- •The International College of Economic and Finance
- •Increase Decrease
- •It includes purchases of common stock
- •A consumer price index (cpi) value of 90 means that prices are
- •10 Percent lower than they were in the base year
- •Decrease Decrease
- •No change Decrease
- •A change in the general price level does not mean a change in relative domestic prices, so the substitutability of goods is different.
- •Total leakages equal total injections.
- •Unemployment
- •They have different lag times between implementation of a policy and the effects of implementation on aggregate demand.
- •A budget surplus and a decrease in public debt
- •A recent college graduate who has been interviewing for jobs but has not taken a job
- •An increase in labor productivity
- •Increase Not change
- •Increase Increase
- •If there is an increase in the money supply, the aggregate demand curve will shift to the right.
- •Consumption increases as income increases
- •Increase real gross domestic product if the economy is below full employment
- •Expect the interest rate to rise
- •Will not change investment
- •All of the above
- •Answers (b) and (c) are true
- •The gradual exhaustion of natural resources
- •Monetary policy becomes more effective at changing real gross domestic product.
- •Increase wage rates because labor becomes more productive
- •Prices, including wages, adjust quickly to bring about full employment.
- •All of the above
- •A simultaneous decision by the Federal Reserve to increase the money supply
- •All of the above
- •All of the above
- •All of the above
- •Elastic Inelastic Inelastic Elastic
increase capital consumption allowances
increase net investment
increase inventory investment
increase non-residential construction
Will not change investment
If an increase in the nominal money supply results in no change in the level of money income, then which of the following is true?
(A) The price level must have risen.
(B) Real income must have declined.
(C) Interest rates must have increased.
(D) Government expenditure must have risen.
(E) The velocity of money must have fallen.
Government tax revenues tend to vary procyclically, whereas government spending tends to vary countercyclically. An econometrician estimates that for every one percent decline in the unemployment rate, government tax revenues rise by $12 billion and spending drops by $15 billion. If the government's budget were in deficit by $70 billion at 8 percent unemployment, what would be the state of the budget at 4 percent?
(A) There would be a deficit of $82 billion.
(B) There would be a deficit of $58 billion.
(C) It would be balanced.
(D) There would be a surplus of $38 billion.
(E) There would be a surplus of $108 billion.
An increase in government expenditures will increase aggregate real income only if it
(A) does not crowd out an equal amount of spending for consumption and business investment
(B) is spent on physical capital projects, not government services
(C) is financed by selling bonds to the central bank
is accompanied by an increase in the money supply
All of the above
Questions 34-35 are based on the following simplified model of the determination of the money stock.
M = C+ D C = 0.2D R = 0.1D H = R + C
where M = money stock
C = currency in circulation
R = bank reserves
D = deposits of the public
H = high-powered money
If the money stock were $120 billion, bank reserves would have to be
(A) $5 billion
(B) $10 billion
(C) $15 billion
(D) $20 billion
(E) $50 billion
If H were equal to $40 billion, M would equal
(A) $200 billion
(B) $160 billion
(C) $100 billion
(D) $60 billion
(E) an amount that cannot be determined from the information given
In an economy in which the marginal propensity to save is 0.4, in order to remove an excess demand for aggregate output of $60 billion, exogenous spending must be
(A) reduced by $15 billion
(B) reduced by $40 billion
(C) reduced by $24 billion
(D) increased by $24 billion
(E) increased by $40 billion
Which of the following transactions or activities would be counted in the national income and product accounts as an imputed value?
The construction of a municipal waste-treatment plant
The salary of a member of Congress
Housing services enjoyed by house owners
Automobile services enjoyed by the car owners
Answers (b) and (c) are true
Which of the following, if it occurred, would be LEAST likely to increase real wage rates over the long run?
(A) Continued productivity improvements in agriculture
(B) A more rapid rate of accumulation of capital than of population growth
(C) An increase in investment in human capital