question

The value of the best opportunity that must be sacrificed in order to take the action.

answer

Ch 1.The opportunity cost of an action is best defined as which of the following?

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if something is true for an individual, then it must also be true for the group.

answer

Ch 1.The fallacy of composition is the incorrect view that

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People will rationally choose not to become fully informed when making decisions.

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Ch1. Because information is costly to acquire, how does the cost change decision making?

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It depends on many factors, including who uses it and under what circumstances.

answer

Ch1.How is the value of a good determined?

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Other things are assumed to be constant.

answer

Ch 1.Economists use the term ceteris paribus to indicate which of the following?

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Adam Smith and the writing of The Wealth of Nations.

answer

Ch1.Modern economics as a field of study is usually thought to have begun with which of the following

question

Charge a stand-by passenger more than $100.

answer

Ch 1. Suppose an airline company has several empty seats on a flight and the full price of an air ticket is $500 while the marginal cost per passenger is $100. The flight leaves in one hour. Which of the following actions will be the best profitable way to to ensure the remaining seats are sold?

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what is true for the individual will also be true for the group.

answer

Ch1.The fallacy of composition is the fallacious view that

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Her marginal value of food has fallen to zero.

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ch1. A local restaurant offers an "all you can eat" Sunday brunch for $12. Susan eats four servings but leaves half of a fifth helping uneaten. Why?

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The use of resources to produce a good has an opportunity cost because of scarcity.

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ch1.What does the expression "There's no such thing as a free lunch" mean?

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An opportunity cost is always present when scarce resources are used to produce an item.

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ch1.There is no such thing as a free lunch." This statement best reflects which of the following?

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Scarcity imposed by nature

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ch1.Criteria for rationing goods and resources must be established due to which of the following?

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It is a powerful force for economic progress when it is directed by competitive markets.

answer

ch1. According to Adam Smith, what role does individual self-interest play in directing human activity?

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Positive statements are based on fact while normative statements are based on opinion

answer

ch1.Which of the following correctly states the difference between positive economic statements and normative economic statements?

question

The unbiased development and testing of theories about how the world works.

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ch1.What is meant by scientific method?

question

Resource owners will conserve vital resources for the future, particularly if they expect the resource to increase in value.

answer

ch2. Which of the following will most likely occur under a system of clearly defined and enforced private property rights?

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An outward shift of the curve.

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ch2.Using a production possibilities curve, a technological advance that increases the amount of output for both goods while using the same amount of inputs would be illustrated by which of the following?

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Florida has a comparative advantage in producing oranges.

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ch2.Given freedom of movement for both goods and resources, if Florida producers specialize in oranges and Georgia producers specialize in peaches, it would be reasonable to conclude that

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An increase in the rate of investment as a share of total output

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ch2.Other things constant, which of the following would you expect to increase the output growth rate of a country?

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socialism

answer

ch2.A system of economic organization in which the ownership and control of productive capital assets rests with the state and in which resources are allocated through central planning and political decision making is called

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is a high opportunity cost producer.

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ch2.The law of comparative advantage implies that a nation, individual, or region should trade for those economic goods for which it

question

Consider the wishes of others before using their resources.

answer

ch2.When private ownership rights are well-defined and enforced, owners of physical assets and resources will have an incentive to do which of the following?

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capitalism.

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ch2. A form of economic organization that relies primarily on private ownership of productive assets, freedom of exchange, and market prices to allocate goods and resources is often called

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It shifts the production possibilities curve outward, away from the origin.

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ch2.As a general rule, what impact does technological progress have on a PPC?

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Exchange creates value by moving goods from parties who value them less to parties who value them more.

answer

ch2.Which of the following most accurately states the economic significance of exchange?

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the value of the highest valued alternative that must be forgone because of attending the class

answer

ch2 .Which of the following activities describes the opportunity cost of attending an economics class?

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an increase in unemployment

answer

ch2.Which of the following will be most likely to cause the production possibilities curve for a country to shift inward?

