The Obama stimulus package included fiscal policy actions designed to assist the
economy in its recovery from recession. These fiscal policy actions would include
________ government spending and ________ taxes.
A) increasing; decreasing
B) decreasing; increasing
C) increasing; Increasing
D) decreasing; decreasing
When an individual in the US invests in a 401K, that person is taxed:
A) only after cashing-in the investment.
B) immediately after making the investment.
C) only after the person dies.
D) one year after making the investment.
If the Ricardian Equivalence were true, the effect of an increase in government
expenditure:
A) will have no effect on investment.
B) will increase investment by the amount of the increased government spending.
C) will decrease investment by the amount of the government spending.
D) will increase investment by more than the increase in government spending.
Recall Application 2, “More Disability, Less Unemployment?” to answer the following
questions:
According to the application, the changes in the federal Disability Insurance program:
A) encouraged more individuals to claim disability and stay unemployed.
B) encouraged more individuals to claim disability and stay employed.
C) encouraged more individuals to claim disability and stay out of the labor force.
D) encouraged more individuals to look for work.
Which of the following is a topic not directly under macroeconomics?
A) inflation
B) recessions
C) why the price of crude oil is high
D) All of the above are topics in macroeconomics.
A change in the reserve requirement is used infrequently by the Fed because it
A) is disruptive to the banking system.
B) does not influence the money supply.
C) does not affect bank reserves.
D) does not affect the money multiplier.
As inflation rates increase, money becomes less useful as a
A) unit of account.
B) store of value.
C) medium of exchange.
D) double coincidence of wants.
An index that reflects the average of real exchange rates of the U.S. and its major
trading partners is called:
A) a multilateral exchange rate.
B) an average nominal exchange rate.
C) a multinational real exchange rate.
D) none of the above.
Macroeconomics is the study of the:
A) purchase decisions of individual consumers.
B) national economy taken as a whole.
C) economic choices of laboratory animals.
D) effects of patents upon product innovation.
If the multiplier = 2.5, the MPC would be
A) 0.25.
B) 0.4.
C) 0.6.
D) 0.75.
Recall the Application about the Fed’s expanded involvement in the economy following
the financial crisis in 2008 to answer the following question(s).Recall the Application.
Prior to the financial crisis in 2008, the Fed’s traditional method of conducting
monetary policy to expand the money supply was
A) purchasing Treasury securities.
B) purchasing mortgage-backed securities.
C) lowering reserve requirements.
D) raising the discount rate.