A) the same as a bond. B) backed by silver.
C) backed by gold. D) fiat money.
AP Economics Chapters 13, 14, 15 Exam
88 Minute Time Limit <<<<<<<<<<<<<
1. Money eliminates the need for a coincidence of
wants primarily through its use as a:
A) unit of account.
B) medium of exchange.
C) store of value.
D) standard of confidence.
8. A 15 percent increase in the price level:
A) increases the value of a dollar by 15 percent.
B) decreases the value of a dollar by 15 percent.
C) decreases the value of a dollar by 13 percent.
D) decreases the value of a dollar by 8 percent.
2. Which would be included in the definition of the
money supply? Currency and checkable deposits
owned by:
A) the Federal Reserve banks.
B) the U.S. Treasury.
C) commercial banks.
D) the public.
9. The consumer price index was 100 in one year and
330 ten years later. The value of the purchasing
power of the dollar over the ten years fell by:
A) 330 percent. B) 230 percent. C) 70 percent.
D) 30 percent.
Use the following table to answer the next question(s) about
the money supply.
1.
2.
3.
4.
5.
6.
10. When nominal GDP is $800 billion and, on average,
each dollar is spent four times in the economy over a
year, the quantity of money demanded for
transactions purposes will be:
A) $200 billion. B) $400 billion.
C) $800 billion. D) $3,200 billion.
Items
Money market mutual funds
Savings deposits, including money market deposit accounts
Large time deposits
Currency held by the public
Small time deposits
Checkable deposits
3. Refer to the above table. The M1 money supply is
composed of items:
A) 5 and 6. B) 4 and 6. C) 6 and 7.
D) 1 and 4.
11. A decrease in the interest rate will cause a(n):
A) increase in the transactions demand for money.
B) decrease in the transactions demand for money.
C) decrease in the amount of money held as an
asset.
D) increase in the amount of money held as an
asset.
4. Refer to the above table. Which item is included in
the M3 money supply, but not the M2 money supply?
A) 1 B) 2 C) 3 D) 5
12. The asset demand for money and the rate of interest
are:
A) inversely related. B) directly related.
C) unrelated. D) both stable.
5. One reason that "near-monies" are important is
because:
A) they simplify the definition of money and
therefore the formulation of monetary policy.
B) they can be easily converted into money or vice
versa, and thereby can influence the stability of
the economy.
C) they do not reflect the level of consumer
spending but they have a critical impact on
saving and investment in the economy.
D) credit cards synchronize one's expenditures and
income, thereby reducing the cash and checkable
deposits one must hold.
13. An increase in nominal GDP will:
A) increase the transactions demand and total
demand for money.
B) decrease the transactions demand and total
demand for money.
C) increase the transactions demand for money but
decrease the total demand for money.
D) decrease the transactions demand for money but
increase the total demand for money.
6. Checkable deposits are:
A) near-money. B) token money.
C) legal tender. D) a medium of exchange.
7. The paper money issued by the United States
government is:
Page 1
18. Refer to the above table. If the transactions demand
for money is $400 billion, an increase in the money
supply from $800 billion to $900 billion would cause
the equilibrium interest rate to:
A) rise to 7 percent.
B) rise to 6 percent.
C) fall to 4 percent.
D) remain at 5 percent.
14. Refer to the above graph, in which Dt is the
transactions demand for money, Dm is the total
demand for money, and Sm is the supply of money. If
the money market is in equilibrium at a 6 percent rate
of interest and the money supply increases, then Sm2
will shift to:
A) Sm3 and the interest rate will be 4 percent.
B) Sm3 and the interest rate will be 8 percent.
C) Sm1 and the interest rate will be 8 percent.
D) Sm1 and the interest rate will be 4 percent.
19. Refer to the above graph which shows the supply and
demand for money where Dm1, Dm2, and Dm3
represent different demands for money and Sm1, Sm2
, and Sm3 represent different levels of the money
supply. The initial equilibrium point is A. What will
be the new equilibrium point following a decrease in
the asset demand for money?
