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Final Exam
Final Exam
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Questions
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Answers
1
What is an automatic stabilizer?
A new law that changes tax or spending levels
Adjustments that the government makes to account for inflation
Something the Fed uses to adjust the FFR
Changes in tax and spending levels that occur automatically
2
What do we know for sure about unemployment when there is a recessionary gap?
Unemployment is lower than the natural rate
There is no unemployment
Unemployment is higher than the natural rate
Unemployment is lower than when there is an inflationary gap
3
What is the largest source of revenue for state governments?
Sales tax
Transfers
Property tax
Individual income tax
4
Who is the Chair of the FOMC?
The President of the NY Fed
The Chair of the Fed Board
The President
The Speaker of the House
5
What will happen in the AS/AD model if the government cuts taxes?
AD curve shifts left
AS curve shifts right
AS curve shifts left
AD curve shifts right
6
Which of the following is a goal of the Fed?
Maximum Employment
High inflation
A balanced budget
Maximum unemployment
7
Supply creates its own demand reflects which of the following
The Law of Demand
Keynes' Law
The Law of Supply
Say's Law
8
Which of the following is NOT a responsibility of the FOMC?
Oversee open market operations affecting the federal funds rate
Oversee foreign exchange markets
Fiscal Policy
Monetary policy
9
Which of the following is MOST likely to shift the SRAS curve to the left?
The price of wheat going up
Baby boomers retiring
None of these...
More people finishing high school
10
Which of the following is NOT a problem with discretionary fiscal policy?
Automatic stabilizers
Politics
Lags
Crowding out
11
Which of the following best describes aggregate demand?
The sum of all purchases made
The average amount of goods and services demanded at each price level
None of these...
The total amount of goods and services demanded at each price level
12
What is the World Bank's goal for low income countries?
Expanding the PPF
Mitigation of extreme poverty and higher incomes
Low and stable inflation
Encourage competition domestically and internationally
13
Which of the following best represents a monetary policy response that would close the output gap seen in the graph?
Decreasing federal spending
The Fed lowering the IORB
The Fed raising the IORB
Increasing federal spending
14
The Fair Housing Act of 1968...
Prohibits discrimination in the extension of housing credit
Encourages financial institutions to meet the credit needs of communities
Prohibits discrimination in credit transactions
Encourages financial institutions to lend to risky borrowers
15
Which of the following does NOT contribute to differences in GDP across countries?
Geographic differences
Age of population
Industry structure
All of these contribute...
16
If the MPS = 0.15 then the MPC is...
0.15
-0.85
0.85
6.67
17
The Federal Funds Rate is...
The rate at which depository institutions lend to each other
The target policy rate to achieve objectives of the Fed
All of the above
Not set by the Fed
18
What is the Feds primary tool for adjusting the FFR?
Open Market Operations
Discount window
IORB
ON RRP
19
The individual income tax is
Progressive
Regressive
Flat
Proportional
20
In recent years, which countries have contributed most to climate change?
Low income
High income
Middle income
They have all contributed equally
21
Which of the following is a mandatory spending category for the federal government?
Transportation
Defense
Sanitation
Social Security
22
Which regional Federal Reserve bank serves Knoxville?
Atlanta
Richmond
Nashville
St. Louis
23
When the government spends more than it receives in taxes, there is a...
Balanced budget
Budget deficit
None of the above
Budget surplus