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Specialization and exchange will make it possible for trading partners to expand their combined output.

answer

ch2.The law of comparative advantage explains which of the following?

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using the property in a manner that invades or infringes on the property of another

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ch2.Which of the following is a private owner prohibited from doing?

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she spends less time doing other things.

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ch2.Sally wishes to spend more time this week studying for her classes. Using the idea of a production possibilities curve, and assuming Sally is currently spending all of her time efficiently, Sally can spend more time studying this week only if

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The inverse relationship between the price of a good and the quantity demanded.

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ch3.Which of the following best expresses the law of demand?

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number of tickets that will be purchased at various prices.

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ch3.A demand curve for concert tickets would show the

question

an increase in quantity supplied

answer

ch3.An increase in demand will cause

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a technological advance that lowers the cost of producing wheat

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ch3.Which of the following would most likely cause the supply of wheat to increase?

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an increase in quantity demanded.

answer

ch3. An increase in supply will cause

question

Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.

answer

ch3.Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

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an increase in the supply of the good

answer

ch3.If we observe a decrease in the price of a good and an increase in the amount of the good bought and sold, this could be explained by

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basic principle of economics: Incentives influence behavior in a predictable fashion.

answer

ch3.The law of demand is simply a reflection of the

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Price would increase, and quantity would decrease.

answer

ch3.If the supply of a good decreased, what would be the effect on the equilibrium price and quantity?

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increase, which is a shift to the right of the demand curve.

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ch3.For a typical product, an increase in consumer income will cause the market demand for the product to

question

It increases.

answer

ch3.If price rises, what happens to quantity supplied of a product?

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It decreases.

answer

ch3.If price rises, what happens to the quantity demanded for a product?

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It does not change.

answer

ch3.If price falls, what happens to the demand for a product?

question

Equilibrium quantity will rise, fall, or stay the same and equilibrium price will increase.

answer

ch3.Suppose demand increases and supply decreases. Which of the following will happen?

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there is excess demand for the good.

answer

ch3.The price of a good will tend to rise when

question

It fails to account for the introduction of new goods.

answer

ch7. Which of the following is one of the widely-acknowledged problems with the consumer price index (CPI) as a measure of the cost of living?

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purchase of a new home

answer

ch7.Which of the following expenditures are not included in the consumption component of GDP?

question

$7.2 billion of exports and $4.8 billion of imports.

answer

ch7.Suppose a country had $2.4 billion of net exports and bought $4.8 billion of goods and services from foreign countries. This country would have

question

Ms. Bartolini pays $500 to fix the front end of her car damaged in a recent accident.

answer

ch7.Which one of the following transactions would be included in GDP?

question

the goods and services that are typically bought by consumers as determined by government surveys

answer

ch7.What basket of goods is used to construct the CPI?

question

$52.4 billion of exports and $44.1 billion of imports.

answer

ch7.Suppose a country had net exports of $8.3 billion and sold $52.4 billion of goods and services abroad. This country had

question

In German GDP, but it is not included in U.S. GDP

answer

ch7.Anna, a U.S. citizen, works only in Germany. Where is the value she adds to production in Germany included?

question

It is included in U.S. GNP, but it is not included in U.S. GDP.

answer

ch7.Greg, a U.S. citizen, works only in Canada. Where is the value that his labor contributes to put in national income accounting?

question

Inventory investment adds to GDP because it represents goods produced during the current period.

answer

ch7.Which of the following about inventory changes and GDP is true?

question

The 2006 sale affected neither 2005 GDP nor 2006 GDP.

answer

ch7.Until recently, George lived in a home that was newly constructed in 2005. In 2005, he paid $200,000 for the brand new house. He sold the house in 2006 for $225,000. Which of the following statements is correct regarding the sale of the house?

question

a freight-hauling firm buying a new domestically produced truck

answer

ch7.Which one of the following would count as investment in the national income accounts?

question

Yes, because these inventories are part of the output of the economy in 2007.

answer

ch7.A business produced $10 million of goods in 2007 but sold only $9 million. Is the $1 million increase in inventory counted as part of the 2007 gross domestic product?

