure
Answers: a.
growing complexity of management and organizational structure
b.
the application of the law of diminishing marginal returns to labor
c.
the application of the law of diminishing marginal returns to capital
d.
the application of the law of diminishing marginal returns to land
Question 18
5 out of 5 points
Average variable cost is at a minimum at the same amount of output at which
Selected Answer: a.
average product is at a maximum
Answers: a.
average product is at a maximum
b.
marginal product is at a maximum
c.
average product is at a minimum
d.
marginal product is at a minimum
Question 19
5 out of 5 points
Total cost is the sum of fixed costs and
Selected Answer: a.
variable costs
Answers: a.
variable costs
b.
explicit costs
c.
implicit costs
d.
accounting costs
Question 20
5 out of 5 points
Which of the following is FALSE?
Selected c.
Answer: Fixed Fixed costs remains constant in the long run
Answers: a.
Long-run average variable costs equal long-run average total costs
b.
As a firm produces more output, eventually it experiences diseconomies of
scale
c.
Fixed Fixed costs remains constant in the long run
d.
In the long run, both the amount of capital and labor used by the firm can
be changed
STUDY GUIDE 4
Question 1
10 out of 10 points
In a perfectly competitive industry, a permanent decrease in demand initially brings a lower
price, economic
Selected Answer: c.
loss, and exit from the industry
Answers: a.
profit, and exit from the industry
b.
profit, and entry into the industry
c.
loss, and exit from the industry
d.
loss, and entry into the industry
Question 2
10 out of 10 points
In perfect competition, the marginal revenue of an individual firm
Selected Answer: c.
equals the price of the product
Answers: a.
is positive but less than the price of the product
b.
exceeds the price of the product
c.
equals the price of the product
d.
is zero
Question 3
10 out of 10 points
The price elasticity of demand for any particular perfectly competitive firms output is
Selected Answer: d.
infinite
Answers: a.
1
b.
less than 1
c.
equal to zero
d.
infinite
Question 4
10 out of 10 points
In perfect competition, restrictions on entry into an industry
Selected Answer: a.
do not exist
Answers: a.
do not exist
b.
apply to both capital and labor
c.
apply to labor but not to capital
d.
apply to capital but not to labor
Question 5
10 out of 10 points
A firms shutdown point is the quantity and price at which the firms total revenue just equals
its
Selected Answer: b.
total variable cost
Answers: a.
marginal cost
b.
total variable cost
c.
total fixed cost
d.
total cost
Question 6
10 out of 10 points
The break-even point is defined as occurring at an output rate at which
Selected Answer: b.
total revenue equals total opportunity cost
Answers: a.
economic profit is maximized
b.
total revenue equals total opportunity cost
c.
total cost is minimized
d.
marginal revenue equals marginal cost
Question 7
10 out of 10 points
As firms enter a perfectly competitive industry
Selected Answer: a.
the price falls and the existing firms economic profits decrease
Answers: a.
the price falls and the existing firms economic profits decrease
b.
the price falls and the existing firms economic profits do not change
c.
the price falls and the existing firms economic losses do not change
d.
the price rises and the existing firms economic profits decrease
Question 8
0 out of 10 points
A firm in perfect competition will expand the amount of output it produces as long as its
Selected Answer: d.
marginal cost exceeds its marginal revenue
Answers: a.
average total revenue exceeds its average total cost.
b.
marginal revenue exceeds its marginal cost
c.
average total revenue exceeds its average variable cost
d.
marginal cost exceeds its marginal revenue
Question 9
0 out of 10 points
The short-run supply curve for a perfectly competitive firm is its
Selected Answer: d.
average cost curve above its shutdown point
Answers: a.
average cost curve above the horizontal axis
b.
marginal cost curve above the horizontal axis
c.
marginal cost curve above its shutdown point
d.
average cost curve above its shutdown point
Question 10
10 out of 10 points
A perfectly competitive firm maximizes its profit by producing the output at which its marginal
cost equals its
Selected Answer: b.
marginal revenue
Answers: a.
average fixed cost
b.
marginal revenue
c.
average variable cost
d.
average total cost
STUDY GUIDE 5
The table gives the real and nominal GDP or a hypothetical nation. What was the economic
growth between 1998 and 1999?:
Nominal GDP Real GDP GDP
(billions of (billions of deflator
Year dollars) 1992 dollars)
1997 5,200 4,800
1998 5,500 112
1999 5,740 5,000
Selected Answer: d.
1.8 percent.
Answers: a.
14.8 percent
b.
2.5 percent.
c.
Without more information, the economic growth cannot be calculated.
d.
1.8 percent.
Question 2
5 out of 5 points
Using the data in the table, what is real GDP in 1998?:
Nominal GDP Real GDP
Year (billions of (billions of GDP deflator
dollars) dollars)
1998 2500 ____ 105
1999 ____ 2400 117
Selected Answer: c.
$2381 billion
Answers: a.
$2137 billion
b.
$2051 billion
c.
$2381 billion
d.
$2520 billion
Question 3
0 out of 5 points
A nation produces only haircuts and cell phones. Using the data in the table, what is nominal
GDP in 2001?
Price of a Quantity Price of a Quantity
haircut of cell phone of
Year (dollars)) haircuts (dollars) cell
phones
2001 18 500 40 150
2002 24 750 45 400
Selected Answer: b.
$15,000
Answers: a.
$2,232
b.
$15,000
c.
$15,000
d.
$9,000
Question 4
5 out of 5 points
From the data in the next table, GDP equals
Government purchases of goods $240
and services
Depreciation 240
Gross private domestic investment 400
Personal income taxes 140
Net taxes 120
Net exports of goods and services 80
Personal consumption expenditures 640
Net interest 100
Selected Answer: d.
$1,360
Answers: a.
$1,120
b.
$1,290
c.
$1,280
d.
$1,360
Question 5
5 out of 5 points
Using the data in the table, what is the inflation rate between 1998 and 1999?
dollars) dollars)
1998 2500 ____ 105
1999 ____ 2400 117
Selected Answer: d.
11.4 percent
Answers: a.
7.9 percent
b.
10.25 percent
c.
12.3 percent
d.
11.4 percent
Question 6
5 out of 5 points
The circular flow diagram shows that:
Selected d.
Answer: the total amount of income generated by the economy equals the total
purchases of final goods and services.
Answers: a.
the flow of payments to the resources used to produce goods and services
exceeds the flow of payments for final goods and services.
b.
product and resource markets are independent.
c.
consumption expenditure equals saving.
d.
the total amount of income generated by the economy equals the total
Question 7
5 out of 5 points
In the circular flow diagram, aggregate expenditure includes the sum of:
Selected Answer: d.
consumption and investment.
Answers: a.
consumption, investment, and saving.
b.
saving and investment.
c.
income and saving.
d.
Question 8
5 out of 5 points
In the circular flow model:
Selected Answer: d.
firms sell goods and services in the goods markets.
Answers: a.
firms sell the services of resources in resource markets.
b.
households sell the services of their resources in the goods markets.
c.
households sell goods and services in the resource markets.
d.
Question 9
5 out of 5 points
If the objective were to measure economic welfare, then what adjustments would have to
made to GDP to make it a better measure of economic welfare?
Selected a.
Answer: All of the answers are adjustments would need to be made.
Answers: a.
All of the answers are adjustments would need to be made.
b.
Household production would need to be included.
c.
The amount of leisure time that households have would need to be
included.
d.
The effect of pollution on the environment would need to be included.
Question 10
5 out of 5 points
In the national income accounts, the purchase of a new house counts as:
Selected Answer: d.
investment.
Answers: a.
a transfer.
b.
consumption expenditure.
c.
an addition to inventory.
d.
investment.
Question 11
5 out of 5 points
Suppose that nominal GDP per person is $18,000 in 1999, the 1996 GDP deflator is 100, and
the 1999 GDP deflator is 110. The approximate real per capita GDP in 1999 is:
Selected Answer: d.
$16,364
Answers: a.
$18,000
b.
$16,634
c.
$19,800
d.
$16,364
Question 12
5 out of 5 points
The GDP deflator is:
Selected c.
Answer: a measure of the average level of prices of all goods and services included
in GDP.
Answers: a.
the least used price index because it is so costly to calculate.
b.
an index used to calculate inflation at the wholesale level.
c.
a measure of the average level of prices of all goods and services included
in GDP.
d.
an index that measures real production.
Question 13
5 out of 5 points
The GDP deflator equals 100 times:
Selected Answer: a.
nominal GDP divided by real GDP.
Answers: a.
b.
net domestic product divided by gross domestic product.
c.
gross domestic product divided by net domestic product.
d.
real GDP divided by nominal GDP.
Question 14
5 out of 5 points
Which of the following relationships is correct?:
Selected Answer: c.
GDP Deflator = (Nominal GDP/Real GDP) x 100
Answers: a.
Real GDP = (Nominal GDP x GDP Deflator)/100
b.
Real GDP = Nominal GDP x 100
c.
d.
Nominal GDP = (GDP Deflator/Real GDP) x 100
Question 15
5 out of 5 points
The largest component of GDP is:
Selected Answer: a.
personal consumption expenditures.
Answers: a.
b.
gross private domestic investment.
c.
net exports of goods and services.
d.
government purchases of goods and services.
Question 16
5 out of 5 points
Economists distinguish real from nominal GDP to:
Selected Answer: b.
determine whether real production has changed.
Answers: a.
determine whether the government sector is growing.
b.
c.
measure the change in nominal interest rates.
d.
determine whether economic welfare has changed.
Question 17
5 out of 5 points
Aggregate expenditures include all of the following EXCEPT:
Selected Answer: b.
purchases of intermediate goods.
Answers: a.
purchases of guns by the government.
b.
c.
purchases of a piece of capital equipment.
d.
consumption of food.
Question 18
5 out of 5 points
Which of the following is a macroeconomic issue?
Selected Answer: a.
How federal government budget deficits affect interest rates.
Answers: a.
b.
How a rise in the price of sugar affects the market for sodas.
c.
The cause of a decline in the price of peanut butter.
d.
What determines the amount a firm will produce.
Question 19
5 out of 5 points
Real GDP measures the Real GDP measures the:
Selected d.
Answer: value of total production linked to prices of a single year.
Answers: a.
total profits earned by all businesses valued using prices from a single
year.
b.
changes in the prices of output measured in dollars.
c.
general upward drift in consumer prices.
d.
value of total production linked to prices of a single year.
Question 20
5 out of 5 points
Which of the following is NOT included in real GDP?
Selected d.
Answer: Production that takes place in the underground economy.
Answers: a.
Production of goods that last less than a year, such as production of hot
dogs.
b.
Production of goods that last more than a year, such as a pair of roller
blades.
c.
Production of services, such as the services of hair dressers.
d.
Production that takes place in the underground economy.
the 1999 deflator is 105. The approximate real GDP per person in 1999 is:
Selected Answer: c.
$21,000
Answers: a.
$22,050
b.
$19,048
c.
$21,000
d.
$20,000
Question 2
5 out of 5 points
Selected Answer: c.
Answers: a.
b.
c.
d.
Question 3
0 out of 5 points
In broad terms the difference between microeconomics and macroeconomics is that:
Selected c.
Answer:
microeconomics studies the effects of government taxes on the national
unemployment rate.
Answers: a.
macroeconomics studies the effects of government regulation and taxes on

