ECONOMICS FOR MANAGERS ASSESSMENT:
Question 1
If planned investment decreases, the multiplier will decrease the equilibrium income.
True
False
Question 2
The change in the level of planned spending that results from a change in the price level is indicated by the movement of the economy along a given
aggregate expenditure curve
aggregate demand curve
aggregate supply curve
both (a) and (b)
Question 3
In the Keynesian model, whenever unplanned inventory increases occur in the economy, production is likely to
speed up slowly
slow down
remain unchanged
speed up immediately
Question 4
If planned construction investment increases by $30 billion and the MPC is two-thirds, total output will increase by
$30 billion
$20 billion
$45 billion
$90 billion
Question 5
Keynes recommended the use of government deficit spending to overcome widespread unemployment.
True
False
Question 6
According to the Keynesian analysis, as income increases, the marginal propensity to consume will rise.
True
False
Question 7
Say's Law states that
supply is greater than demand
supply is less than demand
demand generates supply
supply generates demand
Question 8
The time lags lead monetarists to contend that monetary policy is counterproductive.
True
False
Question 9
The classical doctrine assumed that the normal equilibrium position for the economy was at full employment.
True
False
Question 10
According to the Keynesian analysis, equilibrium occurs at the point where total aggregate expenditure equals total output.
True
False
Question 11
In the Keynesian model, the most important influence on planned consumption is
the interest rate
expectations
disposable income
the price level
Question 12
The multiplier is the reciprocal of the marginal propensity to consume.
True
False
Question 13
Aggregate expenditure in the U.S. economy includes spending for U.S. output by
households and businesses, but not governments
households, businesses, and the federal government, but not state and local governments
households, businesses, and all governments except foreign ones
households, businesses, and governments, both domestic and foreign
Question 14
The bulk of the M1 money supply is made up of
silver dollars and gold bars
checkable deposits
travelers checks
money market funds
Question 15
If a new cash deposit creates excess reserves of $5,000 and the required reserve ratio is 10 percent, the banking system can increase the money supply by a maximum of
$50,000
$500
$5,000
$4,500
Question 16
An increase in the velocity of money can have an effect similar to that of an increase in the money supply.
True
False
Question 17
If a bank has $60,000 in legal reserves and is subject to a 10 percent reserve requirement, it could have outstanding checkable deposits to the extent of
$60 million
$600,000
$6 million
$60,000
Question 18
If a worker's money wage increases at a faster pace than the CPI, his or her real wage will rise.
True
False
Question 19
The Treasury issues all paper currency today.
True
False
Question 20
Funds that earn a fixed rate of interest and must be held for a stipulated period of time are known as
checkable deposits
time deposits
savings deposits
money market funds
Question 21
Included in the official U.S. money supply are
U.S. government bonds
corporate stocks
checkable deposits
all of the above
Question 22
The U.S. money supply measure that consists of currency plus travelers checks and checkable deposits is referred to as
M1
M2
M3
M1 + M2
Question 23
The quantity theory of money assumes that
the national economy tends to operate at less than full
the velocity of money is unstable
the national economy tends to operate at full employment
the velocity of money varies with changes in interest rates
Question 24
If the CPI in City A is 150 and the CPI in City B is 135,
the dollar has greater purchasing power in City B
prices are higher in City A than they are in City B
City B must be using a different base year
none of the above
Question 25
The value or purchasing power of the dollar can be obtained by dividing $1 by the CPI.
True
False
Question 26
Stored value and smart cards are forms of electronic banking.
True
False
Question 27
Each Federal Reserve Bank has its own board of directors.
True
False
Question 28
The First Bank of the United States was chartered by
the federal government
the state of New York
the city of New York
Suffolk County
Question 29
All members of the Board of Governors are members of the Fed's Open Market Committee.
True
False
Question 30
The Federal Reserve System was established in
1980
1913
1864
1791
Question 31
Members of the Board of Governors are
appointed by Congress
selected by the U.S. President
elected by member banks
selected by the U.S. Treasury Department
Question 32
By buying government securities, the Federal Open Market Committee adds to member banks' reserves.
True
False
Question 33
The Board of Governors of the Federal Reserve System is
under the jurisdiction of the U.S. President
responsible to the Secretary of the U.S. Treasury
independent within the U.S. government
responsible to the Council of Economic Advisors
Question 34
The members of the Board of Governors of the Federal Reserve System are appointed by the U. S. President.
True
False
Question 35
Various studies have recommended changes in the Federal Reserve structure and policy that include
having Congress set the discount rate
placing monetary policy in the control of Congress
dissolving the Board of Governors
making each appointment to the Board of Governors a lifetime appointment
Question 36
If the Federal Open Market Committee desired to tighten credit, it would
buy securities in the open market
sell securities in the open market
lower the discount rate
raise the discount rate
Question 37
Competition in U.S. banking has been increased by
the expansion of interstate banking
the expansion of foreign bank branches into the United States
the movement of brokerage houses and large corporations into traditional banking activities
all of the above
Question 38
If a Federal Reserve Bank wanted to tighten the money supply, it would
lower the reserve requirement
buy securities in the open market
raise the discount rate
lower the discount rate
Question 39
The existence of undistributed corporate profits tends to cause
NNP to be smaller than GDP
national income to be larger than personal income
national income to be smaller than NNP
personal income to be larger than disposable personal income
Question 40
National income is equivalent to total earnings in the form of wages, rent, interest, and profits.
True
False
Question 41
The GDP counts durable goods only during their year of production.
True
False
Question 42
Imports constitute a minus figure in national income accounting.
True
False
Question 43
GDP overstates national income because it does not make any adjustment for national debt.
True
False
Question 44
The national income accounts for the United States are prepared by the
Bureau of Labor Statistics
U.S. Department of Commerce
Federal Reserve Board
President Council of Economic Advisors
Question 45
Excluded from the GDP are
military services
postal services
medical services
nonmonetary transactions
Question 46
The difference between GDP and final sales equals
depreciation
exports
imports
net inventory change
Question 47
In dollar value, the nominal GDP in the United States is in the vicinity of
between 3 and 4 billion
between 4 and 5 billion
between 4 and 5 trillion
between 10 and 12 trillion
Question 48
The GDP and NI figures are not equal because
business profits are included in GDP but not in NI
depreciation and indirect taxes are included in GDP but not in NI
all taxes must be deducted from GDP to arrive at NI
none of the above
Question 49
Current disposable income can be adjusted for price changes and population changes to yield real per capita disposable income.
True
False
Question 50
Personal consumption expenditures account for approximately two-thirds of the GDP in the United States.
True
False.