Macro Econ - Final Exam - Assignment Essays

question

Unemployed workers who voluntarily quit their jobs to search for a better position are categorized as ________ unemployed

answer

Frictionally

question

_________ unemployment is the result of changes in the business cycle

answer

Seasonal

question

The nation of Workovia has a population of 15 million, of whom, 10 million are in the labor force and 9 million are working. Workovia unemployment rate is __ percent

answer

9 million

question

In the United States, people are considered unemployed if and when they

answer

do not have a job but are available for work and have been actively seeking work

question

In recent years, the group with the lowest unemployment rate in the United States was

answer

college graduates

question

Chris has been laid off from his job as an aircraft worker. He has been actively looking for a job but has had no luck for the past six weeks. According to the Bureau of Labor Statistics, Chris is

answer

Unemployed

question

Which group benefit from an unanticipated rise in the inflation rate?

answer

homeowners with fixed rate mortgages

question

Retirees and creditors

answer

are hurt by inflation because their purchasing power is reduced

question

John expects to get a raise equal to the increase in the consumer price index (CPI). The CPI has gone from 160 to 164. If Johns salary last year was 50,000, what salary does he expect to earn this year.

answer

COME BACK TO THIS

question

The GDP deflator for the base year is

answer

always equal to 100

question

2018 2019 2020
Nominal $2,291 $8,551
Real GDP $4,500 $5,865
GDP Deflator 86.1. 112.7

What is the Nominal GDP in the year 2019? Round 2 decimal places

answer

5,865 x 86.1 = 504,976.5/100 (always 100) = 5,049.77

question

2018 2019 2020
Nominal $2,291 $8,511
Real GDP $4,500 $5,865
GDP Deflator 86.1 112.7

What is the Real GDP in the year 2020? Round 2 decimal places

answer

8,511 x 100(always)/112.7= 7,551.91

question

Inflation is a

answer

general rise in prices

question

In the United States, our principal measure of inflation is

answer

the consumer price index

question

Which of the following terms describes a situation in which there is a reduction in the rate of inflation from 4% to 3% per year?

answer

Disinflation

question

The high point of a business cycle is called the

answer

peak

question

The low point of a business cycle is called the

answer

trough

question

Which of the following is true about the business cycle

answer

each cycle is unique

question

According to the circular flow model, the value inputs sold in resource markets and the value outputs sold in product markets

answer

are approximately equal

question

When Mr.Wilson worked full time, he paid a service to have his house cleaned twice a month. Now that he is retired, Mr.Wilson does his own cleaning. What is the effect on GDP?

answer

GDP falls as a result of this change

question

GDP measures the final value of goods and services produced to avoid the problem of

answer

double counting

question

Which of the following activities is an example of non-market transactions

answer

growing your own food in a vegetable garden

question

Consider the table below showing various components of spending in an economy
What is the value of net exports in this nation?

Personal Consumption 1,000
Gross private domestic investment 400
Exports 200
Imports 100
Government purchases 300
capital consumption allowance

answer

exports-imports
200-100= 100

question

Consider the table below showing various components of spending in an economy
What is the GDP in this nation?

Personal consumption 1,000
Gross private domestic investment 400
exports 200
imports 100
government purchases 300
capital consumption allowance 250

answer

1,000+400+(200-100)+300= 1800

question

Which of the following is not an example of gross domestic investment

answer

a households purchase of shares of Google stock

question

The labor force is defined as

answer

the total number of employed and unemployed

question

If a product becomes obsolete and the workers who produced that product will need additional training to find new jobs, then they are experiencing

answer

structural unemployment

question

which of the following scenarios best represents discouraged workers

answer

Nick, an actor who is out of work and has stopped seeking new auditions because he feels it unlikely that he'll find work

question

Which are examples of macroeconomic topics

answer

inflation, economic growth, GDP

question

How are the 3 big questions of economics addressed in the U.S

answer

with markets in some cases and government provision in some cases

question

What does the term underemployment represent

answer

when a person has a job that does not align with their human capital

question

What is the per capita GDP in 2018. Round

2017 2018 2019
Population 10000 12000 15000
Full time workers. 4500 4600 4700
part time workers 250 350 500
discouraged workers 100 200 700
unemployed workers 50 50 80
consumer price index 100 105 111
GDP 10,000,000 10,350,000 10,500,000

answer

GDP/Population
10,350,000/12000= 863

question

On the basis of GDP, what is the economic growth rate from 2017 to 2018? Round

2017 2018 2019
Population 10000 12000 15000
Full time workers. 4500 4600 4700
part time workers 250 350 500
discouraged workers 100 200 700
unemployed workers 50 50 80
consumer price index 100 105 111
GDP 10,000,000 10,350,000 10,500,000

answer

Growth Rate =
GDP Yr 2 - GDP Yr 1 / GDP Yr 1
10,350,000-10,000,000/10,000,000= 3.5

question

What is the unemployment rate in 2019?

