ECO 119 exam 2 - Assignment Essays

question

In a small open economy, if exports equal $20 billion, imports equal $30 Billion, and domestic national saving equals $25 billion, the net capital outflow equals:

answer

- $10 billion

question

When exports exceed imports, all of the following are true except:

answer

domestic investment exceeds domestic saving.

question

In a small open economy, if exports equal $5 billion and imports equal $7 billion, then there is a trade ____ and _____ net capital outflow

answer

deficit ; negative

question

In a small open economy, if the world interest rate is r3, then the economy has:

answer

a trade deficit

question

In a small open economy, starting from a position of balanced trade, if the government increases domestic government purchases, this produces a tendency toward a trade ________ and ______ net capital outflow.

answer

deficit ; negative

question

Assume that some large foreign countries decide to subsidize investment by insinuating an investment tac credit. Then a small countries real exchange rate:

answer

will fall, and its net imports will rise.

question

In a small open economy, starting from a position of balanced trade, if the government increases the income tax, this produces a tendency towards a trade _____ and _______ net capital outflow.

answer

surplus ; positive

question

The percentage change in the nominal exchange rate equals the percentage change in the real exchange rate plus the :

answer

foreign inflation rate minus the domestic inflation rate

question

In a small open economy, if consumers shift their preference towards Japanese cars, then net exports:

answer

remain unchanged, but the real exchange rate falls.

question

Which if the panels illustrates the impact of an increase in household saving on the real exchange rate?

answer

question

In a small open economy, if the government adopts a policy that lowers imports, then that policy:

answer

raises the real exchange rate and does not change net exports.

question

If the information technology boom increases investment demand in a small open economy, then net exports ______, and the real exchange rate _________.

answer

decrease ; appreciates

question

In a small open economy, if the world interest rate falls, then domestic investment will ______, and the real exchange rate will _______, holding all else constant.

answer

increase ; decrease

question

Which of the panels illustrates the impact of an increase in an investment demand on the real exchange rate?

answer

question

An effective policy to reduce a trade deficit in a small open economy would be to:

answer

increase taxes

question

In a small open economy, if the introduction of automatic teller machines reduces the demand for money, then net exports:

answer

increase, and the real exchange rate remains unchanged

question

If the real exchange rte depreciates from 1 Japanese good per US good to 0.5 Japanese good per US good, then the US exports _________, and US imports _________.

answer

increase ; decrease

question

Which of the panels illustrate the impact of contractionary fiscal policies abroad on the real exchange rate

answer

question

Predict (trade balance, real exchange rate, and nominal exchange rate)

what would happen in response to a fall in consumer confidence about the future that induces them to spend less and save more.

answer

1. Trade balance would increase

2. Real exchange rate would fall

3. The nominal exchange rate would fall

question

World investment decreases as a function of the world interest rate will _______. As a result, the world interest rate will _____>

answer

increase ; rise

question

This will cause domestic investment in Oceania to _______ and push the trade balance toward ________.

answer

decrease ; surplus

question

Ultimately, the real exchange rate for Oceania currency will _______.

answer

decrease

question

Any policy aimed at lowering the natural rate of unemployment must either ______ the rate of job separation or _______ the rate of job finding

answer

reduce ; increase

question

In the model of the steady-state unemployment rate with a fixed labor force, the rate of job findings equal the percentage of the ______ who find a job each month, while the rate of job separation equals the percentage of the _____ who lose their job each month.

answer

unemployed ; employed

question

Sectoral Shifts:

answer

make frictional employment inevitable.

question

Unemployment insurance increases the amount of frictional unemployment by

answer

softening the economic hardship of unemployment

question

All of the following are reasons for frictional unemployment except:

answer

unemployment workers accept the first job offer that they receive.

question

Economists call the changes in composition of demand among industries and regions:

answer

sectoral shifts

question

according to efficiency wage theory, firms benefit by paying higher-than equilibrium wages because worker _____ increases

answer

productivity

question

When insiders have a much greater impact on the wage bargaining process than do outsiders, the negotiated wage is likely to be _______ the equilibrium wage

answer

much greater than

question

Assume that a country experiences a reduction in productivity that shifts the labor demand curve downward and to the left. If the labor market were always in equilibrium, this would lead to:

answer

a lower real wage and no change in unemployment.

question

By paying efficiency wages, firms contribute to higher unemployment because they:

answer

keep the wage above the equilibrium level

question

Paying efficiency wages helps firms reduce the problem of moral hazard by:

answer

encouraging unsupervised workers to maintain a higher level of productivity.

