FINAL ECON MACRO
Suppose the reserve requirement is 15%. What is the effect on total check able deposits in the economy if bank reserves increase by 450 billion? (a) $50 billion increase (b) $330 billion increase (c) $3 billion increase (d) $750 billion increase
(b) $330 billion increase
What is the difference between federal government purchases (spending) and federal government expenditures? (a) Government purchases refer to spending for which no good or service is received. (b) Government purchase are included in government expenditures (c)government expenditures are included in government purchases (d) they are the same.
(b) Government purchase are included in government expenditures
Why is GDP an imperfect measurement of total production in the economy? (a) The official measure of GDP does not include intermediate goods and services. (b) GDP measures total income paid to the factors of production, not production. (c) GDP does not include household production or production from the underground economy. (d) The BEA does not include the value of new houses in GDP.
(c) GDP does not include household production or production from the underground economy.
Which of the following equations sums up the components of Gross Domestic Product (GDP)? (a) Y = C+I-G+NX (b) Y = C+I+G-NX (c) Y = C+I+G+NX (d) Y = C-I-G-NX
(c) Y = C+I+G+NX
One-time tax rebates, such as those in 2001 and 2008, increase consumption spending by less than a permanent tax cut because one-time tax rebates increase.. (a) taxable income (b) permanent income (c) current income (d) multiplier effect
(c) current income
If prices rise over time, then the real GDP will be.. (a) smaller than nominal GDP in years before the base year (b) smaller than nominal GDP in the base year (c) larger than nominal GDP in years before the base year (d) larger than nominal GDP in years after the base year.
(c) larger than nominal GDP in years before the base year
How does a budge deficit act as an automatic stabilizer and reduce the severity of a recession? (a) consumers spend more than they would in the absence of social insurance programs like unemployment. (b) during recessions, tax obligations fall due to falling wages and profits (c) transfer payments to households increase (d) all of the above
(d) all of the above
Increased government debt can lead to higher interest rates and as a result crowding out of private investment spending. In terms of borrowing (debt spending) what will offset the effect of crowding out in the long run so that government debt poses less of a problem to the economy? (a) dept spending on highways and ports (b) debt spending on education (c) debt spending on research and development (d) all of the above
(d) all of the above
What are the gains to be had from simplifying the tax code? (a) resources from the tax preparation industry freed up for other endeavors (b) Greater clarity of the decisions made by households and firms (c) increased efficiency of households and firms (d) all of the above
(d) all of the above
Consider the figure to the right. Why does the short - run aggregate supply curve( SRAS)slope upwards? (a) contracts keep wages "sticky" (b) prices of final goods rise more quickly than the prices of inputs (c) firms and workers fail to predict changes in the price level (d) all the above (e) A and B only.
(d) all the above
Which of the following causes changes in the CPI to overstate the true inflation rate? (a) New product bias (b)Increase in quality bias (c) substitution bias (d) all the above
(d) all the above
Policy that is specifically designed to affect aggregate supply and increase incentives to work, save, and start a business, by reducing the tax wedge is called... (a) labor economics (b) tax-and spend economics (c) demand side economics (d) supply side economics
(d) supply side economics
Does government spending ever reduce private spending? (a) yes, due to reduced interest rates. (b) No, due to crowding out (c) no, they are unrelated (d) yes, due to crowding out.
(d) yes, due to crowding out.
Even perfectly anticipated inflation imposes costs. Why? (a) paper money loses its purchasing power by the rate of inflation (b) some wages will fail to keep up with anticipated inflation (c)menu costs (d)all the above (e) A and C only.
