Midterm Exam 2. Version B
|
|
- Shonda Stephens
- 7 years ago
- Views:
Transcription
1 Midterm Exam 2 Econ Spring 2010 Date: March 12 Instructor: Soojae Moon Version B Instruction: On the scantron, fill out your name (both the bubbles and the write-in portion) and place your recitation section number in the boxes labled `1234` Recitation Number Day of week Time TA Location 0011 T 12:30 McMahan CHEM T 5:00 McMahan ECON R 12:30 McMahan HLMS R 3:30 McMahan EDUC 138 You have 50 minutes to complete the exam. There are total 30 questions. Please read carefully and choose the choice that best completes the statement or answers the question. Answer All. Try your best! Good luck!
2 1. The concept of monetary neutrality describes a situation in the long run when: A) increases in the money supply have no effect on real variables such as GDP but only raises the price level. B) increases in the money supply have no effect on the price level but only raises real C) decreases in the money supply lower real GDP and the price level. D) increases in the money supply raise real GDP and the price level. 2. To increase the money supply, the central bank could: A) lower the discount rate. B) make open-market purchases. C) lower reserve requirements. D) lower the discount rate, make open-market purchases, or lower reserve requirements. 3. Suppose a bank has excess reserves of $800 and the reserve ratio is 10%. If Diana deposits $1,500 of cash into her checking account and the bank lends $600 to Russell, that bank can lend an additional: A) $1,550 B) $1,300 C) $2,000 D) $1,350 Deposit=1,500 =>rr=10%=>required reserve=10% of 1,500 =150 =>Excess reserve = 1, =1,350 *Already had excess reserve = 800 => Total excess reserve = 800+1,350 = 2,150 *Already loaned out = 600 => Additional loan = 2, = 1, The tool of monetary policy that involves the Fed's buying and selling of government bonds is: A) moral suasion. B) reserve requirements. C) the discount rate. D) open-market operations. Use the following to answer question 5. Figure: Output Gap
3 5. (Figure: Output Gap) Consider to the figure provided. If the economy is producing Y 1, then it has: A) an inflationary gap, as actual real GDP exceeds potential real GDP and the Fed should use contractionary monetary policy. B) a recessionary gap, as potential real GDP exceeds actual real GDP and the Fed should use expansionary monetary policy. C) an inflationary gap, as potential real GDP exceeds actual real GDP and the Fed should use contractionary fiscal policy. D) a recessionary gap, as actual real GDP exceeds potential real GDP and the Fed should use expansionary fiscal policy. 6. Which of the following is part of M1? A) short-term certificates of deposit (CDs) B) shares of corporate stock C) currency in a bank's vault D) travelers checks 7. Automatic stabilizers are government spending and taxation rules that: A) cause fiscal policy to be expansionary when the economy contracts. B) cause fiscal policy to be contractionary when the economy contracts. C) cause fiscal policy to be neutral when the economy contracts. D) cause fiscal policy to be ineffective when the economy contracts. 8. If government spending increases and taxes decrease: A) implicit liabilities will increase. B) implicit liabilities will decrease. C) the public debt will increase. D) the public debt will decrease.
4 Public debt is a government debt held by individuals and institutions outside the government. Increase in government spending and lowering taxes are expansionary fiscal policies and this will make a budget surplus smaller or a budget deficit bigger. This will also make public debt increase. Implicit liabilities is a spending promises made by governments that are like a debt although they are not included in the usual debt statistics. In the US, the largest implicit liabilities arise from Social Security and Medicare, which promise transfer payments to Social Security and Medicare. They are Government transfers and the question doesn t mention about TR, so we can eliminate answers that contain implicit liabilities. 9. The demand for money is higher in Japan than in the United States because: A) telecommunications and information technology is more advanced in the United States than in Japan. B) the Japanese use credit cards more than people in the United States. C) Japanese interest rates are very high in comparison to interest rates in the United States. D) Japanese interest rates are very low in comparison to interest rates in the United States. Figure: Short-Run Determination of the Interest Rate 10. (Figure: Short-Run Determination of the Interest Rate) If the money supply is currently at MS 1 and the central bank chooses to buy bonds, then the resulting shortrun shift in the supply of savings (loanable funds) may be represented by a shift of the: A) money supply curve to MS 2 that raises the interest rate. B) supply of loanable funds from S 1 to S 2 and a lower interest rate. C) supply of loanable funds from S 2 to S 1 and a higher interest rate. D) interest rate from r 2 to r 1. Liquidity preference model: Ms r I Y Yd saving Loanable funds market: saving supply of loan r
