11) The quantity of reserves supplied equals A) nonborrowed reserves minus borrowed reserves. B) nonborrowed reserves plus borrowed reserves. C) required reserves plus borrowed reserves. D) total reserves minus required reserves.   12) In the market for reserves, when the federal funds interest rate is below the discount rate, the supply curve of reserves is A) vertical. B) horizontal. C) positively sloped. D) negatively […]

  81) In the national-income accounts, disposable personal income is calculated as A) GNP minus that part of it not actually paid to households, minus transfer payments to households. B) GNP minus that part of it not actually paid to households, plus personal income taxes paid by households. C) GNP minus that part of it not actually paid to households, plus transfer payments, minus personal […]

  41) When the Fed buys $100 million of securities from a commercial bank the A) monetary base increases. B) money supply decreases. C) bank’s reserves decrease. D) required reserve ratio decreases. E) bank is risking its depositors’ money. 42) If the reserve requirement is 20 percent and the Fed buys $10,000 worth of Treasury bonds, what is the change in the banks’ total reserves? […]

    81) On any given day, ________ changes to achieve equilibrium in the money market. A) real GDP B) the price level C) the inflation rate D) the nominal interest rate E) the real interest rate 82) Every day, ________ changes to make the quantity of money demanded equal the quantity of money supplied. A) real GDP B) the money supply C) the price […]

  Application-Level Multiple-Choice Items     31.Cells are related to the nutrients we eat in foods because: a.cells create certain essential nutrients if we do not eat enough of them. b.all cells replenish themselves every few days with nutrients that are consumed. c.nutrients can affect how the genes in cells work. d.enzymes are created to slow down the chemical reactions of a nutrient.   32.A […]

      51) The above figure shows the market for college education in the United States. With no government intervention, the market equilibrium is at a tuition of ________ and ________ million students per year. A) 16,000; 14 B) $20,000; 10 C) $13,000; 10 D) $13,000; 17 E) $16,000; 10 52) The above figure shows the market for college education in the United States. […]

  31.RefertoFigure27-5.Supposetheverticaldistancebetweenthepoints(0,A)and(0,B)is12.Ifhiswealthincreasedfrom$1,300to$1,800,then a.Dexter’ssubjectivemeasureofhiswell­beingwouldincreasebylessthan12units. b.Dexter’ssubjectivemeasureofhiswell­beingwouldincreasebymorethan12units. c.Dexterwouldchangefrombeingarisk-aversepersonintoapersonwhoisnotriskaverse. d.Dexterwouldforgotheinsuranceheboughtwhenhiswealthwas$1,300. 32.RefertoFigure27-5.SupposeDexterbeginswith$1,300inwealth.Startingfromthere, a.thepainoflosing$500ofhiswealthwouldequalthepleasureofadding$500tohiswealth. b.thepainoflosing$500ofhiswealthwouldexceedthepleasureofadding$500tohiswealth. c.thepleasureofadding$500tohiswealthwouldexceedthepainoflosing$500ofhiswealth. d.Thiscannotbedeterminedfromthegraph. 33.Fromthestandpointoftheeconomyasawhole,theroleofinsuranceis a.toenticerisk-lovingpeopletobecomeriskaverse. b.topromotethephenomenonofadverseselection. c.nottoeliminatetherisksinherentinlife,buttospreadthemaroundmoreefficiently. d.nottospreadrisks,buttoeliminatethemforindividualpolicyholders. 34.Theproblemofmoralhazardarisesbecause a.lifeisfullofallsortsofrisks. b.afterpeoplebuyinsurance,theyhavelessincentivetobecarefulabouttheirriskybehavior. c.ahigh-riskpersonismorelikelytoapplyforinsurancethanisalow-riskperson. d.insurancecompaniesgotogreatefforttoavoidpayingclaimstotheirpolicyholders. 35.Asthenumberofstocksinaperson’sportfolioincreases, a.theriskoftheportfolioincreases,asindicatedbytheincreasingvalueofthestandarddeviationoftheportfolio. b.theriskoftheportfolioincreases,asindicatedbythedecreasingvalueofthestandarddeviationoftheportfolio. c.theriskoftheportfoliodecreases,asindicatedbytheincreasingvalueofthestandarddeviationoftheportfolio. d.theriskoftheportfoliodecreases,asindicatedbythedecreasingvalueofthestandarddeviationoftheportfolio. 36.Thelargestreductioninaportfolio’sriskisachievedwhenthenumberofstocksintheportfolioisincreasedfrom a.80to100. b.40to80. c.10to20. d.1to10. 37.Diversificationofaportfolio a.caneliminatemarketrisk,butitcannoteliminatefirm-specificrisk. b.caneliminatefirm-specificrisk,butitcannoteliminatemarketrisk. c.increasestheportfolio’sstandarddeviation. d.isnotnecessaryforapersonwhoisriskaverse. 38.MaryBethisriskaverseandhas$1,000withwhichtomakeafinancialinvestment.Shehasthreeoptions.OptionAisarisk-freegovernmentbondthatpays5percentinteresteachyearfortwoyears.OptionBisalow-riskstockthatanalystsexpecttobeworthabout$1,102.50intwoyears.OptionCisahigh-riskstockthatisexpectedtobeworthabout$1,200infouryears.MaryBethshouldchoose a.optionA. b.optionB. c.optionC. d.eitherAorBbecausetheyarethesametoher. 39.Ameasureofthevolatilityofavariableisits a.presentvalue. b.futurevalue. c.return. d.standarddeviation. 40.Arisk-averseperson a.hasautilitycurvewheretheslopeincreaseswithwealth,andmighttakeabetwitha80percentchanceofwinning$300anda20perchanceoflosing$300. b.hasautilitycurvewheretheslopeincreaseswithwealth,andwouldnevertakeabetwitha80percentchanceofwinning$300anda20percentchanceoflosing$300. c.hasautilitycurvewheretheslopedecreaseswithwealth,andmighttakeabetwitha80percentchanceofwinning$300anda20perchanceoflosing$300. d.hasautilitycurvewheretheslopedecreaseswithwealth,andwouldnevertakeabetwitha80percentchanceofwinning$300anda20percentchanceoflosing$300.    

