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MCQ11. Which of the following events will cause the interest rate to increase?

A. an open market sale of bonds B. an increase in the reserve deposit ratio (i.e., ) C. an increase in income D. all of the above


12. Which of the following is a component of high powered money?

A. bonds held by banks, loans, and bank reserves. B. currency in circulation plus bank reserves. C. currency in circulation plus checkable deposits. D. bonds held by banks plus checkable deposits. E. the sum of currency in circulation, bank reserves, and checkable deposits.


13. The broadest based price index available is the:

A. Producers price index B. Consumers price index C. GDP deflator D. Wholesale price index E. Price level


14. The user cost of capital is given by the following formula, where pk is the real price of capital goods, d is the depreciation rate, and r is the expected real interest rate. nt


A. uc = (r+d) pk B. uc = pk / (r+d) C. uc = d pk / r D. uc = (r+d) pk E. uc = rpk/d


15. Adam Smith's idea of the 'invisible hands' says that given a country's resources and its initial distribution of wealth, the use of markets will:

A. insulate a nation from the effects of political instability B. will eliminate social problems such as crime. C. eliminate inequalities between the rich and the poor. D. make people as economically well off as possible. E. make people not as economically well off as possible.


16. The Widget Company has the following production function

Number of Workers Number of Cases Produced

0 0

1 9

2 17

3 24

4 30

5 35

If Widgets sell for $6 each and the wage rate is $33, how many workers will the company hire?

A. 0 B. 1 C. 2 D. 4 E. 5


17. An adverse supply shock, such as a reduced supply of raw materials, would

A. increase the marginal product of capital B. decrease the marginal product of capital C. increase the marginal product of labor D. decrease the marginal product of labor E. not affect the marginal product of labor 


For the next three questions, use the following information. The non-institutional civilian population is 250 million, of which 100 million are employed and 10 million are unemployed

18. Based on the data above, the unemployment rate is

A. 4% B. 6.6% C. 9.1%. D. 10%. E. 11.1%


19. Based on the data above, the labor force participation rate is

A. 36%. B. 40%. C. 44%. D. 90.1%. E. 66%.


20. Based on the data above, the non-employment rate is

A. 4%. B. 9.1%. C. 10%. D. 60%. E. e. 66% 

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MCQ 11. Which of the following events will cause the interest rate to increase? A. an open market sale of bonds B. an increase in the reserve deposit...
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