Macro 2301 21346 Review 3 Jun 10Student: ___________________________________________________________________________

1. "Unemployment increased in the last month to its highest level in the past ten years." This quote wouldbe an example of:

A. Post hoc, ergo propter hoc fallacyB. The fallacy of compositionC. A positive economic statementD. A normative economic statement

2. The role of an assumption in an economic theory is to:

A. Add realismB. Prove the theoryC. Cover special casesD. Simplify the theory

3. The vertical intercept of line (2) on the above graph is:

A. 8B. 12C. 16D. 24

4. The production possibilities curve bows outward from the origin because:

A. Opportunity costs decrease as the production of a good increasesB. Opportunity costs increase as the production of a good increasesC. More production of one good results in more production of the other goodD. Resources are of uniform quality

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5. A schedule or curve that shows the various combinations of two products a consumer can purchase witha specific amount of money income is:

A. A tradeoffB. A budget lineC. A tangent pointD. An optimal output

6. Are the goods that businesses offer for "free" to consumers also free to society?

A. Yes, because the individual consumer does not have to pay for themB. Yes, because the marginal benefit is greater than the marginal costC. No, because scarce resources were used to produce the free goodsD. No, because society does not assign a value to free goods

7. The "economic perspective" focuses largely on:

A. Normative economicsB. The post hoc fallacyC. Marginal analysisD. The fallacy of composition

8. The post hoc, ergo propter hoc fallacy deals with:

A. Irrational behaviorB. The difficulty in holding everything constantC. The problem of distinguishing cause and effectD. Determining whether what is true for the whole is also true for the parts

9. Which shows a positive relationship between x and y?

A. A change in y = 2 and a change in x = 4B. A change in y = 2 and a change in x = 0C. A change in y = -1 and a change in x = 4D. A change in y = 6 and a change in x = -11

10. Economics is a social science concerned with:

A. Increasing the level of productive resources so there is maximum output in societyB. Increasing the level of productive resources so there is a minimum level of incomeC. The best use of scarce resources to achieve the maximum satisfaction of economic wantsD. The best use of scarce resources paid for at the minimum level of cost to consumers and businesses

11. Economics is a:

A. Natural scienceB. Social scienceC. Managerial scienceD. Business science

12. When producers maximize their profits from the production of a good or service, they are:

A. Testing a hypothesisB. Exhibiting rational behaviorC. Assuming that all other things are equalD. Making a tradeoff between economic efficiency and economic freedom

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13. Refer to the above graph. The selection of which point on the production possibilities curve is most liketo result in the largest increase in economic growth over time?

A. AB. BC. CD. D

14. Which is the main problem with the barter system of exchange? Barter:

A. Encourages self-interest and selfishnessB. Fosters specialization and division of laborC. Requires a coincidence of wantsD. Undermines the right to bequeath

15. Which is a key feature of the market system?

A. Price floors and price ceilings in all marketsB. Reallocation of all resources from private to public usesC. The right to own private property and control resource useD. Central planning by government to provide goods and services

16. In 1999, McDonald's introduced the "Big Xtra" and it turned out to be successful product. In themarketplace for fast-food products, this success would be an example of:

A. Derived demandB. Medium of exchangeC. Consumer sovereigntyD. Roundabout production

17. In 1997, McDonald's introduced the "55-cent special." It turned out to be an unsuccessful product. In themarketplace for fast-food products, this lack of success would be an example of:

A. Normal profitB. Economic costsC. Consumer sovereigntyD. Medium of exchange

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18. Consumers express self-interest when they:

A. Reduce business lossesB. Collect economic profitsC. Seek the lowest price for a productD. Search for jobs with the highest wages

19. The fact that expenditures on products and payments to owners of resources used to produce thoseproducts flow in opposite directions is known as:

A. Roundabout productionB. A barter economyC. A pure economyD. The circular flow of income

20. All economic systems must answer certain fundamental economic questions. Which is not one of thesequestions?

A. Which actions should government take to reduce inflation?B. How will the goods and services be produced?C. What goods and services will be produced?D. Who is to receive the output?

21. In the simple circular flow model:

A. Households are sellers of resources and demanders of productsB. Households are sellers of products and demanders of resourcesC. Businesses are sellers of resources and demanders of productsD. Businesses are sellers of both resources and products

22. Which of the following would be primarily determined in the resource market?

A. The price of compact discsB. The wage rates for electriciansC. The number of automobiles producedD. The amount of money in circulation

23. The circular flow model:

A. Assumes that central planning is taking placeB. Illustrates how natural resources are createdC. Illustrates how money is created by the banking systemD. Illustrates the interdependence of businesses and consumers

24. What, according to economist Donald Boudreaux, best explains why the decentralized market system isnot a random, chaotic mess?

A. There is active cooperation among private property owners and government officials to correct theexcesses of a market economy

B. The roundabout methods of production allocate resources from consumers to producers and thenproducers to consumers

C. Government planning limits the chaos and government controls direct economic activity to createstability in the market system

D. People seek to make the best use of resources and in doing so create arrangements that produce theproducts people want

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25. Which is characteristic of the market system?

A. Unselfish individualsB. Centralized decision-makingC. Free enterprise and choiceD. Government ownership of the means of production

26. The market system is said to be characterized by "consumer sovereignty." This is because:

A. A large number of consumer goods are producedB. The prices of consumer goods are regulated by governmentC. Consumer goods are more profitable than investment goodsD. Of the role of consumers in determining what goods are produced

27. If farmers withhold some of their current corn harvest from the market because they anticipate a higherprice of corn in the future, then this would cause a decrease in the:

A. Demand for cornB. Supply of cornC. Current price of cornD. Quantity of corn supplied

28. Other things equal, which may cause an increase in the price of used houses?

A. An increase in property taxesB. An increase in mortgage interest ratesC. An increase in construction costs for new housesD. A decrease in the population of first-time homebuyers

29. Which would cause a rightward shift in the supply curve for telephone service?

A. An increase in the price of telephonesB. An improvement in telephone technologyC. An increase in the wage of telephone workersD. An increase in consumer incomes in the economy

30. There is a surplus in a market for a product when:

A. The decrease in supply is greater than the increase in demandB. The increase in demand is greater than the decrease in supplyC. Quantity supplied is less than quantity demandedD. Quantity demanded is less than quantity supplied

31. If product Y is an inferior good, an increase in consumer incomes will:

A. Result in a surplus of product YB. Not affect the sales of product YC. Shift the demand curve for product Y to the leftD. Shift the demand curve for product Y to the right

32. The institution which coordinates actions of consumers and producers to establish prices for goods andservices is known as:

A. A marketB. A monopolyC. An economic systemD. Consumer sovereignty

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Assume that the graphs show a competitive market for the product stated in the question.

33. Select the graph above that best shows the change to demand or supply in a market given the followingsituation: In the market for Florida oranges, a major frost damages the orange crop.

