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macroeconomics
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Questions in this quiz (50)
1The money supply is the:
- Atotal value of financial assets that can be used to purchase goods and services.
- Btotal value of the nation's store of gold.
- Ctotal value of stock market holdings.
- Dannual sum of gains from trade.
2Which of the following is NOT a role played by money?
- AIt is a medium of exchange.
- BIt is a store of value.
- CIt is a unit of account.
- DIt is a means to increase purchasing power.
3Which of the following is NOT commodity money?
- Acigarettes
- Ba gold coin
- Ca silver coin
- Da $5 bill in U.S. currency
4The value of fiat money arises from its:
- Ausefulness as a commodity.
- Bability to be redeemed in precious metals.
- Chistorical reputation as a currency that maintains its value in international markets.
- Dofficial status as a means of exchange.
5M1 includes those assets that are:
- Adirectly usable as a medium of exchange.
- Bgood as a store of value, but not useful as a medium of exchange.
- Cnot liquid enough to be included in M2.
- Dnear-monies.
6Federal deposit insurance serves to:
- Aprotect the dollar from inflation
- Bprevent bank runs
- Cpreserve the value of the dollar in terms of gold
- Deliminate the need for banks to satisfy capital requirements
7The size of the U.S. money supply is determined:
- Aby the Internal Revenue Service.
- Bby the amount of gold held within U.S. borders.
- C by the willingness of other countries to supply the United States with gold.
- Djointly by the federal government and the banking system.
8the monetary base is:
- Athe sum of currency in circulation and bank reserves.
- Bequal to M1.
- Cequal to M2.
- Dthe amount of currency held in the bank vaults.
9Which of the following items is a component of the monetary base but is NOT part of the money supply?
- Adeposits held in checking accounts
- Bcurrency in circulation
- Cbank reserves
- Dnear-monies
10The money multiplier is the ratio of:
- Athe money supply to the monetary base.
- Bbank deposits to currency in circulation.
- Cbank reserves to bank deposits.
- DM2 to M1.
11Long-run economic growth depends primarily on:
- Aenvironmental quality.
- Bproductivity.
- Chealth care costs.
- Dethical business standards.
12A sustained increase in per capita GDP arises from:
- Apopulation growth.
- Blower prices.
- Chigher productivity.
- Dimporting more goods.
13Which of the following is NOT a determinant of productivity?
- Athe level of technology
- Bthe level of wages
- Cthe amount of physical capital per worker
- Dthe amount of human capital per worker
14When more physical capital is added to the production process but the number of workers remains constant:
- Athe amount of output per worker declines.
- Bthe amount of output per worker increases, but at a decreasing rate.
- Cthe amount of output per worker increases at an increasing rate.
- Dproductivity declines.
15In order to increase its stock of physical capital, an economy must:
- Aengage in investment spending.
- Bhave a high level of consumption spending.
- Chave a high level of government spending.
- Dhave a generous endowment of natural resources.
16A healthy banking system can contribute to the growth of an economy by:
- Aproviding a way for savings to be channelled into business investment.
- Bredistributing income between rich and poor citizens.
- Cincreasing the amount of gold held by its citizens.
- Dadding to the overall level of employment.
17In a simplified economy with no government and no interaction with other countries, all investment spending must come from:
- Ataxes.
- Bimports.
- Cexports.
- Ddomestic savings.
18The presence of a government budget surplus means that:
- Athe government has provided savings to the financial system.
- Bthe household sector has not provided any savings to the financial system.
- Cthis is a closed economy.
- Dthis is an open economy.
19The two components of national savings in an economy without interactions with other countries are:
- Aprivate savings and the budget balance.
- Bconsumption spending and investment spending.
- Ctaxes and the budget balance.
- Dprivate savings and taxes.
20Which of the following occurs in an economy that interacts with other countries?
- ACapital inflow equals private saving plus government saving.
- BCapital inflow equals desired investment spending.
- CInvestment spending equals national saving plus capital inflow.
- DInvestment spending equals consumption spending minus taxes.
21Financial markets serve to match:
- Asavers with borrowers.
- Bexporters with importers.
- Cproducers with consumers.
- Dworkers with employers
22From the point of view of savers, the interest rate represents the:
- Acost of researching different investment opportunities.
- Bcost of monitoring investments to make sure they are secure.
- Creward for accepting a permanently lower standard of living.
- Dreward for postponing consumption.
23Crowding out is the:
- Anegative effects of taxation on investment decisions.
- Bpositive effects of taxation on investment decisions.
- Cnegative effect of government budget deficits on private investment.
- Dpositive effect of government budget deficits on private investment.
24According to the Fisher effect:
- Athe expected real interest rate is unaffected by a change in expected future inflation.
- Bthe expected nominal interest rate is unaffected by a change in expected future inflation.
- Cexpected future inflation is unaffected by a change in the real interest rate.
- Dexpected future inflation is unaffected by a change in the nominal interest rate.
25If you take out a bank loan to buy a car, the loan is a(n):
- Aliability both for you and for the bank.
- Basset both for you and for the bank.
- Cliability for the bank and an asset for you.
- Dasset for the bank and a liability for you.
26By allowing for diversification, financial markets:
- Areduce transaction costs
- Breduce risk.
- Cincrease liquidity.
- Dcreate inefficiency.
27By investing in a mutual fund, you are:
- Aowning a share of a stock portfolio
- Bavoiding the risks of dealing with financial intermediaries
- Cendorsing the efficient markets hypothesis
- Dendorsing the random walk theory
28When we look at movements up or down along the aggregate demand curve, we are considering a:
- Asimultaneous change in the prices of all final goods and services.
- Bchange in the price of one good, with all other prices held constant.
- Cchange in the price of one good, with real consumer wealth held constant.
- Dchange in the price of one good, with interest rates held constant.
29Which of the following is NOT a component of aggregate demand?
- Agovernment expenditures
- Btaxes
- Cinvestment spending
- Dconsumption spending
30The aggregate supply curve shows the relationship between the:
- Alevel of real GDP and the level of unemployment.
- Blevel of nominal wages and the level of real GDP.
- Caggregate price level and the quantity of aggregate output supplied.
- Dlevel of nominal wages and the quantity of aggregate output supplied.
31The positive slope of short-run aggregate supply arises from the fact that...
- Aincreases in the aggregate price level will increase the rate of unemployment.
- Bincreases in the aggregate price level will increase profit per unit.
- Cincreases in unemployment cause an increase in aggregate demand.
- Ddecreases in real output arise from supply shocks.
32The long-run aggregate supply curve is drawn as a vertical line to reflect the fact that, in the long run, changes in:
- Athe aggregate price level do not affect the level of potential real GDP.
- Bproductivity do not affect the level of potential real GDP.
- Creal GDP do not affect the level of employment.
- Dthe stock of physical capital do not affect the level of potential real GDP.
33A shift in short-run aggregate supply occurs when there is a change in:
- Athe aggregate price level
- Breal output.
- Cprofit per unit.
- Dimports.
34Stagflation is:
- Aa combination of inflation and rising unemployment.
- Ba combination of high interest rates and high levels of investment spending.
- Ca combination of a government budget deficit and a trade deficit.
- Dthe pattern of fluctuations in economic activity over the course of the business cycle.
35If the economy experiences a negative demand shock, policy makers should:
- Anot take any action.
- Btry to shift the aggregate supply curve to the left.
- Ctry to shift the aggregate demand curve to the right.
- Dtry to shift the aggregate supply curve to the right.
36Which of the following is the BEST course of action for policy makers if the economy experiences a negative supply shock?
- APolicy makers should try to shift the aggregate supply curve to the left.
- BPolicy makers should try to shift the aggregate demand curve to the left.
- CPolicy makers should try to shift the aggregate demand curve to the right.
- DThere is no clear "best" policy.
37Disposable income is the:
- Aamount of household income collected as tax revenue.
- Btotal income households have available to spend.
- Cportion of household income saved.
- Dportion of household income invested.
38A recessionary gap occurs when:
- Aaggregate output falls below potential output.
- Bpotential output falls below aggregate output.
- Ctransfer payments undermine incentives to work.
- Dtaxes on corporate profits undermine incentives to invest.
39To address a recessionary gap, the appropriate fiscal policy would be an increase in:
- Apersonal taxes.
- Bcorporate taxes.
- Cgovernment spending.
- Dinterest rates.
40The effect of expansionary fiscal policy is to shift aggregate:
- Asupply to the left.
- Bsupply to the right.
- Cdemand to the left.
- Ddemand to the right.
41Which of the following would shift aggregate demand to the left?
- Aan increase in government transfer payments that affects disposable income
- Ba decrease in taxes that affects disposable income
- Can increase in taxes that affects disposable income
- Dan increase in private investment spending, funded by tax cuts
42The government budget deficit is MOST likely to rise when the:
- Ainterest rate falls.
- Binterest rate rises.
- Cunemployment rate rises.
- Deconomy recovers from a recession.
43Economists using a Keynesian model will suggest that:
- Asupply shocks do not affect real output
- Bdemand shocks do not affect real output
- Cshifts in the aggregate demand curve will affect output and employment as well as aggregate prices
- Dshifts in the aggregate demand curve will affect aggregate prices but will leave output and employment unchanged
44New classical macroeconomics is built on the two concepts of:
- Aan upward-sloping aggregate supply curve and a vertical aggregate demand curve.
- Bthe liquidity trap and the political business cycle.
- Cdiscretionary monetary policy and an emphasis on the short run.
- Drational expectations and real business cycle theory.
45Milton Friedman argued that:
- Aa discretionary monetary policy should be used to offset the fluctuations of the business cycle.
- Bthe effectiveness of expansionary fiscal policy is often limited by the effects of crowding out.
- Ca central bank following a monetary policy rule would destabilize the economy.
- Dthe velocity of money is unstable.
46The Friedman-Phelps (natural rate) hypothesis predicted that:
- Athe apparent tradeoff between inflation and unemployment would not survive once expectations of high inflation were built into public perceptions.
- Beffective policy action by the Federal Reserve could keep unemployment below its natural rate.
- Ceffective policy action by Congress could keep unemployment below its natural rate.
- Dthe velocity of money would become volatile when the economy reached a situation of full employment.
47The balance of payments on financial account:
- Areflects transfers of factor income.
- Bis the difference between exports of goods and exports of services.
- Cis the total value of exports.
- Dis the difference between the country's sales of assets to foreigners and its purchases of assets from foreigners.
48Which of the following economic conditions would be MOST likely to attract a capital inflow?
- Aa relatively low interest rate
- Ba relatively high rate of domestic savings
- Ca relatively high rate of economic growth
- Da merchandise trade surplus
49Which of the following would lead to an appreciation of the Japanese yen against the euro
- Aan increase in demand for euros by Japanese investors and consumers
- Ban increase in demand for European-made goods by Japanese consumers
- Can increase in the supply of Japanese yen on the foreign exchange market
- Dan increase in demand for Japanese-made goods by European consumers
50Which actor or institution called the growth in East Asia a miracle
- APaul Krugman
- BAdam Smith
- CThe IMF
- DThe World Bank
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- (economics) Quiz on macroeconomics, created by David Jacobus Costa on 25/05/2014.
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- David Jacobus Costa
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