A) B B) E C) F D) I
15. Refer to the above graph, in which Dt is the
transactions demand for money, Dm is the total
demand for money, and Sm is the supply of money. If
the money market is in equilibrium at the 6 percent
rate of interest and the money supply decreases to
Sm1, the transaction demand for money will be:
A) $50. B) $100. C) $125. D) $175.
20. Refer to the above graph which shows the supply and
demand for money where Dm1, Dm2, and Dm3
represent different demands for money and Sm1, Sm2
, and Sm3 represent different levels of the money
supply. The initial equilibrium point is A. What will
be the new equilibrium point following an increase in
the money supply?
A) C B) D C) G D) H
16. Refer to the above graph, in which Dt is the
transactions demand for money, Dm is the total
demand for money, and Sm is the supply of money. If
the money market is in equilibrium at a 6 percent rate
of interest and the supply of money increases to Sm3,
then the asset demand for money will have increased
by:
A) $75. B) $125. C) $200. D) $325.
Interest
rate
7%
6
5
4
21. Which statement is true?
A) Bond prices and the interest rate are directly
related.
B) A lower interest rate lowers the opportunity cost
of holding money.
C) The supply of money is directly related to the
interest rate.
D) The total demand for money is directly related to
the interest rate.
Asset demand for money
(billions)
$200
300
400
500
17. Refer to the above table. Suppose the transactions
demand for money is equal to 20 percent of the
nominal GDP, the supply of money is $800 billion,
and the asset demand for money is that shown in the
table. If the nominal GDP is $2000 billion, the
equilibrium interest rate is:
A) 4 percent. B) 5 percent. C) 6 percent.
D) 7 percent.
22. A bond with no expiration has an original price of
$10,000 and a fixed annual interest payment of
$1000. If the price of this bond decreases by $2000,
the interest rate in effect will:
A) decrease by 1.5 percentage points.
B) decrease by 2.5 percentage points.
C) increase by 1.5 percentage points.
D) increase by 2.5 percentage points.
Page 2
23. The price of a bond with no expiration date was
originally $1,000 with an annual fixed interest
payment of $100. If the price of the bond rises by
$200, the effective interest rate yield to a new buyer
of the bond will be:
A) 7.4 percent. B) 8.3 percent. C) 9.5 percent.
D) 11.2 percent.
multiplier.
31. If borrowers request that part of their loans be paid in
currency, this would:
A) increase the maximum checkable-deposit
creation of the banking system.
B) decrease the lending potential of the banking
system.
C) decrease the reserve ratio of the banking system.
D) increase the excess reserves of banks.
24. The price of a bond with no expiration date is
$10,000 and it has a fixed annual interest payment of
$2,000. If the bond is sold to a new owner for a price
of $12,500, then the effective interest rate yield on
the bond is now:
A) 22 percent. B) 18 percent. C) 17 percent.
D) 16 percent.
32. The commercial banking system, because of a recent
change in the required reserve ratio from 8 percent to
10 percent, finds that it is $50 million short of
reserves. If it is unable to obtain any additional
reserves, it must:
A) increase the money supply by $500 million.
B) decrease the money supply by $400 million.
C) decrease the money supply by $500 million.
D) decrease the money supply by $50 million.
25. Which is the most important function of the Federal
Reserve System?
A) setting reserve requirements
B) controlling the money supply
C) lending money to banks and thrifts
D) acting as the fiscal agent for the U.S.
government
33. If the Fed buys government securities from
commercial banks in the open market,:
A) the Fed gives the securities to the commercial
banks, and they pay for them by writing checks
that increase their reserves at the Fed.
B) the Fed gives the securities to the commercial
banks, and they pay for them by writing checks
that decrease their reserves at the Fed.
C) commercial banks give the securities to the Fed,
and it pays for them by increasing the reserves
of commercial banks at the Fed.
