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Final Review Part 2 Flashcards | StudBud
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Final Review Part 2
Final Review Part 2
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Questions
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Answers
1
A sales tax on cigarettes can considered as a
regressive tax structure
progressive tax structure
proportional tax structure
excise tax
2
For Keynes, money supply and interest rate are _____________ related.
none of the choices
all of the choices
inversely
directly
3
Which of the following will increase commercial bank reserves
the sale of government bonds in the open market by the Federal Reserve Bank
decrease in the reserve ratio
the purchase of government bonds in the open market from the FED
an increase in the discount rate
4
Which of the following is not a component of aggregate demand?
Consumption
Taxes
Government purchases
Investment
5
A minimum wage legislation that sets wage rates above the equilibrium wage rate in the labor market will
all of the choices listed
increase unemployment (of even those who had jobs before)
help employees because they can now get quality labor
help workers because they can make more money
6
The liquidity trap refers to
Spiraling Keynesian unemployment bc of insufficient aggregate demand
The fact that investment does not increase even when interest rates fall
The fact that investment doesn't decrease even when the interest rate falls
The trap that companies and individuals fall into because of heavy debt
7
The actual effect of rent control would be to
increase homelessness by increasing the number of apartments available
decrease homelessness by decreasing the number of apartments available
decrease homelessness by increasing the number of apartments available
increase homelessness by decreasing number of apartments available
8
Savers and borrowers are linked through financial institutions when
both savers and borrowers invest in the same markets
the financial institutions offer the same rate of exchange to each
savers deposit money that is then used to lend money to the borrowers
borrowers take money from financial institutions to invest with savers
9
To cure a recession Keynes suggested a fiscal policy aimed at
increasing government spending and taxes
increasing government spending and reducing taxes
reducing government spending and taxes
reducing government spending and increasing taxes
10
According to Keynesians, a reduction in business investment
reduces the demand for labor through a decrease in demand for the GDP
increases the nation's long-run capacity
leaves more money around for employment of labor
reduces the problem of unemployment
11
Which one of the following statements is true?
the demand and supply curves both slope upwards
the demand curve slopes downwards and the supply curve slopes upwards
the demand curve slopes upwards and the supply curve slopes downward
the demand and supply curves both slope downwards
12
If there is excess demand at a particular price, then we know that this price will
fail to meet equilibrium
rise to meet the equilibrium price
none of the choices listed
stay unchanged because of this equilibrium price
13
Your income = $100 w/ a tax rate of 10%. Your friend = $200. W/ regressive tax structures, what would be her income tax?
Less than yours
None of the choices
More than Yours
Equal to yours
14
The multiplier effect refers to the multiple effect on
inflation, a small government budget surplus has
GNP, a small propensity to consumer has
GNP, a small initial government spending has
inflation, a small government budget deficit has
15
Lorena lost her job in bc of the use of robots. She plans to go to a tech school.The type of unemployment she faces is:
Keynesian
natural
structural
frictional
16
Open-market operation refers to
the purchase or sale of government securities by the FED
the specifying of margin requirements on stock purchase
purchase of stocks in the NYSE
central bank lending to commercial banks
17
Keynesian monetary policy during recessions aims to
increase the money supply so as to drive down interest rates
cut labor costs to stimulate business investments
increase the money supply so that people will spend more
cause inflation
18
The discount rate is
Interest rate charged by local banks like S&T on loans provided by the FED
Interest rates charged by the FED on loans provided to local banks like S&T
The discount consumers obtain at a sale in retail stores such as Walmart
Discount provided by the local banks like S&T to consumers on large loans
19
According to Keynes, investment and interest rate are _________ related
inversely
directly
both options
20
When a commercial bank has "excess reserves"
it is charging a very low interest rate on loans
it is in a position to make additional loans
none of the choices
its actual reserves are less than its required reserves
21
If the government wishes to pursue expansionary fiscal policy then it should
Increase government spending and decrease tax rates
Decrease both government spending and tax rates
none of the choices listed
Increase both government spending and tax rates
22
For an economist, capital means
gold, silver, and other precious metals
machines, factories, and equipment
money (as in dollars, raw cash)
shares in IBM and mutual funds
23
Double-coincidence of wants refers to
Citizens paying income taxes when they sell, and sales taxes when they buy
For two individuals to barter, each must have what the other wants
The FED engaged in open market operations & sets the discount rate
Money which is both a store of value and a medium of exchange
24
When interest rates rise
investment in new equipment is discouraged in the economy
investment in machinery is encouraged in the economy
the stock market got up
investment in equipment & machinery is not related to interest rates
