1. Ceteris paribus, which of the following situations would result in the largest quantity of money demanded?

a. When nominal GDP = $1.4 trillion and the interest rate is 6 percent

b. When nominal GDP = $1.4 trillion and the interest rate is 3 percent

c. When nominal GDP = $1.2 trillion and the interest rate is 5 percent

d. When nominal GDP = $800 billion and the interest rate is 4 percent

2. A decrease in the demand for the output that an input produces will cause the input's:

a. demand curve to shift to the right

b. supply curve to shift to the right

c. supply curve to shift to the left

d. demand curve to shift to the left

3. The long-run aggregate supply relationship refers to:

a. a time period in which output prices can change but input prices have not had time to adjust.

b. a time period in which input prices can change but output prices have not had time to adjust.

c. any time period of more than a year

d. a time period long enough for the prices of both outputs and inputs to adjust to changes in the economy

4. A supply schedule shows:

a. how many units producers are willing and able to sell at various prices

b. how many units consumers would like to buy at various prices

c. possible combinations of output as input prices vary.

d. projected sales as ad spending varies.

5. Economic growth is measured by the

a. rate of business investment and capital formation

b. annual percentage change in per capita real output of goods and services.

c. Advancement in the quality of a nations technology

d. Marginal change in nominal output divided by total output from the previous year

6. If real GDP per capita is increasing, real output is

a. growing more rapidly than the population

b. growing more rapidly than are prices

c. growing less rapidly than the population

d. growing at the same rate as the population

7. An upward-sloping supply curve shows that:

a. buyers are not affected either directly or indirectly by the sellers' costs of production

b. suppliers are willing to increase production of their goods if they recieve higher prices for them

c. buyers are willing to pay more for particularly scarce products

d. buyers are willing to buy more as teh product price falls

e. suppliers expand production as the product price falls.

8. In the long run, an increase in the price level:

a. increases the profit margins of many producers

b. increases output prices relative to input prices

c. increase RGDP supplied

d. does none of the above

e. does all of the above

9. All decisions of the Fed are subject to approval by:

a. the FDIC

b. the U.S. Congress

c. the President of the United States

d. none of the above

10. An understanding of opportunity costs is important to understanding:

a. how accountants calculate accounting profits

b. how to assess the economic profitability of a firm

c. how to calculate the total revenue generated by a firm

d. the tax liability of a firm

11. Which of the following activities, if any, represents an external cost?

a. The reduction in the incidence of chicken pox when children are inoculated against the disease

b. the price you pay for the prime rib that you consume at a local restaurant

c. the increase in local property values when the city creates a neighbourhood park

d. the damage to a person's health from second hand smoke