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Use the following diagram for questions 35 & 36. 35.Refer to the…  Use the following diagram for questions 35 & 36.        35. Refer to the above diagram for a private closed economy. The equilibrium RGDP with both consumption and investment spending is: A. $180 B.B. $60 B.C. between $60 and $180 B.D. $40 B.  36. Investment (planned investment) in this economy is how much?A. $60 BB. $120 BC. $180 B.D. $40 B.  Use the following assumed values for MPC, I, Co, and G to complete the table below. After completing the table, answer questions 37, 38, and 39. MPC = marginal propensity to consume = .8       Co = autonomous consumption = $500billion (B)I = Investment =$100 billion (B)                          G = Government Spending = $400 billion (B) Income (Y)CoCSIC+IGC+I+G$0 B500      $1,000 B500 -300  400 $2,000 B 2,100 100   $3,000 B    3,000  $4,000 B      4,20037. At income = $4,000 B, total consumption (C) in the economy is equal to:A. $3,000 BB. $3,700 BC. $2,800 BD. $2,900 B 38. At income = $2,000 B, C+I+G, which represents total expenditures in the economy, is equal to:A. $1800 BB. $2,600 BC. $3,400 BD. $2,500 B 39. At income = $0 B, S is equal to:A. $500  BB. –  $300 BC. – $1,000 BD. – $500 B  Using the data below, calculate equilibrium RGDP. Then, answer question 40 based on your calculation.  Co = autonomous consumption= $100B              I = Investment = $200B  MPC = marginal propensity to consume =.90      X = Exports = $50 B      G = Government Spending =$400 B                   t  = tax rate =.1  MPI = Marginal Propensity to Import = .06                                   40. Equilibrium RGDP is:A. $750 BB. $3,500 BC. $3,000 BD. $400 B41. Consider discretionary fiscal policy. The two expansionary fiscal policy options are to ________ and __________. A. increase government spending, decrease taxes.B. decrease government spending, increase taxes.C. increase government spending, increase interest ratesD. decrease taxes, increase interest rates.42. Consider discretionary fiscal policy. The two contractionary fiscal policy options are to ______ and _______.A. increase government spending, decrease taxes.B. decrease government spending, increase taxes.C. increase government spending, increase interest ratesD. decrease taxes, increase interest rates. Use the following graph for question 43. 43. Refer to the above diagram, in which Qf is the full-employment output (PRGDP). If aggregate demand curve AD3 is the economy’s AD curve, the economy is experiencing a(n) _________ gap and appropriate fiscal policy would be to _______, respectively. A. recessionary gap, do nothing since the economy appears to be achieving full-employment real output.B. inflationary gap, increase taxes and reduce government spending to shift the aggregate demand curve leftward from AD3 to AD2.C. inflationary gap, increase taxes on businesses to shift the aggregate supply curve rightward to reduce the price level.D. recessionary gap, increase taxes and increase government spending to shift the aggregate demand curve from AD3 to AD1.Use the following diagram for question 44.  44. Refer to the above diagram and consider expansionary fiscal policy. If the full-employment level of GDP (PRGDP) is B and aggregate expenditures are AE3, government spending needs to ______ by the amount represented by ________, respectively. A. increase, e to iB. decrease, A to BC. decrease, B to CD. increase, d to e 45. Assume an inflationary gap of $300 B exists in the U.S. macroeconomy. Also assume that the MPC = .9, t = .2, and the MPI = .05. How much does government spending need to change, approximately, and does the change in government spending represent an increase or a decrease? A. $300 B, decreaseB. $300 B, increaseC. $100 B, decreaseD. $100 B, increase 46. There are several problems when it comes to implementing fiscal policy. These problems are called problems of timing or lags. One problem is the time it takes the government to agree on the tax/spending change and vote the change into law. This problem is called _____ lag.A.         administrativeB.         recognitionC.         specificationD.         demand47. Which of the following best describes the built-in stabilizers as they function in the United States? A. The size of the open economy multiplier varies inversely with the level of GDP.B. Personal and corporate income tax collections automatically increase and transfers and subsidies automatically decrease as RGDP rises, thus helping to restrain the growth of aggregate demand.C. Personal and corporate income tax collections and transfers and subsidies do not automatically change with the level of RGDP.D. Personal and corporate income tax collections automatically decrease and transfers and subsidies automatically increase as RGDP rises, thus helping to restrain the growth of aggregate demand.48. The Federal budget deficit is found by: A. subtracting government tax revenues plus government borrowing from government spending in a particular year.B. subtracting government tax revenues from government spending (expenditures)  in a particular year.C. cumulating the differences between government spending and tax revenues over all years since the nation’s founding.D. subtracting government revenues from the noninvestment-type government spending in a particular year.49. The financing of a government deficit increases interest rates and, as a result, reduces private investment spending. This statement describes: A. the supply-side effects of fiscal policy.B. built-in stability.C. the crowding-out effect.D. the net export effect.  50. Suppose the Federal government had budget deficits of $80 billion in year 1 and $120 billion in year 2 but had budget surpluses of $20 billion in year 3 and $50 billion in year 4. Also assume that it used its budget surpluses to pay down the public debt. At the end of these four years, the Federal government’s public debt would have: A. decreased by $130 billion.B. increased by $130 billion.C. decreased by $200 billion.D. decreased by $70 billion.  51. If you place a part of your summer earnings in a one year certificate of deposit (CD), you are using money primarily as a: A. medium of exchange.B. store of value.C. unit of account.D. standard of value.  