Question 1

When recessions occur,advocates of small government should recommend

Accepted Answer

A)  reductions in the number of federal employees. 
B)  reductions in transfer payments. 
C)  reductions in taxes. 
D)  increases in transfer payments and government spending. 
A)  reductions in the number of federal employees. 
B)  reductions in transfer payments. 
C)  reductions in taxes. 
D)  increases in transfer payments and government spending.

Question 2

In terms of the price-real GDP diagram,a given expansion of the money supply will have a greater effect on prices the

Accepted Answer

A)  steeper the aggregate supply curve. 
B)  flatter the aggregate supply curve. 
C)  higher the initial price level. 
D)  lower the initial price level. 
A)  steeper the aggregate supply curve. 
B)  flatter the aggregate supply curve. 
C)  higher the initial price level. 
D)  lower the initial price level.

Question 3

____ is a school of economic thought which uses equation of exchange to analyze the macro economic data.

Accepted Answer

A)  Mercantilism 
B)  Monetarism 
C)  Supply side economics 
D)  Keynesianism 
A)  Mercantilism 
B)  Monetarism 
C)  Supply side economics 
D)  Keynesianism

Question 4

How rapidly does the economy's self-correcting mechanism work? Most economists agree that it

Accepted Answer

A)  works quickly and reliably. 
B)  works slowly and not very reliably. 
C)  works reliably,but not very quickly. 
D)  does not work at all. 
A)  works quickly and reliably. 
B)  works slowly and not very reliably. 
C)  works reliably,but not very quickly. 
D)  does not work at all.

Question 5

The reason that velocity increases when interest rates rise is

Accepted Answer

A)  the Fed encourages banks to turn money in faster for recycling,which causes money to move faster. 
B)  the opportunity cost of saving increases,so people hold smaller cash balances. 
C)  home mortgage payments increase,so people write larger checks that reduces their checking account balances. 
D)  the opportunity cost of holding money increases,so average money balances decrease. 
A)  the Fed encourages banks to turn money in faster for recycling,which causes money to move faster. 
B)  the opportunity cost of saving increases,so people hold smaller cash balances. 
C)  home mortgage payments increase,so people write larger checks that reduces their checking account balances. 
D)  the opportunity cost of holding money increases,so average money balances decrease.

Question 6

President George W.Bush's tax cut in 2001 was a rare example of

Accepted Answer

A)  timely monetary policy. 
B)  timely fiscal policy. 
C)  the slow response of policy to events. 
D)  the inability of Congress to react to policy needs. 
A)  timely monetary policy. 
B)  timely fiscal policy. 
C)  the slow response of policy to events. 
D)  the inability of Congress to react to policy needs.

Question 7

The equation M × V = P × Y is called the

Accepted Answer

A)  multiplier formula. 
B)  transactions formula. 
C)  equation of exchange. 
D)  balanced exchange formula. 
A)  multiplier formula. 
B)  transactions formula. 
C)  equation of exchange. 
D)  balanced exchange formula.

Question 8

Which of the following is an example of the Fed's use of unconventional monetary policy?

Accepted Answer

A)  buying assets other than Treasury bills 
B)  participating in rescue operations for troubled financial institutions 
C)  lending massive amounts to banks and other financial institutions 
D)  all of the above 
A)  buying assets other than Treasury bills 
B)  participating in rescue operations for troubled financial institutions 
C)  lending massive amounts to banks and other financial institutions 
D)  all of the above

Question 9

Velocity is commonly calculated by which of the following formulas?

Accepted Answer

A)  (Value of money stock)/(Value of nominal GDP) 
B)  (Value of transactions)/(money stock) 
C)  (Value of financial transactions)/(GDP) 
D)  (Value of output)/(Value of input) 
A)  (Value of money stock)/(Value of nominal GDP) 
B)  (Value of transactions)/(money stock) 
C)  (Value of financial transactions)/(GDP) 
D)  (Value of output)/(Value of input)

Question 10

If the aggregate supply curve is steep,

Accepted Answer

A)  increased aggregate demand will not lead to higher prices. 
B)  greater demand for labor will not cause significant wage increases. 
C)  business firms are probably producing near capacity. 
D)  All of the above are correct. 
A)  increased aggregate demand will not lead to higher prices. 
B)  greater demand for labor will not cause significant wage increases. 
C)  business firms are probably producing near capacity. 
D)  All of the above are correct.

