macro - Assignment Essays

question

high and persistent inflation is caused by excessive growth in the quantity of money in the economy

answer

true

question

in the short run, a reduction in inflation tends to cause a reduction in unemployment

answer

false

question

if there is an increase in supply accompanied by a decrease in demand for coffee, then there will be a decrease in both the equilibrium price and quantity in the market for coffee

answer

false

question

we are forced to make choices because of

answer

scarcity

question

economic growth is depicted by

answer

a shift in the PPf outward

question

supposed there is an increase in both the supply and demand for personal computers. In the market for personal computers we would expect the

answer

equilibrium quantity to rise and change in the equilibrium price to be ambiguous

question

Suppose a frost destroys much of the Florida orange crop. At the same time, suppose consumer tastes shift toward orange juice. What would we expect to happen to the equilibrium price and quantity in the market for orange juice?

answer

price will increase; quantity is ambiguous

question

which of the following events must cause equilibrium price to rise

answer

demand increases and supply decreases

question

there is a positive relationship between the quantity of investment spending and the interest rate

answer

false

question

between 1929 and 1933, the U.S. economy moved upward from left to right along its short-run aggregate supply curve

answer

false

question

when the price level increases and people want to hold more money, interest rates decrease

answer

false

question

a negative supply shock raises production costs and increases the quantity producers are willing to supply at any given price level

answer

false

question

an increase in the price of oil is likely to shift the short run aggregate supply curve to the right

answer

false

question

refer to figure. if the economy is at point x, the appropriate monetary policy is to:

answer

increase the money supply and decrease interest rates

question

suppose the economy is an inflationary gap. to move equilibrium aggregate output closer to the level of potential output, the best fiscal policy option is to:

answer

decrease government purchases

question

according to the figure: short run equilibrium, if the economy is at equilibrium at y1 and p1, the appropriate policy to return the economy to potential output would be an

answer

increase in taxes

question

nominal wages are sticky because

answer

wages are slow to rise when there are labor shortages and slow to fall even when the level of unemployment is significant

question

if the fed decreases the quantity of money in circulation, increase rates _, investment spending _, and the aggregate demand curve shifts to the _

answer

increase; decreases; left

question

Unexpectedly rising commodity prices lead to a _____ shock.

answer

negative supply

question

which factor will shift the short run aggregate supply curve to the right

answer

a widespread decrease in commodity prices

question

refer to figure. at point f, potential output is _ than actual output and unemployment is _

answer

higher; high

question

if government increases income tax rates, the aggregate demand curve is likely to:

answer

shift to the left

question

when the aggregate price level increases, the purchasing power of many assets falls, causing a decrease in consumer spending. this, the _ effect, is the reason the _ curve slopes _

answer

wealth; aggregate demand; downward

question

potential real GDP is $10,000 and the current level of real GDP is $9,000. the output gap is therefore _ %

answer

-10%

question

a decrease in the money supply is likely to cause a(n) _ in borrowing, a(n) _ interest rates, and a(n) _ in aggregate demand

answer

decrease; increase; decrease

question

a minimum wage is likely to have a greater impact on the market for skilled workers than on the market for unskilled workers

answer

false

question

long run economic growth depends almost entirely on

answer

rising productivity

question

if inflation turns out to be higher than people expected, wealth is redistributed to lenders from borrowers

answer

false

question

if borrowers and lenders agree on nominal interest rate and inflation rates turn out to be greater than they had anticipated, lenders will gain at the expense of borrowers

answer

false

question

if workers and firms agree on an increase in wages based on their expectations of inflation and inflation turns out to be less than they expected, workers will gain at the expense of firms

answer

true

question

if the CPI is 200 in year 1990 and 300 today, then $600 in 1990 has the same purchasing power as _ today

answer

$900

question

in 1999, the CPI was 124.0 in 2000, it was 130.7. what was the rate of inflation over this period?

answer

5.4%

question

if inflation is 8% and the real interest rate is 3%, then the nominal interest rate should be

answer

11%

question

when inflation rises, people will desire to hold

answer

less money and go to the bank more frequently

question

menu costs refers to

answer

the cost of more frequent price changes induced by higher inflation

question

which of the following statements is true regarding the long run aggregate supply curve? the long run aggregate supply curve

answer

is vertical because an equal change in all prices and wages leaves output unaffected

question

which of the following events shifts the short run aggregate supply curve to the right

answer

a drop in oil prices

question

most economists believe that classical theory describes the world

answer

in the long run

question

which of the following would help explain why the aggregate demand curve slopes downward?