5 11. Holding everything else constant, if the required reserve ratio falls, then: A) a $1 loan can lead to a smaller change in the money supply than before the change in the required reserve ratio. B) the money multiplier increases. C) the amount of excess reserves falls also. D) the money multiplier decreases. 12. If a bank has deposits of $100,000, cash on hand of $10,000 and $15,000 on deposit at the Federal Reserve, and the required reserve ratio is 0.20, then the bank: A) has no excess reserves. B) has excess reserves of $5,000. C) has insufficient reserves to meet requirements. D) has an insufficient deposit to loan ratio. Bank reserves are currency held by banks in their vaults ($10,000) plus their deposits ($15,000) at the Federal Reserve, so $25,000. Excess reserves is a bank s reserves over and above the reserves required by law or regulation. Required reserves is $100,000*0.2=$20,000. Excess reserves = bank s reserves reserve required by law = $25,000-$20,000 = $5, The primary difference between M1 and M2 is that: A) the dollar amount of M1 is much larger than the dollar amount of M2. B) M1 includes checkable deposits, but M2 does not. C) M2 includes checkable deposits, but M1 does not. D) M2 includes savings deposits and time deposits, but M1 does not. M1: currency, traveler s check and checking deposits M2: M1 + near moneys (saving deposits, time deposits..) 14. The demand curve for money will shift to the right because of a: A) fall in the interest rate. B) rise in real C) rise in the interest rate D) fall in real Remember 4 factors that shift money demand curve? One of them is change in real Increase in real GDP shift Md shift right 15. A change in taxes or a change in government transfers affects consumption through a change in: A) autonomous consumption. B) the marginal propensity to save. C) disposable income. D) government spending.
6 Disposable income is an income plus government transfers minus taxes: the total amount of household income available to use for consumption and saving. 16. If the MPC is 0.8 and the government spending decreases by $50 million, then equilibrium GDP will decrease by: A) $40 million. B) $50 million. C) $200 million. D) $250 million. 50*(1/0.2)= When the Fed decreases bank's reserves through an open-market operation: A) deposits increase, currency in circulation increases, and the monetary base remains the same. B) the monetary base decreases, the money multiplier decreases, and the money supply increases. C) loans increase, the federal funds rate rises, and the discount rate rises. D) the monetary base decreases, loans decrease, and the money supply decreases. Use the following to answer question 18. Figure: Short-Run Equilibrium 18. (Figure: Short-Run Equilibrium) The accompanying graph shows the current shortrun equilibrium in the economy. Appropriate fiscal policy action in this situation would be: A) a decrease in transfer payments. B) an increase in government purchases. C) a decrease in tax rates.
7 D) an increase in the investment tax credit. Potential output < actual output: there is a inflationary gap. To close inflationary gap, they need to use contractionary fiscal policy. 19. The money demand curve is because a lower interest rate. A) upward-slopping; increases the opportunity cost of holding money B) downward-slopping; increases the opportunity cost of holding money C) upward-slopping; decreases the opportunity cost of holding money D) downward-slopping; decreases the opportunity cost of holding money Use the following to answer question 20. Figure: Changes in the Money Supply 20. (Figure: Changes in the Money Supply) If the supply of money shifts from S 1 to S 2, the Fed must have government bonds in the open market. A) sold B) bought C) issued new D) borrowed 21. Suppose the MPC = 0.8 and the government cuts taxes by $40 billion. Which of the following will be the likely effect? A) Real GDP will expand by $200 billion. B) Real GDP will contract by $200 billion. C) Real GDP will expand by $160 billion. D) Real GDP will contract by $160 billion. 40*[0.8/(1-0.8)]=160 Use the following to answer questions
8 Figure: Fiscal Policy I 22. (Figure: Fiscal Policy I) Suppose that this economy is in equilibrium at E 2. If there is an increase in taxes, then: A) AD 2 will shift to the left, causing an increase in the price level and a decrease in real B) AD 2 will shift to the left, causing a decrease in the price level and a decrease in the real C) AD 1 will shift to the right, causing an increase in the price level and an increase in real D) AD 1 will shift to the right, causing a decrease in the price level and an increase in real 23. (Figure: Fiscal Policy I) Suppose that this economy is in equilibrium at E 1. If there is an increase in government purchases, then: A) AD 2 will shift to the left, causing an increase in the price level and a decrease in real B) AD 2 will shift to the left, causing a decrease in the price level and a decrease in the real C) AD 1 will shift to the right, causing an increase in the price level and an increase in real D) AD 1 will shift to the right, causing a decrease in the price level and an increase in real 24. All of the following are roles of money, EXCEPT: A) a measure of wealth. B) a medium of exchange.
