答案2 MACROECONOMICS.doc

CMA-CFM PART 1the money supply.CHAPTER 2 MACROECONOMICS Unofficial Answers7. /b/ Both reducing the reserve requirement and lowering the discount rate will expand monetary policy by increasing the money supply. A, C, and D are incorrect because raising the reserve requirement and/or the discount rate will constrict monetary policy.l. /c/ Used and second-hand sales are excluded from GNP. The valuation is measured at the transactions fair market value.8. /d/ The governments borrowing to finance the national debt can lead to higher interest rates, decreasing private investment.2. /b/ When (aggregate) demand equals (aggregate) supply and (intended) saving equals (intended) investment, income and employment tend towards an equilibrium level. A is incorrect because there is not necessarily a change in inventory levels. C is incorrect because full employment is never achieved. D is incorrect because at equilibrium, savingsequals investment, not consumption.9. /a/ Many monetarists, including Milton Friedman, argue in favor of a constant money growth rate rule. Answers B, C and D are incorrect statements with respect to monetarists views in general.10. /d/ Only Answer D of the choices given would lead to an increase in the money supply. Policies described in Answers A, B and C would be expected to result in a decrease in the money supply.3. /d/ Structural unemployment is created by changes in the economy creating a mismatch in the supply and demand for labor. C is incorrect because fictional unemployment includes the normal turnover of labor which exists in a dynamic economy.11. /a/ Answer A correctly describes the reserve ratio the specified percentage of a commercial banks deposit liabilities that must be kept on deposit and not loaned out. Answers B, C and D do not describe the reserve ratio.4. /d/ Only answer D is an assumption of Keynesian theory. Answers A and B are basic assumptions of the monetarists, not Keynesians. Answer C is incorrect because Keynesians emphasize balancing the budget cyclically, not constantly, as a means of stabilizing the economy.12. /b/ Answer B is the correct definition of the discount rate that which the central bank charges commercial banks for loans made to them. Answers A, C, and D do not describe the discount rate.5. /b/ Answer B states a problem associated with the use of fiscal policy - that it can be inflationary. Answers A, C, and D do not state problems relating to the use of fiscal policy.13. /b/ Answer B is the only correct statement concerning the Board of Governors of the Federal Reserve System. Members of the Board are appointed by the U. S. President and confirmed by the Senate. Answers A, C, and D are all incorrect.6. /d/ Answer D describes the best and most direct tool utilized by the Federal Reserve to control the money supply. Answers A, B, and C are not measures used by the Federal Reserve to control the money supply.14. /c/direct tool utilized by the Federal Reserve to control the money supply. Only Answer C is correct in that it is the Federal Deposit Insurance Corporation that insures commercial bank deposits to $100,000 per account. This is not the function of any of theorganizations given in Answers A, B, or D.15. /a/ Gross domestic product (GDP) less depreciation equals net domestic product (NDP). $4,000 - 500 = $3,500.16. /b/ Net domestic product (NDP) less indirect business taxes equals national income (NI). $3,500 - 210 = $3,290.17. /c/ National income (NI) less the total of corporate undistributed profit, income taxes, and social security payroll taxes plus government transfer payments equals personal income (PI). $3,290 -(25 + 50 + 200) + 500 - $3,515.18. /d/ Personal income (PI) less personal income taxes equals disposable (personal) income (DP! or DI).$3,515 - 250 = $3,265.19. /b/ The reserve requirement change will increase total demand deposits by1 x reserve change reserve ratio1 x $1,000,000 = $5,000,000 20%20. /d/ The marginal propensity to consume is the change in consumption divided by the change in income or$6,000/8,000 = .7521. /c/ The formula to quantify the final increase in GDP is1 or 1 x Stimulate=MPS 1 - MPC1 x 1,000,000 = $5,000,000 0.20of which 80% or $4,000,000 will be increased GDP and $1,000,000 will be savings. A is incorrect because this is the amount of the stimulant and disregards the multiplier effect. B and D are incorrect because these total only the original stimulant.22. /d/ VAT taxes have a regressive incidence of tax because lower income groups bear more of the tax incidence as a percentage of their income. A is incorrect because VATs tend to discourage consumption and encourage investment. B and C are incorrect because VAT taxes have a regressive tax incidence.23. /d/ Complying with safety regulations is the best example of social regulation. A, B, and C are less correct because in a competitive model environment, such decisions are left to market forces.24. /d/ The CPSC has the power to order the recall of products it has determined to be unsafe. A is incorrect because the Commission does not cover all consumer products. B is incorrect because the Commission is not normally involved in product standards. C is incorrect because the Commission is not usually opposed to an industry group adopting voluntary standards.25. /b/ A special corporate federal tax finances the Superfund. A and C are incorrect because specific owners may be assessed: the Superfund covers damage where individual assessment is not possible. D is incorrect because the Superfund is not financed by general revenues.26. /c/ Contributions made to the organization are the criteria comparable worth would use to allocate employee compensation. A, B, and D are not the best answers of the concept of comparable worth.27. /a/ Disclosure of the finance charges and annual percentage rate are the purpose of the Truth in Lending Act. B, C, and D are incorrect because none of these actions are possible under the Act.28. /d/ Pre-employment tests must be directly related to job requirements. A is incorrect because all employees may be required to take pre-employment tests. B is incorrect because such testsare primarily tested under the criteria of job relationship.29. /d/ Increased mergers followed the Airline Deregulation Act of 1978. A, B, and C are incorrect answers because these factors did not result from the Act.30. /b/ The Taft Hartley Act of 1947 does not guarantee the workers right to organize; this right was a part of the Wagner Act of 1935. A, C, and D are incorrect because the Taft Hartley Act contains these provisions.31. /d/ The Wagner Act of 1935 does not prohibit a closed shop (a closed shop is where only union members can be hired). This prohibition was a part of the Taft-Hartley Act of 1947. A is not the best answer because the supply of labor was affected by the Wagner Act. B and C are incorrect because the Wagner Act contains these provisions.32. /a/ The Federal Trade Commission (FTC) is the agency that deals with antitrust actions and most consumer protection issues. B is incorrect because the FTC does not regulate import quotas. C is incorrect because railroads are regulated by the Interstate Commerce Commission (ICC) and airlines are regulated by the Federal Aviation Administration (FAA). D is not the best answer because the FTC does not monitor labor union practices.33. /b/ This is a example of price fixing between horizontal producers which is a per se violation of the Sherman Act. A is incorrect because a merger between firms in different, unrelated industries would not seem to violate the rule of reason which might prohibit unreasonable combinations. C is incorrect because a single retailer can almost always offer discounts to unrelated parties for large purchases. D is incorrect because the Federal Trade Commission regulates false advertising under the Wheeler-Lea Act of 1938.34. /d/ Occupational Safety and Health Administration (OSHA) requires employers to provide safe, healthy working conditions for employees. A and C are incorrect because states regulate their own workers compensation laws through an insurance system.35. /a/ An agencys regulations determine how it operates; the regulations must be consistent with the standards of the congressional act which created the agency. B and D are incorrect because usually neither the Executive nor the GAO must preapprove an agencys regulations. C is not the best answer because the notice to affected parties requirement may be satisfied constructively through publication.36. /d/ Regulatory hearing procedures do not normally provide for compensation or costs for affected parties. A, B, and C are all incorrect because these are areasin which consumer protection regulations have applied.37. /b/ Discrimination in the hiring of employees is the best example of social regulation of business. A, C, and D are incorrect because they are all examples of economic regulation by government.38. /d/ The Truth in Lending Act requires commercial creditors to clearly and conspicuously disclose to the borrower the annual percentage rate and finance charges. A is incorrect because there is no requirement that lenders provide going-concern assumption information. B is incorrect because interest rates are not subject to a federal ceiling; a number of states have usury statutes, however. C is incorrect because advertising is not prohibited.39. /d/ By definition. The rates on other commercial loans are often tied to the prime rate as in prime plus 2%.40. /c/ Agreements to set minimum or maximum prices are illegal. A is incorrect because professionals are not exempt from the antitrust laws. B is incorrect because such agreements areillegal even if there are mitigating circumstances. D is incorrect because any is too broad and not all discrimination is illegal.41. /c/ The only true statement. A is incorrect because the Commerce Department is not involved in antitrust enforcement. D is incorrect because the test under the Clayton Act is whether there is a substantial lessening of competition.42. /d/ Natural monopoly rates are usually allowed so that the utility earns a reasonable return on capital investment. A is incorrect because rate schedules are often different for different classes of customers. B is not the best answer because original cost method is not the only method used to base valuations.43. /d/ Allocation of markets is illegal under the Sherman Act. A, B and C are incorrect because the antitrust laws do not set prices and firms may collect price information.44. /a/ Tie-in sales are legal (and thus an exception to the antitrust !aw) if necessary to assure product quality.45. /c/ Computer software was added to the Federal 1972 Copyright Act in 1980. Registration provides protection for the life of the author plus 70 years.Statutory damages are to be awarded even if no actual damages can be proven. A is not the best answer because a common law tort action is always available to the artist of a proprietary work or invention. The disadvantage of that action is that damages must be proven to be recovered under the common law. B is not the best answer because the advantage to filing the claim under the Federal statute is that statutory damages (if in excess if actual damages) are recoverable. D is not the best answer because it is more likely U.S. would file under the 1980 amendment to the Copyright Act which added computer software.46. /b/ The most important characteristic of consumer confidence is that it accounts for two thirds of purchasing power.Thus any change can have a profound effect on the economy. A is not the best answer because the principle of savings is not related to consumer confidence. C is not the best answer because consumer confidence is a leading indicator of the economy as a whole. D is not the best answer because capital goods investment decisions are made by business managers, not consumers.47. /c/ Environmental standards and penalties for noncompliance are the usual approach in pollution control. A is incorrect because this is not the most widely used method. D is incorrect because state regulation has often proven ineffective.48. /c/ Answer C is correct. One basis point equals 1/100 of one percent.49. /b/ Answer B describes a major policy of the EEOC. Answers A, C, and D are not policies of that agency.50. /d/ Health and safety regulations lead to higher costs of manufacturing and distributing the affected products, which in turn lead to higher prices for the products. Answers A, B, and C would not be expected to result from imposition of health and safety regulations.51. /a/ Right-to-work laws prohibit the requirement that an individual belong to a union in order to obtain employment or join within a given period of time after being employed.52. /b/ Efficiency is perceived in terms of whether the marginal benefits of such regulations exceed the marginal costs of compliance.53. /b/ The Sherman Antitrust Act prohibits various practices which lead to restraint of trade. Answers A, C, and D are all false statements with respect to the Act.54. /c/ Decreased consumer freedom of choice is a cost resulting from government standard-setting and other regulatory activities. Answers A, B and D describe conditions that the various forms of government regulation are intended to correct.55. /a/ The Consumer Product Safety Commission was created to address social concerns regarding unsafe products and hazardous substances. Answers B, C, and D are agencies created to regulate specific industries.56. /c/ Increased public awareness and concern for numerous social issues led to a rapid expansion of related regulatory activity to achieve such social goals as workplace safety, equal employment opportunity, pollution control, and protection against unsafe consumer products.57. /a/ Answer A is the reason given that equal employment opportunity regulations can lead to economic inefficiency. Answers B, C, and D are incorrect responses to this question.58. /b/ Answer B, setting safety standards for consumer products, is the emphasis of the CPSC. Answers A, C, and D do not describe the general approach of this agency.59. /b/ Answer B best describes the concept of comparable worth. Answers A, C, and D do not correctly describe comparable worth.60. /d/ The standard created by the rule of reason reduced the effectiveness of the Sherman Antitrust Act (Answer D). Under this standard, the courts determine on a case by case basis whether a particular restraint was unreasonable. Answers A, B, and C would not reduce the effectiveness of the Act.61. /d/ Only Answer D is a false statement about the Americans with Disabilities Act of 1990. The Act did not provide federal funds to employers and those providing public accommodation to cover the costs of implementation. Answers A, B, and C are all correct statements about the Act.62. /a/ A closed shop requires union membership as a consideration of hiring. B is incorrect because union membership is required in a closed shop. C is incorrect because under a closed shop, collective bargaining is usual. D is incorrect because right to work refers to state legislation forbidding a closed shop.63. /a/ The free market, if unregulated, would fail to provide sufficient incentives for safety and environmental protection. Emphasis would be placed on producing at the lowest possible cost, not on various social concerns. Answers B, C, and D are incorrect.64. /d/ Of the choices listed, the most efficient way to control pollution given the purpose of the Clean Air Act Amendments of 1990 is to allow firms to buy and sell permits for pollution. Doing so creates a financial incentive for producing less pollution. Answers A, B, and C are not provisions of the Act.65. /d/ U.S. environmental policies would leave an acceptable amount of pollution. It is not cost effective to society to remove all pollution. Answers A, B, and C are all untrue statements concerning environmental policies and the implementation of environmental regulations.66. /a/ Answer A does not describe a power of federal regulatory agencies - the imposition of agency taxes on private industry. Answers B, C, and D are all activities of such agencies.67. la/ The Robinson-Patman Act amended the Clayton Act to prohibit price discrimination between buyers unless necessary to meet a competitors lower price (or justified by cost differences). B, C, and D are not justifications for price discrimination.68. /b/ Only Answer B correctly describes one of the provisions of the National Labor Relations (Wagner) Act - guaranteeing employees the right to organize and bargain collectively with management.69. /d/ One of the provisions of the Taft-Hartley (Labor-Management Relations) Act is given by Answer D -prohibiting unions from coercing employees to join. Answers A, B, and C do not state provisions of this Act.70. /d/ The Landrum Griffin Act requires labor unions to retain financial records and provide them to the government.All loans and transactions with related parties must be disclosed. Items A, B, and C are federal statutes that do not require union reporting.71. /d/ All the listed federal agencies are considered social agencies in that they are consumer oriented