Macro - Assignment Essays

question

Aggregate output is:

answer

The total quantity of final goods and services produced within an economy

question

In the circular-flow model, households:

answer

Receive transfer payments from the government

question

The National Income and Product accounts are calculated by the:

answer

Bureau of Economic Analysis.

question

Economists frequently use GDP per Capita to reflect:

answer

Differences in living standards across countries

question

Suppose a consumer buys a frozen cheese pizza at the grocery store for $10. The frozen pizza company sold the pizza to the store for $5. The frozen pizza company purchased the pizza dough and tomato sauce from a food processing company at a price of $2 and bought the cheese from a dairy at a price of $1. How much has GDP increased?

answer

$10

question

Which is an example of a final good?

answer

a Computer purchased from Apple by a college student to be used to take online courses.

question

Consider an economy that produces only two goods: DVDs and DVD players. If 10 DVDs are sold at $20 each and 5 DVD players are sold at $100 each, then nominal GDP is:

answer

$700

question

Which is the best definition of GDP?

answer

The total dollar value of all final goods and services produced in the economy during a given year.

question

A laptop computer that is purchased by an accounting firm is considered to be:

answer

Investment Spending

question

Which would NOT be classified as a macroeconomic question:

answer

What determines the cost to a university or college of offering a new course?

question

Suppose only two countries existed in the world. Country A imported $200 million worth of goods and services from country B. Country B imported $100 million worth of goods and services from country A. Net exports for:

answer

Country A equal - $100 million

question

In the expanded circular-flow diagram, the three markets of the economy are:

answer

Factor markets, Finical Markets, and Markets for goods and services

question

Barbara pays $3 for a plain basket and buys $2 of craft materials to make Easter baskets. If the value added by Barbara is $7, the price of each basket should be:

answer

$12

question

Which transaction would not be counted in the GDP for the United States?

answer

Your Mother buys 100 shares of Nike Stock

question

Fiscal Policy involves:

answer

Changes in taxation and government spending

question

Which would NOT be included in GDP:

answer

The dollar value of a repair job done by your professor on his or her own car

question

Which is included in GDP The dollar value of a repair job done by your professor on his or her own car:

answer

The purchase of a ticket to a Lady Gaga concert

question

A Countrys exports minus its imports during a period are

answer

Net Imports

question

Monetary Policy involves:

answer

Changes in the money supply intended to affect interest rates

question

Real GDP tends to understate our economic well-being because it:

answer

Excludes the value of leisure.

question

A stock company is

answer

A share of ownership of a company held by a shareholder.

question

All are costs of inflation EXCEPT:

answer

efficiency wage costs

question

The producer price index is often regarded as a warning sign of inflation because:

answer

A. commodity producers are relatively quick to raise prices.

question

Last week Stephanie quit her job as a copywriter at an advertising agency. She has spent the past few days browsing the help wanted ads but hasn't found anything that matches her skills. Stephanie is best classified as

answer

frictionally unemployed.

question

Jim has a part-time job and would prefer to have a full-time job but has been unable to find full-time work. Jim is classified as:

answer

an underemployed worker

question

The wage divided by the price level is known as the:

answer

Real wage.

question

If the CPI is 120 in year 1 and 150 in year 2, then the rate of inflation from year 1 to year 2 is:

answer

25%

question

Which federal agency calculates the official unemployment rate?

answer

Bureau of Labor Statistics

question

f a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its labor force is:

answer

150 Million

question

Donna was laid off by her employer at the beginning of 2011. She looked for a job for three months, but could not find anything suitable. She then decided to volunteer for a soup kitchen and stopped looking for a job. Donna is considered to be:

answer

Discouraged Worker

question

Unemployment rates are usually higher in Europe than in the United States because:

answer

unemployment benefits are more generous in Europe than in the United States

question

Which price index measures the cost of living?

answer

CPI

question

Suppose the real interest rate is 2.1% and the nominal interest rate is 5.4%. The inflation rate is:

answer

3.3%

question

If the cost of a market basket is $200 in year 1 and $230 in year 2, the price index for year 2 using year 1 as the base is:

answer

115

question

The GDP deflator for a given year is 100 times:

answer

nominal GDP for that year divided by real GDP for that year.

question

Anna recently moved to Boston in order for her husband Joe to begin a new job as an economics professor at Harvard. Anna is an experienced surgeon who is interviewing with several hospitals in Boston. Anna is:

answer

Fictionally unemployed

question

The labor supply curve is positively sloped because:

answer

more people are willing to work at higher wages than at lower wages.

question

The costs that arise from the way inflation makes money a less reliable unit of measurement are known as:

answer

unit-of-account costs.