(d)all the above
According to the dynamic AD-AS model, what is the most common cause of inflation? (a) total spending increases faster than total production (b) AD increases by more than LRAS (c) the u.s. mint prints too much currency (d) all the above (e) A and B only
(e) A and B only
Why did the Fed help JP morgan chase buy bear steams? (a) Failure of bear stearns would lead to a larger investment bank failure (b) Jp morgam chase is an influential partner with the FED (c) commercial banks would be reluctant to lend to investment banks (d) all the above (e) A and C only
(e) A and C only
Consider the figures below and determine which is the best description of what causes the shift from Ad1 to Ad2. (a) Example A shows a contractionary monetary policy. The price level and real GDP both fall. (b) Example B shows and expansionary monetary policy. The price level and real GDP both rise (c)Both examples show expansionary monetary policy. The price level and real GDP both rise (d) Example A shows an expansionary monetary policy. The price level rises and real GDP falls. (e) Both A and B
(e) Both A and B
Which of the following is true with respect to Irving Fishers quantity equation, MxV = PxY? (a) v = avg num of times a dollar is spent on goods and services (b) v =(PxY) / M (c) M = m1 definition of the money supply (d) p = GDP deflator (e) all the above
(e) all the above
Why is the unemployment rate, as measured by the Bureau of Labor Statistics, an imperfect measure of the extent of joblessness in the economy? (a) it fails to account for illegal activities (b) discouraged workers are not considered unemployed (c) it does not account for inaccurate response to the current population survey (d) underemployed people are considered employed. (e) all the above
(e) all the above
- Suppose that initially, the economy is in long-run macroeconomic equilibrium at point A. If there is increased pessimism about the future of teh economy, the AD curve will shift from_______ - The new short- run macroeconomic equilibrium occurs at____________ - Long-run adjustment will shift the SRAS curve from ___________________ as workers adjust to lower than excepted prices. - The new long run macroeconomic equilibrium occurs at _________________
- AD0 to AD1 -point B -Sras0 to Sras1 -point c
The figure to the right illustrates they dynamic AD- AS model. Suppose the economy is in equilibrium in the first period at point A. In the second period, the economy reaches point b. We would expect the federal government to pursue what type of policy in order to move Ad1 to Ad2policy and reach equilibrium point C in the second period? _________________ If the federal governments policy is successful, what is the effect on the following macroeconomic indicators? - Actual real GDP:__________________ -Potential real GDP: ________________ -Price level:_______________ -Unemployment:_________________
- Expansionary fiscal policy - Actual real GDP: increases -Potential real GDP: does not change -Price level: increases -Unemployment: decreases
The figure to the right illustrates a dynamic AD- AS model. Suppose the economy is in equilibrium in the first period at point A. In the second period, the economy reaches point B. We would expect the Fed to pursue what type of policy in order to move AD2 to AD2 policy and reach equilibrium (point C) in the second period? _________________________ In the federal reserve banks policy is successful, what is the effect on the following macroeconomic indicators? Actual gdp: ____________________________ Potential real GDP: ___________________ Price level: _____________________ Unemployment: ________________
- Expansionary monetary policy - Actual GDP: Increases -Potential real GDP: does not change -Price level: increases -Unemployment: decreases
The figure to the right illustrates the economy using dynamic aggregate demand and aggregate supply model. If actual real GDP in 2006 occurs at point B and potential GDP occurs at LRAS06 we would expect the federal government to pursue a __________ fiscal policy. If the government's policy is successful, what is the effect of the policy on the following macroeconomic indicators? - Actual real GDP:__________________ -Potential real GDP: ________________ -Price level:_______________ -Unemployment:_________________
Contractionary - Actual real GDP: decreases -Potential real GDP: does not change -Price level: decreases -Unemployment: decreases
What is inflation targeting? (a) Committing the central bank to achieve an announced level of inflation (b) A target that links the Fed's target for the federal funds rate to inflation (c) A policy that attempts to reduce inflation to zero. (d) Another name for contractionary monetary policy
(a) Committing the central bank to achieve an announced level of inflation
What are the four major categories of expenditure? (a) Consumption, investment, government purchases, and net exports. (b) Labor capital, natural resources, and entrepreneurship (c) Wages, interest, rent, and profit. (d) Final goods, intermediate goods, production, and income.
(a) Consumption, investment, government purchases, and net exports.
Which of the following is NOT a function of money? (a) unit of account (b) acceptability (c) medium of exchange (d) store of value
(b) acceptability
National income is... (a) GDP minus sales taxes (b) NNP minus income taxes (c) GNP plus depreciation (d) GDP minus depreciation
(d) GDP minus depreciation
Evaluate the following statement: Banks use deposits to make consumer loans to households and commercial loans to businesses. Banks will loan out every penny of their deposits in order to make a profit. (a) False. Banks must hold a fraction of their deposits as vault cash or with the federal reserve. (b) False. In reality, banks are rarely able to find borrowers for all of their deposits. (c)True, deposits that sit in a bank as vault cash earn no interest rate (d) true, any money that is left over after a bank loans money to businesses and households will be loaned to other banks.
