Question:

Answer: B. GDP per capita of poor countries will grow more rapidly than in rich countries

Question: A general formula for the multiplier is:

1. 1/(1-MPS)

2. B.1/MPC

3. C.1/MPS

4. D.1/(MPS-1)

5. Answer: C. 1/MPS

6. Question: If planned aggregate expenditure is less than total production,

7. A. Actual inventories will equal planned inventories

8. B. Firms will experience an unplanned decrease in inventories

9. C. GDP will decrease

10. D. The economy is in equilibrium

11. Answer: C. GDP will decrease

12. Question: Which of the following is not counted in M1?

13. A. Checking account balances

14. B. Credit card balances

15. C. Coins in circulation

16. D. currency in circulation

17. Answer: B. Credit card balances

18. Question:

19. Answer: C. Open market operations, discount policy, and reserve requirements

20. Question:

21. Answer: A. Economic growth, but not an increase in living standards

22. Question: The key idea of the aggregate expenditure model is that in any particular year, the level of GDP is determined mainly by

23. A. Investment spending.

24. B. Export spending.

25. C. Government spending.

26. D. The level of aggregate expenditure.

27. Answer: D. The level of aggregate expenditure

28. Question: Consumption spending is $5 million, planned investment spending is $8 million, unplanned investment spending is $2 million, government purchases are $10 million, and net export spending is $2 million. What is aggregate expenditure?

29. A. $15 million

30. B. $23 million

31. C. $25 million

32. D. $27 million

33. Answer: C. $25 million

34. Question:

35. Answer: B. Little to no intrinsic value and is authorized by the central bank or governmental body

36. Question: Which of the following is not a function of the Federal Reserve System, or the “Fed”?

37. A. Acting as a lender of last resort

38. B. Acting as a banker’s bank

39. C. Performing check clearing services

40. D. Insuring deposits in the banking system

41. Answer: D. Insuring deposits in the banking system