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Maurice receives $100 as a birthday gift. In deciding how to spend the money, he narrows his options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally he decides on Option B. The opportunity cost of this decision is
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the value to Maurice of the option he would have chosen had Option B not been available.
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Mallory decides to spend three hours working overtime rather than watching a video with her friends. She earns $8 an hour. Her opportunity cost of working is
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Regan grows flowers and makes ceramic vases. Jayson also grows flowers and makes vases, but Regan is better at producing both. In this case, trade could
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Paul can produce 8 units of wheat or 10 units of corn per day. Cliff can produce 6 units of wheat or 4 units of corn per day. The comparative advantage for wheat belongs to __________ and the comparative advantage for corn belongs to __________.
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Other things the same, an increase in the interest
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would decrease the quantity of loanable funds demanded.
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An increase in capital
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In the short run, an increase in the money supply causes interest rates to
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In the short run, a decrease in the money supply causes interest rates to
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If the Federal Reserve decided to lower interest rates, it could
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When it comes to people's tastes, economists generally believe that
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Economists in general
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Suppose today people change their expectations about the future. This change in expectations
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You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought, and that this will cause the price of peanuts to double by the end of the year. As a result,
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A steel company sells some steel to a bicycle company for $100. The bicycle company uses the steel to produce a bicycle, which it sells for $200. Taken together, these two transactions contribute
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One bag of flour is sold for $1.50 to a bakery, which uses the flour to bake bread that is sold for $4.00 to consumers. A second bag of flour is sold to a consumer in a grocery store for $2.00. Taking these three transactions into account, what is the effect on GDP?
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Renee earned a salary of $60,000 in 2001 and $80,000 in 2006. The consumer price index was 177 for 2001 and 221.25 for 2006. Renee's 2006 salary in 2001 dollars is
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In 1970 Professor Fellswoop earned $12,000; in 1980 he earned $24,000; and in 1990 he earned $36,000. If the CPI was 40 in 1970, 60 in 1980, and 100 in 1990, then in real terms, Professor Fellswoop's salary was highest in
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Suppose you are given the following information about the current levels of spending and output in the economy: potential GDP=2000, consumption=1000, investment=400, government spending=400, and net exports= -200. Since the current level of output is ___ potential GDP, in the absence of government intervention we can expect inflation (or price) to ___.
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If the MPC is 0.80 and there is no crowding- out effect, then an initial increase in aggregate demand of $100 billion will eventually shift the aggregate demand curve to the right by
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Suppose that the MPC is .60 and there is no crowding-out effect. If government expenditures increase $20 billion, aggregate demand
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Assume that the MPC is 0.75. Assuming that only the multiplier effect matters, a decrease in government purchases of $10 billion will shift the aggregate demand curve
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If the Federal Reserve decreased the stock of money, the:
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In the economy, when the demand for something decreases its price will tend to ___ and when the supply of something decreases its price will tend to ____.
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If the spending multiplier in the economy is equal to 4 this means that a
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Lower inflation makes domestic goods sold abroad ___ expensive and, hence ___ short-run equilibrium output. Assume a constant exchange rate to answer this question.
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Use the balance sheet for the following questions.
Table 29-2
First Bank of Mason City
Assets Liabilities
Required Reserves $20.00 Deposits $100.00
Loans $80.00
Refer to Table 29-2. The reserve ratio is
Table 29-2
First Bank of Mason City
Assets Liabilities
Required Reserves $20.00 Deposits $100.00
Loans $80.00
Refer to Table 29-2. The reserve ratio is
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Use the balance sheet for the following questions.
Table 29-2
First Bank of Mason City
Assets Liabilities
Required Reserves $20.00 Deposits $100.00
Loans $80.00
Refer to Table 29-2. If $1,000 is deposited into the First Bank of Mason City, and the bank takes no other actions, it's
Table 29-2
First Bank of Mason City
Assets Liabilities
Required Reserves $20.00 Deposits $100.00
Loans $80.00
Refer to Table 29-2. If $1,000 is deposited into the First Bank of Mason City, and the bank takes no other actions, it's
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Use the balance sheet for the following questions.
