1) To say that the Federal Reserve Banks are quasi-public banks means that:
A.they are privately owned, but managed in the public interest.
B.they deal only with banks of foreign nations and do not have direct business contact
with U.S. banks.
C.they deal only with commercial banks, and not the public.
D.they are publicly owned, but privately managed.
2) Checkable deposits are:
A.included in M1.
B.not included in either Ml or M2.
C.considered to be a near money.
D.also called time deposits.
3) Under the international gold standard a flow of gold from country A into country B
would be halted by:
A.a rise in the price of B’s currency measured in terms of A’s currency.
B.government export controls on gold.
C.rising prices and incomes in B and falling prices and incomes in A.
D.rising prices and incomes in A and falling prices and incomes in B.
4) Which of the following statements is true about falling birthrates?
A.They tend to lag behind falling death rates, allowing population growth to continue
for at least one or two more generations.
B.They tend to precede declines in death rates, causing a temporary dip in population
before it stabilizes in a generation or two.
C.They tend to lag behind declining standards of living.
D.They always cause population to decline.
5) When the actual rate of inflation exceeds the expected rate:
A.the unemployment rate will temporarily rise.
B.firms will experience rising profits and thus increase their employment.
C.the actual rate of inflation will fall.
D.nominal wages will decline.
6) A merger of several firms operating in different industries-for example, a trucking
company, a fast-food chain, and a brokerage house-is called:
A.an integrated merger.
B.a conglomerate merger.
C.a vertical merger.
D.a horizontal merger.
7) Since 1970 the distribution of income has:
A.remained virtually constant from year to year.
B.become more equal.
C.varied considerably from year to year but in general has been stable.
D.become less equal.
8) recurring upswings and downswings in an economy’s real gdp over time are called:
a.recessions.
b.business cycles.
c.output yo-yos.
d.total product oscillations.
9) Other things equal, a restrictive monetary policy during a period of demand-pull
inflation will:
A.lower the interest rate, increase investment, and reduce net exports.
B.lower the price level, increase investment, and increase aggregate demand.
C.increase productivity, aggregate supply, and real output.
D.increase the interest rate, reduce investment, and reduce aggregate demand.
10) (Last Word) The use of U.S. dollars in foreign countries:
A.is illegal under international law.
B.actually benefits the United States because each dollar costs less than a dollar to
produce.
C.varies directly (positively) with U.S. interest rates.
D.is less in volume than the use of foreign currencies in the United States.
11) the minimum efficient scale of a firm:
a.is realized somewhere in the range of diseconomies of scale.
b.occurs where marginal product becomes zero.
c.is in the middle of the range of constant returns to scale.
d.is the smallest level of output at which long-run average total cost is minimized.
12) Explain the effects of the migration of labor from a poorer nation to a richer nation.
Give your answer in terms of the effects on wage rate, domestic output, and business
incomes in the two nations. What are some complications that might qualify the
conclusions?
13) What are three significant generalizations supported by results from the extended
AD-AS model?
14) Compare the real cost of commodity resources today (circa 2007) with their cost in
the 18451850 period. What explains the change?
15) Describe the mainstream view of self-correction in the economy.
16) How does a fixed exchange rate system work? How can a nation maintain its fixed
exchange rate?
17) Why dont economists agree with backing paper money with a certain commodity,
such as gold?