1. According to the text, as compared to rich countries, most of the poor countries do not fare well because: a. they have no oil. b. the people in these countries have limited property rights. c. access to education in these countries is very limited. d. high tariffs in these countries prevent international trade. e. they do not have any natural resources. 2. is the primary reason that explains why some nations are richer than the others. a. A democratic government b. A strong judicial system c. Access to education d. Private ownership e. A stable currency 3. In spite of having no natural resources, a country like _was able to make itself one of the wealthiest countries in the world because it allowed private ownership. a. India b. Poland c. Hungary d. Hong Kong e. China 4. To say that something is scarce means that: a. it is no longer available in stores. b. it must be conserved at any cost. c. even the government cannot supply it. d. sufficient amounts of it available only at a zero price. e. not enough is available to satisfy people's wants at a zero price.5. If you have a choice of consuming either two apples, three oranges, or one candy bar, the opportunity cost of the candy bar is: a. two apples. b. three oranges. c. two apples and three oranges. d. two apples or three oranges, whichever you value more. e. the difference in the prices of the three options. 6. Nicky makes $25,000 a year as a sales clerk. He then decides to quit his job to enter a MBA program full-time (assume Nicky doesn't work in the summer or hold any part-time jobs). His tuition, books, living expenses, and fees total $15,000 a year. Given this information, the annual total cost of Nicky's MBA studies is: a. $10,000. b. $30,000. c. $40,000. d. $15,000. e. $25,000 Commen 7. The difference between what can be produced and consumed without specialization and trade and with specialization and trade is called: a. comparative advantage. b. a tradeoff. c. marginal cost. d. opportunity cost. e. gains from trade. 8. ensure that resources are allocated to where they are most highly valued. a. Communist governments b. Consumers c. Suppliers d. Non-governmental organizationse. Markets 9. Money exchanges are more efficient than barter because: a. money exchanges do not require a double coincidence of wants. b. the government guarantees the value of money. c. money usually has an intrinsic value. d. money is backed by a physical commodity. e. opportunity costs are higher with barter trades. 10. According to the law of demand, if the price of movie rentals decreases, ceteris paribus, : a. the demand for movie rentals would increase. b. the quantity demanded of movie rentals would decrease. c. the quantity demanded of movie rentals would increase. d. the demand for movie rentals would decrease. e. the quantity demanded of movie rentals would not change. The table given below reports the quantity of bread loaves demanded and supplied at different per unit prices. Table 3.3 Price per Loaf Quantity Quantity Demanded Supplied 5 30 102 48 84 66 66 84 48 102 30 1 1. According to Table 3.3, equilibrium in the market for bread occurs at the price of: a. $2 per unit b. $3 per unit c. $4 per unit d. $4.5 per unit e. $1.5 per unit12. Which of the following institutions form the private sector in an economy? a. Only households b. Households and the government c. Households, businesses, and foreign firms d. Households and businesses only e. Foreign investors and foreign governments 13. Which of the following economic indicators is used by the World Bank to classify countries as industrial or emerging economies? a. GDP b. Rate of inflation e. Net exports d. Per capita income e. Budget deficits 14. When the government's spending is less than tax revenue, it implies that: a. the government budget is balanced. b. the government is running a deficit. c. there is a budget surplus. d. there is a higher chance of default by the government. e. the government needs to borrow from the central bank. 15. The national income accounting system provides a measure of: a. only the total amount of profits made by business firms. b. the total value of all inputs used in production. c. the government budget surplus and deficit. d. the net exports of a nation. e. the output of an entire economy. 16. GDP, according to the income method, is the sum of:a. wages, rent, interest, and profits. b. consumption, gross investment, depreciation, and net exports. c. depreciation, net factor income from abroad, and indirect business taxes. d. gross investment, wages, profits, rent, and indirect business taxes. e. consumption, profits, interest, rent, and net exports. 