Econ Exam 2

If in the economy, business saving equals $50 billion, household saving equals $10 billion and government saving equals -$60 billion, what is the value of national saving?

$0 Billion

If the principal amount of a bond is $2,000,000, the coupon rate is 6 percent , and the inflation rate is 4 percent, then the annual coupon payment made to the holder of the bond is:

$120,000

Sydney purchases a newly-issued, two-year government bond with a principal amount of $15,000 and a coupon rate of 5% paid annually. One year before the bonds matures (and after receiving the coupon payment for the first year), Sydney sells the bond in the bond market. What price (rounded to the nearest dollar) will Sydney receive for his bond if newly-issued one-year government bonds are paying a 4% coupon rate?

$15,144

There is $5,000 of currency in Econland, all held by banks as reserves. The public does not hold any currency. If the banks' desired reserve/deposit ratio is 0.25, then the money supply equals:

$20,000

You expect a share of EconNews.Com to sell for $64 a year from now. If you are willing to pay $64.42 for one share of the stock today, and you require a return of 6 percent, what dividend payment must you expect to receive from the stock?

$4.28

Taylor has the following assets and liabilities: What is the value of Taylor's assets?

$419,000

Based on the following information, the value of the M1 measure of the money supply is ________ and the value of the M2 measure of the money supply is ________.

$530 billion; $4,230 billion

There is $2,000,000 of currency in Econland, which are all held by banks as reserves. The public does not hold any currency. If the banks' desired reserve/deposit ratio is 0.25, then the money supply equals

$8,000,000

The following table provides information about production at the XYZ-TV Company. The price of a TV is $1,000.

1

If real GDP equals 3,500, nominal GDP equals 5,250, and the price level equals 1.5, then what is velocity if the money stock equals 2,100?

2.5

Based on the labor market diagram below, if the minimum wage is set at $10 per hour, there will be ________ unemployed workers.

22

Production data for Joe's Pizza Parlor are as follows. For simplicity assume that labor is the only input. Each pizza sells for $5 How many workers will Joe hire if he must pay each one $24 a day?

3

Suppose the following information describes the economy: Consumption 6,000; Investment 2,000 Government purchases 2,000; Net exports 0 Government transfers and interest payments 600 Government tax collections 1,500

3,100; -1,100; 2,000

In an open economy, if domestic citizens decide to save more, then the domestic real interest rate will ________ and the level of capital investment in the country will ________, holding other factors constant

Decrease;Increase

Holding constant risk and the real returns available abroad, lower domestic real interest rates _____ capital inflows, _______ Capital outflows, and _________ net capital inflows.

Decrease;Increase;Decrease

Holding other factors constant, if a change in law discourages people from saving more for retirement, then the real interest rate will _______ and the equilibrium quantity of saving and investing will ________.

Increase; Decrease

Holding other factors constant, if new technology becomes available that allows machines to produce manufactured goods more quickly and with fewer defects, then the real will _________ the the equilibrium quantity of national saving and investment will ______.

Increase;Increase

Holding other factors, if oil prices rise relative to the prices of other products, then the real wage ______ and employment of oil workers will _________

Increase;Increase

Labor unions contribute to structural unemployment by:

Keeping wages above the marketing-clearing level

Sang's current income is $100 more per month than his current consumption needs. He decided to use the $100 to reduce his credit card debt. As a result, his

Liabilities will decrease, and his wealth will increase

The money supply will increase by a multiple of the increase in bank reserves created by the central bank unless

There is 100 percent reserve banking

When an American buys stock in a French company, from the perspective of France, this is a(n):

capital inflow.

Compared to the 1960 and 1973 period, average real earnings of workers ________ from 1973 to 1995 and then ________ from 2007 to 2016.

declined; slowed again

Holding other factors constant, if food prices decline relative to the prices of other products, then the real wages of agricultural workers w ill ________ and employment of agricultural workers will ________.

decrease; decrease

As the real interest rate decreases, the supply of savings ______ and the quantity of the supply of saving ____.

does not change; decrease

Bequest saving is saving:

for the purpose of leaving an inheritance.

Short-term unemployment that is associated with the process of matching workers with jobs is called ________ unemployment.

frictional

Banks help savers find productive uses for their funds because banks are specialized in:

gathering information about and evaluating potential borrowers.

Francesca pays $5,000 for a newly issued two-year government bond with a $5,000 face value and a 8 percent coupon rate. One year later, after receiving the first coupon payment, Francesca sells the bond. If the current one-year interest rate on government bonds is 6 percent, then the price Francesca receives is

greater than $5,000.

When a U.S. restaurant purchases Japanese cars and the Japanese car company uses the proceeds to buy U.S. government debt, U.S. ______ and there is a capital ______ the United States..

imports increase; inflow to

The introduction of a new technology that raises the marginal product of new capital will:

increase real interest rates and the equilibrium quantity of saving supplied and demanded.

In an open economy, a decrease in capital inflows ______ the equilibrium domestic real interest rate and ______ the quantity of domestic investment.

increases; decreases.

Mo's current income is $100 more per month than his current consumption needs. He decides to use the $100 to reduce his credit card debt. As a result, his:

liabilities will decrease and his wealth will increase.

The amount originally lent by a bondholder is called the:

principle amount.

The money supply in Erebor is currently 4,800, bank reserves are 500, currency held by public is 800, and banks' desired reserve-deposit ratio is 0.5. Assuming the values of the currency held by the public and the desired reserve-deposit ratio do not change, if the Central Bank of Erebor wishes to increase the money supply to 7,500, then it should conduct an open-market ______ government bonds.

purchase of $1,350

Psychological factors that may influence the saving rate are ________ and ________.

self-control problems; the demonstration effect

The demand for labor depends on ________ and ________.

the marginal product of labor; the price of output produced