question

Radhika just graduated from college. She recently quit her part time job to focus on finding a full time job that better uses the skills she has acquired in college. Radhika is considered to be:

answer

Fictionally Unemployed

question

Efficiency wages are usually set by employers to:

answer

provide an incentive for better performance.

question

Which statement is TRUE concerning interest rates?

answer

The real interest rate can be zero, positive, or negative.

question

In February of 2012, the Bureau of Labor Statistics calculated the unemployment rate to be 8.3%. If frictional unemployment was 2% and structural unemployment was 3.2%, then cyclical unemployment would be:

answer

3.1%

question

Congress increases personal income tax rates in order to balance the budget. Which is likely to result?

answer

Automatic stabilizers will decrease the contractionary impact of the decrease in aggregate demand.

question

A change in taxes or a change in government transfers affects consumption through a change in:

answer

Disposable income

question

The 2009 U.S. stimulus was a(n) _________ fiscal policy that ________ aggregate demand.

answer

expansionary; increased

question

The difference between a budget deficit and government debt is that:

answer

a deficit is the amount by which government spending exceeds tax revenues, whereas debt is the amount the government owes.

question

Which fiscal policy would make a budget surplus smaller or a budget deficit larger?

answer

increase in government purchases of goods and services

question

All are sources of federal tax revenue EXCEPT

answer

Sales tax

question

The existence of lags makes:

answer

both fiscal and monetary policy more challenging to implement.

question

Government spending and taxation changes that cause fiscal policy to be expansionary when the economy contracts and contractionary when the economy expands are known as:

answer

automatic stabilizers.

question

An increase in government transfers is an example of ________ because it ________.

answer

expansionary fiscal policy; shifts the aggregate demand curve to the right, increasing aggregate output

question

President Johnson's use of a temporary 10% surcharge on income taxes is a classic example of:

answer

contractionary fiscal policy.

question

If the marginal propensity to consume is 0.75 and the federal government increases spending by $100 billion, the income expenditure model would predict that real GDP will increase by:

answer

$400 billion

question

Government payments to households for which no good or service is provided in return are called:

answer

transfer payments

question

Which is an expansionary fiscal policy?

answer

increase in unemployment benefits

question

If the current level of real GDP lies below potential GDP, then an appropriate fiscal policy would be to increase _____, which will shift the _____ curve to the _____.

answer

government purchases; AD; right

question

If there is an inflationary gap in the economy, fiscal policy will likely involve action to:

answer

shift aggregate demand to the left.

question

If the marginal propensity to consume is 0.75 and government purchases of goods and services decrease by $30 billion, real GDP will:

answer

decrease by $120 billion

question

Discretionary fiscal policy involves

answer

A. using government spending or tax policy to affect aggregate demand.

question

The government budget balance equals taxes:

answer

minus government purchases minus government transfers.

question

The cyclically adjusted budget balance is an estimate of:

answer

what the budget balance would be if real GDP were exactly equal to potential output

question

The multiplier effect of changes in government purchases of goods and services is equal to:

answer

1/(1 - MPC).

question

An example of an automatic stabilizer that works when the economy contracts is a:

answer

rise in government transfers as more people receive unemployment insurance benefits.

question

If the MPC is 0.9, then the government spending multiplier is

answer

10.

question

Currency held in bank vaults and bank deposits held at the Federal Reserve are:

answer

not part of the money supply.

question

A reserve ratio is the:

answer

fraction of deposits that the bank is required to hold.

question

When you are using money to purchase a new MP3 player, money is serving as a:

answer

medium of exchange.

question

Probably the most important feature of deposit insurance is that it:

answer

protects the economy against bank runs.

question

The reserve ratio is the:

answer

fraction of deposits that banks hold in their vaults plus their deposits at the Federal Reserve.

question

If the required reserve ratio rises

answer

the banking system must keep more of a deposit in its reserves

question

Reserve requirements

answer

set the minimum amount of reserves a bank must hold.

question

Money is anything that:

answer

serves as a medium of exchange for goods and services

question

Suppose you transfer $500 from your checking account to your savings account. With this transaction, M1 _____ and M2_____.

answer

Decreases; Stays the same

question

According to the Glass-Steagall Act of 1933:

answer

investment banks could create and trade financial assets, such as stocks and bonds, but commercial banks could not trade stocks and bonds.

question

Decisions about monetary policy are made by:

answer

the Federal Open Market Committee.

question

Banks create money when they:

answer

Make loans

question

when banks extend loans:

answer

the money supply increases

question

An example of a double coincidence of wants is a(n):

answer

car mechanic who wants a TV, finding an owner of an electronics store who wants a car repaired.

question

Subprime loans are loans

answer

made to buyers who don't meet the usual criteria for getting a mortgage.

