Midterm 2
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
