Econ Final

Suppose the Fed carries out an open market purchase and credits the account of a bank by $160,000. Further suppose that the reserve ratio (RR) is 10%. By how much is the money supply expected to change?

$1.6 million

(Table) Based on the data in the table, what is GDP in the economy of Europia?

$13,800 GDP = C+I+G+(X-M) Consumption, investments, gov. spending, exports, imports

If U.S. per capita GDP is $50,000 and grows at 2% per year, what will U.S. per capita GDP be in 70 years?

$200,000 F=P(1+i)^n n=years i=%

(Table) If 2008 prices are used in the calculation of real GDP, then nominal GDP in 2009 is ________ and rea GDP in 2009 is _________.

$34,310; $33,700

(Table: Prices and Quantities in a 4-good Economy) Suppose an economy produces only the four goods listed. All of the countrys tomatoes are used in the production of pizzas. What is the GDP in this country?

$7,200

A country has a 2016 GDP growth rate of 4.2% and a 2015 GDP of $8,222 (in billions). What was the GDP in 2016?

$8,567

(Table) Suppose an economy produces only the three finished goods shown in the table. The table gives information on the quantities produced and the prices of goods sold in 2008 and 2009. What is the growth rate of real GDP in 2009 if 2009 prices are used in the calculation of real GDP?

-1.97%

(17) A country has 50 million people, 30 million of whom are adults. Of the adults, 5 million are not interested in working, another 5 million are interested in working but have given up looking for work, and 5 million are still looking for work. Of those who do have jobs, 5 million are working part time but would like to work full time, and the remaining 10 million are working full time. What is this country's unemployment rate?

16.7%

The value of a car produced and sold in 2000 and sold again to a second owner in 2008 would be included in GDP for:

2000 Only

(Table: CPI) According to the table, in which of the following years did this country experience disinflation?

2001 only

(Table: CPI) In which of the following years did this country experience deflation?

2002 only

If the reserve ratio is 4 percent, then the money multiplier is

25. 1/(4) * 100

(Table: Wheat and Corn) Consider a country that produces only wheat and corn. Based on the data in the table, the growth rate of nominal GDP from 2005 to 2006 is:

27%

Jordan loaned Taylor $1,200 on March 15, 2009. Taylor returned $1,260 on March 14, 2010. Inflation was 2% over the 1-year period. What is the real interest rate that Taylor paid?

3%

From 17, how many discouraged workers does this country have?

5 million

From 17, what is this country's labor force participation rate?

66.7%

(Table: Wheat and Corn) The growth rate of real GDP from 2007 to 2008 (in 2005 dollars) is:

8.3%

If the average price level rises from 120 in year 1 to 130 in year 2, the inflation rate between years 1 and 2 will be:

8.33%

Which of the following is NOT a price index used by economists to measure inflation?

Commodity Consumption Indicator (CCI)

An unemployed person is one who:

Does not have a job but is actively looking for one

Every year, 1.8 million children in poor countries die of diarrhea. Which is most effective in preventing these deaths?

Economic growth

Which of the following is the best example of frictional unemployment?

Heather recently graduated with her doctorate in economics. She is searching for a job that matches her skills.

Politicians and especially the general public worry about recessions because of:

High unemployment

If the economy is in a recession, the most appropriate fiscal policy would be to:

Increase government spending and cut taxes, thus running a higher budget deficit.

Many economists worry about the Federal Reserve overstimulating the economy because such overstimulation will lead to rising:

Inflation

In the AD-AS model, what happens to the economy in the short run when consumer spending decreases?

Inflation is lower, and the real growth rate is lower.

The federal reserve acquires its exclusive powers through its ability to:

Issue Money

Which is a limitation of monetary policy in stabilizing the economy?

Monetary policy is subject to uncertain lags.

(Figure: Oil Market Diagrams) Consider the world oil market diagrams presented in the figure. Which of the panels correctly depicts what happened in the market for oil during the 1973 OPEC oil crisis?

Panel B (Supply curve shifts left, raising equilibrium up and left)

Which of the follwing is the best example of cyclical unemployment?

Peter, a highly skilled construction worker, lost his job when the recession began. He is looking for work but demand in the construction industry is still low.

If the Fed was concerned about the economy falling into recession, it might try to stimulate the economy by:

Purchasing additional government securities

The natural unemployment rate is the rate of ________ unemployment plus the rate of _______ unemployment.

Structural; frictional

A worker repairing VHS cassette-tape players was laid off because most of his customers have started using DVD players. This worker is now:

Structurally Unemployed

An increase in government spending causes:

The aggregate demand curve to shift to the right

What will happen when banks decide to increase their reserve ratios?

The money supply will contract

(Table) Refer to the table. Which of the four towns has the lowest standard of living?

Town Cf

If the Fed overreacts to a negative spending shock by increasing money growth too much:

both real GDP growth and inflation will increase more than the Fed prefers

If the interest rate rises from 5% to 9%, the number of new businesses will:

decrease

When the Fed buys short-term Treasury securities, short-term interest rates:

fall

The primary tools of fiscal policy are:

government expenditure and taxation.

In the AD-AS model, an unexpected increase in the growth rate of the money supply:

increases both the inflation and real growth rates in the short run.

The buyer of a bond is a:

lender

When economists speak of "Long-run economic growth", they mean increasing the:

per capita real GDP of a country

According to the quantity theory of money, in the long run, an increase in money supply causes an increase in:

prices

Increases in _____________ are considered the best measure of increases in living standards because they measure only increases in production.

real GDP per capita

A decrease in spending growth will cause the economy's aggregate demand curve to:

shift to the left

The average number of times a dollar is spent on final goods and services during a year is the:

velocity of money