AP Macroeconomics Unit 4 - Mods 22-29

The Federal Reserve Bank’s activities are controlled by

• the President

• Board of Governors

• Congress

• the citizens

The Fed does not

• print money

• regulate banks

• serve as a lender of last resort

• control the money supply

Which President is on the $5 dollar Bill?

• Washington

• Jackson

• Hamilton

• Lincoln

In the Keynesian aggregate-expenditure model, if the MPC is 0.75 and gross investment increases by $6 billion, equilibrium GDP will increase by

• $6 billion
• $8 billion
• $1.25 billion
• $24 billion

If Mr. Woodward's disposable income increases from $600 to $650 and her level of personal consumption expenditures increase from $480 to $520, you may conclude that her marginal propensity to

• consume is 0.8

• consume is 0.4

• save is 0.8

• save is 0.4

An increase in personal income taxes will most likely result in which of the following changes in real GDP and the price level in the shortrun?

• Decrease Real GDP; Decrease Price Level
• Increase Real GDP; Decrease Price Level
• Decrease Real GDP; Increase Price Level
• Increase Real GDP; Increase Price Level

Which would be least appropriate for expansionary FISCAL policy

• Increase taxes

• Decrease taxes

• Increase government spending

• Combination of decreasing taxes and increasing spending

Why will government have to change taxes by a larger magnitude than they would change spending.

• Some spending leaks out of the economy through international trade
• Some portions of tax cuts are saved and not spent
• Government spending is too inefficient a process
• Tax cuts are always superior to government spending

What is NOT a consequence of contractionary fiscal policy

• aggregate demand shifts left
• price level increases
• unemployment increases
• output decreases

The Federal Reserve System was established in

• 1799
• 1913
• 1863
• 1881