The aggregate demand curve shows the relationship between the ________ and ________.

a.real interest rate: quantity of real GDP supplied

b.inflation rate; quantity of real GDP demanded

c.nominal interest rate; quantity of real GDP demanded

d.price level; quantity of real GDP demanded

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The level of long-run aggregate supply is affected by all of the following except:

a.changes in the capital stock.

b.changes in the number of workers.

c.changes in the price level.

d.changes in the technology.

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Nominal GDP is GDP in a given year

a.adjusted for anticipated inflation.

b.valued in the prices of that year.

c.adjusted for inflation.

d.valued in the prices of the base year.

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How does an increase in the relative price of a country's goods in terms of foreign goods, or real exchange rate, affect its balance of trade?

a.An increase in the real exchange rate raises imports, reduces exports, and increases the balance of trade.

b.An increase in the real exchange rate raises imports, reduces exports, and reduces the balance of trade.

c.An increase in the real exchange rate reduces imports, raises exports, and reduces the balance of trade.

d.An increase in the real exchange rate reduces imports, raises exports, and increases the balance of trade.

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Real GDP is GDP in a given year

a.valued in the prices of that year.

b.valued in the prices of the base year.

c.adjusted only for unanticipated inflation.

d.adjusted only for anticipated inflation.

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Government deficits tend to increase during

a.recessions and booms.

b.periods of increased financial uncertainty.

c.periods of war and recession.

d.periods of below- or above-average growth.

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Refer to Table 2-3. Which of the following statements is true?

	George	Jack
Lawns Mowed	10	6
Gardens Cultivated	5	4

Table 2-3 shows the output per day of two gardeners, George and Jack. they can either devote their time to mowing lawns or cultivating gardens.

a.George has a comparative advantage in both tasks.

b.Jack has a comparative advantage in both tasks.

c.Jack has a comparative advantage in garden cultivating and George in lawn mowing.

d.Jack has a comparative advantage in lawn mowing and George in garden cultivating.

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Borrowing to pay for long-lived capital expenditures makes sense as the benefits are received:

a.in the current year so the burden of paying for them should be paid in the current year.

b.over many years so the burden of paying for them should be paid in the current year.

c.over many years so the burden of paying for them should be spread over many years.

d.in the current year so the burden of paying for them should be spread over many years.

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Discouraged workers are classified by the BLS as

a.part of the labor force.

b.employed.

c.part-time employees.

d.out of the labor force.

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If the number of unemployed workers is 19 million, the number in the working-age population is 500 million, and the unemployment rate is 4%, how many workers are in the labor force?

a.1 million

b.20 million

c.475 million

d.481 million

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If the bank of Waterloo receives a $10,000 deposit, and the reserve requirement is 10 percent, how much can the bank loan out? (Assume that before the deposit this bank is just meeting its legal reserve requirement.)

a.$1,000

b.$9,000

c.$10,000

d.$11,000

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How does a decrease in value of a country's currency relative to other currencies affect its balance of trade?

a.A decrease in value of a country's currency relative to other currencies reduces imports, raises exports, and reduces the balance of trade.

b.A decrease in value of a country's currency relative to other currencies raises imports, reduces exports, and reduces the balance of trade.

c.A decrease in value of a country's currency relative to other currencies reduces imports, raises exports, and increases the balance of trade.

d.A decrease in value of a country's currency relative to other currencies raises imports, reduces exports, and increases the balance of trade.

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Which of the following is most likely to be able to sustain economic growth in an economy?

a.technological change

b.accumulations of economic resources

c.sustained increases in the labor force participation rate

d.increases in capital per hour worked

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M1 includes

a.currency in circulation, savings account balances, checking account deposits in banks, and holdings of traveler's checks.

b.currency in circulation, checking account deposits in banks, and holdings of traveler's checks.

c.currency in circulation, savings account balances, and checking account deposits in banks.

d.coins, savings account balances, traveler's checks.

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Which of the followingwould result in a trade surplus for the United States?

a.

Exports of goods = $450 billion;Imports of goods = $490 billion; Exports of services = $200 billion; Imports of services = $100 billion

b.

