Q.

1 : When we are calculating the consumer price index and the inflation rate for a certain year,
A. both the value of the consumer price index and the inflation rate may depend on the choice of a base
year.
B. the inflation rate may depend on the choice of a base year, but the value of the consumer price index
does not depend on the choice of a base year.
C. the value of the consumer price index may depend on the choice of a base year, but the inflation rate
does not depend on the choice of a base year.
D. neither the value of the consumer price index nor the inflation rate depends on the choice of a base
year.
Q. 2 : Demand deposits are a type of
A. savings deposit. B. time deposit.
C. money market mutual fund. D. checking account.
Q. 3 : Tim mows the yard for his neighbors. He spends $1 on gas and charges them $20 for each lawn he
mows. What’s the total contribution to GDP each time Tim mows a yard?
A. $1 B. $19 C. $20 D. $21
Q. 4 : According to the quantity theory of money, a 3 percent increase in the money supply
A. causes the price level to rise by less than 3 percent
B. causes the price level to fall by 3 percent
C. leaves the price level unchanged
D. causes the price level to rise by 3 percent
Q. 5 : The statistical discrepancy that regularly arises in national income accounting refers to the slight
difference between
A. estimates of GDP and actual GDP.
B. the income and expenditure approaches to the calculation of GDP.
C. the quarterly and annual approaches to the calculation of GDP.
D. personal income and personal disposable income.
Q. 6 : In June 2009 the Bureau of Labor Statistics reported an adult population of 234.9 million,
unemployment of 12.4 million, and employment of 141.6 million. Based on these numbers the labor-
force participation rate was
A. 154/234.9. B. 141.6/234.9.
C. 141.6/154. D. None of the above is correct.
Q. 7 : The inflation rate you are likely to hear on the nightly news is calculated from
A. the GDP deflator. B. the Dow Jones Industrial Average.
C. the CPI. D. the unemployment rate.
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 Q. 8 : A bank loans Kellie's Print Shop $350,000 to remodel a building near campus to use as a new store.
On their respective balance sheets, this loan is
A. a liability for the bank and an asset for Kellie's Print Shop. The loan increases the money supply.
B. an asset for the bank and a liability for Kellie's Print Shop. The loan does not increase the money
supply.
C. a liability for the bank and an asset for Kellie's Print Shop. The loan does not increase the money
supply.
D. an asset for the bank and a liability for Kellie's Print Shop. The loan increases the money supply.
Q. 9 : When the commercial banks buys government bonds from Fed,
A. the money supply decreases B. the money supply increases
C. the money supply increases D. the money supply decreases
Q. 10 : Who of the following would necessarily be included in the Bureau of Labor Statistics’ “unemployed”
category?
A. Huey, who did not work during the previous four weeks
B. Dewey, who tried to find new employment during the previous four weeks
C. Louie, who was an unpaid worker during the previous four weeks
D. None of the above is correct.
Q. 11 : When computing the cost of the basket of goods and services purchased by a typical consumer,
which of the following changes from year to year?
A. the goods and services making up the basket
B. the quantities of the goods and services purchased
C. All of the above are correct.
D. the prices of the goods and services
Q. 12 : Maury did not work last week because fire forced an evacuation of his workplace. The Bureau of
Labor Statistics counts Maury as
A. unemployed and in the labor force.
B. unemployed and not in the labor force.
C. employed and in the labor force.
D. employed and not in the labor force
Q. 13 : The crowding out effect refers to
A. the presence of the Ricardo-Barro effect.
B. how a cyclical budget deficit changes over the business cycle
C. the wealth effectʹs impact on the aggregate demand curve
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 D. government investment crowding out private investment
Q. 14 : Year Price of Cereal Quantity of Cereal Price of Milk Quantity of Milk

2015 $4.00 100 $1.50 180

2016 $4.00 120 $2.00 200
2017 $5.00 150 $2.50 200
2018 $6.00 180 $3.50 240

The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last
several years are shown below. The base year is 2015.. In 2017, this country’s
A. real GDP was $1250, and the GDP deflator was 128.0.
B. real GDP was $1250, and the GDP deflator was 138.9.
C. real GDP was $900, and the GDP deflator was 128.0.
D. real GDP was $900, and the GDP deflator was 138.9.
Q. 15 : If MPC = 0.75, consumption is RM 500 million when income equals to zero
and autonomous investment is RM200 million. What is consumption function?
A. C= 200 +0.25Yd B. C= 300 +0.75Yd C. C= 500 - 0.25Yd D. C= 500 +0.75Yd
Q. 16 : When income increases, the money demand curve shifts to the ________, which ________ the
interest rate with a fixed money supply.
A. right; decreases B. left; decreases
C. right; increases D. left; increases
Q. 17 : Government increases expenditure of goods and services and decreases tax in recession period
of economy. This means government is applying
A. Tight Monetary Policy B. Contractionary Fiscal Policy
C. Easy Monetary Policy D. Expansionary Fiscal Policy
Q. 18 : In 2009, based on concepts similar to those used to estimate U.S. employment figures, the Swedish
adult non- institutionalized population was 7.568 million, the labor force was 4.888 million, and the
number of people employed was 4.486 million. According to these numbers, the Swedish labor-force
participation rate and unemployment rate were about
A. 64.6% and 5.3%. B. 64.6% and 8.2%. C. 59.3% and 5.3%. D. 59.3% and 8.2%.
Q. 19 : Money demand refers to
A. how much currency the Federal Reserve decides to print
B. how much wealth people want to hold in liquid form
C. the total quantity of financial assets that people want to hold
D. how much income people want to earn per year
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Q. 20 : Banks are able to create money only when
A. only a fraction of deposits are held in reserve
B. the reserve ratio is 100%.
C. the Fed sells U.S. government bonds.
D. interest rates are above 2%.
Q. 21 : Given function: S = 300 + 0.8Yd ; What is MPC?
A. 0.2 B. -300 C. 300 D. 0.8
Q. 22 : Which of the following is included in the investment component of GDP?
A. spending on new business equipment such as power tools and spending on stocks and bonds
B. spending on stocks and bonds but not spending on new business equipment such as power tools
C. spending on new business equipment such as power tools but not spending on stocks and bonds
D. neither spending on new business equipment such as power tools nor spending on stocks and bonds
Q. 23 : Which of the following is a function of money?
A. a unit of account B. a store of value
C. medium of exchange D. All of the above are correct.
Q. 24 : In the long run, money demand and money supply determine
A. the real interest rate but not the price level
B. the price level and the real interest rate
C. the price level but not the real interest rate
D. neither the price level nor the real interest rate
Q. 25 : In the basket of goods that is used to compute the consumer price index, the three largest categories
of consumer spending are
A. housing, transportation, and recreation.
B. housing, food & beverages, and education & communication.
C. housing, transportation, and food & beverages.
D. housing, medical care, and education & communication.
Q. 26 : Which list ranks assets from most to least liquid?
A. money, cars, houses, bonds B. bonds, money, cars, houses
C. money, bonds, cars, houses D. bonds, cars, money, houses
Q. 27 : Suppose that some country had an adult population of about 25 million, a labor-force participation
rate of 60 percent, and an unemployment rate of 6 percent. How many people were employed?

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 A. 14.1 million B. 15 million C. 0.9 million D. 23.5 million
Q. 28 : Suppose OPEC succeeds in raising world oil prices by 300 percent. This price increase causes
inventors to look at alternative sources of fuel for internal-combustion engines. A hydrogen-powered
engine is developed which is cheaper to operate than gasoline engines. Which problems in the
construction of the CPI does this situation represent?
A. substitution bias and introduction of new goods
B. income bias and substitution bias
C. substitution bias and unmeasured quality change
D. introduction of new goods and unmeasured quality change
Q. 29 : Measuring unemployment is the job of the
A. Department of Commerce. B. Bureau of Labor Statistics.
C. Council of Economic Advisers. D. Congressional Budget Office.
Q. 30 : Economists call an institution designed to oversee the banking system and regulate the quantity of
money in the economy
A. a charter bank. B. a national bank.
C. a central bank. D. a state bank.
Q. 31 : Fiscal policy affects the goods market through
A. changes in money supply.
B. changes in taxes and money supply.
C. changes in government spending and money supply.
D. changes in taxes and government spending.
Q. 32 : For an open economy, the equation Y = C + I + G + NX is an identity. If we define national saving, S,
as the total income in the economy that is left after paying for consumption and government
purchases, then for an open economy, it is true that
A. S = I. B. S = 0. C. I = S + NX. D. S = I + NX.
Q. 33 : The manager of the bank where you work tells you that the bank has $300 million in deposits and
$255 million dollars in loans. If the reserve requirement is 8.5 percent, how much is the bank holding
in excess reserves?
A. $15 million B. $25.5 million C. $19.5 million D. $0 million
Q. 34 : Suppose the banking system currently has $300 billion in reserves, the reserve requirement is 5
percent, and excess reserves are $30 billion. What is the level of loans?
A. $5,400 billion B. $5,100 billion C. $6,000 billion D. $270 billion
Q. 35 : Which of the following statements is true?
A. If we know the base year is 2000, and if we know the value of the consumer price index for the year
1995, then we have all the information we need to calculate the inflation rate for 1995.

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 B. Even if we know the values of the consumer price index for the years 2009 and 2010, we cannot
calculate the inflation rate for 2010 if we do not know which year is the base year.
C. If we know the base year is 2000, and if we know the value of the consumer price index for the year
1995, then we have all the information we need to calculate the percentage change in the cost of
living between 1995 and 2000.
D. If we know the base year is 1990, and if we know the value of the consumer price index for the year
2010, then we have all the information we need to calculate the inflation rate for 2010.
Q. 36 : On a given morning, Franco sold 40 pairs of shoes for a total of $80 at his shoe store.
A. The $80 is a nominal variable. The quantity of shoes is a real variable.
B. Both the $80 and the quantity of shoes are nominal variables.
C. Both the $80 and the quantity of shoes are real variables.
D. The $80 is a real variable. The quantity of shoes is a nominal variable.
Q. 37 : In the economy of Taki in 2015, consumption was $5000, exports were $400, government purchases
were $1000, imports were $600, and investment was $1200. What was Taki’s GDP in 2015?
A. $7000 B. $6400 C. $6200 D. $8200
Q. 38 : Suppose private saving in a closed economy is $12b and investment is $10b.
A. National saving must equal $12b.
B. Public saving must equal $2b.
C. The government budget surplus must equal $2b.
D. The government budget deficit must equal $2b.
Q. 39 : Suppose the bank faces a reserve requirement of 10 percent. Starting from the situation as depicted
by the T-account, a customer deposits an additional $60,000 into his account at the bank. If the bank
takes no other action it will
The First Bank of Roswell
Assets Liabilities

Reserves $30,000 Deposits $200,000

Loans 170,000
A. be in a position to make new loans equal to $6,000
B. have $64,000 in excess reserves.
C. have $4,000 in excess reserves.
D. None of the above is correct.
Q. 40 : The figure in the economy as follow: C = 1,500 + 0.8Yd ; I = 800+ 0.75Y; G= 700 ; X= 800; M=
300+0.6Y ; Tt = 0.25Y ; Tr = 625
At the Equilibrium National income point , What happen for Government Budget?
A. Surplus B. Shortage
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 C. Budget = 0 D. All answers are wrong
Q. 41 : Assume that in the closed economy. The investment is 15,000, the government spending is 10,000.
The tax is 40,000. The function of Consumption is
C= 75,000 +0.5Yd. If the investment reduces 5,000. Calculating the new eq’ national income
A. 130,000 B. 160,000 C. 150,000 D. 140,000
Q. 42 : If the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied,
A. there is a surplus and the interest rate is above the equilibrium level.
B. there is a surplus and the interest rate is below the equilibrium level.
C. there is a shortage and the interest rate is above the equilibrium level.
D. there is a shortage and the interest rate is below the equilibrium level.
Q. 43 : The deviation of unemployment from its natural rate is called
A. structural unemployment. B. cyclical unemployment.
C. frictional unemployment. D. the economic rate of unemployment.
Q. 44 : The table below contains data for the country of Crete for the year 2010