(a) False. Banks must hold a fraction of their deposits as vault cash or with the federal reserve.
Suppose John Q. worker is currently unemployed. Each day, John Q. worker spends the entire day searching available job openings for an appropriate positions given his set of skills, abilities, and interests. If someone asks John Q. what he does for work, he tells them that he is currently " in between jobs". Which of the following best classifies John Q unemployment status? (a) Fictionally unemployed (b) Seasonally unemployed (c) Structurally unemployed (d) Cyclically unemployed
(a) Fictionally unemployed
How do investment banks differ from commercial banks? (a) Investment banks do not take deposits. (b) Investment banks generally do not lend to households (c) commercial banks do not lend to households (d)investment banks take deposits (e) commercial banks are financial advisors to firms issuing stocks
(a) Investment banks do not take deposits. (b) Investment banks generally do not lend to households
The BLS uses the establishment survey to collect information on employment in the economy. Indicate one drawback of the establishment survey compared to the current population survey and indicate one advantage. (a) It does not include information about self employed people (b) it includes complete information about unemployment (c) it is based on unverifiable, self-reported survey responses. (d) it is based on the company payroll and not on unverifiable answers.
(a) It does not include information about self employed people (d) it is based on the company payroll and not on unverifiable answers.
In 2008 the required reserve ration for a banks first $9.4 million in checking account deposit was zero. It was 3 percent on deposits between $9.3 million and $millionaire, and 10 percent on deposits above $43.9 million. In most cases, and for simplicity we assume that the required reserve ration is 10 percent on all deposits. Therefore, the simple deposit multiplier is 10. Is the real-world deposit multiplier greater than, less than, or equal to the simple deposit multiplier? (a) Less. The simple deposit multiplier is a model with assumptions that keep it higher than the real-world multiplier (b) Greater inflation plays a large role in the increase in check able deposits (c) Equal, there is no difference between the two (d) none of the above they are very different concepts
(a) Less. The simple deposit multiplier is a model with assumptions that keep it higher than the real-world multiplier
Personal income is... (a) National income minus retained corporate earnings plus government transfer payments and interest on government bonds. (b) national income minus income taxes (c) equal to the value of all final goods and services produced within a country's borders during one year (d) national income plus government transfer payments.
(a) National income minus retained corporate earnings plus government transfer payments and interest on government bonds.
Which of the following would be included in the gross national product(GNP) of the united states? (a) Production from the U.S. firm that operates in Mexico (b) Production from an hungarian citizen who works in Denver, CO. (c)Production from a canadian firm that operates in Montana. (d) All the above are included in the GNP of the U.S.
(a) Production from the U.S. firm that operates in Mexico
Suppose the base year is 2001. Looking at GDP data from the united states from 2001 to the present, what would be true of the relationship between nominal GDP and real GDP? (a) RGDP < NGDP because prices are rising (b) RGDP > NGDP because prices are falling (d) Th relationship is uncertain without more information on prices.
(a) RGDP < NGDP because prices are rising
According to the quantity theory of money, inflation results from which of the following? (a) The money supply grows faster than real GDP (b) The money supply grows at the same rate as GDP (c) The money supply grows slower than real GDP
(a) The money supply grows faster than real GDP
An initial decrease in a bank's reserves will decrease checkable deposits... (a) by an amount greater than the decrease in reserves. (b) by an amount less than the decrease in reverses (c) by an amount equal to the decrease in reserves (d) an initial decrease in reserves will increase checkable deposits.
(a) by an amount greater than the decrease in reserves.
