Bordlemay Be Trippin All The Time, Man.

Front 1

Which of the following is always true of aneconomy operating on its production possibilitiesfrontier?

Back 1

(A) Its resources are fully employed.

Front 2

Open market operations take place when the

Back 2

central bank buys or sells government bonds

Front 3

A rightward shift in the short-run aggregatesupply curve will occur when

Back 3

(D) the stock of physical capital increases

Front 4

An increase in which of the following is mostlikely to increase long-run economic growth?

Back 4

(E) Money demand

Front 5

Suppose that personal income is $3,500 billion,personal taxes are $1,000 billion, and depreciationis $500 billion. Disposable income is equal towhich of the following?

Back 5

(D) $3,000 billion

Front 6

The money demand curve is downward slopingbecause

Back 6

(B) people hold less money as the opportunitycost of holding money rises

Front 7

According to the quantity theory of money,the quantity of money is related

Back 7

(E) positively to the nominal gross domesticproduct

Front 8

Which of the following would generate cost-pushinflation?

Back 8

(A) An increase in the price of labor

Front 9

Assuming no change in the nominal wage and asignificant increase in human capital, the outputper worker will

Back 9

B) increase and the real wage will increase

Front 10

Scarcity exists because

Back 10

human wants exceed the productive capacityof the economy

Front 11

To counter a recession, the central bank mightpursue which of the following actions?

Back 11

(D) Decreasing the discount rate and buyingsecurities on the open market

Front 12

An increase in the price of a key input will causethe aggregate demand curve and the short-runaggregate supply curve to change in which of thefollowing ways

Back 12

(D) No change Shift to the left

Front 13

. Suppose that the central bank buys $100 worthof bonds on the open market. Assume that therequired reserve ratio is 10 percent, banks keep noexcess reserves, and there are no cash leakages.After banks have made all adjustments, reserves,demand deposits, and loans will increase bywhich of the following?

Back 13

(E) $100 $1,000 $900

Front 14

A simultaneous increase in both the demand forand the supply of a good in a market will lead towhich of the following changes in the equilibriumprice and quantity of the good?

Back 14

(C) Indeterminate Increase

Front 15

Country A both imports and produces tea. IfCountry A imposes a tariff on imported tea, whichof the following will occur?

Back 15

(C) Employment in the domestic tea industry willincrease.

Front 16

16. In the United States, which event would havecaused the shift of the money supply curve fromS1 to S2 in the money market shown above?

Back 16

(A) The purchase of government bonds on theopen market by the Federal Reserve

Front 17

17. The short-run Phillips curve shows that

Back 17

(A) there is a trade-off between inflation andunemployment

Front 18

Real Disposable Income Consumption$18,000 $19,000$22,000 $22,000$26,000 $25,00018. According to the income and consumptionschedules shown above, the marginal propensityto consume is

Back 18

(D) 0.75

Front 19

Which of the following is an example of frictionalunemployment?

Back 19

(A) A person quits a job to search for another job

Front 20

In the long run, a decrease in the money supplywill affect the price level and the level of outputin which of the following ways?

Back 20

(E) Decrease No change

Front 21

21. If fiscal policy is used to correct a recessionarygap, which of the following would most likelyoccur in the absence of crowding out in theshort run?

Back 21

(A) Increase Decrease

Front 22

Given the aggregate demand and aggregate supplycurves shown above, if policy makers want toincrease real output without causing inflation,they can pursue a policy that will

Back 22

(A) increase aggregate demand and decreaseaggregate supply by equal amounts