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Economic
Q:
An individual who suffers from money illusion will
A) feel that a doubling of prices and income improves his economic position.
B) concentrate on relative prices.
C) never be fooled by the impact of price changes on the purchasing power of income.
D) try to use counterfeit money.
Q:
What is measured on the horizontal axis when we draw a graph of the long -run aggregate supply curve?A) production of capital goods B) production of consumer goodsC) the price level D) real GDP
Q:
If population growth is greater than the growth of real output,A) real per capita Gross Domestic Product (GDP) growth will be less than the growth of real Gross Domestic Product (GDP).B) the production possibilities curve is shifting to the left.C) real per capita Gross Domestic Product (GDP) growth will be greater than the growth of real Gross Domestic Product (GDP).D) real per capita Gross Domestic Product (GDP) and real Gross Domestic Product (GDP) will be growing at the same rate.
Q:
C + net I + G + X equalsA) GDP.B) DPI. C) NDP. D) PI.
Q:
Changes in leading indicators signalA) the changes in the frictional and seasonal unemployment rate. B) the changes that will occur in the economy.C) the changes in the frictional unemployment rate and the changes in the inflation rate. D) the changes in the market basket.
Q:
The fact that a number of lifeguards lose their jobs at the end of each summer would be counted asA) cyclical unemployment. B) frictional unemployment. C) seasonal unemployment. D) structural unemployment.
Q:
A multinational agency that specializes solely in making loans to promote long -term development and growth in developing countries is theA) Federal Reserve System. B) World Bank.C) International Monetary Fund. D) International World Fund.
Q:
In the above figure, if we start at AD1 and SRAS1, and the money supply increases unexpectedly, what would be the short-run equilibrium even with rational expectations?A) E1 B) E2 C) E3 D) P1
Q:
The official Federal Reserve strategy for implementing its monetary policy objectives is spelled out in theA) Federal Reserve Board (FRB) Decree.B) Federal Reserve Bank Cooperative (FRBC) Proposal. C) Federal Advisory Committee (FAC) Statement.D) Federal Open Market Committee (FOMC) Directive.
Q:
The downward slope of the demand for money curve reflects the fact thatA) people hold more of their wealth in the form of money as the price level rises. B) people hold more of their wealth in the form of money as the price level falls.C) people hold more of their wealth in the form of money as the interest rate rises. D) people hold more of their wealth in the form of money as the interest rate falls.
Q:
Goldsmiths were able to practice an early form of fractional reserve banking because they knew thatA) people were relatively unsophisticated in their financial transactions. B) gold was the major form of money.C) not all depositors would claim their gold at the same time.D) gold did not serve as a unit of account.
Q:
Given the list of assets below, which is the most liquid?
A) $500 worth of General Motors common stock
B) $500 worth of General Motors bonds
C) A $500 travelers check
D) A one-ounce gold coin
Q:
Fiscal policy during periods of relatively low unemployment and low inflation haveA) little effect due to time lags and the crowding-out effect.B) significant effect due to the timely intervention of the president and congress.C) significant effect because the changes in fiscal policy gives investors confidence in the economy.D) little effect because the global market makes up fifty percent of aggregate spending.
Q:
Which of the following is a true statement?A) The C + I + G + X curve has no relationship to the aggregate demand curve other than some of the variables that affect one curve also affect the other.B) The C + I + G + X curve is used to derive the aggregate demand curve, but theC + I + G + X curve is drawn for one price level while price levels vary along the aggregate demand curve.C) The C + I + G + X curve is used to derive the aggregate demand curve, but the aggregate demand curve is drawn for one price level.D) Both the C + I + G + X curve and the aggregate demand curve are drawn for one price level.
Q:
Real Disposable IncomePlanned Real Consumption03,0002,0004,4004,0005,8006,0007,2008,0008,60010,00010,00012,00011,40014,00012,800Refer to the above table. The table gives the combinations of real disposable income and real consumption for a college student for a year. What does planned real saving equal when real disposable income equals $12,000?A) 0 B) 600 C) 3,000 D) 11,400
Q:
Assume equilibrium real GDP per year is equal to full-employment real GDP. Which of the following will cause a recessionary gap?A) an increase in aggregate demand B) a reduction in aggregate demandC) a discovery of a new raw material D) a temporary reduction in the price of oil
Q:
An individual who is suffering from money illusion is more concerned withA) relative prices than with nominal prices. B) relative prices than with real prices.C) nominal prices than with relative prices. D) real prices than with nominal prices.
