/

"
\

LOUISIANA STATE UNIVERSITY

ECONOMICS 2030
SPRING 2014; EXAM 1

\
NAME:
FRIDAY

LAB MEETING DAY:

LAB MEETING TIME:
LAB INSTRUCTOR:

11 :30
- ~~SaYUki

on~

GO

Yuanbo Zhang

VERSION C
INSTRUCTIONS
1.
Read these instructions
carefully and DO NOT TURN THIS PAGE until you are told that you
may begin the examination.
Fill in the information in the blank spaces above, signing your name where
it says "SIGNATURE" and printing your name where it says "NAME." In addition, CIRCLE your lab
meeting day, time, and lab instructor's name.
2.
The only materials you may use on the exam are a pencil, an eraser, a highlighter, and a
small scantron (Form no. 882-E). You may NOT use calculators, other electronic devices, scrap paper,
or any other materials. Please place all unusable items in a closable receptacle, close the receptacle,
and place that under your seat. All electronic devices must be turned off for the duration of the exam.
3.
On your scantron please print the following information
Name, Lab Section Number, and Test Version Letter.

ONLY: Name, Lab Instructor's

4.
Each question is worth 0.80 points. Each question has only one correct answer: MARK your
choice clearly on your scantron. Any question on which a single answer is not marked clearly will be
considered incorrect.
5.
To sit for the exam you must have a valid LSU STUDENT 10 card. Please place it on your desk
where it can be seen and leave it there for the duration of the exam.
6.
Once the instructor begins to distribute the exam you may not talk.
raise your hand. The question will be answered by the instructor.

If you have a question,

7.
After the announcement
to begin, you have 50 minutes in which to complete the exam and
fill your scantron.
When the instructor announces "Time is up" you MUST stop working immediately and
turn in your exam and scantron. Please turn in the exam and scantron at your lab instructor's table,
presenting your LSUID when doing so. When leaving the testing room, please do so quietly.
8.
By signing this cover sheet you acknowledge that you have read, understood, and agreed
to the conditions enumerated in this list of instructions.
Violations of the exam instructions
will
be treated as a violation of the Code of Student Conduct and dealt with in accordance with the
Code.

f.

, .

b~(t kfl
1. The fewer substitutes that are availabfe"for a gO~i' ey,erything else held constant, the more
price __
demand will be for the good. The greafer the proportion of a consumer's
budget a good makes up, everything else held constant, the more price __
demand will
be for the good.
---,;
A) irrefagtic, . iI ielasoo~
B) 'elaSLlc, iI ieIElsti~.
elastic; elastic
~
inelastic; elastic

5.l

2. I a market, a shortage exists when __

is greater than __
A} the quantity demanded; the quantity suppliedthe EJ'I>IaFiltity
8l::lr>'J:llieel"t-tR6
eJeJ'antity""d'EITl'Tl!i'iCled
C)~~
D) demand; supply

3. Suppose that Spam is a meat product and is an inferior good. Which of the following would
cause the d,gmand for Spam to increase, everything else held constant?
~
A decrease in worker productivity in Spam factories.
>-p ji1~'(tiOfl ""~(\.\l i (QJ"1,
@)) A decrease in the incomes of Spam consumers.
..,
1-~ss (d,.~",,~I.,I6'1
C) An increase in the number of vegetarians. '"
D) A decrease in the price of Spam ..
E) An increase. in worker productivity in Spam factories.

Use the following to answer questions 4-5:

Suppose rational reader Debi is considering buying one of two books: Mongrels & Misfits by
Beth Patterson, priced at $6, or After I Was Dfl.ad by Laura Mullen, priced at $15.
11 J.-/II\.. tt"

~ff".

ilS

4. In the situation above, suppose Debi cJllose to purchase After--I Was Dead. It can be
concluded with certainty that her expected pleasure from reading After I Was Dead was
__
the.expected pleasure of reading Mongrels & Misfits.
A) less ibaj:j..Qr:.equal ta.B} greater than or equal togreater thafl-te&S-ttrarr-

