Ec 202 | Economics Exam Questions With Correct Verified Answers | 100% Pass (A+ Certified)

EC 202 | ECONOMICS EXAM QUESTIONS WITH CORRECT VERIFIED ANSWERS | 100% PASS (A+ CERTIFIED)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: 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.) Answer $100 The present value of a given payment in the future _______ when interest rates rise. Answer decreases Which of the following is not included in M1? 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. Answer $2,000 If the banking system has a required reserve ratio of 5 percent, then the money multiplier is: Answer 20 If the FED sells $7.5 million of US bonds and the reserve requirement is 25%, M1 will eventually: Answer decrease by $30 million If the quantity of money demanded exceeds the quantity of money supplied, then the: Answer interest rate will increase If the FED has a major policy objective to decrease unemployment, it should: 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? Answer E When money is used to express the value of goods and services, it is functioning as a: Answer unit of account An open market purchase by the Fed: 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: Answer a rise in prices, which will induce them to increase production and increase the number of workers.