Question 1

Business cycles result when

Accepted Answer

A)  the labor force participation rate changes. 
B)  aggregate demand grows faster than potential GDP. 
C)  real GDP equals potential GDP. 
D)  aggregate supply and aggregate demand change at an uneven pace. 
A)  the labor force participation rate changes. 
B)  aggregate demand grows faster than potential GDP. 
C)  real GDP equals potential GDP. 
D)  aggregate supply and aggregate demand change at an uneven pace.

Question 2

The demand for labor ________and the accumulated skill and knowledge of human is called________

Accepted Answer

A)  is independent of technology; the marginal product of labor 
B)  increases when productivity rises; technology 
C)  depends on the nominal wage rate; human capital 
D)  depends on the real wage rate; human capital 
A)  is independent of technology; the marginal product of labor 
B)  increases when productivity rises; technology 
C)  depends on the nominal wage rate; human capital 
D)  depends on the real wage rate; human capital

Question 3

$$\begin{array} { | l | l | } 
\hline \begin{array} { l } 
\text { Cheese } \
\text { (tons) }
\end{array} & \begin{array} { l } 
\text { DVDs } \
\text { (thousands } \
\text { ) }
\end{array} \
\hline 0 & 60 \
\hline 2 & 56 \
\hline 4 & 48 \
\hline 6 & 36 \
\hline 8 & 20 \
\hline 10 & 0 \
\hline
\end{array}$$
-The table above lists six points on the production possibilities frontier for cheese and DVDs. From this information you can conclude that production is inefficient if this economy produces

Accepted Answer

A)  5 tons of cheese and 48 thousand DVDs. 
B)  2 tons of cheese and 56 thousand DVDs. 
C)  8 tons of cheese and 21 thousand DVDs. 
D)  7 tons of cheese and 20 thousand DVDs. 
A)  5 tons of cheese and 48 thousand DVDs. 
B)  2 tons of cheese and 56 thousand DVDs. 
C)  8 tons of cheese and 21 thousand DVDs. 
D)  7 tons of cheese and 20 thousand DVDs.

Question 4

If the wood used to produce houses rises in price, then the________ houses ________.

Accepted Answer

A)  demand for; decreases 
B)  supply of; increases 
C)  supply of; decreases 
D)  demand for; increases 
A)  demand for; decreases 
B)  supply of; increases 
C)  supply of; decreases 
D)  demand for; increases

Question 5

GDP is defined as

Accepted Answer

A)  generally demanded product. 
B)  gross domestic product. 
C)  generally demanded prices. 
D)  gross demanded prices. 
A)  generally demanded product. 
B)  gross domestic product. 
C)  generally demanded prices. 
D)  gross demanded prices.

Question 6

Lizzie takes 20 seconds to stuff an envelope and 10 seconds to seal it. Arnold takes 15 seconds to stuff an envelope and 5 seconds to seal it. Lizzie has a comparative advantage in and Arnold has a comparative advantage in .

Accepted Answer

A)  stuffing envelopes; sealing them 
B)  neither of these activities; both activities 
C)  both activities; neither of these activities 
D)  sealing envelopes; stuffing them 
A)  stuffing envelopes; sealing them 
B)  neither of these activities; both activities 
C)  both activities; neither of these activities 
D)  sealing envelopes; stuffing them

Question 7

In the United States over the past 40 years, the

Accepted Answer

A)  unemployment rate has fluctuated and the labor force participation rate has risen. 
B)  labor force participation rate has remained relatively constant and the unemployment rate has trended upwards. 
C)  labor force participation rate has fallen and real GDP has increased. 
D)  both the unemployment rate and real GDP have tended to increase. 
A)  unemployment rate has fluctuated and the labor force participation rate has risen. 
B)  labor force participation rate has remained relatively constant and the unemployment rate has trended upwards. 
C)  labor force participation rate has fallen and real GDP has increased. 
D)  both the unemployment rate and real GDP have tended to increase.

Question 8

________increases real GDP.

Accepted Answer

A)  An increase in employment 
B)  A decrease in government spending 
C)  A fall in the price level 
D)  An increase in the natural rate of unemployment 
A)  An increase in employment 
B)  A decrease in government spending 
C)  A fall in the price level 
D)  An increase in the natural rate of unemployment

Question 9

If the Fed makes an open market __________of government securities, the federal funds rate will__________ as the quantity of money __________.