.&qcraHo-

Version C

Page 1

Use the following to answer questions 6-7:

Suppose workers in England and Portugal can produce either wine or cloth. Productivity at
each activity is the following:
Output per nr

per Hour

\....: ;/

Wine

Cloth

England

40

20

Portugal

15

15

6. In the situation above, suppose the two countries move from autarky to mutually beneficial
trade. Everything else held constant, this will cause the number of workers in the English
wine industry to
~ vJ
-..!:
A) decrease.
f \ \11-" /1 2...1#
n.-w~ V (Y'-~
~
remain unchanged. I{)
I (..
11,/
f
I _I
'"
c.:!.Jincrease.
I
Vlo 'V
~
\J Q

[t'~

7. In the situation above, suppose the two countries move from autarky to mutually beneficial
trade. Everything else held constant, this will cause the price of ~oth in Portug.!jo

~1

in~~~:::..

/ "1

remain unchanged.

~\

8. Suppose natto and rice are complements in consumption.

A d~r~in
will cause the __
rice to __
' everything else held constant.
~
supply of; decrease-e~
demand for; lncrease=- ~L.
__ ~/
(vMr l~ MJvv

I./-

C)

.s1J~~FeaSe

OJ

d~

p Of'/"

the price of natto

5 -

fI e

rJ # 1(

~~

~Q( ft

'

9. Suppose Brad's price elasticity of demand for restaurant meals is~

Suppose further that
the price of restaurant meats was lower in January than it was in' December. Everything
else held constant, it can be concluded with certainty that Brad's total s8-ending on
re taurant meals in December was __
it was in January.
)

less than_
the same as

C)

greater than

E "'-1,5 L,d-1V

~.f.LlS;-

c,c.

r"'".

~qc,\

~Ip

10. If a _-__
percent __
in price results in a 3 percent increase i
~oncluded
that supply is price Lnelastic.
V&.J greater than 3; decrease.
-

B)
C)
D)
E)

less-than 3; decrease;
3; decreases
less than 3; increase;
greater than 3; increase

Version C

Page 2

supplied, it can

~\~

1\~, . ~~~

11. Suppose both bUY~r

d ~eFs~expect the price of gold to tnlgc~-~IDre
else held constant, the eq~' J!um rice of gold will __
and-t ;
..QLlI.cL1ransactedwill ~
, ..
increase; decrease
B) increase; be ambiguous ~
decrease; be ambiguous
~
D) be ambiguous; decrease
E) be ambiguous; increase

12. Suppose a store sells pairs of shoes for $30 each and is running a "buy one, get one 50%
off" sale. Suppose further that you buy four pairs. The marginal cost of the fourth pair of
rchased is
M
;'

A)
~
C)
D)
E)

'15
.3 ~ 1:5

lW

$15.
O.
$45.
$75.
$90.

LI

'\

1. 11"'.
~

~lS

.\..

Use the following to answer questions 13-15:

Suppose soybeans and corn are substitutes in production.
are the main input in the production :>f tofu.

Suppose further that soybeans

13. Suppose world demand for tofu increases. Everything else held constant, this will cause the
equilibrium pric~ of soybeans to __
and the equilibrium quantity of soybeans
transacted to __

A)
B)
C)
D)

increase; increase
decrease; increase
decrease; decrease
increase; decrease

~
- ~~'I

14. Suppose world demand for tofu increases. Everything else held constant, this will cause the
equilibrium price of corn to __
and the equilibrium quantity of corn transacted to __
.
A) decrease: -increase
B) remain unchanged; remain unchanged
(0(1 YI
C)
D)
E)

IX

increase: increase
decrease; decrease
increase; decrease

15. In the market for soybeans-producers

A) buyers.
B) sellers.

of tofu are

Version C

Page 3

16. Suppose Harry, a rational decision maker, faces a choice: he Fan buy a ticket to see either
Daria Dzurik or Zoe Boekbinder in concert. The price of a tic~et to see Daria is $20 and the
price of a ticket to see Zoe is $10. Suppose further that Harrts reservation price for seeing
Daria is~nd
his reservation price for seeing Zoe is $10. Everything else held constant,
which concert will Harry choose to attend?
&... He will see either one as he is indifferent between the two choices.
<Jll:)He will definitely see Zoe Boekbinder-s-C) He will definitely see Daria Dzurik.
0) He will not go to either concert as he is rational.

