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Economics Final Exam - Spring 2015 Undergrad
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Questions in this quiz (63)
1Business Cycles are__________________________________?
- Aalternating rises and declines in the level of economic activity.
- Balternating rises and declines in the level of economic activity
2What are the 4 components of a business cycle? (Separate each item by a semi-colon, followed by a space)
- Apeak; recession; trough; expansion
- Bpeak; recession; trough;
3At a peak____________________________?
- Abusiness activity has reached a temporary maximum.
- Bbusiness activity has reached a temporary maximum
4What is a recession?
- AA recession is a period of decline in total output, income, and employment.
- Ba period of decline in total output, income, and employment
5In the trough of the recession or depression,______________________________.
- Aoutput and employment bottom out at their lowest levels
- Boutput and employment "bottom-out" at their lowest levels
6A recession is usually followed by ____________________________________.
- Aa recovery and expansion, a period in which real GDP, income, and employment rise.
- Ba recovery and expansion, a period in which real GDP, income, and employment rise
7Define Inflation.
- AInflation is a rise in the general level of prices.
- BInflation is a rise in the general level of prices
8How is inflation measured?
- Aaccording to the Consumer Price Index
- BAccording to the Consumer Price Index
9What are the two types of inflation?
- Ademand pull inflation and cost push inflation
- Bdemand-pull inflation and cost-push inflation
10How many tools of monetary control does the Fed have?
- A4
- Bfour
11The Fed has four main tools of monetary control it can use to alter the reserves of commercial banks. List them. (Separate each answer by a semi-colon, followed by a space.)
- Aopen market operations; the reserve ratio; the discount rate; interest on reserves
- Bopen-market operations; the reserve ratio; the discount rate; interest on reserves
12List the three types of unemployment. (Separate each answer by a semi-colon, followed by a space.)
- Africtional; structural; cyclical
- Bstructural; frictional; cyclical
13Define frictional unemployment.
- AA type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs
- Bunemployed workers between jobs
14Define Structural unemployment.
- Aunemployment of workers whose skills are not demanded by employers
- Bworkers who lack sufficient skill to obtain employment
- Cworkers who cannot easily move to locations where jobs are available
- Dunemployment of workers whose skills are not demanded by employers, who lack sufficient skill to obtain employment, or who cannot easily move to locations where jobs are available
15Firms that produce these goods are most affect by the business cycle.
- Adurable goods
- Bdurable-goods
16Why are firms that produce durable goods most affect by the business cycle?
- Abecause people forgo the opportunity to buy these goods in order to buy goods of necessity
- Bbecause people forgo the opportunity to buy durable goods in order to buy goods of necessity
- Cbecause people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non durable goods
- Dbecause people forgo the opportunity to buy durable goods in order to buy goods of necessity which would fall under the category of non durable goods
- Ebecause people forgo the opportunity to buy durable goods in order to buy goods of necessity which would fall under the category of non-durable goods
- Fbecause people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non-durable goods
17Firms that produce these goods are the least affected by the business cycle.
- Anon-durable goods
- Bnon durable goods
18Explain the cyclical impact of non-durable and durable goods.
- AFirms that produce durable goods are affected most by the business cycle because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non-durable goods.
- Bfirms that produce durable goods are affected most by the business cycle because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non-durable goods.
- CFirms that produce durable goods are affected most by the business cycle because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non durable goods.
- Dfirms that produce durable goods are affected most by the business cycle because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non durable goods.
- EFirms that produce durable goods are affected most by the business cycle because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non-durable goods
- Ffirms that produce durable goods are affected most by the business cycle because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non-durable goods
- GFirms that produce durable goods are affected most by the business cycle because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non durable goods
- Hfirms that produce durable goods are affected most by the business cycle because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non durable goods
19List 3 examples of durable goods. (Separate each answer by a semi-colon, followed by a space.)
- AAutomobiles; Computers; Refrigerators
- Bautomobiles; computers; refrigerators
20List 3 examples of non-durable goods. (Separate each answer by a semi-colon, followed by a space.)
- AFood; Clothing; Medical Services
- Bfood; clothing; medical services
21What are the five causes of business cycles? (Separate each answer by a semi-colon, followed by a space.)
