1. When I use money to purchase a movie ticket, my dollars are acting as a __________.

a.)unit of account

b.)store of value

c.)medium of exchange

d.)bartering agreement

2. Which of the following choices is a reason why gold became a form of currency?

a.)It is the most liquid form of money.

b.)It contributes to inflation.

c.)It has little practical value.

d.)It is almost impossible to counterfeit.

3. Which of the following can be described as when a bank holds a part of its gold and loans out the rest?

a.)Deposit account

b.)Fractional reserve

c.)Fiduciary money

d.)Fiat currency

4. Some of the founding fathers were initially against a Central Bank because __________.

a.)the control of the English bank over the colonies

b.)they couldn't agree which branch of government would control a Central Bank

c.)the 'Continental' currency had already been issued

d.)different states wanted their own currency

5. Which of the following statements regarding central banks is true?

a.)A run could never happen at a central bank.

b.)A central bank is charged with the regulation of money supply and interest rates.

c.)Banks are not required to maintain cash on hand.

d.)As the value of the currency becomes more certain, people rely more on commodity standards.

6. Which of the following statements about the Federal Reserve is true?

a.)The Federal Reserve Board of Governors are elected by the general public.

b.)The Federal Reserve is directly controlled by the government, as its members are all elected politicians.

c.)The Federal Reserve prints more money to prevent runs on banks.

d.)The members of the Board of Governors of the Federal Reserve are appointed for terms of 14 years.

7. The M1 definition of money includes __________.

a.)demand deposits and time deposits

b.)physical currency only

c.)physical currency and demand deposits

d.)demand deposits only

8. If the reserve requirement of a bank is 50%, then the multiplier effect will be ________ and $100 in M1 will increase the money supply by ________.

a.)2; $50

b.)0.5; $200

c.)0.5; $50

d.)2; $200

9. What is the result when the Federal Reserve buys Treasury bonds?

a.)Fewer investments (I)

b.)Higher interest rates

c.)More currency in the hands of the public

d.)Less consumption (C)

10. Which of the following statements is true as it relates to banks and the federal funds market?

a.)Banks with less than the reserve requirement need overnight loans to meet their obligations.

b.)The FOMC uses taxation to control our money supply.

c.)The federal funds market developed as banks lost customers.

d.)The federal funds rate is charged on an annual basis.

11. Why would banks need to borrow directly from the Fed?

a.)To purchase Federal Treasury bonds on the open market

b.)To meet monthly deposit target goals

c.)To increase the interest rate they can charge to lenders

d.)To meet the reserve requirement

12. Which of the following statements regarding inflation is true?

a.)When the unemployment rate is under 5%, inflation is not a concern anymore.

b.)Decreasing the discount rate is one way to combat inflation.

c.)According to most economists, an annual inflation rate of 8% is normal and just fine.

d.)When inflation is extreme, it can destroy a country's currency.

13. Expansionary policy is created in order to __________.

a.)counteract inflation

b.)slow down business investment in the economy

c.)reduce GDP

d.)encourage households and businesses to spend money

14. Using the GDP model, which of the following often happens during a recession?

a.)Net exports (X-M) will always increase.

b.)Consumption (C) will be less than savings (S).

c.)Consumption (C) steadily increases.

d.)Government spending (G) will be greater than taxes (T).

15. Which of the following statements about expansionary fiscal policy is true?

a.)It is when government expenditures exceeds tax revenues.

b.)It decreases the purchase of goods and services.

c.)It is used to curb inflation.

d.)It tends to increase the unemployment rate.

16. Contractionary fiscal policy is enacted in order to __________.

a.)fight inflation

b.)lower the interest rate

c.)encourage borrowing

d.)decrease unemployment

17. U.S. debt in the form of bills, notes and bonds are sold by the __________.

a.)Congressional Budget Committee

b.)Federal Reserve Member Banks

c.)Federal Open Market Committee

d.)U.S. Treasury

18. When the government finances debt, interest must be paid to __________.

a.)stockholders

b.)bondholders

c.)member banks with excess deposits

d.)fund transfer payments

19. Higher interest rates will __________.

a.)slow down government spending

b.)increase investment in the stock market

c.)decrease the consumption in the economy

d.)decrease the cost of borrowing money

20. Large budget deficits __________.

a.)reduce the value of domestic currency

b.)occur when tax revenues are greater than government spending

c.)help alleviate the national debt

d.)Decrease the interest rate

21. Which of the following, regarding contractionary policy, is true?

a.)Influenced by the multiplier effect

b.)Creates demand for goods and services through government expenditures

c.)Entices banks to make loans

d.)Raises interest rates

22. When the government borrows money, some economists claim it leads to __________.

a.)lower interest rates

b.)crowding out

c.)increase in the money supply

d.)decrease in the demand for money

23. Which of the following is true regarding the relationship between international trade and AD?

a.)An increase in exports will have a negative effect on AD.

b.)If the U.S. economy is doing well, AD in other countries will decrease.

c.)Chinese economic policies have resulted in a lower standard of living in the U.S.

d.)A recession in the U.S. could lead to a reduction in imports.

