In the case where money demand is completely interest insensitive (interest elasticity equals zero), an increase in the quantity of money will a. increase income but leave the interest rate unchanged. b. increase income and lower the interest rate. c. lower the interest rate but leave income unchanged. d. leave both income and the interest […]
The Taylor rule relates a. inflation rates to unemployment rates. b. the federal funds rate to inflation and output rates. c. differences in the federal funds rate from its target to differences in inflation and unemployment from its target. d. differences in the federal funds rate from its target to differences in inflation and unemployment […]
Suppose an economy is in a steady state, then its saving rate falls, once and permanently. As the economy approaches its new long-run steady state, consumption per worker is ________. A) falling B) rising C) unaffected D) either rising or falling ANSWER A
The energy source most often used by the earliest factories was (a) animal power. (b) wind power. (c) water power. (d) steam engines. ANSWER (a)
Suppose that Apple computer buys computer components for $10,000 and uses them to make ipods that they sell to Best Buy for $30,000 . Best Buy sells these ipods for $32,000 . As a result, GDP has risen by: a. $22,000 b. $2,000 c. $20,000 d. $32,000 ANSWER D
What must be true in a perfectly competitive equilibrium? a. the marginal product of labor is equal to the real wage for every unit of labor. b. the marginal product of labor is equal to the money wage for the last unit of labor. c. the marginal product of labor can be less than the […]
In the wake of the financial crisis of 2007-2009, the debt-to-GDP ratio has risen in many countries around the world. Should the expenditures enabled by this debt be considered government consumption or government investment? What will be an ideal response? ANSWER Probably, government investment. Since a well-functioning financial sector is essential for economic growth, […]
Real business cycle proponents argue that a. recessions are caused by movements of output away from the natural rate of output. b. prices and wages are sticky. c. macroeconomics should be based on the same assumptions as microeconomics. d. monetary policy is important in determining recessions. e. none of the above. ANSWER C
What was the crucial factor permitting cotton textile production to take off in New England between 1790 and 1815? (a) The imposition of high tariff rates (b) A lowering of import tariffs by Britain (c) The blocking of trade with England through the Embargo and the War of 1812 (d) A relaxation of regulations restricting […]
What do the foreign leaders investing in the industrial enclaves of developing countries of today have in common with those foreign investors who helped colonize North America? (a) Both sets of leaders exploit the labor of the indigenous people. (b) Both expect to make personal and business sacrifices, take on risks and gain something of […]
