Eco 3203 final multiple choice pt 3 (exam 1&2)

question

An increase in the price of imported goods will show up in

answer

The CPI but not in the GDP deflator

question

if an increase of an equal percentage in all factors of production increases output of the same percentage, then a production function has the property called

answer

constant returns to scale

question

Real GDP ____ overtime, and the growth rate of real GDP ____.

answer

grows; fluctuates

question

if the number of employed increases while the number of unemployed does not change, the unemployment rate

answer

will decrease

question

a measure of how fast the general level of prices is rising is called the

answer

inflation rate

question

the price received by each factor of production is determined by

answer

demand and supply of factors

question

the largest component of GDP is

answer

consumption

question

in the United States since the end of World War II

answer

the labor force participation rate of men has decreased while the labor force participation rate of women has increased

question

in a simple model of the supply and demand for pizza, the endogenous variables are

answer

the price of pizza and the quantity of pizza sold

question

a fixed weight price index like the CPI _____ the change in the cost of living because it _____ take into account that people can substitute less expensive goods for ones that have become more expensive

answer

overestimates; does not

question

When prices of different goods are increasing by different amounts comma the price index that will rise the fastest is

answer

The CPI

question

a production function is a mathematical relationship between

answer

factors of production and the quantity of output produced

question

an example of decreasing returns to scale is when capital and labor inputs

answer

both increase 10% and output increases 5%

question

macroeconomic models

answer

make different assumptions to explain different aspects of the macro economy

question

using a market clearing model to analyze the labor market is ____ because wages usually change _____.

answer

unrealistic; infrequently

question

the real wage is the price per unit of Labor measured in

answer

units of output

question

a competitive, profit maximizing firm hires labor until the

answer

price of output multiplied by the marginal product of Labor equals the wage

question

The labor force equals the

answer

number of employed and unemployed individuals

question

assume that a rancher sells McDonald's a quarter pound of meat for $1 and then McDonald's sells you a hamburger made from that meat for $2. In this case, GDP increases by

answer

question

GNP equals GDP ____ income earned domestically by foreigners _____ income that Nationals earn abroad

answer

minus; Plus

question

when a firm sells a product out of inventory, investment expenditures _____, and consumption expenditures _____

answer

decrease; Increase

question

the assumption that the factors supply is fixed will imply that the factors

answer

supply curve is vertical

question

assume that the Market Basket of goods and services purchased in 2004 by the average family in the United States cost $14,000 in 2004 prices, whereas the same basket costs $21,000 in 2009 prices. Given the data, The CPI in 2009 using 2004 as the base year would be

answer

1.50

question

Which of the following is the best example of a sticky price
a) the price of a barrel of oil
b) the price of a share of stock
c) the price Of the US dollar in terms of euros
d) the price of a soda in a vending machine

answer

d)The price of a soda in a vending machine

question

unlike the real-world, the classical model with fixed output assumes that

answer

capital and labor are fully utilized

question

An increase in supply of capital will

answer

decrease the real rental price of capital

question

in the classical model with fixed income, a reduction in the government budget deficit will lead to a

answer

lower real interest rate

question

compared to typical open market operations, when engaging in quantitative easing operations conducted by the Federal Reserve between 2007 and 2011, Federal Reserve purchases tended to be ____ securities

answer

riskier and longer term

question

the demand for loanable funds is equivalent to

answer

investment

question

demand deposits are funds held in

answer

checking accounts

question

if many banks fail, this is likely to

answer

increase the ratio of currency to deposits

question

money market mutual fund shares are included in

answer

M2 only

question

in a closed economy, Y - C - G =

answer

National Savings

question

the neoclassical theory of distribution explains the allocation of

answer

income among factors of production

question

to increase the money supply, The Federal Reserve

answer

buys government bonds

question

when saving increases as the interest rate increases (In other words, the supply of loanable funds curve is upward sloping ), an increase in investment demand results in a ____ interest rate and ____ in the quantity of investment

answer

higher; An increase

question

people use money as a store of value when they

answer

hold money to transfer purchasing power into the future

question

if the Federal Reserve increases the interest rate paid on reserves, banks will tend to hold ____ excess reserves, which will ____ the money multiplier

answer

more; Decrease

question

according to the neoclassical theory of distribution, if firms are competitive and subject to constant returns to scale, total income in the economy is distributed

answer

between the labor and capital used in production, according to their marginal productivities

question

in a fractional reserve banking system, banks create money when they

answer

make loans

question

the money supply will decrease if the

answer

currency deposit ratio increases

question

the reserve deposit ratio is determined by

answer

business policies of banks and the laws regulating banks

question

a trade in a barter economy requires

answer

a double coincidence of wants

question

a consumption function shows the relationship between consumption and

answer

disposable income

question

in a closed economy with fixed output, when government spending increases

answer

public saving decreases

question

the money supply consists of

answer

currency plus demand deposits

question

consumption depends ____ on disposable income, and investment depends _____ on the real interest rate

