Econ Final Exam: Combined Semester Tests
Who did John Lee Hooker learn from?
A man from shreveport
Which part of the opera does the singer show off their vocal skills by singing?
Aria
Which points are attainable vs. unattainable?
Attainable- points inside and on the curve Unattainable- points outside the curve
Inflections or rubber notes
Blue notes
Saturday night music
Blues
Speaks to the human condition
Blues
What are the basic economics questions for every society?
-What goods and services/ produced? -How to produce the goods/services? -Who will receive the goods/services?
When the Marginal Propensity to Consume (MPC) = 0.75, the multiplier is ____________. a. 0.25 b. 0.75 c. 3 d. 4 c. 1.33
d. 4
Which points are efficient vs inefficient?
Efficient-> points on the curve (full employment) Inefficient-> points inside the curve (unemployment)
John Lee Hooker used what type of guitar?
Electric
Quantity supplied = quantity demanded
Equilibirum
The idea that music can make people do things they normally wouldn't do
Ethos of music
Musicians that are able to play quick and fast.
European Virtuoso
What does it mean by "there is no free lunch"?
Everything cost something
Taking into account unintended consequences
Fallacy of composition
A shorthand that allowed the performer to improvise the notes.
Figured Bass
What are the factors of production and their rewards?
Land = rent Labor = wages Capital = interest Entrepreneur = profit
Ceteris Paribus; price and quantity are inversely or negatively related
Law of Demand
Ceteris Paribus, positive/ direct relationship between price and quantity supply
Law of supply
Small pieces of music
Licks
Long drawn out pieces of music
Lines
Choices and performance of the entire economy
Macroeconomics
What is "deciding on the margin"?
Making decisions by comparing marginal costs and marginal benefits
Notes played over time (single line)
Melody
Decisions made by individual units (consumers & firms in a single market)
Microeconomics
Where did country blues originate from?
Mississippi
Single voiced music without accompaniment
Monophony
Who was the first Blues player to use an amplifier?
Muddy Waters
Who is the missing link between Blues and Rock n Roll?
Muddy Waters (McKinly Morganfield)
What is normal good vs. inferior good?
Normal good- demand rises as income rises Inferior good- demand falls as income rises
What is the difference between normative and positive statements?
Normative- opinions that can't be verified by facts (subjective) Positive- facts supported or rejected by evidence (objective)
A dramatic play with music that can be funny or sad?
Opera
The value of the next best alternative given up
Opportunity cost
How do we show economic growth with PPF?
Outward shift of PPF
Highness of lowness of the sound
Pitch
Describes a many voiced texture
Polyphony
At what price will there be a surplus?
Price is higher than equilibrium
At what price will there be a shortage?
Price is lower than equilibrium
What type of music is written to depict something not musical?
Program music
Which part of the opera do they just tell the story?
Recitation
The movement of music in time. It can be fast or slow and dense or sparse.
Rhythm
How is opportunity cost found from a PPF?
The slope of the PPF at that point
When income increases by $400, increase in consumption is $300. If autonomous investment changes by $5000, then a. the Marginal Propensity to Consume (MPC) = ________. b. the Marginal Propensity to Save (MPS) = ________. c. the multiplier = ________. d. the total change in AD = ________.
a. (0.75 or .75 or 75%) b. (0.25 or .25 or 25%) c. (4) d. (20,000 or $20,000)
When the disposable income rises by $500 and consumption rises by $400, the marginal propensity to save is ________ percent. a. 20 b. 40 c. 80 d. need more information to decide
a. 20
With a required reserve ratio of 5%, the money multiplier is a. 20 b. 2 c. 5 d. 50
a. 20
Which of the following will lead to a decrease in investment spending? a. An increase in the interest rate b. A decrease in the interest rate c. An increase in disposable income d. A decrease in disposable income
a. An increase in the interest rate
If annual government spending exceeds tax revenues, there is an increase in public debt. a. True b. False
a. True
The Marginal Propensity to Consume is a relationship between _____________ a. a change in consumption and a change in income. b. a change in consumption and a change in saving. c. changes in consumption and a changes in saving. d. the ratio of income to consumption at any given level of income. e. the total level of consumption at the total level of saving.
