Economists who prefer a broader definition of money prefer the:
a. M4 measure of the money supply to the M1 measure.
b. M2 measure of the money supply to the M1 measure.
c. M3 measure of the money supply to the M2 measure.
d. prefer the M1 measure of the money supply to the M2 measure.
QUESTION 2Adam Smith's basic economic philosophy stated in The Wealth of Nations can be stated as:
a. laissez faire. b. allow to act.
c. the least government is best. d. all of these.
QUESTION 3A 1 million increase in investment spending will raise equilibrium output (real GDP) by:
a. less than 1 million.
b. exactly 1 million.
c. between 0.5 and 1.5 million.
d. more than 1 million.
QUESTION 4Which of the following compose the M2 money supply?
a. Currency only.
b. Currency, checkable deposits, and traveler's checks.
c. M1 plus large denomination time deposits and Eurodollar deposits.
d. M1 plus savings deposits and small-denomination time deposits.
QUESTION 5Adam Smith wrote that the:
a. economic problems of eighteenth-century England were caused by free markets.
b. government should control the economy.
c. pursuit of private self interest promotes the public interest in a market economy.
d. public or collective interest is not promoted by people pursuing their self interest.
QUESTION 6When households' marginal propensity to consume (MPC) increases, the size of the spending multiplier:
a. also increases.
b. decreases.
c. remains unchanged.
d. reacts unpredictably.
QUESTION 7The M1 definition of the money supply includes:
a. coins and currency in circulation.
b. coins and currency in circulation and checkable deposits.
c. Federal Reserve notes, gold certificates, and checkable deposits.
d. Federal Reserve notes and bank loans.
Quick Reply
