Module 8 : Module 8 - Final Time Remaining: 1. Refer to the graphs. Which of the graphs correctly labels the axes of the AS/AD model? (Points : 2) A B C D 2. Laissez-faire economists believe: (Points...

Module 8 : Module 8 - Final
Time Remaining:
1. Refer to the graphs. Which of the graphs co
ectly labels the axes of the AS/AD model?
(Points : 2)
A
B
C
D
2. Laissez-faire economists believe: (Points : 2)
government policies do not affect economic activity.
government can implement policy proposals that can positively impact the economy.
most government policies would probably make things worse.
government intervention in the market is necessary for a smoothly operating economy.
3. A fall in the U.S. price level will cause foreigners to: (Points : 2)
substitute U.S. goods for their own domestically-produced goods.
substitute their own domestically-produced goods for U.S. goods.
buy more of their own domestically-produced goods.
buy fewer U.S. goods.
4. The discount rate is the interest rate: (Points : 2)
commercial banks charge their largest customers.
the Fed charges on loans to individuals.
the Fed charges on loans to commercial banks.
the interest rate commercial banks charge one another for overnight loans.
5. M1 consists primarily of cash in the hands of the public and: (Points : 2)
savings account balances.
commercial paper.
demand (checking) deposits.
certificates of deposit.
6. If the Fed increases required reserves, financial institutions will likely lend out: (Points : 2)
more than before, increasing the money supply.
less than before, decreasing the money supply.
more than before, decreasing the money supply.
less than before, increasing the money supply.
7. If output is below potential output, it is most likely that the economy: (Points : 2)
is experiencing inflation.
is in a boom.
is near a peak.
is near a trough.
8. Using the expenditure approach, gross domestic product equals: (Points : 2)
gross national product.
gross national product minus net exports.
the sum of consumption, investment, government purchases.
the sum of consumption, investment, government purchases and net exports.
9. Transfers of assets, such as stock sales are: (Points : 2)
included in GDP because they raise domestic production.
included in GDP because they increase domestic wealth.
not included in GDP because they do not increase domestic production.
not included in GDP because they do not increase domestic wealth.
10. Value added is calculated by: (Points : 2)
subtracting the cost of materials used in production from the value of sales.
adding the cost of materials used in production to the value of sales.
subtracting the value of sales from the cost of materials used in production.
adding the value of output to the value of inputs.
11. Nominal GDP can never be equal to real GDP. (Points : 2)
True.
False.
12. If the required reserve ratio is .10 and individuals hold no cash, what is the maximum amount of
money that can be created from a $2 million deposit in the banking system? (Points : 2)
$ 2 million.
$ 4 million.
$ 20 million.
$200 million.
13. The marginal propensity to expend equals the ratio of: (Points : 2)
income to aggregate expenditure.
the change in income to a change in aggregate expenditure.
aggregate expenditure to income.
the change in aggregate expenditure to a change in income.
14. The higher the reserve ratio, the: (Points : 2)
greater the money multiplier.
the more money will be created.
the smaller the money multiplier.
the greater the level of required reserves.
15. If unemployment rises from 6 to 7%, and total output equals $12 trillion, according to Okun’s rule of
thumb how much will output change? (Points : 2)
fall by...