HI PLEASE ANSWER ALL 78 MULTIPLE CHOICE QUESTIONS THANK YOU

1. Which of the following will lead to a decrease in both equilibrium price and quantity in a market?

a)A decrease in demand

b)An increase in demand c)A decrease in supply d)An increase in supply

e)Subsidies to producers

2. Operating at any point on the production possibilities curve necessarily indicates that an economy

a)can improve its productive efficiency by moving to a point inside of the curve

b)is using all available resources and technology efficiently

c)is achieving equal distribution of income

d)is operating below full employment

e)can produce more of one good without decreasing production of another good

3.The production possibilities curve for an economy is generally bowed out from the origin because

a)resources are equally productive to alternative uses

b)there are no trade-offs in production c)opportunity costs increase as more of a good is produced

d)all wants can be satisfied efficiently by choosing points on the curve

e)more of all goods can be produced at zero opportunity cost

4. Economics is best defined as a study of how

a)to make money for everyone in the society

b)modern businesses can make a profit

c)resources are apportioned to satisfy human wants d)public policy influences the distribution of goods and services e)competitive markets work

5.Which of the following changes in the supply of and the demand for bananas would definitely lead to an increase in the equilibrium price of bananas?

Supply. demand

a)Increase Increase

b)Increase Decrease

c)increase No change

d)Decrease increase

e)No change Decrease

6. Which of the following is most likely to cause a country's production possibilities curve to shift to the right?

a)A decrease in frictional and structural unemployment levels

b)A decrease in the opportunity cost of using idle resources

c)A decrease in production of capital goods and an increase in production of consumer goods

d)Improvement in labor force education and training

e)Movement from recession toward full employment

7. A country has developed a new technology that increases its potential productive capacity. As a result, the country's production possibilities curve will

a)shift inward

b)shift outward

c)become a straight line d)stay the same, but the economy will move to a point farther to the right on the curve

e)stay the same, but the economy will move to a point farther to the left on the curve

8. The countries of Booth and Taggart produce only ice cream and pecans. The table below shows the maximum quantities they can produce for either good.

Ice Cream pecan

Booth 25 or. 100

Taggart. 10 or 100

If the countries specialize and trade, which of the following is a term of trade that would make both countries better off?

a)1 ice cream = 1 pecan

b)1 ice cream - 4 pecans

c)1 ice cream = 5 pecans

d)1 ice cream = 10 pecans

e)1 ice cream = 25 pecans

9.The factors of production are

a)money, technology, oil, and steel

b)land, labor, capital, and entrepreneurship

c)rent, wages, profits, and taxes

d)income, investment, raw materials, and labor

e)income, technology, investment, and profits

10. People who are currently not working at a paying job and not actively looking for work are classified as

a)unemployed

b)cyclically unemployed

c)structurally unemployed

d)frictionally unemployed e)not in the labor force

11. An increase in the marginal propensity to consume will cause which type of inflation?

a)Hyperinflation

b)Cost-push inflation

c)Stagflation

d)Demand-pull inflation

e)Hidden inflation

12. In Country X the unemployment rate is 14 percent. It is known that 2 percent of the labor force is frictionally unemployed and 5 percent is cyclically unemployed. The natural rate of unemployment in Country X should be

a) 12%

b)10%

c)9%

d)7%

e)5%

13.The primary cause of hyperinflation is an excessive growth of the

a)money supply b)nominal interest rate

c)real gross domestic product

d)economy's capital stock

e)government budget surplus

14.Of the following, which is the largest component of the gross domestic product of the United States?

a)Investment spending

b)Government spending

c)Consumption spending

d)Imports

e)Exports

15.The consumer price index increased by 4.5% during the past six months. Which of the following statements is accurate for the period?

a)The costs of all goods produced increased by 4.5%

b)The prices of all goods increased by 4.5%.

c)The price of the market basket of imported consumer goods increased by 4.5%.

d)The price of the market basket of consumer goods increased by 4.5%

e)The cost for producers of consumer goods increased by 4.5%.

16. Which of the following is true when the economy is at full-employment equilibrium?

a)The long-run aggregate supply curve is horizontal.

b)The short-run aggregate supply curve is vertical.

c)Everyone in the labor force is employed. d)There is only cyclical unemployment.

e)There is only frictional and structural unemployment.

17.During a period of inflation, nominal gross domestic product (GDP) rose by 5 percent. During the same period, which of the following must be true for the real GDP?

a)It increased by more than 5 percent.

b)It increased by less than 5 percent.

c)It increased by exactly 5 percent.

d)It remained the same as during the previous period.

e)It may have increased, decreased, or remained the same, depending on the inflation rate.