A. Graph AB. Graph BC. Graph CD. Graph D

34. One objection to a competitive and legal market for human organs for transplant is that it would:

A. Decrease the cost of organs for transplantB. Increase the cost of organs for transplantC. Decrease the supply of organs for transplantD. Increase the demand for organs for transplant

35. Over a period of time, the price of a good or service increases and the quantity of the good or servicesold decreases. All of the following could account for this situation, except:

A. An increase in the costs of productionB. The removal of a subsidy on the good or serviceC. The imposition of a sales tax on the good or serviceD. A decrease in the price of an alternative good or service that producers could also produce

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36. An increase in demand, holding supply constant, will tend to cause:

A. Higher prices and a larger quantity soldB. Higher prices and a smaller quantity soldC. Lower prices and a smaller quantity soldD. Lower prices and a larger quantity sold

37. Which is a determinant of supply?

A. Tastes and preferencesB. TechnologyC. Consumer incomeD. Number of consumers

38. Government-set price floors and price ceilings:

A. Do not affect the rationing function of price in a free marketB. Interfere with the rationing function of price in a free marketC. Result in surpluses of products in markets where they are usedD. Result in shortages of products in markets where they are used

Answer the next question(s) based on the following supply and demand schedules in units per week for aproduct.

39. Refer to the above table. If demand increased by 40 units at each price, while supply decreased by 60units at each price, the equilibrium price would be:

A. $30B. $40C. $50D. $60

40. The issue of the separation of ownership and control is concerned with the fact that:

A. Politicians pass laws to control corporations, but since corporations cannot vote, they cannot Protestsuch control

B. Major decisions in large corporations are generally made by professional managers rather than theowners of the corporation

C. Most farms are owned by landlords who do not live on the farmsD. Many small proprietorships are actually controlled by large corporations

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41. Refer to the pie diagram above, which represents the business population by form of legal organizationin the United States. What would be represented by the A slice?

A. Sole proprietorshipsB. CorporationsC. PartnershipsD. Cooperatives

42. The U.S. Army Corps of Engineers is virtually the sole dam builder in the United States. From aneconomic view why is this true?

A. The government has taken over the production of dams and many goods in the past 30 years simplyto direct the national economy

B. This is primarily due to the huge capital costs involved which would be prohibitive to most privatecompanies

C. This is largely due to the fact that consumers have an incentive to understate the true value of a damto them

D. This is because without government intervention, spillover benefits would not cover spillover costs tobuild dams

43. Personal saving constitutes about what proportion of total income in the United States?

A. 0 percentB. 8 percentC. 16 percentD. 24 percent

The following data represent a personal income tax schedule. Answer the next question(s) on the basis ofthis information.

44. Refer to the above table. If income increases from $15,000 to $30,000, the marginal tax rate is:

A. 10.0 percentB. 13.3 percentC. 18.3 percentD. 26.6 percent

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45. It is difficult to collect information on individuals' true preferences for public goods and services, since:

A. They know it is economically efficient to have private companies produce all goods and servicesB. Someone must horizontally sum individuals' demand curves for these goods to find the overall

demand scheduleC. When it is time to pay for public goods, they have incentives to understate the benefits they receive

from these goodsD. While people do indicate their true preferences for public goods, there are too many people to

consider and count their preferences accurately

46. One often-discussed option to improve the financial viability of Social Security is to

A. Lower payroll taxes so Social Security is less of a burden to the U.S. governmentB. Raise interest rates so the U.S. government can make a higher return on its investmentsC. Let individuals use part of their tax contributions to establish private investment accountsD. Let the Federal Reserve increase the money supply and invest it in the Social Security trust fund

47. Which was the single most important type of spending of local governments?

A. HighwaysB. WelfareC. EducationD. Public safety

48. What basic economic function is government pursuing when it charges a company with price fixing?

A. Maintaining competitionB. Reallocating resourcesC. Providing a public goodD. Stabilizing the economy

49. The most effective form of business organization for raising money to finance the expansion of itsfacilities and capabilities is a:

A. PartnershipB. CorporationC. ConglomerateD. Sole proprietorship

50. Government purchases currently amount to about:

A. 5 percent of the economy's total outputB. 10 percent of the economy's total outputC. 18 percent of the economy's total outputD. 36 percent of the economy's total output

51. The primary way that government deals with monopoly is to:

A. Regulate the monopoly firmB. Establish a competing government firmC. Redistribute monopoly incomes through tax lawsD. Compensate those who are affected by monopoly power

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52. Refer to the above circular flow model. If box E represents government, box A businesses, and box Chouseholds, then flows (11) and (12) represent:

A. Goods and servicesB. ExpendituresC. ResourcesD. Net taxes

53. Since 1975 the ratio of U.S. exports to GDP has almost:

A. DoubledB. TripledC. QuadrupledD. Quintupled

54. What is one way that the deficit of the United States in goods and services is financed?

A. By U.S. buying real assets of foreignersB. By selling real assets of the U.S. to foreignersC. By borrowing from U.S. citizensD. By lending from U.S. banks

55. An increase in the United States demand for Japanese goods will:

A. Increase the demand for Japanese yen and increase the dollar price of yenB. Increase the demand for Japanese yen, but decrease the dollar price of yenC. Decrease the demand for Japanese yen and decrease the dollar price of yenD. Decrease the demand for Japanese yen, but increase the dollar price of yen

56. The main commodity exports of the United States are primarily:

A. Agricultural productsB. Industrial productsC. Natural resourcesD. Services

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57. Which would be an example of a nontariff or non quota barrier?

A. The voluntary restraint agreement that limits imports of autos to the United States from JapanB. A limit on the import of textile products from ChinaC. The use of extensive custom checks on product qualityD. A $5.00 per case tax on imported wine

The following table shows the foreign currency per U.S. dollar near the end of January of each yearlisted.

58. Refer to the above table. From 2004 to 2005, what happened to the value of the Japanese yen and thevalue of the U.S. dollar?

A. The Japanese yen appreciated and the U.S. dollar depreciatedB. The Japanese yen depreciated and the U.S. dollar depreciatedC. The Japanese yen depreciated and the U.S. dollar appreciatedD. The Japanese yen appreciated and the U.S. dollar appreciated

59. Which was an outcome of the North American Free Trade Agreement (NAFTA)?

A. Decreased American exports to MexicoB. Decreased American imports from MexicoC. A higher standard of living in MexicoD. A lower standard of living in Mexico

60. Research studies show that the cost of an American job saved in several industries protected fromforeign competition:

A. Is much less than the benefits to the American economyB. Is much greater than the benefits to the American economyC. Has fallen in recent yearsD. Has risen in recent years

61. If the equilibrium exchange rate changes so that the U.S. dollar price for Japanese yen decreases, itmeans that:

A. The U.S. dollar has depreciated in valueB. The Japanese yen has appreciated in valueC. U.S. citizens will be able to buy fewer Japanese goodsD. Japanese citizens will be able to buy fewer U.S. goods

