question
Which of the following is NOT a topic studied in Macroeconomics?
answer
the price of Dell computers
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Which of the following ARE topics studied in Macroeconomics?
answer
gross domestic product; aggregate behavior of households and industries
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Prices that do not always adjust rapidly to maintain equality between quantity supplied and quantity demanded are...
answer
sticky prices
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The demand for corn has increased in May without any change in supply. Eight months later there still has been no change in corn prices. This is an example of a...
answer
sticky price
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When the Fed slows the rate of growth of the money supply to slow down the economy, the unemployment type that will be directly affected is the...
answer
cyclical unemployment
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When an economics professor quits his/her job at a university and starts looking for a better job in another university, he/she is...
answer
frictionally unemployed
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An increase in the overall price level is known as...
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inflation
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Aggregate behavior is...
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the behavior of all households and firms together
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Inflation is an...
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increase in overall price level
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Deflation occurs when...
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the average price level declines
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The government implements fiscal policy when it changes...
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Taxes and/or spending
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The government wants to encourage consumer spending through cutting income taxes. This is an example of...
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Fiscal policy
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An individual who cannot find a job because his or her job skills have become obsolete is an example of...
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Structural unemployment
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The natural rate of unemployment is generally thought of as the...
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sum of frictional unemployment and structural unemployment
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A man is fired from his job because he was late for work too many times. While he is searching for another job he would be classified as...
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Frictionally unemployed
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Deflation is a decrease in...
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The overall price level
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The MPC is...
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the change in consumption divided by the change in income
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The MPS is...
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the change in saving divided by the change in income
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If the MPS is 0.60, MPC is...
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0.40
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Higher interest rates are likely to...
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decrease consumer spending and increase consumer saving
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The fraction of a change in income that is consumed or spent is called...
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the marginal propensity to consume
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If you save $80 when you experience a $400 rise in your income,
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your MPC is 0.80
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If the MPS is 0.22, the MPC is...
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0.78
question
If the MPS is 0.05, the MPC is...
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0.95
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Lower interest rates are likely to...
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increase consumer spending and decrease consumer saving
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Household income is ___ related to consumption and ___ related to household saving.
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positively; positively
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If the MPS is 0.3, the MPC is...
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0.7
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If the MPS is 0.20, the MPC is...
answer
0.80
question
Which of the following instruments is NOT used by the Federal Reserve to change the money supply?
answer
The federal tax code
question
The Fed uses open market operations to...
answer
buy or sell government securities
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The discount rate is...
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the interest rate the Fed charges commercial banks for borrowing funds
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A decrease in the required reserve ratio...
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will increase the money supply.
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Which of the following represents an action by the Federal Reserve that is designed to increase the money supply?
answer
Buying government securities in the open market
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If the Fed sells government securities, then there is...
answer
a decrease in the supply of money
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If Mr. Garrison is paid an interest rate of 4% on his savings, but the inflation rate is 11%, the real interest rate Mr. Garrison earns is...
answer
-7%
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You want to make a 6% real return on a loan that you are planning to make, and the expected inflation rate during the period of the loan is 4%. You should charge a nominal interest rate of...
answer
10%
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Lola wants to make an 11% real return on a loan that she is planning to make, and the expected inflation rate during the period of the loan is 5%. She should charge an interest rate of...
answer
16%
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A period of very rapid increase in the overall price level is known as...
answer
hyperinflation
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The trend of the economy is...
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the long run growth path of the economy
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The term business cycle refers to the
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short-term ups and downs in the level of economic activity
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A period during which aggregate output rises is known as an...
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expansion
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A period when the economy shrinks is known as a...
answer
recession, contraction, and/or slump
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