9 C) a unit of account. D) a store of value. 25. Suppose an economy has $200,000 of demand deposits and $40,000 of excess reserves with a 10% required reserve ratio. If the monetary authorities raise the required reserve ratio to 20%, then which of the following will likely follow? A) The excess reserves will rise by 10%. B) The excess reserves will fall by 10%. C) There will be no more excess reserves in the system. D) Excess reserves will decrease by $20,000. Deposit=200,000 =>rr=10%=>required reserve=10% of 200,000 =20,000 =>Excess reserve = 200,000-20,000=180,000 *Already had excess reserve = 40,000 => Total excess reserve = 180,000+40,000=220,000 Deposit=200,000 =>rr=20%=>required reserve=20% of 200,000 =40,000 =>Excess reserve = 200,000-40,000=160,000 *Already had excess reserve = 40,000 => Total excess reserve = 160,000+40,000=200,000 Excess reserves will decrease by $20,000 if the monetary authorities raise the required reserve ratio to 20%. 26. The government budget balance equals: A) Taxes + Government purchases + Government transfers. B) Taxes Government purchases Government transfers. C) Taxes Government purchases + Government transfers. D) Taxes + Government purchases Government transfers. 27. All of the following are examples of fiscal policy EXCEPT: A) increasing the reimbursement amounts under Medicaid. B) reducing the money supply in order to raise the interest rate. C) increasing the personal income tax deductions for home ownership. D) reducing federal subsidies to state universities. A) is government transfer, C) is regarding tax, D) is regarding government spending, so A,C,D is a fiscal policy, but B) is monetary policy (altering money supply) 28. A decrease in the supply of money, with no change in demand for money, will lead to in the equilibrium quantity of money and in the equilibrium interest rate. A) an increase; an increase B) an increase; a decrease C) a decrease; an increase D) a decrease; a decrease
10 29. When an individual decides to hold money instead of other assets: A) that individual is giving up the interest that could have been earned by holding other types of assets. B) that individual becomes more likely to suffer from money illusion. C) that individual is not affected by unanticipated inflation. D) that individual is able to maintain a higher standard of living. 30. The discount rate is the interest rate the Fed charges on loans to: A) consumers. B) the federal government. C) state governments. D) banks.
11 Answer Key - Midterm2-B 1. A 2. D 3. A 4. D 5. A 6. D 7. A 8. C 9. D 10. B 11. B 12. B 13. D 14. B 15. C 16. D 17. D 18. A 19. D 20. B 21. C 22. B 23. C 24. A 25. D 26. B 27. B 28. C 29. A 30. D
Macroeconomics, Fall 2007 Exam 3, TTh classes, various versions
Name: _ Days/Times Class Meets: Today s Date: Macroeconomics, Fall 2007 Exam 3, TTh classes, various versions Read these Instructions carefully! You must follow them exactly! I) On your Scantron card you
More informationEconomics 152 Solution to Sample Midterm 2
Economics 152 Solution to Sample Midterm 2 N. Das PART 1 (84 POINTS): Answer the following 28 multiple choice questions on the scan sheet. Each question is worth 3 points. 1. If Congress passes legislation
More informationPractice Problems Mods 25, 28, 29
Practice Problems Mods 25, 28, 29 Multiple Choice Identify the choice that best completes the statement or answers the question. Scenario 25-1 First National Bank First National Bank has $80 million in
More informationchanges in spending changes in income/output AE = Aggregate Expenditures = C + I + G + Xn = AD
small larger changes in spending changes in income/output AE = Aggregate Expenditures = C + I + G + Xn = AD The Multiplier Effect A small change in spending gives rise to a larger change in income/output
More informationWhat three main functions do they have? Reducing transaction costs, reducing financial risk, providing liquidity
Unit 4 Test Review KEY Savings, Investment and the Financial System 1. What is a financial intermediary? Explain how each of the following fulfills that role: Financial Intermediary: Transforms funds into
More informationSRAS. is less than Y P
KrugmanMacro_SM_Ch12.qxp 11/15/05 3:18 PM Page 141 Fiscal Policy 1. The accompanying diagram shows the current macroeconomic situation for the economy of Albernia. You have been hired as an economic consultant
More informationIntroduction to Macroeconomics 1012 Final Exam Spring 2013 Instructor: Elsie Sawatzky
Introduction to Macroeconomics 1012 Final Exam Spring 2013 Instructor: Elsie Sawatzky Name Time: 2 hours Marks: 80 Multiple choice questions 1 mark each and a choice of 2 out of 3 short answer question
More informationchapter: Solution Fiscal Policy
Fiscal Policy chapter: 28 13 ECONOMICS MACROECONOMICS 1. The accompanying diagram shows the current macroeconomic situation for the economy of Albernia. You have been hired as an economic consultant to
More informationSolution. Solution. Monetary Policy. macroeconomics. economics
KrugmanMacro_SM_Ch14.qxp 10/27/05 3:25 PM Page 165 Monetary Policy 1. Go to the FOMC page of the Federal Reserve Board s website (http://www. federalreserve.gov/fomc/) to find the statement issued after
More informationECON 4110: Money, Banking and the Macroeconomy Midterm Exam 2
ECON 4110: Money, Banking and the Macroeconomy Midterm Exam 2 Name: SID: MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following
More information1. Firms react to unplanned inventory investment by increasing output.