- AIrregular innovation; Productivity changes; Monetary factors; Political events; Financial instability
- Birregular innovation; productivity changes; monetary factors; political events; financial instability
- CIrregular Innovation; Productivity Changes; Monetary Factors; Political Events; Financial Instability
- DIPMPF
- EI.P.M.P.F.
22Define Monetary Policy.
- AMonetary policy is policy which is enacted by the Federal Open Market Committee that consists of deliberate changes in the money supply to influence interest rates and thus the total level of spending in the economy.
- BMonetary policy is policy which is enacted by the Federal Open Market Committee that consists of deliberate changes in the money supply to influence interest rates and thus the total level of spending in the economy
- Cpolicy enacted by the Federal Open Market Committee that consists of deliberate changes in the money supply to influence interest rates and thus the total level of spending in the economy
- Dpolicy which is enacted by the Federal Open Market Committee that consists of deliberate changes in the money supply to influence interest rates and thus the total level of spending in the economy
- Epolicy enacted by the Federal Open Market Committee that consists of deliberate changes in the supply of money to influence interest rates and thus the total level of spending in the economy
23What does (FOMC) stand for?
- AFederal Open Market Committee
- Bfederal open market committee
- Cthe federal open market committee
- DThe Federal Open Market Committee
24What is the goal of monetary policy?
- AThe goal of monetary policy is to achieve and maintain price level stability, full employment, and economic growth.
- BThe goal of monetary policy is to achieve and maintain price level stability, full employment, and economic growth
- Cto achieve and maintain price level stability, full employment, and economic growth
25What are two types of monetary policy enacted by the FOMC? (Separate each answer by a semi-colon, and a space.)
- AExpansionary Monetary Policy; Restrictive Monetary Policy
- Bexpansionary monetary policy; restrictive monetary policy
- CExpansionary monetary policy; Restrictive monetary policy
26Describe Expansionary Monetary Policy.
- AExpansionary Monetary Policy is that which lowers the interest rate to bolster borrowing and spending, which will increase aggregate demand and expand real output.
- BExpansionary monetary policy is that which lowers the interest rate to bolster borrowing and spending, which will increase aggregate demand and expand real output.
- CExpansionary Monetary Policy is policy which lowers the interest rate to bolster borrowing and spending, which will increase aggregate demand and expand real output.
- DExpansionary Monetary Policy is policy which lowers the interest rate to bolster borrowing and spending, which will increase aggregate demand and expand real output
- EExpansionary Monetary Policy is that which lowers the interest rate in order to bolster borrowing and spending, which will increase aggregate demand and expand real output.
- FExpansionary Monetary Policy is that which lowers the interest rate in order to bolster borrowing and spending, which will increase aggregate demand and expand real output
27Describe Restrictive Monetary Policy.
- ARestrictive Monetary Policy is that which will increase the interest rate to reduce borrowing and spending, which will curtail the expansion of aggregate demand and hold down price-level increases.
- BRestrictive Monetary Policy is that which will increase the interest rate to reduce borrowing and spending, which will curtail the expansion of aggregate demand and hold down price-level increases
- CRestrictive Monetary Policy is policy which will increase the interest rate in order to reduce borrowing and spending, which will decrease aggregate demand and hold down price level increases.
- DRestrictive Monetary Policy is policy which will increase the interest rate to reduce borrowing and spending, which will decrease aggregate demand and hold down price level increases.
- ERestrictive Monetary Policy is policy which will increase the interest rate in order to reduce borrowing and spending, which will decrease aggregate demand and hold down price level increases
- FRestrictive Monetary Policy is that which will increase the interest rate in order to reduce borrowing and spending, which will decrease aggregate demand and hold down price level increases.
- GRestrictive Monetary Policy is policy which will increase the interest rate in order to reduce borrowing and spending, which will curtail the expansion of aggregate demand and hold down price level increases.
28Expansionary Monetary Policy is enacted when the economy is doing bad.
- ATrue
- BFalse
29The FOMC enacts a Restrictive Monetary Policy when the economy is rapidly expanding.
- ATrue
- BFalse
30Define Fiscal Policy.
- AFiscal Policy is that which consists of deliberate changes in government spending and tax collections designed to achieve full employment, control inflation, and encourage economic growth.
