question
The Federal Deposit Insurance Corporation insures:
bank buildings and property against fire and theft.
that the bank will maintain sufficient required reserves.
savings accounts against unlawful transfer into checking accounts.
bank deposits against the failure of an individual bank.
bank buildings and property against fire and theft.
that the bank will maintain sufficient required reserves.
savings accounts against unlawful transfer into checking accounts.
bank deposits against the failure of an individual bank.
answer
that the bank will maintain sufficient required reserves.
question
Which of the following is not evidence of an recessionary gap?
very low sales figures
very long search times for people looking for jobs.
very long lines at employment agencies
very low unemployment rates
very low sales figures
very long search times for people looking for jobs.
very long lines at employment agencies
very low unemployment rates
answer
very low sales figures
question
Which role of money is being exhibited by the following:
Hugo deposits money in his checking account so that in the future it will be available to him should he want to purchase some good or service.
money as a medium of exchange.
this is an example of commodity money.
money as a store of value.
money as a unit of account.
Hugo deposits money in his checking account so that in the future it will be available to him should he want to purchase some good or service.
money as a medium of exchange.
this is an example of commodity money.
money as a store of value.
money as a unit of account.
answer
money as a store of value
question
One of the objectives of supply-side policies is to:
focus attention on the trade-off between inflation and unemployment.
sharpen the tradeoff between inflation and unemployment.
convince the public of the tradeoff between inflation and unemployment.
eliminate the trade off between inflation and unemployment
focus attention on the trade-off between inflation and unemployment.
sharpen the tradeoff between inflation and unemployment.
convince the public of the tradeoff between inflation and unemployment.
eliminate the trade off between inflation and unemployment
answer
eliminate the trade off between inflation and unemployment
question
C = 500 + .90DI
T = .3Y
I = 2000
G = 3000
X-IM=1000-.13Y
What is the equilibrium level of GDP?
17,567.57
27,083.30
13,000
32,500
T = .3Y
I = 2000
G = 3000
X-IM=1000-.13Y
What is the equilibrium level of GDP?
17,567.57
27,083.30
13,000
32,500
answer
17,567.57
question
the results of a positive supply shock are:
increased growth and lower inflation.
a fall in the price level and a rise in output
a rise in the price level and a fall in output
a fall in the price level and output
increased growth and lower inflation.
a fall in the price level and a rise in output
a rise in the price level and a fall in output
a fall in the price level and output
answer
increased growth and lower inflation.
question
If Congress votes to decrease government purchases and at the same time increase personal income taxes, they:
are trying to achieve a federal budget surplus.
have voted for the proper policy to counteract a recessionary gap.
have voted for the proper policy to counteract an inflationary gap.
have decided to balance the federal budget.
are trying to achieve a federal budget surplus.
have voted for the proper policy to counteract a recessionary gap.
have voted for the proper policy to counteract an inflationary gap.
have decided to balance the federal budget.
answer
have voted for the proper policy to counteract a recessionary gap.
question
Congress has decided to raise taxes and government spending both by$25 billion. What will happen to GDP?
it will increase.
it will decrease.
it will remain the same.
it is impossible to know without the multiplier.
it will increase.
it will decrease.
it will remain the same.
it is impossible to know without the multiplier.
answer
it will decrease.
question
An increase in aggregate demand will lead to:
more inflation and more unemployment.
more inflation and less unemployment.
less inflation and more unemployment
less inflation and less unemployment.
more inflation and more unemployment.
more inflation and less unemployment.
less inflation and more unemployment
less inflation and less unemployment.
answer
more inflation and less unemployment.
question
Which of the following statements about a balance sheet is correct?
assets = liabilities - net worth
reserves = loans outstanding
assets = liabilities + networth
assets = liabilities
reserves = deposits
assets = liabilities - net worth
reserves = loans outstanding
assets = liabilities + networth
assets = liabilities
reserves = deposits
answer
assets = liabilities + net worth
question
In response to the demands of environmentalists, large sections of timberlands are putt off limits to logging. What effect will this have on the aggregate supply curve?
shift it upward.
move the economy down the curve.
shift it upward
move the economy up along the curve
shift it upward.
move the economy down the curve.
shift it upward
move the economy up along the curve
answer
move the economy down along the curve.
question
The investment and capital spending boom of the late 1900's most likely resulted in a:
flatter aggregate supply curve.
steeper aggregate supply curve.
increase in aggregate supply
decrease in aggregate supply
flatter aggregate supply curve.
steeper aggregate supply curve.
increase in aggregate supply
decrease in aggregate supply
answer
steeper aggregate supply curve.
question
GDP is currently 15,000 and potential GDP is 13,500. The expenditure multiplier is 2.5 and the fixed multiplier is -2.
Based on this information above, what change in fixed taxes will restore output to potential?
a decrease of T by 600
a decrease of T by 750
a increase of T by 750
a decrease of T by 1500
an increase of T by 1500
Based on this information above, what change in fixed taxes will restore output to potential?
a decrease of T by 600
a decrease of T by 750
a increase of T by 750
a decrease of T by 1500
an increase of T by 1500
answer
a decrease of T by 1500
question
During a period of recession, a profit-oriented bank will act in such a way that
worsens the recession
converts the recession to an expansion
makes no impact on the recession
shortens the recession
worsens the recession
converts the recession to an expansion
makes no impact on the recession
shortens the recession
answer
worsens the recession
question
In figure 10-6, which graph best illustrates an increase in consumption spending?