2017 2018 2019
Population 10000 12000 15000
Full time workers. 4500 4600 4700
part time workers 250 350 500
discouraged workers 100 200 700
unemployed workers 50 50 2300
consumer price index 100 105 111
GDP 10,000,000 10,350,000 10,500,000

answer

4700+500+2300= 7500
2300/7500=.30666667x100= 30.67

question

What is the inflation between 2018 and 2019

2017 2018 2019
Population 10000 12000 15000
Full time workers. 4500 4600 4700
part time workers 250 350 500
discouraged workers 100 200 700
retired people 800 2000 2300
consumer price index 100 105 111
GDP 1,000,000 1,350,000 1,500,000

answer

Price Index Yr 2- Price Index Yr 2/Price Index Yr 1 x 100

111-105/105x100= 5.71

question

Consider how many years are expected to elapse before GDP has doubled

2017 2018
Population 10000 12000
Full time workers. 4500 4600
part time workers 250 350
discouraged workers 100 200
Retired people 50 50
consumer price index 100 105
GDP 10,000,000 10,350,000

answer

Growth Rate = GDP yr 2 - GDP yr 1/GDP yr 1

10,350,000-10,000,000/10,000,000=3.5%

GDP to double. 70 Rule
70/3.5 = 20

question

When a nation is experiencing full employment

answer

cyclical unemployment is zero

question

Suppose that John has lost his job as an airline pilot and has not been able to find another job as a pilot. Since he is old enough to be eligible for his pension, he decides to retire and devote himself to caring for his elderly parents. According to the Bureau of Labor Statistics, John is

answer

not in the labor force

question

The rule of 70 shows

answer

the number of years that it will take GDP to double at current growth rates

question

______ unemployment includes workers who voluntarily quit their jobs to search for better positions

answer

frictional

question

people are considered employed id they are

answer

working part time but hoping to work full time

question

which of the following groups benefit from an unanticipated rise in the inflation rate

answer

homeowners who have borrowed money through a fixed-rate mortgage

question

the capital to labor ratio measures

answer

the amount of physical capital per worker

question

which is a negative consequence associated with inflation

answer

menu costs

question

the two approaches used by the government in estimating GDP are

answer

expenditure and income

question

which of the following values is an example of a non market transaction not included in the national income and product accounts

answer

mowing your lawn

question

a production function

answer

shows the output that is produced using different combinations of inputs combined with existing technology

question

when inflation occurs

answer

the purchasing power of saved sums of money declines

question

which component of GDP includes inventory changes

answer

investment

question

an increase in ______ is the best evidence for inflation

answer

Consumer price Index

question

the catching up effect predicts that nations with lower levels of GDP will have higher growth rates than nations with higher levels of GDP

answer

TRUE

question

In Guns,Germs and Steel, Jared Diamond argues that the main reason that growth rate in Papua New Guiena has been low because the country has not invested in education

answer

FALSE

question

Which statement regarding the relationship between physical capital and economic growth is true

answer

investments in machinery helps all economies but helps more in nations with lower levels of capital

question

suppose that a person is laid off after their employer faces difficulty due to the recession. Which type of unemployment is this describing

answer

cyclical

question

which item should NOT be counted for GDP calculations

answer

a USED bike that Brian purchased to treat himself

question

in terms of GDP calculations, what is investment

answer

spending on physical capital, construction of new buildings, or positive changes in inventories

question

suppose that the unemployment increases from 5 to 8 percent. What conclusion can be made about the labor force participation rate?

answer

the Labor force participation rate has gone up

question

the U.S economy uses markets to provide all goods and services

answer

false

question

increases in per capita GDP are associated with increases in the average standard of living

answer

true

question

when a nations population increases, GDP usually increases too

answer

true

question

what is the difference between real GDP and Nominal GDP

answer

Real GDP accounts for changes in the price level; Nominal does not

question

a person who is interested in finding a job but has stopped looking for work because they do not feel it likely that they will find work is called

answer

discouraged worker

question

when changes occur in a country that lead to the economy having a higher capacity for producing goods and services, is called

answer

long term economic growth

question

when an economy is producing at full capacity, the unemployment rate falls to around 0

answer

false

question

when disinflation occurs, prices are rising but at a lower rate than a previous years

answer

true

question

an rationale sometimes cited for protectionism is that domestic firms need help in developing and that protectionism can help a nations business become industry leaders in the future

answer

infant industry argument

question

which Is the most accurate interpretation of the import demand curve

answer

the relationship between the price of a good and the amount of the good that a nation imports

question

which is an example of a non-tariff barrier

answer

box by box inspection requirements for imported fruit

question

the interest rate effect suggest that

answer

an increase in the price level will increase the demand for money, increase interest rates and decrease consumption and investment spending

question

when comparing the benefits and costs to international trade, studies show that

answer

the benefits exceed the costs

question

the aggregate demand curve

answer

shows the amount of real output that will be purchased at each possible price level

question

in the theory of comparative advantage, a good should be produced in that nation where

answer

it cost is least in terms of alternative goods that might otherwise be produced

question

in the recent years the united states

answer

imported more goods than it exported

question

countries engaged in international trade specialize in production based on

answer

comparative advantage

question

the factors that explain why the AD curve takes its particular pattern are

answer

real balances, interest rate, and foreign purchases effect

question

the real balances effect indicated

answer

a higher price level will decrease the real value of many financial assets and therefore reduce spending