Accepted Answer

A)  purchase; fall; decreases 
B)  sale; fall; increases 
C)  sale; rise; decreases 
D)  purchase; rise; increases 
A)  purchase; fall; decreases 
B)  sale; fall; increases 
C)  sale; rise; decreases 
D)  purchase; rise; increases

Question 10

An opportunity cost of economic growth is

Accepted Answer

A)  the capital accumulation given up to increase present consumption. 
B)  the present consumption given up to accumulate capital. 
C)  the increased future consumption. 
D)  None of the above because there is no opportunity cost since if an economy grows, it can produce more of all goods. 
A)  the capital accumulation given up to increase present consumption. 
B)  the present consumption given up to accumulate capital. 
C)  the increased future consumption. 
D)  None of the above because there is no opportunity cost since if an economy grows, it can produce more of all goods.

Question 11

Jelly beans and popcorn are substitutes. A fall in the price of a bag of jelly beans will________ the demand for popcorn and the price of popcorn will________ .

Accepted Answer

A)  increase; rise 
B)  decrease; rise 
C)  decrease; fall 
D)  increase; fall 
A)  increase; rise 
B)  decrease; rise 
C)  decrease; fall 
D)  increase; fall

Question 12

The Fed can change the federal funds rate

Accepted Answer

A)  purchasing government securities. 
B)  increasing aggregate demand. 
C)  increasing spending. 
D)  lowering taxes. 
A)  purchasing government securities. 
B)  increasing aggregate demand. 
C)  increasing spending. 
D)  lowering taxes.

Question 13

If the Fed makes an open market __________of government securities, the federal funds rate__________ and the immediate impact is to shift the aggregate curve__________.

Accepted Answer

A)  purchase; rises; supply 
B)  purchase; falls; demand 
C)  sale; falls; demand 
D)  sale; rises; supply 
A)  purchase; rises; supply 
B)  purchase; falls; demand 
C)  sale; falls; demand 
D)  sale; rises; supply

Question 14

At potential GDP

Accepted Answer

A)  unemployment is at its natural rate. 
B)  there is no unemployment but there is not necessarily full employment. 
C)  there is no unemployment and there is full employment. 
D)  None of the above is correct. 
A)  unemployment is at its natural rate. 
B)  there is no unemployment but there is not necessarily full employment. 
C)  there is no unemployment and there is full employment. 
D)  None of the above is correct.

Question 15

According to the quantity theory of money,

Accepted Answer

A)  a decrease in the quantity of money will decrease the price level. 
B)  a decrease in the quantity of money will decrease the velocity of circulation. 
C)  a change in the discount rate changes real GDP. 
D)  the only way the Fed can change the quantity of money without affecting the velocity of circulation is by using open market operations. 
A)  a decrease in the quantity of money will decrease the price level. 
B)  a decrease in the quantity of money will decrease the velocity of circulation. 
C)  a change in the discount rate changes real GDP. 
D)  the only way the Fed can change the quantity of money without affecting the velocity of circulation is by using open market operations.

Question 16

According to the principle of comparative advantage, if the United States trades with Mexico, most likely,

Accepted Answer

A)  the United States will benefit and Mexico will lose. 
B)  neither of the countries will benefit. 
C)  both countries will benefit. 
D)  the United States will lose and Mexico will benefit. 
A)  the United States will benefit and Mexico will lose. 
B)  neither of the countries will benefit. 
C)  both countries will benefit. 
D)  the United States will lose and Mexico will benefit.

Question 17

Long-run macroeconomic equilibrium occurs when

Accepted Answer

A)  real GDP is at a point along the short-run aggregate supply curve. 
B)  the unemployment rate is zero. 
C)  real GDP is equal to potential GDP. 
D)  all able-bodied adults have jobs. 
A)  real GDP is at a point along the short-run aggregate supply curve. 
B)  the unemployment rate is zero. 
C)  real GDP is equal to potential GDP. 
D)  all able-bodied adults have jobs.

Question 18

A decrease in the reserves of commercial banks could be the result of

Accepted Answer

A)  a decrease in the velocity of circulation. 
B)  an increase in the required reserve ratio. 
C)  an increase in the velocity of circulation. 
D)  the sale of government securities by the Federal Reserve. 
A)  a decrease in the velocity of circulation. 
B)  an increase in the required reserve ratio. 
C)  an increase in the velocity of circulation. 
D)  the sale of government securities by the Federal Reserve.