a. a change in consumption and a change in income
The aggregate demand curve slopes downward to the right, reflecting a relationship between the price level and ____________. a. real GDP b. interest rates c. the saving rate d. the investment level e. the consumption level
a. real GDP
How does the federal government finance budget deficit? a. By borrowing from the governments of other countries b. by borrowing from the Federal Reserve c. By selling treasury securities d. By printing money
c. By selling treasury securities
Monetary policy-making group within the Fed is the ____ committee. a. Federal Reserve Tax b. Federal Reserve Banking c. Federal Open Market d. Federal Reserve Decision-Making e. Regional Bank
c. Federal Open Market
Which of the following is an example of money serving as store of value? a. John buys a cup of coffee and a roll at the dinning room b. Steve says gas prices are falling. Gas is only $2.69 per gallon c. Roland puts his coins into a piggy bank d. All of the above are correct
c. Roland puts coins into a piggy bank
Ceteris paribus, if real GDP is decreasing, _______________. a. employment is rising b. unemployment is falling c. unemployment is rising d. the labor force is increasing
c. unemployment is rising
Public debt is the a. difference between government expenditure and tax revenue in one year. b. total debt of the households and businesses. c. total amount of outstanding treasury securities. d. total debt of the federal government owned by the public e. total government debt owned by foreign residents and governments
d. total debt of the federal government owned by the public
In order for something to be used as money, it must be a. issued by the government b. issued by banks c. declared to be money d. universally acceptable as medium of exchange e. made of something valuable
d. universally acceptable as medium of exchange
The short-run aggregate supply curve is _______ and the long-run aggregate supply curve is ________. a. upward sloping; horizontal b. vertical; upward sloping c. vertical; horizontal d. upward sloping; vertical
d. upward sloping; vertical
Assume the Federal Reserve injects $20 billion of new excess reserves into the banking system. If the money multiplier is 5, what is the maximum money the banking system could create as a result of this action? a. $4 billion b. $5 billion c. $10 billion d. $20 billion e. $100 billion
e. $100 billion
When there is an increase in demand, ceteris paribus, what happens to equilibrium price and equilibrium quantity?
increase in price, quantity increases
When there is an decrease in demand, ceteris paribus, what happens to equilibrium price and equilibrium quantity?
price decreases, quantity decreases
What is the shape of supply curve?
upward sloping
Bass that goes down and makes people sad or depressed
Lament Bass
Suppose the required reserve ratio is 5% and Ana deposits $1000 in her account with Bank of America, Required reserves Bank of America has to hold from Ana's deposit = $ Excess reserves from Ana's deposit = $ Money multiplier = Total money supply created by the entire banking system with Ana's deposit =
- 50 - 950 - 20 - 19000
What is the difference between scarcity and shortage?
--Scarcity- limited resources (permanent) --Shortage- Excess in demand at a particular price (temporary)
How does a change in each determinant shift supply?
--Technology- better technology = increase in supply --Number of sellers- more sellers = increase in supply --Expectations of future prices- higher expected prices = decrease in supply --Alternatives to sellers- more profitable alternatives = supply decreases
Who are the three composers we learned about in the Baroque Period?
-Bach -Handel -Vivaldi
What group came and changed the way music was made? What did they allow musicians to do that was different?
-Florentine Camerata -Improvise
Which points show unemployment vs. full employment?
-Points on the curve show full employment -Points inside the curve show unemplyment
7 things that generate vibration
-Voice -String -Column of air -Reed -membrane -The instrument itself -electricity
What are the differences between a capitalist and command economy?
Capitalism- price system co-ordinate unregulated markets; Command- public or common ownership of resources, centralized planning
All other things are constant except the variable being studied
Ceteris paribus
What is the difference between change in quantity demanded and change in demand?
Change in quantity demanded is due to change in price, Change in demand involves a factor other than price
What is meant by "people respond to incentives"?
Changes in rewards attract people to change decisions
Blues that included electric instruments and bands.