question

suppose the domestic price of copper is 1.20 a pound in the U.S while the world price is 1 pound. Assuming no transportation costs, the U.S will

answer

import copper

question

the foreign purchases effect(also known as the net exports effect) suggest that a decrease in the U.S price level relative to other countries will

answer

increase the U.S exports and decrease U.S imports

question

Tariffs

answer

are taxes applied to imported goods

question

Country A limits other nations exports to Country A to 1,000 tons of coal annually. This is an example of

answer

import quota

question

Suppose that the United States places tariffs on German bicycles. as a result, we would expect

answer

consumers in the u.s to purchase more American bikes, the price of German bicycles to increase in the u.s, employment to decrease in the German bicycle industry. All of these answers are correct

question

under autarky, nations typically have had a trade surplus

answer

false

question

the gains from international trade come from comparative advantage rather than absolute advantage

answer

true

question

when two nations engage in international trade, each country will necessarily have a comparative advantage in the production of one good

answer

true

question

when a nations autarky price is the same as the world price, the nation will neither export nor import the good

answer

true

question

when a tariff is imposed on a good, domestic consumption of that good declines

answer

true

question

the aggregate demand curve shows that inflation leads to a reduction in the total level of expenditure in the economy

answer

true

question

which statement is consistent with the employment argument for protectionism

answer

tariffs and quotas are appropriate to make sure that there are enough jobs for domestic workers

question

Suppose that the states of Oregon and Washington are both producing two goods, apples and pears.

Washington can produce either 100 apples or 20 pears
Oregon can produce either 12 apples or 2 pears

What is the opportunity cost of producing a PEAR in WASHINGTON

answer

100/20 = 5 Pears

question

answer

12/2=6 Pears

question

answer

20/100= 1/5 0r 0.2

question

answer

2/12= 1/6 0r .17

question

Based on the above information, what statement is true

answer

Washington has a comparative advantage in pears, Oregon has a comparative advantage in apples

question

Which of the following would most likely shift the aggregate demand curve to the right

answer

An increase in stock prices that increases consumer wealth

question

Suppose that an analyst is concerned that fiscal policy is ineffective because of the existence of lags. What does this mean

answer

That fiscal policy is of limited effectiveness because its benefits aren't experienced immediately but instead after some time has elapsed

question

According to comparative advantage, a good should be produced in that nation where

answer

the opportunity cost is lower

question

The Federal government has a large public debt that it finances through borrowing. As a result, real interest rates are higher than otherwise and the amount of private investment and consumption spending is reduced. This illustrates the

answer

crowding out effect

question

A major advantage of the built-in or automatic stabilizers is that they

answer

require no legislative action by Congress to be made effective.

question

Taxes on imported goods that help shield domestic producers from foreign competition are called

answer

protective tariffs

question

On which item does the federal government of the U.S. spend the most

answer

military/national defense

question

Contractionary fiscal policy is so named because it

answer

is aimed at reducing aggregate demand and thus achieving price stability.

question

An appropriate fiscal policy for a severe recession is

answer

increase in government spending

question

The amount by which Federal government expenditures exceed Federal tax revenues during a particular year is the

answer

budget deficit

question

The real-balances, interest-rate, and foreign purchases effects all help explain

answer

why the AD demand curve slops down

question

What is the impact of a reduction in government spending

answer

a decrease in AD

question

The crowding-out effect of expansionary fiscal policy suggests that

answer

deficit spending can lead to decreases in private investment or consumptio

question

When governments use expansionary fiscal policy, which of the following is the expected short-run result

answer

increase economic output and a higher price level

question

Which of the following best describes the built-in stabilizers as they function in the United States

answer

Built-in stabilizers function in a similar way to fiscal policy but are not subject to the same lags

question

If the price level increases in the United States relative to foreign countries, then American consumers will purchase more foreign goods and fewer U.S. goods. This statement describes

answer

foreign purchases effect

question

A progressive tax

answer

takes a larger share of income from wealthier people

question

(1) The composite index of leading indicators turns downward for three consecutive months, suggesting the possibility of a recession; (2) Economists reach agreement that the economy is moving into a recession; (3) A tax cut is proposed in Congress; (4) The tax cut is passed by Congress and signed by the President; (5) Consumption spending begins to rise, aggregate demand increases, and the economy begins to recover.