Macro Exam 2 Self Test -- T/F questions Dr. McGahagan Fill in your answer (T/F) in the blank in front of the question. If false, provide a brief explanation of why it is false, and state what is true.
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Econ 111 Summer 2007 Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The classical dichotomy allows us to explore economic growth
More information2.If actual investment is greater than planned investment, inventories increase more than planned. TRUE.
Macro final exam study guide True/False questions - Solutions Case, Fair, Oster Chapter 8 Aggregate Expenditure and Equilibrium Output 1.Firms react to unplanned inventory investment by reducing output.
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Study Questions 5 (Money) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The functions of money are 1) A) medium of exchange, unit of account,
More informationPRACTICE- Unit 6 AP Economics
PRACTICE- Unit 6 AP Economics Multiple Choice Identify the choice that best completes the statement or answers the question. 1. The term liquid asset means: A. that the asset is used in a barter exchange.
More informationMONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL*
Chapter 11 MONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL* The Demand for Topic: Influences on Holding 1) The quantity of money that people choose to hold depends on which of the following? I. The price
More information1 Multiple Choice - 50 Points
Econ 201 Final Winter 2008 SOLUTIONS 1 Multiple Choice - 50 Points (In this section each question is worth 1 point) 1. Suppose a waiter deposits his cash tips into his savings account. As a result of only
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Suvey of Macroeconomics, MBA 641 Fall 2006, Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Modern macroeconomics emerged from
More informationEC2105, Professor Laury EXAM 2, FORM A (3/13/02)
EC2105, Professor Laury EXAM 2, FORM A (3/13/02) Print Your Name: ID Number: Multiple Choice (32 questions, 2.5 points each; 80 points total). Clearly indicate (by circling) the ONE BEST response to each
More informationEcon 202 Section H01 Midterm 2
, Spring 2010 March 16, 2010 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Section H01 Midterm 2 Multiple Choice. 2.5 points each. 1. What would
More informationGovernment Budget and Fiscal Policy CHAPTER
Government Budget and Fiscal Policy 11 CHAPTER The National Budget The national budget is the annual statement of the government s expenditures and tax revenues. Fiscal policy is the use of the federal
More informationCHAPTER 7: AGGREGATE DEMAND AND AGGREGATE SUPPLY
CHAPTER 7: AGGREGATE DEMAND AND AGGREGATE SUPPLY Learning goals of this chapter: What forces bring persistent and rapid expansion of real GDP? What causes inflation? Why do we have business cycles? How
More informationECON 3312 Macroeconomics Exam 3 Fall 2014. Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
ECON 3312 Macroeconomics Exam 3 Fall 2014 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Everything else held constant, an increase in net
More informationWith lectures 1-8 behind us, we now have the tools to support the discussion and implementation of economic policy.
The Digital Economist Lecture 9 -- Economic Policy With lectures 1-8 behind us, we now have the tools to support the discussion and implementation of economic policy. There is still great debate about
More informationUniversity of Lethbridge Department of Economics ECON 1012 Introduction to Microeconomics Instructor: Michael G. Lanyi. Chapter 29 Fiscal Policy
University of Lethbridge Department of Economics ECON 1012 Introduction to Microeconomics Instructor: Michael G. Lanyi Chapter 29 Fiscal Policy 1) If revenues exceed outlays, the government's budget balance
More informationEcon 202 H01 Final Exam Spring 2005
Econ202Final Spring 2005 1 Econ 202 H01 Final Exam Spring 2005 1. Which of the following tends to reduce the size of a shift in aggregate demand? a. the multiplier effect b. the crowding-out effect c.
