Econ Review
The nominal interest rate is 8%. The inflation rate is 6%. The real interest rate is equal to 2%.
2%
The nominal interest rate is 12%. The inflation rate is 5%. The real interest rate is equal to 7%.
7%
Which of the following events would cause a decrease in short−run aggregate supply? A. an unexpected increase in the price of oil correct answer. B. an increase in the capital stock C. an increase in the price level D. a decrease in consumption
A. an unexpected increase in the price of oil
The following questions refer to the WSJ video you were required to watch titled: How Interest Rates Are Set: The Fed's New Tools Explained. In the video, what does the WSJ use to demonstrate the new tools? A. a child sliding down a slide on a playground B. an elevator inside a skyscraper Your answer is correct. C. the stock price of Netflix before 2007 D. a bowling ball on top of a bowling lane The video is a tale of how many different kinds of banks? A. 1 B. 3 Your answer is correct. C. 2 D. 4
B , B
Which of the following is an example of an expansionary fiscal policy? A. An increase in the money supply. B. A decrease in taxes. Your answer is correct. C. A decrease in government spending. D. An increase in investment spending.
B. A decrease in taxes.
The real business cycle model focuses on changes in the quantity of money to explain fluctuations in real GDP. A. True B. False Correct
B. False
Chinese businesses switch to an improved inventory method that increases output per worker worked. This will cause a shift of China's per-worker production function.
shift of
A technological change will cause thelong-run aggregate supply curve to shift to the right.
shift to the right.
Increases in the value of the dollar relative to foreign currencies will make the aggregate demand curve shift to the left
to the left
A change in the price level causes a movement along the short-run aggregate supply (SRAS) curve. In the figure, this is shown by moving from point A to B. A change in any other factor causes a shift in the SRAS curve. In the figure, this is shown by moving from point B to C.
.
The difference between microeconomics and macroeconomics is A. microeconomics studies smaller parts of the economy such as markets and individuals, while macroeconomics studies the economy as a whole. Your answer is correct. B. microeconomics studies smaller parts of the economy such as GDP and inflation, while macroeconomics studies the economy as a whole. C. macroeconomics studies smaller parts of the economy such as markets and individuals, while microeconomics studies the economy as a whole. D. microeconomics studies how individuals make decisions while macroeconomics studies how government makes decisions. Identify whether the following topics belong in microeconomics or macroeconomics: How does the price of corn change if the price of wheat increase? Microeconomics Identify the best measurement of total output in the US economy. Macroeconomics How will an increase in government spending impact the inflation rate? Macroeconomics The most efficient market structure is perfect competition. Microeconomics
.
The United States is divided into 12 Reserve districts The Federal Reserve was established in 1913. If the Federal Reserve thinks there needs to be less economic activity due to higher levels of inflation, they can attempt to ________ interest rates to ______ the access to liquidity. A. raise; speed up B. lower; slow down C. raise; slow down This is the correct answer. D. lower; speed up
12 , 1913 , C-raise; slow down
Assuming that inflation has occurred over time, what is the relationship between nominal GDP and real GDP. in each of the following situations? a. In years after the base year, nominal GDP is greater than real GDP. b. In the base year, nominal GDP is equal to real GDP. c. In years prior to the base year, nominal GDP is less than real GDP.
> , = , <
What is the rule of 70? The rule of 70 A. is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to double. Your answer is correct. B. is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to increase by two hundred percent. C. is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to quadruple. D. states when an individual can be eligible for full social security benefits. If real GDP per capita grows at a rate of 4.4 percent per year, it will take 15.9 years to double. (Enter your response rounded to one decimal place.)
A , 15.9
The natural rate of unemployment is A. the sum of structural unemployment and frictional unemployment. This is the correct answer. B. the sum of cyclical unemployment and frictional unemployment. C. the sum of seasonal unemployment and cyclical unemployment. D. the sum of structural unemployment and cyclical unemployment. When the economy is at full employment, unemployment is equal to A. the natural rate of unemployment. This is the correct answer. B. zero. C. cyclical unemployment −seasonal unemployment. D. normal rate of unemployment − abnormal rate of unemployment.
A , A
Which of the following is not a limitation to monetary policy mentioned in the lesson? A. The information lag Your answer is correct. B. The implementation lag C. The data lag D. The recognition lag Sometimes, the inflation rate may be stable and the unemployment rate may be going up just slightly. It's tough to know if the economy is in a recession or not. This is an example of the: A. recognition lag. Your answer is correct. B. implementation lag. C. information lag. D. data lag. Unemployment data comes out the following month and is revised twice. GDP data takes several months to come out and also goes through revisions. Because of this, we see a ______ when it comes to monetary policy. A. data lag Your answer is correct. B. recognition lag C. implementation lag D. information lag Even after it is decided to take on monetary policy, the FOMC will need to meet and hash out exactly what needs to be done, and that takes time. Because of this, we see a ______ when it comes to monetary policy. A. information lag B. recognition lag C. data lag D. implementation lag Correct
A , A , A , D
At the macro-economy level, A. knowledge capital exhibits increasing returns and physical capital exhibits decreasing returns. Your answer is correct. B. both knowledge capital and physical capital exhibit decreasing returns. C. physical capital exhibits increasing returns and knowledge capital exhibits decreasing returns. D. both knowledge capital and physical capital exhibit increasing returns. At the firm level, A. physical capital exhibits increasing returns and knowledge capital exhibits decreasing returns. B. knowledge capital exhibits increasing returns and physical capital exhibits decreasing returns. C. both knowledge capital and physical capital exhibit decreasing returns. This is the correct answer. D. both knowledge capital and physical capital exhibit increasing returns.
A , C
Monetary policy _______ would shift aggregate demand to the right when an economy is experiencing stagflation. A. doves Your answer is correct. B. hawks C. sparrows D. eagles Stagflation occurs when the price level _____ and output _____. A. rises; rises B. falls; falls C. rises; falls Your answer is correct. D. falls; rises Monetary policy _______ are willing to sacrifice higher inlfation for lower levels of unemployment. A. hawks B. sparrows C. doves Your answer is correct. D. eagles Monetary policy _______ are willing to sacrifice higher unemployment for lower levels of inflation. A. hawks Your answer is correct. B. doves C. sparrows D. eagles Monetary policy _______ would shift aggregate demand to the left when an economy is experiencing stagflation. A. sparrows B. eagles C. doves D. hawks Correct
A , C , C , A , D
Changes in the CPI overstate the true inflation rate due to four "biases." If apple prices rise rapidly during the month while orange prices fall, consumers will reduce their apple purchases and increase their orange purchases. Which of the four biases is concerned with this consumer behavior? A. the substitution bias Your answer is correct. B. the outlet bias C. the increase in quality bias D. the new product bias The BLS collects price statistics from traditional full-price retail stores, which do not reflect the prices some consumers pay by shopping at discount stores or on the Internet. This is a description of which bias? A. the new product bias B. the increase in quality bias C. the substitution bias D. the outlet bias Correct
A , D
One definition of fiscal policy is: A. Fiscal policy can be described as changes in government spending and taxes to achieve macroeconomic policy objectives. Your answer is correct. B. Fiscal policy can be described as changes in interest rates to achieve macroeconomic policy objectives. C. Fiscal policy can be described as changes in interest rates and taxes to achieve macroeconomic policy objectives. D. Fiscal policy can be described as changes in government spending and interest rates to achieve macroeconomic policy objectives. Fiscal policy is conducted by: A. Fiscal policy is controlled by market forces. B. The Federal Reserve controls fiscal policy. C. The federal government and the Federal Reserve jointly control fiscal policy. D. The federal government controls fiscal policy. Correct
A , D
Why does inflation make nominal GDPLOADING... a poor measure of the increase in total production from one year to the next? A. When nominal GDP increases from year to year, the increase is due partly to changes in prices and partly to changes in quantities. Your answer is correct. B. Nominal GDP separates increases in GDP as a result of price changes from increases in GDP as a result of quantity changes. C. GDP is a measure of production in quantity terms. D. All of the above E. A and B only How does real GDPLOADING... deal with the problem inflation causes with nominal GDP? A. By keeping prices constant, we know that changes in real GDP represent changes in the quantity of output produced. B. Real GDP separates price changes from quantity changes. C. Real GDP uses the prices of goods and services in the base year to calculate the value of goods in all other years. D. All of the above. Your answer is correct. E. A and C only.
A , D
When we introduced employment in this lessons, we referenced Tweets by two US Politicians. Who were they? A. Donald Trump & Bernie Sanders Your answer is correct. B. Donald Tump & Hillary Clinton C. Joe Biden & Donald Trump D. Bernie Sander & Alexandria Oasio-Cortez Currently, the unemployment rate is: A. Between 6% & 8% Your answer is correct. B. Between 8% & 10% C. Above 10% D. Below 6% The unemployment rate never reaches 0% True Your answer is correct. False Which of the following governmental agencies released the Jobs Report? A. Bureau of Economic Analaysis B. Bureau of Labor Statistics Your answer is correct. C. Department of Commerce D. National Bureau of Economic Research
A, A, True, B
Which of the following is considered to be a problem in using GDP as a measure of national well-being? A. GDP is not adjusted to account for depletion of natural resources. Your answer is correct. B. Items included in U.S. GDP are measured in dollars. C. GDP does not include the value of illegal goods, such as drugs. D. GDP does not include products that you produce yourself
A. GDP is not adjusted to account for depletion of natural resources.
What is the difference between the federal budget deficit and federal government debt? A. The federal budget deficit is the year-to-year short fall in tax revenues relative to government spending (T < G + TR), financed through government bonds. The federal government debt is the accumulation of all past deficits. CORRECT. B. The federal budget debt is the year-to-year short fall in tax revenues relative to government spending (T < G + TR), financed through government bonds. The federal government deficit is the accumulation of all past debts. C. The federal budget deficit is the year-to-year short fall in tax revenues relative to government spending (T < G + TR), financed through corporate bonds. The federal government debt is the accumulation of all past deficits. D. The federal budget deficit is the year-to-year surplus in tax revenues relative to government spending (T > G + TR), financed through government bonds. The federal government debt is the accumulation of all past deficits.
A. The federal budget deficit is the year-to-year short fall in tax revenues relative to government spending (T < G + TR), financed through government bonds. The federal government debt is the accumulation of all past deficits.
Suppose that you are available to go to work but have not looked for a job for at least the last four weeks because you believe that there aren't any jobs available. You would be counted as A. a discouraged worker. Your answer is correct. B. underemployed. C. part of the labor force. D. unemployed.
A. a discouraged worker.
The seven members of the Board of Governors of the Federal Reserve are appointed by A. the President. Your answer is correct. B. the Governors of the States. C. Congress. D. leaders in the banking industry.
A. the President.
The part of the balance of payments that records purchases of assets a country has made abroad and foreign purchases of assets in the country is called A. the financial account. Your answer is correct. B. the current account. C. the balance account. D. the capital account.
A. the financial account.
The difference between the nominal interest rate and the real interest rate is A. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate minus the inflation rate. Your answer is correct. B. the real interest rate is the stated interest rate whereas the nominal interest rate is the real interest rate minus the inflation rate. C. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate plus the inflation rate. D. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate divided by the inflation rate.
A. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate minus the inflation rate.
Expansionary monetary policy to prevent real GDP from falling below potential real GDP would cause the inflation rate to be relatively ________ and real GDP to be relatively ________. A. higher; higher This is the correct answer. B. lower; higher C. lower; lower D. higher; lower
A. higher; higher
The following questions refer to the video you watched on MR University titled Game of Theories: Real Business Cycle. According to real business cycle theory, negative real shocks initially affect A. long-run aggregate supply. Your answer is correct. B. wages. C. aggregate demand. D. the money supply.
A. long-run aggregate supply.
Look carefully at the following list. a. The coins in your pocket. b. The funds in your checking account. c. The funds in your savings account. d. The traveler's check that you have left over from a trip. e. Your Citibank Platinum MasterCard. Which of the things above are NOT included in the M1 definition of the money supply? A. c & e Your answer is correct. B. b & e C. a & b D. d & e
A. c. The funds in your savings account. & E. Your Citibank Platinum MasterCard
GDP is an imperfect measure of economic well-being because it fails to measure what types of production? A. Household production and the underground economy. Your answer is correct. B. Business investment and foreign production. C. Foreign production and the government sector. D. Household production and foreign production. Even if GDP included these types of production, why would it still be an imperfect measure of economic well-being? A. The value of leisure is not included in GDP. B. GDP is not adjusted for pollution and it does not account for unequal income distribution. C. GDP is not adjusted for crime or other social problems. D. All of the above. Your answer is correct. E. A and C only.
