THE ULTIMATE

compound growth

GDP*(1.0+percent increase)^amount of years

autonomous expenditure does not depend on what factor

GDP/output

the most liquid source of money is

M1

suppose an economy is defined by the following C=150+.7(Yd)

MPC

Darnell is a skilled dancers, makes 44,000, she is giving up her work to join a touring dance company, she will make 24,000 a year, her decision results in

a two year opportunity cost of 40,000 after leaving her teaching position, 44k-24k=20kx2

which of the following institutional structures is most likely to promote growth

a well enforced system of patents and copyrights

a key part of the income expenditure model is understanding that as GDP rises, so does

aggregate expenditure

to find the macro equilibrium in a table, the numbers for ___ and __ should equal each other

aggregate expenditure, GDP/national income

what is the best explanation for the relatively horizontal area of the short run aggregate supply curve

an increase in aggregate demand when the economy is operating below potential output causes real output to grow, with littler or no effect on the price level

the multiplier effect means that

an increase in investment can cause GDP to change by a larger amount

other things equal, which of the following would increase the rate of economic growth, as measured by changes in real gdp

an increase in the size of the working age population

if for some reason household become increasingly thrifty, we could this by

an upward shift of the saving schedule

as disposable income increases, consumption

and saving both increase

where is the macro equilibrium found in the income-expenditure model graphically

at the level of GDP where national income equals aggregate expenditure

when describing the economy's aggregate expenditure components impacted bu the real level of income, which of the following terms is excluded from that description

autonommous expenditure

which is inaccurate about banks deposits

banks lend out all of their deposits to earn income

cigarettes can be used as a form of

barter

how would the equation where x=3 and y-4 be represented on a graph

beginning y=4 on the y axis as a horizontal line, vertical straight line for x=3

which of the following is true about export and imports as function of national income

both are horizontal lines with imports being negative as it related to real GDP

silicon is used for manufacturing of semiconductor chips, price of silicon has decrease by 15%, what has happened to the supply and demand curves?

both the demand and supply of semi chips will increase shifting the curves to the right with the equilibrium quantity increasing but is impossible to pinpoint the equilibrium price chanfe

when potential gap is reached, aggregate supply becomes vertical for

both the income expenditure model and the traditional AD-AS model

what tool might the Fed use to boost the economy during a recession

buying govt securities

because of our limited money, time and effort, we are best off when we allocate thinfs

by constantly assessing the opportunity costs of our choices

a positive statment is

can be shown to be correct or incorrect

when tasks involved with producing a good or service are divided among different workers, business

can produce a greater quantity of those good or services

which of the following statements is correct

central bank intervention reflects its goals for inflation, unemployment and economic growth

the M2 money supply consists of everything in the M1 money supply, savings deposits and which of the following

certificates of deposit

the multiplier is useful in determining the

change inGDP resulting from a change in spending

self interest is not necessarily selfish, some say. in fact, self interest likely includes an individuals consideration for

close friends and family

if the economy's real GDP doubles in 18 years, we can

conclude that its average annual rate of growth about 3.9 percent

suppose an economy is defined by the following: C=210+.8(Yd), this equation represents the

consumption function

tessas break even income is 10,000 and her mpc is .75, if her actual disposable income is 16,000, her level of

consumption spending will be 14,500

which type of deposits institutions are considered the safest

credit unions

if the marginal propensity to consume is .9, then the marginal propensity to save must be

.1

which criticism of the 0% inflation target is best supported by the economic literature?

0% inflation target could lead to deflation

what inflation target is most advisable

1-2%

during an inflationary gap due to overly sufficient aggregate demand, the govt should ___ spending by an amount determined bu the spending multiplier in an attempt to return the economy to potential GDP/full employment

decrease

online mortgage companies have been growing in numbers and size, if all other things are equal, as a result of this growth, traditional banks have had to

decrease the interests on their mortgage loans as the demand for traditional mortgage loans decreases

some highways have commuter or express pass lanes...

drivers who call speed and convenience more than those in the stoop and go lanes are willing to pay additional express pass fees for the option of avoiding traffic jams

economic growth is best defined as an increase in

either real GDP or real GDP per capita.

all of the following contribute to low investment spending in DVC's except

expensive labor

capital flight refers to the fact that many DVC must use their export earnings to pay interest on their outstanding external debts

false

the intense competition of free trade prevents the investment that generates economic growth

false

the population of the developing nations are growing

faster than those of the industrially advanced nations

wesley lives in a country with little protection under the law for conducting business or bringing ideas about a revolutionary new car tire to the market with patent production

find a country where he can develop his tire ideas and have it protected under strong patent laws

gpa question

follow the ****in formula

rapid population growth can be an obstacle to economic development

for all of these reasons

the country of zanabar produces computers and in a large quantity, while abathana expertly produces cell phones

freely trade computer and cellphone to improve allocative efficiency

which of the following is included in GDP

government purchases of labors, goods, and services

which of the following is NOT true about government spending as function of national income

govt soending will fluctuate

the slope of a budge constraint line is influenced by

how much one product costs compared to the other

after getting her degree in economics, jeanie went to work for the BLS. she compiles data on the unemployment rate, which serves as an economic indicator. what does this data help jeanie understand

how well the economy is doing at a macro level

with a marginal propensity to save of .4, the marginal propensity to consume will be

1.0-.4

wakanda has GDP 2018 of 555 billion, 2 million workers, average of 1400 hours a year, what is the value of the output per worker per hour of work

198$

in the last few decades the car manufacturing sector has found it difficult to compete with foreign car imports. high labor costs is one of the main reasons economist site as lack of competitiveness for the car manufacturing industry. if there was modest inflation, how could it possibly help the car manufacturing industry in the US compete with foreign car manufacturing?

it could allow real wages to downwardly adjust more easily

most of the dvc find it difficult to accumulate capital goods b/c

it is very difficult to restrict consumption and thus to free resources for capital goods production

this year the economy is strong and there is every expectation that it will continue to be strong over the next few years. with this confidence in the economy, what would most likely happen to the consumption function

it will shift the consumption function upward

read graphs properly

just read them

which of the following scenarios would be most beneficial to a bank

kim and micah decide to move most of their money from a checking account into a savings account

what are the factors of production

land, economic capital, labor, entrepreneurship

it is important to remember when calculating the spending multiplier to determine govt spending, the ___ in the income expenditure model is found at the point where the level of GDP/national income equals expenditure

macro equilibrium

a bank is more likely to face bank runs by deposition if it

makes risky loans to investors

in 1985 inflation in israel reached a record 500%, how did this period of high inflation affect market adjustments towards equilibrium price and quantity

markets adjusted to equilibrium more erratically and slowly

charlie is researching the relationship between the number of hours he spends on social and his success in his classes. he sets up an equation to better understand the implications of this relationship. this describes a

math function

what will we never do in a world of scarcity

meet all of society's wants

small loans to entrepreneurs and small business owners in DVC are referred to as

microfinance

macroeconomic polices that focus on credit and interest rates or controlling the money supply are called

monetary polices

how does monetary policy affect the market

monetary policy has an indirect impact on aggregate demand

the M2 measure of money includes

money market funds

from an initial equilibrium, suppose there's an increase in demand, once the market reaches its new equilibrium there will be

more transaction, and they will take a place at a higher price

one can determine the amount of any level of total income that is consumed by

multiplying total income by the APC

in order to satisfy as many wants as possible, it is necessary to achieve allocative efficiency,

since others output may go to where it is less valued

a liability in a banks T-account is

something owned by the bank

if trents MPC is .8, this means that he will

spend 8/10 of any increase in disposable income

if the demand for home gaming system games has drastically increased in the last month, what scenario is most likely to have happened

the holidays and new years are around the corner

the most important determinant of consumer spending is

the level of income

a restaurant chain sponsored a charity that provides support to the parents of children being treated for cancer. how would the use of company funds for this purpose be justified by a business whose goal is to maximize profit?

the money spent is worth the boost it gives to corporate image

a local bank sponsors a charity run that raises funds for a nonprofit building wells and schools in mali, africa. how would the use of the bank's funds for this fundraise be justified when its goal is to maximize profit?

the money spent is worth the public relations boost it gives the banks image

what will happen to the money supply if the fed increases the reserve requirement

the money supply will decrease

all of the following are resources of increasing returns and economies of scale except

the multiplier effect

if nations labor forces receives a significant influx of young workers

the natural rate of unemployment is likely to increase

to find unemployment, you need to calculate

the number of unemployed workers divided by the labor force

of these statements about the potential gap line, which is incorrect

the potential GDP line makes the assumption that it is at less than full employment of its physical capital and labor

scarcity is imposed on individual households in the form of income and

the price of goods that person may purchase

money creation in the US results from which of the following

the process of multiple banks lending out deposits

the GDP deflator is

the ratio of nominal GDP to real GDP

when quantity demanded decreases in response to a change in price

there is a moment from one point to another along the demand curve

the supply curve will shift to the right if which of the following occurs

there is an improvement in production tech

as an economist George is analyzing a consumption graph and notices that the slope has flattened

there was a decrease in the MPC

according to the growth accounting studies, if you lived in a country where illiteracy was high and 40% of the children left school early and did not complete their education what would probably be the results for that country?