the price of individual goods and services whereas microeconomics does
not
b.
they use different sets of tools and ideas.
c.

unemployment rate.
d.
microeconomics studies decisions of individual people and firms and

macroeconomics studies the entire national economy.
Question 4
5 out of 5 points
Selected Answer: b.
Answers: a.
b.
c.
d.
Question 5
5 out of 5 points
Selected Answer: a.
Answers: a.

b.
c.
d.
Question 6
5 out of 5 points
Selected Answer: d.
Answers: a.
b.
c.
income and saving.
d.
Question 7
5 out of 5 points
The circular flow diagram shows:
Selected Answer: c.
the flows between different sectors of the economy.
Answers: a.
how the prices of resources are determined.
b.
the effects of inflation in a simple economy.
c.
d.
how nominal GDP is distinct from real GDP.
Question 8
0 out of 5 points
The circular flow diagram indicates that:
Selected Answer: c.
firms buy the services of resources from the government.
Answers: a.
firms buy goods and services from households.
b.
households sell the services of resources to firms.
c.
d.
households sell goods and services to the government.
Question 9
5 out of 5 points
Selected Answer: a.
investment.
Answers: a.
investment.
b.
c.
d.
a transfer.
Question 10
5 out of 5 points

1997 5,200 4,800
1998 5,500 112
1999 5,740 5,000
Selected d.
Answer:
1.8 percent.
Answers: a.
2.5 percent.
b.
Without more information, the economic growth cannot be
calculated.
c.
14.8 percent
d.
1.8 percent.
Question 11
5 out of 5 points
Government purchases of $240

goods and services
Depreciation 240
Gross private domestic 400
investment
Net taxes 120
Net exports of goods and 80
services
Personal consumption 640
expenditures
Net interest 100
Selected Answer: c.
$1,360
Answers: a.
$1,280
b.
$1,120
c.
$1,360
d.
$1,290
Question 12
0 out of 5 points
GDP in 2001?

phones
2001 18 500 40 150
2002 24 750 45 400
Selected Answer: c.
$15,000
Answers: a.
$9,000
b.
$2,232
c.
$15,000
d.
$15,000
Question 13
5 out of 5 points
The table gives the real and nominal GDP or a hypothetical nation. What was real GDP in
1998?:

1997 5,200 4,800
1998 5,500 112
1999 5,740 5,000
Selected Answer: c.
$4,911 billion
Answers: a.
$4,820 billion
b.
$5,320 billion
c.
$4,911 billion
d.
$4,875 billion
Question 14
5 out of 5 points
Selected c.
Answer:
Answers: a.

included.
b.
c.
d.
Question 15
0 out of 5 points
The table gives the real and nominal GDP or a hypothetical nation. What was the inflation
rate between 1998 and 1999?

1997 5,200 4,800
1998 5,500 112
1999 5,740 5,000
Selected Answer: c.
14.8 percent
Answers: a.
2.5 percent
b.
Without more information, the inflation rate cannot be calculated.
c.
14.8 percent
d.
114 percent
Question 16
5 out of 5 points
Selected Answer: c.
Answers: a.
b.
c.
d.
Question 17
5 out of 5 points
Selected c.
Answer:
a general indicator of inflation because it measures changes in prices of
the goods and services included in GDP.
Answers: a.
b.
an index that is used to help calculate the consumer price index (CPI).
c.

d.
Question 18
0 out of 5 points
The table gives the real and nominal GDP or a hypothetical nation. What is the GDP deflator
for 1997?:

1997 5,200 4,800
1998 5,500 112
1999 5,740 5,000
Selected Answer: c.
109.6
Answers: a.
105.2
b.
108.3
c.
109.6
d.
111.5
Question 19
5 out of 5 points

Selected c.
Answer:
Production in the home.
Answers: a.
Production of goods that do not last more than one year, such as
gasoline
b.
Production of goods that last more than one year, such as television
sets
c.
d.
Production of services, such as the services of doctors
Question 20
5 out of 5 points
Selected c.
Answer:
Answers: a.
year.
b.
c.
d.
Selected Answer: a.
investment.
Answers: a.
investment.
b.
a transfer.
c.
d.
Question 2
5 out of 5 points
Selected Answer: d.
Answers: a.
b.
c.
d.
Question 3
5 out of 5 points
Selected c.
Answer:
Answers: a.
Production of goods that last more than one year, such as television
sets
b.
c.
d.
Production of goods that do not last more than one year, such as
gasoline
Question 4
0 out of 5 points
Real Gross Domestic Product is:
Selected [None Given]

Answer:
Answers: a.
the productivity of labor.
b.
the amount of people unemployed divided by the total labor force.
c.
the most that can be produced when the economys resources are fully
employed.
d.
the value of total production linked back to the prices of a single year.
Question 5
5 out of 5 points
Selected Answer: d.
Answers: a.
b.
c.
d.
Question 6
5 out of 5 points
GDP in 2001?

phones
2001 18 500 40 150
2002 24 750 45 400
Selected Answer: a.
$15,000
Answers: a.
$15,000
b.
$15,000
c.
$9,000
d.
$2,232
Question 7
0 out of 5 points
Using the data in the table, what is nominal GDP in 1999?
Nominal Real
Year GDP GDP GDP
(billions of (billions deflator
dollars) of
dollars)
1998 2500 ____ 105
1999 ____ 2400 117
Selected Answer: b.
$2381 billion
Answers: a.
$2808 billion
b.
$2381 billion
c.
$2520 billion
d.
$2400 billion
Question 8
0 out of 5 points
In the table, using 1979 as the base year, what was real GDP in 1989?
Year Price Nominal GDP

level
1979 100 $1,600
1989 150 $3,000
1999 300 $6,000
Selected Answer: c.
$2,400
Answers: a.
$3,000.
b.
$2,000
c.
$2,400
d.
$1,600
Question 9
5 out of 5 points
Selected Answer: b.
$20,000
Answers: a.
$19,048
b.
$20,000
c.
$22,050
d.
$21,000
Question 10
5 out of 5 points
Which of the following relationships is correct?:
Selected Answer: b.
Answers: a.
Real GDP = (Nominal GDP x GDP Deflator)/100
b.
c.
Nominal GDP = (GDP Deflator/Real GDP) x 100
d.
Real GDP = Nominal GDP x 100
Question 11
5 out of 5 points
Selected c.
Answer:
Answers: a.
an index that is used to help calculate the consumer price index (CPI).
b.
c.

d.
Question 12
5 out of 5 points
Selected Answer: d.
Answers: a.
b.
c.
d.
Question 13
5 out of 5 points
Selected a.
Answer:
Answers: a.
b.
c.
d.

included.
Question 14
5 out of 5 points
Macroeconomics is the branch of economics that studies:
Selected Answer: c.
the economy as a whole.
Answers: a.
the way individual markets work.
b.
important, as opposed to trivial, issues.
c.
d.
prices of individual goods.
Question 15
0 out of 5 points
The table gives the real and nominal GDP or a hypothetical nation. What was the inflation
rate between 1998 and 1999?

1997 5,200 4,800
1998 5,500 112
1999 5,740 5,000
Selected Answer: c.
114 percent
Answers: a.
14.8 percent
b.
2.5 percent
c.
114 percent
d.
Without more information, the inflation rate cannot be calculated.
Question 16
5 out of 5 points
Selected Answer: a.
Answers: a.
b.
c.
d.
Question 17
0 out of 5 points
Selected Answer: a.
Answers: a.
b.
c.
d.
Question 18
5 out of 5 points
Selected c.
Answer:
Answers: a.
b.
c.
d.

Question 19
5 out of 5 points
In the circular flow of economic activity:
Selected c.
Answer:
aggregate expenditure measures the dollar value of purchases of final
goods and services.
Answers: a.
aggregate expenditure measures the dollar value of purchases of

resources.
b.
aggregate expenditure is measured as it moves through the financial

markets.
c.

goods and services.
d.
aggregate income measures the dollar value of labor resources only.
Question 20
0 out of 5 points
Using the data in the table, what is the economic growth between 1998 and 1999?
Nominal Real
Year GDP GDP GDP
dollars) of
dollars)
1998 2500 ____ 105
1999 ____ 2400 117
Selected Answer: d.
11.4 percent
Answers: a.
0.8 percent
b.
7.9 percent
c.
10.1 percent
d.
11.4 percent
Study GUIDE 6
Question 1
10 out of 10 points
If a market basket of goods cost $200 in the base year and $450 in a later year, the CPI in the
later year equals:
Selected Answer: a.
225.
Answers: a.
225.
b.
300.
c.
450.
d.
250.
Question 2
0 out of 10 points
Assume the inflation rate falls from 4 percent to 2 percent. This means that:
Selected Answer: b.
the average price level has fallen.
Answers: a.
the average price level is increasing more slowly.
b.
the average price level has fallen.
c.
real GDP is decreasing.
d.
the economy is experiencing deflation.
Question 3
0 out of 10 points
When the inflation rate is positive, the:
Selected Answer: b.
nominal interest rate is zero.
Answers: a.
real interest rate is greater than the nominal interest rate.
b.
c.
real interest rate is less than the nominal interest rate.
d.
real interest rate equals the nominal interest rate.
Question 4
0 out of 10 points
When some dollar amount is corrected for inflation, the amount is said to be:
Selected Answer: b.
Converted to nominal value.
Answers: a.
Indexed for inflation.
b.
c.
Corrected for the substitution bias.
d.
None of the above
Question 5
10 out of 10 points
The CPI tells us:
Selected b.
Answer: changes in prices of a group of goods and services bought by a typical
urban household.
Answers: a.
the rate at which wages are rising.
b.
changes in prices of a group of goods and services bought by a typical
urban household.
c.
the increase in the prices of those goods that are rising slowest.
d.
the increase in prices of those goods that are rising fastest.
Question 6
10 out of 10 points
Deflation refers to the situation when:
Selected Answer: c.
the price level is falling.
Answers: a.
the inflation rate decreases.
b.
there is a recession and inflation.
c.
the price level is falling.
d.
prices generally are not changing.
Question 7
0 out of 10 points
Inflation is:
Selected b.
Answer: a rise in prices that is faster than the rise in wages.
Answers: a.
a general rise in all macroeconomic variablesprices, interest rates and
unemployment.
b.
a rise in prices that is faster than the rise in wages.
c.
a general rise in prices.
d.
a rise in wages that is faster than the rise in prices.
Question 8
0 out of 10 points
The rate of inflation can be measured by:
Selected d.
Answer: the level of the CPI.
Answers: a.
the GDP deflator minus the CPI index.
b.
the percentage change in the Consumer Price Index (CPI) from one year
to the next:
c.
the level of the GDP deflator.
d.
the level of the CPI.
Question 9
0 out of 10 points
The information in the table gives the 1992 base period market basket and prices used to
construct the CPI for a small nation. It also has the 1999 prices. What is the value of the CPI
for the yesar 1999?:
1992 1999
Item Quantity Price Price
Movie
tickets 4 $5.00 $7.50
Bags of
popcorn 2 $3.00 $3.00
Drinks of
soda 4 $1.00 $1.50
Selected Answer: d.
130
Answers: a.
140
b.
100
c.
40%
d.
130
Question 10
0 out of 10 points
Which of the following events could bias the CPI?:
Selected Answer: b.
underestimating real GDP.
Answers: a.
not adjusting a goods cost for improvements in quality.
b.
underestimating real GDP.
c.
comparing the CPI to the GDP deflator.
d.
underestimating nominal GDP.
If 1998 is the base year, what is the consumer price index for a market basket of goods for 1999 in
the table?
Market 1998 1999

basket price price
quantity
CDs 10 discs $16 per $12 per
disc disc
Gasoline 200 gallons $1.00 $1.25
per per
gallon gallon
Selected c.
Answer:
102.8
Answers: a.
128.0
b.
Zero because the price of CDs fell and the price of gasoline increased in the
same percentage.
c.
102.8
d.
97.3
If the CPI in 1998 was 100 and the CPI in 1999 was 115, the rate of inflation was:
Selected Answer: d.
115 percent.
Answers: a.
1.5 percent.
b.
100 percent.
c.
15 percent.
d.
115 percent.
In 1980, the minimum wage in Mexico was 0.14 pesos and the CPI was 0.08. What would
be the minimum wage in 2015 if the CPI was 128.2 in that year?:
Selected Answer: a.
224.34
Answers: a.
224.34
b.
We need more information to answer the question
c.
128.20
d.
2,804.40
Study guide 7
Question 1
10 out of 10 points
The law of diminishing returns states that if
Selected a.
Answer: only one input is increased, output increases by progressively smaller
amounts.
Answers: a.
only one input is increased, output increases by progressively smaller
amounts.
b.
only one input is increased, output decreases by progressively smaller
amounts
c.
all inputs in production double, so does output per labor hour.
d.
all inputs in production increase, output per labor hour increases but does
not necessarily double
Question 2
10 out of 10 points
The amount of goods and services produced from each unit of labor input is called:
Selected Answer: c.
productivity.
Answers: a.
externality
b.
marginal benefit
c.
productivity.
d.
opportunity cost
Question 3
10 out of 10 points
) In the United States, incomes historically have grown about 2 percent per year. At this rate,
average income doubles every
Selected Answer: c.
35 years
Answers: a.
45 years
b.
25 years
c.
35 years
d.
15 years
Question 4
10 out of 10 points
What is the most important factor that explain differences in living standards across
countries?
Selected Answer: a.
productivity.
Answers: a.
productivity.
b.
equality.
c.
the level of unemployment
d.
the quantity of money
Question 5
10 out of 10 points
Suppose a typical worker in India can produce 32 units of a product in an eight-hour day,
while a typical worker in Bangladesh can produce 30 units of product in a10 hour-day. We can
conclude that
Selected a.
Answer: the standard of living will likely be higher in India than in Bangladesh
Answers: a.
the standard of living will likely be higher in India than in Bangladesh
b.
worker productivity in Bangladesh is higher than in India
c.
productivity is 4 units per hour for the worker in Bangladesh and 3 units
per hour for the worker in India
d.
there will be no difference between the standard of living in India and
Bangladesh
Question 6
10 out of 10 points
Which of the following directly creates growth in labor productivity?
I. Growth in capital per hour of labor.
II. Technological change.
III. Population growth.
Selected Answer: b.
I and II.
Answers: a.
I and III
b.
I and II.
c.
II
d.
I
Question 7
0 out of 10 points
US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens
of Ghana. Which of the following conclusions can be drawn from this statement?
Selected Answer: c.
The US has a higher standard of living than Ghana
Answers: a.
All of the answers are correct
b.
Average income in the US is higher than the average income in Ghana
c.
The US has a higher standard of living than Ghana
d.
Productivity in the US is higher than productivity in Ghana
Question 8
10 out of 10 points
Labor productivity is measured by
Selected Answer: a.
real GDP per hour of work
Answers: a.
b.
real GDP.
c.
capital per hour of work
d.
real GDP per unit of capital
Question 9
0 out of 10 points
In a particular country in 1999, the average worker had to work 20 hours to produce 55 units
of output. In that same country in 2009, the average worker needed to work 28 hours to
produce 77 units of output. In that country, the productivity of the average worker
Selected Answer: c.
decrease by 3 percent between 1999 and 2009
Answers: a.
increase by 5 percent between 1999 and 2009
b.
remained unchanged between 1999 and 2009
c.
d.
Question 10
10 out of 10 points
To compare economic growth across countries, the best measure is
Selected Answer: c.
growth rates of real GDP per person
Answers: a.
potential GDP
b.
population growth rates
c.
growth rates of real GDP per person
d.
real GDP
1,2,7,9,
If capital per hour of work increases, output per hour of work

Selected Answer: c.
decreases because the level of technology decreases
Answers: a.
decreases for a given level of technology
b.
increases because the level of technology increases

c.
d.
increases for a given level of technology
Question 2
0 out of 10 points
To increase living standards, public policy should
Selected a.
Answer:
ensure a greater degree of equality, taking all income-earners into
account
Answers: a.
ensure a greater degree of equality, taking all income-earners into

account
b.
make unemployment benefits more generous
c.
ensure that workers are well educated and have the necessary tools
and technology
d.
move workers into jobs directly from high school
A productivity growth slowdown can be caused by
Selected Answer: b.
a lower growth rate of technological progress
Answers: a.
a higher growth rate of technological progress
b.
c.
a higher growth rate of capital per hour
d.
reduced energy prices
The primary determinant of a countrys standard of living is
Selected Answer: d.
the countrys ability to produce goods and services
Answers: a.
the total supply of money in the economy
b.
the average age of the countrys labor force
c.
the countrys ability to prevail over foreign competition
d.
the countrys ability to produce goods and services
A direct or positive relationship exists between a countrys

