Download Multiple Choice Quiz 1. The labor force consists of A) the entire adult

Multiple Choice Quiz
1. The labor force consists of
A) the entire adult population.
B) that portion of the adult population that is
currently employed
C) that portion of the population over age
sixteen that is unemployed but is actively
seeking work
D) that portion of the population over age
sixteen who are employed or who are actively
seeking employment.
2. The unemployment rate
A) is obtained by dividing the number of unemployed
people by the number of people in the labor force.
B) is obtained by dividing the number of unemployed
people by that portion of the population that is older than
age sixteen.
C) is obtained by dividing the number of unemployed
people by the total population.
D) is obtained by calculating the ratio of the total number
of people employed to the total population and subtracting
the result from the number "1" in order to obtain the
unemployment rate.
3. The term “inflation” is used to describe a
situation in which
a.
the overall level of prices in the
economy is increasing.
b. incomes in the economy are
increasing.
c.
stock-market prices are rising.
d. the economy is growing rapidly.
4. The inflation rate is defined as the
a.
price level.
b. change in the price level.
c.
price level divided by the price level
in the previous period.
d. percentage change in the price level
from the previous period.
5. During periods of rising prices
A) wages also tend to rise.
B) wealth gets redistributed from some
individuals to others.
C) some individuals change their consumption,
saving, or investment behavior due to the
uncertainties associated with inflation.
D) All of the above are true.
6. If the consumer price index was 100 in the
base year and 107 the following year, the
inflation rate was
a.
107 percent.
b. 10.7 percent.
c.
7 percent.
d. None of the above are correct.
7. According to the Keynesian view of the
macro economy,
A) the economy is inherently stable.
B) the economy is not always stable; however,
the economy quickly returns to full
employment.
C) the economy is inherently unstable;
however, government intervention would only
worsen the situation.
D) not only is the economy inherently
unstable, but government has the ability to
intervene in a way that will increase economic
stability.
8. The aggregate supply curve is
A) always horizontal.
B) always vertical.
C) horizontal in the long run but clearly
vertical in the short run.
D) typically upward sloping.
9. Macroeconomic equilibrium is associated
with
A) the intersection of the aggregate demand
and aggregate supply curves.
B) any point on the aggregate supply curve.
C) any point on the aggregate demand curve.
D) all points above the intersection of the
aggregate demand and aggregate supply curves
but no points below the intersection.
10. Which change in the price index shows the
greatest rate of inflation: 100 to 110, 150 to
165, or 180 to 198?
a.
100 to 110
b. 150 to 165
c.
180 to 198
d. All changes show the same rate of
inflation.
11. The average amount of goods and services
produced from each hour of a worker's time is
called
a.
per capita GDP
b. per capita GNP
c.
productivity
d. human capital
12. The inputs used to produce goods and
services are also called
a.
productivity indicators.
b. capitalization producers.
c.
production functions.
d. factors of production.
13. The primary components of aggregate
demand are
A) consumption, investment, youth
expenditures and exports minus imports.
B) health care, education, automobiles and net
exports.
C) consumption, investment, government
spending and net exports.
D) entertainment, housing, food and, finally,
education.
14. The following represent examples of
investment spending
A) the purchase of savings bonds.
B) the purchase of stock.
C) the purchase of modern machines for a
local factory.
D) All of the above represent examples of
investment spending.
15. During a recession the economy
experiences
a.
rising employment and income.
b. rising employment and falling
income.
c.
rising income and falling
employment.
d. falling employment and income.
16. Which of the following is included in the
aggregate demand for goods and services?
a.
consumption demand
b. investment demand
c.
net exports
d. All of the above are correct.
17. When taxes decrease, consumption
a.
increases, so aggregate demand shifts
right.
b. increases, so aggregate supply shifts
right.
c.
decreases, so aggregate demand shifts
left.
d. decreases, so aggregate supply shifts
left.
18. The marginal propensity to consume plus
the marginal propensity to save
A) always add to a number less than one.
B) always add to one.
