05 Jun Question Consider a production possibilities curve for the
Question
Consider a production possibilities curve for the U.S. that puts capital goods on the vertical axis and consumer goods on the horizontal axis. How would the US production possibilities curve be affected in this case: the AIDS epidemic becomes rampant in America claiming millions of lives.
Answer
A.
A movement from a point inside the curve to a point on or near the curve
B.
A movement from a point on or near the curve to a point inside the curve
C.
A shift in the entire curve outward (away from the origin of the graph).
D.
A shift in the entire curve to inward (toward the origin of the graph).
E.
A movement along the curve
Statement I: The interest rate is the price of money (loanable funds).
Statement II: Interest rates would rise if the supply of loanable funds increased.
Answer
A.
Statement I is true and statement II is false.
B.
Statement II is true and statement I is false.
C.
Both statements are true.
D.
Both statements are false.
Which of these relations is correct?
Answer
A.
APC – APS = 1
B.
MPC + MPS = 1
C.
APC + MPC = 1
D.
1 + MPC = MPS
When the MPC is 0.8, then the MPS must be:
Answer
A.
0.9
B.
0.8
C.
0.4
D.
0.2
What underlying factor causes the real GDP to be above the nominal GDP in early years of time series and below in the later years?
Answer
A.
decreasing price levels
B.
increasing price levels
C.
increases in average income
D.
decreases in the output of the economy
In order to measure real GDP
Answer
A.
Current output should be calculated at base year prices.
B.
Current output should be calculated at current prices.
C.
Base year output should be calculated at current prices.
D.
All of the statements are true.
After a business cycle trough a recovery follows
Answer
A.
all of the time
B.
most of the time
C.
some of the time
D.
none of the time
Which of the following statements is NOT true?
Answer
A.
The supply of money decreases whenthe Federal Reserve buys securities from households or businesses.
B.
Excess reserves are the amount by which actual reserves exceed required reserves.
C.
Commercial bank reserves are an asset to commercial banks but a liability of the Federal Reserve Banks.
D.
All of the above statements are false.
Statement I: If we run a federal budget deficit, the national debt will rise.
Statement II: If we run a federal budget surplus of $100 billion, the national debt will decline by $100 billion.
Answer
A.
Statement I is true and statement II is false.
B.
Statement II is true and statement I is false.
C.
Both statements are true.
D.
Both statements are false.
Which statement is true?
Answer
A.
M1 is larger than M2
B.
M1 + M2 = M3
C.
M2 + large denomination time deposits = M3
D.
M1 times M2 = M3
Top of Form
If interest rates fall, the quantity of money demanded
Answer
A.
rises.
B.
falls.
C.
stays about the same.
D.
It is impossible to determine an answer from the information provided in this question.
3 points
Question 17
The most powerful individual in the Federal Reserve System is the
Answer
A.
senior member of the Federal Open Market Committee
B.
Superintendent of the Board of Governors
C.
Chairman of the Federal Reserve Board
D.
New York District Bank President
3 points
Question 18
If all banks are subject to a uniform 20% reserve requirement and demand deposits are the only form of money, a $1,000 open market purchase by the Fed could ultimately cause the money supply to
Answer
A.
increase by $1,000
B.
decrease by $1,000
C.
decrease by $5,000
D.
increase by $5,000
3 points
Question 19
Which statement is TRUE?
Answer
A.
More people are going to college, but our labor force is less educated.
B.
Work study programs in our country allow over 5 million young people who chose not to go to college to get high paying, technical jobs.
C.
Close to three million immigrants arrive in the United States every year.
D.
None of the statements are true.
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