Liberty University ECON 214 Exam 3

ECON 214 Exam 3

·         Question 1

2 out of 2 points

Refer to the following figure to answer the questions that follow.

According to the figure, if the government increases spending by only $4 billion in an effort to shift aggregate demand enough to return to long-run equilibrium, the marginal propensity to consume must be equal to:

·         Question 2

2 out of 2 points

When money is acting as a unit of account, it:

·         Question 3

2 out of 2 points

During economic expansions:

·         Question 4

2 out of 2 points

If the marginal propensity to consume is equal to 0.75, the spending multiplier is equal to:

·         Question 5

2 out of 2 points

Why did tax revenues fall so sharply after 2007?

·         Question 6

2 out of 2 points

Supply-side fiscal policy will lead to:

·         Question 7

2 out of 2 points

Which of the following is not a revenue source for the U.S. federal government?

·         Question 8

2 out of 2 points

When I decide to deposit $100 in cash into my savings account at the bank, how would this be reflected on the bank’s balance sheet?

·         Question 9

2 out of 2 points

Which of the following is not a component of M1?

·         Question 10

2 out of 2 points

If a bank has a required reserve ratio of 25% and there is $10,000 in deposits, what is the amount of required reserves?

·         Question 11

2 out of 2 points

If the economy begins to fall into a recession, one would expect Congress and the president to conduct:

·         Question 12

2 out of 2 points

What are federal funds?

·         Question 13

2 out of 2 points

Why is a budget deficit not necessarily a bad thing?

·         Question 14

2 out of 2 points

Supply-side fiscal policy initiatives take a long time to shift the aggregate supply curve to the right. As a result:

·         Question 15

2 out of 2 points

A budget is:

·         Question 16

0 out of 2 points

Payroll taxes:

·         Question 17

2 out of 2 points

Which of the following would be the theoretical outcome of expansionary fiscal policy in the following aggregate demand–aggregate supply model?

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·         Question 18

2 out of 2 points

By 1918, the top marginal income tax rate in the United States rose to:

·         Question 19

2 out of 2 points

Time lags, crowding-out, and savings shifts are all:

·         Question 20

2 out of 2 points

Use the following example to answer the questions that follow:
Imagine that you deposit $25,000 in currency (which you had been storing in your closet), into your checking account at the bank. Assume that this institution has a required reserve ratio of 25%.

As a result of this deposit, by how much will the bank’s reserves increase?

·         Question 21

2 out of 2 points

In which of the following situations does money serve as a unit of account?

·         Question 22

2 out of 2 points

During which of the following situations would you advise for expansionary fiscal policy?

·         Question 23

2 out of 2 points

The wealthiest 20% of households in the United States:

·         Question 24

2 out of 2 points

Why do Social Security and Medicare pose problems for the federal government budget?

·         Question 25

2 out of 2 points

Use the following table to answer the questions that follow.

According to the table, the country with the lowest average yearly budget deficit over the time period is:

·         Question 26

2 out of 2 points

Lowering marginal income tax rates for individuals:

·         Question 27

2 out of 2 points

How is it that the banking system is able to lend by a multiple of its excess reserves?

·         Question 28

2 out of 2 points

Countercyclical fiscal policy:

·         Question 29

2 out of 2 points

Where MPC is the marginal propensity to consume, the formula for the spending multiplier is:

·         Question 30

2 out of 2 points

Refer to the following table to answer the questions that follow.

Using the table, what is the marginal income tax rate for someone who makes $67,000 per year?

·         Question 31

2 out of 2 points

The assertion that increases in government spending and decreases in taxes are largely offset by increases in savings is called:

·         Question 32

2 out of 2 points

Government programs that automatically implement countercyclical fiscal policy in response to economic conditions are called:

·         Question 33

0 out of 2 points

When the government borrows, the ___________ loanable funds shifts to the right, causing the interest rate to ___________, which causes private investment to ___________.

·         Question 34

2 out of 2 points

Mandatory outlays are different than discretionary outlays because:

·         Question 35

2 out of 2 points

The use of the money supply to influence the economy is:

·         Question 36

2 out of 2 points

The Laffer curve shows that:

·         Question 37

2 out of 2 points

When can a bank make loans?

·         Question 38

2 out of 2 points

When a bank decided to invest in cash-counting equipment and new cubicles for its loan officers, they were recorded on the bank balance sheet as:

·         Question 39

2 out of 2 points

Mandatory outlays:

·         Question 40

2 out of 2 points

____________ is/are considered a liability on a bank’s balance sheet.