209021778 economics econ 2313 final test prep

8/20/2019 209021778 Economics ECON 2313 Final Test prep

1/48

Chapter 1

• 1 )

• Drawing a production possibilities curve bowed out from the origin i a graphical way of showing thelaw of increasing opportunity costs.

(5pts)

• True• False

Answer: Incorrect

Points:

• ! )

• "hich is a factor of production#

(5pts)

• money

• interest

• rent

• capital

Answer: $orrect

Points: 5

•

% )

• Desscribe how technoiogical advances will affect the production possibilities curve.

(5pts)

Answer:&dvances in technolgies will improve the production possibilities curve' because as technologyimproves production output will improve.

Points: 5

• )

• "hich is not considered to be an economic resource#

(5pts)

• land (or natural resources)

• money

• labor

• tools and machinery

Answer: $orrect


2/48

Points: 5

• 5 )

• "hich of the following is not a central focus of the economic perspective#

(5pts)

• *carcity and choice.

• The scientific method

• +urposeful behavior.

• ,arginal analysis

Answer: $orrect

Points: 5

• - )

• The budget line shows all combinations of two products gtaht the consumer can purchase' given money

income and the prices of the products.

(5pts)

• True

• False

Answer: $orrect

Points: 5

• )

• & point on the frontier of the production possibilities curve is/

(5pts)

• attainable and the economy is efficient.

• attainable' but the economy is inefficient

• unattainable' but the economy is inefficient.

• unattainable and the economy is efficient.

Answer: Incorrect

Points:

• 0 )

• The process of developing hypotheses' testing them against facts' and using the results to construct

theories is called/

(5pts)


3/48

• opportunity cost calculation.

• the scientific method.

• marginal analysis.

• microeconomics.

Answer: $orrect

Points: 5• )

• From the economist2s perspective' investment refers to money income.

(5pts)

• True

• False

Answer: $orrect

Points: 5• 1 )

• &long a production possibilities curve' an increase in the production of one type of good can be

accomplished only by/

(5pts)

• decreasing the production of the other type of good.

•

increasing the production of the other type of good

• . holding constant the production of the other type of good.

• decreasing the price of the other type of good.

Answer: $orrect

Points: 5

• 11 )

• *uppose a consumer has an income of 31-' the price of & is 3!' and the price of 4 is 31. "hich

combination is on the consumer2s budget line#

(5pts)

• & and 4

• 5& and -4

• 5& and 4

• -& and -4


4/48


5/48

(5pts)

• is determined by consumer income.

• is determined by the price of the product.

• varies from person to person using the product.

• is constant from person to person using the product.

Answer: $orrect

Points: 5

• 1- )

• 86plain the difference between macroeconomics and microeconomics.

(5pts)

Answer:,acroeconomics e6amines either the economy as a whole or its basic subdivisions or aggregates.,icroeconomics is the part of economics concerned with individual units.

Points: 5• 1 )

• 8conomics is the study of/

(5pts)

• increasing the level of productive resources so there is ma6imum output in society.

• increasing the level of productive resources so there is a minimum level of income.

• how people' institutions' and society mae choices under conditions of scarcity.

• the efficient use of scarce resources paid for at the minimum level of cost to consumers and businesses

Answer: $orrect

Points: 5

• 10 )

• The term scarcity in economics refers to the fact that/

(5pts)

• economic wants are limited and resources are abused.

• even in the richest country some people go hungry.

• no country can produce enough products to satisfy everybody2s economic wants.

• it is impossible to produce too much of any particular good or service in a maret economy.

Answer: $orrect

Points: 5

• 1 )

• & point inside the production possibilities curve is/


6/48

(5pts)

• attainable and the economy is efficient.

• attainable' but the economy is inefficient.

• unattainable' but the economy is inefficient.

• . unattainable and the economy is efficient

Answer: Incorrect

Points:

• ! )

• "hat are the four economic resources# 9ow is each resource defined#

(5pts)

Answer:

:and includes all natural resources used in the production process. :abor consists of the physical andmental talents of individuals used in producing goods and services. $aptial includes all manufactured

aids used in producing consumer goods and services. 8ntrepreneurial ability is the entrepreneur thattaes the initiative in combining the resources of land' labor' and capital to produce things.

Points: 5


7/48

Chapter 2

• 1 )

• If an increase in the demand for a product and a rise in its price cause an increase in the 7uantitysupplied' price is successfully performing its

(5pts)

• guiding function

• circular flow role

• division;of;labor role

• medium;of;e6change function

Answer: $orrect

Points: 5• ! )

• In the maret system' the role of government is best described as

(5pts)

• limited

• e6tensive

• significant

• none6istent

Answer: $orrect

Points: 5

• % )

• "hich is the primary factor determining the share of the total output of the econom received by a

household#

(5pts)

• the tastes of the household

• the medium of e6change used by the household

• the prices at which the household sells its resources

• ethical considerations in the operation of a maret economy

Answer: $orrect

Points: 5

• )


8/48

• +roperty rights encourage investment' innovation' e6change' maintenance of property' and economic

growth.

(5pts)

• True

• False

Answer: $orrectPoints: 5

• 5 )

• The ownership of property resources by private individuals and organi


9/48

• False

Answer: $orrect

Points: 5

• )

• In a maret system' the government owns most of the property resources (land and caouta).

(5pts)

• True

• False

Answer: $orrect

Points: 5

• 1 )

• The two inds of marets found in the cicular flow model are

(5pts)

• real and money marets

• real and socialist marets

• money and command marets

• product and resource marets

Answer: $orrect

Points: 5

• 11 )

• The advent of personal computers and word processing software that eliminated the maret for electric

typewriters would be an e6ample of

(5pts)

• speciali


10/48

(5pts)

Answer: privately' marets and prices ;; Incorrect

Points:

• 1% )

• 86plain how the maret system provides a strong incentive for technological advance and creative

destruction.

(5pts)

Answer:

In the maret system' competition' freedom of choice' self;interest' and personal reward provide theopportunity and motivation for technological advance. It enables better products and processes tosupplant inferior ones. "ith new technologies comes competition for other firms to eep up' socreative destruction doesn2t occur.

Points: 5

• 1 )

• In the circular flow model' businesses

(5pts)

• buy products and resources

• sell products and resources

• buy products and sell resources

• sell products an buy resources

Answer: $orrect

Points: 5

• 15 )

• "ho will get the output from a maret economy# 86plain

(5pts)

Answer: $onsumers generally get the output if they can pay the price.

Points: 5

• 1- )

• The maret system is a method of

(5pts)

• maing economic decisions by central planning

• communicating and coordinating economic decisions

• promoting speciali


11/48

• 1 )

• In a command economy' property resources are primarily (publicly' privately)========== owned. The

coordinating device(s) in this economic system (is central planning' are marets and prices)===========================.

(5pts)

Answer: publicly' central planning ;; IncorrectPoints: 5

• 10 )

• In the circular flow model'

a. 9ouseholds are buyers and businesses are sellers in (product' resource)================ marets'and businesses are buyers and households are sellers in ============== marets.

b. the flow of economic resources and finished goods and services is the (money' real)============flow' and the flow of income and e6penditures is the ================== flow.

(5pts)

Answer: &. product' resource 4/ real' money ;; Incorrect

Points: 5

• 1 )

• 86plain the ma>or characteristics;;institutions and assumptions;;embodied in a maret system.

(5pts)

Answer:

,aret systems e6ist in order to promote economic growth for the future. &dvances in technology'speciali


12/48

Chapter 3

• 1 )

• &nswer the ne6t 7uestion(s) on the basis of the given supply and demand data for wheat/

?efer to the above data. 87uilibrium price will be/

(1pts)

• 3.

• 3%.

• 3!.

• 31.

Answer: $orrect

Points: 1

• ! )

• & recent study found that an increase in the Federal ta6 on beer (and thus an increase in the price of

beer) would reduce the demand for mari>uana. "e can conclude that/

(1pts)

• beer and mari>uana are substitute goods.

• beer and mari>uana are complementary goods.

• beer is an inferior good.

• mari>uana is an inferior good.

Answer: $orrect

Points: 1

• % )

• In the past few years' the demand for donuts has greatly increased. This increase in demand might best

be e6plained by/

(1pts)


13/48

• an increase in the cost of maing donuts.

• an increase in the price of coffee.

• consumers e6pecting donut prices to fall.

• a change in buyer tastes.