24. The United States currently has a trade deficit with China, meaning that the ________ has a negative balance.

a.)capital account

b.)current account

c.)trade barrier

d.)balance of payments

25. Which of the following, relating to comparative advantage, is true?

a.)It is the best rationale for quotas and import taxes.

b.)It occurs when a country has a lower opportunity cost for production of a good than its trading partner.

c.)It will always belong to the country with the absolute advantage in production of a good.

d.)It occurs when a country's production of a good is less efficient that its trading partner's.

26. Critics of trade barriers argue that trade barriers __________.

a.)reduce the domestic incentive for production efficiency

b.)are only good at full employment

c.)are politically too easy to remove when the economy recovers

d.)help a domestic economy be more productive

27. Which statement regarding sustainable economic growth is true?

a.)Economic output is sustainable if it is caused by expansionary governmental policies.

b.)Overuse of current resources without planning for future needs is sustainable.

c.)New production techniques can cause the level of sustainable output to increase.

d.)Sustainable sources of growth shift the AD curve to the left.

28. Which of the following is a nonprofit organization of economists who conduct cost/benefit analyzes on policies that address global issues?

a.)Copenhagen Consensus

b.)Kyoto Protocol

c.)Conference of Parties

d.)United Nations Intergovernmental Panel on Climate Change

29. Which statement is NOT an example of corporate social responsibility?

a.)Assessing all stages of the supply chain for their environmental impact

b.)Establishing a sustainability committee at a corporation

c.)Creating a corporate endowment

d.)Emphasizing the importance of short term profits

30. What do economic indicators provide?

a.)A look into specific industries only

b.)The ability to predict with certainty what will happen next in the economy

c.)A view of the whole economy at a specific point in time

d.)Data that can be used for decades to come, as indicators are slow to change

31. Which of the following describes real GDP?

a.)Adjusted for inflation to show growth in output

b.)Is the best measure of per capita standard of living

c.)Shows changes in prices of goods based on inflation

d.)Considers the nominal prices of goods/services

32. The CPI and PPI are measured by__________

a.)the Internal Revenue Service

b.)the Bureau of Labor Statistics

c.)the Congressional Budget Committee

d.)a compilation of state assessments made each month

33. The Nonfarm Payroll is __________.

a.)the labor force that is looking for work outside the farming sector

b.)the amount of money earned by workers outside of the farming sector

c.)the number of people unemployed outside of the farming sector

d.)the number of people employed outside of the farming sector

34. Which of the following descriptions related to retail sales is true?

a.)Includes growth of new stores in a chain and are conducted weekly

b.)Includes growth of new stores in a chain and are conducted yearly

c.)Excludes growth of new stores in a chain and are conducted yearly

d.)Excludes growth of new stores in a chain and are conducted weekly

35. Which of the following related to consumer confidence is FALSE?

a.)Collected and evaluated by the Conference Board

b.)Highly responsive to the influence of media and marketing

c.)A type of coincident indicator

d.)Measures growth in an economy by looking at how well stores perform from one year to the next

36. What would the Gini coefficient be if one person retains all of the income in a country?

a.)-1

b.)50

c.)0

d.)1

37. Which statements is true about GDP?

a.)GDP measures the production of a country's citizens no matter where they are located.

b.)GDP is lower than GNP with countries that have a great deal of production happening in other nations.

c.)GDP will be less than GNP for countries whose nationals do NOT produce in other countries.

d.)GDP is always a good indicator of the economic health of a country.

38. If a country were to begin experiencing a higher level of poverty, which of the following might also increase?

a.)Employment rate

b.)Mortality rate

c.)Infant live birth rate

d.)Literacy rate

39. Which of the following is often associated with an increasing employment rate of women in living wage occupations?

a.)Less access to education

b.)Fewer resources for children

c.)Higher standard of living for families

d.)Increased population growth