52. The paper money of the United States is: A. National Bank Notes.B. Treasury Notes.C. United States Notes.D. Federal Reserve Notes.  53. The measurements of the U.S. money stock/supply (M1, M2) are based on liquidity. Which of the following four forms of money is the least liquid? A. $10, 000 in cashB. $10,000 in a checking accountC. $50 in quartersD. A $10,000 certificate of deposit (CD)  54. Currency is: A. included in M1.B. not included in either M1 or M2.C. considered to be a near money.D. also called time deposits.  55. The difference between M1 and M2 is that _____ and the other does not. A. the former includes time depositsB. the latter includes small time deposits, noncheckable savings accounts, money market deposit accounts, and money market mutual fund balancesC. the latter includes negotiable government bondsD. the former includes small time deposits, noncheckable savings accounts, money market deposit accounts, and money market mutual fund balances 56. Which of the following does not explain what backs the money supply in the United States? A. It is backed by gold.B. It is widely accepted in transactions.C. It is designated “legal tender” by the Federal government.D. It is relatively scarce.  57. If the price index rises from 100 (1) to 110 (1.3), the purchasing power value of the dollar: A. may either rise or fall.B. will rise by about 23%.C. will fall by about 23%.D. will rise by 123 %.  58. During periods of very rapid (hyper) inflation, money may cease to work as a medium of exchange: A. unless it has been designated legal tender.B.  unless it is green.C. unless it is fiat money.D. because people and businesses will not want to accept it in transactions.  59. The transactions demand for money is most closely related to money functioning as a: A. unit of account.B. medium of exchange.C. store of value.D. measure of value.  60. The asset (speculative) demand for money is most closely related to money functioning as a: A. unit of account.B. medium of exchange.C. store of value.D. measure of value.  61.  The total demand for money curve will increase (as a result of): A. if investors perceive less risk in the stock market and expect stock prices to increase causing investors to want to buy stocks .B. a decrease in nominal GDP.C. if investors perceive more risk in the stock market and expect stock prices to decline causing investors to want to sell their stocks .D. an increase in interest rates.  Use the following diagrams to answer questions 62-64. Note that S is the supply (stock) of money M.  Image transcription text+ Rate of interest (percent) Rate ofinterest (percent) Rate of interest(percent) D 100 200 300… Show more… Show more62. Refer to the above market for money diagrams. The transactions demand for money is shown by: A. D1.B. D2.C. D3.D. S. 63. Refer to the above market for money diagrams. The equilibrium interest rate is: A. 6%.B. 5%.C. 4%.D. 400. 64. Refer to the above market for money diagrams. Ceteris paribus, if the Federal Reserve decreased the stock of money, S, the: A. S curve would shift leftward and the equilibrium interest rate would rise.B. S curve would shift rightward and the equilibrium interest rate would fall.C. D3 would shift leftward and the equilibrium interest rate would fall.D. D3 curve would shift leftward and the equilibrium interest rate would rise. 65. The reserves (actual reserves) of a commercial bank consist of: A. the amount of money market funds it holds.B. required reserves and excess reserves.C. government securities that the bank holds.D. the bank’s net worth.66. Reserve Requirement (%)           Checkable Deposits                             Actual Reserves   Excess Reserves                                W                                            $200,000                               $20,000                          $0  Refer to the above table. The value appropriate for space W is: A. 10.B. 20.C. 15.D. 5.  67. The primary purposes of the (legal) reserve requirement is to: A. prevent banks from hoarding too much vault cash and meet demand deposit obligations.B. meet demand deposit obligations and provide a means by which the monetary authorities can influence the lending ability of commercial banks.C. prevent banks from hoarding cash and prevent commercial banks from earning excess profits.D. meet demand deposit obligations and provide a dependable source of interest income for commercial banks. 68. The amount that a commercial bank can lend is determined by its: A. required reserves.B. excess reserves.C. outstanding loans.D. outstanding checkable deposits. The ABC national bank is a new bank located in Phoenix, Arizona. Use the following balance sheet for the ABC National Bank to answer question 69. Assume the required reserve ratio (R) is 10 percent.  Image transcription textAssets Liabilities and net worthReserves $ 27,000 Checkable deposits$110,000 Loans 50,000 S… Show more… Show more69. Refer to the above balance sheet. This bank has required reserves of: A. $16,000.B. $11,000.C. $27,000.D. $5,000. 70. The Federal funds market is the market in which: A. banks borrow from the Federal Reserve Banks.B. U.S. securities are bought and sold.C. banks borrow reserves from one another on an overnight basis.D. Federal Reserve Banks borrow from one another. 71. If the monetary authorities want to decrease the monetary multiplier (1/R), they should: A. lower the required reserve ratio.B. raise the required reserve ratio.C. increase bank reserves.D. lower interest rates.72. Other things equal, if the required reserve ratio, R, is lowered: A. banks would have to reduce their lending.B. the size of the monetary multiplier would increase.C. the actual reserves of banks would increase.D. the Federal funds interest rate would rise.73. Suppose a commercial banking system has $100,000,000 of outstanding checkable deposits and actual reserves of $35,000,000. If the reserve ratio is 20 percent, the banking system can expand the supply of money by the maximum amount of: A. $122,000,000.B. $175,000,000.C. $300,000,000.D.   $75,000,000.74. The Federal Reserve System (Fed) was created in: A. 1926.B. 1946.C. 1895.D. 1913. 75. In the U.S. economy the money supply is controlled by the: A. Federal Reserve System.B. U.S. Treasury.C. Senate Committee on Banking and Finance.D. Congress. Business Economics MacroeconomicsECON 125

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