18.Uma's father earned $20,000 in his first job in 1980. If the consumer price index this year is 250 and 194 is the base year, how much does Uma have to earn this year to have real earnings equivalent to the real earnings of her father's first job?

a)$8,000

b)$19750

c)$20250

d)$50000

e)$5000000

19.The simple circular-flow diagram of an economy can be used to demonstrate

a)the flow of resources and money between firms and households

b)the shift of resources from the public to the private sector

c)how international trade affects equilibrium output

d)the impact of producer prices on consumer prices

e)how real gross domestic product (GDP is related to nominal GDP

20.Which of the following will increase the supply of loanable funds?

a)A decrease in the interest rate

b)An increase in the interest rate c)An increase in the demand for loanable funds d)An increase in consumption

e)An increase in national saving

21. If the Federal Reserve sells $5 million of United States government securities, and as a result, checking deposits decrease by $25 million, the maximum value of the required reserve ratio is

a)5

b).5

c).25

d).2

e).1

22)Which of the following expressions defines the relationship between the real and nominal interest rates?

a)Real interest rate - expected inflation rate = nominal interest rate

b)Real interest rate + expected inflation rate =nominal interest rate

c)Real interest rate - nominal interest rate = expected inflation rate d)Real interest rate / nominal interest rate = expected inflation rate

e)Nominal interest rate / real interest rate = expected inflation rate

23. If households in the United States increase their saving rate, the supply of loanable funds and the equilibrium interest rate will change in which of the following ways?

Supply of Loanable Funds Equilibrium Interest Rate

a)Increase. Increase

b)Increase Not change

c)increase Decrease

d)Not change Decrease

e)Decrease Increase

24. Suppose that a recession overseas caused the demand for United States net exports to fall by $40 billion. If the marginal propensity to consume in the United States is 0 8, then aggregate demand in the United States would

a)be unaffected

b)increase by up to $200 billion c)increase by up to $40 billion d)decrease by up to $200 billion

e)decrease by up to $32 billion

25. Assume that the United States economy is currently in long-run equilibrium. The price of oil rises unexpectedly, and oil is a widely used input in the economy. Which of the following should be expected to occur?

a)Real output and the price level will increase in the short run.

b)Real output and the price level will decrease in the short run. c)Real output will increase, but the price level will decrease in the short run

d)Real output will decrease, but the price level will increase in the short run. e)There will be no change in the economy in the short run, since the change in the price of oil was unexpected.

26. Which of the following is necessarily true when an economy is in equilibrium?

a)It is producing the maximum amount of gross domestic product.

b)Disposable income equals the sum of saving and investment.

c)Aggregate quantity demanded equals aggregate quantity supplied. d)The inflation rate is constant and equal to zero.

e)The actual unemployment rate is equal to the natural rate.

27.Let C = consumption spending, I = investment spending, G = government spending, T = taxes, S = saving,

X = exports, and M = imports. For an open economy that is currently in equilibrium, which of the following

is true?

a)I+G+S =C+x-M

b)S+I+C=G M-X

C)I+G+X=S+T+M

D)S+T+I=G +x-M

E)(I-S)+(G-T)=X+M

28. The short-run aggregate supply curve is upward sloping because

A)wages and prices are flexible

B)wages and prices are sticky

C)there is a high level of competition

d)the aggregate demand curve is downward sloping

e)the economy is at full employment

29. Which of the following can cause a rightward shift of the aggregate demand curve in the short run?

a)An increase in tax rates

b)An increase in per-unit production costs

c)An increase in imports

d)A decrease in interest rates

e)A decrease in the money supply

30. If taxes are decreased by $150 million, the equilibrium output will most likely

a)decrease by less than $150 million

b)decrease by more than $150 million

c)increase by $150 million

d)increase by less than $150 million

e)increase by more than $150 million

31. Assume that the marginal propensity to consume is 0.9. If government spending increases by $10 billion, what will be the maximum possible change in aggregate demand?

a)$9 billion

b)$10 billion

c)$ 90 billion

d)$100 billion

e)$109 billion

32.Which of the following circumstances are consistent with an economic contraction?

a)Real output is growing at 4% and the inflation rate is 2%.

b)Real output is growing at 4% and there is deflation.

c)Nominal output is growing at 4% and the inflation rate is 2%.

d)Nominal output is growing at 2% and the inflation rate is 4%.

e)Nominal output is growing at 2% and the inflation rate is 2%.