17. Suppose Barbara, a rational artist, has a reservation price of $450 for her mixed-media
piece, "}\udubon Oak." Suppose further that a potential customer made an offer for the
piece and Barbara sold it. It can be concluded with certainty that the price offered for
"Audubon Oak" was
$450.
S.
(l
A) less than
B) greater than
"S
equal to
0) greater than or equal to
) less than or equal to

J ,~

It",

<i>

18. "Modeling is a job, and we deserve basic protections like any other worker, and it's all the
more important when you realize that it's an industry that relies heavily on children, often
~
14, 1.~, 16 y~ars old'; is ~n example of a __
statement about a __
issue.
pos~t~ve; mlcroeconoml~
f.st: it.e. - I. _1.. J, ~
B) positive; m~rtJeccrrromlcr~ v
.
C) normative; ffleeroeGooprnjc
VV~\.cl
~fJ1 "
0) normative; microeconomic

CW

19. On a production possibilities frontier (PPF) graph, a specific combination of goods is said to
be unattainable at a particular point in time if it lies __
the PPF.
A) on or inside
'
B) on
onor outside
outside
inside

':J

20. "The ~rgentinian government continued to i flate the currency excessively, ~ally
suppressj:ld accurate economic
tistics to cover up this inflation, and confiscated pensions
to pay the over
'I
IS an example of a statement about a __
issue.
A
microeconomic
~'I~~'
acroeconom ic

Version C

Page 4

Use the following to answer questions 21-23:

Suppose Amber and Jade can spend their days making croissants or writing poems. Their
productivity at each activity is the following:
Output per

n per Day

Croissants

Poems

Amber

50

Jade

60

21. In the above situation Amber's opportunity cost of writing one poem is
A)
1/25 croissants.
8) 2/3 poems.
R 3/2 poems.
CQ1.) 25 croissants.
E) 50 croissants.

22. In the situation above, ~

has the absolute advantage in writing poems and
the comparative advantage in making croissants.
A) Am ber; Am ber
8) Amber; Jade
C) Jade; Amber
D) Jade; Jade

23.~
~es,
8)
C)
D)

_Ir_

has

situation above, can mutually beneficial trade occur?

if Amber specializes in making croiHi9AtS and trades them to Jade for her goems
No, because Jade is more productive than Amber at both activities.
No, because Amber more productive than Jade at both activities.
Yes, if Amber specializes in writing poems and trades them to Jade for her croissants.

Use the following to answer questions 24-25:

1 .-'

Suppose la~osts

in the coff~industry

increase.,

24. In the situation above, the equilibrium ~

of coffee transacted will J. ~c,.- ,everything
A)
increase; increase
~
decrease; decrease
increase; decrease
D) decrease; increase

6Y

25. In the situation above, the __

~
supply of; increase
~
supply of; decrease
.
C)
demand for; increase
D) demand for; decrease-

of coffee will 111.,,;'14<. and the equilibrium guantitx_

else held constant.

':.,f"

o Jf\

I,

,/

coffee will __

/' \.

' everything else held constant.

0
V

Version C

,/

,;r -, ,...

If'- V~

Page 5

Il'f
,./
,/

LOUISIANA STATE UNIVERSITY

ECONOMICS 2030
SPRING 2014; EXAM 2

NAME:
FRIDAY

LAB MEETING DAY:

LAB MEETING TIME:

~
Yuanbo Zhang

LAB INSTRUCTOR:

VERSION B
INSTRUCTIONS
1.
Read these instructions
carefully and DO NOT TURN THIS PAGE until you are told that you
may begin the examination.
Fill in the information in the blank spaces above, signing your name where
it says "SIGNATURE" and printing your name where it says "NAME." In addition, CIRCLE your lab
meeting day, time, and lab instructor's name.
2.
The only materials you may use on the exam are a pencil, an eraser, a highlighter, and a
small scantron (Form no. 882-E). You may NOT use calculators, other electronic devices, scrap paper,
or any other materials. Please place all unusable items in a closable receptacle, close the receptacle,
and place that under your seat. All electronic devices must be turned off for the duration of the exam.
3.
On your scantron please print the following information
Name, Lab Section Number, and Test Version Letter.