answer

a lower price level reduces the interest rate, which encourages greater spending on investment goods

question

commodity-backed money is a medium of exchange with no intrinsic value, whose ultimate value is guaranteed by a promise that it can be converted into valuable goods

answer

true

question

The fraction of customer deposits that a bank holds as reserves is known as the reserve ratio.

answer

true

question

an increase in the demand for loanable funds increases the equilibrium interest rate and decreases the equilibrium level of saving

answer

false

question

A reduction in the budget deficit should shift the supply of loanable funds to the right, lower the real interest rate, and increase the quantity demanded of loanable funds.

answer

true

question

subprime lending is lending at interest rates that are less than the prime rate

answer

false

question

currency in the united states today is commodity-backed money

answer

false

question

there is positive relationship between the quantity of investment spending and the interest rate

answer

false

question

expectations of improving economy will generally cause an increase in investment by shifting the loanable funds demand curve to the right

answer

true

question

the crowding out effect is the negative effect of government budget deficits on private investment spending

answer

true

question

the federal funds rate is the interest rate between the fed and banks

answer

false

question

the money multiplier equals 1/(1 - R), where R represents the reserve ratio

answer

...

question

Banks cannot influence the money supply if they are required to hold all deposits in reserve.

answer

true

question

If the Fed buys bonds in the open market, the money supply decreases.

answer

false

question

If the Fed decreases reserve requirements, the money supply will increase.

answer

true

question

an increase in the money supply decreases the equilibrium interest rate and shifts the aggregate-demand curve to the right

answer

true

question

If the multiplier equals 4, then the marginal propensity to save must be equal to:

answer

1/4

question

the main difference between the classical model of the price level and keynesian economics is that

answer

the classical model assumes a vertical short-run aggregate supply curve

question

the classical model of the price level is most applicable in

answer

periods of high inflation

question

is a bank has assets equal to $100 million dollars, according the practice with a 7% reserve requirement, its liabilities should NOT exceed:

answer

$93 million

question

the reserve requirement is 20%

answer

reserves increase by $1000, and demand deposits increase by $1000

question

Because money is an asset that can be traded for goods and services, we say that it is:

answer

a medium of exchange

question

the supply of loanable funds is _ sloping because _ respond to lower interest rates by _ their quantity supplied of loanable funds

answer

upward; savers; decreasing

question

the interest rate is 5% in the market for loanable funds. investors wish to borrow $100 million and savers wish to save $125 million at this interest rate. we would expect the interest rate to:

answer

fall, as there is a surplus of loanable funds

question

All scenarios are associated with government budget deficits EXCEPT:

answer

the total amount of borrow decreases

question

according to the figure: crowding out, the demand for loanable funds curve DLF1 will shift to DLF2 where there is a(n):

answer

increase in the government budget deficit

question

suppose the economy is in an inflationary gap. to move equilibrium aggregate output closer to the level of potential output, the best fiscal policy option is to:

answer

decrease government purchases

question

according to the figure: short run equilibrium, if the economy is at equilibrium at y1 and p1, the appropriate policy to return the economy to potential output would be a(n):

answer

increase in taxes

question

the effect of government deficit on the economy is

answer

expansionary

question

to _ the money supply, the federal reserve could _

answer

increase; lower the reserve requirements

question

in countries with rapidly growing economies, like China and India, the demand for loanable funds is _ and interest rates are _ than in countries with slowly growing economies

answer

larger; higher

question

investment spending

answer

fluctuates more than consumption

question

US Treasury Bills are a(n):

answer

liability of the U.S. government but an asset to the Federal Reserve.