question

either output, or the general level of prices, or both must be rising.

answer

ch7. If nominal GDP rises from one year to the next, then

question

a price index has been used to adjust money GDP for the effects of inflation.

answer

ch7. When economists speak of changes in GDP measured in constant dollars, they mean that

question

sold $6 billion more goods and services during the year than they produced.

answer

ch7.If inventory investment during a year was negative $6 billion, producers must have

question

Uncertainty about changes in relative prices causes a decrease in economic efficiency.

answer

ch8.What happens during periods when the inflation rate fluctuates widely?

question

Real GDP rises, and unemployment falls.

answer

ch8.Which of the following will most likely occur during the expansionary phase of a business cycle?

question

Joe, who is on layoff waiting for better weather so he can return to his construction job

answer

ch8.Which one of the following persons would be classified as unemployed by the Bureau of Labor Statistics?

question

One of every ten people in the labor force is currently unemployed

answer

ch8.Suppose the official unemployment rate is 10 percent. Which of the following is a definite conclusion to draw?

question

cyclical unemployment.

answer

ch8.The natural rate of unemployment occurs if there is no

question

Normal dynamic changes given the institutional arrangements of the economy.

answer

ch8.What causes the natural rate of unemployment to exist?

question

Not a member of the labor force.

answer

ch8.Mallory Trammell is a homemaker. Last week, she was busy with her normal household activities. How will she be classified by the Bureau of Labor Statistics?

question

A laid-off construction worker waiting to return to a previous job.

answer

ch8.Which of the following would be officially classified as unemployed?

question

cyclical unemployment

answer

ch8.Full employment means which of the following is zero?

question

Frictional

answer

ch8.Jacqueline, a brilliant new Ph.D. in economics, has turned down many job offers because she hopes eventually to teach at one of the top ten universities in her field. What type of unemployment is she experiencing?

question

frictional unemployment.

answer

ch8.Sharon was being treated unfairly by her boss, so she stormed off the job and two days later found another position. For two days, Sharon experienced

question

The unemployment rate increases, and the labor-force participation rate decreases.

answer

ch8. Matt loses his job and decides to sit on the beach rather than looking for work the next few months. Other things the same, what happens to the unemployment rate and labor-force participation rate?

question

The sales of most businesses decline, and the unemployment rate rises.

answer

ch8.Which of the following will most likely occur during the contractionary phase of a business cycle?

question

Periods of growth in real output followed by periods of decline.

answer

ch8.Which of the following best describes the distinguishing characteristics of business cycles?

question

Unemployed

answer

ch8.How would the Bureau of Labor Statistics classify a person who is not working and refuses an offer of employment in order to keep looking for a better job?

question

Businesses buy resources from households, and households use their income to buy goods and services from businesses.

answer

ch9.Which of the following best characterizes the circular flow of income?

question

7%

answer

ch9.Suppose people anticipate inflation will be 3 percent during the next several years. If this is true, when the real interest rate is 4 percent, what will be the nominal (money) interest rate?

question

profits will increase.

answer

ch9.If resource prices are fixed and the product selling price rises, then

question

The quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is below equilibrium.

answer

ch9.Which of the following is true if there is a shortage of loanable funds?

question

the Yen depreciates relative to the dollar.

answer

ch9.If the dollar appreciates relative to the Yen, it can be said that

question

The quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is above equilibrium.

answer

ch9.Which of the following is true if there is a surplus of loanable funds?

question

Increase the cost of producing goods and services, which will lead to a higher price level.

answer

ch9.Other things constant, an increase in resource prices will do which of the following?

question

Competitive forces will restore the usual relationship between product prices and costs.

answer

ch9.Which of the following will occur once decision makers fully adjust to an increase in prices?

question

U.S. exports to England decrease.

answer

ch9. A decrease in the dollar price of the English pound will make

question

people would want to lend more, making the quantity of loanable funds supplied increase.

answer

ch9.Other things the same, when the interest rate rises

question

Real output or real GDP.

