I don’t need an explanation. I would like to have the answer to compare to the ones I have already

I don’t need an explanation. I would like to have the answer to compare to the ones I have already
Type of Deposit Reserve Requirement Checkable Deposits   $7.8 − 48.3 Million 3% Over $48.3 Million 10 Noncheckable personal savings and time deposits   Refer to the accompanying table. If a bank has $60 million in savings deposits and $40 million in checkable deposits, then its required reserves are Top of Form Multiple Choice $30 million. $3 million. $1.8 million. $1.2 million. Bottom of Form When a bank loan is repaid, the supply of money Top of Form Multiple Choice is constant, but its composition will have changed. is decreased. is increased. may either increase or decrease. Bottom of Form Which of the following would reduce the money supply? Top of Form Multiple Choice Commercial banks use excess reserves to buy government bonds from the public. Commercial banks loan out excess reserves. Commercial banks sell government bonds to the public. A check clears from Bank A to Bank B. Bottom of Form Assets Liabilities and Net Worth Reserves $ 20 Checkable Deposits $ 100 Loans 25 Stock Shares 50 Securities 15   Property 90   Refer to the accompanying balance sheet for the First National Bank of Bunco. All figures are in millions. If this bank has excess reserves of $6 million, the legal reserve ratio must be Top of Form Multiple Choice 10 percent. 12 percent. 14 percent. 20 percent. Bottom of Form Monetary policy is thought to be Top of Form Multiple Choice equally effective in moving the economy out of a depression as in controlling demand-pull inflation. more effective in moving the economy out of a depression than in controlling demand-pull inflation. more effective in controlling demand-pull inflation than in moving the economy out of a recession. only effective in moving the economy out of a depression. Bottom of Form Banks’ borrowed funds come mostly from Top of Form Multiple Choice buying bonds and loans. buying stocks and selling Treasury bonds. issuing stocks and buying Treasury bonds. issuing bonds and accepting deposits. Bottom of Form As a result of policy actions taken by the Fed since 2008, it (the Fed) can no longer expect to affect the federal funds rate through traditional open market operations to alter the overall amount of excess reserves in the banking system. This is because Top of Form Multiple Choice Congress has taken this power away from the Fed. there is a massive amount of excess reserves already in the banking system. the federal funds rate has become rigidly fixed by law. banks are no longer holding any excess reserves. Bottom of Form Assets Liabilities + Net Worth Reserves $ 60 Checkable Deposits $ 150 Loans 100 Stock Shares 135 Securities 25   Property 100   Refer to the accompanying consolidated balance sheet for the commercial banking system. Assume the required reserve ratio is 12 percent. All figures are in billions of dollars. The maximum amount by which the commercial banking system can expand the supply of money by lending is Top of Form Multiple Choice $250 billion. $350 billion. $450 billion. $600 billion. Bottom of Form The multiple by which the commercial banking system can expand the supply of money is equal to the reciprocal of Top of Form Multiple Choice the MPS. its actual reserves. its excess reserves. the reserve ratio. Bottom of Form All else equal, when the Federal Reserve Banks engage in a restrictive monetary policy, the prices of government bonds usually Top of Form Multiple Choice fall. rise. remain constant. move in the same direction as the bonds’ interest rate yield. Bottom of Form In the recent financial and economic crises, the economy fell into a so-called liquidity trap, which means that Top of Form Multiple Choice banks did not have enough reserves to continue lending to firms. the Fed injected reserves into the banking system, but the interest rates remained high. firms did not want to borrow from banks because they had little need for extra liquidity. banks held on to excess reserves and people chose to pay off loans rather than spend. Bottom of Form The reserve ratio refers to the ratio of a bank’s Top of Form Multiple Choice reserves to its liabilities and net worth. capital stock to its total assets. checkable deposits to its total liabilities. required reserves to its checkable-deposit liabilities. Bottom of Form A checkable deposit at a commercial bank is a(n) Top of Form Multiple Choice liability to the depositor and an asset to the bank. liability to both the depositor and the bank. asset to the depositor and a liability to the bank. asset to both the depositor and the bank. Bottom of Form Money is destroyed when Top of Form Multiple Choice loans are made. checks written on one bank are deposited in another bank. loans are repaid. the net worth of the banking system declines. Bottom of Form Which of the following would not be a consequence of negative interest rates? Top of Form Multiple Choice People’s deposits in banks would have shrinking balances over time. Reduced bank reserves that could cause a contraction in the economy. People would want to put more money in banks. People would rather hold cash than bank deposits. Bottom of Form The possible asymmetry of monetary policy is the central idea of the Top of Form Multiple Choice invisible hand concept. ratchet