Macro Test 2 final
The distinction between the absolute and relative sizes of public debt is important because A. The absolute size doesn't tell you about the economy's capacity to repay the debt B, the US has the largest relative size public debt of any country C. the relative size doesn't tell you about the capacity to repay the debt. D. if the absolute size is larger than the relative size, then it is less of a problem
A, The absolute size doesn't tell you about an economy's capacity to repay the debt
You invest $300 at an annual interest rate of 4 percent. What will your investment be worth at the end of one year? A. $312 B. $304 C. $340 D. $400
A. $312 (1+0.04)^1*300
The crowding-out effect is A. a reduction in investment spending caused by an increase in interest rates arising from an increae in government spending B. A reduction in investment spending caused by a decrease in interest rates arsisng from an increase in government spending C. an increase in investment spending caused by a decrease in interest rates arising from an increase in government spending D. an increase in government spending cause by an increase in interest rates arising from an increase in government spending
A. A reduction in investment spending caused by an increase in interest rates arising in government spending
The following are two hypothetical ways in which the Federal Reserve Board might be appointed. a. Upon taking office, the U.S. president appoints seven people to the Federal Reserve Board, including a chair. Each appointee must be confirmed by a majority vote of the Senate, and each serves the same 4-year term as the president. b. Congress selects seven members from its ranks (four from the House of Representatives and three from the Senate) to serve at congressional pleasure as the Board of Governors of the Federal Reserve System. In the opinion of most economists, which option would be favored? A. Neither option is ideal because the independence of the Fed would be compromised. B. Option (a) would be favored because it would provide more cohesion for the Fed. C. Either option would be accepted since both have favorable aspects. D. Option (b) would be favored because it would make monetary policy consistent with congressional action.
A. Neither option is ideal because the independence of the Fed would be compromised.
What type of tax system would have the most built-in stability? A. Progressive tax system, because it increases at an increasing rate as income rise, thus having more if a dampening effect on rise (or falling)incomes B. Proportional tax system, because those with higher incomes will pay more taxes, thus having more of a dampening effect on rising (or falling) incomes C. Regressive tax system, because those with higher incomes pay a smaller proportion if their income in tax and thus can spend more D. Regressive tax system, because those with higher incomes pay a smaller proportion of their income in tax and thus can spend more.
A. Progressive tax system because it increases at an increasing rate, thus having more of a dampening effect on ries (or falling) incomes
The crowding-out effect is A. strongest when the economy is at full employment. B. strongest when the economy is in a deep recession. C. weakest when there is demand-pull inflation D. .equally strong, regardless of the state of the macroeconomy.
A. Strongest when the economy is at full employment
Suppose that the city of New York issues bonds to raise money to pay for a new tunnel linking New Jersey and Manhattan. An investor named Susan buys one of the bonds on the same day that the city of New York pays a contractor for completing the first stage of construction. What type of investment is Susan making? What about the city of New York? a. Susan is making: A. a financial investment. B. an asset investment. C. a portfolio investment D.an economic investment.
A. a financial investment
A longer-term U.S. government bond would be expected to have A. a higher interest rate than a short-term U.S. government bond, because the time period is longer. B. a lower interest rate than a short-term U.S. government bond, because the risk is lower over longer periods of time. C. a lower interest rate than a short-term U.S. government bond, because the time period is longer. D. a higher interest rate than a short-term U.S. government bond, because the risk is lower over longer periods of time.
A. a higher interest rate than a short-term U.S. government bond, because the time period is longer.
It is reasonable to ignore diversifiable risk and care only about nondiversifiable risk if the portfolio is A. already diversified. B. increasing. C. decreasing. D. monitored closely.
A. already diversified
The city of New York is making: A. an economic investment. B. a financial investment. C. a risky investment. D. a mortgage investment.
A. an economic investment
Subprime mortgage loans were one of the factors that exacerbated the financial crisis of 2007-2008. These loans resulted in A. an increase in demand for housing and a rapid, unsustainable increase in home prices. B. too much refinancing on the part of current home owners. C. too many lenders competing for the same loan business. D. an increase in the supply of housing and a rapid, sustainable increase in home prices.