A. Household production and the underground economy. D. All of the above.
An article in the Wall Street Journal noted that real GDP in Greece declined during 2016. The article stated that economists "attributed it to a 2.1% decline in [government spending] and weaker net exports." Source: Nektaria Stamouli, "Greek Economy Contracts at Faster Pace Than Estimated Adding Hurdle to Bailout Talks," Wall Street Journal, March 6, 2017. Use a basic aggregate demand and aggregate supply graph (with LRAS constant) to explain what happened in Greece in 2016. Assume the economy is initially in long-run equilibrium. The aggregate demand curve will shift to the left. The new short-run equilibrium will be where A. the new aggregate demand curve intersects the original long-run aggregate supply curve. B. the new aggregate demand curve intersects a new short-run aggregate supply curve. C. the original short-run aggregate supply curve intersects the original long-run aggregate supply curve. D. the new aggregate demand curve intersects the original short-run aggregate supply curve. This is the correct answer. To adjust back to long-run equilibrium, the short-run aggregate supply curve will shift to the right. The new long-run equilibrium will be where A. the new aggregate demand curve intersects the new short-run aggregate supply curve at a new long-run aggregate supply curve. B. the original aggregate demand curve intersects the new short-run aggregate supply curve at the original long-run aggregate supply curve. C. the new aggregate demand curve intersects the new short-run aggregate supply curve at the original long-run aggregate supply curve. This is the correct answer. D. the new aggregate demand curve intersects the original short-run aggregate supply curve at the original long-run aggregate supply curve.
AG-D Left , D , SR-AG-S Right , C
An increase in the amount of excess reserves that banks keep _________ the value of the real-world deposit multiplier. A. leaves unchanged B. decreases This is the correct answer. C. increases D. eliminates Whenever banks gain reserves and make new loans, the money supply ___________; and whenever banks lose reserves, and reduce their loans, the money supply __________. A. expands; contracts This is the correct answer. B. contracts; expands C. contracts; contracts D. expands; expands
B , A
Gross domestic product is best defined as A. the amount of all incomes earned by all citizens of a country, including those living overseas. B. the market value of all final goods and services produced in a country during a period of time, typically one year. Your answer is correct. C. the total quantity of goods and services produced in a country during a period of time. D. the total value of all goods that can be found in a country. What happens if we measure GDP by adding up the value of every good and service produced in the economy? A. GDP is overestimated because of double counting. Your answer is correct. B. This is the correct measure of real GDP but not nominal GDP. C. GDP is underestimated because of double counting. D. This is the correct measure of nominal GDP but not real GDP.
B , A
The following questions refer to the video you watched on MR University titled Game of Theories: The Austrians. According to the Austrian theory of business cycles, how does the boom part of the business cycle lead to the bust? A. Overconfidence caused by the boom leads entrepreneurs to further invest in short-term goods, past the amount required to meet consumer demand. B. Malinvestments made in response to distorted price signals fail when met with insufficient consumer demand. Your answer is correct. C. The increased production of short-term goods caused by distorted price signals is met with insufficient consumer demand. D. The decrease in interest rates caused by distorted price signals creates an excess of consumer demand. What is the Austrian solution to business cycles? A. Limited government that doesn't interfere with market price signals. Your answer is correct. B. Reduce long-term investments. C. Tie the central bank down to a stable rate of inflation. D. Account for distortions in price signals caused by the central bank.
B , A
The federal funds rate is: A. one of the new tools of monetary policy. B. the overnight interest rate banks pay to borrow funds from each other. This is the correct answer. C. the interest rate banks pay to borrow funds from the Fed. D. one of the old tools of monetary policy. When the Fed takes action, if there are _______ reserves in the system, interest rates will ______. A. more; fall This is the correct answer. B. less; fall C. more; rise D. more; stay the same E. none of the above answers satisfy this question If the Fed thinks there needs to be more economic activity, they will want to: A. lower interest rates. Your answer is correct. B. C. keep interest rates steady. D. raise interest rates. Monetary policy in the US is conducted by: A. the Federal Reserve. Your answer is correct. B. the President and Congress C. both the Federal Reserve and the President and Congress D. the Vice President
B , A , A , A
Who is the current chair of the Federal Reserve? A. Donald Trump B. Jerome Powell Your answer is correct. C. Mike Pence D. Steve Mnuchin E. Janet Yellen Which committee sets the position of monetary policy? A. The Federal Open Market Committee Your answer is correct. B. The Quantitative Easing Committee C. The Open Market Trading Desk at the New York Fed D. The National Bureau of Economic Research Before the 2007 financial crises, we would say that the banking system has ample reserves. True False Your answer is correct. Interest on reserves applies to both required reserves (IORR) and excess reserves (IOER). True Your answer is correct. False
B , A , F , T
A recession occurs when an economy experiences a period in which there is A. a decrease in the inflation rate. B. a decrease in total production. Your answer is correct. C. a negative amount of net exports. D. an increase in total employment. The business cycle exists because A. the price level tends to increase over some periods and decrease over others. B. total production experiences periods of increases and periods of decreases. Your answer is correct. C. there are changes in the level of government expenditures, sometimes they increase and sometimes they decrease. D. exports and imports do not always increase and decrease at the same rate which causes cyclical movements in net exports.
B , B
If inflation in the United States is lower than inflation in other countries, then U.S. exports ________ and U.S. imports ________, which _________ net exports. A. increase; increase; decreases B. increase; decrease; increases Your answer is correct. C. decrease; increase; decreases D. decrease; increase; increases When incomes rise faster in the United States than in other countries, A. exports usually rise faster than imports. B. U.S. net exports will fall. Your answer is correct. C. foreign consumers' purchases of U.S. goods and services will increase faster than U.S. consumers' purchases of foreign goods and services. D. U.S. net exports will rise.
B , B
Which of the following factors does not cause the aggregate demand curve to shift? A. a change in government monetary or fiscal policies B. a change in the price level Your answer is correct. C. a change in the expectations of households and firms D. a change in foreign variables How can government policies shift the aggregate demand curve to the right? A. by increasing business taxes B. by increasing government purchases Your answer is correct. C. by increasing personal income taxes D. All of the above.
B , B
Which of the following is included in the economist's definition of investment? A. the purchase of a rare coin or a deposit in a savings account B. the purchase of new machines, factories, or houses Your answer is correct. C. the purchase of a share of stock D. All of the above. In calculating GDP, which levels of government spending are included in government purchases? A. spending by governments only on national security, social welfare, and other national programs B. spending by federal, state, and local governments Your answer is correct. C. spending by the federal government only D. spending by the federal government and some state governments, but not local governments
B , B
Which of the following is not a limitation to fiscal policy we spoke about this week? A. Deficits and the debt B. Term limits Your answer is correct. C. Crowding Out D. Lags E. All of the above were limitations we spoke about this week. Which of the following is not a lag in fiscal policy we spoke about this week? A. Implementation B. Data C. Information Your answer is correct. D. Recognition E. All of the above were lags we spoke about this week.
B , C
Which of the following is not a limitation to monetary policy mentioned in the lesson? A. The implementation lag B. The information lag Your answer is correct. C. The data lag D. The recognition lag Unemployment data comes out the following month and is revised twice. GDP data takes several months to come out and also goes through revisions. Because of this, we see a ______ when it comes to monetary policy. A. information lag B. recognition lag C. data lag Your answer is correct. D. implementation lag Even after it is decided to take on monetary policy, the FOMC will need to meet and hash out exactly what needs to be done, and that takes time. Because of this, we see a ______ when it comes to monetary policy. A. data lag B. recognition lag C. implementation lag Your answer is correct. D. information lag Sometimes, the inflation rate may be stable and the unemployment rate may be going up just slightly. It's tough to know if the economy is in a recession or not. This is an example of the: A. recognition lag. Your answer is correct. B. information lag. C. data lag. D. implementation lag.
B , C , C , A
The wealth effect refers to the fact that A. when the price level falls, the nominal value of assets rises, while the real value of assets remains the same. B. when the price level falls, the real value of household wealth rises, and so will consumption. Your answer is correct. C. when income rises, consumption rises. D. All of the above. The interest rate effect refers to the fact that a higher price level results in A. lower interest rates and lower investment. B. lower interest rates and higher investment. C. higher interest rates and higher investment. D. higher interest rates and lower investment. Your answer is correct. The international-trade effect refers to the fact that an increase in the price level will result in A. an increase in exports and a decrease in imports. B. a decrease in exports and a decrease in imports. C. a decrease in exports and an increase in imports. Your answer is correct. D. an increase in exports and an increase in imports.
B , D , C
The current account records A. net capital flows, net investment income, and net transfers. B. net exports, net investment income, and net transfers. Your answer is correct. C. net capital flows and net investment income. D. only net capital flows. E. only net exports. The financial account records A. net capital flows, net investment income, and net transfers. B. net exports, net investment income, and net transfers. C. only net exports. D. net capital flows and net investment income. E. only net capital flows. Your answer is correct. The balance of payments is equal to A. the current account times the financial account. B. the current account divided by the financial account. C. the current account plus the financial account. Your answer is correct. D. the current account minus the financial account.
B , E , C
A way to achieve more economic growth is by increasing the knowledge capital of firms. Suppose policymakers wanted to assist in this increase. Which of the following policies would not help? A. The government could increase the amount of scholarships to allow more people to gain additional training and college education. B. The government could reduce corporate tax rates for service and retail companies. Your answer is correct. C. The government could increase the level of funding for research grants to develop additional basic research. D. The government could increase resources spent on assisting companies to enforce their patents. When reading about endogenous growth theory you will likely run into physical capital being referred to as ideas and knowledge capital being referred to as objects. True False Your answer is correct.
B , F
Changes in interest rates affect aggregate demand. Which of the following is affected by changes in interest rates and, as a result, impacts aggregate demand? (Mark all that apply.) A. Government spending B. Business investment projects This is the correct answer. C. Consumption of durable goods This is the correct answer. D. The value of the dollar This is the correct answer.
B C D
An important conclusion to draw from the circular-flow diagram is that A. personal consumption expenditures are equal to the value of GDP. B. we can measure GDP by calculating the total value of expenditures on final goods and services, or we can measure GDP by calculating the value of total income. Your answer is correct. C. the total value of expenditures equals the value of GDP, but does not equal the value of income. D. the value of total income equals the value of GDP, but does not equal the value of expenditures. In the circular-flow diagram, who supplies factors of production in exchange for income? A. firms B. households Your answer is correct. C. the government D. All of the above.
B,B
Suppose the economy is initially at point A. The government decides to decrease government spending. In the short-run, this contractionary fiscal policy will cause: A. A shift from AD1 to AD2 and a movement to point B, with a higher price level and higher output. B. A shift from AD2 to AD1 and a movement to point D, with a lower price level and lower output. This is the correct answer. C. A shift from SRAS2 to SRAS1 and a movement to point B, with a lower price level and higher output. D. A shift from SRAS1 to SRAS2 and a movement to point A, with a higher price level and the same output. [ADBC]
B. A shift from AD2 to AD1 and a movement to point D, with a lower price level and lower output.
Suppose the economy is initially in long-run equilibrium. The Fed decides to sell bonds. In the short-run, this contractionary monetary policy will cause: A. A shift from SRAS2 to SRAS1 and a movement to point B, with a lower price level and higher output. B. A shift from AD2 to AD1 and a movement to point D, with a lower price level and lower output. Your answer is correct. C. A shift from AD1 to AD2 and a movement to point B, with a higher price level and higher output. D. A shift from SRAS1 to SRAS2 and a movement to point A, with a higher price level and the same output.
B. A shift from AD2 to AD1 and a movement to point D, with a lower price level and lower output.
The graph to the right illustrates the static AD-AS model. Suppose the economy is initially in long-run equilibrium at point A. The government decides to increase taxes. In the short-run, this contractionary fiscal policy will cause: A. A shift from SRAS1 to SRAS2 and a movement to point A, with a higher price level and the same output. B. A shift from AD2 to AD1 and a movement to point D, with a lower price level and lower output. This is the correct answer. C. A shift from SRAS2 to SRAS1 and a movement to point B, with a lower price level and higher output. D. A shift from AD1 to AD2 and a movement to point B, with a higher price level and higher output.
B. A shift from AD2 to AD1 and a movement to point D, with a lower price level and lower output.
How does a decrease in the price level affect the quantity of real GDP supplied in the long run? A. In the long run, a decrease in the price level increases inflation, which will decrease real GDP. B. Changes in the price level do not affect the level of GDP in the long run. Correct answer. C. In the long run, a decrease in the price level decreases inflation, which will decrease real GDP. D. In the long run, a decrease in the price level will increase real GDP.
B. Changes in the price level do not affect the level of GDP in the long run.
In the circular flow of expenditure and income, why must the total value of production in an economy equal the total value of income? A. Taxes on the production of goods and services are determined according to individual income. B. Every penny spent on a good or service must end up as someone's income. Your answer is correct. C. People tend to spend all of their income on goods and services. D. Domestic expenditures on imports generally equal foreign expenditures on U.S. exports.
B. Every penny spent on a good or service must end up as someone's income. Your answer is correct.
The term "crowding out" refers to a situation where: A. Fed policy decreases interest rates and increases private investment. B. Government spending increases interest rates and decreases private investment. Your answer is correct. C. Government spending decreases interest rates and increases private investment. D. Fed policy increases interest rates and decreases private investment.
B. Government spending increases interest rates and decreases private investment.
Refer to the diagram to the right. Currency speculators believe that the value of the Euro will increase relative to the dollar. Assuming all else remains constant, how would this be represented? A. Supply would decrease, demand would increase and the economy moves from A to D to C. B. Supply would increase, demand would decrease and the economy moves from C to B to A. Your answer is correct. C. Supply would increase, demand would increase and the economy moves from D to A to B. D. Supply would decrease, demand would decrease and the economy moves from B to C to D.
B. Supply would increase, demand would decrease and the economy moves from C to B to A.
In the aggregate expenditure model, when is planned investment greater than actual investment? A. When there is no unplanned change in inventories. B. When there is an unplanned decrease in inventories. Your answer is correct. C. Planned investment always equals actual investment in the aggregate expenditure model. D. When there is an unplanned increase in inventories.
B. When there is an unplanned decrease in inventories.
Suppose that the inflation rate turns out to be much lower than most people expected. In that case, A. a lender will lose from the situation while a borrower will gain. B. a borrower will lose from the situation while a lender will gain. Your answer is correct. C. both borrower and lender will gain from the situation. D. both borrower and lender will lose in this situation.
B. a borrower will lose from the situation while a lender will gain.
Imagine a 45°-line (Keynesian cross) diagram in which the upward-sloping aggregate expenditure curve intersects the 45°-line at point A. In the graph, a point where inventories are rising would be plotted A. anywhere on the 45°-line where Y=AE. B. on the AE line to the right of point A. Your answer is correct. C. on the AE line at point A. D. on the AE line to the left of point A.
B. on the AE line to the right of point A.
A Penn State football fan with a Saquon Barkley football card wants to trade it for a Michael Jordan basketball card, but everyone the fan knows who has a basketball card doesn't want a football card. Economists characterize this problem as a failure of the A. fiat money cration. B. principle of a double coincidence of wants. Your answer is correct. C. commodity money at work. D. market clearing mechanism.
B. principle of a double coincidence of wants.
The unemployment rate A. is the amount of people in the population that are not working. B. shows the percentage of the labor force that is considered unemployed. This is the correct answer. C. shows the percentage of the population that is considered unemployed. D. is the amount of the labor force that is not working.
B. shows the percentage of the labor force that is considered unemployed.
Which of the following does the aggregate expenditure macroeconomic model seek to explain? A. cyclical unemployment B. the business cycle Your answer is correct. C. inflation D. long-run economic growth
B. the business cycle
Transfer payments are not included in GDP calculations because A. transfer payments come from taxes and government expenditures so they are already included in government purchases. B. transfer payments are simply transfers of income from one group to another and not a purchase of a new good or service. Your answer is correct. C. transfer payments do not include movements of income between countries so they should only be included in foreign country GDPs. D. None of the above because transfer payments are included in GDP.
B. transfer payments are simply transfers of income from one group to another and not a purchase of a new good or service.
When the economy is experiencing an expansion automatic stabilizers will cause: A. transfer payments to increase and tax revenues to increase. B. transfer payments to decrease and tax revenues to increase. Your answer is correct. C. transfer payments and tax revenues to be unaffected. D. transfer payments to decrease and tax revenues to decrease.
B. transfer payments to decrease and tax revenues to increase.
The LRAS is A. vertical because in the long run, changes in the price level affect potential GDP via other variables, such as the size of the labor force, capital stock, and technology. B. vertical because in the long run, changes in the price level do not affect potential GDP, as potential GDP depends on the size of the labor force, capital stock, and technology. This is the correct answer. C. vertical because in the long run, the price level does not change, but potential GDP changes its value. D. vertical because in the long run, changes in the size of the labor force, capital stock, and technology affect the price level but not potential GDP.
B. vertical because in the long run, changes in the price level do not affect potential GDP, as potential GDP depends on the size of the labor force, capital stock, and technology.
Read the following statement and indicate where you agree or disagree. "During times when individuals and investors buy few shares of stock, investment will be low and, in turn, GDP will be as well" A. Agree: GDP = C + I + G + NX. Therefore, as "I" (Investment) decreases, GDP decreases. B. Disagree: Investment as a component of GDP refers to the purchase of physical and human capital and inventory, not stock purchases. Your answer is correct. C. Agree: When investment is low, people must have less money to spend. Therefore, GDP decreases. D. Disagree: While GDP will be low in this case, it is the result of a decrease in consumer expenditure on stocks, not investment spending.
B. Disagree: Investment as a component of GDP refers to the purchase of physical and human capital and inventory, not stock purchases.
According to your required reading titled, What full employment really means, barriers to job switching, like occupational licensing, __________ friction and push ______ the natural rate. A. decrease; down B. increase; up Your answer is correct. C. decrease; up D. increase; down
B. increase; up
At the new short run equilibrium, the unemployment rate will be lower compared to the unemployment rate at the initial equilibrium, prior to the increase in exports. Which of the following best explains how the economy will adjust back to long-run equilibrium? A. Short-run aggregate supply will increase (shift rightward) as firms and workers adjust to the new price level. B. Short-run aggregate supply will decrease (shift leftward) as firms and workers adjust to the new price level. Your answer is correct. C. Aggregate demand will increase, restoring the original equilibrium price and quantity. D. Aggregate demand will decrease, restoring the original equilibrium price and quantity. At the new long-run equilibrium, A. real GDP, the unemployment rate and the price level all will remain the same compared to the initial equilibrium, prior to the increase in exports. B. real GDP and the price level will be higher but the unemployment rate will remain the same compared to the initial equilibrium, prior to the increase in exports. C. real GDP and price level will be higher and the unemployment rate will be lower compared to the initial equilibrium, prior to the increase in exports. D. real GDP and the unemployment rate will remain the same, but price level will be higher compared to the initial equilibrium, prior to the increase in exports. Correct
Be Lower , B , D
If the Fed believes the economy is about to fall into recession, it should A. use an expansionary fiscal policy to increase the interest rate and shift AD to the right. B. use a contractionary monetary policy to lower the interest rate and shift AD to the left. C. use an expansionary monetary policy to lower the interest rate and shift AD to the right. Your answer is correct. D. use its judgment to do nothing and let the economy make the self adjustment back to potential GDP. If the Fed believes the inflation rate is about to increase, it should A. use a contractionary monetary policy to increase the interest rate and shift AD to the left. Your answer is correct. B. use an expansionary monetary policy to lower the interest rate and shift AD to the right. C. use a combination of tax increases and spending cuts to keep the budget balanced. D. use a contractionary fiscal policy to increase the interest rate and shift AD to the left.
C , A
Long-run growth in GDP is determined by A. technology, investment, and consumption B. consumption, investment, and government expenditures. C. capital, labor productivity, and technology. Your answer is correct. D. labor productivity, capital, and government expenditures. Technological progress is affected by (check all that apply) A. entrepreneurship Your answer is correct. B. population growth C. investment in capital Your answer is correct. D. private property rights Your answer is correct. E. new software developments Your answer is correct
C , A&C&D&E
Which of the following is not a limitation to fiscal policy we spoke about this week? A. Crowding Out B. Lags C. Term limits Your answer is correct. D. Deficits and the debt E. All of the above were limitations we spoke about this week. Which of the following is not a lag in fiscal policy we spoke about this week? A. Implementation B. Information Your answer is correct. C. Recognition D. Data E. All of the above were lags we spoke about this week.
C , B
The federal funds rate is: A. the interest rate banks pay to borrow funds from the Fed. B. one of the old tools of monetary policy. C. the overnight interest rate banks pay to borrow funds from each other. Your answer is correct. D. one of the new tools of monetary policy. When the Fed takes action, if there are _______ reserves in the system, interest rates will ______. A. more; stay the same B. less; rise Your answer is correct. C. more; rise D. less; fall E. none of the above answers satisfy this question If the Fed thinks there needs to be more economic activity, they will want to: A. keep interest rates steady. B. lower interest rates. Your answer is correct. C. raise interest rates. Monetary policy in the US is conducted by: A. the Federal Reserve. Your answer is correct. B. the Vice President C. both the Federal Reserve and the President and Congress D. the President and Congress
C , B , B , A
The discussion this week about the deficit and debts were centered around an infographic released by the: A. The Treasury B. The White House C. Congressional Budget Office (CBO) This is the correct answer. D. Internal Revenue Service (IRS) Which of the following categories was the largest for revenues in 2019? A. Mandatory spending B. Individual income taxes This is the correct answer. C. Payroll taxes D. Discretionary spending Which of the following categories was the largest for outlays in 2019? A. Discretionary spending B. Mandatory spending This is the correct answer. C. Payroll taxes D. Individual income taxes Major health programs was the largest change, as a percentage of GDP from 1999-2019, out of all mandatory spending programs. True Your answer is correct. False
C , B , B , T
An increase in interest rates affects aggregate demand by A. shifting the aggregate demand curve to the right, increasing real GDP and lowering the price level. B. shifting the aggregate supply curve to the right, increasing real GDP and lowering the price level. C. shifting the aggregate demand curve to the left, reducing real GDP and lowering the price level. Your answer is correct. D. shifting the aggregate supply curve to the left, decreasing real GDP and increasing the price level. As the interest rate increases, A. consumption, investment, and net exports increase, and aggregate demand increases. B. consumption, investment, and net exports fall but government spending increases, and aggregate demand increases. C. consumption increases but investment and net exports decrease; aggregate demand remains unchanged. D. consumption, investment, and net exports decrease; aggregate demand decreases. Correct
C , D
The Federal Reserve is divided into two bodies: A. the Board of Governors and the FDIC. B. the FDIC and the Treasury. C. the Board of Governors and 12 regional districts. This is the correct answer. D. the FDIC and 12 regional districts. Which of the following is not a Federal Reserve district? A. Dallas B. Richmond C. Philadelphia D. Denver Correct
C , D
The following questions refer to the video you watched on MR University titled Game of Theories: The Keynesians. Which of the following is a reason for sticky wages? A. Monetary Policy B. Aggregate Demand C. Long-term contracts Your answer is correct. D. Fiscal Policy E. All of the above What are some problems with Keynesian business cycle theory? A. It does not predict stagflation. B. Falling aggregate demand may be a symptom, not cause, of recession. C. Wages are only sticky during recessions. D. a & b only Your answer is correct. E. b & c only
C , D
Which of the following will cause interest rates to rise? A. lowering the required reserve ratio B. lowering the discount rate C. open market sales Your answer is correct. D. all of the above E. none of the above Which of the following will cause interest rates to fall? A. open market sales B. lowering the discount rate C. lowering the required reserve ratio D. all of the above E. B&C only Your answer is correct. Member banks receive interest on reserves as they are able to hold deposits at the Fed. True Your answer is correct. False The reverse repurchasing rate is around because of primary dealers who are unable to hold deposits at the Fed. True correct answer. False
C , E , T , T
When we talk about economic growth (increases in real GDP per capita), we can break it down into two sources: inputs and productivity. Which of the follow statements is true? A. The Solow model focuses on the "try better" strategy. B. The Romer model focuses on the "try harder" strategy. C. One way to increase productivity is to improve allocative efficiency. Your answer is correct. D. We can think of inputs and the "try better" strategy Both Robert Solow and Paul Romer won Nobel Prizes for their work. True Your answer is correct. False
C , T
When we talk about economic growth (increases in real GDP per capita), we can break it down into two sources: inputs and productivity. Which of the follow statements is true? A. We can think of inputs and the "try better" strategy B. The Solow model focuses on the "try better" strategy. C. One way to increase productivity is to improve allocative efficiency. Your answer is correct. D. The Romer model focuses on the "try harder" strategy. Both Robert Solow and Paul Romer won Nobel Prizes for their work. True Your answer is correct. False
C , T
Which one of the following is not a function of money? A. Medium of exchange. B. Unit of account. C. Open market operation. Your answer is correct. D. Store of value. If something is to be considered as money, it has to fulfill all four functions.
C , all four functions.
How does an increase in the price level affect the quantity of real GDP supplied in the long run? A. In the long run, an increase in the price level will increase real GDP. B. In the long run, an increase in the price level increases inflation, which will decrease real GDP. C. Changes in the price level do not affect the level of GDP in the long run. This is the correct answer. D. In the long run, an increase in the price level decreases inflation, which will decrease real GDP.
C. Changes in the price level do not affect the level of GDP in the long run.
Why is GDP an imperfect measurement of total production in the economy? A. The official measure of GDP does not include intermediate goods and services. B. The BEA does not include the value of new houses in GDP. C. GDP does not include household production or production from the underground economy. Your answer is correct. D. GDP measures total income paid to the factors of production, not production.
C. GDP does not include household production or production from the underground economy.
What are the largest asset and the largest liability of a typical bank? A. Loans are the largest liability and deposits are the largest asset of a typical bank. B. Cash in its vault is the largest asset and bonds are the largest liability of a typical bank. C. Loans are the largest asset and deposits are the largest liability of a typical bank. This is the correct answer. D. Reserves are the largest asset and deposits are the largest liability of a typical bank.
C. Loans are the largest asset and deposits are the largest liability of a typical bank.
Bob Wesley believes that structural unemployment should be eliminated in order for an economy to be healthy. In making this argument, which of the following relevant issues is he ignoring? A. Structural unemployment is often a result of job dissatisfaction. B. Structural unemployment is short-term unemployment that arises from the process of matching workers with jobs. C. Structural unemployment will exist in an economy that is innovative. Your answer is correct. D. Structural unemployment is often shorter than frictional unemployment. E. Structural unemployment is limited to capital-intensive industries.
C. Structural unemployment will exist in an economy that is innovative.
Suppose that Sally J. Society recently lost her job as an underwater welder. In looking for a new job, she discovers that the only available jobs are for economists and that there are no openings for underwater welders because the trade is now obsolete. If Sally J. Society decides to return to school to earn an Economics degree, what is the best classification of her unemployment status? A. Cyclically unemployed B. Seasonally unemployed C. Structurally unemployed Your answer is correct. D. Frictionally unemployed
C. Structurally unemployed
In the Medium article Professor Tierney wrote titled GDP Doesn't Tell the Whole Story, which alternate to GDP was the article about? A. The GINI Index B. The Gross National Product C. The Gross National Happiness Index Your answer is correct. D. The Social Progress Index
C. The Gross National Happiness Index
Why do few economists argue that it would be a good idea to balance the federal budget every year? A. To keep a balanced budget during an expansion, taxes would have to decrease and government expenditures would have to increase, which would increase aggregate demand and decrease inflation. B. To keep a balanced budget during an expansion, taxes would have to increase and government expenditures would have to decrease, which would increase aggregate demand and lead to inflation. C. To keep a balanced budget during a recession, taxes would have to increase and government expenditures would have to decrease, which would further reduce aggregate demand and deepen the recession. CORRECT D. To keep a balanced budget during a recession, taxes would have to decrease and government expenditures would have to increase, which would further reduce aggregate demand and deepen the recession.
C. To keep a balanced budget during a recession, taxes would have to increase and government expenditures would have to decrease, which would further reduce aggregate demand and deepen the recession.
How do the banks "create money"? A. Banks sell bonds in the open market and lose reserves; the excess cash holding by households increases the money supply. B. When there is a decrease in checking account deposits, banks lose reserves and reduce their loans, and the money supply expands. C. When there is an increase in checking account deposits, banks gain reserves and make new loans, and the money supply expands. This is the correct answer. D. Banks buy bonds in the open market and gain reserves; this excess reserve holding increases the money supply.
C. When there is an increase in checking account deposits, banks gain reserves and make new loans, and the money supply expands.
Suppose that you are available to go to work but have not looked for a job for at least the last four weeks because you believe that there aren't any jobs available. You would be counted as A. unemployed. B. underemployed. C. a discouraged worker. This is the correct answer. D. part of the labor force.
C. a discouraged worker.
Which of the following is true about the Federal Reserve and its ability to prevent recessions? The Federal Reserve A. cannot realistically fine tune the economy and has little to no effect on the magnitude and length of recessions. B. can fine tune the economy and realistically hope to keep the economy from experiencing recessions. C. cannot realistically fine tune the economy, but seeks to keep recessions shorter and milder than they would otherwise be. Your answer is correct. D. does not try to eliminate recessions, but instead focuses on preventing inflation.
C. cannot realistically fine tune the economy, but seeks to keep recessions shorter and milder than they would otherwise be.
An increase in the interest rate should A. increase investment spending. B. increase net exports. C. decrease consumption spending. Your answer is correct. D. increase government spending.
C. decrease consumption spending.
The LRAS curve is A. determined by consumption, investment, government purchases, and net exports. B. determined by the price level and aggregate demand. C. determined by the number of workers, the amount of capital, and the available technology. Your answer is correct. D. determined by the price level, the available technology, and "sticky" prices. E. All of the above.
C. determined by the number of workers, the amount of capital, and the available technology.
All of the following are reasons the SRAS slopes upward except for one. Which one is that? A. in the short run, prices of final goods and services adjust slowly due to the existence of menu costs. B. in the short run, as prices of final goods and services increase, some firms are very slow to adjust their prices, thus their sales increase. C. in the short run, an unexpected change in the price of an important resource can change the cost to firms. Your answer is correct. D. in the short run, as prices of final goods and services increase, input prices react more slowly.
C. in the short run, an unexpected change in the price of an important resource can change the cost to firms.
Credit cards are A. included in the M1 definition of the money supply, but not in the M2 definition. B. included in the M2 definition of the money supply, but not in the M1 definition. C. included in neither the M1 definition of the money supply nor in the M2 definition. Your answer is correct. D. included in both the M1 and the M2 definitions of the money supply.
C. included in neither the M1 definition of the money supply nor in the M2 definition.
Which of the following would be most likely to induce the Federal Reserve to conduct expansionary monetary policy? A significant decrease in A. income tax rates. B. oil prices. C. investment spending. Your answer is correct. D. business taxes.
C. investment spending.
Which of the following does the aggregate expenditure macroeconomic model seek to explain? A. inflation B. cyclical unemployment C. the business cycle correct answer. D. long-run economic growth
C. the business cycle
When you see the term per-capita reported on a statistic that just means: A. the data have been divided by the amount of money to get it per-dollar B. the data have been divided by total capital to get it per-machine C. the data have been divided by population to get it per-person Your answer is correct. D. none of the above are correct.
C. the data have been divided by population to get it per-person
Macroeconomics is the study of A. why the U.S. has spent so much money on wars and government surveillance of its own citizens. B. how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices. C. the economy as a whole, including topics such as inflation, unemployment, and economic growth. D. the economy on a state-by-state basis, covering areas affected by the Commerce Clause.
C. the economy as a whole, including topics such as inflation, unemployment, and economic growth.
Real exchange rate is A. the exchange rate set by the demand and supply in the foreign exchange market. B. the exchange rate set by the central bank of a country. C. the price of domestic goods in terms of foreign goods. Correct answer. D. the exchange rate determined by the demand and supply in the foreign exchange market most of the time with occasional government intervention to manage the currency's float.
C. the price of domestic goods in terms of foreign goods.
What are the four major components of expenditures in GDP? A. Consumption, Investment, Government Purchases, and Non-Durable Expenditures B. Consumption, Intermediate Goods, Goods and Services, and Net Exports C. Consumption, Investment, Government Purchases, and Net Exports Your answer is correct. D. Consumption, Intermediate Goods, Government Purchases, and New Expenditures
C. Consumption, Investment, Government Purchases, and Net Exports
If you are having an issue with MyEconLab or Packback, you should first: A. Contact Pearson or Packback directly. Those websites are located on Troubleshooting Technology page on Canvas. Correct answer. B. Contact Penn State tech support C. Not do the assignment D. Contact your professor [please don't do this until after you've contacted support for the company]
Contact Pearson or Packback directly. Those websites are located on Troubleshooting Technology page on Canvas.
On the graph of the consumption function, the horizontal axis measures _______, while the vertical axis measures _______. A. real consumption spending; real national income B. real disposable income; real national income C. real GDP; real aggregate expenditure D. real national income or real GDP; real consumption spending Correct
Correct
Cyclical unemployment is unemployment caused by a recession. As output (GDP) is increasing, the amount of cyclical unemployment would decrease.
Cyclical unemployment , Decrease
Economic growth models predicts that the A. level of per capita GDP in poor countries will decrease over time and the poor nations will not be able to catch up with the rich nations. B. rich countries will have stagnant growth and will catch up with the poor countries, so that there will be a convergence toward a "poverty trap." C. level of per capita GDP in rich countries will increase so fast that it will be difficult for poor countries with low income per capita to ever catch up with the rich countries. D. level of per capita GDP in poor countries will increase faster than rich countries and the poor nations will catch up with the rich nations. Your answer is correct. Have poor countries been catching up to rich countries? A. There has been catch-up by some poor but industrialized countries. Your answer is correct. B. The rich countries are getting poorer and going down to the level of poor countries. C. There has been no catch-up by any of the poor countries. D. There has been catch-up among all poor countries.
D , A
The statement, "A burrito at the student center on campus is only $5!" represents money's function as A. a standard of deferred payment. B. a medium of exchange. C. a store of value. D. a unit of account. This is the correct answer. When a local restaurant accepts your $20 bill when you purchase a to-go order of pasta, the $20 bill serves as: A. a medium of exchange. Your answer is correct. B. a standard of deferred payment. C. a store of value. D. a unit of account. Your university gives you an education each year in exchange for money in the future through student loans. This illustrates which function of money? A. a unit of account. B. a medium of exchange. C. a store of value. D. a standard of deferred payment. Your answer is correct. If whole avocados were used as a society's money, which of the following functions would be the hardest to satisfy? A. a standard of deferred payment. B. a store of value. Your answer is correct. C. a medium of exchange. D. a unit of account.
D , A , D ,B
Endogenous growth theory (the Romer model) states that A. knowledge capital is subject to decreasing returns at the level of the whole economy but increasing returns at the firm level. B. growth in labor productivity is a significant factor in bringing about long-run growth in real GDP per capita. C. firms will add to an economy's stock of physical capital leading to increases in real GDP but at a increasing rate. D. firms will add to an economy's stock of knowledge capital by engaging in research and development or by contributing to technological change. Your answer is correct. Romer's growth theory differs from Solow since A. the new growth theory focuses on technological change and the quantity of capital available to workers whereas the Solow growth theory states that accumulation of knowledge capital is a key determinant of economic growth. B. the Solow growth theory focuses on technological change and the quantity of capital available to workers whereas the new growth theory states that accumulation of knowledge capital is a key determinant of economic growth. This is the correct answer. C. the new growth theory says that physical capital is nonrival and nonexcludable and the Solow growth theory states that knowledge capital is nonrival and nonexcludable and is a key determinant of economic growth. D. the Solow growth theory says that the rate of technological change is influenced by how individuals and firms respond to economic incentives, whereas the new growth theory leaves technological change unexplained.
D , B
When the government begins to run a budget surplus, A. the supply of loanable funds curve shifts to the right. B. savings and investment increase. C. the equilibrium interest rate decreases and the quantity of loanable funds increases. D. all of the above hold true. Correct answer. When households increase their consumption in anticipation of future tax decreases, all of the following hold, except that A. the equilibrium interest rate rises and quantity of loanable funds decreases. B. investment increases. Correct answer. C. savings and investment decrease. D. the supply of loanable funds decreases and the supply curve shifts to the left.
D , B
Stagflation occurs when the price level _____ and output _____. A. falls; falls B. falls; rises C. rises; rises D. rises; falls Your answer is correct. Monetary policy _______ are willing to sacrifice higher unemployment for lower levels of inflation. A. eagles B hawks Your answer is correct. C sparrows D doves Monetary policy _______ are willing to sacrifice higher inflation for lower levels of unemployment. A. eagles B. sparrows C. hawks D. doves Your answer is correct. Monetary policy _______ would shift aggregate demand to the left when an economy is experiencing stagflation. A. eagles B. hawks This is the correct answer. C. doves D. sparrows Monetary policy _______ would shift aggregate demand to the right when an economy is experiencing stagflation. A. doves This is the correct answer. B. hawks C. eagles D. sparrows
D , B , D , B , A
Economic growth will A. not be sustained if developing countries stop accumulating capital because of diminishing returns to capital. B. not be affected because the key to economic growth is capital accumulation whether there are diminishing returns or not. C. be faster if more capital per hour is used because of increasing returns to capital. D. slow down or stop if more capital per hour is used because of diminishing returns to capital. Your answer is correct. Some economies are able to maintain high growth rates despite diminishing returns to capital by using A. a labor-intensive technology because labor, unlike capital, is not subject to diminishing returns. B. a newer production method that, if used properly, produces increasing returns to capital. C. better or enhanced technology, along with accumulating capital; these economies are growing because technology, unlike capital, is subject to increasing returns. Your answer is correct. D. a larger proportion of capital, thereby making their production capital intensive, so the sheer volume of capital protects them from diminishing returns to capital.
D , C
The following questions refer to the video you watched on MR University titled Game of Theories: The Austrians. According to the Austrian theory of business cycles, how does the boom part of the business cycle lead to the bust? A. Overconfidence caused by the boom leads entrepreneurs to further invest in short-term goods, past the amount required to meet consumer demand. B. The increased production of short-term goods caused by distorted price signals is met with insufficient consumer demand. C. The decrease in interest rates caused by distorted price signals creates an excess of consumer demand. D. Malinvestments made in response to distorted price signals fail when met with insufficient consumer demand. Your answer is correct. What is the Austrian solution to business cycles? A. Reduce long-term investments. B. Account for distortions in price signals caused by the central bank. C. Limited government that doesn't interfere with market price signals. Your answer is correct. D. Tie the central bank down to a stable rate of inflation.
D , C
The three types of unemployment are A. full, frictional, and involuntary unemployment. B. natural, unnatural, and cyclical unemployment. C. voluntary, structural, and cyclical unemployment. D. frictional, structural, and cyclical unemployment. Your answer is correct. The type of unemployment most likely to result in hardship for the people who are unemployed is A. cyclical and frictional because these two types are closely related. B. frictional because people need to find a new job in the labor market. C. structural because this type of unemployment requires retraining to acquire new job skills. Your answer is correct. D. cyclical because people have to wait for a recession to end.
D , C
Who is the current chairman of the Federal Reserve? A. Janet Yellen B. Joe Biden C. Ben Bernanke D. Jerome Powell Your answer is correct. E. Kamala Harris The interview we watched with the chairman of the Federal Reserve in class was hosted by which news agency? A. New York Times B. The Economist C. Wall Street Journal Your answer is correct. D. CNN The chairman of the Federal Reserve referenced the policy objectives of the Fed. What is another name for this? A. the requirements B. the tools of the Fed C. the dual mandate Your answer is correct. D. the macro points How many districts does the Federal Reserve consist of? Please enter a whole number and not words. ANS: 12
D , C , C , 12
If the GDP deflator in 2015 has a value of 97.0, then A. prices have increased 9.7 percent between the base year and 2015 B. the inflation rate in 2015 is -3 percent. C. the inflation rate in 2015 is 3 percent. D. prices have decreased 3 percent between the base year and 2015 Your answer is correct. When is the GDP Deflator in a specific year equal to 100? A. When the specific year is the base year. B. When nominal GDP in the year is equal to the real GDP in the specific year. C. When the prices in the specific year are equal to the prices in the base year. D. All of the above are true. Correct
D , D
The following questions refer to the video you watched on MR University titled Game of Theories: The Monetarists. Which of the following is not a reason that monetarists want to constrain the Fed? A. A stable inflation rate should be enough to stabilize business cycles. B. Policy implementation lags are long and variable. C. The information of policymakers is limited. D. Policymakers have institutional incentives to keep business cycles unstable. Your answer is correct. What is a problem with monetarism? A. Stabilizing one measure of the money supply may destabilize other measures of it. B. It leaves the Fed unable to act in case of negative real shocks and velocity shocks. C. It only applies to times when inflation is too high, such as the 1970s. D. a & b only Your answer is correct.
D , D
The new growth theory states that A. firms will add to an economy's stock of physical capital leading to increases in real GDP but at a increasing rate. B. growth in labor productivity is a significant factor in bringing about long-run growth in real GDP per capita. C. knowledge capital is subject to decreasing returns at the level of the whole economy but increasing returns at the firm level. D. firms will add to an economy's stock of knowledge capital by engaging in research and development or by contributing to technological change. Your answer is correct. The new growth theory differs from the growth theory developed by Robert Solow, since A. the new growth theory says that physical capital is nonrival and nonexcludable and the Solow growth theory states that knowledge capital is nonrival and nonexcludable and is a key determinant of economic growth. B. the Solow growth theory says that the rate of technological change is influenced by how individuals and firms respond to economic incentives, whereas the new growth theory leaves technological change unexplained. C. the new growth theory focuses on technological change and the quantity of capital available to workers whereas the Solow growth theory states that accumulation of knowledge capital is a key determinant of economic growth. D. the Solow growth theory focuses on technological change and the quantity of capital available to workers whereas the new growth theory states that accumulation of knowledge capital is a key determinant of economic growth. Correct
D , D
The simple deposit multiplier equals A. the formula used to calculate the total increase in checking account deposits from an increase in bank reserves. B. the inverse, or reciprocal, of the required reserve ratio. C. the ratio of the amount of deposits created by banks to the amount of new reserves. D. All of the above. This is the correct answer. A higher required reserve ratio _________ the value of the simple deposit multiplier. A. increases B. leaves unchanged C. eliminates D. decreases Correct
D , D
To answer this question you must have watched Fear the Boom and Bust on YouTube and taken notes. a. Hayek wants ________, Keynes wants________. A. to set markets free; to set markets free B. to steer markets; to steer markets C. to steer markets; to set markets free D. to set markets free; to steer markets Your answer is correct. b. Keynes blames ___________ whiles Hayek blames _______ for the boom and bust cycle. A. animal spirits; animal spirits B. low interest rates; animal spirits C. low interest rates; low interest rates D. animal spirits; low interest rates Your answer is correct. c. Who had a mustache in this video? A. Keynes B. Hayek C. neither D. both Correct
D , D , D
The Romer model suggests that the accumulation of knowledge capital can be slowed because knowledge is both nonrival and nonexcludable. How does the federal government intervene in the market to increase the amount of knowledge capital? A. Subsidies B. Public education C. Patents D. All of the above Your answer is correct. E. A and B only A good is said to be rival if the person or firm owning the good can keep others from using it in some way. True False Correct
D , F
The example we will be using in this course the most in about what? A. A Car Dealership B. A Farmers' Market C. A Hotdog Cart in New York City D. A T-Shirt Factory Your answer is correct. Inflation focuses on individual prices and not the price level as a whole. True False Your answer is correct. The _________ is the most well-known publisher for data on prices. A. National Bureau of Economic Research (NBER) B. Bureau of Econonomic Analysis (BEA) C. Federal Reserve Economic Database (FRED) D. Bureau of Labor Statistics (BLS) Correct
D , F , D
Contractionary monetary policy will result in: A. lower consumption. B. lower investment. C. higher imports. D. all of the above. This is the correct answer. E. A & B only. When interest rates rise, the dollar will become stronger (appreciate). True Your answer is correct. False When interest rates fall, the aggregate expenditure function: A. becomes flatter. B. shifts down. C. becomes steeper. D. shifts up. This is the correct answer. Net exports rises when interest rates fall because the dollar becomes weaker (depreciates). True Your answer is correct. False
D , T , D , T
The appreciation of the dollar is represented as a movement from A. C to A. B. B to A. C. C to B. D. D to C. Correct [CDBA]
D to C.
Which of the following transactions is not counted in GDP? A. A business buys new computers for its workers. B. A consumer goes out to dinner and to see a movie. C. The U.S. government pays salaries to members of Congress. D. A consumer repairs her own car Correct
D. A consumer repairs her own car
Suppose the economy is initially in long-run equilibrium. The Fed enacts a policy to decrease the discount rate. In the short-run, this expansionary monetary policy will cause: A. A shift from SRAS2 to SRAS1 and a movement to point D, with a higher price level and lower output. B. A shift from AD2 to AD1 and a movement to point C, with a lower price level and the same output. C. A shift from SRAS1 to SRAS2 and a movement to point B, with a lower price level and higher output. D. A shift from AD1 to AD2 and a movement to point B, with a higher price level and higher output. Correct
D. A shift from AD1 to AD2 and a movement to point B, with a higher price level and higher output.
Consider the figure to the right. Why does the short-run aggregate supply curve (SRAS) slope upward? A. Prices of final goods rise more quickly than the prices of inputs. B. Contracts keep wages "sticky". C. Firms and workers fail to predict changes in the price level. D. All of the above. Your answer is correct. E. A and B only.
D. All of the above.
Indicate which of the following is correct about the multiplier effect. A. A decrease in autonomous spending decreases real GDP by a multiple of the change. B. The larger the MPC, the more additional consumption that occurs. C. The multiplier ignores the effect on real GDP of imports, inflation, and interest rates. D. All of the above. Correct
D. All of the above.
Consider the demand for U.S. dollars in exchange for Japanese yen. Which of the following will not increase the foreign currency demand for the dollar? A. Foreign firms and consumers who want to buy goods and services from the United States. B. Foreign firms and consumers who want to invest in the United States. C. Currency traders who believe that the value of the dollar in the future will be greater than its value today. D. Currency traders who believe that the value of the dollar in the future will be less than its value today. Correct
D. Currency traders who believe that the value of the dollar in the future will be less than its value today.
Why might increasing taxes as a fiscal policy be a more difficult policy than the use of monetary policy to slow down an economy experiencing inflation? A. The legislative process works quickly. B. The economy may have already slowed. C. The government has more concentrated power than the Fed. D. The legislative process experiences longer delays than monetary policy. CORRECT
D. The legislative process experiences longer delays than monetary policy.
According to the Page One Economics article posted by the St. Louis Fed titled How Do Imports Affect GDP that you were required to read for this week, addressed which of the following topic? A. How imports increase a country's GDP. B. How imports are difficult to measure in GDP. C. How imports decrease a country's GDP. D. The misconceptions about how imports affect overall GDP. Correct
D. The misconceptions about how imports affect overall GDP.
How would it affect the unemployment rate if the Bureau of Labor Statistics counted as unemployed both (1) discouraged workers and (2) people who work part-time but would prefer to work full-time? A. The annual unemployment rate would have been close to 50 percent in the last decade. B. The unemployment rate would remain the same because those people are already counted as unemployed. C. The unemployment rate would decrease. D. The unemployment rate would increase. Correct
D. The unemployment rate would increase.
A student says the following: "I understand why the Fed uses expansionary policy but I don't understand why it would ever use contractionary policy. Why would the government ever want the economy to contract?" The government would want the economy to contract when real GDP is A. below potential GDP and the price level is rising. B. below potential GDP and the price level is falling. C. above potential GDP and the price level is falling. D. above potential GDP and the price level is rising. Correct
D. above potential GDP and the price level is rising.
Which of the following events would cause an increase in short−run aggregate supply? A. a decrease in the price level B. a decrease in the labor force C. an increase in consumption D. an improvement in technology Correct
D. an improvement in technology
According to your required reading titled, What full employment really means, the phenomenon short-term unemployment coulse become long-term unemployment is known as: A. slack B. excessive aversion C. friction D. hysteresis Correct
D. hysteresis
The balance of payments A. is positive since we spend much more on foreign goods and services than on domestic goods and services. B. can be either positive or negative, depending on the statistical discrepancy. C. is negative since we spend much more on foreign goods and services than on domestic goods and services. D. is always zero. Correct
D. is always zero.
Milton Friedman argued that the Federal Reserve should adopt a ________ to reduce fluctuations in real GDP, employment, and inflation. A. restrictive fiscal policy B. fixed interest rate policy C. contractionary lending practices policy D. monetary growth rule Correct
D. monetary growth rule
if the GDP deflator in 2012 has a value of 98.0, then A. prices have increased 9.8 percent between the base year and 2012. B. the inflation rate in 2012 is -2 percent. C. the inflation rate in 2012 is 2 percent. D. prices have decreased 2 percent between the base year and 2012. Correct
D. prices have decreased 2 percent between the base year and 2012.
When the economy is experiencing a recession automatic stabilizers will cause: A. transfer payments and tax revenues to be unaffected. B. transfer payments to increase and tax revenues to increase. C. transfer payments to decrease and tax revenues to decrease. D. transfer payments to increase and tax revenues to decrease. Correct
D. transfer payments to increase and tax revenues to decrease.
There are _ members of the Board of Governors, who the President of the United States appoints to _. One of the Board members is appointed Chairman for _. A. 14; 4-year nonrenewable terms; a 4-year nonrenewable term B. 12; 14-year nonrenewable terms; a 4-year nonrenewable term C. 9; 7-year nonrenewable terms; an 8-year renewable term D. 7; 14-year nonrenewable terms; a 4-year renewable term Correct
D. 7; 14-year nonrenewable terms; a 4-year renewable term
The general algebraic version of the aggregate expenditure model can be written as follows, where letters with "bars" represent fixed or autonomous values. C = C + MPC (Y) I = I G = G NX = NX If you think of the aggregate expenditure function as a line on the 45°-line diagram, the intercept would be E. C+ I+ G+NX This is the correct answer. If you think of the aggregate expenditure function as a line on the 45°-line diagram, the slope would be A. 1 - MPC B. MPC Your answer is correct. C. C+ I+ G+NX D. MPC(Y)
E , B
Which of the following causes the short-run aggregate supply curve to shift to the right? A. a higher expected future price level B. a decrease in the capital stock C. a negative technological change D. All of the above E. None of the above. Your answer is correct. Which of the following causes the short-run aggregate supply curve to shift to the left? A. an increase in the expected price of an important natural resource B. an decrease in the labor force C. an decrease in productivity D. All of the above This is the correct answer. E. B & C only.
E , D
Which of the following sets a floor on the federal funds rate? A. the discount rate B. the interest paid on reserves C. the open market purchases rate D. the required reserve ratio E. the reverse repo rate This is the correct answer. Which of the following sets a ceiling on the federal funds rate? A. the open market purchases rate B. the required reserve ratio C. the reverse repo rate D. the interest paid on reserves This is the correct answer. E. the discount rate
E , D
Which of the following will cause interest rates to rise? A. lowering the required reserve ratio B. open market purchases C. lowering the discount rate D. all of the above E. none of the above This is the correct answer. Which of the following will cause interest rates to fall? A. open market purchases B. lowering the discount rate C. lowering the required reserve ratio D. all of the above This is the correct answer. E. B&C only Member banks cannot receive interest on reserves as they are unable to hold deposits at the Fed. True False This is the correct answer. The reverse repurchasing rate is around because of primary dealers who are unable to hold deposits at the Fed. True This is the correct answer. False
E , D , F , T
Inflation occurs when prices in an economy rise as a whole (deflation is when they stay constant). True False
F
Currently, in the basket of good created by the BLS for the CPI, there are about 100 different types of goods and servies placed into 8 major categories. True False Your answer is correct. BLS employees then visit 23,000 stores across 87 cities to record the prices every 6 months to update the CPI. True False Correct
F , F
The Austrian school is best known for arguing the superiority of government economic planning over the market system. A. True B. False Correct
False
Refer to the graph to answer the following questions: a. With the shift in the demand for loanable funds, the equilibrium real interest rate increases and the equilibrium quantity of loanable funds increases. b. The fact that the equilibrium quantity of loanable funds may increase along with an increase in the real rate of interest A. contradicts the law of demand. B. assumes that demand for loanable funds decreases with supply remaining unchanged. C. assumes that demand for loanable funds increases with supply remaining unchanged. This is the correct answer. D. assumes that supply of loanable funds increases with demand remaining unchanged. c. How much would the quantity of loanable funds demanded have increased if the interest rate had remained at i1? A. from 0 to L1 B. from L1 to L3 This is the correct answer. C. from L2 to L3 D. from L1 to L2 d. How much does the quantity of loanable funds supplied increase with the increase in the interest rate from i1 to i2? A. from 0 to L1 B. from L2 to L3 C. from L1 to L2 This is the correct answer. D. from L1 to L3
Inc & Inc , C , B , C
Into which category of aggregate expenditures would the following transaction fall? Prudential Insurance Company purchases 250 new computers from Dell.
Investment expenditure
The economic growth model predicts that poor countries will grow faster than rich countries. Which of the following best explains what is actually happening to real per capita GDPs of countries? A. Most countries now have similar real per capita GDP levels. B. Poor countries are generally catching up with rich countries. C. Lower-income industrial countries are catching up with higher-income industrial countries. Your answer is correct. D. Lower-income countries have not caught up to higher-income countries at all.
Poor & rich , C
Imagine a 45°-line (Keynesian cross) diagram in which the upward-sloping aggregate expenditure curve intersects the 45°-line at point A. The economy is currently in macroeconomic equilibrium at output level Yo. Suppose that investment increases. If investment increases, the aggregate expenditures line will shift up. The new equilibrium levels of GDP and expenditures will be A. where the new AE line intersects the 45°-line. Your answer is correct. B. anywhere on the new AE line. C. where the new AE line intersects the original AE line. D. unchanged.
Shift up , A.
An increase in real GDP that increases interest rates will cause the value of the multiplier to be smaller. A decrease in individual income tax rates will cause the value of the multiplier to be larger.
Smaller , larger
Which famous celebrity did I take an awkward picture with? A. Snoop Dogg Your answer is correct. B. Saquon Barkley C. Ben Bernanke D. Mike Piazza
Snoop Dogg
GDP doesn't measure many things such as happiness or equality. True False
T
Open market purchases will add liquid assets to the system and cause interest rates to fall. True Your answer is correct. False An increase in the discount rate makes it easier for banks to borrow from the Fed. True False This is the correct answer. If the Fed raises the required reserve ratio, liquid assets become scarcer and interest rates fall. True False Your answer is correct. Before the Great Recession, almost all monetary policy in the U.S. was done through open market operations. True Your answer is correct. False
T , F , F , T
Interleaving means you shouldn't study one idea for too long. Instead, you should change up your topics. True Your answer is correct. False Interleaving will help you make connections across material. True Your answer is correct. False
T , T
Expansionary monetary policy results in lower interest rates. True Your answer is correct. False Lower interest rates will increase economic activity. True Your answer is correct. False Higher interest rates will: A. move up along a stationary aggregate demand curve. B. shift the aggregate demand curve to the right. C. move down along a stationary aggregate demand curve. D. shift the aggregate demand curve to the left. Your answer is correct. Expansionary monetary policy will: A. move up along a stationary aggregate demand curve. B. shift the aggregate demand curve to the right. Your answer is correct. C. shift the aggregate demand curve to the left. D. move down along a stationary aggregate demand curve.
T , T , D , B
Expansionary monetary policy results in lower interest rates. True Your answer is correct. False Lower interest rates will increase economic activity. True This is the correct answer. False Higher interest rates will: A. move up along a stationary aggregate demand curve. B. move down along a stationary aggregate demand curve. C. shift the aggregate demand curve to the right. D. shift the aggregate demand curve to the left. This is the correct answer. Expansionary monetary policy will: A. shift the aggregate demand curve to the left. B. move up along a stationary aggregate demand curve. C. shift the aggregate demand curve to the right. Your answer is correct. D. move down along a stationary aggregate demand curve.
T , T , D , C
Crowding out, with respect to fiscal policy, is when an increase in government purchases results in a decline in private expenditures. True Your answer is correct. False Crowding out is only when we see an increase in government purchases, not when we see a decrease. True Your answer is correct. False When the government starts running a larger deficit—which it does when it increases spending or decreases taxes (expansionary policy)—the supply curve shifts to the right and the interest rate increases. True False Correct answer. Crowding out makes it easier to estimate the actual multiplier effect. True False Your answer is correct.
T , T , F , F
Crowding out, with respect to fiscal policy, is when an increase in government purchases results in a decline in private expenditures. True Your answer is correct. False Crowding out is only when we see an increase in government purchases, not when we see a decrease. True Your answer is correct. False When the government starts running a larger deficit—which it does when it increases spending or decreases taxes (expansionary policy)—the supply curve shifts to the right and the interest rate increases. True False Your answer is correct. Crowding out makes it easier to estimate the actual multiplier effect. True False Correct
T , T , F , F
The current Federal Debt in the United States is greater than the level of GDP in the United States. True Your answer is correct. False The current Federal Debt, in total terms, is the highest it has ever been in the United States. True Your answer is correct. False For the first time in the Trump administration, the US ran a budget surplus in 2019 True False Your answer is correct. Under the Trump administration, the total Federal Debt in the United States decreased. True False Correct
T , T , F , F
Some economists argue that because increases in government spending crowd out private spending, increased government spending will reduce the long-run growth rate of real GDP. a. This is most likely to happen if the private spending being crowded out is investment spending. b. In terms of its effect on the long-run growth rate of real GDP, it is likely to matter more if the additional government spending involves A. increased spending on the national parks. B. increased spending on highways and bridges. Your answer is correct. C. both would have the same impact on long-run growth in real GDP. D. neither matters to long-run growth in real GDP.
investment spending , B
Look at the following statements. Choose whether the statement is a microeconomic or a macroeconomic issue. a. The effect of higher cigarette taxes on the quantity of cigarettes sold. This is a microeconomic issue. b. The effect of higher income taxes on the total amount of consumer spending. This is a macroeconomic issue. c. The reasons for the economies of East Asian countries growing faster than the economies of sub-Saharan African countries. This is a macroeconomic issue. d. The reasons for low rates of profit in the airline industry. This is a microeconomic issue.
micro, macro, macro, micro
According to the multiplier effect, an initial decrease in government purchases decreases real GDP by more than the initial decrease in government purchases.
more than
Indicate whether each of the following is a final good, an intermediate good, or neither. Coffee beans purchased by a coffee shop Intermediate good One share of Google stock Neither A new pick-up truck purchased by a consumer Final good A new home purchased by a family Final good
.
The labor force participation rate is the percentage of the working-age population in the labor force. Suppose an economy is given by: Population = 222 million Working-age population = 135 million Labor force = 84 million The number of people employed = 78 million The number of people unemployed = 6 million The labor force participation rate for this economy is 62.2%. (Enter your response rounded to one decimal place.)
.
You were required to watch a YouTube video by Chad Jones of Stanford. Please answer the following questions based on that video. Approximately what percentage of doctors, lawyers, and managers were white men in the year 1960 A. 70% B. 90% This is the correct answer. C. 60% D. 100% E. 80% Approximately what percentage of doctors, lawyers, and managers were white men in the year 2010 A. 60% Your answer is correct. B. 70% C. 90% D. 80% E. 100% Women were _ times more likely to be a secretary in 1980 and _ times less likely to be a lawyer. 64 , 4 Growth in LF participation plus growth in GDP per worker equals the growth in GDP per person. True Your answer is correct. False
.
The level of total investment by firms in new machinery and equipment helps to determine how rapidly the economy grows. This is a macroeconomic issue. However, to understand how much new machinery and equipment firms decide to purchase, one must analyze the incentives individual firms face, which is a microeconomic issue.
1. Macro , 2. Micro
Suppose the fixed interest rate on a loan is 5.75% and the rate of inflation is expected to be 4.25%. The real interest rate is 1.5%. Suppose now that instead of 4.25%, the inflation rate unexpectedly reaches 5.5%. Who gains and who loses from this unanticipated inflation? (Mark all that apply.) A. Lenders lose from a lower real interest rate. Your answer is correct. B. Borrowers gain from a lower real interest rate. Your answer is correct. C. Borrowers lose from a lower real interest rate. D. Lenders gain from a lower real interest rate.
A & B
What index is used to measure the average prices paid by a typical family? An average of the prices of the goods and services purchased by a typical family is the: A. consumer price index (CPI). Your answer is correct. B. inflation rate index. C. producer price index (PPI). D. aggregate price level index. Suppose the economy's consumer price index (CPI) in 2008 was 186 and the CPI in 2009 was 199. The inflation rate over the period from 2008-2009 was equal to 7%. (Enter your response rounded to one decimal place.)
A , 7%
Economic growth will A. slow down or stop if more capital per hour is used because of diminishing returns to capital. Your answer is correct. B. not be affected because the key to economic growth is capital accumulation whether there are diminishing returns or not. C. be faster if more capital per hour is used because of increasing returns to capital. D. not be sustained if developing countries stop accumulating capital because of diminishing returns to capital. Some economies are able to maintain high growth rates despite diminishing returns to capital by using A. better or enhanced technology, along with accumulating capital; these economies are growing because technology, unlike capital, is subject to increasing returns. Your answer is correct. B. a newer production method that, if used properly, produces increasing returns to capital. C. a larger proportion of capital, thereby making their production capital intensive, so the sheer volume of capital protects them from diminishing returns to capital. D. a labor-intensive technology because labor, unlike capital, is not subject to diminishing returns.
A , A
Which of the following is the definition of the new growth theory? A. a model of long-run economic growth that emphasizes that technological change is influenced by economic incentives Your answer is correct. B. a growth model that focuses on growth in the ratio of capital to labor as the key factor in explaining long-run growth in real GDP per capita C. a model of long-run economic growth that emphasizes that increases in technology are difficult to explain D. the economic growth model that was first developed in the 1950s by Robert Solow, an economist at MIT and winner of the Nobel Prize in Economics When are additions to knowledge capital subject to diminishing returns? A. when the additions are due to improved education for workers B. when we look only at their effect on an individual firm This is the correct answer. C. when those additions don't involve advances in basic science D. when we look at their effect on the economy as a whole Which of the following is not a government policy that will increase the accumulation of knowledge capital? A. subsidizing research and development B. encouraging the growth of labor unions Your answer is correct. C. protecting intellectual property with patents and copyrights D. subsidizing education
A , B , B
To answer this question you must have listened to the podcast Surprisingly Awesome -- Interest Rates and taken notes. a. After the Dutch legalized interest and set up borrowing and lending areas, they A. became the richest country in the world. Your answer is correct. B. lost independance to Spain. C. quickly made interest illegal again. D. fell deep into debt. b. What movie is being filmd in New Orleans while this podcast is being recorded? A. Bridge of Spies B. The Big Short Your answer is correct. C. The Wolf on Wall Street D. Sisters c. According to this podcast, how did the rich Italians get so rich? A. They robbed churches of their donations. B. They charged interest on loans. Your answer is correct. C. They bought and sold silver and gold. D. They manipulated the currency markets. d. The base interest rate in the US is called the: A. reverse repurchase rate. B. federal funds rate. Your answer is correct. C. mortgage rate. D. discount rate.