Selected Answer: a.
amount of government expending and its productivity
Answers: a.
b.
productivity and its standard of living
c.
rate of population growth and the extend of its trade with other
countries.
d.
total population and its average citizens income
STUDY GUIDE 8
Question 1
10 out of 10 points
Which of the following institutions is NOT a financial intermediary?
Selected Answer: d.
The U.S. Treasury
Answers: a.
A commercial bank
b.
A thrift institution, such as a savings and loan association
c.
A money market mutual fund
d.
The U.S. Treasury
Question 2
10 out of 10 points
Is a certificate of indebtdness that specifies obligations of the borroer to the holder:
Selected Answer: b.
A bond
Answers: a.
A stock
b.
A bond
c.
d.
A financial institution
Question 3
10 out of 10 points
If the government reduce taxes to encourage greater savings, the result will be:
Selected Answer: a.
A lower interest rate and greater investment
Answers: a.
b.
A higher interest rate and greater investment
c.
A lower interest rate and lower investment
d.
A higher interest rate and lower investment
Question 4
0 out of 10 points
Is an insitution that sells shares to the public and uses the proceeds to buy a portfolio, of
various types of stocks, bonds or both.
Selected Answer: b.
A insurance compay
Answers: a.
A bank
b.
A insurance compay
c.
A mutual fund
d.
A credit union
Question 5
0 out of 10 points
An investment tax credit granted by the government will result in:
Selected Answer: b.
A higher interest rate and a grater quantity saved
Answers: a.
All answers are correct
b.
c.
An increase in the supply of loanable funds
d.
A shift in the supply curve to the right
Question 6
10 out of 10 points
Which of the following is NOT a correct relationship in a closed economy?
Selected Answer: c.
Government saving = Private saving
Answers: a.
Investment = National saving
b.
Y=C+I+G
c.
Government saving = Private saving
d.
National saving = Private saving + Government saving
Question 7
0 out of 10 points
Is made up of financial institutions that coordinate the actions of savers and borrowers:
Selected Answer: a.
financial markets
Answers: a.
financial markets
b.
financial intermediaries
c.
d.
financial system
Question 8
10 out of 10 points
When the government borrows money to finance its deficit, reduces the supply of loanable
funds, then:
Selected Answer: c.
There will be a higher interest rate and lower investment
Answers: a.
There will be a higher interest rate and higher investment
b.
There will be a lower interest rate and lower investment
c.
d.
There will be a lower interest rate and higher investment
Question 9
0 out of 10 points
It represents a partial ownership in a firm and a claim to the profits that the firm makes
Selected Answer: d.
Answers: a.
a bond
b.
a security
c.
a stock
d.
Question 10
0 out of 10 points
When the government spends more money than it receives:
Selected Answer: a.
The government enhance the investment
Answers: a.
b.
The government reduce its debt
c.
The government runs a budget surplus
d.
The government runs a budget deficit
The crowding out effect ocurrs when

Selected b.
Answer: A budget surplus decreses the supply of loanable funds increases interest rate
and decreses investment
Answers: a.
A budget defict decreses the supply of loanable funds increases interest rate and
decreses investment
b.
A budget surplus decreses the supply of loanable funds increases interest rate
c.
A budget surplus increases the supply of loanable funds rdecreses interest rate
and increases investment
d.
A budget defict reduces the supply of loanable funds decreses interest rate and
decreses investment
A firm that takes deposits from households and firms and makes loans to other households and
firms is a:
Selected Answer: a.
credit company
Answers: a.
credit company
b.
bank
c.
stockbroker
d.
usurer
Is an insitution that sells shares to the public and uses the proceeds to buy a portfolio, of various
types of stocks, bonds or both.
Selected Answer: c.
A credit union
Answers: a.
A insurance compay
b.
A bank
c.
A credit union
d.
A mutual fund
The equilibrium between supply and demand of loanable funds determines

Selected Answer: c.
The real interest rate
Answers: a.
The price of a bond
b.
The nominal interest rate
c.
d.
The price of a stock
Which of the following is not a component of a bond

Selected Answer: c.
A lenght of time
Answers: a.
Tax treatment
b.
Credit risk
c.
A lenght of time
d.
Dividens
Study guide 9
Question 1
0 out of 10 points
The tools of fiscal policy are:
Selected Answer: b.
Taxes and reserves
Answers: a.
Government purchases and discount rate
b.
Taxes and reserves
c.
Government purchases and taxes
d.
Taxes and interest rates
Question 2
10 out of 10 points
The government purchases multiplier formula is:
Selected Answer: a.
1/(1 MPC)
Answers: a.
1/(1 MPC)
b.
MPC/(1 MPC)
c.
(1 MPC)
d.
(1 MPC)/(1 MPC)
Question 3
0 out of 10 points
When the overall level of prices in the economy rises:
Selected Answer: a.
Interest rate decreases
Answers: a.
b.
Interest rate doesnt change
c.
Money demand decreases
d.
Interest rate increases
Question 4
0 out of 10 points
The aggregate demand shows the relationship between:
Selected Answer: c.
The price level and the quantity of petential GDP
Answers: a.
The interest rate and the quantity of loanable funds demanded
b.
The price level and the quantity of real GDP demanded
c.
The price level and the quantity of petential GDP
d.
The aggregate income and the aggregate expenditure
Question 5
0 out of 10 points
The aggregate demand slopes downward for any of the following reasons, EXCEPT:
Selected Answer: a.
The wealth effect
Answers: a.
The wealth effect
b.
The interest rate effect
c.
The crowding out effect
d.
The exchange rate effect
Question 6
0 out of 10 points
If the MPC = 0.75, a $10 billion increase in government purchases increases the real GDP by
Selected Answer: a.
$30 billion
Answers: a.
$30 billion
b.
$0.75 billion
c.
$40 billion
d.
$25 billion
Question 7
0 out of 10 points
If the Central Bank increases the discount rate:
Selected Answer: b.
The aggregate demand increases
Answers: a.
The aggregate supply increases
b.
c.
The aggregate demand decreases
d.
The aggregate supply decreases
Question 8
10 out of 10 points
Selected Answer: a.
The money supply decreases
Answers: a.
b.
The money supply increases
c.
The money demand decreases
d.
The money demand increases
Question 9
10 out of 10 points
The Central Bank controls the money supply with all of these instruments EXCEPT:
Selected Answer: d.
Wage controls like the minimum wage
Answers: a.
Open market operations
b.
Changing the reserve requirements
c.
Changing the discount rate
d.
Question 10
10 out of 10 points
When the government increases its own purchases of goods and services:
Selected Answer: c.
Shifts the aggregate demand curve rightwards
Answers: a.
Shifts the aggregate supply curve rigthtwards
b.
Shifts the aggregate demand curve leftwards
c.
d.
Shifts the aggregate supply curve leftwards
For the U.S. economy, the most important reason for the downward slope of the aggregate-
demand curve is:
Selected Answer: c.
The wealth effect

Answers: a.

b.

c.
The wealth effect

d.

The equilibrium interest rate is
Selected Answer: c.
The one that balance the supply and demand for money
Answers: a.
All the answers are correct

b.
The one that is determined by the Central Bank

c.
d.
The one at which commercial banks lend money
If the interest rate in the money market is above the equilibrium level:
Selected b.
Answer:
The quantity of money that people want to hold could be less or greater
than the quantity of money the Central Bank has supplied
Answers: a.
People will sell interest-bearing bonds
b.
c.
The quantity of money that people want to hold is greater than the
quantity of money the Central Bank has supplied
d.
The quantity of money that people want to hold is less than the quantity
of money the Central Bank has supplied
The money demand curve is downward sloping because:

Selected d.
Answer:
The opportunity cost of holding money increase when interest rate
increase
Answers: a.
The opportunity cost of holding money decrease when interest rate

increase
b.
None of the answers are correct
c.

decrease
d.

increase
Question 10
0 out of 10 points
Using the AD-AS model, in the short run an increase in government spending
Selected Answer: b.
increases real GDP and decreases the price level
Answers: a.
has no impact on real GDP
b.
c.
decreases both real GDP and the price level
d.
increases both real GDP and the price level
Question 5
0 out of 10 points
When the interest rate rise:
Selected Answer: a.
The quantity of goods and services supplied increase

Answers: a.