answer

ch9.Within the aggregate demand/aggregate supply framework, what does the quantity produced and purchased in the goods and services market represent?

question

purchases of stock and bonds

answer

ch9.Which of the following is not included in aggregate demand?

question

The output of the economy will correspond with the full-employment output.

answer

ch9.Which of the following will always be true when an economy is in long-run equilibrium?

question

the nation must be experiencing a net capital outflow.

answer

ch9.If equilibrium is present in the foreign exchange market and a nation is experiencing a trade surplus,

question

European demand for U.S. government bonds.

answer

ch9.Which of the following would generate a supply of euros in exchange for dollars?

question

short-run and long-run aggregate supply

answer

ch10.An improvement in technology would shift which of the following curve(s)?

question

lower resource prices and lower real interest rates

answer

ch10.If an unanticipated decrease in aggregate demand results in an output below the economy's long-run capacity, long-run equilibrium will eventually be restored by

question

a supply shock that will increase short-run aggregate supply.

answer

ch10.An abnormally large grain crop due to highly favorable weather conditions in the Midwest is an example of

question

current output is less than the economy's full-employment level.

answer

ch10.Resource prices will fall and short-run aggregate supply will increase if

question

an increase in the rate of investment

answer

ch10.Which of the following will most likely increase long-run aggregate supply?

question

Excess demand in resource markets will lead to higher resource prices, which will increase costs and direct the economy toward full employment.

answer

ch10.When an economy is temporarily operating at an output that is beyond its full-employment rate, which of the following is true?

question

a decrease in output and a lower price level

answer

ch10.Which of the following will most likely occur in the short run if long-run equilibrium is disturbed by an unanticipated decrease in aggregate demand?

question

Output will decrease, and the general level of prices will fall.

answer

ch10.How will an unanticipated decrease in aggregate demand influence equilibrium output in the goods and services market?

question

higher oil prices resulting from a revolution in an oil-exporting country

answer

ch10.Which of the following will most likely be an unanticipated economic change?

question

an increase in the general level of prices

answer

ch10.Which of the following will most likely result from an unanticipated decrease in aggregate supply due to unfavorable weather conditions in agricultural areas?

question

Net exports will decrease and AD will shift leftward.

answer

ch10.If Asian economies suffer a serious economic slump, what will happen to U.S. net exports and Aggregate Demand (AD)?

question

an increase in employment

answer

ch10.If there is an unanticipated increase in aggregate demand, which of the following is most likely to occur?

question

increase long-run aggregate supply.

answer

ch10.Within the AD/AS model, an increase in capital formation that permits the economy to achieve a larger output will

question

Prices rise and output falls.

answer

ch10. What usually happens after an adverse supply shock?

question

will converge toward the economy's long-run capacity

answer

ch10.Within the framework of the AD/AS model, in the long run, output

question

Agricultural interests seek a redistribution of income favoring themselves.

answer

ch6.Which of the following provides the most reasonable explanation for why agricultural interests lobby for higher farm subsidies and price supports?

question

a. Private companies face a profit motive that keeps them operating efficiently, government bureaucracies use taxpayer money and, therefore, do not face this profit motive. c. Politicians have a strong incentive to support projects that have immediate and easily recognized benefits and distant and unidentifiable costs, even if the total costs outweigh the total benefits. d. Politicians have a strong incentive to support programs where the benefits are highly concentrated on special interest groups and the costs are widely dispersed among voters, even if the total costs outweigh the benefits.

answer

ch6.Which of the following represents why private production tends to be more efficient then government production?

question

Producers are generally better organized than consumers

answer

ch6.Why do producers tend to be better represented in lobbying efforts and other elements of the political process than consumers?

question

that reflect the political attractiveness of special-interest issues

answer

ch6.Restrictions that limit sugar imports, subsidies for the construction of sports stadiums, and federal spending on programs like the construction of an indoor rain forest in Iowa all provide examples of government programs

question

the shortsightedness effect

answer

ch6.Which of the following explains why elected representatives will find borrowing to be an attractive method of financing current government programs?

