40. Which of the following is NOT an example of a fiscal policy lag? (Points: 5)
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)
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
45. Commercial banks are required by law to hold reserves. These reserves are specified as
percentages of a bank's: (Points: 5)
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)
47. Barter involves: (Points: 5)
a double coincidence of wants.
48. The largest United States bank in 2008 was: (Points: 5)
J.P. Morgan Chase.
49. Which is NOT a job of the Federal Reserve? (Points: 5)
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:
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:
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)
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)
56. The only school of economics that could be construed as advocating big government are the:
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
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)
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
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)
family planning programs.
implementing improved technology.
62. Leaders in the lower level underdeveloped countries can enhance per capita income by
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?
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
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)
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:
69. Which of the following would not be expected to increase labor productivity? (Points: 5)
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)
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.
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)
stayed about the same.
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
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)
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
Members of working class families
78. _________________ breeds poverty. (Points: 5)
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: