True or Flase Questions The Japanese yen is the main currency held in reserve by

Question

True or Flase Questions

The Japanese yen is the main currency held in reserve by other nations

Question 2

An increase in domestic interest rates will lead to an appreciation of the domestic currency.

True

False

1 points

Question 3

Fiscal policy is most effective when people are otherwise unwilling to spend money.

True

False

1 points

Question 4

Trade creates value by moving goods from people that value them less to people that value them more.

True

False

1 points

Question 5

A technological innovation in the production of electronic goods causes the supply for electronic goods to increase.

True

False

1 points

Question 6

Tax rebates are likely to have a larger impact on consumer spending if the tax cuts are permanent rather than temporary.

True

False

1 points

Question 7

For most of recorded history, there was long-run growth in real per-capita GDP.

True

False

1 points

Question 8

Monetary policy is more effective at combating real shocks than AD shocks.

True

False

1 points

Question 9

The median wage is half the wage that the worker earns in a single hour.

True

False

1 points

Question 10

The Federal Reserve's control of the money supply is subject to uncertain lags.

True

False

1 points

Question 11

Price floors and price ceilings both result in lost gains from trade and decreases in the quality of the product.

True

False

1 points

Question 12

In the long run, the value of a currency is ultimately determined by the value of what it can purchase.

True

False

1 points

Question 13

If golf course fees decrease, the demand for golf balls will increase.

True

False

1 points

Question 14

The Federal Reserve's attempts to combat a recession and high unemployment could result in faster inflation.

True

False

1 points

Question 15

Specializing in one's comparative advantage and trading with others will make individuals better off, but may not make countries better off.

True

False

1 points

Question 16

If nominal GDP grows by 3% and the GDP deflator grows by 2%, then real GDP must grow by 5%.

True

False

1 points

Question 17

When comparing two countries with two goods each, if one country has a comparative advantage in one good, the other country will have a comparative advantage in the other good.

True

False

1 points

Question 18

A temporary decrease in spending decreases both inflation and real growth in the long run.

True

False

1 points

Question 19

A higher opportunity cost of producing a good increases the supply of that good.

True

False

1 points

Question 20

In practice, the Fed has been able to totally offset all spending shocks by changing the growth rate of the money supply.

True

False

1 points

Question 21

In the long run, an increase in the growth rate of the money supply leads to an increase in both the real exchange rate and the amount of exports.

True

False

1 points

Question 22

Money is not what economists typically consider capital.

True

False

Question 23

Trade refers to the exchange of goods or services between two parties.

True

False

1 points

Question 24

If the equilibrium price is achieved, all willing demanders become buyers.

True

False

1 points

Question 25

The national spending approach classifies all of the spending in a nation as consumption, investment, government purchases, or net exports.

True

False

1 points

Question 26

Total consumer surplus is measured by the area beneath the demand curve.

True

False

1 points

Question 27

In the event of an oil supply disruption, the price system provides incentives to allocate oil away from low-value uses.

True

False

1 points

Question 28

In addition to monetary incentives, economists also believe people respond to incentives like fame, power, reputation, and love.

True

False

1 points

Question 29

Disinflation is a decrease in prices, while deflation is a significant reduction in the rate of inflation.

True

False

1 points

Question 30

A real shock is a rapid change in economic conditions that affects the productivity of resources.

True

False

1 points

Question 31

Social Security will pay you less if you live longer.

True

False

1 points

Question 32

Conan O'Brien hosts the Conan show and Andy Richter, his sidekick, writes for it. Conan needs 4 hours to rehearse and host a good show. It takes Andy 10 hours to do the same. Conan writes one usable joke in an hour, but Andy needs 2 hours to do the same. Gains from trade are largest when Conan hosts the show and Andy writes for the show.

True

False

1 points

Question 33

Trade makes rich people richer and poor people poorer.

True

False

1 points

Question 34

Landlocked countries tend to grow slower than countries that have access to water.

