1.Monetary policy involves which of the following?

Select one:

a.Automatic stabilizers taking effect

b.Congress's spending and taxing activities

c.Making adjustments in the supply of money

d.Periodic sale of newly issued government financial instruments such as Treasury bills

2.As disposable income increases while holding all else constant, consumer expenditures:

Select one:

a.remain constant, savings remain constant, and GDP increases.

b.increase by an amount consistent with the MPC, savings decrease by an amount consistent with the MPS, and GDP decreases.

c.increase by an amount consistent with the MPC, savings decrease by an amount consistent with the MPS, and GDP increases.

d.increase by an amount consistent with the MPC, savings increase by an amount consistent with the MPS, and GDP increases.

3.Money creation is the increase in the supply of money. In the United States, this results from which of the following?

Select one:

a.The rise in the value of gold held and owned by the US Government

b.The purchases of government securities by banks and financial institutions

c.The process of multiple deposits held in a fractional reserve banking system

d.The actions of a single commercial bank buying additional government securities

4.Holding all else constant, an increase in interest rates leads to:

Select one:

a.an increase in the price of bonds, an increase in the quantity demanded of bonds, and no change in the supply of stocks.

b.a decrease in the price of bonds, an increase in the quantity demanded of bonds, and a decrease in the demand for stocks.

c.an increase in the price of bonds, a decrease in the quantity demanded of bonds, and a decrease in the demand for stocks.

d.an increase in the price of bonds, an increase in the quantity demanded of bonds, and no change in the demand for stocks.

5.Money helps us to avoid bartering, primarily because it functions as a:

Select one:

a.store of value.

b.unit of account.

c.medium of exchange.

d.a way to measure how much gold backs the US dollar.

6.Which of the following statements about fiscal policy in the US is true?

Select one:

a.Fiscal policy in the US requires action by Congress that causes changes in government taxes and spending.

b.Fiscal policy in the US requires action by the Federal Reserve that causes government taxes and spending.

c.Fiscal policy in the US requires action by Congress that causes changes in money supply and interest rates.

d.Fiscal policy in the US requires action by the Federal Reserve that causes money supply and interest rates.

7.Holding all else constant, expansionary monetary policy is likely to involve a(n) ________ in the number and value of government bonds held by banks, which ________ interest rates for bank loans.

Select one:

a.decrease; lowers

b.decrease; raises

c.increase; lowers

d.increase; raises

8.The monetarists focus a lot of their attention on which of the following?

Select one:

a.The negative relationship between the rates of change in the money supply and the price level

b.The positive relationship between the rates of change in the money supply and the price level

c.The lack of a relationship between the rates of change in the money supply and the price level

d.The relationship between the rates of change in the money supply and the balanced budget multiplier

9.Which of the following statements regarding a quota is true?

Select one:

a.A quota increases the tax on an import.

b.A quota decreases the price of an import.

c.A quota increases the quantity of an import.

d.A quota decreases the quantity of an import.

10.The gains from international trade for any given country are:

Select one:

a.non-existent.

b.the result of isolation.

c.a wider variety of goods.

d.purely emotional, rational, or political in nature.

11.Which of the following statements best describes the role of international trade in the exchange of currencies?

Select one:

a.International trade inhibits the flow of foreign currency units back to the owning country.

b.International trade inhibits the flow of domestic currency units back to the owning country.

c.International trade facilitates the flow of foreign currency units back to the owning country.

d.International trade facilitates the flow of domestic currency units back to the owning country.

12.How is the price of a foreign currency unit expressed?

Select one:

a.In terms of the quantity of a foreign currency unit

b.In terms of the quantity of a country's own currency unit

c.In terms of the price paid for a trading partner's currency unit

d.In terms of the quantity of a foreign currency that can be bought for a given amount in a county's own currency unit

13.A country that observes ______ opportunity costs in its production of good X relative to another country is known to have ______ advantage.

Select one:

a.lower; absolute

b.higher; absolute

c.lower, comparative

d.higher; comparative

14.A country that observes ______ units of production in good X relative to another country is known to have ______ advantage.

Select one:

a.lower; absolute

b.higher; absolute

c.lower, comparative

d.higher; comparative

15.According to the comparative advantage concept, trading partners will have more of each product in any given combination of imports and exports due to which of the following?

Select one:

a.Low prices

b.High prices

c.Low opportunity costs

d.High opportunity costs