Chicago/Urban Blues
Multiple notes played at once
Chord
Ability to produce something at a lower opportunity cost than another producer
Comparative Advantage
Describes music that is pleasant to the ear
Consonance
When there is an increase in supply, ceteris paribus, what happens to equilibrium price and equilibrium quantity?
Decrease in price, increase in quantity
Country blues are also known as...
Delta Blues
No electric instruments, trumpets or trumbones
Delta/country blues
Describes music that isn't pleasant to the ear
Dissonance
When notes are played in the major scale people feel happy but when they are played in the minor scale people feel sad.
Doctrine of Affections
What is the shape of demand curve?
Downward slope
Structure and design in music, based on repetition, contrast and variation; the organizing principle of music.
Form
Sunday morning music
Gospel
What is the production possibilities frontier?
Graph that represents the maximum possible combination of 2 goods that can be produced with given resources and technology
A West African historian, story teller, praise singer, poet, musician. They were responsible for oral tradition.
Griot
Musicians that are able to tell a story with the notes they play.
Griot Virtuoso
The succession of chords one after another that support a melody
Harmony
Occurs when one melodic voice is prominent over the accompanying lines or voices
Homophony
What is the blues harmonic progression?
I IV V
What are the factors that shift demand?
Income Prices of related goods Preferences Number of buyers Expectations
When there is an decrease in supply, ceteris paribus, what happens to equilibrium price and equilibrium quantity?
Increase in price, decrease in quantity
Limited resources to satisfy unlimited human wants
Scarcity
What is economics?
Science of making choices, science of scarcity
Quantity supplied < quantity demanded
Shortage
Quantity supplied > quantity demanded
Surplus
What are the factors that shift supply?
Technology Number of sellers Expectations of future prices Alternatives to seller
The rate of speed, or pace, or the music
Tempo
Refers to the interweaving of the melodic lines with harmony in music
Texture
The sound quality of an instrument
Timbre
Principle of organization around a tonic, or home, pitch, based on a major or minor scale.
Tonality
Performed secular music in courts
Troubadour
How do economist build and use economic models?
Using descriptive statements, graphs, and mathematical equations
Who wrote The Four Seasons?
Vivaldi
What is the fallacy that association is causation?
What is true for the individual is not true for the group
Ceteris paribus, a depreciation of the U.S. dollar tends to result in _____________________. a. an increase in exports but a decrease in imports b. an increase in both exports and imports c. a decrease in both exports and imports d. a decrease in exports but an increase in imports
a. an increase in exports but a decrease in imports
When the Congress decreases government purchases or increases taxes, it characterizes a/an a. contractionary fiscal policy b. expansionary fiscal policy c. contractionary monetary policy d. expansionary monetary policy
a. contractionary fiscal policy
If the economy is experiencing demand-pull inflation, the Federal Reserve will adopt a. contractionary monetary policy b. expansionary monetary policy c. contractionary fiscal policy d. expansionary fiscal policy
a. contractionary monetary policy
Aggregate Supply curve shifts to the left when: a. cost of production increases. b. beneficial supply shock. c. the economy is expected to expand. d. labor productivity increases.
a. cost of production increases
The medium of exchange function of money allows an economy to avoid the problem of: a. double coincidence of wants. b. unemployment. c. loss of purchasing power during an inflation. d. rising interest rates.
a. double coincidence of wants
The fractional reserve banking system refers to a system in which banks: a. hold reserves equal to a fraction of their deposits. b. keep 100% of their deposits always on reserve. c. forbid the removal of more than a fraction of demand deposits per day. d. pay interest only on a fraction of their deposits.
a. holds reserves equal to a fraction of their deposits
Ceteris paribus, an increase in government spending will _________. a. increase domestic aggregate demand b. decrease domestic aggregate demand c. increase domestic aggregate supply d. decrease domestic aggregate supply
a. increase domestic aggregate demand
When an economy experiences cost push inflation, there is a. increase in unemployment along with rising prices. b. decrease in unemployment along with rising prices. c. increase in unemployment along with falling prices. d. decrease in unemployment along with falling prices.
a. increase in unemployment along with rising prices.
