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1.The spending multiplier effect becomes bigger if a. the MPC becomes bigger and the MPM becomes smaller b. both the MPC and the MPM become bigger c. both the MPC and the MPM become smaller d. the MPC becomes smaller and the MPM becomes bigger

1.The spending multiplier effect becomes bigger if a. the MPC becomes bigger and the MPM becomes smaller b. both the MPC and the MPM become bigger c. both the MPC and the MPM become smaller d. the MPC becomes smaller and the MPM becomes bigger

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1.The spending multiplier effect becomes bigger if a. the MPC becomes bigger and the MPM becomes smaller b. both the MPC and the MPM become bigger c. both the MPC and the MPM become smaller d. the MPC becomes smaller and the MPM becomes bigger 2. "The U.S. Department of Commerce has estimated that if U.S. manufacturers use metric measures, their increased ability to compete on world markets should increase exports by about $600 million and thus benefit the U.S. economy by between $1.2 billion and $1.8 billion." These numbers suggest that a. exports have a much smaller multiplier impact than other kinds of spending. b. the export spending multiplier is between 2 and 3. c. it takes between $1.2 and $1.8 billion increase in income to generate a $600 million increase in exports. d. imports should increase by between $1.2 and $1.8 billion. 3. The functions of the Federal Reserve System include all of the following, except: a.controlling the money supply b. promoting the stability of the financial system c.regulating and supervising banks d. issuing deposit insurance to banks 4.The reserve requirement exists so that commercial banks a.can guarantee that depositors will get their money back if the bank fails. b.are able to make sure that the bank can repay any discount window loans. c.can cover losses due to bad loans. d.are able to satisfy depositor requests to withdraw their money. 5.The term structure of interest rates is a.the relationship among interest rates of different bonds with the same maturity. b.the structure of how interest rates move over time. c.the relationship among interest rates on bonds with different maturities. d.the comparison of terms to maturity of different bonds.
Transcribed Image Text:1.The spending multiplier effect becomes bigger if a. the MPC becomes bigger and the MPM becomes smaller b. both the MPC and the MPM become bigger c. both the MPC and the MPM become smaller d. the MPC becomes smaller and the MPM becomes bigger 2. "The U.S. Department of Commerce has estimated that if U.S. manufacturers use metric measures, their increased ability to compete on world markets should increase exports by about $600 million and thus benefit the U.S. economy by between $1.2 billion and $1.8 billion." These numbers suggest that a. exports have a much smaller multiplier impact than other kinds of spending. b. the export spending multiplier is between 2 and 3. c. it takes between $1.2 and $1.8 billion increase in income to generate a $600 million increase in exports. d. imports should increase by between $1.2 and $1.8 billion. 3. The functions of the Federal Reserve System include all of the following, except: a.controlling the money supply b. promoting the stability of the financial system c.regulating and supervising banks d. issuing deposit insurance to banks 4.The reserve requirement exists so that commercial banks a.can guarantee that depositors will get their money back if the bank fails. b.are able to make sure that the bank can repay any discount window loans. c.can cover losses due to bad loans. d.are able to satisfy depositor requests to withdraw their money. 5.The term structure of interest rates is a.the relationship among interest rates of different bonds with the same maturity. b.the structure of how interest rates move over time. c.the relationship among interest rates on bonds with different maturities. d.the comparison of terms to maturity of different bonds.
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