Question

42.   Macroeconomics deals mainly with: (a) the market behavior of individual industries and firms; (b) economics...

42.   Macroeconomics deals mainly with: (a) the market behavior of individual industries and firms; (b) economics from the perspective of an entire economy; (c) price theory; (d) none of the above.

43.   Over the last several decades, the share of national income accruing to labor has tended to: (a) trend downward relative to the share accruing to capital; (b) increase annually relative to capital’s share; (c) increase sharply despite periodic declines attributable to inflation; (d) remain constant.

44.   Fiscal policy involves all of the following, except: (a) the level and structure of taxes; (b) setting of the discount rate; (c) implementation of entitlement programs; (d) the level and structure of government spending.

45.   Rising income and wealth disparity often results in: (a) a rise in unproductive investment; (b) immediately accelerating inflation; (c) rising average propensities to consume in most countries; (d) sharply rising increases in consumer nondurables sales.

46.   According to Milton Friedman, when the public holds more cash balances than it desires at any level of interest rates, the public tends to: (a) increase personal consumption expenditures; (b) sell fixed income securities; (c) give money away to the charities of their choice; (d) eat more sushi.

47.   Prior to the financial crisis that began in the last decade, the Fed influenced reserves in the banking system, at the margin, in order to: (a) reduce the Federal budget deficit; (b) immediately raise long-term bond yields; (c) stabilize the Federal funds rate at, or near, its target level; (d) directly control the prime rate of interest.

48.   In the short run, the market for crude oil posts a price below where the supply curve and demand curve for crude oil intersect. We can conclude that: (a) the oil market is in backwardation; (b) competition in the oil market has disappeared; (c) oil is putting downward pressure on the global inflation rate; (d) the crude oil market is out of equilibrium.

49.   Effects of increases in the supply of bank reserves on inflation tend to be: (a) reflected almost immediately in sales of nondurable goods; (b) transparent; (c) permanent; (d) lagged and variable.

50.   Which body is responsible for formulating U.S. monetary policy? (a) the Federal Reserve Bank of New York; (b) the Federal Open Market Committee; (c) the Secretary of the Treasury; (d) the International Monetary Fund.

51.   One characteristic of the U.S. central bank is its: (a) control by the White House; (b) acceptance of appropriations from the Congress; (c) independence within the government; (d) dominance by large banks on its boards of directors.

52.   Which of the following is not a primary role of the Federal Reserve? (a) to work with the president’s administration directly on the setting of fiscal policy; (b) to serve as a bank for banks; (c) to maintain the nation’s payments system; (d) to participate in supervision and regulation of banking institutions.

Homework Answers

Answer #1

42) Economics from the perspective of an entire economy.

( The term macro itself means large. So macro economics is concerned with the study of economy as a whole.)

43) trend downward relative to the share accruing to capital

( Labour share in national income compared to Capital has been falling in most of the countries since 1980's)

44) setting of the discount rate

( It's a tool of monetary policy tool while others are a part of fiscal policy)

45) Unproductive investment

( When income inequality and wealth inequality Increases it leads to unproductive investment mainly in the form of unwanted investment.)

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