62. Which is a principal commodity export of the United States?

A. PetroleumB. ClothingC. ChemicalsD. Iron and steel

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63. An increase in the American demand for Japanese goods will increase the:

A. Demand for yen and decrease the dollar price of yenB. Demand for yen and increase the dollar price of yenC. Supply of yen and decrease the dollar price of yenD. Supply of yen and increase the dollar price of yen

64. International trade and global competition has forced American businesses to:

A. Raise production costsB. Improve productivityC. Be less efficientD. Redistribute income to workers

65. When a nation is specializing in the production of a product for which it is the least-cost producercompared to other nations, it is:

A. Achieving full employment of resources in the nationB. Specializing according to its comparative advantageC. Creating a coincidence of wants for the money economyD. Maximizing exchange between business and household sectors

66. If consumers become pessimistic, the economy is likely to experience

A. a negative demand shockB. a positive demand shockC. a negative supply shockD. a positive supply shock

67. Which of the following markets is most likely to exhibit extremely flexible prices?

A. The oil marketB. The market for haircutsC. The market for newspapersD. The market for coin-operated laundry machines

68. If prices of goods and services are free to quickly adjust, then

A. a negative demand shock would lead to increased unemployment in the short runB. a positive demand shock would lead to increased unemployment in the short runC. a negative demand shock would have no short-run effect on unemploymentD. there would be no short-run demand shocks

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69. Refer to the graph above. Suppose a firm is currently producing 500 computers per week and charging aprice of $1000. What happens to the firm's inventory of computers if there is a negative demand shockwhen prices are sticky?

A. The firm's inventories will not changeB. The firm's inventories will increase by 200 computers per weekC. The firm's inventories will decrease by 150 computers per weekD. The firm's inventories will increase by 350 computers per week

70. Which of the following is NOT a factor that increases short-run price stickiness?

A. Consumers tend to prefer stable pricesB. Stable prices make it easier for consumers to plan their spendingC. A firm can lower its price without fear that rival firms will also lower their pricesD. Firms try to avoid price wars

71. Between 1995 and 2007, the amount of output generated by the U.S. economy grew at an average rateof

A. 1.7% per yearB. 2.7% per yearC. 3.0% per yearD. 3.7% per year

72. Which of the following is most likely to be an indication of inflation?

A. An increase in real GDPB. An increase in nominal GDPC. A decrease in real GDPD. A decrease in nominal GDP

73. What impact will a negative demand shock have on the main measures of economic performance?

A. Real GDP will increase, inflation will increase, and unemployment will decreaseB. Real GDP will decrease, inflation will decrease, and unemployment will increaseC. Real GDP will decrease, inflation will increase, and unemployment will increaseD. Real GDP will increase, inflation will decrease, and unemployment will decrease

74. Decisions about savings and investment are

A. generally made under conditions of complete certainty about the futureB. complicated by the fact that the future is uncertainC. unaffected by expectations of the futureD. independent of expectations about the future

75. Economists need different models of the economy because

A. the economy behaves differently depending on how much time has passed after a demand shockB. we need a different model to analyze a positive demand shock than we need to analyze a negative

demand shockC. the way economic performance is measured of changes over timeD. prices tend to be less flexible over time

76. Which of the following is the best example of financial investment?

A. Ford Motor Co. builds a new manufacturing plantB. A student pursues an MBA degreeC. A retiree purchases Google stockD. A young couple purchases a new home

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77. Situations in which firms expect one thing to happen but then something else happens are called

A. recessionsB. shocksC. business cyclesD. fluctuations

78. Because prices are sticky, positive demand shock will lead to

A. no change in unemploymentB. an increase in unemploymentC. a decrease in unemploymentD. an unpredictable change in unemployment

79. A nation buys three products, A, B, and C. Over two years, the prices of these products change asfollows:

Over the period referred to, the nation's nominal income increased by 2 percent. The nation's real incomechanged by approximately:

A. 2 percentB. 3 percentC. -3 percentD. -2 percent

80. Refer to the above data. Personal income is equal to:

A. $8,348 billionB. $8,899 billionC. $9,053 billionD. $10,446 billion

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81. Some of the production of an economy creates pollution. As a result:

A. Nominal GDP is greater than real GDPB. Real GDP is greater than nominal GDPC. GDP tends to understate social welfareD. GDP tends to overstate social welfare

Assume an economy is producing only one product. Year 2 is the base year. Output and price data for afive-year period are given.

82. Refer to the above data. If year 2 is chosen as the base year, the price index for year 1 is:

A. 70B. 80C. 95D. 125

83. Which is included in the GDP but not in national income?

A. Consumption of fixed capitalB. Corporate dividendsC. Undistributed corporate profitsD. Personal income taxes

84. Refer to the above data. If year 2 is the base year, then for the years shown, the growth of:

A. Real GDP has exceeded the growth of nominal GDPB. Nominal GDP exactly reflects increases in real outputC. Nominal GDP overstates increases in real outputD. Nominal GDP understates increases in real output

85. A consumer price index attempts to measure changes in:

A. The prices of all goods and services produced by the U.S. economyB. The price of a select market basket of goods and servicesC. The spending patterns of all consumers in the United StatesD. The spending patterns of consumers worldwide

86. Which of the following represents an income or allocation flow in the circular flow of domestic outputand national income?

A. Net exportsB. Investment expendituresC. Government purchasesD. Corporate profits

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87. An example of an intermediate good or service would be:

A. A calculator purchased by a college student for taking examsB. Gasoline used by an insurance agent visiting clientsC. A house bought by a banking executive with five childrenD. A boat bought by a medical doctor for use on vacation

Answer the question(s) based on the following price and output data over a five-year period for aneconomy that produces only one good. Assume that year 2 is the base year.

88. Refer to the above data. If year 2 is the base year, then in determining real GDP for year 1:

A. Nominal GDP in year 1 should be deflatedB. Nominal GDP in year 1 and 2 should be deflatedC. The price index number in year 1 is 95D. The price index number in year 1 will be greater than 100

(The following national income data are in billions of dollars.)

89. Refer to the above data. Net domestic product is:

A. $1,039 billionB. $1,044 billionC. $1,054 billionD. $1,076 billion

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90. Nominal GDP is less than real GDP in an economy in year 1 and year 2. In year 3, nominal GDP isequal to real GDP. In year 4, nominal GDP is slightly greater than real GDP. In year 5, nominal GDP issignificantly greater than real GDP. Which year is most likely to be the base year being used to calculatethe price index for this economy?

A. 2B. 3C. 4D. 5

Answer the question(s) based on the following data, using year 1 as the base year. All dollars are inbillions.

