Question 1.1. (TCO 5) An increase in expected future income will (Points : 4) in

ID: 1143443 • Letter: Q

Question

Question 1.1. (TCO 5) An increase in expected future income will (Points : 4)

increase aggregate demand and aggregate supply.

decrease aggregate demand and aggregate supply.

increase aggregate supply.

increase aggregate demand.

Question 2.2. (TCO 5) The upward slope of the short-run aggregate supply curve is based on the assumption that (Points : 4)

wages and other resource prices do not respond to price level changes.

wages and other resource prices do respond to price level changes.

prices of output do not respond to price level changes.

prices of inputs are flexible while prices of outputs are fixed.

Question 3.3. (TCO 5) If the price of crude oil decreases, then this event would most likely (Points : 4)

decrease aggregate supply in the U.S.

increase aggregate supply in the U.S.

increase aggregate demand in the U.S.

decrease aggregate demand in the U.S.

Question 4.4. (TCO 5) Deflation refers to a situation where (Points : 4)

price level falls.

price level rises.

the rate of inflation falls.

the rate of inflation rises.

Question 5.5. (TCO 6) Dissaving occurs when (Points : 4)

income is greater than saving.

income is less than consumption.

saving is greater than consumption.

saving is greater than the interest rate.

Question 6.6. (TCO 7) The M1 money supply is composed of (Points : 4)

all coins and paper money held by the general public and the banks.

bank deposits of households and business firms.

bank deposits and mutual funds.

checkable deposits and currency in circulation.

Question 7.7. (TCO 7) The basic requirement of money is that it be (Points : 4)

backed by precious metals--gold or silver.

authorized as legal tender by the central government.

generally accepted as a medium of exchange.

some form of debt or credit.

Question 8.8. (TCO 7) How many members can serve on the Board of Governors of the Federal Reserve System? (Points : 4)

Seven

Nine

Question 9.9. (TCO 7) Which group is responsible for the policy of changing the money supply? (Points : 4)

Federal Open Market Committee

Office of Management and Budget

Thrift Advisory Council

Federal Advisory Council

Question 10.10. (TCO 7) Money is "created" when (Points : 4)

a depositor gets cash from the bank's ATM.

a bank accepts deposits from its customers.

people receive loans from their banks.

people spend the incomes that they receive.

Question 11.11. (TCO 7) The difference between Fed behavior during the Bank Panics of 1930-1933 and the Financial Crisis of 2007-2008 is that the Fed (Points : 4)

was very active during the former crisis, while it was basically passive during the latter crisis.

stood idly by during the former crisis, but took dramatic actions during the latter crisis.

was not yet in existence during the 1930s.

was a much bigger institution in the 1930s than it is today.

Question 12.12. (TCO 7) The purchase and sale of government securities by the Fed is called (Points : 4)

federal funds market.

open market operations.

money market transactions.

term auction facility.

Question 13.13. (TCO 7) The tools of monetary policy for altering the reserves of commercial banks are the (Points : 4)

tax rate, transfer payments, and level of government spending.

consumer price index, inflation, and unemployment rate.

public debt, budget surplus, budget deficit, and interest rates.

discount rate, reserve ratio, open market operations, and term auction facility.

Question 14.14. (TCO 8) Which of the following products is a leading import of the United States? (Points : 4)

Grains

Aircraft

Petroleum

Generating equipment

Question 15.15. (TCO 8) In a two-nation world, comparative advantage means that one nation can produce (Points : 4)

a product with fewer inputs than the other nation.

a product at lower average cost than the other nation.

a product at a lower domestic opportunity cost than the other nation.

more of a product than the other nation.

Question 16.16. (TCO 8) A tariff is a (Points : 4)

tax.

price ceiling.

quantity limit.

subsidy.

Question 17.17. (TCO 8) If a nation agrees to set an upper limit on the total amount of a product that it exports to another nation, then this situation would be an example of (Points : 4)

an import quota.

a revenue tariff.

a protective tariff.

a voluntary export restriction.

Question 18.18. (TCO 8) The major beneficiaries of a tariff on a product are the (Points : 4)

domestic producers of the product.

domestic consumers of the product.

workers engaged in trade, like transportation workers.

foreign producers of the product.

Question 19.19. (TCO 8) Which organization meets regularly to establish rules and settle disputes related to international trade? (Points : 4)

The United Nations Commission on Trade Law

The United Nations Conference on Trade and Development

The World Trade Organization

The Federal Reserve Board

Question 20.20. (TCO 9) U.S. businesses are demanders of foreign currencies because they need them to (Points : 4)

produce goods and services exported to foreign countries.

pay for goods and services imported from foreign countries.

receive interest payments from foreign governments.

receive interest payments from foreign businesses.

Explanation / Answer