C) can add to any number since they are
independent data series.
D) generally add to a number larger than one
since the poor consume while the rich save.
19. Which of the following is RIGHT?
A) the multiplier is equal to 1/(1 - MPS)
B) the multiplier is equal to 1/(1 - MPC)
C) the multiplier is equal to 1/(1 + MPS)
D) the multiplier is equal to (1 - MPC)*10.
20. When the government spends more, the
initial effect is that
a.
aggregate demand shifts right.
b. aggregate demand shifts left.
c.
aggregate supply shifts right.
d. aggregate supply shifts left.
21. A rightward shift in aggregate demand,
especially when it is to the right of the full
employment level of output
A) increases output and employment but has
no effect on prices.
B) decreases prices but has no effect on
output.
C) increases both prices and output, running
the risk of renewed inflation.
D) causes an increase in employment and
output but a decrease in prices.
22. Barter consists
A) of the direct exchange of one good for
another without the use of money.
B) of the ability to conduct a clever
negotiation.
C) of the purchase of a good for money at a
market.
D) None of the above are true.
23. Aggregate demand shifts left when the
government
a.
decreases taxes.
b. cuts military expenditures.
c.
Both of the above are correct.
d. None of the above is correct.
24. If countries that imported from the United
States went into recession, we would expect that
U.S. net exports would
a.
rise, making aggregate demand shift
right.
b. rise, making aggregate demand shift
left.
c.
fall, making aggregate demand shift
right.
d. fall, making aggregate demand shift
left.
25. An increase in government spending
initially and primarily shifts
a.
aggregate demand right.
b. aggregate demand left.
c.
aggregate supply right.
d. neither aggregate demand nor
aggregate supply.
26. The government purchases multiplier is
defined as
a.
MPC.
b. 1 – MPC.
c.
1/MPC.
d. 1/(1 – MPC).
27. If the MPC = 3/5, then the government
purchases multiplier is
a.
5/3.
b. 5/2.
c.
5.
d. 15.
28. If the multiplier is 2.5, the MPC is
a.
0.2.
b. 0.6.
c.
0.75.
d. 1.00.
29. Tax cuts
a.
and increases in government
expenditures shift aggregate demand right.
b. and increases in government
expenditures shift aggregate demand left.
c.
shift aggregate demand right while
increases in government expenditures shift
aggregate demand left.
d. shift aggregate demand left while
increases in government expenditures shift
aggregate demand right.
30. If taxes
a.
increase, consumption increases,
aggregate demand shifts right.
b. increase, consumption decreases,
aggregate demand shifts left.
c.
decrease, consumption increases,
aggregate demand shifts left.
d. decrease, consumption decreases,
aggregate demand shifts right.
31. Examples of things that have been or are
currently used as money include
A) U.S. dollars.
B) Tobacco
C) Furs
D) All of the above are relevant examples.
32. Which of the following represents the
largest single element of the M1 money supply?
A) Cash and coins.
B) U.S. savings bonds.
C) Transactions accounts such as checking
accounts.
D) Paper money that is backed by gold or
silver to give it value.
33. Suppose that the reserve ratio is 5 percent
and that a bank has $1,000 in deposits. Its
required reserves are
a.
$5.
b. $50.
c.
$95.
d. $950.
34. The term "reserve ratio"
A) describes the ratio of a bank's reserves to
its deposits.
B) describes the ratio of an individual's assets
to their monthly expenditures.
C) describes the ratio of a bank's assets to its
liabilities.
D) describes the ratio of unused productive
capacity to total productive capacity to describe
the extent of "tightness" or "looseness" in the
aggregate economy.
35. Suppose a bank has $10,000 in deposits and
$8,000 in loans. It has a reserve ratio of
a.
2 percent.
b. 12.5 percent
c.
20 percent.
d. 80 percent.
36. An individual bank can make additional
loans up to
A) an amount equal to total reserves minus
excess reserves.
B) an amount equal to its excess reserves.
C) any amount it can persuade customers to
borrow.
