Arlington, Virginia
Economics 199 Macroeconomics
David Pomeroy, Assistant Professor of Economics
"The ideas of economists and political
philosophers, both when they are right and when they are wrong, are more
powerful than is commonly understood. Indeed the world is ruled by little else.
Practical men, who believe themselves to be quite exempt from any intellectual
influences, are usually the slaves of some defunct economist. Madmen in
authority, who hear voices in the air, are distilling their frenzy from some
academic scribbler of a few years back. I am sure that the power of vested
interests is vastly exaggerated compared with the gradual encroachment of
ideas." John Maynard Keynes
Contents: Resources for Microeconomics ECO199
GRADING POLICY
|
Quizzes (2) |
30% (15% each) |
|
Midterm Exam |
30% (Cumulative) |
|
Final Exam |
40% (Cumulative) |
Final and midterm exams will be cumulative, and
semester grade will include students' in-class participation. Makeup tests will
be considered only under exceptional circumstances and by special arrangement
made in advance. Additional class assignments may be given which will
contribute to the semester grade. If so, weights will be adjusted accordingly.
Additional requirements, if any, will be announced in class. Students not
attending class, for any reason, when assignments or changes to the schedule
are announced are still required to comply.
Quizzes cover subjects covered in class from the
last test up to, but not including the subjects scheduled for the week of the
quiz. Midterm and final exams are always cumulative.
5. CLASS SCHEDULE
|
Week |
Date |
Chaps. |
Topics To Cover |
|
1 |
28-Aug |
1-2 |
The Science of Choice |
|
2 |
04-Sep |
15 |
Economic Policy and the Role of Government |
|
3 |
11-Sep |
22 |
Economic Growth, Unemployment, and Inflation |
|
4 |
18-Sep |
23 |
Quiz #1 & Measuring Economic Activity--National Income Accounting |
|
5 |
25-Sep |
25 |
Aggregate Supply and Demand |
|
6 |
02-Oct |
26 |
The Keynesian Multiplier Model |
|
7 |
09-Oct |
ALL |
Midterm Examination |
|
8 |
16-Oct |
26 |
The Keynesian Multiplier Model |
|
9 |
23-Oct |
27 |
Demand Management Policy |
|
10 |
30-Oct |
27 |
Demand Management Policy |
|
11 |
06-Nov |
29 |
Money, Banking, and the Financial Sector |
|
12 |
13-Nov |
30 |
Quiz #2 & Monetary Policy |
|
13 |
20-Nov |
30 |
Monetary Policy |
|
14 |
27-Nov |
30 |
Thanksgiving Holiday - The Great Macro Debate |
|
15 |
04-Dec |
31 |
Comprehensive Review & Inflation and Its Relationship to Unemployment & Comprehensive Review |
|
16 |
11-Dec |
ALL |
Final Exam* |
Macroeconomics: Practice Multiple Choice Questions
STOP! Unless you hate trees (and the people with whom you share your printer) DO NOT PRINT this document--It is nearly 70 pages in length, depending on your font settings. Instead of printing, cut and paste to a WORD file, then adjust font, and print that document
Practice Multiple Choice Questions: This material will help you prepare for
quizzes and tests. The questions are
designed to help you learn useful skills for answering multiple choice
questions. By examining the logical
structure of questions and answers (for example, question may contain
the word “not” which will, of course, affect your answer, or answers may have
two parts, like, “shift “demand” “rightwards”, or shift “supply” “leftwards” in which case, both parts
must be true for the answer to be correct.)
Questions cover much but not all of the material for which you are
responsible. If you have questions
about a question, please feel free to ask me, and I will be glad to help. Questions appear in the approximate order of
the material covered during the semester.
Bold headings are a guide to the chapters covered.
NOTE: ANSWER KEY
IS AFTER THE QUESTIONS.
I have edited the list of questions and changed their order
to match the order of presentation during the semester. The answer key at the end is correct,but not
in the same order—simply look up the answer you need in numerical order.
NOTE: Answers follow the questions -- (CLICK TO JUMP TO ANSWERS)
I have removed a number of the questions I felt were outside the relevant subject material. The question numbers have not changed. Simply ignore the answers for deleted questions.
INTRODUCTION
901.
Which of the following is one of the three central problems that every
economic system must solve?
a)
How far should people be allowed to go in protecting their own property?
b)
How are society's scarce resources to be allocated?
c)
How fair is it for some individuals to live in poverty while others are
surrounded by luxury?
d)
How involved should government be in regulating the activities of big
business?
903.
Macroeconomics is
a)
the study of individual choice and how that choice is influenced by
economic forces.
b)
an analysis of economic reality that proceeds from the parts to the
whole.
c)
the study of the pricing policies of firms and the purchasing decisions
of households.
d) the study of the
overall economy and aggregate economic relationships.
904.
Which of the following is a macroeconomic concern?
a)
How profits are maximized by a firm.
b)
The causes of unemployment in the United States.
c)
The effects of agricultural price supports on the income of farmers.
d)
Wage rates of electricians in Kansas City.
905.
A production possibility curve usually has a negative slope because
a)
there is an opportunity cost to any decision.
b)
you get more of one benefit only if you get more of another benefit.
c)
there is a direct relationship between obtaining the benefits of various
choices.
d)
obtaining the benefit of a decision is costless.
908.
Households are on the:
a)
supply side of factor markets and the demand side of goods markets.
b)
demand side of both factor markets and goods markets.
c)
demand side of factor markets and the supply side of goods markets.
d)
supply side of both factor markets and goods markets.
18.
Households in the aggregate use the largest share of their total
income
to:
A) save.
B) consume.
C) do none
of these.
D) pay
taxes.
ROLE OF GOVERNMENT
227. A tax
imposed on polluters is:
A) neutral
B)
progressive
C) imposed
according to the ability-to-pay principle
D)
regressive
E) a way to
reduce negative externalities
228. The
"free-rider problem" refers to the fact that:
A) the
benefits associated with public goods cannot be denied to those
who are
unwilling to pay for them.
B)
government subsidizes the fares of many municipal mass-transit
systems.
C)
government arbitrarily attaches excise taxes to a select list of
goods
and services.
D) some
people receive income from welfare programs to which they are
not entitled.
909. The specific roles of the government
include all of the following except:
a) providing for and protecting private
property rights. c) providing private goods that consumers
demand.
b) promoting workable, effective
competition. d) correcting for positive and negative
externalities.
911.
