Fractional reserve banking (a) destroys money. (b) requires banks to engage in 100 percent of total banking activities. (c) allows banks to create money while requiring them only to hold a fraction of money. (d) all of the above. ANSWER (c)
Date: September 10th, 2020
If the propensity to hold money is 6 and the money supply is 12, then the classical aggregate demand curve is a. P = 2Y b. P/Y = 48 c. P = 1/(2Y) d. P = 2/Y ANSWER D
Date: September 10th, 2020
The Cambridge and Fischer versions of the quantity theory are identical if a. V = k.. b. V=k2. c. V= 1/k. d. none of the above. ANSWER C
Date: September 10th, 2020
During World War II, the distribution of income shifted. Who did this shift favor? (a) Labor (b) The idle and wealthy class (c) The government (d) Foreign-born individuals ANSWER (a)
Date: September 10th, 2020
The structural deficit is the deficit that a. is composed by of nondiscretionary spending by the federal government. b. results from the economy being below its natural rate of output. c. exists when output is at its natural rate of output. d. results from temporary tax cuts. e. all of the above ANSWER C
Date: September 10th, 2020
Assuming a simultaneous reduction in income taxes and transfer payments of $50 billion, then aggregate disposable income will a. be higher than before. b. be lower than before. c. remain constant. d. None of the above ANSWER C
Date: September 10th, 2020
In the IS-LM model, if interest rates fall while output falls the a. money supply must have fallen. b. price level must have fallen. c. money supply must have risen. d. level of government spending must have risen. e. none of the above. ANSWER E
Date: September 10th, 2020
From the net tax function: T = t0 + t1Y, where t0 < 0 and t1 > 0, it follows that, as income rises a. average taxes falls and the surplus declines. b. average taxes rises and the deficit increases. c. average taxes falls and the deficit declines. d. Average taxes and the deficit do […]
Date: September 10th, 2020
The largest percent of colonial trade (both exports and imports) was with (a) the United Kingdom. (b) Southern Europe. (c) Africa. (d) the West Indies. ANSWER (a)
Date: September 10th, 2020
During World War II, price controls were necessitated as shortages emerged in consumer markets. This required (a) the federal government to ration goods through tickets. (b) the federal distribution of rationing points. (c) a forced reduction in private consumption. (d) all of the above actions. ANSWER (d)
Date: September 10th, 2020
