Macro Final

The real GDP per capita of Bangladesh in 2020 was approximately 2,000 USD. If the growth rate of Real GDP per capita in Bangladesh is 2.5%, then it will take Bangladesh roughly ____ to catch up to the current United States GDP per capita of 64,000.

140 years

Suppose that the CPI was 150 last year, and the CPI is 175 this year. What is this year's inflation rate?

16.66%

If nominal GDP in some year is 280 and real GDP is 160, then the GDP price index for that year is

175

A command system is characterized by the private ownership of resources and the use of prices to coordinate economic activity

False

Demand-pull inflation and cot-push inflation are identical concepts because both involve lower unemployment rates and rising prices

False

Full employment occurs when cyclical employment reaches its minimum, during the peak of the business cycle

False

Loans made to customers are a liability on the bank's balance sheet

False

Real GDP and Real GDP Per Capita will always grow at the same rate over time

False

Whenever currency is deposited in a commercial bank, cash goes out of circulation and as a result the money supply is reduced

False, because a checkable deposit in a commercial bank is also part of the money supply

Most modern banking systems are based on

Fractional reserves

Tory earns $10 an hour working at FloorMart. She learns that PriceCo is paying more. She leaves her current job to hopefully start working at PriceCo or another job which pays more. Tory is said to experience.

Frictional Unemployment

Which of the following will shift aggregate demand to the right

Government spending has increased

What will occur in the short run if there is cost-push inflation and the government adopt a hands off approach to it

High unemployment and a loss of real output

The area to the left of the LRAS curve is associated with____ and the area to the right is_______

Higher unemployment to the left and lower unemployment to the right

The problem of time laps is enacting and applying fiscal policy is

In the time it takes to identify the situation, enact a policy, and allow it to work, economic circumstances may have changed

Assume that country has MPS of .25. Recessionary Gap of $30 billion. Which would get the economy back to full employment.

Increase gov spending by 7.5 billion or decrease taxes by 10 billion

The costs of unemployment are not limited to economic costs. noneconomic costs of unemployment include

Increases poverty, suicide rates, and homicide rates

The purchasing power of money and the price level vary

Inversely

What are two criticisms of the unemployment rate

Involuntary part-time workers counted as full-time Discouraged workers are not counted as unemployed

The near-money components of M2 are

Less-liquid as the M1 components of M2

Which of the following pairs of statements correctly identifies a micro and macro Economic concept

Macroeconomics: The unemployment rate in the United States was 3.7 in December Microeconomics: A U.S software firm laid off 15 workers last month and transferred the work to India

Which of the following is a characteristic of a laissez fair system

Minimal government intervention

Determinants of Aggregate Demand

Net Exports, Government Spending, Consumption, and Investment.

Which of the following correctly identifies and a positive and normative statement

Normative: The unemployment is too high positive: Higher unemployment rate are correlated with higher crime rates

Any point in the production possibility curve indicates

That more output can be produced with the available resources

Which of the following are two reasons why command systems have failed in the past

The coordination problem and the incentive problem

The money supply is backed

by the government's ability to control the supply of money and therefore to keep its value relatively stable

If nominal GDP is 150 and the GDP price index is 200, then the real GDP is.

75.00

Suppose that AD and AS intersect at an output level that is higher than the full employment output level. After the economy adjusts back to equilibrium in the long run

APL is higher and RDGP is lower

Critics of economic growth:

B. argue that economic growth does not resolve socioeconomic problems such as an unequal distribution of income and wealth.

What does it mean when economists say that buyers are underwater on their mortgages

Buyers owe more on their mortgages than their property is worth

Refer to the diagram as it relates to production possibilities analysis. The law of increasing opportunity cost is reflected in curve

C

Which of the following is not part of the M2 money supply

Credit card Balances

which of the following would help a government reduce an inflationary output gap

Decrease government spending, Increases taxes, or both

The Aggregate curve is

Downsloping because of the interest-rate, real balances, and foreign purchases effects

Changes in the nominal GDP can be caused by changes ______ while changes in the real GDP indicate changes in _____

Output or Prices, Output

Price floor refer to diagram

Price floor is located at the top

The two conflicting goals commercial banks face are

Profit and liquidity

Government's fiscal policy options for ending severe demand-pull inflation include

Reducing government spending, increasing taxes or both

The major assets on a commercial bank's balance sheet include

Reserves, securities, loans, and vault cash

The law demand states, as prices falls the quantity demanded _____ , while the law of supply states, as prices fall the quantity supplied ____

Rises, falls

Which is a true statement regarding money

The use of money makes trade easier, as it eliminates the issue of "coincidence of wants" and is a medium if exchange

Built-in stabilizers are a mechanism that increases governments budget deficit during a recession and increases governments budget surplus.

True

The M2 money supply is larger than the M1 money supply

True

The four general categories of economic resources include land, labor, capital, and entrepreneurship ability

True

The value of the price index in the base Year is always 100 and GDP and Real GDP are always equal the first year

True

Economic systems differ according to which two main characteristics

Who owns the factors of production and the methods used to Coordinate economic activity

Which of these is a true statement regarding " Institutional structures that promote modern economic growth"

Without proper protection through patents and copyrights they aren't encouraged to invent new things

Excess reserves

can be lent out, thereby increasing the money supply

In sequential order, the four phases of the business cycle are

peak, recession, trough, and expansion