If the Fed wishes to raise the interest rate, it will
a. increase the money supply
b. decrease the money supply
c. increase money demand
d. decrease money demand
e. simply set a higher market interest rate
If the government announces a big tax cut, which of the following combinations of
events would be most likely to occur?
a. An upward shift of the aggregate expenditure line, a rightward shift of the money
demand curve, and a rightward shift of the aggregate demand curve
b. A downward shift of the aggregate expenditure line, a leftward shift of the money
demand curve, and a leftward shift of the aggregate demand curve
c. An upward shift of the aggregate expenditure line, a leftward shift of the money
demand curve, and a rightward shift of the aggregate demand curve
d. A downward shift of the aggregate expenditure line, a rightward shift of the money
demand curve, and a rightward shift of the aggregate demand curve
e. An upward shift of the aggregate expenditure line, a rightward shift of the money
demand curve, and a leftward shift of the aggregate demand curve.
Everything that consumers purchase during a period is included as part of consumption
when calculating GDP.
Reserves are defined as
a. the total cash in bank vaults
b. money deposited in Federal Reserve accounts
c. the sum of vault cash and deposits at Federal Reserve banks
d. the total amount of money a bank must hold
e. ten percent of demand deposit liabilities
Firms are assumed to be price takers in a perfectly competitive market because
Unemployment benefits tend to be higher in Europe and are offered for longer periods
than in the United States.
If income decreases, there will be a parallel inward shift of the budget line.
Inflation and unemployment are examples of macroeconomic topics.
The federal government’s revenue has declined steadily relative to GDP since 1960.
The extent to which a firm is viewed by consumers as being a monopoly depends
primarily on
One reason a bank keeps vault cash is because it
a. may be required to provide cash to customers who are withdrawing their funds
b. wants to earn more interest income
c. wants to offer more loans
d. may need to make transactions with other banks
e. may need to pay more interest on its savings accounts
If the CPI was 101.7 in 2006 and 101.5 in 2007, it can be concluded that
a. 2001 was the base year
b. all goods were more expensive in 2007 than in 2006
c. all goods were less expensive in 2007 than in 2006
d. all goods were less expensive in 2006 than in 2007
e. the price level fell from 2006 to 2007
If a factory hires 1,000 new workers, the nation’s output level is probably
a. increasing and unemployment is likely to increase
b. increasing and unemployment is likely to decrease by 1000 individuals
c. fluctuating
d. stable
e. increasing and unemployment is likely to decrease by less than 1,000 individuals
During the Great Depression, the economist who raised the loudest objections against
the classical model was
a. Milton Friedman
b. John Nash
c. Adam Smith
d. Ben Bernanke
e. John Maynard Keynes