- •The International College of Economics and Finance macroeconomics Mock Exam April 8, 2005
- •Labor supply
- •Money supply growth
- •(C) Calculate value added at each stage of production
- •Consumption Expenditures Investment Unemployment
- •An increase in output and either increase or decrease in tax receipts;
- •Transactions costs
- •Interest rates Unemployment
- •Decreases production.
- •An increase in the availability of education and training
- •Resources are underemployed and an increase in demand will be satisfied without any pressure on the price level
- •Output and the price level are unchanged from their initial values.
- •Causes higher interest rates, which change the composition of output
- •Saving.
- •Investment.
- •No change in the level of saving
- •Changes in net tax revenues that are the result of a change in the level of economic activity
- •The provision of loans will rise by 400 million dollars.
- •I, II, and III only
- •The total amount of loans made by commercial banks will decrease
Consumption Expenditures Investment Unemployment
(A) Decrease Increase Increase
(B) Decrease No change Increase
(C) Increase Decrease Decrease
(D) Decrease No change Decrease
(E) No change No change No change
In the economy with trade balance a reduction in planned investment would probably lead to
(A) A decline in output and a trade surplus
(B) A decline in output and a trade deficit
(C) No change in output and a trade balance
(D) A decrease in output and no change in trade balance
(E) An increase in output and a trade deficit
The effect of a government surplus upon the equilibrium level of GDP is substantially the same as an increase in:
Net exports
Unplanned inventory investment
Consumption
Saving
Fixed investment
In a closed economy with Keynesian unemployment and with fixed demand for investment and government expenditures a fall in the rate of the proportional tax will bring to:
An increase in output and either increase or decrease in tax receipts;
(B) A decrease in output and a fall in tax receipts;
(C) An increase in output and no change in tax receipts;
(D) A decrease in output;
(E) None of the above.
The conversion of a barter economy to one that uses money increases efficiency by reducing
Prices
The need to specialize
The need to employ team production methods
Transactions costs
All of the above
A difference between Ml and M2 is that
(A) Ml is a first mortgage and M2 is a second mortgage
(B) M2 is Ml plus assets that are more liquid
(C) M2 includes savings deposits
(D) M2 is always double Ml
(E) All of the above
Which of the following portfolio allocation decisions represents the best individual response to an increase in the interest rate on non-monetary assets?
(A) Sell some stocks and use the money to buy bonds.
(B) Sell some bonds and use the money to buy stocks.
(C) Reduce your assets and increase your liabilities.
(D) Trade some money for non-monetary assets.
(E) Sell some land and use the money to buy stocks and bonds.
Which of the following is most likely to increase if the public decides to increase its holdings of currency?
(A) The price level
(B) The interest rate
(C) Disposable personal income
(D) Employment
(E) Personal wealth
When the banking system receives $400 in additional reserves and the reserve requirement is 0.25, maximum check-writing deposit expansion is
(A) $2000, (B) $1600 (C) $1200, (D) $375, (E) $100.
The less sensitive money demand is to changes in the interest rate, the more an increase in the money stock will
(A) Increase aggregate demand and raise interest rates
(B) Increase aggregate demand and lower interest rates
(C) Decrease aggregate demand and lower interest rates
(D) Decrease aggregate demand and raise interest rates
(E) none of the above
If the government simultaneously engages in expansionary monetary and a contractionary fiscal policy, which of the following is the likely effect on interest rates and unemployment