Table 29-2
First Bank of Mason City
Assets Liabilities
Required Reserves $20.00 Deposits $100.00
Loans $80.00
Refer to Table 29-2. If someone deposits $400 into the First Bank of Mason City,
Table 29-2
First Bank of Mason City
Assets Liabilities
Required Reserves $20.00 Deposits $100.00
Loans $80.00
Refer to Table 29-2. If someone deposits $400 into the First Bank of Mason City,
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Which of the following increases the marginal product of labor thereby increasing potential output?
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Which of the following would NOT increase productivity?
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When the money supply and the price level in countries that experienced hyperinflation are plotted against time, we see that
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Steven puts money into an account. One year later he sees that he has 6 percent more dollars and that his money will buy 2 percent more goods.
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The quantity theory of money
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When the price level rises, the number of dollars needed to buy a representative basket of goods
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Your boss gives you an increase in the number of dollars you earn per hour. This increase in pay makes
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According to the quantity equation, if P = 12, Y = 6, and M= 8, then V =
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According to the quantity equation, if P = 2, Y = 6,000, and M= 3,000, then V =
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If V and M are constant, and Y doubles, the quantity equation implies that the price level
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If velocity and output were nearly constant,
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Suppose that monetary neutrality and the Fisher effect both hold. An increase in the money supply growth rate raises.
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You buy a stock and its price rises less than the price level. Before taxes you made
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If inflation is higher than expected,
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If the exchange rate is 5 units of Peruvian currency per dollar and a hotel room in Lima costs 300 units of Peruvian currency, how many dollars do you need to get a room?
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You are staying in London over the summer and you have a number of dollars with you. If the dollar appreciated relative to the British pound then, other things the same,
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Other things the same, if the exchange rate changes from 115 yen per dollar to 125 yen per dollar, the dollar has
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Suppose a country had net exports of $8.3 billion and sold $52.4 billion of goods and services abroad. This country had
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One year a country has negative net exports. The next year it still has negative net exports and imports have risen more than exports.
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An Italian citizen opens and operates a spaghetti factory in the United States. This is Italian
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Greg, a U.S. citizen, opens an ice cream store in Bermuda. His expenditures are U.S.
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Catherine, a citizen of Spain, decides to purchase bonds issued by Chile instead of ones issued by the United States even though the Chilean bonds have a higher risk of default. An economic reason for her decision might be that
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If U.S. imports total $100 billion and U.S. exports total $150 billion, which of the following is correct?
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Most economists use the aggregate demand and aggregate supply model primarily to analyze
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Which of the following shifts aggregate demand to the left?
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Which of the following shifts aggregate demand to the left?
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As recessions begin, production
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The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,
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According to the sticky-wage theory of the short-run aggregate supply curve, if workers and firms expected prices to rise by 4 percent, but instead they rise by 2 percent, then
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Which of the sentences concerning the aggregate demand and aggregate supply model is correct?
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Other things the same, the aggregate quantity of goods demanded decreases if
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Investment spending decreases when the price level
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When the dollar appreciates, U.S.
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An increase in the interest rate causes investment to
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Suppose a stock market boom makes people feel wealthier. The increase in wealth would cause people to desire
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From 2001 to 2005 there was a dramatic rise in the price of houses. If this made people feel wealthier, then it would shift
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The initial impact of an increase in an investment tax credit is to shift
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Suppose that the Federal reserve is concerned about the effects of rising stock prices on the economy. What could it do?
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Which of the following tends to make aggregate demand shift right farther than the amount government expenditures increase?
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The government buys a bridge. The owner of the company that builds the bridge pays her workers. The workers increase their spending. Firms that the workers buy goods from increase their output. This type of effect on spending illustrates
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If there is crowding out, which of the following might decrease as government expenditures increased?
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