Econ Final
If the government sets floor prices for wheat or corn that guarantee farmers an above-market price for that product, the most probable result would be what
overproduction
The federal minimum wage is an example of a
price floor
A nation achieves economic growth when its
production possibilities frontier shifts outward
A contractionary monetary policy reduces GDP by
raising interest rates and discouraging investment and consumption spending
A decrease in taxes will shift the AD curve to the ________, while a decrease in government expenditure will shift the curve to the ________.
right; left
When the supply of loanable funds shifts its position to the right, interest rates will ________ because loanable funds will be
rise, more scarce rise, scarcer
If the Fed raises reserves requirements, then interest rates will ________ and the money supply will ________
rise; decrease
If the Fed wants to decrease the quantity of money in the economy, it can
sell bonds
A country's government should ________ when inflation begins to climb to unacceptable levels in the economy
shift aggregate demand to the left by using contractionary fiscal policy
In order to satisfy as many wants as possible, it is necessary to achieve allocative efficiency
since otherwise output may go to where it is less valued
When prices do not respond quickly to bring forces of supply and forces of demand to the equilibrium point, they are called:
sticky prices
Which of the following is considered a Federal Reserve monetary policy tool?
varying the discount rate
The required reserve ratio for Jack's bank is 10 percent. If Jack deposits $2,000 cash in his checking account, what is the amount of new money the bank would create when it lends out its excess reserves
$1,800
If a macroeconomy has the money supply and aggregate demand increased by the Central Bank, what monetary policy is the Central Bank following
An expansionary monetary policy
Which of the following scenarios would be MOST beneficial to a bank?
Kim and Micah decide to move most of their money from a checking account into a savings account
Which of the following best describes a business cycle?
Periods of increasing and decreasing real GDP
If an economy moves into a recessionary period, examples of fiscal policies that act as automatic stabilizers include
an increase in transfer spending, such as unemployment benefits
Kayden decided to attend college and gain a degree in accounting. He is now starting his degree. The yearly cost of tuition is $10,000 and he left his auto mechanic shop management job giving up a $32,000 a year to attend college. Kayden's decision resulted in
an opportunity cost to attend college of $42,000 per year.
From a neoclassical perspective, when the economy is in a recession if the government increases its spending it is
at the risk of crowding out private investment.
A common complaint with trade policies is the act of
dumping
Excess supply will result in suppliers ________ prices, which encourages consumers to demand ________
lowering; more
The term "full employment GDP" is synonymous with which of the following?
macroeconomic equilibrium
One of the goals of monetary policy
maintaining price stability
Suppose that there are only two types of output in a country: nuclear missiles and consumer goods. All else being constant, as the nation produces more missiles,
the greater the opportunity cost will be of satisfying consumer wants
When Ian experiences diminishing marginal utility when buying shirts
the personal value of each additional shirt he purchases starts to fall
Assuming that Brazil can produce 100 pounds of beef or 10 autos and the United States can produce 40 pounds of beef or 30 autos, what is the opportunity cost of producing one pound of beef in Brazil
1/10 of an auto
Suppose, in the graph below, there is a price ceiling of $3. Then there is a shortage of
3
Country A's real GDP is growing at a rate of 2 percent per year. Using the rule of 72, it will take country A ________ to double its GDP
36 years
The standard of living for country Y is affected by compounded growth. If the economy for country Y starts with a GDP of 200 and a growth rate of 4% per year, what will its GDP be in 20 years?
438
Which is a factor that drives economic growth
Increased human capital
In India one person can produce 330 pounds of rice or 110 shirts in one year. In China one person can produce 400 pounds of rice or 200 shirts in one year. Which of the following statements is true?
India has a comparative advantage in the production of rice
What happens to the money supply if the Fed lowers the discount rate
It increases
The production possibilities model illustrates an inverse relationship between two goods or services because
Production of different types will compete for limited resources
When the economy is at full employment, what is the relationship between real GDP and real potential GDP
Real GDP is equal to real potential GDP
How would you interpret a graph of a nation when its production possibilities frontier shifts outward
The country is achieving economic growth
How do central bank policies affect interest rates
When the central bank decides to increase the discount rate, then interest rates increase
A key part of the Income-Expenditure model is understanding that as GDP (or national income) rises, so does ________.
aggregate expenditure
An expansionary fiscal policy can increase the level of aggregate demand by all of the following EXCEPT
decreasing government purchases
A broad reason that intra-industry trade between similar nations produces economic gains involves ________ because it allows producers to supply the market and variety to consumers
economies of scale
The idea that firms will get the most for their money when they pay wages higher than the equilibrium wage is called
efficiency wage theory
There are certain types of unemployment that exist at all times and determine the natural rate of unemployment. Which of the following types fit this description
frictional unemployment and structural unemployment
A welder who quits his job and moves from Pittsburgh to Madison to try to get a better welding job is said to be
frictionally unemployed
The country of Andorrata's Gross Domestic Product in 2016 was $31,000 per capita. The GDP grew by 4% in 2017 while the population grew by 2%. What would the per capita GDP in 2017 be
gdp per capita for 2017 would be higher
In the AS-AD model depicting economic growth, the vertical line that represents potential GDP will
gradually shift to the right in the long run.
In order to ________ the money supply, government should ________ bonds in open market operations
increase; buy
Which of the following actions by the Fed will increase the money supply
increasing the reserve requirement and buying bonds
The main risk of quantitative easing is
inflation
When a Central Bank decides to make a policy intervention it must be mindful of the trade off between
inflation and unemployment.
Inflation increases uncertainty in the markets because:
it is more difficult to stay aware of how one product compares in cost to another
An economy is considered to be in a recession if
it is moving from the peak toward the trough of the business cycle
A decision by the Federal Reserve to change reserve requirements for banks is an example of
monetary policy
If productivity increases from one year to the next
nominal and real gross domestic product would increase
During a recession, what is a traditional tool used by the Fed to boost the economy
open market operations
In the long run, the most important factor that shifts the aggregate supply curve is
technological change
Individuals and countries will continue to trade airplanes for cars until
the value of each additional airplane and car is equal for both countries or individuals.
For productivity to increase
the value of the production per hour worked has to increase
To measure a real increase in wages
the wages would have to be adjusted for inflation overtime
When quantity demanded increases in response to a change in price
there is a movement from one point to another along the demand curve