A progressive tax is a tax rate that
a) does not depend on income.
b) falls as income increases.
c)
remains constant as income increases.
d) increases as income increases.
238.
"Public goods" refers to:
A) goods
which cannot be financed and produced through the price
system.
B) goods
which are produced using minimal amounts of society's scarce
resources.
C) any
goods or services which society wants produced.
D) goods
whose production presumes large monopolistic corporations as
opposed
to small competitive firms.
249. The most
important characteristic of a public good is that it:
A) is
useful for the public, without creating positive externalities
B) may be
enjoyed by all, even those who do not pay for it
C) is
useful for the public, without creating pollution or negative
externalities
D) is so
expensive that only the federal government can afford it; it
is
beyond the means of state and local governments
E) is so
expensive that most people cannot afford it without help from
the
governme
221. A market
externality refers to:
A) the
impact of legal and institutional forces upon market behavior.
B) none of
the other answers shown is correct.
C) any noneconomic
force, e.g. political disruption of the flow of Arab
oil,
which has market effects.
D) any
unanticipated change in market price or output.
E) economic
costs or benefits which affect others not directly involved
in the market transaction.
3. If the
exclusion principle does not apply to product X:
A) the
production of X will probably have to be financed through
taxation.
B) the
price system will tend to overallocate resources to the
production of X.
C) no
externalities will be associated with the production of
consumption of X.
D) then X
will be produced in optimal amounts by private firms.
6.
Pollution:
A) is not an
economic problem because it does not involve the use of
scarce
resources.
B) is not
an economic problem because it is external to the market
system.
C) is an
example of a spillover or external cost.
D) should
be corrected by the subsidization of offending firms.
E) is an
example of private costs.
8. The
"free-rider problem" refers to the fact that:
A) the
benefits associated with public goods cannot be denied to those
who are
unwilling to pay for them.
B)
government arbitrarily attaches excise taxes to a select list of
goods
and services.
C) some
people receive income from welfare programs to which they are
not
entitled.
D) government
subsidizes the fares of many municipal mass-transit
systems.
10. Which of the following is most likely to be
accompanied by external
or
spillover benefits?
A) being
immunized for measles
B) the
construction of a nuclear power plant
C) eating
dinner at an expensive French restaurant
D) studying
in the library
11. Which of
the following statements is correct?
A) Public
goods are bought voluntarily out of private incomes and yield
widespread spillover benefits.
B) Public
goods yield widespread spillover benefits and are purchased
by
government with tax revenues.
C) Private
goods yield direct benefits to the purchaser and are
financed
by government.
D) Public
goods are bought voluntarily out of private incomes and yield
no
significant spillover benefits.
13.
"Double taxation" means that:
A) payroll
taxes which finance social security are levied upon both
workers
and employers.
B) the part
of corporate earnings paid as dividends is taxed as
corporate profits and also as income to stockholders.
C)
corporate tax rates are twice as high as those on the incomes of
unincorporated businesses.
D) taxes
levied on wholesale products also apply at the retail level.
UNEMPLOYMENT & INFLATION AND THE BUSINESS CYCLE
4. Which of
the following would NOT be appropriate if government were
attempting
to restrain a dramatic rise in the general price level?
A) a
decrease in government spending
B) an
increase in tax rates
C) an
increase in transfer payments to households
D) a
decrease in subsidies to businesses
914.
When an economy comes out of a trough, economists call the period:
a)
a recession. b) an inflation. c) a stagflation. d)
recovery.
920.
Inflation is the upward movement in prices as measured by the:
a)
numerical change in the price
index from one year to the next.
b)
percentage difference between the price level and the base year price
index.
c)
percentage change in the price index from one year to the next.
d)
difference between the price level and the price index.
21.
Inflation is said to exist whenever:
a) the unemployment rate is low. c) the economy is
contracting.
b) the general price level is rising. d) some prices are
rising while others are falling.
924.
If the rate of inflation exceeds the rate of increase of a person's
nominal income, that person's:
a) real income declines.
c) purchasing power
increases.
b) market basket will expand. d) nominal income
declines.
925.
Borrowers benefit during periods of unexpected inflation because:
a)
the money they pay lenders is worth more than the money they originally
borrowed.
b)
the purchasing power of the dollars borrowed is greater than the
purchasing power of the dollars repaid to lenders.
c)
inflation out paces wage growth.
d)
nominal interest rates fall.
5. In a
full-employment economy resources can be reallocated from
private
to public employment by:
A) reducing
taxes and reducing government expenditures.
B) reducing
taxes and increasing government expenditures.
C)
increasing taxes and increasing government expenditures.
D) increasing
taxes and reducing government expenditures.
42. Suppose
there are 5 million unemployed workers seeking jobs. After
a period
of time, 1 million of them become discouraged over their
job
prospects and cease to look for work.
As a result of this, the
official
unemployment rate would:
A) increase
in the short run but eventually decline.
B) be
unchanged.
C)
increase.
D) decline.
44. The unemployment rate is the:
A) number of
employed workers MINUS the number of unemployed workers.
B) ratio of
unemployed to employed workers.
C)
percentage of the total population which is out of work.
D)
percentage of the labor force which is out of work.
45. Suppose
you are unemployed because you voluntarily quit your present
job with
a plan to join the circus. You would be
considered:
A)
frictionally unemployed.
B)
cyclically unemployed.
C)
secularly unemployed.
D) employed.
E) nuts.
47. The official unemployment rate is:
A) the
percentage of the total labor force which is unemployed.
B) the
ratio of unemployed to employed workers.
C) the
percentage of the total population which is not working.
D) those
people over 16 years of age who are not currently seeking
employment.
50. Real
income can be determined by:
A) dividing
the price level by nominal income.
B) deflating
nominal income for inflation.
C)
inflating nominal income for inflation.
D) dividing
the annual rate of inflation into the number "70."
E) adding
the rate of inflation to the rate of increase in nominal
income.
117. Cost-push
inflation occurs when the aggregate:
A) supply
curve shifts leftward.
B) supply
curve shifts rightward.
C) demand
curve shifts leftward.
D) demand
curve shifts rightward.
205. Suppose
you are unemployed because you voluntarily quit your present
job with
a plan to join the circus. You would be
considered:
A)
frictionally unemployed.
B)
cyclically unemployed.
C)
employed.
D) nuts.
E)
secularly unemployed.