question

a. Each representative has little incentive to oppose pork-barrel spending since the tax savings would accrue to taxpayers throughout the nation. b. General opposition to pork-barrel spending by a legislator would make it more difficult for the legislator to arrange for pork-barrel projects that provide concentrated benefits for his district. c. Logrolling increases the likelihood that pork-barrel projects will be approved.

answer

ch6.Which of the following explains why pork-barrel spending is often approved, even when the spending is inefficient?

question

Spend more time rent seeking

answer

ch6.As both the budget and regulatory powers of government grow, public choice analysis indicates that individuals and groups will find it in their interest to do which of the following?

question

The lack of incentive voters have to become well-informed about candidates and issues because their vote is unlikely to affect the outcome of an election.

answer

ch6.The rational-ignorance effect refers to which of the following scenarios?

question

When businesses either implicitly or explicitly provide political decision-makers with contributions and other forms of political support in "exchange" for government favors that will improve their profitability.

answer

ch6.When is crony capitalism most likely to be present?

question

both the market and the government may fail to meet conditions of economic efficiency; in each individual case, the choice of market or public-sector action requires careful evaluation.

answer

ch6.An analysis of market failure and government failure indicates

question

too much of these activities relative to what would be efficient.

answer

ch6. For activities in which the benefits are concentrated and the costs widespread, governments are likely to undertake .

question

Public choice analysis suggests that the primary motivating factor for politicians will be finding the policies that are most likely to

answer

ch6.Public choice analysis suggests that the primary motivating factor for politicians will be finding the policies that are most likely to

question

grown rapidly.

answer

ch6.Measured as a share of national income, government expenditures on income transfers during the last 70 years have

question

9 percent

answer

ch6.In 2010, the combined expenditures of federal, state, and local governments in the United States were approximately 40 percent of gross domestic product (GDP). Approximately what percentage of GDP were government expenditures in 1930?

question

Short-run benefits and long-run costs.

answer

ch6. According to the shortsightedness effect, politicians tend to favor projects with which of the following characteristics?

question

cause nominal output to rise by some multiple of the initial increase in spending

answer

ch11.The multiplier effect refers to the fact that a change in spending (aggregate demand) will

question

increases government spending and/or reduces taxes

answer

ch11.The government is pursuing an expansionary fiscal policy if it

question

powerful trade unions and large corporations made wages highly inflexible.

answer

ch11.Keynes rejected the view that lower wages would direct a recessionary economy back to full employment because

question

a debt of $10.7 trillion and a deficit of $700 billion.

answer

ch11.If the government owes $10.0 trillion and then borrows $700 billion more this year, this leads to

question

By the time the impact of a policy is felt, the problem may have been corrected by market forces.

answer

ch11.Why do long lags make discretionary policy less effective?

question

Equilibrium output will be less than the full-employment rate of output.

answer

ch11.Within the framework of the Keynesian model, which of the following will occur if spending is abnormally low?

question

a decrease in tax rates

answer

ch11.According to the Keynesian view, which of the following would most likely stimulate real output if an economy were in a recession?

question

the larger the multiplier.

answer

ch11.The larger the marginal propensity to consume,

question

decrease government spending and/or raise taxes.

answer

ch11.If policy makers believe that an inflationary boom is about to begin, the Keynesian view indicates that they should

question

insufficient aggregate demand and the failure of market forces to direct the economy back to full employment.

answer

ch11.Keynesian economists believed that the prolonged unemployment of the 1930s was the result of

question

It shows why small shifts in investment have a powerful influence on national income

answer

ch11.Why is the multiplier principle important?

question

Government expenditures exceed government revenues.

answer

ch11.Which of the following is true when the federal government is running a budget deficit?

question

the federal budget

answer

ch11.The primary tool of fiscal policy is

question

discretionary fiscal policy.

answer

ch11.Changes in government spending and/or taxes as the result of legislation, is called

question

Revenues from the corporate income tax increase sharply during a business boom but decline substantially during a recession, even though no new tax legislation has been enacted.