33. An increase in government deficit spending will cause which of the following changes?

a)An increase in gross private investment

b)An increase in the demand for loanable funds

c)An increase in the supply of loanable funds

d)A decrease in the real interest rate

e)A decrease in personal income taxes

34. Banks create money when they

a)accept deposits

b)transfer reserves to the Federal Reserve

c)keep cash in their vaults d)make loans

e)invest in financial markets

35. Which of the following will shift the money demand curve to the right?

a)An increase in the real interest fate

b)An increase in income taxes

c)An increase in aggregate demand

d)A decrease in real gross domestic product

e)A decrease in nominal gross domestic product

36.Assume that the economy is in a deep recession and the Federal Reserve wants to increase the money supply by $1 billion The required reserve ratio is 10 percent. Assuming there are no cash leakages, which of the following actions should the Federal Reserve take to accomplish its goal?

a)Buying $100 million in government bonds b)Selling $100 million in government bonds

c)Buying $900 million in government bonds

d)Selling $1 billion in government bonds

e)Buying $1 billion in government bonds

37.In the market for loanable funds, an increase in the government's budget deficit will

a)increase the demand for loanable funds and decrease nominal interest rates

b)decrease the demand for loanable funds and decrease real interest rates

c)increase the supply of loanable funds and increase real interest rates

d)increase the supply of loanable funds and decrease real interest rates

e)decrease the supply of loanable funds and increase real interest rates

38. Which of the following is true about the quantity of money demanded?

a)It reflects the function of money as a store of value

b)It reflects the aggregate amount of money spent for stock purchases.

c)It is equivalent to the M2 measure of the money supply.

d)It varies inversely with the nominal interest rates.

e)It varies inversely with nominal gross domestic product.

39. Which of the following is true about the quantity of money demanded?

a)It reflects the function of money as a store of value.

b)It reflects the aggregate amount of money spent for stock purchases.

c)It is equivalent to the M2 measure of the money supply. d)It varies inversely with the nominal interest rates.

e)It varies inversely with nominal gross domestic product.

40. The required reserve ratio is 10 percent. University Bank currently has required reserves of $200,000 and excess reserves of $50,000. Which of the following statements about money expansion is true?

a)University Bank can expand loans by up to $5,000 immediately, and the banking system as a whole can increase the money supply by up to $50,000 b)University Bank can expand loans by up to $50,000 immediately, and the banking system as a whole can increase the money supply by up to $500.000

c)University Bank can expand loans by up to $20,000 immediately, and the banking system as a whole can increase the money supply by up to $200,000.

d)University Bank can expand loans by up to $200,000 immediately, and the banking system as a whole can increase the money supply by up to $2,000,000.

e)University Bank can expand loans by up to $45,000 immediately, and the banking system as a whole can increase the money supply by up to $450,000

41. Which of the following best illustrates the concept of the present value of money?

a)The exchange rate is 1 United States dollar to 1.10 Canadian dollars.

b)A sum of $1,000 to be received twelve years from now is currently worth $620

c)An investment of $500 will yield $50 dividends every year.

d)The minimum wage is indexed to increase by the rate of inflation each year.

e)The United States currency is no longer backed by gold reserves.

42. The nominal rate of interest equals 4 percent, and the rate of inflation is expected to be 6 percent. The real interest rate is equal to

a) 24%

b)10%

c)2%

d)-2%

e)-10%

43. According to the quantity theory of money, an increase in the money supply will result in a proportional increase in

a)velocity

b) the real price

c) real income

d) employment

e) money demand

44. If the consumer price index (CPI) for two successive months is 237.96 and 237.60, which of the following statements is true?

a)Consumers need more income in the second month to buy the same basket of goods and services they bought in the previous month.

b)Consumers need less income in the second month to buy the same basket of goods and services they bought in the previous month.

c)Consumers need the same income in the second month to buy the same basket of goods and services they bought in the previous month

d)The country has experienced inflation equal to 0.36 percent.

e)The country has experienced deflation equal to 0.36 percent.

45. If a budget surplus is required to bring the economy to full employment output, which of the following is most likelv true?

a)The economy's actual output is less than the full employment output.

b)The economy's actual output is the full employment output.

c)The economy's actual output is greater than the full employment output. d)The unemployment rate is equal to the natural rate of unemployment.

e)The unemployment rate is above the natural rate of unemployment.

46. Which of the following describes the relationship between actual output and the full-employment output in the long run?

a)Actual output and the full-employment output will be equal.

b)The actual unemployment rate will be less than the natural rate of unemployment.

c)The full-employment output will increase, but the actual output will not.

d)The full-employment output will increase faster than the actual output.

e)The full-employment output is unrelated to the actual output.

