Practice Econ 4

Question 1 of 24

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Which of the following rates does the Fed actually set?

Select one of the following:

  • the Federal Funds rate

  • the discount rate

  • the market interest rates

  • all of these rates

Question 2 of 24

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M1 includes

Select one of the following:

  • Currency, Checkable Deposits, Demand deposits

  • Currency, Federal Reserves, Checkable deposits

  • Checkable Deposits only

  • Currency, Checkable Deposits, Small time deposits

Question 3 of 24

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Why does so much U.S. currency circulate in other countries?

Select one of the following:

  • Several countries use the U.S. dollar as their official currency.

  • The U.S. dollar is frequently used in drug trafficking.

  • Dollars hold their value in unstable countries.

  • All of the above

Question 4 of 24

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In the United States, the amount of cash per capita is about $3,000. This figure

Select one of the following:

  • shows how much currency each American holds in their checking accounts.

  • misrepresents actual currency holdings in the United States because a lot of dollars are held outside the country.

  • accurately represents the size of the underground economy in the United States

  • shows how much the world depends on the U.S. monetary system.

Question 5 of 24

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The Federal Reserve's major tools to control the money supply are
I. open market operations.
II. discount rate lending and the term auction facility.
III. required reserve ratio and payment of interest on reserves.
IV. federal funds lending

Select one of the following:

  • I only

  • I, II

  • I, II, III

  • I, II, III, IV

Question 6 of 24

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The Federal Funds rate is the interest rate charged on a(n)

Select one of the following:

  • overnight loan from one bank to another.

  • low interest loan from the Federal Reserve to a bank.

  • loan from the Federal Reserve to a bank.

  • long-term loan from one bank to another.

Question 7 of 24

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Why is the SRAS curve steeper above its intersection with the Solow growth curve?

Select one of the following:

  • Wages are stickier in the upward direction.

  • Wages are less sticky in the upward direction

  • Lower inflation will lead to faster growth.

  • Employees become less motivated to work during times of unexpected inflation.

Question 8 of 24

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According to the quantity theory of money, an increase in money supply causes an increase in

Select one of the following:

  • prices

  • production

  • velocity of money

  • real GDP

Question 9 of 24

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The short-run aggregate supply curve shows a relationship between the real growth rate and the

Select one of the following:

  • actual inflation rate

  • expected inflation rate

  • long-run inflation rate

  • none of the above

Question 10 of 24

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How has the role of agricultural production changed in the Indian economy?

Select one of the following:

  • It is now only 1 percent of GDP.

  • It has fallen to about 20 percent of GDP due to economic diversification.

  • It has remained about 40 percent of GDP, but has doubled in yield.

  • It has become a greater part of GDP, due to technological advances.

Question 11 of 24

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Imagine that a government starts out with the budget surplus. If in the next period the government temporarily runs a budget deficit, what would you expect to happen to aggregate demand?

Select one of the following:

  • AD would increase

  • AD would decrease

  • AD would remain the same

  • AD would lie on the Solow growth curve

Question 12 of 24

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In the AD and SRAS model, changes in the growth rate of C, I, G, and NX tend to be changes in:

Select one of the following:

  • money velocity

  • money supply

  • prices

  • all of the above

Question 13 of 24

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The Solow growth rate is the rate of economic growth that occurs when

Select one of the following:

  • inflation is moderate

  • wages and prices are flexible

  • wages and prices are sticky

  • the money supply is growing

Question 14 of 24

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An increase in _______ will shift the SRAS curve

Select one of the following:

  • actual inflation, but not expected inflation

  • expected inflation, but not actual inflation

  • both expected and actual inflation

  • neither expected nor actual inflation

Question 15 of 24

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Suppose both the growth rate of the money supply and the velocity of money are fixed, then an increase in the growth rate of exports will cause

Select one of the following:

  • a shift of the dynamic AD curve to the right.

  • a shift of the dynamic AD curve to the left.

  • a downward movement along the dynamic AD curve.

  • an upward movement along the dynamic AD curve.

Question 16 of 24

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The aggregate demand curve shows all the combinations of ______ that are consistent with a specified rate of spending growth.

Select one of the following:

  • inflation and real GDP growth rates

  • employment rates and price levels

  • production shocks and flexible price

  • money velocity and money supply

Question 17 of 24

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n the basic
AD
and Solow growth curve model, shocks to aggregate demand always cause
I. changes in real GDP.
II. changes in inflation.
III. changes in spending growth.

Select one of the following:

  • I only

  • I, II

  • II only

  • I, II, III

Question 18 of 24

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The Solow growth curve is represented by a vertical line at the Solow growth rate because
I. it does not depend on the rate of inflation.
II. there is an underlying assumption of strong money neutrality.
III. it does not depend on the stock of factors of production

Select one of the following:

  • I only

  • I, II

  • I, III

  • I, II, III

Question 19 of 24

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Which of the following is a shock that could shift the Solow growth curve?

Select one of the following:

  • productivity shock

  • negative supply shock

  • real shock

  • all of the above

Question 20 of 24

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The average annual rate of growth of real GDP in the United States has fluctuated around ____ for the last 50 years.

Select one of the following:

  • 3%

  • 1%

  • 5%

  • -1%

Question 21 of 24

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What are some of the economic effects of a tariff?

Select one of the following:

  • Wealth is redistributed from wealthy nations to poor nations and taxes fall.

  • Unemployment and inflation rates both fall.

  • Capital and labor are used less efficiently.

  • Trade remains the same in the long run and GDP rises in the nation that enacts the tariff.

Question 22 of 24

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If wages are not as flexible as prices, an increase in money growth will lead to

Select one of the following:

  • an increase in inflation and a rise in real long-run GDP growth.

  • an increase in inflation but no rise in real short-run GDP growth.

  • an increase in inflation and firms profits.

  • no change in inflation, but a fall in firms' profits.

Question 23 of 24

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Politicians and especially the general public worry about recessions because of

Select one of the following:

  • unemployment

  • inflation

  • changes in the Solow Growth rate

  • All of the above

Question 24 of 24

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What factors triggered the Great Depression?

Select one of the following:

  • decreased consumer spending and tight monetary policy

  • decreased investment and increased inflation

  • decreased employment and increased money supply

  • decreased inflation and increased income taxes

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Practice Econ 4

mjheg
Quiz by , created over 3 years ago

Econ 101 Quiz on Practice Econ 4, created by mjheg on 06/05/2013.

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