Test Bank Essay

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MACROECONOMICS 1. Between 1988 and 1998 the GDP of a certain country increased from $1 trillion to $2 trillion while the appropriate price index measuring its prices increased from 140 to 210. Which of the following expresses the 1998 GDP in 1988 prices? A. $ 1.50 trillion. C. $1 trillion. E. $3 trillion. B. $ 1.33 trillion. D. $2 trillion. The money supply in the United States is controlled by: A. Congress (in particular, the Senate Committee on Banking and Finance). B. the commercial banking industry. C. the U.S. Treasury Department. D. the Federal Reserve. E. the New York Stock Exchange. Suppose a constitutional amendment is adopted which requires the federal government to balance its budget annually. If the budget is currently balanced and now policymakers wish to increase the equilibrium level of the national product by $30 billion, the federal government: A. would be unable to bring about this change through fiscal policy. B. should increase both its spending and taxes by $15 billion. C. should increase both its spending and taxes by $30 billion. D. should reduce both its spending and taxes by $30 billion. E. should increase its spending by $15 billion and reduce taxes by $15 billion. If a nation's depreciation exceeds its gross investment, we can say that: A. net investment is positive. B. net investment is zero. C. the nation's stock of capital is growing. D. the nation's stock of capital is declining. E. the nation's GDP will rise. Supply-side economics stresses: A. an "easy" money policy. B. the stimulation of incentives to work, save, invest, and undertake entrepreneurial risk. C. the stimulation of consumption spending by households. D. the need for expansionary fiscal policy. E. the need for increased governmental involvement in the economy. 2. 3. 4. 5. 6. Mindy deposits $600 in currency in her checking account at the Second National
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