b.
c.
The quantity of goods and services demanded increase
d.
The quantity of goods and services demanded falls
Question 6
0 out of 10 points
When the government increases its own purchases in $20 billion and the GDP increases more
than $20 billion is because:
Selected Answer: b.
There is a major change in the other components of GDP demanded
Answers: a.
There is a multiplier effect on aggregate demand
b.
c.
The interest rates are higher

d.
People will spend more money in the money market
Question 7
10 out of 10 points
Which of the following is NOT a revenue source for the Federal government?
Selected Answer: c.
Interest rate on corporate bond holdings
Answers: a.
Consumption taxes
b.
Personal income taxes
c.
d.
Corporate income taxes
Question 1
10 out of 10 points
Selected Answer: a.
The U.S. Treasury
Answers: a.
The U.S. Treasury
b.
c.
d.
A commercial bank
Question 2
10 out of 10 points
It represents a partial ownership in a firm and a claim to the profits that the firm makes
Selected Answer: d.
a stock
Answers: a.
a bond
b.
a security
c.
d.
a stock
Question 3
10 out of 10 points
Is a certificate of indebtdness that specifies obligations of the borroer to the holder:
Selected Answer: b.
A bond
Answers: a.
A stock
b.
A bond
c.
A financial institution
d.
Question 4
0 out of 10 points
The crowding out effect ocurrs when
Selected c.
Answer: A budget surplus decreses the supply of loanable funds increases interest rate
Answers: a.
A budget defict decreses the supply of loanable funds increases interest rate
b.
A budget surplus increases the supply of loanable funds rdecreses interest rate
and increases investment
c.
A budget surplus decreses the supply of loanable funds increases interest rate
d.
A budget defict reduces the supply of loanable funds decreses interest rate and
decreses investment
Question 5
10 out of 10 points
Is an insitution that sells shares to the public and uses the proceeds to buy a portfolio, of various
types of stocks, bonds or both.
Selected Answer: c.
A mutual fund
Answers: a.
A bank
b.
A credit union
c.
A mutual fund
d.
A insurance compay
Question 6
10 out of 10 points
If the government reduce taxes to encourage greater savings, the result will be:
Selected Answer: c.
Answers: a.
A lower interest rate and lower investment
b.
A higher interest rate and lower investment
c.
d.
A higher interest rate and greater investment
Question 7
10 out of 10 points
Selected Answer: a.
Dividens
Answers: a.
Dividens
b.
Tax treatment
c.
A lenght of time
d.
Credit risk
Question 8
10 out of 10 points
When the government borrows money to finance its deficit, reduces the supply of loanable
funds, then:
Selected Answer: b.
Answers: a.
There will be a lower interest rate and higher investment
b.
c.
There will be a lower interest rate and lower investment
d.
There will be a higher interest rate and higher investment
Question 9
10 out of 10 points
Selected Answer: c.
Answers: a.
b.
c.
d.
The price of a bond
Question 10
10 out of 10 points
Is made up of financial institutions that coordinate the actions of savers and borrowers:
Selected Answer: b.
financial system
Answers: a.
financial markets
b.
financial system
c.
d.
financial intermediaries
Question 1
10 out of 10 points
When the government increases its own purchases of goods and services:
Selected Answer: b.
Answers: a.
Shifts the aggregate demand curve leftwards
b.
c.
Shifts the aggregate supply curve rigthtwards
d.
Shifts the aggregate supply curve leftwards
Question 2
10 out of 10 points
The money supply curve is
Selected Answer: a.
Vertical and independet of the interest rate
Answers: a.
Vertical and independet of the interest rate
b.
Vertical and dependent of the interest rate
c.
Positive and dependent of the interest rate
d.
Positive and independent of the interest rate
Question 3
0 out of 10 points
The aggregate demand curve shifts for many reasons, incluiding:
Selected Answer: b.
Change in money wages
Answers: a.
Fiscal and monetary policies
b.
c.
Technological advances
d.
Capital accumulation
Question 4
10 out of 10 points
The equilibrium interest rate is
Selected Answer: a.
Answers: a.
b.
All the answers are correct
c.
The one at which commercial banks lend money
d.
The one that is determined by the Central Bank
Question 5
10 out of 10 points
The tools of fiscal policy are:
Selected Answer: c.
Answers: a.
Taxes and reserves
b.
Taxes and interest rates
c.
d.
Government purchases and discount rate
Question 6
10 out of 10 points
Selected Answer: b.
Answers: a.
b.
c.
d.
Question 7
10 out of 10 points
Selected Answer: d.
Answers: a.
b.
c.
d.
Question 8
10 out of 10 points
When the interest rate rise:
Selected Answer: c.
Answers: a.
The quantity of goods and services demanded increase
b.
c.
d.
Question 9
10 out of 10 points
When the government increases consumption taxes on goods and services:
Selected Answer: b.
The aggregate demand curve shifts leftwards.
Answers: a.
The aggregate supply curve shifts rightwards.
b.
c.
The aggregate supply curve shifts leftwards.
d.
The aggregate demand curve shifts rightwards.
Question 10
10 out of 10 points
Selected Answer: c.
$40 billion
Answers: a.
$25 billion
b.
$30 billion
c.
$40 billion
d.
$0.75 billion
EXAMEN
Question 1
2.5 out of 2.5 points
Selected Answer: c.
productivity.
Answers: a.
marginal benefit
b.
externality
c.
productivity.
d.
opportunity cost
Question 2
Labor productivity is measured by
Selected Answer: c.
Answers: a.
real GDP per unit of capital
b.
capital per hour of work
c.
d.
real GDP.
Question 3
What is the most important factor that explain differences in living standards across countries?
Selected Answer: a.
productivity.
Answers: a.
productivity.
b.
equality.
c.
the level of unemployment
d.
the quantity of money
Question 4
A productivity growth slowdown can be caused by
Selected Answer: a.
Answers: a.
b.
a higher growth rate of capital per hour
c.
a higher growth rate of technological progress
d.
reduced energy prices
Question 5
0 out of 2.5 points
GDP in 2001?
phones
2001 18 500 40 150
2002 24 750 45 400
Selected Answer: c.
$15,000
Answers: a.
$15,000
b.
$9,000
c.
$15,000
d.
$2,232
Question 6
Selected Answer: d.
$20,000
Answers: a.
$19,048
b.
$21,000
c.
$22,050
d.
$20,000
Question 7
Government purchases of goods $240
and services
Depreciation 240
Gross private domestic investment 400
Net taxes 120
Net exports of goods and services 80
Personal consumption expenditures 640
Net interest 100
Selected Answer: d.
$1,360
Answers: a.
$1,120
b.
$1,280
c.
$1,290
d.
$1,360
Question 8
dollars) dollars)
1998 2500 ____ 105
1999 ____ 2400 117
Selected Answer: d.
$2381 billion
Answers: a.
$2051 billion
b.
$2137 billion
c.
$2520 billion
d.
$2381 billion
Question 9
Selected Answer: c.
Answers: a.
b.
c.
d.
Question 10
If the MPC = 0.85, the government purchases multiplier is
Selected Answer: d.
6.67
Answers: a.
0.67
b.
15
c.
1.18
d.
6.67
Question 11
Using the data in the table, what is the inflation rate between 1998 and 1999?
dollars) dollars)
1998 2500 ____ 105
1999 ____ 2400 117
Selected Answer: a.
11.4 percent
Answers: a.
11.4 percent
b.
12.3 percent
c.
7.9 percent
d.
10.25 percent
Question 12
1997 5,200 4,800
1998 5,500 112
1999 5,740 5,000
Selected Answer: a.
1.8 percent.
Answers: a.
1.8 percent.
b.
2.5 percent.
c.
Without more information, the economic growth cannot be calculated.
d.
14.8 percent
Question 13
In 1980, the minimum wage in Mexico was 0.14 pesos and the CPI was 0.08. What would be
the minimum wage in 2015 if the CPI was 128.2 in that year?:
Selected Answer: d.
224.34
Answers: a.
128.20
b.
We need more information to answer the question
c.
2,804.40
d.
224.34
Question 14
construct the CPI for a small nation. It also has the 1999 prices. What is the value of the CPI for
the yesar 1999?:
1992 1999
Movie
tickets 4 $5.00 $7.50
Bags of
popcorn 2 $3.00 $3.00
Drinks of
soda 4 $1.00 $1.50
Selected Answer: a.
140
Answers: a.
140
b.
100
c.
40%
d.
130
Question 15
Selected Answer: b.
Answers: a.
b.
c.
d.
Question 16
Selected Answer: a.
Answers: a.
b.
c.
d.
Question 17
GDP using the expenditure approach equals the sum of personal consumption expenditures
plus:
Selected d.
Answer: gross private investment plus government purchases of goods and services
plus net exports of goods and services.
Answers: a.
gross private investment plus government purchases of goods and services.
b.
gross private investment.
c.
gross private investment plus government purchases of goods and services
minus imports of goods and services.
d.
gross private investment plus government purchases of goods and services
plus net exports of goods and services.
Question 18
Which of the following is a macroeconomic issue?
Selected Answer: c.
Answers: a.
The cause of a decline in the price of peanut butter.
b.
What determines the amount a firm will produce.
c.
d.
How a rise in the price of sugar affects the market for sodas.
Question 19
A definition of the gross domestic product (GDP) is:
Selected d.
Answer: the market value of final goods and services produced by the economy in one
year.
Answers: a.
the value added of all final and intermediate goods and services produced by
the economy excluding those goods exported to foreign nations.
b.
the sum of wage and salary compensation of employees and corporate profits.
c.
the value of personal consumption expenditures, gross private domestic
investment, and federal government expenditures.
d.
the market value of final goods and services produced by the economy in one
year.
Question 20
Selected Answer: b.
Answers: a.
b.
c.
d.
income and saving.
Question 21
Selected Answer: c.
Answers: a.
b.
c.
d.
Question 22
Selected a.
Answer: microeconomics studies decisions of individual people and firms and
Answers: a.
b.
c.
unemployment rate.
d.
macroeconomics studies the effects of government regulation and taxes on the
price of individual goods and services whereas microeconomics does not
Question 23
Selected b.
Answer: All of the answers are adjustments would need to be made.
Answers: a.
b.
c.
d.
included.
Question 24
Selected Answer: a.
Answers: a.
b.
Production of goods that do not last more than one year, such as gasoline
c.
Production of goods that last more than one year, such as television sets
d.
Question 25
When the inflation rate is positive, the:
Selected Answer: a.
Answers: a.
b.
c.
d.
Question 26
The consumer price index (CPI):
Selected c.
Answer: compares the cost in the current period to the cost in a base period of a
basket of goods typically consumed in the base period.
Answers: a.
measures the increase in the prices of the goods included in GDP.
b.
compares the cost of the typical basket of goods consumed in period 1 to the
cost of a basket of goods typically consumed in period 2.
c.
compares the cost in the current period to the cost in a base period of a
basket of goods typically consumed in the base period.
d.
is the ratio of the average price of a typical market basket of goods to the cost
of producing those goods.
Question 27
When some dollar amount is corrected for inflation, the amount is said to be:
Selected Answer: a.
Answers: a.
b.
c.
Corrected for the substitution bias.
d.
None of the above
Question 28
0 out of 2.5 points
If the Central Bank buys bonds in an open market operation:
Selected Answer: d.
Answers: a.
b.
The aggregate demand decreases
c.
The aggregate supply decreases
d.
Question 29
Selected Answer: b.
Answers: a.
b.
c.
d.
Question 30
The aggregate demand slopes downward for any of the following reasons, EXCEPT:
Selected Answer: a.
Answers: a.
b.
The wealth effect
c.
d.
Question 31
The government purchases multiplier formula is:
Selected Answer: a.
1/(1 MPC)
Answers: a.
1/(1 MPC)
b.
(1 MPC)/(1 MPC)
c.
(1 MPC)
d.
MPC/(1 MPC)
Question 32
demand curve is:
Selected Answer: c.
Answers: a.
The wealth effect
b.
c.
d.
Question 33
The money demand curve is downward sloping because:
Selected Answer: c.
The opportunity cost of holding money increase when interest rate increase
Answers: a.
The opportunity cost of holding money decrease when interest rate increase
b.
The opportunity cost of holding money increase when interest rate decrease
c.
The opportunity cost of holding money increase when interest rate increase
d.
None of the answers are correct
Question 34
Selected Answer: a.
Answers: a.
b.
Consumption taxes
c.
d.
Question 35
When the government increases consumption taxes on goods and services:
Selected Answer: c.
Answers: a.
The aggregate supply curve shifts leftwards.
b.
The aggregate supply curve shifts rightwards.
c.
d.
The aggregate demand curve shifts rightwards.
Question 36
A direct or positive relationship exists between a countrys
Selected Answer: d.
Answers: a.
b.
rate of population growth and the extend of its trade with other countries.
c.
total population and its average citizens income
d.
Question 37
Selected Answer: a.
Answers: a.
b.
c.
d.
Question 38
Which of the following is NOT an investment
Selected c.
Answer: When you use your $200 paycheck to buy stock in AT&T
Answers: a.
When you borrow money from your aunt to buy a new computer for your business
b.
When your family takes out a mortgage and buys a new house
c.
When you use your $200 paycheck to buy stock in AT&T
d.
When you borrow $1,000 from a bank to buy a car to use in your pizza-delivery
business
Question 39
Selected Answer: c.
Answers: a.
b.
c.
d.
The price of a bond
Question 40
Selected Answer: c.
Dividens
Answers: a.
A lenght of time
b.
Credit risk
c.
Dividens
d.
Tax treatment
Question 1
Selected Answer: d.
Answers: a.
b.
c.
d.
Question 2
Selected Answer: b.
Dividens
Answers: a.
Credit risk
b.
Dividens
c.
A lenght of time
d.
Tax treatment
Question 3
Selected Answer: d.
The U.S. Treasury
Answers: a.
b.
A commercial bank
c.
d.
The U.S. Treasury
Question 4
When the government spends more money than it receives:
Selected Answer: d.
Answers: a.
b.
The government reduce its debt
c.
The government runs a budget surplus
d.
Question 5
The law of diminishing returns states that if
Selected d.
Answer:
amounts.
Answers: a.
all inputs in production double, so does output per labor hour.
b.
only one input is increased, output decreases by progressively smaller

amounts
c.
all inputs in production increase, output per labor hour increases but
does not necessarily double
d.

amounts.
Question 6
Selected Answer: c.
productivity.
Answers: a.
marginal benefit
b.
opportunity cost
c.
productivity.
d.
externality
Question 7
Suppose a typical worker in India can produce 32 units of a product in an eight-hour day,
while a typical worker in Bangladesh can produce 30 units of product in a10 hour-day. We can
conclude that
Selected b.
Answer:
Answers: a.
there will be no difference between the standard of living in India and
Bangladesh
b.
c.
worker productivity in Bangladesh is higher than in India
d.
productivity is 4 units per hour for the worker in Bangladesh and 3 units
per hour for the worker in India
Question 8
If capital per hour of work increases, output per hour of work
Selected Answer: c.
Answers: a.
increases because the level of technology increases
b.
c.
d.
decreases for a given level of technology
Question 9

Macroeconomics is the branch of economics that studies:
Selected Answer: d.
Answers: a.
the way individual markets work.
b.
prices of individual goods.
c.
important, as opposed to trivial, issues.
d.
Question 10
Selected Answer: c.
Answers: a.
b.
c.
d.

Question 11
Selected d.
Answer:
Answers: a.

included.
b.
c.
d.
Question 12
Selected Answer: b.
Answers: a.
b.
c.
d.
Question 13
Selected b.
Answer:
Answers: a.
macroeconomics studies the effects of government regulation and taxes on

the price of individual goods and services whereas microeconomics does
not
b.

c.
d.

unemployment rate.
Question 14
In the circular flow of economic activity:

Selected d.
Answer:
goods and services.
Answers: a.
aggregate income measures the dollar value of labor resources only.
b.
aggregate expenditure is measured as it moves through the financial

markets.
c.
aggregate expenditure measures the dollar value of purchases of

resources.
d.

goods and services.
Question 15
Selected d.
Answer:
Answers: a.
b.
c.
d.
Question 16
Selected b.
Answer:
Answers: a.
b.
c.
d.
year.
Question 17
Selected Answer: b.
Answers: a.

b.
c.
d.
Question 18
The circular flow diagram shows:
Selected Answer: b.
Answers: a.
how the prices of resources are determined.
b.
c.
the effects of inflation in a simple economy.
d.
how nominal GDP is distinct from real GDP.
Question 19
Selected Answer: d.
$40 billion
Answers: a.
$25 billion
b.
$0.75 billion
c.
$30 billion
d.
$40 billion
Question 20
Selected Answer: d.
Answers: a.
b.

c.
d.
Question 21

construct the CPI for a small nation. It also has the 1999 prices. What is the value of the CPI
for the yesar 1999?:
1992 1999
Movie
tickets $5.00 $7.50
4
Bags of
popcorn $3.00 $3.00
2
Drinks of
soda $1.00 $1.50
4
Selected Answer: b.
140
Answers: a.
100
b.
140
c.
40%
d.
130
Question 22
If the CPI in 1998 was 100 and the CPI in 1999 was 115, the rate of inflation was:
Selected Answer: a.
15 percent.
Answers: a.
15 percent.
b.
115 percent.
c.
1.5 percent.
d.
100 percent.
Question 23
Selected Answer: c.
Answers: a.
b.
c.
d.
Question 24

The table gives the real and nominal GDP or a hypothetical nation. What was real GDP in
1998?:

1997 5,200 4,800
1998 5,500 112
1999 5,740 5,000
Selected Answer: d.
$4,911 billion
Answers: a.
$4,820 billion
b.
$5,320 billion
c.
$4,875 billion
d.
$4,911 billion
Question 25
Selected Answer: a.
$20,000
Answers: a.
$20,000
b.
$22,050
c.
$19,048
d.
$21,000
Question 26
0 out of 2.5 points
In the table, using 1979 as the base year, what was real GDP in 1999?
Year Price Nominal GDP

level
1979 100 $1,600
1989 150 $3,000
1999 300 $6,000
Selected Answer: a.
$3,000.
Answers: a.
$3,000.
b.
$2,000.
c.
$1,600
d.
$6,000
Question 27
Nominal Real
Year GDP GDP GDP
dollars) of
dollars)
1998 2500 ____ 105
1999 ____ 2400 117
Selected Answer: a.
$2381 billion
Answers: a.
$2381 billion
b.
$2520 billion
c.
$2051 billion
d.
$2137 billion
Question 28
A nation produces only haircuts and cell phones. Using the data in the table, ans assuming
2001 as a base year, what is real GDP in 2002?

phones
2001 18 500 40 150
2002 24 750 45 400
Selected Answer: d.
$29,500
Answers: a.
$43,350
b.
$36,000
c.
$18,000
d.
$29,500
Question 29
Using the data in the table, what is the economic growth between 1998 and 1999?
Nominal Real
Year GDP GDP GDP
dollars) of
dollars)
1998 2500 ____ 105
1999 ____ 2400 117
Selected Answer: b.
0.8 percent
Answers: a.
7.9 percent
b.
0.8 percent
c.
10.1 percent
d.
11.4 percent
Question 30
If the interest rate in the money market is above the equilibrium level:
Selected d.
Answer:
Answers: a.
The quantity of money that people want to hold is greater than the
quantity of money the Central Bank has supplied
b.
c.
d.
Question 31
Selected Answer: d.
Answers: a.
b.
c.
d.
Question 32
Selected Answer: a.
Answers: a.
b.
c.
d.
Consumption taxes
Question 33
The Keynes theory of liquidity preferences refers to

Selected Answer: a.
what factors determine the economys interest rate

Answers: a.
what factors determine the economys interest rate

b.
Whats a liquid asset

c.
The relationship between money and goods.

d.
The liquidity of money
Question 34
The Central Bank controls the money supply with all of these instruments EXCEPT:
Selected Answer: b.

