quizes 10-15 - Assignment Essays

question

the business cycle is defined as:

answer

alternatinkg periods of economic gorwth and contraction

question

what is true anout business cycles in the united states?

answer

they vary greatly in length, frequency, and intensity.

question

the inflation-adjusted value of all goods and services produced is:

answer

Real GDP

question

T/F
the cornerstone of Classical thought is flexible wages and prices.

answer

True

question

T/F
an economic expansion refers to an increase in the volume of goods and services produced

answer

True

question

T/F
during a recession, real output actually falls

answer

True

question

T/F
if the population is growing then the economy must be expanding

answer

False

question

T/F
all economists believe that market- driven economies are stable

answer

False

question

T/F
business cycles result from recurrent shifts of the aggregate supply and demand curves

answer

True

question

T/F
macro outcomes are the result of the interaction between aggregate supply and aggregate demand.

answer

True

question

aggregate demand is the total quantity of output:

answer

demanded at alternative price levels in a given time period

question

the combination of price level and real output that is compatible with both aggreagate demand and aggregate supply is the definition of:

answer

equilibrium

question

according to Keynesian theory, what is not true at macro equilibrium?

answer

macroeconomic goals are achieved

question

the components of aggregate demand are:

answer

consumption, government spending, net exports and investment.

question

T/F
keynes believed government intervention was required to boost spending to move the economy out of a recessionary gap

answer

True

question

T/F
unlike the classical economists, Keynes felt that the economy would auttomatically adjust to full employment

answer

False

question

T/F
most economists recognize that a short-run macro failure is possible

answer

True

question

T/F
inflation is an increase in the average level of prices of goods and services

answer

True

question

T/F
deflation is a decrease in the avergae level of prices, not a decrease in any specific price.

answer

True

question

T/F
everyone is made worse off by inflation.

answer

False

question

according to Keynesian theory, what should be used to increase aggregate demand?

answer

an increase in government expenditure.

question

fiscal policy is:

answer

the use of budget levers to influence the macroeconomy.

question

fiscal policy works primarily through:

answer

shifts of the AD curve

question

what is generally considered a desirable outcome of fiscal policy?

answer

more jobs

question

if the multiplier equals 2 and the AD shortfall is $6 million, then the desired fiscal stimulus is:

answer

$3 million

question

if the multiplier is 5 and a change in fiscal policy leads to a $500 million decrease in total spending, we can conclude that:

answer

government spending decreased by $500 million

question

assume the MPC is 0.75. to eliminate an AD shortfall of $200 billion, the government should:

answer

increase spending by $50 billion

question

T/F
checks for unemployment benefits sent to unemployed people are considered government purchases

answer

false

question

T/F
fiscal policy involves changes in government spending and taxes, but not regulation of prices or production.

answer

True

question

T/F
the impact of fiscal stimulus on aggregate demand includes both the new government spending and all subsequent increase in concumer spending triggered by the initial government outlays.

answer

True

question

the direct exchange of one good for another:

answer

is barter

question

what is not a characteristic of money

answer

mechanism for barter

question

money is functioning as a standard of value when you:

answer

use it to compare two houses that are different prices

question

the basic money supply includes:

answer

currency, transactions accounts, and traveler's checks

question

deposit creation occurs when:

answer

banks make loans to borrowers

question

the term fractional reserves refers to:

answer

reserves being a small fraction of total transactions account balances.

question

suppose a bank has $200,000 in deposits and a required reserve ratio of 20 percent. the required reserves are:

answer

$40,000

question

initially a bank has a required ratio of 20 percent and no excess reserves. if $5,000 is deposited into the bank, then ceteris paribus:

answer

this bank can increase its loans by $4,000

question

T/F
a reduction in the minimum required reserve ratio will reduce the money multiplier.

answer

False

question

T/F
the banking system creates additional money by making loans equal to total reserves.

answer

False

question

the use of money and credit controls to achieve macroeconomics goals is:

answer

monetary policy

question

the federal reserve holds deposits from:

answer

banks

question

what services are performed by the regional federal reserve banks

answer

providing currency to private banks

question

regional fed banks are not responsible for

answer

cashing checks for large corporations

question

what is not true for members of the federal reserve board of governors?

answer

they ususally serve two or three terms

question

T/F
the price of money is the interest rate.

answer

True

question

T/F
the equilibrium rate of interest is set and maintained by the central bank.

answer

False

question

T/F
when the fed buys securities in the open market, interest rates rise.

answer

False

question

T/F
the federal funds rateis the interest rate charged when a bank borrows from the fed.

answer

False

question

T/F
the fed has more direct control over long-term interest rates than it does over short-term interest rates

answer

False

question

what is a major goal of short-run macroeconomic policy?

answer

move toward the production possibilities curve

question

a long-run increase in capacity:

answer

shifts the production possibilities curve rightward

question

economists define economic growth in terms of changes in:

answer

potential GDP

question

the percentage change in real GDP from one period to another is called:

answer

the growth rate

question

if real GDP rises from $500 billion, then the economic growth rate is:

answer

2 percent

question

T/F
while short-run growth increases capacity, long-run growth increases capacity utilization.

answer

False

question

T/F
average GDP is also known as GDP per capita

answer

True

question

T/F
Real GDP per capita is a commonly used measure of productivity.

answer

False

question

T/F
labor productivity is measured as total labor hours divided by total output.