Money: a. is anything that is accepted in exchange for other goods and services. b. is anything that is backed by precious metals. c. is currency. d. has to have an intrinsic value.
a. is anything that is accepted in exchange for other goods and services.
If the economy is in a long-run equilibrium, a. if is producing maximum potential RGDP. b. it is producing less than maximum potential RGDP. c. is is producing more than maximum potential RGDP. d. there is high unemployment
a. it is producing maximum potential RGDP
When the economy is in recession, the FOMC policy decision would be to a. lower the federal funds target rate b. raise the federal funds target rate c. keep the federal funds target rate unchanged d. need more information to decide
a. lower the federal funds target rate
Which two of the following are not an activity of the Fed? a. making loans to the public b. clearing banks' checks c. lending funds to the federal government d. purchasing US government securities e. holding deposits of the US Treasury
a. making loans to the public AND/OR c. lending funds to the federal government
The monetary policy tool the Fed uses most often to control the money supply is a. open market operations b. the required reserve ratio c. the discount rate d. the federal funds rate
a. open market operations
Outstanding US Treasury Bills- $900 Currency in Circulation- $500 Money Market Deposit Accounts- $300 Small Denomination Time Deposits- $600 Checkable Deposits- $1,000 Stock Market Shares- $1,000 Money Market Mutual Funds Balances- $500 Savings Deposits- $400 Traveler's Checks- $200 ___________________________ Based on the information in the table above, the value of M1 is a. $2,100 b. $1,700 c. $3,000 d. $3,100
b. $1,700
If you deposit $100 in your bank when the reserve requirement is 20%, what is the maximum loan your bank can offer a borrower from your deposit? a. $100 b. $80 c. $20 d. $1000
b. $80
Federal Reserve System has __________ districts banks. a. 10 b. 12 c. 7 d. 5
b. 12
Which of the following will lead to a decrease in investment spending by businesses? a. Expectations of economic expansion in near future. b. Expectations of economic recession in near future. c. A decrease in business income. a. An increase in business income.
b. Expectations of economic recession in near future
As the U.S. disposable income is increasing: a. U.S. imports are decreasing b. U.S. imports are increasing c. U.S. exports are increasing d. U.S. exports are decreasing
b. U.S. imports are increasing
Which of the following will result in the Aggregate Demand curve shifting to its left? a. Decrease in interest rates b. Weak consumer confidence c. An improvement in technology d. An increase in foreign national income.
b. Weak consumer confidence
Monetary policy means a. a change in the money demand and interest rates b. a change in the money supply and interest rates c. a change in the tax rates and government spending d. both a and b are corect
b. a change in the money supply and interest rates
The federal government budget is _______________. a. a year-end record of how much the government received in income and how much it spent b. a plan for government expenditures and revenues for the coming year c. always in balance; receipts must equal expenditures d. equal to the government receipts minus government expenditures.
b. a plan for government expenditures and revenues for the coming year.
Ceteris paribus, when interest rates fall, a. aggregate demand falls. b. aggregate demand increases. c. short run aggregate supply decreases. d. short run aggregate supply increases
b. aggregate demand increases
A continuing resolution a. shuts down the government agencies in the absence of an approved budget b. allows agencies to spend at the rate of the previous year in the absence of an approved budget c. enables Congress to override the President's budget d. contributes to the efficiency of the federal budget process
b. allows agencies to spend at the rate of the previous year in the absence of an approved budget
A continuing resolution a. shuts down government agencies in the absence of an approved budget. b. allows agencies to spend at the rate of the previous year in the absence of an approved budget. c. enables Congress to override the President's budget. d. contributes to the efficiency of the federal budget process.
b. allows agencies to spend at the rate of the previous year in the absence of an approved budget.
