Macro - Assignment Essays

question

Dissaving occurs when:

answer

income is less than consumption

question

As disposable income decreases, consumption:

answer

and saving both decrease

question

If disposable income is $900 billion when the average propensity to consume is 0.9, it can be concluded that:

answer

saving is $90 billion

question

If a family's MPC is 0.7, it means that the family is:

answer

spending seven-tenths of any increment to its income

question

Frank Castle's disposable income increases from $4,000 to $4,500 and his level of saving increases from $200 to $325, it may be concluded that his marginal propensity to:

answer

Consume is .75

question

If businesses feel more optimistic about the state of the economy, then this change is likely to:

answer

Shift the investment demand curve to the right

question

The factors that affect the amounts that consumers, businesses, government, and foreigners wish to purchase at each price level are the:

answer

Determinants of aggregate demand

question

The determinants of aggregate supply:

answer

explain why real domestic output and the price level are directly related

question

What would not shift the aggregate supply curve?

answer

an increase in the price level

question

Other things equal, a reduction in personal and business taxes can be expected to:

answer

increase both aggregate demand and aggregate supply

question

Contractionary fiscal policy is so named because it:

answer

in aimed at reducing aggregate demand and thus achieving price stability

question

An appropriate fiscal policy for a severe recession is:

answer

a decrease in tax rates

question

When changes in taxes and government spending occur in the economy without explicit action by Congress, such policy is called ________ fiscal policy:

answer

nondiscretionary

question

When the Federal government cuts taxes and increases spending to stimulate the economy during a period of recession, such actions are design to be:

answer

Countercyclical

question

The intent of contractionary fiscal policy is to:

answer

decrease aggregate demand

question

A budget surplus means that:

answer

government revenues are greater than expenditures in a given year

question

When a consumer wants to compare the price of one product with another, money is primarily functioning as a:

answer

Unit of account

question

United States currency has value primarily because it:

answer

is relatively scarce, is legal tender, and is generally acceptable in exchange for goods and services

question

The main tools that the Fed can use to alter the reserves of commercial banks are the required-reserve ratio except:

answer

exchange rate

question

The fundamental objective of monetary policy is to assist the economy in achieving:

answer

a full-employment, noninflationary level of total output

question

A decrease in the interest rate will cause a (an):

answer

increase in the amount of money held as an asset

question

Which of the following varies directly with the interest rate?

answer

the opportunity cost of holding money

question

An increase in the money supply is likely to reduce:

answer

interest rates

question

bond prices and the interest rate are inversely related

answer

true

question

The purchase and sale of government securities (bonds) by the Fed is called:

answer

open market operations

question

Which of the following Fed actions increases the excess reserves of commercial banks?

answer

Lower the reserve ratio

question

The interest rate that banks charge one another for the loan of excess reserves is the:

answer

federal funds rate

question

The immediate short-run aggregate supply (AS) curve is:

answer

horizontal

question

Which is the newest tool the Fed has to manipulate the money supply?

answer

interest on reserves

question

A recurring theme in economics is that people:

answer

have unlimited economic wants, but limited resources

question

Opportunity cost is best defined as:

answer

the value of the best forgone alternative

question

Macroeconomics focuses on:

answer

total output and the general level of prices in the economy

question

Which of the following is a normative economic statement?

answer

a trade deficit of 20 billion dollars will harm the economy

question

Which would be a positive economic statement?

answer

stock prices rose to a new record last month for the fourth month in a row

question

The role of the entrepreneur in society is to:

answer

bring the factors of production together and take the risks of producing

question

One major element of the command system is:

answer

central planning conducted by the government

question

Which will not cause a change in the demand for product A?

answer

a change in the price of A

question

In the past few years, the demand for donuts has greatly increased. This increase in demand might best be explained by:

answer

a change in buyer tastes

question

All of the following would affect the position of the supply curve for cranberries, except the:

answer

popularity of cranberry drinks

question

There is a surplus of tomatoes in the market. This implies that:

answer

the current price is set above the equilibrium level

question

If the price in this market was $4:

answer

farmers would not be able to sell all their wheat

question

If price was initially $5 we would observe:

answer

quantity supplied to exceed quantity demanded

question

The term "recession" describes a situation where:

answer

output and living standards decline

question

Why are high rates of unemployment of concern to economists?

answer

all of these options are reasons why economists are concerned about high unemployment rates

question

Shocks to the economy occur:

answer

when expectations are unmet

question

Prices tend to be sticky because:

answer

firms are worried that frequent price changes would annoy consumers

question

Which of the following statements best describes price flexibility in the economy?

answer

prices tend to be sticky in the short run but become more flexible over time

question

In the treatment of U.S. exports and imports, national income accountants:

answer

add exports, but subtract imports, in calculating GDP

question

If intermediate goods and services were included in GDP:

answer

the GDP would be overstated

question

Which of the following best defines disposable income?

answer

income received by households less personal taxes

question

Nominal GDP differs from real GDP because:

answer

real GDP results from adjusting for changes in the price level

question

One year nominal GDP was $286 billion and the price index was 88. Real GDP that year was:

answer

$325 billion

question

Normative statement is defined as:

answer

is subjective and valued based; opinion based and cannot be approved or disapproved

question

A positive statement is defined as:

answer

objective and fact based; does not have to be true but must be tested to be approved or disapproved