The operational (effect) lag is reflected in events

answer

question

answer

3 and 4

question

Of the national debt of the U.S., the clear majority is owed to the Chinese government

answer

False, owed to U.S citizens

question

The benefits and costs of international trade are estimated to be roughly equal

answer

False - trade is beneficial

question

A nation's long-run average supply curve can shift when a change to a a nations's resource endowment takes place

answer

True

question

With the short-run aggregate supply model, input prices are assumed to be flexible and output prices are assumed to be sticky

answer

False - input are sticky, output flexible

question

One effect of tariffs are higher prices for consumers

answer

true

question

If a nation with an absolute advantage in a particular good then it will also have a comparative advantage in the good

answer

false

question

Suppose that the U.S. can produce 1,000 cars for every 250 avocados. What is the opportunity cost for each car

answer

250/1,000= .25

question

Suppose that the U.S. can produce 1,000 cars for every 250 avocados. What is the opportunity cost for each avocado

answer

1,000/250 = 4

question

The value of M1 will be larger than the value of M2 if there are substantial deposits in checking accounts

answer

false

question

Real estate is an example of an asset which is not very liquid

answer

true

question

Economic activity using barter requires a double-coincidence of wants

answer

true

question

Commodity money is used more frequently than fiat money because it does a better job of limiting transaction costs

answer

false

question

Canadian dollars are an example of fiat money

answer

true

question

Based on the information below, what is the value of M1
Checking Account Deposits: 400
Savings Account Deposits: 500
Currency in Circulation: 300
Gold Bars:300
Sum of all Credit Card Balances: 1500
Existing Traveler's Checks: 5
Real Estate Holdings: 2000
Small Denomination Time Deposits: 50
Money Market Mutual Fund Accounts: 50

answer

Checking Account
Currency in circulation
existing travelers checks

400+300+5= 705

question

Based on the information below, what is the value of M2
Checking Account Deposits: 400
Savings Account Deposits: 500
Currency in Circulation: 300
Gold Bars:300
Sum of all Credit Card Balances: 1500
Existing Traveler's Checks: 5
Real Estate Holdings: 2000
Small Denomination Time Deposits: 50
Money Market Mutual Fund Accounts: 50

answer

Checking Account
savings account
Currency in circulation
existing travels checks
Small denomination time deposits
money market mutual fund

400+500+300+5+50+50=1,305

question

Which definition of the money supply is the most restrictive

answer

question

Suppose that the prime interest rate is 4%, the federal funds rate is 5%, the discount rate is 6%, and the required reserve ratio is 7%.

In this case, what is the money multiplier

answer

1/.07=14.29

question

Suppose that the prime interest rate is 4%, the federal funds rate is 5%, the discount rate is 6%, and the required reserve ratio is 7%.

In this case, by how much will the money supply increase if the Federal Reserve puts an additional $2,000 into circulation.

answer

Money multiplier x 2,000

14.29 x 2,000 = 28,580

question

If you deposit money that you've earned into a savings account so that it is available for a future date, you are using money primarily as a

answer

store of value

question

3 essential functions of money

answer

store of value
medium of exchange
unit of account

question

Who controls the money supply in the U.S.

answer

the FED

question

The members of the Federal Reserve Board of Governors

answer

serve 14 year terms, in a 12 federal reserve banks

question

Which type of institution accepts deposits and offers banking services like checking accounts, savings accounts, and debit cards

answer

commercial banks (ie chase, Wells Fargo)

question

Fractional reserve banking can lead to bank panics

answer

True

question

Central banks sometimes experience bank panics and therefore deposit insurance has been created to limit the likelihood of these events happening

answer

false

question

Which is the most frequently used tool of monetary policy

answer

Open market operations

question

What happens if the discount rate is reduced

answer

Commercial banks can borrow money from the Federal Reserve at a lower interest rate

question

What happens if the required reserve ratio is reduced

answer

money multiplier will increase

question

When is it appropriate to use contractionary monetary policy

answer

when inflation is a concern

question

How is monetary policy different than fiscal policy

answer

Monetary policy refers to changes in the money supply; fiscal policy refers to changes in taxes and government spending

question

Which statement regarding the Federal Reserve is false

answer

the fed is subject to close supervision by congress

question

When the the Fed buys bonds, the money supply ____

answer

increases

question

Which item represents expansionary monetary policy

answer

lowering the discount rate

question

Suppose that the discount rate decreases. Which of the following will occur as a result

answer

Commercial banks will borrow more money from the Fed and the money supply will increase correspondingly

question

In a fractional reserve banking system

answer

banks can create money through the lending process

question

Which of the following is a tool of monetary policy

answer

changes to the discount rate

question

When economists say that money serves as a store of value, they mean that it is

answer

a way to keep wealth in a readily spendable form for future use

question

When economists say that money is a unit of account, they mean that it is

answer

a monetary unit for measuring and comparing the relative values of goods

question

The federal funds rate is the interest rate charged by

answer

banks for loans to other banks

question

Which statement regarding the Federal Reserve is true

answer

The Federal Reserve has a great deal of freedom in choosing the policies that it deems appropriate

question

Which monetary policy tool is used most often in the U.S.

answer

making sales and purchases of government bonds

question

Which of the following is least likely to be a problem for monetary policy

answer

admin lag

question

An increase in the reserve ratio increases the

answer

the percentage of deposits that commercial banks must keep rather than lend

question

Open market operations ______

answer

occur when central banks lend to commercial banks

question

When the Fed buys a U.S. bond in the open market

answer

its action expands total reserves and the money supply

question

Assume the economy is operating at less than full employment. An expansionary monetary policy will cause interest rates to _______, which will ___________ investment spending.

