3. Which of the following policies will have a positive impact on the growth of an economy in the long run?

A. Increasing the labor force participation rate B. Decreasing the inflow of foreign investments C. Decreasing government spending D. Increasing the tax rates E. Decreasing investment in technology

4. Which of the following would effectively increase the money multiplier?

A. An increase in cash drain to the public B. A decrease in the required reserve ratio C. An increase in the excess reserves held by commercial banks D. An increase in interest rates in the economy E. A decrease in the marginal propensity to consume

5. Assume that an economy is going through a slump and is experiencing less than ideal output levels and a decreased national income. Which one of the following actions can a central bank take in order to fix the economy?

A. The central bank advises the government to increase taxes. B. The central bank increases the discount rate for commercial banks. C. The central bank increases the reserve ratio of commercial banks. D. The central bank of the country buys securities via open market operations. E. The central bank of the country sells securities via open market operations.

6. If the marginal propensity to consume (MPC) is 0.8, then what should the magnitude of change in the tax levels be when the government wants to increase the national income by $3,000?

A. The tax levels should be decreased by $12,000. B. The tax levels should be increased by $24,000. C. The tax levels should be decreased by $24,000. D. The tax levels should be increased by $12,000. E. The tax levels would have no role and should remain the same.

7. Why do economists state the unemployment rate tends to underestimate the inadequacy of labor market opportunities?

A. The unemployment rate does not include the discouraged workers who have ceased looking for a job. B. The unemployment rate does not include those who retired before reaching 65 years of age. C. The unemployment rate is not adjusted downward for people who are working overtime. D. The unemployment rate does not include full-time students who have no job. E. The unemployment rate does not include senior citizens who have no work but are seeking employment.