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Economics 25 Multiple Choice Questions

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Question;1) Use Table 10.2. The following is the output of a two product economy.Table 10.2 Year 1 Prices Year 2 Prices10 bicycle $400/bicycle $440/bicycle50 snowboards $150/snowboards $200/snowboardsUsing Year 1 as the base year, the price index in this economy in Year 2 is1751101251572) WHICH OF THE FOLLOWING WOULD BENEFIT FINANCIALLY FROM UNANTICIPATED INFLATION?A) A BORROWER WITH AN ADJUSTABLE RATE MORTGAGEB) A FIRM WHOSE WORKERS ARE COVERED BY A COLA AGREEMENTC) A BANK THAT HAS MADE LOANS AT FIXED NOMINAL INTEREST RATED) A BORROWER WHOSE LOAN HAS A FIXED NOMINAL INTEREST RATE3) IF YOUR NOMINAL INCOME RISES AT 5% AND INFLATION HAS RISEN AT 2% YOUR PURCHASING POWER HAS A) STAYED THE SAMEB) INCREASEDC) ERODEDD) FALLEN, BUT WILL INCREASE DUE TO INDEXING4) IF YOUR INCOME GOES UP BY $1,000 PER WEEK, AND YOUR CONSUMPTION GOES UP BY $800 PER WEEK, YOU HAVE A MARGINAL PROPENSITY TO CONSUME OF A) 0.2B) 1.0C) 1.2D) 0.85) DISCRETIONARY FISCAL POLICY IS SUBJECT TO TIME LAGS IN IMPLEMENTATIONA) TRUEB) FALSE6) ALL OF THE FOLLOWING WOULD CAUSE THE DEMAND FOR INVESTMENT TO SHIFT EXCEPTA) A CHANGE IN BUSINESS TAXESB) A CHANGE IN THE REAL INTEREST RATEC) A CHANGE IN PRODUCTIVE TECHNOLOGYD) A CHANGE IN PRODUCER EXPECTATIONS OF FUTURE PROFIT7) IN THE KEYNESIAN MODEL, CONSUMPTIONA) AND SAVING ARE POSITIVELY RELATED TO THE REAL INTEREST RATEB) IS POSITIVELY RELATED TO INCOME BUT SAVING IS NOT SYSTEMATICALLY RELATED TO EITHER INCOME OR INTEREST RATESC) AND SAVING ARE POSITIVELY RELATED TO INCOMED) IS POSITIVELY RELATED TO INCOME AND SAVING IS NEGATIVELY RELATED TO THE STOCK MARKET8) IF THE MARGINAL PROPENSITY TO CONSUME IS.75 AND INVESTMENT SPENDING INCREASES BY $100 BILLION, THEN REAL NATIONAL INCOME WILL INCREASE BYA) $400 BILLIONB) $100 BILLIONC) $75 BILLIOND) $250 BILLION9) IF THE MARGINAL PROPENSITY TO CONSUME IS 0.75 AND THE FISCAL POLICY GOAL IS TO INCREASE REAL NATIONAL INCOME BY $100, THEN A) GOVERNMENT SPENDING NEEDS TO INCREASE BY $25 BILLIONB) SAVING NEEDS TO INCREASE BY $100 BILLIONC) GOVERNMENT SPENDING NEEDS TO INCREASE BY $100 BILLIOND) SAVING NEEDS TO INCREASE BY $25 BILLION10) IF THE MARGINAL PROPENSITY TO CONSUME IS.75, THE VALUE OF THE MULTIPLIER IS 3A) TRUEB) FALSE11) THE DISTRIBUTION OF MONEY MIRRORS THE DISTRIBUTION OF WEALTHA) TRUE B) FALSE12) WHAT CHARACTERISTIC DEFINES SOMETHING AS MONEY?A) ASSETS LEGISLATED BY THE GOVERNMENT TO BE OF VALUEB) A MEDIUM OF EXCHANGE UNIVERSALLY ACCEPTED IN AN ECONOMYC) AN ASSET THAT EARNS INTEREST D) NOTES YOU CAN DEPOSIT IN A SAVINGS ACCOUNT13) THE ONLY WAY THE MONEY SUPPLY EXPANDS IN WHEN THE FEDERAL RESERVE PRINTS MORE MONEYA) TRUEB) FALSE14) FOR SOMETHING TO SERVE AS MONEY, IT MUST BEA) BACKED BY THE AUTHORITY OF THE GOVERNMENTB) LIGHT, DURABLE, AND COMMONC) CONVERTIBLE TO GOLDD) GENERALLY ACCEPTED BY BUYERS AND SELLERS15) THE FEDERAL RESERVE CONTROLS THE MONEY SUPPLY BY A) SETTING THE PRICE LEVEL WITH A SYSTEM OF PRICE CONTROLSB) DETERMINING HOW MUCH CURRENCY TO PRINTC) TELLING BANKS HOW MUCH THEY CAN ACCEPT IN THE WAY OF DEPOSITSD) CHANGING THE AMOUNT OF RESERVES IN THE BANKING SYSTEM16) THE PROFIT MOTIVE EXPLAINS THE UPWARD SLOPE OF AGGREGATE SUPPLYA) TRUEB) FALSE17) IF THE AMOUNT OF GOODS SUPPLIED BY FIRMS EXCEED PLANNED SPENDING THENA) INVENTORIES ACCUMULATE AND FIRMS REDUCE PRICESB) INVENTORIES ACCUMULATE AND FIRMS RAISE PRICESC) INVENTORIES ARE DEPLETED AND FIRMS RAISE PRICESD) INVENTORIES ARE DEPLETED AND FIRMS REDUCE PRICES18) ALL OF THE FOLLOWING ARE COMPONENTS OF AGGREGATE DEMAND EXCEPTA) GOVERNMENT PURCHASESB) CONSUMPTION SPENDINGC) THE LEVEL OF TECHNOLOGYD) INVESTMENT SPENDING19) THE AGGREGATE DEMAND CURVE DEPICTSA) AN INVERSE RELATIONSHIP BETWEEN CHANGES IN THE PRICE LEVEL AND CHANGES IN NOMINAL GDPB) A DIRECT RELATIONSHIP BETWEEN CHANGES IN THE PRICE LEVEL AND CHANGES IN REAL GDPC) A DIRECT RELATIONSHIP BETWEEN CHANGES IN THE PRICE LEVEL AND CHANGES IN THE UNEMPLOYMENT RATED) AN INVERSE RELATIONSHIP BETWEEN CHANGES IN THE PRICE LEVEL AND CHANGES IN REAL GDP20) THE VALUE ON THE AXES OF THE AGGREGATE SUPPLY DIAGRAM ARE A) REAL GDP PER YEAR AND PRICE LEVELB) REAL GDP AND INTEREST RATESC) REAL GDP AND NOMINAL GDPD) NOMINAL GDP AND THE PRICE LEVEL21) BECAUSE INDIVIDUAL DEMAND CURVES SLOPE DOWN, THE AGGREAGE DEMAND CURVES SLOPES UPA) TRUEB) FALSE22) WHICH OF THE FOLLOWING WOULD LIKELY RESULT IN A SHIFT OF THE AD CURVE TO THE RIGHT?A) WORSENING ECONOMIC CONDITIONS IN OTHER COUNTRIESB) TAX DECREASESC) DECREASES IN JOB SECURITYD) TAX INCREASES23) A DECLINE IN CONSUMER CONFIDENCE WILL INCREASE AGGREGATE SUPPLYA) TRUE B) FALSE24) A DECREASE IN THE EXCHANGE RATE VALUE OF THE DOLLAR WILLA) LOWER THE NOMINAL PRICE OF IMPORTED GOODSB) NOT AFFECTED THE BUSINESS SECTORC) NOT AFFECTED THE HOUSEHOLD SECTORD) RAISE THE NOMINAL PRICE OF IMPORTED GOODS25) THE EFFECT OF AN INCREASE IN AGGREGATE SUPPLY IS TO LOWER THE PRICE LEVEL AND TO DECREASE REAL OUTPUTA) TRUE B) FALSE

 

Paper#56850 | Written in 18-Jul-2015

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