D) commercial banks give the securities to the Fed,
and it pays for them by decreasing the reserves
of commercial banks at the Fed.
26. A single commercial bank must meet a 25 percent
reserve requirement. If it initially has no excess
reserves and then $2,000 in cash is deposited in the
bank, it can increase its loans by a maximum of:
A) $2,000. B) $1,500. C) $1,250. D) $1,000.
27. Assume the commercial banking system has excess
reserves of $5,000 and can make new loans of
$35,000 and just meet its legal reserve requirements.
The required reserve ratio must be about:
A) 7 percent. B) 14 percent. C) 20 percent.
D) 26 percent.
34. If the Fed buys government securities from the public
in the open market,:
A) the Fed gives the securities to the public; the
public pays for the securities by writing checks
that when cleared will increase commercial bank
reserves at the Fed.
B) the Fed gives the securities to the public; the
public pays for them by writing checks that
when cleared will decrease commercial bank
reserves at the Fed.
C) the public gives the securities to the Fed; the Fed
pays for the securities by check, which when
deposited at commercial banks will increase
their reserves at the Fed.
D) the public gives the securities to the Fed; the Fed
pays for the securities by check, which when
deposited at commercial banks will decrease
their reserves at the Fed.
28. Assume the required reserve ratio is 162/3 percent
and that the commercial banking system has $110
million in excess reserves. The maximum amount of
money which the banking system could create is:
A) $110 million. B) $330 million. C) $660
million. D) $1,353 million.
29. If the required reserve ratio is 20 percent and
commercial bankers decide to hold additional excess
reserves equal to 5 percent of any newly acquired
checkable deposits, then the effective monetary
multiplier for the banking system will be:
A) 3. B) 4. C) 5. D) 6.
30. Maximum checkable-deposit expansion is equal to:
A) actual reserves minus excess reserves.
B) assets plus net worth and liabilities.
C) excess reserves times the monetary multiplier.
D) excess reserves divided by the monetary
Page 3
35. If the Fed sells government securities to commercial
banks in the open market,:
A) the Fed gives the securities to the commercial
banks, and the commercial banks pay for them
by writing a check that increases their reserves at
the Fed.
B) the Fed gives the securities to the commercial
banks, and they pay for them by writing a check
that decreases their reserves at the at the Fed.
C) commercial banks give the securities to the Fed,
and it pays for them by increasing the reserves
of commercial banks at the Fed.
D) commercial banks give the securities to the Fed,
and it pays for them by decreasing the reserves
of commercial banks at the Fed.
money-lending potential of the commercial
banking system will decrease by $120 million.
B) decrease by $120 million and the maximum
money-lending potential of the commercial
banking system will decrease by $480 million.
C) increase by $120 million and the maximum
money-lending potential of the commercial
banking system will increase by $480 million.
D) increase because the securities are an asset to the
commercial banks and a liability to the Federal
Reserve.
39. Assume the commercial banking system has
checkable deposits of $20 billion and excess reserves
of $2 billion at a time when the reserve ratio is 25
percent. If the reserve ratio is lowered to 20 percent,
we can conclude that the:
A) bank now has excess reserves of $3.2 billion.
B) bank now has neither an excess nor a deficiency
of reserves.
C) maximum money-creating potential of the
banking system has been increased by $7 billion.
D) Board of Governors has decided that the
economy is experiencing a high rate of inflation.
36. If the Fed sells government securities to the public in
the open market,:
A) the Fed gives the securities to the public; the
public pays for the securities by writing checks
that when cleared will increase commercial bank
reserves at the Fed.
B) the Fed gives the securities to the public; the
public pays for the securities by writing checks
that when cleared will decrease commercial
bank reserves at the Fed.
C) the public gives the securities to the Fed; the Fed
pays for the securities by check, which when
deposited at commercial banks will increase
their reserves at the Fed.
D) the public gives the securities to the Fed; the Fed
pays for the securities by check, which when
deposited at commercial banks will decrease
their reserves at the Fed.