208. Suppose
that the economy is at full employment, with little or no
inflation. Now suppose that there is an increase in taxes. The most
likely
result will be
A) less
output and less unemployment
B) an
increase in the money stock
C) a more
rapid increase in real output
D)
inflation
E) less
output and more unemployment
212. Someone
who is retiring now is most likely to lose in the event of:
A)
unexpected deflation
B) none of the above; inflation affects
only those who are still working
C) expected
inflation
D) expected
deflation
E)
unexpected inflation
219. The
unemployment rate is
A) the
percentage of the population unemployed
B) the
percentage of the population that has voluntarily quit, or decided not to work
C) the
percentage of the population that has been laid off or fired
D) the
percentage of the labor force unemployed
E) the
percentage of the labor force that has been laid off or fired
232. The
official unemployment rate is:
A) the
ratio of unemployed to employed workers.
B) the
percentage of the total population which is not working.
C) the percentage
of the total labor force which is unemployed.
D) those
people over 16 years of age who are not currently seeking employment.
240. The
United States' economy is generally considered to be at "full
employment" when:
A) 90 percent of the total population is
employed.
B) between
5 and 6 percent of the labor force is unemployed.
C) 10 to 20
percent of the labor force is unemployed.
D) 90
percent of the labor force is employed.
E) 100 percent
of the labor force is employed.
243. After
the expansion phase of the business cycle, which comes next?
A) upswing
B) peak
C) trough
D)
depression
E)
recession
MONEY AND THE BANKING SYSTEM
213. The
money supply is "backed":
A)
dollar-for-dollar with gold bullion.
B) by the
government's ability to control the supply of money and
therefore to keep its value relatively stable.
C)
dollar-for-dollar with gold and silver.
D) by
government bonds.
222. The
opportunity cost of holding money:
A) varies
inversely with the interest rate.
B) is zero
because nothing is more desirable than money.
C) varies
directly with the interest rate.
D) is zero
because money is not an economic resource.
E) varies
inversely with the level of economic activity.
223. The
multiple by which the commercial banking system can increase the
supply of
money on the basis of each dollar of excess reserves is
equal to:
A) 1 minus
the legal reserve ratio.
B) the
reciprocal of the income velocity of money.
C) 1/MPS.
D) 1/legal
reserve ratio.
E) 1/banks
excess reserves
224. Which of
the following is the best example of a "near money"?
A) checking
deposits
B) a dollar
"in hand" vs. a dollar in the bank
C)
short-term government securities
D) real
estate
E)
travelers checks
226. The
reserves of a commercial bank consist of:
A) the
bank's net worth.
B) deposits
at the Federal Reserve bank and vault cash.
C) the sum
of its loans to the public.
D)
government bonds which the bank holds.
E) the
amount of money market funds it holds.
230. In the
United States the money supply (M1) is comprised of:
A) paper
currency, coins, gold certificates, and time deposits.
B) coins,
paper currency, and monopoly money held by everyone.
C) coins, paper currency, and checkable
deposits held by the public.
D) coins,
paper currency, checkable deposits, and credit balances held
by
commercial banks.
E)
currency, checkable deposits, and Series E bonds.
237. A
commercial bank's excess reserves are:
A) required
reserves minus total reserves
B) holdings
of currency minus required reserves
C) total
reserves minus checking deposit liabilities
D) reserve
deposits minus checking deposit liabilities
E) total
reserves minus required reserves
201. Money
functions as:
A) a medium
of exchange.
B) a
standard of value.
C) a store
of value.
D) all of
the above.
E) B and C
only
202. The
major component of the money supply (M1) is:
A) gold
certificates.
B) the
accumulated credit on all credit cards
C) coins.
D)
checkable deposits.
E) paper
money in circulation.
121. The money
supply is "backed":
A)
dollar-for-dollar with gold bullion.
B) by
government bonds.
C) by the
government's ability to control the supply of money and
therefore to keep its value relatively stable.
D)
dollar-for-dollar with gold and silver.
122. The
principal type of paper money used in the United States is:
A) Federal
Reserve Notes.
B) National
Bank Notes.
C) United
States Notes.
D) Treasury
Notes of 1890.
123. The transactions
demand for money will shift to the:
A) right
when aggregate income decreases.
B) right
when the interest rate increases.
C) left
when the interest rate decreases.
D) right
when aggregate income increases.
E) left when aggregate income increases.
124. If you
place a part of your summer earnings as cash in a safety
deposit
box, you are employing money as:
A) a
standard of value.
B) all of
the above.
C) a store of
value.
D) a medium
of exchange.
E) none of
the above.
125.
"Checkable" deposits include:
A) only the
demand and savings deposits of commercial banks.
B) only the
demand deposits of commercial banks.
C) both large
and small time deposits.
D) demand
deposits, ATS accounts, NOW accounts, and share draft
accounts.
127. In the
United States the money supply (M1) is comprised of:
A) coins, paper
currency, checkable deposits, and credit balances held
by
commercial banks.
B) paper
currency, coins, gold certificates, and time deposits.
C)
currency, checkable deposits, and Series E bonds.
D) coins,
paper currency, and checkable deposits held by the public.
E) coins,
paper currency, and monopoly money held by everyone.
130. The total demand for money will shift to the left as
a result of:
A) an
increase in nominal GDP.
B) a change
in the interest rate.
C) an
increase in the price level.
D) a
decline in nominal GDP.
131. If the
reserve requirement is 10 percent, how much EXCESS reserves
does a
bank acquire when a business deposits a $500 check drawn on
another bank?
A) $550
B) $5000
C) $450
D) $500
133. Suppose a
commercial bank has demand deposits of $100,000 and the
legal
reserve ratio is 10 percent. If the
bank's required and
excess
reserves are equal, then its actual reserves:
A) cannot
be determined from the given information.
B) are
$10,000.
C) are
$30,000.
D) are
$20,000.
136. The
goldsmith's ability to create money was based on the fact that:
A) withdrawals of gold tended to exceed
deposits of gold in any given
time
period.
B)
consumers and merchants preferred to use gold for transactions,
rather
than paper money.
C) the
goldsmith was required to keep 100 percent gold reserves.
D) paper
money was rarely redeemed for gold.
137. Suppose a
commercial banking system has $100,000 of outstanding
demand
deposits and actual reserves of $35,000.
If the reserve
ratio is
20 percent, the banking system can expand the supply of
money by
the maximum amount of:
A) $15,000.
B)
$122,000.
C) $75,000.
D)
$175,000.
E)
$300,000.
138. When a
commercial bank has "excess reserves":
A) it is
charging too high an interest rate on its loans.
B) its
actual reserves are less than its required reserves.
