ECON 2213 Final Exam (macroeconomics)

If the price of the computers shown in the graph above is $400, then there is: A. a shortage of 40 computers B. A shortage of 80 computers C. A surplus of 80 computers D. a surplus of 120 computers E. A surplus of 40 computers

A. a shortage of 40 computers.

A decrease in supply of chocolate chip cookies, ceteris paribus, would result in a(n): A. higher equilibrium price and lower equilibrium quantity. B. lower equilibrium price and a lower equilibrium quantity C. lower equilibrium price and a higher equilibrium quantity D. higher equilibrium price and a higher equilibrium quantity E. Increase in the supply of chocolate chips

A. higher equilibrium price and lower equilibrium quantity.

United States in considered to be a: A. capitalist economy B. mixed economy C. market economy D. command economy

B. mixed economy

If you deposit $500 in your bank when the reserve requirement is 5%, what is the maximum loan your bank can offer a borrower from your deposit? a. $500 b. $95 c. $2500 d. $475 e. $25

d. $475

Which of the following is not a question that scarcity forces all societies to answer? A. Which goods and services are to be produced? B. How are goods and services to be produced? C. Who will get the goods and services produced? D. How can scarcity be eliminated?

D. How can scarcity be eliminated?

Only X

Refer to the graph, Which points on this graph show that there is inefficiency?

Consider the following data: currency in circulation = $354 billion, checkable deposits = $250 billion, traveler's checks = $4 billion, small-denomination time deposits = $200 billion, savings deposits = $100 billion, money market mutual funds = $160 billion. M1 equals __________ billion a. $608 b. $708 c. $604 d. $694

a. $608

With a required reserve ratio of 5%, the money multiplier is a. 20 b. 2 c. 5 d. 50

a. 20

Open market sales 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.

b. decrease the bank's excess reserves.

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

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

With the Open Market Operations, the Federal Reserve increases banks' excess reserves by $20 billion. 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.

If an economy is producing maximum possible output with the given resources and technology: A. There would be no more opportunity costs. B. There would no longer be a problem with scarcity. C. All goods and services are produced efficently. D. All of the above.

C. All goods and services are produced efficiently

The opportunity cost of working after high school rather than going to college is: A. the cost of food and housing. B. the cost of clothing and transportation. C. The higher wages that come with additional education. D. zero, since the person is earning an income.

C. The higher wages that come with additional education.

If Sean can bake bread at a lower opportunity cost than Jason, and Jason can produce paintings at a lower opportunity cost than Sean, it follows that: A. Sean has a comparative advantage in paintings and Jason has comparative advantage in baking bread. B. Both Sean and Jason have a comparative advantage in baking bread. C. Both Sean and Jason have a comparative disadvantage in producing paintings. D. Sean has a comparative advantage in baking bread and Jason has a comparative advantage in producing paintings. E. There is not enough information to answer the question.

D. Sean has a comparative advantage in baking bread and Jason has a comparative advantage in producing paintings.

A technological advantage that increases the productivity of all inputs is best illustrated as: A. a movement along the production possibilities frontier. B. a flattening of the production possibilities frontier. C. an inward shift of the production possibilities frontier. D. an outward shift of the production possibilities frontier.

D. an outward shift of the production possibilities frontier.

If the Federal Reserve lowers the discount rate, it would a. encourage banks to increase lending. b. discourage banks to increase lending. c. not affect banks' lending because the discount rate affects banks' borrowing d. increase bank's required reserves. e. decrease bank's required reserves.

a. encourage banks to increase lending.

When the economy is in a 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.

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 correct.

b. a change in the money supply and interest rates.

John is shopping for a tablet. When he compares price of a Samsung tablet as $449 and an Apple IPad as $600, he is using money as a. a medium of exchange. b. an unit of account. c. a store of value. d. none of the above as he has not bought the tablet yet.

b. an unit of account.

When the Congress increases government purchases or decreases tax rates, it characterizes a/an a. contractionary fiscal policy. b. expansionary fiscal policy. c. contractionary monetary policy. d. expansionary monetary policy.

b. expansionary fiscal policy

If the actual current output is less than the potential output the Federal Reserve will adopt a. contractionary monetary policy b. expansionary monetary policy c. contractionary fiscal policy d. expansionary fiscal policy

b. expansionary monetary policy

The interest rate that banks charge other banks for borrowing reserves is the: a. open market rate. b. federal funds rate. c. discount rate. d. bank rate.

b. federal funds rate.

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

A government receives seigniorage whenever it a. sells gold to people for money b. issues money whose face value is greater than the value of the resources used up in supplying the money c. sells goods and services it produces for money d. uses money to buy goods and services

b. issues money whose face value is greater than the value of the resources used up in supplying the money

An appropriate fiscal policy response to a demand-pull inflation 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.

c. decrease government expenditures and increase taxes.

The crowding-out effect suggests that a. high taxes reduce both consumption and saving. 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.

Expansionary 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.

c. lower interest rates and increase aggregate demand

Fiat money is money because a. it is backed by gold. b. it bears the signature of a U.S. 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.

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

Open Market Operations are conducted by a. the Board of Governors in Washington, D.C. b. the U.S. 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 charged by: a. banks to other banks. b. banks to their best customers. c. the Federal Reserve to financial depository institutions. d. none of the above.

c. the Federal Reserve to financial depository institutions.

The United States is divided into __________ Federal Reserve districts, each with a district bank. a. three b. eight c. twelve d. twenty

c. twelve

Nick is Delighted to see that the price of his favorite food, black olives, has fallen. Which of the following could be responsible? a. an increase in the demand for black olives b. a decrease in the supply of black olives c. a simultaneous increase in demand and decrease in the supply of black olives d. a simultaneous decrease in demand and increase in the supple of black olives

d. a simultaneous decrease in demand and increase in the supple of black olives

Which of the following would cause the demand curve for oranges to shift to its right? a. a freeze in Florida (a major orange producing state) b. a new machine that allows orange growers to harvest oranges faster c. a decrease in the price of apples d. an announcement by the FDA that oranges lowers cholesterol e. a decrease in the price of oranges

d. an announcement by the FDA that oranges lowers cholesterol

The Federal Reserve changes the money supply in the economy mostly by: a. printing or destroying money. b. increasing or decreasing the federal budget. c. setting the prime rate for each financial depository institution. d. changing the amount of excess reserves in the banking system.

d. changing the amount of excess reserves in the banking system.

Banks create money when they: a. charge higher interest to their borrowers. b. print money. c. earn a profit. d. make loans and create checking deposits.

d. make loans and create checking deposits.

Credit cards are included in a. only M1. b. only M2. c. both M1and 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

Suppose you find $500 hidden in your attic. You deposit that cash in your checking account. What is the overall immediate effect on M1 and M2? a. Both M1 and M2 increase by $500. b. M1 falls by $500, M2 is unchanged. c. M1 is unchanged, M2 rises by $500. d. Both M1 and M2 decrease by $500. e. Neither M1 nor M2 .change.

e. Neither M1 nor M2 .change.

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 Reserve 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

Which of the following is not a function of the Federal Reserve System? a. holding deposits of member banks b. clearing checks c. making loans to member banks d. serving as a bank to the Federal government e. making loans to the public

e. making loans to the public

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