If the Federal Reserve unexpectedly raised its interest rate target, which of the
following would most likely occur?
a. The interest rate would increase and bond prices would rise.
b. The interest rate would decrease and bond prices would rise.
c. The interest rate would increase and bond prices would fall.
d. The interest rate would decrease and bond prices would fall.
e. The interest rate would increase but bond prices would not change.
When the feedback effects from income to the money market are included,
a. a given change in the money supply will cause a smaller change in the quantity of
money demanded.
b. a given change in the money supply will cause a larger change in the interest rate
c. given change in the money supply will cause no change in the interest rate
d. a given change in the money supply will cause a smaller change in the interest rate
e. a given change in the money supply will cause a larger change in the quantity of
money demanded.
Which of the following is a common way of measuring the average standard of living?
a. The unemployment rate plus the inflation rate
b. Real GDP divided by the price level
c. The unemployment rate multiplied by the population
d. Real GDP divided by the population
e. Inflation rate divided by the population
The term quantity demanded
a. can refer to either an individual or all buyers in a market
b. only refers to all buyers in a specific market
c. only refers to individual buyers in a market
d. refers to how many units of a good a buyer would be willing and able to purchase at
a series of prices
e. determines price when it intersects with the supply curve
Which of the following might explain why the government would create a price floor
for a certain good?
a. The equilibrium price that would result in the market would be considered too high
b. The equilibrium price that would result in the market would be considered too low
c. The equilibrium quantity that would result in the market would be considered too
high
d. The equilibrium quantity that would result in the market would be considered too low
e. The market will never achieve equilibrium on its own
If the Fed sells bonds, we should expect to see the money supply
a. decrease, the interest rate increase, autonomous consumption decrease, business
investment decrease, and real GDP decrease
b. increase, the interest rate decrease, autonomous consumption decrease, business
investment decrease, and real GDP decrease
c. increase, the interest rate decrease, autonomous consumption increase, business
investment increase, and real GDP increase
d. decrease, the interest rate decrease, autonomous consumption increase, business
investment increase, and real GDP decrease
e. decrease, the interest rate increase, autonomous consumption increase, business
investment increase, and real GDP increase
Suppose that the government reports the following information on violent crime in a
certain area: there were 1100 incidents in the base year (2007) and 1155 incidents in
2008. The person collecting these data wants to present them in the form of an index.
What is the index for 2008?
a. 100.0
b. 110.0
c. 116.0
d. 105.0
e. 95.2
Open market bond sales can be conducted either by the Federal Reserve or the Treasury
Department, and either way the result is the same.
The average percentage markup in the economy
a. is greater, the more competitive are market conditions
b. is greater, the less competitive are market conditions
c. is unaffected by the competitive conditions of the economy
d. tends to be highly unstable from year to year
e. tends to be stable from year to year, ensuring that the price level is stable from year to
year
An increase in output will tend to
a. increase productivity in the economy as a whole
b. reduce prices of non-labor inputs and other commodities in limited supply in the
short run
c. increase real wage rates
d. increase nominal wage rates
e. decrease the price level.
The term investment, in the language of economists, refers to the purchases of stocks,
bonds, and other financial instruments.
Tax avoidance reduces the federal government’s revenue flow.
Fiscal policy is a change in either government purchases or the money supply designed
to change total spending in the economy, thereby influencing the levels of employment
and output.
Establishing a unit of value and establishing a standard means of payment are two
functions of a monetary system.
The Federal Reserve tends to increase the money supply each year.
Roughly what fraction of total spending is consumption spending?
a. One-half
b. One-eighth
c. Two-fifths
d. One-quarter
e. Two-thirds.
The price that a firm’s only competitor charges would be a
a. topic in microeconomics
b. topic in finance
c. macroeconomic topic
d. topic in public finance
e. normative issue