C) it is in
a position to make additional loans.
D) its
reserves exceed its assets.
E) the
supply of its loans exceeds the demand for its loans.
139. When a
check is drawn and cleared:
A) the bank
against which the check is cleared loses reserves and
deposits
equal to the amount of the check.
B) the reserves
and deposits of both the bank against which the check
is
cleared and the bank receiving the check are unchanged by this
transaction.
C) the bank
against which the check is cleared acquires reserves and
deposits
equal to the amount of the check.
D) the bank
receiving the check loses reserves and deposits equal to
the
amount of the check.
140. Banks
create money when they:
A) allow
loans to mature.
B) sell
government bonds.
C) accept
deposits of cash.
D) buy
government bonds.
141. Required
reserves must be deposited in the Federal Reserve Banks by:
A) only
commercial banks which are members of the Federal Reserve
System.
B) state
chartered commercial banks only.
C)
federally chartered commercial banks only.
D) all
depository institutions, that is, all commercial banks and
thrift
institutions.
154. Other
things being equal, in which of the following cases would the
amount of
money demanded be the greatest? When nominal GDP is:
A) $700
billion and the interest rate is 6 percent.
B) $700
billion and the interest rate is 12 percent.
C) $400 billion
and the interest rate is 10 percent.
D) $600
billion and the interest rate is 8 percent.
NATIONAL INCOME ACCOUNTING
926.
GDP is:
a)
the sum of coins, bills, and demand deposits circulating in an economy
one year period
b)
the market value of an economy's production of all goods and services
one year period.
c)
the total expenditures of the federal government over the period of one
year.
d)
the market value of an economy's production of final goods and services
in a one year period.
927.
GDP includes:
a) complementary but not intermediate products. c)
final but not intermediate products.
b) intermediate but not final products. d) substitute but
not intermediate products.
928.
Value added is calculated by:
a)
adding the cost of materials used in production to the value of sales.
b)
adding the value of output to the value of inputs.
c)
subtracting the cost of materials used in production from the value of
sales.
d)
subtracting the value of sales from the cost of materials used in
production.
929.
The sum of the values added throughout the economy in one year is equal
to:
a)
GDP.
b)
nominal GDP minus real GDP.
c)
the dollar value of intermediate products.
d)
the value of intermediate products minus the value of final goods and
services.
930.
For purposes of calculating GDP using the expenditure approach, which of
the following is NOT included in the government expenditures account?
a) the welfare payments made to the poor. c)
the payroll of the federal government.
b) the government's purchase of a computer. d) the government's
purchase of pencils.
931.
Net exports are defined as:
a)
exports less imports. b) imports less exports. c)
exports plus imports. d) investment less saving.
932.
GDP is a
a)
good measure of relative living standards in various countries.
b)
good measure of relative prices in various countries.
c)
good measure of production at market prices.
d)
good measure of relative welfare in various countries.
933.
Real GDP is calculated by:
a)
multiplying nominal GDP by the appropriate price index times 100.
b)
dividing nominal GDP by the inflation rate times 100.
c)
dividing nominal GDP by the appropriate price index times 100.
d)
multiplying nominal GDP by the inflation rate times 100.
934.
Investment includes:
a)
an increase in corporate stock volumes during the year.
b)
an increase in government spending.
c)
an increase in business inventories.
d)
the purchase of medical supplies by the National Guard.
935.
If a woman divorces her house spouse and hires him to continue cleaning
her house for $20,000 per year, GDP will
a)
remain constant. b) remain unchanged. c) decrease by $20,000
per year. d) increase by $20,000 per year.
32. The term
"final goods and services" refers to:
A) the
excess of American exports over American imports.
B) goods
and services which are unsold and therefore added to
inventories.
C) consumer
goods, as opposed to investment goods.
D) goods
and services whose value has been adjusted for changes in the
price
level.
E) goods
and services purchased by ultimate users, as opposed to resale
or
further processing.
34. The GDP
tends to:
A)
overstate economic welfare because it does not include certain
nonmarket
activities such as the productive work of housewives.
B)
overstate economic welfare because it does not reflect improvements
in
product quality.
C)
understate economic welfare because it includes expenditures
undertaken to offset or correct pollution.
D)
understate economic welfare because it does not take into account
increases in leisure.
37. The
largest component of total expenditures is:
A) net
investment.
B) gross
investment.
C) net
exports.
D)
consumption.
E)
government purchases.
38. If
intermediate goods and services were included in GDP:
A) the GDP
would then have to be deflated for changes in the price
level.
B) the GDP would be overstated.
C) the GDP
would be understated.
D) money
GDP would exceed real GDP.
39. Net
exports may be defined as:
A) imports
less exports.
B) that
portion of consumption and investment goods sent to other
countries.
C) exports
less imports.
D) exports
plus imports.
40. If real
GDP increases and the price index has increased:
A) nominal
GDP may have either increased or decreased.
B) nominal
GDP must have increased.
C) the
percentage increase in nominal GDP must have been less than the
percentage increase in the price level.
D) nominal
GDP must have fallen.
E) none of
the other answers is correct.
203. Which
of the following is the best example of a transfer payment
A) profits
of defense contractors
B)
purchases of planes for the air force
C) local
government expenditures for schools
D) salaries
of judges
E) social
security pensions paid to the elderly
207. Net
exports may be defined as:
A) imports
less exports.
B) that
portion of consumption and investment goods sent to other countries.
C) exports
less imports.
D) exports
plus imports.
236. This
year's nominal GDP measures
A) NDP less
sales taxes
B) National
income less depreciation
C) this
year's output at this year's prices
D) NDP less
depreciation
E) this
year's output at base-year prices
246. Transfer
payments are included in:
A) NDP
B)
Consumption expenditures
C) Personal
income
D) National
income
E) GDP
247. When investment
demand increases, which of the following functions
shifts
upward:
A)
consumption
B) leakages
C)
aggregate expenditures
D) saving
E)
aggregate supply
GDP EQUILIBRIUM AND THE KEYNESIAN MODEL
53. The aggregate demand curve is:
A)
downsloping because production costs decrease as real national
output
increases.
B) vertical
if full employment exists.
C)
downsloping because of the wealth, and foreign
purchases effects.
D)
horizontal when there is considerable unemployment in the economy.
58. An
increase in aggregate demand in the classical range of the
aggregate
supply curve will:
A) increase
both real national output and the price level.
B) increase
real national output, but not the price level.
C) increase
the price level, but not affect the real national output.
D) none of
the above
E) decrease
both real national output and the price level.
66. The
consumption schedule shows:
A) that
households consume more when interest rates are low.
B) the
amounts households plan or intend to consume at various possible
levels
of aggregate income.
C) that
consumption depends primarily upon the level of business
investment.
D) that the
MPC increases in proportion to NDP.
67. If the
MPC is .8 and disposable income is $200, then
A) saving will
be $40.
B) saving
will be $20.
C) personal
consumption expenditures will be $160.
D) personal
consumption expenditures will be $80.
E)
consumption and saving cannot be determined from the information
given.
68. Keynesian
economics discredits price-wage flexibility as a mechanism
for
achieving full employment by arguing that:
A)
monopolistic forces in the economy cause wages and prices to be
inflexible and lower wages will result in spending declines.
B) in
modern capitalism there is too much competition to permit price-
wage
flexibility.
C) wage
receivers and price setters belong to different income groups.
D) the interest
rate will not synchronize saving and investment plans.
69. According
to Keynesian economics:
A) saving
varies directly with the level of disposable income.
B) saving
is inversely related to the rate of interest.
C) consumption
rises, but saving declines, as disposable income rises.
D) saving
varies directly with the profitability of investment.
72. If an
unintended increase in business inventories occurs:
A) we can
expect businesses to lower the level of production.
B) we can
expect aggregate production to be unaffected.
C) we can
expect businesses to increase the level of production.
D)
aggregate expenditures must exceed the national output.
E) planned
investment must exceed saving.
73. The
equilibrium level of NDP in a private economy is where:
A)
unemployment is about 3 percent of the labor force.
B) saving
equals planned investment.
C) planned
consumption equals saving.
D) planned
consumption equals planned investment.
76. If the
MPC is .70 and net investment increases by $3 billion, the
equilibrium NDP will:
A) increase
by $10 billion.
B) increase
by $4.29 billion.
C) increase
by $2.10 billion.
D) increase
by $6 billion.
E) decrease
by $4.29 billion.
77. The
economy will tend to expand when:
A) saving
exceeds planned investment.
B) actual
GDP is less than potential GDP.
C) unplanned
disinvestment occurs.
D) the
national output exceeds aggregate expenditures.
E)
unplanned investment occurs.
79. The
simple multiplier may be calculated as:
A) MPC/MPS
B) 1 - MPC
= MPS
C) 1/(1 -
MPC)
D) 1/(1 -
MPS)
E) 1/(MPS +
MPC)
80. If 100
percent of any change in income is spent, the multiplier will be:
A) zero.
B)
infinitely large.
C) equal to
the MPS.
D) equal to
the MPC.
E) 1.
81. The simple multiplier is defined as:
A) 1 - MPS.
B) change
in NDP x initial change in spending.
C) change
in NDP - initial change in spending.
D) change
in NDP/initial change in spending.
E) initial change
in spending/change in NDP.
82. The level
of aggregate expenditures in a public-private economy is
comprised
of:
A) Ca + In
+ G - T.
B) Ca + G.
C) Ca + In
+ G.
D) none of
the above.
E) Ca + In +
G + T.
97. In a
mixed (public-private) economy, where aggregate expenditures
exceed
NDP:
A) In >
S.
B)
disposable income exceeds NDP.
C) Ca + In
+ G < national output.
D) In + G
> Sa + T.
E) In + G =
Ca.
146. A decline
in the equilibrium level of NDP is most likely to be
caused
by:
A) a
downshift in the investment schedule.
B) an
upshift in the saving schedule.
C) an
upshift in the investment schedule.
D) a downshift in the consumption schedule.
204.
According to Keynesian theory:
A) prices
and wages are flexible downward.
B) The
economy will automatically tend to full employment equilibrium.
C) changes
in the interest rate will always equate saving and planned
investment.
D) supply
creates its own demand.
E) none of
the other answers is correct.
209. Which
of the following best defines disposable income?
A) the market
value of the annual output net of capital consumption
allowances
B) income
received by households less personal taxes
C) all
income earned by resource suppliers for their current
contributions to production
D) the before-tax income received by
households
214. Suppose that MPC equals 0.75 and that all taxes are
lump-sum taxes.
If
national product is $3,000 billion and full-employment national
product
is $3,400 billion, then the output gap is:
A) $600
billion B) $700 billion C) $100 billion D) $1,600 billion E) $400 billion
215. The
marginal tax rate is:
A) the
amount of income which must be given up when Congress increases
taxes.
B) the
amount of additional taxes paid as a result of a rise in income.
C) less
than the average tax rate when a tax is progressive.
D)
calculated by dividing total taxes paid by one's total taxable
income.
E) the
percentage of one's total income which is paid in taxes.
225. Consider
a simple economy, with no government and no international
trade.
The multiplier is equal to:
A) MPS
B) 1/MPS
C) 1 - MPC
D) MPC
E) 1/MPC
229. If an
unintended increase in business inventories occurs at some
level of
NDP, we can surmise that NDP:
A) is too
high for equilibrium and will start to fall.
B) may be
either above or below the equilibrium output.
C) causes
aggregate expenditures to exceed aggregate production.
D) causes
planned investment to exceed savings.
E) is too
low for equilibrium and will start to rise.
231. The
formula for the simple spending multiplier is:
A) 1/(1 -
MPS).
B) 1/MPC.
C) 1/(1 +
MPC).
D) 1/MPS.
E) 1/(1 +
MPS)
241. In his
theories, Keynes' principal concern was with the goal of:
A)
allocative efficiency
B)
technological efficiency
C) stable
prices
D) reducing
unemployment
E) an
equitable distribution of income
242. Based on
the diagram, the equilibrium level of NDP in this economy:
A) is $180
billion.
B) is $60
billion.
C) cannot
be determined from the information given.
D) is
between $60 and $180 billion.
FISCAL POLICY
59. Which of
the following is an expansionary fiscal policy?
A)
decreased government spending and tax increases
B) decreased
government spending and tax decreases
C)
increased government spending and tax decreases
D)
increased government spending and tax increases
E) an
increase in the money supply
61. If
stagflation occurs and the government uses expansionary fiscal
and
monetary policies, then in the short-run:
A)
employment will increase and the price level will fall.
B) the
price level will fall, but unemployment will rise.
C)
employment will increase, but inflation will worsen.
D)
employment will increase and the price level will remain unchanged.
65. The
investment-demand curve will shift to the right as a result of:
A) an
increase in business taxes.