According to Costco CEO " paying good wages and keeping people working for you is good business....what is Costco CEO referring to? (a) efficient wages (b) structural unemployment (c) marketing strategies (d)union contracts
(a) efficient wages
In addition to the Feral Reserve Bank, what other economic actors influence the money supply? (a) household, firms, and banks (b) the u.s senate and the u.s. house of representatives (c) the u.s. president and vice president (d) the u.s. mint and the u.s. treasury
(a) household, firms, and banks
credit cares are.... (a) included in neither the M1 definition of the money supply nor the m2 definition. (b) included in the m2 definition of the money supply but not in the m1 definition (c) included in the m1 definition of the money supply, but not in the m2 definition (d) included in both the m1 and then m2 definitions of the money supply
(a) included in neither the M1 definition of the money supply nor the m2 definition
The federal funds rate... (a) is the rate that banks charge each other for short term loans of excess reserves (b) equals the discount rate (c) only matters to banks and has very little impact on individual consumers (d) is set by the federal reserve bank.
(a) is the rate that banks charge each other for short term loans of excess reserves
Suppose the fixed interest rate on a loan is 5.75% and the rate of inflation is expected to be 4.25%. The real interest rate is 1.5%. Suppose now that instead of 4.25%, the inflation rate unexpectedly reaches 5.5%. Who gains and who loses from this unanticipated inflation? (a) lenders who lose from a lower real interest rate (b) borrowers gain from a lower real interest rate (c) lenders gain from a lower real interest rate (d) borrowers lose form a lower real interest rate.
(a) lenders who lose from a lower real interest rate (b) borrowers gain from a lower real interest rate
Indicate which of the following would cause a shift in the aggregate demand curve from point A to point C (mark all that apply) (a) lower taxes (b) inflation (c) increased consumer optimism (d) lower interest rates (e) decrease in the price level (f) decrease in the u.s. exchange rate relative to other currencies.
(a) lower taxes (b) inflation (c) increased consumer optimism (d) lower interest rates (f) decrease in the u.s. exchange rate relative to other currencies.
Which of the following formulas does the Bureau of Labor Statistics use to calculate the unemployment rate? (a) num of unemployed / num in labor force x 100 (b) num of unemployed/num employed x 100 (c) num in labor/num of unemployed x 100 (d) num unemployed/working - age population x 100
(a) num of unemployed / num in labor force x 100
As the figure to the right indicates, the Fed can affect both the money supply and interest rates. However, in recent years, the Fed targets interest rates in monetary policy more often than it does the money supply. Which interest rate does the Fed target? (a) the federal fund rate (b) the long term nominal interest rate (c) the short term real interest rate (d) the discount rate
(a) the federal fund rate
Changes in interest rates affect aggregate demand. Which of the following is affected by changes in interest rates and , as a result, impacts aggregate demand? (a) the value of the dollar (b) consumption of durable goods (c) Government spending (d) business investment projects
(a) the value of the dollar (b) consumption of durable goods (d) business investment projects
When is it considered " good policy" for the government to run a budget deficit? (a) when borrowing is used for long lived capital goods (b) when borrowing is used to pay for social insurance programs (c)when borrowing is used for current expenses (d) all the above
(a) when borrowing is used for long lived capital goods
In a fractional reserve banking system, what is the difference between a "bank run" and a "bank panic?" (a) a bank run involves many banks; a bank panic involves one bank (b) A bank run involves one bank; a bank panic involves many banks. (c) A bank run is a u.s. issue; a bank panic is an international issue. (d) a bank run is a local issue; a bank panic is a national issue.
(b) A bank run involves one bank; a bank panic involves many banks.
Consider the figure to the right. An increase in government spending shifted to the aggregate demand curve from AD1 to AD2. As a result, both the price level and real GDP increased. What can be said, however, about the increase in real GDP? (a) It increased by more than indicated by a multiplier with a constant price level (b) It increased by less than indicated by a multiplier with constant price level (c) It increased by the same amount as indicated by a multiplier with a constant price level. (d) None of the above
(b) It increased by less than indicated by a multiplier with constant price level
How does the U.S. economy create and destroy millions of jobs each year? (Mark all that apply) (a) The federal government determines that certain industries are obsolete and closes firms. (b) Some businesses are expanding, while others are contracting. (c)When unemployment is high, the federal government hires more workers to offset the effects of unemployment (d) In the market system, new firms are constantly entering and exiting various industries.
(b) Some businesses are expanding, while others are contracting. d) In the market system, new firms are constantly entering and exiting various industries.
