Econ Exam 2 Review

The demand for loanable funds curve shows that the higher the real interest rate, the a. smaller the demand for loanable funds b. larger the quantity of loanable funds demanded c. smaller the quantity of loanable funds demanded d. larger the demand for loanable funds

C

Which of the following events would result in lower equilibrium interest rate and greater equilibrium quantity of loanable funds? a. the supply of loanable funds shifted leftward b. the demand for loanable funds shifted rightward c. the demand for loanable funds shifted leftward d. the supply of loanable funds shifted rightward

D

A newspaper headline read "a new wave of workers enters the job market!" This wave of young, new entrants to the labor market is likely to lead to a. an increase in the natural unemployment rate b. a decrease in the unemployment rate c. no effect on the unemployment rate d. a decrease in the country's potential GDP

A

Efficiency wages, above equilibrium wage rates and higher union wages are likely to a. increase the natural unemployment rate b. increase cyclical unemployment c. reduce the equilibrium interest rate d. decrease the natural unemployment rate

A

If real GDP grows at a faster rate than does population, then the standard of living, as measured by real GDP per person, a. improves b. worsens c. remains the same d. cannot be measured

A

Suppose firms become more optimistic about the economy's ability to avoid a recession and hence the expected profit increases. As a result, the demand for loanable funds curve shifts ___________ and the equilibrium real interest rate ____________. a. rightward; rises b. rightward; falls c. leftward; rises d. leftward; falls

A

The supply of loanable funds is from a. households and the government if it has a budget surplus b. households and the government if it has a budget deficit c. firms and the government if it has a budget surplus d. firms and the government if it has a budget deficit

A

To determine potential GDP from the production function, we need to know: a. the full-employment equilibrium quantity of labor supplied b. the natural unemployment rate c. the full-employment equilibrium quantity of labor supplied by firms d. the full-employment equilibrium wage rate

A

Which of the following is correct? a. all items that are included in M1 are also included in M2 b. all items that are included in M2 are also in M1 c. credit cards and gift cards are included in both M1 and M2 d. savings deposits are included in both M1 and M2

A

In which of the following cases would the supply of loanable funds curve shift leftward a. Alexander is worried about cutbacks at his firm, so his expected future disposable income falls b. Alexandra learns that at year's end she will receive a bonus that will double her current salary c. the average price of houses decreases d. the capital inflow from other nations is increasing

B

Job rationing occurs when the real wage is __________ the equilibrium level and there is a __________ of labor a. above; shortage b. above; surplus c. below; shortage d. below; surplus

B

The idea that the production function exhibits __________ implies that ________________. a. diminishing returns; the Lucas Wedge increases and output increases b. diminishing returns; each additional unit of labor employed generates an ever-decreasing amount of real GDP c. increasing returns; potential GDP is always increasing d. increasing returns; output should increase steadily as technology grows

B

Which of the following best illustrates the concept of a store of value? a. you pay for your theater tickets with dollars b. you keep 6 ounces of gold in your safe-deposit box at the bank for emergencies c. you sell items on eBay and your prices are stated in terms of dollars d. none of the above

B

A surplus of labor is eliminated by ________ in the real wage rate and a shortage of labor is eliminated by __________ in the real wage rate a. an increase; and increase b. an increase; a decrease c. a decrease; an increase d. a decrease; a decrease

C

Holding all other influences constant, an increase in the real wage rate __________ the quantity of labor demanded and __________ the quantity of labor supplied a. increases; increases b. increases; decreases c. decreases; increases d. decreases; decreases

C

Which of the following would be most likely to reduce frictional unemployment? a. the government eliminates the minimum wage b. the government increases unemployment insurance benefits c. more workers post their resumes at Monster.com, and more employers use Monster.com to find suitable workers to hire d. a new law bans labor unions

C

Crowding-out effect occurs when investment declines because a. a budget deficit makes interest rates fall b. a budget surplus makes interest rates rise c. a budget surplus makes interest rates fall d. none of the above

D

Last year country A had a nominal GDP of $600 billion, a GDP deflator of 150 and a population of 40 million. Country B had a nominal GDP of $720 billion, a GDP deflator of 120 and a population of 50 million. From these numbers which country is likely to have had the higher standard of living? a. Country A because it had the higher nominal GDP per person b. Country B because it had the higher nominal GDP per person c. Country A because it had the higher real GDP per person d. Country B because it had the higher real GDP per person

D

The growth rate of real GDP per person equals the a. population growth rate plus the growth rate of real GDP b. change in the economic growth rate divided by change in the population growth rate c. economic growth rate per person divided by the change in the population growth rate d. growth rate of real GDP minus the growth rate of the population

D

When the real interest rate _______ the equilibrium real interest rate, there is a _________ of loanable funds and the real interest rate ____________. a. exceeds; surplus; rises b. is less than; surplus; rises c. exceeds; shortage; rises d. is less than; shortage; rises

D

Which of the following statements is NOT correct? a. the Fed was created in 1913 to provide central banking functions b. federal open market committee makes decisions regarding monetary policy c. the Fed is a central bank of the US and the current chairwoman is Janet Yellen d. the Fed plays a role in regulating banks; but it is responsible for conducting the nation's fiscal and monetary policy

D

Which of the following statements is correct? a. money supply is the quantity of money available in the economy b. money is any commodity or token that is generally accepted as a mean of payment c. money is a set of assets in an economy that people regularly use to buy goods and services from other people d. all of the above

D

Which of the following statements is correct? a. potential GDP is the level of nominal gdp that the economy would produce if it was at full employment b. potential gdp is the level of real gdp that the economy would produce if there was no inflation c. potential gdp is the level of real gdp that the economy would produce if there was no unemployment d. none of the above

D