1)US per capita GDP grew from $2700 in 1890 to $33,000 in 1990. Thus the average annual rate of growth in per capita GDP over the period was A)2.03% B) 3.13% C) 2.19% D) none of the above 2) If the...

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MULTIPLE CHOICES:
1) US per capita GDP grew from $2700 in 1890 to $33,000 in 1990. Thus the average
annual rate of growth in per capita GDP over the period was
A) 2.03% B) 3.13% C) 2.19% D) none of the above

2) If the real interest rate increases, and the expected profitability of a project increases, then
A) Investment spending will be higher
B) Investment spending will be lower
C) Investment spending will not be impacted
D) Investment spending could be higher or lower.
3) Large increases in the national debt are typically associated with
A) Tax Cuts
B) Wars
C) Recessions
D) B and C above
E) All of the above
4) The decrease in consumption in 2008 and 2009 was a result of
A) An autonomous decrease due to lower income
B) An autonomous increase due to lower taxes
C) An induced increase due to higher income
D) B and C above
E) None of the above.
5) Production possibilities curves are typically
A) Convex to the origin because of factor suitability problems
B) Concave to the origin because of economies of scale issues
C) Concave to the origin because all resources are not equally adaptable
D) None of the above.
6) The following are reasons for immigrant success in the US compared to Europe except:
A) Easier to start a business
B) Better enforcement of antidiscrimination laws in the work place
C) Less need for a formal education
D) Easy access to finance
7) Suppose the GDP deflator for 2007 was 105.44 and the GDP deflator for the year 2010 was
118.6. Then
A) The value of a 2007 dollar in the year 2010 would have been 74 cents
B) The rate of inflation from 1999 to 2004 would have been 36%
C) The value of a 1999 dollar in the year 2004 would have been 38 cents
D) None of the above.
8) Which of the following was NOT included in recent suggestions to reform social security?
A) Invest the entire trust fund surplus in government bonds
B) Invest part of the trust fund surplus in private individual retirement accounts
C) Increase the retirement age
D) Subject income above $106,800 to the payroll tax
E) Create private retirement accounts with some of the surplus
9) In the period 2010-2011 the largest share of total federal government outlays in the US was
devoted to:
A) National defense
B) Health and human service programs
C) Non-defense discretionary spending
D) Interest payments on the national debt.
10) In the last five months the 10-year government bond yield has decreased relative to the two
year government bond yield
A) Implying that the yield curve has flattened and a recession is imminent
B) Implying that the yield curve has got steeper and a recession is imminent
C) Implying that the yield curve has flattened and a boom is imminent
D) None of the above.
11) The largest holder of federal government bonds is the
A) Federal Reserve Bank
B) Foreigners
C) Banks, insurance companies and pension funds
D) Local governments.
12) Automatic stabilizers
A) Prolong the inside lag but reduce the outside lag
B) Make active fiscal policy unnecessary
C) Always combine fiscal policy with monetary policy
D) Increase the multiplier effect of a change in aggregate demand on GDP
E) None of the above.
13) If we counted the wheels, tires, workers‟ salaries, steel, body parts, and final car sales in
calculating GDP, then we would be
A) Understating GDP by overlooking car dealers‟ profits
B) Ignoring the contribution of capital to output
C) Overstating GDP through double counting
D) Using the value added technique for calculating GDP
E) None of the above.
14) Suppose G=1000, TR=700. Y=8000 and t=0.30. The government is running a
A) Budget surplus equal to 700
B) Budget deficit equal to 450
C) Budget surplus equal to 600
D) Budget deficit equal to 600
E) None of the above.
15) If the prime interest rate is 18.5%, the expected inflation rate is 12.5%, and the tax rate is
25%, then the ex ante after tax real interest rate is
a) 3.25% b) 1.75% c) 2.45% d) 1.37% e) none of the above
16) All of the following are negative consequences of deflation except
A) An increase in labor costs
B) An increase in the value of debt
C) A reduction in consumer spending
D) An increase in exchange rates
17) According to the World Bank, Fiscal Policy in LDC‟s is ineffective because
A) It tends to be procyclical
B) It is countercyclical
C) Is too reliant on non discretionary fiscal policy
D) None of the above
18) All of the following constitute national savings EXCEPT
A) Household savings
B) Foreign savings
C) Government savings
D) Retained earnings.
19) To boost spending in the short run all of the following policies would be effective except
A) Increasing the EITC allowance
B) Reducing the rate of inflation
C) Reducing the Social Security Tax
D) Increasing the Unemployment Insurance Payment
20) Which of the following is responsible for the decline in HH sector savings since the 1970‟s?
A) The larger government budget deficit
B) Greater trade with LDC‟s
C) The increase in immigration
D) Tax laws that encourage spending
E) None of the above.
21) A straight-line production-possibilities curve assumes that:
A) Resources are perfectly adaptable to producing different goods
B) The prices of the two goods are the same
C) The opportunity cost of each good is the same
D) The optimal mix of output is at the midpoint of the curve.
22) All of the following have been identified as components of investment spending EXCEPT
A) Construction of housing
B) Sales of machinery
C) Inventory related spending
D) Spending on new plant and equipment.
23) If the total value of goods and service production using domestic resources a
oad is greater
than the total value of goods and service production using foreign resources domestically,...