Macroeconomics Questions


Question 1 (1 point)

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The actual change in the money supply equals


Question 2 (1 point)

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The required reserve ratio equals 10 percent and all banks initially have zero excess reserves. The Fed buys $1 million in U.S. government securities. The most the money supply can increase is


Question 3 (1 point)

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The more people decide to hold currency, the


Question 4 (1 point)

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The discount rate is the


Question 5 (1 point)

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The most precise way the Fed has to control the money is


Question 6 (1 point)

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According to the above figure, a shortage is shown between which two points?


Question 7 (1 point)

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A decrease in demand and a decrease in supply will lead to a


Question 8 (1 point)

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If the current price of a market basket of goods is $850 and the base year price for the same market basket is $500, what is the value of the price index?


Question 9 (1 point)

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The only way that a society can produce outside the production possibilities curve is


Question 10 (1 point)

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Suppose the tax rate on the first $10,000 income is 0; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $30,000; and 40 percent on any income over $80,000. Family A has income of $40,000 and Family B has income of $100,000. What is the marginal and average tax rate for each family?


Question 11 (1 point)

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The marginal tax rate is equal to


Question 12 (1 point)

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One solution to the Social Security problem cited in the text is to


Question 13 (1 point)

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Social Security taxes are regressive because


Question 14 (4 points)

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Assume an open, mixed economy (C + I + G + X = real GDP) and an MPS of .2 What is the multiplier?


Question 15 (1 point)

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The U.S. fiduciary monetary system


Question 16 (1 point)

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Refer to the above table. The value of M1 is


Question 17 (1 point)

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Possession of information by one party in a financial transaction but not by the other party is


Question 18 (1 point)

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The Federal Reserve bank is managed by


Question 19 (1 point)

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As a “lender of last resort” the Fed


Question 20 (1 point)

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Required reserves are


Question 21 (1 point)

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A bank with deposits of $500 million has $75 million in cash on hand, $50 million in deposits with the Fed, and $80 million in government securities. If the reserve requirement is 15 percent, the bank has excess reserves of


Question 22 (1 point)

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A bank with $100 million in deposits has $6 million in vault cash, $6 million on deposit with the Fed, and $6 million in government securities. The reserve requirement is 20 percent. A person deposits a check for $10 million drawn on another bank. The maximum loan this bank can make once the check clears is


Question 23 (1 point)

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Assuming a reserve ratio of 10 percent, if a bank sells $100,000 in securities how much can the bank loan out?


Question 24 (1 point)

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When the Fed buys a U.S. bond in the open market


Question 25 (1 point)

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The Fed buys securities and gives a bond dealer a check for the amount. After the check has cleared,


Question 26 (1 point)

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The required reserve ratio is 20 percent. The bank of a bond dealer has $100 million in deposits, $10 million in vault cash, $10 million in deposits with the Fed, and $10 million in government securities. The Fed buys $1 million in securities from the bond dealer. As a result of the transaction,


Question 27 (1 point)

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A purchase of U.S. government securities by the Fed causes


Question 28 (1 point)

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Fiscal policy is


Question 29 (1 point)

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Automatic stabilizers work by


Question 30 (1 point)

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Which of the following represent expansionary fiscal policy?


Question 31 (1 point)

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If the economy is experiencing an inflationary gap and the government wants to accelerate the adjustment to the long-run equilibrium, it should


Question 32 (1 point)

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Which of the following actions could be undertaken if the government wants to close a recessionary gap?


Question 33 (1 point)

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Suppose the government increases lump-sum taxes. This causes


Question 34 (2 points)

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Refer to the above figure. An increase in taxes will lead to a(n)


Question 35 (2 points)

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Refer to the above figure. Suppose the economy is operating at point A. There is a recessionary gap of ________, which can be closed by ________.


Question 36 (1 point)

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If the government increases spending but doesn’t raise taxes,


Question 37 (1 point)

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If the supply of investment funds is horizontal and the government increases spending by $200 billion, the change in real GDP will be (assuming a marginal propensity to consume of 0.8)


Question 38 (1 point)

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Expansionary fiscal policy falls short of its goal. Some economists claim it is due to indirect crowding out. What evidence is consistent with this claim?


Question 39 (1 point)

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If the economy is below its full-employment level of real GDP, a supply-side economist would argue the appropriate policy is


Question 40 (1 point)

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Suppose there are two policy options facing a vote in the Senate. In the first, government spending will increase $50 billion, while the second option is to cut taxes by $50 billion. A Keynesian economist would argue for


Question 41 (1 point)

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The government spends exactly what it receives in taxes is


Question 42 (1 point)

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The difference between the gross public debt and the net public debt is that the


Question 43 (1 point)

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Which of the following statements is true about the public debt and future generations?


Question 44 (1 point)

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In the short-run, a budget deficit, when the economy has a recessionary gap, can


Question 45 (1 point)

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What happens when the government imposes a unit excise tax on a good?


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