Practice Exam 1 MCQ
Comprehensive Questions with
Verified Answers Graded A+
A production possibilities curve that is concave to the origin (bowed out) implies that as more of
a good is produced, the opportunity cost - Answer: increases
In the long run, government subsidies that promote the development of technology with
widespread business applications will have which of the following effects? - Answer: A positive
supply shock and lower price level
Olivia volunteers full time at an animal shelter and will not accept any offers for a paid job for
the next six months. Olivia is - Answer: not in the labor force
With an expansionary fiscal policy, what will most likely happen to the real gross domestic
product (GDP) and the nominal interest rate in the short run? - Answer: Real GDP- Increase,
Nominal Interest Rate - Increase
Economic growth is best measured by a sustained increase in which of the following? - Answer:
Per capita real gross domestic product
The long-run Phillips curve indicates that there are no trade-offs between - Answer: inflation
and unemployment
, Assume that a country's government increases borrowing. What will most likely happen to the
prices of previously issued bonds and the price level in the short run? - Answer: Bond Prices -
Decrease, Price Level - Increase
The graph above shows the foreign exchange market for United States dollars in terms of
Japanese yen. Assume that there is an increase in United States consumers' preference for
Japanese automobiles. Which of the following changes will most likely take place in the market
for dollars? - Answer: The supply of dollars will increase.
According to the data above, in which year was real gross domestic product (GDP) the largest? -
Answer: 2010
Which of the following will happen if a country's government reduces business taxes? - Answer:
The short-run aggregate supply curve will shift to the right.
In the coffee market, which of the following changes will increase the price and decrease the
quantity of coffee? - Answer: Supply - Decrease, Demand - Change
An increase in inventories will increase which component of gross domestic product? - Answer:
Investment expenditures
If real output is $9,000, and the price level is 2, and the velocity of money is 3, then the money
supply is - Answer: $6,000
Assume a country's banking system has ample reserves. Which of the following combinations of
fiscal and monetary policy will reduce the price level? - Answer: Decreasing government
spending and increasing administered interest rates
All of the following may result in increases in real gross domestic product in the long run EXCEPT
- Answer: decrease in factor productivity
Comprehensive Questions with
Verified Answers Graded A+
A production possibilities curve that is concave to the origin (bowed out) implies that as more of
a good is produced, the opportunity cost - Answer: increases
In the long run, government subsidies that promote the development of technology with
widespread business applications will have which of the following effects? - Answer: A positive
supply shock and lower price level
Olivia volunteers full time at an animal shelter and will not accept any offers for a paid job for
the next six months. Olivia is - Answer: not in the labor force
With an expansionary fiscal policy, what will most likely happen to the real gross domestic
product (GDP) and the nominal interest rate in the short run? - Answer: Real GDP- Increase,
Nominal Interest Rate - Increase
Economic growth is best measured by a sustained increase in which of the following? - Answer:
Per capita real gross domestic product
The long-run Phillips curve indicates that there are no trade-offs between - Answer: inflation
and unemployment
, Assume that a country's government increases borrowing. What will most likely happen to the
prices of previously issued bonds and the price level in the short run? - Answer: Bond Prices -
Decrease, Price Level - Increase
The graph above shows the foreign exchange market for United States dollars in terms of
Japanese yen. Assume that there is an increase in United States consumers' preference for
Japanese automobiles. Which of the following changes will most likely take place in the market
for dollars? - Answer: The supply of dollars will increase.
According to the data above, in which year was real gross domestic product (GDP) the largest? -
Answer: 2010
Which of the following will happen if a country's government reduces business taxes? - Answer:
The short-run aggregate supply curve will shift to the right.
In the coffee market, which of the following changes will increase the price and decrease the
quantity of coffee? - Answer: Supply - Decrease, Demand - Change
An increase in inventories will increase which component of gross domestic product? - Answer:
Investment expenditures
If real output is $9,000, and the price level is 2, and the velocity of money is 3, then the money
supply is - Answer: $6,000
Assume a country's banking system has ample reserves. Which of the following combinations of
fiscal and monetary policy will reduce the price level? - Answer: Decreasing government
spending and increasing administered interest rates
All of the following may result in increases in real gross domestic product in the long run EXCEPT
- Answer: decrease in factor productivity
