Posted: April 12th, 2016

What annual deficit could a $55 billion economy growing at a real annual rate of 5% have without changing its debt burden?

1 A Federal Reserve Bank

a is primarily in the business of consumer lending with insured deposits
b is established with the sole purpose of holding bank reserves
c is an agency of the US government
d Is a non profit bank to make business loans
2 Why do Rolling Stones receive more income from a single concert than a school teacher may receive for a lifetime of work?
a Because Rolling Stones deserve more money
b Because demand for Rolling Stones performance is relatively elastic
c Because demand for Rolling Stones performance is relatively inelastic
d Because the economy does not favor teaching
3 The equilibrium price will rise if the
a demand falls and supply remains constant
b demand falls and supply rises
c demand and supply both rise
d demand rises and supply falls
4 In economics, all resources are scarce
a except in highly productive economies
b except where technology is a major component of production
c except where the labor force is continuously trained and re trained
d none of the above
5 John Maynard Keynes
a is the father of classical economics
b was an advocate of tax cuts to stimulate the economy
c was an advocate of government spending to boost the economy
d Both b and c

6 Opportunity Cost is a concept
a used to comply with Generally Accepted Accounting Principles
b The cost of the next best alternative
c really the same as Marginal Cost of producing an item
d none of the above
7 Deficit spending is
a can not be undertaken by small governments
b an established monetary policy tool
c can only be implemented by the Fed
d an established fiscal policy tool
8 What annual deficit could a $55 billion economy growing at a real annual rate of 5% have without changing its debt burden?
a $150 million
b $250 million
c $350 million
d none of the above
9 The effect of contractionary monetary policy on the exchange rate through income and price:
a It pushes up the interest rate
b It decreases income and, thus, imports
c It has a tendency to decrease inflation
d All of the above results in increase of the exchange rate
10 The following topics are included in Macroeconomics except
a Impact of taxes on aggregate output
b the effect of trade on economic growth
c how firms set the price and quantity of their products
d military spending

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