Econ 202 final

Assume that the required reserve ratio is 5%. If a commercial bank has $2 million cash in its vault, $1 million in government securities, $3 million on deposit at the Fed, and $60 million in checkable deposits, then its excess reserves equal

2 million

Assume that MPS is 0.4. If spending increases by $8 billion, then real GDP will increase by

20 billion

In an economy, the government wants to increase aggregate demand by $50 billion at each price level to increase real GDP and reduce unemployment. If the MPS is 0.4, then it could increase government spending by

20 billion

Lauren makes $150 a day as a bank clerk. She takes two days off work without pay to fly to another city to attend the concert of her favorite band. The cost of transportation and lodging for the trip is $250. The cost of the concert ticket is $50. The opportunity cost of Lauren's decision to attend the concert is

600

If the total population is 200 million, the labor force is 100 million, and 92 million workers are employed, then the unemployment rate would be

8%

A nation's average annual real GDP growth rate is 8%. Based on the "rule of 72," the approximate number of years that it would take for this nation's real GDP to double is

9 years

Between years 2 and 3

Malta's real GDP grew more rapidly than Zorn's real GDP

Other things being equal, which of the following is a necessary consequence of a depreciation of the U.S. dollar against other currencies?

US exports will become cheaper relative to other nations' products

Which of the following is an example of built-in stability? As real GDP decreases, income tax revenues

decreases and transfer payments increase

The table below shows the weekly demand for hamburger in a market where there are just three buyers. Refer to the above table. If the price of hamburger rises from $4 to $5, then the weekly market quantity demanded will

decreases from 37 to 24

According to real-business-cycle theory, recessions are caused by

deviations of aggregate supply from long-term growth trends

If, in the market for money, the amount of money supplied exceeds the amount of money households and businesses want to hold, the interest rate will

fall, causing households and businesses to hold more money

The economy is at equilibrium at point B. What would expansionary fiscal policy do?

move the economy from point B to point A

Suppose there are 10 million part-time workers and 90 million full-time workers in an economy. Five million of the part-time workers switch to full-time work. As a result, the

official unemployment rate will remain unchanged

If U.S. citizens flock to Canada for summer vacations and buy more Canadian goods and services, then the

price of US dollars in Canadian dollars will fall

In the 1990s and early 2000s, Japan's central bank reduced real interest rates to 0%, but investment spending did not respond enough to bring the economy out of recession. Japan's experience is an illustration of

the liquidity trap

Which of the following will increase commercial bank reserves?

the purchase of government bonds in the open market by the federal reserve banks

if the real interest rate decreases

there will be a movement downward along the investment demand curve

Who has the comparative advantage in the production of green beans?

giovanni

Which of the following is not true about the Federal Reserve banks?

they compete with commercial banks in their basic functions

Assume that Japan and the United States are engaged in a system of flexible exchange rates. One U.S. dollar will purchase how many Japanese yen?

125

If the Fed were to reduce the required reserve ratio, we would expect

Lower interest rates, an expanded GDP, and a higher rate of inflation

Joe deposits $200 in currency into his checking account at a bank. This deposit is treated as

No change in the money supply because the $200 in currency has been converted to a $200 increase in checkable deposits

Assume that the economy is in initial equilibrium where AD1 intersects AS1 . If there is an unanticipated increase in aggregate demand, then according to new classical economics, the economy will self-correct with a

Shift from AS1 to AS2

For a price floor to be effective and alter the market situation, it must be set

above $15

If the aggregate supply curve shifted from AS0 to AS1 and the aggregate demand curve remains at AD0, we could say that

aggregate supply has decreased, equilibrium output has decreased, and unemployment has increased

Adding the market value of all final and intermediate goods and services in an economy in a given year would result in

an amount greater than GDP for that year

Refer to the three demand curves for pasta. Which of the following would cause a shift in pasta demand from D1 to D3 if pasta is an inferior good?

an increase in customer incomes

If Japanese autos surge in popularity in the United States, then this event is most likely to cause the Japanese yen to

appreciate and the US dollar to depreciate

According to the circular flow model, product markets are where

businesses earn their revenues from households

A newspaper reports that the average price of new homes in a certain city had decreased, and the number of new homes sold had also decreased. This situation is probably caused by

declining incomes of people in that cit

Assume that D1 and S1 are the initial demand for and supply of dollars. Suppose that Britain's demand for dollars increases from D1 to D2. If the British government wishes to fix the exchange rate at the initial level, one possible way to do this is for the government to

sell some of its dollar reserves

An increase in the price of product B leads to an increase in the demand for product C. This indicates that products B and C are

substitute goods

French and German farmers wanting to buy equipment from an American manufacturer based in the U.S. will be

supplying euros and demanding dollars in the foreign exchange market

GDP in this economy is

6,230.....

The economy experiences a decrease in the price level and an increase in real domestic output. Which is a likely explanation?

business costs and wage rates have decreased

The major problem facing the economy is high unemployment and weak economic growth. The inflation rate is low and stable. Therefore, the Federal Reserve decides to pursue a policy to increase the rate of economic growth. Which policy changes by the Fed would reinforce each other to achieve that objective?

buying government securities and lowering the discount rate

A large increase in the supply of HD-TV sets occurs simultaneously with a smaller decrease in its demand. As a result the equilibrium price will

decrease and the equilibrium quantity will increase

Assume that the required reserve ratio is 25%. If the Federal Reserve sells $120 million in government securities to the general public, the money supply will immediately

decrease by 120 million with this transaction, and the decrease in money supply could eventually reach a max of $480 million

Projecting that it might temporarily fall short of legally required reserves in the coming days, the Bank of Beano decides to borrow money from its regional Federal Reserve Bank. The interest rate on the loan is called the

discount rate