Federal funds rate is the interest rate at which a. the Federal Reserve lends reserves to banks. b. banks lend reserves to other banks. c. the Federal Reserve lends reserves to the federal government. d. the Federal Reserve borrows reserves from banks.
b. banks lend reserves to other banks
The amount by which annual tax revenues exceed government spending is called a _____________. a. budget deficit b. budget surplus c. public debt d. public surplus
b. budget surplus
Which of the following actions is NOT a tool of monetary policy? a. changing the discount rate b. changing government spending and taxes c. changing reserve requirements d. open market operations
b. changing government spending and taxes
Given the short run aggregate supply curve, a decrease in aggregate demand would _____________. a. increase output and the price level b. decrease output and the price level c. increase output and decrease the price level d. decrease output and increase the price level e. cause no change in output or the price level
b. decrease output and the price level
When the multiplier is equal to 2, an initial decrease in investment spending of $10 billion will __________ a. increase Aggregate Demand by $20 billion. b. decreases Aggregate Demand by $20 billion. c. decreases Aggregate Demand by $5 billion. d. increases Aggregate Demand by $5 billion.
b. decreases Aggregate demand by $20 billion
An individual bank can, at most, lend out all its: a. checkable deposits. b. excess reserves. c. required reserves. d. profits.
b. excess reserves
A budget surplus occurs when a. the national debt is reduced to zero dollars. b. government expenditures are less than tax revenue. c. government expenditures equal tax revenue. d. government expenditures are greater than tax revenue.
b. government expenditures are less than tax revenue
The unique feature of a progressive income tax is that the higher one's income, the __________ proportion of income is paid in taxes. a. lower b. higher c. same d. none of the above
b. higher
Supply-side economists believe that decreasing tax rate would a. decrease incentive to work and as a result decrease SRAS b. increase incentive to work and as a result increase SRAS c. decrease incentive to work and as a result increase SRAS d. increase incentive to work and as a result decrease SRAS
b. increase incentive to work and as a result increase SRAS
The federal budget deficit becomes _________ during recessions because __________. a. smaller; transfer payments increase and tax revenues decline b. larger; transfer payments increase and tax revenues decline c. larger; both transfer payments and tax revenues increase d. smaller; both transfer payments and tax revenues increase e. smaller; both transfer payments and tax revenues decrease
b. larger; transfer payments increase and tax revenues decline
Seigniorage is a. a retirement home for senior citizens b. profit earned from issuing money c. a fine paid by counterfeiters d. the profits made by illegally "clipping" or "shaving" bits of precious metal from coins e. the oldest known form of commodity money
b. profit earned from issuing money
The amount of U.S. exports purchased by the rest of the world is primarily determined by _____________. a. real income in the United States b. real income in other nations c. the real interest rate in other nations d. the real interest rate in the United States e. the government budget deficit in other nations
b. real income in other nations
The larger the Marginal Propensity to Save, ceteris paribus, _________________. a. the larger than Marginal Propensity to Consume b. the smaller the multiplier c. the larger the multiplier d. larger disposable income
b. the smaller the multiplier
Ceteris paribus, if Real GDP is increasing ___________. a. employment is decreasing b. unemployment is decreasing c. unemployment is increasing d. depending on price level, unemployment can either increase or decrease
b. unemployment is decreasing
The banking system creates money in the sense that it a. prints money b. creates excess reserves from loans c. creates loans from excess reserves d. creates required reserves from loans e. creates loans from required reserves
c. creates loans from excess reserves
M1 is equal to: a. currency plus demand deposits. b. currency plus demand deposits plus savings deposits. c. currency plus demand deposits plus traveler's checks plus other checkable deposits. d. currency.
c. currency plus demand deposits plus traveler's checks plus other checkable deposits.
