The change in the money supply in an economy is measured as:

The change in the money supply in an economy is measured as:
 a. the difference between the government deficit and government borrowing.
  b. the sum of a change in high-powered money and the change in tax revenues.
  c. the difference between government borrowing and government spending.
  d. the ratio of the change in excess reserves to the deposit expansion multiplier.
  e. the change in the government budget deficit.

Question 2

Demand is said to be ____ when the quantity demanded is very responsive to changes in price.
 a. independent
  b. inelastic
 c. unit elastic
 d. elastic

Question 3

Which of the following combinations would not produce conflicting effects on the supply of money?
 a. The Fed pays a higher interest rate on bank reserves and increases the required reserve ratio.
 b. The Fed conducts an open market purchase and lowers the discount rate.
 c. The Fed pays a higher interest rate on bank reserves and conducts an open market sale of government securities.
  d. None of the above would produce conflicting effects on the supply of money

Question 4

Government spending can be financed by all of the following, except:
 a. personal income taxes.
  b. investment spending.
  c. government borrowing.
  d. money creation.
  e. excise taxes.

Question 5

Total revenue for a seller represents the amount that:
 a. sellers receive for a good or service which is computed as P  Q.
  b. sellers receive for a good or service which is computed as P Q.
  c. one buyer spends on a good or service which is computed as P Q.
  d. one buyer spends on a good or service which is computed as P  Q.

Question 6

Which of the following is false?
 a. The money supply will tend to rise when the Fed pays a lower interest rate on bank reserves.
 b. If banks never wanted to hold excess reserves, decreasing the interest rate the Fed pays on reserves would increase the money supply.
  c. If banks hold excess reserves, the actual money multiplier would be less than potential money expansion.
  d. All of the above are true

Question 7

In the 1980s, U.S. economists acknowledged that it was not possible to exploit the trade-off suggested by the Philips curve of the 1960s. This realization led to more stable macroeconomic policy, which in turn contributed to:
 a. more volatility in real output.
  b. less volatility in real output.
  c. complete removal of unemployment.
  d. more volatility in the price level.
  e. short business cycles.

Question 8

Price elasticity of demand is defined as:
 a. the slope of the demand curve.
 b. the slope of the demand curve divided by the price.
 c. the percentage change in price divided by the percentage change in quantity demanded.
  d. the percentage change in quantity demanded divided by the percentage change in price.

Question 9

Which of the following is true?
 a. The money supply will tend to fall when the Fed pays a higher interest rate on bank reserves.
 b. If banks never wanted to hold excess reserves, decreasing the interest rate the Fed pays on reserves would not increase the money supply.
  c. If banks hold excess reserves, the actual money multiplier would be less than potential money expansion.
 d. All of the above are true

Question 10

Identify the correct statement.
 a. The removal of financial market regulations has lowered the probability of a financial crisis to zero.
  b. Investment in residential housing in the U.S. was less volatile during the era prior to the removal of Regulation Q.
  c. Investment in residential housing in the U.S. was more volatile after the removal of Regulation Q.
  d. The removal of financial market regulations lowered output volatility.
  e. The removal of financial market regulations increased variability in consumer spending.

Question 11

Given an upward sloping supply curve, the more inelastic is demand, the greater the fraction of the burden of taxation that is borne by consumers.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 12

The money supply contracts when the Fed:
 a. replaces worn and ripped Federal Reserve notes.
  b. sells government securities.
 c. borrows from the U.S. Treasury.
 d. purchases equities in major U.S. corporations.

Question 13

In the presence of Regulation Q, when interest rates would rise, _____.
 a. the transaction demand for money in the economy would increase
  b. people would invest in the bond markets
  c. the economy would grow faster
  d. people would withdraw money from banks seeking higher interest rates elsewhere
  e. the U.S. dollar would depreciate

Question 14

An increase in tax rates on a product will raise more revenue, the more inelastic is the demand curve.
 a. True
  b. False
  Indicate whether the statement is true or false