Short-run macroeconomic policies concentrate on: A. minimizing fluctuations arou

Question

Short-run macroeconomic policies concentrate on:

A. minimizing fluctuations around potential GDP

B. maximizing fluctuations around potential GDP

C. incentives for increasing productivity and the potential output of the economy

D. none of the above

QUESTION 2

Measuring expenditures and income with the price level allowed to vary, so that changes in these values represent changes in either the actual amount of goods, services, and income or changes in the price level or a combination of both factors is denoted in ________ terms

. A. nominal B. real C. constant dollar D. all of the above

QUESTION 3

The vital link between the real and monetary sectors of the economy is the:

A. price level B. interest rate C. balance of payments D. budget deficit

QUESTION 4

The sum of personal consumption expenditure, investment expenditure, government expenditure, and net export expenditure on the total amount of real output in the economy in a given period of time is called:

A. potential GDP B. aggregate expenditure C. real money balances D. none of the above

QUESTION 5

Household consumption primarily depends on:

A. disposable income B. the interest rate C. marginal propensity to import D. credit card debt

QUESTION 6

If marginal propensity to save equals 0.50, then the marginal propensity to consume is:

A. 1.25 B. 0.50 C. 0.70 D. 1.00

QUESTION 7

An index based on a mail survey of 5,000 households by the Conference Board that measures households' perceptions of general business conditions, available jobs in the households' local area, and expected personal family income in the coming six months is called the:

A. Consumer Sentiment Index B. Consumer Confidence Index C. Consumer Satisfaction Index D. Consumer Consumption Index

QUESTION 8

A lower real interest rate, amount of consumer debt, and personal taxes ________ personal consumption expenditures.

A. increase B. decrease C. have no effect on D. none of the above

QUESTION 9

The capacity utilization rate is the ratio of ________ to ________.

A. production; capacity B. capacity; production C. capacity; potential GDP D. none of the above

QUESTION 10

The function of money that enables money to be used for future purchases is called:

A. medium of exchange B. store of value C. unit of account D. measure of power

QUESTION 11

Large denomination time deposits are included in:

A. M1 B. M2 C. M3 D. L

QUESTION 12

Deposits held by commercial banks are insured by the:

A. Federal Trade Commission

B. Federal Deposit Insurance Corporation

C. Federal Communications Commission

D. Resolution Trust Corporation

QUESTION 13

The fraction of deposits banks are required to keep as reserves is called the:

A. deposit requirement B. reserve requirement C. excess reserve requirement D. none of the above

QUESTION 14

The reserve requirement is 0.20. What is the simple deposit multiplier?

A. 1 B. 5 C. 0.10 D. 100

QUESTION 15

If $1000 was deposited in a bank and the reserve requirement is 0.10, how much is available for loans?

A. $900 B. $910 C. $920 D. $930

QUESTION 16

The money supply consists of:

A. currency plus reserves B. currency plus required reserves C. currency plus excess reserves D. currency plus demand deposits

QUESTION 17

The currency deposit ratio, c, is 0.10. The reserve requirement, rr, is 0.08. The excess reserve ratio, e, is 0.05. What is the size of the money multiplier?

A. 4.70 B. 4.78 C. 4.75 D. 4.00

QUESTION 18

When a country's import spending exceeds export spending, the country is experiencing a:

A. trade deficit B. trade surplus C. budget deficit D. none of the above

QUESTION 19

Exports are:

A. positively related to income in the rest of the world and currency appreciation.

B. positively related to income in the rest of the world and currency depreciation

C. positively related to domestic income and currency appreciation

D. positively related to domestic income and currency depreciation

QUESTION 20

The current flows of goods, services, investment income, and unilateral transfers between a country and the rest of the world is called the:

A. current account B. capital account C. national income product account D. none of the above

Explanation / Answer

A. minimizing fluctuations around potential GDP

D. all of the above

B. interest rate

A. potential GDP

A. disposable income

B. 0.50

B. Consumer Confidence Index

B. decrease

D. none of the above

B. store of value

D. L

B. Federal Deposit Insurance Corporation

B. reserve requirement

B. 5

A. $900

C. currency plus excess reserves

D. 4.00

A. trade deficit

A. positively related to income in the rest of the world and currency appreciation.

A. current account

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