25 Multiple Choice Questions | Intermediate Macroeconomic Theory | ECON 305, Exams of Economics

Download 25 Multiple Choice Questions | Intermediate Macroeconomic Theory | ECON 305 and more Exams Economics in PDF only on Docsity! NAME____________________________________ FIRST EXAM BENNETT ECON 305 MULTIPLE-CHOICE 3 points each: Circle the letter beside the best answer. 1. Macroeconomics Is the study of a. the economic issues which affect individual well being and individual firms' profit levels b. the economic issues which affect foreign and domestic prices of related goods and services c. inflation and poverty at the level of the household d. the economic issues which affect the nation's total income, employment, and output 2. A low unemployment rate implies that a. job offers are scarce and inflation is high b. job offers are plentiful and wages are high c. jobs are permanent and job offers are plentiful d. jobs are difficult to find, and wages are low 3. The inflation rate is the a. measure used to calculate the price level b. measure used to calculate the GNP deflator c. percentage increase in the average level of prices d. percentage increase in the average level of wages 4. A rising inflation rate tends to help the following types of people a. retirees and students with savings accounts b. borrowers and homeowners without mortgages c. homeowners with mortgages and students with loans d. landowners and borrowers 5. The natural level of real GNP is that level of a. real GNP at which the price level will remain constant b. nominal GNP at which the price level will remain constant c. real GNP at which there is no tendency for inflation to accelerate or decelerate d. both a and c are correct 6. Suppose that steel produced this year is used to produce a car sold next year. The value of the steel ___ included in GNP this year as ___. a. is; an intermediate good b. Is not; an intermediate good c. is; an adjustment to inventories d. is not; an adjustment to inventories 7. Which of the following is not a leakage? a. import of a Toyota b. export of a Cadillac c. personal saving d. Indirect business taxes 8. By definition, when the economy is in equilibrium it must be true that a. leakages equal injections b. saving equals investment c. government spending equals taxes d. exports equal imports 9. If real GNP for 1990 is $2400 billion and nominal GNP is $3000 billion a. 1990 is the base year for the GNP deflator b. the GNP deflator for 1990 is 1.25 c. the GNP deflator for 1990 is 0.8 d. the GNP deflator for 1990 Is 1.10 10. The producer price index measures the average price level of a. goods sold by producers b. intermediate goods purchased by businesses c. the raw materials purchased by producers d. Both b and c are correct 11. A fixed or rigid price level implies a. that income is fixed b. that real GNP is greater than nominal GNP c. that nominal GNP is less than real GNP d. that real GNP equals nominal GNP 12. What type of variables have their movements explained by theory? a. endogenous b. exogenous c. autonomous d. both b and c are correct NAME______________________________________Bennett, 305, First Exam, Page 2 13. The multlplkir measures the a. number of steps it takes to move from one equilibrium to another b. rise in saving resulting from a rise in income c. marginal propensity to Invest d. rise in equilibrium GNP resulting from one dollar rise in planned autonomous expenditures 14. Raising the income tax rate will result in a. a lower multiplier b. a higher multiplier c. no change in the size of the multiplier d. none of the above 15. If both autonomous imports and autonomous taxes decrease by $100 billion, we expect that equilibrium income will a. increase by more than $200 billion b. decrease by more than $200 billion c. increase by $200 billion d. remain unchanged 16. A fall in the interest rate will shift a. the IS curve rightward and the LM curve leftward b. the IS curve leftward and the LM curve rightward c. both the IS and LM curves rightward d. none of these 17. When the marginal propensity to save declines the a. multiplier becomes larger and the IS curve becomes flatter b. marginal propensity to consume increases and there is no effect on the IS curve c. multiplier becomes larger the the IS curve becomes steeper d. multiplier declines and the IS curve becomes steeper 18. If the demand for money was totally independent of the interest rate, the a. LM curve would have a positive slope and monetary policy would be quite powerful b. LM curve would have a positive slope and monetary policy would be impotent c. LM curve would be vertical and monetary policy would be quite powerful d. LM curve would be vertical and monetary policy would be impotent 19. An increase in the money supply will raise equilibrium GNP if the a. IS curve is not vertical b. IS curve is negatively sloped c. pottition of the IS curve depends on the level of real money balances d. position of the LM curve depends on the level of real money balances 20. A flat LM curve implies that a. an Increase in government spending will change output by a relatively small amount b. a decrease in taxes will change output by a relatively small amount c. changes In government spending and taxes will have a large multiple effect on output d. both a and b 21. When a fiscal policy stimulus raises the interest rate a. the value of the dollar appreciates b. the value of the dollar depreciates c. im|x>rt8 decrease and exports increase d. boith a and c 22. The "crowding-out" effect refers to the fact that a. fiscal policy cannot be used to shift the IS curve b. risiing Interest rates tend to accompany an expansionary fiscal policy c. there may be a liquidity trap d. all of these 23. A deliberate change in the government's deficit a. constitutes discretionary fiscal policy b. leads to automatic stabilization c. acts as a drag on the economy 24. In an open economy with flexible exchange rates, an expansionary fiscal policy will have a ___ impact on output a. smaller; because domestic and international crowding out is increased b. larger; because domestic and International crowding out is increased c. giant; because domestic and international crowding out is decreased d. very small; because domestic and international crowding out is decreased 25. With flexible exchange rates the fiscal policy multiplier becomes a. larger because exports leak out of the economy b. smaller because the increase in interest rates lowers the exchange rate c. smaller because the increase in interest rates raises the exchange rate d. larger because the increase in interest rates raises the exchange rate