answer

False

question

the sources of productivity gains include investment in human capital

answer

True

1 of 60

question

the business cycle is defined as:

answer

alternatinkg periods of economic gorwth and contraction

question

what is true anout business cycles in the united states?

answer

they vary greatly in length, frequency, and intensity.

question

the inflation-adjusted value of all goods and services produced is:

answer

Real GDP

question

T/F
the cornerstone of Classical thought is flexible wages and prices.

answer

True

question

T/F
an economic expansion refers to an increase in the volume of goods and services produced

answer

True

question

T/F
during a recession, real output actually falls

answer

True

question

T/F
if the population is growing then the economy must be expanding

answer

False

question

T/F
all economists believe that market- driven economies are stable

answer

False

question

T/F
business cycles result from recurrent shifts of the aggregate supply and demand curves

answer

True

question

T/F
macro outcomes are the result of the interaction between aggregate supply and aggregate demand.

answer

True

question

aggregate demand is the total quantity of output:

answer

demanded at alternative price levels in a given time period

question

the combination of price level and real output that is compatible with both aggreagate demand and aggregate supply is the definition of:

answer

equilibrium

question

according to Keynesian theory, what is not true at macro equilibrium?

answer

macroeconomic goals are achieved

question

the components of aggregate demand are:

answer

consumption, government spending, net exports and investment.

question

T/F
keynes believed government intervention was required to boost spending to move the economy out of a recessionary gap

answer

True

question

T/F
unlike the classical economists, Keynes felt that the economy would auttomatically adjust to full employment

answer

False

question

T/F
most economists recognize that a short-run macro failure is possible

answer

True

question

T/F
inflation is an increase in the average level of prices of goods and services

answer

True

question

T/F
deflation is a decrease in the avergae level of prices, not a decrease in any specific price.

answer

True

question

T/F
everyone is made worse off by inflation.

answer

False

question

according to Keynesian theory, what should be used to increase aggregate demand?

answer

an increase in government expenditure.

question

fiscal policy is:

answer

the use of budget levers to influence the macroeconomy.

question

fiscal policy works primarily through:

answer

shifts of the AD curve

question

what is generally considered a desirable outcome of fiscal policy?

answer

more jobs

question

if the multiplier equals 2 and the AD shortfall is $6 million, then the desired fiscal stimulus is:

answer

$3 million

question

if the multiplier is 5 and a change in fiscal policy leads to a $500 million decrease in total spending, we can conclude that:

answer

government spending decreased by $500 million

question

assume the MPC is 0.75. to eliminate an AD shortfall of $200 billion, the government should:

answer

increase spending by $50 billion

question

T/F
checks for unemployment benefits sent to unemployed people are considered government purchases

answer

false

question

T/F
fiscal policy involves changes in government spending and taxes, but not regulation of prices or production.

answer

True

question

T/F
the impact of fiscal stimulus on aggregate demand includes both the new government spending and all subsequent increase in concumer spending triggered by the initial government outlays.

answer

True

question

the direct exchange of one good for another:

answer

is barter

question

what is not a characteristic of money

answer

mechanism for barter

question

money is functioning as a standard of value when you:

answer

use it to compare two houses that are different prices

question

the basic money supply includes:

answer

currency, transactions accounts, and traveler's checks

question

deposit creation occurs when:

answer

banks make loans to borrowers

question

the term fractional reserves refers to:

answer

reserves being a small fraction of total transactions account balances.

question

suppose a bank has $200,000 in deposits and a required reserve ratio of 20 percent. the required reserves are:

answer

$40,000

question

initially a bank has a required ratio of 20 percent and no excess reserves. if $5,000 is deposited into the bank, then ceteris paribus:

answer

this bank can increase its loans by $4,000

question

T/F
a reduction in the minimum required reserve ratio will reduce the money multiplier.

answer

False

question

T/F
the banking system creates additional money by making loans equal to total reserves.

answer

False

question

the use of money and credit controls to achieve macroeconomics goals is:

answer

monetary policy

question

the federal reserve holds deposits from:

answer

banks

question

what services are performed by the regional federal reserve banks

answer

providing currency to private banks

question

regional fed banks are not responsible for

answer

cashing checks for large corporations

question

what is not true for members of the federal reserve board of governors?

answer

they ususally serve two or three terms

question

T/F
the price of money is the interest rate.

answer

True

question

T/F
the equilibrium rate of interest is set and maintained by the central bank.

answer

False

question

T/F
when the fed buys securities in the open market, interest rates rise.

answer

False

question

T/F
the federal funds rateis the interest rate charged when a bank borrows from the fed.

answer

False

question

T/F
the fed has more direct control over long-term interest rates than it does over short-term interest rates

answer

False

question

what is a major goal of short-run macroeconomic policy?

answer

move toward the production possibilities curve

question

a long-run increase in capacity:

answer

shifts the production possibilities curve rightward

question

economists define economic growth in terms of changes in:

answer

potential GDP

question

the percentage change in real GDP from one period to another is called:

answer

the growth rate

question

if real GDP rises from $500 billion, then the economic growth rate is:

answer

2 percent

question

T/F
while short-run growth increases capacity, long-run growth increases capacity utilization.

answer

False

question

T/F
average GDP is also known as GDP per capita

answer

True

question

T/F
Real GDP per capita is a commonly used measure of productivity.

answer

False

question

T/F
labor productivity is measured as total labor hours divided by total output.

answer

False

question

the sources of productivity gains include investment in human capital

answer

True

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