21. If the marginal propensity to consume is 4/5, then the multiplier is: a. 5 b....
21. If the marginal propensity to consume is 4/5, then the multiplier is:
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a. 5 |
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b. 1 |
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c. 1/5 |
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d. 5/4 |
22. Crowding out negatively affects the economy by:
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a. decreasing government borrowing |
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b. decreasing consumption |
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c. increasing private borrowing |
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d. reducing investment spending on physical capital |
23. The “classical” position is when the economy is in a recessionary gap, prices and wages will:
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a. never fall |
||
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b. take such a long time to adjust that the economy cannot be regarded as self-regulating |
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c. take such a short time to adjust that the economy can be regarded as self-regulating |
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d. fall instantaneously |
24. The purchase of government bonds in the open market by the Fed is predicted to cause:
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a. an increase in the price of bonds and a decrease in commercial bank reserves |
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b. a decrease in the price of bonds and a decrease in the interest rate |
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c. an increase in commercial bank reserves and a decrease in the interest rate |
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d. a decrease in the price of bonds and an increase in the interest rate |
25. If a bank has deposits of $100,000, cash on hand of $10,000, $15,000 on deposit at the Federal Reserve, and the reserve ratio is .20, then the bank
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a. has no excess reserves |
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b. has excess reserves of $5,000 |
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c. has insufficient reserves to meet its reserve target |
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d. has an insufficient deposit to loan ratio |
26. The velocity of money is:
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a. nominal GDP divided by the nominal quantity of money |
||
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b. nominal GDP divided by the real quantity of money |
||
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c. real GDP divided by the real quantity of money |
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d. real GDP divided by the nominal quantity of money |
27. U.S. citizens are likely to carry cash even with the prevalence of credit cards, debit cards and ATMs because:
|
a. cash is more convenient |
||
|
b. not all firms accept credit cards |
||
|
c. some firms won’t accept debit cards for small purchases |
||
|
d. all of the above |
28. The rational expectations hypothesis assumes that individuals will:
|
a. never make forecasting errors |
||
|
b. be as likely to overestimate as to underestimate the future rate of inflation |
||
|
c. continually make systematic forecasting errors |
||
|
d. ignore past forecasting errors when formulating |
Homework Answers
Add Answer to:
21. If the marginal propensity to consume is 4/5, then the
multiplier is:
a. 5
b....
Consider two economies, A and B. Economy A has a marginal propensity to consume of 0.9,...
Consider two economies, A and B. Economy A has a marginal propensity to consume of 0.9, a net tax rate of 0.3 and a marginal propensity to import of 0.3. Economy B has a marginal propensity to consume of 0.9, a net tax rate of 0.1 and a marginal propensity to import of 0.3. Suppose there is an increase in autonomous investment of $5 billion in each of these economies. Which of the following statements is true? Group of answer...
26. The velocity of money is: a. nominal GDP divided by the nominal quantity of money b. nominal GDP divided by the real quantity of money c. real GDP divided by the real quantity of money d. real GD...
26. The velocity of money is: a. nominal GDP divided by the nominal quantity of money b. nominal GDP divided by the real quantity of money c. real GDP divided by the real quantity of money d. real GDP divided by the nominal quantity of money
QUESTION 1 The change in MPS is defined as ____________. a. disposable income divided by saving...
QUESTION 1 The change in MPS is defined as ____________. a. disposable income divided by saving b. saving divided by disposable income c. the change in disposable income divided by the change in saving d. the change in saving divided by the change in disposable income 1 points QUESTION 2 Discouraged workers are those individuals who _____. a. are getting paid too little b. do not like their job c. are working part time but are looking for a...
An increase in the marginal propensity to consume Select one: a increases the multiplier, so that...
An increase in the marginal propensity to consume Select one: a increases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. b. decreases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. C. increases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand. d. decreases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand. If many...
Circle the best answer 1. The purchase of Treasury securities by the Federal Reserve will, in...
Circle the best answer 1. The purchase of Treasury securities by the Federal Reserve will, in general, A) not change the money supply. B) not change the quantity of reserves held by banks. C) decrease the quantity of reserves held by banks. D) increase the quantity of reserves held by banks. Suppose, r0.10,0 $400 Billion, D-5800 Billion, EX.R- $0.8 billion MI-CD-$1200 Billion 2. Refere to above information, the mm (mony multiplier) is A) 1.5 B) 2.5 C) 2 D) 4...
