Econ Final: 19-25

Which of the following government policies is least likely to increase growth in Africa?

Increase restrictions on the importing of Japanese automobiles and electronics

Suppose the economy is initially in long-run equilibrium. Then suppose there is a reduction in investment spending. According to the model of aggregate demand and aggregate supply, what happens to prices and output in the short run?

Prices fall and output falls.

An example of fiat money is _______.

a U.S. twenty-dollar bill

If the world price for a good exceeds the before-trade domestic price for a good, then that country must have _______.

a comparative advantage in the production of the good

The initial impact of an increase in government spending is to shift _______.

aggregate demand to the right

If a nation's currency doubles in value on foreign exchange markets, the currency is said to ________, reflecting a change in the ________ exchange rate.

appreciate; nominal

Real GDP is measured in ______ prices, while nominal GDP is measured in ______ prices.

base year; current year

If the Fed wants to increase the money supply, it can __________.

buy bonds in open-market operations

Suppose the world price is below the before-trade domestic price for a good. If a country allows free trade in this good, _______.

consumers will gain and producers will lose

If the U.S. dollar appreciates and prices remain the same at home and abroad, foreign goods become ________ expensive relative to American goods, pushing the U.S. trade balance toward ________.

less; deficit

If nominal GDP in 2022 exceeds nominal GDP in 2021, then the production of output must have _______.

risen or fallen because there is not enough information to determine what happened to real output

In the model of aggregate demand and aggregate supply, the initial impact of a decrease in consumer optimism is to _______.

shift aggregate demand to the left

Suppose the economy is operating in a recession such as point B in the graph. If policymakers wished to move output to its long-run natural level, they should attempt to _______.

shift aggregate demand to the right

Suppose the money supply in Great Britain grows more quickly than the money supply in the rest of Europe. We would expect that _______.

the British pound should depreciate relative to the Euro

Suppose all banks maintain a 100 percent reserve ratio. If an individual deposits $1,000 of currency in a bank, _______.

the money supply is unaffected

The amount of unemployment that the economy normally experiences is known as _______.

the natural rate of unemployment

If a tariff is placed on this good, consumer surplus is the area _______.

A + B

Which of the following people or firms would be pleased by a depreciation of the dollar?

A British importer of U.S. farm trackers

If the nominal interest rate is 4 percent and the inflation rate is 2 percent, then the real interest rate is _______.

2 percent

Which of the following statements about a tariff is true?

A tariff increases producer surplus, decreases consumer surplus, increases revenue to the government, and reduces total surplus.

If free trade is allowed, producer surplus is the area _______.

B + C + D

Maggie goes to college and reads many books while at school. Her education increases which of the following factors of production?

Human capital

The gains from trade correspond to the area _______.

D

Sectoral shifts tend to raise which type of unemployment?

Frictional unemployment

The reserve ratio is the ratio of a bank's reserves to its _______.

deposits

Commodity money _______.

has intrinsic value

The deadweight loss from the tariff is the area _______.

D + F

Some frictional unemployment is inevitable because _______.

there are changes in the demand for labor among different firms

If the reserve ratio is 20 percent, the value of the money multiplier is _______.

5

If free trade is allowed, consumer surplus is the area _______.

A

If free trade is allowed, consumer surplus is the area _______.

A + B + C + D + E + F

Which of the following describes an increase in technological knowledge?

A farmer discovers that yields improve if the fertilizer is used earlier in the growing season.

Which of the following statements regarding the impact of population growth on productivity is true?

All of the answer choices are correct.

Government revenue from the tariff is the area _______.

E

Suppose the economy is initially in long-run equilibrium. Then suppose there is a sudden rise in the price of crude oil due to a military conflict in the Middle East. According to the model of aggregate demand and aggregate supply, what happens to prices and output in the short run?

Prices rise and output falls.

Which of the following is not a function of money?

Protection against inflation

If all quantities produced rise by 5 percent and all prices fall by 5 percent, which of the following best describes what occurs?

Real GDP rises by 5 percent, while nominal GDP is unchanged.

Which of the following best describes how an expansionary monetary policy shifts aggregate demand?

The money supply shifts right, the interest rate falls, investment increases, and aggregate demand shifts right.

Under which of the following conditions would you prefer to be the borrower?

The nominal rate of interest is 20 percent and the inflation rate is 25 percent.

Suppose a wave of negative "animal spirits" overruns the economy, and people become pessimistic about the future. To stabilize aggregate demand, the Fed could ________ its target for the federal funds rate or Congress could ________ taxes.

decrease; decrease

If the Fed raises the interest rate it pays on reserves, it will ________ the money supply by increasing ________.

decrease; excess reserves

If the central bank wants to contract aggregate demand, it can ________ the money supply and thereby ________ the interest rate.

decrease; increase

When a country allows trade and exports a good, _______.

domestic producers are better off, domestic consumers are worse off, and the nation is better off because the gains of the winners exceed the losses of the losers

Gross domestic product is the sum of the market value of the _______.

final goods and services

When prices rise at an extraordinarily high rate, it is called _______.

hyperinflation

If the government wants to expand aggregate demand, it can ________ government purchases or ________ taxes.

increase; decrease

Increases in the amount of human capital in the economy tend to ________ real incomes because they increase the ________ of labor.

increase; productivity

If your grandparents buy a new retirement home in the United States, U.S. GDP accounts record the transaction as _______.

investment

Isabella takes $100 of currency from her wallet and deposits it into her checking account. If the bank adds the entire $100 to reserves, the money supply ________, but if the bank lends out some of the $100, the money supply ________.

is unchanged; increases

For a given level of technology, we should expect an increase in labor productivity within a nation when there is an increase in each of the following except _______.

labor

Which of the following is an example of an automatic stabilizer? When the economy goes into a recession, ___________.

more people become eligible for unemployment insurance benefits

To increase growth, governments should do all of the following except _______.

nationalize major industries

A coal miner who has been unable to find work for so long that he has stopped looking for work is considered to be _______.

not in the labor force

According to the Bureau of Labor Statistics, a husband who chooses to stay home and take care of the household is _______.

not in the labor force

Our standard of living is most closely related to _______.

our productivity because our income is equal to what we produce

A reasonable measure of the standard of living in a country is _______.

real income per person