A. an increase in demand for housing and a rapid, unsustainable increase in home prices.
Sammy buys stock in a suntan-lotion maker and also stock in an umbrella maker. One stock does well when the weather is good; the other does well when the weather is bad. Sammy's portfolio indicates that "weather risk" is __________ risk. A. a diversifiable B. a nondiversifiable C. an automatic
A. diversifiable
Refinancing of the public debt might cause A. higher interest rates, which can lower investment, and economic growth slows. B. lower interest rates, which can raise investment and economic growth increases. C. lower interest rates, which can lower investment, and economic growth slows .D. higher interest rates, which can raise investment, and economic growth increases.
A. higher interest rates, which can lower investment, and economic growth slows.
Total money demand is the A. horizontal sum of the transactions demand for money and the asset demand for money. B. horizontal sum of the consumer demand for money and the producer demand for money. C. vertical sum of the transactions demand for money and the asset demand for money. D. vertical sum of the private demand for money and the public demand for money.
A. horizontal sum of the transactions demand for money and the asset demand for money.
When the price of everything goes up, it is not because everything is worth more but because the currency is worth less. This statement acknowledges that A. if the price of everything rises, it means the currency has less purchasing power. B. inflation is not neutral C.if the price of everything rises, incomes also rise. D. when a currency is worth less, some prices are affected more than others.
A. if the price of everything rises, it means the currency has less purchasing power.
A major strength of monetary policy is A. its speed and flexibility. B. the relatively short appointments of members of the Fed's Board of Governors. C. the rule that it uses to manage the economy D. .its long-term consequences.
A. its speed and flexibility.
The basic determinant of the transactions demand for money is the A. level of nominal GDP. B. interest rate. C.price level. D. reserve ratio.
A. level of nominal GDP
The three basic functions of money are A. medium of exchange, unit of account, and store of value B. medium of exchange, record of account, and assessment of value. C. account of exchange, medium of account, and store of value. D. medium of exchange, store of account, and unit of value.
A. medium of exchange, unit of account, and store of value
The financial crisis of 2007-2008 was exacerbated by subprime mortgage loans. These loans were made to borrowers A. more likely to default on their loans. B. purchasing low-priced homes. C. who were not first-time home buyers. D. at exceptionally low rates.
A. more likely to default on their loans.
. Mutual funds A. pool investors' money and buy a collection of stocks or bonds. B. have an international agenda C. restrict the frequent buying and selling of assets in the fund. D. require a fee to join.
A. pool investors' money and buy a collection of stocks or bonds.
Distinctive products A. provide an export niche for a country. B. decrease production costs for a country. C.increase production costs for a country. D. are the basis for international trade and specialization
A. provide an export niche for a country.
An import demand curve is A. the difference between quantity supplied and quantity demanded in the domestic market for a price below the domestic equilibrium price. B. the difference between quantity supplied and quantity demanded in the domestic market for a price above the domestic equilibrium price. C. the sum of the quantity supplied and quantity demanded in the domestic market for a price below the domestic equilibrium price. D. the sum of the quantity supplied and quantity demanded in the domestic market for a price above the domestic equilibrium price.
A. the difference between quantity supplied and quantity demanded in the domestic market for a price below the domestic equilibrium price.
Compound interest is A. the interest an investment earns when interest is paid on the original amount invested plus all interest payments that have been previously made. B. the interest an investment earns when interest is paid on the original amount invested minus all interest payments that have been previously made. C. equal to the annual interest rate minus the inflation rate. D. equal to the annual interest rate plus the inflation rate.
A. the interest an investment earns when interest is paid on the original amount invested plus all the interest payments that have been previously made
The basic objective of monetary policy is A. to assist the economy in achieving a full-employment, noninflationary level of total output. B. to increase employment and stabilize exchange rates. C. to maintain steady exchange rates and lower inflation. D. to eliminate inflation and lower interest rates.
A. to assist the economy in achieving a full-employment, noninflationary level of total output.
. The Federal Open Market Committee (FOMC) A. votes on the Fed's monetary policy and directs the purchase or sale of government securities. B. develops monetary policy and sells government securities. C. develops fiscal policy and directs the purchase or sale of government securities. D. votes on the Fed's monetary policy and purchases government securities.