91. Refer to the above data. Real GDP in year 2 was approximately:

A. $3,245 billionB. $3,271 billionC. $3,295 billionD. $3,402 billion

92. "Show me a pastoral society with an untouched environment, an abundance of leisure, and nonsecularvalues, and I will show you an underdeveloped, poverty-ridden country." This statement is most likely tobe made by a(n):

A. Advocate of learning by doingB. Advocate of network effectsC. Proponent of economic growthD. Critic of economic growth

93. Historically, the total amount of real capital per worker in the United States has:

A. Provided financing for the industrial expansion of businessB. Increased significantly and made labor more productiveC. Been the single most important determinant of economic growthD. Remained relatively constant, although the quality of capital has improved dramatically

94. The New Economy is often described as one with a faster rate of:

A. UnemploymentB. InflationC. Population growthD. Productivity growth

95. One of the macroeconomic implications of the New Economy is that it can achieve:

A. A higher rate of frictional unemploymentB. A lower natural rate of unemploymentC. A lower rate of simultaneous consumptionD. A higher rate of inflation

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96. A supply factor in economic growth would be:

A. A fall in the efficient use of resourcesB. A rise in the rate of resource depletionC. An increase in the quantity of laborD. An increase in consumption spending

The table below shows the quantity of labor (measured in hours) and the productivity of labor (measuredin real GDP per hour) in a hypothetical economy in three different years.

97. Refer to the above table. What explains the increase in real GDP from Year 1 to Year 3? An increasein:

A. Labor productivity between Year 2 and Year 3B. The quantity of labor between Year 1 and Year 2C. Labor productivity between Year 1 and Year 2 and an increase in the quantity of labor between Year

2 and Year 3D. Labor productivity between Year 2 and Year 3 and an increase in the quantity of labor between Year

1 and Year 2

98. From 1995-2005, labor productivity grew on average by:

A. 1.4 percentB. 2.1 percentC. 2.9 percentD. 4.7 percent

99. Assume that an economy has 2,000 workers, each working 4,000 hours per year. If the average realoutput per worker-hour is $10, then total output or real GDP will be:

A. $20 millionB. $40 millionC. $80 millionD. $100 million

100.Rising real wages for women in the U.S. workforce since the 1960s have:

A. Reduced access to job opportunities for womenB. Increased the opportunity cost of staying at homeC. Led to a rise in the number of lifetime births per womanD. Reallocated labor resources from urban to rural areas of the nation

101.One of the main arguments against further growth for industrialized nations focuses on the problem of:

A. Technological knowledgeB. Environmental qualityC. Feedback mechanismsD. Infrastructure

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102.Real GDP or total output in any year is equal to:

A. Labor inputs divided by resource outputsB. Labor productivity multiplied by real outputC. Worker-hours multiplied by labor productivityD. Worker-hours divided by labor productivity

103.Refer to the above diagram. If there is a movement away from the full employment of resources in aneconomy with production possibilities curve AB, this can be shown by:

A. A shift of the curve from AB to CDB. A movement from point 3 to point 1C. A movement from point 2 to point 4D. Point 5 in the diagram

104.Which of the following is a main source of increasing returns in recent years?

A. More learning by doingB. The concentration of development costsC. The use of less specialized inputs as firms growD. More resources devoted to agricultural production

105.A statement that is often used to describe demand-pull inflation is:

A. "A rising tide lifts all boats"B. "Money is easily earned, but not easily saved"C. "Too much money chasing too few goods"D. "There is no such thing as a free lunch"

106.In Year 1, the price level was 120 and the average nominal income was $30,000. In Year 2, the pricelevel was 125 and the average nominal level of income was $32,000. What happened to real incomefrom Year 1 to Year 2?

A. It fell by $400B. It rose by $400C. It rose by $600D. It rose by $2,000

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107.Some economists prefer to use the term business fluctuations rather than business cycles to describe thehistorical growth record in the United States because:

A. Cycles include a trough phase while fluctuations do notB. Cycles imply regularity while fluctuations do notC. Fluctuations include an expansion phase while cycles do notD. Fluctuations are relatively predictable events

108.In what circumstances would lenders most benefit?

A. When there is an unanticipated decrease in inflationB. When there is an anticipated increase in inflationC. When there is an unanticipated increase in inflationD. When there is an anticipated decrease in inflation

109.In an economy nominal GDP is $4,000 billion. The actual unemployment rate is 8 percent and thenatural rate of unemployment is 6 percent. According to Okun's law there will be:

A. $80 billion lost in potential outputB. $100 billion lost in potential outputC. $160 billion lost in potential outputD. $300 billion lost in potential output

110.The higher the rate of unemployment:

A. The larger is the GDP gapB. The smaller is the GDP gapC. The higher the level of actual GDPD. The higher the level of potential GDP

111.If average nominal income was about $15,000 and the price level index was 118, then average realincome would be about:

A. $11,146B. $12,712C. $13,385D. $14,249

112.If unemployment is above the natural rate of unemployment, then potential GDP is:

A. Equal to the GDP gapB. Equal to actual GDPC. Less than actual GDPD. Greater than actual GDP

113.What does research indicate about the effect of changes in stock price averages on stability in themacroeconomy?

A. The consumption effects of stock price changes are a major cause of macroeconomic instability; theinvestment effects are not a major cause of instability

B. The investment effects of stock price changes are a major cause of instability, but the consumptioneffects are not a major cause of instability

C. Both the consumption and investment effects of stock price changes are a major cause of instability inthe macroeconomy

D. Neither the consumption nor the investment effects of stock price changes are a major cause ofmacroeconomic instability

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114.A high unemployment rate most likely means that there is a:

A. High rate of inflation in the economyB. Low rate of interest in the economyC. Large GDP gap in the economyD. Small GDP gap in the economy

115.Which industry or sector of the economy would least likely be affected by the business cycle?

A. AutomobilesB. Consumer durablesC. Capital goodsD. Services

116.Which is the correct way to calculate the unemployment rate?

A. [(unemployed)/(population)] x 100B. [(unemployed)/(labor force)] x 100C. [(labor force)/(population)] x 100D. [(labor force)/(unemployed)] x 100

117.When a consumption schedule is plotted as a straight line, the slope of that line is:

A. VerticalB. HorizontalC. Greater than the slope of the 45º lineD. Less than the slope of the 45º line

118.If a family's MPC is .7, it is:

A. Operating at the break-even pointB. Spending seven-tenths of any increment to its incomeC. Necessarily dissavingD. Spending 70 percent of its income on consumer goods

119.Refer to the above graph. Which of the following would shift the investment demand curve from ID2 toID3?

A. A lower real interest rateB. A higher real interest rateC. Higher operating costs for capital goodsD. Lower operating costs for capital goods

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120.Refer to the above graphs, which correspond to each other across different levels of disposable income.In graph A, if line A2 shifts to A1 because of a tax increase, then in graph B, line:

A. B2 will shift to B3B. B1 will shift to B2C. B2 will shift to B1D. B3 will shift to B2

121.The investment demand curve will shift to the left as the result of:

A. Business pessimism about future economic conditionsB. The availability of excess productive capacityC. An increase in the interest rateD. A decrease in business taxes

122.Which statement about the multiplier is correct?