Consider the figures below. Determine which combination of fiscal policies shifted Ad1 to Ad2 in each figure and returned the economy to long-run macroeconomic equilibrium. (a) contractionary fiscal policy, expansionary fiscal policy (b) expansionary fiscal policy, contractionary fiscal policy (c) expansionary fiscal policy, expansioary fiscal policy (d) contractionary fiscal policy, contractionary fiscal policy
(b) expansionary fiscal policy, contractionary fiscal policy
The u.s dollar can best be described as.. (a) reserve money (b) fiat money (c) commodity-backed money (d) commodity money
(b) fiat money
The m2 definition of the money supply includes... (a) savings accounts, mutual funds, small time deposits, and credit cards. (b) m1, savings account, small time deposits, and money markets (c) m1 savings accounts, small time deposits, money markets, and credit cards (d) m1, saving accounts mutual funds, and credit cards.
(b) m1, savings account, small time deposits, and money markets
If the federal reserve is late to recognize a recession and implements an expansionary policy too late, the result could be an increase in inflation during the beginning of the next phase. Even though the goal had been to reduce the severity of the recession, the poor timing caused another problem: inflation. This is an example of what type of policy? (a) fiscal policy (b) pro cyclical policy (c)tight policy (d) Counter-cyclical policy
(b) pro cyclical policy
How do unemployment insurance payments in the united states and social insurance programs in other countries increase the unemployment rate? (a) they are paid as long as the unemployed person remains unemployed (b) they decrease the opportunity cost of job search (c) they increase the opportunity cost of job search (d) the payments are costly and firms are forced to lay off workers
(b) they decrease the opportunity cost of job search
The figure to the right illustrates the dynamic AD-AS model. Suppose the economy is in equilibrium in the first period at point (A). In the second period, the economy reaches point (B). What policy would the federal government likely pursue in order to move AD2 to AD2,policy and reach equilibrium (point C) in the second period? (a) open market purchase of government securities (b)Increase government spending (c) increase taxes (d) all of the above
(b)Increase government spending
What two institutions did Congress create in order to increase the availability of mortgages in a secondary market? (a) the bank oversight committee and the department of interior (b) the federal open market committee and the federal deposit insurance corp. (c) Frannie mae and Freddie Mac (d) The national Bureau of economic research and bureau of labor stat.
(c) Frannie mae and Freddie Mac
In the figure to the right, when the money supply increased from Ms1 to MS2 the equilibrium interest rate fell from 4% to 3%. why? (a) Initially, firms hold more money than they want relative to other financial assets. (b) Increased demand for Treasury securities drives down their interest rate (c) Increased demand for Treasury securities drives up their prices (d) all the above
(d) all the above
After September 11, 2001, the federal government increased military spending on wars in Iraq and Afghanistan. Is this increase in spending considered fiscal policy? (a) Yes, fiscal policy refers to changes in government spending and taxes (b) Yes, Increases in Defense spending are designed to achieve macroeconomic policy objectives (c) No. The increase in defense spending after that date was designed to achieve homeland security objectives. (d) No. Fiscal policy refers to changes in interest rates and the money supply.
(c) No. The increase in defense spending after that date was designed to achieve homeland security objectives.
Indicate whether the following statement is true or false and why. " A wage rising slower than the rate of inflation is actually falling" (a) True. If wages are increasing slower than the average price of goods and services, purchasing power increases (b) False. A higher wage decreases purchasing power regardless of inflation (c) True. If wages are increasing slower than the average price of goods and services, purchasing power falls. (d) False. A higher wage increases purchasing power regardless of inflation.
(c) True. If wages are increasing slower than the average price of goods and services, purchasing power falls.
As a result of crowding out in the short run, the effect on real GDP of an increase in government spending is often.. (a) more than the increase in government spending (b) unrelated to the increase in government spending. (c) less than the increase in government spending (d) equal to the increase in government spending.