answer

decrease, increase

question

The value of money varies

answer

inversely with the price level

question

One of the strengths of monetary policy relative to fiscal policy is that monetary policy

answer

can be implemented more quickly

question

In the U.S., money has value because _____

answer

the confidence that people have in dollars

question

Modern banking systems are usually based upon _____

answer

fractional reserve banking system

question

Which item is included in M1 but not M2

answer

everything in M1 is included in M2

question

Which item is included in M2 but not M1?

answer

small denomination time deposits

question

Which item below refers to a barter exchange

answer

trading a taco for a cup of coffee

question

Suppose that the discount rate is 2%, the required reserve ratio is 4%, and the prime interest rate is 7%. By how much will the money supply increase if the Fed puts an additional $3,000,000 into circulation?

answer

1/.04= .25
.25x 3,000,000= 750,000

question

Suppose that the discount rate is 2%, the required reserve ratio is 4%, and the prime interest rate is 7%. What is the value of the money multiplier if the Fed puts an additional $3,000,000 into circulation?

answer

COME BACK TO THIS

question

A central bank controls the amount of money in circulation in an economy

answer

true

question

The central bank of the United States is the U.S. Treasury

answer

false

question

Presently, the central bank of the U.S. is pursuing a contractionary monetary policy

answer

false

question

The public elects the chair of the Federal Reserve System

answer

false

question

Which item listed below is likely to be the least liquid

answer

a rare and valuable painting

question

Pick the policy that would be appropriate to address concerns about inflation

answer

the fed selling bonds

question

Pick another policy that would be appropriate to address concerns about inflation

answer

raising the rrr

question

On a graph, what is the impact of expansionary monetary policy

answer

increase in aggregate demand

question

Which item is an example of fiat money

answer

bit coin

question

Which item is an example of commodity money

answer

cigarettes

question

Today, the use of commodity money is less common than the use of fiat money.

answer

true

question

In what way do commercial banks help economic activity

answer

payment intermediation, by giving people additional methods to purchase goods and services, by brining together borrowers and lenders to loans
all answers are correct

question

What is the role of deposit insurance in the banking industry

answer

Deposit insurance reduces the incentive to withdraw money and therefore makes bank panics less likely

question

Credit unions are similar to commercial banks but sometimes have membership restrictions and can offer slightly better terms/rates

answer

true

question

An advantage of monetary policy is that lags do not exist

answer

false

1 of 182

question

Unemployed workers who voluntarily quit their jobs to search for a better position are categorized as ________ unemployed

answer

Frictionally

question

_________ unemployment is the result of changes in the business cycle

answer

Seasonal

question

The nation of Workovia has a population of 15 million, of whom, 10 million are in the labor force and 9 million are working. Workovia unemployment rate is __ percent

answer

9 million

question

In the United States, people are considered unemployed if and when they

answer

do not have a job but are available for work and have been actively seeking work

question

In recent years, the group with the lowest unemployment rate in the United States was

answer

college graduates

question

Chris has been laid off from his job as an aircraft worker. He has been actively looking for a job but has had no luck for the past six weeks. According to the Bureau of Labor Statistics, Chris is

answer

Unemployed

question

Which group benefit from an unanticipated rise in the inflation rate?

answer

homeowners with fixed rate mortgages

question

Retirees and creditors

answer

are hurt by inflation because their purchasing power is reduced

question

answer

COME BACK TO THIS

question

The GDP deflator for the base year is

answer

always equal to 100

question

2018 2019 2020
Nominal $2,291 $8,551
Real GDP $4,500 $5,865
GDP Deflator 86.1. 112.7

What is the Nominal GDP in the year 2019? Round 2 decimal places

answer

5,865 x 86.1 = 504,976.5/100 (always 100) = 5,049.77

question

2018 2019 2020
Nominal $2,291 $8,511
Real GDP $4,500 $5,865
GDP Deflator 86.1 112.7

What is the Real GDP in the year 2020? Round 2 decimal places

answer

8,511 x 100(always)/112.7= 7,551.91

question

Inflation is a

answer

general rise in prices

question

In the United States, our principal measure of inflation is

answer

the consumer price index

question

Which of the following terms describes a situation in which there is a reduction in the rate of inflation from 4% to 3% per year?

answer

Disinflation

question

The high point of a business cycle is called the

answer

peak

question

The low point of a business cycle is called the

answer

trough

question

Which of the following is true about the business cycle

answer

each cycle is unique

question

According to the circular flow model, the value inputs sold in resource markets and the value outputs sold in product markets

answer

are approximately equal

question

When Mr.Wilson worked full time, he paid a service to have his house cleaned twice a month. Now that he is retired, Mr.Wilson does his own cleaning. What is the effect on GDP?

