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40. Which of the following is NOT an example of a fiscal policy lag? (Points: 5)
         Decision
         Monetary
         Impact
        Deficit
41. Precautionary cash balances: (Points: 5)
         are invested in insurance policies by people who are highly risk-averse.
         were emphasized by classical writers on monetary theory.
         are intended primarily for unexpected expenditures.
         grow when individuals acquire personal lines of credit.


42. Money is NOT: (Points: 5)
         a medium of exchange.
         a standard of value.
         a store of value.
         the exclusive means of holding wealth.


43. The first bankers were: (Points: 5)
         goldsmiths.
         printers.
         storekeepers.
         innkeepers.


44. One of the main results of the Depository Institutions Deregulation and Monetary Control
Act of 1980 may be to: (Points: 5)
         lessen the number of financial institutions in the United States.
         increase the number of financial institutions in the United States.
         discourage the formation of big, nationwide, all-purpose financial institutions.
         make it easier for the member banks to borrow money from the Federal Reserve District
Banks.
45. Commercial banks are required by law to hold reserves. These reserves are specified as
percentages of a bank's: (Points: 5)
        total assets.
        total liabilities.
        checkable deposit liabilities.
        holdings of government securities.


46. Foreigners, especially __________, consider American dollars, particularly one hundred
dollar bills, as a much better medium of exchange and standard of value than there owns
currencies. (Points: 5)
        Germans
        Brazilians
        Asians
        Russians


47. Barter involves: (Points: 5)
        money.
        specialization.
        a double coincidence of wants.
        demand deposits.


48. The largest United States bank in 2008 was: (Points: 5)
        BankAmerica.
        Citigroup.
        J.P. Morgan Chase.
        Security Pacific.


49. Which is NOT a job of the Federal Reserve? (Points: 5)
        Check clearing
        Issuing currency
        Insuring bank deposits
        Controlling the rate of growth of the money supply
50. The Federal reserve Board has the power to change reserve requirements within legal limits.
The limits for checkable deposits are between __________ percent. (Points: 5)
        8 and 14
        10 and 12
        15 and 20
        6 and 8


51. When the Fed engages in a tight money policy, the price of government bonds tend to:
(Points: 5)
        fall.
        rise.
        remain constant.
        move in the same direction as the bonds' market interest rate return.


52. Passage of the Depository Institutions Deregulation and Monetary Control Act of 1980:
(Points: 5)
        created uniform reserve requirements for all financial institutions.
        resulted in an increase in the number of financial institutions in the United States.
        discouraged the formation of big, nationwide, all-purpose financial institutions.
        meant that vault cash would no longer count toward bank reserves.


53. Lowering tax rates was the main priority of the: (Points: 5)
        classicals.
        Keynesians.
        monetarists.
        supply-siders.


54. Which of the following theories of expectations holds that individuals use all information
available in forming expectations? (Points: 5)
        Rational expectations theory
        Certainty equivalent theory
        Expected value analysis
        Adaptive expectations theory


55. Which of the following would be most likely to suggest reducing the money supply as a way
to end a prolonged inflation? (Points: 5)
        Monetarist
        Keynesian
        Economic behaviorists
        Classical economist


56. The only school of economics that could be construed as advocating big government are the:
(Points: 5)
        classicals.
        Keynesians.
        monetarists.
        supply-siders.


57. Which is the most accurate statement? (Points: 5)
         The quantity theory of money and the equation of exchange are two ways of saying
exactly the same thing.
       The crude quantity theory of money very accurately describes the relation between the
money supply and the price level.
        According to the crude quantity theory, Q and V are constants.
        One of our main economic problems has been that the equation of exchange has not
been balanced.


58. Proponents of the monetarist approach to economic stabilization think that the growth of the
money supply should be approximately equal to the: (Points: 5)
        prime rate.
        long-term average growth of real output.
        real interest rate.
        growth of federal expenditures.
59. A conclusion of the theory of rational expectations is that the impact of discretionary fiscal
policies designed to shift the aggregate demand curve will: (Points: 5)
        result in no net change in aggregate demand.
       be anticipated and compensated for, causing no significant change in real GDP or
employment levels.
        be completely opposite of the intended result.
        be incorrectly evaluated by most economists.