(c) less than the increase in government spending
Suppose the economy is in equilibrium in the first period at point A. In the second period, the economy reaches point B. What policy would the Fed likely pursue in order to move Ad2 to Ad2 policy and reach equilibrium point c in the second period? (what policy will increase the price level and increase actual real gdp) (a) Increase the discount rate (b) decrease taxes (c) open market purchase of government securities (d) increase the reserve requirement
(c) open market purchase of government securities
What effect do labor unions have on the unemployment rate? (a) by increasing the wag above the market equilibrium, labor unions considerably increase the unemployment rate (b) by increasing the wages above market equilibrium, labor unions considerably decrease the unemployment rate (c) since few non-government workers are unionized , there is no significant effect on the unemployment rate. (d) labor unions can significantly increase the unemployment rate when members go on strike
(c) since few non-government workers are unionized , there is no significant effect on the unemployment rate.
Consider the downward-sloping aggregate demand(AD) curve to the right. Which of the following results in a movement from point A to point B (a movement up along the AD curve) or from point A to point C ( a movement down along the AD curve)? ( mark all that apply) (a) multiplier effect (b) inflation effect (c) wealth effect (d) interest rate effect
(c) wealth effect (d) interest rate effect
The Fed uses monetary policy to offset the effects of a recession (high unemployment and falling prices when actual real GDP falls short of potential GDP) and the effects of a rapid expansion ( high prices and wages) Can the Fed, therefore, eliminate recessions? (a) The fed can eliminate recession by properly anticipating the economic events that cause them (b) the fed is only concerned with the money supply and interest rates. (c)The fed can only soften the magnitude of recessions, not eliminate them. (d) the Fed can but chooses not to, eliminate recessions.
(c)The fed can only soften the magnitude of recessions, not eliminate them.
If a 3-month Treasury bill pays 5.5% and the change in the consumer price index (CPI) is 4.7%, what is the real interest rate (the true return to lending)? (a) 4.7% (b)5.5% (c)10.2% (d).8%
(d) . 8%
When the economy is at full employment... (a) all remaining unemployment is either frictional or structural (b) the unemployment rate is greater than zero (c) the natural rate of unemployment prevails (d) All the above
(d) All the above
How does a decrease in the price level affect the quantity of real GDP supplied in the long run? (a) in the long run, a decrease in the price level decreases inflation, which will decrease real GDP (b) In the long run, a decrease in the price level increases inflation, which will decrease real GDP (c) In the long run, a decrease in the price level will increase real GDP (d) Changes in the price level do no affect the level of GDP in the long run.
(d) Changes in the price level do no affect the level of GDP in the long run.
Consider the figure to the right. Can the Fed achieve a $900 billion money supply (MS) and a 5% interest rate (point C)? (a) Yes, controlling the money supply sets the interest rate. (b) No the Fed does not control the money supply. (c) Yes the Fed can target the money supply or the interest rate. (d) No, the Fed cannot target both the money supply and the interest rate simultaneously.
(d) No, the Fed cannot target both the money supply and the interest rate simultaneously.
The figure to the right illustrates a dynamic AD-AS model. Suppose the economy is in equilibrium in the first period at point A. In the second period, the economy reaches point B. What policy would the Fed likely pursue in order to move AD2 to AD2 policy and reach equilibrium (point c) in the second period? (a) Raise the discount rate (b) Decrease taxes (c) Increase the reserve requirement (d) Open market purchase of government securities.
(d) Open market purchase of government securities.
Nobel laureate Milton Friedman and his followers belong to a school of thoughts known as monetarism. What do the monetarists argue the Fed should target? (a) The fed should target both the interest rate and the money supply (b) The fed should target the interest rate, not the money supply, and that it should adopt the monetary growth rule (c) The Fed should target neither the interest rate nor the money supply (d) The Fed should target the money supply, not the interest rate, and that it should adopt the monetary growth rule .
(d) The Fed should target the money supply, not the interest rate, and that it should adopt the monetary growth rule .
What are the four categories of income? (a) Wages, Salaries, Interest, and Dividens (b) Labor, capital, natural resources, and entrepreneurship (c) consumption, investment, government purchases, and net exports (d) wages, interest, rent and profit.
(d) Wages, interest, Rent and Profit.