D) an amount equal to its assets minus its
liabilities.
37. Under a fractional reserve banking system,
banks
a.
hold more reserves than deposits.
b. generally lend out a majority of the
funds deposited.
c.
cause the money supply to fall by
lending out reserves.
d. All of the above are correct.
38. When there is an increase in the money
supply
A) generally there is a resulting rightward
shift of the aggregate supply curve.
B) generally there is a resulting leftward shift
of the aggregate supply curve.
C) generally there is a resulting rightward
shift of the aggregate demand curve.
D) generally there is a resulting leftward shift
of the aggregate demand curve.
39. Monetary policy
A) is the use of tax increases or cuts designed
to change the amount of money available for
spending.
B) is the use of audits（审计）to make
certain that banks follow bank policy.
C) is the use of money and credit controls to
influence macroeconomic activity.
D) exists only in textbooks and has no
applicability to the "real world."
40. If the reserve ratio is 5 percent and a bank
receives a new deposit of $500, this bank
a.
must increase its required reserves
by $25.
b. will initially see its total reserves
increase by $500.
c.
will be able to make a new loan of
$475.
d. All of the above are true.
41. The Board of Governors of the Fed
A) is an advisory group consisting of 7 state governors
who represent the views of individual states in monetary
policy.
B) consists of seven members appointed by the President
of the United States who together act as the key decisionmaking entity for monetary policy.
C) is an advisory group consisting of 13 large
commercial bank CEO's who represent the interests of the
private banking sector in monetary policy.
D) is the primary monetary group responsible for buying
and selling bonds designed to change reserves in the
banking system.
42. When there is an increase in the reserve
requirement
A) there is typically a resulting decrease in the
money supply.
B) there is typically a resulting increase in the
money supply since banks have more required
reserves to work with.
C) there is also an increase in the money
multiplier.
D) it generally reflects a desire by monetary
authorities to stimulate the economy.
43. Open-market operations
A) consist of rules designed to open monetary
operations to public review.
B) consist of changes in the discount rate that
is open to the entire market to see.
C) consist of changes in the reserve
requirements.
D) consist of purchases or sales of government
securities by monetary authorities designed to
change reserves in the banking system.
44. "Discounting" is a term used to
A) describe the serious distrust the public has
with monetary authorities.
B) describe bank loans to customers on
extremely favorable terms.
C) describe a loan make by the Small Business
Administration to a small business on favorable
terms.
D) describe the process by which a bank
borrows reserves from the Fed.
45. The discount rate
A) is the rate of interest charged by the Fed
when it provides reserves to private banks.
B) is the reduction in the prime rate that big
banks provide to "fat cat" （有钱有势的）
corporate borrowers.
C) is always equal to the market rate minus the
core rate of inflation.
D) is the rate that private banks charge other
private banks for a loan.
46. If the monetary authorities wanted to
stimulate the economy, they would most likely
A) reduce the discount rate.
B) decrease excess reserves in the banking
system.
C) increase excess reserves in the banking
system.
D) Both (a) and (c) are true.
47. As the reserve ratio increases, the money
multiplier
a.
increases.
b. does not change.
c.
decreases.
d. could do any of the above.
48. Monetary policy designed to stimulate
economic activity is most effective
A) when it induces a corresponding leftward
shift of the aggregate supply curve.
B) when the aggregate supply curve is
vertical.
C) when the aggregate supply curve is
horizontal.
D) when the aggregate demand curve is
horizontal.
49. If the central bank in some country lowered
the reserve ratio, the money multiplier
a.
would increase.
b. would not change.
c.
would decrease.
d. could do any of the above.
50. If the reserve ratio is 10 percent, the money
multiplier is
a.
100.
b. 10.
c.
9/10.
d. 1/10.
51. If the reserve ratio increased from 10
percent to 20 percent, the money multiplier
would
a.
rise from10 to 20.
b. rise from 5 to 10.
c.
fall from 10 to 5.
d. not change.
