Do You Know Macro?

55 Questions | Attempts: 90
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C Quizzes & Trivia

This is a quick test quiz i just typed up. It's good for studying macro.


Questions and Answers
  • 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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