_____ represents the relation between total expenditures, or total spending, and the price level.

A.	Gross National Product
B.	Inflation
C.	Real Gross Domestic Product
D.	Aggregate supply
E.	Aggregate demand

1 points   QUESTION 2

1. Which of the following is an incorrect statement?A.Macroeconomic equilibrium occurs at the intersection of the aggregate demand and aggregate supply curves.B.The aggregate supply curve indicates a positive relationship between the price level and GDP.C.Other things equal, a downward shift of the aggregate demand curve implies that the economy is entering a contractionary phase.D.Aggregate demand and aggregate supply determine the equilibrium price and quantity of any given good.E.The aggregate demand curve indicates a negative relationship between the price level and GDP.

1 points   QUESTION 3

1. Other things equal, a decrease in government spendingA.increases the slope of the aggregate demand curve.B.increases the domestic interest rate.C.decreases aggregate expenditures.D.shifts the aggregate demand curve to the right.E.increases the equilibrium level of GDP.

1 points   QUESTION 4

1. The AD curve will shift to the right if:A.people become pessimistic about the future of the economy.B.there is a decrease in foreign income.C.the government decreases spending.D.the domestic price level decreases.E.
   the foreign price level increases.

1 points   QUESTION 5

1. Which of the following is most likely to lead to an inward shift of the aggregate demand curve?A.A decrease in the prices of raw materialsB.A decline in foreign price levelsC.A decline in the domestic price levelD.An optimistic expectation about the economy’s performance in the near futureE.A decrease in foreign income

1 points   QUESTION 6

1. Which of the following is true of the aggregate supply curve?A.It shows the inverse relationship between prices and national output.B.It shows the positive relationship between the price level and the supply of all goods produced in the economy.C.It shows the amount of real GDP consumed at different price levels.D.It is a negatively sloped curve that shows the relationship between the price level and the cost of production of firms in the economy.E.It shows the positive relationship between price and quantity supplied of an individual good.

1 points   QUESTION 7

1. The positive slope of the AS curve is a _____ phenomena, when the _____ are held constant.A.long-run; business profitsB.short-run; government expendituresC.short-run; costs of productionD.long-run; commodity pricesE.long-run; aggregate expenditures

1 points   QUESTION 8

1. Which of the following could lead to a decline in aggregate supply in the U.S.?A.The discovery of new mineral deposits in ArizonaB.Higher real wage rates in the U.S.C.Lower personal income in FranceD.Cutbacks in government borrowingE.Rapid depreciation of the Swiss franc

1 points   QUESTION 9

1. The long-run aggregate supply increases as:A.new production technology is introduced.B.the quality of labor declines.C.the average price level increases.D.the minimum wage rate increases.

1 points   QUESTION 10

1. Which of the following will be observed if the U.S. federal government reduces fiscal spending, keeping other things constant?A.The aggregate demand curve will shift to the right.B.The aggregate expenditure in the economy will decrease.C.The economy will approach potential GDP.D.The marginal propensity to consume will increase.E.The average price level will increase.

1 points   QUESTION 11

1. The figure given below shows the macroeconomic equilibria of a country.Figure 11.1
   Refer to Figure 11.1. If the economy is in equilibrium at point C, then, other things equal, an increase in government spending will:
   A.decrease the price level.B.
   lower real GDP and leave the price level unchanged.C.lower real GDP and increase the price level.D.
   increase the price level and leave real GDP unchanged.E.have no effect on real GDP or the price level.

1 points   QUESTION 12

1. If crowding out exists, the expansionary effect of government spending will be:A.smaller than intendedB.negative.C.infinite.D.larger than intended.E.zero.

1 points   QUESTION 13

1. A U.S. federal budget deficit that raises real interest rates is most likely to:A.lead to a depreciation of the dollar in the foreign exchange market.B.encourage foreign investment in U.S. securities.C.lead to an increase in exports.D.lead to an appreciation of other currencies relative to the U.S. dollar.E.discourage imports of foreign goods.

1 points   QUESTION 14

1. Which of the following constitutes a transfer payment?A.Income taxesB.Corporate salariesC.Fiscal spendingD.Dividend paymentsE.Welfare benefits

1 points   QUESTION 15

1. A progressive tax system is one in which the tax rate actually increases as income rises. True False

1 points   QUESTION 16

1. Calculate the dollar price of a German automobile worth 40,000 euros, if the dollar per euro exchange rate is 1.5.A.$41,500B.$26,700C.$60,000D.$50,000E.$38,500

1 points   QUESTION 17

1. The table given below shows the components of money supply in an economy.
   Table 12.1
   Money ComponentAmount (in millions)Currency$550Travelers’ Checks$20Savings Deposits$180NOW Accounts$185Small-Denomination Time Deposits$620Retail Money Market Mutual Funds$605ATS Accounts$180Demand Deposits$210
   Refer to Table 12.1 and calculate the value of M1.
   A.$550 millionB.$570 millionC.$780 millionD.$1,125 millionE.$1,145 million

1 points   QUESTION 18

1. Refer to Table 12.1 and calculate the value of M2.A.$1,145B.$1,325C.$1,750D.$2,550E.$2,815

1 points   QUESTION 19

1. Excess reserves are equal to:A.total reserves plus required reserves.B.total reserves multiplied by required reserves.C.total reserves minus loans.D.total reserves minus required reserves.E.required reserves minus loans.

1 points   QUESTION 20

1. Suppose the reserve requirement is 10 percent and a person deposits $1,500 in a local bank. The local bank can now create a maximum of:A.$150 in additional money, by lending $150.B.$15,000 in additional money, by lending $15,000.C.$1,500 in additional money, by lending $1,500.D.$1,350 in additional money, by lending $1,350.E.
   $135 in additional money, by lending $135.

1 points   QUESTION 21

1. Assume that the reserve requirement is 25 percent and that the amount of checkable deposits in Federal Bank is $200. If the bank has loaned out $120, then the bank’s excess reserves must equal:A.$0.B.$25.C.$30.
   D.$80.E.$225.

1 points   QUESTION 22

1. If the reserve requirement is 33.3 percent, what is the approximate value of deposit expansion multiplier?A.3.33B.3C.0.33D.0.667E.1.5

1 points   QUESTION 23

1. Which of the following is an incorrect statement?A.Macroeconomic equilibrium occurs at the intersection of the aggregate demand and aggregate supply curves.B.The aggregate supply curve indicates a positive relationship between the price level and GDP.C.Other things equal, a downward shift of the aggregate demand curve implies that the economy is entering a contractionary phase.D.Aggregate demand and aggregate supply determine the equilibrium price and quantity of any given good.E.The aggregate demand curve indicates a negative relationship between the price level and GDP.

1 points   QUESTION 24

1. The maximum money that can be created by the entire banking system is equal to a multiple of its excess reserves. True False

1 points   QUESTION 25

1. An increase in the amount of currency held by the public will raise the value of the deposit expansion multiplier. True False

1 points   

 

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