ONLY: Name, Lab Instructor's

4.
Each question is worth 0.80 points. Each question has only one correct answer: MARK your
choice clearly on your scantron. Any question on which a single answer is-not marked clearly will be
considered incorrect.
5.
To sit for the exam you must have a valid LSU STUDENT ID card. Please place it on your desk
where it can be seen and leave it there for the duration of the exam ..
6.
Once the instructor begins to distribute the exam you may not talk.
raise your hand. The question will be answered by the instructor.

If you have a question.

7.
After the announcement
to begin, you have 50 minutes in which to complete the exam and
fill your scantron.
When the instructor announces "Time is up" you MUST stop working immediately and
turn in your exam and scantron. Please turn in the exam and scantron at your lab instructor's table,
presenting your LSUID when doing so. When leaving the testing room, please do so quietly.
8.
By signing this cover sheet you acknowledge that you have read, understood, and agreed
to the conditions enumerated in this list of instructions.
Violations of the exam instructions
will
be treated as a violation of the Code of Student Conduct and dealt with in accordance with the
Code.

l-,

1. If the aggregate price level decreases in the United States, the exchange rate effect will
cause U.S. exports to __
.
remain unchanged
B) increase
aecrF!ase

:-r

2. The
rate
A)
8)
C

' everything else held constant.

0.._ ~

4t~~.\""

. ~

/ \-~;Il"~''''

.f'rJ"-.J.'=!'...r'~.!/f~b~

}1p'!Y ..

St

'<

"\~"

,.~

~.f::' ...

Me ~~

Fisher effect states that a~e.cl'eas;e imt~1Cjnll~tt

to __
' everything else held constant"
)real;' decrease
c, Y\ nominal; increase
real; increase
r:::z. y\ nominal; decrease-..:

the

'W~';"~~ VL~

1;(

';l

interest

'k- f

-rr
~

3. Which of the following would cleCcF!ase.,thene~t

component of French GDP? A) An automobile produced in France is purchased in Canada.
.!!L A bottle of mineral water produced in Romania is purchased in Loulstana.y
~
A bottle of wine produced in California is purchased in France. ~ ~#I~
D) A hockey stick produced in Canada is purchased in Romania.\(

'/-.:r

Use the following to answer question 4:

The data below depict the performance of the U.S. economy in 1969 and 1970.
Year/Quarter
1969/Q1
1969/Q2
1969/Q3
1969/Q4

Annual Percent
Change Real GDP
+6.5
+1.2
+2.6

(-1.9..)

Year/Quarter
1970/Q1
1970/Q2
1970/Q3
1970/Q4

4'~'d the U.S. economy experience a technical rec~n

A) Yes.
No.

Annual Percent
Change Real GDP

(-O~
+0.7
+3.6
-4.2

in the period depicted above?

5. Suppose the U.S. economy is operating at full employment.

Everything else held constant,
an increase in business confidence will cause __
in the unemployment rate in the short
r nand __
in real GDP in the long run.
A
a oecrease; no change
8)
a decrease; an increase
$
C) an increase; no change ....
D) an increase; a decrease
E) a decrease; a decrease

LJt- s

S}}-

Version B

Page 1

6. Suppose textile workers in the United States are laid off from their jobs as the result of
competition from low-cost foreign producers. The laid-off workers would be considered
__
unemployed.
A
seasonally
B
frictionallystructurallY0) .cyclically "__

7. Suppose Mark ost his job as a sales executive due to a recession. He sends his resume
to thirty companies per week on average and is available to begin a job immediately, if
offered one. In this situation Mark would be considered
A) not in the labor force.
B) seasonally unemployed.
frictionally unemployed.
cyclically unemployed.
structurally unemployed.