answer

GDP falls as a result of this change

question

GDP measures the final value of goods and services produced to avoid the problem of

answer

double counting

question

Which of the following activities is an example of non-market transactions

answer

growing your own food in a vegetable garden

question

answer

exports-imports
200-100= 100

question

answer

1,000+400+(200-100)+300= 1800

question

Which of the following is not an example of gross domestic investment

answer

a households purchase of shares of Google stock

question

The labor force is defined as

answer

the total number of employed and unemployed

question

If a product becomes obsolete and the workers who produced that product will need additional training to find new jobs, then they are experiencing

answer

structural unemployment

question

which of the following scenarios best represents discouraged workers

answer

Nick, an actor who is out of work and has stopped seeking new auditions because he feels it unlikely that he'll find work

question

Which are examples of macroeconomic topics

answer

inflation, economic growth, GDP

question

How are the 3 big questions of economics addressed in the U.S

answer

with markets in some cases and government provision in some cases

question

What does the term underemployment represent

answer

when a person has a job that does not align with their human capital

question

answer

GDP/Population
10,350,000/12000= 863

question

answer

Growth Rate =
GDP Yr 2 - GDP Yr 1 / GDP Yr 1
10,350,000-10,000,000/10,000,000= 3.5

question

answer

4700+500+2300= 7500
2300/7500=.30666667x100= 30.67

question

answer

Price Index Yr 2- Price Index Yr 2/Price Index Yr 1 x 100

111-105/105x100= 5.71

question

answer

Growth Rate = GDP yr 2 - GDP yr 1/GDP yr 1

10,350,000-10,000,000/10,000,000=3.5%

GDP to double. 70 Rule
70/3.5 = 20

question

When a nation is experiencing full employment

answer

cyclical unemployment is zero

question

answer

not in the labor force

question

The rule of 70 shows

answer

the number of years that it will take GDP to double at current growth rates

question

______ unemployment includes workers who voluntarily quit their jobs to search for better positions

answer

frictional

question

people are considered employed id they are

answer

working part time but hoping to work full time

question

which of the following groups benefit from an unanticipated rise in the inflation rate

answer

homeowners who have borrowed money through a fixed-rate mortgage

question

the capital to labor ratio measures

answer

the amount of physical capital per worker

question

which is a negative consequence associated with inflation

answer

menu costs

question

the two approaches used by the government in estimating GDP are

answer

expenditure and income

question

which of the following values is an example of a non market transaction not included in the national income and product accounts

answer

mowing your lawn

question

a production function

answer

shows the output that is produced using different combinations of inputs combined with existing technology

question

when inflation occurs

answer

the purchasing power of saved sums of money declines

question

which component of GDP includes inventory changes

answer

investment

question

an increase in ______ is the best evidence for inflation

answer

Consumer price Index

question

the catching up effect predicts that nations with lower levels of GDP will have higher growth rates than nations with higher levels of GDP

answer

TRUE

question

In Guns,Germs and Steel, Jared Diamond argues that the main reason that growth rate in Papua New Guiena has been low because the country has not invested in education

answer

FALSE

question

Which statement regarding the relationship between physical capital and economic growth is true

answer

investments in machinery helps all economies but helps more in nations with lower levels of capital

question

suppose that a person is laid off after their employer faces difficulty due to the recession. Which type of unemployment is this describing

answer

cyclical

question

which item should NOT be counted for GDP calculations

answer

a USED bike that Brian purchased to treat himself

question

in terms of GDP calculations, what is investment

answer

spending on physical capital, construction of new buildings, or positive changes in inventories

question

suppose that the unemployment increases from 5 to 8 percent. What conclusion can be made about the labor force participation rate?

answer

the Labor force participation rate has gone up

question

the U.S economy uses markets to provide all goods and services

answer

false

question

increases in per capita GDP are associated with increases in the average standard of living

answer

true

question

when a nations population increases, GDP usually increases too

answer

true

question

what is the difference between real GDP and Nominal GDP

answer

Real GDP accounts for changes in the price level; Nominal does not

question

a person who is interested in finding a job but has stopped looking for work because they do not feel it likely that they will find work is called

answer

discouraged worker

question

when changes occur in a country that lead to the economy having a higher capacity for producing goods and services, is called

answer

long term economic growth

question

when an economy is producing at full capacity, the unemployment rate falls to around 0

answer

false

question

when disinflation occurs, prices are rising but at a lower rate than a previous years

answer

true

question

an rationale sometimes cited for protectionism is that domestic firms need help in developing and that protectionism can help a nations business become industry leaders in the future

answer

infant industry argument

question

which Is the most accurate interpretation of the import demand curve

answer

the relationship between the price of a good and the amount of the good that a nation imports

question

which is an example of a non-tariff barrier

answer

box by box inspection requirements for imported fruit

question

the interest rate effect suggest that

answer

an increase in the price level will increase the demand for money, increase interest rates and decrease consumption and investment spending

question

when comparing the benefits and costs to international trade, studies show that

answer

the benefits exceed the costs

question

the aggregate demand curve

answer

shows the amount of real output that will be purchased at each possible price level

question

in the theory of comparative advantage, a good should be produced in that nation where

answer

it cost is least in terms of alternative goods that might otherwise be produced

question

in the recent years the united states

answer

imported more goods than it exported

question

countries engaged in international trade specialize in production based on

answer

comparative advantage

question

the factors that explain why the AD curve takes its particular pattern are

answer

real balances, interest rate, and foreign purchases effect

question

the real balances effect indicated

answer

a higher price level will decrease the real value of many financial assets and therefore reduce spending

question

suppose the domestic price of copper is 1.20 a pound in the U.S while the world price is 1 pound. Assuming no transportation costs, the U.S will