question

Which of the following is the best example of structural unemployment

answer

Kirby is seeking a job as an airline pilot by the high union wages in the industry have limited the number of jobs available

question

The unemployment resulting when real wages are held above equilibrium is called _____ unemployment, while the unemployment that occurs as workers search for a job that best suits their skills is called _______ unemployment.

answer

structural ; frictional

question

Spells of unemployment end when the unemployed person finds a job or:

answer

withdraws from the labor force.

question

Discouraged workers are counted as:

answer

out of the labor force

question

A relative demand for unskilled workers falls, wages for unskilled workers _____, and unemployment compensation becomes a _____ attractive option.

answer

fall ; more

question

If the underground economy is larger in Europe than in the United States, the difference in the _____ number of hours worked between Europe and the United States may be smaller than the difference in the _____ numbers of hours worked.

answer

Actual ; measured

question

If the economy has a large number of discourage workers, the unemployment rate will ________ and the employment-population ratio will be ________.

answer

remain unaffected ; be low

question

Although not a goal of the unemployment insurance system, one effect is that the system reduces

answer

the rate of job finding.

question

Monetary neutrality, the irrelevance of the money supply in determining values of _______ variables, is generally thought to be a property of the economy in the long run.

answer

real

question

most economists believe that prices are:

answer

flexible in the long run but many are sticky in the short run

question

For a fixed money supply, the aggregate demand curve slopes downward because at a lower price level, real money balances are ______ , generating a _______ quantity of output demanded

answer

higher ; greater

question

along the aggregate demand curve, which of the following are held constant

answer

the money supply and velocity

question

When an aggregate demand curve is drawn with real GDP (y) along the horizontal axis and the price level (P) along the vertical axis, the money supply is decreased, then the aggregate demand curve will shift:

answer

downward and to the left.

question

If the long-run aggregate supply curve is vertical, then changes in aggregate demand affect:

answer

prices but not level of output

question

The short run refers to a period :

answer

during which prices are sticky and cyclical unemployment may occur

question

Monetary neutrality is a characteristic of the aggregate-demand-aggregate supply model in:

answer

the long run but not in the short run

question

If the short-run aggregate supply curve is horizontal and the long-run aggregate supply curve is vertical, then a change in the money supply will change in the short run and change ______ in the long run

answer

only output ; only prices

question

Assume that the economy starts from long-run equilibrium. If the Fed increases the money supply, the _______ increase(s) in the short run and _______ increase(s) in the long run.

answer

output ; prices

question

C ; B

answer

question

Assume the economy is at point E. With no further shocks or policy moves, the economy in the long run will be at point:

answer

less ; more

question

If the fed accommodates an adverse supply shock, output falls ______, and prices rise ______.

answer

increasing the money supply, but at the cost of permanently higher prices.

question

Starting from long-run equilibrium,, if a drought pushes up food prices throughout the economy, the fed could move the economy more rapidly back to full employment output by:

answer

Central bank A should decrease the quantity of money, whereas Central Bank B should increase it.

question

If central bank A cares only about keeping the price level stable and Central bank B cares only about keeping output at its natural level, then in response to exogenous increase in the price of oil:

answer

Is more volatile than

question

Over the business cycle, investment spending _______ consumption spending

answer

decreases ; increases

question

When GDP growth declines, investment spending typically ______ and consumption spending typically ________.

answer

downward and to the left

question

An increase in taxes shifts the IS curve:

answer

rise ; decrease

question

In this graph, if firms are producing at level Y3, then inventories will ________, inducing firms to ______ production.

answer

is larger than

question

In the Keynesian model with a given MPC > 0, the government - expenditure multiplier _________ the tax multiplier

answer

decrease ; downward

question

After an explanation for the slope if the IS curve is that as the interest rate increases, the quantity of investment ______, and the shifts the expenditure function ______. thereby decreasing income

answer

Increase but by less than 100.

question

In the Keynesian-cross model, if taxes are reduced by 100, then planned expenditures ________ for any given level of income.

answer

the government-spending multiplier is larger than the tax multiplier

question

Based on the Keynesian model, one reason to support government spending increases as measures to increase output is that:

answer

the interest rate

question

In the liquidity preference model, what adjusts to move the money market to equilibrium following a change in the money supply?

answer

negatively related to the interest rate and related to income.