A. votes on the Fed's monetary policy and directs the purchase or sale of government securities.
Paying off an internally held debt A.would not burden the economy as a whole. B. would improve the distribution of income. C. may lower the dollar exchange rate. D. would involve selling government bond
A. would not burden the economy as a whole
In the United States, who is responsible for maintaining money's purchasing power? A.Board of Governors of the Federal Reserve System B. The Congress C. Federal Open Market Committee of the Federal Reserve System D. The Senate
A.Board of Governors of the Federal Reserve System
What is the largest component of M1? A. Currency B. Checkable deposits C. Coins D. Savings deposits
B. Checkable deposits
When economists say that the Federal Reserve Banks are quasi-public banks, it means that A. Federal Reserve Banks used to be public, but are now private. B. Federal Reserve Banks are a blend of private ownership and public control. C. the public owns the buildings, but the private sector owns the deposits. D. only a portion of the public can use them.
B. Federal Reserve Banks are a blend of private ownership and public control.
The transactions demand for money is most closely related to money functioning as a A. unit of account. B. medium of exchange C. store of value D.measure of value.
B. Medium of exhange
What "backs" the money supply in the United States? A. Half the money supply is backed by gold. B. There is no concrete backing to the money supply in the United States. C. The money supply is backed by U.S. Treasury notes. D. The gold standard applies to a small fraction of the money supply.
B. There is no concrete backing to the money supply in the United States.
The equilibrium interest rate in the money market is determined A. by the Fed. B. at the intersection of the total demand for money curve and the supply of money curve. C. at the intersection of the aggregate demand and aggregate supply curves. D. by how much the interest rate fluctuates over time.
B. at the intersection of the total demand for money curve and the supply of money curve.
An internally held debt is one in which A. the bondholders are citizens of other nations B. bondholders live in the nation having the debt C. the bondholders are the ones recieving the payments D, the funds are spent on domestic projects
B. bondholders live in the nation having the debt
Expectations of near-term policy reversal weaken fiscal policy because A. tax cuts are combined with spending increases so there is no real effect B. consumes may hesitate to increase their spending because they believe that tax rates will rise again C. people tend to make decisions bases on pre-tax incomes D. interest rates will usually rise, offsetting any change in fiscal policy
B. consumers may hesitate to increase their spending because they believe that tax rates will rise again
The tw ways to measure the public debt are A. its average dollare size adn its relative size as a fraction of GDP B. its absolute dollar size and its relative size as a percentage of GDP C. it real dollar size and its relative size as a multiple of GDP D. it relative dollar size and its relative size as a percentage of GDP
B. its absolute dollar size and its relative size as a percentage of GDP
Paying off an externally held debt A. would allow U.S. citizens to buy products or other assets abroad B. may lower the dollar exchange rate. C. would improve the distribution of income. D. would keep the proceeds in the domestic economy.
B. may lower the dollar exchange rate
The Federal Open Market Committee (FOMC) includes A. the Chairman of the Federal Reserve Board of Governors and 7 of the 12 presidents of the Federal Reserve Banks, of which the president of the New York Fed has a permanent voting seat. B. members of the Board of Governors and 5 of the 12 presidents of the Federal Reserve Banks, of which the president of the New York Fed has a permanent voting seat. C. members of the Board of Governors and 5 of the 12 presidents of the Federal Reserve Banks, of which the Chairman of the Federal Reserve Board of Governors has a permanent voting seat D.members of the Board of Governors, 7 of the 12 presidents of the Federal Reserve Banks, and the president of the United States.
B. members of the Board of Governors and 5 of the 12 presidents of the Federal Reserve Banks, of which the president of the New York Fed has a permanent voting seat.
Money is whatever society says it is. This statement acknowledges that A. money is the only medium that can be exchanged for goods and services. B. money must be an acceptable medium for exchange to occur. C. money is accepted if it is the currency of the country D.money creates a demand for goods.
B. money must be an acceptable medium to exchange to occur
Bonds issued by the U.S. government have lower rates of return than bonds issued by corporations because A. the risk of default is higher with the federal government. B. the risk of default is lower with the federal government. C. The U.S. government issues fewer bonds than corporations. D. the U.S. government issues more bonds than corporations.
B. the risk of default is lower with the federal government.
The Board of Governors of the Federal Reserve System A. is replaced every 2 years B.coordinates policies for the 12 Federal Reserve Banks C. is made up of five members. D. is the largest bank in the United States.