The Fed sells $30,000,000 in bonds to Jim, a bond dealer who pays for the bonds...
The Fed sells $30,000,000 in bonds to Jim, a bond dealer who pays for the bonds with a check drawn on his bank. Assume a 10% required reserve atio. Which of the following statements correctly records this transaction at Jim's bank with respect to the bank's reserves? O A. The bank's reserves will go down by $30,000,000. O B. The bank's reserves wil go up by S30,000,000. OC. The bank's reserves will go up by $1,000,000. 0 D. The bank's...
50) The Federal Open Market Committee A) is the main policy-making organ of the Federal Reserve....
50) The Federal Open Market Committee A) is the main policy-making organ of the Federal Reserve. B) is headed by the president of the New York Federal Reserve Bank. C) consists of the Fed chairman and the 12 regional bank presidents. D) meets every week to review the state of the economy 50) 51) When the quantity of money demanded is greater than the quantity of moneyupplied, people 1) bonds and the interest rate A) buy; falls B) sell; falls...
21. Entry into and exit from the labor force are important to the determination of the...
21. Entry into and exit from the labor force are important to the determination of the unemployment rate because: a. more than one-half of the unemployed have only recently entered the labor force. b. most of the unemployed are young workers still looking for their first job. c. discouraged workers are counted as part of the labor force. d. almost one-half of all spells of unemployment end in the unemployed person's withdrawal from the labor market. 10. The characteristic of...
9) Which of the following imply a deflation? I. persistently increasing CPI III. positive CPI V....
9) Which of the following imply a deflation? I. persistently increasing CPI III. positive CPI V. persistently lower inflation rate IL. persistently decreasing CPI IV, negative CPI VI. negative inflation rate C) II, IV and VI 10) The quantity theory of money argues that, in the long run (when RGDP stays constant), the percentage change in money will create an equal percentage change in A) velocity B) real GDP C) inflation rate. D) the price level. 11) If velocity is...
1. Use the information in the following table to calculate: a. the adult population b. the...
1. Use the information in the following table to calculate: a. the adult population b. the labor force c. the labor-force participation rate d. the unemployment rate Employed Unemployed Not in the labor force 142,263,000 10,112,000 82,932,000 2. Assume that the reserve requirement is 3 percent. All other equal, will the money supply expand more if the Federal Reserve buys $3,000 worth of bonds or if someone deposits in a bank $3,000 that he had been hiding in his cookie...
An increase in the marginal propensity to consume Select one: a increases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. b. decreases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. C. increases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand. d. decreases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand. If many...
Circle the best answer 1. The purchase of Treasury securities by the Federal Reserve will, in general, A) not change the money supply. B) not change the quantity of reserves held by banks. C) decrease the quantity of reserves held by banks. D) increase the quantity of reserves held by banks. Suppose, r0.10,0 $400 Billion, D-5800 Billion, EX.R- $0.8 billion MI-CD-$1200 Billion 2. Refere to above information, the mm (mony multiplier) is A) 1.5 B) 2.5 C) 2 D) 4...
The Fed sells $30,000,000 in bonds to Jim, a bond dealer who pays for the bonds with a check drawn on his bank. Assume a 10% required reserve atio. Which of the following statements correctly records this transaction at Jim's bank with respect to the bank's reserves? O A. The bank's reserves will go down by $30,000,000. O B. The bank's reserves wil go up by S30,000,000. OC. The bank's reserves will go up by $1,000,000. 0 D. The bank's...
50) The Federal Open Market Committee A) is the main policy-making organ of the Federal Reserve. B) is headed by the president of the New York Federal Reserve Bank. C) consists of the Fed chairman and the 12 regional bank presidents. D) meets every week to review the state of the economy 50) 51) When the quantity of money demanded is greater than the quantity of moneyupplied, people 1) bonds and the interest rate A) buy; falls B) sell; falls...
9) Which of the following imply a deflation? I. persistently increasing CPI III. positive CPI V. persistently lower inflation rate IL. persistently decreasing CPI IV, negative CPI VI. negative inflation rate C) II, IV and VI 10) The quantity theory of money argues that, in the long run (when RGDP stays constant), the percentage change in money will create an equal percentage change in A) velocity B) real GDP C) inflation rate. D) the price level. 11) If velocity is...
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