47.Federal government budget deficits are associated with

a)decreased government borrowing

b)total government expenditures that exceed tax revenues

c)increased printing of currency to match the size of the government budget

d)decreased interest costs due to less spending by the government

e)export levels that exceed import levels

48. An open-market sale of bonds by the Federal Reserve would cause which of the following changes in bank reserves and interest rate?

Bank Reserves. interest rates

a) A decrease. no change

b)A decrease. an increase

c)An increase. an increase

d)An increase A decrease

e) no change. A decrease

49. An increase in inflationary expectations will cause which of the following?

a)A leftward shift in the aggregate demand curve b)A leftward shift in the aggregate supply curve c)A leftward shift in the Phillips curve

d)A decrease in nominal interest rates

e)A decrease in nominal gross domestic product

50. Which of the following is true of the short-run Phillips curve?

a)It is a vertical line, indicating no trade-off between inflation and unemployment.

b)It is upward sloping, indicating that higher unemployment leads to higher inflation

c)It is generated by demand-side trade-offs, indicating that higher unemployment leads to lower inflation.

d)It is determined by the type of monetary policy implemented by the Federal Reserve.

e)It is not affected by changes in aggregate supply.

51. Following the implementation of expansionary monetary policy, which of the following are the most likely short-run effects on the price level, real output and real wages?

price level real output real wages

A) increase increase decrease

b)increase decrease. no change

c) increase increase increase

d)decrease decrease increase

e) decrease increase decrease

52. A country's real gross domestic product (GDP) has been declining steadily for the past several months.

Which of the following is a fiscal policy that can be used to reverse the decline in real GDP?

a)Decreasing taxes and government spending to increase aggregate demand

b)Decreasing deficit spending by increasing taxes

c)Decreasing taxes and increasing government spending

d)Increasing taxes and decreasing government spending

e)Decreasing unemployment benefits

53. If the Federal Reserve decreases the federal funds rate target, which of the following will happen in the short run?

a)The short-run Phillips curve will shift to the right.

b)The aggregate demand curve will shift to the right.

c)The nominal interest rate will increase.

d)The international value of the dollar will appreciate

e)The supply of loanable funds will decrease.

54. A country's real gross domestic product decreased significantly during a year. An appropriate fiscal policy to reverse the trend would be to

a)increase the money supply

b)decrease the money supply

c)decrease government spending

d)increase government spending e)increase business taxes

55. Which of the following is an expansionary fiscal policy?

a)Decreasing government spending b)Expanding the money supply

c)Giving tax credits for car purchases

d)Decreasing transfer payments

e)Increasing taxes

56. The United States government deliberately decreased its spending and increased tax rates. Those actions were most likely in reaction to

a)high rates of unemployment b)recessionary expectations

c)a high inflation rate

d)a low international value of United States currency e)mounting government surpluses

57. A supply-side fiscal policy to combat a recession would be to

a)order firms to increase production

b)increase government spending c)institute more regulations in the financial sector

d)increase money supply e)decrease marginal income tax rates

58. If an economy is operating below the full-employment output level, which fiscal policy action can bring the economy back to full-employment equilibrium?

a)An increase in personal income taxes

b)An increase in government spending

c)An increase in the required reserve ratio d)A decrease in the money supply

e)A decrease in transfer payments

59. Which of the following policies will decrease the nominal interest rate?

a)A decrease in income taxes

b) An increase in government spending that is financed by borrowing

c)An open-market purchase of government bonds by the Federal Reserve

d)An increase in the federal funds rate

e)An increase in the discount rate

60. Which of the following statements about the United States national debt is true?

a)Whenever the government sells bonds the national debt decreases.

b)An increase in government budget deficit will increase the national debt.

c)The national debt will decrease if the government has a balanced budget. d)The national debt is the amount the government borrows in a given year when expenditures exceed revenues e)An increase in the national debt will cause a decrease in real interest rates.

61. The national debt of the United States is the sum of the

a)federal government's annual budget deficits

b)individual states budget deficits

c)corporate debt held by the government

d)consumer debt held by the government

e)corporate and consumer debt held by foreign countries

62. If the government decides to pursue expansionary fiscal policies to steer the economy out of a recession, it may take which of the following actions?

a)Decrease the money supply

b)Increase government funding for public education

c)Increase taxes on private education companies

d)Increase licensure requirements for public-school teachers

e)Impose a price ceiling on gasoline sales

63. Which of the following statements most appropriately relates to the concept of economic growth?

a)Country A's nominal gross domestic product grew for nine years, while there was significant inflation during the same period

b)Country B has moved up along its production possibilities curve, producing more butter and fewer guns.

c)The population growth rate in Country X increased every year for the last ten years

d)Savings rates in Country Y have decreased as its citizens purchased more imported consumer goods

e) Country Z has experienced sustained increases in real output over a period of seven years

64. A trade deficit exists if

a)imports are negative

b)exports are negative

c)imports exceed exports

d)exports exceed imports

e)the capital account exceeds the current account

65. Which of the following is true of the effect of technological improvement?

a)It raises labor productivity but decreases the demand for labor.

b)It increases aggregate supply but lowers wage rates. c)It increases nominal income but decreases real income. d)It leads to greater output of goods and services.

e)It leads to higher imports and less exports.

