The seven members of the Board of Governors serve 14-year terms to:
a. reduce political influence.
b. provide steady employment.
c. inhibit independent decisions.
d. prevent illegal appointments.
Which of the following represents the proper order of the financial decision
framework?
a. Analyze the information, formulate the question, gather information from financial
statements, monitor your decision, make the decision.
b. Formulate the question, Analyze the information, gather information from financial
statements, monitor your decision, make the decision.
c. Formulate the question, Gather information from financial statements, Analyze the
information, Make the decision, Monitor your decision
d. Analyze the information, monitor your decision, make the decision, formulate the
question, gather information from financial statements.
Which of the following would most likely increase the demand for televisions?
a. A decrease in the price of televisions.
b. A decline in consumer income.
c. A decrease in the price of home stereo systems, a substitute for televisions.
d. A decrease in the price of DVD players, a product that is complementary with
televisions.
A rightward shift of the investment demand curve could be caused by:
a. a technological advance.
b. optimism about long-term growth.
c. forecasts of favorable business conditions.
d. an increase in confidence in short-run economic conditions.
e. any of these.
Microeconomics approaches the study of economics from the viewpoint of:
a. inflation, unemployment, and economic growth.
b. the federal government.
c. individual economic units, such as consumers, firms, and units of government.
d. the economy as a whole.
When building a model, an economist must:
a. adjust for exceptional situations.
b. provide a complete description of reality.
c. make simplifying assumptions.
d. develop a set of behavioral equations.
Banks normally hold few excess reserves because this practice is:
a. subject to an excess reserves tax.
b. not profitable.
c. against Fed policy.
d. illegal.
“Crowding out” refers to federal government deficits financed by:
a. borrowing which increases interest rates and thereby reduces private spending.
b. increasing taxes which reduces private spending.
c. the federal government buying foreign debt which reduces the amount of government
spending and government programs.
d. reducing government spending which reduces interest rates.
Which of the following would be included in the government expenditures component
of GDP?
a. The export of 100 fighter jets to Japan
b. Construction costs of a new public school building
c. Food stamps used by the Smith family
d. A $1,000 check issued by the federal government as part of the Pell Grant program to
help college students pay for school
Which of the following options could be used to eliminate a recessionary gap?
a. Increase government spending.
b. Decrease government spending.
c. Decrease investment.
d. Increase taxes.
Economists began to lose confidence in the Phillips curve during the:
a. 1930s.
b. 1960s.
c. 1970s.
d. 1980s.
e. 1990s.
Keynesian economists argue that monetary policy works through its effects on:
a. interest rates and investment.
b. price- and wage-flexibility.
c. budget deficits and trade deficits.
d. the spending and money multipliers.
When prices rise, consumers and businesses hold larger money balances. This reduces
the supply of loanable funds, increases the interest rate, and discourages both
consumption and investment. This process is called the:
a. interest-rate effect.
b. real balance effect.
c. investment effect.
d. disinvestment effect.
Suppose Sue’s buys a good for $60 on eBay. If the consumer surplus from the sale is
$25, Sue would have been willing to pay:
a. $35.
b. $25.
c. $60.
d. $85.
Unemployment caused by people voluntarily quitting work in order to seek more
attractive employment is called:
a. the natural rate of unemployment.
b. full employment.
c. cyclical unemployment.
d. frictional unemployment.
e. structural unemployment.