Assignment:
1) Calculate the tax multiplier for an MPC of 0.8.
2) Calculate the effect of a decrease in taxes of $100,000.
3) Calculate the government spending multiplier for an MPC of 0.8.
4) Calculate the effect of an increase in government spending of $100,000.
5) What is the Balanced Budget multiplier for an MPC of 0.8?
6) What is the potential deposit multiplier (or money multiplier) when the required reserve ratio is 10%?
7) What is the potential deposit creation for an Open Market Purchase of $50,000 given RRR = 10%?
8) What is the potential macroeconomic effect of an Open Market Sale of $10,000 given RRR = 10%?
9) If the MPC = .75 and autonomous consumption = $100 For an income of $1000 Consumption will be:
10) Given the above information savings will be:
11) Given the above if income increases to $1500; consumption will be:
12) The most frequently used tool of monetary policy is:
13) A commonly cited measure of income distribution is:
14) In the Quantity Theory of Money, P x Q =
15) According to quantity theorists, expansionary monetary policy can only result in:
16) GDP per capita is a sufficient or Insufficient measure of social welfare. (circle one)
17) A deficit in the current account is the result of
a. The accumulation of too much debt
b. Government spending greater than tax revenue
c. Exports greater than imports
d. Imports greater than exports
18) An Increase in investment in the economy will
a. Increase real output
b. Increase GDP
c. Increase employment
d. Be multiplied throughout the economy
e. All of the above
19) An environmental disaster:
a. will decrease GDP as measured
b. reduce social welfare
c. the real costs will be accounted for in the national accounts
d. all of the above
20) The primary determinant of investment is:
a. The cost of money
b. The interest rate
c. The opportunity cost of money
d. All of the above
21) Macroeconomic policies became more influenced by Keynes's theories starting with:
a. The period of high unemployment and inflation in the 1970s
b. The Great Depression
c. The period of high inflation in the early 1980s.
d. The OPEC recession.
22) A simultaneous increase in the overall price level and Inflation is known as:
a. Deflation
b. Recession
c. Inflation
d. Stagflation
23) The Phillips curve illustrates
a. The observation of the normally inverse relationship between inflation and unemployment.
b. A policy recommendation that inflation be traded off for employment and vice versa.
c. A & b
d. None of the above
24) Gross Domestic Product (GDP) measures:
a. The total spending of everything in the economy.
b. The value of all output in the economy.
c. The total income of everyone in the economy.
d. All of the above.
25) Which of the following is an example of a final good or service?
a. Wheat a bakery purchases to make bread.
b. Coffee beans Starbucks purchases to make coffee.
c. Lumber purchased by a construction company to be used in building houses.
d. A tractor purchased by a farmer to cultivate his farm.
26) Which of the following is an example of an intermediate good?
a. The dough you buy to fix yourself a pizza for dinner
b. The chocolate you buy to make yourself some cookies.
c. The pizza sauce you purchase to make pizzas to sell at a fundraiser.
d. None of the above.
27) Nominal GDP is gross domestic product measured
a. In the prices of a base year
b. In current dollars
c. At a constant level but at the base-year prices
d. As the difference between the current year's GDP and the last year's GDP.
28) Real GDP is gross domestic product measured
a. At constant output but at current prices
b. In current dollars
c. In the prices of a base year
d. As the difference between the current year's GDP and last year's GDP
29) A highly valued currency on world markets
a. Decreases that country's trade deficit.
b. Is a sign of a weak economy
c. Increases the cost of imports into the country
d. Decreases the cost of exports from the country.
30) A country's exchange rate is a derived demand determined by:
a. Demand for that country's goods and services domestically
b. demand for that country's goods and services by international markets
c. the price of input costs
d. the price of labor
e. all of the above
31) For a person to be considered out of the labor force, they could be
a. A full time student
b. A full time volunteer
c. A full time retiree
d. Any of the above
32) When an individual quits his or her job and decides to stay home for a while, the labor force participation rate
a. Decreases
b. Increases
c. Stays the same
d. May increase or decrease depending on the length of time
33) Classifying discouraged workers as unemployed would
a. Increase the unemployment rate
b. Decrease the unemployment rate
c. Not change the unemployment rate
d. Have an indeterminate effect on the unemployment rate
34) An individual who cannot find a job because his or her job skills have become obsolete is an example of
a. Frictional unemployment
b. Structural unemployment
c. Cyclical unemployment
d. Seasonal unemployment