B) an increase
in the excess productivity capacity available in
industry.
C) an
increase in the acquisition and maintenance cost of capital
goods.
D)
technological progress.
88. An increase
in taxes will reduce the equilibrium NDP:
A) the
larger the MPS.
B) the
smaller the MPC.
C) if the
tax revenues are redistributed through transfer payments.
D) the
larger the MPC.
90. A $1
increase in government spending on goods and services will have
a greater
impact upon the equilibrium NDP than will a $1 decline in
taxes
because:
A)
government spending is more employment-intensive than is either
consumption or investment spending.
B) taxes
vary directly with income.
C)
government spending increases the money supply and a tax reduction
does
not.
D) a
portion of a tax cut may be saved.
91. The
"political business cycle" refers to the possibility that:
A)
politicians will manipulate the economy to enhance their chances of
being
reelected.
B) there is
more inflation during Democratic administrations than
during
Republican administrations.
C) incumbent politicians will be reelected
regardless of the state of
the
economy.
D)
recessions coincide with election years.
92. If an
expansionary fiscal policy were to shift the aggregate demand
curve rightward
within the intermediate range of the aggregate
supply
curve, then:
A) the
effect of the fiscal policy on real NDP would be strengthened.
B) the
price level would tend to fall.
C) the
effect of the fiscal policy on real NDP would be weakened.
D) tax
revenues would tend to fall because of built-in stability.
93. If the
MPC is .50, all taxes are lump-sum taxes, and the equilibrium
NDP is
$40 billion below the full-employment NDP, then the size of
the
recessionary gap:
A) is $20
billion.
B) is $60
billion.
C) is $40
billion.
D) cannot
be determined from the information given.
NDP C
S Yd I
G T
0 14
-34 -20 60
26 20
100 94
-14 80 60
26 20
200 174
6 180 60 26 20
300 254
26 280 60
26 20
400 334
46 380 60
26 20
500 414
66 480 60
26 20
600 494
86 580 60
26 20
700
574 106 680
60 26 20
800 654
126 780 60
26 20
900 734
146 880 60
26 20
1000 814
166 980 60
26 20
96. In the
accompanying table, the government spending multiplier is:
A) 2
B) 4
C) none of
the answers shown is correct
D) 3
E) 5
98. If the
government increases its spending during recession in order
to assist
the economy in recovery, the funds for such expenditures
must come from some source. Which of
the following sources would
tend to
be the most expansionary?
A)
borrowing from the public
B)
additional taxes upon corporate profits
C)
additional taxes upon personal incomes
D) creating new money
99. If a
lump-sum income tax of $25 billion is levied and the MPS is
.20, the:
A)
consumption schedule will shift downward by $20 billion.
B)
consumption schedule will shift downward by $25 billion.
C)
consumption schedule will shift upward by $20 billion.
D) saving
schedule will shift upward by $5 billion.
E)
consumption schedule will shift upward by $25 billion.
217. The GDP
gap (output gap) measures the:
A)
difference between NDP and GDP.
B) amount
by which nominal GDP exceeds real GDP.
C) amount
by which potential GDP exceeds actual GDP.
D) amount
by which actual GDP exceeds potential GDP.
218. A $100 million
increase in taxes causes aggregate demand to:
A) shift up
by $100 million
B) shift
down by $100 million
C) remain
stable
D) shift up
by less than $100 million
E) shift
down by less than $100 million
220. The
"crowding out" effect of fiscal policy applies to which of the following ideas?
A) an
increase in G leads to an increase in interest rates, which leads to a decline
in Investment
B) an
increase in G leads to an increase in interest rates, which leads to an
increase in Investment
C) an
increase in G leads to a decrease in interest rates, which leads to an increase
in Investment
D) an increase in G leads to an increase in the money supply,
which leads to a decrease in interest rates
E) an
increase in the number of people trying to board a subway which is already full
leads to
somebody getting pushed out
234. Suppose
that the recessionary gap is $10 billion, and it is expected
to remain
at that amount into the future if no action is taken. The
appropriate policy to eliminate this $10 billion gap is:
A) an
increase in taxes of $10 billion
B) a cut in
taxes of $10 billion
C) an increase in government spending
of $10 billion x the multiplier
D) an
increase in government spending of $10 billion
E) a cut in
government spending of $10 billion
250. A large
GDP (OUTPUT) gap implies:
A) a sharply
rising price level.
B) an
excess of imports over exports.
C) that the
structure of consumer demand has changed from goods to
services.
D) a high
rate of unemployment.
E) a low
rate of unemployment.
MONETARY POLICY
142. A
contraction of the money supply tends to:
A) lower
both the interest rate and aggregate expenditures.
B) increase
the interest rate, but decrease aggregate expenditures.
C) lower
the interest rate, but increase aggregate expenditures.
D) increase
the interest rate and aggregate expenditures.
144. If the
amount of money demanded exceeds the amount supplied, it can
be
expected that the:
A)
demand-for-money curve will shift to the left.
B) money
supply curve will shift to the right.
C) interest
rate will rise.
D) interest
rate will fall.
147. Assume
that the commercial banking system has demand deposits of $10
billion
and excess reserves of $1 billion at a time when the reserve
requirement is 20 percent. If
the reserve requirements is now
raised to
30 percent, the banking system then has:
A) a
deficiency of reserves of $1/2 billion.
B) neither an
excess nor a deficiency of reserves.
C) excess
reserves of only $1/2 billion.
D) excess
reserves of $2 billion.
148. Which of
the following is an illustration of a minor selective
credit
control?
A)
increasing the discount rate
B) lowering
the margin requirement
C) lowering
the reserve ratio
D) selling
government bonds in the open market
149. Which of
the following is not a tool of monetary policy?
A) changes
in the discount rate
B) changes
in tax rates
C) changes
in reserve requirements
D) changes
in margin requirements
E) open
market operations
150. Which of
the following is correct?
A) If nominal
GDP is expanding, the monetary authorities will have to
decrease
the money supply to keep interest rates stable.
B) If
nominal GDP is contracting, the monetary authorities will have to
increase
the money supply to keep interest rates stable.
C) If
nominal GDP is expanding, the monetary authorities will have to
increase
the money supply to keep interest rates stable.
D) If the
demand for money changes, the monetary authorities can
simultaneously
achieve the money supply and the level of interest
rates
they desire.
151.
Keynesians argue that the amount of money the public holds to
satisfy
the asset demand for money:
A) varies directly
with the size of NDP.
B) has
nothing to do with the velocity of money.
