Quiz
Question 1 (1 point)
The actual change in the money supply equals
Question 2 (1 point)
The required reserve ratio equals 10 percent and all banks initially have zero excess reserves. The Fed buys $1 million in U.S. government securities. The most the money supply can increase is
Question 3 (1 point)
The more people decide to hold currency, the
Question 4 (1 point)
The discount rate is the
Question 5 (1 point)
The most precise way the Fed has to control the money is
Question 6 (1 point)
According to the above figure, a shortage is shown between which two points?
Question 7 (1 point)
A decrease in demand and a decrease in supply will lead to a
Question 8 (1 point)
If the current price of a market basket of goods is $850 and the base year price for the same market basket is $500, what is the value of the price index?
Question 9 (1 point)
The only way that a society can produce outside the production possibilities curve is
Question 10 (1 point)
Suppose the tax rate on the first $10,000 income is 0; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $30,000; and 40 percent on any income over $80,000. Family A has income of $40,000 and Family B has income of $100,000. What is the marginal and average tax rate for each family?
Question 11 (1 point)
The marginal tax rate is equal to
Question 12 (1 point)
One solution to the Social Security problem cited in the text is to
Question 13 (1 point)
Social Security taxes are regressive because
Question 14 (4 points)
Assume an open, mixed economy (C + I + G + X = real GDP) and an MPS of .2 What is the multiplier?
Question 15 (1 point)
The U.S. fiduciary monetary system
Question 16 (1 point)
Refer to the above table. The value of M1 is
Question 17 (1 point)
Possession of information by one party in a financial transaction but not by the other party is
Question 18 (1 point)
The Federal Reserve bank is managed by
Question 19 (1 point)
As a “lender of last resort” the Fed
Question 20 (1 point)
Required reserves are
Question 21 (1 point)
A bank with deposits of $500 million has $75 million in cash on hand, $50 million in deposits with the Fed, and $80 million in government securities. If the reserve requirement is 15 percent, the bank has excess reserves of
Question 22 (1 point)
A bank with $100 million in deposits has $6 million in vault cash, $6 million on deposit with the Fed, and $6 million in government securities. The reserve requirement is 20 percent. A person deposits a check for $10 million drawn on another bank. The maximum loan this bank can make once the check clears is
Question 23 (1 point)
Assuming a reserve ratio of 10 percent, if a bank sells $100,000 in securities how much can the bank loan out?
Question 24 (1 point)
When the Fed buys a U.S. bond in the open market
Question 25 (1 point)
The Fed buys securities and gives a bond dealer a check for the amount. After the check has cleared,
Question 26 (1 point)
The required reserve ratio is 20 percent. The bank of a bond dealer has $100 million in deposits, $10 million in vault cash, $10 million in deposits with the Fed, and $10 million in government securities. The Fed buys $1 million in securities from the bond dealer. As a result of the transaction,
Question 27 (1 point)
A purchase of U.S. government securities by the Fed causes
Question 28 (1 point)
Fiscal policy is
Question 29 (1 point)
Automatic stabilizers work by
Question 30 (1 point)
Which of the following represent expansionary fiscal policy?
Question 31 (1 point)
If the economy is experiencing an inflationary gap and the government wants to accelerate the adjustment to the long-run equilibrium, it should
Question 32 (1 point)
Which of the following actions could be undertaken if the government wants to close a recessionary gap?
Question 33 (1 point)
Suppose the government increases lump-sum taxes. This causes
Question 34 (2 points)
Refer to the above figure. An increase in taxes will lead to a(n)
Question 35 (2 points)
Refer to the above figure. Suppose the economy is operating at point A. There is a recessionary gap of ________, which can be closed by ________.
Question 36 (1 point)
If the government increases spending but doesn’t raise taxes,
Question 37 (1 point)
If the supply of investment funds is horizontal and the government increases spending by $200 billion, the change in real GDP will be (assuming a marginal propensity to consume of 0.8)
Question 38 (1 point)
Expansionary fiscal policy falls short of its goal. Some economists claim it is due to indirect crowding out. What evidence is consistent with this claim?
Question 39 (1 point)
If the economy is below its full-employment level of real GDP, a supply-side economist would argue the appropriate policy is
Question 40 (1 point)
Suppose there are two policy options facing a vote in the Senate. In the first, government spending will increase $50 billion, while the second option is to cut taxes by $50 billion. A Keynesian economist would argue for
Question 41 (1 point)
The government spends exactly what it receives in taxes is
Question 42 (1 point)
The difference between the gross public debt and the net public debt is that the
Question 43 (1 point)
Which of the following statements is true about the public debt and future generations?
Question 44 (1 point)
In the short-run, a budget deficit, when the economy has a recessionary gap, can
Question 45 (1 point)
What happens when the government imposes a unit excise tax on a good?
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