1 of 54

question

Dissaving occurs when:

answer

income is less than consumption

question

As disposable income decreases, consumption:

answer

and saving both decrease

question

If disposable income is $900 billion when the average propensity to consume is 0.9, it can be concluded that:

answer

saving is $90 billion

question

If a family's MPC is 0.7, it means that the family is:

answer

spending seven-tenths of any increment to its income

question

Frank Castle's disposable income increases from $4,000 to $4,500 and his level of saving increases from $200 to $325, it may be concluded that his marginal propensity to:

answer

Consume is .75

question

If businesses feel more optimistic about the state of the economy, then this change is likely to:

answer

Shift the investment demand curve to the right

question

The factors that affect the amounts that consumers, businesses, government, and foreigners wish to purchase at each price level are the:

answer

Determinants of aggregate demand

question

The determinants of aggregate supply:

answer

explain why real domestic output and the price level are directly related

question

What would not shift the aggregate supply curve?

answer

an increase in the price level

question

Other things equal, a reduction in personal and business taxes can be expected to:

answer

increase both aggregate demand and aggregate supply

question

Contractionary fiscal policy is so named because it:

answer

in aimed at reducing aggregate demand and thus achieving price stability

question

An appropriate fiscal policy for a severe recession is:

answer

a decrease in tax rates

question

When changes in taxes and government spending occur in the economy without explicit action by Congress, such policy is called ________ fiscal policy:

answer

nondiscretionary

question

When the Federal government cuts taxes and increases spending to stimulate the economy during a period of recession, such actions are design to be:

answer

Countercyclical

question

The intent of contractionary fiscal policy is to:

answer

decrease aggregate demand

question

A budget surplus means that:

answer

government revenues are greater than expenditures in a given year

question

When a consumer wants to compare the price of one product with another, money is primarily functioning as a:

answer

Unit of account

question

United States currency has value primarily because it:

answer

is relatively scarce, is legal tender, and is generally acceptable in exchange for goods and services

question

The main tools that the Fed can use to alter the reserves of commercial banks are the required-reserve ratio except:

answer

exchange rate

question

The fundamental objective of monetary policy is to assist the economy in achieving:

answer

a full-employment, noninflationary level of total output

question

A decrease in the interest rate will cause a (an):

answer

increase in the amount of money held as an asset

question

Which of the following varies directly with the interest rate?

answer

the opportunity cost of holding money

question

An increase in the money supply is likely to reduce:

answer

interest rates

question

bond prices and the interest rate are inversely related

answer

true

question

The purchase and sale of government securities (bonds) by the Fed is called:

answer

open market operations

question

Which of the following Fed actions increases the excess reserves of commercial banks?

answer

Lower the reserve ratio

question

The interest rate that banks charge one another for the loan of excess reserves is the:

answer

federal funds rate

question

The immediate short-run aggregate supply (AS) curve is:

answer

horizontal

question

Which is the newest tool the Fed has to manipulate the money supply?

answer

interest on reserves

question

A recurring theme in economics is that people:

answer

have unlimited economic wants, but limited resources

question

Opportunity cost is best defined as:

answer

the value of the best forgone alternative

question

Macroeconomics focuses on:

answer

total output and the general level of prices in the economy

question

Which of the following is a normative economic statement?

answer

a trade deficit of 20 billion dollars will harm the economy

question

Which would be a positive economic statement?

answer

stock prices rose to a new record last month for the fourth month in a row

question

The role of the entrepreneur in society is to:

answer

bring the factors of production together and take the risks of producing

question

One major element of the command system is:

answer

central planning conducted by the government

question

Which will not cause a change in the demand for product A?

answer

a change in the price of A

question

In the past few years, the demand for donuts has greatly increased. This increase in demand might best be explained by:

answer

a change in buyer tastes

question

All of the following would affect the position of the supply curve for cranberries, except the:

answer

popularity of cranberry drinks

question

There is a surplus of tomatoes in the market. This implies that:

answer

the current price is set above the equilibrium level

question

If the price in this market was $4:

answer

farmers would not be able to sell all their wheat

question

If price was initially $5 we would observe:

answer

quantity supplied to exceed quantity demanded

question

The term "recession" describes a situation where:

answer

output and living standards decline

question

Why are high rates of unemployment of concern to economists?

answer

all of these options are reasons why economists are concerned about high unemployment rates

question

Shocks to the economy occur:

answer

when expectations are unmet

question

Prices tend to be sticky because:

answer

firms are worried that frequent price changes would annoy consumers

question

Which of the following statements best describes price flexibility in the economy?

answer

prices tend to be sticky in the short run but become more flexible over time

question

In the treatment of U.S. exports and imports, national income accountants:

answer

add exports, but subtract imports, in calculating GDP

question

If intermediate goods and services were included in GDP:

answer

the GDP would be overstated

question

Which of the following best defines disposable income?

answer

income received by households less personal taxes

question

Nominal GDP differs from real GDP because:

answer

real GDP results from adjusting for changes in the price level

question

One year nominal GDP was $286 billion and the price index was 88. Real GDP that year was:

answer

$325 billion

question

Normative statement is defined as:

answer

is subjective and valued based; opinion based and cannot be approved or disapproved

question

A positive statement is defined as:

answer

objective and fact based; does not have to be true but must be tested to be approved or disapproved

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