The Federal Open Market Committee is responsible for: a. regulating banks. b. running the check-clearing process. c. deciding monetary policy actions. d. deciding changes in income tax rates.
c. deciding monetary policy actions
A fall in prices of resources such as oil, will ____________. a. decrease aggregate demand b. increase aggregate demand c. increase short run aggregate supply d. decrease short run aggregate supply
c. increase short run aggregate supply
Open market purchases of treasury securities by the Federal Reserve would a. increase the bank's discount rate b. decrease the bank's excess reserves c. increase the bank's loan making ability d. decrease the bank's required reserves
c. increase the bank's loan making ability
As disposable income increases, consumption spending ____________. a. increases by the same amount b. decreases by the same amount c. increases by less than the increase in disposable income d. decreases by less than the increase in disposable income
c. increases by less than the increase in disposable income
As disposable income increases, consumption spending __________________. a. increases by the same amount b. decreases by the same amount c. increases by less than the increase in disposable income d. decreases by less than the increase in disposable income e. does not change at all
c. increases by less than the increase in disposable income
The crowding-out effect suggests that a. high taxes reduce both consumption and spending b. increases in consumption are always at the expense of saving c. increases in government spending may raise the interest rate, thereby reducing consumption and investment d. increases in government spending will close a recessionary gap
c. increases in government spending may raise the interest rate, thereby reducing consumption and investment
The situation in which an economy is producing output that is more than its potential output a. is impossible because all resources are employed to produced potential output b. is possible only in times of high unemployment. c. is possible only in expansionary gap d. is possible only in contractionary gap e. is possible only in stagflation
c. is possible only in expansionary gap
Expansionary monetary policy include a. lowering reserve requirements, increasing the discount rate, and buying government securities using open market operations. b. raising reserve requirements, increasing the discount rate, and buying government securities using open market operations. c. lowering reserve requirements, lowering the discount rate, and buying government securities using open market operations. d. raising reserve requirements, increasing the discount rate, and selling government securities using open market operations.
c. lowering reserve requirements, lowering the discount rate, and buying government securities using open market operations.
Fiat money is money because a. it is backed by gold b. it bears the signature of a US president c. of public faith that it will be widely accepted as a means of payment d. it is backed by silver
c. of public faith that it will be widely accepted as a means of payment
The federal funds rate is the interest rate paid when a. the Federal Reserve makes loans to member banks b. taxpayers pay overdue taxes c. one bank borrows reserves from another bank d. banks make loans to the federal government e. the federal debt is refinanced
c. one bank borrows reserves from another bank
Which of the following is not a monetary policy tool of the Federal Reserve? a. changing the required-reserve ratio b. changing the discount rate c. setting the tax rates d. conducting open market operations
c. setting the tax rates
Federal budget deficits grow during recessions without any policy changes because a. both tax revenues and transfer payments decrease b. both tax revenues and transfer payments increase c. tax revenues decrease while transfer payments increase d. tax revenues increase while transfer payments decrease e. tax revenues decrease but transfer payments are unchanged
c. tax revenues decrease while transfer payments increase
Open Market Operations are conducted by a. the main Fed office in Washington, DC b.the US Treasury on behalf of the Fed c. the Federal Reserve Bank of New York d. a consortium of private banks contracted by the Fed
c. the Federal Reserve Bank of New York
The discount rate is the interest rate changed by a. banks to other banks b. banks to their best customers c. the Federal Reserve to banks d. none of the above
c. the Federal Reserve to banks
The powers of the federal Reserve System do not include a. the ability to buy and sell US government securities b. the ability to extend loans to commercial banks c. the ability to provide deposit insurance for customers of commercial banks d. the ability to impose reserve requirements on commercial banks e. the authority to clear checks
c. the ability to provide deposit insurance for customers of commercial banks
If the economy is producing at full employment, _________________. a. it is a contractionary gap b. it is a expansionary gap c. there is long run equilibrium d. there is stagflation
c. there is long run equilibrium
National debt is the __________________. a. difference between government expenditure and tax revenue in one year. b. total government debt owned by the public c. total accumulation of all past deficits and surpluses d. total government debt owned by foreign residents and governments
c. total accumulation of all past deficits and surpluses
If the US Congress does not approve the federal budget or some kind of spending bill by the beginning of the fiscal year, what is the most likely immediate effect? a. The federal government cannot borrow. b. The federal government cannot spend. c. The federal government cannot collect tax revenue. d. There is no effect.