analogy. pushing-on-a-string analogy. bandwagon effect. Bottom of Form Reserves $ 100 Checkable Deposits 1,000 Loans (to customers) 300 Property 400 Securities (owned) 300 Stock Shares 100   Refer to the accompanying table of information for the Moolah Bank. Assume that the listed amounts constitute this bank’s complete set of accounts. Moolah’s Top of Form Multiple Choice assets are $1,100. liabilities are $1,100. net worth is $300. profit is $1,000. Bottom of Form Lowering the discount rate has the effect of Top of Form Multiple Choice turning required into excess reserves. turning excess into required reserves. making it less expensive for commercial banks to borrow from central banks. forcing commercial banks to call in outstanding loans from their best customers. Bottom of Form Which one of the following is presently a major deterrent to bank panics in the United States? Top of Form Multiple Choice the legal reserve requirement the fractional reserve system the gold standard deposit insurance Bottom of Form When a check is drawn and cleared, the Top of Form Multiple Choice reserves and deposits of both the bank against which the check is cleared and the bank receiving the check are unchanged by this transaction. bank against which the check is cleared loses reserves and deposits equal to the amount of the check. bank receiving the check loses reserves and deposits equal to the amount of the check. bank against which the check is cleared acquires reserves and deposits equal to the amount of the check. Bottom of Form A commercial bank buys a $40,000 government security from a securities dealer. The bank pays the dealer by increasing the dealer’s checkable deposit balance by $40,000. The money supply has Top of Form Multiple Choice increased by $40,000. decreased by $40,000. not been affected. increased by $40,000 multiplied by the reserve ratio. Bottom of Form A bank that has liabilities of $150 billion and a net worth of $20 billion must have Top of Form Multiple Choice assets of $170 billion. excess reserves of $130 billion. assets of $150 billion. excess reserves of $150 billion. Bottom of Form Type of Deposit Reserve Requirement Checkable Deposits   $7.8 − 48.3 Million 3% Over $48.3 Million 10 Noncheckable personal savings and time deposits   Refer to the accompanying table. If a bank has $20 million in savings deposits and $50 million in checkable deposits, then its required reserves are Top of Form Multiple Choice $5 million. $10 million. $2 million. $70 million. Bottom of Form The price of a bond with no expiration date is originally $1,000 and has a fixed annual interest payment of $150. If the price of the bond then rises by $200, what will be the interest rate yield to a new buyer of the bond? Top of Form Multiple Choice 10 percent 12.5 percent 15 percent 18.8 percent 6.3 percent Bottom of Form (Advanced analysis) Assume the equation for the total demand for money is L = 0.4Y + 80 − 4i, where L is the amount of money demanded, Y is gross domestic product, and i is the interest rate. If gross domestic product is $350 and the interest rate is 7 percent, what amount of money will society want to hold? Top of Form Multiple Choice 220. 175. 350. 192. 216. Bottom of Form Refer to the graph. If the initial equilibrium interest rate was 5 percent and the money supply increased by $50 billion, then the new interest rate would be     Top of Form Multiple Choice 4 percent. 2 percent. 3 percent. 1 percent. Bottom of Form If nominal GDP is $900 billion and, on average, each dollar is spent six times in the economy over a year, then the quantity of money demanded for transactions purposes will be Top of Form Multiple Choice 3,600 900 450 150 750 Bottom of Form Answer the question based on the following information for a bond having no expiration date: bond price = $1,000; bond fixed annual interest payment = $100; bond annual interest rate = 10 percent. If the price of this bond increases to $1,250, the interest rate will Top of Form Multiple Choice rise to 18 percent. fall to 8 percent. rise to 12.5 percent. fall to 1.25 percent. fall to 2.5 percent. Bottom of Form Answer the question based on the following information: For transactions, households and businesses want to hold an amount of money equal to one-half of nominal GDP. The table shows the amounts of money they want to hold as an asset at various interest rates. If nominal GDP is $300 and the supply of money is $230, the equilibrium interest rate will be   Interest Rate Amount of Money Demanded as an Asset 10% $ 20 40 60 80 100   Top of Form Multiple Choice 4 percent. 10 percent. 6 percent. 2 percent. 8 percent. Bottom of Form Assume that Smith deposits $80 in currency into her checking account in the XYZ Bank. Later that same day, Jones negotiates a loan for $700 at the same bank. In what direction and by what amount has the supply of money changed? Top of Form Multiple Choice increased by $700 decreased by $80 increased by $780 increased by $80 Bottom of Form