In February 2014, the unemployment rate in the United States was _' _ it was in January
In February 2014, the size of labor force in the United States was __
it was in
January 2014.
I
~
higher than; less than nigher than; greater than
lower than; less than
0)
lower than; greater than
E) the same as; less than

8.

2014.

___

'.7

-IlL

Suppose the U.S. econ-omy is operating at full employment.

A one-time increase i.q.
productivity growth will cause ~
in the aggregate price level in the short run and __
in the aggregate price level in the long run, everything else helUJnstant.
A) a decrease; an increase
B) a decrease; a decrease
.
C) a aecrease; no change
~
an increase; no change
an increase; an increase

5d..5

<.W

L....!-_-S-+_~O

10. Suppose Reka is a 13tJ'ear-old full-time LSU student who works 20 hours per week as an
unpaid volunteer at a local food bank in Baton Rouge. At present she
actively seeking a
~t
a law office in New Orleans, a position she can begin In May According
10 the BLS"nousehold survey, Reka would be classified as
A) not in the working-age population.
B) employed.
~.
unemployed.(@ not in ttie labor force".....

11.

Version B

Page 2

12. Which of the following types of unemployment

performance of a dynamic market economy?
A) Seasonal.
8
Frictional.
C
Cyclical.
Structural.

is the most harmful to the macroeconomic

13. If a macroeconomy is operating __

full employment, then it is experiencing a __
in
the labor market. Over time, I~or costs in this economy will decrease, everything else
constant.
A) above; surplusabove; shortage
C) below; shortage
OJ below; surplus

cW

14. In the United States the nominal interest rate tends to move __
the economy is in __
' the nominal interest rate increases.
A) countercyclically;
an expansionprocyclically;
a recession
C) procyclically;
an expa siofr>
countercyclically;
a recession
~

15. In the short run, a decrease in the money supply will cause __
held constant.
~
short-run aggregate supply; decrease
~
aggregate demand; decrease
C) aggregate demand; increase
0) short-run aggregate supply; increase

This means that when

to __

' everything else

Use the following to answer question 16:

The data below depict the performance of the Oceanian economy in 2013.
Year/Quarter
2013/Q1
2013/Q2
2013/Q3
2013/Q4

Annual Percent Change

Nominal GOP
+3.8
+4.2
+5.3
+7.5

Version B

Annual Percent Change

Real GOP
-1.2
-0.8
+0.3
+2.5

IY

16. In 2013 the inflation rate in Oceania

A) increased.
~ ..~decreased.
~
emained steady.

Page 3

~~ /V~ 1r'

')r

N-fJ.

\
(

y
17. In which of the following situations is it most advantageous to be saving?
The

8)
~
D)
E)

cw
x
18.

A)

C)
D)
E)

The
The
The
The

real
real
real
real
real

interest
interest
interest
interest
interest

rate
rate
rate
rate
rate

~h7~S t#-

is~\lrcent
and the expected inflation rate is 4 percent.
i~ercent
and the expected inflation rate is 15 Qercent.
is 7 percent and the expected inflation rate is 6 percent.
is 11 percent and the expected inflation rate is 9 percent.
is 1 percent and the expected inflation rate is 2 percent.

term "business cycle" refers to the

long-term trends in economic growth.~
short-term fluctuations in the aggregate price level.
short-term fluctuations in the unemployment rate.
short-term fluctuations in economic growth",.e"'"
long-term trends in the aggregate price level.

19. Suppose Jean-Claude is a 25-year-old baker who has not worked for the past seven week~
because he broke both legs~ent.
During this period Jean-Claude has not
been paidrnor has he looked'for another job, but he expects to be back at his old job within
the next month. According to the BLS household survey, Jean-Claude would be classified
as
employed.
unemployed.
) not in the working-age populati0rY.\
D) not in the labor force.)(

,
T~IIvt'..(.

qp

20. Everything else held constant, an increase in the federal government's funding of job
~aining
programslwill be most effective in combating __
unemployment.
~
structurar-e
B) cyclica;l>(
C) season~
D) frictional(

21. Suppos~ a
transaction
A) would
would
would
would
~[)

Cr

U.S. citizen purchases 14Q...sharesof stock in Microsoft,

a..\J.~.company .