B.coordinates policies for the 12 Federal Reserve Banks
To lower the inflation rate to 4 percent, you recommend contracting the money supply A. decreasing the reserve ratio, increasing the IOER rate or the discount rate, or buying bonds. B.increasing the reserve ratio, the IOER rate, or the discount rate, or selling bonds. C. increasing the reserve ratio, decreasing the IOER rate or the discount rate, or selling bonds. D. decreasing the reserve ratio, the IOER rate, or the discount rate, or buying bonds.
B.increasing the reserve ratio, the IOER rate, or the discount rate, or selling bonds.
In the United States, monetary policy is the responsibility of the A. U.S. Treasury. B. Department of Commerce. C. Board of Governors of the Federal Reserve System D. U.S. Congress.
C. Board of Governors of the Federal Reserve System
Which of the following represents land-, labor-, and capital-intensive commodities, respectively? A. Wheat, automobiles, and transistor radios B. Clothing, aircraft, and automobiles C. Corn, clothing, and aircraft D. Automobiles, corn, and transistor radios
C. Corn, clothing, and aircraft
The equilibrium world price of a tradable good is determined by the A>.difference between quantity supplied and quantity demanded in the domestic market for domestic equilibrium price. B. World Trade Organization.i C. Intersection of the world supply and demand schedules. D. intersection of the supply and demand schedules of developed countries.
C. Intersection of the world supply and demand schedules.
What determines the value (domestic purchasing power) of money? A. The Federal Reserve System B. The cache of gold owned by the Treasury C. People's willingness to accept it in exchange for goods and services D. The foreign exchange rate
C. People's willingness to accept it in exchange for goods and services
Any central bank can create money; the trick is to create enough, but not too much, of it. This statement acknowledges that A. any central bank can control the price level and the level of out B. put.a central bank can create too much money, increasing its value and causing inflation. C. a central bank can create too much money, lowering its value and causing inflation. D. any central bank can control the money supply.
C. a central bank can create too much money, lowering its value and causing inflation.
Distinctions between land-, labor-, and capital-intensive commodities are important because A. when a country has an abundance of one type of resource, it usually does not have much of other resources B.for every one unit of capital-intensive commodities, two of land and labor must be present C. an abundant supply of one type of resource gives a country a comparative cost advantage in products using that resource. D. these commodities must be present for growth to occur.
C. an abundant supply of one type of resource gives a country a comparative cost advantage in products using that resource.
Passively managed funds A. constantly buy and sell assets to generate high returns. B. guarantee investors a higher rate of return than actively managed funds. C. buy whatever stocks are included in their funds' respective underlying indexes D. possess the same level of risk as actively managed funds.
C. buy whatever stocks are included in their funds' respective underlying indexes
refinancing of the public debt might drive up real interest rates because A. borrowing rates are higher than lending rates B .bonds have higher interest rates than other assets. C. government borrowing to finance the debt increases demand for funds and competes with private borrowing .D. the Treasury charges the government more than the private sector.
C. government borrowing to finance the debt increases demand for funds and competes with private borrowing
The problem of time lags in enacting and applying fiscal policy is that A. for a policy to have its full effect on the economy, it must be enacted in three months, however, it usually takes longer B. there are offsetting circumstances that can occur in the private market C. in the time it takes to identify the situation, enact a policy, and allow it to work, economic circumstances may have changed D. Discretionary fiscal policy only works in certain economic situations
C. in the time it takes to identify the situation, enact a policy, and allow it to work, economic circumstances may have changed
A commercial bank sells a Treasury bond to the Federal Reserve for $100,000. The potential money supply: A. is unaffected by the transaction B .decrease C. Increase
C. increase
Discretionary fiscal policy refers to A. any change in government spending or taxes that destabilizes the economy B .the authority that the president has to change personal income tax rates . C. intentional changes in taxes and government expenditures made by Congress to stabilize the economy. D, the changes in taxes and transfers that occur as GDP changes.
C. intentional changes in taxes and government expenditures made by Congress to stabilize the economy.
Contractionary fiscal policy is so named because it A. involves a contraction of the nation's money supply. B. necessarily reduces the size of government. C. is aimed at reducing aggregate demand and thus achieving price stability. D. is expressly designed to expand real GDP.
