ECON_120_Final Exam_ch10_12_13_14_ans

ECON_120_Final Exam_ch10_12_13_14_ans - < Your...

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Unformatted text preview: < Your location: Assessments > View All Submissions > View Attempt View Attempt 1 of 1 Title: Final (Cth. 12. 13. 14) Started: December 13, 2009 10:00 PM Submitted: December 13, 2009 11:43 PM Time spent: 01:34:45 Total score: 35MB 2 815% Total score adjusted by 0.0 Maximum possible score: 40 1. In order to increase the aggregate demand curve; a government must spending and taxation. Student Value Correct Answer Feedback Response A. decrease: increase g}. B. increase; 100% [7 decrease C. decrease: decrease D. increase; increase Score: 1y‘1 What is the reason that stabilization policies do not have an immediate effect on an economy? Student Value Correct Answer Feedback Response A. Consumers are slow to catch up on spending. 5, 0. There is a 100% 5 time lag for policies to take effect. C. Imports come into the country too fast. D. Exports often are not shipped fast enough. Score: 1f1 Economic advisers who fear that the economy is growing too rapidly would recommend that the government increase spending or decrease taxes. Student Value Correct Answer Feedback Response A. True 5, 0. False 100% ’\‘| Score: 1f1 Ivvhy are transfer payments not included in GDP? Student Value Correct Answer Feedback Response A. The amount is too low to have any effect. B. Unemployment varies and can't be tracked. 9'. C. They do not 100% E7 represent payments to these who contributed resources to currently produced goods or seryices. D. Money companies receive from the government isn't reported. Score: 1f1 Which of the following is an example of government discretionary spending? Student Value Correct Answer Feedback Response A. Social Security retirement payments B. Medicare benefits for the elderly 9'. C. defense 100% I? spending D. net interest paid on goyernment debt held by the public Score: 1f1 According to supply-side economics, a decrease in the tax rate tends to the labor supply and aggregate output. Student Value Correct Answer Feedback Response 9'. A. increase; 100% [7 Increase B. increase; decrease C. not change; increase 0. decrease; Increase Score: 1f1 Which of the following is an example of an automatic stabilizer? Student Value Correct Answer Feedback Response A. Congress authorizes spending increases during a recession. B. Congress increases the tax rate during an expansion. 9', C. More 100% [i unemployment benefits are paid during a rncnccinn D. Welfare payments decrease during a recession. Score: lfl Using expansionary policies to combat a recession would: Student Value Correct Answer Feedback Response 9'. A. increase a 100% {7 budget deficit. B. increase a budget surplus. C. decrease discretionary spending. D. increase federal reyenue. Score: lfl Taxes and transfer payments automatically reduce fluctuations in real GDP and thereby stabilize the economy without any need for decisions from Congress or the White House. Student Value Correct nnswer Feedback Response 9'. fl. True 100% [7 B. False Score: ly‘l ID. President George W. Bush used part of the budget surplus inherited from the Clinton administration to: Student Value Correct Answer Feedback Response A. fund tax cuts. B. stimulate the economy that was slowing down following the end of the high-tech inyestment boom. C. increase goyernment entitlement spending. 9'. D. both fund 100% [7 tax cuts and stimulate the economy that was slowing down following the end of the high-tech inyestment boom Score: lfl 11. Which of the following is an example of inyestment? 12. 13. 14. Student Response A. .flifirm builds a new plant E. .Di student attends college. C. The government Value builds a dam to have a source of hvdroelectric power. 9', D. all of these Score: lfl 100% Correct Answer Compared to consumption, investment is a much Student Response A. larger; stable El. smaller; stable C. larger; volatile . smaller; volatile Score: lfl Value 100% Correct Answer I./ The multiplier—accelerator model: Student Response 9'. fl. suggests that a downturn in real GDP will lead to a sharp fall in investment; which leads to further reductions in GDP through the multiplier. B. links investment spending to stock prices. C.emphasfies that current investment spenmng depends negadvew onthe expemed future grovvth of GDP. D. emphasizes the role of real interest rates and taxes. Score: 1fl Suppose that a firm can invest $100 todav in a project and receive $105 a vearfrom todav. There is no inflation; and the Value 100% Correct