There is only one correct answer per question. select the best answer, even when there are other correct answers.
1 If the Fed reduces a commercial bank s reserve requirements the commercial bank can

a lend the extra reserve to the Fed
b Use the extra reserve to create more money
c eliminate its need for overnight lending
d use the extra reserve amount for facility expansion
2 Economics is about
a efficiency
b how to best use money
c resource allocation
d deciding who is affected by taxation
3 The Fed Chairman is
a elected for up to a maximum of 3 terms
b is the principal government officer in charge of all economic policy
c accountable to the President
d none of the above

4 If a price ceiling is set on gasoline nationwide,
a the economy would experience unprecedented prosperity
b most oil companies would go bankrupt
c supply and demand for gasoline will be at dynamic equilibrium
d shortage of gasoline would be likely
5 Monetary policy
a involves running a surplus and deficit
b involves changing money supply and taxes
c is managed by the Treasury Department
d none of the above
6 If a central bank issues large quantities of money, that
a would be inflationary
b is because some central bank lack independence form political control
c is because they feel that the risk of inflation is less than the risk of economic breakdown
d All of the above
7 Factors of production

a are not the same in different economies
b are only two in free enterprise economies
c include land and labor
d steel mills

8 Relative demand elasticity is high for
a healthcare
b food in general
c hot dogs
d Pepsi and Coke

9 If real income has risen from $4 trillion to $4.2 trillion and the price level went up
by 10 percent, by how much has the nominal income risen?
a $440 billion
b $400 billion
c $360 billion
d none of the above
10 Tax and spend is
a a classical economics concept in nature
b a Keynesian concept in nature
c primarily an emphasis on free enterprise economy
d a little used area of monetary policy
11 The supply curve represents a relationship between
a the producer and the market
b the suppliers and the firm

c price of a product and its production quantity
d produced goods and the economy as a whole
12 When oranges are plentiful as a result of a good growing season, what happens to the market price of oranges?

a It goes up.
b It goes down.
c It widely fluctuates
d None of the above
13 The most important reason for branding is to make a product
a more appealing to the consumer
b relatively more demand elastic
c distinguishable from competing products only
d relatively demand inelastic
14 Keynesian economics favors government spending and is
a a classical economics concept in nature
b essentially not an economic concept
c a part of fiscal policy
d a part of monetary policy
15 In fiscal policy
a the Fed chairman usually recommends policy choices to the government
b the President and the Congress play key roles
c interest rates are not affected by the policy
d deficits are unimportant
16 Economics is mainly about

a efficiency only
b resource allocation
c how to best use money
d deciding who is affected by taxation
17 Economics is
a the science of who gets what and how
b allocation of scarce resources among alternative uses
c authoritative allocation of scarce resources and values
d how totality of a system functions with respect to land, labor and capital

18 Equilibrium price is established when
a Marginal Cost is equal to Average Cost
b Average Revenue is equal to demand
c supply and demand curves intersect
d Marginal Revenue is greater than Marginal Cost
19 Tariffs are
a an import tax
b a restriction on the amount of imports of a foreign good
c Only applied to strategic goods
d none of the above
20 If labor is displaced by technology
a the displaced workers would not be able to find jobs again
b The displaced workers are better off going to a different sector of the economy
c productivity of the firm will be diminished
d re training would be a reasonable strategy for the workers to find new jobs