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Assume the economy is at full employment and that investment spending declines dramatically. If the goal is to restore full employment, government fiscal policy should be directed toward Top of Form Multiple Choice an equality of tax receipts and government expenditures. an excess of tax receipts over government expenditures. an excess of government expenditures over tax receipts. a reduction of subsidies and transfer payments and an increase in tax rates. Bottom of Form Which of the following statements is correct? Top of Form Multiple Choice Federal deficits were larger in the early 2000s than in the late 2000s. Deep tax cuts always expand tax revenues and reduce the public debt. The public debt has usually declined during wartime. There is a tendency for the public debt to grow during recessions. Bottom of Form Which would tend to reduce the crowding-out effect that occurs when the federal government increases its borrowing to finance a deficit? Top of Form Multiple Choice The economy is operating at full employment. The economy is operating at less than full employment. The expenditures fail to contribute to the development of human capital. The deficit financing reduces the profit expectations of business firms. Bottom of Form If the economy is to have significant built-in stability, then when real GDP increases, the tax revenues should Top of Form Multiple Choice fall proportionately more than the change in GDP. fall proportionately less than the change in GDP. rise proportionately more than the change in GDP. rise proportionately less than the change in GDP. Bottom of Form The cyclically adjusted budget deficit in an economy is zero. If this economy goes into recession, then the actual government budget will be Top of Form Multiple Choice balanced. in deficit. in surplus. expanding. Bottom of Form Coins held in commercial bank vaults are Top of Form Multiple Choice included in M1 but not in M2. included both in M1 and in M2. included in M2 but not in M1. not part of the nation’s money supply. Bottom of Form (Consider This) Credit cards are Top of Form Multiple Choice the fastest-growing component of the M1 money supply. near monies that are part of the M2 money supply but not the M1 money supply. not money, as officially defined. also known as time deposits. Bottom of Form Refer to the given list of assets.   1. Large-denominated ($100,000 and over) time deposits 2. Savings deposits 3. Currency (coins and paper money) in circulation 4. Small-denominated (under $100,000) time deposits 5. Stock certificates 6. Checkable deposits 7. Money market deposit accounts 8. Money market mutual fund balances held by individuals 9. Money market mutual fund balances held by businesses 10. Currency held in bank vaults   The M2 definition of money includes Top of Form Multiple Choice items 2, 3, 4, 6, 7, 8, and 10. items 3, 4, 5, and 6. items 2, 3, 4, 6, 7, and 8. all of the items listed. Bottom of Form In practice, during a financial crisis, the Fed and other central banks are under pressure to adopt an “extend and pretend” policy, in order to contain the wave bankruptcies. “Extend and pretend” refers to extending loans Top of Form Multiple Choice only to financial firms that are solvent, as long as the firms could pledge enough assets. to financial firms, both solvent and insolvent, as long as the firms could pledge enough assets. to financial firms in need of liquidity, regardless of whether the firms pledge enough assets or not. to firms and then pretending that the loans are being repaid when they become due. Bottom of Form The built-in stabilizers in the economy tend to Top of Form Multiple Choice fully offset irregular swings in real GDP. magnify somewhat the irregular swings in real GDP. dampen the irregular swings in real GDP. overcompensate for the irregular swings in real GDP. Bottom of Form The government bailout of large institutions creates the problem of moral hazard, which means that these large firms will Top of Form Multiple Choice not be able to pay back the bailout money. have an incentive to make highly risky investments. now have to play it safer to reduce their risks. be limited in terms of the securities and services that they get involved in. Bottom of Form A checking account entry is money because it Top of Form Multiple Choice is ensured by the Federal Deposit Insurance Corporation. has been declared as such by the federal government. performs the functions of money. can be sold for currency. Bottom of Form Which of the following statements is correct? Top of Form Multiple Choice Built-in stability only partially offsets fluctuations in economic activity. Built-in stability works in halting inflation, but it cannot alleviate unemployment. Built-in stability can be relied on to eliminate completely any fluctuation in economic activity. Built-in stability has eliminated the need for discretionary fiscal policy. Bottom of Form Year Government Spending Tax Revenues GDP $ 450 $ 425 $ 2,000 500 450 3,000 600 500 4,000 640 620 5,000 680 580 4,800 600 620 5,000   The accompanying table gives budget information for a hypothetical economy. Assume that all budget surpluses are used to pay down the public debt. The budget deficit in year 3 is Top of Form Multiple Choice $175 billion. $3,050 billion. $100 billion. $295 billion. Bottom of Form Which of the following fiscal policy changes would be the most contractionary? Top of Form Multiple Choice a $40 billion increase in taxes a $10 billion increase in taxes and a $30 billion cut in government spending a $20 billion increase in taxes and a $20 billion cut in government spending a $30 billion increase in taxes and a $10 billion cut in government spending Bottom of Form Refer to the diagram. Discretionary