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Page 1 of 12
Which of the following is true about exchange rates?
They often change as a result of changing economic conditions in one country compared to another.
A country's exchange rate will depend on how much supply and demand exist for its currency.
Exchange rates matter when making international purchases or traveling abroad.
All of the above are true regarding exchange rates.
CONCEPT
Foreign Exchange and Currency 2
Select the statement below that is true of ONLY price ceilings.
Are binding when they are above equilibrium
Can create a shortage of product
The market clears, there are no shortages or surpluses
The market is allowing for trade to occur between buyers and sellers Page 2 of 12
CONCEPT
Binding & Non-Binding Constraints 3
Which statement below about expansionary fiscal policy is true?
It generally has a negative effect on GDP.
If it is based on a tax cut, it will trigger the multiplier effect.
It could include lowering interest rates.
It could include decreasing the reserve requirement.
CONCEPT
Expansionary Policy 4
If the reserve requirement for a bank is 25%, $15 in M0 will lead to which of the following amounts of money of M1?
$
$
$
$
CONCEPT
Reserve Requirement 5
Laura is willing to pay as much as $1,000 for a wedding dress but is happy to find one she likes that costs $300.
Select the term below that corresponds to this situation.
Producer surplus is a similar concept to consumer surplus.
CONCEPT
Producer Surplus 8
Which statement below best describes what will most likely happen, from an economic standpoint, when a music group with growing popularity goes on tour and sells out a certain venue in hours with tickets for $25 apiece?
Nothing changes, since the market is already clearing.
The price of tickets for future concert dates will rise until it hits equilibrium.
The group will add more performance dates with tickets at a lower cost.
The group will cancel the concert and give everyone a refund.
CONCEPT
Prevailing Price 9
If the government would like to maintain the same growth trajectory for the economy, which of the policy types below should it implement?
Monetary policy
Neutral policy
Expansionary policy
Contractionary policy
CONCEPT
Monetary Policy/Fiscal Policy 10
Page 5 of 12
The government influences the economy through taxes, subsidies and regulations.
The circular flow diagram provides a big picture view of the economy.
Firms purchase final goods and services from households.
The circular flow diagram shows how the main parties in the economy interact.
CONCEPT
Circular Flow Diagram 11
Which statement below corresponds to the term "central bank?"
This can happen when consumers lose confidence in the bank or the system as a whole.
They allow a bank to loan out money to other banks.
They have a variety of tools that can be used to control the money supply.
This was developed by the founding fathers in order to ensure strict banking practices.
CONCEPT
Central Banks 12
Which of the following is not a goal of monetary policy?
Promote maximum stable employment
Prevent destruction of the currency's value
15 Page 7 of 12
Using the image shown here, which of the following flows from the government to firms?
Wages, interest and transfer payments
Imports
Taxes
Purchases of goods and services
CONCEPT
Circular Flow Diagram
Page 8 of 12
In the short run, there is no relationship between price level and RGDP.
If production is below the LRAS, it will eventually have to fall back.
The discovery of new resources can cause the LRAS curve to move.
In the long run, changes in price will affect output.
CONCEPT
Aggregate Supply 17 Which statement below regarding reasons for studying macroeconomics is false?
Macroeconomics helps us understand the economic situation of the United States but has little application for other countries.
Macroeconomics is the basis for discussions of economics in the media.
Macroeconomics can help you understand the limitations of monetary and fiscal policy but not individual decision- making.
Understanding macroeconomics helps one become a better citizen.
CONCEPT
Why Study Macroeconomics? 18 What happens during a bank run?
Creditors demand their accounts to be settled with banks.
Banks lower interest rates to encourage loans to households and businesses. https://capella.sophia.org/spcc/macroeconomics-2/milestone_take_feedbacks/5160679 8/10/
21 Page 10 of 12
Which statement below regarding monetary and fiscal policy is FALSE?
Expansionary policy causes AD to shift to the left.
The inverse relationship between inflation and unemployment is known as the Phillips Curve.
If AD increases too much, prices will increase and AD will return to equilibrium.
The situation where unemployment is high and inflation is high is stagflation.
CONCEPT
Monetary and Fiscal Policy 22
Which of the following statements are true regarding unemployment?
Full employment is natural unemployment minus 100%.
People who lost their jobs during the recession experienced cyclical unemployment.
Frictional unemployment is due to changes in the economy.
It is possible to eliminate natural unemployment.
CONCEPT
Unemployment/Full Employment - Frictional / Structural / Cyclical 23
Which of the following has NOT influenced global poverty rates?
Differential access to health care
Income polarity
Increasing population
Gini coefficient
CONCEPT
Global Indicators of Standard of Living 24
Which of the following is an example of medium of exchange?
A restaurant lists a price for dinner in gold coins.
People invest in gold because it stays stable over time and does not tarnish, rust or deteriorate.
People in the Pacific Islands used cowrie shells as a form of payment for the things they wanted.
A chicken farmer who wants a cow needs to find a cattle farmer who wants some chickens.
CONCEPT
History of Money 25
Which of the following is the Federal Reserve Committee responsible for making key decisions about interest rates and the money supply?
Federal Reserve Districts
The House of Representatives
The Executive Branch
FOMC
