True/False Questions: Please write next to the question number either “T” or “F”.
1. With a reserve requirement of 25 percent, an injection of $100 million of new excess reserves into the economy could cause the money supply to expand by $400 million.
2. The interest rate charged by a depository institution for all loans is set by the Federal Reserve.
3. A decrease in excess reserves would lower the interest rate on loans.
4. An increase in excess reserves in the economy would encourage spending.
5. Lowering the reserve requirement is a tight money policy.
6. If a bank does not meet its reserve requirement it can borrow from the Fed or from other banks in the Federal Funds market.
7. The prime rate is the rate paid by financial depository institutions to borrow reserves from the Fed.
8. Open market operations are the Fed's least frequently used tool of monetary policy.
9. Buying securities by the Fed would decrease excess reserves held by financial depository institutions.
10. Profit-maximizing behavior requires businesses to reduce their costs as much as possible, even if it means endangering their workers or the environment.
11. Crowding out occurs when government borrowing forces up the interest rate and discourages households and businesses from borrowing.
12. The Fed has generally not followed a philosophy of increasing excess reserves to finance government deficits.
13. In the Keynesian model, total spending in the economy will be less than total output if leakages from the spending stream are less than injections.
14. Actions of the Federal Reserve will have little if any impact on the money supply if banks are unwilling to make loans or borrowers are unwilling to borrow.
15. The acceptance of economic theories depends only on their logic, and not on how well they explain economic events.
16. All macroeconomic models attempt to explain the same relationships.
17. The classical economists held that the economy tends to operate at full employment.
18. Classical economics favored government intervention in the operation of an economy.
19. The classical economists believed changes in wages and prices would help to ensure that the economy would operate at full employment.
20. The classical economists thought that supply creates its own demand and investment spending always equals saving.
21. According to Keynesian economists, government efforts to stimulate the economy always lead to inflation.
22. In the new classical model, aggregate supply is upward sloping in the short run, and perfectly vertical at the natural rate of unemployment in the long run.
23. The interest rate effect, the wealth effect, and the foreign trade effect cause the aggregate supply curve to be upward sloping in the new classical model.
24. The new classical economists hold that rational expectations and adaptive expectations by businesses and households are important factors standing in the way of the federal government's success in managing the economy.
25. The argument that individual decision making in businesses and households affects the macroeconomy is part of new Keynesian economics.
26. The position that wage and price flexibility will bring the economy to the desired level of output is shared by the classical school and the new classical school.
27. The position that classical economics and Keynesian economics were both correct is espoused by the monetarist school.
28. A typical Phillips curve shows that there is a direct relationship between an economy's rates of inflation and its rates of unemployment.
29. In the U.S., the rate of inflation associated with any given rate of unemployment was typically lower in the late 1990s and early 2000s than it was in the late 1970s and early 1980s.
30. Fewer teenagers in the labor force would cause a lower rate of unemployment to accompany any given rate of inflation.
31. The number of single-person households in the U.S. has been decreasing in recent decades.
32. The size of households in the U.S. with one person has been decreasing in recent years.
33. Households headed by college graduates have among the highest average incomes in the U.S.
34. A durable good has a useful lifetime of more than one year.
35. Maximizing economic well-being by an individual requires balancing the costs and benefits of different actions that could be taken.
36. To maximize the satisfaction from consuming several different goods, expenditures must be allocated toward goods that have the lowest prices.
37. Maximizing economic well-being from earning income requires taking the job that pays the highest salary.
38. A sole proprietor and a general partner are both subject to unlimited liability.
39. A sole proprietor cannot raise funds by issuing stocks and bonds.
40. Proprietorships generate the smallest percentage of total receipts of the three legal forms of business.
41. A bondholder is an owner of a corporation.
42. The majority of total business receipts in the U.S. goes to corporations.
43. Most U.S. businesses are organized as corporations.
44. A holding company is a corporation formed for the purpose of owning or holding shares of stock in other corporations.
45. A conglomerate merger occurs when one firm in a market acquires a competing firm in the same market.
46. A furniture and sofa manufacturer buying a lumber or fabric mill is an example of a vertical merger.
47. Profit or loss is what is left for a business after it subtracts its costs from the revenue received from selling its product.
48. Keynesian economists do not think flexible wages and prices ensure that an economy will operate at full employment.
49. Profit or loss is equal to revenue divided by costs.
True/False Questions: Please take my economics survey: “T” or “F”.?
That's too many dang questions at once! I got frustrated and gave up.
Reply:If this is a class assignment, NO WONDER you're so depressed!!
Find the richness in yourself, it's not in a crazy class. You are more valuable and deserve more happiness than it will ever offer...
Peace
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