- BFiscal Policy is that which consists of deliberate changes in government spending and tax collections designed to achieve full employment, control inflation, and encourage economic growth
- CFiscal policy is policy which consists of deliberate changes in government spending and tax collections in order to achieve full employment, control inflation, and encourage economic growth.
- DFiscal policy is that which consists of deliberate changes in government spending and tax collections designed to achieve full employment, control inflation, and encourage economic growth
- EFiscal policy is that which consists of deliberate changes in government spending and tax collections designed to achieve full employment, control inflation, and encourage economic growth.
- FFiscal Policy is policy which consists of deliberate changes in government spending and tax collections in order to achieve full employment, control inflation, and encourage economic growth
31Identify the two types of fiscal policy enforced by the federal government. (Separate each answer by a semi-colon, and a space.)
- AExpansionary Fiscal Policy; Contractionary Fiscal Policy
- Bexpansionary fiscal policy; contractionary fiscal policy
- CExpansionary fiscal policy; Contractionary fiscal policy
- DExpansionary and Contractionary fiscal policy
32Who enacts fiscal policy?
- AThe government
- Bthe government
33The Government enacts Restrictive Fiscal Policy
- ATrue
- BFalse
34The tools of fiscal policy include_____________________________.
- AThe tools of fiscal policy include increasing or decreasing government spending, increasing or decreasing taxes, or some combination of the two. By manipulating these aspects of the economy the government can increase or decrease aggregate demand, and/or raise real GDP, as well as, inflation.
- Bincreasing or decreasing governmental spending, increasing or decreasing taxes, or some combination of the two, By manipulating these aspects of the economy, the government can increase or decrease aggregate demand and/or raise real GDP, as well as, inflation.
- Cincreasing or decreasing governmental spending, increasing or decreasing taxes, or some combination of the two. By manipulating these aspects of the economy the government can increase or decrease aggregate demand thereby raising real GDP or lowering or eliminating inflation.
35What are the limitations to fiscal policy? (Separate each by a semi-colon, followed by a space.)
- Arecognition lag; administrative lag; operational lag
- BRecognition lag; Administrative lag; Operational lag
36Describe the recognition lag.
- AThe recognition lag is the time between the beginning of recession or inflation and the certain awareness that it is actually happening.
- BThe recognition lag is the time between the beginning of recession or inflation and the certain awareness that it is actually happening
- Cthe recognition lag is the time between the initial beginning of recession or inflation and the certain awareness that it is happening.
37Describe the administrative lag.
- AThe administrative lag is represented by the time fiscal action is initially needed and the time action is actually taken.
- BThe administrative lag is represented by the time fiscal action is initially needed and the time action is actually taken
- Cthe administrative lag occurs between the time fiscal policy is initially needed and the time when action is actually taken
38Describe the operational lag.
- AThe operational lag occurs between the time fiscal policy is taken and the time that action actually affects output, the employment rate, or the price level.
- BThe operational lag occurs between the time fiscal action is taken and the time that action actually affects output, the employment rate, and the price level.
- CThe operational lag occurs between the time fiscal action is initially taken and the time that action actually affects output, the employment rate, and the price level.
- DThe operational lag occurs between the time fiscal action is initially taken and the time that action actually affects output, the employment rate, and the price level
39Describe the U.S. National Debt.
- AThe U.S. national debt or public debt is the accumulation off all past federal deficits and surpluses.
- BThe U.S. national debt or public debt is an accumulation of all past federal deficits and surpluses
- CThe U.S. national debt, otherwise known as the public debt, is an accumulation of all past federal deficits and surpluses.
- DThe U.S. national debt is an accumulation of all past federal deficits and/or surpluses
40As of 2015, what is the U.S. national debt?
- A$18 trillion
- BAs of 2015, the public debt is $18 trillion.
- CAs of 2015, the public debt is $18 trillion
41Assess the actual burden of the national debt.
- AThe primary burden of the debt is the interest accruing on the bonds sold to finance the debt.
- BThe primary burden of the debt is the interest accruing on the bonds sold to finance the debt
- CThe interest accruing on the bonds sold to finance the debt is the primary burden of the national debt.
- DThe primary burden of the national debt is the interest accruing on the bonds that are sold to finance the debt.
42Discuss the issue of government securities as it relates to the national debt.
- AThe distribution of government securities is highly uneven.
- BThe distribution of government securities is highly uneven
- CGovernment securities are severely unevenly distributed.
- DThe distribution of government securities is very uneven.
43Discuss the relevance of interests as it pertains to the public debt.
- AThe current public debt necessitates annual interests payments of $360 billion.
- BThe current public debt necessitates annual interest payments of $360 billion
- Cthe current national debt necessitates annual interest payments of $360 billion
- DThe current national debt necessitates annual interest payments of $360 billion.
44Discuss the relevance of foreign institutions and citizens as they pertain to the U.S. national debt.
- AThe 33 percent of the U.S. public debt held by citizens and institutions of foreign countries is an economic burden to Americans.
- BThe 33 percent of the U.S. national debt held by citizens and institutions of foreign countries is an economic burden to Americans
- CCitizens and institutions of foreign countries hold approximately 33 percent of the U.S. national debt. This is an economic burden to Americans
- DThe 33 percent of the U.S. national/ public debt held by citizens and institutions of foreign countries is an economic burden to Americans
45Discuss how the continual refinancing of the U.S. national debt can impact future generations.
- AThe continual refinancing of the large U.S. national debt can transfer a real economic burden to future generations by passing on to them a smaller stock of capital goods.
- BThe continual refinancing of the large public debt can transfer a real economic burden to future generations by passing on to them a smaller stock of capital goods
- CA smaller stock of capital goods can be passed on to future generations as a result of the continual refinancing of the large public debt.
- DThe continual refinancing of the huge national/public debt can transfer a real economic burden to future generations by passing on to them a smaller stock of capital goods.
46Describe the federal funds rate.
- AThe federal funds rate is the rate of interests that banks charge one another on overnight loans made from temporary excess reserves.
- BThe federal funds rate is the rate of interests that banks charge one another for overnight loans made from temporary excess reserves
- Cthe federal funds rate is the rate of interest that banks charge other banks for overnight loans deriving from temporary excess reserves
- Dthe federal funds rate is the rate of interest that banks charge other banks for overnight loans taken from temporary excess reserves.
47How does the Fed directly influence the federal funds rate?
- AThe Fed, by using its influence on the Federal Reserve Bank of New York, can force it to undertake whatever open- market operations may be necessary to achieve and maintain the targeted rate.
- BThe Fed, by using its influence on the Federal Reserve Bank of New York, can force it to undertake whatever open-market operations may be necessary to achieve and maintain the targeted rate
- CBy using its influence on the Federal Reserve Bank of New York, the Fed can force it too undertake whatever open-market operations necessary to achieve and maintain the targeted rate.
- DIn order to achieve and maintain the targeted rate, the Fed, by using its influence on the Federal Reserve Bank of New York, can force it to undertake whatever open-market operation it deems necessary.
48Explain the effectiveness of Monetary Policy.
- AThe effectiveness of monetary policy arises from its speed and flexibility as a process. Monetary policy also gains effectiveness from the fact that its isolated from political pressures.
- BThe effectiveness of monetary policy arises from its speed and flexibility as a process. Monetary policy also gains effectiveness from the fact that its isolated from political pressures
- CThe speed and flexibility of monetary policy are the main forces behind its effectiveness. It also gains considerable effectiveness from the fact that it is isolated from political pressures.
- DMonetary policy is made effective by its speed and flexibility as a process. Its also made effective by the fact that it is isolated from political pressures.
49How many shortcoming does monetary policy involve?
- A4
- Bfour
50What are the shortcomings of monetary policy?
- AThe shortcomings of monetary policy include a recognition lag and an operational lag. Other shortcomings include: Cyclical asymmetry; Liquidity trap
- BThe shortcomings of monetary policy include a recognition lag and an operational lag. Other shortcomings include: Cyclical asymmetry; Liquidity trap.
- Ca recognition lag; an operational lag; liquidity trap; cyclical asymmetry.
- Da recognition lag; an operational lag; cyclical asymmetry; liquidity trap
51In the aggregate, households increase their spending as their ______________________________rises, and spend a larger portion of a _________________ disposable income than that of a _____________________ disposable income.
