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Most economists think that the Keynesian position is that
a. the wage rate will never fall and the price level will never adjust downward if the
economy is in a recessionary gap.
b. the time required before wages and prices adjust downward is short enough for the
economy to be called self-regulating.
c. the time required before wages and prices adjust downward is long enough for the
economy to exist in a recessionary gap for a long time.
d. the time required before wages and prices adjust downward if the economy is in a
recessionary gap is rather long, but short enough for the economy to be considered
self-regulating.
When the Fed sells government securities to a bank, the securities will be
a. an asset for the bank.
b. a liability for the bank.
c. both an asset and a liability for the bank.
d. neither an asset nor a liability for the bank.
A bank is reserve deficient when
a. its reserves fall short of the level determined by the required reserve ratio.
b. its excess reserves are greater than its required reserves.
c. its required reserves are greater than its excess reserves.
d. it purchases government securities from the Fed.
Exhibit 14-1
What sequence of points shows the short- and long-run consequences of a fall in the
money supply under monetarist assumptions?
a. A-E-B
b. B-D-A
c. A-D-B
d. B-A
In recent years, the Chinese government has _____________ bonds issued by the U.S.
government which has _____________ interest rates in the United States beyond what
they would have been otherwise.
a. bought; lowered
b. bought; raised
c. sold; lowered
d. sold; raised
Given the following data, what is the distance from the origin to the point where the
total expenditures (TE) curve cuts the vertical axis?
C = $400 + 0.75Yd
I = $120
G = $270
a. $670
b. $790.75
c. $790
d. $400
e. $390
Exhibit 4-3
If price P1 is a price floor, then
a. the quantity exchanged is Q1.
b. there is a surplus in the market for good X.
c. it is the lowest price that can legally be charged in the market for good X.
d. both b and c
e. all of the above
The word that best describes the relationship between the required reserve ratio and the
money supply is
a. direct.
b. constant.
c. inverse.
d. roundabout.
Unlike in the 1930's, farmers today can insure themselves against price swings that
would impact them adversely through the futures market.
a. True
b. False
Which of the following statements is false?
a. A discouraged worker is counted as an unemployed worker.
b. The frictional unemployment rate is greater than the natural unemployment rate.
c. The natural unemployment rate is greater than the structural unemployment rate.
d. The natural unemployment rate is equal to the sum of the frictional unemployment
rate and the structural unemployment rate.
e. a and b
The concept of an optimal currency area arose from the debate over whether fixed or
flexible exchange rates are better.
a. True
b. False
To eliminate a recessionary gap the Fed typically uses __________ monetary policy,
and to eliminate an inflationary gap the Fed typically uses __________ monetary
policy.
a. expansionary; expansionary
b. expansionary; contractionary
c. contractionary; contractionary
d. contractionary; expansionary
Exhibit 3-4
At a price of $6 _______________ units will be exchanged.
a. 5
b. 10
c. 15
d. 20