fiscal policy designed to slow the economy is illustrated by Top of Form Multiple Choice the shift of curve T1 to T2. the shift of curve T2 to T1. a movement from a to c along curve T2. a movement from d to b along curve T1. Bottom of Form Consider This) Which of the following is not part of the M2 money supply? Top of Form Multiple Choice currency in circulation credit card balances small-denominated time deposits of less than $100,000 checkable deposits Bottom of Form What does it mean when economists say that home buyers are “underwater” on their mortgages? Top of Form Multiple Choice Buyers owe more on their mortgage than the properties are worth. Buyers are financially incapable of repaying their mortgages and bankruptcy is inevitable. Buyers are purchasing homes on flood plains and are highly susceptible to financial losses. Buyers are paying interest rates substantially higher than current market interest rates, creating interest payments that create financial hardship. Bottom of Form The American Recovery and Reinvestment Act of 2009 was implemented primarily to Top of Form Multiple Choice reduce inflationary pressure caused by oil price increases. curb the overspending by households that contributed to the Great Recession. bring the federal budget back into balance. stimulate aggregate demand and employment. Bottom of Form As of March 2019, more than half of the money supply (M1) was in the form of Top of Form Multiple Choice currency. checkable deposits. gold coins and bars. savings deposits. Bottom of Form If the MPS in an economy is 0.25, government could shift the aggregate demand curve rightward by $88 billion by Top of Form Multiple Choice increasing government spending by $22 billion. increasing government spending by $88 billion. decreasing taxes by $22 billion. increasing taxes by $22 billion. Bottom of Form If the price index rises from 100 to 135, then the purchasing power of the dollar will fall by about Top of Form Multiple Choice 26 percent. 16 percent. 20 percent. 35 percent. 100 percent. Bottom of Form Item Billions of Dollars Checkable Deposits $ 2,000 Small Time Deposits 350 Currency Held by the Public 80 Savings Deposits, Including Money-Market Deposit Accounts 1,300 Money-Market Mutual Funds Held by Individuals 470 Money-Market Mutual Funds Held by Businesses 700   The accompanying table contains hypothetical data for an economy. The size of the M2 money supply is Top of Form Multiple Choice $4,200 billion. $1,300 billion. $3,730 billion. $2,900 billion. Bottom of Form If the MPS in an economy is 0.2, government could shift the aggregate demand curve leftward by $20 billion by Top of Form Multiple Choice reducing government expenditures by $4 billion. reducing government expenditures by $100 billion. increasing taxes by $20 billion. increasing taxes by $200 billion. Bottom of Form Money Market Mutual Fund Balances Held by Businesses $ 100 Money Market Mutual Fund Balances Held by Individuals 220 Currency in Banks 10 Currency in Circulation 70 Savings Deposits, Including Money Market Deposit Accounts 50 Large-denominated ($100,000 or more) Time Deposits 180 Small-denominated ($100,000 or less) Time Deposits 80 Checkable Deposits 80   Refer to the table. Money supply M2 for this economy is Top of Form Multiple Choice $500. $70. $80. $510. Bottom of Form If the MPC in an economy is 0.9, government could shift the aggregate demand curve rightward by $90 billion by Top of Form Multiple Choice decreasing taxes by $10 billion. increasing government spending by $10 billion. increasing government spending by $81 billion. decreasing taxes by $90 billion. Bottom of Form The economy is in a recession. The government enacts a policy to increase spending by $6 billion. The MPS is 0.2. What would be the full increase in real GDP from the change in government spending, assuming that the aggregate supply curve is horizontal across the range of GDP being considered? Top of Form Multiple Choice $30 billion $6 billion $36 billion $18 billion Bottom of Form Item Billions of Dollars Checkable Deposits $ 1,000 Small Time Deposits 350 Currency Held by the Public 70 Savings Deposits, Including Money-Market Deposit Accounts 1,300 Money-Market Mutual Funds Held by Individuals 600 Money-Market Mutual Funds Held by Businesses 700   The accompanying table contains hypothetical data for an economy. The size of the M1 money supply is Top of Form Multiple Choice $1,070 billion. $1,000 billion. $70 billion. $1,670 billion. $1,420 billion. Bottom of Form Item Billions of Dollars Checkable Deposits $ 535 Small Time Deposits 818 Currency 631 Money-Market Mutual Funds Held by Businesses 1,045 Savings Deposits, Including Money-Market Deposit Accounts 2,866 Money-Market Mutual Funds Held by Individuals 979   Refer to the accompanying table. The size of the M1 money supply is Top of Form Multiple Choice $1,166 billion. $535 billion. $631 billion. $1,984 billion. Bottom of Form An economy is experiencing a high rate of inflation. The government wants to reduce consumption by $36 billion to reduce inflationary pressure. The MPC is 0.6. By how much should the government raise taxes to achieve its objective?   Top of Form Multiple Choice $24 billion $6 billion $14 billion $90 billion Bottom of Form
