David Jacobus Costa
Quiz by , created more than 1 year ago

(economics) Quiz on macroeconomics, created by David Jacobus Costa on 05/25/2014.

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David Jacobus Costa
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macroeconomics

macroeconomics

Question 1 of 50

1

The money supply is the:

Select one of the following:

  • total value of financial assets that can be used to purchase goods and services.

  • total value of the nation's store of gold.

  • total value of stock market holdings.

  • annual sum of gains from trade.

Explanation

Question 2 of 50

1

Which of the following is NOT a role played by money?

Select one of the following:

  • It is a medium of exchange.

  • It is a store of value.

  • It is a unit of account.

  • It is a means to increase purchasing power.

Explanation

Question 3 of 50

1

Which of the following is NOT commodity money?

Select one of the following:

  • cigarettes

  • a gold coin

  • a silver coin

  • a $5 bill in U.S. currency

Explanation

Question 4 of 50

1

The value of fiat money arises from its:

Select one of the following:

  • usefulness as a commodity.

  • ability to be redeemed in precious metals.

  • historical reputation as a currency that maintains its value in international markets.

  • official status as a means of exchange.

Explanation

Question 5 of 50

1

M1 includes those assets that are:

Select one of the following:

  • directly usable as a medium of exchange.

  • good as a store of value, but not useful as a medium of exchange.

  • not liquid enough to be included in M2.

  • near-monies.

Explanation

Question 6 of 50

1

Federal deposit insurance serves to:

Select one of the following:

  • protect the dollar from inflation

  • prevent bank runs

  • preserve the value of the dollar in terms of gold

  • eliminate the need for banks to satisfy capital requirements

Explanation

Question 7 of 50

1

The size of the U.S. money supply is determined:

Select one of the following:

  • by the Internal Revenue Service.

  • by the amount of gold held within U.S. borders.

  • by the willingness of other countries to supply the United States with gold.

  • jointly by the federal government and the banking system.

Explanation

Question 8 of 50

1

the monetary base is:

Select one of the following:

  • the sum of currency in circulation and bank reserves.

  • equal to M1.

  • equal to M2.

  • the amount of currency held in the bank vaults.

Explanation

Question 9 of 50

1

Which of the following items is a component of the monetary base but is NOT part of the money supply?

Select one of the following:

  • deposits held in checking accounts

  • currency in circulation

  • bank reserves

  • near-monies

Explanation

Question 10 of 50

1

The money multiplier is the ratio of:

Select one of the following:

  • the money supply to the monetary base.

  • bank deposits to currency in circulation.

  • bank reserves to bank deposits.

  • M2 to M1.

Explanation

Question 11 of 50

1

Long-run economic growth depends primarily on:

Select one of the following:

  • environmental quality.

  • productivity.

  • health care costs.

  • ethical business standards.

Explanation

Question 12 of 50

1

A sustained increase in per capita GDP arises from:

Select one of the following:

  • population growth.

  • lower prices.

  • higher productivity.

  • importing more goods.

Explanation

Question 13 of 50

1

Which of the following is NOT a determinant of productivity?

Select one of the following:

  • the level of technology

  • the level of wages

  • the amount of physical capital per worker

  • the amount of human capital per worker

Explanation

Question 14 of 50

1

When more physical capital is added to the production process but the number of workers remains constant:

Select one of the following:

  • the amount of output per worker declines.

  • the amount of output per worker increases, but at a decreasing rate.

  • the amount of output per worker increases at an increasing rate.

  • productivity declines.

Explanation

Question 15 of 50

1

In order to increase its stock of physical capital, an economy must:

Select one of the following:

  • engage in investment spending.

  • have a high level of consumption spending.

  • have a high level of government spending.

  • have a generous endowment of natural resources.

Explanation

Question 16 of 50

1

A healthy banking system can contribute to the growth of an economy by:

Select one of the following:

  • providing a way for savings to be channelled into business investment.

  • redistributing income between rich and poor citizens.

  • increasing the amount of gold held by its citizens.

  • adding to the overall level of employment.

Explanation

Question 17 of 50

1

In a simplified economy with no government and no interaction with other countries, all investment spending must come from:

Select one of the following:

  • taxes.

  • imports.

  • exports.

  • domestic savings.

Explanation

Question 18 of 50

1

The presence of a government budget surplus means that:

Select one of the following:

  • the government has provided savings to the financial system.

  • the household sector has not provided any savings to the financial system.

  • this is a closed economy.

  • this is an open economy.

Explanation

Question 19 of 50

1

The two components of national savings in an economy without interactions with other countries are:

Select one of the following:

  • private savings and the budget balance.

