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ECO - Multiple Choice Questions

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Question;1. The dynamic aggregate demand curve is A) upward sloping. B) downward sloping. C) a vertical line. D) a horizontal line. 2 The Solow growth curve is A) upward sloping. B) downward sloping. C) a vertical line. D) a horizontal line. 3. Which of the following can shift the Solow growth curve? A) wars B) increases in technology C) strikes D) Each of these answers is correct. 4. A negative real shock causes the Solow growth curve to shift A) up. B) down. C) left. D) right. 5. Wages that do not respond quickly to changes in the inflation rate are A) real wages. B) flexible wages. C) decreasing wages. D) sticky wages. 6. The short-run aggregate supply curve is A) upward sloping. B) downward sloping. C) a vertical line. D) a horizontal line. Page 2 7. A negative real shock causes A) a lower inflation rate and a lower real growth rate. B) a lower inflation rate and a higher real growth rate. C) a higher inflation rate and a lower real growth rate. D) a higher inflation rate and a higher real growth rate. 8. From Point X in the accompanying dynamic aggregate demand model, a negative real shock will cause the economy to move to Point A) W. B) X. C) Y. D) Z. Page 3 9. Beginning at Point A in the diagram above, what is the short-run growth rate in this economy after a positive shock to aggregate demand? A) 6 percent B) 3 percent C) 1.2 percent D) 2 percent 10. Beginning at Point A in the diagram above, what is the short-run growth rate in this economy after a negative shock to aggregate demand? A) 6 percent B) 3 percent C) 1.2 percent D) 2 percent 11. According to the diagram above, what is the long-run growth rate in this economy after a positive money shock? A) 3 percent B) 4 percent C) 6 percent D) 2 percent 12. In the short run, what happens to the economy when consumer spending decreases in the AD and SRAS model? A) Inflation is higher and the real growth rate is higher. B) Inflation is higher and the real growth rate is lower. C) Inflation is lower and the real growth rate is higher. D) Inflation is lower and the real growth rate is lower. 13. Which of the following causes the dynamic AD curve to shift left (decrease)? I. increased taxes II. increased consumer confidence III. increased import growth A) I and II only B) II and III only C) I and III only D) I, II, and III 14. Who is Janet Yellen? A) Secretary of the U.S. Treasury B) Chair of the President's Council of Economic Advisors C) Vice President of the United States D) Chair of the Federal Reserve Page 4 15. The Federal Reserve is the A) federal government's bank. B) U.S. central bank. C) banker's bank in the United States D) Each of these answers is correct. 16 The monetary base (MB) refers to A) currency. B) currency plus total reserves held at the Fed. C) currency plus checkable deposits. D) currency, savings deposits, money market mutual funds, and small time deposits. 17. M1 refers to A) currency. B) currency plus total reserves held at the Fed. C) currency plus checkable deposits. D) currency, checkable deposits, savings deposits, money market mutual funds, and small-time deposits. 18. What part of the money pyramid does the Fed have direct control over? A) the monetary base B) M1 C) the monetary base plus M1 D) M2 19. Which of the following is the most liquid asset? A) currency B) checkable deposits C) savings deposits D) money market mutual funds 20. If the required reserve ratio is 4 percent, the money multiplier is A) 4. B) 16. C) 20. D) 25. 21. Suppose the reserve ratio is 20 percent for all banks. If the Fed increases bank reserves by $200, then the money supply will A) decrease by $400. B) increase by $400. C) decrease by $1,000. D) increase by $1,000. Page 5 22. Suppose you deposit $1,000 in your checking account. If the reserve ratio is 10 percent, how much of your deposit can the bank loan out? A) $0. B) $100. C) $900. D) $1,000. 23. When the Federal Reserve makes an open market purchase, the reserves of the banking system will A) increase. B) decrease. C) remain constant. D) become difficult to predict. 24. If the Fed buys bonds in the open market, I. investment spending should increase. II. short-term interest rates should increase. III. inflation could increase. A) I and II only B) II and III only C) I and III only D) I, II, and III 25. An increase in money growth will cause the economy's AD curve to A) not shift. B) shift inward. C) shift outward. D) shift outward during expansions and inward during contractions.

 

Paper#57457 | Written in 18-Jul-2015

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