question

The central bank of the United States is called the

answer

Federal Reserve System

question

The TED rate is the

answer

difference between the interest rate at which banks lend to each other and the interest rate on U.S. government debt

question

Debit cards:

answer

are considered part of the money supply, since they allow access to a part of the money supply

question

Deposit insurance:

answer

provides depositors with assurances that they will receive their deposits even if there are questions about a bank's soundness.

question

The monetary base is the sum of:

answer

reserves held by the banks and currency in circulation.

question

If a bank has deposits of $100,000, loans of $75,000, cash on hand of $10,000, and $15,000 on deposit at the Federal Reserve, then its reserve ratio is:

answer

25%

question

When we keep part of our wealth in a savings account, money is playing the role of:

answer

Store of Value

1 of 86

question

Aggregate output is:

answer

The total quantity of final goods and services produced within an economy

question

In the circular-flow model, households:

answer

Receive transfer payments from the government

question

The National Income and Product accounts are calculated by the:

answer

Bureau of Economic Analysis.

question

Economists frequently use GDP per Capita to reflect:

answer

Differences in living standards across countries

question

answer

$10

question

Which is an example of a final good?

answer

a Computer purchased from Apple by a college student to be used to take online courses.

question

Consider an economy that produces only two goods: DVDs and DVD players. If 10 DVDs are sold at $20 each and 5 DVD players are sold at $100 each, then nominal GDP is:

answer

$700

question

Which is the best definition of GDP?

answer

The total dollar value of all final goods and services produced in the economy during a given year.

question

A laptop computer that is purchased by an accounting firm is considered to be:

answer

Investment Spending

question

Which would NOT be classified as a macroeconomic question:

answer

What determines the cost to a university or college of offering a new course?

question

answer

Country A equal - $100 million

question

In the expanded circular-flow diagram, the three markets of the economy are:

answer

Factor markets, Finical Markets, and Markets for goods and services

question

Barbara pays $3 for a plain basket and buys $2 of craft materials to make Easter baskets. If the value added by Barbara is $7, the price of each basket should be:

answer

$12

question

Which transaction would not be counted in the GDP for the United States?

answer

Your Mother buys 100 shares of Nike Stock

question

Fiscal Policy involves:

answer

Changes in taxation and government spending

question

Which would NOT be included in GDP:

answer

The dollar value of a repair job done by your professor on his or her own car

question

Which is included in GDP The dollar value of a repair job done by your professor on his or her own car:

answer

The purchase of a ticket to a Lady Gaga concert

question

A Countrys exports minus its imports during a period are

answer

Net Imports

question

Monetary Policy involves:

answer

Changes in the money supply intended to affect interest rates

question

Real GDP tends to understate our economic well-being because it:

answer

Excludes the value of leisure.

question

A stock company is

answer

A share of ownership of a company held by a shareholder.

question

All are costs of inflation EXCEPT:

answer

efficiency wage costs

question

The producer price index is often regarded as a warning sign of inflation because:

answer

A. commodity producers are relatively quick to raise prices.

question

answer

frictionally unemployed.

question

Jim has a part-time job and would prefer to have a full-time job but has been unable to find full-time work. Jim is classified as:

answer

an underemployed worker

question

The wage divided by the price level is known as the:

answer

Real wage.

question

If the CPI is 120 in year 1 and 150 in year 2, then the rate of inflation from year 1 to year 2 is:

answer

25%

question

Which federal agency calculates the official unemployment rate?

answer

Bureau of Labor Statistics

question

f a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its labor force is:

answer

150 Million

question

answer

Discouraged Worker

question

Unemployment rates are usually higher in Europe than in the United States because:

answer

unemployment benefits are more generous in Europe than in the United States

question

Which price index measures the cost of living?

answer

CPI

question

Suppose the real interest rate is 2.1% and the nominal interest rate is 5.4%. The inflation rate is:

answer

3.3%

question

If the cost of a market basket is $200 in year 1 and $230 in year 2, the price index for year 2 using year 1 as the base is:

answer

115

question

The GDP deflator for a given year is 100 times:

answer

nominal GDP for that year divided by real GDP for that year.

question

answer

Fictionally unemployed

question

The labor supply curve is positively sloped because:

answer

more people are willing to work at higher wages than at lower wages.

question

The costs that arise from the way inflation makes money a less reliable unit of measurement are known as:

answer

unit-of-account costs.

question

Radhika just graduated from college. She recently quit her part time job to focus on finding a full time job that better uses the skills she has acquired in college. Radhika is considered to be:

answer

Fictionally Unemployed

question

Efficiency wages are usually set by employers to:

answer

provide an incentive for better performance.

question

Which statement is TRUE concerning interest rates?

answer

The real interest rate can be zero, positive, or negative.

question

answer

3.1%

question

Congress increases personal income tax rates in order to balance the budget. Which is likely to result?

answer

Automatic stabilizers will decrease the contractionary impact of the decrease in aggregate demand.

