U S Macroeconomics Trivia Questions

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Macroeconomics Quizzes & Trivia

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  • 1. 
    Faced with growing problems in Asia, the US government spent several billion dollar buying Japanece yen. This action was intended to:
    • A. 

      Increase the supply of Japanese yen in Asia

    • B. 

      Increase the supply of Japanese yen in the US

    • C. 

      Weaken the Japanese yen and strenghten the US dollar

    • D. 

      Strengthen the Japanese yen and make the Japanese exports less expensive

    • E. 

      Strengthen the Japanese yen and make Japanese exports more expensive

  • 2. 
    Under the Bretton Woods system,
    • A. 

      Foreign currencies could be converted into US dollars, which could be redemmed for gold at a rate determined by supply and demand

    • B. 

      Foreign currency currencies could be converted into US dollars, which could be redemmed for gold at a rate of 35 dollars per ounce

    • C. 

      Foreign currencies could be converted into gold at a rate determined by supply and demand

    • D. 

      Foreign currencies could be converted into gold at a rate of $35 per ounce

    • E. 

      Gold was the international medium of exchange

  • 3. 
    If the U.S. dollar appreciates in the foreign exchange market,
    • A. 

      American goods will become more expensive for foreign buyers and foreign goold will be cheaper for Americans

    • B. 

      American goods will become less expensive for foreign buyers and foreign goods will be more expensive for Americans

    • C. 

      American goods will become more expersive and foreign goods will be more expensive for Americans

    • D. 

      American goods will become cheaper for foreign buyers and foreign goods will be cheaper for Americans

    • E. 

      Neither the price of U.S. exports nor the price oof U.S. imports will change

  • 4. 
    If the exchange rate has been $1.50 per British pound but now falls to $1.25 per British pound, there will be
    • A. 

      More U.S. imports from Great Britain because the price of pounds has fallen

    • B. 

      More exports to Great Britain because the price of pounds has risen

    • C. 

      Fewer exports to Great Britain because the price of the pound has risen

    • D. 

      More US exports to Great Britain since the price of the dollar has falen

    • E. 

      No change in either exports or imports

  • 5. 
    If the US dollar depreciates, it means that
    • A. 

      The value of the US dollar has increased

    • B. 

      The value of foreign exchange has decreased

    • C. 

      Fewer dollars are required to purchase foreign exchange

    • D. 

      More dollars are required to purchase foreign exchange

    • E. 

      Exports will immediately fall

  • 6. 
    The inflation associated with the oil embargoes of the 1970's resulted in
    • A. 

      Reduced unemployment because aggregate demand increased

    • B. 

      Reduced unemployment because aggregate demand fell

    • C. 

      Increased unemployment because aggregate demand increased

    • D. 

      Increased unemployment because aggregate demand fell

    • E. 

      Increased unemployment because aggregate supply fell

  • 7. 
    The time it takes to identify and examine the nature and seriousness of an economic problem is the
    • A. 

      Activity lag

    • B. 

      Decision-making lag

    • C. 

      Effectiveness lag

    • D. 

      Implementation lag

    • E. 

      Recognition lag

  • 8. 
    If those who favor an active approach to policy think that the natural rate of unemployment is much lower than it actually is and act accordingly, the long-run result of their error will be
    • A. 

      Unemployment

    • B. 

      A higher level of potential output

    • C. 

      A higher price level

    • D. 

      A lower price level

    • E. 

      A shift of the long-run aggregate supply curve

  • 9. 
    Velocity measures
    • A. 

      The average length of time that people hold wealth

    • B. 

      How fast aggregate spending will increase for a given decline in money demand

    • C. 

      How fast inflation will rise for a given increase in the money supply

    • D. 

      How quickly money changes hands

    • E. 

      How quickly banks create money

  • 10. 
    A decrease in the interest rate will
    • A. 

      Shift the demand for money curve to the right

    • B. 

      Shift the demand for money curve to the left

    • C. 

      Increase the quiantity of money people want to hold

    • D. 