40. Which increases the excess reserves of commercial
banks?
A) The central banks sell bonds to the public.
B) The central banks sell bonds to commercial
banks.
C) The central banks buy bonds from commercial
banks.
D) The Board of Governors increases the discount
rate.
37. Assume the required reserve ratio is 20 percent. If the
Federal Reserve buys $80 million in government
securities from the public, then the money supply will
immediately:
A) increase by $80 million, and the maximum
money-lending potential of the commercial
banking system will increase by $80 million.
B) increase by $80 million, but the maximum
money-lending potential of the commercial
banking system will decrease by $80 million.
C) increase by $80 million, and the maximum
money-lending potential of the commercial
banking system will increase by $400 million.
D) decrease, because the securities are an asset to
the commercial banks and a liability to the
Federal Reserve.
41. Which of the following is correct?
A) Excess reserves may be found by subtracting
actual from required reserves.
B) The supply of money declines when the public
purchases securities from commercial banks.
C) Commercial bank reserves are a liability to
commercial banks but an asset to Federal
Reserve Banks.
D) Commercial banks reduce the supply of money
when they "purchase" personal IOUs or
government bonds from the public.
38. Assume the required reserve ratio is 25 percent. If the
Federal Reserve sells $120 million in government
securities to the public, the money supply will
immediately:
A) decrease by $120 million and the maximum
Page 4
42. Assume that there is a 25 percent reserve ratio and
that the Federal Reserve buys $200 million worth of
government securities. If the securities are purchased
from the public, then this action has the potential to
increase bank lending by a maximum of:
A) $600 million, and also by $600 million if the
securities are purchased directly from
commercial banks.
B) $800 million, and also by $800 million if the
securities are purchased directly from
commercial banks.
C) $600 million, but by $800 million if the
securities are purchased directly from
commercial banks.
D) $800 million, but only by $600 million if the
securities are purchased directly from
commercial banks.
45. Refer to the above graphs, in which the numbers in
parentheses after the AD1, AD2 , and AD3 labels
indicate the level of investment spending associated
with each curve, respectively. All numbers are in
billions of dollars. The interest rate and the level of
investment spending in the economy are at point B on
the investment demand curve. To achieve the goal of
a noninflationary full-employment output Qf in the
economy, the Fed should:
A) decrease the interest rate from 10 to 8 percent.
B) decrease the interest rate from 8 to 6 percent.
C) decrease the interest rate from 6 to 4 percent.
D) increase investment spending from $30 to $60
billion.
46. Refer to the above graphs, in which the numbers in
parentheses after the AD1, AD2 , and AD3 labels
indicate the level of investment spending associated
with each curve, respectively. All numbers are in
billions of dollars. The interest rate and the level of
investment spending in the economy are at point C on
the investment demand curve. To achieve the goal of
a noninflationary full-employment output Qf in the
economy, the Fed should:
A) increase aggregate demand by increasing the
interest rate.
B) decrease aggregate demand by increasing the
interest rate.
C) increase aggregate demand by decreasing the
interest rate.
D) make no change in the interest rate.
43. A television report states: "The Federal Reserve will
lower the discount rate for the fourth time this year."
This report indicates that the Federal Reserve is most
likely trying to:
A) reduce inflation.
B) save the banking industry.
C) stimulate the economy.
D) improve the savings rate.
47. Refer to the above graphs, in which the numbers in
parentheses after the AD1, AD2 , and AD3 labels
indicate the level of investment spending associated
with each curve, respectively. All numbers are in
billions of dollars. The economy is at equilibrium at
point X on the aggregate demand and aggregate
supply graph. What should the Fed do to achieve the
goal of a noninflationary full-employment output Qf
in the economy?
