Economics Practice MCQ Page 27

Multiple Choice questions for Economics in the sets of 10 each on one page with questions and answers. All sets are useful in the preparation of subject tests for employment or admission.
Question: 1684   The monetary policy favored by monetarists is
  1. a steadily increasing rate of monetary growth.
  2. a constant and slow rate of monetary growth.
  3. vigorous monetary expansion during recessions.
  4. a constant (nongrowing)money supply.
  5. a moderate countercyclical policy of monetary growth .
Question: 1686   A major drawback to using the reserve requirement to conduct monetary policy is that
  1. it is an unfair subsidy to the banking system.
  2. it has only weak announcement effects.
  3. it is too powerful to use one on a daily basis.
  4. it would require interest rate targeting.
Question: 1687   The monetary based includes all of following expect
  1. bank loans and investments.
  2. currency in circulation.
  3. vault cash.
  4. bank deposit at the Fed.
Question: 1690   Which of the following would be considered to be fiscal policy?
  1. Defense cuts after the demise of the Soviet Union .
  2. New highway construction in Alaska.
  3. Expanded Medicare payments to the elderly.
  4. A tax cut enacted to combat a recession.
  5. All of the above.
Question: 1692   There is growing consensus among economists that discretionary fiscal policy can best be used to
  1. control the money supply.
  2. help promote economic growth .
  3. moderate the business cycle.
  4. keep interest rates as high as possible.
Question: 1693   The supply -side view of a cut in federal income tax rates that it would cause
  1. AD to increase.
  2. AD to decrease.
  3. SRAS to increase.
  4. SRAS to decrease.
Question: 1695   The process of formulating and enacting a federal budget now takes about
  1. 3 millions.
  2. 6 millions.
  3. 9 millions.
  4. 18 millions.
  5. 36 millions.
Question: 1696   Which of the following would be appropriate fiscal policy to combat an inflationary gap?
  1. Increasing government spending.
  2. Increasing taxes .
  3. Increasing the money supply.
  4. Decrease taxes.
  5. Decrease the money supply.
Question: 1697   An increase in government spending leads to the full effect predicted by the simple expenditure multiplier
  1. always .
  2. if prices are constant.
  3. if the money supply curve is horizontal.
  4. if the aggregate supply curve is horizontal .
  5. if the aggregate supply curve is horizontal and there is no crowing out.
Question: 1699   If fiscal policy used to eliminate an inflationary gap before the self-correcting mechanism beings to work,then
  1. prices do not change.
  2. prices go down .
  3. prices go up by the less than if self-correction is used.
  4. prices go up by the same amount as if self-correcting is used.
  5. prices go up by more than if self-correcting is used.
Question: 1701   If a social stimulus causes AD to increase crowding out the private sector spending occurs if
  1. SRAS also increases.
  2. SRAS also decreases.
  3. interest rates rise.
  4. the price level falls.
Question: 1702   Which of the following is an automatic stabilizer?
  1. An increase in defense spending .
  2. An expansion of the money supply during a recession.
  3. A legislated tax increase during a boom.
  4. An increase in the number of people receiving unemployment benefits during a recession.
  5. An increase in taxes due to inflation occurring during recession.