The value or purchasing power of the dollar can be obtained by dividing $1 by the CPI.

04 Jun The value or purchasing power of the dollar can be obtained by dividing $1 by the CPI.

Question
ECON125-HK2. ECONOMICS FOR MANAGERS (ECON125-HK2) > TAKE ASSESSMENT: EXAM 3

Question 1 2 points Save

If planned investment decreases, the multiplier will decrease the equilibrium income.

True

False

Question 2 2 points Save

The change in the level of planned spending that results from a change in the price level is indicated by the movement of the economy along a given

aggregate expenditure curve

aggregate demand curve

aggregate supply curve

both (a) and (b)

Question 3 2 points Save

In the Keynesian model, whenever unplanned inventory increases occur in the economy, production is likely to

speed up slowly

slow down

remain unchanged

speed up immediately

Question 4 2 points Save

If planned construction investment increases by $30 billion and the MPC is two-thirds, total output will increase by

$30 billion

$20 billion

$45 billion

$90 billion

Question 5 2 points Save

Keynes recommended the use of government deficit spending to overcome widespread unemployment.

True

False

Question 6 2 points Save

According to the Keynesian analysis, as income increases, the marginal propensity to consume will rise.

True

False

Question 7 2 points Save

Say’s Law states that

supply is greater than demand

supply is less than demand

demand generates supply

supply generates demand

Question 8 2 points Save

The time lags lead monetarists to contend that monetary policy is counterproductive.

True

False

Question 9 2 points Save

The classical doctrine assumed that the normal equilibrium position for the economy was at full employment.

True

False

Question 10 2 points Save

According to the Keynesian analysis, equilibrium occurs at the point where total aggregate expenditure equals total output.

True

False

Question 11 2 points Save

In the Keynesian model, the most important influence on planned consumption is

the interest rate

expectations

disposable income

the price level

Question 12 2 points Save

The multiplier is the reciprocal of the marginal propensity to consume.

True

False

Question 13 2 points Save

Aggregate expenditure in the U.S. economy includes spending for U.S. output by

households and businesses, but not governments

households, businesses, and the federal government, but not state and local governments

households, businesses, and all governments except foreign ones

households, businesses, and governments, both domestic and foreign

Question 14 2 points Save

The bulk of the M1 money supply is made up of

silver dollars and gold bars

checkable deposits

travelers checks

money market funds

Question 15 2 points Save

If a new cash deposit creates excess reserves of $5,000 and the required reserve ratio is 10 percent, the banking system can increase the money supply by a maximum of

$50,000

$500

$5,000

$4,500

Question 16 2 points Save

An increase in the velocity of money can have an effect similar to that of an increase in the money supply.

True

False

Question 17 2 points Save

If a bank has $60,000 in legal reserves and is subject to a 10 percent reserve requirement, it could have outstanding checkable deposits to the extent of

$60 million

$600,000

$6 million

$60,000

Question 18 2 points Save

If a worker’s money wage increases at a faster pace than the CPI, his or her real wage will rise.

True

False

Question 19 2 points Save

The Treasury issues all paper currency today.

True

False

Question 20 2 points Save

Funds that earn a fixed rate of interest and must be held for a stipulated period of time are known as

checkable deposits

time deposits

savings deposits

money market funds

Question 21 2 points Save

Included in the official U.S. money supply are

U.S. government bonds

corporate stocks

checkable deposits

all of the above

Question 22 2 points Save

The U.S. money supply measure that consists of currency plus travelers checks and checkable deposits is referred to as

M1

M2

M3

M1 + M2

Question 23 2 points Save

The quantity theory of money assumes that

the national economy tends to operate at less than full

the velocity of money is unstable

the national economy tends to operate at full employment

the velocity of money varies with changes in interest rates

Question 24 2 points Save

If the CPI in City A is 150 and the CPI in City B is 135,

the dollar has greater purchasing power in City B

prices are higher in City A than they are in City B

City B must be using a different base year

none of the above

Question 25 2 points Save

The value or purchasing power of the dollar can be obtained by dividing $1 by the CPI.

True

False

Question 26 2 points Save

Stored value and smart cards are forms of electronic banking.

True

False

Question 27 2 points Save

Each Federal Reserve Bank has its own board of directors.

True

False

Question 28 2 points Save

The First Bank of the United States was chartered by

the federal government

the state of New York

the city of New York

Suffolk County

Question 29 2 points Save

All members of the Board of Governors are members of the Fed’s Open Market Committee.

True

False

Question 30 2 points Save

The Federal Reserve System was established in

1980

1913

1864

1791

Question 31 2 points Save

Members of the Board of Governors are

appointed by Congress

selected by the U.S. President

elected by member banks

selected by the U.S. Treasury Department

Question 32 2 points Save

By buying government securities, the Federal Open Market Committee adds to member banks’ reserves.

True

False

Question 33 2 points Save

The Board of Governors of the Federal Reserve System is

under the jurisdiction of the U.S. President

responsible to the Secretary of the U.S. Treasury

independent within the U.S. government

responsible to the Council of Economic Advisors

Question 34 2 points Save

The members of the Board of Governors of the Federal Reserve System are appointed by the U. S. President.

True

False

Question 35 2 points Save

Various studies have recommended changes in the Federal Reserve structure and policy that include

having Congress set the discount rate

placing monetary policy in the control of Congress

dissolving the Board of Governors

making each appointment to the Board of Governors a lifetime appointment

Question 36 2 points Save

If the Federal Open Market Committee desired to tighten credit, it would

buy securities in the open market

sell securities in the open market

lower the discount rate

raise the discount rate

Question 37 2 points Save

Competition in U.S. banking has been increased by

the expansion of interstate banking

the expansion of foreign bank branches into the United States

the movement of brokerage houses and large corporations into traditional banking activities

all of the above

Question 38 2 points Save

If a Federal Reserve Bank wanted to tighten the money supply, it would

lower the reserve requirement

buy securities in the open market

raise the discount rate

lower the discount rate

Question 39 2 points Save

The existence of undistributed corporate profits tends to cause

NNP to be smaller than GDP

national income to be larger than personal income

national income to be smaller than NNP

personal income to be larger than disposable personal income

Question 40 2 points Save

National income is equivalent to total earnings in the form of wages, rent, interest, and profits.

True

False

Question 41 2 points Save

The GDP counts durable goods only during their year of production.

True

False

Question 42 2 points Save

Imports constitute a minus figure in national income accounting.

True

False

Question 43 2 points Save

GDP overstates national income because it does not make any adjustment for national debt.

True

False

Question 44 2 points Save

The national income accounts for the United States are prepared by the

Bureau of Labor Statistics

U.S. Department of Commerce

Federal Reserve Board

President Council of Economic Advisors

Question 45 2 points Save

Excluded from the GDP are

military services

postal services

medical services

nonmonetary transactions

Question 46 2 points Save

The difference between GDP and final sales equals

depreciation

exports

imports

net inventory change

Question 47 2 points Save

In dollar value, the nominal GDP in the United States is in the vicinity of

between 3 and 4 billion

between 4 and 5 billion

between 4 and 5 trillion

between 10 and 12 trillion

Question 48 2 points Save

The GDP and NI figures are not equal because

business profits are included in GDP but not in NI

depreciation and indirect taxes are included in GDP but not in NI

all taxes must be deducted from GDP to arrive at NI

none of the above

Question 49 2 points Save

Current disposable income can be adjusted for price changes and population changes to yield real per capita disposable income.

True

False

Question 50 2 points Save

Personal consumption expenditures account for approximately two-thirds of the GDP in the United States.

True

False