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Real gross domestic product Top of Form is a measure of inflation. will increase if the price level increases. will increase if the level of output increases. can change from one year to the next even if there is no change in output.     One principle of economic growth is the notion that, to raise living standards over time, an economy must Top of Form Multiple Choice have full employment of its labor force. devote some portion of its current output to increasing its future output. maintain low inflation over the years. have a small population so that its GDP per person will be high. Macroeconomics is primarily concerned with studying two broad topics: Top of Form Multiple Choice long-run economic growth and short-run business cycles. the price of oil and gas abroad and prices of energy in the domestic market. the stock market and the housing market. household incomes and firms’ profits. Personal Consumption Expenditures $ 400 Government Purchases 128 Gross Private Domestic Investment 88 Net Exports Net Foreign Factor Income Consumption of Fixed Capital 43 Taxes on Production and Imports 50 Compensation of Employees 369 Rents 12 Interest 15 Proprietors’ Income 52 Corporate Income Taxes 36 Dividends 24 Undistributed Corporate Profits 22 Statistical Discrepancy   Refer to the accompanying national income data for the economy. All figures are in billions of dollars. The national income is Top of Form Multiple Choice $561. $573. $580. $530. Prices tend to be sticky because Top of Form Multiple Choice firms are worried that frequent price changes would annoy consumers. most firms have agreements with each other to fix prices at profit-maximizing levels. government controls most prices. foreign competition discourages domestic firms from price changes. If real GDP falls from one period to another, we can conclude that Top of Form Multiple Choice deflation occurred. inflation occurred. nominal GDP fell. none of these necessarily occurred. GDP measured using current prices is called Top of Form Multiple Choice nominal GDP. real GDP. constant GDP. deflated GDP. Personal income will equal disposable income when Top of Form Multiple Choice corporate profits are zero. personal taxes are zero. transfer payments are zero. Social Security contributions are zero. Real GDP measures the Top of Form Multiple Choice total dollar value of all goods and services produced within the borders of a country using current prices. value of final goods and services produced within the borders of a country, adjusted for price changes. total dollar value of all goods and services consumed within the borders of a country, corrected for price changes. value of all goods and services produced in the world, using current prices.   Refer to the figures. Which figure(s) represent(s) a situation where prices are sticky? Top of Form Multiple Choice A only B only both A and B neither A nor B The amount of new output produced per year for both consumption and additions to capital stock is measured by Top of Form Multiple Choice GDP. net investment. NDP. net exports.   Refer to the figure. Assuming this market is representative of the economy as a whole, a positive demand shock will Top of Form Multiple Choice increase both the price level and the quantity of output produced. increase output but leave prices unchanged. lower the price level but leave output unchanged. raise the price level but leave output unchanged. In national income accounting, government purchases include Top of Form Multiple Choice purchases by federal, state, and local governments. purchases by the federal government only. government transfer payments. purchases of goods for consumption but not public capital goods.   Refer to the figure. Assuming this market is representative of the economy as a whole, a positive demand shock will Top of Form Multiple Choice increase both the price level and the quantity of output produced. increase output but leave prices unchanged. lower the price level but leave output unchanged. raise the price level but leave output unchanged. An economy is enlarging its stock of capital goods Top of Form Multiple Choice when net investment exceeds gross investment. when gross investment exceeds depreciation. whenever gross investment is positive. when depreciation exceeds gross investment. Consider This) What is the difference between financial investment and economic investment? Top of Form Multiple Choice There is no difference between the two. Financial investment refers to the purchase of financial assets only; economic investment refers to the purchase of any new or used capital goods. Economic investment is adjusted for inflation; financial investment is not. Financial investment refers to the purchase of assets for financial gain; economic investment refers to the purchase of newly created capital goods. Corporate profits” in the national income accounts consists of the following, except Top of Form Multiple Choice retained earnings. interest. dividends. corporate income taxes. Which of the following is not an effect of inflation that is troublesome to consumers? Top of Form Multiple Choice Household incomes may be rising slower than the overall prices. The purchasing power of people’s savings would decrease. Workers’ wages may be rising faster than the overall price level. Their standard of living will fall if their household has a fixed nominal income. Gross output (GO) for an economy in a given year Top of Form Multiple Choice will always be less than GDP for that economy in the same year. will always equal GDP for that economy in the same year. may be greater than or less than GDP for that economy in the same year. will always exceed GDP for that economy in the same year. If nominal GDP in some year is $280 and real GDP is $160, then the GDP price index for that year is Top of Form Multiple Choice 175. 