IVY SOFTWARE MBA PREPWORKS FUNDAMENTALS OF
ECONOMICS PRACTICE EXAM 2024/2025 NEWEST !! ACTUAL
COMPLETE 200 REAL EXAM QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED ANSWERS) |ALREADY
GRADED A+|| BRAND NEW!
. Suppose the price level equals 5 (P=5). Now suppose the
Federal Reserve Bank conducts open market operations and
auctions off government bonds. Assume nothing else in the
economy changes. Because of the sale of bonds, the price level
will _________ increase decrease
not change - ANSWER -decrease
Suppose the price level equals 5 (P=5). Now suppose the
Federal Reserve Bank conducts open market operations and
auctions off government bonds. Assume nothing else in the
economy changes. Because of the sale of bonds, the value of
one unit of money will __________ increase decrease
not change - ANSWER -increase. When the Fed auctions off
government bonds, currency is taken out of circulation and the
money supply is decreased. A decrease in the money supply is
graphically demonstrated by shifting the money supply curve
to the left.
,Suppose the price level equals 5 (P=5). Now suppose the
Federal Reserve Bank conducts open market operations and
purchases government bonds. Assume nothing else in the
economy changes. Because of the purchase of bonds, the
price level will __________ increase decrease
not change - ANSWER -increase
Suppose the price level equals 5 (P=5). Now suppose the
Federal Reserve Bank conducts open market operations and
purchases government bonds. Assume nothing else in the
economy changes. Because of the purchase of bonds, the
value of one unit of money will __________ increase decrease
not change - ANSWER -decrease. when the Fed purchases
government bonds, the money supply increases, an increase in
the money supply is graphically demonstrated by shifting the
money supply curve to the right.
SUppose the price level equals 8 (P=8) Now suppose the Fed
decreases the required reserve deposit ratio, ceteris paribus. In
the money market, this monetary policy change will cause the
money ________ (supply/demand) curve to shift ________ (left,
right, north-east, south-west) - ANSWER -supply, southwest.
When the Federal Reserve Bank decreases the required reserve
deposit ratio, currency is taken out of bank reserves and placed
into circulation. As a result, the money supply is increased. An
,increase of money supply is graphically demonstrated by
shifting the money supply curve to the right.
SUppose the price level equals 8 (P=8) Now suppose the Fed
decreases the required reserve deposit ratio, ceteris paribus.
Because of the change to the required reserve deposit ratio, the
price level will_______ (increase, decrease, not change) -
ANSWER -increase. WHen the Fed decreases the required
reserve deposit ratio, currency is taken OUT of bank reserves
and placed into circulation. As a result the money supply is
increased. An increase of money supply is graphically
demonstrated by shifting the money supply curve to the right.
An increase in the money supply causes the price level to
increase
SUppose the price level equals 8 (P=8) Now suppose the Fed
decreases the required reserve deposit ratio, ceteris paribus.
Because of the change to the required reserve deposit ratio, the
value of one unit of money will _______ (increase, decrease, not
change) - ANSWER -decrease. An increase in the money supply
causes the price level to increase and the value of each unit of
money to decrease.
, Consider the following decision made by New Century Power
Company. In electricity production, once electricity has been
generated at a power plant, distribution networks are needed to
bring the electricity to the customer. Suppose NCPC has
decided to build its own electricity distribution network, but it
has also decided to purchase electricity from many different
independent electric power producers. In making this decision,
NCPC has calculated that diseconomies of scale or
diseconomies of scope exist when electricity generation and
electricity distribution are integrated under unified ownership?
- ANSWER -diseconomies of scope. NCPC must observe an
advantage to NOT having unified ownership of electricity
generation and electricity distribution. If two activities in the
production of a good are integrated under unified ownership
and there is a cost DISadvantage, then diseconomies of scope
exist. By purchasing electricity generation from the market,
then it must be less costly. Otherwise, we would observe
unified ownership of the distribution network and the
generation of electricity.
The profit maximizing rule states that a business maximizes
profits when it produces where total revenue equals total cost
(t/f) - ANSWER -False.