60. According to the classical economists, if the quantity of money that people wanted to save
was greater than the amount that people wanted to invest: (Points: 5)
        there would be a recession.
        there would be inflation.
        the interest rate would fall.
        the interest rate would rise.

61. Virtually all LDCs spend a major part of their budgets on (Points: 5)
        medical care.
        family planning programs.
        implementing improved technology.
        armaments.


62. Leaders in the lower level underdeveloped countries can enhance per capita income by
(Points: 5)
        providing better health care
        encouraging citizens to leave the cities and enter agricultural production
        encouraging smaller families
        implementing a social security program


63. In 2006, which one of these would have been considered the poorest country in the world?
(Points: 5)
        Liberia
        Ethiopia
        Burundi
        Nigeria
64. Which statement is true? (Points: 5)
        Because of their large populations, India and China have relatively high per capita GDPs
       The only way to industrialize is to build up capital in the form of new plant and
equipment.
        The NICs have the highest per capita GDPs in the world.
        We find GDP per capita by dividing GDP into population.


65. Which statement is true about the Malthusian theory? (Points: 5)
        It predicts that famine can easily be averted.
        It is an application of the law of diminishing returns.
        It is unduly optimistic.
        It has proven true in most countries.


66. The age of mass consumption truly arrived in the (Points: 5)
        1950s
        1920s
        1930s
        1960s


67. Each of the following would be an example of technological change, except (Points: 5)
        increases in output due to increases in capital.
        improvements in the qualities of resources.
        improved knowledge about how to combine resources.
        the introduction of totally new production processes.


68. Through the 1970s and 1980s most of our productivity was in the _________ sector. (Points:
5)
        services
        agriculture
        manufacturing
        technology
69. Which of the following would not be expected to increase labor productivity? (Points: 5)
        Technological advance
        The acquisition of more education and training by the labor force
        An increase in the size of the labor force
        The realization of economies of scale


70. According to Thomas Robert Malthus, the wage rate would be depressed to the subsistence
level because of (Points: 5)
        the power of monopolies.
        the desire of capitalists to exploit the working class.
        the natural tendency of population to grow more rapidly than the production of food.
        the long-run downward trend in investment.


71. The lowest the poverty rate during the last 40 years was in (Points: 5)
        1960.
        1988.
        1973.
        1979.


72. Charles Murray believed that the antipoverty programs of the 1960s and 1970s (Points: 5)
        drastically reduced the level of poverty.
        slightly reduced the level of poverty.
        had no impact on the level of poverty.
        caused more poverty.


73. William Julius Wilson believes that the rise of black urban poverty was caused by each of the
following except (Points: 5)
        the rise of welfare dependency.
        racism.
        the decline of smokestack industries.
        the exodus from the ghettos of the black middle and working classes.
74. Between 1994 and 2005 our welfare rolls (Points: 5)
        rose sharply.
        stayed about the same.
        declined somewhat.
        declined sharply.


75. A study by Kathryn Edin and Laura Lein found that (Points: 5)
         virtually all single mothers—whether working or receiving public assistance—had to
supplement their income with money from relatives, boyfriends, or the absent father of their
children.
       most welfare families lived very comfortably on their public assistance checks,
supplemented by Medicaid, public housing, and food stamps.
        only half the number of Americans officially below the poverty line were actually poor.
        government assistance hurt the poor much more than it helped the poor.


76. The conservative theory of poverty blames _____ for welfare dependency. (Points: 5)
        the poor
        the government
        both the poor and the government
        neither the poor nor the government


77. Which group has the highest poverty rate from among these groups? (Points: 5)
        Children under 18
        Persons over 65
        White males
        Members of working class families


78. _________________ breeds poverty. (Points: 5)
        joblessness
        poverty
        discrimination
        welfare


79. The biggest anti-poverty program in the United States is (Points: 5)
        public assistance payments.
        unemployment insurance benefits.
        Social Security benefits.
        the negative income tax.


80. Almost half of the world’s population lives on less then _______ dollar(s) per day. (Points:
5)
        one
        five
        two
        three
        low wage
        employment

				
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