Exam 1 - Macroeconomics

If currency held by the public equals $500 billion, reserves held by banks equal $100 billion, and bank deposits equal $1 trillion, then the money supply equals:

$1.5 trillion

If the GDP deflator in 2009 equals 1.25 and nominal GDP in 2009 equals $15 trillion, what is the value of real GDP in 2009?

$12 trillion

If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is $741, and government purchases are $1,098, then net exports are:

-$31

If the consumption function is given by C = 150 + 0.85Y and Y increases by 1 unit, then personal saving increases by:

0.15 units

If the consumption function is given by C = 500 + 0.5(Y-T), and Y is 6,000 and T is given by T = 200 + 0.2Y, then C equals:

2,800

If real GDP grew by 6% and population grew by 2%, then real GDP per person grew by approximately ______ percent

4

If income is 4,800, consumption is 3,500, government spending is 1,000, and taxes minus transfers are 800, private saving is:

500

If households and businesses fear a banking crisis where they worry that some banks may fail, what is a likely consequence:

C/D ratio increases and money multiplier falls

If output is described by the production function Y = AK^0.2L^0.8, then the production function has:

Constant returns to scale

In the long run, the level of national income in an economy is determined by its:

Factors of production and production function (technology)

The Chair of the Federal Reserve is:

Jerome Powell

The Fed Funds rate is currently targeted to be:

about 5%

If bread is produced by using a constant returns to scale production function, then if the:

amounts of equipment and workers are both doubled, twice as much bread will be produced

Given that the national saving = private saving + public saving, a decrease in government's budget deficit leads to

an increase in national saving and more funds are available for businesses to borrow

To increase the money supply, the Federal Reserve:

buys government bonds

The minimum amount of owners' equity in a bank mandated by regulators is called a _____ requirement

capital

If many banks fail, this is likely to:

cause surviving banks to raise their ratios of reserves to deposits

A country that is on a gold standard primarily uses:

commodity money

Real GDP means the value of goods and services is measured in ______ prices

constant

If an increase of an equal percentage in all factors of production results in an increase in output of the same percentage, then a production function has the property called:

constant returns to scale

Nominal GDP means the value of goods and services is measured in ______ prices.

current

Liabilities of banks include

demand deposits

GDP is the market value of all ______ goods and services produced with in an economy in a given period of time

final

To compute the value of GDP:

goods and services are valued at market prices

In the circular flow diagram, firms receive revenus from the _____ market, which is used to purchase inputs in the ______ market

goods; factor

Budget deficit refers to:

government's spending minus government's revenue

When there is a fixed supply of loanable funds, an increase in investment demand results in a(n):

higher real interest rate

People use money as a store of value when they:

hold money to transfer purchasing power to the future

If government purchases exceed taxes minus transfer payments, then the government budget is:

in deficit

With given Y, when government spending increases and taxes are increased by an equal amount, interest rates:

increase

In the classical model with fixed income, an increase in the real interest rate could be the result of a(n):

increase in government spending

In a financial crisis when the Fed worries about money supply falling, it can try to counter that by

increasing the monetary base

In a fractional-reserve banking system, banks create money when they:

make loans

In equilibrium is a closed economy, total investment equals:

national saving

Consumption depends ________ on disposable income, and investment depends ________ on the real interest rate

positively, negatively

The currency-deposit ratio is determined by:

preferences of households over currency vs deposits, that they wish to hold

If there is no currency and the proceeds of all loans are deposited somewhere in the banking system and if rr denotes the reserve-deposit ratio, then the total money supply is:

reserves divided by rr

The monetary base is altered by

the Fed making discount loans

All of the following are a stock except: a consumer's wealth, the government budget deficit, the number of unemployed people, the amount of capital in the economy

the government budget deficit

If you hear in the news that the Federal Reserve conduction open-market purchases, then you should expect ________ to increase

the money supply

The real wage will increase if:

the productivity of labor increases

The GDP deflator is equal to:

the ratio of nominal GDP to real GDP

Classical distribution theory is

the systematic attempt to account for the sharing of the national income among the owners of the factors of production—land, labour, and capital.

Which of the following is a stock variable: Wealth, consumption, investment income, income

wealth

If banks are fearful that their borrowers may default or that a bank run is possible, a likely consequence is that

R/D ratio may rise and banks make fewer loans

All of the following actions are investments in the sense of the term used by macroeconomists except: IBM's building a new factory, Corner candy store's buying a new computer, John Smith's buying a newly constructed home, Sandra Santiago's buying 100 shares of IBM stock

Sandra Santiago's buying 100 shares of IBM stock

Suppose the Fed lowers interest rate but investment falls, this is a case of:

a downward shift of the investment curve

The national income accounts identity, for an open economy, is:

Y = C + I + G + NX

If the production function describing an economy is Y = 100 K^0.25 L^0.75, then the share of output going to labor:

is 75%

With a Cobb-Douglas production function, the share of output going to labor:

is independent of the amount of labor