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OfflineHUBSonDUBS
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Anyone want to help me with Macro economics? (updated)
    #6335910 - 12/05/06 12:10 PM (14 years, 9 months ago)

Please only serious answers, just seeing if anyone wants to shorten my review time. Thanks for those who do respond.

Tallahassee Community College ECO2013 - Macroecono
mics Study Question - Test #3
Choose the best answer for each of the following questions.

2. Keynes argued that the level of economic activity is predominantly determined by the
level of:
A) Aggregate supply.
B) Aggregate demand. *
C) Unemployment.
D) Interest rates.

5. If inj ections exceed leakages:
A) Unemployment will rise.
B) The economy will expand.
C) Prices will fall.
D) All of the above.

6. The transactions demand for money is most closely associated with which of the
following functions of money?
A) Standard of deferred payment.*
B) Standard of value.
C) Store of value.
D) Medium of exchange.

8. According to Keynesian view of the macro economy, when the economy is at equilibrium:
A) Aggregate supply equals aggregate demand.
B) The economy is at full employment.
C) The price level is stable.
D) All of the above are true.


16. If an economy is at full employment and investment spending decreases while all other
levels of spending remaining constant then:
A) The price level increases and output increases.
B) The price level increases and output decreases.*
C) The price level decreases and output increases.
D) The price level decreases and output decreases.


18. Ml:
A) Includes the most liquid forms of money.
B) Is the narrowest definition of the money supply.
C) Largely consists of transactions-account balances.*
D) All of the above.*

20. The "naive or early" Keynesian model is unrealistic because it:
A) Does not take into account probable changes in the price level as the economy
approaches full employment.
B) Assumes that the price level decreases as AD increases.*
C) Assumes that AS is upward sloping when it is more probably horizontal.*
D) Does not account for changes in output due to the multiplier.

21. Suppose that Brian receives a check for $ 100 from a bank in Atlanta. He deposits the
check in his account at a Baltimore bank. The Baltimore bank will collect the $100
directly from the:
A) Atlanta bank.
B) Baltimore bank's regional Federal Reserve Bank.
C) The central Federal Reserve Bank in Washington, D.C.
D) Board of Governors.

22. When unwanted inventories pile up in retail stores, retail managers will take actions that
lead to greater:
A) Inflation.
B) Unemployment.
C) Wages.
D) Economic growth.

23. Bradley digs out $100 from his cookie jar and deposits it in his bank. As a result of this transaction, Ml has:
A) Not changed.*
B) Increased by more than $ 100.
C) Increased by less than $ 100.
D) Increased by $100.

24. Suppose the economy is operating below full employment. If the government wishes to
expand aggregate spending but does not wish to increase the size of the government in
the process, w-hich of the following policy actions should it undertake?
A) Increase government spending and leave tax rates unchanged.
B) Decrease tax rates and leave government spending unchanged.
C) Increase government spending and taxes by the same amount.
D) Decrease government spending by more than an increase in taxes.


26. Assume there is no government and no foreign trade. Aggregate demand equals
aggregate supply where saving is equal to:
A) Desired investment.
B) Actual investment.
C) Gross investment.
D) Actual investment plus undesired investment.


29. In a diagram of aggregate demand and supply curves, the GDP gap is measured:
A) As the horizontal distance between the equilibrium output and the
full-employment output.*
B) As the vertical distance between the equilibrium price and the price at which the
aggregate demand would intersect aggregate supply at full employment.
C) As the horizontal distance between the aggregate demand necessary to achieve
full employment and the aggregate demand curve at equilibrium output.
D) As the vertical distance between the equilibrium output and the full-employment
output.

30. Expansionary monetary policy, according to Keynesians, will:
A) Increase bank lending capacity.
B) Lower interest rates.
C) Encourage people to borrow and spend money.
D) Do all of the above.

31. If banks do not have enough reserves to satisfy the reserve requirement they can:
A) Buy securities.
B) Pay off discount loans at the Federal Reserve bank.
C) Lend additional reserves in the federal funds market.
D) Sell securities.*

32. Which of the following is an example of the multiplier at work as a result of an increase in consumption expenditures?
A) Consumers compete with the government by increasing their expenditures,
causing businesses to increase their investments in order to satisfy the increased
demand.
B) Consumption expenditures increase inflation, which reduces real incomes;
consumer expenditures and investment decline, which reduces aggregate
spending.
C) Households and businesses receive income from consumption expenditures; they
spend a portion of this new income; these expenditures in turn generate income
for other businesses and households, which in turn spend a portion of the new
income, and so on.
D) Consumption expenditures stimulate investment in new plant and equipment in
order to produce goods and services for the government, which provides jobs and
increases incomes.


