Macroeconomics

Front

Assume that the reserve requirement is 20 percent. If a bank initially has no excess reserves and $10,000 cash is deposited in the bank, the maximum amount by which this bank may increase its loans is

Back

$8,000

Front

Which of the following is true according to the circular flow model?

• Firms are suppliers in both the product and factor markets.
• Firms are demanders in the product markets and suppliers in the factor markets.
• Households are demanders in both the product and factor markets.
• Households are demanders in the product markets and suppliers in the factor markets.
• The government is a demander in the product market only.

Back

Households are demanders in the product markets and suppliers in the factor markets.

Front

Any point inside a production possibilities curve is

Back

associated with inefficient use or unemployment of some resources

Front

If two nations specialize according to their individual comparative advantages and engage in trade, then which of the following must be true?

• If one nation gains from trade with the other nation, then the other nation will lose.
• Both nations can consume beyond their individual production possibilities.
• Both nations can consume only what they produce.
• Both nations will lose from trade.

Back

Both nations can consume beyond their individual production possibilities.

Front

Suppose two countries are each capable of individually producing two given commodities. Instead, each specializes by producing the commodity for which it has a comparative advantage and then trades with the other country. Which of the following is most likely to result?

Back

Both countries will become better off.

Front

What are the nominal GDP and real GDP in 1993? Responses: Nominal GDP is $90, Real GDP is $96; Nominal GDP is $74, Real GDP is $96; Nominal GDP is $70, Real GDP is $96; Nominal GDP is $96, Real GDP is $90; Nominal GDP is $96, Real GDP is $74

Back

Nominal GDP is $96, Real GDP is $90

Answer explanation

Front

The value of which of the following is counted in the United States gross domestic product? Clean air, Child care a father provides for his child, An automobile produced in Sweden by a United States firm, A car produced in the United States and sold in Europe, Medical services not provided due to preventative health care

Back

A car produced in the United States and sold in Europe

Front

If an economy is operating with significant unemployment, a decrease in which of the following will most likely cause employment to increase and the interest rate to decrease? The central bank’s administered interest rates, Transfer payments, Income tax rates, Government expenditures, Investment in basic infrastructure

Back

The central bank’s administered interest rates

Front

Which of the following would cause the official unemployment rate to understate the problem of unemployment?
Workers receiving unemployment compensation,
Cyclically unemployed workers,
Discouraged workers,
Recent college graduates looking for work,
Retirees

Back

Discouraged workers

Front

Which of the following individuals is classified as unemployed? A fifteen-year-old high school student who is looking for a babysitting job, A laid-off computer programmer who has given up looking for a new job, A parent who works in an after-school day care center for 15 hours a week, A recent college graduate who is looking for her first job, A mayor who lost an election and retired

Back

A recent college graduate who is looking for her first job