Which of the following is true?
a. The quantity of money demanded varies inversely with the nominal rate of interest.
b. Money market equilibrium occurs at that nominal interest rate where the quantity of money demanded equals the quantity of money supplied.
c. Rising national income will shift the demand for money to the right, leading to a new higher equilibrium nominal interest rate.
d. All of the above are true.
Question 2If real GDP remains unchanged, the population size is stationary, and people have more leisure time, then per capita real GDP will _____.
a. overstate actual economic growth
b. understate actual economic growth
c. be the most accurate measure of actual economic growth
d. show that actual economic growth was negative
e. show that actual economic growth was positive
Question 3If the elasticity of supply coefficient for a good is one-sixth (in absolute terms), we know:
a. that for every 1 increase in quantity, there will be a 6 increase in price.
b. that for every 1 increase in quantity, there will be a 6 decrease in price.
c. that for every 6 increase in quantity, there will be a 1 increase in price.
d. that for every 6 increase in quantity, there will be a 1 decrease in price.
Question 4An unexpected change in nominal interest rate changes real interest rate by ____ in the short run.
a. a smaller amount
b. a larger amount
c. the same amount
d. an indeterminate percent
Question 5Which of the following is accounted for when we measure economic growth in terms of per capita real GDP?
a. Changes in the quality of life
b. Changes in income distribution
c. Changes in standards of living
d. Changes in price level
e. People's nonmonetary needs
Question 6If the elasticity of demand coefficient for a good is one-sixth (in absolute terms), we know:
a. that for every 1 increase in quantity, there will be a 6 increase in price.
b. that for every 1 increase in quantity, there will be a 6 decrease in price.
c. that for every 6 increase in quantity, there will be a 1 increase in price.
d. that for every 6 increase in quantity, there will be a 1 decrease in price.
Question 7If the Fed wanted to reduce the federal funds interest rate, it might:
a. decrease the interest rate it pays on bank reserves.
b. decrease the required reserve ratio.
c. buy government securities.
d. Do any of the above.
Question 8What is the approximate per capita income of the US if the population is 3,405,813 and its GDP is 24 million?
a. 8.17
b. 1.41
c. 7.05
d. 0.08
e. 6.18
Question 9The long run demand curve for wheat is likely to be:
a. more elastic than the short run demand curve for wheat.
b. more inelastic the short run demand curve for wheat.
c. the same as the short run demand curve for wheat.
d. more inelastic than the short run supply of wheat.
Question 10If the Fed wanted to reduce the federal funds interest rate, it might:
a. increase the discount rate.
b. increase the required reserve ratio.
c. buy government securities.
d. sell government securities.
Question 11The per capita real GDP in Sri Lanka is likely to be lower than the United States because Sri Lanka's economy is characterized by:
a. a more equitable income distribution system.
b. a high population growth.
c. a low regard for political freedom.
d. a higher level of consumption spending.
e. a high budget deficit.
Question 12For a given increase in price, a greater elasticity of demand will result in a greater
a. increase in quantity demanded.
b. increase in demand.
c. decrease in quantity demanded.
d. decrease in demand.
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