question

A change in taxes or a change in government transfers affects consumption through a change in:

answer

Disposable income

question

The 2009 U.S. stimulus was a(n) _________ fiscal policy that ________ aggregate demand.

answer

expansionary; increased

question

The difference between a budget deficit and government debt is that:

answer

a deficit is the amount by which government spending exceeds tax revenues, whereas debt is the amount the government owes.

question

Which fiscal policy would make a budget surplus smaller or a budget deficit larger?

answer

increase in government purchases of goods and services

question

All are sources of federal tax revenue EXCEPT

answer

Sales tax

question

The existence of lags makes:

answer

both fiscal and monetary policy more challenging to implement.

question

Government spending and taxation changes that cause fiscal policy to be expansionary when the economy contracts and contractionary when the economy expands are known as:

answer

automatic stabilizers.

question

An increase in government transfers is an example of ________ because it ________.

answer

expansionary fiscal policy; shifts the aggregate demand curve to the right, increasing aggregate output

question

President Johnson's use of a temporary 10% surcharge on income taxes is a classic example of:

answer

contractionary fiscal policy.

question

If the marginal propensity to consume is 0.75 and the federal government increases spending by $100 billion, the income expenditure model would predict that real GDP will increase by:

answer

$400 billion

question

Government payments to households for which no good or service is provided in return are called:

answer

transfer payments

question

Which is an expansionary fiscal policy?

answer

increase in unemployment benefits

question

If the current level of real GDP lies below potential GDP, then an appropriate fiscal policy would be to increase _____, which will shift the _____ curve to the _____.

answer

government purchases; AD; right

question

If there is an inflationary gap in the economy, fiscal policy will likely involve action to:

answer

shift aggregate demand to the left.

question

If the marginal propensity to consume is 0.75 and government purchases of goods and services decrease by $30 billion, real GDP will:

answer

decrease by $120 billion

question

Discretionary fiscal policy involves

answer

A. using government spending or tax policy to affect aggregate demand.

question

The government budget balance equals taxes:

answer

minus government purchases minus government transfers.

question

The cyclically adjusted budget balance is an estimate of:

answer

what the budget balance would be if real GDP were exactly equal to potential output

question

The multiplier effect of changes in government purchases of goods and services is equal to:

answer

1/(1 - MPC).

question

An example of an automatic stabilizer that works when the economy contracts is a:

answer

rise in government transfers as more people receive unemployment insurance benefits.

question

If the MPC is 0.9, then the government spending multiplier is

answer

10.

question

Currency held in bank vaults and bank deposits held at the Federal Reserve are:

answer

not part of the money supply.

question

A reserve ratio is the:

answer

fraction of deposits that the bank is required to hold.

question

When you are using money to purchase a new MP3 player, money is serving as a:

answer

medium of exchange.

question

Probably the most important feature of deposit insurance is that it:

answer

protects the economy against bank runs.

question

The reserve ratio is the:

answer

fraction of deposits that banks hold in their vaults plus their deposits at the Federal Reserve.

question

If the required reserve ratio rises

answer

the banking system must keep more of a deposit in its reserves

question

Reserve requirements

answer

set the minimum amount of reserves a bank must hold.

question

Money is anything that:

answer

serves as a medium of exchange for goods and services

question

Suppose you transfer $500 from your checking account to your savings account. With this transaction, M1 _____ and M2_____.

answer

Decreases; Stays the same

question

According to the Glass-Steagall Act of 1933:

answer

investment banks could create and trade financial assets, such as stocks and bonds, but commercial banks could not trade stocks and bonds.

question

Decisions about monetary policy are made by:

answer

the Federal Open Market Committee.

question

Banks create money when they:

answer

Make loans

question

when banks extend loans:

answer

the money supply increases

question

An example of a double coincidence of wants is a(n):

answer

car mechanic who wants a TV, finding an owner of an electronics store who wants a car repaired.

question

Subprime loans are loans

answer

made to buyers who don't meet the usual criteria for getting a mortgage.

question

The central bank of the United States is called the

answer

Federal Reserve System

question

The TED rate is the

answer

difference between the interest rate at which banks lend to each other and the interest rate on U.S. government debt

question

Debit cards:

answer

are considered part of the money supply, since they allow access to a part of the money supply

question

Deposit insurance:

answer

provides depositors with assurances that they will receive their deposits even if there are questions about a bank's soundness.

question

The monetary base is the sum of:

answer

reserves held by the banks and currency in circulation.

question

If a bank has deposits of $100,000, loans of $75,000, cash on hand of $10,000, and $15,000 on deposit at the Federal Reserve, then its reserve ratio is:

answer

25%

question

When we keep part of our wealth in a savings account, money is playing the role of:

answer

Store of Value

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