A) increase the interest rate from 2 to 4 percent
B) increase the interest rate from 4 to 6 percent
C) increase the interest rate from 6 to 8 percent
D) decrease the interest rate from 6 to 4 percent
44. Refer to the above graphs, in which the numbers in
parentheses after the AD1, AD2 , and AD3 labels
indicate the level of investment spending associated
with each curve, respectively. All numbers are in
billions of dollars. The interest rate and the level of
investment spending in the economy are at point D
on the investment demand curve. To achieve the goal
of a noninflationary full-employment output Qf in the
economy, the Fed should:
A) decrease aggregate demand by increasing the
interest rate from 2 to 4 percent.
B) decrease aggregate demand by increasing the
interest rate from 4 to 6 percent.
C) increase aggregate demand by decreasing the
interest rate from 4 to 2 percent.
D) increase the level of investment spending from
$120 billion to $150 billion.
Page 5
48. Refer to the above graphs, in which the numbers in
parentheses after the AD1, AD2 , and AD3 labels
indicate the level of investment spending associated
with each curve, respectively. All numbers are in
billions of dollars. The economy is at equilibrium at
point Y on the aggregate demand and aggregate
supply graph. What should the Fed do to achieve the
goal of a noninflationary full-employment output Qf
in the economy?
A) increase the interest rate from 6 to 8 percent
B) decrease the interest rate from 8 to 6 percent
C) decrease the interest rate from 6 to 4 percent
D) decrease the interest rate from 4 to 2 percent
with each curve. All figures are in billions. The
economy is at equilibrium at point c on the aggregate
demand curve. What policy should the Fed pursue to
achieve a noninflationary full-employment level of
real GDP?
A) increase the money supply from $75 to $150
billion
B) increase the money supply from $150 to $225
billion
C) decrease the money supply from $225 to $150
billion
D) make no change in the money supply
52. Refer to the above diagrams, in which the numbers in
parentheses after the AD1, AD2 , and AD3 labels
indicate the level of investment spending associated
with each curve. All figures are in billions. The
economy is at point X on the investment demand
curve. Given these conditions, what policy should the
Fed pursue to achieve a noninflationary fullemployment level of real GDP?
A) decrease aggregate demand from AD1 to AD2
B) increase the money supply from $75 to $150
billion
C) increase interest rates from 4 to 8 percent
D) make no change in monetary policy
49. Refer to the above graphs, in which the numbers in
parentheses after the AD1, AD2 , and AD3 labels
indicate the level of investment spending associated
with each curve, respectively. All numbers are in
billions of dollars. The level of investment spending
in the economy is $90 billion. What should the
monetary authorities do to achieve the goal of a
noninflationary full-employment output Qf in the
economy?
A) increase the interest rate from 6 to 8 percent
B) decrease the interest rate from 8 to 6 percent
C) decrease the interest rate from 6 to 4 percent
D) make no change in the interest rate
53. Refer to the above diagrams, in which the numbers in
parentheses after the AD1, AD2 , and AD3 labels
indicate the level of investment spending associated
with each curve. All figures are in billions. The
economy is at point Y on the investment demand
curve. Given these conditions, what policy should the
Fed pursue to achieve a noninflationary fullemployment level of real GDP?
A) increase aggregate demand from AD3 to AD2
B) decrease the money supply from $225 to $150
billion
C) increase interest rates from 4 to 8 percent
D) make no change in monetary policy
50. Refer to the above diagrams, in which the numbers in
parentheses after the AD1, AD2, and AD3 labels
indicate the level of investment spending associated
with each curve. All figures are in billions. The
interest rate in the economy is 4 percent. What should
the Fed do to achieve a noninflationary fullemployment level of real GDP?
A) increase the money supply from $75 to $150
billion
B) increase the money supply from $150 to $225
billion
C) decrease the money supply from $225 to $150
billion
D) make no change in the money supply
54. Refer to the above diagrams, in which the numbers in
parentheses after the AD1, AD2 , and AD3 labels
indicate the level of investment spending associated
with each curve. All figures are in billions. The
economy is at point Z on the investment demand
curve. Given these conditions, what policy should the
monetary authorities pursue to achieve a
noninflationary full-employment level of real GDP?