C) varies
inversely with the rate of interest.
D) varies
directly with the rate of interest.
152. According
to Keynesians velocity varies:
A) directly with the rate of interest and
inversely with the supply of
money.
B)
inversely with both the rate of interest and the supply of money.
C)
inversely with the rate of interest and directly with the supply of
money.
D) directly
with both the rate of interest and the supply of money.
153. Which of
the following is not a component of the equation of
exchange?
A) the
velocity of money
B) the
supply of money
C) real output
D) the
interest rate
E) the
price level
155. The
"monetary rule" is the notion that:
A) the
annual rate of increase in the money supply should be equal to
the
long-term increase in the price level.
B) monetary
policy does not have an impact upon the economy until 6 to
9 months
after the money supply is changed.
C) an
expansionary fiscal policy should always be accompanied by an
easy
monetary policy.
D) the
annual rate of increase in the money supply should be equal to
the
potential annual growth rate of real GDP.
158. Keynesian economists believe that the supply of money
(M), the rate
of
interest (i), and the velocity of money (V) are related as
follows:
A) An
increase in M will lower i and the reduction in i tends to
increase
V.
B) A
reduction in M will reduce i and the reduction in i tends to
increase
V.
C) An increase
in M will increase i and the increase in i will tend to
increase
V.
D) A
reduction in M will increase i and the increase in i tends to
increase
V.
159.
Monetarists are of the opinion that the private economy is
inherently:
A) unstable
and the public sector should be large in scope.
B) unstable
and the public sector should be small in scope.
C) stable
and that the government sector should be small in scope.
D) stable,
but that the public sector should be large in scope.
160. The
velocity of money measures the:
A) ratio of
the transactions demand to the asset demand for money.
B) number
of times per year the average dollar is spent on final goods
and services.
C) average
annual rate of increase in the money supply.
D)
proportion of the money supply which is held as an asset.
52. A tight
money policy involves:
A)
increasing the money supply to shift the aggregate demand curve
rightward.
B)
increasing the money supply to shift the aggregate demand curve
leftward.
C)
decreasing the money supply to shift the aggregate demand curve
rightward.
D)
decreasing the money supply to shift the aggregate demand curve
leftward.
210. An
important ROUTINE function of the Federal Reserve Banks is to:
A) advise
commercial banks as to the most profitable ways of
reinvesting profits.
B) provide
facilities by which commercial banks and thrift institutions
may
collect checks.
C) help new
commercial banks sell capital stock.
D) help
large commercial banks develop correspondent relationships with
smaller
commercial banks.
E)
supervise the liquidation of the assets of bankrupt state banks.
216. If the
Fed reduces the required reserve ratio, then:
A) the
amount of checking deposits that can be created on any given
reserve base
will decrease
B) the
amount of checking deposits that can be created on any given
reserve
base will increase
C) it must
follow this step with an open market sale, if there is to be
any
effect on the money stock
D) bond prices will rise, and so will
interest rates
E) it must
follow this step with an open market purchase, if there is
to be
any effect on the money stock
235. The
discount rate refers to:
A) the rate
at which banks write off bad loans
B) the
penalty paid by risky bank borrowers; that is, the amount of
interest
they pay in excess of the prime rate
C) the rate
at which money loses its value as a result of inflation
D) the rate
of interest that the Fed charges on loans to commercial
banks
E) the rate
at which assets lose their real value as a result of
inflation
248. If the
Federal Reserve wants to tighten monetary conditions, it is
most
likely to:
A) increase
the rate of purchases on the open market
B) lower
the discount rate
C) lower
margin requirements
D) sell
securities on the open market
E) cut the
required reserve ratio
POLICY DEBATES KEYNES, CLASSICAL, AND SUPPLY SIDERS
55.
Supply-side economics stresses:
A) the need
to keep the economy operating in the Keynesian range of the
aggregate supply curve so prices will be stable.
B) an easy
money policy.
C) the stimulating of incentives to work,
to save and invest, and to
undertake entrepreneurial risk.
D) an
expansionary fiscal policy.
64. The
classical theory of employment held that, if total spending was
less than
total output, then:
A) product
prices would rise, but resource prices would fall.
B) both
product and resource prices would fall.
C) product
prices would fall, but resource prices would rise.
D) both
product and resource prices would rise.
E) nominal
GDP would rise, but real GDP would remain constant.
84. If the
economy is encountering inflation, supply-side economists
would
recommend:
A) a tax
increase to reduce disposable income and consumption.
B) tax
reductions to increase the size of the full-employment NDP.
C) wage and
price controls.
D) that
fiscal policy not be used.
100.
Supply-side economists argue that the primary effect of tax cuts is
to:
A) lower real NDP and increase the price
level.
B) shift
the aggregate supply curve rightward.
C) shift
the aggregate demand curve leftward.
D) shift
the aggregate supply curve leftward.
145. Assuming
government wishes to either increase or decrease the level
of
aggregate expenditures, which of the following pairs are not
consistent policy measures?
A) a
reduction in government expenditures and a decline in the money
supply
B) a tax increase and an increase in
the interest rate
C) a tax
increase and an increase in government spending
D) a tax
reduction and an increase in the money supply
206.
According to classical economists, when the economy was at
equilibrium, then real GDP would be
A) above
potential GDP
B) below
potential GDP
C) at
potential GDP
D) about
10% above the level in the most recent recession
E) either (c)
or (d), but we can't tell which without information on
aggregate demand
211. Which of
the following is the best example of an automatic
stabilizer?
A)
inheritance taxes
B) the
personal income tax
C) temporary
tax increases passed by congress to fight inflation
D) local
property taxes
E) public
works designed to get the economy out of a depression
239. A person
who advocates laissez-faire believes that
A) tariffs
increase the prosperity of the economy
B) the
government should abolish private schools
C) the
government has the responsibility to maintain full employment
D) in most
instances, the government should leave the economy alone
E) government
regulation of wages and prices is needed to prevent
Inflation
244. Which of
the following is likely to reduce the natural rate of
unemployment?
A) more
generous unemployment insurance benefits
B) more
emphasis on fiscal policy, and less on monetary policy
C) a rise
in the minimum wage
D) tax
breaks for businesses with on-the-job training programs
E) none of
the above
NATIONAL DEBT AND DEFICITS
105. If
government adhered strictly to the notion of an annually balanced
budget,
then during a recession:
A)
expenditures would have to be increased and/or tax rates decreased.
B) both
expenditures and tax rates would have to be increased.
