EC 202 assignment#4, EC 202 assignment#3,
economics chapter 7, EC 202 assignment#2, Quiz 1,
EC 202 assignment #1 WITH QUESTIONS AND
WELL VERIFIED ANSWERS [GRADED A+]
REAL EXAM 100%
Suppose you have $200 to invest at a nominal interest rate of 8%. If the inflation rate is
3%, then the real return on your investment is: Correct Answer: $10
If Table 11.3 represents all the investments available to the economy, the nominal
interest rate is 10%, and there is no inflation, what will be the level of investment in the
economy? (Note that the Cost represents the level of investment for each investment
project.) Correct Answer: $100
The present value of a given payment in the future _______ when interest rates rise.
Correct Answer: decreases
Which of the following is not included in M1? Correct Answer: savings accounts
Assume the following information about the DUCK BANK: Bank deposits are $30,000;
Loans are $20,000; Reserves are $5,000; and the reserve requirement is 10%. The DUCK
BANK is holding _______ in excess reserves. Correct Answer: $2,000
If the banking system has a required reserve ratio of 5 percent, then the money
multiplier is: Correct Answer: 20
If the FED sells $7.5 million of US bonds and the reserve requirement is 25%, M1 will
eventually: Correct Answer: decrease by $30 million
If the quantity of money demanded exceeds the quantity of money supplied, then the:
Correct Answer: interest rate will increase
If the FED has a major policy objective to decrease unemployment, it should: Correct
Answer: decrease the reserve requirement and/or conduct an open market purchase.
Refer to Fig. 13.1. Assume the initial equilibrium point is the intersection of the solid
money demand and supply lines. Which point is a likely equilibrium outcome if the
FED conducts an open market sale and real income decreases? Correct Answer: E
1|Page
, When money is used to express the value of goods and services, it is functioning as a:
Correct Answer: unit of account
An open market purchase by the Fed: Correct Answer: Increases both investment and
output
Suppose consumer tastes and preferences shift from a desire to go skiing to an interest
in snowboarding. If skis and snowboards are produced by different firms, then firms
that produce snowboards will experience: Correct Answer: a rise in prices, which will
induce them to increase production and increase the number of workers.
Assuming a long-run Classical aggregate supply curve, a decrease in the money supply
results in _______ in output and _______ in prices. (Note there is a typo in the ANS9
answer to question 20 in QUES9, as the answer should state that the long-run Classical
supply is perfectly INELASTIC, not perfectly ELASTIC.) Correct Answer: no change; a
decrease
Assuming a short-run Keynesian aggregate supply curve, a decrease in taxes results in
_______ in output and _______ in prices. Correct Answer: a substantial increase; a slight
or no increase
Consider Fig. 9.2. A simultaneous increase in the labor force due to an increase in
immigration and an increase in government spending would cause a movement from
________ . Correct Answer: B to C
If the government wants to reduce unemployment, government spending should be
________ and/or taxes should be _________. Correct Answer: increased; decreased
In a situation where the government is operating on a budget surplus, it can reduce its
overall debt by ________ . Correct Answer: buying back bonds it has sold to the public.
If firms experience an unplanned increase in inventories, they are likely to: Correct
Answer: decrease production.
If the consumption function is C = 50 + 0.75 y, where C is consumption and y is output,
then the marginal propensity to consume is _______ and the Keynesian multipler is
_____. Correct Answer: 0.75; 4
2|Page
economics chapter 7, EC 202 assignment#2, Quiz 1,
EC 202 assignment #1 WITH QUESTIONS AND
WELL VERIFIED ANSWERS [GRADED A+]
REAL EXAM 100%
Suppose you have $200 to invest at a nominal interest rate of 8%. If the inflation rate is
3%, then the real return on your investment is: Correct Answer: $10
If Table 11.3 represents all the investments available to the economy, the nominal
interest rate is 10%, and there is no inflation, what will be the level of investment in the
economy? (Note that the Cost represents the level of investment for each investment
project.) Correct Answer: $100
The present value of a given payment in the future _______ when interest rates rise.
Correct Answer: decreases
Which of the following is not included in M1? Correct Answer: savings accounts
Assume the following information about the DUCK BANK: Bank deposits are $30,000;
Loans are $20,000; Reserves are $5,000; and the reserve requirement is 10%. The DUCK
BANK is holding _______ in excess reserves. Correct Answer: $2,000
If the banking system has a required reserve ratio of 5 percent, then the money
multiplier is: Correct Answer: 20
If the FED sells $7.5 million of US bonds and the reserve requirement is 25%, M1 will
eventually: Correct Answer: decrease by $30 million
If the quantity of money demanded exceeds the quantity of money supplied, then the:
Correct Answer: interest rate will increase
If the FED has a major policy objective to decrease unemployment, it should: Correct
Answer: decrease the reserve requirement and/or conduct an open market purchase.
Refer to Fig. 13.1. Assume the initial equilibrium point is the intersection of the solid
money demand and supply lines. Which point is a likely equilibrium outcome if the
FED conducts an open market sale and real income decreases? Correct Answer: E
1|Page
, When money is used to express the value of goods and services, it is functioning as a:
Correct Answer: unit of account
An open market purchase by the Fed: Correct Answer: Increases both investment and
output
Suppose consumer tastes and preferences shift from a desire to go skiing to an interest
in snowboarding. If skis and snowboards are produced by different firms, then firms
that produce snowboards will experience: Correct Answer: a rise in prices, which will
induce them to increase production and increase the number of workers.
Assuming a long-run Classical aggregate supply curve, a decrease in the money supply
results in _______ in output and _______ in prices. (Note there is a typo in the ANS9
answer to question 20 in QUES9, as the answer should state that the long-run Classical
supply is perfectly INELASTIC, not perfectly ELASTIC.) Correct Answer: no change; a
decrease
Assuming a short-run Keynesian aggregate supply curve, a decrease in taxes results in
_______ in output and _______ in prices. Correct Answer: a substantial increase; a slight
or no increase
Consider Fig. 9.2. A simultaneous increase in the labor force due to an increase in
immigration and an increase in government spending would cause a movement from
________ . Correct Answer: B to C
If the government wants to reduce unemployment, government spending should be
________ and/or taxes should be _________. Correct Answer: increased; decreased
In a situation where the government is operating on a budget surplus, it can reduce its
overall debt by ________ . Correct Answer: buying back bonds it has sold to the public.
If firms experience an unplanned increase in inventories, they are likely to: Correct
Answer: decrease production.
If the consumption function is C = 50 + 0.75 y, where C is consumption and y is output,
then the marginal propensity to consume is _______ and the Keynesian multipler is
_____. Correct Answer: 0.75; 4
2|Page
