Econ 201 : economic questions answers-9

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If Keynes’ law applies during economic contractions and Say’s law applies during economic expansion, how will the three goals of macroeconomics be affected?

Question options:

 

a)

 trade-offs and connections may differ in the short run and the long run

 

 

b)

 institutional and market structures will connect factors of production

 

 

c)

 the economy will face genuine limits to how much can be produced

 

 

d)

determinates of total supply for the economy will be traded-off

 

Question 3

 

0 / 2 points

 

 

 

 

If the price level of what firms produce is rising across an economy, but the costs of production are constant, then:

Question options:

 

a)

 higher profits will induce expanded production.

 

b)

 the maximum potential GDP will be exceeded.

 

c)

increase in quantity produced won’t be large.

 

d)

 a majority of industries will start running into limits.

Chapter 11 Mandatory

 

Referring to the above diagram, which of the following is a true statement?

Question options:

 

a)

 Macroeconomic policy will be needed to address rising inflation.

 

 

b)

There is insufficient aggregate demand to reach full employment.

 

 

c)

 The equilibrium in the economy is at a level of output above full employment.

 

 

 

d)

 There is sufficient aggregate demand to cause inflationary pressures.

 

Question 6

 

0 / 2 points

 

 

 

 

The graph above refers to a significant increase in individual income taxes, taking them to their highest level in 50 years. Which of the following is likely to result?

Question options:

 

a)

 macroeconomic supply will decrease in the short run

 

b)

 cyclical unemployment will decrease

 

c)

 the economy will experience lower economic growth

 

d)

 inflationary pressures will be mild

Chapter 12 Random

 

According to macroeconomic theory, evidence that high unemployment may be accompanied by low inflation, and low unemployment may be accompanied by high inflation is supported by the:

Question options:

 

a)

 neoclassical expenditure-output model.

 

b)

 Keynesian Inflation trade-off model.

 

c)

 Keynesian cross diagram.

 

d)

 Keynesian Phillips curve tradeoff.

Chapter 12 mandatory

 

 

 

 

 

Question 22

 

0 / 2 points

Referring to the diagram, which of the following is a true statement?

Question options:

 

a)

The increase in supply (Q1 to Q2) may result from decreased government spending.

 

b)

 The increase in supply (Q1 to Q2) may come about because of increased money supply.

 

c)

 The increase in output (Q1 to Q2) may result from increased levels of taxation.

 

d)

The increase in output (Q1 to Q2) may come about because of lower levels of taxation.

Chapter 15 Random

 

Question 23

 

0 / 2 points

According to the quantity theory, if constant growth in the money supply is combined with fluctuating velocity, which of the following is most likely to result?

Question options:

 

a)

unpredictable rises and falls in nominal GDP

 

b)

 quantity of credit rises above where it otherwise be

 

c)

 innovations relating to banking and finance

 

d)

monetary policy will become inevitably imprecise

Question 25

 

0 / 2 points

Which of the following events would cause interest rates to increase?

Question options:

 

 

b)

 lower reserve requirements

 

c)

 a higher discount rate

 

d)

 an open market operation to buy bonds

Chapter 15 mandatory

 

Question 27

 

0 / 2 points

If the economy is at equilibrium as shown in the diagram above, then an expansionary monetary policy will:

Question options:

 

a)

 reduce both unemployment and inflation.

 

b)

 reduce unemployment, but have little effect on inflation.

 

c)

reduce unemployment, but increase inflation.

 

d)

 have no effect on both unemployment and inflation.

Question 28

 

0 / 2 points

  1. The diagram above refers to a private closed economy.  In this instance, the equilibrium GDP is:

Question options:

 

 

 

c)

 $60 billion at all levels of GDP.

 

d)

 between $60 and $180 billion.

Essay/ short answer

 

Question 33

 

2 / 5 points

 The government of Talonia has decided to stimulate its economy by increasing is spending during the upcoming fiscal year. The government’s economic advisors have determined that for each 100 in stimulus spending received, 24% will be repaid to the government for taxes, 18% of after-tax income will be saved, 22% will be spent on imports, and the remaining balance will be spent on domestically produced goods and services. Determine what fraction of expenditures is recycled and calculate the value of Talonia’s multiplier.

Question 35

 

2 / 7 points

 

 

 

 

 

 Stealth Bank is holding $4 million in reserves, $9 million in government bonds and $9.6 million in low risk mortgage loans. Out of the $20 million in customers’ deposits, Stealth holds $13.1 million in the form of certificates of deposit. Describe the formula for determining Stealth Bank’s net worth and, using the figures above, determine the Bank’s net worth. Identify the criteria for classifying a bank as healthy or unhealthy and determine which applies to Stealth Bank in these circumstances.