This

be included in U.S. GDP as part of government spen~

be included in U.S. GDP as part of investment. be included in U.S. GDP as part of consumption. F?
not be included in U.S. GDP.--

S~J"3rfoi6nJ

1liJ.- ~ d ~

), S

J (AE G ~/1\..',.l

22. Suppose the U.S. economy is operating at full employment.

A decrease in taxes will cause
~
in the unemployment rate in the __
run, everything else held constant.
~""a
decrease;
short
B) an increase; long
...\.."C) an increase; short
D) a decrease;
long
/'

/~
I

Version B

Page 4

23. ~crease
in interest rates is an example of __
~
an expansionary monetaryB) an expansionary fiscal
C) a contractionary monetary
D) a contractionary fiscal

policy action.

24. Suppose Jay purchases, from a local Baton Rouge dealership, a new automobile that was
produced in Germany. Suppose further that the automobile is for his personal use.
Everything else held constant, this purchase will cau,se the __
component of U.S. GDP
.
crease.
~}
consumptionnet export
~
C) investment
D) qovernmentspendinq

25. Suppose the U.S. economy is operating at full employment.

An increase in foreign
economic growth will cause ~
in real GDP in the United States and __
in the
aggregate price level in the United States in the short run, everything else held constant.
A) an increase; no change)(
B) an increase; a decreas~
C) a decrease; a decrease
o a decrease; an increassc
) an increase; an increase "'
L

Version B

Page 5

LOUISIANA STATE UNIVERSITY

ECONOMICS 2030
SPRING 2014; EXAM 3

NAME:"
LAB MEETING DAY:
LAB MEETING TIME,
LAB INSTRUCTOR'

WEDNESD

0":

_.~30
YUki ~

FRIDAY

CV
Yuanbo Zhang

VERSION "E
INSTRUCTIONS
1.
Read these instructions
carefully and DO NOT TURN THIS PAGE until you are told that you
may begin the examination.
Fill in the information in the blank spaces above, signing your name where
it says "SIGNATURE" and printing your name where it says "NAME." In addition, CIRCLE your lab
meeting day, time, and lab instructor's name.
2.
The only materials you may use on the exam are a pencil, an eraser, a high lighter, and a
small scantron (Form no. 882-E). You may NOT use calculators, other electronic devices, scrap paper,
or any other materials. Please place all unusable items in a closable receptacle, close the receptacle,
and place that under your seat. All electronic devices must be turned off for the duration of the exam.
3.
On your scantron please print the following information
Name, Lab Section Number, and Test Version Letter.

ONLY: Name, Lab Instructor's

4.
Each question is worth 0.80 points. Each question has only one correct answer: MARK your
choice clearly on your scantron. Any question on which a single answer is not marked clearly will be
considered incorrect.
5.
To sit for the exam you must have a valid LSU STUDENT ID card. Please place it on your desk
where it can be seen and leave it there for the duration of the exam.
6.
Once the instructor begins to distribute the exam you may not talk.
raise your hand. The question will be answered by the instructor.

If you have a question,

7.
After the announcement
to begin, you have 50 minutes in which to complete the exam and
fill your scantron. When the instructor announces "Time is up" you MUST stop working immediately and
turn in your exam and scantron. Please turn in the exam and scantron at your lab instructor's table,
presenting your LSUID when doing so. When leaving the testing room, please do so quietly.
8.
By signing this cover sheet you acknowledge that you have read, understood, and agreed
to the conditions enumerated in this list of instructions.
Violations of the exam instructions
will
be treated as a violation of the Code of Student Conduct and dealt with in accordance with the
Code.

