Question

12 .Which one of these assets is the MOST liquid one?

Select one:

a. Land

b. A corporate bond

13. Justin pays for his groceries using a debit card. Justin is using money as:

Select one:

a. A medium of arbitration

b. A medium of exchange

c. A unit of account

d. A store of value

e. A unit of transaction

c. A stock in a small, risky company

d. A vehicle

14. Emma, a high school student, lives with her parents in a middle class neighborhood, but does not have enough money to buy a car, which she really wants? Under what type of state does Emma live?

Select one:

a. Utility constraint

b. Geo-spatial constraint

c. Absolute scarcity

d. Relative scarcity

e. No scarcity

e. An antique clock

15. Which of the following statements is a normative statement?

Select one:

a. The U.S. economy will probably expand this year

b. The federal government should reduce taxes to stimulate growth

c. The price of gasoline reached a peak in 2008

d. It should be a cold winter

e. The unemployment rate fell below 6% in 2014

Which one of these actions will lower the amount of money in M2 WITHOUT changing the amount in M1?

Select one:

16. a. Martha use money from her money market fund to purchase land in Tennessee

b. Moesha uses money from her checking account for a down payment on a house

c. Marissa uses money from her savings account to purchase travelers checks

d. Melinda sells corporate stocks and places the money in a checking account

e. Marsha transfers money from her checking account to a time deposit

17.

When the economy is in a recession due to a fall in aggregate demand: 1. Inflation is likely to _______ and 2. Tax revenue (that the government collects) is like to _______?

Select one:

a. 1. Rise; 2. Rise

b. 1. Rise; 2. Fall

c. 1. Fall; 2. Rise

d. 1. Fall; 2. Fall

e. Both variables will remain unchanged unless the government intervenes

18.

Which of these actions can the U.S. government take in order to slow down a demand-pulled inflation?

Select one:

a. Raise government spending on education

b. Raise minimum wage

c. Print more money

d. Lower the Required Reserves Ratio

e. Raise corporate taxes

19.

Assuming there is no trade, if the Marginal Propensity to Save is 0.20 and the government increases spending by $20 billion, by how much will output rise?

Select one:

a. By $100 billion

b. By $80 billion

c. By $60 billion

d. By $50 billion

e. By $40 billion

20.

Assume that banks lend out all their excess reserves and individuals deposit all their money. If the Required Reserve Ratio is .10, what does the Fed have to do to Increase the supply of money by $300 billion?

Select one:

a. Sell $30 billion worth of government bonds to commercial banks

b. Sell $45 billion worth of government bonds to commercial banks

c. Buy $60 billion worth of government bonds from commercial banks

d. Buy $45 billion worth of government bonds from commercial banks

e. Buy $30 billion worth of government bonds from commercial banks

Answer 1

12 - Option B

A corporate bond

Land is an illequid asset

13 - Option B

A medium of exchange

Since the product has been bought in return for payment by card , it worked as the medium of exchange

14 - Option A

Utility constraint

She is not facing the scarcity and not in a geo spatial constraint. But she has a constraint of budget and hence cant fulfill her utility.

15 - Option B

The federal government should reduce taxes to stimulate growth

This is normative statement as it is suggestive in nature unlike other options

16 - Option A

Martha uses money from her money market fund to purchase the land

This will decrease M2 as money market funds are part of M2 , but land is not part of money supply