Economics Final Study Guide
Economics Final Study Guide: PART II
1. Workers who wages tend to adjust slowly include all of the following EXCEPT
a. Movie Stars, professional athletes, and rock stars
b. Those with long-term contracts
c. Unskilled, low wage workers
d. Union workers
2. Which of the following causes a movement along the aggregate demand curve
a. An increase in the price level
b. An increase in government spending
c. An increase in the money supply
d. A fall in wages
3. Refer to figure, 9.2 a movement from point b to point a could be caused by a(n)
a. Increase in government spending
b. Decrease in the price of oil
c. Increase in taxes
d. A massive crop failure
4. The fact that it takes time for government to identify and recognize a problem is one reason for the occurrence of
a. Structural lags
b. Inside lags
c. Outside lags
d. Implementation lags
5. A white house proposal to lower business taxes by increasing tax deductions is an example of
a. Expansionary fiscal policy
b. Contractionary fiscal policy
c. Automatic Stabilization
d. Progressive taxation
6. Recall the application about the success of the 2009 stimulus package to answer the following question.
The Obama stimulus package was implemented to assist the economy in its recovery from recession. This package was designed to shift
a. Aggregate demand to the left
b. Aggregate demand to the right
c. Aggregate supply to the left
d. Aggregate demand and aggregate supply to the left
7. Money that has no intrinsic value and is created by a government decree is called
a. Barder money
b. Fiat money
c. Asset money
d. Commodity money
8. Suppose Diego deposits $4,000 in his bank. If the reserve ratio is 10 percent, this will lead to a maximum increase of _______ in checking account balances throughout all banks.
a. $0
b. 4,000
c. 10,000
d. 40,000
9. The federal reserve system is the Central Bank of the United States
a. True
b. False
10. Recall the application about how the Fed kept the U.S. financial system in operations following the attacks of September 11, 2001, to answer the following question(s) To help prevent financial firms from defaulting on their debts, the Fed took several steps to provide additional funds to the financial system, including allowing banks to borrow more, increasing the difference between the credits and debits it extended while serving as a clearinghouse for checks, purchasing government securities and providing dollars to Foreign central banks. Together, these actions increased the credit extended by the Fed by over 90 billion
According to this application, immediately following the attacks of September 11, 2001, the Fed provided additional funds to the financial system. On September 12, banks borrowed $45.5 billion dollars, up from 99 million the previous week. This was an example of the Fed acting as a.
a. Store of value
b. Medium of exchange
c. Unit of account
d. Lender of last resort
11. We use interest rate to measure the opportunity cost of holding money
a. True
b. False
12. To decrease the money supply using the reserve requirements as a tool, what would the Fed typically do?
a. Reduce the reserve requirement for banks
b. Make each bank voluntarily set its own reserve levels
c. Raise the reserve requirement for banks
d. Let each bank get less currency from the Treasury
13. Based on the model of the money market, when real income decreases, the equilibrium interest rate should
a. Increase
b. Decrease
c. Stay the same
d. Increase to the same extent that the supply of money increases
14. Lower U.S. interest rates cause the value of the dollar to
a. Rise, making U.S. goods relatively more expensive on world markets
b. Fall, making U.S. goods relatively more expensive on world markets
c. Rise, making U.S. goods relatively cheaper on world markets
d. Fall, making U.S. goods relatively cheaper on world markets
15. The outside lags related to monetary policy tend to be quite long.
a. True
b. False
Hair pins / hour Bandanas / hour
Nigel 4 10
Mia 9 3
Table 3.3
16. Consider two individuals, Nigel and Mia, who produces hair pins and bandanas. Nigel’s and Mia’s hourly productivity are shown in table 3.3. Mia’s opportunity cost of producing one hair pin is
a. 1/3 of a bandanas
b. 2.5 bandanas
c. 3 bandanas
d. 10 bandanas.
17. Which of the following situations will arise in the domestic market following the imposition of a voluntary export restraint?
a. Imports increase, domestic production decreases, prices decrease
b. Imports decrease, domestic production increases, prices increase
c. Imports decrease, domestic production increases, prices decrease
d. Imports increase, domestic production increase, prices increase
18. The first major international trade agreement following World War II was the North American Free Trade Agreement (NAFTA).
a. True
b. False
19. As the dollar depreciates relative to the Russian ruble, U.S. goods become cheaper for Russians to purchase. Therefore, in the foreign exchange market, the
a. Demand curve for dollars is downward sloping
b. Supply curve of euros is downward sloping
c. Supply curve of dollars is downward sloping
d. Demand curve for euros is upward sloping
20. If a country’s currency depreciates, the country will experience a _____ in exports and a _______ in imports.
a. Rise; fall
b. Rise; rise
c. Fall; fall
d. Fall; rise
Needs help with similar assignment?
We are available 24x7 to deliver the best services and assignment ready within 3-4 hours? Order a custom-written, plagiarism-free paper
![](https://powerpointpresentationhelp.com/wp-content/uploads/2022/03/WhatsApp_icon.png)
![](https://powerpointpresentationhelp.com/wp-content/uploads/2022/03/205-2057855_essay-icon.png)