U S Macroeconomics Trivia Questions
Study for final exam
- 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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