Economics Quiz

When the loanable funds market is in equilibrium, EC105

• borrowing equals lending

• the interest rate is greater than the demand

• supply equals demand

• investment spending equals consumer spending

If aggregate demand increased, which of the following would occur? EC107

• movement along the long-run Phillips curve

• movement along the short-run Phillips curve

• a rightward shift of the long-run Phillips curve

• a leftward shift of the long-run Phillips curve

Crowding out is when:

• businesses refuse to pay for transfer payments

• unemployment of older workers decreases because they are replaced by younger workers

• there is a decrease in consumption and/or private investment due to an increase in government spending

• the money supply is pushed to its maximum supply levels

Of the following assets, which is the most liquid?

• currency

• stocks

• bonds

• real estate

All of the following are part of the M1 money supply except:

• currency

• stocks

• bonds

• real estate

A budget deficit exists when . . .

• tax revenue exceeds government spending

• government spending exceeds tax revenue

• tax revenue is magnified by the spending multiplier

• government spending ceases to occur

The long-run Phillips curve . . .

• is horizontal at full employment

• is shifted left only when capital stock increases

• is vertical at full employment

• has an inverse relationship with the aggregate demand curve

If the central bank wanted to control inflation, which of the following policies would it implement?

• decrease government spending

• increase investment spending

• sell government bonds to the public

• decrease the required reserve ratio

Which of the following would lead to an increase in the equilibrium real interest rate in the loanable funds market?

• A decrease in foreign financial capital inflows

• A decrease in taxable purchases

• A decrease in the expected inflation rate

• An increase in private savings

If a government wanted to achieve a reduction in inflation, it should: