71) The Fed raises the interest rate when it A) fears recession. B) wants to increase the quantity of money. C) fears inflation. D) wants to encourage bank lending. E) cannot change the quantity of money.   72) When the Federal Reserve wants to slow inflation, it A) lowers the federal funds rate. B) raises the federal funds rate target. C) cuts […]

    21) Increasing marginal returns always occurs when the A) marginal product of an additional worker exceeds the marginal product of the previous worker. B) average product of an additional worker exceeds the average product of the previous worker. C) marginal product of an additional worker is less than the marginal product of the previous worker. D) average product of an additional worker is […]

  17.3   Monetary Policy and Economic Activity   1) The ability of the Federal Reserve to use monetary policy to affect economic variables such as real GDP ultimately depends upon its ability to affect A) tax rates. B) real interest rates. C) nominal interest rates. D) foreign exchange rates.   2) An increase in interest rates A) decreases investment spending on machinery, equipment and factories, […]

    31) In the short run, if the Fed wants to raise the federal funds rate, it A) instructs large commercial banks to sell government securities in the open market. B) instructs the New York Fed to sell government securities in the open market. C) tells large commercial banks to raise their interest rates. D) instructs the New York Fed to sell government securities […]

    31) The employee benefit that provides medical care, income, and rehabilitation expenses for individuals who sustain job-related injury or illness is called: A) workers’ compensation. B) Social Security. C) survivor benefits. D) unemployment insurance.   32) Which of the following would LEAST likely improve a firm’s workers’ compensation costs? A) Emphasizing safe work procedures to all employees B) Providing health insurance to high-risk […]

  150.Comparative financial statements for TJ Cleaners for December 31, 2014 and 2013 follow:   December 31 Assets   2014  2013 Current assets: Cash$     12,000              $   12,458 Accounts receivable45,489              37,486 Inventory40,23933,568 Prepaid expenses       3,400                    2,581 Total current assets101,128               86,093 Long-term investments              128,580              104,600 Property, plant, and equipment, net                  867,565              739,258 Total assets$1,097,273              $929,951   Liabilities and Stockholders’ Equity Current liabilities: Accounts […]

  101) Refer to Table 31-3. Suppose that for each year listed the unemployment rate among males is 5% while it is 7% among females. Which of the following statements correctly describes the change in the NAIRU in this economy between 1960 and 1980? A) Since females account for a smaller percentage of the labour force in all years, the NAIRU is decreasing over time. […]

  71.Intheaggregatedemandandaggregatesupplymodel,stickywages,stickyprices,andmisperceptionsaboutrelativeprices a.havetemporaryeffects. b.explainwhytheshortrunaggregatesupplycurvemightshift. c.explainwhytheaggregatedemandcurveisdownwardsloping. d.explainmonetaryneutrality. 72.Ofthefollowingtheories,whichisconsistentwithaverticallong-runaggregatesupplycurve? a.thesticky-wagetheory b.misperceptionstheory c.boththesticky-wageandmisperceptionstheories. d.neitherthesticky-wagenorthemisperceptionstheory. 73.Ifthepricelevelishigherthanexpected,firmsmightraisetheirproductionintheshortrunif a.thenominalwagetheypaytheiremployeeswassetbasedontheexpectedpricelevel. b.pricesarecostlytoadjustandtheyhavesettheirpriceatsometimeinthepastbutarenotreadytochangeit. c.theybelievethatthepriceoftheirproducthasrisenrelativetothepriceofotherproducts,wheninfacttheriseinthepriceoftheirproductreflectsanincreaseinthegeneralpricelevel. d.Alloftheabovearecorrect. 74.Iftheactualpricelevelis165,butpeoplehadbeenexpectingittobe160,then a.thequantityofoutputsuppliedrises,butonlyintheshortrun. b.thequantityofoutputsuppliedrisesintheshortrunandthelongrun. c.thequantityofoutputsuppliedfalls,butonlyintheshortrun. d.thequantityofoutputsuppliedfallsintheshortrunandthelongrun. 75.Assumingthataispositive,theoriesofshort-runaggregatesupplyareexpressedmathematicallyas a.quantityofoutputsupplied=naturalrateofoutput+a(actualpricelevel-expectedpricelevel). b.quantityofoutputsupplied=naturalrateofoutput+a(expectedpricelevel-actualpricelevel). c.quantity of output supplied =a(actualpricelevel-expectedpricelevel)-naturalrateofoutput. d.quantityof outputsupplied =a(expectedpricelevel-actualpricelevel)-naturalrateofoutput. 76.Theequation:quantityofoutputsupplied=naturalrateofoutput+a(actualpricelevel-expectedpricelevel),where a.anupward-slopingshort-runaggregatesupplycurve b.averticalshort-runaggregatesupplycurve c.adownward-slopingaggregatedemandcurve d.Noneoftheaboveiscorrect. 77.Themathematicalequation:quantityofoutputsupplied=naturalrateofoutput+a(actualpricelevel-expectedpricelevel),expresses a.howthelongrunequilibriumadjuststochangesinmoneysupply. b.howoutputdeviatesintheshortrunfromitslongrunnaturalrate. c.howtheshortrunaggregatesupplycurveshifts. d.howadverseshiftsinaggregatesupplycancausestagflation. 78.Whichofthefollowingcorrectlyexpresseswhytheshort-runaggregate-supplycurveslopesupward?                   79.Theeffectsofahigherthanexpectedpricelevelareshownby a.shiftingtheshort-runaggregatesupplycurveright. b.shiftingtheshort-runaggregatesupplycurveleft. c.movingtotherightalongagivenaggregatesupplycurve. d.movingtotheleftalongagivenaggregatesupplycurve. 80.Achangeintheexpectedpricelevelislikelytocausewhichofthefollowing? a.ashiftintheshort-runaggregatesupplycurveandlong-runaggregatesupplycurve b.ashiftintheshortrunaggregatesupplycurve c.ashiftintheaggregatedemandcurve d.ashiftinthelong-runaggregatesupplycurve    

    51) The monetary base is equal to A) banks’ assets plus liabilities. B) Federal Reserve notes plus coins plus banks’ reserves at the Fed. C) checkable deposits plus coins plus and traveler’s checks. D) checkable deposits plus coins plus banks’ assets. E) M2 minus M1. Answer:  B Topic:  Monetary base Skill:  Level 1: Definition Section:  Checkpoint 11.3 Status:  DMC   52) The monetary […]

61) Over the next few years more and more people prefer to ride on scooters. Which of the figures above best illustrates how this change affects the demand curve for scooters? A) Figure A B) Figure B C) Figure C D) Figure D E) None of the above answers is correct because the change in tastes will affect the supply curve not the demand curve. […]