A. If a $20 billion increase in spending creates $20 billion of new income in the first round of themultiplier process and $15 billion in the second round, the multiplier in the economy is 5

B. If a $40 billion increase in spending creates $40 billion of new income in the first round of themultiplier process and $20 billion in the second round, the multiplier in the economy is 4

C. If a $60 billion increase in spending creates $60 billion of new income in the first round of themultiplier process and $50 billion in the second round, the multiplier in the economy is 5

D. If an $80 billion increase in spending creates $80 billion of new income in the first round of themultiplier process and $60 billion in the second round, the multiplier in the economy is 4

123.The change in real GDP from an initial change in spending is positive when the:

A. The initial change in spending is negativeB. The initial change in spending is positiveC. Multiplier is positiveD. Multiplier is negative

The disposable income (DI) and consumption (C) schedules are for a private, closed economy. Allfigures are in billions of dollars.

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124.Refer to the above data. If plotted on a graph, the slope of the consumption schedule would be:

A. .6B. .7C. .8D. .9

125.Refer to the above graph. At income level 1, the amount of dissaving is represented by the linesegment:

A. ABB. ACC. ADD. BC

126.The magnification of small changes in spending into larger changes in output and income is producedby:

A. The average propensity to consumeB. The average propensity to saveC. The multiplier effectD. Saving

127.If consumers experience an increase in wealth, then this will shift:

A. Upward both the consumption and saving schedulesB. Downward both the consumption and saving schedulesC. The consumption schedule upward and the saving schedule downwardD. The consumption schedule downward and the saving schedule upward

128.An increase in household wealth that creates a wealth effect shifts the:

A. Consumption schedule and the saving schedule upwardB. Consumption schedule and the saving schedule downwardC. Consumption schedule upward and the saving schedule downwardD. Consumption schedule downward and the saving schedule upward

23

All figures are in billions of dollars.

129.Refer to the above data. The multiplier is:

A. 1 2/3B. 2C. 2 1/2D. 4

130.What is the likely result from a depreciation of a nation's currency when its economy is operating at itsfull-employment level of output?

A. Net exports fall and contribute to demand-pull inflationB. Net exports rise and contribute to demand-pull inflationC. Net exports fall, but equilibrium GDP risesD. Net exports rise, but equilibrium GDP falls

The data are for a closed, private (no government) economy. All figures are in billions of dollars.

131.Refer to the above data. The MPC is:

A. .80B. .75C. .67D. .60

24

132.Which economic concept is most directly applicable for explaining the economic downturn in the U.S.economy in 2001?

A. LeakagesB. InjectionsC. An inflationary expenditure gapD. A recessionary expenditure gap

133.What is one limitation of the aggregate expenditures model?

A. It accounts for the natural rate of unemployment, but not the full-employment unemployment rateB. It explains cost-push, but not demand-pull inflationC. It explains demand-pull, but not cost-push inflationD. It describes the effects of consumption, but not investment spending on the economy

134.Injections into the income-expenditure stream include:

A. Investment and importsB. Investment and exportsC. Transfers and importsD. Transfers and exports

135.In 2005, the U.S. economy achieved full employment output because:

A. Net exports were positiveB. Net exports were negativeC. Domestic consumption was greater than investmentD. Foreign lending helped finance high U.S. domestic spending

The table shows a private, open economy. All figures are in billions of dollars.

136.Refer to the above table. If the marginal propensity to consume in this economy is 0.8, a $10 increase inits net exports would increase its equilibrium real GDP by:

A. $25B. $50C. $100D. $200

25

137.The following data show levels of planned variables for an economy. Ig = Investment; Sa = Saving aftertaxes; G = Government spending; T = Taxation; X = Exports; M = Imports. What is the equilibrium levelof domestic output?

A. Choice AB. Choice BC. Choice CD. Choice D

138.A personal tax cut of $50 billion will affect income differently than an increase in government spendingby $50 billion because:

A. The increase in government spending will produce a political business cycleB. The increase in government spending is less expansionary than the increase in taxesC. Households may save part of the additional income from the tax cutD. Households may consume more than the additional income from the tax cut

All figures are in billions of dollars.

139.Refer to the above data. If gross investment is $8 billion, net exports are zero, and there is nogovernment, the equilibrium level of GDP will be:

A. $260 billionB. $270 billionC. $280 billionD. $290 billion

140.If a government raises its expenditures by $50 billion and at the same time levies a lump-sum tax of $50billion, the net effect on the economy will be to:

A. Increase GDP by less than $50 billionB. Increase GDP by more than $50 billionC. Increase GDP by $50 billionD. Make no change in GDP

26

141.A decrease in the price level in the aggregate expenditures model would:

A. Decrease aggregate expenditures and real GDPB. Increase aggregate expenditures and real GDPC. Decrease aggregate expenditures and increase real GDPD. Increase aggregate expenditures and decrease real GDP

142.Suppose that real domestic output in an economy is 300 units, the quantity of inputs is 50 and the priceof each input is $9. If productivity increased such that 400 units are now produced with the quantity ofinputs still equal to 50, then per-unit production costs would:

A. Increase and aggregate demand would decreaseB. Decrease and aggregate demand would increaseC. Decrease and aggregate supply would decreaseD. Decrease and aggregate supply would increase

143.Which of the following will cause the aggregate demand curve to shift to the left?

A. A decrease in the price levelB. An increase in the price levelC. An increase in national incomes abroadD. An appreciation in the value of the U.S. dollar

It shows the aggregate demand-aggregate supply schedule for a hypothetical economy.

144.Refer to the above table. Using the original data from the table, if the quantity of real domestic outputdemanded increased by $3000 and the quantity of real domestic output supplied increased by $1000 ateach price level, the new equilibrium price level and quantity of real domestic output would be:

A. 350 and $8000B. 300 and $9000C. 250 and $8000D. 200 and $7000

145.The interest rate effect indicates that a(n):

A. Decrease in the price level will increase the demand for money, increase interest rates, and decreaseconsumption and investment spending

B. Decrease in the price level will decrease the demand for money, decrease interest rates, and increaseconsumption and investment spending

C. Increase in the price level will increase the demand for money, reduce interest rates, and decreaseconsumption and investment spending

D. Increase in the supply of money will increase interest rates and decrease interest-sensitiveconsumption and investment spending

27

146.Refer to the above graph. Which factor explains the downward slope?

