ECO 372 Week 4 Federal Reserve Presentation

 This paperwork of ECO 372 Final Exam shows the solutions to the following problems:


 1) The largest source of household income in the U.S. is obtained from

 A. stock dividends

 B. wages and salaries

 C. interest earnings

 D. rental income

 2) The market where business sell goods and services to households and the government is called the

 A. goods market

 B. factor market

 C. capital market

 D. money market

 3) Real gross domestic product is best defined as

 A. the market value of intermediate goods and services produced in an economy, including exports

 B. all goods and services produced in an economy, stated in the prices of a given year and multiplied by quantity

 C. the market value of all final goods and services produced in an economy, stated in the prices of a given year

 D. the market value of goods and services produced in an economy, stated in current-year prices

 4) Underemployment includes people

 A. who work “-off-the-books”- to avoid tax liabilities

 B. who are working part time, or not using all their skills at a full-time job

 C. who are tired of looking for a job, so they quit looking, but still want one

 D. whose skills are not in demand anymore

 5) The Bureau of Economic Analysis is responsible for which of the following?

 A. Setting interest rates

 B. Managing the money supply

 C. Calculating U.S. gross domestic product]

 D. Paying unemployment benefits

 6) The Federal Reserve provides which of the following data?

 A. Federal funds rate

 B. Stock price of GE

 C. Bond yields of corporations

 D. Debt to GDP of Ireland

 7) Consider if the government instituted a 10 percent income tax surcharge. In terms of the AS/AD model, this change should have

 A. shifted the AD curve to the left

 B. shifted the AD curve to the right

 C. made the AD curve flatter

 D. made the AD curve steeper

 8) If the depreciation of a country’-s currency increases its aggregate expenditures by 20, the AD curve will

 A. shift right by more than 20

 B. shift right by less than 20

 C. shift right by exactly 20

 D. not shift at all

 9) Aggregate demand management policies are designed most directly to

 A. minimize unemployment

 B. minimize inflation

 C. control the aggregate level of spending in the economy

 D. prevent budget deficits or surpluses

 10) Suppose that consumer spending is expected to decrease in the near future. If output is at potential output, which of the following policies is most appropriate according to the AS/AD model?

 A. An increase in government spending

 B. An increase in taxes

 C. A reduction in government spending

 D. No change in taxes or government spending

 11) According to Keynes, market economies

 A. never experience significant declines in aggregate demand

 B. quickly recover after they experience a significant decline in aggregate demand

 C. may recover slowly after they experience a significant decline in aggregate demand

 D. are constantly experiencing significant declines in aggregate demand

 12) The laissez-faire policy prescription to eliminate unemployment was to

 A. eliminate labor unions and government policies that hold real wages too high

 B. strengthen unions and government regulations protecting unions and workers

 C. increase real wages so that people are encouraged to work

 D. have government guarantee jobs for every

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