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Final Exam Lake Washington Institute of Technology Macroeconomics, Fall 2013 NAME______________________________ 1) According to the Quantity Theory…

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Final Exam
Lake Washington Institute of Technology
Macroeconomics, Fall 2013
NAME
______________________________
1)
According to the Quantity Theory of Money, MV=PY, a Classical view of a
change in the Money Supply would cause a __________________ change in the ___________.
A)
Equal, Opposite
B)
Opposite, GDP
C)
Opposite, Price Level
D)
Equal, Price Level
2)
Refer to the “Anatomy of a Loan” video: Banks make loans by ________
A) Getting money from the vault
B) Creating money out of nothing using the loan asset as collateral
C) Getting people to lend to them and lending that money out
D)
Trading credit and money with other depositors
3)
Interest rate effect (think Skyscraper Theory) suggests that
A) an increase in the price level decreases interest rate, which causes businesses and
consumers to reduce desired spending
B) an increase in the price level increases interest rate, which causes both
businesses & consumers to reduce spending & businesses to reduce investment
C) a decrease in the price level decreases interest rate, which causes businesses and
consumers to reduce desired spending.
D) an increase in the price level increases money supply, which causes businesses
and consumers to increase desired spending
4)
According to Austrian economists, Government intervention in markets often
does what
A)
Stimulates the economy and creates Real Economic Growth
B)
Causes false signals, which lead to malinvestments and recessions
C)
Protects Laizze Faire markets and keeps the economy open
D)
Promotes free enterprise and protects the economy from recession
5)
The bank run is caused by a panic by depositors who in fear of their savings
‘run’ to the bank and demand their deposits therefore
A)
removing the reserves that back other loans from the bank
B)
potentially collapsing the bank by making it illiquid
C)
forcing the bank to close its doors, upon which they cannot be reopened
D)
All of the above
E)
None of the above

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6)
Austrian economists are in favor of
Plans by the ________, as in the market
A)
Many
B)
Few
C)
President
D)
group
7)
Consider the above figure. Autonomous consumption (Keynesian) is equal to
A) $30
B) $40
C) $60
D) $80
8)
Consider the above figure. At an income of $110 we would expect saving to
be about
A) $60
B) $35
C) $10
D) $0
Refer to the video, “What Austrian Economics is and is Not”,
9)
Austrian Economics is referred to as
A)
A set of interventionist policy decisions
B)
A set of claims about how markets work
C)
Set of Free Market Economic policies
D)
A ‘how-to’ of recession fixes
10)
Key to the theory is that Austrians assume that only _________ choose
A)
Groups/businesses
B)
Governments
C)
Individuals
D)
Well trained economists

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