Question 19

If the Fed makes an unexpected open market of government securities, the aggregate
Curve shifts rightward and .

Accepted Answer

A)  sale; demand; there is a movement along the short-run Phillips curve 
B)  purchase; demand; the long-run Phillips curve shifts rightward 
C)  sale; supply; the short-run Phillips curve shifts upward 
D)  purchase; demand; the short-run Phillips curve shifts downward 
A)  sale; demand; there is a movement along the short-run Phillips curve 
B)  purchase; demand; the long-run Phillips curve shifts rightward 
C)  sale; supply; the short-run Phillips curve shifts upward 
D)  purchase; demand; the short-run Phillips curve shifts downward

Question 20

The Fedʹs instruments include

Accepted Answer

A)  the structural budget deficit. 
B)  open market operations. 
C)  the federal funds rate base. 
D)  the Ricardo-Barro effect. 
A)  the structural budget deficit. 
B)  open market operations. 
C)  the federal funds rate base. 
D)  the Ricardo-Barro effect.

Business cycles result when

The demand for labor and the accumulated skill and knowledge of human is called

Cheese (tons) DVDs (thousands ) 0 60 2 56 4 48 6 36 8 20 10 0 -The table above lists six points on the production possibilities frontier for cheese and DVDs. From this information you can conclude that production is inefficient if this economy produces

If the wood used to produce houses rises in price, then the houses .

GDP is defined as

Lizzie takes 20 seconds to stuff an envelope and 10 seconds to seal it. Arnold takes 15 seconds to stuff an envelope and 5 seconds to seal it. Lizzie has a comparative advantage in and Arnold has a comparative advantage in .

In the United States over the past 40 years, the

________increases real GDP.

If the Fed makes an open market of government securities, the federal funds rate will as the quantity of money __.

An opportunity cost of economic growth is

Jelly beans and popcorn are substitutes. A fall in the price of a bag of jelly beans will the demand for popcorn and the price of popcorn will .

The Fed can change the federal funds rate

If the Fed makes an open market of government securities, the federal funds rate and the immediate impact is to shift the aggregate curve__.

At potential GDP

According to the quantity theory of money,

According to the principle of comparative advantage, if the United States trades with Mexico, most likely,

Long-run macroeconomic equilibrium occurs when

A decrease in the reserves of commercial banks could be the result of

If the Fed makes an unexpected open market of government securities, the aggregate Curve shifts rightward and .

The Fedʹs instruments include

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Review

Business cycles result when

The demand for labor ________and the accumulated skill and knowledge of human is called________

Cheese (tons) DVDs (thousands ) 0 60 2 56 4 48 6 36 8 20 10 0 -The table above lists six points on the production possibilities frontier for cheese and DVDs. From this information you can conclude that production is inefficient if this economy produces

If the wood used to produce houses rises in price, then the________ houses ________.

GDP is defined as

Lizzie takes 20 seconds to stuff an envelope and 10 seconds to seal it. Arnold takes 15 seconds to stuff an envelope and 5 seconds to seal it. Lizzie has a comparative advantage in and Arnold has a comparative advantage in .

In the United States over the past 40 years, the

________increases real GDP.

If the Fed makes an open market __________of government securities, the federal funds rate will__________ as the quantity of money __________.

An opportunity cost of economic growth is

Jelly beans and popcorn are substitutes. A fall in the price of a bag of jelly beans will________ the demand for popcorn and the price of popcorn will________ .

The Fed can change the federal funds rate

If the Fed makes an open market __________of government securities, the federal funds rate__________ and the immediate impact is to shift the aggregate curve__________.

At potential GDP

According to the quantity theory of money,

According to the principle of comparative advantage, if the United States trades with Mexico, most likely,

Long-run macroeconomic equilibrium occurs when

A decrease in the reserves of commercial banks could be the result of

If the Fed makes an unexpected open market of government securities, the aggregate Curve shifts rightward and .

The Fedʹs instruments include

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

The demand for labor and the accumulated skill and knowledge of human is called

If the wood used to produce houses rises in price, then the houses .

If the Fed makes an open market of government securities, the federal funds rate will as the quantity of money __.

Jelly beans and popcorn are substitutes. A fall in the price of a bag of jelly beans will the demand for popcorn and the price of popcorn will .

If the Fed makes an open market of government securities, the federal funds rate and the immediate impact is to shift the aggregate curve__.