there would be both a human and economic loss

frictional unemployment occurs because in a world of imperfect information, it takes ____ for people to find jobs

time

given the annual rate of economic growth, the rule of 70 allows one

to calculate the number of years required for real GDP to double

1-MPC=MPS

true

the greater the mpc, the greater the multiplier

true

the multiplier shows the relationship between changes in a component of spending investment and the consequent changes in real income and output

true

which of the following institutional arrangements is most likely to promote growth

unrestricted trade between nations

what combination of model characteristics are frequently used in the most effective models

useful and simple

normative statements are based upon

value judgements

many countries remain poor because they are currently poor, this statement summary the

vicious circle of poverty

underemployment occurs

when workers are working fewer hours than they desire or when they are working less productivity than they are capable

if ali grows hot peppers in his garden for his own consumption, the value of his production

will not be included in GDP and understate the value of the production in his country

nice that total spending for a household will have a base of $1000, we can predict total spending with the y=mx+b

y represent total spending

id the fed raises reserves requirements, the interest rates will__ and the money supply will___

rise; decrease

the consequences of unemployment are likely more serious in DVC

DVC are more likely to lack unemployment assistance programs

the theory of rational behavior

is an assumption that economists make to have a useful model for how decisions are made

if a technological advance expands output and requires a smaller investment in capital goods, this technological advance

is capital-saving

GDP deflator

(Nominal GDP/ deflator) x100

with a real gap of 100bil in 2016 and 140bil in 2017, the death growth would be?

40%, (real GDP 2017-real 2016)/real GDP 2016

miriam owns a small shop selling custom headband, she sold 335 for 10, based on law of demand, what quantity will she sell with 6

415

at the point where the consumption schedule intersects the 45 degree line

APC is 1.0

suppose a family's consumption exceeds its disposable income, this means that

APC is greater than 1

other thing equal, which of the following would decrease the rate of economic growth, as measured by changes in real gdp

a decrease in the labor force participation rate

a highly active role by govt may be needed to promote economic growth in low income DVC due to

a lack of infrastructure

which of the following is a characteristic of a DVC

a large percentage of labor force is in agriculture

GDP is a __ measurement of standard of living because

imperfect, not all important determinants of standard of living are incorporated

all of the following are components of the aggregate expenditure model except

import spending

the consumption schedule is drawn on the assumption that as income increases, consumption will

increase absolutely but decline as a percentage of income

as the info tech advances and consumer buy the products requiring more and more technology, the wages of people with high level programming and other tech skills

increase as the demand for high tech skills increases

for the GDP to change when the AS curve is horizontal, means it must change through

increases or decrease in aggregate demand

an expansionary monetary policy affects aggregate demand

indirectly, by lowering interest rates and increasing the availability quantity of loans which stimulates spending

if 100% of any change in income is spent, the multiplier will be

infinitely large

when a central bank decides to make a policy intervention it must be mindful of the trade off between

inflation and unemployment

two common ways to discourage tobacco use are taxes and info, which one causes a shift in the demand curve for smoking

info campaign on hazards of tobacco

consumers must choose whether they prefer to consume goods, including money, now or in the future,

intertemporal decision making

consider the A.E=C+I+G+(X-M), which function is drawn as horizontal

investment

reading budget constraint models

negative because of scarcity and the limited amount of money available

rapid technological change is likely to increase which problem MOST for CPI as an accurate measure of cost of living changes

new good bias

the money multiplier defines the amount of

only that the banking systems can create

the budget constraint model differs from ppt model in that, typically

only the ppt model demonstrates diminishing returns

if the govt sets floor prices for wheat or corn that guarantee farmers an above market price for that product, the most probable result would be what

overproduction

strong property rights are important for modern economic growth because

people are more likely to incest if they don't fear that others can taker their on investment without compensation

an interest rate is the ___ and the reward for lending money

price of borrowing money

henry accepted a new position at a ball bearing manufacturing plant after graduation from college. with his macroeconomic education, henry has been asked to advise the best way to measure inflation for the company to be able to accurately adjust its prices. what would henry advise the comment to use?

producer price index

a contractionary monetary policy reduces GDP by

raising interest rates and discouraging investments and consumption spending

chart questions

read the chart

for a nations real GDP per capita to rise during a year

real GDP must increase more rapidly than population

the size of the multiplier is equal to the

reciprocal of the slope of the consumption schedule

a contraction or tight monetary policy

reduces borrowing

in contrast to investment, consumption is

relatively stable

corporate stock

represents ownership in a firm

the relationship between the price in a market and the amount that producer collective make available for sale, is referred to as,

supply

which economics principle is present in financial markets

supply and demand

investment in kind refers to the possibility that

surplus labor in agriculture can be diverted to the production of a simple capital goods such as earthen dams

inflation makes certain things less valuable in real terms, including

the dollar

the current economic policy being implemented by the Key economist in got is moving the economy back toward potential gap through increased taxation, knowing this policy what would you say is the current state of the economy

the economy is experiencing an inflationary gap

if the fed reserve did not regulate monetary policy, monitor banks and provide services for banks, what would most likely be the economic conditions to transact business in the US

the economy would be less efficient and transactions most likely more costly

identify the normative statement

the federal govt spends too much, statement has an opinion rather than plain facts

which of the following is unlikely to affect labor productivity

the frequency of business cycles

a free market is described by which of the following statements

the govt does not set or influence market prices in any way

capital flight refers to

the high international mobility of speculative funds caused by variation in exchange rates