57. 160. 280. MC Qu. 26-166 (Algo) Refer to the graphs. Which…     Refer to the graphs. Which of the following best represents a negative demand shock when prices are flexible? Top of Form Multiple Choice the shift from D2 to D1 in graph B the shift from D2 to D1 in graph A the shift from D2 to D3 in graph A the shift from D2 to D3 in graph B MC Qu. 27-218 (Algo) The following are national income account… The following are national income account data for a hypothetical economy in billions of dollars: gross private domestic investment ($320), imports ($40), exports ($22), personal consumption expenditures ($2,460), and government purchases ($470). What is GDP in this economy? Top of Form Multiple Choice 3,250 billion 3,272 billion 3,232 billion 3,294 billion Answer this question based on the given information for an economy in some year.   Dollar value of resource extraction activity = $20 billion Dollar value of production activity = $50 billion Dollar value of distribution activity = $80 billion Dollar value of final output = $120 billion   Gross output for this economy equals Top of Form Multiple Choice $120 billion. $150 billion. $270 billion. $260 billion. Assume that a manufacturer of stereo speakers purchases $30 worth of components for each speaker. The completed speaker sells for $70. The value added by the manufacturer for each speaker is Top of Form Multiple Choice $70. $30. $40. $2,100. $100.   Refer to the graphs. Suppose a firm is currently producing 500 computers per week and charging a price of $1,000. How will the firm respond to a positive demand shock if prices are flexible? Top of Form Multiple Choice The firm will increase the price to $1,200. The firm will keep the price at $1,000. The firm will reduce the price to $600. The firm will increase production to 650 computers. Suppose a small economy produces only smart TVs. In year one, 100,000 TVs are produced and sold at a price of $1,200 each. In year two, 75,000 TVs are produced and sold at a price of $1,200 each. As a result, Top of Form Multiple Choice nominal GDP fell to $90 million. real GDP increased. nominal GDP increased. real GDP stayed the same. Gross Private Domestic Investment $ 1,593 Personal Taxes 1,113 Transfer Payments 1,683 Taxes on Production and Imports 695 Corporate Income Taxes 213 Personal Consumption Expenditures 7,304 Consumption of Fixed Capital 1,393 US Exports 1,059 Dividends 300 Government Purchases 1,973 Net Foreign Factor Income 10 Undistributed Corporate Profits 141 Social Security Contributions 748 US Imports 1,483 Statistical Discrepancy 50   Refer to the accompanying national income data (in billions of dollars). Corporate profits are equal to Top of Form Multiple Choice $654. $513. $644. $441.   Refer to the graphs. Suppose a firm is currently producing 500 computers per week and charging a price of $1,000. What happens to the firm’s inventory of computers if there is a positive demand shock and prices are inflexible? Top of Form Multiple Choice The firm’s inventory will decrease by 150 computers per week. The firm’s inventory will stay at their current level. The firm’s inventory will increase by 150 computers per week. The firm’s inventory will increase by 350 computers per week. If in some year gross investment was $120 billion and net investment was $65 billion, then in that year the country’s capital stock Top of Form Multiple Choice increased by $55 billion. decreased by $55 billion. increased by $65 billion. may have either increased or decreased. Suppose a family’s income increases by 3 percent at the same time that inflation is 0 percent. Then the rev: 10_17_2020_QC_CS-236105 Top of Form Multiple Choice family will spend the same amount as they did last year to purchase the same goods and services. family’s standard of living will decrease. purchasing power of their income will decrease. purchasing power of their savings will decrease by 3% Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form
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Refer to the given diagram. The marginal propensity to save is Top of Form Multiple Choice CD/EF. CB/CF. CB/AF. EF/CB. Bottom of Form Ca = 25 + 0.75 (Y − T) Ig = 50 Xn = 10 G = 70 T = 30 (Advanced analysis) The accompanying equations are for a mixed open economy. The letters Y, Ca, Ig, Xn, G, and T stand for GDP, consumption, gross investment, net exports, government purchases, and net taxes, respectively. Figures are in billions of dollars. The multiplier for this economy is Top of Form Multiple Choice 4. 3. 2. 