Docstoc

macroeconomics.doc _707K_ - Student Of Fortune

Document Sample
macroeconomics.doc _707K_ - Student Of Fortune Powered By Docstoc
					Question 1 (Multiple Choice Worth 2.5 points)
When the price level falls:


     the demand for money rises.


     there is a decrease in spending that is sensitive to interest-rate changes.


     there is an increase in the quantity of goods demanded as net exports.


     holders of financial assets with fixed money values increase their spending.




Question 2 (Multiple Choice Worth 2.5 points)
A major concern with the Social Security trust fund is that:


     surpluses for Social Security are too large.


     the Federal government buys too many government securities.


     costs for administering the fund are greater than the current revenue.


     the fund will be insufficient to cover obligations in one or two decades.




Question 3 (Multiple Choice Worth 2.5 points)
Fiscal policy refers to the:


     manipulation of government spending and taxes to stabilize domestic output, employment, and the
price level.


    manipulation of government spending and taxes to achieve greater equality in the distribution of
income.
    altering of the interest rate to change aggregate demand.


    fact that equal increases in government spending and taxation will be contractionary.




Question 4 (Multiple Choice Worth 2.5 points)
A Federal budget deficit exists when:


    federal government assets are less than liabilities.


    federal government spending exceeds tax revenues.


    federal government spending is increasing.


    federal government taxation is decreasing.




Question 5 (Multiple Choice Worth 2.5 points)
Due to automatic stabilizers, when income rises, government transfer spending:


    increases and tax revenues decrease.


    decreases and tax revenues increase.


    and tax revenues decrease.


    and tax revenues increase.




Question 6 (Multiple Choice Worth 2.5 points)
The fundamental objective of monetary policy is to assist the economy in achieving:
    a rapid pace of economic growth.


    a money supply which is based on the gold standard.


    a full-employment, noninflationary level of total output.


    a balanced-budget consistent with full-employment.




Question 7 (Multiple Choice Worth 2.5 points)
One advantage of automatic fiscal policy over discretionary fiscal policy is that automatic fiscal policy:


    makes the actual budget a better reflection of the condition of the economy than the standardized
budget.


    does not produce a cyclical deficit as discretionary policy does.


    is not subject to the timing problems of discretionary policy.


    has a greater multiplier effect than discretionary policy.




Question 8 (Multiple Choice Worth 2.5 points)
An increase in aggregate demand is most likely to be caused by a decrease in:


    the wealth of consumers.


    consumer confidence.


    expected future prices.


    the tax rates on household income.
Question 9 (Multiple Choice Worth 2.5 points)
When the Federal government uses taxation and spending actions to stimulate the economy it is
conducting:


    fiscal policy.


    income policy.


    monetary policy.


    employment policy.




Question 10 (Multiple Choice Worth 2.5 points)
The conduct of monetary policy in the United States is the main responsibility of the:


    U.S. Treasury.


    Federal Reserve.


    Bureau of the Public Debt.


    Bureau of Economic Analysis.




Question 11 (Multiple Choice Worth 2.5 points)
An increase in the money supply is likely to decrease:


    prices.


    nominal income.
    money demand.


    interest rates.




Question 12 (Multiple Choice Worth 2.5 points)
An increase in productivity will:


    increase aggregate demand.


    increase aggregate supply.


    increase aggregate supply and aggregate demand.


    decrease aggregate supply and aggregate demand.




Question 13 (Multiple Choice Worth 2.5 points)
As the economy declines, the collection of personal income tax revenues automatically falls. This
relationship best describes how the progressive income tax system:


    increases crowding out in the economy.


    decreases real interest rates in the economy.


    offsets the timing problem for fiscal policy.


    provides built-in stability for the economy.




Question 14 (Multiple Choice Worth 2.5 points)
A fall in prices of imported resources will cause aggregate:


    supply to increase.


    demand to increase.


    supply to decrease.


    demand to decrease.




Question 15 (Multiple Choice Worth 2.5 points)
Which of the following would be one of the factors that shift the aggregate demand curve?


