Download Practice Test Unit IV

Practice Test Unit IV
Student: ___________________________________________________________________________
1. A nation's gross domestic product (GDP):
A. can be found by summing C + Ig + G + Xn.
B. is the dollar value of the total output produced by its citizens, regardless of where they are living.
C. can be found by summing C + S + G + Xn.
D. is always some amount less than its NDP.
2. If intermediate goods and services were included in GDP:
A. the GDP would then have to be deflated for changes in the price level.
B. nominal GDP would exceed real GDP.
C. the GDP would be overstated.
D. the GDP would be understated.
3. Which of the following best measures improvements in the standard of living of a nation?
A. growth of nominal GDP
B. growth of real GDP
C. growth of real GDP per capita
D. growth of national income
4. Recurring upswings and downswings in an economy's real GDP over time are called:
A. recessions.
B. business cycles.
C. output yo-yos.
D. total product oscillations.
5. The phase of the business cycle in which real GDP declines is called:
A. the peak.
B. an expansion.
C. a recession.
D. the trough.
6. Inflation means that:
A. all prices are rising, but at different rates.
B. all prices are rising and at the same rate.
C. prices in the aggregate are rising, although some particular prices may be falling.
D. real incomes are rising.
7. Demand-pull inflation:
A. occurs when total spending in the economy is excessive.
B. is measured differently than cost-push inflation.
C. can be present even during an economic depression.
D. is also called "hyperinflation."
8. Cost-push inflation may be caused by:
A. a decline in per unit production costs.
B. a decrease in wage rates.
C. a negative supply shock.
D. an increase in resource availability.
9. Other things equal, a decrease in the real interest rate will:
A. expand investment and shift the AD curve to the left.
B. expand investment and shift the AD curve to the right.
C. reduce investment and shift the AD curve to the left.
D. reduce investment and shift the AD curve to the right.
10. The economy's long-run aggregate supply curve:
A. slopes upward and to the right.
B. is vertical.
C. is horizontal.
D. slopes downward and to the right.
11. In the above diagram, a shift from AS1 to AS3 might be caused by a(n):
A. increase in productivity.
B. increase in the prices of imported resources.
C. decrease in the prices of domestic resources.
D. decrease in business taxes.
12. Other things equal, an improvement in productivity will:
A. increase the equilibrium price level.
B. shift the aggregate supply curve to the left.
C. shift the aggregate supply curve to the right.
D. shift the aggregate demand curve to the left.
13. Fiscal policy refers to the:
A. manipulation of government spending and taxes to stabilize domestic output, employment, and the price level.
B. manipulation of government spending and taxes to achieve greater equality in the distribution of income.
C. altering of the interest rate to change aggregate demand.
D. fact that equal increases in government spending and taxation will be contractionary.
14. Suppose that the economy is in the midst of a recession. Which of the following policies would most likely end the recession and stimulate output
growth?
A. a Congressional proposal to incur a Federal surplus to be used for the retirement of public debt
B. a reduction in agricultural subsidies and veterans' benefits
C. a postponement of a highway construction program
D. a reduction in Federal tax rates on personal and corporate income
15. Assume that aggregate demand in the economy is excessive, causing demand-pull inflation. Which of the following would be most in accord with
appropriate government fiscal policy?
A. an increase in Federal income tax rates
B. an increase in the size of income tax exemptions for each dependent
C. passage of legislation providing for the construction of 8,000 new school buildings
D. an increase in soil conservation subsidies to farmers
16. An appropriate fiscal policy for a severe recession is:
A. a decrease in government spending.
B. a decrease in tax rates.
C. appreciation of the dollar.
D. an increase in interest rates.
17. The amount by which Federal tax revenues exceed Federal government expenditures during a particular year is the:
A. Federal reserve.
B. budget deficit.
C. budget surplus.
D. public debt.
18. The crowding-out effect of expansionary fiscal policy suggests that:
A. tax increases are paid primarily out of saving and therefore are not an effective fiscal device.
B. increases in government spending financed through borrowing will increase the interest rate and thereby reduce investment.