1. The Federal Open Market Committee expresses its monetary policy stance in terms of its
target for the federal funds rate. The federal funds rate is the interest rate charged by
A) the federal government on loans to the Fed.
B) the Fed on loans to the federal government.
C) the Fed on loans to commercial.banks,,!~!1di~i}?iates.
D) U.S. commercial banks on loans-to cb~~~~outsid'e
of the United States.
E) U.S. commercial banks on loans to, other cqcnme!&ial banks in the United States ..

. Jrlrt~r-"f.1-;\(,..Jl

l.r,...i> c~,,'

r:

L,;

(;4 to

.'

'.

tc:

~ (l.&t. - Y1~ r.Js

r J ()~
CJ
2. Answer true or false to the following statement.
One of t e di erences between money and
profit is that money is a stock variable and profit is a flow variable.
4)
~

Stoct_

True.
False.

B)

H~w- -

hMJLi~~
L.

I.

r;>v1. MjlLI'\e.--v-

3. Everything else held constant, an open market purchase of U.S. government bonds by the
Fed will cause
in the national debt of the United States.
~)
no change B) an increase
M o{'l.( M">1"'1

C)

a decrease-

4. Suppose market participants believe that interest rates will remain unchanged next week.
You, on the other hand, are certain that interest rates will decrease. Given your views, the
most profitable action to take TODAY would be to __
bonds.
A) buy
8) sell
I

IL3

5. A decision by the FOMC to ~

growth is an example of a __
A) increase; monetary
B) decrease; fiscal s:'"
C) increase; fiscal
D
decrease;
monetaryMi)"'~~)'_

F uIf., I -

'1'

its target for interest rates in order to stimulate economic

policy action.
-

iQ'1(.<l-r.-l<;
M f'1[, "'~-I,,).~

Laf\'NI.~~

-' ,

6. In the money market, a recession will cause _V_ in the __

money and __
equilibrium nominal rate of interest, everything else held constant.
A) a decrease; demand for; a decrease
B) an increase; supply of; a decreaseC) an increase; supply of; an increase
D) an increase; demand for; an increase E) a decrease; supply of; a decrease

if! the

lRI,,,rs
~Ih

7. As of today there are three vacancies on the Board of Governors of the Federal Reserve
System. This means that presently there are __
voting members on the FOMC.
A) 4

7
9

E)

12
14

B)

Dr

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8. In the money market, a contractionary policy action by the Fed will cause __
equilibrium nominal rate of interest, everything else held constant.
A) an increase

tk
" .

B) no change
e) ./ a decrease

lli

in the

~tl~

9. In March 2014 the unemployment rate in the United States was __

2014.
~L higher than
{,."
B) lower thane the same as

it was in February

ciJ.

Suppose Deborah deposits her payroll check from Barnes & Noble into her demand d~osit
account. Suppose further that commercial banks are making some loans. This action will
cause the monetary base to __
and the money multiplier 'to __
' everything else held
constant.
11 =- L.ie bIJ-"
ell
A) remain unchanged;
mcrease=B) remain unchanged;
decrease
/15:: c..,' c +- c/t
e) increase; remain unchanged
q~::. -JV tAl
D) decrease; remain unchanged
E} remain unchanged; remain unchanged
f1 Y'f1fI\ 1'11>

Iii'

t"(~.,..

It

11. Suppose the U.S. government experiences an unexpected increase in its budget deficit.

If

it finances the increase by issuing bonds, then the equilibrium price of government bonds
will _-v_ and market interest rates will _1'_, everything else held constant.
A) increase; decrease
B) decrease; decrease
e) increase; increase
D) decrease; increase

12. What makes it possible for a government to maintain a constant debt-to-GDP ratio and still
run continual budget deficits?A) Continual increases in the aggregate price level.
B) Continual trade surpluses.
e) Continual increases in real GDP. 0') Continual increases in taxes.

J. e.h t
-J;

13. Suppose Kristen goes to an ATM and withdraws $60 from her demand deposit account.
Suppose further that commercial banks ~making
some loans. This action, everytl'iing
else held constant, will cause bank reserves to ~
and the money supply to __
.
decrease; decreaseB) increase; remain unchanged
lilO
e) decrease; increase
Wb
S:1 L; L d- C, ~ ,
D) increase; increase
E) increase; decrease
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14. Suppose that during the Christmas shopping season the demand for money increases
significantly in the United States. If the Fed wants to hold nominal interest rates constant
during this period, then it should pursue an open market __
of government bonds,
everything else held constant.
A)

sale
purchase

l\l'~
fk-.
-

15. Suppose Carolyn is easily frightened by financial news.

Recently, convinced that the

banking system would crash because of an increase in ATM user fees, she withdrew all of
her funds from her savings account and stashed the currency under a loose floor board in
her bedroom. By ta'king this action, __
remained the same. The function of money
that the currency is now satisfying in this case is __
.
CtA] M2; store of value B) M2; standard of value
C) M1; standard of value
0) M2; unit of account
E) M1; store of value-

Yh -

I'\'j,16. Which of the following monetary policy tools does the Fed primarily use to prevent financial
panics from occurring in t e United States?
~}
Discounting. - v0;1
"'-'l-tw1Jv~B) Swap arranqements.vv
C) Open market operations,-/If'4'(.~{
~II

0)

St..v.\I--N,fj'e 1

Setting reserve requirements.

17. Suppose Chris purchases a meal at a local Baton Rouge restaurant and pays with her
bank-issued credit card. Everything else held constant, this purchase will cause the money
multiplier to __
and the money supply to __
.
'
(. '~l increase; increase
B) decrease; increase
ih"f\L~s-t:s (f'1u11 b_ k-5 I'h...wk~' fA- /(1Qvfj
C) decrease; decrease
0) increase.. decrease
2M tJ JCfIh
(

11M

M8

18. The Kapauku people of the mountains of New Guinea used shells in a number of different
economic activities, one being that shells were passed on to heirs as an inheritance.', Used
in this way, shells were functioning as a
A) standard of value. ~
B) standard of deferred payment.
C) medium of exchange.
1 means of unilateral payment.
E) unit of account. -

~suppose
~~overnment

that the U.S. economy Is operating above full employment and the actual
budget deficit is $100 billion. In this situation, the government's structural
deficit is
$100 billion.
I'
.
A
greater than
5tJ- f"'~~~
J~~l LItT -It\1.. f5
(V~"l
vV4 Vl }~
~(;"'OW'lr

H~

f tk.

B)
C)

40

less than
equal to

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-t

~t"'CA-+'r-u. "* ,{IS -11",,1( fo-l-~irJt'

CtJ-Pl)Jt D~ t-kJ41Liv ~~,",l- V.1~t~/(, {-tv.
.

l'j

"('1

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20. Suppose the Fed sells $1 million of U.S. government bonds to a commercial bank. If
commercial banks are making some loans, the sale will cause the money supply to __
$1 million, everything else held constant.
A) decrease by
B) increase by
decrease by more than>
D) increase by more than
E) decrease by less than

21. The expression "a penny for your thoughts" dates to 16th century England. When that
phrase is used figuratively today, the penny is serving which of the following functions of
money?
A) Store of value.
B) Standard of value.
C) Unit of accountD) Means of unilateral payment.
E) Medium of exchange.

22. When you compare prices at different stores, money is serving which of the following
functions?
A) Standard of deferred payment.x Q./Uc"-I-.,,,,B) Means of unilateral payment.
C) Store of value.
r) Unit of account.
E) Medium of exchange. 'f Qf',\l

23. The
A)
B)
C)
D)
E)

Federal Reserve Bank serving Baton Rouge is located in

Dallas, Texas.
Kansas City, Missouri.
St. Louis, Missouri.
Washington, DC.
Atlanta, Georgia.

24. The structural government budget deficit

A) increases as real GDP decreases and decreases as real GDP increases.
6:) does not change as real GDP changes.
C) increases as real GDP increases and decreases as real GDP decreases.

25. Suppose the U.S. economy is operating at full employment.

An increase in taxes will cause
the cyclical deficit to __
in the short run and the actual deficit to __
in the long run,
everything else held constant.
increase; decrease
B) decrease; increase
C) increase; increase
"D) decrease; decrease

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