More informationPracticed Questions. Chapter 20
Practiced Questions Chapter 20 1. The model of aggregate demand and aggregate supply a. is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution
More informationProblem Set for Chapter 20(Multiple choices)
Problem Set for hapter 20(Multiple choices) 1. According to the theory of liquidity preference, a. if the interest rate is below the equilibrium level, then the quantity of money people want to hold is
More informationExtra Problems #3. ECON 410.502 Macroeconomic Theory Spring 2010 Instructor: Guangyi Ma. Notice:
ECON 410.502 Macroeconomic Theory Spring 2010 Instructor: Guangyi Ma Extra Problems #3 Notice: (1) There are 25 multiple-choice problems covering Chapter 6, 9, 10, 11. These problems are not homework and
More informationEcon 202 Section 4 Final Exam
Douglas, Fall 2009 December 15, 2009 A: Special Code 00004 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Section 4 Final Exam 1. Oceania buys $40
More informationReference: Gregory Mankiw s Principles of Macroeconomics, 2 nd edition, Chapter 15. The Banking System and the Money Supply
Macroeconomics Topic 6: Explain how the Federal Reserve and the banking system create money (i.e., the supply of money) Explain the factors that affect the demand for money. Reference: Gregory Mankiw s
More informationPre-Test Chapter 11 ed17
Pre-Test Chapter 11 ed17 Multiple Choice Questions 1. Built-in stability means that: A. an annually balanced budget will offset the procyclical tendencies created by state and local finance and thereby
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Survey of Macroeconomics, MBA 641 Fall 2006, Quiz 4 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The central bank for the United States
More informationECON 201: Introduction to Macroeconomics Final Exam December 13, 2012 NAME:
ECON 201: Introduction to Macroeconomics Final Exam December 13, 2012 NAME: Circle your TA s name: Amy Thiago Samir Circle your section time: 9 a.m. 3 p.m. INSTRUCTIONS: 1) The exam lasts 2 hours. 2) The
More informationFISCAL POLICY* Chapter. Key Concepts
Chapter 11 FISCAL POLICY* Key Concepts The Federal Budget The federal budget is an annual statement of the government s expenditures and tax revenues. Using the federal budget to achieve macroeconomic
More informationEcon 202 Final Exam. Table 3-1 Labor Hours Needed to Make 1 Pound of: Meat Potatoes Farmer 8 2 Rancher 4 5
Econ 202 Final Exam 1. If inflation expectations rise, the short-run Phillips curve shifts a. right, so that at any inflation rate unemployment is higher. b. left, so that at any inflation rate unemployment
More informationMacroeconomics Instructor Miller Fiscal Policy Practice Problems
Macroeconomics Instructor Miller Fiscal Policy Practice Problems 1. Fiscal policy refers to changes in A) state and local taxes and purchases that are intended to achieve macroeconomic policy objectives.
More informationQUIZ IV Version 1. March 24, 2004. 4:35 p.m. 5:40 p.m. BA 2-210
NAME: Student ID: College of Business Administration Department of Economics Principles of Macroeconomics O. Mikhail ECO 2013-0008 Spring 2004 QUIZ IV Version 1 This closed book QUIZ is worth 100 points.
More information_FALSE 1. Firms react to unplanned inventory investment by increasing output.
Macro Exam 2 Self Test -- ANSWERS Dr. McGahagan WARNING -- Be sure to take the self-test before peeking at the answers. Chapter 8 -- Aggregate Expenditure and Equilibrium Output _FALSE 1. Firms react to
More information2.5 Monetary policy: Interest rates
2.5 Monetary policy: Interest rates Learning Outcomes Describe the role of central banks as regulators of commercial banks and bankers to governments. Explain that central banks are usually made responsible
More informationRefer to Figure 17-1
Chapter 17 1. Inflation can be measured by the a. change in the consumer price index. b. percentage change in the consumer price index. c. percentage change in the price of a specific commodity. d. change
More informationThe Money Market and the Interest Rate. 2003 South-Western/Thomson Learning
The Money Market and the Interest Rate 2003 South-Western/Thomson Learning Individuals Demand for Money An individual s quantity of money demanded is the amount of wealth that the individual chooses to
More informationBUSINESS ECONOMICS CEC2 532-751 & 761
BUSINESS ECONOMICS CEC2 532-751 & 761 PRACTICE MACROECONOMICS MULTIPLE CHOICE QUESTIONS Warning: These questions have been posted to give you an opportunity to practice with the multiple choice format
More informationChapter 11 Money and Monetary Policy Macroeconomics In Context (Goodwin, et al.)
Chapter 11 Money and Monetary Policy Macroeconomics In Context (Goodwin, et al.) Chapter Overview In this chapter, you will be introduced to a standard treatment of the banking system and monetary policy.
