Question

1) Social security, welfare payments, aid for housing are all components of

a) business investment

b) consumption spending

c) disposable income

d) transfer payments

e) exports

2). If Government spending decreases by $100, GDP will

   a) increase by $500   b) fall by $500   c) fall by $400

   d) increase by $900   e) fall by $900

3) If taxes increase by $100, GDP will

   a) increase by $400   b) decrease by $400   c) rise by $500

   d) fall by $600       e) not change

4) Lower interest rates will

a) lower government spending

b) increase transfer payments

c) decrease car and housing sales

d) increase business investment

5) If the demand for cattle is increasing more rapidly than supply

a) cattle prices will rise

b) cattle prices will fall

c) cattle prices will not change

d) any of the above is possible

6) Given a reserve requirement ratio of 10 percent, what will be the impact on the money   supply if the Fed buys $10 in securities from the banks

a) increase by $100       b) decrease by $100

c) increase by $50       d) decrease by $20

e) decrease by $30

Answer 1

1) Social security, welfare payments, aid for housing are all components of

d) transfer payments

4) Lower interest rates will

d) increase business investment
Exp: Interest rate and investment are inversely related.

5) If the demand for cattle is increasing more rapidly than supply

a) cattle prices will rise

6) Given a reserve requirement ratio of 10 percent, what will be the impact on the money   supply if the Fed buys $10 in securities from the banks

a) increase by $100       b) decrease by $100

c) increase by $50       d) decrease by $20

e) decrease by $30