Answer: $orrect

Points: 1• )

• "hich of the following is an e6ample of a public good#

(1pts)

• a firewors display

• a hotdog

• a barbe7ue grill

• a personal computer

Answer: $orrect

Points: 1

• 5 )

• @onrivalry and none6cludability are the main characteristics of/

(1pts)

• capital goods.

• private goods.

• public goods.

• consumption goods.

Answer: $orrect

Points: 1

• - )

• The division of labor means that/

(1pts)

• labor marets are geographically segmented.

• unsilled worers outnumber silled worers.

• worers speciali


14/48

Points: 1

• )

• &nswer the ne6t 7uestion(s) on the basis of the given supply and demand data for wheat/

?efer to the above data. If the price in this maret was 3/

(1pts)

• the maret would clearA 7uantity demanded would e7ual 7uantity supplied.

• buyers would want to purchase more wheat than is currently being supplied.

• farmers would not be able to sell all their wheat.

• there would be a shortage of wheat.

Answer: $orrect

Points: 1

• 0 )

•

"hich of the above diagrams illustrate(s) the effect of a governmental subsidy on the maret for &ID*research#

• (1pts)

• & only.


15/48

• 4 only.

• $ only.

• D only.

Answer: $orrect

Points: 1

•

)

•

"hich of the above diagrams illustrate(s) the effect of an increase in the price of 4udweiser beer on the mfor $oors beer#

• (1pts)

• & and $.

• & only.

• 4 only.

• $ only.

Answer: $orrect

Points:1

• 1 )

• &n e6ample of a public good is/

(1pts)

• a movie theater.

• a freight train.

• the war on terrorism.


16/48

• Disneyland.

Answer: $orrect

Points: 1

Chapter 4

• 1 )

• *ocial security ta6es are regressive because/

(1pts)

• the social security ta6 rate increases as income increases.

• no social security ta6 is collected for incomes in e6cess of a set income level.

• each individual must pay a set percentage of his or her income in social security ta6es.

• as income increases' the social security ta6 rate increases at a decreasing rate.

Answer: Incorrect

Points:

• ! )

• & public good/

(1pts)

• generally results in substantial spillover costs.

• can never be provided by a nongovernmental organi


17/48

• % percent.

Answer: Incorrect

Points:

• )

• If an economy is being allocatively efficient' then that means the economy is/

(1pts)

• using the least costly production techni7ues.

• producing the products most wanted by society.

• fully employing all economic resources.

• ma6imi


18/48

• If an economy is being productively efficient' then that means the economy is/

(1pts)

• producing the products most wanted by society.

• fully employing all economic resources.

• ma6imi


19/48

(1pts)

• liability rules and lawsuits.

• inflation and unemployment.

• nonrivalry and none6cludability.

• positive and negative e6ternalities.

Answer: $orrect

Points: 1

Chapter 5

• 1 )

• "ith no inflation' a ban would be willing to lend a business firm 35 million at an annual interest rate of

-C. 4ut' if the rate of inflation was anticipated to be C' the ban would most liely charge the firm anannual interest rate of/

(5pts)

• ! percent

•

percent• - percent

• 1 percent

Answer: $orrect

Points: 5

• ! )

• In an economy' %5 million worers are employed' the labor force is 5 million' and total population is

million. The unemployment rate is/

(5pts)

• 15 percent

• !5 percent

• % percent

• 5 percent

Answer: $orrect


20/48

Points: 5

• % )

• "hen unanticipated inflation occurs/

(5pts)

• 4oth creditors and debtors benefit

• $reditors are hurt' but debtors benefit

• Debtors are hurt' but creditors benefit

• 4oth creditors and debtors are hurt

Answer: $orrect

Points: 5

• )

• & nation has a population of !- million people. f these' - million are retired' in the military' in

institutions' or under 1- years old. There are 100 million who are employed and 1! million who areunemployed. "hat is the unemployment rate

(5pts)

• percent

• - percent

• percent

• ! percent

Answer: $orrectPoints: 5

• 5 )

• ?ecurring upswings and downswings in an economy2s real BD+ over time are called/

(5pts)

• recessions.

• business cycles.

• output yo;yos.

• total product oscillations.