question

Refer to Table: Balance Sheet. If the reserve ratio is 25%, deposits are:

answer

$80,000

question

Marginal Propensity to Consume (MPC) equals the change in _ divided by the change in _

answer

consumer spending; disposable income

question

long term interest rates and short term interest rates:

answer

don't always move closely together

question

a sale of treasury bills by the federal reserve _ interest rates and _ the money supply

answer

raises; reduces

question

if interest rates are at the zero lower bound

answer

monetary policy is ineffective

question

the money multiplier and the required reserve ratio are

answer

inversely related

1 of 77

question

high and persistent inflation is caused by excessive growth in the quantity of money in the economy

answer

true

question

in the short run, a reduction in inflation tends to cause a reduction in unemployment

answer

false

question

if there is an increase in supply accompanied by a decrease in demand for coffee, then there will be a decrease in both the equilibrium price and quantity in the market for coffee

answer

false

question

we are forced to make choices because of

answer

scarcity

question

economic growth is depicted by

answer

a shift in the PPf outward

question

supposed there is an increase in both the supply and demand for personal computers. In the market for personal computers we would expect the

answer

equilibrium quantity to rise and change in the equilibrium price to be ambiguous

question

answer

price will increase; quantity is ambiguous

question

which of the following events must cause equilibrium price to rise

answer

demand increases and supply decreases

question

there is a positive relationship between the quantity of investment spending and the interest rate

answer

false

question

between 1929 and 1933, the U.S. economy moved upward from left to right along its short-run aggregate supply curve

answer

false

question

when the price level increases and people want to hold more money, interest rates decrease

answer

false

question

a negative supply shock raises production costs and increases the quantity producers are willing to supply at any given price level

answer

false

question

an increase in the price of oil is likely to shift the short run aggregate supply curve to the right

answer

false

question

refer to figure. if the economy is at point x, the appropriate monetary policy is to:

answer

increase the money supply and decrease interest rates

question

suppose the economy is an inflationary gap. to move equilibrium aggregate output closer to the level of potential output, the best fiscal policy option is to:

answer

decrease government purchases

question

according to the figure: short run equilibrium, if the economy is at equilibrium at y1 and p1, the appropriate policy to return the economy to potential output would be an

answer

increase in taxes

question

nominal wages are sticky because

answer

wages are slow to rise when there are labor shortages and slow to fall even when the level of unemployment is significant

question

if the fed decreases the quantity of money in circulation, increase rates _, investment spending _, and the aggregate demand curve shifts to the _

answer

increase; decreases; left

question

Unexpectedly rising commodity prices lead to a _____ shock.

answer

negative supply

question

which factor will shift the short run aggregate supply curve to the right

answer

a widespread decrease in commodity prices

question

refer to figure. at point f, potential output is _ than actual output and unemployment is _

answer

higher; high

question

if government increases income tax rates, the aggregate demand curve is likely to:

answer

shift to the left

question

when the aggregate price level increases, the purchasing power of many assets falls, causing a decrease in consumer spending. this, the _ effect, is the reason the _ curve slopes _

answer

wealth; aggregate demand; downward

question

potential real GDP is $10,000 and the current level of real GDP is $9,000. the output gap is therefore _ %

answer

-10%

question

a decrease in the money supply is likely to cause a(n) _ in borrowing, a(n) _ interest rates, and a(n) _ in aggregate demand

answer

decrease; increase; decrease

question

a minimum wage is likely to have a greater impact on the market for skilled workers than on the market for unskilled workers

answer

false

question

long run economic growth depends almost entirely on

answer

rising productivity

question

if inflation turns out to be higher than people expected, wealth is redistributed to lenders from borrowers

answer

false

question

if borrowers and lenders agree on nominal interest rate and inflation rates turn out to be greater than they had anticipated, lenders will gain at the expense of borrowers

answer

false

question

if workers and firms agree on an increase in wages based on their expectations of inflation and inflation turns out to be less than they expected, workers will gain at the expense of firms

answer

true

question

if the CPI is 200 in year 1990 and 300 today, then $600 in 1990 has the same purchasing power as _ today

answer

$900

question

in 1999, the CPI was 124.0 in 2000, it was 130.7. what was the rate of inflation over this period?

answer

5.4%

question

if inflation is 8% and the real interest rate is 3%, then the nominal interest rate should be

answer

11%

question

when inflation rises, people will desire to hold

answer

less money and go to the bank more frequently

question

menu costs refers to

answer

the cost of more frequent price changes induced by higher inflation

question

which of the following statements is true regarding the long run aggregate supply curve? the long run aggregate supply curve

answer

is vertical because an equal change in all prices and wages leaves output unaffected

question

which of the following events shifts the short run aggregate supply curve to the right

answer

a drop in oil prices

question

most economists believe that classical theory describes the world

answer

in the long run

question

which of the following would help explain why the aggregate demand curve slopes downward?