Answers: a.
Changing the discount rate
b.

c.
Open market operations

d.
Changing the reserve requirements
Question 35
0 out of 2.5 points
Selected Answer: b.
Answers: a.
b.
c.
The money demand increases
d.
The money demand decreases
Question 36
demand curve is:
Selected Answer: d.

Answers: a.

b.
The wealth effect
c.
d.
Question 37
The aggregate demand curve shifts for many reasons, incluiding:

Selected Answer: c.

Answers: a.
Technological advances
b.
c.

d.
Capital accumulation
Question 38
When the inflation rate is negative, the:
Selected Answer: d.
Answers: a.
b.
c.
d.
Question 39
The CPI tells us:
Selected d.
Answer:
urban household.
Answers: a.
the increase in the prices of those goods that are rising slowest.
b.
the rate at which wages are rising.
c.
the increase in prices of those goods that are rising fastest.
d.

urban household.
Question 40
Inflation is:
Selected b.
Answer:
Answers: a.
a general rise in all macroeconomic variablesprices, interest rates and

unemployment.
b.
c.
a rise in prices that is faster than the rise in wages.
d.
a rise in wages that is faster than the rise in prices.
Question 1
0 out of 5 points
The law of one price means that:
Selected Answer: a.
The government must fix the same price for the exchange rate
Answers: a.
b.
People will buy a good only if it has the same price in all countries
c.
A good must sell for the same price in all locations
d.
The price of the McDonalds hamburgers must be the same in all countries
Question 2
5 out of 5 points
The balance of trade is:
Selected Answer: c.
the value of exports minus the value of imports
Answers: a.
the volume of exports minus the volume of imports
b.
the total trade of the world minus the total U.S. trade
c.
d.
the volume of trade minus the value of domestic production
Question 3
0 out of 5 points
The purchase of foreign assets by domestic residents minus the purchase of domestic assets by
foreigners is called:
Selected Answer: c.
Exchange rate
Answers: a.
Interest rate
b.
Net capital outflow
c.
Exchange rate
d.
Real capital flow
Question 4
0 out of 5 points
Which of the following is NOT a factor that affects net exports?
Selected Answer: b.
The prices of goods at home and abroad
Answers: a.
The tastes of consumers
b.
c.
The interest rates
d.
The exchange rate
Question 5
5 out of 5 points
In the next table, the net exports is a
Amount
Component (billions of dollars)
Investment, I 700
Net taxes, T 1,300
Government purchases, G 1,200
Exports, X 1,500
Imports, M 1,700
Selected Answer: b.
deficit of $200 billion
Answers: a.
b.
c.
surplus of $200 billion
d.
Question 6
0 out of 5 points
The process of taking advantage of differences in prices in different markets is called:
Selected Answer: d.
Relative advantage
Answers: a.
Arbitrage
b.
Comparative advantage
c.
Absolute advantage
d.
Relative advantage
Question 7
5 out of 5 points
A countrys balance of payments accounts record
Selected d.
Answer: its international trading, borrowing, and lending
Answers: a.
the flow of human and nonhuman resources between it and its trading
partners
b.
the countrys net indebtedness to foreigners
c.
only its official transactions with other governments
d.
its international trading, borrowing, and lending
Question 8
5 out of 5 points
The real exchange rate is:
Selected d.
Answer: The rate at which a person can trade the goods and services of one country
for the goods and services of other
Answers: a.
The value of the goods and services of one country over the value of the
goods and services of other.
b.
The rate at which a person can trade the currency of one country for the
currency of other.
c.
The price index of the domestic country over the price index of the foreign
country.
d.
The rate at which a person can trade the goods and services of one country
Question 9
0 out of 5 points
When a dollar buys more foreign currency there is:
Selected Answer: d.
An appreciation of the dollar
Answers: a.
An increase in the interest rates of the foreign country
b.
A depreciation of the dollar
c.
An appreciation of the foreign currency
d.
Question 10
0 out of 5 points
The U.S. capital account measures
Selected Answer: c.
net transfer payments between U.S. residents and foreigners
Answers: a.
net increases and decreases in the U.S. holdings of foreign currency
b.
receipts from goods and services sold and transfers to and from foreigners
c.
d.
foreign investment in the United States minus U.S. investment abroad
Question 11
0 out of 5 points
If the purchasing power is always the same at home and abroad, then the exchange rate:
Selected Answer: b.
Will remain the same
Answers: a.
Will decrease
b.
c.
Could decrease, increase or remain the same.
d.
Will increase
Question 12
5 out of 5 points
The largest component of the Mexicos current account consists of:
Selected Answer: b.
receipts from exports and payments for imports
Answers: a.
United States transfers of U.S. dollars to Mexico
b.
c.
net borrowing between Mexico and other countries
d.
net interest payments between the United States and Mexico
Question 13
5 out of 5 points
Which of the following apply to exchange rate:
I. The exchange rate is a price
II. The exchange rate for a currency depends on which foreign exchange market
you use.
III. The foreign exchange rate is different from other prices because it
is NOT determined by supply and demand
Selected Answer: a.
Only I
Answers: a.
Only I
b.
II and III
c.
I, II, and III
d.
I and II
Question 14
0 out of 5 points
Which of the following is correct?
Selected c.
Answer: The private sector surplus or deficit equals net exports plus the public sector
surplus or deficit.
Answers: a.
The public sector surplus or deficit equals net exports plus the private sector
surplus or deficit.
b.
Net exports equals the government sector surplus or deficit plus the private
sector surplus or deficit.
c.
The private sector surplus or deficit equals net exports plus the public sector
surplus or deficit.
d.
Net exports equals the current account plus the capital account plus the
official settlements account.
Question 15
5 out of 5 points
By definition, currency depreciation occurs when
Selected Answer: c.
the value of one currency falls relative to another currency.
Answers: a.
the value of all currencies fall relative to gold
b.
the value of gold falls relative to the value of currencies
c.
d.
the value of one currency rises relative to another currency
Question 16
5 out of 5 points
A countrys balance of payments accounts includes all of the following EXCEPT:
Selected Answer: d.
government budget account
Answers: a.
current account
b.
capital or financial account
c.
official settlements account
d.
Question 17
5 out of 5 points
Its a theory widely accepted that explain the variations in the exchange rates:
Selected Answer: c.
Theory of Purchasing Power Parity
Answers: a.
Theory of Diminishing Returns of Capital
b.
Theory of supply and demand
c.
d.
Theory of Comparative Advantages
Question 18
5 out of 5 points
An economy that does not interact with other economies is a:
Selected Answer: d.
Closed economy
Answers: a.
Classical economy
b.
Keynesian economy
c.
Open economy
d.
Closed economy
Question 19
5 out of 5 points
In general, the net exports balance is
Selected Answer: c.
positively related to the government budget balance
Answers: a.
primarily the private sector balance
b.
mainly determined by movements in official settlements account
c.
d.
negatively related to the government budget balance
Question 20
0 out of 5 points
If the price level in one country increases faster than in other countries:
Selected Answer: b.
The exchange rate of this country will appreciate
Answers: a.
The price level in other countries will decrease
b.
c.
The exchange rate of this country will depreciate
d.
The price level in the other countries will increase
Question 1
5 out of 5 points
The balance of trade is:
Selected Answer: a.
Answers: a.
b.
the volume of trade minus the value of domestic production
c.
the volume of exports minus the volume of imports
d.
the total trade of the world minus the total U.S. trade
Question 2
5 out of 5 points
Selected Answer: b.
Answers: a.
b.
c.
d.
Question 3
5 out of 5 points
Its a theory widely accepted that explain the variations in the exchange rates:
Selected Answer: c.
Answers: a.
Theory of Comparative Advantages
b.
Theory of supply and demand
c.
d.
Theory of Diminishing Returns of Capital
Question 4
5 out of 5 points
Selected a.
Answer: its international trading, borrowing, and lending
Answers: a.
b.
c.
the flow of human and nonhuman resources between it and its trading
partners
d.
Question 5
5 out of 5 points
The process of taking advantage of differences in prices in different markets is called:
Selected Answer: c.
Arbitrage
Answers: a.
Absolute advantage
b.
Relative advantage
c.
Arbitrage
d.
Comparative advantage
Question 6
5 out of 5 points
Selected d.
Answer: Net exports equals the government sector surplus or deficit plus the private
Answers: a.
surplus or deficit.
b.
Net exports equals the current account plus the capital account plus the
official settlements account.
c.
surplus or deficit.
d.
Question 7
5 out of 5 points
Selected Answer: d.
Answers: a.
b.
c.
d.
Question 8
5 out of 5 points
Selected Answer: c.
Net capital outflow
Answers: a.
Exchange rate
b.
Real capital flow
c.
Net capital outflow
d.
Interest rate
Question 9
5 out of 5 points
II. The exchange rate for a currency depends on which foreign exchange market
you use.
III. The foreign exchange rate is different from other prices because it
is NOT determined by supply and demand
Selected Answer: a.
Only I
Answers: a.
Only I
b.
I, II, and III
c.
I and II
d.
II and III
Question 10
5 out of 5 points
Selected b.
Answer: The rate at which a person can trade the goods and services of one country
Answers: a.
country.
b.
The rate at which a person can trade the goods and services of one country
c.
The value of the goods and services of one country over the value of the
goods and services of other.
d.
The rate at which a person can trade the currency of one country for the
currency of other.
Question 11
5 out of 5 points
Selected Answer: d.
Answers: a.
b.
c.
d.
Question 12
5 out of 5 points
In the next table, the net exports is a
Amount
Component (billions of dollars)
Investment, I 700
Net taxes, T 1,300
Government purchases, G 1,200
Exports, X 1,500
Imports, M 1,700
Selected Answer: b.
Answers: a.
b.
c.
d.
Question 13
5 out of 5 points
Selected Answer: a.
Answers: a.
b.
c.
d.
Question 14
5 out of 5 points
The largest component of the Mexicos current account consists of:
Selected Answer: d.
Answers: a.
United States transfers of U.S. dollars to Mexico
b.
net interest payments between the United States and Mexico
c.
net borrowing between Mexico and other countries
d.
Question 15
5 out of 5 points
An economy that does not interact with other economies is a:
Selected Answer: c.
Closed economy
Answers: a.
Classical economy
b.
Keynesian economy
c.
Closed economy
d.
Open economy
Question 16
5 out of 5 points
Which of the following is NOT a factor that affects net exports?
Selected Answer: c.
The interest rates
Answers: a.
The tastes of consumers
b.
c.
The interest rates
d.
The exchange rate
Question 17
5 out of 5 points
Selected Answer: b.
Answers: a.
b.
c.
d.
Question 18
5 out of 5 points
By definition, currency depreciation occurs when
Selected Answer: a.
Answers: a.
b.
the value of gold falls relative to the value of currencies
c.
the value of one currency rises relative to another currency
d.
the value of all currencies fall relative to gold
Question 19
5 out of 5 points
A countrys balance of payments accounts includes all of the following EXCEPT:
Selected Answer: c.
Answers: a.
current account
b.
official settlements account
c.
d.
capital or financial account
Question 20
5 out of 5 points
If the purchasing power is always the same at home and abroad, then the exchange rate:
Selected Answer: d.
Will decrease
Answers: a.
Could decrease, increase or remain the same.
b.
c.
Will increase
d.
Will decrease
4 out of 4 points
Goods whose income elasticities are negative are called
Answers: a.
complements
b.
superior goods
c.
normal goods
d.
inferior goods
Question 2
4 out of 4 points
An increase in the number of fast-food restaurants