34. Which of the following institutions has focused on consumer loans?
A) Credit unions.
B) Commercial banks.*
C) Savings and loan associations.
D) Mutual savings banks.

35. The multiplier effect exists because:
A) Of the circular nature of the economy.
B) One person's expenditures become another person's income.
C) A change in autonomous spending results in changes to household income.
D) All of the above are reasons.


37. Given a $800 billion AD shortfall and an MFC of 0.50, the desired fiscal stimulus would be:
A) A $1600 billion increase in government expenditures.
B) A $400 billion increase in government expenditures.*
C) A $800 billion increase in government expenditures.
D) A $200 billion increase in government expenditures.

38. The liquidity trap:
A) Refers to the vertical portion of the money demand curve.
B) Refers to the possibility that interest rates may not respond to changes in the money supply.*
C) Implies that people are willing to hold very limited amounts of money at low
interest rates.
D) All of the above.

39. Suppose the Fed desires to sell more bonds than people are willing to purchase. The most
likely result of this situation would be a:
A) Decrease in the price of bonds.*
B) Switch to another type of monetary policy lever by the Fed.
C) Switch to fiscal policy.
D) Purchase of the unsold bonds by the Fed.

40. Assuming an upward-sloping aggregate supply curve, when aggregate demand increases:
A) Unemployment decreases and the price level decreases.
B) Unemployment decreases and the price level increases.*
C) Unemployment increases and the price level decreases.
D) Unemployment increases and the price level increases.

41. One of the main functions of banks is:
A) Borrowing money and lending to savers.
B) Creating money.
C) Ownership of projects in which they invest.
D) All of the above.

42. The amount of additional income generated by increased government spending depends
on:
A) The marginal propensity to consume.
B) The number of spending cycles that occur in a given period of time.
C) The size of the multiplier.
D) All of the above.

43. The most frequently used tool on the part of the Fed is:
A) The reserve requirement.
B) The discount rate.
C) Open-market operations.
D) The fed funds rate.


45. Suppose a bank has $80,000 in deposits and a required reserve ratio of 20 percent. Then
required reserves are:
A) $8,000.
B) $16,000.
C) $40,000.
D) $80,000.


47. One of the essential functions a bank performs is that of:
A) Creating money by lending required reserves.
B) Participating in the stock market.
C) Transferring money from savers to spenders.
D) Purchasing government bonds

48. The desired tax cut to close a GDP gap is given by:
A) AD shortfall x MPS.
B) AD shortfall / MFC.
C) AD shortfall / (MPC * MPS).
D) Desired fiscal stimulus x MPC.

49. The real GDP gap is:
A) The horizontal distance between full-employment GDP and equilibrium GDP.
B) The amount of the recessionary1 or inflationary gap.
C) The difference between leakages and injections.
D) All of the above.

50. Monetary policy is most effective when the money-demand curve is and
investment demand is .
A) Horizontal, elastic.
B) Horizontal, inelastic.
C) Downward sloping, elastic
D) Downward sloping, inelastic.


53. A decrease in a GDP gap will most likely be associated with:
A) A decrease in structural unemployment.
B) A decrease in the price level.
C) A decrease in cyclical unemployment.
D) All of the above.

54. Monetary policy is most likely to result in inflation when the aggregate supply curve is:
A) Vertical and the Fed lowers the discount rate.
B) Vertical and the Fed raises the reserve requirement.
C) Horizontal and the Fed sells securities.
D) Horizontal and the Fed lowers the reserve ratio.

55. Suppose Student's Bank and Trust has zero excess reserves. If the required reserve ratio
decreases:
A) The bank's assets will increase.
B) The bank will not have enough required reserves.
C) The bank will be able to make more loans.
D) The money multiplier will decrease.

56. When there is excess aggregate demand in the economy:
A) Unemployment is higher than at full employment.
B) The GDP gap is negative.
C) Aggregate supply must be shifted leftward.*
D) All of the above.