C. is aimed at reducing aggregate demand and thus achieving price stability.
Monetary policy is easier to conduct than fiscal policy because A. the Fed has more control of the economy. B. the economy responds better to monetary policy than to fiscal policy. C. monetary policy has a much shorter administrative lag than fiscal policy. D. monetary policy is easier to understand. Explanation
C. monetary policy has a much shorter administrative lag than fiscal policy.
Rapid inflation can undermine money's ability to perform its functions. During periods of runaway inflation, A. the future value of money cannot be predicted so money cannot act as a predictor of value. B. the value of money falls so money cannot serve as a measure of price. C. people often revert to barter because money fails as a medium of exchange. D. money cannot hold sufficient value to act as a medium of value.
C. people often revert to barter because money fails as a medium of exchange.
When economists say that the Federal Reserve Banks are central banks, it means that Federal Reserve Banks are centrally located in their districts B.the banks' policies are determined by the policymakers at the center of government. C. the banks' policies are coordinated by the Federal Reserve Board of Governors. D. Federal Reserve Banks are central to the operation of monetary policy.
C. the banks' policies are coordinated by the Federal Reserve Board of Governors.
Complete the following statement: If there is an increase in the total demand for money, A. the equilibrium interest rate will fall. B. the money supply will rise C.the equilibrium interest rate will rise. D. the money supply will fall.
C. the equilibrium interest rate will rise
When economists say that the Federal Reserve Banks are bankers' banks, it means that A. Federal Reserve Banks are owned by banks. B. the Federal Reserve owns the buildings. C. they perform the same functions for banks as banks perform for the public. D. bankers set the policies for Federal Reserve Banks.
C. they perform the same functions for banks as banks perform for the public.
The opportunity cost of holding money A. is zero because money is not an economic resource. B. varies inversely with the interest rate. C. varies directly with the interest rate. D. varies inversely with the level of economic activity.
C. varies directly with the interest rate
Suppose that you are a member of the Board of Governors of the Federal Reserve System and the economy is experiencing an 8 percent inflation rate. Unemployment is at the full-employment level and the target interest rate is currently 4 percent. a. If the economy is experiencing a sharp rise in inflation, as a member of the Board of Governors, you would recommend A. decreasing the federal funds rate. B. setting the federal funds rate equal to the discount rate C.increasing the federal funds rate. D. setting the federal funds rate equal to zero.
C.increasing the federal funds rate.
The difference between stocks and bonds in terms of the future payments that they are expected to make is A. bonds pay dividends out of profits, whereas stocks pay a predetermined amount of interest at regular intervals. B. stocks pay fixed dividends, wheras bonds pay a variable amount of interest at regular intervals C.stocks pay dividends out of profits, whereas bonds pay a predetermined amount of interest at regular intervals. D. bonds pay fixed dividends out of revenues, whereas stocks pay a variable amount of interest at regular intervals.
C.stocks pay dividends out of profits, whereas bonds pay a predetermined amount of interest at regular intervals.
Each member of the Board of Governors of the Federal Reserve System is selected by A. the U.S. president and confirmed by the Supreme Court B .the Chairman of the Banking Committee and confirmed by the Senate. C.the U.S. president and confirmed by the Senate. D. the Supreme Court and confirmed by the Senate.
C.the U.S. president and confirmed by the Senate.
Consider the following statement: "The United States can make certain toys with greater productive efficiency than can China. Yet we import those toys from China." We import these toys from China because A. China has an absolute advantage in producing toys, but the United States has a comparative advantage in producing toys. B. China produces better toys C.the United States has an absolute advantage in producing toys, but China has a comparative advantage in producing toys. D. the United States has a higher cost per unit of producing the toys.
C.the United States has an absolute advantage in producing toys, but China has a comparative advantage in producing toys.
Stocks are considered A. almost risk-free, since companies need to have earnings to stay in business B.less risky than bonds, because stock prices and profits are not highly variable C.less risky than bonds, because companies need to have earnings to stay in business D .more risky than bonds, because stock prices and profits are highly variable.
D .more risky than bonds, because stock prices and profits are highly variable.
