Quiz Question 1 (1 point) The actual change in the money supply equals Save Question 2 (1 point) The required reserve ratio equals 10 percent and all banks initially have zero excess reserves. The Fed buys $1 million in U.S. government securities. The most the money supply can increase is Save Question 3 (1 point) The more people decide to hold currency, the Save Question 4 (1 point) The discount rate is the Save Question 5 (1 point) The most precise way the Fed has to control the money is Save Question 6 (1 point) According to the above figure, a shortage is shown between which two points? Save Question 7 (1 point) A decrease in demand and a decrease in supply will lead to a Save Question 8 (1 point) If the current price of a market basket of goods is $850 and the base year price for the same market basket is $500, what is the value of the price index? Save Question 9 (1 point) The only way that a society can produce outside the production possibilities curve is Save Question 10 (1 point) Suppose the tax rate on the first $10,000 income is 0; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $30,000; and 40 percent on any income over $80,000. Family A has income of $40,000 and Family B has income of $100,000. What is the marginal and average tax rate for each family? Save Question 11 (1 point) The marginal tax rate is equal to Save Question 12 (1 point) One solution to the Social Security problem cited in the text is to Save Question 13 (1 point) Social Security taxes are regressive because Save Question 14 (4 points) Assume an open, mixed economy (C + I + G + X = real GDP) and an MPS of .2 What is the multiplier?  Save Question 15 (1 point) The U.S. fiduciary monetary system Save Question 16 (1 point) Refer to the above table. The value of M1 is Save Question 17 (1 point) Possession of information by one party in a financial transaction but not by the other party is Save Question 18 (1 point) The Federal Reserve bank is managed by Save Question 19 (1 point) As a "lender of last resort" the Fed Save Question 20 (1 point) Required reserves are Save Question 21 (1 point) A bank with deposits of $500 million has $75 million in cash on hand, $50 million in deposits with the Fed, and $80 million in government securities. If the reserve requirement is 15 percent, the bank has excess reserves of Save Question 22 (1 point) A bank with $100 million in deposits has $6 million in vault cash, $6 million on deposit with the Fed, and $6 million in government securities. The reserve requirement is 20 percent. A person deposits a check for $10 million drawn on another bank. The maximum loan this bank can make once the check clears is Save Question 23 (1 point) Assuming a reserve ratio of 10 percent, if a bank sells $100,000 in securities how much can the bank loan.

1. Quiz
Question 1
(1 point)
The actual change in the money supply equals
Save
Question 2
(1 point)
The required reserve ratio equals 10 percent and all banks
initially have zero excess reserves. The Fed buys $1 million in
U.S. government securities. The most the money supply can
increase is
Save
Question 3
(1 point)

2. The more people decide to hold currency, the
Save
Question 4
(1 point)
The discount rate is the
Save
Question 5
(1 point)
The most precise way the Fed has to control the money is
Save
Question 6
(1 point)
According to the above figure, a shortage is shown between
which two points?

3. Save
Question 7
(1 point)
A decrease in demand and a decrease in supply will lead to a
Save
Question 8
(1 point)
If the current price of a market basket of goods is $850 and the
base year price for the same market basket is $500, what is the
value of the price index?
Save
Question 9
(1 point)
The only way that a society can produce outside the production
possibilities curve is

4. Save
Question 10
(1 point)
Suppose the tax rate on the first $10,000 income is 0; 10 percent
on the next $20,000; 20 percent on the next $20,000; 30 percent
on the next $30,000; and 40 percent on any income over
$80,000. Family A has income of $40,000 and Family B has
income of $100,000. What is the marginal and average tax rate
for each family?
Save
Question 11
(1 point)
The marginal tax rate is equal to
Save
Question 12
(1 point)