ECONOMICS PRACTICE EXAM 2024/2025 NEWEST !! ACTUAL
COMPLETE 200 REAL EXAM QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED ANSWERS) |ALREADY
GRADED A+|| BRAND NEW!
. Suppose the price level equals 5 (P=5). Now suppose the
Federal Reserve Bank conducts open market operations and
auctions off government bonds. Assume nothing else in the
economy changes. Because of the sale of bonds, the price level
will _________ increase decrease
not change - ANSWER -decrease
Suppose the price level equals 5 (P=5). Now suppose the
Federal Reserve Bank conducts open market operations and
auctions off government bonds. Assume nothing else in the
economy changes. Because of the sale of bonds, the value of
one unit of money will __________ increase decrease
not change - ANSWER -increase. When the Fed auctions off
government bonds, currency is taken out of circulation and the
money supply is decreased. A decrease in the money supply is
graphically demonstrated by shifting the money supply curve
to the left.
,Suppose the price level equals 5 (P=5). Now suppose the
Federal Reserve Bank conducts open market operations and
purchases government bonds. Assume nothing else in the
economy changes. Because of the purchase of bonds, the
price level will __________ increase decrease
not change - ANSWER -increase
Suppose the price level equals 5 (P=5). Now suppose the
Federal Reserve Bank conducts open market operations and
purchases government bonds. Assume nothing else in the
economy changes. Because of the purchase of bonds, the
value of one unit of money will __________ increase decrease
not change - ANSWER -decrease. when the Fed purchases
government bonds, the money supply increases, an increase in
the money supply is graphically demonstrated by shifting the
money supply curve to the right.
SUppose the price level equals 8 (P=8) Now suppose the Fed
decreases the required reserve deposit ratio, ceteris paribus. In
the money market, this monetary policy change will cause the
money ________ (supply/demand) curve to shift ________ (left,
right, north-east, south-west) - ANSWER -supply, southwest.
When the Federal Reserve Bank decreases the required reserve
deposit ratio, currency is taken out of bank reserves and placed
into circulation. As a result, the money supply is increased. An
,increase of money supply is graphically demonstrated by
shifting the money supply curve to the right.
SUppose the price level equals 8 (P=8) Now suppose the Fed
decreases the required reserve deposit ratio, ceteris paribus.
Because of the change to the required reserve deposit ratio, the
price level will_______ (increase, decrease, not change) -
ANSWER -increase. WHen the Fed decreases the required
reserve deposit ratio, currency is taken OUT of bank reserves
and placed into circulation. As a result the money supply is
increased. An increase of money supply is graphically
demonstrated by shifting the money supply curve to the right.
An increase in the money supply causes the price level to
increase
SUppose the price level equals 8 (P=8) Now suppose the Fed
decreases the required reserve deposit ratio, ceteris paribus.
Because of the change to the required reserve deposit ratio, the
value of one unit of money will _______ (increase, decrease, not
change) - ANSWER -decrease. An increase in the money supply
causes the price level to increase and the value of each unit of
money to decrease.
, Consider the following decision made by New Century Power
Company. In electricity production, once electricity has been
generated at a power plant, distribution networks are needed to
bring the electricity to the customer. Suppose NCPC has
decided to build its own electricity distribution network, but it
has also decided to purchase electricity from many different
independent electric power producers. In making this decision,
NCPC has calculated that diseconomies of scale or
diseconomies of scope exist when electricity generation and
electricity distribution are integrated under unified ownership?
- ANSWER -diseconomies of scope. NCPC must observe an
advantage to NOT having unified ownership of electricity
generation and electricity distribution. If two activities in the
production of a good are integrated under unified ownership
and there is a cost DISadvantage, then diseconomies of scope
exist. By purchasing electricity generation from the market,
then it must be less costly. Otherwise, we would observe
unified ownership of the distribution network and the
generation of electricity.
The profit maximizing rule states that a business maximizes
profits when it produces where total revenue equals total cost
(t/f) - ANSWER -False.