    Productivity


    Prices of imported resources


    Domestic resource availability


    Profit expectations on investment projects




Question 16 (Multiple Choice Worth 2.5 points)
Which is an example of an automatic stabilizer? As real GDP decreases, income tax revenues:


    increase and transfer payments decrease.


    decrease and transfer payments increase.


    and transfer payments decrease.


    and transfer payments increase.
Question 17 (Multiple Choice Worth 2.5 points)
How is the public debt calculated?


     By adding up consumption, investment, government purchases, and net exports and then cumulating
the annual totals over the years of the nation


   By subtracting consumption and investment from government spending each year and then
cumulating the annual totals over the years of the nation


    By subtracting current government spending from current government tax revenues


    By computing the difference between annual government tax revenues and annual government
spending and cumulating the differences over the years of the nation




Question 18 (Multiple Choice Worth 2.5 points)
Monetary policy in Japan during the late 1990s and early 2000s was:


    restrictive, and effective in reducing high inflation.


    restrictive, but ineffective in reducing high inflation.


    expansionary, and effective in bringing the economy out of recession.


    expansionary, but ineffective in bringing the economy out of recession.




Question 19 (Multiple Choice Worth 2.5 points)
Other things being equal, a reorganization of the OPEC cartel to permit it to increase world oil prices by
70 percent would most likely have which effect?
    it would shift the aggregate demand curve right.


    it would shift the aggregate supply curve right.


    it would shift the aggregate supply curve left.


    it would shift the aggregate demand curve right and the aggregate supply curve left.




Question 20 (Multiple Choice Worth 2.5 points)
An aggregate supply curve represents the relationship between the:


    price level and the buying of real domestic output.


    price level and the production of real domestic output.


    real domestic output bought and the real domestic output sold.


    price level that producers are willing to accept and the price level buyers are willing to pay.




Question 21 (Multiple Choice Worth 2.5 points)
If Congress raised taxes on businesses, this action would:


    increase per-unit production costs and thus increase aggregate demand.


    increase per-unit production costs and thus increase aggregate supply.


    increase per-unit production costs and thus decrease aggregate supply.


    increase aggregate demand and increase aggregate supply.
Question 22 (Multiple Choice Worth 2.5 points)
The economy is experiencing a low rate of economic growth and the Fed decides to pursue an
expansionary money policy. Which set of actions by the Fed would be most consistent with this policy?


    Selling government securities and lowering the discount rate


    Selling government securities and raising the discount rate


    Buying government securities and raising the discount rate


    Buying government securities and lowering the discount rate




Question 23 (Multiple Choice Worth 2.5 points)
Crowding-out is the notion that:


    since tax revenues vary directly with GDP, a rise in the level of GDP will increase the budget surplus
and limit expansion.


     deficit financing will increase the demand for money, increase the interest rate, and reduce the level
of investment spending in the economy.


    the standardized budget is the best indicator of whether a budget deficit crowds out investment.


    the actual budget is the best indicator of whether a budget deficit crowds out saving.




Question 24 (Multiple Choice Worth 2.5 points)
An increase in expected future income will:


    increase aggregate demand and aggregate supply.
    decrease aggregate demand and aggregate supply.


    increase aggregate supply.


    increase aggregate demand.




Question 25 (Multiple Choice Worth 2.5 points)
The major purpose of the Federal Reserve buying government securities in open market operations is to:


    increase interest rates.


    raise money for government spending.


    reduce the excess reserves of banks.


    allow banks to increase their lending.




Question 26 (Multiple Choice Worth 2.5 points)
Which are contractionary fiscal policies?


    increased taxation and increased government spending.


    increased taxation and decreased government spending.


    decreased taxation and no change in government spending.


    no change in taxation and increased government spending.
Question 27 (Multiple Choice Worth 2.5 points)
The public debt is the:


    amount of U.S. paper currency in circulation.


    ratio of all past deficits to all past surpluses.


    total of all past deficits minus all past surpluses.


    difference between current government expenditures and revenues.