A , B , B , B
An article in the Wall Street Journal notes, "Productivity improvements are a key ingredient for the U.S. economy to maintain a 3% growth rate, a goal of the Trump administration." Source: Eric Morath, "U.S. Worker Productivity Advances at Best Rate since 2010," Wall Street Journal, May 2, 2019. a. What economic variable was the Trump administration hoping would grow at a rate of 3 percent per year? A. Real GDP This is the correct answer. B. Real income C. Nominal GDP Your answer is not correct. D. Saving rate b. What is the connection between productivity growth and growth in the variable you identified in part (a)? Productivity refers to ____________, and increases in productivity are a key determinant of this variable's growth rate. A. the ability of workers to produce a good or service at the lowest possible cost B. the amount of income that can be earned per worker or per hour of work C. the quantity of goods and services that can be produced per worker or per hour of work Your answer is correct. D. the quantity of capital available to workers per hour of work
A , C
When the economy is at full employment, which types of unemployment remain? A. frictional and structural This is the correct answer. B. frictional and cyclical C. cyclical and structural D. None of the above. Full employment means that there is no unemployment, so the unemployment rate would be zero. The "normal" underlying level of unemployment in the economy is A. the sum of structural unemployment and frictional unemployment. B. the full-employment rate of unemployment. C. the natural rate of unemployment. D. All of the above. Correct
A , D
The following questions are related to your required reading in the Wall Street Journal titled, The Fed's Point Man on Productivity. Since 2004, total facot productivity growth has been A. lower than 1% but greater than 0%. This is the correct answer. B. negative. C. higher than 2%. D. higher than 1% but lower than 2% Your answer is not correct. True or False: The technology boom of the 1990s did not help business become more efficient because the benefits of tech innovations flow more to leisure activities, such as social media and smartphone apps. True False Correct
A , F
The financial system of a country is important for long-run economic growth because A. firms that use the financial system predominantly are being reckless. B. firms need the financial system to acquire funds from households. Your answer is correct. C. people can increase their wealth very quickly under a healthy financial system. D. most firms rely on their own retained earnings and do not use the financial system.
B. firms need the financial system to acquire funds from households.
When looking at output & production, you are given a simplified exam in the Canvas readings. What what that example? A. A T-shirt Factory B. A Brewery C. A Fastfood Restaurant D. A Farmers' Market
A. A T-shirt Factory
Which groups tend to have above-average unemployment rates, and which groups tend to have below-average unemployment rates? Consider the following choices. Which one is NOT accurate? A. Black teenagers as a group have lower unemployment rates than white teenagers. This is the correct answer. B. Black adults have above-average unemployment rates. C. Generally, teenagers as a group have higher unemployment rates than adults. D. White adults have below-average unemployment rates.
A. Black teenagers as a group have lower unemployment rates than white teenagers.
In this lesson, we introduced one way of measuring the price level. That was by using the: A. Consumer Price Index (CPI) Your answer is correct. B. Unemployment Index (UI) C. GDP Deflator D. Producer Price Index (PPI) The inflation rate is equal to: A. the difference in the price level over the past year. B. the percentage change in the price level of the past month. C. the percentage change in the price level over the past year. Your answer is correct. D. the difference in the price level over the past month.
A. Consumer Price Index (CPI) C. the percentage change in the price level over the past year. Your answer is correct.
When planned aggregate expenditure is less than real GDP, as in the diagram to the right, what happens to firms' inventories? A. Inventories accumulate if production is not scaled back. Your answer is correct. B. Inventories fall if production is not scaled back. C. Inventories fall as firms increase output. D. Inventories accumulate as firms increase production.
A. Inventories accumulate if production is not scaled back.
We refer to data on the economy as:
A. economic indicators Your answer is correct. B. economic collections C. economic pieces D. economic secrets A
When aggregate expenditure is greater than GDP, A. inventories fall, and GDP and employment increase. Your answer is correct. B. inventories rise, and GDP and employment decrease. C. inventories are unchanged, and the economy is in macroeconomic equilibrium. D. Not enough info
A. inventories fall, and GDP and employment increase.
Which of the following was not one of the three biggest in macroeconomics talked about in the Canvas readings?
A. output & production B. employment C. prices D. money D
On the graph of the consumption function, the horizontal axis measures _______, while the vertical axis measures _______. A. real national income or real GDP; real consumption spending Your answer is correct. B. real GDP; real aggregate expenditure C. real disposable income; real national income D. real consumption spending; real national income
A. real national income or real GDP; real consumption spending
Scarcity means that resources are ______ and our wants as a society are _______.
A. limited; unlimited Your answer is correct. B. unlimited; limited C. limited; limited D. unlimited; unlimited A
Consider each of the following events and then figure out how each of these events will affect the aggregate demand curve. a. An increase in the price level will cause a movement up along the aggregate demand curve. b. An increase in government purchases will cause a rightward shift of the aggregate demand curve. c. An increase in state income taxes will cause a leftward shift of the aggregate demand curve. d. An increase in interest rates will cause a leftward shift of the aggregate demand curve. e. A faster income growth in other countries will cause a rightward shift of the U.S. aggregate demand curve.
A. Movement up Along B. Rightward shift of C. Leftward shift of D. Leftward shift of E. rightward shift of
Capital can be differentiated between physical capital and human capital. Human capital is A. the energy use to bring together the factors of production to produce goods and services. B. the knowledge and skills workers acquire from education and training or from their life experiences Your answer is correct. C. the new developments in machinery and software. D. the goods manufactured to produce other goods and services. Which of the following is the best example of human capital? A. a manager buys workers more personal computers B. a worker gets a college degree Your answer is correct. C. a manager devotes more spending to research and development D. a worker pays less taxes
B , B
All of the following are problems in measuring the unemployment rate except that A. discouraged workers are not included in the labor force. B. people on active military service are included as unemployed. This is the correct answer. C. part-time workers are included as employed. D. lack of verification of people's responses in the household survey. When there are workers that drop out of the labor force, the official BLS measure of the unemployment rate _ the true degree of unemployment. understates
B , Understate
Generally, during the business cycle, which of the following is true for unemployment and inflation? A. During a recession, unemployment and inflation decrease. B. During an expansion, unemployment falls and inflation increases. This is the correct answer. C. During an expansion, unemployment and inflation increase. D. During a recession, unemployment and inflation increase. On FRED, the shaded areas represent expansions. True False
B. During an expansion, unemployment falls and inflation increases. This is the correct answer. , False
In most countries, political stability has little to do with economic growth. A. True B. False Correct
B. False
The main way economists measure output and production is through: A. The unemployment rate (U-3) B. Gross Domestic Product (GDP) C. Consumer Price Index (CPI) D. Gross National Product (GNP)
B. Gross Domestic Product (GDP)
Which of the following statements regarding net exports is not correct? A. Net exports consist of exports minus imports. B. Net exports are typically one of the largest components of aggregate expenditure. This is the correct answer. C. Net exports are directly impacted by decisions made by consumers outside the domestic economy. D. Net exports are the one component of aggregate expenditure that can have a negative value.
B. Net exports are typically one of the largest components of aggregate expenditure.
According to the Page One Economics article posted by the St. Louis Fed titled How Do Imports Affect GDP that you were required to read for this week, addressed which of the following topic? A. How imports decrease a country's GDP. Your answer is not correct. B. The misconceptions about how imports affect overall GDP. This is the correct answer. C. How imports are difficult to measure in GDP. D. How imports increase a country's GDP.
B. The misconceptions about how imports affect overall GDP. This is the correct answer.
When business taxes increase, the equilibrium interest rate decreases and the equilibrium quantity of loanable funds decreases. What will be the effect of an increase in business taxes on the quantity of investment by firms and the economy's capital stock in the future? A. The quantity of investment will increase and the economy's future capital stock will decrease. B. The quantity of investment will decrease and the economy's future capital stock will decrease. This is the correct answer. C. The quantity of investment will increase and the economy's future capital stock will increase. D. The quantity of investment will decrease and the economy's future capital stock will increase.
B. The quantity of investment will decrease and the economy's future capital stock will decrease.
Business cycles are A. all roughly the same in duration and severity. B. alternating periods of expanding and contracting economic activity, which are usually illustrated using movements in real GDP. This is the correct answer. C. alternating periods of smoothly expanding and contracting economic activity, which are usually illustrated using movements in nominal GDP. D. alternating periods in which real GDP increases in an expansion to a business cycle trough and then decreases in a recession to a business cycle peak.
B. alternating periods of expanding and contracting economic activity, which are usually illustrated using movements in real GDP. This is the correct answer.
The line that represents the relationship between consumption and disposable income is called the _. The slope of the this line is the _. A. disposable income function; marginal propensity to consume B. consumption function; marginal propensity to consume Your answer is correct. C. disposable income function; marginal propensity to save D. consumption function; marginal propensity to save
B. consumption function; marginal propensity to consume
Microeconomics is the study of A. the economy as a whole, including topics such as inflation, unemployment, and economic growth. B. how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices. Your answer is correct. C. how individuals make good decisions for themselves but hurt society. D. how individuals and firms act altruistically to better society.
B. how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices. Your answer is correct.
What is the rule of 70? The rule of 70 A. is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to increase by two hundred percent. B. is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to double. Your answer is correct. C. is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to quadruple. D. states when an individual can be eligible for full social security benefits. If real GDP per capita grows at a rate of 6.2 percent per year, it will take 11.3 years to double. (Enter your response rounded to one decimal place.)
B. is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to double.
Why do economists believe that setting a goal of zero percent unemployment is not feasible or desirable? Creating a goal of zero percent unemployment for an economy is not feasible nor is it desirable because A. the economy always experiences cyclical unemployment even if the economy were operating at the full-employment level of output. B. the economy needs some short-term unemployment in order to allow for better matching of jobs with workers that possess the proper skill sets. This is the correct answer. C. workers lose jobs due to changes in output of goods and services in the economy. D. many people retire each year and therefore they become unemployed making changes to the unemployment rate.
B. the economy needs some short-term unemployment in order to allow for better matching of jobs with workers that possess the proper skill sets.
If the price level increases, then A. the aggregate demand curve will shift to the left. B. there will be a movement up along a stationary aggregate demand curve. Your answer is correct. C. the aggregate demand curve will shift to the right. D. none of the above will occur.
B. there will be a movement up along a stationary aggregate demand curve.
Transfer payments are not included in GDP calculations because A. transfer payments come from taxes and government expenditures so they are already included in government purchases. B. transfer payments are simply transfers of income from one group to another and not a purchase of a new good or service. This is the correct answer. C. transfer payments do not include movements of income between countries so they should only be included in foreign country GDPs. D. None of the above because transfer payments are included in GDP.
B. transfer payments are simply transfers of income from one group to another and not a purchase of a new good or service.
Which of the following is included in the economist's definition of investment? A. the purchase of a share of stock B. the purchase of a rare coin or a deposit in a savings account C. the purchase of new machines, factories, or houses Your answer is correct. D. All of the above. In calculating GDP, which levels of government spending are included in government purchases? A. spending by federal, state, and local governments Your answer is correct. B. spending by the federal government and some state governments, but not local governments C. spending by governments only on national security, social welfare, and other national programs D. spending by the federal government only
C , A
Which of the following is not a main determinant of net exports? A. The exchange rate between the dollar and other currencies. B. The growth rate of GDP in the United States relative to the growth rates of GDP in other countries. C. Expectations of future profitability in the United States. Your answer is correct. D. The price level in the United States relative to price levels in other countries. How would an increase in the growth rate of GDP in Canada and Mexico affect U.S. net exports? An increase in the growth rate of GDP in Canada and Mexico will A. increase U.S. net exports by increasing exports to these countries. Your answer is correct. B. have no effect on U.S. net exports. C. decrease U.S. net exports by increasing exports to these countries. D. increase U.S. net exports by decreasing imports from these countries.
