Economics Quiz Unit 4

Of the following assets, which is the most liquid?

• currency

• stocks

• bonds

• real estate

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

• sell government bonds to the public

• decrease government spending

• increase investment spending

• 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

• an increase in private savings

• a decrease in taxable purchases

• a decrease in the expected inflation rate

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

• bonds

• traveler's checks

• currency in circulation

• checkable deposits

When the loanable funds market is in equilibrium,

In the context of the loanable funds market, which of the following statements is true?

• borrowing equals lending

• the interest rate is greater than the demand

• supply equals demand

• investment spending equals consumer spending

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

• increase taxes and sell government bonds

• decrease taxes and sell government bonds

• increase taxes and buy government bonds

• decrease taxes and buy government bonds

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

• movement along the short-run Phillips curve

• movement along the long-run Phillips curve

• a leftward shift of the long-run Phillips curve

The long-run Phillips curve . . .

• is vertical at full employment

• is shifted left only when capital stock increases

• is horizontal at full employment

• has an inverse relationship with the aggregate demand curve

A budget deficit exists when . . .

• government spending exceeds tax revenue

• government spending ceases to occur

• tax revenue exceeds government spending

• tax revenue is magnified by the spending multiplier