Question

Question 1: According to Milton Friedman, the reason there are two Phillips curves is because
a. prices are inflexible.

b. the expected inflation rate does not instantaneously adjust to changes in the actual inflation rate.
c. the expected inflation rate is equal to 1 minus the actual inflation rate.
d. the expected inflation rate adjusts to changes in the actual inflation rate.

Question 2: Milton Friedman argued that there
a, are two Phillips curves, a short-run one and a long-run one.

b, are three Phillips curves, a short-run one, a long-run one, and one in stagflation.

c, is one Phillips curve, and it is vertical.

d, is one Phillips curve, and it is horizontal.

Question 10: Per-capita real economic growth refers to an increase from one period to the next in

a, per-capita GDP.
b, Real GDP.
c, per-capita Real GDP.

Question 11: __________ rights refer to the range of laws, rules, and regulations that define rights for the use and transfer of resources.

a, Constitutional
b, Property
c, Economic

Question 16: A bank with a leverage ratio of 9 to 1 has
a, $9 in assets for every $1 in liabilities.
b, $9 in assets for every $1 in capital.
c, $1 in assets for every  $9 in capital.

Question 20: __________________ capital specifies the amount of capital financial institutions should hold based on the riskiness of their assets.
a, Regulatory
b, Securitization-based
c, Risk-based
d, Leverage-based

Question 23: Securitization is the process by which financial institutions
a, pool together a group of loans and then issue securities backed by the pool.
b, determine the composition of their assets that will yield the optimal amount of security for their financial health.
c, borrow funds from the Federal Reserve and then use those funds to make loans to their customers.

Question 34: Economists who are in favor of smaller government tend to prefer ________________ when expansionary _______________ policy is needed to raise aggregate demand.

a, tax cuts; fiscal
b, tax cuts; monetary
c, more government spending; fiscal

d, more government spending; monetary

Question 51: Tariffs and quotas are often imposed when a government is more responsive to __________ interests, and the benefits of those trade restrictions are often __________.
a, consumer; concentrated

b, consumer; widely dispersed

c, producer; concentrated
d, producer; widely dispersed

Question 58: Which of the following is a major import for the United States?

a, corn
b, soybeans
c, coal
d, fish

Question 59: Which of the following statements is false?
Specialization and trade does not allow a country's inhabitants to consume at a level beyond its production possibilities frontier.
Some of the goods the U.S. exports include cars, coal, and wheat.
Some of the goods the U.S. imports include cars, oil, and coffee.
A country has a comparative advantage in producing that good it can produce at lower opportunity cost than another country.

Question 62: Which of the following statements is false?
Consumers receive more consumers' surplus when tariffs exist.
Producers receive more producers' surplus when tariffs do exist.
A tariff results in a net loss to society.
With a tariff, the gains to the winners are less than the losses to the losers.

Question 66: Economist A argues that a “dollar spent is a dollar spent.”  This economist is most likely to agree with which of the following:

What matters is that government increase spending and what it spends the money on doesn’t matter as much.
What matters is that government increase spending and what it spends the money on matters quite a bit.
What matters is that government cut taxes and what taxes it cuts matters little.
What matters is that government raise taxes and what taxes it raises matters little.
none of the above

Question 68: Economist C believes that if tax rates are cut, tax revenue is likely to remain constant.  This economist most likely believes that the percentage decrease in tax rates will ______________________________ percentage rise in the tax base.
be larger than the resulting
be equal to the resulting
be smaller than the resulting
occur long after the

Question 72: A decrease in U.S. real interest rates causes the dollar to _________________, which tends to __________________ U.S. Real GDP.
appreciate; raise
appreciate; lower
depreciate; raise
depreciate; lower

Question 74: A fall in the price of foreign inputs leads to a
rightward shift of the AD curve.
leftward shift of the AD curve.
rightward shift of the SRAS curve.
leftward shift of the SRAS curve.

Question 75: An expansionary monetary policy causes interest rates to _____________________, and eventually United States net exports ____________ causing the AD curve to shift to the ___________________.
fall; rise; right

fall; fall; left

rise; rise; right
rise; fall; left
rise; rise; left

Question 76: A rise in the price of foreign inputs leads to a
rightward shift of the AD curve.
leftward shift of the AD curve.
rightward shift of the SRAS curve.
leftward shift of the SRAS curve.

Question 78: Expansionary fiscal policy
raises Real GDP more in an open economy than in a closed economy.
raises Real GDP more in a closed economy than in an open economy.
raises Real GDP equally in an open economy and in a closed economy.
does not affect Real GD”P in an open economy.

Question 83: _______________ is the practice of hiring people in other countries to do a job that was once done domestically.
Offshoring
Onshoring
Insourcing
Megasourcing

Question 84: Suppose the dollar depreciates in the foreign exchange markets.  What is the impact on U.S. Real GDP?
It must rise because dollar depreciation shifts the U.S. AD curve rightward.
It must fall because dollar depreciation shifts the U.S. SRAS curve leftward.
It remains constant since dollar depreciation does not shift either the U.S. AD curve or the U.S. SRAS curve.
It may rise, fall, or remain constant depending upon whether the U.S. AD curve shifts rightward by more, less, or an amount equal to the leftward shift of the U.S. SRAS curve.

Question 85: Suppose the price level in Germany rises, ceteris paribus.  This ________________ United States net exports, ultimately shifting the United States AD curve ____________________.
stimulates; rightward
stimulates; leftward
depresses; rightward
depresses; leftward.

Question 86: In general, a dry cleaner in a small town is ______________ likely to be unethical in his business practices than a dry cleaner in a large city.  This is because the larger a percentage of the population one person is, the _____________likely that person will have to further engage with people he encounters.  
more; less
less; less
more; more
less; more

Question 88: Which of the following statements is false?
A theory should be judged based upon whether or not it tells us the things we want to hear.
Scientists are interested in finding out when their theories are wrong or right.
Scientists are interested in building theories that can be refuted.
If evidence is consistent with a theory’s predictions, we state that the evidence fails to reject the theory.  

Question 89: Which of the following statements is true?
The motivation to try to explain something is at the heart of building a theory.
If a theory makes people uncomfortable then it should be discarded or ignored.
In order for a theory to be valid it must be a perfect description of reality.
Building a theory and evaluating a theory are the same thing.

Answer 1

1. According to Milton friedman, the reason there are two two Phillips curves is because the expected inflation rate does not simultaneously adjust to changes in the actual inflation rate. Hence,option(B) is correct.

2. Milton Friedman argued that there are two Phillips curve , short run one and a long-run one. Hence,option(A) is correct.

10.Per-capita real economic growth refers to an increase from one period to the next in per-capita real GDP. Hence, option(C) is correct.

11. Property rights refers to the range of laws , rules and regulations that define rights for the use and transfer of resources.Hence,option(B) is correct.

16. A bank with leverage ratio of 9 to 1 has $1 in assets for every $9 in capital.Hence,option(C) is correct.