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Topics: Monetary policy, Unemployment, Inflation Pages: 5 (846 words) Published: September 6, 2013
Questions List
* Level 1
1) A recession occurs when real GDP declines.( T )
2)  For an economy as a whole, income equals expenditure because the income of the seller must be equal to the expenditure of the buyer.( T ) 3) If the marginal propensity to consume is 0.8, the marginal propensity to save will be 0.2.( T ) 4) When Government totals expenditure greater than total revenue, the government budget is in surplus. ( F ) * If Government total expenditure greater than total revenue, government spending exceeds tax revenues, and the budget is in deficit 5) The major problem of barter is the need for a double coincidence of wants.( T ) 6) A bank will list the mortgage loans it makes as liabilities.( F ) * They are assets to the bank.

7) A recession occurs when real GDP declines.( T )
8) If the MPC for the economy is 0.8, the tax multiplier is 3.5.( F ) * 1/1-MPC , 5
9) Rapid increases in the price level during periods of recession or high unemployment are known as inflation. ( F ) * Stagflation
10) The larger the MPC, the smaller the government spending multiplier.( F )

* Level 2
1) A progressive income tax means that those with a higher income pay (a) A lower percentage of their income in taxes than low-income people. (b) A higher percentage of their income in taxes than low-income people. (c) The same percentage of their income in taxes as low-income people. (d) All the taxes in the economy.

2) Economists identify a tax structure as being progressive if (a) The average tax rate increases as the level of taxable income increases (b) The marginal tax rate falls as taxable income rises

(c) The average tax rate remains constant as the level of taxable income rises (d) The marginal tax rate remains constant as the level of taxable income rises

3) A current account deficit implies that
(a) Spending exceeds income
(b) Income exceeds spending
(c) Exports exceeds imports
(d) None of the above

4) An example of a transfer payment is
(a) Profit.
(b) Rent.
(c) Unemployment benefits.
(d) Wages.

5) Gross Domestic Product is the sum of the market value of the (a) Intermediate goods.
(b) Final goods and services.
(c) Manufactured goods.
(d) Inferior goods and services.
(e) Normal goods and services.

6) An example of an expansionary monetary policy is
(a) An increase in the required reserve ratio.
(b) An increase in the discount rate.
(c) A reduction in the taxes banks pay on their profits.
(d) The Central bank buying government securities in the open market.

7) The natural rate of unemployment is generally thought to be the sum of (a) Frictional unemployment and cyclical unemployment.
(b) Cyclical unemployment and structural unemployment.
(c) Frictional unemployment and structural unemployment.
(d) Frictional unemployment and seasonal unemployment.

8) In a macroeconomic model without foreign trade or government spending, aggregate demand is the sum of (a) Personal saving and private investment
(b) Personal saving and personal consumption
(c) Personal consumption and personal income
(d) Personal consumption and private investment

9) Money is
(a) The same as income.
(b) Anything that is generally accepted as a medium of exchange. (c) The value of all coins and currency in circulation at any time. (d) all of the above

10) If the MPC for the economy is 0.8, the
(a) The multiplier is 1.25
(b) The multiplier is 5
(c) The multiplier is undefined
(d) The MPS is 0.4

* Level 3
1) List four difficulties in calculating national income
(a) Problems of non-monetized sector
(b) Problem of illiteracy
(c) Problems of expertise
(d) Problem of less sophisticated machinery
(e) Problem of double counting
(f) Problem of false information...
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