17. If 'C' denotes consumption expenditure, 'I' denotes investment expenditure, "G' denotes government expenditure and 'X' denotes net exports, then C + I+ G + X equals: a. net national product. b. disposable personal income. c. net exports. d. personal income. e. gross domestic product. The table given below reports the value of different economic variables of a country during a year. Table 5.4 GNP Data (Adjusted for net factor income from abroad Net Investment $400 Capital Consumption $800 Allowance Indirect Business Taxes $600 U.S. Exports $200 U.S. Imports $300 Government Purchases $150 Consumption Spending $2,030 18. Refer to Table 5.4. Compute the GNP of the country. a. $2,680b. $2,480 c. $3,280 d. $3,880 e. $4,480 19. Refer to Table 5.4. Calculate the NNP for this country. a. $2,680 b. $2,480 c. $3,280 d. $3,880 e. $4,480 20. Refer to Table 5.4. Calculate the national income of this country. a. $1,880 b. $2,480 c. $3,280 d. $3,880 e. $4,280 The table given below reports the value of the different economic variables of a nation during a year. Table 5.5 GNP Data (Adjusted for net factor income from abroad) Consumption Spending $1,150 Gross Investment $320 Exports $420Capital Consumption $60 Allowance Government Purchases $200 Social Security Benefits $365 Imports $540 Personal Income Tax $225 21. Refer to Table 5.5. For the economy described in the table above, personal income is: a. $1,235. b. $1, 375. c. $1,325. d. $1,600. e. $1,855. vise mallob off han envogue to suffer aslie agoiving ban aboog lo eognedown ollesmob ! brenda bisd nallob .2 0 to moume edvlo bio 22. If the U.S. dollar price of the New Zealand dollar (NZD) is $0.5709, then the NZD price of one U.S. dollar will be: a. 1.5709 NZD. b. 1.75 NZD. c. 1.6711 NZD. d. 0.5709 NZD. e. 1.75 NZD.23. If the current dollars/peso exchange rate is $0.10 per peso, so that 10 pesos buy you a dollar, then how many dollars do you need to buy something that costs 50 pesos? a. $50 b. $5 c. $15 d. $0.50 e. $1.50 24. The balance of payments is: a. the difference between the dollar value of exports and the dollar value of imports. b. the same as the merchandise account. c. a summary statement of all international trade transactions of one country with the rest of the world. d. a summary statement of all domestic exchanges of goods and services between producers and buyers. e. a record of the amount of U.S. dollars held abroad. 25. The part of a business cycle that follows a peak is the: a. trough phase of the cycle. b. break-even point of the cycle. c. peak period of the cycle. d. recessionary phase of the cycle. e. expansionary phase of the cycle.26. Which of the following is observed in an economy during the contraction phase of the business cycle? a. Nominal GDP begins to rise b. Real GDP remains constant c. Real GDP falls d. Productivity of resources increase e. Unemployment falls van doque after Scenario 7.1 Of 1,350 people surveyed, 318 are not working. The status of those not working is as follows: 122 full-time students 29 discouraged workers 18 in long-term-care facilities 21 seeking employment and aged 16 or older 50 retirees 63 under age 16 15 working in the underground economy and not looking for a "real" job Eight of those working were under 16 years of age. 27. Refer to Scenario 7.1. According to the data provided, the number of workers officially unemployed is: a. 122. b. 36. c. 40. d. 21. e. 55.28. Business cycles are linked to the interaction between: a. the foreign exchange rate and the balance of payments account. b. the aggregate demand and aggregate supply curves. c. the demand and supply curves for a particular good. d. the substitution and the wealth effect. e. the long-run aggregate supply curve and the aggregate resource curve. 29. Which of the following is true of the disposable income of the households? a. An increase in the average price level lowers the disposable income of the households. b. Disposable income refers to the purchasing power of nominal income. c. An increase in direct taxes will lower the disposable income of the households. d. A decrease in government transfers will increase the disposable income of the households. e. Disposable income refers to the net private transfers of the household sector.Each of the panels given below represents the short-run equilibrium in the U.S. economy. The Aggregate Demand and Aggregate Supply curves in each panel responds to various economic changes. Figure 8.1 (A) (B) ASold U.S. Price Level U.8 . Price Level AD U.S. National Income (D) ASold U.S. Price Level U.8. Price Level ADold X Snews ADare U. S. National Income U.S. National Income (E) U.S. Price Level U.S. National Income30. Refer to Figure 8.1. Which of the graphs in the figure best describes the impact of lower real income in Germany on U.S. equilibrium real GDP and the U.S. equilibrium price level? a. Panel A b. Panel B c. Panel C d. Panel D e. Panel E 31. The sum of consumption and saving is called a. net investment b. net income c. personal income d. disposable income e. transfer payment 32. The part of the disposable income that is not consumed by households is: a. given away in the form of taxes. b. given away as charity. c. saved. d. deducted as a depreciation cost. e. spent on imports.33. The second-largest component of aggregate expenditures in the United States is a. consumption b. investment c. government expenditure d. imports e. exports demo abood mommoved to too 34. Which of the following will cause the net export function to shift? a. A change in real GDP b. An increase in government spending c. An increase in investment spending to sialo d. A change in the exchange rate e. A change in the domestic interest rate 35. When the government uses taxes and spending to affect national economy, it is engaging in: a. fiscal policy. b. monetary policy. c. interest rate policy. d. trade policy. sileomoo srly e. exchange rate policy. bolboo el nolt find to migrate 36. are elements of fiscal policy that automatically change in value as national income changes.a. Statistical discrepancies b. Exchange rates c. Budget deficits d. Automatic stabilizers e. Supply-side shocks 37. National debt can be defined as: a. the total money supply in the economy. b. the total stock of government bonds outstanding. c. the difference between real GDP and potential GDP. d. the change in fiscal deficit that results from an increase in government spending. e. the total volume of private investment in the country. 