Question 28 (Multiple Choice Worth 2.5 points)
An expansionary fiscal policy can be illustrated by a(n):


    change in the price level.


    increase in aggregate supply.


    increase in aggregate demand.


    decrease in aggregate demand.




Question 29 (Multiple Choice Worth 2.5 points)
The massive increase in government spending during World War II moved the economy in the span of a
few short years from mass unemployment and price stability to "overfull" employment and severe
demand-pull inflation. This situation can be best characterized by:


    a decrease in aggregate supply.


    an increase in aggregate supply.
     an increase in aggregate demand.


     a decrease in aggregate demand.




Question 30 (Multiple Choice Worth 2.5 points)
If the interest rate increases, there will be a(n):


     decrease in the amount of money held as assets.


     decrease in the transactions demand for money.


     increase in the transactions demand for money.


     increase in the amount of money held as assets.




Question 31 (Multiple Choice Worth 2.5 points)
Which of the following was NOT part of the Fed response to the mortgage debt crises?


     Lowering the target for the Federal funds rate


     Buying bonds on the open market


     Encouraging banks to borrow reserves from the Fed


     Holding auctions in which lenders bid on interest rates on loans from the Fed




Question 32 (Multiple Choice Worth 2.5 points)
If the economy is in a recession and prices are relatively stable, then the discretionary fiscal policies that
would most likely be recommended to correct this macroeconomic problem would be:


    increased government spending or increased taxation, or a combination of the two actions.


    increased government spending or decreased taxation, or a combination of the two actions.


    increased government spending or increased taxation, but not a combination of the two actions.


    decreased government spending or decreased taxation, or a combination of the two actions.




Question 33 (Multiple Choice Worth 2.5 points)
If the government wishes to increase the level of real GDP, it might reduce:


    taxes.


    transfer payments.


    the size of the budget deficit.


    its purchases of goods and services.




Question 34 (Multiple Choice Worth 2.5 points)
Lowering the discount rate has the effect of:


    changing required into excess reserves.


    changing excess into required reserves.


    making it less expensive for commercial banks to borrow from the central banks.


    forcing commercial banks to call in outstanding loans from their best customers.
Question 35 (Multiple Choice Worth 2.5 points)
Foreign exchange rates refer to the:


    price at which purchases and sales of foreign goods take place.


    movement of goods and services from one nation to another.


    price of one nation's currency in terms of a second nation's currency.


    difference between exports and imports in a particular nation.




Question 36 (Multiple Choice Worth 2.5 points)
According to the principle of comparative advantage, worldwide output and consumption levels will be
highest when goods are produced in nations where:


    domestic opportunity costs are lowest.


    inflation rates are low.


    the balance of trade is in a surplus position.


    the exchange rate is falling.




Question 37 (Multiple Choice Worth 2.5 points)
Which combination of factors would most likely increase aggregate demand?


    An increase in household indebtedness and a decrease in foreign demand for products
    An increase in consumer wealth and a decrease in interest rates


    An increase in personal taxes and a decrease in government spending


    An increase in business taxes and a decrease in profit expectation




Question 38 (Multiple Choice Worth 2.5 points)
If the demand for money and the supply of money both increase, then the new equilibrium:


    quantity of money and the interest rate will both increase.


    quantity of money and the interest rate will both decrease.


    quantity of money will increase, but the change in the interest rate cannot be predicted.


    interest rate will increase, but the change in the interest rate cannot be predicted




Question 39 (Multiple Choice Worth 2.5 points)
A television report states: "The Federal Reserve will lower the discount rate for the fourth time this year."
This report indicates that the Federal Reserve is most likely trying to:


    reduce inflation.


    save the banking industry.


    stimulate the economy.


    improve the savings rate.
Question 40 (Multiple Choice Worth 2.5 points)
The passage of new legislation requiring more extensive government regulation of business will most
likely:


    increase aggregate demand.


    increase aggregate supply.


    decrease aggregate demand.


    decrease aggregate supply.

				
DOCUMENT INFO
Shared By:
Categories:
Stats:
views:1343
posted:7/4/2011
language:English
pages:16