answer Feedback component of GDP and is much more Feedback Feedback annual interest rate in the economv is 6%. The firm should: Student Value Correct answer Feedback Response A. invest in the project because the opportunity cost is less than the return on the investment. B. invest in the project because the opportunity cost is greater than the return on :he 'nvestment. C. invest in the project oecause :he opportunity cost is the same as :he return on the 'nvestment. .5. D. notinvest 100% {7 in the project oecause :he opportunity cost is greater :han the return on the investment. Score: lfl 15. If you want to purchase a new sailboat in three years for 3310000, how much would you presently need to have in your bank account to have “510000 in three years? Assume your bank account pays 5 percent interest. Student Value Correct nnswer Feedback Response A. $114? a. $1836 5. (3.2681639 100% [7 0. $9,212 Score: lfl 16. If the nominal interest rate is 5 percent and the inflation rate is El percentj then the real rate of interest is: Student Value Correct nnswer Feedback Response A. —3 percent. 100% [7 B. 3 percent. C. 13 percent. D. 5 percent. Score: ill 17. Suppose you have $200 to invest at a nominal interest rate of El percent, and the investment's term to maturity is 1 year. If the inflation rate is 3 percent, then the real return on your investment is: Student Value Correct nnswer Feedback Response .5. A. $10. 100% [7 B. $16. c. $6. 0. $22. Score: lfl 18. Returns on Investment lnvestment Cost Returns A $100 101 $2110 mm 21-: $130 109 Table 12.2 MU Referring to Table 12.2, if the nominal interest rate is 10 percent and there is no inflation, which investments will be undertaken? Student Value Correct nnswer Feedback Response AA BUG-UB- C. A. B. and C D. none of 100% 0 these Score: lfl 19. Ivvhich of the following activities does not diversifv risk? Student Value Correct unswer Feedback Response iii. writing earthguake insurance policies for the entire Western United States B. writing 100% I} hurricane insurance policies onlv in Florida C. investing in real estate in various states across the U.S. D. purchasing the stock of a varietv of different companies Score: 1f1 2|]. Deposit insurance indirectlv helped to create the savings and loan crisis in the United States because: Student Value Correct Answer Feedback Response iii. the government. without warning, eliminated depost insurance for savings and loans, therebv causing a run on these institutions. B. depositors 100% E} were not concerned with the tvpes of investments made because thev were insured. while at the same time savings and leans were aggressively investing in nskv projects. C. depositors were not concerned with the tvpes of investment made because savings and leans were making verv conservative investments. D. depositors, believing that the government would not secure their deposits. were verv concerned with the tvpes of investments made at savings and loans. Score: ill 21. Checking account balances are included in: Student Value Correct Answer Feedback Response A. Ml onlv. B. M2 onlv. 9', C. both M1 100% [7 and M2. D. neither M1 nor M2. Score: lfl 22. Which of the following is not included in M1? Student Value Correct nnswer Feedback Response 9'. iii. savings 100% [7 accounts B. deposits in checking accounts C. deposits in checking accounts that pav interest D. traveler's checks Score: lfl 23. In I III .u \l. l.o1"|r.l n 24. 25. 26. 27. Currency new Dyme pumlc HLU pullon Demand de can: $2E|IJbllllon Dthercheckable depots: $190bfllion Traveler's checks $5 billion Samnss (1:130:11: $900bllllon Small fime depan 530191111011 Money market mmal funds $220 billlon Ta b| e 1 3 . 1 according to the information in Table 13.1. M1 is equal to: Student Response #3.. $420 billion B. $620 billion .$eos billion :4 n o. $1,o25 billion Score: 111 Value 100% El Correct Answer Feedback Given the following information aboutAM bank: Bank Deposrts Loans Requlred Reserves Exoess R2 Halves! sszuou 315,000 szono ssonp Ivvhat is the reserve ratio? Student Value Response . 50 percent Correct nnswer . 30 percent . 20 percent a,- D. 10 percent 100% E, 0031‘:- Score: lfl Given the following information about Acme Bank: BankDepoms 330.000 Loans 320J00I] Reserves 35.000 Reserve Requirement 'lUperoenf flcme Bank is holding Student Value Response A.$5,000 e.$3.ooo c.$2,soo a-o.$eooo 100% 5 Score: lfl Correct Answer Suppose Diane deposits $5000 in her bank. If the reserve ratio is 5 percent, this will lead to an increase of checking account balances. Student Value Response A.$0 e.$s,ooo c.$1dooo g-o.$1odooo 100% 5 Correct nnswer Score: 1fl ll’l EXCESS FBSBI’VBS. Feedback Feedback Feedback in Suppose Kirk has $5000 in currencv which he deposits in his bank. If the reserve ratio is 25 percent, this will lead to an increase of in M1. Student Value Correct nnswer Feedback Response A. $o e. $s.ooo c. $?,soo 5;. o. $15Jooo move [7 Score: 1f1 23. Rita receives a check for $1000 from filice and deposits it in her bank. Suppose that the reserve ratio is 10 percent. As a result of this transaction the money supply vvill: Student Value Correct Answer Feedback Response A. increase by $9,ooo. B. decrease by $1oJooo and then increase by $9,000. C. decrease by $9,ooo and then increase by 3510.000. g}. D. not 100% [7 change. Score: 1f1 29. The purpose of having governors of the Federal Reserve serve fourteen-year terms is to: Student Value Correct Answer Feedback Response a. ensure that the governors become well—experienced at policymaking. 5. B. insulate the 100% E? governors' policy decisions from the influence of presidential elections and politics. C. promote unity of opinion from shared time together. 0. establish long-standing ties with high—level officials of other nations' central banks. Score: ill 30. Monetary policy refers to the actions taken by the Treasury Department to set the level of the money supply. Student Value Correct answer Feedback Response A. True 5. 0. False 100% [7 Score: 1f1 31. Suppose that the interest rate available to you on a long-term bond is 5 percent. If you hold $1000 of your wealth in currency instead of in the form of a bond. the annual opportunity cost is: C‘I’IIrlnnI' "alnn Fn—unrvl- llnruln— EnanI-uanlr .JLuuclu. 'Iulul: LUIIISLI. nnarnsl I ccuuuLn Response A. $.05. 0. $5.00. 5;. c. $50.00. 100% I; 0. $500.00. Score: 1fl 32. A decrease in the price level in the economy leads to: Student Value Correct Answer Feedback Response A. a leftward {7 shift in the demand for monev curve. B. a rightward shift in the demand f0r monev curve. C. a leftward m0vement along the demand fer monev curve. 5, 0. a 0% rightward mevement al0ng the demand f0r monev curve. Score: 0fl 33. Which 0f the f0||0wing fact0rs d0es not Shift the demand curve f0r menev? Student Value Correct Answer Feedback Response A. changes in {7 the interest rate 0. changes in the price level in the ec0n0mv 5;. C. changes in 0% real income D. changes in real GDP Scere: 0fl 34. The federal funds rate is the interest rate that: Student Value Correct Answer Feedback Response A. the Fed charges to banks that borrow from it. E. banks charge the Fed for using their reserves. C. the Fed pavs on bank reserves. 5. D. banks 100% {7 charge each other for borrowed monev. Score: lfl 35. Which set of actions could the Fed use to increase the money supply? Student Value Correct answer Feedback Response A. discount rate cut and an open market sale B. reduction 5 in the required reserve ratio and an open market purchase g}. C. an open 0% market purchase and a tax cut D. an open market sale and a reduction in the required reserve ratio Score: 0fl 36. When the Federal Reserve buvs bonds on the open market. it decreases the monev supplv. Student Value Correct answer Feedback Response A. True 5;. B. False 100% {7 Score: lfl 37. If the Federal Reserve conducts an open market sale the: Student Value Correct nnswer Feedback Response fl. interest rate will not change. .5," 0. interest 100% [7 rate will increase. C. interest rate vvill decrease. D. monev supva is increased. Score: lfl 33. If a bond was to pav off one vearfrom now for $210 and was purchased for $200, what is the interest rate? Student Value Correct answer Feedback Response g}, A. 5 percent 100% {7 B. 10 percent C. 21 percent D. 15 percent Score: lfl 39. If the Fed wished to increase GDP, it could: Student Value Correct Answer Feedback Response A. increase the reserve requirement or conduct an open market sale. ,5. B. increase 0% the reserve requirement or conduct an open market purchase. C. decrease the reserve requirement or conduct an open market sale. D. decrease [7 the reserve requirement or conduct an open market purchase. Score: Dfl 4|]. An open market sale bv the Fed causes the value of the dollar to: Student Value Correct nnswer Feedback Response A. rise, increasing net exports. B. rise, [7 reducing net experts. C. fall, increasing net exports. 5,, D. fall, ova reducing net experts. Score: Dfl DDI'IB ...
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ECON_120_Final Exam_ch10_12_13_14_ans - &amp;lt; Your...

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