Answer: $orrect

Points: 5

• - )


21/48

• In the e6pansion phase of a business cycle/

(5pts)

• The inflation rate decreases' but productive capacity increases

• The inflation rate and productive capacity decrease

• 8mployment increases' but output decreases

• 8mployment and output increase

Answer: Incorrect

Points:

• )

• The unemployment rate in an economy is -C. The total population of the economy is ! million' and

the si


22/48

(5pts)

• 9yperinflation

• $ost;push inflation

• Enanticipated inflation

• &nticipated inflation

Answer: $orrect

Points: 5

• 1 )

• The production of durable goods is more stable than the production of nondurables over the business

cycle.

(5pts)

• True

•

False

Answer: $orrect

Points: 5

Chapter 6

• 11 )

• "hen an economy2s production capacity is e6panding/

(5pts)

• nominal BD+' but not necessarily real BD+' is rising.

• net e6ports is always a positive amount.

• DI e6ceeds +I.

• domestic investment e6ceeds depreciation.

Answer: $orrect

Points: 5

• 1! )

• If depreciation e6ceeds gross investment/

(5pts)


23/48

• the economy2s stoc of capital may be either growing or shrining.

• the economy2s stoc of capital is shrining.

• the economy2s stoc of capital is growing.

• net investment is


24/48

Answer: $orrect

Points: 5

• 1- )

• If real BD+ in a particular year is 30 billion and nominal BD+ is 3! billion' the BD+ price inde6 for

that year is/

(5pts)

• 1.

• !.

• !.

• %.

Answer: $orrect

Points: 5

• 1 )

• Ese the following table for a hypothetical single;product economy.

?efer to the above data. @ominal BD+ in year is/

(5pts)

• 3%!.

• 35.

• 3!!5.

• 30.

Answer: $orrect

Points: 5• 10 )

• The concept of net domestic investment refers to/

(5pts)

• the amount of machinery and e7uipment used up in producing the BD+ in a specific year.

• the difference between the maret value and boo value of outstanding capital stoc.

• gross domestic investment less net e6ports.


25/48

• total investment less the amount of investment goods used up in producing the year2s output.

Answer: $orrect

Points: 5

• 1 )

• *uppose a nation2s !% nominal BD+ was 3! billion and the general price inde6 was . To mae the

!% BD+ comparable with the base year BD+' the !% BD+ must be/

(5pts)

• ad>usted downward to 3-0 billion.

• deflated to 30- billion.

• inflated to 310 billion.

• deflated to 310 billion.

Answer: $orrect

Points: 5• ! )

• If depreciation (consumption of fi6ed capital) e6ceeds domestic investment' we can conclude that/

(5pts)

• nominal BD+ is rising but real BD+ is declining.

• net investment is negative.

• the economy is importing more than it e6ports.

• the economy2s production capacity is e6panding.

Answer: $orrect

Points: 5

Chapter 7

• 1 )

• "hen there is an increase in aggregate demand' there will be an increase in the price level but not in the

level of output or employment.

(5pts)

• True

• False


26/48

Answer: $orrect

Points: 5

• ! )

• &n increase in consumer wealth will decrease aggregate demand.

(5pts)

• True

• False

Answer: $orrect

Points: 5

• % )

• "hich would be one of the factors that increase aggregate demand#

(5pts)

• &n increase in personal income ta6 rates

• &n increase in the productivity of labor

• &n increase in consumer wealth

• &n increase in real interest rates

Answer:$orrect

Points: 5

• )

• & fall in prices of imported resources will cause aggregate/

(5pts)

• *upply to increase

•

Demand to increase• *upply to decrease

• Demand to decrease

Answer: $orrect

Points: 5

• 5 )


27/48


28/48

(5pts)

• True

• False

Answer: $orrect

Points: 5

• )

• If the prices of imported resources decrease' then this event would most liely/

(5pts)

• Decrease aggregate supply

• Increase aggregate supply

• Increase aggregate demand

• Decrease aggregate demand

Answer: $orrect

Points: 5

• 1 )

• "hich would most liely shift the aggregate supply curve# & change in/

(5pts)

• $onsumer e6pectations

• Bovernment spending

• 86cess capacity in business

• +rices of imported resources

Answer: $orrect

Points: 5

• 11 )

• The aggregate demand curve shows the/

(5pts)

• Inverse relationship between the price level and real BD+ purchased

• Direct relationship between the price level and real BD+ produced

• Inverse relationship between interest rates and real BD+ produced

• Direct relationship between real;balances and real BD+ purchased


29/48

Answer: $orrect

Points: 5

• 1! )

