AP Macro Econ Unit 4

AP Macro Econ Unit 4

11th Grade

10 Qs

quiz-placeholder

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AP Macro Econ Unit 4

AP Macro Econ Unit 4

Assessment

Quiz

Social Studies

11th Grade

Practice Problem

Medium

Used 75+ times

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10 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Assume the reserve requirement is 20 percent. If a bank initially has no excess reserves and $10,000 cash is deposited in the bank, the maximum amount by which this bank may increase its loans is

2,000

8,000

10,000

20,000

50,000

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Assume that Atlantic National Bank has demand deposits of $100,000 and no excess reserves, and that the reserve requirement is 10 percent. A customer withdraws $5,000 from the bank. To meet the reserve requirement, the bank must increase its reserves by

500

1,000

2,000

4,000

4,500

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Commercial Banks can create money by

transferring depositors accounts at the Federal Reserve for conversion to cash

buying Treasury bills from the Federal Reserve

sending vault cash to the Federal Reserve

Maintaining a 100 percent reserve requirement

lending excess reserves to customers

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If the required reserve ratio is 10 percent, actual reserves are $10 million and currency in circulation is equal to $20 million, M1 will at most be equal to

20 million

30 million

90 million

120 million

150 million

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The annual inflation rate is expected to be 5 percent over the next 3 years. Juan plans to take out a 3-year loan to purchase an automobile. If Juan decides not to take out the loan if the real interest rate exceeds 3 percent, the highest nominal interest rate he is willing to pay is

2%

3%

8%

15%

25%

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If the central bank buys government bonds from individuals on the open market and banks do not loan out any excess reserves created by the open market purchase, which of the following will happen?

The money supply will increase

The money supply will remain unchanged

Loans to the private sector will increase

Demand deposits will decrease

The level of actual reserves will decrease

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

All of the following changes will shift the investment demand curve to the right EXCEPT

a decrease in the corporate income tax rate

an increase in the productivity of new capital goods

an increase in the real interest rate

an increase in corporate profits

an increase in real gross domestic product

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