answer

a lower price level reduces the interest rate, which encourages greater spending on investment goods

question

commodity-backed money is a medium of exchange with no intrinsic value, whose ultimate value is guaranteed by a promise that it can be converted into valuable goods

answer

true

question

The fraction of customer deposits that a bank holds as reserves is known as the reserve ratio.

answer

true

question

an increase in the demand for loanable funds increases the equilibrium interest rate and decreases the equilibrium level of saving

answer

false

question

A reduction in the budget deficit should shift the supply of loanable funds to the right, lower the real interest rate, and increase the quantity demanded of loanable funds.

answer

true

question

subprime lending is lending at interest rates that are less than the prime rate

answer

false

question

currency in the united states today is commodity-backed money

answer

false

question

there is positive relationship between the quantity of investment spending and the interest rate

answer

false

question

expectations of improving economy will generally cause an increase in investment by shifting the loanable funds demand curve to the right

answer

true

question

the crowding out effect is the negative effect of government budget deficits on private investment spending

answer

true

question

the federal funds rate is the interest rate between the fed and banks

answer

false

question

the money multiplier equals 1/(1 - R), where R represents the reserve ratio

answer

...

question

Banks cannot influence the money supply if they are required to hold all deposits in reserve.

answer

true

question

If the Fed buys bonds in the open market, the money supply decreases.

answer

false

question

If the Fed decreases reserve requirements, the money supply will increase.

answer

true

question

an increase in the money supply decreases the equilibrium interest rate and shifts the aggregate-demand curve to the right

answer

true

question

If the multiplier equals 4, then the marginal propensity to save must be equal to:

answer

1/4

question

the main difference between the classical model of the price level and keynesian economics is that

answer

the classical model assumes a vertical short-run aggregate supply curve

question

the classical model of the price level is most applicable in

answer

periods of high inflation

question

is a bank has assets equal to $100 million dollars, according the practice with a 7% reserve requirement, its liabilities should NOT exceed:

answer

$93 million

question

the reserve requirement is 20%

answer

reserves increase by $1000, and demand deposits increase by $1000

question

Because money is an asset that can be traded for goods and services, we say that it is:

answer

a medium of exchange

question

the supply of loanable funds is _ sloping because _ respond to lower interest rates by _ their quantity supplied of loanable funds

answer

upward; savers; decreasing

question

the interest rate is 5% in the market for loanable funds. investors wish to borrow $100 million and savers wish to save $125 million at this interest rate. we would expect the interest rate to:

answer

fall, as there is a surplus of loanable funds

question

All scenarios are associated with government budget deficits EXCEPT:

answer

the total amount of borrow decreases

question

according to the figure: crowding out, the demand for loanable funds curve DLF1 will shift to DLF2 where there is a(n):

answer

increase in the government budget deficit

question

suppose the economy is in an inflationary gap. to move equilibrium aggregate output closer to the level of potential output, the best fiscal policy option is to:

answer

decrease government purchases

question

according to the figure: short run equilibrium, if the economy is at equilibrium at y1 and p1, the appropriate policy to return the economy to potential output would be a(n):

answer

increase in taxes

question

the effect of government deficit on the economy is

answer

expansionary

question

to _ the money supply, the federal reserve could _

answer

increase; lower the reserve requirements

question

in countries with rapidly growing economies, like China and India, the demand for loanable funds is _ and interest rates are _ than in countries with slowly growing economies

answer

larger; higher

question

investment spending

answer

fluctuates more than consumption

question

US Treasury Bills are a(n):

answer

liability of the U.S. government but an asset to the Federal Reserve.

question

Refer to Table: Balance Sheet. If the reserve ratio is 25%, deposits are:

answer

$80,000

question

Marginal Propensity to Consume (MPC) equals the change in _ divided by the change in _

answer

consumer spending; disposable income

question

long term interest rates and short term interest rates:

answer

don't always move closely together

question

a sale of treasury bills by the federal reserve _ interest rates and _ the money supply

answer

raises; reduces

question

if interest rates are at the zero lower bound

answer

monetary policy is ineffective

question

the money multiplier and the required reserve ratio are

answer

inversely related

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order