Exam 1 - Macroeconomics
If currency held by the public equals $500 billion, reserves held by banks equal $100 billion, and bank deposits equal $1 trillion, then the money supply equals:
$1.5 trillion
If the GDP deflator in 2009 equals 1.25 and nominal GDP in 2009 equals $15 trillion, what is the value of real GDP in 2009?
$12 trillion
If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is $741, and government purchases are $1,098, then net exports are:
-$31
If the consumption function is given by C = 150 + 0.85Y and Y increases by 1 unit, then personal saving increases by:
0.15 units
If the consumption function is given by C = 500 + 0.5(Y-T), and Y is 6,000 and T is given by T = 200 + 0.2Y, then C equals:
2,800
If real GDP grew by 6% and population grew by 2%, then real GDP per person grew by approximately ______ percent
4
If income is 4,800, consumption is 3,500, government spending is 1,000, and taxes minus transfers are 800, private saving is:
500
If households and businesses fear a banking crisis where they worry that some banks may fail, what is a likely consequence:
C/D ratio increases and money multiplier falls
If output is described by the production function Y = AK^0.2L^0.8, then the production function has:
Constant returns to scale
In the long run, the level of national income in an economy is determined by its:
Factors of production and production function (technology)
The Chair of the Federal Reserve is:
Jerome Powell
The Fed Funds rate is currently targeted to be:
about 5%
If bread is produced by using a constant returns to scale production function, then if the:
amounts of equipment and workers are both doubled, twice as much bread will be produced
Given that the national saving = private saving + public saving, a decrease in government's budget deficit leads to
an increase in national saving and more funds are available for businesses to borrow
To increase the money supply, the Federal Reserve:
buys government bonds
The minimum amount of owners' equity in a bank mandated by regulators is called a _____ requirement
capital
If many banks fail, this is likely to:
cause surviving banks to raise their ratios of reserves to deposits
A country that is on a gold standard primarily uses:
commodity money
Real GDP means the value of goods and services is measured in ______ prices
constant
If an increase of an equal percentage in all factors of production results in an increase in output of the same percentage, then a production function has the property called:
constant returns to scale
Nominal GDP means the value of goods and services is measured in ______ prices.
current
Liabilities of banks include
demand deposits
GDP is the market value of all ______ goods and services produced with in an economy in a given period of time
final
To compute the value of GDP:
goods and services are valued at market prices
In the circular flow diagram, firms receive revenus from the _____ market, which is used to purchase inputs in the ______ market
goods; factor
Budget deficit refers to:
government's spending minus government's revenue
When there is a fixed supply of loanable funds, an increase in investment demand results in a(n):
higher real interest rate
People use money as a store of value when they:
hold money to transfer purchasing power to the future
If government purchases exceed taxes minus transfer payments, then the government budget is:
in deficit
With given Y, when government spending increases and taxes are increased by an equal amount, interest rates:
increase
In the classical model with fixed income, an increase in the real interest rate could be the result of a(n):
increase in government spending
In a financial crisis when the Fed worries about money supply falling, it can try to counter that by
increasing the monetary base
In a fractional-reserve banking system, banks create money when they:
make loans
In equilibrium is a closed economy, total investment equals:
national saving
Consumption depends ________ on disposable income, and investment depends ________ on the real interest rate
positively, negatively
The currency-deposit ratio is determined by:
preferences of households over currency vs deposits, that they wish to hold
If there is no currency and the proceeds of all loans are deposited somewhere in the banking system and if rr denotes the reserve-deposit ratio, then the total money supply is:
reserves divided by rr
The monetary base is altered by
the Fed making discount loans
All of the following are a stock except: a consumer's wealth, the government budget deficit, the number of unemployed people, the amount of capital in the economy
the government budget deficit
If you hear in the news that the Federal Reserve conduction open-market purchases, then you should expect ________ to increase
the money supply
The real wage will increase if:
the productivity of labor increases
The GDP deflator is equal to:
the ratio of nominal GDP to real GDP
Classical distribution theory is
the systematic attempt to account for the sharing of the national income among the owners of the factors of production—land, labour, and capital.
Which of the following is a stock variable: Wealth, consumption, investment income, income
wealth
If banks are fearful that their borrowers may default or that a bank run is possible, a likely consequence is that
R/D ratio may rise and banks make fewer loans
All of the following actions are investments in the sense of the term used by macroeconomists except: IBM's building a new factory, Corner candy store's buying a new computer, John Smith's buying a newly constructed home, Sandra Santiago's buying 100 shares of IBM stock
Sandra Santiago's buying 100 shares of IBM stock
Suppose the Fed lowers interest rate but investment falls, this is a case of:
a downward shift of the investment curve
The national income accounts identity, for an open economy, is:
Y = C + I + G + NX
If the production function describing an economy is Y = 100 K^0.25 L^0.75, then the share of output going to labor:
is 75%
With a Cobb-Douglas production function, the share of output going to labor:
is independent of the amount of labor