A) decrease the reserve ratio
B) decrease the discount rate
C) sell government securities in the open market
D) make no change in monetary policy
51. Refer to the above diagrams, in which the numbers in
parentheses after the AD1, AD2 , and AD3 labels
indicate the level of investment spending associated
Page 6
55. Refer to the above diagrams, in which the numbers in
parentheses after the AD1, AD2 , and AD3 labels
indicate the levels of investment spending associated
with each curve. All figures are in billions. A shift in
the aggregate demand curve from AD3 to AD2 can
be achieved by Federal Reserve action to:
A) increase the reserve ratio.
B) increase the discount rate.
C) buy government securities in the open market.
D) sell government securities in the open market.
each other to achieve that objective?
A) selling government securities and raising the
discount rate
B) selling government securities and lowering the
discount rate
C) buying government securities and lowering the
discount rate
D) buying government securities and lowering the
reserve ratio
60. Suppose the economy is at full employment with a
high inflation rate. Which combination of
government policies is least likely to reduce the
inflation rate?
A) Buy government securities in the open market
and increase taxes.
B) Buy government securities in the open market
and decrease taxes.
C) Sell government securities in the open market
and increase government spending.
D) Sell government securities in the open market
and decrease government spending.
56. Refer to the above diagrams, in which the numbers in
parentheses after the AD1, AD2 , and AD3 labels
indicate the levels of investment spending associated
with each curve. All figures are in billions. What is
the desired level of investment spending in this
economy if it is to achieve a noninflationary fullemployment level of real GDP?
A) $50 B) $100 C) $150 D) $225
57. The major problem facing the economy is high
unemployment and weak economic growth. The
inflation rate is low and stable. Therefore, the Federal
Reserve decides to pursue a policy to increase the
rate of economic growth. Which policy changes by
the Fed would reinforce each other to achieve that
objective?
A) selling government securities and raising the
discount rate
B) selling government securities and lowering the
discount rate
C) buying government securities and lowering the
discount rate
D) buying government securities and raising the
reserve ratio
61. The economy is experiencing inflation and the
Federal Reserve decides to pursue a tight money
policy. Which actions by the Fed would be most
consistent with this policy?
A) lowering the discount rate
B) lowering the reserve ratio
C) buying government securities
D) selling government securities
62. An easy money policy would be least effective in the:
A) horizontal range of the aggregate demand curve.
B) horizontal range of the aggregate supply curve.
C) intermediate range of the aggregate supply
curve.
D) vertical range of the aggregate supply curve.
58. The major problem facing the economy is high
unemployment and weak economic growth. The
inflation rate is low and stable. Therefore, the Federal
Reserve decides to pursue a policy to increase the
rate of economic growth. Which policy changes by
the Fed would tend to offset each other in trying to
achieve that objective?
A) selling government securities and raising the
discount rate
B) selling government securities and raising the
reserve ratio
C) buying government securities and raising the
discount rate
D) buying government securities and lowering the
reserve ratio
63. An increase in the money supply will have its most
significant effect on the price level in:
A) the horizontal range of the aggregate supply
curve.
B) the intermediate range of the aggregate supply
curve.
C) the vertical range of the aggregate supply curve.
D) any of the three ranges of the aggregate supply
curve.
64. A Federal Reserve official notes: "A tight money
policy can force a contraction of the money supply,
but an easy money policy may not achieve an
expansion of the economy." The official has
described the problem of the:
A) inflexibility of monetary policy tools.
B) change in velocity on monetary policy.
C) cyclical asymmetry of monetary policy.
D) political acceptability of monetary policy.
59. Inflationary pressure is a growing problem for the
economy. Therefore, the Federal Reserve decides to
pursue a policy to reduce the inflationary pressure.
Which policy changes by the Fed would reinforce
Page 7
65. The strengths of monetary policy compared to fiscal
policy are generally thought to include all of the
following except greater:
A) speed. B) flexibility. C) impact on taxation.
