1The central bank sets the required reserve ratio at 20% and there is an initial deposit of $15 000. Calculate the total increase in money supply using the money multiplier:

Select one:

a.$75000

b.$25000

c.$7500

d.$1500

2Which of the following BEST represents Keynesian views as to the cause and persistence of the great depression?

Select one:

a.Government and private sector investment spending were persistently too high.

b.Economic setbacks led to sudden and persistent reduction in consumption and investment spending.

c.The Federal Reserve pursued a policy of decreasing the money supply.

d.Such depressions are an inevitable outcome of the capitalist system.

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A consumption function is given as C = 200 + 0.50Y. given an increase in consumption expenditure of $50 000 equilibrium income is likely to:

Select one:

a.Decrease by $50 000

b.Increase by $100 00

c.Increase by $50 000

d.Decrease by $100 000

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Which of the following would be classified as a final good?

Select one:

a.Motor vehicle purchased by a utility company

b.Flour purchased by a baking company

c.Tires purchased by an automobile manufacturer

d.Lumber purchased by a furniture manufacturing company

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A basic numerical version of the Keynesian model is given as follows: C = 200 +0.8yd; I = 300; G = 250; T = 150. Determine the equilibrium level of output:

Select one:

a.$750

b.$3150

c.$3938

d.$4350

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Which of the following statements is true?

Select one:

a.There is no relationship between a change in savings and consumption and investment.

b.An increase in savings will lead to a direct increase in the circular flow of income.

c.An increase in savings will lead to an increase in the consumption of final goods and services.

d.An increase in savings will lead to a potential increase in investment.

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Which of the following statistical definitions of money includes currency in the hands of the public plus reserves held on behalf of commercial banks ONLY?

Select one:

a.Mo

b.M1

c.M2

d.M3

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Which of the following is CORRECT with respect to Real and Nominal GDP?

Select one:

a.In periods of inflation Real GDP will be higher than Nominal GDP

b.In periods of inflation one cannot predict the relative sizes of Nominal and Real GDP.

c.In periods of inflation Nominal GDP will be higher than Real GDP

d.In periods of inflation Nominal GDP will be the same as Real GDP

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The demand curve for investment in the economy as a function of interest rates is:

Select one:

a.upward sloping from left to right

b.horizontal.

c.vertical.

d.downward sloping from left to right

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A market basket of goods consisted of 10 loaves of bread, 5 shirts and 1 pair of shoes. The prices of bread, shirts and shoes were $200, $500 and $2000 respectively for 2014 and $250, $600 and $2200 for 2015. Given 2014 as the base year. Calculate the C.P.I for 2014 and 2015

Select one:

a.2014: 118.5; 2015: 100

b.2014: 100; 2015: 118.5

c.2014: 84; 2015: 118.5

d.2014: 84; 2015: 100

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Given a consumption function of C = $700 billion + 0.75Y; if an investor spends an extra $250 000 in the economy. What will be the impact on national income?

Select one:

a.Decrease by $1 000 000

b.Decrease by $250 000

c.Increase by $1 000 000

d.Increase by $250 000

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Consider the following two statements: The central bank acts as a lender of last resort to commercial banks; Commercial banks provide services such as mortgages and insurance

Select one:

a.Statement 1 is correct but statement 2 is incorrect

b.Both statements are correct.

c.Both statements are incorrect

d.Statement 2 is correct but statement 1 is incorrect

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The following figures were given for a period: Consumption expenditure 450; Investment expenditure 250; Export earnings 180; Government expenditure 350; Import expenditure 220; Savings 50. Calculate the total value of Aggregate Demand:

Select one:

a.$1010

b.$1500

c.$960

d.$1000

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According to the Phillips curve:

Select one:

a.Increase in unemployment would lead to an increase in inflation

b.There is no relationship between unemployment and inflation

c.There is an inverse relationship between unemployment and inflation

d.Decrease in unemployment would lead to a decrease in inflation

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In Arbez, there are 80,000 persons in the labor force, and the unemployment rate is 25%. As job openings increase, 5,000 discouraged workers become "encouraged" and begin searching for a job. The unemployment rate will become

Select one:

a.18.75%.

b.31.25%.

c.23.53%.

d.29.41%.