Total income $5731

Household purchases of durable goods $1108
Household purchases of nondurable goods $702
Household purchases of non-education services $203
Household purchases of education services $302
Household purchases of new housing $816
Purchases of capital equipment $333
Inventory changes $75
Purchases of new structures $267
Depreciation $401
Local government spending on goods and services $236
State government spending on goods and services $419
Federal government spending on goods and services $1182
Transfer payments $707
Foreign purchases of domestically produced goods $217
Domestic purchases of foreign goods $129
What was Crete’s net exports in 2010 ?
A. -$217 B. $88 C. -$88 D. $217
Q. 45 : If a bank that desires to hold no excess reserves and has just enough reserves to meet the required
reserve ratio of 15 percent receives a deposit of $600, it has a
A. $510 increase in excess reserves and a $90 increase in required reserves.
B. $600 increase in excess reserves and no increase in required reserves.
C. $600 increase in required reserves and no increase in excess reserves.
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 D. $90 increase in excess reserves and a $510 increase in required reserves.
Q. 46 : For an economy that engages in international trade, GDP is divided into four components. Which of
the following items is not one of those components?
A. national saving. B. government purchases.
C. consumption. D. net exports.
Q. 47 : Suppose that in a closed economy GDP is equal to 15,000, government purchases are equal to 3,000,
consumption equals 10,500, and taxes equal 3,500. What are private saving and public saving?
A. 1,500 and -500, respectively B. 1,500 and 500, respectively
C. 1,000 and -500, respectively D. 1,000 and 500, respectively
Q. 48 : Assume the following information for an imaginary, closed economy.
GDP = $5 trillion; consumption = $3.1 trillion; government purchases = $0.7 trillion; and taxes = $0.9
trillion.
For this economy, national saving is equal to
A. $1.2 trillion. B. $2.9 trillion. C. $1.1 trillion. D. $1.7 trillion
Q. 49 : If the economy is in an inflationary period, what action would Fiscal Policy most likely take?
A. Increase spending B. Increase taxes
C. Decrease the discount rate D. Decrease taxes
Q. 50 : Which of the following could explain an increase in the equilibrium interest rate and a decrease in the
equilibrium quantity of loanable funds?
A. The demand for loanable funds shifted right.
B. The demand for loanable funds shifted left.
C. The supply of loanable funds shifted right.
D. The supply of loanable funds shifted left.
Q. 51 : If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold
A. fewer reserves, so the reserve ratio will rise.
B. more reserves, so the reserve ratio will rise.
C. fewer reserves, so the reserve ratio will fall.
D. more reserves, so the reserve ratio will fall.
Q. 52 : When the money market is drawn with the value of money on the vertical axis, if the Fed sells bonds
then
A. the money supply and the price level increase.
B. the money supply and the price level decrease
C. the money supply increases and the price level decreases.
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 D. the money supply increases and the price level increases.
Q. 53 : If the tax revenue of the federal government is less than its spending, then the federal government
necessarily
A. runs a budget deficit. B. runs a budget surplus.
C. runs a national debt. D. will increase taxes.
Q. 54 : The manager of the bank where you work tells you that the bank has $400 million in deposits and
$340 million dollars in loans. The Fed then raises the reserve requirement from 5 percent to 10
percent. Assuming everything else stays the same, how much is the bank holding in excess reserves
after the increase in the reserve requirement?
A. $40 million B. $20 million C. $0 D. $60 million
Q. 55 : An American company operates a fast food restaurant in Paris, France. Which of the following
statements is accurate?
A. The value added by American workers and equipment in France is included in U.S. GDP and the
value added by French workers and equipment is added to French GDP.
B. The value of the goods and services produced by the restaurant is included in French GDP, but not in
U.S. GDP.
C. The value of the goods and services produced by the restaurant is included in U.S. GDP, but not in
French GDP.
D. The value of the goods and services produced by the restaurant is included in both French GDP and
U.S. GDP.
Q. 56 : In the base year, the GDP deflator is always
A. 100 B. 0 C. -1 D. -100
Q. 57 : Given AD = 500 + 0.8Y. How much for equilibrium output is?
A. 6250 B. 5000 C. 2500 D. Unknown
Q. 58 : If the Fed sells government bonds to the public, then reserves
A. increase and the money supply increases.
B. increase and the money supply decreases.
C. decrease and the money supply increases.
D. decrease and the money supply decreases.
Q. 59 : Economists use the term “money” to refer to
A. all wealth.
B. all financial assets, but not real assets.
C. those types of wealth that are regularly accepted by sellers in exchange for goods and services.
D. all assets, including real assets and financial assets.
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Q. 60 : For an economy as a whole,
A. consumption must equal income. B. consumption must equal saving.
C. income must equal expenditure. D. wages must equal profit.

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