If a certain combination of goods lies outside the production possibilities curve of an economy, which of the following is true? Resources are not being used efficiently to achieve that combination of goods or services The economy is experiencing a surplus of resources The combination is attainable with current resources The economy is operating at full efficiency

Resources are not being used efficiently to achieve that combination of goods or services

Which of the following groups would likely gain from unanticipated inflation? Individuals with fixed income investments Lenders with fixed interest loans Savers with fixed interest savings accounts Individuals who have borrowed money at fixed interest rates

Individuals who have borrowed money at fixed interest rates

With a constant money supply, if the demand for money increases, the equilibrium interest rate and quantity of money will change in which of the following ways? Interest Rate: Increase, Quantity of Money: Not Change Interest Rate: Decrease, Quantity of Money: Decrease Interest Rate: Increase, Quantity of Money: Increase Interest Rate: Decrease, Quantity of Money: Not Change

Interest Rate: Increase, Quantity of Money: Not Change

According to the graph above, an increase in aggregate supply will most likely cause income and unemployment to change in which of the following ways? Income: Decrease, Employment: Decrease Income: Increase, Employment: Decrease Income: Increase, Employment: Increase Income: Decrease, Employment: Increase

Income: Increase, Employment: Increase

If the exchange rate between the United States ($) and the British pound (£) changed from $2 per £1 to $3 per £1, and domestic prices in both countries stayed the same, then the United States dollar would Appreciate, making US exports cheaper Depreciate, making the US imports from Britain more expensive Depreciate, making US exports more expensive Remain stable, with no effect on trade

Depreciate, making the US imports from Britain more expensive

The concept of opportunity cost would no longer be relevant if The supply of all resources were unlimited Resources were scarce All goods were free Demand for goods was infinite

The supply of all resources were unlimited

Understanding Economic Concepts and Policies through Multiple-Choice Questions

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Economics - Macroeconomics

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Cards in this deck(100)

If a certain combination of goods lies outside the production possibilities curve of an economy, which of the following is true?

Which of the following groups would likely gain from unanticipated inflation?

With a constant money supply, if the demand for money increases, the equilibrium interest rate and quantity of money will change in which of the following ways?

According to the graph above, an increase in aggregate supply will most likely cause income and unemployment to change in which of the following ways?

If the exchange rate between the United States ($) and the British pound (£) changed from $2 per £1 to $3 per £1, and domestic prices in both countries stayed the same, then the United States dollar would

If an economy is operating with significant unemployment, an increase in which of the following will most likely cause unemployment to increase and the interest rate to decrease?

An increase in which of the following is most likely to promote economic growth?

An appropriate fiscal policy to combat a recession would be to increase which of the following?

The concept of opportunity cost would no longer be relevant if

An appreciation of the United States dollar on the foreign exchange market could be caused by a decrease in which of the following?

Which of the following would indicate that economic growth has occurred?

Which of the following is most likely to occur if the Federal Reserve engages in open market operations to reduce inflation?

Which Federal Reserve action can shift the aggregate demand curve to the left?

Crowding out refers to the decrease in

If the real interest rate in the United States increases relative to that of the rest of the world, capital should flow

Which of the following policy choices represents a combination of fiscal and monetary policies designed to bring the economy out of a recession?

Which of the following will be counted as unemployed by the US Bureau of Labor Statistics?

Which of the following sequences of events would occur if the Federal Reserve implemented contractionary monetary policy?

Suppose that autonomous consumption is $400 and that the marginal propensity to consume is 0.8. If disposable income increases by $1,200, consumption spending will increase by

In an economy in which all prices, including wages, are completely flexible, an increase in labor productivity changes in output and real wages?

When the average price level increases by 10 percent in a given year, which of the following must increase by 10 percent for real output to remain constant?

Which of the following will occur in a competitive market when the price of a good is less than the equilibrium price?

A short-run Phillips curve shows an inverse relationship between

Which of the following can be expected to cause an increase in gross domestic product in the short run?

If the federal government reduces its budget deficit when the economy is close to full employment, which of the following will most likely result?

Which of the following will cause the US dollar to depreciate relative to the euro?

Stagflation is most likely to be caused by

Assume that the nominal interest rate is 10 percent. If the expected inflation rate is 5%, the real interest rate is

Which of the following will lead to an increase in the US gross domestic product?

An advance in technology will cause the

Suppose that the Federal Reserve buys $400 billion worth of government securities from the public. If the required reserve ratio is 20 percent, the maximum increase in the money supply is

Before specialization and trade, the domestic opportunity cost of producing 1 ton of grain in Alpha and in Beta is which of the following?

The theory of comparative advantage implies that Alpha would find it advantageous to

At what real exchange ratio, also referred to as the terms of trade, between grain (G) and steel (S) would both Alpha and Beta find it mutually advantageous to specialize and trade?

According to the graph above, which of the following is true about the long-run equilibrium of the economy depicted?

An increase in personal income taxes will most likely cause aggregate demand and aggregate supply to change in which of the following ways in the short run?

Which type of unemployment would increase if workers lost their jobs because of a recession?

Which of the following is true about the marginal propensity to consume?

When an economy is operating below the full-employment level of output, an appropriate monetary policy would be to increase which of the following?

Assume that the economy is at full employment. Policymakers wish to maintain the price level but want to encourage greater investment. Which of the following combinations of monetary and fiscal policies would best achieve this goal?

In one year, spending on consumption, investment, and government purchases was equal to 103% of a country's gross domestic product. This would be possible only if

When firms restructure their operations to decrease production costs, the aggregate supply curve, the price level, and real output will change in which of the following ways?

An economy is in a short-run equilibrium at a level of output that is less than full-employment output. If there were no fiscal or monetary policy interventions, which of the following changes in output and the price level would occur in the long term?

Assume that the world operates under a flexible exchange rate system. If the Central Bank of Mexico increases its money supply but other countries do not change theirs, Mexico's inflation rate and the international value of the Mexican peso will most likely change in which of the following ways?

The Federal Reserve decreases the federal funds rate by

Based on the information in the table above, what is the unemployment rate for Country X?

Suppose that the government decreases taxes and at the same time the Central Bank decreases the discount rate. The combined actions will result in

In a closed economy with only lump-sum taxation, if the marginal propensity to consume is equal to 0.75, a $7 billion increase in government spending could cause a maximum increase in output of

Which of the following is NOT a function of fiat money?

When an economy is at full employment, which of the following will most likely create demand-pull inflation in the short run?

Under rational expectations, an announced expansion in the money supply will change nominal and Real gross domestic products (GDP) in which of the following ways?

A decrease in labor productivity will shift the

In the long run, if aggregate demand increases, Real gross domestic product (GDP) and the price level will change in which of the following ways?

Suppose that all banks keep only the minimum reserves required by law and that there are no currency drains. The legal reserve requirement is 10%. If Maggie deposits the $100 bill she received as a graduation gift from her grandmother into her checking account, the maximum increase in the total money supply will be

Assuming fixed exchange rates, if a country's rate of inflation increases relative to its trading partners, the country's imports and exports will most likely change in which of the following ways?

Which of the following household purchases will be counted as a part of gross private investment in a country's gross domestic product?

An increase in aggregate demand will cause which of the following?

Which of the following would cause a short-run aggregate supply curve to shift to the right?

A decrease in business taxes would lead to an increase in national income by increasing which of the following?

In an open economy, an increasing government budget tends to cause the international values of the country's currency and trade deficit to change in which of the following ways?

A country's government runs a budget deficit when which of the following occurs in a given year?

A high marginal propensity to consume implies which of the following?

The transaction demand for money is very closely associated with money's use as a

Unlike a market economy, a command economy uses

The value of a country's currency will tend to appreciate if

Which of the following best illustrates an improvement in a country's standard of living?

Hyperinflation is typically caused by

All of the following changes will shift the investment demand curve to the right EXCEPT

The official unemployment rate understates the unemployment level in the economy because the official unemployment rate

If a reduction in aggregate supply is followed by an increase in aggregate demand, which of the following will definitely occur?

Which of the following combinations of changes in government spending and taxes is necessarily expansionary?

The amount of money that the public wants to hold in the form of cash will

For an economy consisting of households and businesses only, which of the following is consistent with the circular flow of income and production?

With an increase in the real interest rate, consumption and real gross domestic product will most likely change in which of the following ways?

According to the short-run Phillips curve, lower inflation rates are associated with

Which of the following will lead to a decrease in a nation's money supply?

An increase in which of the following would cause the aggregate demand curve to shift to the left?

Which of the following changes in the supply of and the demand for a good will definitely result in a decrease in both the equilibrium price and quantity of the good?

Based on the balance sheets above for the three different banks, which of the following is true, if the reserve requirement is 10 percent?

Which of the following will most likely lead to a decrease in inflationary expectations?

With an upward-sloping SRAS curve, an increase in government expenditure will most likely

Which of the following are most likely short-run effects of an increase in government expenditures?

In the short run, an expansionary monetary policy would most likely result in which of the following changes in the price level and real GDP?

A reduction in inflation can best be achieved by which of the following combinations of fiscal and monetary policy?

Which of the following is likely to occur following the depreciation of the United States dollar?

Country A: Computers: 24:0, Cars: 0:12; Country B: Computers: 45:0, Cars: 0:15. Which of the following is true according to the data in the table?

What is considered officially unemployed? Additional details: This answer expands on the key concept with supporting explanations and examples.

An increase in net investment leads to faster economic growth because capital per worker and output per worker will change in which of the following ways?

If a country's economy is operating below the full-employment level of output at a very low inflation rate, the central bank of the country is most likely to

Assume the economy is currently in long-run equilibrium and the short-run aggregate supply curve is upward sloping. An adverse supply shock, such as a drought, will most likely cause which of the following to the economy in the short run?

If Country Alpha has been experiencing a higher inflation rate than Country Beta over the past decade, which of the following is true?

Based on the economic figures in the table above, what is the value of GDP, in billions of dollars?

Which of the following best explains the increase in national income that results from equal increases in government spending and taxes?

Which of the following statements is true of an unanticipated inflation?

A simultaneous increase in inflation and unemployment could be explained by an increase in which of the following?

A country can have an increased surplus in its balance of trade as a result of

Policies intended to reduce demand-pull inflation are most likely to increase which of the following in the short run?

An increase in the government budget deficit is most likely to increase in which of the following?

An increase in which of the following would be likely to increase long-run growth?

A commercial bank's ability to create money depends on which of the following?

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