If checkable deposits rise, it follows that the
a. required reserve ratio will fall.
b. dollar amount of reserves will rise.
c. dollar amount of vault cash will rise.
d. required reserve ratio will rise.
e. none of the above
According to classical economists, if the amount of funds households save is greater
than the amount of funds firms invest, then
a. the interest rate will fall, ultimately moving to a level where the amount of funds
households plan to save equals the amount of funds firms plan to invest.
b. the interest rate will rise, ultimately moving to a level where the amount of funds
households plan to save equals the amount of funds firms plan to invest.
c. the interest rate will remain constant and people will simply buy more goods.
d. more money will he used for leisure purposes, since households save in order to
consume leisure at some later time.
e. none of the above
When the actual unemployment rate is less than the natural unemployment rate, the
economy is in a recessionary gap.
a. True
b. False
You have data for compensation of employees, proprietors’ income, rental income, and
net interest. Can you compute national income?
a. Yes, all of the components of national income are given.
b. No, since data on indirect business taxes are missing.
c. No, since data on corporate profits is missing.
d. No, since data on the capital consumption allowance is missing.
e. No, since net interest has not been adjusted for profits.
If GDP is $9,000 billion and the money supply is $1,800 billion, velocity is
approximately
a. 0.20.
b. 6.00.
c. 4.15.
d. 5.00.
e. There is not enough information provided to answer this question.
Exhibit 3-1
At a price of $2 there is a
a. shortage of 100 units.
b. shortage of 200 units.
c. shortage of 150 units.
d. surplus of 200 units..
e. surplus of 150 units.
Jerry has $50,000 in his savings account and the average new car price is $23,000. Does
Jerry have a demand for a new car?
a. Yes, since Jerry can afford a new car.
b. Not necessarily. Jerry has the ability to buy a new car, but we don’t know if he also
has the willingness to buy a new car.
c. Yes, since Jerry’s savings is more than double the average new car price.
d. none of the above
Increased productivity in agriculture leads to lower prices for consumers and higher
revenues for farmers.
a. True
b. False
Exhibit 5-5
If the airline charges price P2 for both aisle seats and middle seats, the result will be
a. a surplus of middle seats and the equilibrium quantity of aisle seats.
b. a surplus of aisle seats and the equilibrium quantity of middle seats.
c. a shortage of middle seats and the equilibrium quantity of aisle seats.
d. a shortage of aisle seats and the equilibrium quantity of middle seats.
Look at the following data: Employed persons = 110 million; civilian labor force = 135
million persons; civilian noninstitutional population = 190 million. The unemployment
rate is __________ percent and the employment rate is __________ percent.
a. 10; 69
b. 8; 57.9
c. 18.5; 57.9
d. 18.5; 81.5
e. 12; 88
You turn to the bond market page of a newspaper and look under the column headed
“Close” and see that it says, “49 1/2” this indicates that
a. the closing price for the bond on this particular day is $495.
b. the closing price for the bond on this particular day is $49.50.
c. the closing price for the bond was $49.50 higher than on the previous trading day.
d. the bond will mature on June 30, 2049.
One of the contributing factors to the financial crisis of 2007-2009 was that mortgage
lending practices were ____________ strict in the late 1990s and early 2000s,
compared to earlier periods such as the 1970s and 1980s, which led to a(n)
_______________ in subprime and other nontraditional mortgage loans.
a. less; increase
b. more; increase
c. less; decline
d. more; decline
Which of the following statements is true?
a. Treasury bills mature in 2 to 10 years.
b. Treasury notes mature in 13 or 26 weeks.
c. Treasury bills, notes, and bonds are considered to be very safe investments.
d. Municipal bonds are issued to help the federal government build new projects such as
highways and stadiums.
In the 1990s and early 2000s, mortgage lending standards ______________ in the
United States.In general, there was a move _____________ traditional lending practices
during this period.
a. declined; away from
b. declined; towards more
c. became more strict; away from
d. became more strict; towards more