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The quantity of reserves held by a bank in addition to the legally required amounts is
known as:
a. actual reserves.
b. excess reserves.
c. the required reserve ratio.
d. the money multiplier.
e. the monetary base.
The former Soviet Union was known for black markets. An explanation for the
existence of these illegal markets is that:
a. goods were not subject to price controls.
b. the government imposed a price ceiling below the equilibrium price.
c. the government imposed a price ceiling above the equilibrium price.
d. all of these.
Exhibit 1A-8 Straight line relationship
Which of the following would cause a shift in the relationship shown in Exhibit 1A-8?
a. A fall in household incomes.
b. A fall in the price of pizza.
c. A fall in the quantity of pizza that people wish to purchase.
d. All of these would shift the line in the graph.
If there is a recession, the Fed would most likely encourage banks to provide loans by:
a. buying government securities.
b. raising the discount rate.
c. selling government securities.
d. raising the federal funds rate.
A market demand curve:
a. is the sum of the demand curves of all the individuals in a particular market.
b. is determined by the demand of those who purchase in quantity.
c. is always horizontal.
d. cannot be estimated.
e. never includes demand by the government.
If the current market price is above the equilibrium price, then:
a. the quantity demanded exceeds the quantity supplied.
b. there will be a shortage.
c. the quantity supplied will exceed the quantity demanded.
d. the price will have to increase to establish equilibrium.
e. demand will shift to the left.
Which of the following statements is true of a market?
a. An increase in demand, with no change in supply, will increase the equilibrium price
and quantity.
b. An increase in supply, with no change in demand, will decrease the equilibrium price
and the equilibrium quantity.
c. A decrease in supply, with no change in demand, will decrease the equilibrium price
and increase the equilibrium quantity.
d. All of these.
The IASB is a branch of the FASB.
a. True
b. False
Exhibit 10-1 Aggregate supply curve
In Exhibit 10-1, there are plenty of idle
resources and no upward pressure on prices in:
a. the segment labeled ab.
b. the segment labeled bc.
c. the segment labeled cd.
d. both segment bc and segment cd.
e. the entire curve.
Real-world accuracy of the money multiplier can be affected by:
a. the amount of loans provided by nonbanks.
b. the way the public divides its holding of M1 between currency and certificates of
deposit.
c. the willingness of banks to loan excess reserves.
d. all of these.
Which of the following is least likely to increase the demand for new tires?
a. a decrease in the price of tires
b. a decrease in the price of cars
c. an increase in consumer income
d. an increase in the number of miles people drive per year
Exhibit 16A-2 Macro AD/AS Models
In Panel (a) of
Exhibit 16A-2, the economy is initially in short-run equilibrium at real GDP level Y1
and price level P2. Classical theory argues that:
a. SRAS will shift to leftward and establish full employment at P3Y without
government intervention.
b. higher wages will result in a leftward shift of SRAS.
c. long-run equilibrium will be established at Y and P1.
d. all of these will take place.
In the aggregate expenditures model, if an economy operates above equilibrium GDP,
there will be:
a. unplanned inventory accumulation.
b. unplanned inventory depletion.
c. an increase in GDP.
d. an increase in employment.
Suppose consumers and business decision makers become more optimistic about the
future, and aggregate expenditures increase. The most likely result is that:
a. real GDP and employment and income to decline.
b. real GDP and employment rise.
c. real GDP rises and employment falls.
d. real GDP falls and employment rises.
The balance of payments ____.
a. b and e
b. is always zero
c. with some nations is different than it is with others
d. is negative when the nation runs a trade deficit
e. can only be expanded when the government has foreign exchange reserves
National income:
a. is included in gross private domestic investment.
b. includes the sum of all payments made to resource owners for the use of their
resources.
c. includes depreciation.
d. is often measured as C + I + G + (X - M).
Without trade, the consumption possibilities for two nations are:
a. outside their production possibilities curve.
b. inside their production possibilities curve.
c. along their production possibilities curve.
d. at a point equal to the world production possibilities curve.