  • consumption spending and investment spending.

  • taxes and the budget balance.

  • private savings and taxes.

Explanation

Question 20 of 50

1

Which of the following occurs in an economy that interacts with other countries?

Select one of the following:

  • Capital inflow equals private saving plus government saving.

  • Capital inflow equals desired investment spending.

  • Investment spending equals national saving plus capital inflow.

  • Investment spending equals consumption spending minus taxes.

Explanation

Question 21 of 50

1

Financial markets serve to match:

Select one of the following:

  • savers with borrowers.

  • exporters with importers.

  • producers with consumers.

  • workers with employers

Explanation

Question 22 of 50

1

From the point of view of savers, the interest rate represents the:

Select one of the following:

  • cost of researching different investment opportunities.

  • cost of monitoring investments to make sure they are secure.

  • reward for accepting a permanently lower standard of living.

  • reward for postponing consumption.

Explanation

Question 23 of 50

1

Crowding out is the:

Select one of the following:

  • negative effects of taxation on investment decisions.

  • positive effects of taxation on investment decisions.

  • negative effect of government budget deficits on private investment.

  • positive effect of government budget deficits on private investment.

Explanation

Question 24 of 50

1

According to the Fisher effect:

Select one of the following:

  • the expected real interest rate is unaffected by a change in expected future inflation.

  • the expected nominal interest rate is unaffected by a change in expected future inflation.

  • expected future inflation is unaffected by a change in the real interest rate.

  • expected future inflation is unaffected by a change in the nominal interest rate.

Explanation

Question 25 of 50

1

If you take out a bank loan to buy a car, the loan is a(n):

Select one of the following:

  • liability both for you and for the bank.

  • asset both for you and for the bank.

  • liability for the bank and an asset for you.

  • asset for the bank and a liability for you.

Explanation

Question 26 of 50

1

By allowing for diversification, financial markets:

Select one of the following:

  • reduce transaction costs

  • reduce risk.

  • increase liquidity.

  • create inefficiency.

Explanation

Question 27 of 50

1

By investing in a mutual fund, you are:

Select one of the following:

  • owning a share of a stock portfolio

  • avoiding the risks of dealing with financial intermediaries

  • endorsing the efficient markets hypothesis

  • endorsing the random walk theory

Explanation

Question 28 of 50

1

When we look at movements up or down along the aggregate demand curve, we are considering a:

Select one of the following:

  • simultaneous change in the prices of all final goods and services.

  • change in the price of one good, with all other prices held constant.

  • change in the price of one good, with real consumer wealth held constant.

  • change in the price of one good, with interest rates held constant.

Explanation

Question 29 of 50

1

Which of the following is NOT a component of aggregate demand?

Select one of the following:

  • government expenditures

  • taxes

  • investment spending

  • consumption spending

Explanation

Question 30 of 50

1

The aggregate supply curve shows the relationship between the:

Select one of the following:

  • level of real GDP and the level of unemployment.

  • level of nominal wages and the level of real GDP.

  • aggregate price level and the quantity of aggregate output supplied.

  • level of nominal wages and the quantity of aggregate output supplied.

Explanation

Question 31 of 50

1

The positive slope of short-run aggregate supply arises from the fact that...

Select one of the following:

  • increases in the aggregate price level will increase the rate of unemployment.

  • increases in the aggregate price level will increase profit per unit.

  • increases in unemployment cause an increase in aggregate demand.

  • decreases in real output arise from supply shocks.

Explanation

Question 32 of 50

1

The long-run aggregate supply curve is drawn as a vertical line to reflect the fact that, in the long run, changes in:

Select one of the following:

  • the aggregate price level do not affect the level of potential real GDP.

  • productivity do not affect the level of potential real GDP.

  • real GDP do not affect the level of employment.

  • the stock of physical capital do not affect the level of potential real GDP.

Explanation

Question 33 of 50

1

A shift in short-run aggregate supply occurs when there is a change in:

Select one of the following:

  • the aggregate price level

  • real output.

  • profit per unit.

  • imports.

Explanation

Question 34 of 50

1

Stagflation is:

Select one of the following:

  • a combination of inflation and rising unemployment.

  • a combination of high interest rates and high levels of investment spending.

  • a combination of a government budget deficit and a trade deficit.

  • the pattern of fluctuations in economic activity over the course of the business cycle.

Explanation

Question 35 of 50

1

If the economy experiences a negative demand shock, policy makers should:

Select one of the following:

  • not take any action.

  • try to shift the aggregate supply curve to the left.