Answers: a.
raises the price of fast-food meals

b.
increases the supply of fast-food meals

c.
increases the demand for substitutes for fast-food meals

d.
increases the demand for fast-food meals
Question 3
4 out of 4 points
The price elasticity of demand measures

Answers: a.

b.
how sensitive the quantity demanded is to changes in demand

c.
the slope of a demand curve

d.
how often the price of a good changes

Question 4
4 out of 4 points
Economies to scale refer to

Answers: a.
a feature of short-run production functions but not long-run production functions

b.
the point at which marginal cost equals average cost

c.
the range of output over which the long-run average cost falls as output increases
d.
the fact that in the long run, fixed costs remain constant as output increases
Question 5
4 out of 4 points
The bowed-outward shape of a PPF:

Answers: a.
illustrates the fact that no opportunity cost is incurred for increasing the
production of the good measured on the horizontal axis but it is incurred to
increase production of the good measured along the vertical axis
b.

c.
is due to capital accumulation

d.
reflects the unequal application of technology in production
Question 6
4 out of 4 points
Which of the following will shift the supply curve for good X leftward?
Answers: a.
A technological improvement in the production of X

b.

c.
A situation in which quantity demanded exceeds quantity supplied

d.
A decrease in the wages of workers employed to produce X.
Question 7
4 out of 4 points
Which of the following principles refers to how people make decisions?
Answers: a.
b.
c.
Trade Can Make Everyone Better Off
d.
A Country's Standard of Living Depends on Its Ability to Produce Goods and

Services
Question 8
4 out of 4 points

Answers: a.

b.

c.

d.
Question 9
4 out of 4 points
construct the CPI for a small nation. It also has the 1999 prices. What is the value of the CPI for
the yesar 1999?:
1992 1999
Movie
tickets $5.00 $7.50
4
Bags of
popcorn $3.00 $3.00
2
Drinks of
soda $1.00 $1.50
4
Answers: a.
100
b.
130
c.
40%
d.
140
Question 10
4 out of 4 points
To increase living standards, public policy should

Answers: a.
make unemployment benefits more generous

b.
move workers into jobs directly from high school

c.
ensure that workers are well educated and have the necessary tools and
technology
d.
ensure a greater degree of equality, taking all income-earners into account
Question 11
4 out of 4 points

Answers: a.

b.

c.
A commercial bank
d.
The U.S. Treasury

Question 12
4 out of 4 points
GDP using the expenditure approach equals the sum of personal consumption expenditures
plus:
Answers: a.
gross private investment plus government purchases of goods and services.

b.
gross private investment plus government purchases of goods and services plus
c.
gross private investment.

d.
gross private investment plus government purchases of goods and services minus
imports of goods and services.
Question 13
4 out of 4 points
Which of the following directly creates growth in labor productivity?
I. Growth in capital per hour of labor.
II. Technological change.
III. Population growth.
Answers: a.
I and III
b.
II
c.
I
d.
I and II.
Question 14
4 out of 4 points
Nominal Real
Year GDP GDP GDP
dollars) of
dollars)
1998 2500 ____ 105
1999 ____ 2400 117
Answers: a.
$2520 billion
b.
$2051 billion
c.
$2137 billion
d.
$2381 billion
Question 15
4 out of 4 points
Answers: a.
b.

c.

d.
Question 16
4 out of 4 points

Answers: a.

b.

c.

d.
Question 17
4 out of 4 points

Answers: a.
Net exports equals the current account plus the capital account plus the official
settlements account.
b.
surplus or deficit.
c.
d.
surplus or deficit.
Question 18
4 out of 4 points

Answers: a.
the flow of human and nonhuman resources between it and its trading partners
b.

c.

d.
Question 19
4 out of 4 points

II. The exchange rate for a currency depends on which foreign
exchange market you use.
III. The foreign exchange rate is different from other prices because
it is NOT determined by supply and demand
Answers: a.
I, II, and III

b.
II and III
c.
I and II
d.
Only I
Question 20
4 out of 4 points

Answers: a.
The rate at which a person can trade the currency of one country for the currency
of other.
b.
The value of the goods and services of one country over the value of the goods
and services of other.
c.
The rate at which a person can trade the goods and services of one country for
the goods and services of other
d.
country.
Question 21
4 out of 4 points
Answers: a.
Net capital outflow

b.
Real capital flow

c.
Exchange rate
d.
Interest rate
Question 22
4 out of 4 points

Answers: a.

b.

c.
d.
Question 23
4 out of 4 points

Answers: a.

b.

c.

d.
Question 24
4 out of 4 points
Answers: a.

b.

c.

d.
Question 25
4 out of 4 points

Answers: a.

b.
c.
d.
http://web.cjcu.edu.tw/~lcc/Courses/1_tb03.pdf
http://academic.udayton.edu/PMIC/MC%20Questions/Chap%209%20MC.pdf

Impera PDF

Transféré par

Informations du document

Titre original

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Impera PDF

Transféré par

Droits d'auteur :

Formats disponibles

Study GUIDE 1

The issue of scarcity exists:

Which of the following is a positive statement?

The PPF shifts if:

The Market for Wapanzo Beans

personal consumption expenditures.

net exports of goods and services.

government purchases of goods and services.

personal consumption expenditures.

gross private domestic investment.

In broad terms the difference between microeconomics and macroeconomics is that:

macroeconomics studies the effects of government regulation and taxes on

they use different sets of tools and ideas.

microeconomics studies the effects of government taxes on the national

microeconomics studies decisions of individual people and firms and

Economists distinguish real from nominal GDP to:

determine whether real production has changed.

determine whether the government sector is growing.

determine whether real production has changed.

measure the change in nominal interest rates.

determine whether economic welfare has changed.

Aggregate expenditures include all of the following EXCEPT:

purchases of intermediate goods.

purchases of intermediate goods.

purchases of a piece of capital equipment.

purchases of guns by the government.

consumption and investment.

saving and investment.

consumption, investment, and saving.

income and saving.

consumption and investment.

The circular flow diagram shows:

how the prices of resources are determined.

the effects of inflation in a simple economy.

the flows between different sectors of the economy.

how nominal GDP is distinct from real GDP.

The circular flow diagram indicates that:

firms buy the services of resources from the government.

firms buy goods and services from households.

households sell the services of resources to firms.

firms buy the services of resources from the government.

households sell goods and services to the government.

Nominal GDP Real GDP GDP

From the data in the next table, GDP equals

Government purchases of $240

Price of a Quantity Price of a Quantity

Nominal GDP Real GDP GDP

The amount of leisure time that households have would need to be

All of the answers are adjustments would need to be made.

The effect of pollution on the environment would need to be included.

Nominal GDP Real GDP GDP

Without more information, the inflation rate cannot be calculated.

The GDP deflator equals 100 times:

nominal GDP divided by real GDP.

gross domestic product divided by net domestic product.

real GDP divided by nominal GDP.

nominal GDP divided by real GDP.

net domestic product divided by gross domestic product.

The GDP deflator is:

the least used price index because it is so costly to calculate.

a general indicator of inflation because it measures changes in prices of

an index used to calculate inflation at the wholesale level.

Nominal GDP Real GDP GDP