1
2
3
4
1
2
3
4
answer
1
question
In figure 10-4, if full employment occurs at an output level of 4,000 and the economy is currently at an output level of 5,000 then we can expect:
answer
decrease in investment spending that shifts the aggregate demand curve to the left.
question
when you compare the effects of government spending on aggregate demand with the effects of taxes on aggregate demand, the effects of taxes are:
smaller
the smae
larger
impossible to predict
smaller
the smae
larger
impossible to predict
answer
smaller
question
If the reserve requirement is 20 percent and a new deposit of $10,000 in cash is made by a customer to their checking account, by how much are excess reserves increased?
10,000
8,000
2,000
4,000
10,000
8,000
2,000
4,000
answer
8,000$
question
In the long run, the aggregate demand and aggregate supply curve intersect
below potential GDP
at potential GDP
above potential GDP
at a poiNt which may or may not be equal to potential GDP
below potential GDP
at potential GDP
above potential GDP
at a poiNt which may or may not be equal to potential GDP
answer
at a point which may or may not be equal to potential GDP
question
A change in a fixed tax will cause the aggregate expenditure schedule to
become steeper
shift in a paraell manner
remain fixed as the economy moves alongside the schedule
become flatter
become steeper
shift in a paraell manner
remain fixed as the economy moves alongside the schedule
become flatter
answer
become flatter
question
stagflation could be caused by which of the following?
a decrease in aggregate demand.
an increase of potential GDP
a decrease in aggregate supply
a decrease in energy prices
a decrease in aggregate demand.
an increase of potential GDP
a decrease in aggregate supply
a decrease in energy prices
answer
a decrease in aggregate demand
question
The most important effects of supply side tax cuts are on
household savings in the short run.
economic growth in the long run
the numbers of workers in the economy in the short run.
all of the above are correct
household savings in the short run.
economic growth in the long run
the numbers of workers in the economy in the short run.
all of the above are correct
answer
all of the above
question
the money multiplier yielded by the deposit creation formula assumes that
recipients of loans take some of the proceeds in cash.
recipients of loans do not redeposit their funds in other banks.
banks hold no excess reserves.
banks hold excess reserves
recipients of loans take some of the proceeds in cash.
recipients of loans do not redeposit their funds in other banks.
banks hold no excess reserves.
banks hold excess reserves
answer
banks hold NO excess reserves
question
The banking system receives a new cash deposit of $200,000. Total deposits eventually rise by $1,000,000. The value of the required ration, rr is:
4
0.50
0.25
0.20
4
0.50
0.25
0.20
answer
0.20
question
TF
IF THE ECONOMY EXPERIENCES INFLATION AND ECONOMIC GROWTH, THIS MEANS THAT AGGREGATE SUPPLY GROWS BY MORE THAN AGGREGATE DEMAND.
IF THE ECONOMY EXPERIENCES INFLATION AND ECONOMIC GROWTH, THIS MEANS THAT AGGREGATE SUPPLY GROWS BY MORE THAN AGGREGATE DEMAND.
answer
FALSE
question
TF
MONEY THAT IS BACKED SOLEY BY A GOVERNMENT DECREE IS REFERRED TO AS A COMMODITY MONEY.
MONEY THAT IS BACKED SOLEY BY A GOVERNMENT DECREE IS REFERRED TO AS A COMMODITY MONEY.
answer
FALSE
question
TF
BANKS try to keep their excess reserves at a maximum in order to maximize profits.
BANKS try to keep their excess reserves at a maximum in order to maximize profits.
answer
true
question
TF
barter transactions typically take place between two individuals with the same goods to supply.
barter transactions typically take place between two individuals with the same goods to supply.
answer
FALSE
question
tf
Government purchases have the same multiplier effect as business investment spending.
Government purchases have the same multiplier effect as business investment spending.
answer
true
question
TF
Fiscal policy is the use of taxes and spending by the government to affect aggregate demand.
Fiscal policy is the use of taxes and spending by the government to affect aggregate demand.
answer
true
question
TF
during th debate on the stimulus package in 2009 and 2010, republicans argued in favor of increased government spending as opposed to tax cuts based in part of the impact government spending would have on aggregate supply.
during th debate on the stimulus package in 2009 and 2010, republicans argued in favor of increased government spending as opposed to tax cuts based in part of the impact government spending would have on aggregate supply.
answer
false
question
TF
Decreasing profit margins indicate a need to increase production in an economy.
Decreasing profit margins indicate a need to increase production in an economy.
answer
true
question
TF
Inflation increases the multiplier effect by reducing consumer wealth and purchasing power.
Inflation increases the multiplier effect by reducing consumer wealth and purchasing power.
answer
false
question
TF
In 2006 and 2007, the US faced an inflationary gap which would require the use of expansionary fiscal policy.
In 2006 and 2007, the US faced an inflationary gap which would require the use of expansionary fiscal policy.
answer
false
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