Which of the following could lead to an increase in the equilibrium quantity of a good?
a. a decrease in supply and a decrease in demand
b. an increase in the price of an input
c. an increase in demand and an increase in supply
d. a decrease in demand regardless of supply
e. a decrease in technology
If the Federal Reserve sets a required reserve ratio of 0.2 and a bank has $100 million in
loans and $80 million in deposits, what is the level of required reserves for the bank?
a. $100 million
b. $16 million
c. $80 million
d. $20 million
e. $36 million
All of the following are examples of constraints faced by decision makers, except one.
Which is the exception?
a. income for a consumer
b. natural resources for a firm
c. time for a laborer
d. consumer wants
e. wealth for a consumer
The skills and knowledge possessed by workers are referred to as
a. labor capital
b. human technology
c. labor tools
d. labor technology
e. human capital
During recessions, output
a. and unemployment both fall
b. and unemployment both rise
c. rises, but unemployment falls
d. falls, but unemployment rises
e. rises and unemployment remains constant
During which decade were John Maynard Keynes’ ideas challenged?
a. 1930s
b. 1940s
c. 1960s
d. 1970s
e. 1980s
A key tool of countercyclical fiscal policy is
a. the interest rate
b. the federal funds rate
c. government spending
d. the regulatory code
e. Presidential executive orders.
Since 1933, bank failures have occurred
a. frequently
b. very rarely
c. once every 3 years
d. every year
e. once every 5 years
If money demand decreases due to greater use of credit cards, which of the following
would most likely happen under a neutralization policy?
a. The money supply would decrease, real GDP would not change, and neither would
the interest rate.
b. The money supply would increase, real GDP would not change, and neither would
the interest rate.
c. The money supply would decrease, real GDP would increase, and the interest rate
would decrease.
d. The money supply would increase, real GDP would not change, and the interest rate
would decrease.
e. The money supply would decrease, real GDP would decrease, but the interest rate
would not change.
The price of apples in Denver, Colorado is
a. a normative value judgment
b. an example of a factor of production
c. a microeconomic variable
d. a macroeconomic variable
e. not the sort of thing that economists would try to explain
The Federal Reserve can tightly control
a. cash in the hands of the public
b. cash in the hands of the public and demand deposits
c. demand deposits
d. funds in savings accounts and checking accounts
e. borrowing by the government
Refer to Figure 15-7. If the economy is currently at a price level of 120 and real GDP is
$6.5 trillion, an increase in government purchases will, in the short run,
a. shift the aggregate demand curve rightward, increasing both the price level and real
GDP
b. shift the aggregate demand curve leftward, decreasing both the price level and real
GDP
c. shift the aggregate supply curve upward, increasing the price level and decreasing
real GDP
d. shift the aggregate supply curve downward, decreasing the price level and increasing
real GDP
e. have no effect on aggregate demand because of crowding out
The law of demand says that as the price of a good rises, the quantity demanded of the
good tends to fall.
The Fed typically increases the money supply by
a. selling government bonds
b. buying government loans
c. selling government loans
d. printing more currency
e. buying government bonds
Which of the following is a liability of a commercial bank?
a. Property and buildings owned
b. Loans
c. Government bonds held
d. Cash in its vault
e. Deposits at the bank