Econ Final

The economy is in a recession. The government enacts a policy to increase purchases by $2 billion. The MPC is .8. What would be the full increase in real GDP from the change in government purchases at a given price level? A $16 billion B $10 billion C $8 billion D $6 billion

B $10 billion

Other things being equal, which of the following is a necessary consequence of a depreciation of the US dollar against other currencies A the terms of trade will move in favor of the US B US exports will become cheaper relative to other nations products C international speculations will buy US dollars and sell other currencies D the US will experience an increase in the volume of imports

B US exports will become cheaper relative to other nations products

Which of the following statements best describes a protective tariff A a specification of the maximum amount of a product that may be imported in any period of time which is often used to protect domestic producers of a product B an excise tax that is designed to put foreign producers at a competitive disadvantage in selling in domestic markets C such activities as restricting the issuance of licenses for imported products or setting unreasonable standards for qualify or safety in order to restrict imports and protect domestic markets D an excise tax that is usually applied to products that are not produced domestically in order to raise revenues for the governments

B an excise tax that is designed to put foreign producers at a competitive disadvantage in selling in domestic markets

Marginal cost can be defined as the change in A benefit resulting from one more unit of production B cost resulting from one more unit of production C benefit resulting from one less unit of production D cost resulting from one less unit of production

B cost resulting from one more unit of production

Assume the economy is operating at less than full employment. An expansionary monetary policy will cause interest rates to ________, which will ___________ investment spending. A decrease; decrease B decrease; increase C increase; increase D increase; decrease

B decrease; increase

The interest rate that commercial banks charge each other for very short term loans is called the A prime rate B federal funds rate C federal reserve discount rate D commercial paper rate

B federal funds rat

An exchange rate that is set by official government policy is called a ______ exchange rate A real B fixed C nominal D flexible

B fixed

The higher price of imported products due to trade barriers causes some consumers to shift their purchases to a domestically produced product that is now A lower in price because import competition has risen B higher in price because import competition has declined C lower in price because import competition has declined D higher in price because import competition has risen

B higher in price because import competition has declined

The presence of discouraged workers A increases the size of the labor force but does not affect the unemployment rate B may cause the official unemployment rate to understate the true amount of unemployment C reduces the size of the labor force but does not effect the unemployment rate D may cause the official unemployment rate to overstate the true amount of unemployment

B may cause the official unemployment rate to understate the true amount of unemployment

Determining the comparative advantage of a country requires that you look at the economic notion of A accounting and economic profit B opportunity cost C ceteris paribus D external costs

B opportunity cost

With a tax of $2,000 on $30,000 of income, and $2,000 on $70,000 of income, we can describe the structure of this tax as A proportional B regressive C progressive D marginal

B regressive

In an effort to avoid recession, the government implements a tax rebate program, effectively cutting taxes for households. We would expect this to: A Increase Aggregate demand B reduce aggregate demand C reduce aggregate supply D affect neither aggregate supply nor aggregate demand

A Increase Aggregate demand

The fact that international specialization and trade based on the comparative advantage can increase world output is demonstrated by the reality that A a nations trading possibilities line that lies to the right of its production possibilities like B a nations production possibilities and trading possibilities lines coincide C a nations possibilities line lies to the right of its trading possibilities lines D the production possibilities curves of any two nations are identical

A a nations trading possibilities line that lies to the right of its production possibilities like

Financial Markets pay close attention to changes in federal funds rate because these changes A affect other interest rates in the economy B indicate commercial bank lending policies C directly affect a large volume of loans D directly affect the interest payments on the national on the national debt

A affect other interest rates in the economy

Which of the following is not an example of an investment in human capital A an earned paycheck B education C training D healthcare

A an earned paycheck

Which one of the following is included in the official GDP estimate A crime prevention expenses B household production such as cooking and cleaning C environmental quality D underground economy

A crime prevention

Suppose the domestic price (no-international-trade price) of wheat is $3.50 a bushel in the United States while the world price is $4.00 a bushel. Assuming no transportation costs, the United States will A export wheat B import wheat C neither export nor import wheat D have a domestic shortage of wheat

A export wheat

A market in which the money of one nation is exchanged for the money of another nation is a: A foreign exchange market B resource market C bond market D stock market

A foreign exchange market

Which of the following is not considered an Economic right A free speech B adequate housing C food security D access to education

A free speech

Search and wait unemployment is another way to describe A frictional unemployment B noncyclical unemployment C cyclical unemployment D structural unemployment

A frictional unemployment

Which question is an illustration of a macroeconomics question? A how will the government's budget deficit be affected by public infrastructure projects B is a corporation unresponsive to the demands of its customers C are oil companies ripping off consumers by charging exorbitantly high prices for gasoline D is a consumer boycott an effective means of reducing a products price

