Midterm 2

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Which of the following might create cost-push inflation

An increase in taxes

Which of the following is not a reason that the CPI overs states the cost of living

The Location of typical purchases is not adequately updated

which of the following is not a reason for the aggregate demand curve to be downward sloping?

diminishing marginal utility

open market operations refer to the buying and selling of

government securities

any event that creates a " crisis in confidence" is likely to lead to

lower aggregate prices

which of the following would be described as the operational lag

the time required to agree upon a policy remedy for a recession

an increase in taxes will cause

AD to decrease (move to the left)

a decrease in interest rates will cause

AD to increase (move to the right)

a decrease in confidence will cause

AD to increase(move to the right)

an increase in productivity will cause

AD to increase(move to the right)

The expenditures approach to GDP equals

Consumption + net investment( gross investment-Depreciation)+ Government purchase + Net exports

which of the following would be described as the administrative lag?

The time required to know that there is a recession

congress and the president have control of the tax system and government spending. As a result, their policies will directly impact.

aggregate demand

expansionary monetary policy would shift the

aggregate demand curve to the right

The purpose of fiscal policy is to

alter the direction of the economy

which of the following would qualify as an aggregate demand shock

an unexpected reduction in consumer confidence

The reason that only final sales count in GDP is to

avoid double counting

If a person is laid-off from a job and told that they will be brought back as the economy picks up and demand for their product rises, then economist call this person

cyclically unemployed

when recent college graduates begin looking for their first professional work in June, the unemployment

decrease as the labor force increases

fiscal policy is the purposeful movements in designed to direct an economy

government spending and taxes

one subject of the study for macroeconomies is

inflation

a political leader suggesting that an economic downturn will be cushioned by nondiscretionary fiscal policy is referring to

interest rates and tax rates

In measuring Gross Domestic product, goods produced by foreign firms in the untied states are

not counted

a political problem with discretionary fiscal policy is the

overreaction bias

when domestic price rises

people buy more imported goods

of the federal reserve wishes to increase interest rates using open market operations it would

sell us government securities

If a person is unemployed because their industry has moved to another country, economist refer to the person as

structurally unemployed

an example of nondiscretionary fiscal policy would be

tax cut adopted to stimulate consumption

the institution that governs monetary policy is

the Federal Reserve

The GDP Deflator is different than the CPI in that

the GDP deflator includes everything while the CPI only includes what average people buy

a political problem with discretionary fiscal policy

the ability of powerful politicians to direct government spending to their favored causes

the Obama stimulus plan's requirement that projects be " shovel-ready" was designed to combat

the administrative lag

an example of discretionary fiscal policy would be

the operation of the progressive federal income tax

Inflation is measured using in price index

the percentage year to year increase

The reason that only final sales are counted in GDP is

to avoid double counting goods that are sold so as to be resold

when the federal reserve wishes to, in the short run, decrease inflation it

will decrease the money supply by selling bonds

Which of the following can make the unemployment rate fall?

A decrease in the number of people who are looking for work and an increase in the number of people with jobs

an increases in government spending will cause

ad to increase ( move to the left)

An increase in regulation will cause which curve to shift, in which direction?

AS to decrease( move to up and to the left)

an increase in input prices will increase

AS to increase ( move to down and to the right)

How does GDP account for something that was produced for sale in one year and sold in the next year

it is counted in the second year

how does GDP deal with a ford produced in Mexico

it is not counted at all


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