Exam 3
the price level
A change in _____ results in a movement along the short-run aggregate supply curve but does not shift te short-run aggregate supply curve
Military Account
A country's balance of payments accounts include all of the following EXCEPT:
the aggregate demand curve shifts leftward
A key issue in the presidential election of 2012 between President Obama and Mr. Romney concerned tax rates. President Obama favored increasing taxes, especially on the rice. As a result of a tax increase,
deppreciates
According to the same table, Canadian dollar ___ against the US dollar, and
the price level and the quantity of real GDP suppllied
An aggregate supply curve depicts the relationship between (asking for axes)
an increase in autonomous expenditure
An increase in investment by US firms that is intended to maintain US competitiveness in world markets represents ______ in the US (an increase in autonomous expenditure, a decrease in autonomous expenditure, an increase in induced expenditure, a decrease in induced expenditure)
An appreciation
An increase in the value of a domestic currency in terms of other currencies is known as:
There is an upward movement along the supply curve for dollars
Consider the market for dollars. If the exchange rate rises from 2 pesos per dollar to 4 pesos per dollar
above; supplied; demanded; fall
Consider the market for euros. Suppose the exchange rate is ____ its equilibrium. This means that the quantity of euros ______ is greater than the quantity of euros ______ and the exchange rate will _______
Aggregate income minus taxes plus transfer payments
Disposable income is equal to:
Market value of FINAL goods and services produced in a country during a given time period
Gross Domestic Product (GDP) measures the:
A flexible exchange rate
If a nation's central bank increased domestic interest rates, the nation's exchange rate would change if the country's exchange rate was a _______________.
0.8
If consumption expenditures for a household increase from $1000 to $1800 when disposable income rises from $1000 to $2000, the marginal propensity to consume is:
225
If the basket of goods and services used to calculate the CPI cost $200 in the reference base period and $450 in a later year, the CPI for the latter year equals ______
real GDP equals potential GDP
If the economy is at a long run equilibrium then (what is the relationship of real GDP and potential GDP)
demand for dollars will increase
If the interest rate on Japanese yen assets falls while interest rates in the US remain constant
Interest Rate Parity
If there are equal rates of return between assets in two currencies, then there is:
I. interest rates around the world III. The expected future exchange rate
Important factors that change the demand for dollars and hence shift the demand curve for dollars include which of the following:
Keynesian economists
In 2009, just after taking office, Pres. Obama approved an $800 billion stimulus package of tax cuts and increased gov't spending to combat the recession brought on by the financial crisis of 2007. Which group of economists most approved of Pres. Obama's actions?
Point E
In the figure above, suppose the economy is initially at Point A. The interest rate in Japan rises relative to the interest rate in the US. As a result, there will be a change from Point A to a Point such as:
Did not change, increased
Last year in the country of Union, the price level increased and the real GDP increased. Such an outcome might have occurred because short-run aggregate supply _______________ and aggregate demand __________________.
the SAS and AD curves
Short-run equilibrium occurs at the intersection of (the SAS and AD curves, the SAS, LAS, and AD curves, the SAS and LAS curves, the LAS and AD curves)
950 million yuan
Suppose China Airlines wants to purchase a French airbus. The price of the Airbus is 95 million Euro. If the exchange rate is 1 euro per 10 yuan, the price of this airplane to China Airlines is
buys US dollars today because it expects profit from buying US dollars and holding them
Suppose Mitsubishi Bank expects the exchange rate to be 125 yen per US dollar at the end of the year. If today's exchange rate is 120 yen per US dollar, Mitsubishi bank:
Prices rose 43.6 percent over the reference base period, on average
Suppose the CPI is 143.6. What does that number mean?
Purchasing power parity does not prevail with these prices.
Suppose the exchange rate between the US dollar adn the Mexican peso was $1 = 5 pesos. A can of Pepsi sells for $2 in Boston and for 12 pesos in Mexico City. (Does purchasing power parity prevail?)
B
Suppose the price of identical SUV $32,000 in US dollars in the US and $32,000 in Canadian dollars in Canada. In addition, the exchange rate....
Can, Can
The FED ___________ intervene in the foreign exchange market by supplying dollars and the FED ____________ intervene in the foreign exchange market by demanding dollars.
General Motors' purchases of tires for new automobiles
The calculation of the final goods and services sold in an economy would NOT include (purchase of lawnmower by household, purchase of tires from auto company, robot used to produce cars, purchase of service by household)
foreign investment in the US minus US investment abroad
The capital account measures _______. (foreign investment in the US minus US investment abroad, capital produced outside of the US minus capital produced inside the US, capital used inside the US but manufactured outside the US, ...)
at the same pace as long run.
The country of Epsilon has continuous strong economic growth and a steady price level. This situation is most likely the result of aggregate demand growing ______ aggregate supply. (same pace as long run, slower than long run, slower than short-run, faster than long run)
inventories rise and the price level falls
The data above in the table indicate that when the price level is 120...
Appreciate, more
The demand curve for US dollars slopes downward because as the dollar _________________ US goods become ______________ expensive to foreign residents, so they purchase fewer US goods, and the quantity of dollars demanded decreases.
lower the exchange rate, the greater the quantity of dollars demanded AND the higher the exchange rate, the smaller the quantity of dollars demanded
The law of demand for dollars in the foreign exchange market means that the
The relationship of the price level and real GDP when the economy is at full employment
The long-run aggregate supply curve illustrates the:
Less than $16.2 trillion
The quantity of real GDP demanded equals $16.2 trillion when the price level is 90. If the price level rises to 95, the quantity of real GDP demanded equals:
induced expenditure
The sum of the components of aggregate expenditure that vary with real GDP is called (induced expenditure, the MPC, autonomous expenditures, autonomous consumption)
deppreciated; deppreciated
The table above shows the exchange rates between various currencies and the US dollar. Between 2015 and 2016, the Japanese yen __ against the US dollar and the Euro ___ against the US dollar
Appreciates, Appreciates
The table above shows the exchange rates between various currencies and the US dollar. Between 2015 and 2016, the US dollar ______________ against the Canadian dollar and the US dollar ________________ against the Euro.
$8,403 billion
Using the data in the table above, the GDP is:
the change in consumption expenditure divided by the change in disposable income
What is the marginal propensity to consume?
0.2
When disposable income increases from $7 trillion to $7.5 trillion, consumption expenditure increase from $6.5 trillion to $6.9 trillion. The MPS is equal to
Demand, Supply
When people are holding the money of some other country want to exchange it for US dollars, they ____________ US dollars and ________________ the foreign currency.
less expensive; increase
When the US exchange rate rises, foreign goods become _____ and US imports ______
crawling peg
Which of the following exchange rate policies uses a target exchange rate, but allows the target to change? (crawling peg, flexible exchange rate, fixed exchange rate, moving target)
MPS + MPC = 1
Which of the following is true? (formula relationship between MPS and MPC)
An increase in disposable income leads to a decrease in aggregate demand
Which of the following statements if FALSE?
Monetarist
Which school of thought believes that recession are the result of inappropriate monetary policy?
Keynesian
_________ economists believe that active help from fiscal and monetary policy is needed to insure that the economy is operating at full employment
Classical
_____________ economists believe that the economy is self-regulating and always at full employment.