answer

ch11.Which of the following is an example of an automatic stabilizer?

question

The growth of consumption is likely to remain sluggish even as the economy begins to recover

answer

ch12.Which of the following is most likely true when household debt as a share of income is abnormally high?

question

It fell during most of the 1990s, but rose sharply during 2001-2011.

answer

ch12.Measured as a share of GDP, what happened to the net federal debt between 1990 and 2011?

question

Successful fiscal policy is difficult to achieve because Congress acts slowly and our ability to predict the future is limited.

answer

ch12.Which of the following is true with regard to the use of countercyclical fiscal policy as a stabilization tool?

question

Budget deficits are a highly effective tool with which to combat a severe recession.

answer

ch12.Which one of the following is an area of continued disagreement among modern macroeconomists with regard to the use of fiscal policy?

question

the difficulties involved in timing discretionary changes in fiscal policy in a stabilizing manner

answer

ch12.Both Keynesians and non-Keynesians now recognize

question

a reduction in tax rates

answer

ch12.Which of the following is most likely to increase the incentive to invest, produce, and employ others?

question

higher than during the 1960s and 1970s.

answer

ch12.During 1960-1980, those with the highest incomes confronted federal marginal tax rates between 70 and 90 percent. Since 1986, the highest federal income tax rate has been less than 40 percent. Since 1986, the share of the personal income tax collected from the top one-half of one percent of earners has been

question

An increase in borrowing by the government will push interest rates upward, which will lead to a reduction in private spending.

answer

ch12.Which of the following best describes the crowding-out effect?

question

The dollar will depreciate leading to an increase in net exports

answer

ch12.What is mostly likely to happen if decreased government borrowing drives down real interest rates in the United States?

question

It expanded and real government spending increased rapidly, indicating that fiscal policy was expansionary.

answer

ch12.During 2001-2011, what happened to the federal budget deficit?

question

a. government spending is directed by political forces, rather than efficient cost-revenue comparisons. c. more political spending will lead to more wasteful rent-seeking activities and less production of goods and services that people value. d. more spending and debt will lead to higher future taxes to cover the cost of government and the interest on the debt.

answer

ch12.Critics of the Keynesian view argue that increases in government spending financed by borrowing will hamper the recovery from a recession and slow long term growth because

question

It is difficult to time changes in discretionary fiscal policy in a manner that will promote stability.

answer

ch12.Which one of the following is an area of agreement among modern macroeconomists with regard to the use of fiscal policy?

question

Proper timing of changes in discretionary fiscal policy is both crucially important and difficult to achieve.

answer

ch12.Which of the following is true about fiscal policy?

question

It has rapidly increased

answer

ch12.Since the mid-1980s, what has happened to the debt-to-income ratio of American households?

question

Additional government borrowing to finance a larger deficit will increase the demand for loanable funds, causing real interest rates to rise.

answer

ch12.Which of the following does the crowding-out effect stress?

question

they are widely used as a means of making payment.

answer

ch13.Checking account deposits are counted as part of the M1 money supply because

question

Pay interest to commercial banks on their reserves

answer

ch13.The Fed acquired the authority to do which of the following during the economic crisis of 2008?

question

a fractional reserve banking system

answer

ch13.When commercial banks extend loans, they are able to expand the supply of money in the United States because the U.S. has

question

the difference between interest paid on deposits and interest received on loans.

answer

ch13.The main source of profit for financial institutions is

question

the use of deposits to extend loans and undertake investments.

answer

ch13.The primary source of earnings of commercial banks is income derived from

question

member banks

answer

ch13. Who owns the Fed?

question

Both the bank's liabilities and its assets will increase.

answer

ch13.What is the effect when a customer deposits $100 into a checking account?

question

cheaper for banks to obtain additional reserves by borrowing from the Fed

answer

ch13.When the Fed lowers the discount rate, it makes it

question

Excess reserves

answer

ch13.In order to increase the money supply, the banking system must have which of the following?

question

The gains from trade would be severely limited

answer

ch13.Which of the following would be true if money were not used as a medium of exchange?