  • try to shift the aggregate demand curve to the right.

  • try to shift the aggregate supply curve to the right.

Explanation

Question 36 of 50

1

Which of the following is the BEST course of action for policy makers if the economy experiences a negative supply shock?

Select one of the following:

  • Policy makers should try to shift the aggregate supply curve to the left.

  • Policy makers should try to shift the aggregate demand curve to the left.

  • Policy makers should try to shift the aggregate demand curve to the right.

  • There is no clear "best" policy.

Explanation

Question 37 of 50

1

Disposable income is the:

Select one of the following:

  • amount of household income collected as tax revenue.

  • total income households have available to spend.

  • portion of household income saved.

  • portion of household income invested.

Explanation

Question 38 of 50

1

A recessionary gap occurs when:

Select one of the following:

  • aggregate output falls below potential output.

  • potential output falls below aggregate output.

  • transfer payments undermine incentives to work.

  • taxes on corporate profits undermine incentives to invest.

Explanation

Question 39 of 50

1

To address a recessionary gap, the appropriate fiscal policy would be an increase in:

Select one of the following:

  • personal taxes.

  • corporate taxes.

  • government spending.

  • interest rates.

Explanation

Question 40 of 50

1

The effect of expansionary fiscal policy is to shift aggregate:

Select one of the following:

  • supply to the left.

  • supply to the right.

  • demand to the left.

  • demand to the right.

Explanation

Question 41 of 50

1

Which of the following would shift aggregate demand to the left?

Select one of the following:

  • an increase in government transfer payments that affects disposable income

  • a decrease in taxes that affects disposable income

  • an increase in taxes that affects disposable income

  • an increase in private investment spending, funded by tax cuts

Explanation

Question 42 of 50

1

The government budget deficit is MOST likely to rise when the:

Select one of the following:

  • interest rate falls.

  • interest rate rises.

  • unemployment rate rises.

  • economy recovers from a recession.

Explanation

Question 43 of 50

1

Economists using a Keynesian model will suggest that:

Select one of the following:

  • supply shocks do not affect real output

  • demand shocks do not affect real output

  • shifts in the aggregate demand curve will affect output and employment as well as aggregate prices

  • shifts in the aggregate demand curve will affect aggregate prices but will leave output and employment unchanged

Explanation

Question 44 of 50

1

New classical macroeconomics is built on the two concepts of:

Select one of the following:

  • an upward-sloping aggregate supply curve and a vertical aggregate demand curve.

  • the liquidity trap and the political business cycle.

  • discretionary monetary policy and an emphasis on the short run.

  • rational expectations and real business cycle theory.

Explanation

Question 45 of 50

1

Milton Friedman argued that:

Select one of the following:

  • a discretionary monetary policy should be used to offset the fluctuations of the business cycle.

  • the effectiveness of expansionary fiscal policy is often limited by the effects of crowding out.

  • a central bank following a monetary policy rule would destabilize the economy.

  • the velocity of money is unstable.

Explanation

Question 46 of 50

1

The Friedman-Phelps (natural rate) hypothesis predicted that:

Select one of the following:

  • the apparent tradeoff between inflation and unemployment would not survive once expectations of high inflation were built into public perceptions.

  • effective policy action by the Federal Reserve could keep unemployment below its natural rate.

  • effective policy action by Congress could keep unemployment below its natural rate.

  • the velocity of money would become volatile when the economy reached a situation of full employment.

Explanation

Question 47 of 50

1

The balance of payments on financial account:

Select one of the following:

  • reflects transfers of factor income.

  • is the difference between exports of goods and exports of services.

  • is the total value of exports.

  • is the difference between the country's sales of assets to foreigners and its purchases of assets from foreigners.

Explanation

Question 48 of 50

1

Which of the following economic conditions would be MOST likely to attract a capital inflow?

Select one of the following:

  • a relatively low interest rate

  • a relatively high rate of domestic savings

  • a relatively high rate of economic growth

  • a merchandise trade surplus

Explanation

Question 49 of 50

1

Which of the following would lead to an appreciation of the Japanese yen against the euro

Select one of the following:

  • an increase in demand for euros by Japanese investors and consumers

  • an increase in demand for European-made goods by Japanese consumers

  • an increase in the supply of Japanese yen on the foreign exchange market

  • an increase in demand for Japanese-made goods by European consumers

Explanation

Question 50 of 50

1

Which actor or institution called the growth in East Asia a miracle

Select one of the following:

  • Paul Krugman

  • Adam Smith

  • The IMF

  • The World Bank

Explanation

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