58. Demand-pull inflation can develop when:
A) There is a shortage of investment and investors bid up interest rates.
B) Inventories shrink and consumers bid up prices.*
C) There is a surplus of resources and so wages are bid up by employers.
D) All of the above.

59. Monetarists argue that:
A) The velocity of money is constant.
B) Fiscal policy puts idle money balances to work, which reduces V.
C) When there is a recession, people accumulate money balances which increases
D) The velocity of money increases as much as total spending falls so that MV
remains constant.

60. Suppose a bank has $200,000 in deposits, a required reserve ratio of 10 percent, and reserves of $100,000. Then it has excess reserves of:
A) $80,000.*
B) $20.000.
C) Negative $100,000.
D) $200,000.

61. The Monetary Control Act of 1980:
A) Reduced the distinction between different types of depository institutions.
B) Further restricted the Federal Reserves control of the banking system.
C) Placed S&Ls, credit unions, mutual savings banks, and nonmember banks under regulatory institutions other than the Fed.
D) All of the above.

62. When business inventories decrease below desired levels, which of the following is likely
to take place?
A) A higher level of unemployment.
B) A higher price level.*
C) A lower level of output.
D) A lower price level.


63. An inflation problem can best be solved by:
A) An increase in production of goods and services.*
B) A reduction in desired spending.
C) An increase in aggregate demand.
D) A reduction in aggregate supply.


65. If the government increases spending and maintains a balanced budget at the same time:
A) There will be no effect on the economy, since taxes balance government
spending.
B) Income will increase by the amount of the increase in government spending.
C) Income will increases through the multiplier effect by more than the increase in
government spending.
D) Income will actually decrease by the amount that taxes have to be increased to
offset the effects of the government spending.

66. Excess reserves are:
A) Total reserves less required reserves.
B) Total reserves less transactions-account balances.
C) Required reserves less demand deposits.
D) Bank reserves in excess of vault cash.

67. The quantity theory of money asserts that changes in nominal GDP are inversely related to changes in the velocity of money
A) changes on the quantity of money are positively related to changes in the velocity of money
B) changes in the quantity' of money are unrelated to changes in the price level
C) changes in the output level are unrelated to changes in the price level
E) changes in the quantity of money are directly related to changes on nominal GD


68. Taxes affect aggregate demand
A) indirectly by changing consumption
B) indirectly by changing investment spending
C) indirectly by changing net exports
D) directly by changing disposable income
E) directly through government spending


70. Money is
A) an indicator of the scarcity of wants
B) anything that the government classifies as a trade commodity
C) anything that seller accept in exchange for goods and services
D) is a form of barter*

71. The Gramm-Rudman-Hollings Act of 1985
A) increased marginal tax rates by 10 percent
B) called for spending cuts to reduce the federal budget deficit
C) are overseen by the Federal Savings and Loan Insurance Corporation
D) control U. S. monetary policy
E) are financial intermediaries that offer demand


73. Restrictive monetary policy is associated with which of the following actions?
A) a decrease in the discount rate
B) an increase in excess reserves
C) a decrease on the federal funds rate
D) the purchase of government securities
E) an increase in the reserve requirement

For each of the following questions, tell whether the statement is basically true (A) or false (B)


75. If the interest rate in the money market is below equilibrium, there is a shortage of
money.

77.The Sixteenth Amendment to the Constitution in 1913 made it possible for the federal government to significantly expand its share of the GDP.