question

the theory of liquidity preference states that the quantity of real money balances demanded is:

answer

supply of real balances exceeds the demand.

question

If the interest rate is above the equilibrium value, the:

answer

sell ; rise

question

Based on the graph, if the interest rate is r3, then people will ______ bonds, and the interest rate will ________.

answer

upward and to the left.

question

A decrease in the real money supply, other things being equal will shift the LM curve:

answer

investment spending ; demand

question

The interest rates determines ______ in the good market and money ________ in the money markt

answer

undefined

1 of 70

question

In a small open economy, if exports equal $20 billion, imports equal $30 Billion, and domestic national saving equals $25 billion, the net capital outflow equals:

answer

- $10 billion

question

When exports exceed imports, all of the following are true except:

answer

domestic investment exceeds domestic saving.

question

In a small open economy, if exports equal $5 billion and imports equal $7 billion, then there is a trade ____ and _____ net capital outflow

answer

deficit ; negative

question

In a small open economy, if the world interest rate is r3, then the economy has:

answer

a trade deficit

question

answer

deficit ; negative

question

Assume that some large foreign countries decide to subsidize investment by insinuating an investment tac credit. Then a small countries real exchange rate:

answer

will fall, and its net imports will rise.

question

In a small open economy, starting from a position of balanced trade, if the government increases the income tax, this produces a tendency towards a trade _____ and _______ net capital outflow.

answer

surplus ; positive

question

The percentage change in the nominal exchange rate equals the percentage change in the real exchange rate plus the :

answer

foreign inflation rate minus the domestic inflation rate

question

In a small open economy, if consumers shift their preference towards Japanese cars, then net exports:

answer

remain unchanged, but the real exchange rate falls.

question

Which if the panels illustrates the impact of an increase in household saving on the real exchange rate?

answer

question

In a small open economy, if the government adopts a policy that lowers imports, then that policy:

answer

raises the real exchange rate and does not change net exports.

question

If the information technology boom increases investment demand in a small open economy, then net exports ______, and the real exchange rate _________.

answer

decrease ; appreciates

question

In a small open economy, if the world interest rate falls, then domestic investment will ______, and the real exchange rate will _______, holding all else constant.

answer

increase ; decrease

question

Which of the panels illustrates the impact of an increase in an investment demand on the real exchange rate?

answer

question

An effective policy to reduce a trade deficit in a small open economy would be to:

answer

increase taxes

question

In a small open economy, if the introduction of automatic teller machines reduces the demand for money, then net exports:

answer

increase, and the real exchange rate remains unchanged

question

If the real exchange rte depreciates from 1 Japanese good per US good to 0.5 Japanese good per US good, then the US exports _________, and US imports _________.

answer

increase ; decrease

question

Which of the panels illustrate the impact of contractionary fiscal policies abroad on the real exchange rate

answer

question

Predict (trade balance, real exchange rate, and nominal exchange rate)

what would happen in response to a fall in consumer confidence about the future that induces them to spend less and save more.

answer

1. Trade balance would increase

2. Real exchange rate would fall

3. The nominal exchange rate would fall

question

World investment decreases as a function of the world interest rate will _______. As a result, the world interest rate will _____>

answer

increase ; rise

question

This will cause domestic investment in Oceania to _______ and push the trade balance toward ________.

answer

decrease ; surplus

question

Ultimately, the real exchange rate for Oceania currency will _______.

answer

decrease

question

Any policy aimed at lowering the natural rate of unemployment must either ______ the rate of job separation or _______ the rate of job finding

answer

reduce ; increase

question

answer

unemployed ; employed

question

Sectoral Shifts:

answer

make frictional employment inevitable.

question

Unemployment insurance increases the amount of frictional unemployment by

answer

softening the economic hardship of unemployment

question

All of the following are reasons for frictional unemployment except:

answer

unemployment workers accept the first job offer that they receive.

question

Economists call the changes in composition of demand among industries and regions:

answer

sectoral shifts

question

according to efficiency wage theory, firms benefit by paying higher-than equilibrium wages because worker _____ increases

answer

productivity

question

When insiders have a much greater impact on the wage bargaining process than do outsiders, the negotiated wage is likely to be _______ the equilibrium wage

answer

much greater than

question

Assume that a country experiences a reduction in productivity that shifts the labor demand curve downward and to the left. If the labor market were always in equilibrium, this would lead to:

answer

a lower real wage and no change in unemployment.