Q:
When the production possibilities curve shifts outward,A) the long-run aggregate supply curve shifts to the left. B) the long-run aggregate supply curve is unchanged.C) the price level rises in the long run.D) the long-run aggregate supply curve shifts to the right.
Q:
What are the shortcomings of using changes in per capita real GDP to measure economic growth?
Q:
C + I + G + X equalsA) GDP. B) DPI. C) NDP. D) PI.
Q:
Typically during a recession,A) incomes fall, and unemployment falls. B) incomes and unemployment rise.C) incomes fall, and unemployment rises.D) incomes increase, and unemployment falls.
Q:
Which one of the following individuals would be classified as structurally unemployed?A) Bennett lost his construction job because there was a reduction in the number of houses built during the winter of 2010.B) Gail lost her job with the state because there was a reduction in the state budget.C) Tommy lost his job when the steel mill where he worked closed because domestic producers would not produce as efficiently and cheaply as foreign firms.D) Fay lost her job in early January when the Christmas store where she worked closed.
Q:
The largest International Monetary Fund quota subscription, denominated in Special Drawing Rights, is held byA) the United States. B) Japan.C) China. D) Russia.
Q:
The rational expectations hypothesis is based on all the following assumptions EXCEPT A) use of judgment about effects of future policy actions.B) use of knowledge of effects of past policy actions. C) understanding of how the economy operates.D) understanding that prices are sticky.
Q:
The Trading Deskʹs open market operationsA) are confined within a one-hour interval each weekday morning. B) are confined within a six-hour interval each weekday morning. C) occur throughout each day.D) occur once a week.
Q:
The amount of money that people wish to hold to use in transactions varies directly withA) their planned near-term purchases. B) the money supply. C) the income tax rate. D) the interest rate.
Q:
In the United States, who determines monetary policy? What is the major tool used to determine monetary policy?
Q:
What are the functions of money?
Q:
The traditional Keynesian approach to fiscal policy assumes thatA) the effect of unemployment compensation is to destabilize the economy. B) an equal income distribution ensures a stable economy.C) consumers spend more when their incomes are higher.D) cutting taxes is a more effective way to stimulate the economy than is increasing government spending.
Q:
Suppose that aggregate demand increases along the upward sloping portion of the aggregate supply curve. What is the result?A) Nominal GDP and real GDP decrease by the same amount. B) Nominal GDP and real GDP increase by the same amount. C) Nominal GDP increases more than real GDP increases.D) Real GDP increases more than nominal GDP increases.
Q:
The equation change in real saving change in real disposable income is theA) average propensity to consume. B) average propensity to save. C) marginal propensity to consume. D) marginal propensity to save.
Q:
A short-run equilibrium occursA) at the intersection of the long-run aggregate supply curve and the aggregate demand curve.B) at the intersection of the short -run aggregate supply curve and the long-run aggregate supply curve.C) at the intersection of the short -run aggregate supply curve and the aggregate demand curve.D) at the real GDP associated with full employment.
Q:
In the classical model, aggregate demand and aggregate supply will
A) not exist.
B) intersect at less than full employment.
C) intersect at the point of full employment.
D) not intersect.
Q:
The values on the axes of the long-run aggregate supply diagram areA) real GDP per year and the price level. B) nominal GDP and the price level.C) real GDP and interest rates. D) real GDP and nominal GDP.
Q:
ʺThere is a direct relationship between economic growth rates and the wealth of a nation.ʺ Do you agree or disagree? Why?
Q:
The components of GDP using the expenditure method areA) consumption expenditures, investment expenditures, and government expenditures.B) consumption expenditures, investment expenditures, government expenditures, and net exports.C) wages and interest.D) wages, interest, rents ,and profits.
Q:
A business fluctuation when the pace of economic activity is slowing down is calledA) a reduction. B) a contraction. C) a depression. D) a slowdown.
Q:
When an individual is frictionally unemployed, the unemployment arises fromA) a short-term elimination of jobs because of a slowdown in business activity.B) imperfect labor market information which requires individuals to search for appropriate employment.C) the permanent elimination of jobs because of a change in the structure of the economy.D) a reduction in the overall demand for laborʹs skills.
