Economics Past Paper PDF

1) Which of the following will definitely cause a change in the relative prices of 2 goods? Different rates of change in the prices of the two goods 2) Which of the following is not a basic measure of macroeconomic performance? Public Goods 3) Which of the following types of unemployment is most dir...

1) Which of the following will definitely cause a change in the relative prices of 2 goods? Different rates of change in the prices of the two goods 2) Which of the following is not a basic measure of macroeconomic performance? Public Goods 3) Which of the following types of unemployment is most directly related to real GDP growth? Cyclical Unemployment 4) Which of the following individuals is part of the labor force? The CEO of General Motors 5) An office worker who loses her job because she does not have the necessary computer skills, ceteris paribus: Structurally Unemployed 6) If the price of computers falls during a period when the average price level remains constant, which of the following has occurred? A change in relative prices 7) The U.S. goal for price stability: Is an inflation rate of fewer than 3 percent 8) Over time, U.S. real GDP has increased: At an average rate of 3 percent per year 9) The uncertainty of inflation is likely to affect: Production and Consumption Decisions 10) Important measures of economic performance include economic growth, employment, and price stability. True 11) Monetary policy emphasizes the role of money and interest rates in shifting the aggregate supply curve. False 12) If an economy is experiencing a recession, the Keynesian approach to achieving full employment is to: Use tax cuts or more government spending or both 13) An increase in the average level of prices of goods and services is known as: Inflation 14) Inflation and Unemployment are macroeconomic failures True 15) Which of the following is definitely true if the economy is in macro equilibrium? The price level and the output level may or may not be optimal 16) Which of the following is likely to cause a leftward shift In the aggregate supply curve, ceteris paribus? An increase in the cost of natural gas 17) According to the text, which of the following is not a determinant of macroeconomic outcomes? Economic Growth 18) Which of the following is likely to occur if OPEC increases the amount of oil it supplies and domestic energy prices fall, ceteris paribus? Aggregate supply will increase or shift to the right 19) Say’s Law implies that: The economy will not experience a long term decrease in output 20) If an economy is experiencing a recession, the classical approach to achieving full employment is to: Do nothing and wait for natural market forces to improve the economy 21) Which of the following will definitely reduce a budget a deficit and provide fiscal restraint? Lower government spending and higher taxes 22) All of the following represent government spending as part of aggregate demand except for: Social Security Checks 23) Saving: Is part of disposable income that is not yet spent 24) With respect to the aggregate demand curve, a tax cut will: Shift the curve rightward 25) The total quantity of output demanded at alternative price levels refers to: Aggregate Demand 26) 27) One news wire article in the text says. “After years of living happily beyond their means, Americans are finally facing financial reality.” Ceteris Paribus, a decrease in consumer spending will result in: A leftward shift of the aggregate demand curve 28) If the current level of spending falls short of full employment, the government can close the GDP gap by: Increasing government spending by an amount less than the GDP gap 29) Assume a MPC of 0.75. The change in total spending for the economy as a result of a $20 billion new government spending injection would be: $80 billion 30) Between 1921 and 1927, the stock market’s value more than doubled, adding billions of dollars of the wealth of U.S. households and businesses. Which of the following indicates the appropriate change in the U.S. economy? Aggregate Demand shift to the right 31) Ceteris Paribus, if Tamika pays off a loan at the bank, then over time: The money supply becomes smaller 32) A transactions account is considered to be inconvenient for most people because a trip to the bank is required to access the funds in it False 33) The Federal Reserve System requires banks to maintain a minimum reserve ratio True 34) Money is functioning as a standard of value when you: Use it to compare two houses in different price ranges 35) When money is used to pay for goods and services it is functioning as a: Medium of Exchange 36) The money multiplier represents the relationship between excess reserves and the number of deposit dollars the banking system can generate. True 37) Money is functioning as a medium of exchange if you: Purchase coffee at the local coffee shop before school 38) Transactions accounts make up almost one-third of the basic money supply False 39) Suppose a bank has $1,000,000 in deposits, a minimum reserve requirement of 15 percent, and bank reserves of $170,000. Then the bank can make new loans in the amount of: $20,000 40) Money if functioning as a store of value when you: Decide to save your cash to pay for tuition next semester 41) According to the monetarist view, the aggregate supply curve is: Perfectly vertical at the natural rate of unemployment 42) When the Fed sells bonds in the open market, interest rates ______ and aggregate demand shifts to the _____? Rise, Left 43) By buying bonds, the Fed decreases the quantity of reserves in the banking system and decreases the money supply. False 44) Ceteris Paribus, which of the following will occur if the Fed buys bonds through open-market operations? The aggregate demand curve should shift rightward 45) 46) The key decision maker for general Federal Reserve policy is the: Board of Governors 47) When the Fed announces that it is raising the federal funds rate, this signals its intention to ______ bonds in the open market and _______ the money supply. Sell, Reduce 48) If the Fed wishes to increase the money supply it can: Decrease the discount rate 49) The 12 regional Fed banks do all of the following except: Lend money to individuals 50) The Board of Governors has ____ members, and they are appointed for _____ year terms. 7, 14 51) Suppose that in a population of 100 million people, 50 million are in the labor force and 47 million are employed. The unemployment rate is: 6.0 percent 52) If the number of dollars you receive every year is the same, but prices are rising, then your nominal income: Stays the same but your real income falls 53) The business cycle is the alternating periods of economic growth and contraction. True 54) According to Keynes: Government intervention in the economy is necessary at times 55) Keynesian economists advocate active government policy during periods of high unemployment and low output. True 56) The marginal propensity to consume is: The fraction of each additional dollar of disposable income spent on consumption 57) The aggregate demand curves shifts to the left when: Government purchases are decreased 58) Which of the following helps explain the multiplier effect? Income is spent and re-spent in the circular flow model 59) If the marginal propensity to save is 0.1 and government spending is raised by $5 billion, then total aggregate spending will rise by: $50 billion 60) For a single bank in a large banking system, excess reserves are equal to the: Amount of loans a bank can make after meeting the reserve requirement 61) Deposit creation possibilities are greater with a larger minimum reserve requirement. False 62) When you purchase jeans at the mall, money is serving as a medium of exchange. True 63) The chairman of the Federal Reserve Board of Governors: Serves a 4 year term and can be reappointed 64) If a bank does not have enough reserves, it can: Borrow reserves from the discount window 65) The principal mechanism for directly changing the reserves of the banking system is: Open-market operations