Economics Quiz

The opportunity cost of holding money

• decreases when the interest rate increases, so people desire to hold more of it.

• decreases when the interest rate increases, so people desire to hold less of it.

• increases when the interest rate increases, so people desire to hold more of it.

• increases when the interest rate increases, so people desire to hold less of it.

The discount rate is the interest rate that

• banks charge one another for loans.

• banks charge the Fed for loans.

• the Fed charges banks for loans.

• the Fed charges Congress for loans.

The interest rate falls if

• either money demand or money supply shifts right.

• money demand shifts right or money supply shifts left.

• either money demand or money supply shifts left.

• money demand shifts left or money supply shifts right.

If a price ceiling is not binding, then

• there will be a surplus in the market.

• there will be a shortage in the market.

• the market will be less efficient than it would be without the price ceiling.

• there will be no effect on the market price or quantity sold.

Peanut butter and jelly are complementary goods. What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

• Price will fall, and the effect on quantity is ambiguous.

• Price will rise, and the effect on quantity is ambiguous.

• Quantity will fall, and the effect on price is ambiguous.

• Quantity will rise, and the effect on price is ambiguous.

The natural rate of unemployment refers to the current unemployment rate.

• True

• False

Which of the following shifts aggregate demand to the right?

• an increase in the price level

• an increase in the money supply

• a decrease in the price level

• a decrease in the money supply

Efficiency wages

• increase productivity and reduce unemployment.

• increase productivity but increase unemployment.

• decrease productivity but reduce unemployment.

• decrease productivity and increase unemployment.

An increase in government spending initially and primarily shifts

• aggregate demand to the right.

• aggregate demand to the left.

• aggregate supply to the right.

• neither aggregate demand nor aggregate supply in either direction.

Fiscal policy refers to the idea that aggregate demand is affected by changes in

• the money supply.

• government spending and taxes.

• trade policy.

• All of the above are correct.