5. One solution to the Social Security problem cited in the text is
to
Save
Question 13
(1 point)
Social Security taxes are regressive because
Save
Question 14
(4 points)
Assume an open, mixed economy (C + I + G + X = real GDP)
and an MPS of .2 What is the multiplier?
Save
Question 15
(1 point)
The U.S. fiduciary monetary system

6. Save
Question 16
(1 point)
Refer to the above table. The value of M1 is
Save
Question 17
(1 point)
Possession of information by one party in a financial transaction
but not by the other party is
Save
Question 18
(1 point)
The Federal Reserve bank is managed by
Save

7. Question 19
(1 point)
As a "lender of last resort" the Fed
Save
Question 20
(1 point)
Required reserves are
Save
Question 21
(1 point)
A bank with deposits of $500 million has $75 million in cash on
hand, $50 million in deposits with the Fed, and $80 million in
government securities. If the reserve requirement is 15 percent,
the bank has excess reserves of
Save

8. Question 22
(1 point)
A bank with $100 million in deposits has $6 million in vault
cash, $6 million on deposit with the Fed, and $6 million in
government securities. The reserve requirement is 20 percent. A
person deposits a check for $10 million drawn on another bank.
The maximum loan this bank can make once the check clears is
Save
Question 23
(1 point)
Assuming a reserve ratio of 10 percent, if a bank sells $100,000
in securities how much can the bank loan out?
Save
Question 24
(1 point)
When the Fed buys a U.S. bond in the open market

9. Save
Question 25
(1 point)
The Fed buys securities and gives a bond dealer a check for the
amount. After the check has cleared,
Save
Question 26
(1 point)
The required reserve ratio is 20 percent. The bank of a bond
dealer has $100 million in deposits, $10 million in vault cash,
$10 million in deposits with the Fed, and $10 million in
government securities. The Fed buys $1 million in securities
from the bond dealer. As a result of the transaction,
Save
Question 27
(1 point)

10. A purchase of U.S. government securities by the Fed causes
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Question 28
(1 point)
Fiscal policy is
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Question 29
(1 point)
Automatic stabilizers work by
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Question 30
(1 point)
Which of the following represent expansionary fiscal policy?
Save

11. Question 31
(1 point)
If the economy is experiencing an inflationary gap and the
government wants to accelerate the adjustment to the long-run
equilibrium, it should
Save
Question 32
(1 point)
Which of the following actions could be undertaken if the
government wants to close a recessionary gap?
Save
Question 33
(1 point)
Suppose the government increases lump-sum taxes. This causes
Save

12. Question 34
(2 points)
Refer to the above figure. An increase in taxes will lead to a(n)
Save
Question 35
(2 points)
Refer to the above figure. Suppose the economy is operating at
point A. There is a recessionary gap of ________, which can be
closed by ________.
Save
Question 36
(1 point)
If the government increases spending but doesn't raise taxes,
Save

13. Question 37
(1 point)
If the supply of investment funds is horizontal and the
government increases spending by $200 billion, the change in
real GDP will be (assuming a marginal propensity to consume
of 0.8)
Save
Question 38
(1 point)
Expansionary fiscal policy falls short of its goal. Some
economists claim it is due to indirect crowding out. What
evidence is consistent with this claim?
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Question 39
(1 point)
If the economy is below its full-employment level of real GDP,
a supply-side economist would argue the appropriate policy is

14. Save
Question 40
(1 point)
Suppose there are two policy options facing a vote in the
Senate. In the first, government spending will increase $50
billion, while the second option is to cut taxes by $50 billion. A
Keynesian economist would argue for
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Question 41
(1 point)
The government spends exactly what it receives in taxes is
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Question 42
(1 point)
The difference between the gross public debt and the net public

15. debt is that the
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Question 43
(1 point)
Which of the following statements is true about the public debt
and future generations?
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Question 44
(1 point)
In the short-run, a budget deficit, when the economy has a
recessionary gap, can
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Question 45
(1 point)
What happens when the government imposes a unit excise tax

16. on a good?
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