question

By paying efficiency wages, firms contribute to higher unemployment because they:

answer

keep the wage above the equilibrium level

question

Paying efficiency wages helps firms reduce the problem of moral hazard by:

answer

encouraging unsupervised workers to maintain a higher level of productivity.

question

Which of the following is the best example of structural unemployment

answer

Kirby is seeking a job as an airline pilot by the high union wages in the industry have limited the number of jobs available

question

answer

structural ; frictional

question

Spells of unemployment end when the unemployed person finds a job or:

answer

withdraws from the labor force.

question

Discouraged workers are counted as:

answer

out of the labor force

question

A relative demand for unskilled workers falls, wages for unskilled workers _____, and unemployment compensation becomes a _____ attractive option.

answer

fall ; more

question

answer

Actual ; measured

question

If the economy has a large number of discourage workers, the unemployment rate will ________ and the employment-population ratio will be ________.

answer

remain unaffected ; be low

question

Although not a goal of the unemployment insurance system, one effect is that the system reduces

answer

the rate of job finding.

question

Monetary neutrality, the irrelevance of the money supply in determining values of _______ variables, is generally thought to be a property of the economy in the long run.

answer

real

question

most economists believe that prices are:

answer

flexible in the long run but many are sticky in the short run

question

For a fixed money supply, the aggregate demand curve slopes downward because at a lower price level, real money balances are ______ , generating a _______ quantity of output demanded

answer

higher ; greater

question

along the aggregate demand curve, which of the following are held constant

answer

the money supply and velocity

question

answer

downward and to the left.

question

If the long-run aggregate supply curve is vertical, then changes in aggregate demand affect:

answer

prices but not level of output

question

The short run refers to a period :

answer

during which prices are sticky and cyclical unemployment may occur

question

Monetary neutrality is a characteristic of the aggregate-demand-aggregate supply model in:

answer

the long run but not in the short run

question

answer

only output ; only prices

question

Assume that the economy starts from long-run equilibrium. If the Fed increases the money supply, the _______ increase(s) in the short run and _______ increase(s) in the long run.

answer

output ; prices

question

C ; B

answer

question

Assume the economy is at point E. With no further shocks or policy moves, the economy in the long run will be at point:

answer

less ; more

question

If the fed accommodates an adverse supply shock, output falls ______, and prices rise ______.

answer

increasing the money supply, but at the cost of permanently higher prices.

question

Starting from long-run equilibrium,, if a drought pushes up food prices throughout the economy, the fed could move the economy more rapidly back to full employment output by:

answer

Central bank A should decrease the quantity of money, whereas Central Bank B should increase it.

question

If central bank A cares only about keeping the price level stable and Central bank B cares only about keeping output at its natural level, then in response to exogenous increase in the price of oil:

answer

Is more volatile than

question

Over the business cycle, investment spending _______ consumption spending

answer

decreases ; increases

question

When GDP growth declines, investment spending typically ______ and consumption spending typically ________.

answer

downward and to the left

question

An increase in taxes shifts the IS curve:

answer

rise ; decrease

question

In this graph, if firms are producing at level Y3, then inventories will ________, inducing firms to ______ production.

answer

is larger than

question

In the Keynesian model with a given MPC > 0, the government - expenditure multiplier _________ the tax multiplier

answer

decrease ; downward

question

After an explanation for the slope if the IS curve is that as the interest rate increases, the quantity of investment ______, and the shifts the expenditure function ______. thereby decreasing income

answer

Increase but by less than 100.

question

In the Keynesian-cross model, if taxes are reduced by 100, then planned expenditures ________ for any given level of income.

answer

the government-spending multiplier is larger than the tax multiplier

question

Based on the Keynesian model, one reason to support government spending increases as measures to increase output is that:

answer

the interest rate

question

In the liquidity preference model, what adjusts to move the money market to equilibrium following a change in the money supply?

answer

negatively related to the interest rate and related to income.

question

the theory of liquidity preference states that the quantity of real money balances demanded is:

answer

supply of real balances exceeds the demand.

question

If the interest rate is above the equilibrium value, the:

answer

sell ; rise

question

Based on the graph, if the interest rate is r3, then people will ______ bonds, and the interest rate will ________.

answer

upward and to the left.

question

A decrease in the real money supply, other things being equal will shift the LM curve:

answer

investment spending ; demand

question

The interest rates determines ______ in the good market and money ________ in the money markt

answer

undefined

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