In the short run in periods of low inflation, an increase in aggregate demand from a position of full employment leads to:
D) higher prices and higher output
In the long run, an increase in aggregate demand from a position of full employment leads to:
B) higher prices and the same output.
Inflation doesn't reduce purchasing power if:
C) nominal wages rise at the same rate as prices.
During periods of high inflation, the short-run aggregate supply curve is:
A) vertical.
In the long run, any given percentage increase in the money supply:
A) leads to an equal percentage increase in the overall price level.
An inflation tax is:
A) the reduction in purchasing power due to inflation.
The closer you get to the equator:
A. economic growth slows down
A Phillips curve implies a negative relationship between:
A) inflation and unemployment.
A liquidity trap is a situation in which:
B) using expansionary monetary policy is not effective because the nominal interest rate is almost zero.
The Federal Reserve is able to have an impact on financial crises because it:
C) conducts monetary policy.
If the Federal Reserve wants to lower the interest rate, it will:
B) increase the money supply.
If the Federal Reserve wants to lower interest rates, it can:
C) increase the money supply by buying Treasury bills.
When the Federal Reserve buys Treasury bills, this leads to:
A) an increase in the money supply.
Money whose value derives entirely from its official status as a means of exchange is known as:
B) fiat money.
All of the following are sources of federal tax revenue EXCEPT:
A) sales taxes.
Expansionary fiscal policy:
C) increases aggregate demand.
Expansionary fiscal policy includes:
C) increasing government expenditures.
An expansionary fiscal policy either _______ government spending or _______ taxes.
A) increases; decreases
A $100 million increase in government spending increases equilibrium GDP by:
C) more than $100 million.
When the economy expands, which of the following is true?
D) Income tax receipts and sales tax revenues will both rise.
The federal budget tends to move toward _____ as the economy ____.
C) deficit; contracts
If the government's total revenues are greater than its total expenditures, then it has a budget:
A) surplus.
Suppose that the budget deficit of a country remains level for five years. Which of the following is true concerning the fiscal stance of this government?
C) The federal debt will rise.
A government would be able to pay off its debt if:
C) GDP grows faster than the government's debt.
Spending promises made by governments that are effectively a debt, despite the fact that they are not included in the usual debt statistics, are known as:
D) explicit assets.
B) implicit liabilities.
A key statistic to measure economic growth is:
B) real GDP per capita.
If a country has a population of 1,000, an area of 100 square miles, and a GDP of $5 million, then its GDP per capita is:
A) $5,000.
The term human capital describes:
C) improvement in a worker's skills made possible by education, training and knowledge.
Which of the following will NOT increase the productivity of labor?
B) an increase in the size of the labor force
If technology advances, then:
C) more output can be obtained from the same inputs.
What was Cameroon’s import tariff at the time of the writing of the article?
B. 60%
From the above table, which is true:
A. The USSR had the most manufacturing growth
What is a time series graph?
D) a graph that shows how something changes over time
A government can:
A) borrow every year
The government of Greece differs from the United States in that:
C) The United States borrows in its own currency
The largest single holder of US debt is:
C) The US government
What is a problem with the debt to GDP ratio?
A) it doesn't account for a nation's assets
What is arbitrage?
A) buying where cheap and selling where expensive
What is a tariff
B) tax on imports
What is a quota in terms of trade
D) limit on imports
The United States gets most of its oil from the Americas. If a conflict in the Middle East erupts and their production is disrupted, this will not affect US gasoline prices.
a) TRUE
b) FALSE
b) FALSE
High K/L countries should have ____ wages relative to low K/L countries
a) low
b) High
b) High
High K/L countries should have ___ returns on investment relative to low K/L
a) low
b) high
a) low
When a government borrows money:
D) it never has to pay it back
What is meant by stationary in the time series context?
C) the data does not go to far from its average value
GDP is non stationary, what does this mean?
B) the data goes far away from its average value
What is the Law of Demand
C) all else being equal, price must go down for more to be demanded
What is the Law of Supply
A) all else being equal, price must go up for more to be demanded
What are substitutes
D) things that can replace each other in production or consumption
What are complements
A) things that must be used together
What is meant by "market clearing" price
B) at this price, there is no excess supply or demand
What is a price ceiling
D) a maximum price that can be charged
What is a price floor
C) a minimum price that can be charged
If the price ceiling is below the equilibrium price, it causes a:
D) a shortage
If the price floor is above the equilibrium price, it causes a:
D) excess supply
What is meant if demand is perfectly inelastic?
D) no matter how high the price, quantity demanded is the same
What is meant if demand is perfectly elastic
C) no matter what the quantity supply, consumers will only pay a certain price
If a country has an absolute advantage in producing a good it means:
C) it can produce more than another country
If a country has a comparative advantage in production a good it means:
D) it can produce the good cheaper than the other country
What is autarky
B) a country being closed to trade
Because of arbitrage in internationally traded goods, prices tend to:
A) be the same everywhere
For a capital intense country, opening trade with a labor intense country will result in:
A) no trade
For a labor intense country, opening trade with a capital intense country will result in:
B) higher wages
Opportunity cost is:
a) the trade
value of something
b) the dollar cost of something
c) what you give up to get something
d) none of the above
c) what you give up to get something
What is economic growth
B) being able to produce more
Efficiency is
A) not being able to make one person better off without taking from someone else
