Social Science Questions
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*Assume you believe in a self regulating economy. What happens when an economy is in an inflationary gap?a. The labor market has a shortage, which increases the wage rate. Cost of production therefore increases, shifting the SRAS to the left until the economy reaches the natural real GDP.b. The labor market has a surplus, which pulls down the wage rate. Cost of production therefore falls, shifting the SRAS to the right until the economy reaches the natural real GDP.c. The labor market has a shortage, which increases the wage rate. Cost of production therefore decreases, shifting the SRAS to the right until the economy reaches the natural real GDP.d. The labor market has a surplus, which pulls down the wage rate. Cost of production therefore increases, shifting the SRAS to the right until the economy reaches the natural real GDP.
*Ceteris Paribus, Real GDP and the unemployment rate area. directly relatedb. inversely relatedc. unrelatedd. directly related when GDP is below its natural level and inversely related when the GDP is above its natural rate
When a commercial bank borrows from the fed:a. the reserve of the bank fallsb. the bank can make more loansc. the bank must not have been meeting its reserve requirementsd. the money supply falls
Assume you're a Keynesian economist. Which of the following do you believe to be true?a. Fiscal policy is inefficient and unnecessaryb. Raising taxes during a recessionary gap will lead to better economic conditionsc. monetary policy (changing the money supply) directly affects the real economy or goods and services marketd. Monetary policy (changing the money supply) indirectly affects the real economy or goods and services market
Why do banks need a required reserve?a. The gov needs to control banks and the money supplyb. in case people want to take their money outc. to make bank runs possibled. in order for banks to create as much money as possible
If the fed buys a government security from a commercial bank, how will this affect the money supply?a. it will increase the money supplyb. it will increase bank reservesc. it will decrease the money supplyd. it will have no effect on the money supply
Tax revenue can be foun bya. multiplying taxable income by the marginal tax rateb. dividing tax base by the (average) tax ratec. summing the tax base and the average tax rated. multiplying the tax base by the (average) tax rate
7. The marginal propensity to consume plus the marginal propensity to save isa. equal to zerob. greater than zero but less than onec. equal to oned. greater than one
*According to the official definition of unemployment, a person is unemployed if he/shea. Works part time but wants to work full timeb. doesnt have a job and is actively looking for onec. doesnt have a job and gave up on looking for oned. All of the above
Which of the following will lower the money supply?a. lowering the discount rateb. raising the required reserve ratioc. an open market purchased. decreasing taxes
Suppose the MPC=0.06 and gov purchases increase by $40 billion. According to Keynesian theory which of the following is true:a. the TE curve shifts downward by 40 bil and Real GDP decreases by 40 bilb. the TE curve shifts upward by 40 bil and Real GDP increases by 40 bilc. the TE curve shifts downward by 40 bil and Real GDP decreases by 100 bild. the TE curve shifts upward by 40 bil and Real GDP increases by 100 bil
Assume you believe in a self regulating economy. What happens when an economy is in a recessionary gap?a. the labor market has a shortage, which increases the wage rate. Cost of production therefore decreases, shifting the SRAS to the left until the economy reaches natural real GDPb. the labor market has a surplus, which pulls down the wage rate. Cost of production therefore increases, shifting the SRAS to the left until the economy reaches natural real GDPc. the labor market has a shortage, which increases the wage rate. Cost of production therefore increases, shifting the SRAS to the left until the economy reaches natural real GDPd. the labor market has a surplus, which pulls down the wage rate. Cost of production therefore falls, shifting the SRAS to the right until the economy reaches natural real GDP
6. Bank A has a checkable deposit of $10 million and a reserve of $1 million. The required reserve ratio is 9%. The bank has an excess reserve ofa. $910,000b. $91,000c. $100,000d. $10,000
Organisation Internationale de Normalisation (ISO)
8. When MPC= 0.80, the multiplier is,a. 5.0b. 0.25c. 4.00d. 7.50
Imagine you believe in a self regulating economy. Who/what do you think should get an economy out of a recession?a. the governmentb. a magician of economicsc. the central bankd. none of the above
Why do Keynesians believe that the economy needs fiscal and monetary policy?a. Because the economy is self regulating. It will get itself out of recessionary and inflationary gaps automaticallyb. Because the economy may get stuck in a recessionary gap and in an inflationary gap it is important for the government to save for those periods when the economy is in recession and the gov needs to spendc. because the economy is always at its natural real gdpd. because the economy may get out of a recessionary gap and in an inflationary gap it is important for the government to spend for those periods when the economy is in a recessionary gap and the gov needs to save
An outward shift in the AD curve would have been the result ofa. a decrease in price levelb. an increase in price levelc. businesses become more optimistic about future salesd. businesses become more pesimistic about future sales
Assume you are a monetarist and believe in a self regulating economy. What happens to the economy when velocity and/or the money supply increases?a. the AD curve shifts to the right. The economy may now find itself in an inflationary gap, eventually shifting the SRAS left until the economy is back at natural real gdpb. the AD curve shifts to the left. The economy may now find itself in an recessionary gap, eventually shifting the SRAS right until the economy is back at natural real gdpc. nothing happens bc the monetarists believe that money supply and velocity stay constantd. none of the above
How did money first come about?a. because using money was more efficient than barteringb. Goldsmiths realized that people wanted to keep their gold in their vaults for safe keeping. The goldsmiths would give a piece of paper that enabled the gold owners to collect their gold at any time. the pieces of paper eventually became moneyc. credit and debit cards had not yet been invented.d. none of the above