d. There is no effect
As a result of an increase in the U.S. disposable income a. U.S. exports decrease b. U.S. imports decrease c. U.S. exports increase d. U.S. imports increase
d. U.S. imports increase
If the $ depreciates against foreign currencies, it will result in __________________. a. an increase in both exports and imports b. a decrease in both exports and imports c. a decrease in exports and an increase in imports d. an increase in exports and a decrease in imports
d. an increase in exports and a decrease in imports
Why does a spending multiplier exist in our economy? a. because of our current laws. b. because the MPC is always at least one. c. because we spend too much money. d. because one person's spending is another person's income.
d. because one person's spending is another person's income
During a recession, output is ___________. a. above potential and unemployment is below the natural rate b. above potential and unemployment is above the natural rate c. below potential and unemployment is below the natural rate. d. below potential and unemployment is above the natural rate e. below potential and the price level is below the natural level
d. below potential and unemployment is above the natural rate
To reduce inflation, the Fed will use which of the following policy? a. expansionary monetary policy. b. expansionary fiscal policy. c. contractionary fiscal policy. d. contractionary monetary policy.
d. contractionary monetary policy
Given the aggregate demand curve, an adverse supply shock would ____________. a. increase output and the price level b. decrease output and the price level c. increase output and decrease the price level d. decrease output and increase the price level
d. decrease output and increase the price level
An appropriate fiscal policy response to a recession would be to a. increase government expenditures and taxes b. decrease government expenditures and taxes c. decrease government expenditures and increase taxes d. increase government expenditures and decrease taxes
d. increase government expenditures and decrease taxes
Aggregate demand will shift rightward if _________________. a. consumer confidence falls b. $ appreciates c. taxes increase d. interest rate falls
d. interest rate falls
Recession occurs because of a shift to the a. right of the SRAS curve. b. left of the SRAS curve. c. right of the AD curve d. left of the AD curve
d. left of the AD curve
Credit cards are included in a. only M1 b. only M2 c. both M1 and M2 d. neither M1 nor M2
d. neither M1 nor M2
Banks do all of the following, except one. Which is the exception? a. link savers and borrowers b. earn profits by loaning money c. create money d. print money e. reduce risk for savers (depositors)
d. print money
Contractionary monetary policy will a. lower interest rates and decrease aggregate demand b. raise interest rates and increase aggregate demand c. lower interest rates and increase aggregate demand d. raise interest rates and decrease aggregate demand
d. raise interest rates and decrease aggregate demand
Which is true regarding the marginal propensity to consume and the multiplier? a. The lower the MPC, the higher the multiplier. b. The higher the MPC, the lower the multiplier. c. The MPC equals the multiplier. d. The sum of the MPC and the multiplier equals 1. e. The lower the MPC, the lower the multiplier.
e. The lower the MPC, the lower the multiplier.
Under a fractional reserve banking system, a. only a fraction of the banks in the system are allowed to create money b. only a fraction of the banks in the system have reserves c. the claims outstanding against the bank are only a fraction of the bank's total reserves d. each bank must deposit a fraction of its reserves with the Federal Reserves Bank e. banks hold reserves that equal to only a fraction of bank deposits
e. banks hold reserves that equal to only a fraction of bank deposits
The Federal Reserve controls money supply by a. changing the amount of currency printed b. changing the federal budget deficit c. setting the interest rate banks can change to their customers d. controlling the amount of credit cards used e. changing the amount of excess reserves in the banking system
e. changing the amount of excess reserves in the banking system
Which of the following is an example of automatic stabilizers? a. congress raises taxes b. congress lowers taxes c. congress increases spending d. congress decreases spending e. none of the above
e. none of the above
The members of the Board of Governors of the Fed are a. elected by the member banks b. chosen by the state governors c. elected for seven year terms d. all replaced after each Presidential election e. selected by the President with the approval of the Senate
e. selected by the President with the approval of the Senate
Under the Federal Reserve System, a. there is one Federal Reserve Bank, located in Washington, DC b. there is one Federal Reserve Bank, whose location changes every 14 years c. there is a Federal Reserve bank in each Congressional district d. there is a Federal Reserve bank in each state e. there are 12 Federal Reserve banks
e. there are 12 Federal Reserve banks
