Unit 4 Test Review
The belief that expansionary is not all helpful with fighting recessions is consistent with __________.
Classical
Economist say that long-run economic growth is almost entirely due to: a) rising productivity b) population growth c) a democratically elected government d) a balance budget e) perfectly competitive markets
a
______________ are a government licensing system that limits the amount of foreign currencies an individual can buy.
Foreign exchange
Discretionary fiscal policy is favored by ___________.
Keysenian
The best currently available measure of the standard of living in a counry is ______________________.
The real gdp per capita
If the value of a U.S dollar changes from Y130 to Y105, it follows that ___________.
U.S goods become cheaper for Japanese consumers
Suppose a panel of economists are predicting that a nation's real GDP per capita will have an average annual growth rate of 2%. Based upon the Rule of 70 how many years will it take for this nation's real gdp per capita to double? a) 35 b) 70 c) 140
a
In the aggregate demand and aggregate supply model, the long-run aggregate supply curve show the relationship between the aggregate price level and the quantity of _________ ________ supplied when all prices including nominal wages are ____________.
aggregate output; flexible
Human capital refers to : a) output per worker b) the education and knowledge embodied in the work force c) society's investment in capital goods d) people working with capital goods e) management information systems
b
Workers tody are more productive than in the past becuase of ______________ .
better technology
Adopting a floating exchange rate regime makes the domestic economy less susceptible to ____________.
business cycles abroad
A currency has depreciated when that currency __________________.
buys fewer foriegn goods
If real gdp per capita grows at a rate of 5% per year consistently over time, how many years would it take for it to double in size? a) 5 b) 110 c) 14 d) 70 e) 20
c
The convergence hypothesis says that international differences in GDP per capita tend to ____________ over time.
decrease
When the value of a pound changes from U.S $1.50 to $2.00, it follows that the U.S dollar has _________.
depreciated
To find approximate number of years it takes the economy to double one would ________________________.
divide 70 by its growth rate
Investment in human capital shifts the aggregate production function: a) downward b) left c) inward d) right e) upward
e
The advantage of a fixed exchange rate is that it ______________________.
eliminates uncertainty
Kenyan banks buy shares in "Goats R Us" and Eritrean company. In the Eritrean balance of payments this would cause the balance on the _________ account to ____________.
financal; increase
A nation's statement that racks the purchase and sale of assets during a particular period is ________________.
financial account
A system where exchange rates are set by government policy is a ____________.
fixed exchange rate
Improvement in labor created by education and knowledge that is embodied in the work force is _____________.
human capital
Technology progess allows workers to produce more even when the amount of __________ capital and _________ capital are scarce.
human; physical
Nearly all economists agree that increases in government spending can ________ aggregate ______.
increase; demand
According to Macro-Consensus school, and unemployment rate of 7% when the natural is 5% should be countered by _________ in the rate of growth of the _________ supply.
increase;money
The nominal exchange rate is unadjusted for ___________.
inflation
An advantage to floating exchange rates is it __________________________.
isolates countries from recession starting in other countries.
Discrestionary fiscal policy maybe counter productive because of ______ in fiscal policy.
lags
____________ economic growth is sustained rise in the quantity of goods and services the economy produces, as opposed to the __________ up and downs of the business cycle.
long-run; short term
"Use monetary policy to stabilize the economy and use fiscal policy only when monetary policy is ineffective" is associated with the ________ _______ view of economy
modern consensus
"The government should avoid deficit spending because of the crowding-out effect on investment spending" is consistent with the ___________ view.
monetarist
Countries that follow floating exchange regimes give up the ability to use _________ as a stabilization tool.
monetary policy
A floating exchange rate retains the ability of _________ policy to help stabilize the __________.
monetary; economy
The formula for the rule of 70, where n is the number of years and r is growth rate, is expressed as ___________.
n x r = 70
A country has a financial account deficit if the balance on the account is ________.
negative
A current account deficit exist when the balance on the current acount is _______.
negative
International rates between countries tend to converge _____________________.
the foreign asset is as good as the domestic asset