66. If the United States (U.S.) central bank increases the money supply to stimulate the economy, then the resulting change in interest rates can lead to which of the following

a) An increase in the demand for the U.S. dollar in the foreign exchange markets, causing the dollar to appreciate

b)An increase in the supply of the U.S. dollar in the foreign exchange markets, causing the dollar to appreciate

c)A decrease in the supply of the U.S. dollar in the foreign exchange markets, causing the dollar to depreciate

d)A decrease in the demand for the U.S. dollar in the foreign exchange markets, causing the dollar to depreciate

e)A decrease in U.S. exports and an increase in U.S. imports

67. A nation's production possibilities curve shifts outward when which of the following occurs?

a)A rightward shift in the nation's aggregate demand curve

b)A leftward shift in the nation's short-run aggregate supply curve

c)A rightward shift in the nation's long run aggregate supply curve

d)A doubling of the nation's nominal gross domestic product

e)An increase in real gross domestic product closer to the full-employment output

68. Assume that the development of improved computer systems causes the full-employment output level to increase. Which of the following will occur?

a)The unemployment rate will increase, since more computers are in use.

b)Long-run aggregate supply will increase, and short-run aggregate supply will decrease.

c)Both long-run and short-run aggregate supply will increase

d)Both long-run and short-run aggregate supply will decrease.

e)Long-run aggregate supply will decrease, and aggregate demand will increase.

69. An increase in which of the following will most likely promote economic growth?

a)Imports of consumer goods

b)Resource prices

c)Protection of property rights

d)Corporate taxes

e)Tariffs on imports

70. Which of the following is recorded in the financial account in a nation's balance of payments accounts?

a)Purchases of assets abroad and purchases of its assets by foreigners b)Imports and exports of equipment

c)Purchases of domestic stocks and bonds d)Government spending on infrastructure and tax revenues e)Income received from foreign investment and net transfers

71. A significant increase in United States tourists traveling to Argentina would have which of the following effects on the demand for and the value of Argentina's currency, the peso?

demand for pesos value of pesos

a) increase indeterminate

b) increase Increase

c)increase decrease

d) decrease increase

e) decrease decrease

72. Increases in the foreign exchange reserves held by a country most likely imply

a)a trade deficit, with imports greater than exports

b)a trade deficit, with imports less than exports

c)a trade surplus, with imports greater than exports d)a trade surplus, with imports less than exports

e)a budget deficit, with tax revenues less than government spending

73. If the United States dollar appreciates in the foreign exchange market, then

a)the value of the dollar will decrease

b)United States aggregate demand will increase

c)more dollars will be required to purchase a unit of foreign currency d)foreign goods will become cheaper for United States consumers

e)United States exports will increase

74. If the central bank increases the money supply during a recession, what is the most likely outcome?

interest rates real output

a) rise fall

b)fall. rise

c)rise rise

d)fall fall

e)rise no change

75. Which of the following statements is correct with respect to the federal budget deficit and the national debt?

a)When the federal government runs a budget deficit, the national debt decreases.

b)When the federal government runs a budget surplus, the national debt increases c)The national debt is the accumulation of past budget deficits and budget surpluses.

d)When the federal government's budget is balanced, the national debt decreases. e)There is no relationship between the budget and the national debt.

76. Which of the following policies can be implemented the fastest?

a)Deregulation

b)Taxes

c)Government spending

d)Open-market operations e)Balanced-budget amendment

77. Which of the following has contributed the most to the growth in real gross domestic product (GDP) per capita in the United States?

a)Increased labor force

b)Increased immigration

c) import restrictions

d)Technology

e)Increased oil production

78. If there is greater inflation in a domestic economy than in a foreign country, which of the following will

result?

a)A rise in exports and a fall in imports in the domestic country

b)A rise in imports and a fall in exports in the domestic country

c)A rise in exports in the domestic country and a rise in imports in the foreign country

d)A rise in imports in the domestic country and a fall in exports in the foreign country

e)A rise in tariffs imposed by the domestic country