  Multiple Choice Questions  50.Conflict is best defined as:  A.any event where two parties demonstrate their dislike of each other. B.any occasion where both parties perceive each other as a threat to achieving the other party’s goals. C.a process in which one party perceives that its interests are being opposed or negatively affected by another party. D.any event where one party acts in a way […]

    31) The unemployment rate is A) the percentage of the labor force that is employed. B) the percentage of the number employed that is unemployed. C) the percentage of the working-age population that is unemployed. D) the percentage of the labor force that is unemployed. E) the percentage of the working-age population that is employed.   32) A full-time student who is not […]

  31.RefertoFigure9-1.Withtrade,totalsurplusintheGuatemalancoffeemarketamountsto a.1,250. b.1,468. c.1,870. d.1,980. 32.Whichofthefollowingstatementsistrue? a.Freetradebenefitsacountrywhenitexportsbutharmsitwhenitimports. b.”Voluntary”limitsonCanadianexportsofhogsarebetterfortheUnitedStatesthanU.S.tariffsplacedonCanadianhogexports. c.Tariffsandquotasdifferinthattariffsworklikeataxandthereforeimposedeadweightlosses,whereasquotasdonotimposedeadweightlosses. d.Freetradebenefitsacountrybothwhenitexportsandwhenitimports. 33.Whenacountryallowsinternationaltradeandbecomesanexporterofagood, a.domesticproducersofthegoodbecomebetteroff. b.domesticconsumersofthegoodbecomeworseoff. c.thegainsofthewinnersexceedthelossesofthelosers. d.Alloftheabovearecorrect. 34.SupposeIcelandgoesfrombeinganisolatedcountrytobeinganexporterofcoats.Asaresult, a.consumersurplusincreasesforconsumersofcoatsinIceland. b.producersurplusincreasesforproducersofcoatsinIceland. c.totalsurplusremainsunchangedinthecoatmarketinIceland. d.itisreasonabletoinferthatothercountrieshaveacomparativeadvantageoverIcelandincoatproduction. 35.SupposeIcelandgoesfrombeinganisolatedcountrytobeinganimporterofcoats.Asaresult, a.consumersurplusincreasesforconsumersofcoatsinIceland. b.producersurplusincreasesforproducersofcoatsinIceland. c.totalsurplusremainsunchangedinthecoatmarketinIceland. d.itisreasonabletoinferthatIcelandhasacomparativeadvantageoverothercountriesincoatproduction. 36.Whenacountryallowsinternationaltradeandbecomesanimporterofagood, a.domesticproducersofthegoodbecomebetteroff. b.domesticconsumersofthegoodbecomeworseoff. c.thegainsofthewinnersexceedthelossesofthelosers. d.Alloftheabovearecorrect. 37.Assume,forColombia,thatthedomesticpriceofcoffeewithoutinternationaltradeishigherthantheworldpriceofcoffee.Thissuggeststhat a.othercountrieshaveacomparativeadvantageoverColombiainproducingcoffee. b.Colombiahasanabsoluteadvantageoverothercountriesinproducingcoffee. c.Colombiawillexportcoffeeifinternationaltradeisallowed. d.Colombiancoffeebuyerswillbecomeworseoffifinternationaltradeisallowed. 38.Supposeacountrybeginstoallowinternationaltradeinsteel.Whichofthefollowingoutcomeswillbeobservedregardlessofwhetherthecountryfindsitselfimportingsteelorexportingsteel? a.Thesumofconsumersurplusandproducersurplusfordomestictradersofsteelincreases. b.Thequantityofsteeldemandedbydomesticconsumersincreases. c.Domesticproducersofsteelreceiveahigherpriceforsteel. d.Thelossesofthelosersexceedthegainsofthewinners. 39.Afteracountrygoesfromdisallowingtradeincoffeewithothercountriestoallowingtradeincoffeewithothercountries, a.thedomesticpriceofcoffeewillbegreaterthantheworldpriceofcoffee. b.thedomesticpriceofcoffeewillbelowerthantheworldpriceofcoffee. c.thedomesticpriceofcoffeewillequaltheworldpriceofcoffee. d.Theworldpriceofcoffeedoesnotmatter;thedomesticpriceofcoffeeprevails. 40.Withinacountry,thedomesticpriceofaproductwillequaltheworldpriceif a.traderestrictionsareimposedontheproduct. b.thecountryallowsfreetrade. c.thecountrychoosestoimport,butnotexport,theproduct. d.thecountrychoosestoexport,butnotimport,theproduct.