C. it is very difficult to have excessive aggregate spending in the U.S. economy.
D. consumer and investment spending always vary inversely.
19. Money functions as:
A. a store of value.
B. a unit of account.
C. a medium of exchange.
D. all of these.
20. Stabilizing a nation's price level and the purchasing power of its money can be achieved:
A. only with fiscal policy.
B. only with monetary policy.
C. with both fiscal and monetary policy.
D. with neither fiscal nor monetary policy.
21. Other things equal, an excessive increase in the money supply will :
A. increase the purchasing power of each dollar.
B. decrease the purchasing power of each dollar.
C. have no impact on the purchasing power of the dollar.
D. reduce the price level.
22. Refer to the above market for money diagrams. If the Federal Reserve increased the stock of money, the:
A. S curve would shift leftward and the equilibrium interest rate would rise.
B. S curve would shift rightward and the equilibrium interest rate would fall.
C. D3 would shift leftward and the equilibrium interest rate would fall.
D. D3 curve would shift leftward and the equilibrium interest rate would rise.
23. When a commercial bank borrows from a Federal Reserve Bank:
A. the supply of money automatically increases.
B. it indicates that the commercial bank is unsound financially.
C. the commercial bank's lending ability is increased.
D. the commercial bank's reserves are reduced.
24. Which of the following is a tool of monetary policy?
A. open market operations
B. changes in banking laws
C. changes in tax rates
D. changes in government spending
25. The three main tools of monetary policy are:
A. tax rate changes, the discount rate, and open-market operations.
B. tax rate changes, changes in government expenditures, and open-market operations.
C. the discount rate, the reserve ratio, and open-market operations.
D. changes in government expenditures, the reserve ratio, and the discount rate.
Practice Test Unit IV Key
1. A
2. C
3. C
4. B
5. C
6. C
7. A
8. C
9. B
10. B
11. B
12. C
13. A
14. D
15. A
16. B
17. C
18. B
19. D
20. C
21. B
22. B
23. C
24. A
25. C
Practice Test Unit IV Summary
Category
# of Questions
Economics Page: 106
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Economics Page: 108
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Economics Page: 125
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Economics Page: 127
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Economics Page: 134
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Economics Page: 136
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Economics Page: 190
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Economics Page: 192
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Economics Page: 194
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Economics Page: 195
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Economics Page: 209
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Economics Page: 210
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Economics Page: 211
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Economics Page: 213
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Economics Page: 217
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Economics Page: 229
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Economics Page: 234
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Economics Page: 260
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Economics Page: 262
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Economics Page: 263
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Learning Objective: 10-1
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Learning Objective: 10-2
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Learning Objective: 11-1
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Learning Objective: 11-4
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Learning Objective: 12-1
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Learning Objective: 12-2
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Learning Objective: 14-1
1
Learning Objective: 14-2
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Learning Objective: 6-1
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Learning Objective: 7-1
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Learning Objective: 7-2
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Learning Objective: 7-3
1
Learning Objective: 7-4
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Macroeconomics Page: 106
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Macroeconomics Page: 108
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Macroeconomics Page: 125
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Macroeconomics Page: 127
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Macroeconomics Page: 134
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Macroeconomics Page: 136
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Macroeconomics Page: 190
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Macroeconomics Page: 192
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Macroeconomics Page: 194
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Macroeconomics Page: 195
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Macroeconomics Page: 209
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Macroeconomics Page: 210
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Macroeconomics Page: 211
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Macroeconomics Page: 213
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Macroeconomics Page: 217
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Macroeconomics Page: 229
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Macroeconomics Page: 234
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Macroeconomics Page: 260
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Macroeconomics Page: 262
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Macroeconomics Page: 263
2
McConnell - Chapter 006
2
McConnell - Chapter 007
6
McConnell - Chapter 010
5
McConnell - Chapter 011
6
McConnell - Chapter 012
3
McConnell - Chapter 014
5
Status: New
4
Topic: 1
6
Topic: 2
9
Topic: 3
3
Topic: 4
3
Topic: 5
1
Topic: 6
3
Type: Application of Concept
10
Type: Complex Analysis
2
Type: Definition
10
Type: Fact
1
Type: Graphical
2