Banca Dati Politica Economica PDF - Multiple Choice Questions

MULTIPLE CHOICE QUESTIONS 1. Monetary policy involves: a. the choice of the average rate of growth of money b. the choice of an average inflation rate c. both previous answers are true 2. Real GDP is a measure of a country's: a. wealth b. money c. aggregate output 2bis. Real GDP is a measure of a...

MULTIPLE CHOICE QUESTIONS 1. Monetary policy involves: a. the choice of the average rate of growth of money b. the choice of an average inflation rate c. both previous answers are true 2. Real GDP is a measure of a country's: a. wealth b. money c. aggregate output 2bis. Real GDP is a measure of a country's: a. wealth b. money c. physical output 3.The nominal exchange rate corresponds: a. to the inverse of the real exchange rate b. the ratio between the average price of foreign goods and the average price of domestic goods c. the price of the domestic currency in terms of foreign currency 4. What is meant by trade surplus? a. Exports are positive b. A positive difference between the value of exports and imports c. None of the above answers are true 5. The investment is the component of aggregate demand: a. that depends on direct taxes b. more unstable because it is also affected by expectations c. positively related to the interest rate 6. The marginal propensity to save: a. it is equal to the complement to 1 of the marginal propensity to consume b. it is equal to the marginal propensity to consume c. may be greater than 1 7. Which of these policy interventions cause a leftward shift of the IS curve? a. an increase in government spending b. monetary expansion c. an exogenous increase in taxation 8. A policy that increases the disposable income is realized through: a. an increase in government spending b. a reduction of the tax burden c. an increase in the interest rate 9. The GDP is defined as: a. the value of final goods and services produced in the economy in a given period of time b. the value of intermediate goods produced in the economy in a given period of time c. the value of final goods produced in the economy in a given period of time 10. The liquidity trap is a situation where: a. the inflation rate fell to zero b. the interest rate dropped to zero and the audience holds liquidity c. the market expects an increase in the price of securities 11. An increase in the money supply can be caused by: a. open market operations b. an increase in aggregate production c. an increase in the official rate of refinancing 12. If the government increases its purchases by $100 and the multiplier is 4, then equilibrium real GDP demanded: a. increases by $25 b. increases by $400 c. decreases by $400 13. Which of the following policy options would simultaneously increase interest rates and decrease output? a. The Federal Reserve Board sells bonds through open market operations. b. The federal government increases its defence purchases. c. The Federal Reserve Board expands the money supply. 14. Intermediate goods are excluded from GDP because: a. they represent goods that have never been purchased so they cannot be counted b. their inclusion would understate GDP c. their inclusion would involve double counting 15. If nominal GDP rises we can say that: a. production has fallen and prices have risen b. production has risen and prices remain constant c. production has risen or prices have risen or both have risen 16. In the Keynesian model of aggregate expenditure, real GDP is determined by the: a. level of aggregate demand b. price level c. level of aggregate supply 17. If disposable income increases, consumption expenditures: a. increase by the same amount b. increase by a larger amount c. increase by a smaller amount 18. The IS curve shows the combinations of output and the real interest rate for which a. the goods market is in equilibrium b. the labour market is in equilibrium c. the exchange market equilibrium 19. The unemployment rate measures the percentage of: a. the working-age population who can't find a job b. people in the labour force who can't find a job c. people who want full-time jobs, but can't find them 20. Assume that the total labour force is 200 individuals with 20 unemployed. The unemployment rate is________. Now assume that 40 people drop out of the labour force and that 20 remain unemployed. The new unemployment rate is ________. a. 10 percent, 12,5 percent b. 11 percent, 10 percent c. 10 percent, 9 percent 21. Investment is defined as: a. the purchase of a stock or bond b. what consumers do with their savings c. the purchase of new capital goods firms 22. Total expenditure equals: a. C + I + G + NX b. C + I + G – NX c. C − I + G + NX 23. The demand for money is effected by: a. the exchange rate b. the interest rate c. the supply money 24. An expansionary open market operation is: a. when the central bank buys bonds b. when the central bank sells bonds c. when the central bank increases the price of bonds 25. Fiscal policy is: a. the tax strategy adopted by the government in the medium run b. the means by which a government adjusts its spending levels and tax rates c. the list of the tax rates to be applied to consumers and firms 26. Inflation: a. means a sustained increase in the aggregate or general price level in an economy b. is measured by the consumer price index c. both previous answers are true 27. Money supply is determined by: a. the level of interest rate b. the government together with the central bank c. the central bank 28. What is a policy mix? a. a combination of a country's monetary and fiscal policy b. a combination of restrictive and expansive fiscal policy c. policy makers strategy 29. Which of these policy interventions cause an downward shift of the LM curve? a. an increase in government spending b. monetary expansions c. an exogenous increase in taxation 30. Which of these is not a major macroeconomic objective of governments? a. Increasing profitability of companies b. Low and stable inflation c. High and sustainable growth 31. Which of these policy interventions cause a rightward shift of the IS curve? a. an increase in government spending b. monetary expansion c. an exogenous increase in taxation 32. A contractionary open market operation is: a. when the central bank buys bonds b. when the central bank change the price of bonds c. when the central bank sells bonds 33. Which of these policy interventions cause a leftward shift of the Wage Setting? a. An increase in unemployment subsidies b. A decrease in unemployment subsidies c. An increase in the markup 34. The LM curve shows the combinations of output and the interest rate for which a. the financial market is in equilibrium. b. the goods market is in equilibrium. c. the labour market is in equilibrium. 35. If Labour Force is indicated by Lf, Unemployed by U and Employed by N. The unemployment rate is determined by: a. 1 – (N/Lf) b. Lf/U c. U/Lf 36. In the IS-LM model, when government spending rises, in short-run equilibrium, the interest rate ______ and output ______. a. rises; rises b. rises; falls c. falls; rises 37. What type of policy uses the interest rates to control the economy? a. monetary policy b. fiscal policy c. insurance policy 38. Net exports depends on: a. real exchange rate b. Y and Y* c. both other answers are true 39. In 2000, the nominal GDP growth of a country was 8% and the real GDP growth was 4%. What was the rate of inflation for this country? a. -4% b. 2% c. 4% 40. Under an assumption of monetary neutrality, a change in the nominal money supply has: a. A less than proportionate effect on the price level b. A proportionate effect on the price level c. More than proportionate effect on the price level 41. What is meant by trade balance? a. The value of exports b. The difference between the value of export and imports c. The difference between public spending and taxes 42. The marginal propensity to consume: a. it is equal to the complement to 1 of the marginal propensity to save b. it is equal to the marginal propensity to save c. may be greater than 1 43. When autonomous expenditure decreases, equilibrium aggregate expenditure: a. decreases by an equal amount b. decreases by a greater amount due to the multiplier c. increases by a greater amount due to the multiplier 44. GDP = __ + I+ G + NX ? a. S b. C c. T 45. The real exchange rate increases as a result of: a. an increase in the national price levels b. a decrease in the level of foreign prices c. both previous answers are true 46. The labour force is given by: a. the total amount of population aged over 16 b. the total amount of employed minus unemployed people c. the total amount of employed plus unemployed people 47. According to the price setting relation of firms, prices a. depends only on the expected price level b. depends only on nominal wages c. depends both on nominal wages and the mark-up