question

transaction costs.

answer

ch13.Compared to a barter economy, using money increases efficiency by reducing

question

An expansion in the supply of money relative to the availability of goods and services is causing an increase in the general level of prices.

answer

ch13.What is meant by the expression, "There is too much money chasing too few goods"?

question

No; money is an asset, while the credit card balances are a liability. Thus, they are not included in the money supply figures.

answer

ch13.Are outstanding credit card balances counted as part of the money supply?

question

$10,000

answer

ch13.A bank that has $10,000 in excess reserves can extend new loans up to a maximum of

question

checking deposits.

answer

ch13.In the modern U.S. economy, most transactions are made with

question

a. the housing price boom (2002-2005), followed by a housing price bust (2007-2008) b. a sharp reduction in stock prices in 2008 c. a sharp increase in the price of crude oil from January 2007 to mid-year 2008

answer

ch14. Which of the following contributed to the financial crisis of 2008?

question

fall by 50 percent.

answer

ch14.Given the strict quantity theory of money, if the quantity of money were decreased by 50 percent, prices would

question

They will rise.

answer

ch14.When the Fed decreases the money supply, what will happen to nominal interest rates?

question

a decrease in the real interest rate

answer

ch14.If the Fed unexpectedly shifts to a more expansionary monetary policy, which of the following will most likely occur in the short run?

question

make it more difficult for the Fed to properly time changes in monetary policy

answer

ch14.If there is a "long and variable time lag" between when a change in monetary policy is instituted and when it impacts aggregate demand and output, this will

question

a decline in interest rates, an increase in investment, and an increase in aggregate demand

answer

ch14.An unanticipated increase in the money supply will lead to

question

Net foreign investment will decline, causing the dollar to depreciate and net exports to increase.

answer

ch14.If expansionary monetary policy reduces real interest rates in the United States, which of the following is most likely to occur?

question

higher real interest rates and a reduction in aggregate demand.

answer

ch14.In the aggregate demand-aggregate supply model, the short-run effects of an unanticipated decrease in the money supply will be

question

the result of rapid growth in the money supply.

answer

ch14.An analysis of countries experiencing rapid inflation indicates that inflation is generally

question

The time lags between changes in monetary policy and when the changes exert an impact on output and prices are long and variable.

answer

ch14.Why will it difficult for the Fed to use monetary policy to direct the economy back to full employment and price stability from the recession of 2008-2009?

question

An increase in interest rates and, thereby, reduced investment, current consumption, and aggregate demand.

answer

ch14.An unanticipated shift to a more restrictive monetary policy by the Fed will result in which of the following?

question

be properly timed.

answer

ch14. If changes in monetary policy are going to help stabilize the economy, they must

question

A decrease in the real interest rate, which in turn stimulates investment and GDP.

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ch14. Which of the following will be the most likely impact of an unanticipated increase in the money supply?

question

an increase in employment

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ch14.In the short run, which of the following is the most likely effect of an unanticipated move to a more expansionary monetary policy?

question

The supply of loanable funds will decrease, which will exert upward pressure on the interest rate

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ch14. If the Federal Reserve unexpectedly decides to sell bonds, which of the following will most likely happen in the short run?

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a. automobiles b. DVD players c. microwave ovens

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ch16. Which of the following goods are available at highly economical prices because the use of mass production techniques substantially reduces their per unit production costs?

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creative destruction.

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ch16. The replacement of older products by newer improved ones is called

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innovation.

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ch16. The successful introduction and adoption of a new product or process is called

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entrepreneurial discovery and production of improved products

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ch16. Which of the following is a driving force underlying economic growth?

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64 years

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ch16. Life expectancy at birth for the world rose from 24 years to 26 years between 1000 and 1820, but by 2003, life expectancy had risen to

question

1820

answer

ch16. According to Angus Madison, a leading authority in the area, world per capita GDP and life expectancy grew very little until which date?

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creative destruction.

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ch16. In recent years, wireless cellular telephones have been replacing land-line phone service. This is an example of

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The poverty rate in sub-Saharan Africa is the highest of any region in the world, and the reduction in the rate during the past quarter of a century has been modest

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ch16. Which of the following is true of sub-Saharan Africa?

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economic growth.

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ch16. Institutions that encourage productive activities and discourage counterproductive ones, will tend to promote

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Economic History

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ch16. The 1993 recipient of the Nobel Prize in Economics, Douglass North is best known for his contributions in which area of economics?

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a. Encourage market exchange. b. Reward innovation. c. Protect people and their property.

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ch17.Nations will attract investment and its citizens will engage in productive activities when the institutions and policies of that country do which of the following?

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Many poor nations grew more rapidly than wealthy nations, while others continued to stagnate.

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ch17. According to data on GDP growth between 1980 and 2009, which of the following statements is true?

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It declined and its rank fell from third to tenth during this period.

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ch17. According to the Economic Freedom of the World measure, between 2000 and 2009 what happened to the economic freedom of the United States?

question

Per capita GDP increased more rapidly in China and India than in the high income industrial countries.

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ch17. One-third of the world's population live in China and India. How did the growth rate of these two countries compare with the growth of high income industrial countries during 1980-2009?

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the income differences between the high and low income countries are still huge.

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ch17. The GDP figures fail to count labor services and other household production. Once this omission is taken into account,

question

Achieve both more rapid growth and higher income levels than those that were less free.

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ch17. Countries with more economic freedom during 1980-2009 tended to do which of the following?

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higher; more rapid

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ch17. Compared to those with less economic freedom, countries with more economic freedom generally have ____ per capita GDP levels and ____ growth rates.

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the third freest economy in the world, behind only Hong Kong and Singapore during 1980-2000.

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ch17. According to the Economic Freedom of the World measure, the United States was

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constitutional protection of private property rights

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ch17. Democracy tends to best promote freedom when there is

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a. live longer. b. have a lower illiteracy rate. c. have a lower infant mortality rate.

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ch17.Compared to those in low-income countries, the residents of countries with high per person incomes nearly always

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a. gains from trade b. entrepreneurial discovery c. capital formation

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ch17. Which of the following provides the fuel for growth and achievement of high income levels?

question

a. institutions and policies supportive of voluntary exchange b. freedom to compete c. protection of people and their property from aggressors

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ch17. Which of the following is a key characteristic of economic freedom?

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a. provide secure protection of privately owned property and evenhanded enforcement of contracts. b. refrain from creating barriers that limit domestic and international trade. c. rely more fully on markets rather than governments to allocate goods and resources.

answer

ch17. In order to achieve a high economic freedom rating, a country must

question

They experienced both more rapid rates of economic growth and larger reductions in poverty rates than countries that were less free.

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ch17. Which of the following is true for the developing countries that moved most rapidly toward economic freedom during 1980-2005 period?

question

more rapidly.

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ch17. Other things constant, countries that invest more will grow

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a tariff.

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ch18. A tax levied on imported goods is called

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the law of comparative advantage

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ch18. Which of the following provides the foundation of the case for free trade?

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A tariff is a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.

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ch18. What is the difference between a tariff and a quota?

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Canada, Mexico, China, and Japan

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ch18. In recent years, the largest trading partners of the United States have been

question

typically generates tax revenue, while a quota does not

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ch18. A major difference between a tariff and a quota is that a tariff

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The sale of a good by a foreign supplier in another country at a price below that charged by the supplier in its home market.

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ch18. What is dumping?

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Specialization and exchange will permit trading partners to maximize their joint output.

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ch18. What does the law of comparative advantage indicate?

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radio and television sets

answer

ch18. Many products consumed by Americans are imported. Imports account for the largest share of which of the following products consumed by Americans?

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civilian aircraft

answer

ch18. Large quantities of many products produced in the United States are exported to purchasers in other countries. Exports account for the largest share of which one of the following products produced in the United States?

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quotas

answer

ch18. Which of the following restricts the volume of international trade?

question

quotas

answer

ch18. Which of the following restricts the volume of international trade?

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