1. An increase in expected future income will 
increase aggregate demand and aggregate supply.
decrease aggregate demand and aggregate supply.
increase aggregate supply.
increase aggregate demand.

2. The upward slope of the short-run aggregate supply curve is based on the assumption that 
wages and other resource prices do not respond to price level changes.
wages and other resource prices do respond to price level changes.
prices of output do not respond to price level changes.
prices of inputs are flexible while prices of outputs are fixed.

3. Which would most likely increase aggregate supply? 
An increase in the prices of imported products
An increase in productivity
A decrease in business subsidies
A decrease in personal taxes

4. With cost-push inflation in the short run, there will be 
an increase in real GDP.
a leftward shift in the aggregate demand curve.
a decrease in real GDP.
a decrease in unemployment.

5. With an MPS of .3, the MPC will be 
1 - .3.
.3 - 1.
1/.3.
.3.

6. Which definition(s) of the money supply include(s) only items which are directly and immediately usable as a medium of exchange? 
M1
M2
Neither M1 nor M2
M1 and M2

7. The basic requirement of money is that it be 
backed by precious metals--gold or silver.
authorized as legal tender by the central government.
generally accepted as a medium of exchange.
some form of debt or credit.

8. How many members can serve on the Board of Governors of the Federal Reserve System? 
Seven
Nine
12
14

9. Which of the following is the most important function of the Federal Reserve System? 
Setting reserve requirements
Controlling the money supply
Lending money to banks and thrifts
Acting as fiscal agent for the U.S. government

10. Other things being equal, an expansion of commercial bank lending 
changes the composition, but not the size, of the money supply.
is desirable during a period of demand-pull inflation.
reduces the money supply.
increases the money supply.

11. During the financial crisis of 2007-2008, the FDIC increased deposit insurance coverage from 
$50,000 to $100,000 per account.
$100,000 to $250,000 per account.
$200,000 to $500,000 per account.
$500,000 to $1,000,000 per account.

12. Which one of the following is a tool of monetary policy for altering the reserves of commercial banks? 
Issuing currency
Check collection
Open-market operations
Acting as the fiscal agent for the federal government

13. The most frequently used monetary device for achieving price stability is: 
open market operations.
the discount rate.
the reserve ratio.
the prime interest rate.

14. Which of the following products is a leading import of the United States? 
Grains
Aircraft
Petroleum
Generating equipment

15. In a two-nation world, comparative advantage means that one nation can produce 
a product with fewer inputs than the other nation.
a product at lower average cost than the other nation.
a product at a lower domestic opportunity cost than the other nation.
more of a product than the other nation.

16. A tariff is a 
tax.
price ceiling.
quantity limit.
subsidy.

17. If a nation agrees to set an upper limit on the total amount of a product that it exports to another nation, then this situation would be an example of 
an import quota.
a revenue tariff.
a protective tariff.
a voluntary export restriction.

18. When tariffs on imported products are removed by a nation, it will result in 
higher prices and lower quantities consumed.
higher prices and quantities consumed.
lower prices and quantities consumed.
lower prices and higher quantities consumed.

19. A major goal of the World Trade Organization is to 
increase the protection of producers against foreign trade competition.
encourage bilateral trade agreements between nations.
liberalize international trade among nations.
maximize tariff revenue for governments.

20. U.S. imports 
increase the foreign demand for foreign currencies.
increase the domestic demand for foreign currencies.
decrease the foreign supply of foreign currencies.
increase the domestic supply of foreign currencies.