What is the compound interest formula? Assume i is the interest rate, t is the amount of years (time), and X is the investment amount. Choose from the options below. A: (1 + i)t/X B: (1 − i)tX C: X/(1 + i)t D: (1 + i)tX
D.
The investment that commonly goes by the nickname "fixed income" is A. mutual funds. B. stocks. C. stocks and bonds. D. bonds.
D. Bonds
Consider the following statement: "The United States can make certain toys with greater productive efficiency than can China. Yet we import those toys from China." Which ideas of Adam Smith and David Ricardo are represented? A. China does not need Smith's expected advantage to specialize in toys, rather it needs Ricardo's actual advantage. B. China does not need Smith's comparative advantage to specialize in toys, rather it needs Ricardo's absolute advantage. C. China needs Smith's customer advantage to specialize in toys rather than Ricardo's producer advantage. D. China does not need Smith's absolute advantage to specialize in toys, rather it needs Ricardo's comparative advantage.
D. China does not need Smith's absolute advantage to specialize in toys, rather it needs Ricardo's comparative advantage.
What are the components of the M1 money supply? A. ATM deposits and checkable deposits B. Currency in circulation and savings deposits C. Savings deposits and checkable deposits D. Currency in circulation and checkable deposits
D. Currency in circulation and checkable deposits
How does the purchasing power of money relate to the price level? A. It is positively related to the price level. B. It is directly related to the price level. C. It is naturally related to the price level. D. It is inversely related to the price level.
D. It is inversely related to the price level.
What near-monies are included in the M2 money supply? A. Checkable savings deposits, money management accounts, small time deposits, and stock market balances B. Noncheckable savings deposits, money market deposit accounts, large time deposits, and money market mutual fund balances C. Checkable savings deposits, interest deposit accounts, large time deposits, and money market mutual fund balances D. Noncheckable savings deposits, money market deposit accounts, small time deposits, and money market mutual fund balances
D. Noncheckable savings deposits, money market deposit accounts, small time deposits, and money market mutual fund balances
Why is the face value of a coin greater than its intrinsic value? A. People would not be able to use the coins B. There are too few resources to make coins that have intrinsic value C. The law requires this. D. People would sell it for its intrinsic value
D. People would sell it for its intrinsic value
In the United States, the debts of government and commercial banks are used as money. This statement acknowledges that A. money is created by a lending process. B. many governments and commercial banks have debt. C. government finances its spending through debt. D. accounts in commercial banks are customer deposits and thus are debts of commercial banks.
D. accounts in commercial banks are customer deposits and thus are debts of commercial banks
If there is an increase in the nation's money supply, the interest rate will A. rise, investment spending will fall, aggregate demand will shift right, real GDP will rise, and the price level will fall. B. rise, investment spending will fall, aggregate demand will shift right, real GDP will fall, and the price level will rise. C. fall, investment spending will rise, aggregate demand will shift right, real GDP will rise, and the price level will fall. D. fall, investment spending will rise, aggregate demand will shift right, and real GDP and the price level will rise.
D. fall, investment spending will rise, aggregate demand will shift right, and real GDP and the price level will rise.
The basic determinant of the asset demand for money is the A. price level B.reserve ratio. C. level of nominal GDP. D. interest rate.
D. interest rate
People often say they would like to have more money, but what they usually mean is that they would like to have more goods and services. This statement acknowledges that A. if people have to choose between money and goods, they will choose money. B. people want money and goods. C. money is used for comparison. D. money can be used to purchase goods and services, but as an asset money provides little return.
D. money can be used to purchase goods and services, but as an asset money provides little return.
A political business cycle is the idea that A. the economy usually contracts during election years because there is intense scrutiny on spending B. Politicians are more interested in adding spending programs that in getting elected C. the economy usually expands during election years because there is extra spending D. politicians are more interested in reelection than in stabilizing the economy
D. politicians are more interested in reelection than in stabilizing the economy
If public investment financed through borrowing complements private investment, A. there will be less public borrowing needed and less pressure on interest rates. B. there will be lower prices than otherwise would occur. C. private borrowers will be more resistant to paying higher interest rates associated with financing the public debt. D. private borrowers may be willing to pay higher interest rates associated with financing the public debt.