• The aggregate demand curve is the relationship between the/

(5pts)

• +rice level and the sales of producers

• +rice level and the purchasing of real domestic output

• +rice level and the distribution of real domestic output

• ?eal domestic output bought and the real domestic output sold

Answer: $orrect

Points: 5

•

1% )

• "hich would most liely increase aggregate supply#

(5pts)

• &n increase in the prices of imported products

• &n increase in productivity

• & decrease in business subsidies

• & decrease in net e6ports

Answer: $orrect

Points: 5

• 1 )

• *uppose that real domestic output in an economy is % units' the 7uantity of inputs is 5 and the price

of each input is 3. The level of productivity in this economy is/

(5pts)

• 5

• -

•

• 5

Answer: $orrect


30/48


31/48

• &n increase in productivity will/

(5pts)

• Increase aggregate demand

• Increase aggregate supply

• Increase aggregate supply and aggregate demand

• Decrease aggregate supply and aggregate demand

Answer: $orrect

Points: 5

• 1 )

• If the prices of imported resources increase' then aggregate supply will decrease.

(5pts)

• True

• False

Answer: $orrect

Points: 5

• ! )

• If $ongress passed new laws significantly increasing the regulation of business' this action would tend

to

(5pts)

• Increase per;unit production costs and shift the aggregate supply curve to the left

• Increase per;unit production costs and shift theaggregate supply curve to the right

• Increase per;unit production costs and shift . the aggregate demand curve to the left

• Decrease per;unit production costs and shift

Answer: $orrect

Points: 5


32/48

Chapter 8

• 1 )

• "hen the public debt is held by foreigners it is not a real burden on real domestic output.

(-.-pts)

• True

• False

Answer: $orrect

Points: -.-

• ! )

• If government spending that gives rise to a budget deficit is for public investment pro>ects' such as

highways' then this spending can increase the economy2s future production capacity.

(-.-pts)

• True

• False

Answer: $orrect

Points: -.-

• % )

• The payment of interest on the public debt probably decreases pincome ine7uality.

(-.-pts)

• True

• False

Answer: $orrect

Points: -.-

• )

• If the $ongress passes legislation to decrease government spending to control demand;pull inflation'

then this would be an e6ample of a(n)/

(-.-pts)

• &utomatic stabili


33/48

Answer: $orrect

Points: -.-

• 5 )

• "hen the Federal government taes action to change ta6es and spending to stimulate the economy such

policy is

(-.-pts)

• +assive

• &utomatic

• Discretionary

• @ondiscretionary

Answer: $orrect

Points: -.-

• - )

• & contractionary fiscal policy can be illustrated by a(n)/

(-.-pts)

• Increase in aggregate demand

• Decrease in aggregate demand

• Increase in aggregate supply

• $hange in the price level

Answer: $orrect

Points: -.-

• )

• Fiscal policy is enacted through changes in/

(-.-pts)

• Interest rates

• The supply of money

• Enemployment and inflation

• Ta6ation and government spending

Answer: $orrect

Points: -.-

• 0 )


34/48

• "hen changes to ta6es and spending occur in the economy without e6plicit action by the Federal

government' such policy is/

(-.-pts)

• $yclical

• Gariable

• Discretionary

• @ondiscretionary

Answer: $orrect

Points: -.-

• )

• "hen the Federal government uses ta6ation and spending actions to stimulate the economy it is

conducting/

(-.-pts)

• Fiscal policy

• Incomes policy

• ,onetary policy

• 8mployment policy

Answer: $orrect

Points: -.-

• 1 )

• The financing of the public debt can increase interest rates and reduce private investment spending.

(-.-pts)

• True

• False

Answer: Incorrect

Points:

• 11 )

• The financing of the public debt can increase interest rates and reduce private investment spending.

(-.-pts)


35/48


36/48

• The Hoint 8conomic $ommittee

• The Federal ?eserve 4oard

Answer: $orrect

Points: -.-

• 15 )

•

The set of fiscal policies that would be most contractionary would be a(n)/

(-.-pts)

• Increase in government spending and ta6es

• Decrease in government spending and ta6es

• Increase in government spending and a decrease in ta6es

• Decrease in government spending and an increase in ta6es

Answer: $orrect

Points: -.-


37/48

Chapter 9

• 1 )

• Firms whose central business is providing individual account shares of collections of stocs' bonds' or both are nown as/

(-.-pts)

• insurance companies.

• mutual funds companies.

• commercial bans.

• thrifts

Answer: $orrect

Points: -.-• ! )

• If actual reserves in the baning system are 35'' e6cess reserves are 35'' and checable deposits

are 3!!5'' then the monetary multiplier is/

(-.-pts)

• .

• 5.

•

1.

• !.

Answer: $orrect

Points: -.-

• % )

• "hen commercial bans use e6cess reserves to buy government securities from the public/

(-.-pts)

• the money supply falls.

• checable deposits decline.

• commercial ban reserves increase.

• new money is created.

Answer: $orrect

Points: -.-

• )


38/48

• In the 1s' $ongress passed legislation that/

(-.-pts)

• allows non;ban firms such as $hrysler and I4, to own large commercial bans or thrifts.

• will eventually replace the 31 bill with a 31 coin.

• replaces the twelve Federal ?eserve 4ans with a single $entral 4an.

• ends the legal separation of the baning industry and securities firms.

Answer: $orrect

Points: -.-

• 5 )

• The goldsmith2s ability to create money was based on the fact that/

(-.-pts)

•

paper money in the form of gold receipts was rarely redeemed for gold.• the goldsmith was re7uired to eep 1 percent gold reserves.

• withdrawals of gold tended to e6ceed deposits of gold in any given time period.

• consumers and merchants preferred to use gold for transactions' rather than paper money.

Answer: $orrect

Points: -.-

• - )

• The basic reason why the commercial baning system can increase its checable deposits by a multiple

of its e6cess reserves is that/

(-.-pts)

• the baning system must eep reserves e7ual to 1 percent of its checable;deposit liabilities.

• the ,+$ of borrowers is greater than


39/48

• deposit insurance

• the fractional reserve system

Answer: $orrect

Points: -.-

• 0 )

•

"hen the receipts given by goldsmiths to depositors were used to mae purchases/

(-.-pts)

• e6isting baning laws were violated.

• the receipts became in effect paper money.

• the gold standard was created.

• a fractional reserve baning system was created.

Answer: $orrect

Points: -.-

• )

• "hich of these pairs of financial institutions are most alie in terms of their main lines of business#

(-.-pts)

• insurance companies and mutual fund companies.

• thrifts and securities firms.

• commercial bans and thrifts.

• pension fund companies and commercial bans.

Answer: $orrect

Points: -.-

• 1 )

• The Federal Deposit Insurance $orporation (FDI$) insures deposits up to 31' in/

(-.-pts)

•

mutual fund companies and pension fund companies.• thrifts and insurance companies.

• securities firms and insurance companies.

• commercial bans and thrifts.

Answer: $orrect

Points: -.-

• 11 )


40/48


41/48


42/48

Chapter 10

• 1 )

• The transactions demand for money is least liely to be a function of the

(5pts)

• +rice level

• Interest rate

• :evel of national income

• Fre7uency of wage and salary payments

Answer: $orrect

Points: 5

• ! )

• & consumer holds money to meet spending needs. This would be an e6ample of the/

(5pts)

• Ese of money as a measure of value

• Ese of money as legal tender

• Transactions demand for money

• &sset demand for money

Answer: $orrect

Points: 5

• % )

• $hanges in the rate of interest will most liely affect/


43/48

(5pts)

• The reserve ratio

• Bovernment spending

• Investment spending

• &ggregate supply

Answer: $orrect

Points: 5

• )

• "hat is one of the advantages of monetary policy over fiscal policy#

(5pts)

• Its control over the sior sectors of the economy

Answer: $orrect

Points: 5

• 5 )

• "hich is an e6pansionary money policy#

(5pts)

• Increase the money supply to shift the aggregate demand curve rightward

• Increase the money supply to shift the aggregate demand curve leftward

• Increase the money supply to shift the aggregate supply curve leftward

• Decrease the money supply to shift the aggregate demand curve leftward

Answer: $orrect

Points: 5

• - )

• "hich one is considered a limitation of monetary policy#

(5pts)

• The cause;effect chain

• Its cyclical asymmetry

• Its isolation from political pressure

• The speed with which it can be implemented


44/48

Answer: $orrect

Points: 5

• )

• "hen nominal BD+ is 30 billion and' on average' each dollar is spent four times in the economy over

a year' the 7uantity of money demanded for transactions purposes will be/

(5pts)

• 3! billion

• 3 billion

• 30 billion

• 3%'! billion

Answer: Incorrect

Points:

• 0 )

• In the chain of cause and effect between changes in the e6cess reserves of commercial bans and the

resulting changes in output and employment in the economy/

(5pts)

• & decrease in aggregate demand will increase output and employment

• & decrease in the rate of interest will decrease aggregate demand

• &n increase in the money supply will decrease the rate of interest

• &n increase in e6cess reserves will decrease the money supply

Answer: $orrect

Points: 5

• )

• "hich one of the following is a tool of monetary policy for altering the reserves of commercial bans#

(5pts)

• Issuing currency

• $hec collection

• pen;maret operations

• &cting as the fiscal agent for the Federal government

Answer: $orrect

Points: 5

• 1 )

• The tools of monetary policy for altering the reserves of commercial bans are the/


45/48

(5pts)

• Ta6 rate and level of government spending

• $onsumer price inde6 and unemployment rate

• +ublic debt' budget surplus' and budget deficit

• Discount rate' reserve ratio' and open;maret operations

Answer: $orrect

Points: 5

• 11 )

• The conduct of monetary policy in the Enited *tates is the main responsibility of the/

(5pts)

• E.*. Treasury

• Federal ?eserve

• 4ureau of the +ublic Debt

• 4ureau of 8conomic &nalysis

Answer: $orrect

Points: 5

• 1! )

• If Federal ?eserve officials attempt to pull the economy out of a recession when the price level is

relatively stable' the policies they would most liely use would be to/

(5pts)

• 4uy government securities and increase the discount rate

• *ell government securities and decrease the discount rate

• 4uy government securities and decrease the discount rate

• *ell government securities and increase the discount rate

Answer:$orrect

Points: 5

• 1% )

• The fundamental ob>ective of monetary policy is to assist the economy in achieving/

(5pts)

• & rapid pace of economic growth

• & money supply which is based on the gold standard


46/48

• & full;employment' noninflationary level of total output

• & balanced;budget consistent with full;employment

Answer: $orrect

Points: 5

• 1 )

•

If interest rates rise' there will be a(n)/

(5pts)

• Increase in the total amount of money demanded

• Decrease in the total amount of money demanded

• . Decrease in the total amount of money supplied

• Increase in the asset demand for money

Answer: $orrect

Points: 5

• 15 )

• The Federal ?eserve alters the amount of the nation2s money supply by/

(5pts)

• ?educing the liabilities of the baning system

• $ontrolling the assets of the nation2s largest bans

• ,inting coins and printing currency that is distributed to bans

• ,anipulating the si


47/48

Answer: $orrect

Points: 5

• 1 )

• "hen the interest rate falls' the/

(5pts)

• &sset demand for money decreases• Transactions demand for money increases

• Total amount of money demanded increases

• Total amount of money demanded decreases

Answer: $orrect

Points: 5

• 10 )

•

&ssume the economy faces high unemployment but stable prices. "hich combination of government policies is most liely to reduce unemployment#

(5pts)

• The purchase of government securities in the open maret and an increase in ta6es

• The sale of government securities in the open maret and a decrease in ta6es

• The sale of government securities in the open maret and a decrease in government spending

• The purchase of government securities in the open maret and an increase in government spending

Answer: $orrect

Points: 5

• 1 )

• If the dollars held for transactions purposes are' on the average' spent four times a year for final goods

and services' then the 7uantity of money people will wish to hold for transactions is e7ual to/

(5pts)

• Four percent of nominal BD+• !5 percent of nominal BD+

• @ominal BD+ multiplied times

• @ominal BD+ divided by !5

Answer: $orrect

Points: 5

• ! )


48/48

• The economy is e6periencing a low rate of economic growth and the Fed decides to pursue an

e6pansionary money policy. "hich set of actions by the Fed would be most consistent with this policy#

(5pts)

• *elling government securities and lowering the discount rate

• *elling government securities and raising the discount rate

• 4uying government securities and raising the discount rate

• 4uying government securities and lowering the discount rate

Answer: $orrect

Points: 5

209021778 economics econ 2313 final test prep

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