D) political acceptance.
66. A headline reads: "Fed raises the Federal funds rate
by half a point." This indicates that:
A) fiscal policy is being offset by monetary policy.
B) monetary policy is being offset by fiscal policy.
C) there has been a tightening of monetary policy.
D) there has been an easing of monetary policy.
67. When the Fed sells government securities in the open
market, it:
A) decreases the excess reserves of the banking
system, reducing excess reserves for overnight
loan in the Federal funds market, and thus
lowering the Federal funds rate.
B) increases the excess reserves of the banking
system, reducing excess reserves for overnight
loan in the Federal funds market, and thus
lowering the Federal funds rate.
C) decreases the excess reserves of the banking
system, reducing excess reserves for overnight
loan in the Federal funds market, and thus
increasing the Federal funds rate.
D) increases the excess reserves of the banking
system, raising excess reserves for overnight
loan in the Federal funds market, and thus
raising the Federal funds rate.
68. When the Federal Reserve increases the Federal
funds rate, it:
A) sells government securities to increase the
excess reserve available for overnight loan.
B) buys government securities to increase the
excess reserve available for overnight loan.
C) sells government securities to decrease the
excess reserve available for overnight loan.
D) buys government securities to decrease the
excess reserve available for overnight loan.
69. An easy money policy will tend to:
A) decrease net exports as will an expansionary
fiscal policy.
B) increase net exports as will an expansionary
fiscal policy.
C) decrease net exports but an expansionary fiscal
policy will tend to increase net exports.
D) increase net exports but an expansionary fiscal
policy will tend to decrease net exports.
70. Net exports would most likely increase when there is
a(n):
A) easy money policy and a contractionary fiscal
policy.
B) tight money policy and a contractionary fiscal
policy.
C) tight money policy and an expansionary fiscal
policy.
D) easy money policy and an expansionary fiscal
policy.
71. If the government pursues a tight money policy, then
it will:
A) increase domestic interest rates, cause the dollar
to appreciate, and decrease net exports.
B) decrease domestic interest rates, cause the dollar
to depreciate, and increase net exports.
C) increase domestic interest rates, cause the dollar
to depreciate, and increase net exports.
D) increase domestic interest rates, cause the dollar
to appreciate, and increase net exports.
72. An easy money policy will most likely result in a(n):
A) appreciation of the dollar and thus an increase in
net exports.
B) depreciation of the dollar and thus an increase in
net exports.
C) depreciation of the dollar and thus a decrease in
net exports.
D) appreciation of the dollar and thus a decrease in
net exports.
73. Other things equal, an increase in taxes on business
will:
A) increase aggregate supply and decrease
aggregate demand.
B) increase aggregate supply and increase
aggregate demand.
C) decrease aggregate supply and decrease
aggregate demand.
D) decrease aggregate supply and increase
aggregate demand.
74. Other things equal, an appreciation of the U.S. dollar
would:
A) increase productivity and increase aggregate
supply.
B) decrease net exports and decrease aggregate
demand.
C) increase the prices of imported resources and
decrease aggregate supply.
D) decrease the supply of money and decrease
aggregate demand.
75. Other things equal, an increase in the prices of
imported resources will:
A) increase aggregate supply and increase real
output.
B) decrease aggregate supply and decrease real
output.
C) increase aggregate supply and decrease real
output.
D) decrease aggregate supply and increase real
output.
Page 8
Answer Key -- exam131415
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
B
D
B
C
B
D
D
C
C
A
D
A
A
A
C
A
B
C
C
C
B
D
B
D
B
B
B
C
B
C
B
C
C
C
B
B
C
B
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
64.
65.
66.
67.
68.
69.
70.
71.
72.
73.
74.
75.
Page 9
C
C
B
C
C
B
B
D
B
B
D
C
A
B
D
C
C
B
C
C
A
B
D
D
C
C
C
C
C
A
D
A
A
B
C
B
B