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1) Everything else held constant, an increase in net taxes ________ aggregate ________
A) increases; demand
B) decreases; demand
C) decreases; supply
D) increases; supply
2) Which investment bank filed for bankruptcy on September 15, 2008 making it the
largest bankruptcy filing in US history?
A) Lehman Brothers
B) Merrill Lynch
C) Bear Stearns
D) Goldman Sachs
3) Aggregate output is ________ related to autonomous consumer expenditure, and is
________ related to the level of taxes
A) negatively; negatively
B) negatively; positively
C) positively; negatively
D) positively; positively
4) The Second Bank of the United States
A) was disbanded in 1811 when its charter was not renewed
B) had its charter renewal vetoed in 1832
C) is considered to be the primary cause of the bank panic of 1907
D) None of the above
5) The ratio that relates the change in the money supply to a given change in the
monetary base is called the
A) money multiplier
B) required reserve ratio
C) deposit ratio
D) discount rate
6) A tax cut ________ disposable income, ________ consumption expenditure, and
shifts the IS curve to the ________, everything else held constant
A) increases; increases; right
B) increases; decreases; right
C) decreases; increases; left
D) decreases; decreases; left
7) If a bank has excess reserves of $4,000 and demand deposit liabilities of $100,000,
and if the reserve requirement is 10 percent, then the bank has actual reserves of
A) $14,000
B) $19,000
C) $24,000
D) $29,000
8) According to rational expectations theory, forecast errors of expectations
A) are more likely to be negative than positive
B) are more likely to be positive than negative
C) tend to be persistently high or low
D) are unpredictable
9) The FDIC must take steps to close down banks whose equity capital is less than
________ of assets
A) 4%
B) 3%
C) 2%
D) 1%
10) The first country to adopt inflation targeting was
A) the United Kingdom
B) Canada
C) New Zealand
D) Australia