Q:
The International Monetary Fund
A) is a central bank like the Federal Reserve System.
B) is the bank that causes international financial crisis when the reserves are too high.
C) is a multinational agency that specializes in making loans to promote long -term development and growth in developing countries.
D) is a multinational organization that aims to promote world economic growth through more financial stability.
Q:
According to the theory based on rational expectations and flexible wages and prices, A) fiscal policy has less effect on real GDP than monetary policy in the long run.B) monetary policy has less effect on real GDP than fiscal policy in the long run.C) neither fiscal nor monetary policy influence real GDP in the long run.D) only the combination of discretionary fiscal policy and conservative monetary policy can affect real GDP in the long run.
Q:
What is the maximum number of voting members of the FOMC?A) 4 B) 7 C) 11 D) 12
Q:
The amount of money people wish to hold shows an inverse relationship to A) their planned near-term purchases. B) the money supply. C) the income tax rate. D) the interest rate.
Q:
The Fed is the bankersʹ bank. What functions of the Fed are involved in this role? What are the other important functions of the Fed?
Q:
Why is money as a medium of exchange important in an economy?
Q:
The traditional Keynesian approach to fiscal policy assumesA) current taxes are the only taxes taken into account by firms and consumers. B) the focus of attention should be the long run.C) prices are flexible while interest rates are not. D) exchange rates are fixed.
Q:
When the equilibrium price level adjusts to an increase in autonomous investment spending, the impact of the multiplier effect resulting from that spending increaseA) will increase real GDP by an amount smaller than the multiplier effect would indicate.B) will increase nominal GDP by an amount smaller than the multiplier effect would indicate.C) will have no impact on the real GDP.D) is only felt when there are changes in consumption.
Q:
The equation change in real consumption change in real disposable incomeis theA) average propensity to consume. B) average propensity to save. C) marginal propensity to consume. D) marginal propensity to save.
Q:
In the above figure, the economy would most likely move from AD 1 to AD2 because ofA) an aggregate supply shock. B) an aggregate demand shock. C) a recession. D) a depression.
Q:
According to classical economists, A) Sayʹs law is not valid.B) unemployment will not be a serious problem in a market economy. C) wage levels are always ʺsticky.ʺD) demand stimulus is needed to produce full employment.
Q:
What is measured on the vertical axis when we draw a graph of long -run aggregate supply?A) production of capital goods B) output of consumer goodsC) the price level D) real GDP
Q:
What is economic growth and why are growth rates so important?
Q:
Using the expenditure approach, GDP is calculated asA) wages + interest + rent + profitsB) consumption expenditures + wagesC) consumption expenditures + wages + interestD) consumption expenditures + investment expenditures + government expenditures + net exports
Q:
According to business activity charts for the last 100 years, the point of the highest business activity in the United States occurredA) during the 1920s bull market boom. B) during World War II.C) during the Vietnam War. D) during the Clinton administration.
Q:
A recent accounting graduate from a major business school is searching for a place to begin his career as an accountant. This individual isA) structurally unemployed. B) seasonally unemployed. C) cyclically unemployed. D) frictionally unemployed.
Q:
Which of the following world regions has received the largest percentage of lending from the World Bank since 1990?A) Latin America/Caribbean B) South AsiaC) Africa D) Middle east
Q:
Refer to the above figure. The rational expectations hypothesis implies that an anticipated decrease in aggregate demand from AD2 to AD1 willA) move the economy from b to c. B) move the economy from b to a. C) move the economy from c to a.D) shift the aggregate supply (AS) curve to the left.
Q:
Which of the following is NOT part of the FOMC directive?A) It lays out the FOMCʹs general economic objectives.B) It establishes short-term federal funds rate objectives. C) It specifies target ranges for money supply growth.D) It specifies who the chair of the Fed is.
Q:
Which of the following will cause a reduction in the amount of money individuals wish to hold?A) an increase in the interest rate B) an increase in incomeC) an increase in the price level D) all of the above
Q:
The members of the Federal Open Market Committee areA) the Treasury secretary, the head of the Federal Deposit Insurance Corporation, and the Comptroller of the Currency.B) the seven members of the Fedʹs Board of Governors and five of the Federal Reserve bank presidents.C) the President, the Speaker of the House of Representatives, and the Senate Majority Leader.D) the five top officials at the Federal Reserve Bank of New Yorkʹs Trading Desk.