A. Market powerB. The interest-rate effectC. Government regulationD. Domestic resource prices

147.An increase in investment spending can be expected to shift the:

A. Aggregate expenditures curve downward and the aggregate demand curve leftwardB. Aggregate expenditures curve upward and the aggregate demand curve leftwardC. Aggregate expenditures curve downward and the aggregate demand curve rightwardD. Aggregate expenditures curve upward and the aggregate demand curve rightward

148.Which would be considered to be one of the factors that shift the aggregate supply curve? A change in:

A. Consumer spendingB. Net export spendingC. Government regulationD. Profit expectations on investment projects

149.The upward slope of the short-run aggregate supply curve is based on the assumption that:

A. Nominal wages and other resource costs do not respond to price level changesB. Nominal wages and other resource costs do respond to price level changesC. Nominal wages are greater than real wagesD. Nominal wages are less than real wages

150.If the U.S. dollar depreciates in value relative to foreign currencies, then this will:

A. Increase aggregate demandB. Decrease aggregate demandC. Cause a movement along the aggregate demand curveD. Cause a movement along the aggregate supply curve

151.A decrease in business taxes will most likely result in a(n):

A. Decrease in aggregate demand and aggregate supplyB. Increase in aggregate demand and aggregate supplyC. Decrease in aggregate demand and increase in aggregate supplyD. Increase in aggregate demand and decrease in aggregate supply

28

152.The passage of new legislation requiring more extensive government regulation of business will mostlikely:

A. Increase aggregate demandB. Increase aggregate supplyC. Decrease aggregate demandD. Decrease aggregate supply

153.The public debt is the sum of all previous:

A. Budget surpluses minus the current budget deficit of the Federal governmentB. Budget deficits minus any budget surpluses of the Federal governmentC. Expenditures of the Federal governmentD. Budget deficits of the Federal government

154.About what percentage of the public debt is held by U.S. government agencies and the FederalReserve?

A. 20 percentB. 53 percentC. 61 percentD. 72 percent

155.With a progressive tax system, as the level of income increases in an economy, the average tax ratewill:

A. DecreaseB. IncreaseC. Remain the sameD. Decrease, increase, or remain the same

156.The standardized deficit is the difference between annual government expenditures and tax revenues thatwould have occurred if the economy was:

A. In a recessionB. At full employmentC. At the peak of a business cycleD. At the trough of the business cycle

157.The actual and standardized budgets will be equal when:

A. The rate of inflation is zeroB. The economy is at full employmentC. The balanced-budget multiplier is 1D. Taxes have no effect on fiscal policy

158.When government tax revenues change automatically and in a countercyclical direction over the courseof the business cycle, this is an example of:

A. ImpoundingB. Built-in stabilityC. Money creationD. The standardized budget

29

159.If the Congress passes legislation to raise taxes to control demand-pull inflation, then this would be anexample of a(n):

A. Political business cycleB. Expansionary fiscal policyC. Contractionary fiscal policyD. Nondiscretionary fiscal policy

160.The United States is experiencing recession, so Congress adopts an expansionary fiscal policy. Stategovernments face a budget shortfall and raise taxes to balance their budgets. The actions of stategovernments would:

A. Slightly increase aggregate supplyB. Slightly increase aggregate demandC. Partially reinforce the fiscal policyD. Partially offset the fiscal policy

161.One timing problem with fiscal policy to counter a recession is a "recognition lag" that occurs betweenthe:

A. Start of the recession and the time it takes to recognize that the recession has startedB. End of the recession and the time it takes to recognize that the recession has endedC. Time fiscal action is taken and the time that the action has its effect on the economyD. Time the need for the fiscal action is recognized and the time that the action is taken

162.One of the potential problems with the public debt is that it may:

A. Make income distribution more equitableB. Increase the debt burden of foreign creditorsC. Lead to added taxes that reduce economic incentivesD. Decrease interest rates and increase investment spending

163.If the Congress passes legislation to decrease government spending to control demand-pull inflation,then this would be an example of a(n):

A. Automatic stabilizersB. Expansionary fiscal policyC. Contractionary fiscal policyD. Nondiscretionary fiscal policy

164.Due to automatic stabilizers, when income rises, government transfer spending:

A. Increases and tax revenues decreaseB. Decreases and tax revenues increaseC. And tax revenues decreaseD. And tax revenues increase

165.The Federal Open Market Committee (FOMC):

A. Provides advice on banking policy to the FEDB. Monitors regulatory banking laws for member banksC. Sets policy on the sale and purchase of government bonds by the FEDD. Follows the actions and operations of financial markets to keep them open and competitive

30

166.How many members can serve on the Board of Governors of the Federal Reserve System?

A. 7B. 9C. 12D. 14

167.When was the Federal Reserve System established?

A. 1913B. 1933C. 1945D. 1955

168.The principal advantage money has over barter is its function as:

A. A store of valueB. A medium of exchangeC. Unit of accountD. Debt

169.The use of electronic money and smart cards:

A. Accounts for most of the financial transactions in the United StatesB. Serves effectively as a measure of value, but not as a medium of exchangeC. Will make it more difficult for the Federal Reserve to control the money supplyD. Will increase consumer choice, but will reduce productivity in the financial services industry

170.To keep high inflation from eroding the value of money, monetary authorities in the United States:

A. Create token money that is less than its intrinsic valueB. Make paper money legal tender for the payment of debtC. Establish insurance on checkable deposit accountsD. Control the supply of money in the economy

171.One reason that "near-monies" are important is because:

A. They simplify the definition of money and therefore the formulation of monetary policyB. They can be easily converted into money or vice versa, and thereby can influence the stability of the

economyC. They do not reflect the level of consumer spending but they have a critical impact on saving and

investment in the economyD. Credit cards synchronize one's expenditures and income, thereby reducing the cash and checkable

deposits one must hold

172.Which declined significantly since the 1980s?

A. The control of the FDMC over the money supplyB. The number of electronic transactions for moneyC. The share of total financial assets held by banks and thriftsD. The amount of debt held by banks and the Federal government

173.The Federal Reserve System is divided into:

A. 5 districtsB. 7 districtsC. 12 districtsD. 15 districts

31

174.When money serves as a means for determining the relative worth of goods, services, and resources, it isfunctioning as a:

A. Unit of accountB. Store of valueC. Medium of exchangeD. Standard of deferred payment

175.Holding the money deposits of businesses and households and making loans to the public are the basicfunctions of:

A. District banks of the Federal Reserve SystemB. Commercial banks and thrift institutionsC. The Open Market Committee and the Board of GovernorsD. The Federal Deposit Insurance Corporation and the Federal Savings and Loan Insurance Corporation

176.A 15 percent increase in the price level:

A. Increases the value of a dollar by 15 percentB. Decreases the value of a dollar by 15 percentC. Decreases the value of a dollar by 13 percentD. Decreases the value of a dollar by 8 percent

177.A commercial bank has no excess reserves until a depositor places $5000 in cash in the bank. The bankthen adds the $5000 to its reserves by sending it to the Federal Reserve Bank. The commercial bank thenlends $4000 to a borrower. As a consequence of these transactions the size of the money supply has:

A. Not been affectedB. Increased by $4000C. Increased by $5000D. Decreased by $5000

178.The reserve ratio is equal to:

A. A commercial bank's checkable-deposit liabilities divided by its required reservesB. A commercial bank's required reserves divided by its checkable-deposit liabilitiesC. A commercial bank's checkable-deposit liabilities multiplied by its excess reservesD. A commercial bank's excess reserves divided by its required reserves