Question 11

Critics of macroeconomic stabilization policies argue that

Accepted Answer

A)  economists are unable to influence policy. 
B)  stabilization policies often do more harm than good. 
C)  stabilization theory has no practical effect. 
D)  policy makers need practical advice,not theory. 
A)  economists are unable to influence policy. 
B)  stabilization policies often do more harm than good. 
C)  stabilization theory has no practical effect. 
D)  policy makers need practical advice,not theory.

Question 12

In 2005-2006,the Fed increased interest rates in an attempt to halt inflation.What was the most likely effect of raising interest rates on velocity?

Accepted Answer

A)  It will decrease. 
B)  It will increase. 
C)  It will remain constant. 
D)  Velocity is unrelated to saving accounts. 
A)  It will decrease. 
B)  It will increase. 
C)  It will remain constant. 
D)  Velocity is unrelated to saving accounts.

Question 13

The equation of exchange is an accounting identity,not an economic theory.

Accepted Answer

A) True 
 B)False

Question 14

The historical data on velocity shows that velocity for

Accepted Answer

A)  M1 has fallen since 1929 and has become more stable since 1981. 
B)  M1 has risen since 1949 and has become more volatile since 1981. 
C)  both M1 and M2 have increased since 1949 but have become more stable since 1979. 
D)  both M1 and M2 have declined since 1949. 
A)  M1 has fallen since 1929 and has become more stable since 1981. 
B)  M1 has risen since 1949 and has become more volatile since 1981. 
C)  both M1 and M2 have increased since 1949 but have become more stable since 1979. 
D)  both M1 and M2 have declined since 1949.

Question 15

The equation of exchange is an accounting identity that

Accepted Answer

A)  relates the money supply to nominal GDP. 
B)  equates the demand for money with the supply of money. 
C)  relates the money supply to real GDP. 
D)  accounts use to balance assets and liabilities. 
A)  relates the money supply to nominal GDP. 
B)  equates the demand for money with the supply of money. 
C)  relates the money supply to real GDP. 
D)  accounts use to balance assets and liabilities.

When recessions occur,advocates of small government should recommend

In terms of the price-real GDP diagram,a given expansion of the money supply will have a greater effect on prices the

____ is a school of economic thought which uses equation of exchange to analyze the macro economic data.

How rapidly does the economy's self-correcting mechanism work? Most economists agree that it

The reason that velocity increases when interest rates rise is

President George W.Bush's tax cut in 2001 was a rare example of

The equation M × V = P × Y is called the

Which of the following is an example of the Fed's use of unconventional monetary policy?

Velocity is commonly calculated by which of the following formulas?

If the aggregate supply curve is steep,

Critics of macroeconomic stabilization policies argue that

In 2005-2006,the Fed increased interest rates in an attempt to halt inflation.What was the most likely effect of raising interest rates on velocity?

The equation of exchange is an accounting identity,not an economic theory.

The historical data on velocity shows that velocity for

The equation of exchange is an accounting identity that

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

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Exam 15: The Debate Over Monetary and Fiscal Policy

When recessions occur,advocates of small government should recommend

In terms of the price-real GDP diagram,a given expansion of the money supply will have a greater effect on prices the

____ is a school of economic thought which uses equation of exchange to analyze the macro economic data.

How rapidly does the economy's self-correcting mechanism work? Most economists agree that it

The reason that velocity increases when interest rates rise is

President George W.Bush's tax cut in 2001 was a rare example of

The equation M × V = P × Y is called the

Which of the following is an example of the Fed's use of unconventional monetary policy?

Velocity is commonly calculated by which of the following formulas?

If the aggregate supply curve is steep,

Critics of macroeconomic stabilization policies argue that

In 2005-2006,the Fed increased interest rates in an attempt to halt inflation.What was the most likely effect of raising interest rates on velocity?

The equation of exchange is an accounting identity,not an economic theory.

The historical data on velocity shows that velocity for

The equation of exchange is an accounting identity that

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters