econ201 quiz 2 latest 2015 all correct answers

Chapter 11 Random

Question 1 1 / 1 point

The _____________ holds that a rise in price level will make domestic goods relatively more expensive, ____________ exports and _______________ imports.

a)

employment effect; discouraging; encouraging

b)

interest rate effect; encouraging; discouraging

c)

wealth effect; encouraging; discouraging

Correct Response

d)

foreign price effect; discouraging; encouraging

Question 2 0 / 1 point

If Keynes’ law applies during economic contractions and Say’s law applies during economic expansion, how will the three goals of macroeconomics be affected?

a)

the economy will face genuine limits to how much can be produced

Incorrect Response

b)

institutional and market structures will connect factors of production

c)

trade-offs and connections may differ in the short run and the long run

d)

determinates of total supply for the economy will be traded-off

Question 3 0 / 1 point

If the price level of what firms produce is rising across an economy, but the costs of production are constant, then:

Incorrect Response

a)

the maximum potential GDP will be exceeded.

b)

higher profits will induce expanded production.

c)

increase in quantity produced won't be large.

d)

a majority of industries will start running into limits.

Question 4 0 / 1 point

What term is used to describe the maximum quantity that an economy can produce, in the context of its existing inputs, market and legal institutions?

a)

potential GDP

b)

AS curve

Incorrect Response

c)

aggregate supply

d)

GDP deflator

Chapter 11 Problems

Question 5 0 / 1 point

Referring to the above diagram, which of the following is a true statement?

a)

Macroeconomic policy will be needed to address rising inflation.

Incorrect Response

b)

The equilibrium in the economy is at a level of output above full employment.

c)

There is sufficient aggregate demand to cause inflationary pressures.

d)

There is insufficient aggregate demand to reach full employment.

Chapter 12 Random

Question 6 0 / 1 point

The equilibrium quantity of labor and the equilibrium wage level decrease when:

a)

labor demand shifts to the right, if wages are flexible.

Incorrect Response

b)

labor supply shifts to the left, if wages are flexible.

c)

labor demand shifts to the left, if wages are flexible.

d)

labor supply shifts to the right, if wages are flexible.

Question 7 0 / 1 point

According to the Keynesian framework, ________________________ may cause a recession, but not inflation.

a)

a major trading partner's economic slowdown

b)

a decrease in interest rates

c)

a decrease in a major trading partners export prices

Incorrect Response

d)

an increase in domestic investment

Question 8 0 / 1 point

The equilibrium quantity of labor and the equilibrium wage increase when:

a)

labor supply shifts to the right, if wages are flexible.

b)

labor supply shifts to the left, if wages are flexible.

Incorrect Response

c)

labor demand shifts to the left, if wages are flexible.

d)

labor demand shifts to the right, if wages are flexible.

Chapter 12 Problems Multiplier

Question 9 0 / 1 point

Suppose that out of the original 100 of government spending, 33 will be recycled back into purchases of domestically produced goods and services in the second round and 10.89 is spent in the third round. Following this multiplier effect, what will the value of the total aggregate expenditures be after the fourth round in the cycle is completed?

Incorrect Response

a)

141.70

b)

147.62

c)

147.48

d)

144.41

Chapter 12 and 13 Graph problems

Question 10 1 / 1 point

Refer to the graph shown below. This graph illustrates a:

Correct Response

a)

Phillips Curve.

b)

Keneyesian Curve.

c)

Neoclassical Curve.

d)

Labor Demand Curve.

Chapter 14 Random

Question 11 0 / 1 point

If Evelyn uses her debit card to buy an iPod, then the money to pay the retailer will come from:

Incorrect Response

a)

the debit card company's M1 funds.

b)

the debit card company's M2 funds.

c)

her M2 funds.

d)

her M1 funds.

Question 12 0 / 1 point

If the central bank decreases the amount of reserves banks are required to hold from 20% to 10%, then:

a)

both the money multiplier and the supply of money in the economy will decrease.

b)

both the money multiplier and the supply of money in the economy will increase.

Incorrect Response

c)

the money multiplier will increase and the supply of money in the economy will decrease.

d)

the money multiplier will decrease and the supply of money in the economy will increase.

Question 13 0 / 1 point

If Brent uses his credit card to purchase a new television, then the money to pay the retailer is taken from:

a)

his M1 funds.

b)

his M2 funds.

c)

the credit card company's M1 funds.

Incorrect Response

d)

the credit card company's M2 funds.

Chapter 14 Bank balance sheet

Question 14 0 / 1 point

Stealth bank has deposits of $700 million. It holds reserves of $20 million and has purchased government bonds worth $350 million. The banks loans, if sold at current market value, would be worth $600 million. What is the total value of Stealth bank’s assets?

Incorrect Response

a)

$1.7 billion

b)

$470 million

c)

$1.3 billion

d)

$970 million

Chapter 13 Random

Question 15 0 / 1 point

When a shift in ________________ occurs, rational expectations hold that its impact on output and employment will only be temporary.

a)

wage levels

b)

aggregate demand

c)

price levels

d)

aggregate supply

Question 16 0 / 1 point

Why do neoclassical economists tend to put relatively more emphasis on long-term growth than on fighting recession?

a)

government focuses more on recession and cyclical unemployment

b)

upward trend of potential GDP determines the rate of inflation

c)

standard of living is ultimately determined by long-term growth

d)

price and wage stickiness is reasonable in the short run

Chapter 15 Random

Question 17 0 / 1 point

The central bank requires Southern to hold 10% of deposits as reserves. Southern Bank's policy prohibits it from holding excess reserves. If the central bank sells $25 million in bonds to Southern Bank which of the following will result?

a)

the money supply in the economy decreases

b)

decrease in Southern's bond assets by $25 million

c)

increase in Southern's loan assets of $25 million

d)

Southern's net worth increases by $25 million

Question 18 0 / 1 point

When the central bank lowers the reserve requirement on deposits:

a)

the money supply and interest rates increase.

b)

the money supply decreases and interest rates increase.

c)

the money supply and interest rates decrease.

d)

the money supply increases and interest rates decrease.

Question 19 0 / 1 point

When a Central Bank takes action to decrease the money supply and increase the interest rate, it is following:

a)

a expansionary monetary policy.

b)

a contractionary monetary policy.

c)

a loose monetary policy.

d)

a quantitative easing policy.

Chapter 15 problems

Question 20 0 / 1 point

If the economy is at equilibrium as shown in the diagram above, then an expansionary monetary policy will:

a)

reduce both unemployment and inflation.

b)

reduce unemployment, but increase inflation.

c)

reduce unemployment, but have little effect on inflation.

d)

have no effect on both unemployment and inflation.

Attempt Score:

2 / 20 - 10 %

Overall Grade (highest attempt):

2 / 20 - 10 %