A how will the government's budget deficit be affected by public infrastructure projects

When restrictions on imported products are removed by a nation, it will result in A lower prices and higher quantities consumed in that nation B lower prices and lower quantities consumed in that nation C higher prices and higher quantities consumed in that nation D higher prices and lower quantities consumed in that nation

A lower prices and higher quantities consumed in that nation

To track the public debt over time and understand its significance to the economy, it is best A measured relative to the gross domestic product B calculated relative to the money supply C examined relative to budget surpluses D to compare it to imports, exports, and the trade deficit

A measured relative to the gross domestic product

Which of the following functions of money enables society to gain the benefits of geographic and labor specialization A medium of exchange B store of value C unit of account D medium of deferred payment

A medium of exchange

Which of the following industries have been significant in the development of Dubai A oil and tourism B Oil C agriculture and tourism D agriculture and real estate E pharmaceutical and real estate

A oil and tourism

As the economy declines, the collection of personal income tax revenues automatically falls. This phenomenon best illustrates how a progressive income tax system A serves as an automatic stabilizer for the economy B decreases real interest rates in the economy C offsets the timing problem for fiscal policy D increases crowding out in the economy

A serves as an automatic stabilizer for the economy

If aggregate demand increases and aggregate supply decreases, the price level: A will increase but real output may increase, decrease, or remain unchanged B and real output will both increase C will decrease but real output may increase decrease or remain unchanged D and real output will both decrease

A will increase but real output may increase, decrease, or remain unchanged

Which question is an example of a microeconomics question? A will the merger of two airlines likely lead to higher cost of air travel in the economy B what should the federal government do to reduce the trade deficit with Japan C will the inflation rate remain relatively stable this year D what factors are contributing to the steep rise in the federal governments total debt

A will the merger of two airlines likely lead to higher cost of air travel in the economy

An increase in production costs is most likely to shift the A short run aggregate supply curve to the right B short run aggregate supply curve to the left C aggregate demand curve to the right D aggregate demand curve to the left

B short run aggregate supply curve to the left

Which if the following is true about government shutdowns A they only happen with Republican presidents B some federal employees are expected to work without pay C congress does not get paid D all government employees are forbidden from going to work

B some federal employees are expected to work without pay

Physical Capital A the talents, training, and education of workers B the factories and machinery used to produce other goods and services C the financial resources available for investment D the physical labor of workers

B the factories and machinery used to produce other goods and services

Which group aids the Board of Governors of the Federal Reserve System in conducting monetary policy? A US congress B US treasury C Federal Open Market Committee D Federal Advisory Council

C Federal Open Market Committee

Which of the following is not an example of an intermediate good A flour bought by a bakery B gasoline bought by a trucking company C an oven bought by a home owner D office supplies bought by an accounting firm

C an oven bought by a home owner

Suppose there are two economies Alpha and Beta that have the same PPF if beta devotes more resources to produce capital goods than consumer goods as compared to Alpha then in the future A alpha will not be able to achieve full employment or productive efficiency B alpha will experience greater economic growth than beta C beta will experience greater economic growth than alpha D beta will not be able to achieve full employment or productive efficiency

C beta will experience greater economic growth than alpha

If a nation is initially producing at a point on its PPF, then it can increase its production of one good only by A decreasing the price of the other good B holding constant the production of the other good C decreasing the production of the other good D increasing the production of the other good

C decreasing the production of the other good

One major part of the opportunity costs of one's decision to go to college after high-school graduation is the A high school diploma needed in order to apply for college B additional income that one can get if one had a college degree C full time job that one could have gotten instead of going to college D education that one gets while in college

C full time job that one could have gotten instead of going to college

If the CPI decline from one year to the next, then which one of the following statements is not true A there if deflation B the inflation rate is negative C The Cpi turns negative in the next year D the average price level is decreasing

C the CPI turns negative in the next year

A tax structure is called progressive when A high income groups pay more taxes absolutely than do low income groups B the average tax rate on low income groups exceeds the tax rate of high income groups C the average tax rate decreases if income decreases D the average tax rate is constant but the absolute amount of taxes paid increases with income increases

C the average tax rate decreases if income decreases

What happened when China opened up to trade with the Western world A RGDP increase B RGDP per capita increased C environmental quality fell D all of the above

D all of the above

What impact do sanction on Russia have A sanctions hurt the Russian economy B sanctions hurt the European economy C sanctions hurt the American economy D all of the above

D all of the above

If a country can with a single unit of labor, produce more of both clothing and computers than another country, then the first country has A an absolute advantage in one good and a comparative advantage in the other B a comparative advantage in both goods C both a comparative advantage and absolute advantage in both goods D an absolute advantage in both goods

