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Macroeconomics Exercises Part 1B

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CMA PART 1 B
MACROECONOMICS
115 QUESTIONS
[1] Source: CMA 1281 1-7
The value of money
A. Varies directly with the tax rates.
B. Varies directly with government spending.
C. Varies directly with investment.
D. Varies inversely with the general level of prices.
[2] Source: CMA 1281 1-9
Monetary theorists believe in the use of
A. A stable growth rate for the money supply.
B. Stable interest rates to stabilize the money supply.
C. Fiscal policy as the main stabilization tool.
D. A "stop-and-go" monetary policy for fine tuning
the economy.
[3] Source: CMA 1283 1-12
During a recession the goal of government fiscal policy is to
raise equilibrium output from $3 trillion to $3.5 trillion. An
appropriate governmental action in this situation would be
to
A. Decrease government spending.
B. Increase government taxes.
C. Increase government spending.
D. Increase government taxes and decrease
government spending by equal amounts.
[4] Source: CMA 1283 1-14
All of the following are functions of the Federal Reserve
System except
A. Acting as a lender of last resort to the business
community.
B. Accepting deposits of, and making loans to,
commercial banks.
C. Supplying the economy with paper money in the
form of Federal Reserve notes.
D. Providing for the collection of checks.
[5] Source: CMA 1283 1-17
The discount rate of the Federal Reserve System is the
A. Specified percentage of a commercial bank's
deposit liabilities that must be deposited in the central
bank.
B. Rate that the central bank charges for loans
granted to commercial banks.
C. Rate that commercial banks charge for loans
granted to the public.
D. Ratio of excess reserves to legal reserves that are
deposited in the central bank.
[6] Source: CMA 0684 1-15
The Keynesian analysis of monetary and fiscal policy
A. Assumes the economy is stable and
self-regulating.
B. Places primary emphasis on monetary policy.
C. Assumes that velocity is stable.
D. Focuses on aggregate expenditures.
[7] Source: CMA 0684 1-16
A major problem arising from the use of fiscal policy to
help stabilize an economy is that there
A. Are too few fiscal goals that have wide public
support.
B. May be an expansionary and, therefore,
inflationary bias to such policies.
C. Is too short a lag between recognizing an
economic problem and implementing a cure.
D. Is a balanced budget that promotes cyclical
fluctuations.
[8] Source: CMA 0684 1-19
The primary mechanism of monetary control of the Federal
Reserve System is
A. Changing the discount rate.
B. Conducting open market operations.
C. Changing reserve requirements.
D. Using moral persuasion.
[9] Source: CMA 0684 1-20
A tight monetary policy is frequently cited as an important
policy instrument for fighting inflation. Keynesian
economists believe that one of the possible undesirable side
effects of such a policy is
A. Reduced business investment due to higher
interest rates.
B. Reduced business investment due to lower interest
rates.
C. Increased business investment due to decreased
government spending.
D. Increased business investment because of reduced

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confidence in business.
[10] Source: CMA 1284 1-12
Providing an adequate supply of money to accommodate
the needs of U.S. business is the task of the
A. United States Treasury.
B. Controller of the Currency.
C. Bureau of Printing and Engraving.
D. Federal Reserve System.
[11] Source: CMA 1284 1-13
Members of the Board of Governors of the Federal
Reserve System are
A. Elected by the presidents of the Federal Reserve
District Banks.
B. Appointed by the U.S. President and confirmed
by the U.S. Senate.
C. Elected by member banks of the Federal Reserve
Banks.
D. Nominated by individual members of the U.S.
House of Representatives and confirmed by a vote of
the House.
[12] Source: CMA 1284 1-15
Which of the following results could be expected from an
open market operation of the Federal Reserve?
A. A sale of securities would lower interest rates.
B. A purchase of securities would raise interest rates.
C. A purchase of securities would lower security
prices.
D. A sale of securities would raise interest rates.
[13] Source: CMA 1284 1-17
One basis point is
A. 1%.
B. 1/10 of 1%.
C. 1/100 of 1%.
D. 1/1,000 of 1%.
[14] Source: CMA 0685 1-20
Economists and economic policy makers are interested in
the multiplier effect because the multiplier explains why
A. A small change in investment can have a much
larger impact on gross domestic product.
B. Consumption is always a multiple of savings.
C. The money supply increases when deposits in the
banking system increase.
D. The velocity of money is less than one.
[15] Source: CMA 0685 1-21
One of the measures economists and economic policy
makers use to gauge a nation's economic growth is to
calculate the change in the
A. Money supply.
B. Total wages.
C. General price level.
D. Real per capita output.
[16] Source: CMA 0685 1-23
When economists are concerned about the liquidity
preference function, they are interested in
A. The relationship of the demand for money and the
rate of interest.
B. The proportion of liquid (cash) reserves
maintained by commercial banks.
C. The preference for a currency backed by gold.
D. A bank's desire for accounts receivable as
collateral.
[17] Source: CMA 0685 1-24
When the addition to capital goods in an economy exceeds
the capital consumption allowance, the economy has
experienced
A. Negative net investment.
B. Equilibrium investment.
C. Positive gross investment.
D. Positive net investment.
[18] Source: CMA 0685 1-25
The creation of deposit money by U.S. commercial banks
increases the
A. Real wealth of the United States.
B. Real U.S. national income.
C. U.S. money supply.
D. Purchasing power of the U.S. dollar.
[19] Source: CMA 0686 1-17
Personal income is equal to
A. Gross domestic product minus net national
product.
B. Net domestic product plus transfer payments to

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CMA PART 1 B MACROECONOMICS 115 QUESTIONS [1] Source: CMA 1281 1-7 The value of money A. Varies directly with the tax rates. B. Varies directly with government spending. C. Varies directly with investment. D. Varies inversely with the general level of prices. [2] Source: CMA 1281 1-9 Monetary theorists believe in the use of B. Rate that the central bank charges for loans granted to commercial banks. C. Rate that commercial banks charge for loans granted to the public. D. Ratio of excess reserves to legal reserves that are deposited in the central bank. [6] Source: CMA 0684 1-15 The Keynesian analysis of monetary and fiscal policy A. Assumes the economy is stable and self-regulating. B. Places primary emphasis on monetary policy. C. Assumes that velocity is stable. D. Focuses on aggregate expenditures. A. A stable growth rate for the money supply. B. Stable interest rates to stabilize the money supply. C. Fiscal policy as the main stabilization tool. D. A "stop-and-go" monetary policy for fine tuning the economy. [3] Source: CMA 1283 1-12 During a recession the goal of government fiscal policy is to raise equilibrium output from $3 trillion to $3.5 trillion. An appropriate governmental action in this situation would be to A. Decrease government spending. B. Increase government taxes. C. Increase government spending. D. Increase government taxes and decrease government spending by equal amounts. [7] Source: CMA 0684 1-16 A major problem arising from the use of fiscal poli ...
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