Exports of goods = $450 billion; Imports of goods = $450 billion; Exports of services = $200 billion; Imports of services = $250 billion

c.

Exports of goods = $450 billion;Imports of goods = $460 billion; Exports of services = $200 billion; Imports of services = $100 billion

d.

Exports of goods = $450 billion; Imports of goods = $400 billion; Exports of services = $200 billion; Imports of services = $250 billion

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If national saving decreases,

a.the sum of domestic investment and foreign investment must decrease.

b.the sum of domestic investment and net exports must increase.

c.the sum of domestic investment and foreign investment must increase.

d.foreign investment must increase to cover the loss.

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If the Fed lowers the reserve requirement, then this

a.increases excess reserves, causes banks to reduce their loans, and increases the money supply.

b.decreases excess reserves, causes banks to reduce their loans, and increases the money supply.

c.increases excess reserves, encourages banks to make more loans, and increases the money supply.

d.decreases excess reserves, causes banks to reduce their loans, and decreases the money supply.

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Which of the following is not directly counted in GDP?

a.investment expenditures

b.intermediate goods

c.government purchases

d.consumer goods

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What is Jack's opportunity cost of mowing a lawn?

Refer to Table 2-3. Which of the following statements is true?

	George	Jack
Lawns Mowed	10	6
Gardens Cultivated	5	4

Table 2-3 shows the output per day of two gardeners, George and Jack. they can either devote their time to mowing lawns or cultivating gardens.

a.Jack has an absolute advantage in garden cultivating and George in lawn mowing.

b.Jack has an absolute advantage in both tasks.

c.Jack has an absolute advantage in lawn mowing and George in garden. cultivating.

d.George has an absolute advantage in both tasks.

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If the United States is a "net borrower" from abroad,

a.net foreign investment must be positive.

b.domestic saving is less than domestic investment.

c.the United States must be exporting more than it is importing.

d.net capital flows must be negative.

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Year	Nominal GDP	Real GDP
2018	$7,400	$7,537
2019	7,813	7,813
2020	8,301	8,165
2021	8,760	8,516

Refer to Table 8-9. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The base year used in calculating real GDP is

a.

2018

b.

2019

c.

2020

d.

2021

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If the number of unemployed workers is 200 million, and the number in the labor force is 500 million, what is the unemployment rate?

a.0.4%

b.4%

c.14%

d.40%

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Consider the following data for Tyrovia, a country that produces only two products: guns and butter.

Year	Guns Produced	Price of Guns	Butter Produced	Price of Butter
2010	80	$5	40	$4
2021	90	6	60	10

Refer to the table above.

Real GDP for Tyrovia for 2021 using 2010 as the base year equals

a.

$1,140

b.

$880

c.

$690

d.

$560

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If you can produce more of something than others with the same resources, you have

a.a free-market economy.

b.a comparative advantage.

c.an efficient production system.

d.an absolute advantage.

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A full-time student who is not working is categorized as

a.a discouraged worker.

b.frictionally unemployed.

c.unemployed.

d.not in the labor force.

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If the CPI changes from 125 to 120 between 2010 and 2011, how did prices change between 2010 and 2011?

a.Prices decreased by 5%

b.Prices decreased by 4%.

c.Prices increased by 25%.

d.Prices increased by 5%.

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Which of the following transactions represents the purchase of a final good?

a.Delta buys a new European-made jetliner.

b.Apple computer buys computer processors from Intel.

c.Your father buys a new John Deere riding lawn mower.

d.Starbucks purchases coffee beans.

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If households in the economy decide to take money out of checking account deposits and put this money into savings accounts, this will initially

a.decrease M1 and decrease M2.

b.increase M1 and decrease M2.

c.decrease M1 and not change M2.

d.decrease M1 and increase M2.

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Money is

a.one's assets net of one's liabilities at any point in time.

b.a liability that people are willing to accept in exchange for goods and services.

c.an asset that people are willing to accept in exchange for goods and services.

d.the income one earns over a period of time.

