Which of the following is a reason why a bank may hold excess reserves?
a. It earns more interest on reserves than on loans.
b. It is required to do so.
c. It may want flexibility to increase its loans if interest rates rise in the near future.
d. Banks often expect a drop in the required reserve ratio.
e. Banks often expect a rise in the required reserve ratio.
Refer to Figure 11-2. Use the graph to determine the marginal propensity to consume.
a. 0.50
b. 0.60
c. 0.75
d. 0.80
e. 0.90
Which of the following changes would probably not lead to an increase in aggregate
expenditure?
a. an increase in aggregate wage income
b. an increased mood of optimism about the nation’s economic prospects
c. an increase in the value of corporate stocks
d. a decrease in the income tax rate
e. an increase in the interest rate
Fiscal policy is
a. a change in money supply designed to change total spending.
b. a change in interest rates designed to change total spending.
c. a change in government purchases or net taxes designed to change total spending.
d. a change in government regulations designed to change total spending.
e. a change in policy stance by the Federal Reserve designed to change total spending.
If net taxes decrease, which of the following would occur?
a. Disposable income decreases, consumption at any income level increases, and the
consumption-income line shifts upward.
b. Disposable income increases, consumption at any income level increases, and the
consumption-income line shifts downward.
c. Disposable income increases, consumption at any income level increases, and the
consumption-income line shifts upward.
d. Disposable income decreases, consumption at any income level decreases, and the
consumption-income line shifts downward.
e. Disposable income increases, consumption at any income level decreases, and the
consumption-income line shifts downward.
Which of the following government policies might increase labor supply?
a. Increasing transfer payments to the needy.
b. Decreasing income tax rates.
c. Increasing income tax rates.
d. Increasing the availability of government training programs.
e. Increase payroll taxes.
If some of unemployed individuals became discouraged workers, which of the
following would result?
a. The labor force would decrease and the unemployment rate would decrease.
b. The labor force would decrease and the unemployment rate would remain the same.
c. The labor force would increase and the unemployment rate would decrease.
d. The labor force would decrease and the unemployment rate would increase.
e. The labor force would increase and the unemployment rate would remain the same.
Regarding the number of discouraged workers,
a. the Bureau of Labor Statistics follows rather loose criteria to classify them.
b. they are included in the official unemployment measure.
c. there is universal agreement among economists that they should be counted as
unemployed
d. they are also known as involuntary part time workers.
e. no one knows for sure how many are there.
Combinations of goods on the production possibilities frontier
a. are unattainable without additional resources
b. can be produced using currently available resources and technology
c. reflect minimum normative value allocations
d. will meet society’s needs but not its wants
e. are attainable only through international trade
Which of the following groups would be considered suppliers in the labor market?
a. Government agencies
b. Firms
c. Households
d. Stockholders
e. Landlords
Which of the following would lead to a rightward movement along a stationary money
demand curve?
a. A decrease in the interest rate
b. A decrease in the price level
c. An increase in the interest rate
d. An increase in the price level
e. An increase in real income
The aggregate demand curve tells us the equilibrium level of real GDP corresponding to
any price level.
Given the demand curve for laptop computers, if the government began to encourage
households to own a computer by providing a subsidy to each family that buys one,
a. both the equilibrium price and quantity of laptops will increase
b. both the equilibrium price and quantity of laptops will decrease
c. the equilibrium price of laptops will increase but the equilibrium quantity will
decrease
d. the equilibrium price of laptops will decrease but the equilibrium quantity will
increase
e. subsidies to households have no effect on either the supply or demand
A decrease in government spending would cause all but one of the following to happen.
Which is the exception?
a. The government’s budget deficit would shrink.
b. The interest rate would decrease.
c. Consumption spending would increase.
d. Investment spending would increase.
e. Total output would decrease.