More informationThe level of price and inflation Real GDP: the values of goods and services measured using a constant set of prices
Chapter 2: Key Macroeconomics Variables ECON2 (Spring 20) 2 & 4.3.20 (Tutorial ) National income accounting Gross domestic product (GDP): The market value of all final goods and services produced within
More informationUsing an appropriately labeled money market graph, show the effects of an open market purchase of government securities by the FED on :
Using an appropriately labeled money market graph, show the effects of an open market purchase of government securities by the FED on : The money supply Interest rates Nominal Interest rates i1 i2 Sm1
More informationBusiness Conditions Analysis Prof. Yamin Ahmad ECON 736
Business Conditions Analysis Prof. Yamin Ahmad ECON 736 Sample Final Exam Name Id # Instructions: There are two parts to this midterm. Part A consists of multiple choice questions. Please mark the answers
More informationChapter 12. Aggregate Expenditure and Output in the Short Run
Chapter 12. Aggregate Expenditure and Output in the Short Run Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 203 502 Principles of Macroeconomics Aggregate Expenditure (AE)
More informationMoney: Definition. Money: Functions. Money: Types 2/13/2014. ECON 3010 Intermediate Macroeconomics
Money: Definition ECON 3010 Intermediate Macroeconomics Chapter 4 The Monetary System: What It Is and How It Works Money is the stock of assets that can be readily used to make transactions. Money: Functions
More informationMacroeconomics Machine-graded Assessment Items Module: Fiscal Policy
Macroeconomics Machine-graded Assessment Items Module: Fiscal Policy Machine-graded assessment question pools are provided for your reference and are organized by learning outcome. It is your responsibility
More informationThe Aggregate Demand- Aggregate Supply (AD-AS) Model
The AD-AS Model The Aggregate Demand- Aggregate Supply (AD-AS) Model Chapter 9 The AD-AS Model addresses two deficiencies of the AE Model: No explicit modeling of aggregate supply. Fixed price level. 2
More information3. a. If all money is held as currency, then the money supply is equal to the monetary base. The money supply will be $1,000.
Macroeconomics ECON 2204 Prof. Murphy Problem Set 2 Answers Chapter 4 #2, 3, 4, 5, 6, 7, and 9 (on pages 102-103) 2. a. When the Fed buys bonds, the dollars that it pays to the public for the bonds increase
More informationExam 1 Review. 3. A severe recession is called a(n): A) depression. B) deflation. C) exogenous event. D) market-clearing assumption.
Exam 1 Review 1. Macroeconomics does not try to answer the question of: A) why do some countries experience rapid growth. B) what is the rate of return on education. C) why do some countries have high
More informationFinance, Saving, and Investment
23 Finance, Saving, and Investment Learning Objectives The flows of funds through financial markets and the financial institutions Borrowing and lending decisions in financial markets Effects of government
More informationApril 4th, 2014. Flow C was 9 trillion dollars, Flow G was 2 trillion dollars, Flow I was 3 trillion dollars, Flow (X-M) was -0.7 trillion dollars.
Problem Session I April 4th, 2014 Reference: Parkin, Introduction to economics, 2011 1. The rm that printed your Introduction to economics textbook bought the paper from XYZ Paper Mills. Was this purchase
More information(a) Using an MPC of.5, the impact of $100 spent the government will be as follows: 1 100 100 2 50 150 3 25 175 4 12.5 187.5 5 6.25 193.
S5 Solutions 24 points Chapter 2: Fiscal policy. If the marginal propensity to save is.5, how large is the multiplier? If the marginal propensity to save doubles to., what happens to the multiplier? With
More informationChapter 13 Money and Banking
Chapter 13 Money and Banking Multiple Choice Questions Choose the one alternative that best completes the statement or answers the question. 1. The most important function of money is (a) as a store of
More informationEconomics 101 Multiple Choice Questions for Final Examination Miller
Economics 101 Multiple Choice Questions for Final Examination Miller PLEASE DO NOT WRITE ON THIS EXAMINATION FORM. 1. Which of the following statements is correct? a. Real GDP is the total market value
More informationChapter 1. Why Study Money, Banking, and Financial Markets?
Chapter 1 Why Study Money, Banking, and Financial Markets? Why Study Money, Banking, and Financial Markets To examine how financial markets such as bond, stock and foreign exchange markets work To examine
More informationASSIGNMENT 1 ST SEMESTER : MACROECONOMICS (MAC) ECONOMICS 1 (ECO101) STUDY UNITS COVERED : STUDY UNITS 1 AND 2. DUE DATE : 3:00 p.m.
Page 1 of 13 ASSIGNMENT 1 ST SEMESTER : MACROECONOMICS (MAC) ECONOMICS 1 (ECO101) STUDY UNITS COVERED : STUDY UNITS 1 AND 2 DUE DATE : 3:00 p.m. 19 MARCH 2013 TOTAL MARKS : 100 INSTRUCTIONS TO CANDIDATES
More information7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Chapter. Key Concepts
Chapter 7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Key Concepts Aggregate Supply The aggregate production function shows that the quantity of real GDP (Y ) supplied depends on the quantity of labor (L ),
More informationChapter 13. Aggregate Demand and Aggregate Supply Analysis
Chapter 13. Aggregate Demand and Aggregate Supply Analysis Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 203 502 Principles of Macroeconomics In the short run, real GDP and
More informationAnswer: C Learning Objective: Money supply Level of Learning: Knowledge Type: Word Problem Source: Unique
1.The aggregate demand curve shows the relationship between inflation and: A) the nominal interest rate. D) the exchange rate. B) the real interest rate. E) short-run equilibrium output. C) the unemployment
More informationChapter 30 Fiscal Policy, Deficits, and Debt QUESTIONS
Chapter 30 Fiscal Policy, Deficits, and Debt QUESTIONS 1. What is the role of the Council of Economic Advisers (CEA) as it relates to fiscal policy? Use an Internet search to find the names and university
More informationThe Fiscal Policy and The Monetary Policy. Ing. Mansoor Maitah Ph.D.