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For which of the following markets real output is equal to real G.D.P?

Select one:

a.Foreign exchange market

b.Loanable funds market

c.Goods and services market

d.Resource market

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Which of the following made barter an inefficient means of exchange?

Select one:

a.The double wants hypothesis

b.The double auction wants criterion

c.The double hypothesis of wants criterion

d.The double coincidence of wants

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Given a marginal propensity to consume of 40% use the tax multiplier to determine the impact of an increase in taxes of $5 000 000.

Select one:

a.Increase in income of $335 000

b.Increase in income of $833 000

c.Decrease in income of $335 000

d.Decrease in income of $833 000

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J. Bond's income increases from $30,000 to $40,000 per week and his tax liability increases from $6,000 to $10, 000 per week. Which of the following is true?

Select one:

a.His marginal tax rate is 20 percent in this range

b.He faces a regressive tax in this income rage

c.His average tax rate is 40 percent at his new income level of $40,000

d.He faces a progressive tax in this income range

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Given a savings function of S = -120 + 0.25Y and an autonomous investment level of 400 dollars, determine the equilibrium level of income using the savings/Investment approach to equilibrium.

Select one:

a.$-120

b.$1600

c.$2080

d.$400

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The following flows were recorded for an economy: Savings 125; Import expenditure 200; Export expenditure 350; Income tax revenue 375; Indirect tax revenue 210; Consumption of domestic goods 550; Investment 425; Government expenditure 310.Calculate the total value of withdrawals from the circular flow:

Select one:

a.$910

b.$1335

c.$700

d.$1200

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Which of the following would likely result in Cost Push inflation?

Select one:

a.Militant labour action which lead to higher than anticipated wage increases

b.Price ceiling placed on several products by government

c.Expectations of price increases

d.Monetary policy which resulted in increased money supply

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Noil was a traditional agricultural economy, specializing in rice production. Due to loans from the World Bank, Noil has developed a thriving industrial sector, and farming (although increasingly mechanized) has declined. We would conclude that, over the past few years, frictional unemployment has ___________ and structural unemployment has _______________

Select one:

a.been unaffected; increased

b.decreased; increased

c.increased; decreased

d.increased; increased

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An increase in technology would shift which of the following curve(s)?

Select one:

a.Aggregate demand and short-run aggregate supply

b.Only the short-run aggregate supply

c.Short-run and long-run aggregate supply

d.Only the aggregate demand

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A reduction in government spending would cause

Select one:

a.An outward shift in the aggregate demand curve and an increase in the price level.

b.An inward shift of the aggregate demand curve and a decrease in the price level.

c.An outward shift in the aggregate supply curve and an increase in the price level.

d.An inward shift of the aggregate demand curve and an increase in the price level.

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Which of the following is not a likely consequence of unemployment?

Select one:

a.Increased crime

b.Increased deterioration of social living conditions

c.Increased inflation rates

d.Increased transfer payments

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Which one of the following is an injection into the circular flow of income?

Select one:

a.savings

b.direct taxation

c.exports

d.imports

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If nominal GDP is $7,700 billion and M1 is $1,000 billion, then velocity is

Select one:

a.10.7

b.7.0

c.7.1

d.7.7

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The accelerator principle is given as the function I = a Y. If investment is equal to $10 million and output moved from $5 million to $7.5 million after net investment expenditure, calculate the accelerator effect:

Select one:

a.2

b.0.25

c.10

d.4

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If a bank holds no excess reserves and the required reserve ratio is twenty 20 percent, then the credit creation multiplier is

Select one:

a.1/20

b.5

c.20

d.1/5