Exam 3 (MC)
If Lola is classified as a discouraged worker, she is
not part of the labor force
A barter transaction involves exchanging
one good for another good
A rancher raises alpaca. Once a year, he shears them and sells the raw wool to a processor who spins it into yarn. The yarn is then sold to a mill which produces and sells alpaca sweaters. In calculating GDP we would count
only the sweaters
Nominal GDP increases over time because
production and prices increase over time
At higher interest rates the:
quantity demanded of money is lower
Prices that do not always adjust rapidly to maintain equality between quantity supplied and quantity demanded are
sticky prices
Ashley received a federal income tax refund of $1,000 in May 2012. Ashley put this money in a saving account so that she could spend it when she goes on vacation in July 2012. This is an example of money saving as a
store of value
Macroeconomics
studies the behavior of the economy as a whole
Lyndon Johnson's policies during the 1960s can best be described as
the "Great Society"
The federal debt is the
total amount owed to the public by the federal government
Timmy started looking for another job immediately after he lost his current job. As a result the
unemployment rate increases
A decrease in the overall price level is
deflation
A currency that is not backed by gold, silver, or any other precious commodity equal to the face value of the money is know as
fiat money
The Federal Reserve Bank for St. Mary's County, MD is located in
Richmond, VA
The short-term ups and down in the level of economic activity is known as a
business cycle
Real GDP increases over time because
production increases over time
the federal deficit is the
yearly federal expenses minus the yearly federal tax revenues
Three monetary policy tools of the fed reserve
1) changing the required reserve ratio: changing the portion of deposits that banks must hold. lower reserves increase bank loans and the money supply 2) changing the discount rate: changing interest rates that the Fed changes banks for loans 3) open market operations (primary tool): buying and selling treasury bonds in the open market
The current Chairman of the Federal Reserve Board of Governors is
Ben Bernanke
The Consumer Price Index is generated monthly by the
Bureau of Labor Statistics
If a firm purchased equipment that is to be used to manufacture goods for export, it should be included in which component of GDP
Gross Private Domestic Investment
Stagflation occurs when the economy's inflation rate is ____ and the unemployment rate is ______
high; high
Inflation refers to an _____ in the overall _____ level
increase; price
Personal taxes are the _____ in the federal government's budget
largest revenue source
Structural Deficit
The deficit that remains at full employment
How many Federal Reserve Governors are there in Washington DC at the Board of Governors
7
Hyperinflation
A period of very rapid increase in the overall price level
Consumer Price Index
A price index computed each month by the Bureau of Labor Statistics using a bundle that is meant to represent the "market basket" purchased monthly by the typical urban consumer
Which of the following is not conducted by the Federal Reserve System?
All are conducted by the Fed
Demand deposits are included in which measure of money
M1 and M2
A progressive income tax is an example of
an automatic stabilizer
Tight monetary policy refers to Fed policy that
contracts the money supply
Gross domestic product calculations count only final goods and services because
counting all goods and services would lead to double counting of many activities
The natural rate of unemployment does not include
cyclical unemployment
