Questions and Answers of Survey Of Economics

Which of the following statements is true?a. Money must be relatively “scarce” if it is to have value.b. Money must be divisible and portable.c. M1 is the narrowest definition of money.d. All
What is the major argument in favor of an independent Fed?
Which of the following is not part of M1?a. Checking accounts.b. Coins.c. Credit cardsd. Traveler’s checks.e. Paper currency.
Which of the following is part of the Federal Reserve System?a. Board of Governors.b. Federal Open Market Committee.c. 12 Federal Reserve District Banks.d. All of the above.
What are the arguments for and against deposit insurance such as that provided by the FDIC?
Which of the following is not a function of the Federal Reserve System?a. To control the money supplyb. To print new moneyc. To supervise and regulate banksd. To aid in the check clearing
Which of the following statements is true?a. The simple money multiplier equals the reciprocal of the required reserve ratio.b. Required reserves is the minimum balance that the Fed requires a
Which of the three monetary policy tools is the most powerful? Why?
If a single bank faces a required reserve ratio of 20 percent, has total reserves of $500,000, and checkable deposit liabilities of $400,000, what is the maximum amount of money this bank could
Which of the three monetary policy tools is the least powerful? Why?
In a simplified banking system in which all banks are subject to a 10 percent required reserve ratio, a $1,000 open market sale by the Fed to a bank would cause the money supply to:a. Increase by
If the Fed wishes to increase the money supply, then it should:a. Increase the required reserve ratio.b. Increase the discount rate.c. Buy government securities on the open market.d. Do any of
Which of the three monetary policy tools is the one which is most used? Why?
Briefly summarize what the Fed could do with its policy tools if it wished to increase the money supply?
When would it be most appropriate for the Fed to increase the money supply: during a recession or when the economy is expanding? Why?
What should the Fed do with the money supply today? Why?
Assume velocity is constant and we are at full employment. If we wish to increase real GDP by 3 percent, then by how much would we have to change the money supply?
Which of the following statements is false?a. The speculative demand for money at possible interest rates gives the demand for money curve its downward slope.b. There is a direct relationship
If the GDP increases, what is expected to happen to the interest rate?
Which of the following is true?a. Keynesians advocate increasing the money supply during economic expansions but decreasing the money supply during economic recessions.b. Monetarists advocate
When the Fed buys government bonds what happens to the price of these bonds and the interest rate?
The monetarists argue:a. The Federal Reserve should follow a monetary rule and simply increase the money supply by a constant percentage each year equal to the potential annual growth rate in real
According to Keynesians, a decrease in the money supply will:a. Decrease the interest rate, and increase investment, aggregate demand, prices, real GDP, and employment.b. Decrease the interest
Why would a monetarist advocate a balanced budget amendment to the constitution?
Why are monetarists sometimes called new or neo-Classicalists?
How could an increase in a nation’s fiscal deficit increase its trade deficit?
Which of the following statements is true?a. Specialization and trade along the lines of comparative advantage allows nations to consume more than if they were to produce just for
What will likely happen to a nation’s balance of payments if its GDP and income levels increase?
Which of the following statements is true?a. A tariff is a physical limit on the quantity of a good allowed to enter a country.b. An embargo is a tax on an imported good.c. A quota is a law that
Which of the following is not an argument used in favor of protectionism?a. To protect an “infant” industryb. To protect domestic jobsc. To preserve national securityd. To protect against
If the dollar appreciates (becomes stronger), this causes:a. The relative price of U.S. goods to increase for foreigners.b. The relative price of foreign goods to decrease for Americans.c. U.S.
Which type of trade barrier is most advantageous from the government’s perspective?
Suppose the U.S. government increases trade barriers on Japanese cars coming into the United States.a. What impact would this have on the American car market? What about the impact on American
What are the benefits and the costs to a nation of higher trade barriers? Which are greater: the benefits or the costs?
An economic system that answers the What, How, and For Whom questions using prices determined by the interaction of the forces of supply and demand is a:a. Market economy.b. Command
An economic system characterized by private ownership of the factors of production and economic activity coordinated through a system of markets and prices is
Which of the following statements is true?a. The United States today comes closer to the socialist form of economic organization than it does to capitalism.b. When central planners set prices above
What are some examples of “socialism” in the United States economy?
Which of the following statements is true?a. The doctrine of laissez-faire advocates an economic system with extensive government intervention and little individual decision-making.b. In
It has been suggested that different nation’s conception of what constitutes an equitable, fair, or just distribution of income is what primarily differentiates the degree to which government is
All modern industrial states in the world have a “socialized” healthcare delivery system, except South Africa and the United States. Why do you think that is? Should the United States adopt a
Why is economic growth and development a goal of virtually all nations?
Which of the following statements is true?a. A less-developed country (LDC) is a country with a low GDP per capita, low level of capital, and uneducated workers.b. The vicious circle of poverty
The “Four Tigers of the Pacific Rim” offer an example of developmental success. What seems to be the key elements necessary for developing countries to offer their citizens higher standards of
Which of the following is not generally considered an ingredient for economic growth?a. Investment in human capitalb. Political instabilityc. High savings rate and investment in capitald. Growth
To what extent do you think the lessons for successful economic growth and development for nations is applicable to regional economic growth and development within depressed areas of developed
Which of the following statements is true?a. There is no single correct strategy for economic growth and development.b. In general, GDP per capita is highly correlated with alternative quality of
GDP per capita comparisons among countries has its limitations:a. Of the questionable accuracy of LDC GDP per capita data.b. GDP per capita ignores the degree of income distribution.c. GDP per
What are two major institutions that are taken for granted in developed countries but are often lacking in many less-developed countries around the world?

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