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Year	CPI (1982-1984 = 100)
2010	175
2011	180

Refer to the table above. Suppose that the data in the table above reflect price levels in the economy. What is the inflation rate between 2010 and 2011?

a.2.9%

b.3.5%

c.4.6%

d.5%

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There has been a decrease in investment. As a result, real GDP will ________ in the short run, and ________ in the long run.

a.decrease; increase to its initial level

b.increase; increases further

c.decrease; decrease further

d.increase; decrease to its initial value

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In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA

a.values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up.

b.simply counts the total number of goods produced in the market place and then adds them up.

c.simply counts the total number of goods and services produced in the marketplace and then adds them up.

d.values goods at their market prices, multiplies them by the quantity produced, and then adds them up.

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A farm worker gets paid today in money, but plans to spend the money next week. This illustrates which function of money?

a.unit of account

b.standard of deferred payment

c.medium of exchange

d.store of value

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A federal budget deficit ________ interest rates, which ________ exchange rates (foreign currency per domestic currency), and ________ the balance of trade.

a.raises; raises; reduces

b.reduces; reduces; raises

c.reduces; raises; reduces

d.raises; reduces; reduces

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The total value of U.S. Treasury bonds outstanding equals

a.the federal government surplus.

b.the federal government deficit.

c.the federal government debt.

d.the cyclically adjusted budget deficit.

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A decrease in the price level results in a(n) ________ in the quantity of real GDP demanded because a lower price level ________ consumption, investment, and net exports.

a.decrease; decreases

b.decrease; increases

c.increase; increases

d.increase; decreases

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Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?

a.never have to engage in trade with other nations.

b.consume a combination of goods that lies outside its own production possibilities frontier.

c.produce a combination of goods that lies outside its own production possibilities frontier.

d.increase the variety of products that it can produce with a decrease in resources.

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A decrease in aggregate demand causes a decrease in ________ only in the short run, but causes a decrease in ________ in both the short run and the long run.

a.real GDP; the price level

b.the price level; the price level

c.the price level; real GDP

d.real GDP; real GDP

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Which of the following is not a tool the Fed uses to manage the money supply?

a.expanding and contracting deposit insurance

b.setting reserve requirements for deposits in the banking system

c.setting the discount rate.

d.open market operations

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What is George's opportunity cost of cultivating a garden?

Refer to Table 2-3. Which of the following statements is true?

	George	Jack
Lawns Mowed	10	6
Gardens Cultivated	5	4

Table 2-3 shows the output per day of two gardeners, George and Jack. they can either devote their time to mowing lawns or cultivating gardens.

a.two lawns mowed

b.one and a half lawns mowed

c.half a garden cultivated

d.two-thirds of a garden cultivated

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Monthly expenditures for a family of 4 in 2010 averaged $1,400. In 2011, the cost of the same purchases was $1,500. If 2010 is the base year, what was the CPI in 2011?

a.110

b.107

c.100

d.93

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Suppose that real GDP for 2020 was $10,000 billion and real GDP for 2021 was $11,000 billion. What is the rate of growth of real GDP between 2020 and 2021?

a.1%

b.2%

c.5%

d.10%

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The unemployment rate is

a.the percentage of the labor force that is unemployed.

b.the percentage of the working-age population that is employed.

c.the percentage of the labor force that is employed.

d.the percentage of the working-age population that is unemployed.

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When the market value of the dollar falls relative to other currencies around the world, we say that

a.the dollar has depreciated.

b.the demand for dollars has decreased.

c.the supply of dollars has decreased.

d.the dollar has appreciated.

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What impact might a decrease in the U.S. federal budget deficit have on interest rates and exchange rates in the market for the U.S. dollar? (Assume the exchange rate is stated in terms of foreign currency per U.S. dollar.)

a.Interest rates decrease and exchange rates increase.

b.Interest rates increase and exchange rates decrease.

c.Interest rates and exchange rates increase.

d.Interest rates and exchange rates decrease.

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Gross domestic product is calculated by summing up

a.the total market value of final goods and services produced in the economy during a period of time.

b.the total market value of goods and services in the economy.

c.the total quantity of goods and services in the economy.

d.the total quantity of goods and services produced in the economy during a period of time.