Which of the following is not a function of the Federal Reserve System?
a. To control the money supply.
b. To print new money.
c. To supervise and regulate banks.
d. To aid in the check clearing process.
e. To maintain and circulate currency.
If the multiplier is 4, equilibrium real GDP is $600 billion, and investment is $25
billion, what will happen if investment increases to $30 billion? Real GDP will:
a. increase to $605 billion
b. decrease to $595 billion
c. increase to $620 billion
d. increase to $624 billion
e. decrease to $580 billion
Normative economics deals with ____ and positive economics deals with ____.
a. what should be; what is
b. fiction; fact
c. microeconomics; macroeconomics
d. negative aspects; positive aspects
e. changing circumstances; same circumstances
Exhibit 4-4 Supply and demand curves for good X
An
increase in the wage rate paid to workers producing good X would be represented by
which of the graphs in Exhibit 4-4?
a. Graph A.
b. Graph B.
c. Graph C.
d. None of these.
If the interest rate increases, then the:
a. economy will move to a new point along the existing consumption function.
b. consumption function will shift upward.
c. investment demand curve will shift downward.
d. investment demand curve will shift upward.
e. economy will move to a new point along the existing investment demand curve.
The required reserve ratio for a bank is set by:
a. Congress.
b. the bank itself.
c. the Treasury Department.
d. the banking system.
e. the Federal Reserve.
How would a decrease in the price of the feed grains used to feed cattle affect the
market for beef?
a. The demand for beef would increase, increasing beef prices.
b. The demand for beef would decrease, decreasing beef prices.
c. The supply of beef would increase, decreasing beef prices.
d. The supply of beef would decrease, increasing beef prices.
Here is a list of accounts and their balances that appear on the Thomas Company’s
income statement and balance sheet.
REQUIRED:
Identify which of these are:
(a) Assets
(b) Liabilities
(c) Expenses
(d) Revenues
When the supply of credit is fixed, an increase in the price level stimulates the demand
for credit, which in turn reduces consumption and investment spending. This argument
is called the:
a. real balances effect.
b. interest-rate effect.
c. net exports effect.
d. substitution effect.
If you were a government official and wanted to raise the price of wheat, which of the
following actions would you take?
a. Take wheat from government storage and sell it.
b. Encourage farmers to use more fertilizer.
c. Lower the price of rye.
d. Subsidize purchases of farm equipment.
e. Encourage farmers to grow less wheat.
Investment in both physical and human capital enhances economic growth because it:
a. increases consumption during the current period.
b. makes it possible for individuals to produce more goods and services per hour
worked.
c. encourages firms to expand output by employing more low-productivity workers.
d. encourages workers to unionize and, thereby, fight for higher wages.
Exhibit 18-1 Production possibilities curves
In Exhibit
18-1, the production possibilities curves of wheat and corn for Nabia and Pada are
presented. If these two nations trade, Pada should specialize in the production of:
a. corn.
b. corn and wheat.
c. neither product since Nabia has the comparative advantage in the production of both.
d. neither product since Nabia has the absolute advantage in the production of both.
e. wheat.
Positive economics:
a. will usually tell us which policy is best.
b. reveals “what ought to be” in economic matters.
c. is of little use to policy makers.
d. is the scientific study of “what is” among economic relationships.
Protectionist policies such as tariffs and quotas are beneficial to the nation imposing
those trade barriers.
If the Fed uses its tools to expand the money supply, bond prices will be bid up and
interest rates will fall.
Most commercial banks belong to the Federal Reserve System.
Discuss how economists calculate NI, PI and DI.
Karl Marx envisioned communism as an economic system that blends the best elements
of capitalism and socialism.
Less of the federal debt is owned by federal, state, and local governments than is owned
by foreigners.
Your scarcity problem would disappear if you were rich.
Either an increase in demand with the supply curve held constant or a decrease in
supply with the demand curve held constant will raise a market’s equilibrium price.
Reserves of member banks appear on the Fed’s balance sheet as liabilities.