Question 1

A movement from point A to point B illustrates which of the following?

a	the opportunity cost of consumer goods
b	an advance in technology
c	an increase in available resources used to produce consumer goods
d	an increase in the price of capital goods
e	an increase in efficiency

Question 2

A country can produce either 100 bushels of wheat or 150 units of textiles, as shown on the graph above. If an advance in technology affects only the production of textiles, what happens to the slope of the production possibilities curve and the opportunity cost of wheat?

a	no change in slope, no change in opportunity cost of wheat
b	decrease in slope, decrease in opportunity cost of wheat
c	increase in slope, increase in opportunity cost of wheat
d	no change in slope, increase in opportunity cost of wheat
e	decrease in slope, increase in opportunity cost of wheat

Question 3

If the price of a substitute good increases, which of the following will happen to the price and quantity sold in a market?

a	Price increases, Quantity sold increases
b	Price increases, Quantity sold decreases
c	Price decreases, Quantity sold increases
d	Price decreases, Quantity sold decreases
e	Price increases, Quantity sold does not change

Question 4

If the wages of workers producing a good increase, the price and quantity of the good sold will change in which of the following ways?

a	Price increases, Quantity increases
b	Price increases, Quantity decreases
c	Price decreases, Quantity increases
d	Price decreases, Quantity decreases
e	Price increases, Quantity does not change

Question 5

Which of the following is not counted in a country's GDP?

a	goods exported to other countries
b	changes in inventories
c	domestically produced capital goods
d	financial assets, such as stocks and bonds
e	newly produced services

Question 6 (1 point)

Which of the following is true of the relationship between real GDP and nominal GDP?

a	Real GDP is higher than nominal GDP when there is inflation in the economy
b	Real GDP is equal to nominal GDP when the economy is at full employment
c	Real GDP minus nominal GDP equals the fate of inflation.
d	Real GDP is nominal GDP adjusted for changes in the price level
e	Real GDP increases when nominal GDP increases

Question 7 (1 point)

Suppose that last year the price level increased and the production of goods and services increased. Which of the following must be true? Nominal GDP

a	increased but real GDP decreased.
b	increased while the value of real GDP cannot be determined.
c	stayed the same while real GDP increased.
d	increased and real GDP increased.
e	decreased while real GDP increased

Question 8 (1 point)

Which of the following individuals is considered frictionally unemployed? A person who is not working and

a	is in the process of looking for a new job
b	does not have the skills needed in the job market
c	was laid off during a recession
d	was laid off due to an increase in the minimum wage
e	has given up looking for a job

Question 9 (1 point)

If the general price level doubles and at the same time a worker's real wage rate doubles, what must be true of the worker's nominal wage rate?

a	It doubled
b	It increased by 50%
c	It quadrupled
d	It decreased
e	It did not change

Question 10 (1 point)

Which of the following is true of the natural rate of unemployment?

a	It equals the actual rate of unemployment in short-run equilibrium.
b	It includes both frictional and structural unemployment.
c	It measures cyclical unemployment.
d	It changes with the business cycle.
e	It increases over time.

Question 11 (1 point)

A Canadian recession will affect the United States' aggregate supply and demand in which of the following ways?

a	Aggregate supply increases, Aggregate demand increases
b	Aggregate supply increases, Aggregate demand decreases
c	Aggregate supply decreases, Aggregate demand increases
d	Aggregate supply decreases, Aggregate demand decreases
e	Aggregate supply does not change, Aggregate demand decreases

Question 12 (1 point)

If the marginal propensity to consume in an economy is 0.9 and the government increases spending by $10 million, GDP will increase by how much?

a	$9 million
b	$10 million
c	$19 million
d	$90 million
e	$100 million

Question 13 (1 point)

In the short run, an increase in aggregate demand will change the price level and aggregate output in which of the following ways?

a	Price level increases, Aggregate output increases
b	Price level increases, Aggregate output decreases
c	Price level decreases, Aggregate output increases
d	Price level decreases, Aggregate output decreases
e	Price level increases, Aggregate output does not change

Question 14 (1 point)

If an economy is in long-run equilibrium, how will an increase in aggregate demand affect real GDP and nominal wages in the long run?

a	Real GDP increases, Nominal wages increase
b	Real GDP increases, Nominal wages decrease
c	Real GDP decreases, Nominal wages increase
d	Real GDP decreases, Nominal wages decrease
e	Real GDP does not change, Nominal wages increase

Question 15 (1 point)

An economy experiences inflationary pressures when the equilibrium level of output is

a	too low.
b	above the full employment level of output.
c	equal to the full employment level of output.
d	decreasing.
e	in long-run equilibrium.

Question 16 (1 point)

Which of the following policies might provide a remedy when the equilibrium output in an economy is below the potential level of output?

a	Decrease government spending.
b	Raise the federal funds rate.
c	Reduce transfer payments.
d	Cut taxes.
e	Sell more government securities.

Question 17 (1 point)

Which of the following would cause the aggregate demand curve to shift to the left?

a	a decrease in taxes
b	an increase in consumer wealth
c	a decrease in consumer confidence
d	an increase in exports
e	a decrease in savings

Question 18 (1 point)

Which of the following is a liability for a commercial bank?

a	deposits
b	loans
c	reserves
d	Treasury securities
e	its building and equipment

Question 19 (1 point)

If the interest rate is 2%, what is the present value of $1 paid to you in one year?

a	less than $1
b	$1
c	$1.02
d	$1.04
e	$1.20

Question 20 (1 point)

Which of the following is a component of the M1 money supply?

a	gold
b	cash
c	savings deposits
d	Treasury bills
e	certificates of deposit