52. If the reserve ratio is 10 percent, $1,000 of
excess reserves can create
a.
$100 of new money.
b. $1,000 of new money.
c.
$10,000 of new money.
d. None of the above are correct.
53. Which of the following is not a tool of
monetary policy?
a.
open market operations
b. reserve requirements
c.
changing the discount rate
d. increasing the deficit
54. To increase the money supply, the Fed
could
a.
sell government bonds.
b. increase the discount rate.
c.
decrease the reserve requirement.
d. None of the above is correct.
55. When the Fed conducts open market
purchases, bank reserves
a.
increase and banks can increase
lending.
b. increase and banks must decrease
lending.
c.
decrease and banks can increase
lending.
d. decrease and banks must decrease
lending.
56. In a fractional reserve banking system, an
increase in reserve requirements
a.
increases both the money multiplier
and the money supply.
b. decreases both the money multiplier
and the money supply.
c.
increases the money multiplier, but
decreases the money supply.
d. decreases the money multiplier, but
increases the money supply.
57. If the discount rate is lowered, banks
choose to borrow
a.
less from the Fed so reserves
increase.
b. less from the Fed so reserves
decrease.
c.
more from the Fed so reserves
increase.
d. more from the Fed so reserves
decrease.
58. The interest rate the Fed charges on loans it
makes to banks is called
a.
the prime rate.
b. the federal funds rate.
c.
the discount rate.
d. the LIBOR.
59. Economic growth theory is primarily
concerned with
A) the long-run view of the economy .
B) short-run economic stabilization.
C) factors that cause short-run fluctuations in
the money supply.
D) factors that influence changes in the
growth rate of the national debt.
60. The primary mechanism for achieving economic
growth
A) is represented by increased capacity utilization,
which is represented by a movement from a point
inside the production possibilities curve to a point on
the curve.
B) is represented by a movement from an undesirable
point on a given production possibilities curve to a
more desirable point on a given production
possibilities curve.
C) is by emphasizing macroeconomic stabilization.
D) is represented by changes in a nation's productive
capacity, represented by an outward shift of the
production possibilities curve.
61. GDP per capita
A) is the amount of GDP produced per unit of
capital equipment since capita is the Latin root
word for capital.
B) is GDP divided by the total population.
C) is the amount of GDP produced by an
individual state.
D) None of the above are true.
62. For GDP per capita to grow
A) The GDP growth rate has to exceed the
growth rate of capital.
B) The GDP growth rate has to exceed the
growth rate of money or financial capital.
C) The marginal rate of GDP growth has to
exceed the average rate of GDP growth.
D) The GDP growth rate has to exceed the
population growth rate.
63. If the per capita growth rate is 4%,
A) Output per worker doubles every 18 years.
B) Output per worker doubles every 36 years.
C) Output per worker doubles every 12 years.
D) Output per worker remains stable if the
population growth rate is also 4%.
64. Productivity is a measure of
A) output per unit of input.
B) how hard individuals work, not how much
they produce.
C) the amount of human capital workers obtain
through training and experience.
D) the amount of capital per worker.
65. The following are sources of increased
productivity:
A) improved labor skills achieved by the job
training.
B) increases in the amount of capital per
worker.
C) technological advances.
D) All of the above are sources of increased
productivity.
66. According to supply-side arguments
A) the only effect of tax cuts is to stimulate
aggregate demand, resulting in a rightward
shift of the aggregate demand curve.
B) the primary effect of tax cuts is to make
the rich richer and the poor poorer.
C) reduced tax cuts tend to make the
aggregate supply curve steeper（陡峭的）.
D) tax cuts can stimulate savings and
investment, resulting in increased capital
accumulation, which acts to shift the aggregate
supply curve to the right.
67. Food and drug standards designed to protect
consumers from dangerous products
A) help prevent dangerous products from
entering the market.
B) cause fewer drugs to be developed, which
could result in increased deaths due to the lack
drug development.
C) cause those drugs that are developed to be
more expensive.
D) All of the above are true.