ECON EXAM 3 Review
Refer to the above diagram. If the initial aggregate demand and supply curves are AD0 and AS0, the equilibrium price level and level of real domestic output will be...
F and C, respectively
Refer to the above diagram, in which C1 is the before-tax consumption schedule. The consumption schedule represented by C3 reflects...
a proportional tax system
Refer to the above diagram in which C3 is the before-tax consumption schedule. The after-tax consumption schedule represented by C2 reflects...
a regressive tax system
An increase in aggregate expenditures resulting from some factor other than a change in the price level is equivalent to...
a rightward shift of the aggregate demand curve in the AD-AS model
An appropriate fiscal policy for severe demand-pull inflation is...
a tax rate increase
Which of the above diagrams best portrays the effects of an increase in resource productivity?
A
Which of the following statements is correct?
A bank's liabilities plus its net worth equal its assets
Refer to the above table. The interest-rate effect of changes in the price level is shown by columns...
1 and 3 of the table
Monetary multiplier formula
1/R
Answer this question on the basis of a following balance sheet for the First National Bank of Bunco. All figures are in millions. If this bank has excess reserves of $6 million, the legal reserve ratio must be...
14%
Real domestic output in an economy is 20 units. Quantity of inputs is 10. Price of each input is $4. The level of productivity is...
2
The combined cost of Social Security and Medicare programs was what percent of US GDP in 2008?
7.6
Refer to the above data. If a lump-sum tax of $40 is imposed in this economy, the MPC is...
8 both before and after taxes
Refer to the above diagram. A shift of the aggregate demand curve from AD1 to AD0 might be caused by an...
increase in investment spending
Refer to the above diagram. Initially, assume that the investment demand curve is ID1. The crowding-out effect of a large public debt would be shown as an...
increase in the interest rate from 4 to 6 percent and a decline in investment spending of $5 billion
In the above diagram, a shift from AS1 to AS3 might be caused by an...
increase in the prices of imported resources
When deriving the aggregate demand (AD) curve from the aggregate expenditure model, an increase in US product prices would cause an increase in...
interest rates and lower consumption expenditures
Commercial banks monetize claims when they...
make loans to the public
An economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the...
multiplier effect
Refer to the above diagram. Assume that G and TI are the relevant curves, the economy is currently at A, and the full employment GDP is B. This economy has a...
neither a surplus nor a deficit in the actual budget
Refer to the above data. If a lump-sum tax of $40 is imposed in this economy, we can conclude that the tax...
neither increases nor decreases built-in stability
The political business cycle refers to the possibility that...
politicians will manipulate the economy to enhance their chances of being reelected
Refer to the above data. A 10% proportional tax on income would...
reduce the size of the multiplier and make the economy more stable.
Refer to the above information. All else being equal, if the price of each input increased from $4 to $6, productivity would...
remain unchanged
The reserve ratio refers to the ratio of a bank's...
required reserves to its checkable deposits liabilities
An expansionary fiscal policy is shown as a...
rightward shift in the economy's aggregate demand curve
The American Recovery and Reinvestment Act of 2009 was implemented primarily to...
stimulate aggregate demand and employment
The multiple by which the commercial banking system can increase the supply of money on the basis of each dollar of excess reserves is equal to...
the reciprocal of the required reserve ratio
The per unit cost of production in the economy described above is...
$2
A single commercial bank must meet a 25% reserve requirement. If the bank has no excess reserves initially, and $5,000 of cash is deposited in the bank, it can increase its loans by a maximum of...
$3,750
Assume that the MPS is .33 in an economy that has an aggregate supply curve with a slope of 1. An increase in investment spending of $10 billion will shift the aggregate demand curve rightward by...
$30 billion and increase real GDP by $15 billion
Refer to row 3 in the above table. The number appropriate for space Y is...
$32,000
Refer to the above data. This commercial bank has excess reserves of...
$5,000
Suppose a credit union has checkable deposits of $500,000 and the legal reserve ratio is 10%. If the institution has excess reserves of $4,000, then its actual reserves are...
$54,000
The federal funds market is the market in which...
banks borrow reserves from one another on an overnight basis
Refer to the above data. The 10 percent proportional tax on income would cause...
both consumption and saving to increase by smaller and smaller absolute amounts as GDP rises
Which of the following is not a significant contributor to the US public debt?
demand-pull inflation
Refer to the above figure. Suppose that the economy is currently operating at the intersection of AS and AD2, and the full employment level of output is Y. If the gov't wants to move the level of real GDP back to Y and reduce demand-pull inflation, in the presence of a ratchet effect, it should...
enact a contractionary fiscal policy that will shift aggregate demand to the left, but not as far as AD1
Overnight loans from one bank to another for reserve purposes entail an interest rate called the...
federal funds rate
The foreign purchases effect suggests that an increase in the US price level relative to other countries will...
increase US imports and decrease US exports
Refer to the above diagrams. Assuming a constant price level, an increase in aggregate expenditures from AE1 to AE2 would...
increase aggregate demand from AD1 to AD2
Other things equal, a reduction in personal and business taxes can be expected to...
increase both aggregate demand and aggregate supply