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Question 1(Multiple Choice Worth 1 points)LiabilitiesTotal Reserves$60,000Demand Deposits$200,000Loans$140,000  

Assets

The balance sheet above shows the financial situation for the Carland National Bank. The central bank has set a reserve requirement of 10 percent. What is the maximum amount of additional money Carland National Bank can create? $600,000

 $40,000

 $200,000

 $60,000

 $400,000


Question 5(Multiple Choice Worth 1 points)

If the required reserve ratio is 5 percent, then the money multiplier is

 0.2

 0.5

 2

 5

 20


Question 6(Multiple Choice Worth 1 points)

The production possibilities curve may shift outward as a result of a(n)

 increase in worker training courses.

 decrease in costs of production.

 increase in short run aggregate supply.

 decrease in short run aggregate supply.

 increase in consumer spending.


Question 7(Multiple Choice Worth 1 points)

Given a normal market supply curve for suitcases, if the price of suitcases increased from $189 to $202, then

 there is an increase in supply of suitcases.

 there is a decrease in supply of suitcases.

 there is a decrease in the quantity supplied of suitcases.

 there is an increase in the quantity supplied of suitcases.

 cannot be determined from information given.


Question 9(Multiple Choice Worth 1 points)

If the economy is operating in the classical (vertical) range of the aggregate supply graph, then a decrease in personal income taxes will impact output and price level in which of the following ways?


Output / Price Level

 Increase / Increase

 No Change / Increase

 Increase / No Change

 No Change / Decrease

 Decrease / Decrease


Question 10(Multiple Choice Worth 1 points)

Assuming that crowding out is not an issue, if Congress increases business taxes at the same time that the Federal Reserve conducts an open market sale, output and price level are likely to change in which of the following ways?


Output / Price Level

 Increase / Decrease

 Decrease / Increase

 Indeterminate / Decrease

 Decrease / Indeterminate

 Decrease / Decrease


Question 11(Multiple Choice Worth 1 points)

A leftward shift of short-run aggregate supply will result in

 lower unemployment.

 lower inflation.

 higher inflation.

 stagflation.

 a smaller recession.


Question 15(Multiple Choice Worth 1 points)

In the long run, the Phillips Curve shows that

 the natural rate of unemployment is independent of fiscal and monetary policy changes.

 unemployment and inflation have a direct relationship.

 an increase in unemployment leads to an increase in inflation.

 there is an inverse relationship between inflation and unemployment.

 unemployment increases when inflation decreases.


Question 16(Multiple Choice Worth 1 points)

Which of the following will cause the production possibilities frontier to shift outward?

 An increase in aggregate demand.

 An increase in transfer payments.

 A decrease in long-run aggregate supply.

 An increase in worker productivity.

 An increase in government spending.


Question 17(Multiple Choice Worth 1 points)

Economic growth would decrease if

 consumer spending decreased.

 employee wages increased.

 floods ravaged the manufacturing sector in the north.

 government spending decreases significantly.

 the number of imports increased.


Question 20(Multiple Choice Worth 1 points)

If the Federal Reserve decreases the money supply, how will interest rates, the international value of the dollar, and exports be impacted as a result?


Interest Rates / Value of Dollar / Exports

 Increase / Decrease / Increase

 Increase / Increase / Decrease

 Increase / Increase / Increase

 Decrease / Decrease / Increase

 Decrease / Increase / Decrease


Question 21(Multiple Choice Worth 1 points)

Higher prices in the Macro Islands will

 increase the number of Macro Island exports purchased by tourists.

 make the international value of the dollar appreciate.

 make Macro Island exports less expensive for foreigners to buy.

 cause the international value of the Macro dollar to rise.

 cause the international value of the Macro dollar to fall.


Question 23(Multiple Choice Worth 1 points)

Which of the following would be true about business inventories?

  1. Decreases in production are preceded by increases in business inventories.
  2. Increases in inflation are preceded by increases in business inventories.
  3. If aggregate demand unexpectedly decreases, business inventories will increase.

 I only.

 II only.

 III only.

 I and II only.

 I and III only.



Question 28(Multiple Choice Worth 1 points)

A nation's gross domestic product would increase if

 a CEO purchased 1,000 shares of stock in a Fortune 500 company.

 a heavy equipment company sold a new ditch digger from last year's inventory at inventory value to a new customer.

 the son of a business owner fixes a broken window for her.

 an American company imported duty free goods from Mexico under the NAFTA agreement.

 a computer company added computers to its inventory that weren't sold by the end of the year.



Question 29(Multiple Choice Worth 1 points)

The unemployment rate published by the government is the percentage of the

 population that has given up looking for work.

 population that is collecting unemployment.

 population that is unemployed.

 labor force with part-time jobs.

 labor force that is unemployed.



Question 30(Multiple Choice Worth 1 points)

A worker who is unemployed while he switches from building houses to teaching school is

 cyclically unemployed

 frictionally unemployed

 structurally unemployed

 an employed individual

 not unemployed

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