2.33. Bottom of Form Which one of the following would increase per-unit production cost and therefore shift the aggregate supply curve to the left? Top of Form Multiple Choice a reduction in business taxes production bottlenecks occurring when producers near full plant capacity an increase in the price of imported resources deregulation of industry Bottom of Form When a consumption schedule is plotted as a straight line, the slope of the consumption line is Top of Form Multiple Choice vertical. horizontal. greater than the slope of the 45° line. less than the slope of the 45° line. Bottom of Form If GDP exceeds aggregate expenditures in a private closed economy, Top of Form Multiple Choice saving will exceed planned investment. planned investment will exceed saving. planned investment will exceed actual investment. injections will exceed leakages. Bottom of Form Which of the diagrams for the U.S. economy best portrays the effects of a substantial reduction in government spending? Top of Form Multiple Choice A B C D Bottom of Form If households consume less at each level of disposable income, they are Top of Form Multiple Choice saving more. saving less. spending more. working less. Bottom of Form The consumption and saving schedules reveal that the Top of Form Multiple Choice MPC is greater than zero but less than one. MPC and APC are equal at the point where the consumption schedule intersects the 45-degree line. APS is positive at all income levels. MPC is equal to or greater than one at all income levels. Bottom of Form   Change in Income Change in Consumption Change in Saving Assumed Increase in Investment $ 5.00 $ 1.25 Second Round $ 2.81 All Other Rounds $ 8.44 Totals $ 5.00   The table illustrates the multiplier process resulting from an autonomous increase in investment by $5. The total change in income resulting from the initial change in investment will be Top of Form Multiple Choice $5. $10. $15. $20. Bottom of Form Price Level C Ig G X M Real GDP 128 $ 18 $ 2 $ 3 $ 1 $ 5   125 20   122 22   119 24   116 26 10     In the accompanying table for a particular country, C is consumption expenditures, Ig is gross investment expenditures, G is government expenditures, X is exports, and M is imports. All figures are in billions of dollars. If this nation’s equilibrium price level is 125, its net exports will be Top of Form Multiple Choice minus $4 billion. minus $2 billion. zero. $2 billion. Bottom of Form Real Domestic Output Demanded (in Billions) Price Level (Index Value) Real Domestic Output Supplied (in Billions) $ 3,000 350 $ 9,000 4,000 300 8,000 5,000 250 7,000 6,000 200 6,000 7,000 150 5,000 8,000 100 4,000   The accompanying table shows the aggregate demand and aggregate supply schedules for a hypothetical economy. The equilibrium price and output levels will be Top of Form Multiple Choice 200 and $5,000. 200 and $6,000. 250 and $7,000. 300 and $8,000. Bottom of Form The size of the multiplier is equal to the Top of Form Multiple Choice slope of the consumption schedule. reciprocal of the slope of the consumption schedule. slope of the saving schedule. reciprocal of the slope of the saving schedule. Bottom of Form The level of aggregate expenditures in a mixed open economy consists of Top of Form Multiple Choice Ca + Ig + Xn. Ca + Ig + G + T + Xn. Ca + Ig + Xn + G. Ca + G. Bottom of Form (Advanced analysis) Assume the consumption schedule for a private closed economy is C = 40 + 0.75Y, where C is consumption and Y is gross domestic product. The multiplier for this economy is Top of Form Multiple Choice 3. 4. 5. 10. Bottom of Form Dissaving occurs where Top of Form Multiple Choice income exceeds consumption. saving exceeds consumption. consumption exceeds income. saving exceeds income. Bottom of Form The $787 billion stimulus package enacted by the Federal government in 2009 to try to deal with the Great Recession was intended to Top of Form Multiple Choice shift the aggregate expenditures schedule down. close an inflationary expenditures gap. bring inflation down. push the aggregate expenditures schedule upward. Bottom of Form (1) (2) (3) DI C DI C DI C $ 0 $ 4 $ 0 $ 65 $ 0 $ 2 10 11 80 125 20 20 20 18 160 185 40 38 30 25 240 245 60 56 40 32 320 305 80 74 50 39 400 365 100 92   Refer to the given consumption schedules. DI signifies disposable income and C represents consumption expenditures. All figures are in billions of dollars. A $2 billion increase in consumption at each level of DI could be caused by Top of Form Multiple Choice a decrease in consumer wealth. new expectations of higher future income. an increase in taxation. an increase in saving. Bottom of Form In a private closed economy, when aggregate expenditures exceed GDP, Top of Form Multiple Choice GDP will decline. business inventories will rise. saving will decline. business inventories will fall. Bottom of Form Amount of Real Output Demanded Price Level (Index Value) Amount of Real Output Supplied $ 200 300 $ 500 300 250 450 400 200 400 500 150 300 600 100 200   The table gives aggregate demand and supply schedules for a hypothetical economy. If the price level is 250 and producers supply $450 of real output, Top of Form Multiple Choice a shortage of real output of $150 will occur. a shortage of real output of $100 will occur. a surplus of real output of $150 will occur. neither a shortage nor a surplus of real output will occur. Bottom of Form The simple multiplier 1/MPS Top of Form Multiple Choice understates the actual multiplier because it includes leakages in domestic spending from the purchase of imports or the paying of taxes. understates the actual multiplier because it excludes leakages in domestic spending from the purchase of imports or the paying of taxes. overstates the actual multiplier because it includes leakages in domestic spending from the purchase of imports or the paying of taxes. overstates the actual