C , A
The following questions are related to the New York Magazine article titled, There's Deflation, But You're Probably Not Enjoying Lower Prices. a. The BLS inflation data for April 2020 showed which of the following? A. Consumer prices rose 0.8 percent from a month earlier. B. Consumer prices fell 0.8 percent from a year earlier. C. Consumer prices fell 0.8 percent from a month earlier. Your answer is correct. D. Consumer prices rose 0.8 percent from a year earlier. b. Which of the following part of CPI seemed to have fallen the most according to the data? A. airfare B. eggs Your answer is not correct. C. retail gasoline This is the correct answer. D. apparel c. Food prices, like fuel prices, tend to be sensitive to shocks on the supply side, which is a reason why monetary policy-makers tend to look at a "core inflation" statistic that excludes food- and fuel-price changes. True Your answer is correct. False d. According to this article, the inflation statistic from April 2020 is likely materially higher than it really should be, if you're trying to measure prices as experienced by consumers. True False Correct
C , C , T , F
The three types of unemployment are A. voluntary, structural, and cyclical unemployment. B. natural, unnatural, and cyclical unemployment. C. frictional, structural, and cyclical unemploment. This is the correct answer. D. full, frictional, and involuntary unemployment. The type of unemployment most likely to result in hardship for the people who are unemployed is A. frictional because people need to find a new job in the labor market. B. cyclical because people have to wait for a recession to end. C. cyclical and frictional because these two types are closely related. D. structural because this type of unemployment requires retraining to acquire new job skills. Correct
C , D
Please answer the following two questions based off of your required reading in The Economist titled Why a dawn of technological optimism is breaking. How many reasons did this article give as to why the "great stagnation" may be ending? A.1 B.2 C.3 Your answer is correct. D.4 This article believes that governments should play an important role in seeing the future increase in techology and productivity. True Your answer is correct. False
C , T
A company lowered the prices of its products, expecting an increase in demand and sales by at least 10 percent. However, sales increased by only 4 percent. Which of the following, if true, can explain this outcome? A. Most consumers feel that, on average, the company's products have better features than what rival firms offer. B. Almost 30 percent of the company's output is exported. C. The government increased personal income tax rates earlier this year. Your answer is correct. D. The company launched a new product this year. E. The company sells its products online through multiple web sites to lower its operating costs.
C. The government increased personal income tax rates earlier this year. Your answer is correct.
A politician makes the following argument: "The economy would operate more efficiently if frictional unemployment were eliminated. Therefore, a goal of government policy should be to reduce the frictional rate of unemployment to the lowest possible level." Eliminating all frictional unemployment A. will not be good for the economy since the presence of frictional unemployment decreases job creation. B. will be good for the economy because the total unemployment will fall. C. will not be good for the economy since the presence of frictional unemployment increases economic efficiency. This is the correct answer. D. will be good for the economy since the presence of frictional unemployment increases job destruction.
C. will not be good for the economy since the presence of frictional unemployment increases economic efficiency.
From June 2009 to June 2019, the Standard & Poor's Index of 500 stock prices increased by more than 300 percent, while the consumer price index increased by less than 18 percent. These changes would have caused A. a decrease in the real value of household wealth, which shifted the aggregate demand curve to the left. B. a decrease in the real value of household wealth, which shifted the aggregate demand curve to the right. C. an increase in the real value of household wealth, which shifted the aggregate demand curve to the left. D. an increase in the real value of household wealth, which shifted the aggregate demand curve to the right. Correct
D. an increase in the real value of household wealth, which shifted the aggregate demand curve to the right.
Which of the following equals the amount of public saving? A. Government transfer payments to household minus the sum of government tax revenue and government purchases. B. The sum of government purchases and government tax revenue, minus transfer payments to households. C. The sum of government tax revenue, government purchases, and government transfer payments to households. D. Government tax revenue minus the sum of government purchases and transfer payments to households. Your answer is correct. A government that collects more in taxes than it spends experiences A. a budget surplus. Your answer is correct. B. an increase in the national debt. C. a budget balance. D. a budget deficit.
D , A
The accumulation of knowledge capital can slow down due to firms underinvesting in research and development. This can then cause slowing of economic growth. Which of the following would be a reason for this to happen? A. research and development are expensive and at the firm level, it is subject to increasing returns. B. knowledge capital is both rival and excludable, and no other firms can freely access the research and development of one particular firm. C. they can save that money and invest in capital accumulation, which is much better for growth. D. knowledge capital is both nonrival and nonexcludable; other firms can freely access the research and development of one particular firm. Your answer is correct. Government policy can increase the accumulation of knowledge capital in all the following ways except by: A. subsidizing research and development. B. investing in physical capital accumulation. Your answer is correct. C. subsidizing education. D. protecting intellectual property with patents and copyrights.
D , B
What are the four main determinants of investment? A. Disposable income, interest rates, taxes and cash flow. B. Expectations of future profitability, interest rates, disposable income and cash flow. C. Expectations of future profitability, interest rates, exchange rate and cash flow. D. Expectations of future profitability, interest rates, taxes and cash flow. Your answer is correct. How would an increase in interest rates affect investment? A. Real investment spending may increase, decrease or remain the same depending on the rate of inflation. B. Real investment spending declines. Your answer is correct. C. Real investment spending increases. D. Real investment spending remains unchanged.
D , B
In determining whether to borrow funds, firms compare the rate of return they expect to make on an investment with A. the initial cost of the investment. B. the total amount of profit they expect to make from the investment. C. the revenue expected from the investment. D. the interest rate they must pay to borrow the necessary funds. This is the correct answer. Which of the following factors determines the supply of loanable funds? A. the quantity of stocks and bonds issued by firms B. the willingness of households and governments to save This is the correct answer. C. changes in the interest rate, which cause firms to undertake more or fewer investment projects D. the number of financial intermediaries available Holding all else constant, a federal government budget deficit will A. increase the demand for loanable funds and increase the equilibrium real interest rate. B. decrease the supply of loanable funds and increase the equilibrium real interest rate. This is the correct answer. C. increase the supply of loanable funds and decrease the equilibrium real interest rate. D. decrease the supply of loanable funds and decrease the equilibrium real interest rate.
D , B , B
Your week 5 reading titled, The Costs of Being Poor, was published by the Centre on Poverty & Social Policy from which university? A. UPenn B. Penn State C. Harvard D. Columbia Your answer is correct. The findings of this study shows that, when adjusted for inflation, we see 3.2 million more people living in poverty in 2018. True Your answer is correct. False Which of the following income quintile's did not experience inflation inequality when it came to measuring their income growth? A. Income Quintile 5 This is the correct answer. B. Income Quintile 3 C. Income Qunitile 1 D. All were negatively affected E. None were negatively affected Jaravel's research shows that, at least in recent years, inflation is steeper at the top of the income distribution. True False Correct
D , T , A , F
Real GDP per capita is often used as a measure of general well-being. While increases in real GDP often do lead to increases in the well-being of the population, why is real GDP not a perfect measure of well-being? A. The costs of pollution are not included. B. GDP does not include crime rates or income distribution. C. The value of leisure is not included. D. All of the above.
D. All of the above.
Which of the following is not an explanation for why firms keep inventories? A. Because customers do not purchase goods at regular intervals, inventories allow firms to have goods in stock when customers want to buy. B. Firms keep inventories in order to provide customers with a wider selection of choices. C. Inventories allow firms a place to store excess production if they incorrectly estimate the quantity that consumers wish to purchase. D. Because goods are produced in quantities that match the exact amounts consumers want to purchase at a given time. Correct
D. Because goods are produced in quantities that match the exact amounts consumers want to purchase at a given time.
Suppose that the economy enters into a recession and that, as a result, Rusty Z. Wrench loses his job as a delivery truck mechanic and remains unemployed. When the economy recovers, Rusty's previous employer rehires him. What is the best classification for his time as an unemployed truck mechanic? A. Seasonally unemployed B. Frictionally unemployed C. Structurally unemployed D. Cyclically unemployed Correct
D. Cyclically unemployed
Briefly explain whether you agree or disagree with the following statement: "I don't believe the government price statistics. The CPI for 2018 was 218, but I know that the inflation rate couldn't have been as high as 118 percent in 2018." A. Agree. A CPI of 218 is a 118% increase in the price level from the base year. The inflation rate in 2018 is 118%. B. Disagree. The inflation rate is always the same as the natural rate of unemployment, which is about 5%. C. Agree. A CPI of 218 is a 118% increase from 100, which is impossible. D. Disagree. The inflation rate is the percentage increase in the price level from the previous year, not the base year. Correct
D. Disagree. The inflation rate is the percentage increase in the price level from the previous year, not the base year.
Indicate whether the following statement is true or false and why. "A wage rising slower than the rate of inflation is actually falling." A. True. If wages are increasing slower than the average price of goods and services, purchasing power increases. B. False. A higher wage increases purchasing power regardless of inflation. C. False. A higher wage decreases purchasing power regardless of inflation. D. True. If wages are increasing slower than the average price of goods and services, purchasing power falls. Correct
D. True. If wages are increasing slower than the average price of goods and services, purchasing power falls.
The unemployment rate that includes discouraged workers and people working part-time who would prefer full-time jobs A. is lower than the official unemployment rate, but the difference between the two grows smaller in recessions. B. is lower than the official unemployment rate, and the difference between the two grows larger in recessions. C. is higher than the official unemployment rate, but the difference between the two grows smaller in recessions. D. is higher than the official unemployment rate, and the difference between the two grows larger in recessions.
D. is higher than the official unemployment rate, and the difference between the two grows larger in recessions.
Gross Domestic Product (GDP) is A. the value of all expenditures made by households and firms in a country during a period of time. B. the amount of income generated from wages, rents, and profits in a country during a period of time. C. the quantity of all final goods and services produced in a country during a period of time. D. the market value of all final goods and services produced in a country during a period of time. Your answer is correct. Consumption is the largest component of GDP in the US. True Your answer is correct. False
D. the market value of all final goods and services produced in a country during a period of time. True
According to your required reading titled, On the Persistence of the Black-White Unemployment Gap, the Black unemployment rate is consistently _______ the White unemployment rate in the US. A. three times B. one-and-a-half times C. below D. twice Correct
D. twice
According to the Freakonomics Podcast you were required to listen to titled How Deep Is the Shadow Economy?, roughly 1 in how many dollars in the world is part of the shadow economy? A.3 B.4 C.6 D.5
D.5
If prices steadily increase year over year, which of the following must be true? A. Nominal GDP will always increase year over year. B. Real GDP is higher than nominal GDP in years after the base year. C. Nominal GDP is higher than real GDP in years before the base year. D. Real GDP will always increase year over year. E. None of these are correct Your answer is correct. If production steadily increases year over year, which of the following must be true? A. Real GDP is higher than nominal GDP in years after the base year. B. Nominal GDP is higher than real GDP in years before the base year. C. Nominal GDP will always increase year over year. D. Real GDP will always increase year over year. Your answer is correct. E. None of these are correct If production and prices steadily increase year over year, which of the following must be true? A. Nominal GDP is higher than real GDP in years after the base year. B. Nominal GDP will always increase year over year. C. All of these are correct This is the correct answer. D. Real GDP will always increase year over year. E. None of these are correct
E , D , C
We say that the economy as a whole is in macroeconomic equilibrium if A. total spending equals GDP. B. aggregate expenditure equals GDP. C. aggregate expenditure equals total production. D. total spending equals total production. E. all of the above. Correct
E. all of the above.
Inflation focuses on individual prices and not the price level as a whole. True False Your answer is correct. The _________ is the most well-known publisher for data on prices. A. Federal Reserve Economic Database (FRED) B. Bureau of Labor Statistics (BLS) This is the correct answer. C. Bureau of Econonomic Analysis (BEA) D. National Bureau of Economic Research (NBER)
False, B. Bureau of Labor Statistics (BLS)
On a 45°-line diagram (or Keynesian Cross), the horizontal axis measures real GDP, while the vertical axis measures real aggregate expenditure. The aggregate expenditures line will be A. upward sloping with a flatter slope than the 45°-line. Your answer is correct. B. upward sloping with a steeper slope than the 45°-line. C. horizontal at the equilibrium level of aggregate expenditures. D. downward sloping. The macroeconomic equilibrium will be A. where the AE line intersects the 45°-line. Your answer is correct. B. at the graph's origin. C. anywhere on the AE line. D. anywhere on the 45°-line.
Real GDP & Real Ag Ex , A , A
The Bureau of Economic Analysis (BEA) is part of the Department of Labor.
True False F
When data are seasonally adjusted they are adjusted to remove seasonal variation in the data.
True False T
The real interest rate A. is the interest rate that adjusts GDP for changes in prices. B. is equal to the nominal interest rate minus the inflation rate. Your answer is correct. C. is the interest rate that is quoted on a financial debt and a firm's assets. D. is equal to the inflation rate minus the nominal interest rate. Suppose an economy has an inflation rate of 3.1% and a bank makes a loan with an interest rate of 6.4%. In this case, the real interest rate is 3.3%. (Enter your response rounded to one decimal place.)
is equal to the nominal interest rate minus the inflation rate. loan - inflR8
In the 3rd quarter, 2020, the US RGDP was reported to increase at a seasonally and inflation-adjusted 33.1% annual rate, a record increase. True Your answer is correct. False When the BEA reports the GDP data from a quarter, they are reporting what a full year would look like (again, adjusting for both inflation and seasonality effects) if this quarterly production occurred. True Your answer is correct. False RGDP in the US declined at an annualized rate by about 31% in the second quarter, 2020. It then increases at an annualized rate by about 33% in the third quarter. Thus, the US RGDP has increases slightly over the 2nd and 3rd quarters of 2020. True False This is the correct answer. The two articles you had to read regarding the increase/decrease of GDP during last two quarters were on which website? A. Medium Your answer is correct. B. Wall Street Journal C. The Economist D. New York Times A Medium
yes