D an absolute advantage in both goods

Which of the following effects best explains the downward slope of the aggregate demand curve A a substitution effect B an expectations effect C a multiplier effect D an interest rate effect

D an interest rate effect

When oil and energy prices rise, the economy tends to experience A natural inflation B unexpected inflation C demand pull inflation D cost push inflation

D cost push inflation

A newspaper headline reads: "Fed Cuts Federal Funds Rate for Fifth Time This Year." This headline indicates that the Federal Reserve is most likely trying to: A reduce inflation in the economy B raise interest rates C tighten monetary policy D ease monetary policy

D ease monetary policy

Which of the following is true about NAFTA A nafta includes strict environmental regulations B economists argue that everyone in the US has been helped by nafta C nafta has increased trade barriers such as tariffs D economists argue that nafta has increased in GDP in all 3 countries

D economists argue that nafta has increased in GDP in all 3 countries

A trough in the business cycle occurs when A cyclical unemployment is at a minimum point B the inflation rate is at its lowest level C the natural rate of unemployment is at a minimum point D employment and output reach their lowest levels

D employment and output reach their lowest levels

If Congress passes legislation to increase government spending to counter the effects of a recession, then this would be an example of a(n): A supply side fiscal policy B contractionary fiscal policy C nondiscretionary fiscal policy D expansionary fiscal policy

D expansionary fiscal policy

A market in which the money of one nation is exchanged for the money of another nation is called a A resource market B bond market C stock market D foreign exchange market

D foreign exchange market

Which of the following is a major category for the consumer price index A intermediate goods B unsold goods C capital goods D housing

D housing

In November 2009, marketopia motors produced an automobile that was delivered to a local dealership in Dec 2009. The auto was then sold to Sharon Smith for personal use in Feb 2010. Following national income accounting practices, this auto would be counted as part of A consumption in 09 and investment in 10 B negative investment in09 and consumption in 10 C consumption in 09 and consumption in 10 D investment in 09 and negative investment in 10

D investment in 09 and negative investment in 10

Because of increasing opportunity costs, the PPF A can be either downward or upward sloping B at first rises, then falls eventually C is a straight downward sloping line D is bowed out from the origin

D is bowed out from the origin

Among its duties, the Federal Reserve A provides deposit insurance for commercial bank customers B uses loans from the commercial banks to increase the money supply C collects taxes from the commercial banks D is responsible for regulating and supervising the banks

D is responsible for regulating and supervising the banks

The expenditure multiplier concept of the aggregate expenditures model A is not at all relevant in the AD/AS Model B reverses the shift of the aggregate demand curve C explains movement up or down the aggregate demand curve D magnifies the shifts of the aggregate demand curve

D magnifies the shifts of the aggregate demand curve

The short run Phillips Curve shows there is ______ relationship between unemployment rate and the rate of inflation A no B constant C positive D negative

D negative

Who benefits from inflation A net exporting countries B net lenders C people on a fixed income D net borrowers

D net borrowers

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 A size of labor force will increase B official unemployment rate will rise C official unemployment rate will fall D official unemployment rate will remain unchanged

D official unemployment rate will remain unchanged

For a nation's real GDP per capita to rise during a year: A investment spending must increase B population must increase more rapidly than real GDP C consumption spending must increase D real GDP must increase more rapidly than population

D real GDP must increase more rapidly than population

One purpose of discretionary fiscal policy is to A increase government spending during a recession B reduce inflation during a recession C increase taxes during an expansion D reduce inflation during an expansion

D reduce inflation during an expansion

A federal budget deficit exists when federal government A spending is increasing in a given year B assets are less than liabilities in a given year C taxation is decreasing in a given year D spending exceeds tax revenues in a given year

D spending exceeds tax revenues in a given year

Kevin has lost his job in an automobile plant because the company switched to robots for its welding step in the assembly line. Kevin plans to go to technical school to learn how to repair microcomputers the type of unemployment that kevin is faced with is A cyclical B frictional C natural D structural

D structural

One of the reasons many economists approve of limiting trade would be A the preservation of a high wage company B the preservation of a high employment company C the preservation of a large production economy D the protection of the environment

D the protection of the environment

One timing problem in using fiscal policy to counter a recession is the "implementation" that occurs between the A start of the recession and the time it takes to recognize that the recession has started B start of a predicted recession and the actual start of the recession C time the need for the fiscal action is recognized and the time that the action is taken D time fiscal policy action is taken and the time that the action has its effect on the economy

D time fiscal policy action is taken and the time that the action has its effect on the economy