Question
(1.) Which of the following statements is true? a.) A price floor is binding when it is placed above equilibrium. b.) A price ceiling is
(1.) Which of the following statements is true?
- a.)
- A price floor is binding when it is placed above equilibrium.
- b.)
- A price ceiling is when the minimum wage is higher than the prevailing market wage.
- c.)
- A price floor happens when the market clears.
- d.)
- A price ceiling creates surplus when it is binding.
(2.) Binding price floors will __________.
- a.)
- transfer some surplus from producers to consumers
- b.)
- benefit all producers in the market
- c.)
- make additional total surplus in the market
- d.)
- transfer some surplus from consumers to producers
(3.) In which of the following ways do subsidies differ from taxes in relation to measuring their impact?
- a.)
- With subsidies, demand is more elastic, so that means that producers benefit more than consumers.
- b.)
- We measure the impact of a subsidy in terms of who benefits from it.
- c.)
- With subsidies, consumers benefit more than producers.
- d.)
- We measure the impact of a subsidy in terms of who pays for it.
(4.) Which of the statements about aggregate demand is true?
- a.)
- The Wealth Effect causes a decrease in consumption as prices fall.
- b.)
- Interest rates have no effect on aggregate demand.
- c.)
- AD represents the downward sloping relationship between price level and RGDP.
- d.)
- The exchange rate has no effect on aggregate demand.
(5.)
Which statement below is NOT true about the LRAS?
- a.)
- An outward shift in LRAS will occur at the same rate as growth in the economy.
- b.)
- The LRAS represents the maximum output level an economy can sustain given its current resources.
- c.)
- The LRAS will shift outward if resources allow for a higher sustainable output level.
- d.)
- The LRAS remains fixed over time.
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(6.) What does a graph that depicts a situation in which expansionary economic policies might be necessary look like?
(7.) When I use money to purchase a movie ticket, my dollars are acting as a __________.
- a.)
- medium of exchange
- b.)
- bartering agreement
- c.)
- store of value
- d.)
- unit of account
(8.) Which of the followingchoices is a reason why gold became a form of currency?
- a.)
- It has little practical value.
- b.)
- It is almost impossible to counterfeit.
- c.)
- It contributes to inflation.
- d.)
- It is the most liquid form of money.
(9.) Which of the following can be described aswhen a bank holds a part of its gold and loans out the rest?
- a.)
- Deposit account
- b.)
- Fiduciary money
- c.)
- Fiat currency
- d.)
- Fractional reserve
(10.) Some of the founding fathers were initially against a Central Bank because __________.
- a.)
- the 'Continental' currency had already been issued
- b.)
- the control of the English bank over the colonies
- c.)
- different states wanted their own currency
- d.)
- they couldn't agree which branch of government would control a Central Bank
(11.) Which of the following statements regarding central banks is true?
- a.)
- A run could never happen at a central bank.
- b.)
- Banks are not required to maintain cash on hand.
- c.)
- A central bank is charged with the regulation of money supply and interest rates.
- d.)
- As the value of the currency becomes more certain, people rely more on commodity standards.
(12.) Which of the followingstatements is NOT true of the Federal Reserve?
- a.)
- The Federal Reserve prevents panics by allowing private banks to hold reserves at regional Federal Reserve banks.
- b.)
- The Federal Reserve prints more money to prevent runs on banks.
- c.)
- The Federal Reserve was created to sustain long term economic health.
- d.)
- The Federal Reserve is independent from the federal government.
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