The Fiscal Policy and The Monetary Policy Ing. Mansoor Maitah Ph.D. Government in the Economy The Government and Fiscal Policy Fiscal Policy changes in taxes and spending that affect the level of GDP to
More information7. Which of the following is not an important stock exchange in the United States? a. New York Stock Exchange
Econ 20B- Additional Problem Set 4 I. MULTIPLE CHOICES. Choose the one alternative that best completes the statement to answer the question. 1. Institutions in the economy that help to match one person's
More informationINTRODUCTION AGGREGATE DEMAND MACRO EQUILIBRIUM MACRO EQUILIBRIUM THE DESIRED ADJUSTMENT THE DESIRED ADJUSTMENT
Chapter 9 AGGREGATE DEMAND INTRODUCTION The Great Depression was a springboard for the Keynesian approach to economic policy. Keynes asked: What are the components of aggregate demand? What determines
More informationBADM 527, Fall 2013. Midterm Exam 2. Multiple Choice: 3 points each. Answer the questions on the separate bubble sheet. NAME
BADM 527, Fall 2013 Name: Midterm Exam 2 November 7, 2013 Multiple Choice: 3 points each. Answer the questions on the separate bubble sheet. NAME 1. According to classical theory, national income (Real
More informationEcon 303: Intermediate Macroeconomics I Dr. Sauer Sample Questions for Exam #3
Econ 303: Intermediate Macroeconomics I Dr. Sauer Sample Questions for Exam #3 1. When firms experience unplanned inventory accumulation, they typically: A) build new plants. B) lay off workers and reduce
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Chatper 34 International Finance - Test Bank MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The currency used to buy imported goods is A) the
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
ECON 4110: Sample Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Economists define risk as A) the difference between the return on common
More information4 Macroeconomics LESSON 4
4 Macroeconomics LESSN 4 The Federal Reserve System and Its Tools Introduction and Description The focus of this lesson is the Federal Reserve System: how its actions relate to the money creation process
More information2. With an MPS of.4, the MPC will be: A) 1.0 minus.4. B).4 minus 1.0. C) the reciprocal of the MPS. D).4. Answer: A
1. If Carol's disposable income increases from $1,200 to $1,700 and her level of saving increases from minus $100 to a plus $100, her marginal propensity to: A) save is three-fifths. B) consume is one-half.
More informationDescribe the functions of the Federal Reserve System (the Fed).
The Monetary System Chapter CHAPTER CHECKLIST Define money and describe its functions. Money is any commodity or token that is generally accepted as a means of payment. Money serves as a medium of exchange,
More informationAnswers. Event: a tax cut 1. affects C, AD curve 2. shifts AD right 3. SR eq m at point B. P and Y higher, unemp lower 4.
A C T I V E L E A R N I N G 2: Answers Event: a tax cut 1. affects C, AD curve 2. shifts AD right 3. SR eq m at point B. P and Y higher, unemp lower 4. Over time, P E rises, SRAS shifts left, until LR
More informationAGGREGATE DEMAND AND AGGREGATE SUPPLY The Influence of Monetary and Fiscal Policy on Aggregate Demand
AGGREGATE DEMAND AND AGGREGATE SUPPLY The Influence of Monetary and Fiscal Policy on Aggregate Demand Suppose that the economy is undergoing a recession because of a fall in aggregate demand. a. Using
More information14.02 PRINCIPLES OF MACROECONOMICS QUIZ 3
14.02 PRINCIPLES OF MACROECONOMICS QUIZ 3 READ INSTRUCTIONS FIRST: Read all questions carefully and completely before beginning the quiz. Label all of your graphs, including axes, clearly; if we can t
More informationCHAPTER 23 FISCAL POLICY: COPING WITH INFLATION AND UNEMPLOYMENT
CHAPTER 23 FISCAL POLICY: COPING WITH INFLATION AND UNEMPLOYMENT Chapter in a Nutshell To say that an economy is in equilibrium tells us very little about the general state of the economy. The model showing
More informationPre-Test Chapter 8 ed17
Pre-Test Chapter 8 ed17 Multiple Choice Questions 1. The APC can be defined as the fraction of a: A. change in income that is not spent. B. change in income that is spent. C. specific level of total income
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The government agency that oversees the banking system and is responsible for the conduct
More informationStudy Questions 8 (Keynesian Model) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Study Questions 8 (Keynesian Model) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In the Keynesian model of aggregate expenditure, real GDP is
More informationEdmonds Community College Macroeconomic Principles ECON 202C - Winter 2011 Online Course Instructor: Andy Williams
Edmonds Community College Macroeconomic Principles ECON 202C - Winter 2011 Online Course Instructor: Andy Williams Textbooks: Economics: Principles, Problems and Policies, 18th Edition, by McConnell, Brue,