38. A(n)_ is an indirect tax imposed on each sale at each stage of production. a. personal tax b. value-added tax c. excise duty d. sales tax e. ad-valorem tax 39. The use of foreign money instead of domestic money when the domestic economy has a high rate of inflation is called a. currency depreciation b. currency substitutionc. capital flight d. currency devaluation e. currency trade 40. A Eurodollar loan is a(n): a. ECU-denominated loan issued by a U.S. bank. b. dollar-denominated loan payable to a European bank. c. ECU-denominated loan that is subject to banking regulations in both the and a United States and Europe. d. dollar-denominated loan issued outside the U.S. domestic banking system. e. loan by the European Community to the U.S. government. Table 12.2 Balance Sheet Assets Liabilities Cash $ 5,000 Demand Deposits $20,000 Loans 15,000 getbooga tommoveg Jo level and gov Total Assets $20,000 Total Maned evillow amin Liabilities $20,000 41. Refer to Table 12.2. With a reserve requirement of 20 percent, the bank has excess reserves of a. $5,000 b. $3,000c. $2,000 d. $1,000 e. $2,500 42. Refer to Table 12.2. Assume a reserve requirement of 10 percent. The maximum amount of new loans the bank could extend is a. $500 b. $1,000 c. $2,000 d. $3,000 e. $4,000 43. Which of the following is a function of the Fed? a. Printing foreign currency b. Determining the level of government spending c. Distributing welfare benefits d. Administrating the Social Security fund e. Ensuring that banks operate in a sound and prudent manner 44. The quantity theory of money asserts that:a. changes in nominal GDP are inversely related to changes in the velocity of money. b. changes in money supply are positively related to changes in the velocity of money. c. changes in the money supply are unrelated to changes in the price level. d. changes in the output level are unrelated to changes in the price level. e. changes in the money supply are directly related to changes in nominal GDP. 45. Assume that the Fed increases the money supply when there is substantial unemployment in the economy. According to the quantity theory of money, if velocity is constant, then: a. the price level will decrease. b. real GDP will decrease. c. nominal GDP will increase. d. nominal GDP will decrease. e. real GDP will remain constant while price level will decrease. 46. The interest rate that banks pay for borrowing overnight from other banks is called: a. bank rate. b. target rate. c. federal funds rate. d. real interest rate. e. prime lending rate.47. The Phillips curve is named after the economist A. W. Phillips, who found that there is: a. an inverse relationship between the PPI and the budget deficit in the United States. b. an inverse relationship between wage rates in Great Britain and the unemployment rate. c. an inverse relationship between economic growth and the unemployment rate in Great Britain. d. a positive relationship between inflation and the unemployment rate in the United States. e. a positive relationship between British national debt and economic downturns. 48. The slope of the short-run Phillips curve is consistent with: a. the long-run trade-off between the unemployment rate and inflation. b. the long-run trade-off between inflation and GDP. c. the short-run trade-off between the money supply and interest rates. d. the short-run trade-off between business productivity and wage contracts. e. the short-run trade-off between the unemployment rate and inflation.The figure given below depicts the long run equilibrium in an economy. Figure 14.1 AS1 P1 AS2 Price Level AD, ADZ Y/2 Real GDP In the figure: AD1 and AD2: Aggregate demand curves AS1 and AS2: Aggregate supply curves Y1 and Y2 : Unemployment rates Y1= natural rate of unemployment 49. Refer to Figure 14.1. The movement from point A to point B to point C results in: a. a constant price level and a decline in the natural rate of unemployment. b. a rightward shift of the short-run Phillips curve. c. a lower price level and no change in the natural rate of unemployment. d. a movement up the short-run Phillips curve.e, a lower price level and a decline in the natural rate of unemployment. 50. Which of the following shifts the aggregate supply curve to the left? a. An improvement in computer technology b. A war that forces people to ration their food and their use of energy c. An increase in real wage rates d. Discovery of a new oil field e. Lower oil prices in the world market