multiplier because it excludes leakages in domestic spending from the purchase of imports or the paying of taxes. Bottom of Form Suppose that technological advancements stimulate $24 billion in additional investment spending. If the MPC = 0.8, how much will the change in investment increase aggregate demand? Top of Form Multiple Choice $120 billion $24 billion $192 billion $22.2 billion Bottom of Form If investment increases by $30 billion and the economy’s MPC is 0.8, the aggregate demand curve will shift Top of Form Multiple Choice rightward by $150 billion at each price level. rightward by $30 billion at each price level. leftward by $150 billion at each price level. leftward by $60 billion at each price level. Bottom of Form If the MPC is 0.5 and the equilibrium GDP is $60 billion below the full-employment GDP, then the size of the recessionary expenditure gap is Top of Form Multiple Choice $30 billion. $50 billion. $60 billion. $120 billion. Bottom of Form (Advanced analysis) Assume the following consumption schedule: C = 20 + 0.9Y, where C is consumption and Y is disposable income. At a(n) $1,000 level of disposable income, the level of saving is Top of Form Multiple Choice $80. $920. $180. $18. Bottom of Form Assume a machine that has a useful life of only one year costs $2,000. Assume, also, that net of such operating costs as power, taxes, and so forth, the additional revenue from the output of this machine is expected to be $2,200. The expected rate of return on this machine is Top of Form Multiple Choice 10 percent. 20 percent. 30 percent. 2 percent. Bottom of Form If disposable income is $900 billion when the average propensity to consume is 0.6, it can be concluded that saving is Top of Form Multiple Choice $360 billion. $540 billion. $900 billion. $400 billion. Bottom of Form If the multiplier in an economy is 10, a $20 billion increase in net exports will Top of Form Multiple Choice increase GDP by $200 billion. reduce GDP by $2 billion. decrease GDP by $200 billion. increase GDP by $20 billion. Bottom of Form Suppose that a new machine tool having a useful life of only one year costs $80,000. Suppose, also, that the net additional revenue resulting from buying this tool is expected to be $112,000. The expected rate of return on this tool is Top of Form Multiple Choice 40 percent. 60 percent. 30 percent. 12 percent. Bottom of Form If the marginal propensity to save is 0.2 in an economy, a $40 billion rise in investment spending will increase consumption by Top of Form Multiple Choice 160. 200. 40. 8. Bottom of Form An economy is employing 3 units of capital, 3 units of raw materials, and 2 units of labor to produce its total output of 120 units. Each unit of capital costs $10; each unit of raw materials, $4; and each unit of labor, $3. The per-unit cost of production in this economy is Top of Form Multiple Choice $0.40. $8.00. $0.30. $0.50. Bottom of Form Suppose that the level of GDP increased by $100 billion in a private closed economy where the marginal propensity to consume is 0.8. Aggregate expenditures must have increased by Top of Form Multiple Choice $20 billion. $100 billion. $80 billion. $10 billion. Bottom of Form If a $200 billion increase in investment spending creates $200 billion of new income in the first round of the multiplier process and $160 billion in the second round, the MPC in the economy is Top of Form Multiple Choice 0.8. 0.6. 0.2. 0.9. Bottom of Form Input Quantity Real Domestic Output 100 200 150 300 200 400   The table gives information about the relationship between input quantities and real domestic output in a hypothetical economy. If the price of each input is $4, the per-unit cost of production in the economy is Top of Form Multiple Choice $2.00. $0.50. $0.20. $1.50. Bottom of Form If the marginal propensity to consume is 0.8 then the marginal propensity to save must be Top of Form Multiple Choice 0.2. 1. 1.2. 0.8. Bottom of Form Suppose that an economy produces 500 units of output. It takes 10 units of labor at $15 a unit and 3 units of capital at $50 a unit to produce this amount of output. The per unit cost of production is Top of Form Multiple Choice $0.60. $1.60. $1.20. $0.30. Bottom of Form Suppose the economy’s multiplier is 5. Other things equal, a $5 billion decrease in government expenditures on national defense will cause equilibrium GDP to Top of Form Multiple Choice decrease by $25 billion. decrease by $50 billion. increase by $25 billion. decrease by $5 billion. remain unchanged. Bottom of Form Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4. The level of productivity is Top of Form Multiple Choice 2. 20. 10. 5. Bottom of Form Suppose that real domestic output in an economy is 120 units, the quantity of inputs is 50, and the price of each input is $6. The per-unit cost of production in the economy described is Top of Form Multiple Choice $2.50. $25. $4. $20. Bottom of Form Assume the MPC is 0.8. If government were to impose $30 billion of new taxes on household income, consumption spending would initially decrease by Top of Form Multiple Choice $24 billion. $30 billion. $60 billion. $6 billion. Bottom of Form If a lump-sum income tax of $25 billion is levied and the MPS is 0.4, the consumption schedule will shift Top of Form Multiple Choice downward by $15 billion. upward by $15 billion. downward by $25 billion. downward by $10 billion. Bottom of Form