ECON

If the money supply equals 1,000, velocity equals 5, and real GDP equals 2,500, then the price level equals:

2.

Financial systems in market economies improve the allocation of saving in each of the following ways EXCEPT by:

A. providing information about which potential use of funds will be most productive. B. helping savers to share the risk of individual investment projects. C. evaluating the potential productivity of alternative capital investments. D. allowing potential favoritism to determine which projects are funded. D

If TV production wage is 28,000?

At that level, the value of marginal product is $29,000 whereas the cost is only $28,000. Note that a fifth worker would only add $27,000 of value but cost an additional $28,000.

During the 1960s and 1970s, the U.S. trade balance was close to zero, but during the 1980s, the trade deficit ballooned to unprecedented levels due to:

C. a decline in national saving caused largely by rapidly rising government budget deficits.

Elaine owns a beautiful diamond ring she purchased for $2,500. When she has it appraised she learns that it is now worth $3,000. Based on this information: Asset went up

Elaine has experienced a $500 capital gain

The M2 measure of money consists of the sum of:

M1, savings deposits, small time deposits, and money market mutual funds.

M1 differs from M2 in that:

M2 includes savings deposits, small-denomination time deposits, and money market mutual funds that are not included in M1.

Which of the following is a liability of a family?

Mortgage

Which of the following is a flow? measure over time

Saving

Steve uses $300 from his paycheck to pay off his credit card balance. Based on this information:

Steve's saving has increased by $300.

A legal promise to repay a debt is called:

a bond.

When your grandfather keeps a bundle of $100 dollar bills behind a brick in the basement, this is an example of dollars serving as:

a store of value.

Purchases of domestic assets by foreign firms or households is called a:

capital inflow

An increase in unemployment insurance benefits will:

decrease job search efforts of unemployed workers.

A war destroys much of the capital stock in the country of Omega. As a result, holding other factors constant, the real wage in Omega will ______ and employment in Omega will ______.

decrease; decrease

Government health and safety regulations or anti-discrimination laws can reduce real wages by:

decreasing the demand for labor.

A regular payment received by stockholders for each share they own is called a:

dividend

Pat pays $10,000 for a newly issued two-year government bond with a $10,000 face value and a 6 percent coupon rate. One year later, after receiving the first coupon payment, Pat sells the bond. If the current one-year interest rate on government bonds is 5 percent, then the price Pat receives is:

greater than $10,000.

One of the serious drawbacks of the deposit insurance system in the United States is that: A. bank failures continue to occur regularly.

if insured intermediaries make many bad loans, the taxpayers may be responsible for covering the losses.

When a U.S. restaurant purchases French wine and the French wine company uses the proceeds to buy U.S. government debt, U.S. ______ and there is a capital ______ the United States.

imports increase; inflow to

Holding other factors constant, a decline in the price of new capital goods will:

increase investment.

An increase in the perceived riskiness of Company A stock ______ the risk premium investors require to purchase Company A stock and ______ the price of Company A stock.

increases; decreases

As the real interest rate increases, the quantity of saving supplied ______ and the quantity of saving demanded ____.

increases; decreases

Globalization and skill-biased technological change have contributed to:

increasing wage inequality.

In the United States there is evidence of

increasing wage inequality.

The coupon rate is the:

interest rate promised when a bond is issued.

Firms will hire additional workers as long as the wage

is less than the value of the marginal product of labor.

The coupon rate on newly issued bonds is usually higher for bonds with ______ terms and ______ risk that the borrower will go bankrupt.

longer; greater

The Federal Open Market Committee makes decisions about ______ policy.

monetary

A financial intermediary that sells shares in itself to the public, and then uses the funds to buy a wide variety of financial assets is called a:

mutual fund.

Total taxes minus transfer payments minus government interest payments is called:

net taxes.

When the Federal Reserve sells government bonds to the public, this is an example of a(n):

open-market sale.

The principle of diminishing returns to labor is based on the:

principle of increasing opportunity cost.

The marginal product of new capital depends on ______ and _____.

productivity of capital; relative price of the firm's output

From the point of view of a particular country, capital outflows are:

purchases of foreign assets by domestic households or firms.

The opportunity cost of capital investment is the:

real interest rate.

Savers may prefer to use financial intermediaries rather than lending directly to borrowers because financial intermediaries:

reduce the cost of gathering information about borrowers.

Assets of the commercial banking system include:

reserves and loans.

Frictional unemployment is:

short-term unemployment that is associated with the process of matching workers with jobs.

The introduction of word processing software that increases the demand for workers with computer skills relative to those without such skills is an example of:

skill-biased technological change

A measure defined at a point in time is called a(n) ______ variable.

stock

Cyclical unemployment is:

the extra unemployment that occurs during periods of recession.

structural unemployment

the industry she worked in was most likely moved out of the country. The job may never come back, so she should train in another field or move to find work.

The three broad reasons for saving, as identified by economists, relate to:

the life-cycle, precaution, and bequests.

The link between the money supply and prices is strongest in:

the long run.

The demand for labor depends on ______ and _______.

the marginal product of labor; the price of output produced

The money supply will increase by a multiple of the increase in bank reserves created by the central bank unless:

there is 100 percent reserve banking.

Payments by the government to the public for which the government receives no current goods or services in return are called:

transfer payments