True

False

1 points

Question 35

An advantage to specialization is that it can decrease the average cost of production by concentrating on smaller-scale production.

True

False

1 points

Question 36

Milton Friedman was chair of the Fed in 1980 and quickly brought inflation rates down.

True

False

1 points

Question 37

When the unemployment rate is equal to the natural rate, cyclical unemployment is zero.

True

False

1 points

Question 38

A trade deficit always indicates that a country has a low level of savings.

True

False

1 points

Question 39

Gains from trade are largest when two parties are similar in terms of opportunity costs of production.

True

False

1 points

Question 40

The formation of the Organization of the Petroleum Exporting Countries (OPEC) made it easier for these oil-producing countries to act together and successfully limit the supply of oil, thus raising prices.

True

False

1 points

Question 41

Lead, an input in the production of ammunition, increased in price from $0.60/lb in 2006 to over $1.50/lb in 2007. A possible explanation for this is that demand has increased faster than supply has increased.

True

False

1 points

Question 42

The information problem for a central planner refers to the fact that he or she may not know what resources are available.

True

False

1 points

Question 43

Economists are more concerned about the future than the current debt-to-GDP ratio.

True

False

1 points

Question 44

If the money multiplier is large, then action taken at the bottom of the money pyramid will have a relatively large effect on the entire pyramid.

True

False

1 points

Question 45

If the Bangladeshi taka depreciates against the Japanese yen, this means that the Japanese yen has appreciated against all currencies.

True

False

1 points

Question 46

Without trade, specialization is impractical.

True

False

Question 47

The Fed must spend time gathering and interpreting economic data, making it difficult to immediately correct a decrease in AD.

True

False

1 points

Question 48

Fiscal policy will be most effective when people are keen to spend their money.

True

False

1 points

Question 49

A student spends four years in college. College tuition, fees, and room and board cost $10,000 per year. This student's opportunity cost of attending college is $10,000.

True

False

1 points

Question 50

A market surplus can be defined as a situation in which the quantity demanded in a market is less than the quantity supplied, at the given price.

True

False

1 points

Question 51

M2 is included in M1.

True

False

1 points

Question 52

The price of professional sports tickets is high; therefore, you should blame the owners for taking advantage of the fans, not the other buyers for outbidding you.

True

False

1 points

Question 53

Deflation has occurred if the economy's price index for this year is lower than the same economy's price index for last year.

True

False

1 points

Question 54

Coffee growers in Mexico have no interest in the world price of oil since they do not produce oil.

True

False

1 points

Question 55

Structural unemployment has been more of a problem in the United States than in Europe.

True

False

1 points

Question 56

Checkable deposits are deposits on which the owner may write checks.

True

False

1 points

Question 57

If pressed to choose a single indicator of current economic performance, most economists would probably choose real GDP growth.

True

False

1 points

Question 58

The level of labor force participation will be higher as the number of unemployed workers is lower.

True

False

1 points

Question 59

South Korea is an example of a country that has adopted good institutions for promoting economic growth.

True

False

1 points

Question 60

In a certain country it takes five of its 10 workers to produce one barrel of wine but only one worker to produce one yard of cloth. If we graphed this country's PPF (placing wine on the vertical axis and cloth on the horizontal axis), the slope of the PPF would equal -1/5.

True

False

1 points

Question 61

Futures contracts are standardized agreements to buy or sell a specific amount of a commodity or financial instrument at a predetermined price at a defined point in the future.

True

False

1 points

Question 62

Government debt monetization generally leads to inflation.

True

False

1 points

Question 63

A computer chip is one example of a final good.

True

False

Question 64

If the CPI for this year is lower than the CPI for last year, disinflation must have occurred.

True

False

1 points

Question 65

Currently, India's growth rate is low compared to that of most countries.

True

False

1 points

Question 66

In the process of trading in free markets, firms and consumers benefit but workers do not.

True

False

1 points

Question 67

In the long run, excess money printing by the government causes inflation and economic busts.

True

False

1 points

Question 68

The Fed can fight the inflationary effects of a negative real shock by decreasing money growth.

True

False

1 points

Question 69

If the average reserve ratio in the banking system is 25% and the Fed increases bank reserves by $20,000, then the change in the money supply will be equal to $100,000.

True

False

1 points

Question 70

Because of their low incomes, about a million people in the United States die from malaria each year.

True

False

1 points

Question 71

Prices ceilings misallocate resources because with them resources are not necessarily allocated to their highest-valued use.

True

False

1 points

Question 72

GDP can be calculated by adding up the physical quantities of goods and services produced in a given year.

True

False

1 points

Question 73

Fiscal policy is especially effective when used to combat real shocks.

True

False

1 points

Question 74

In the context of world history, economic growth is unusual.

True

False

1 points

Question 75

Expansionary fiscal policy financed by borrowing is more effective in affecting real growth in a closed economy than in an open economy.

True

False

1 points

Question 76

The benefits of economies of scale and increased competition to an economy include lower unit costs.

True

False

1 points

Question 77

To trade in oil futures, a trader must be present in Cushing, Oklahoma, on settlement day to receive the purchased oil.

True

False

1 points

Question 78

A positive real shock to the economy will result in an increase in the growth rate of output and a decrease in the rate of inflation.

True

False

1 points

Question 79

A recession is a significant, widespread decline in nominal income and employment.

True

False

1 points

Question 80

Employment-at-will tends to raise the unemployment rate.

True

False

1 points

Question 81

The interest rate that the Fed charges to commercial banks when they borrow money from the Fed is called the Federal Funds rate.

True

False

1 points

Question 82

Personal consumption expenditure is the largest spending component in GDP.

True

False

1 points

Question 83

One of the major costs of inflation is the decreased real purchasing power of wages that accompanies it.

True

False

1 points

Question 84

Over time, the actual unemployment rate varies around the natural rate.

True

False

1 points

Question 85

If the price of gasoline increased from $2.50 per gallon in 2006 to $3.50 per gallon in 2010, during which time the CPI increased from 203.1 to 220.2, then we can conclude that the real price of gasoline declined from 2006 to 2010.

True

False

1 points

Question 86

Workers and employers bear an equal burden from the FICA tax.

True

False

1 points

Question 87

Trades are considered zero-sum transactions since when one person gains, the other loses an equal amount.

True

False

Question 88

A high-valued use of crude oil is in the production of asphalt.

True

False

1 points

Question 89

Nonpriced production is not included in GDP because these activities do not contribute to economic activity.

True

False

1 points

Question 90

It is possible for net exports to be a negative value.

True

False

1 points

Question 91

The government plans to increase cigarette taxes in six months. Since consumers should expect the future price of cigarettes to increase, the current demand for cigarettes will increase, and the price of cigarettes will rise even before the tax is implemented.

True

False

1 points

Question 92

Economists think that noone is ever self-interested.

True

False

1 points

Question 93

Globalization is the advance of human cooperation across national boundaries.

True

False

1 points

Question 94

China's experiment with communal farming failed because of free riding.

True

False

1 points

Question 95

Openness to international trade tends to promote growth because it also opens a country to new ideas and innovation.

True

False

1 points

Question 96

Money is always neutral in the long run in the AD-AS model.

True

False

1 points

Question 97

An increase in the growth rate of velocity shifts the aggregate demand curve to the right.

True

False

1 points

Question 98

The balance of trade (exports minus imports) is the most important component of the current account in the U.S. balance of payments.

True

False

1 points

Question 99

If the Fed reacts to a negative real shock by raising aggregate demand, it can keep the inflation rate stable.

True

False

1 points

Question 100

Credit cards are included only in the M2 definition of the money supply.

True

False

Explanation / Answer

False. Dollar is kept as foreign currency reserves majorly True. The higher interest rates tend to attract foreign investment, increasing the demand for and value of the home country's currency. True.People will spend money according to change in fiscal policy makes fiscal policy effective.   True. Through trade goods are moved from surplus to deficit areas. True

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