A decrease in government spending will cause a(n)

increase in the quantity of real domestic output demanded.

decrease in the quantity of real domestic output demanded.

decrease in aggregate demand.

increase in aggregate demand.

 The long-run aggregate supply curve is

upward-sloping and becomes steeper at output levels above the full-employment output.

upward-sloping and becomes flatter at output levels above the full-employment output.

horizontal.

vertical.

 A fall in labor costs will cause aggregate

supply to increase.

demand to increase.

supply to decrease.

demand to decrease.

 Deflation refers to a situation where

price level falls.

price level rises.

the rate of inflation falls.

the rate of inflation rises.

 Dissaving occurs when

income is greater than saving.

income is less than consumption.

saving is greater than consumption.

saving is greater than the interest rate.

 The M1 money supply is composed of

all coins and paper money held by the general public and the banks.

bank deposits of households and business firms.

bank deposits and mutual funds.

checkable deposits and currency in circulation.

 United States currency has value primarily because it

is legal tender, is generally acceptable in exchange for goods or services, and is backed by the gold and silver of the federal government.

is generally acceptable in exchange for goods or services, is backed by the gold and silver of the federal government, and facilitates trade.

is relatively scarce, is legal tender, and is generally acceptable in exchange for goods and services.

facilitates trade, is legal tender, and permits the use of credit cards and near-monies.

 How many members can serve on the Board of Governors of the Federal Reserve System?

Seven

Nine

12

14

 When the Fed acts as a "lender of last resort", like it did in the financial crisis of 2007-2008, it is performing its role of

controlling the money supply.

setting the reserve requirements.

being the bankers' bank.

providing for check clearing and collection.

 The Federal funds rate is the rate that banks pay for loans from

the Fed.

the U.S. Treasury.

other banks.

large corporations.

 The difference between Fed behavior during the Bank Panics of 1930-1933 and the Financial Crisis of 2007-2008 is that the Fed

was very active during the former crisis, while it was basically passive during the latter crisis.

stood idly by during the former crisis, but took dramatic actions during the latter crisis.

was not yet in existence during the 1930s.

was a much bigger institution in the 1930s than it is today.

 Which one of the following is a tool of monetary policy for altering the reserves of commercial banks? (Points : 4)

Issuing currency

Check collection

Open-market operations

Acting as the fiscal agent for the federal government

 The Federal Reserve could reduce the money supply by

selling government bonds in the open market.

buying government bonds in the open market.

operating the term auction facility.

reducing the discount rate.

 Which country is the United States' largest trading partner in terms of volume of trade?

Mexico

Japan

China

Canada

 Nation X has a comparative advantage in the production of a product compared to Nation Y when

it imposes a tariff on the importation of the product.

its production possibilities curve expands, allowing it to produce more of the product.

it is achieving full employment and is producing the maximum amount of the product.

it has the lower domestic opportunity cost of producing the product.

 If a nation imposes a tariff on an imported product, then the nation will experience a(n)

decrease in total supply and an increase in the price of the product.

decrease in demand and a decrease in the price of the product.

decrease in supply of, and an increase in demand for, the product.

increase in supply of, and a decrease in demand for, the product.

Tariffs and quotas are costly to consumers because

the price of the imported good falls.

the supply of the imported good increases.

import competition increases for domestic goods.

consumers shift purchases to higher-priced domestic goods.

The major beneficiaries of a tariff on a product are the

domestic producers of the product.

domestic consumers of the product.

workers engaged in trade, like transportation workers.

foreign producers of the product.

 Which organization meets regularly to establish rules and settle disputes related to international trade? (Points : 4)

The United Nations Commission on Trade Law

The United Nations Conference on Trade and Development

The World Trade Organization

The Federal Reserve Board

 French and German farmers wanting to buy equipment from an American manufacturer based in the U.S. will be

supplying dollars and also supplying euros in the foreign exchange market.

demanding dollars and also demanding euros in the foreign exchange market.

supplying dollars and demanding euros in the foreign exchange market.

supplying euros and demanding dollars in the foreign exchange market