78. At the full-employment GDP, the total value of goods demanded always equals the total
value of goods supplied.
80. If there is an inflationary spiral, GDP will fall as inventories rise.
81. The social security checks mailed out by the government are government purchases.
82. "L" stands for the most liquid form of money.
83. Fiscal policy involves changes in government spending and taxes, but not regulation of
prices or production.
84. The ability of the banking system to make loans depends on excess reserves and the
reserve requirement.
85. The precautionary demand for money depends partly on the expected future level of
GDP.
86. The multiplier is part of the self-adjustment process that brings the private economy back
into equilibrium at full employment.
87. All checking accounts are transactions accounts.
88. Shifting the aggregate demand curve by the amount of the GDP gap will eventually
achieve full employment only if the price level remains constant.
89. The globalization of money weakens the Fed's control over the money supply.
90. From the Keynesian perspective, a vertical investment demand curve prevents monetary
policy from having an impact on aggregate demand.
91. Defense, health, and highway spending are income transfers.
92. A reduction in the minimum required reserve ratio will reduce the money multiplier.
93. Classical economists believed aggregate spending adjusted quickly to equal
full-employment output.
94. Defense, health, and highway spending are income transfers.
95. A reduction in the minimum required reserve ratio will reduce the money multiplier.
96. Classical economists believed aggregate spending adjusted quickly to equal
full-employment output.
97. In the Keynesian model, changes in the money supply affect macroeconomic outcomes
through interest rates.
98. The multiplier ensures that equilibrium GDP equals full-employment GDP.
99. The discount rate is the rate of interest charged by banks that lend in the federal funds
market.
100. The real GDP gap is the difference between full-employment output and equilibrium
output.
101. When you deposit cash or coins in a bank, you are increasing the money supply by the
amount of your deposit multiplied by the money multiplier.
102. If the real interest rate is 4 percent and anticipated inflation falls from 9 percent to 6
percent, the nominal interest rate would decline from 13 percent to 10 percent.
103. An upward-sloping AS curve implies that an increase in spending will raise both output
and prices.
104. Tax cuts and income transfers have the same fiscal stimulus, dollar for dollar.
105. By purchasing bonds, the Fed reduces bank reserves.
106. Without deposit insurance, the fear of bank insolvency could be significant enough to
trigger a bank run that would make a bank insolvent.
107. How well fiscal policy works depends on how much the velocity of money can be
changed by government tax and spending decisions.
108. The demand for money is made up of transactions demand, speculative demand, and
precautionary demand.
109. Other things equal, as an economy enters an expansionary phase, we would expect
government spending to fall and tax receipts to rise.
110. By the multiplier concept, an increase in government expenditures will raise equilibrium
real GDP by an amount equal to the initial spending increase, other things equal.


--------------------


Edited by HUBSonDUBS (12/06/06 07:21 PM)


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Offlinecookeman
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Registered: 10/26/05
Posts: 1,077
Last seen: 8 years, 5 months
Re: Anyone want to help me with Macro economics? [Re: HUBSonDUBS]
    #6335918 - 12/05/06 12:16 PM (14 years, 9 months ago)

Hah. I'm in the same situation. Except my exam isn't a take home. It's just 50 multiple choice. I fucking hate economics. I'd help you, but I barely cracked my book open during the semester. I only studied the night before the exam, usually all night, and I'm actually doing quite well, except I forget everything I crammed as soon as i leave the exam. Sorry, I'm no help.


--------------------
“Let’s put it this way – to lump psychedelic mushrooms into the same group as methamphetamine is like lumping the Bible into the same group as Mein Kampf.
I mean shit; they’re both books, right?”

Joe Rogan


R.I.P. - "Bones" - One of the greatest people I've ever had the pleasure of getting to know and become friends with.


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OfflineHUBSonDUBS
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Registered: 09/01/05
Posts: 889
Last seen: 3 months, 4 days
Re: Anyone want to help me with Macro economics? [Re: cookeman]
    #6336014 - 12/05/06 12:53 PM (14 years, 9 months ago)

Well its not really a take home its a study guide but I know he puts a lot of these questions on it. I dont even know how to get these answers ive been raging around campus for a economics tutor found one but shes not taking anymore students.


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Invisiblememes
Blessed

Folding@home Statistics
Registered: 01/11/05
Posts: 27,770
Loc: In a Tree
Re: Anyone want to help me with Macro economics? [Re: HUBSonDUBS]
    #6336046 - 12/05/06 01:02 PM (14 years, 9 months ago)

i'd be happy to explain any theories/rules/examples to you...

but i'm not going to go through and do a 100question practice test so you can get answers and learn absolutely nothing.

if you need help, hit me up on AIM - BIGjohnson4043

p.s. i'm an econ major.


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OfflineHUBSonDUBS
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Registered: 09/01/05
Posts: 889
Last seen: 3 months, 4 days
Re: Anyone want to help me with Macro economics? [Re: memes]
    #6341445 - 12/06/06 07:22 PM (14 years, 9 months ago)

I updated the list these are still ones I cant get answers for I put a star by some answers that i think are correct


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