1. Instead of taking the dirty laundry with you when you go back to visit your p
ID: 1101285 • Letter: 1
Question
1. Instead of taking the dirty laundry with you when you go back to visit your parents, you use a Laundromat. Your use of the Laundromat means that
A. your parents' contribution to GDP will increase.
B. what you paid for use of the Laundromat will be included in GDP.
C. GDP will remain the same.
D. GDP will decrease and the country's standard of living will fall.
E. real GDP does not change because the clothes are still being laundered but nominal GDP rises since you are now paying for the service.
2. The required reserve ratio is the
(I think it's A?)
A. amount of reserves banks are required by the Fed to be held as a percentage of the bank's deposits.
B. amount of excess reserves the bank holds just in case.
C. total amount of reserves the bank holds at the Fed.
D. amount of reserves banks are required by the Fed to be held as a percentage of the bank's loans.
E. total amount of reserves the bank holds in its vaults.
3.According to the expenditure approach to measuring GDP, in the United States, the largest component of GDP is
(I think it's A)
A. consumption expenditure.
B. government expenditure on goods and services.
C. investment.
D. net exports of goods and services.
E. wages.
4. An open market purchase by the Fed
A. does not change the total amount of reserves in the banking system.
B. decreases the total amount of reserves in the banking system.
C. increases the total amount of reserves in the banking system.
D. causes the reserve requirement to fall.
5. Banks earn a profit by
A. making loans at a higher interest rate than the rates that they offer on their deposits.
B. keeping as many reserves on hand as possible.
C. charging an interest rate on their depositors' accounts.
D. making loans at a lower interest rate than the rate that they offer on their deposits.
E. not paying interest on their reserves.
6. In the United States for the year 2012, the federal government had a ________ so the national debt was ________.
A. budget surplus; increasing
B. balanced budget; not changing
C. budget deficit; decreasing
D. budget deficit; increasing
E. budget surplus; decreasing
7. The Keynesian macroeconomic model states that
A. markets work efficiently to produce the best macroeconomic outcomes.
B. the economy is fairly stable.
C. changes in technology generate business cycles.
D. fluctuations in the quantity of money are responsible for most economic recessions.
E. the economy is inherently unstable and government intervention is required to maintain continued economic growth.
8. The underground economy ________.
(I think it's D)
A. is difficult to describe but easy to measure
B. is measured by government officials through tax returns
C. is estimated by the government and the estimate is part of official GDP
D. includes production that uses illegal workers who are paid less than minimum wage
E. includes mining production
9. When the Fed engages in open market operations, it is buying or selling
(I think it's D?)
A. gold.
B. loans made to banks to meet the legal reserve requirement ratio.
C. U.S. government securities.
D. U.S. government securities newly issued by the U.S. Treasury.
E. capital equipment.
10. An increase in nominal GDP could result from an increase in
i. production.
ii. prices.
iii. subsidies.
A. i and ii
B. i and iii
C. i, ii, and iii
D. ii only
E. i only
Explanation / Answer
B A A C A D E D C A
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