D. private borrowers may be willing to pay higher interest rates associated with financing the public debt.
If the Federal Reserve thinks that a stock market bubble is occurring and wants to reduce stock prices, it should A. buy securities B.buy stocks. Clower interest rates D.raise interest rates.
D. raise interest rates
The recommendations you provided above would A. increase the lending ability of the banking system, decrease the real interest rate, and reduce investment spending, aggregate demand, and inflation. B. reduce the lending ability of the banking system, decrease the real interest rate, and increase investment spending, aggregate demand, and inflation C.increase the lending ability of the banking system, decrease the real interest rate, and increase investment spending, aggregate demand, and inflation. D. reduce the lending ability of the banking system, increase the real interest rate, and reduce investment spending, aggregate demand, and inflation.
D. reduce the lending ability of the banking system, increase the real interest rate, and reduce investment spending, aggregate demand, and inflation.
Refinancing the public debt measn A. swapping bonds for other assets B. buying new bonds to retire maturing bonds C. paying off bonds at maturity d. Selling new bonds to retire maturing bonds
D. selling new bonds to retire maturing bonds
When the economy is at full employment, A. one cannot generalize in comparing the actual and the cyclically adjusted budgets. B. the cyclically adjusted budget will show a surplus and the actual budget will show a deficit. C. the actual budget will show a surplus and the cyclically adjusted budget will show a deficit. D. the actual and the cyclically adjusted budgets will be equal
D. the actual and the cyclically adjusted budgets will be equal
An export supply curve is A. the sum of the quantity supplied and quantity demanded in the domestic market for a price above the domestic equilibrium price. B. the sum of the quantity supplied and quantity demanded in the domestic market for a price below the domestic equilibrium price. C. the difference between quantity supplied and quantity demanded in the domestic market for a price below the domestic equilibrium price. D. the difference between quantity supplied and quantity demanded in the domestic market for a price above the domestic equilibrium price.
D. the difference between quantity supplied and quantity demanded in the domestic market for a price above the domestic equilibrium price.
If the annual interest payments on the U.S. public debt sharply increased as a percentage of GDP, then A. GDP would fall B. there would be a smaller debt load C .interest payments would represent a smaller portion of tax revenues. D. the government would have to use tax revenues or go deeper into debt.
D. the government would have to use tax revenues or go deeper into debt.
Mutual funds are so popular with investors because A. they have idiosyncratic risk B.they require the investor to closely monitor the portfolio C.they can be risky. D. they diversify risk.
D. they diversify risk
The invention of money is one of the great achievements of humanity, for without it the enrichment that comes from broadening trade would have been impossible. This statement acknowledges that A. humankind likes money. B. trade requires money C. money is the root of happiness for humankind D. without money, trade must occur through barter, which is inefficient and cumbersome
D. without money, trade must occur through barter, which is inefficient and cumbersome
When bond prices go up, interest rates go __________. down nowhere up
Down
An internally held public debt is like a debt of the left hand owed to the right hand. T or F
False
As a percentage of GDP, the total U.S. public debt is the highest such debt among the world's advanced industrial nations. True or False
False
The total public debt is more relevant to an economy than the public debt as a percentage of GDP. T or F
False
Built-in (automatic) stabilizers work by changing __________ so that changes in GDP are reduced. A. Taxes and government payouts B. government payouts and interest rates C. interest rates and investment D. Wages and prices
a. taxes and government
What is the formula for present value? Assume i is the interest rate, t is the amount of years (time), and X is the investment amount. Choose from the options below. A: (1 + i)t/X B: (1 − i)tX C: X/(1 + i)t D: (1 + i)tX
c
A company builds a new factory: economic or financial investment
economic
A mining company sets up a new gold mine: economic or financial
economic
a man buys a newly built home in the city economic or financial
economic
A pension plan buys some Google stock economic or financial
financial
A woman buys a 100-year-old farmhouse in the countryside economic or financial
financial
Diversifiable risk can be reduced or eliminated by A. investing in different types of assets. B. investing in Treasury funds. C. taking on more systemic risk. D. investing all your money into a single risky stock.
investing in different types of assets
Which of the components of M1 is legal tender? A. Checkable deposits B. Coins C. Currency D. Savings deposits
C. currency
An internally held public debt is like a debt of the left hand owed to the right hand. T or F
True
a company buys an old factory economic or financial
financial
