If public goods can be produced more efficiently, then :

If public goods can be produced more efficiently, then
 
  A) public goods increase, and private goods may increase or decrease.
  B) public goods production stays the same, and private goods increase.
  C) public goods and private goods both increase.
  D) public goods production falls, and private goods production rises.

Question 2

The oil shock of 2007-2008 saw the price of oil rising from less than 60 a barrel in March 2007 to over 145 a barrel in July 2008, and decreasing again to just over 30 a barrel in December 2008.
 
  Assuming the economy was at potential GDP prior to the oil shock, the increase in the price of oil, such as what occurred between March 2007 and July 2008, acts as a negative supply shock, causing the inflation rate to ________ and the output gap to ________. A) increase; become negative
  B) increase; become positive
  C) decrease; become negative
  D) decrease; become positive

Question 3

Consumption expenditures decrease when ________.
 
  A) the real interest rate falls
  B) disposable income increases
  C) autonomous consumption increases
  D) all of the above
  E) none of the above

Question 4

During a typical recession in the United States,
 
  A) investment expenditures usually decrease at the same rate as consumption expenditures.
  B) investment expenditures usually decrease, while consumption expenditures usually increase.
  C) investment expenditures usually decrease much more than consumption expenditures.
  D) investment expenditures usually decrease less than consumption expenditures.

Question 5

How does an expansionary monetary policy affect aggregate expenditures according to the bank lending channel?
 
  What will be an ideal response?

Question 6

The idea that government budget deficits do not matter under certain circumstances is
 
  A) called the Friedman-Lucas theory.
  B) called the Ricardian equivalence theorem.
  C) attributed to Edward Prescott and Finn Kydland.
  D) preposterous.

Question 7

Rational expectations theory suggests that ________.
 
  A) policy announcements can impact behavior
  B) policy announcements have no impact on behavior
  C) unannounced policies have no impact on behavior
  D) the optimal forecast is identical to the announced policy

Question 8

In a call options contract, the
 
  A) seller has the obligation to deliver the instrument at a specified time.
  B) buyer has the obligation to receive the instrument at a specified time.
  C) seller may choose whether or not to deliver the instrument at a specified time.
  D) buyer will choose to exercise his option only if the value of the underlying security falls.

Question 9

If most shocks to the economy are ________ shocks, then ________.
 
  A) aggregate demand; inflation stabilization policy will also stabilize activity in the short-run
  B) permanent aggregate supply; inflation stabilization policy will also stabilize activity in the short-run
  C) temporary aggregate supply; inflation stabilization policy has no impact on economic activity in the long-run
  D) all of the above
  E) none of the above

Question 10

A theory of saving is necessarily a theory of consumption, because ________.
 
  A) by definition, any unit of disposable income that is not a consumption expenditure is a unit of saving
  B) consumption decisions are made after saving has occurred
  C) private saving is equal to private investment
  D) the goal of consumption choices is to achieve the desired level of savings

Question 11

The consumption function shows how ________.
 
  A) the marginal propensity to consume varies with disposable income
  B) income varies as a result of changes in consumption
  C) consumption depends on the decision to save
  D) all of the above
  E) none of the above

Question 12

As of late 2012, what was the all-time high price for an ounce of gold?
 
  A) 1078
  B) 1780
  C) 7800
  D) 14,163