C) both
expenditures and tax rates would have to be decreased.
D)
expenditures would have to be reduced and/or tax rates increased.
E)
expenditures and tax collections would remain unchanged.
106. The most
likely way the public debt imposes a burden upon future
generations is by:
A) shifting
attention from the really important issues of today, e.g.,
"Can you get AIDS from mosquitos?"
B) causing
future unemployment.
C) causing
interest rates to be lower than otherwise.
D) causing
interest rates to be higher, thus reducing the current level
of
capital accumulation and potential future growth.
E) causing
a slowly falling future price level.
108. The
notion that the basic purpose of the Federal budget is to
stabilize
the economy regardless of resulting increases in the size
of the
public debt best describes:
A)
functional finance.
B) a
procyclical budget.
C) a socially optimum budget.
D) an
annually balanced budget.
E) a
cyclically balanced budget.
109. Since the
1970s the public debt has:
A)
increased absolutely.
B)
increased as a percentage of the GDP.
C)
increased on a per capita basis.
D) done all
of the above.
110. The real
burden of an increase in the public debt:
A) can be
shifted to future generations if the debt is internally
financed.
B) may be
very small or conceivable zero when the economy is in the
midst of
a severe depression.
C) will be
smaller when full employment exists than it will when the
economy
has large quantities of idle resources.
D) can best
be measured by the dollar increase in the size of the debt.
245. The most
likely way the public debt imposes a burden upon future generations is by:
A) causing
future unemployment.
B) causing
interest rates to be higher, thus reducing the current level
of
capital accumulation and potential future growth.
C) causing
interest rates to be lower than otherwise.
D) shifting
attention from the really important issues of today, e.g.,
"Can you get AIDS from mosquitos?"
E) causing a slowly falling future price level.
Answers to the
Macroeconomics: Practice Multiple Choice Questions
Answer Key:
1. A 41. D
81. D 121. C
2. D 42. D
82. C 122. A
3. A 43. C
83. B 123. D
4. C 44. D
84. B 124. C
5. C 45. A
85. D 125. D
6. C 46. A
86. B 126. B
7. A 47. A
87. A 127. D
8. A 48. B
88. D 128. C
9. B 49. B
89. A 129. C
10. A 50. B
90. D 130. D
11. B 51. A
91. A 131. C
12. A 52. D
92. C 132. B
13. B 53. C
93. A 133. D
14. A 54. D
94. B 134. C
15. B 55. C
95. C 135. D
16. D 56. D
96. E 136. D
17. B 57. B
97. D 137. C
18. B 58. C
98. D 138. C
19. B 59. C
99. A 139. A
20. A 60. D
100. B 140. D
21. B 61. C
101. B 141. D
22. B 62. C
102. C 142. B
23. D 63. B
103. A 143. C
24. D 64. B
104. C 144. C
25. B 65. D
105. D 145. C
26. E 66. B
106. D 146. A
27. B 67. E
107. B 147. B
28. B 68. A
108. A 148. B
29. B 69. A
109. D 149. B
30. B 70. C
110. B 150. C
31. D 71. B
111. A 151. C
32. E 72. A
112. A 152. A
33. B 73. B
113. A 153. D
34. D 74. C
114. D 154. A
35. E 75. E
115. C 155. D
36. B 76. A
116. E 156. C
37. D 77. C
117. A 157. D
38. B 78. A
118. E 158. D
39. C 79. C 119. B
159. C
40. B 80. B
120. B 160. B
201. D
214. E 227. E 239. D
202. D
215. B 228. A 240. B
203. E
216. B 229. A 241. D
204. E
217. C 230. C 242. A
205. A
218. E 231. D 243. B
206. C
219. D 232. C 244. D
207. C
220. A 233. B 245. B
208. E
221. E 234. D 246. C
209. B
222. C 235. D 247. C
210. B
223. D 236. C 248. D
211. B 224.
C 237. E 249. B
212. E
225. B 238. A 250. D
213. B
226. B
901. b
911. d 921. b
931.a
902. a
912. d 922. d
932.c
903. d
913. a 923. a
933.c
904. b
914. d 924. a
934.c
905. a
915. d 925. b 935.d
906 b 916. d
926. d
907. b
917. c 927. c
908. a
918. b 928. c
909. c
919. a 929. a
910. d
920. c 930. a
List of Terms to Review for Macroeconomics ECO 199
Terms for Review in approximate order covered during the semester
Ability-to-pay principle
Barter
Benefit principle
Characteristics of a public good
Circular flow
Commodity money
Consumer price index
Consumption
Criticisms of GDP as a measure
Definition of unemployment rate
Depreciation
Exclusion principle
Free rider problem
Frictional, structural, and cyclical unemployment
Imports/Exports
Income tax
Intermediate goods
Inventories
Investment (gross)
Investment (net)
Laissez faire
Losers from unexpected inflation
Marginal tax rate
Market economy
Natural rate of unemployment
Near money
Negative externalities
Net domestic product
Net exports
Nominal rate of interest
Positive externalities
Price index
Progressive tax
Proportional tax
Real rate of interest
Real vs. Nominal variables
Regressive tax
Rent, wages, interest, profit
Sales tax
Spillover benefits
Spillover costs
Winners from unexpected inflation
3 ways the Federal Reserve can tighten monetary conditions
Actual reserves
Changing legal reserve requirements
Crowding out effect
Definition of M1 & M2
Discount rate
Disposable income
Equilibrium GDP
Excess reserves
Expenditures multiplier
Fiat money
Final goods and services approach to GDP
Functions (role) of money
GDP (or output) gap
GDP, NDP, NI, PI, DI, C, S
Government purchases
Gross domestic product
Keynesian theory
Money
Money multiplier = 1/rr
National income
Opportunity cost of holding money
Personal income
Potential GDP
Required reserve ratio
Required reserves
Reserves of a commercial bank
Routine functions of FED
Transfer payment
Transfer payments included in personal Income?
Underground economy
Value added approach to GDP
Action lag
Automatic stabilizers
How change in taxes affects agg. Demand
How Keynesians believe money affects the economy
How monetarists believe money affects the economy
Impact lag
Impact of on GDP of unintended decrease in business inventories
Impact of on GDP of unintended increase in business inventories
Impact on GDP of changing taxes
Inflationary gap
Margin requirements
Monetarist theory
Monetarists' policy rule of thumb
Moral suasion
Open market operations
Public debt: how burdens future generations
Recessionary gap
Recognition lag
Supply side policies