The use of money... (a) reduces the transaction costs of exchange (b) eliminates the double coincidence of wants (c) allows for greater specialization (d) all of the above
(d) all of the above
Real GDP per capita is often used as a measure of generalwell-being. While increases in real GDP often do lead to increases in thewell-being of thepopulation, why is real GDP not a perfect measure ofwell-being? (a) The costs of pollution are not included. (b) GDP does not include crime rates or income distribution (c) The value of leisure is not included (d) All the above
(d) all the above
Which of the follow is a monetary policy tool used by the Federal Reserve bank? (a) buying $500 million worth of government securities, such as treasury bills. (b) decreasing the rate at which banks can borrow money from the federal reserve (c) increasing the reserve requirement from 10 percent to 12.5 percent (d) all the above
(d) all the above
Which of the following is true with respect to hyperinflation? (a) It is caused by central banks increasing the money supply at a rate much greater than the growth rate of real GDP. (b) In the presence of hyper inflation, firms and households avoid holding money. (c)It can be hundreds even thousands of percentage points per year (d) all the above
(d) all the above
In the figure to the right, which of the following events is most likely to cause a shift in the money demand (MD) curve from MD1 to MD2 (point A to point C)? (a) Increase in real GDP or decrease in the price level (b) Decrease in real GDP or decrease in the price level (c) Decrease in real GDP or increase in the price level (d) increase in real GDP or increase in the price level
(d) increase in real GDP or increase in the price level
Which of the following is NOT a monetary policy goal of the Federal reserve bank (the fed)? (a) stable financial markets (b) low unemployment (c) higher living standards (d) low prices
(d) low prices
Disposable personal income is... (a) personal income minus indirect business taxes (b) national income minus personal taxes (c) national income minus depreciation (d) personal income minus personal taxes
(d) personal income minus personal taxes
when compared to the great depression the typical length of unemployment in the modern post great depression era u.s economy is.. (a) significantly longer (b) approximately the same (c) slightly longer (d) relatively brief
(d) relatively brief
Suppose that sally recently lost her job as an underwater welder. In looking for a new job, she discovers that the only available jobs are for economists and that there are no openings for underwater welders because that trade is now obsolete. If sally decides to return to school to earn an economics degree, what is the best classification of her unemployment status? (a) fractionally unemployed (b) cyclically unemployed (c) seasonally unemployed (d) structurally unemployed
(d) structurally unemployed
The largest component of gross domestic income is... (a) Interest (b)profits (c) rent (d) wages
(d) wages
Indicate whether each of the following is a final good, an intermediate good, or neither. - Coffee beans purchased by a coffee shop_____ -One share of google stock _______________ -A new pick up truck purchased by a consumer _________ -A new home purchased by a family _____________
- Coffee beans: Intermediate good -Share of google: Neither -Pick up truck: Final good -Home purchase: Final good
- An increase in the labor force or capital stock is illustrated as a ___________________ - An increase in the expected price of an important natural resource is indicated by_________________ - An improvement in technology is shown as a __________ - An increase in the expected future price level causes ___________________
- shift from A to B - shift from B to A - shift from A to B - shift from B to A
The united states is divided into ___ Federal Reserve Districts. The federal reserve banks board of governors consist of __ members appointed by the president of the u.s. to 14 year, non renewable terms. One of the board members is appointed to a ___ year, renewable term as the chairman.
-12 -7 -4
When the Federal Open Market Committee (FOMC) decides to increase the money supply, it ____ U.S. Treasury securities. If the FOMC wishes to decrease the money supply, it _____ U.S. Treasury securities.
-buys -sells
In the figure to the right, the opportunity cost of holding money _______ when moving from point A to point B on the money demand curve.
-decreases
A change in the price level causes a ___________ the short-run aggregate supply(SRAS) curve. In the figure, this is shown by moving from point _______. A change in any other factor causes a ________ the SRAS curve. In the figure, this is shown by moving from point __________
-movement along -A to B -Shift in -B to C
The____________ is considered the most relevant interest rate when conducting monetary policy.
-short-term nominal interest rate
In the diagram to the right, moving from point A to point B is called a _____________ the AD curve. Moving from point A to point C is refereed to as a __________ the AD curve.
movement along Shift in
Which of the following can give an early warning of the future increases in the price level? (a) producer price index (b) GDP deflator (c) consumer price index (d) all the above
a) producer price index