- Aincome; large; small
- Bwant; unneeded; needed
- Cincome; needed; small
- Ddisposable income; large; small
- Einterest rate; small; large
- Fdisposable income; small; large
- Gdisposable loan; small; large
- Hopportunity; unearned; earned
52If households consume a smaller and smaller proportion of DI as DI increases, then ________________________________________________________________.
- Athey must be saving a larger and larger proportion.
- Bthey must be saving a larger and larger proportion
- Cthey must be saving a larger and larger proportion of DI.
- Dthey must be saving a larger and larger proportion of DI
53The more money households receive, the more they are able to _____________________________________ and the less they are encouraged to __________________________.
- Asave; spend
- Bspend; invest
- Cproduce; consume
- Dconsume; save
- Econsume; produce
- Fproduce; invest
- Ginvest; spend
- Hshop; buy
- Iinvest; produce
54Define Average Propensity to Consume.
- AAverage propensity to consume is the fraction, or percentage, of total income that is consumed
- BAverage propensity to consume is the fraction, or percentage, of total income that is consumed.
- CAverage Propensity to Consume is that fraction, or percentage, of income that is consumed
- DAverage propensity to consume is the percentage, or fraction of income that is consumed
55Define Average propensity to save.
- AAverage propensity to save is that fraction, or percentage, of total income that is saved.
- BAverage propensity to save is that fraction of total income that is saved
- CAverage propensity to save is that percentage of total income that is saved.
- DAverage propensity to save is represented by that fraction or portion of total income that is saved
56_________________________________________________________________________ is called the marginal propensity to consume.
- Athe proportion, or fraction, or any change in income consumed
- BThe proportion, or fraction, or any change in income consumed
- CThe proportion, fraction, or any change in the amount of income consumed
- DThe proportion, or fraction, or any change in the amount if income consumed
57Define Marginal Propensity to Consume.
- Athe MPC is the ratio of a change in consumption to a change in the income that caused the consumption change
- BThe MPC is the ratio of change in consumption to a change in the income that caused the consumption change.
- CThe Marginal Propensity to Consume is the ratio of a change in consumption to a change in the income that caused the consumption change
- DThe Marginal Propensity to Consume is the ratio of change in consumption to a change in the income that caused the change in consumption
58What determines the cost of investment?
- AThe real interest rate determines the cost of investment.
- Bthe real interest rate determines the cost of investment.
- Cthe cost of investment is determined by the real interest rate
- Dthe real interest rate determines the cost of investment
59What does the interest rate represent?
- Athe interest rate represents either the cost of borrowing funds or the opportunity cost of investing your own funds which is forgone
- Bthe interest rate represents, either the cost of borrowing funds, or the opportunity cost of investing your own funds, which is forgone.
- Cthe interest rate represents either the opportunity costs of investing your own funds, which is forgone, or the cost of borrowing money.
- Dthe interest rate represents either the cost of borrowing money, or the opportunity costs of investing your own money, which is forgone.
60Explain the multiplier effect.
- Athe multiplier effect is when changes ripple through the economy to generate even larger changes in real GDP
- Bthe multiplier effect is when changes ripple through the economy to generate even larger changes in real GDP.
- CThe multiplier effect is when changes ripple through the economy to generate even larger changes in GPD
- Dthe multiplier effect is when changes ripple through the economy with the effect of even larger changes which occur in real GDP
61Multiplier effect equals______________________.
- AChange in real GDP/ initial change in spending
- BChange in real GDP / initial change in spending.
- Cthe change in real GDP/ the initial change in spending
- Dthe change in real GDP / initial change in spending
62change in real GDP equals___________________________________
- Ainitial change in spending x multiplier
- Bthe initial change in spending x multiplier
- Cmultiplier x initial change in spending
- Dthe multiplier x initial change in spending
63Why is the initial change in spending usually associated with investment during the multiplier effect?
- AThe initial change in spending is usually associated with investment because it is so volatile. but changes in consumption are also subject to the multiplier effect .
- Bthe initial change in spending is usually associated with investment because it is so volatile. But, changes in consumption which is unrelated to income are also subject to the multiplier effect.
- CThe initial change in spending is usually associated with investment because it is so volatile but changes in consumption are also subject to the multiplier effect.
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- Everett Averhart
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- Created on 21 Apr 2015 · updated on 14 Jan 2017
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