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Which of the following statements is true?
a. The simple money multiplier equals the reciprocal of the required reserve ratio.
b. Required reserves is the minimum balance that the Fed requires a bank to hold in
vault cash or on deposit with the Fed.
c. The discount rate is the interest rate charged banks for loans from the Fed.
d. Excess reserves equal total reserves minus required reserves.
e. All of these.
If $30 billion in new investment was added to the economy and MPC was 0.90, real
GDP would increase by:
a. $30 billion.
b. $90 billion.
c. $100 billion.
d. $210 billion.
e. $300 billion.
In Exhibit 5-10, compute national income (NI). Which of the following is correct?
a. $7,400 billion.
b. $7,250 billion.
c. $8,150 billion.
d. $8,200 billion.
e. $8,350 billion.
Suppose equilibrium real GDP is currently at $800 billion and investment is $100
billion. If an increase in the interest rate reduces investment from $100 billion to $75
billion, and the MPC is 0.8, the new level of equilibrium real GDP will be:
a. $500 billion.
b. $600 billion.
c. $675 billion.
d. $775 billion.
e. $800 billion.
SeveralitemsfromthefinancialstatementsofStandardTiresarelistedbelow.Usethefollowing
answerchoicestoidentifythetypeofaccountforeachitemlisted.Placeyouranswersinthespac
eprovided.
a. Assets
b. Liabilities
c. Revenues
d. Expenses
e. Owners' equity Property, plant, and equipment
Suppose Alice sells a good for $60 on eBay. If the producer surplus from the sale is
$25, Alice's cost of the good must have been:
a. $35.
b. $25.
c. $60.
d. $85.
The development of new technology typically:
a. shifts the supply curve to the right.
b. reduces profits.
c. results in a downward movement along a supply curve.
d. increases costs of production.
e. shifts the demand curve to the right.
Exhibit 1A-1 Straight line
In Exhibit 1A-1, the slope of straight line
AB is:
a. 1.
b. 5. c. 1/2.
d. -1.
Exhibit 8-3 Disposable income and consumption data Disposable
income
Consumption
SavingMarginal propensity to consume (MPC)Marginal propensity to save (MPS)
0 $100
100 175
200 250
300 325
400 400
500 475
600 550 Note: All amounts are in billions of dollars per year. As shown in Exhibit 8-3,
if disposable income is $600, saving is:
a. zero.
b. -$100 billion.
c. $100 billion.
d. -$50 billion.
e. $50 billion.
When the price of a good is above its equilibrium price, a:
a. surplus puts upward pressure on the price.
b. surplus puts downward pressure on the price.
c. shortage puts upward pressure on the price.
d. shortage puts downward pressure on the price.
Sawaddee Enterprises began the year with total assets of $450,000 and total liabilities
of $230,000. If Sawaddee's total assets increased by $80,000 and its total liabilities
increased by $57,000 during the year, what is the amount of Sawaddee's owners' equity
at the end of the year?
a. $197,000
b. $543,000
c. $243,000
d. $220,000
When the price of a good is below its equilibrium level, a:
a. shortage puts upward pressure on the price.
b. surplus puts downward pressure on the price.
c. shortage puts downward pressure on the price.
d. surplus puts upward pressure on the price.