answer

import copper

question

the foreign purchases effect(also known as the net exports effect) suggest that a decrease in the U.S price level relative to other countries will

answer

increase the U.S exports and decrease U.S imports

question

Tariffs

answer

are taxes applied to imported goods

question

Country A limits other nations exports to Country A to 1,000 tons of coal annually. This is an example of

answer

import quota

question

Suppose that the United States places tariffs on German bicycles. as a result, we would expect

answer

consumers in the u.s to purchase more American bikes, the price of German bicycles to increase in the u.s, employment to decrease in the German bicycle industry. All of these answers are correct

question

under autarky, nations typically have had a trade surplus

answer

false

question

the gains from international trade come from comparative advantage rather than absolute advantage

answer

true

question

when two nations engage in international trade, each country will necessarily have a comparative advantage in the production of one good

answer

true

question

when a nations autarky price is the same as the world price, the nation will neither export nor import the good

answer

true

question

when a tariff is imposed on a good, domestic consumption of that good declines

answer

true

question

the aggregate demand curve shows that inflation leads to a reduction in the total level of expenditure in the economy

answer

true

question

which statement is consistent with the employment argument for protectionism

answer

tariffs and quotas are appropriate to make sure that there are enough jobs for domestic workers

question

answer

100/20 = 5 Pears

question

answer

12/2=6 Pears

question

answer

20/100= 1/5 0r 0.2

question

answer

2/12= 1/6 0r .17

question

Based on the above information, what statement is true

answer

Washington has a comparative advantage in pears, Oregon has a comparative advantage in apples

question

Which of the following would most likely shift the aggregate demand curve to the right

answer

An increase in stock prices that increases consumer wealth

question

Suppose that an analyst is concerned that fiscal policy is ineffective because of the existence of lags. What does this mean

answer

That fiscal policy is of limited effectiveness because its benefits aren't experienced immediately but instead after some time has elapsed

question

According to comparative advantage, a good should be produced in that nation where

answer

the opportunity cost is lower

question

answer

crowding out effect

question

A major advantage of the built-in or automatic stabilizers is that they

answer

require no legislative action by Congress to be made effective.

question

Taxes on imported goods that help shield domestic producers from foreign competition are called

answer

protective tariffs

question

On which item does the federal government of the U.S. spend the most

answer

military/national defense

question

Contractionary fiscal policy is so named because it

answer

is aimed at reducing aggregate demand and thus achieving price stability.

question

An appropriate fiscal policy for a severe recession is

answer

increase in government spending

question

The amount by which Federal government expenditures exceed Federal tax revenues during a particular year is the

answer

budget deficit

question

The real-balances, interest-rate, and foreign purchases effects all help explain

answer

why the AD demand curve slops down

question

What is the impact of a reduction in government spending

answer

a decrease in AD

question

The crowding-out effect of expansionary fiscal policy suggests that

answer

deficit spending can lead to decreases in private investment or consumptio

question

When governments use expansionary fiscal policy, which of the following is the expected short-run result

answer

increase economic output and a higher price level

question

Which of the following best describes the built-in stabilizers as they function in the United States

answer

Built-in stabilizers function in a similar way to fiscal policy but are not subject to the same lags

question

If the price level increases in the United States relative to foreign countries, then American consumers will purchase more foreign goods and fewer U.S. goods. This statement describes

answer

foreign purchases effect

question

A progressive tax

answer

takes a larger share of income from wealthier people

question

answer

question

answer

3 and 4

question

Of the national debt of the U.S., the clear majority is owed to the Chinese government

answer

False, owed to U.S citizens

question

The benefits and costs of international trade are estimated to be roughly equal

answer

False - trade is beneficial

question

A nation's long-run average supply curve can shift when a change to a a nations's resource endowment takes place

answer

True

question

With the short-run aggregate supply model, input prices are assumed to be flexible and output prices are assumed to be sticky

answer

False - input are sticky, output flexible

question

One effect of tariffs are higher prices for consumers

answer

true

question

If a nation with an absolute advantage in a particular good then it will also have a comparative advantage in the good

answer

false

question

Suppose that the U.S. can produce 1,000 cars for every 250 avocados. What is the opportunity cost for each car

answer

250/1,000= .25

question

Suppose that the U.S. can produce 1,000 cars for every 250 avocados. What is the opportunity cost for each avocado

answer

1,000/250 = 4

question

The value of M1 will be larger than the value of M2 if there are substantial deposits in checking accounts

answer

false

question

Real estate is an example of an asset which is not very liquid

answer

true

question

Economic activity using barter requires a double-coincidence of wants

answer

true

question

Commodity money is used more frequently than fiat money because it does a better job of limiting transaction costs

answer

false

question

Canadian dollars are an example of fiat money

answer

true

question

answer

Checking Account
Currency in circulation
existing travelers checks

400+300+5= 705

question

answer

Checking Account
savings account
Currency in circulation
existing travels checks
Small denomination time deposits
money market mutual fund

400+500+300+5+50+50=1,305

question

Which definition of the money supply is the most restrictive

answer

question

Suppose that the prime interest rate is 4%, the federal funds rate is 5%, the discount rate is 6%, and the required reserve ratio is 7%.

In this case, what is the money multiplier

answer

1/.07=14.29

question

answer

Money multiplier x 2,000

14.29 x 2,000 = 28,580

question

If you deposit money that you've earned into a savings account so that it is available for a future date, you are using money primarily as a

answer

store of value

question

3 essential functions of money

answer

store of value
medium of exchange
unit of account

question

Who controls the money supply in the U.S.

answer

the FED

question

The members of the Federal Reserve Board of Governors

answer

serve 14 year terms, in a 12 federal reserve banks

question

Which type of institution accepts deposits and offers banking services like checking accounts, savings accounts, and debit cards

answer

commercial banks (ie chase, Wells Fargo)

question

Fractional reserve banking can lead to bank panics

answer

True

question

Central banks sometimes experience bank panics and therefore deposit insurance has been created to limit the likelihood of these events happening

answer

false

question

Which is the most frequently used tool of monetary policy

answer

Open market operations

question

What happens if the discount rate is reduced

answer

Commercial banks can borrow money from the Federal Reserve at a lower interest rate

question

What happens if the required reserve ratio is reduced

answer

money multiplier will increase

question

When is it appropriate to use contractionary monetary policy

answer

when inflation is a concern

question

How is monetary policy different than fiscal policy

answer

Monetary policy refers to changes in the money supply; fiscal policy refers to changes in taxes and government spending

question

Which statement regarding the Federal Reserve is false

answer

the fed is subject to close supervision by congress

question

When the the Fed buys bonds, the money supply ____

answer

increases

question

Which item represents expansionary monetary policy

answer

lowering the discount rate

question

Suppose that the discount rate decreases. Which of the following will occur as a result

answer

Commercial banks will borrow more money from the Fed and the money supply will increase correspondingly

question

In a fractional reserve banking system

answer

banks can create money through the lending process

question

Which of the following is a tool of monetary policy

answer

changes to the discount rate

question

When economists say that money serves as a store of value, they mean that it is

answer

a way to keep wealth in a readily spendable form for future use

question

When economists say that money is a unit of account, they mean that it is

answer

a monetary unit for measuring and comparing the relative values of goods

question

The federal funds rate is the interest rate charged by

answer

banks for loans to other banks

question

Which statement regarding the Federal Reserve is true

answer

The Federal Reserve has a great deal of freedom in choosing the policies that it deems appropriate

question

Which monetary policy tool is used most often in the U.S.

answer

making sales and purchases of government bonds

question

Which of the following is least likely to be a problem for monetary policy

answer

admin lag

question

An increase in the reserve ratio increases the

answer

the percentage of deposits that commercial banks must keep rather than lend

question

Open market operations ______

answer

occur when central banks lend to commercial banks

question

When the Fed buys a U.S. bond in the open market

answer

its action expands total reserves and the money supply

question

Assume the economy is operating at less than full employment. An expansionary monetary policy will cause interest rates to _______, which will ___________ investment spending.

answer

decrease, increase

question

The value of money varies

answer

inversely with the price level

question

One of the strengths of monetary policy relative to fiscal policy is that monetary policy

answer

can be implemented more quickly

question

In the U.S., money has value because _____

answer

the confidence that people have in dollars

question

Modern banking systems are usually based upon _____

answer

fractional reserve banking system

question

Which item is included in M1 but not M2

answer

everything in M1 is included in M2

question

Which item is included in M2 but not M1?

answer

small denomination time deposits

question

Which item below refers to a barter exchange

answer

trading a taco for a cup of coffee

question

answer

1/.04= .25
.25x 3,000,000= 750,000

question

answer

COME BACK TO THIS

question

A central bank controls the amount of money in circulation in an economy

answer

true

question

The central bank of the United States is the U.S. Treasury

answer

false

question

Presently, the central bank of the U.S. is pursuing a contractionary monetary policy

answer

false

question

The public elects the chair of the Federal Reserve System

answer

false

question

Which item listed below is likely to be the least liquid

answer

a rare and valuable painting

question

Pick the policy that would be appropriate to address concerns about inflation

answer

the fed selling bonds

question

Pick another policy that would be appropriate to address concerns about inflation

answer

raising the rrr

question

On a graph, what is the impact of expansionary monetary policy

answer

increase in aggregate demand

question

Which item is an example of fiat money

answer

bit coin

question

Which item is an example of commodity money

answer

cigarettes

question

Today, the use of commodity money is less common than the use of fiat money.

answer

true

question

In what way do commercial banks help economic activity

answer

payment intermediation, by giving people additional methods to purchase goods and services, by brining together borrowers and lenders to loans
all answers are correct

question

What is the role of deposit insurance in the banking industry

answer

Deposit insurance reduces the incentive to withdraw money and therefore makes bank panics less likely

question

Credit unions are similar to commercial banks but sometimes have membership restrictions and can offer slightly better terms/rates

answer

true

question

An advantage of monetary policy is that lags do not exist

answer

false

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order

Macro Econ – Final Exam

Order an Essay Now & Get These Features For Free: