Do You Know Macro?
This is a quick test quiz i just typed up. It's good for studying macro.
- 1.If the demand for money increases,
- A.
The interest rate will fall
- B.
There will be a movement downward along the money demand curve
- C.
There will be a a movement upward (to the left) along the money demand curve
- D.
There will be a rightward shift of the money demand curve
- E.
There will be a leftward shift of the money demand curve
- 2.Of the following, the major influence on th supply of money is
- A.
Interest rates
- B.
Prices
- C.
The transactions demand for money
- D.
GDP
- E.
The Fed
- 3.Over the past 40 years, he most frequent target for the Fed's monetary policy has been
- A.
The prime interest rate
- B.
The federal funds rate
- C.
The M1 money supply
- D.
The M2 money supply
- E.
The M3 money supply
- 4.Discretionary fiscal policy is policy that
- A.
Is developed in secret
- B.
Applies to some states but not others
- C.
Applies to some industries but not others
- D.
Works automaticaly without public announcement or plan
- E.
Is an intentional change in taxation or government spending
- 5.Assume autonomous net taxes fall by $300, the MPC -2/3. Net exports, planned investment, taxes, and government purchases are autonomous and remain fixed. Disposable income will initially
- A.
Remain unchanged
- B.
Rise by $300
- C.
Rise by $200
- D.
Rise by $900
- E.
Fall by $300
- 6.To close a contractionary gap using fiscal policy, the government can
- A.
Increase government spending by the size of the gap
- B.
Decrease government spending by the size of the gap
- C.
Increase government spending by more than the size of the gap
- D.
Increase government spending by less than the size of the gap
- E.
Decrease government spending by more than the size of the gap
- 7.The opposite of a laissez-faire economic policy is
- A.
Active government intervention
- B.
A reliance on prices to adjust to changing market conditions
- C.
Classical economics
- D.
Neoclassical economics
- E.
Quantity supplied creates its own quantity demanded
- 8.Which of the following is an example of an automatic stabilizer?
- A.
Tax reductions passed by Congress in times of unemployment
- B.
Tax reductions passed by Congress in times of inflation
- C.
Government defense spending
- D.
Unemployment compensation
- E.
Welfare programs
- 9.One thing that policy makers often overlook is
- A.
How quickly fiscal policy can respond to changes in economic conditions
- B.
How fiscal policies unintentionally affect individual incentive to work, spend, save, and invest
- C.
How fiscal policy affects the price level
- D.
How fiscal policy affects the economy's output
- E.
How voters might respond to a policy that increases taxes
- 10.A nominal wage is
- A.
Not about the legal minimum
- B.
Always about the legal minimum
- C.
Measured in terms of goods and services it can buy
- D.
Measured in current dollars rather than in constant dollars
- E.
Measured in constant dollars rather than in current dollars
- 11.The expected price level is significant because
- A.
It is the equilibrium price level in the short run
- B.
It determines the actual price level in the short run
- C.
It determines the actual price level in the long run
- D.
Firms and resource owners make long-term agreements based on the expected price level
- E.
The difference between the expected price level and actual price levels is equal to the actual inflation rate
- 12.If the price level rises by 4% and the nominal wage rises to 6%, the real wage
- A.
Falls by 2%
- B.
Falls by 10%
- C.
Rises by 2%
- D.
Rises by 10%
- E.
Remains constant
- 13.The theory that the longer the unemployment rate remains above the natural rate, the higher will be the natural rate, is known as
- A.
Hysteresis
- B.
Hysterical analysis
- C.
Historical analysis
- D.
Histoplasmosis
- E.
Hypoglycemia
- 14.If planned spending exceeds planned output, the result is
- A.
Unintended inventory increases
- B.
A reduction in GP
- C.
A decrease in imports
- D.
An increase in government purchases
- E.
Unintended inventory reductions
- 15.If the multiplier is 4, a $10 billion increase in autonomous investment will casue a
- A.
$10 billion increase in equilibrium investment
- B.
$40 billion increase in equilibrium investment
- C.
$40 billion increase in equilibrium real GDP demanded
- D.
$400 billion increase in equilibrium real GDP demanded
- E.
$40 billion increase in consumption spending
- 16.Job losses soon after the September 11 attacks could be viewed as just part of the 1st round of reduced aggregate expeniture. The 2nd round occured when
- A.
Government started spending more on national security
- B.
People who lost jobs or feared they would lose their jobs started spending less
- C.
Business invested in back-up data centers in case their main computers were attacked
- D.
Consumers went back to shopping at the urging of gov't officials
- E.
All of the above
- 17.If the MPC is 4/5, the value of the simple multiplier is
- A.
4
- B.
1/5
- C.
4/5
- D.
5/4
- E.
5
- 18.A household that expects a decrease in DI in the future will
- A.
Increase it's current C spending
- B.
Decrease it's current C spending
- C.
Maintain "
- D.
Increase it's current C spending, then increase spening when income falls
- E.
Decrease it's current C spending, then increase spening when income falls
- 19.Investment
- A.
Is about as volatile as consumption, except during recession years
- B.
Has averaged about 1/6 of GDP over the psat decade
- C.
Is about a volatile as GP, except during recession years
- D.
Is the largest component of A.Spending
- E.
Have averaged about 2/3 of GDP over the past decade
- 20.During recession years
- A.
Investment declines while C increase
- B.
I increases while C declines
- C.
I is constant while C declines
- D.
I declines much faster than GDP declines
- E.
C declines much faster than GDP declines
- 21.Fluctuations is in investment
- A.
Account for almost all of the variability in GDP during expansions
- B.
Account for almost all of the variability in GDP
- C.
Account for almost all of the variability in GDP during recessions
- D.
Are larger during expansions than during recessions
- E.
Account for more of the variability in GDP than consumption does
- 22.Households act as suppliers when they provide
- A.
Goods and services to firms and government
- B.
Resources to firms and governments
- C.
Tax payments to governments
- D.
The demand for only what firms supply or make available
- E.
Money to firms in exchange for goods and services
- 23.Which of the following is true about sole proprietorship in the US?
- A.
It is the most comon form of business organization
- B.
It is responsible for a large portion of total production of goods and services
- C.
It offers the owner the least personal liability of any form of business organization
- D.
There is no opportunity cost to operating the business
- E.
Only one individual can work in such a firm
- 24.Which of hte following have their profits taxed twice
- A.
Sole proprietorshops
- B.
Partnerships
- C.
Corporations
- D.
Nonprofit institutions
- E.
S-corporations
- 25.Which of the following is true about government activity in the US?
- A.
Macroeconomic policy is handly mainly at the state level.
- B.
Higher education is handled mainly at the national level.
- C.
Primary and secondary education is handled mainly at the local level.
- D.
Primary and secondary education is handled mainly at the national level.
- E.
Police and fire protection are handled mainly at the state level.
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