Macroeconomics questions

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Question 1 (1 point)

The actual change in the money supply equals

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Question 2 (1 point)

The required reserve ratio equals 10 percent and all banks initially have zero excess reserves. The Fed buys $1 million in U.S. government securities. The most the money supply can increase is

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Question 3 (1 point)

The more people decide to hold currency, the

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Question 4 (1 point)

The discount rate is the

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Question 5 (1 point)

The most precise way the Fed has to control the money is

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Question 6 (1 point)

According to the above figure, a shortage is shown between which two points?

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Question 7 (1 point)

A decrease in demand and a decrease in supply will lead to a

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Question 8 (1 point)

If the current price of a market basket of goods is $850 and the base year price for the same market basket is $500, what is the value of the price index?

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Question 9 (1 point)

The only way that a society can produce outside the production possibilities curve is

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Question 10 (1 point)

Suppose the tax rate on the first $10,000 income is 0; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $30,000; and 40 percent on any income over $80,000. Family A has income of $40,000 and Family B has income of $100,000. What is the marginal and average tax rate for each family?

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Question 11 (1 point)

The marginal tax rate is equal to

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Question 12 (1 point)

One solution to the Social Security problem cited in the text is to

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Question 13 (1 point)

Social Security taxes are regressive because

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Question 14 (4 points)

Assume an open, mixed economy (C + I + G + X = real GDP) and an MPS of .2 What is the multiplier?

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Question 15 (1 point)

The U.S. fiduciary monetary system

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Question 16 (1 point)

Refer to the above table. The value of M1 is

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Question 17 (1 point)

Possession of information by one party in a financial transaction but not by the other party is

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Question 18 (1 point)

The Federal Reserve bank is managed by

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Question 19 (1 point)

As a "lender of last resort" the Fed

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Question 20 (1 point)

Required reserves are

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Question 21 (1 point)

A bank with deposits of $500 million has $75 million in cash on hand, $50 million in deposits with the Fed, and $80 million in government securities. If the reserve requirement is 15 percent, the bank has excess reserves of

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Question 22 (1 point)

A bank with $100 million in deposits has $6 million in vault cash, $6 million on deposit with the Fed, and $6 million in government securities. The reserve requirement is 20 percent. A person deposits a check for $10 million drawn on another bank. The maximum loan this bank can make once the check clears is

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Question 23 (1 point)

Assuming a reserve ratio of 10 percent, if a bank sells $100,000 in securities how much can the bank loan out?

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Question 24 (1 point)

When the Fed buys a U.S. bond in the open market

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Question 25 (1 point)

The Fed buys securities and gives a bond dealer a check for the amount. After the check has cleared,

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Question 26 (1 point)

The required reserve ratio is 20 percent. The bank of a bond dealer has $100 million in deposits, $10 million in vault cash, $10 million in deposits with the Fed, and $10 million in government securities. The Fed buys $1 million in securities from the bond dealer. As a result of the transaction,

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Question 27 (1 point)

A purchase of U.S. government securities by the Fed causes

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Question 28 (1 point)

Fiscal policy is

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Question 29 (1 point)

Automatic stabilizers work by

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Question 30 (1 point)

Which of the following represent expansionary fiscal policy?

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Question 31 (1 point)

If the economy is experiencing an inflationary gap and the government wants to accelerate the adjustment to the long-run equilibrium, it should

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Question 32 (1 point)

Which of the following actions could be undertaken if the government wants to close a recessionary gap?

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Question 33 (1 point)

Suppose the government increases lump-sum taxes. This causes

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Question 34 (2 points)

Refer to the above figure. An increase in taxes will lead to a(n)

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Question 35 (2 points)

Refer to the above figure. Suppose the economy is operating at point A. There is a recessionary gap of ________, which can be closed by ________.

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Question 36 (1 point)

If the government increases spending but doesn't raise taxes,

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Question 37 (1 point)

If the supply of investment funds is horizontal and the government increases spending by $200 billion, the change in real GDP will be (assuming a marginal propensity to consume of 0.8)

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Question 38 (1 point)

Expansionary fiscal policy falls short of its goal. Some economists claim it is due to indirect crowding out. What evidence is consistent with this claim?

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Question 39 (1 point)

If the economy is below its full-employment level of real GDP, a supply-side economist would argue the appropriate policy is

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Question 40 (1 point)

Suppose there are two policy options facing a vote in the Senate. In the first, government spending will increase $50 billion, while the second option is to cut taxes by $50 billion. A Keynesian economist would argue for

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