Q:
What is money?
Q:
The traditional Keynesian approach to fiscal policy assumesA) the price level is constant.B) government expenditures are often substitutes for private expenditures.C) the Ricardian equivalence theorem is correct.D) the validity of supply-side economics.
Q:
Because a decrease in real autonomous spending results in a in the price level, the ultimate effect on real GDP is that predicted by the multiplier.A) fall; smaller B) fall; larger C) rise; smallerD) fall, smaller
Q:
The equation real saving real disposable income is theA) average propensity to consume. B) average propensity to save. C) marginal propensity to consume. D) marginal propensity to save.
Q:
The reason that it is possible for the economy in the above figure to be at E 2 rather than at E1 is thatA) in the long run there is always less than full employment.B) in the short run the economy can produce more than it can in a long -run full-adjustment situation.C) AD always shifts outward and never shifts inward.D) the economy must be in a recession.
Q:
In the classical model, an increase in the unemployment rateA) will persist when the reduction in output is caused by a reduction in aggregate demand. B) will result in an increase in the price level if the reduction in output is caused by a change in aggregate demand.C) will likely be temporary.D) is a signal of demand-pull inflation.
Q:
The level of real GDP identified by the long -run aggregate supply curve isA) the full-employment level of real GDP.B) the level of GDP at which each business firm is experiencing growth in sales.C) the level of GDP at which each industry is experiencing growth in sales. D) the level of GDP at which no one is below the poverty line.
Q:
When economic growth is compared between countries, the best measure to use isA) nominal GDP. B) real GDP.C) chain-weighted GDP. D) real GDP per capita.
Q:
Net exports equal theA) total value of all exports.B) total value of all government produced exports.C) value of exports minus the value of imports. D) value of imports minus the value of exports.
Q:
Historically speaking, business fluctuations in an economy were more commonly referred to asA) inflationary pressures. B) economic growth. C) the GDP deflator. D) business cycles.
Q:
Frictional unemployment would increase whenA) migrant workers are unemployed after harvest season.B) the number of individuals who quit one job to find another increases. C) discouraged workers drop out of the work force.D) workers are replaced by machines in production.
Q:
The World Bank
A) is a central bank like the Federal Reserve System.
B) is the bank that causes international financial crisis when the reserves are too high.
C) is a multinational agency that specializes in making loans to promote long -term development and growth in developing countries.
D) is a multinational organization that aims to promote world economic growth through more financial stability.
Q:
Refer to the above figure. The rational expectations hypothesis implies that an anticipated increase in aggregate demand from AD1 to AD2 willA) move the economy from c to b. B) move the economy from a to b. C) move the economy from a to c.D) will shift the aggregate supply (AS) curve to the right.
Q:
In the market for bank reserves, an open market sale by the Fed will causeA) an increase in the federal funds rate. B) a reduction in the quantity of reserves. C) a reduction in the supply of reserves. D) all of the above.
Q:
Which of the following will tend to occur when the interest rate increases?
A) The demand for money curve shifts leftward.
B) The demand for money curve shifts rightward.
C) There is a rightward movement along the demand for money curve.
D) There is a leftward movement along the demand for money curve.
Q:
In 2010, President Obama signed into law that made the Federal Reserve as the nationʹsA) largest private bank. B) federal income tax collector.C) fiscal policy making unit. D) regulator of systemic financial risk.
Q:
Suppose you pay $490.00 for a new iPad. This is an example ofA) money as a medium of exchange. B) money as a store of value.C) barter.D) money as a standard of deferred payment.
Q:
Deficit financingA) is when the government adjusts taxes to raise money to pay for government projects. B) is the mechanism behind the Laffer curve.C) is how the automatic stabilizers work.D) is when discretionary fiscal policy leads to spending more than is collected in taxes.
Q:
When the SRAS curve slopes upward, the actual affect of an increase in real autonomous spending on equilibrium real GDP is smaller than predicted by the multiplier becauseA) the price level falls. B) the price level risesC) real GDP increases. D) real GDP decreases.
Q:
The equation real consumption real disposable incomeis theA) average propensity to consume. B) average propensity to save. C) marginal propensity to consume. D) marginal propensity to save.
Q:
In the above figure, an increase in aggregate demand has resulted inA) a decline in the price level. B) economic growth.C) an inflationary gap. D) a recessionary gap.