Use this information to answer questions 1 – 4, assume the entire economy consists of only three markets.

 

Market 1 Market 2 Market 3

Price Qd Price Qd Price Qd

$9 10 $9 5 $9 50

$8 20 $8 10 $8 60

$7 30 $7 20 $7 70

$6 40 $6 30 $6 80

$5 50 $5 40 $5 90

 

 

Market 1 Market 2 Market 3

Price Qs Price Qs Price Qs

$9 50 $9 40 $9 90

$8 40 $8 30 $8 80

$7 30 $7 20 $7 70

$6 20 $6 10 $6 60

$5 10 $5 5 $5 50

 

1. Which of the following is the correct aggregate demand curve:

 

 

 

Question 1 options:

 

Price QAD

$27 65

$24 90

$21 120

$18 150

$15 180

 

Price QAD

$9 65

$8 90

$7 120

$6 150

$5 180

 

Price QAD

$27 180

$24 150

$21 120

$18 90

$15 65

 

Price QAD

$9 180

$8 150

$7 120

$6 90

$5 65

Save

Question 2 (1 point) Question 2 Unsaved

Which of the following is the correct aggregate supply curve:

Question 2 options:

 

Price QAD

$27 65

$24 90

$21 120

$18 150

$15 180

 

html>

Price QAD

$9 65

$8 90

$7 120

$6 150

$5 180

 

Price QAD

$27 180

$24 150

$21 120

$18 90

$15 65

 

Price QAD

$9 180

$8 150

$7 120

$6 90

$5 65

Save

Question 3 (1 point) Question 3 Unsaved

What is the equilibrium price level?

Question 3 options:

 

$27

 

$21

 

$9

 

$7

Save

Question 4 (1 point) Question 4 Unsaved

What is the equilibrium output level?

Question 4 options:

 

180

 

120

 

65

 

150

 

90

Save

Question 5 (1 point) Question 5 Unsaved

Reagan’s plan for economic growth was called Supply-Side Economics. Which of the following was included in Reagan’s plan?

Question 5 options:

 

increase the use of tariffs

 

increase exports

 

increase private sector investment

 

increase governmental spending

Save

Question 6 (1 point) Question 6 Unsaved

Lyndon Baines Johnson (LBJ) started the current governmental debt by:

Question 6 options:

 

borrowing to finance the Korean War

 

borrowing to finance the Vietnam War

 

borrowing to finance World War II

 

increasing taxes

Save

Question 7 (1 point) Question 7 Unsaved

The sum of accumulated annual federal budget deficits minus budget surpluses refers to

Question 7 options:

 

the national debt.

 

the cyclically unbalanced budget.

 

the trade deficit.

 

the federal government net worth.

Save

Question 8 (1 point) Question 8 Unsaved

Suppose you felt that the government should conduct monetary policy to correct for an inflationary period, but you also felt that the interest rate should not be changed. You would argue that the government should:

Question 8 options:

 

sell bonds

 

buy bonds

 

increase its exhaustive spending

 

decrease its non-exhaustive spending

Save

Question 9 (1 point) Question 9 Unsaved

Suppose you felt that the government should conduct fiscal policy to correct for recessionary period, but you also felt that the tax rate should not be changed. You would argue that the government should:

Question 9 options:

 

decrease the money supply

 

increase the money supply

 

increase its exhaustive spending

 

decrease its non-exhaustive spending

 

increase the interest rate

Save

Question 10 (1 point) Question 10 Unsaved

The MPS = .2, which of the following changes in AD eliminates a $50 million recessionary gap:

Question 10 options:

 

A $10 million increase in Import spending.

 

A $10 million decrease in Import spending.

 

A $50 million increase in Government spending.

 

A $50 million decrease in Government spending.

Save

Question 11 (1 point) Question 11 Unsaved

The MPC = .9, which of the following changes in AD eliminates a $100 million recessionary gap:

Question 11 options:

 

A $10 million increase in Investment spending.

 

A $5 million decrease in Investment spending.

 

A $100 million increase in Export spending

 

A $5 million decrease in Export spending.

Save

Question 12 (1 point) Question 12 Unsaved

Using fiscal policy, if the MPC = .8, which of the following changes in AD alleviates an inflationary gap of $100 billion.

Question 12 options:

 

A $100 billion increase in the Money Supply.

 

A $20 billion increase in the Money Supply.

 

A $100 billion increase in Government spending.

 

A $20 billion decrease in Import spending.

 

A $20 billion decrease in Governmental spending.

Save

Question 13 (1 point) Question 13 Unsaved

In general, if the macroeconomy experiences inflation the federal government should:

Question 13 options:

 

Increase the aggregate demand.

 

Decrease the aggregate demand.

 

Create a balanced budget.

 

Eliminate the national debt.

Save

Question 14 (1 point) Question 14 Unsaved

The tax deferred attribute of your IRA represents:

Question 14 options:

 

you retirement account being non-taxable, until withdrawal

 

a reduction in your taxable income

 

an increase in your taxable income

 

IRAs being completely non-taxable

Save

Question 15 (1 point) Question 15 Unsaved

OPEC’s cartel created the problem of Stagflation. What is Stagflation?

Question 15 options:

 

simultaneous increases in debts and inflation

 

simultaneous increases in debts and unemployment

 

simultaneous increases in unemployment and inflation

 

simultaneous increases in debts and taxes

Save

Question 16 (1 point) Question 16 Unsaved

When the government focuses their spending increases primarily on one segment of the economy, which the following is likely to occur?

Question 16 options:

 

A Crowding Effect

 

An inflationary expectation

 

A budget deficit

 

A budget surplus

Save

Question 17 (1 point) Question 17 Unsaved

The pre-tax contribution on your IRA represents:

Question 17 options:

 

you retirement account being non-taxable, until withdrawal

 

a reduction in your taxable income

 

an increase in your taxable income

 

pre-tax contributions do not effect IRAs.

Save

Question 18 (1 point) Question 18 Unsaved

Inflation that began in the 1960’s was caused by:

Question 18 options:

 

increased governmental spending that increased interest rates to the private sector.

 

the economy being at full employment

 

government spending increases without raising taxes

 

savings and investment being the only leakage and injection that equaled in this time frame.

 

increased oil prices caused by OPEC

Save

Question 19 (1 point) Question 19 Unsaved

Who was the first President to promote zero deficit growth during their administration?

Question 19 options:

 

George W Bush (43rd)

 

Jimmy Carter

 

Ronald Reagan

 

George Bush (41st)

 

Bill Clinton

Save

Question 20 (1 point) Question 20 Unsaved

Which of the following Presidents signed the Civil Rights Act?

Question 20 options:

 

John Kennedy

 

Lyndon Baines Johnson

 

Martin Luther King

 

Richard Nixon

 

Jimmy Carter

Save

Question 21 (1 point) Question 21 Unsaved

In the history of the U.S. economy which of the following schools have had the most impact on the government during the given time period

Question 21 options:

 

the Keynesian school before World War 2

 

the Classical school after World War 2

 

the Supply Siders in the early 1980’s

 

the Keynesian school before 1884

Save

Question 22 (1 point) Question 22 Unsaved

Governmental debts are bad for an economy because:

Question 22 options:

 

interest payments on the debt tie up money that could be used elsewhere

 

debts render fiscal tools more effective than monetary tools

 

tax cuts are politically difficult to sell to the people of the United States

 

all of the above

Save

Question 23 (1 point) Question 23 Unsaved

Which of the following is an example of “trickle-down economics”?

Question 23 options:

 

an income-tax cut that effects everyone.

 

large tax cuts causing large budget deficits.

 

a capital gains tax cut

 

Tax cuts tend to help higher income individuals more than lower income ones.

Save

Question 24 (1 point) Question 24 Unsaved

Inflation that began in the 1970’s was caused by:

Question 24 options:

 

increased governmental spending that increased interest rates to the private sector.

 

the economy being at full employment

 

government spending increases without raising taxes

 

savings and investment being the only leakage and injection that equaled in this time frame.

 

increased oil prices caused by OPEC

Save

Question 25 (1 point) Question 25 Unsaved

Jimmy Carter’s plan to stimulate the economy included:

Question 25 options:

 

An increase in the money supply

 

A decrease in the money supply

 

An increase in the interest rates

 

A decrease in the interest rates

Save

Question 26 (1 point) Question 26 Unsaved

 

 

Use this budget (assuming the government pays no interest and no debt existed before year 1) to answer questions 26-33

 

 

 

 

 

 

 

 

 

 

Revenues Expenditures

Year 1 $100 billion $550 billion

Year 1 $100 billion $450 billion

Year 1 $100 billion $400 billion

Year 1 $100 billion $450 billion

Year 1 $100 billion $450 billion

Year 6 $750 billion $550 billion

 

26. At the completion of year 1, the government operated with a:

 

 

 

Question 26 options:

 

budgetary surplus of $450 billion

 

budgetary deficit of $550 billion

 

a national debt of $550 billion

 

a national debt of $450 billion

 

two of the above are correct

Save

Question 27 (1 point) Question 27 Unsaved

At the completion of year 2, the government operated with a:

Question 27 options:

 

budgetary surplus of $350 billion.

 

budgetary deficit of $350 billion.

 

a national debt of $800 billion.

 

a national debt of $1 trillion.

 

two of the above are correct

Save

Question 28 (1 point) Question 28 Unsaved

When comparing the completed year 1 budget to the completed year 2 budget, which is true:

Question 28 options:

 

the government’s debt increased by $150 billion

 

the government’s deficit increased by $100 billion

 

the government experienced deficit reduction

 

the national debt did not grow

 

two of the above are correct

Save

Question 29 (1 point) Question 29 Unsaved

At the completion of year 3, which of the following would be a true statement:

Question 29 options:

 

the government’s debt increased by $250 billion

 

the government’s deficit decreased by $50 billion

 

the government experienced zero deficit growth

 

the national debt did not grow

 

two of the above are correct

Save

Question 30 (1 point) Question 30 Unsaved

At the completion of year 4, which of the following would be a true statement:

Question 30 options:

 

the government’s deficit increased by $150 billion

 

the government’s deficit decreased by $150 billion

 

the government’s debt increased by $350 billion

 

the national debt did not grow

 

two of the above are correct

Save

Question 31 (1 point) Question 31 Unsaved

At the completion of year 5, which of the following would be a true statement:

Question 31 options:

 

the government’s debt increased by $550 billion

 

the government’s deficit decreased by $50 billion

 

the government experienced zero deficit growth

 

the national debt did not grow

 

two of the above are correct

Save

Question 32 (1 point) Question 32 Unsaved

Identify – after year 6 if the government redirects the budget surplus into “other” programs:

Question 32 options:

 

zero debt growth spending

 

zero deficit growth spending

 

operating a balanced budget

 

none of the above

Save

Question 33 (1 point) Question 33 Unsaved

After year 6 when using the true accounting approach, which of the following would be correct?

Question 33 options:

 

the national debt is at $1.2 trillion

 

the national debt is at $250 billion

 

the national debt is at $1.6 trillion

 

the national debt is at $350 billion