      Decrease the quantity of money people want to hold

    • E. 

      Have no impact on the demand for money curve

  • 11. 
    If the interest rate rises, people hold
    • A. 

      Less money because its opportunity cost has increased

    • B. 

      More money because its opportuniy cost has increased

    • C. 

      Less money because its opportunity cost has declined

    • D. 

      More money because its opportunity cost has declined

    • E. 

      The same amount of money

  • 12. 
    The immediate effect of a bank's purchases of U.S. government securities from the Fed is a(n)
    • A. 

      Decrease in the bank's liabilities

    • B. 

      Increase in the bank's liabilities

    • C. 

      Increase in the bank's required reserve

    • D. 

      Increase in the bank's actual reserves

    • E. 

      Decrease in the bank's actual reserves

  • 13. 
    When people choose to hold some of a newly recieved loan as cash in stead of keeping it in a checking account, the money supply
    • A. 

      Will not increase as a result of that loan

    • B. 

      Decrease as a result of that loan

    • C. 

      Will not increase as much from that point on as it would if borrowers redeposited all of the money because the cash withdrawl increase excess reserves

    • D. 

      Will not increase as much from that point on as it would if borrowers redeposited all of the money because cash is not include in the money supply

    • E. 

      Will not increase as much from that point on as it would if borrowers redeposited all of the money because the cash withdrawal decreases excess reserves

  • 14. 
    Banks create new deposits by
    • A. 

      Lending out excess reserves

    • B. 

      Lending out required reserves

    • C. 

      Raising interest rates on loans

    • D. 

      Calling in loans

    • E. 

      Printing new checks

  • 15. 
    Monetary policy is
    • A. 

      Controlled by the president, who appoints the members of the Board of Governors

    • B. 

      Controlled by the president, who appoints the member of the Open Market Committee

    • C. 

      Insulated from politics since the term of only two members of the Board of Governers expire during tenure of any modern President of thhe U.S.

    • D. 

      Insulated from the tenure of any modern President of the US

    • E. 

      Controlled by the president

  • 16. 
    In Germany after World War II, prices were set well below what people though they should be. As a result,
    • A. 

      Sellers stopped accepting money, and this forced people to borrrow

    • B. 

      The German mark no longer served as a unit of account

    • C. 

      Gresham's Law took effect when people switched to flat money

    • D. 

      The German price level rose

    • E. 

      Nominal GDP fell while real GDP increased

  • 17. 
    Who is famous for  his observation that bad money drives out good money?
    • A. 

      John Maynard Keynes

    • B. 

      Thomas Gresham

  • 18. 
    How does money function as a unit of account?
    • A. 

      Money has intrinsic worth as a commodity

    • B. 

      Money is convertible into commodities that have intrinsic worth

    • C. 

      The prices of all goods and services are measured in terms of money

    • D. 

      Things that function as money can do so because people know there is a standard of value that ultimately backs the money even if it is only faith

    • E. 

      Bank accounts make it easy for people to store their wealth

  • 19. 
    Which of the following does NOT limit the effectiveness of discretionary fiscal policy?
    • A. 

      The difficulty of estimating the natural rate of unemployment

    • B. 

      Time lags involved in enacting appropriate legislation

    • C. 

      The difficulty of getting an accurate measure of the rate of inflation

    • D. 

      Time lags involved in recognizing the need for fiscal policy

    • E. 

      The tendency for people to distinguish between temporary and permanent changes in their income

  • 20. 
    By how much would government purchases have to change if the government wanted to increase income by $1000 and the MPC were point 9
    • A. 

      $100

    • B. 

      $900

    • C. 

      $1000

    • D. 

      $10000/9

    • E. 

      $10,000

  • 21. 
    When the short-run aggregate supply (SRAS) curve has a positive slope, effective fiscal policy to correct for an expansionary gap will
    • A. 

      Only reduce the PL

    • B. 

      Only reduce real GDP

    • C. 

      Only increase the PL

    • D. 

      Only increase real GDP

    • E. 

      Reduce both the price level and real GDP

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