More informationEcon 336 - Spring 2007 Homework 5
Econ 336 - Spring 2007 Homework 5 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The real exchange rate, q, is defined as A) E times P B)
More informationMiami Dade College ECO 2013 Principles of Macroeconomics - Spring 2015 Practice Test #3
Miami Dade College ECO 2013 Principles of Macroeconomics - Spring 2015 Practice Test #3 1. In the Keynesian model, the price level is ; in the aggregate demand and supply model, the price level is. A)
More informationHomework 5: The Monetary System and Inflation
Homework 5: The Monetary System and Inflation Solutions 1. Be sure to read your copy of the Wall Street Journal every weekday, looking especially for items related to the material in this course. Find
More informationThe Circular Flow of Income and Expenditure
The Circular Flow of Income and Expenditure Imports HOUSEHOLDS Savings Taxation Govt Exp OTHER ECONOMIES GOVERNMENT FINANCIAL INSTITUTIONS Factor Incomes Taxation Govt Exp Consumer Exp Exports FIRMS Capital
More informationAnswers to Text Questions and Problems in Chapter 8
Answers to Text Questions and Problems in Chapter 8 Answers to Review Questions 1. The key assumption is that, in the short run, firms meet demand at pre-set prices. The fact that firms produce to meet
More informationChapter 13 Money and Banking
Chapter 13 Money and Banking After reading Chapter 13, MONEY AND BANKING, you should be able to: Explain the three functions of money: Medium of Exchange, Unit of Account, Store of Value. Understand the
More informationMoney. 1 What is money? Spring 2013. 3 functions of money: Store of value Unit of account Medium of exchange
Money Spring 2013 1 What is money? 3 functions of money: Store of value Unit of account Medium of exchange Whether something is money is not always so clear: Physical bills and coins Balances on checking
More informationCHAPTER 3 THE LOANABLE FUNDS MODEL
CHAPTER 3 THE LOANABLE FUNDS MODEL The next model in our series is called the Loanable Funds Model. This is a model of interest rate determination. It allows us to explore the causes of rising and falling
More informationD) surplus; negative. 9. The law of one price is enforced by: A) governments. B) producers. C) consumers. D) arbitrageurs.
1. An open economy is one in which: A) the level of output is fixed. B) government spending exceeds revenues. C) the national interest rate equals the world interest rate. D) there is trade in goods and
More informationThe Banking System and the Money Supply. 2003 South-Western/Thomson Learning
The Banking System and the Money Supply 2003 South-Western/Thomson Learning What Counts as Money MONEY Anything that is widely accepted as a means of payment What Counts as Money MONEY Anything that is
More informationhttp://angel.bfwpub.com/section/content/default.asp?wci=pgt...
Hmwk 14 1. Let's find out what counts as money. In this chapter, we used a typical definition of money: A widely accepted means of payment. Under this definition, which people are using money in the following
More informationChapter 17. Preview. Introduction. Fixed Exchange Rates and Foreign Exchange Intervention
Chapter 17 Fixed Exchange Rates and Foreign Exchange Intervention Slides prepared by Thomas Bishop Copyright 2009 Pearson Addison-Wesley. All rights reserved. Preview Balance sheets of central banks Intervention
More informationFISCAL POLICY* Chapter. Key Concepts
Chapter 15 FISCAL POLICY* Key Concepts The Federal Budget The federal budget is an annual statement of the government s expenditures and tax revenues. Using the federal budget to achieve macroeconomic
More informationChapter 29: The Monetary System Principles of Economics, 7 th Edition N. Gregory Mankiw Page 1
Page 1 1. Introduction a. This is a fairly descriptive chapter, but it contains some important material for understanding the world that we live in. b. Money is important for facilitating trade. c. Paper
More informationPractice Problems on Money and Monetary Policy
Practice Problems on Money and Monetary Policy 1- Define money. How does the economist s use of this term differ from its everyday meaning? Money is the economist s term for assets that can be used in
More informationLesson 7 - The Aggregate Expenditure Model
Lesson 7 - The Aggregate Expenditure Model Acknowledgement: Ed Sexton and Kerry Webb were the primary authors of the material contained in this lesson. Section : The Aggregate Expenditures Model Aggregate
More informationAnswers to Text Questions and Problems. Chapter 22. Answers to Review Questions
Answers to Text Questions and Problems Chapter 22 Answers to Review Questions 3. In general, producers of durable goods are affected most by recessions while producers of nondurables (like food) and services
More information