Answer questions 104-107 on the basis of the following consolidated balance sheet for the commercialbanking system. All figures are in billions. Assume that the required reserve ratio is 10 percent

179.Refer to the above information. If there is a deposit of $10 billion of new currency into checkingaccounts in the banking system, excess reserves will increase by:

A. $1 billionB. $2 billionC. $9 billionD. $10 billion

32

180.Assume a commercial bank has excess reserves of $5,000 and can make new loans of $35,000 and justmeet its legal reserve requirements. The required reserve ratio must be about:

A. 7 percentB. 14 percentC. 20 percentD. 26 percent

181.A commercial bank has actual reserves of $50,000 and checkable deposits of $200,000, and the requiredreserve ratio is 20%. The excess reserves of the bank are:

A. $10,000B. $20,000C. $40,000D. $50,000

182.When commercial banks and thrift institutions make loans, they:

A. Buy government securities from the Federal ReserveB. Sell government securities to the Federal ReserveC. Monetize the credit extended to borrowersD. Decrease their balance-sheet liabilities

183.Refer to the above information. The monetary multiplier:

A. 4B. 5C. 8D. 10

184.A commercial bank buys a $50,000 government security from a securities dealer. The bank gives thedealer an increase in its checkable deposits of $50,000. The money supply has:

A. Not been affectedB. Decreased by $50,000C. Increased by $50,000D. Increased by $50,000 multiplied by the reciprocal of the required reserve ratio

Use the following balance sheet for the First Federal Bank. Assume the required reserve ratio is 20percent

185.Refer to the above information. Using the original bank balance sheet, assume that the bank makes aloan of $30,000 and has a check cleared against it for the amount of the loan. The bank will then haveexcess reserves of:

A. $10,000B. $20,000C. $30,000D. $40,000

33

Answer the next question(s) on the basis of the following figures for a single commercial bank whichyou are to arrange on the balance sheet. All figures are in thousands of dollars

186.Refer to the above data. This bank has liabilities and net worth of:

A. $400 millionB. $440 millionC. $550 millionD. $580 million

Answer the next question(s) based on the following consolidated balance sheet for the commercialbanking system. Assume the required reserve ratio is 12 percent. All figures are in billions of dollars

187.Refer to the above data. The commercial banking system has excess reserves of:

A. $32 billionB. $36 billionC. $42 billionD. $60 billion

188.The relative importance of various asset items on a commercial bank's balance sheet reflects a bank'spursuit of which two conflicting goals?

A. Profits and riskB. Liquidity and profitsC. Assets and liabilitiesD. Buying and selling government securities

189.Which is a valid counterargument to use tariffs to protect high wages from cheap foreign labor?

A. The benefits of such a policy will go to consumers, not workersB. The benefits of such a policy will go to businesses, not workersC. Wage rates in a nation are largely determined by productivityD. The economy may become overheated, thus increasing inflation

190.When a nation has a comparative advantage in producing a product, then in comparison with any othernation it can produce that product:

A. At a lower average total costB. At a lower domestic opportunity costC. With less capitalD. With less labor

34

191.Refer to the above diagrams. Assume that prior to specialization and trade Italy and Greece preferredpoints I and G on their production possibilities curves. As a result of complete specialization accordingto comparative advantage, the resulting gains in output will be:

A. 5X and 15YB. 10YC. 15X and 5YD. 25X

192.The basic difference in the economic effects of a tariff compared with a quota is that a:

A. Quota generates revenue for the governmentB. Tariff generates revenue for the governmentC. Tariff raises product prices, but a quota does not raise product pricesD. Quota raises product prices, but a tariff does not raise product prices

193.In a two-nation world, comparative advantage means that one nation can produce:

A. A product with fewer inputs than the other nationB. A product at lower average cost than the other nationC. A product at a lower domestic opportunity cost than the other nationD. More of a product than the other nation

35

194.Refer to the above graph, where Sd and Dd are the domestic supply and demand for a product. The worldprice of the product is $6. What would be the difference in the total revenue received by foreignproducers after a quota of 20 units is imposed compared with the total revenue received by foreignproducers when a $4 per unit tariff is paid?

A. $0 revenue differenceB. $80 more revenue with a quota than with a tariffC. $200 more revenue with a quota than with a tariffD. $120 more revenue with a tariff than with a quota

195.Which is a principal commodity export of the United States?

A. SemiconductorsB. SteelC. ClothingD. Petroleum

196.A basic assumption for comparing the straight-line production possibilities curves for two nations is thatthe production possibilities curves reflect:

A. Decreasing opportunity costsB. Increasing opportunity costsC. The same opportunity costs for producing in each nationD. Different opportunity costs for producing in each nation

Autos and chemicals are in units of one million

197.The data in the above tables show that production in:

A. Germany is subject to increasing domestic opportunity costs and the United States to constantdomestic opportunity costs

B. The United States is subject to increasing domestic opportunity costs and Germany to constantdomestic opportunity costs

C. Both Germany and the United States are subject to constant domestic opportunity costsD. Both Germany and the United States are subject to increasing domestic opportunity costs

36

198.Refer to the above graph which shows the import demand and export supply curves for two nations thatproduce a product. The import demand curves for the two nations are represented by lines:

A. 5 and 6B. 5 and 7C. 6 and 8D. 7 and 8

199.Assume that a tariff is imposed on an imported product. The difference between the domestic price andthe world price is captured by:

A. The governmentB. Domestic consumersC. Domestic producersD. Foreign exporters

200.A licensing requirement, or unreasonable standard pertaining to the product quality and safety for aproduct that is imported into a country, is an example of:

A. Protective tariffsB. Nontariff barriersC. Voluntary export restrictionsD. Quotas on imported products

37

Macro 2301 21346 Review 3 Jun 10 Key

1. C

2. D

3. B

4. B

5. B

6. C

7. C

8. C

9. A

10. C

11. B

12. B

13. A

14. C

15. C

16. C

17. C

18. C

19. D

20. A

21. A

22. B

23. D

24. D

25. C

26. D

27. B

28. C

29. B

30. D

1

31. C

32. A

33. D

34. B

35. D

36. A

37. B

38. B

39. B

40. B

41. A

42. C

43. A

44. B

45. C

46. C

47. C

48. A

49. B

50. C

51. A

52. D

53. A

54. B

55. A

56. B

57. C

58. A

59. C

60. B

61. D

62. C

63. B

64. B

2

65. B

66. A

67. A

68. C

69. C

70. C

71. B

72. B

73. B

74. B

75. A

76. C

77. B

78. C

79. C

80. B

81. D

82. B

83. A

84. C

85. B

86. D

87. B

88. A

89. C

90. B

91. B

92. C

93. B

94. D

95. B

96. C

97. C

98. C

3

99. C

100. B

101. B

102. C

103. C

104. A

105. C

106. C

107. B

108. A

109. C

110. A

111. B

112. D

113. D

114. C

115. D

116. B

117. D

118. B

119. D

120. C

121. A

122. D

123. B

124. D

125. A

126. C

127. C

128. C

129. C

130. B

131. B

132. D

4

133. C

134. B

135. D

136. B

137. B

138. C

139. B

140. C

141. B

142. D

143. D

144. C

145. B

146. B

147. D

148. C

149. A

150. A

151. B

152. D

153. B

154. B

155. B

156. B

157. B

158. B

159. C

160. D

161. A

162. C

163. C

164. B

165. C

166. A

5

167. A

168. B

169. C

170. D

171. B

172. C

173. C

174. A

175. B

176. C

177. B

178. B

179. C

180. B

181. A

182. C

183. D

184. C

185. A

186. D

187. C

188. B

189. C

190. B

191. A

192. B

193. C

194. B

195. A

196. D

197. C

198. D

199. A

200. B

6

7

Macro 2301 21346 Review 3 Jun 10 Summary

Category # of QuestionsAACSB: Analytic 166AACSB: Analytical 12AACSB: Analytical Skills 13AACSB: Reflective 9Bloom's: Application 70Bloom's: Comprehension 5Bloom's: Knowledge 125Learning Objective: 1-1 9Learning Objective: 1-2 1Learning Objective: 1-4 1Learning Objective: 1-5 2Learning Objective: 2-2 6Learning Objective: 2-3 3Learning Objective: 2-5 4Learning Objective: 23-2 2Learning Objective: 23-4 2Learning Objective: 23-5 9Learning Objective: 24-1 1Learning Objective: 24-2 4Learning Objective: 24-3 4Learning Objective: 24-4 3Learning Objective: 24-5 1Learning Objective: 25-1 6Learning Objective: 25-2 1Learning Objective: 25-3 4Learning Objective: 25-4 2Learning Objective: 26-1 3Learning Objective: 26-2 1Learning Objective: 26-3 8Learning Objective: 27-1 4Learning Objective: 27-2 3Learning Objective: 27-4 2Learning Objective: 27-5 3Learning Objective: 28-1 1Learning Objective: 28-3 1Learning Objective: 28-4 7Learning Objective: 28-5 3Learning Objective: 29-1 6Learning Objective: 29-2 5Learning Objective: 29-3 1Learning Objective: 3-1 2Learning Objective: 3-2 4Learning Objective: 3-3 2Learning Objective: 3-4 3Learning Objective: 3-5 2Learning Objective: 30-1 4Learning Objective: 30-2 3

1

Learning Objective: 30-3 2Learning Objective: 30-4 3Learning Objective: 31-1 5Learning Objective: 31-3 5Learning Objective: 31-4 2Learning Objective: 32-2 7Learning Objective: 32-3 4Learning Objective: 32-5 1Learning Objective: 37-1 1Learning Objective: 37-2 6Learning Objective: 37-3 4Learning Objective: 37-4 1Learning Objective: 4-1 1Learning Objective: 4-2 2Learning Objective: 4-3 1Learning Objective: 4-4 4Learning Objective: 4-5 5Learning Objective: 5-1 5Learning Objective: 5-2 1Learning Objective: 5-3 4Learning Objective: 5-4 2Learning Objective: 5-5 1Level: Difficult 56Level: Easy 59Level: Moderate 85McConnellTBII - Chapter 01 15McConnellTBII - Chapter 02 13McConnellTBII - Chapter 03 15McConnellTBII - Chapter 04 16McConnellTBII - Chapter 05 14McConnellTBII - Chapter 23 14McConnellTBII - Chapter 24 18McConnellTBII - Chapter 25 15McConnellTBII - Chapter 26 12McConnellTBII - Chapter 27 16McConnellTBII - Chapter 28 16McConnellTBII - Chapter 29 14McConnellTBII - Chapter 30 12McConnellTBII - Chapter 31 12McConnellTBII - Chapter 32 16McConnellTBII - Chapter 37 16Topic: AD in relation to the AE model 2Topic: Aggregate demand 4Topic: Aggregate supply (short-run) 5Topic: Analysis of tariffs and quotas 3Topic: Applications and critiques 3Topic: Arguments for protectionism 1Topic: Built-in stabilizers 3Topic: Categorizing macroeconomic models using price stickiness 1Topic: Changes in equilibrium price and quantity 3Topic: Characteristics of the market system 6Topic: Circular flow model 4Topic: Combined topics 4Topic: Comparative advantage 5

2

Topic: Consumption function/APC/MPC 3Topic: Demand and demand curve 1Topic: Demand-pull and cost-push inflation 1Topic: Determinants of demand 1Topic: Determinants of supply 4Topic: Discretionary fiscal policy 2Topic: Economic functions of government 2Topic: Economics; economic perspective 4Topic: Economics; economics perspective 2Topic: Equilibrium GDP in private closed economy 2Topic: Equilibrium; changes in equilibrium 1Topic: Equilibrium; rationing function 2Topic: Federal finance and progressive taxes 1Topic: Five fundamental questions 3Topic: Foreign exchange market 4Topic: Functions of Money 2Topic: GDP accounting: expenditure approach 1Topic: GDP accounting: value added; income approach 2Topic: GDP and social welfare 1Topic: GDP concept 1Topic: GDP gap; Okun's law 4Topic: Government in circular flow 1Topic: Government-set prices 2Topic: Graphs/tables; mixed consumption and saving 2Topic: Growth debate 2Topic: Growth record; growth accounting 1Topic: How sticky are prices? 2Topic: Individual's economizing problem - budget lines 1Topic: Inflation effects 1Topic: Ingredients and graphical analysis 6Topic: Investment demand 2Topic: Legal forms of business 3Topic: Mixed economy 5Topic: Multilateral agreements: free trade zones; implications of the global economy 2Topic: Multiplier effect 3Topic: Nominal versus real income 2Topic: Open economy 2Topic: Other social accounts 1Topic: Performance and policy 2Topic: Personal and functional distribution of income 2Topic: Positive and normative economics 1Topic: Problems, criticisms, complaints 2Topic: Production possibilities model 1Topic: Public debt 3Topic: Public goods 2Topic: Purchases, transfers, and government size 1Topic: Real versus nominal GDP; price indexes 7Topic: Recent developments and reform 2Topic: Shifts in consumption and saving functions 2Topic: Single commercial bank 8Topic: Specialization and comparative advantage 1Topic: Standardized budget 2Topic: State and local finance 1Topic: Supply and demand analysis of exports and imports 1

3

Topic: Supply of money (definition, value, etc.) 3Topic: The business cycle 3Topic: The miracle of modern economic growth 2Topic: The New Economy 4Topic: Theories, principles, and models 1Topic: Trade barriers 2Topic: Trade facts 1Topic: Trade: volume, facilitating factors, participants 4Topic: Types of trade barriers 1Topic: U.S. financial system 5Topic: Uncertainty, expectations and shocks 6Topic: Unemployment 1Topic: Unemployment, growth, and the future 3

4