Exam 3 (MC)

If Lola is classified as a discouraged worker, she is

not part of the labor force

A barter transaction involves exchanging

one good for another good

A rancher raises alpaca. Once a year, he shears them and sells the raw wool to a processor who spins it into yarn. The yarn is then sold to a mill which produces and sells alpaca sweaters. In calculating GDP we would count

only the sweaters

Nominal GDP increases over time because

production and prices increase over time

At higher interest rates the:

quantity demanded of money is lower

Prices that do not always adjust rapidly to maintain equality between quantity supplied and quantity demanded are

sticky prices

Ashley received a federal income tax refund of $1,000 in May 2012. Ashley put this money in a saving account so that she could spend it when she goes on vacation in July 2012. This is an example of money saving as a

store of value

Macroeconomics

studies the behavior of the economy as a whole

Lyndon Johnson's policies during the 1960s can best be described as

the "Great Society"

The federal debt is the

total amount owed to the public by the federal government

Timmy started looking for another job immediately after he lost his current job. As a result the

unemployment rate increases

A decrease in the overall price level is

deflation

A currency that is not backed by gold, silver, or any other precious commodity equal to the face value of the money is know as

fiat money

The Federal Reserve Bank for St. Mary's County, MD is located in

Richmond, VA

The short-term ups and down in the level of economic activity is known as a

business cycle

Real GDP increases over time because

production increases over time

the federal deficit is the

yearly federal expenses minus the yearly federal tax revenues

Three monetary policy tools of the fed reserve

1) changing the required reserve ratio: changing the portion of deposits that banks must hold. lower reserves increase bank loans and the money supply 2) changing the discount rate: changing interest rates that the Fed changes banks for loans 3) open market operations (primary tool): buying and selling treasury bonds in the open market

The current Chairman of the Federal Reserve Board of Governors is

Ben Bernanke

The Consumer Price Index is generated monthly by the

Bureau of Labor Statistics

If a firm purchased equipment that is to be used to manufacture goods for export, it should be included in which component of GDP

Gross Private Domestic Investment

Stagflation occurs when the economy's inflation rate is ____ and the unemployment rate is ______

high; high

Inflation refers to an _____ in the overall _____ level

increase; price

Personal taxes are the _____ in the federal government's budget

largest revenue source

Structural Deficit

The deficit that remains at full employment

How many Federal Reserve Governors are there in Washington DC at the Board of Governors

7

Hyperinflation

A period of very rapid increase in the overall price level

Consumer Price Index

A price index computed each month by the Bureau of Labor Statistics using a bundle that is meant to represent the "market basket" purchased monthly by the typical urban consumer

Which of the following is not conducted by the Federal Reserve System?

All are conducted by the Fed

Demand deposits are included in which measure of money

M1 and M2

A progressive income tax is an example of

an automatic stabilizer

Tight monetary policy refers to Fed policy that

contracts the money supply

Gross domestic product calculations count only final goods and services because

counting all goods and services would lead to double counting of many activities

The natural rate of unemployment does not include

cyclical unemployment