answer

positively; Negatively

question

skill based technological change ____ the demand for high skilled workers, while a slowdown in the pace of educational advancement reduces the supply of skilled workers. If we observe both of these phenomena , we would expect ____ wages for skilled workers

answer

Increase; Higher

question

when the demand for loanable funds exceeds the supply of loanable funds, households want to save ____ than firms want to invest, and the interest rate ____

answer

less; Rises

question

assume that an increase in consumer confidence raises consumers expectations of future income and thus the amount they want to consume today for any given level of disposable income. This shift, in a neoclassical economy, will

answer

lower investment and raise the interest rate

1 of 50

question

An increase in the price of imported goods will show up in

answer

The CPI but not in the GDP deflator

question

if an increase of an equal percentage in all factors of production increases output of the same percentage, then a production function has the property called

answer

constant returns to scale

question

Real GDP ____ overtime, and the growth rate of real GDP ____.

answer

grows; fluctuates

question

if the number of employed increases while the number of unemployed does not change, the unemployment rate

answer

will decrease

question

a measure of how fast the general level of prices is rising is called the

answer

inflation rate

question

the price received by each factor of production is determined by

answer

demand and supply of factors

question

the largest component of GDP is

answer

consumption

question

in the United States since the end of World War II

answer

the labor force participation rate of men has decreased while the labor force participation rate of women has increased

question

in a simple model of the supply and demand for pizza, the endogenous variables are

answer

the price of pizza and the quantity of pizza sold

question

answer

overestimates; does not

question

When prices of different goods are increasing by different amounts comma the price index that will rise the fastest is

answer

The CPI

question

a production function is a mathematical relationship between

answer

factors of production and the quantity of output produced

question

an example of decreasing returns to scale is when capital and labor inputs

answer

both increase 10% and output increases 5%

question

macroeconomic models

answer

make different assumptions to explain different aspects of the macro economy

question

using a market clearing model to analyze the labor market is ____ because wages usually change _____.

answer

unrealistic; infrequently

question

the real wage is the price per unit of Labor measured in

answer

units of output

question

a competitive, profit maximizing firm hires labor until the

answer

price of output multiplied by the marginal product of Labor equals the wage

question

The labor force equals the

answer

number of employed and unemployed individuals

question

assume that a rancher sells McDonald's a quarter pound of meat for $1 and then McDonald's sells you a hamburger made from that meat for $2. In this case, GDP increases by

answer

question

GNP equals GDP ____ income earned domestically by foreigners _____ income that Nationals earn abroad

answer

minus; Plus

question

when a firm sells a product out of inventory, investment expenditures _____, and consumption expenditures _____

answer

decrease; Increase

question

the assumption that the factors supply is fixed will imply that the factors

answer

supply curve is vertical

question

answer

1.50

question

answer

d)The price of a soda in a vending machine

question

unlike the real-world, the classical model with fixed output assumes that

answer

capital and labor are fully utilized

question

An increase in supply of capital will

answer

decrease the real rental price of capital

question

in the classical model with fixed income, a reduction in the government budget deficit will lead to a

answer

lower real interest rate

question

answer

riskier and longer term

question

the demand for loanable funds is equivalent to

answer

investment

question

demand deposits are funds held in

answer

checking accounts

question

if many banks fail, this is likely to

answer

increase the ratio of currency to deposits

question

money market mutual fund shares are included in

answer

M2 only

question

in a closed economy, Y - C - G =

answer

National Savings

question

the neoclassical theory of distribution explains the allocation of

answer

income among factors of production

question

to increase the money supply, The Federal Reserve

answer

buys government bonds

question

answer

higher; An increase

question

people use money as a store of value when they

answer

hold money to transfer purchasing power into the future

question

if the Federal Reserve increases the interest rate paid on reserves, banks will tend to hold ____ excess reserves, which will ____ the money multiplier

answer

more; Decrease

question

according to the neoclassical theory of distribution, if firms are competitive and subject to constant returns to scale, total income in the economy is distributed

answer

between the labor and capital used in production, according to their marginal productivities

question

in a fractional reserve banking system, banks create money when they

answer

make loans

question

the money supply will decrease if the

answer

currency deposit ratio increases

question

the reserve deposit ratio is determined by

answer

business policies of banks and the laws regulating banks

question

a trade in a barter economy requires

answer

a double coincidence of wants

question

a consumption function shows the relationship between consumption and

answer

disposable income

question

in a closed economy with fixed output, when government spending increases

answer

public saving decreases

question

the money supply consists of

answer

currency plus demand deposits

question

consumption depends ____ on disposable income, and investment depends _____ on the real interest rate

answer

positively; Negatively

question

answer

Increase; Higher

question

when the demand for loanable funds exceeds the supply of loanable funds, households want to save ____ than firms want to invest, and the interest rate ____

answer

less; Rises

question

answer

lower investment and raise the interest rate

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