Macro Cumulative

If banks were required to keep 100% of deposits in reserves; they could:

Make no loans

When you use money to purchase a new car, money serves as a:

Medium of exchange

_____ is the most liquid asset in the economy

Money

When Coca Cola consumption recently decreased, the Coca Cola Company hired a survey firm to determine what was going on. The firm interviewed consumers, who said that rising Coke prices were discouraging them from purchasing Coke. This implies a:

Movement along the supply curve for Coca Cola

Time lags in the implementation of fiscal policy

Must be considered when fiscal policy is used

Stagflation is usually caused by a _____ shock

Negative supply

You are a college student and NOT working or looking for work. You are:

Not a part of the labor force

Discouraged workers are ________

Not working, want to work, but are not actively seeking a job

The labor force is the total:

Number of people who are employed or unemployed

The Federal Reserve affects interest rates through:

Open Market Operations that shift the money supply curve

The largest source of federal tax revenue is:

Personal income taxes

Probably the most important feature of deposit insurance is that it:

Protects the economy against bank runs

If the price of pepperoni (an ingredient in pizza) increases:

The supply of pizza will fall

Government spending will NOT crowd out private spending if

There is a recessionary gap

Government payments to households for which no good or service is provided in return is called:

Transfer payments

Which statement is TRUE regarding a normal good

When income increases, the demand for the good increases.

During 2010, the Republic of Bolivia recorded investment spending of $3 billion, government purchases of $3 billion, consumer spending of $7 billion, imports of $5 billion, government transfers of $1 billion, and exports of $3 billion. The Republic of Bolivia's GDP in 2010 is:

$11 billion

Which transaction is included in GDP as investment spending

Maggie buys a play-gym set for her day-care business

First National Bank has $160 million in checkable deposits, $30 million in deposits with the Federal Reserve, $10 million cash in the bank vault, and $10 million in government bonds. If the minimum reserve ratio is 20%, how much is the bank required to keep reserves

$32 million

In February 2020, the Bureau of Labor Statistics calculated the unemployment rate to be 3.5%. If frictional unemployment was 1% and the structural unemployment was 2%, then the cyclical rate of unemployment was:

0.5%

The Consumer Price Index (CPI) in 2011 was 221.6 and in 2012 was 224.6. The inflation rate between 2011 and 2012 was _____%

1.4

If the rate of unemployment is 10%, the labor force is 130 million and the population is 200 million, the number of unemployed workers is _______ million.

13

If the rate on unemployment is 10%, the labor force is 130 million and the population is 200 million, the number of unemployed workers ______ million

13

If a bank has deposits of $10,00 and reserves of $5,000, and the reserve requirement is 20%, its excess reserves are $________

3,000

Suppose that the reserve ratio is 25% the money multiplier is:

4

Use the information below on Employment Data. Full-time employed 135 million Not working but looking for work 7 million Part-time employed 20 million Discouraged workers 5 million The unemployment rate is _____%

4.3

Which statement is CORRECT

A change in quantity demanded is a movement along the demand curve, and a change in demand is a shift of the demand curve

Potential output would NOT be increased by:

A decrease in the aggregate price level

When Tayla was laid off at the beginning of 2020, she looked for a job for three months but could not find anything suitable. She then volunteered in a soup kitchen, giving up her job search. Tayla is considered to be:

A discouraged worker

Suppose that in the long run, aggregate price level falls. This could result from:

A leftward shift in aggregate demand

In the class, we've explored two significant historical factors that supported the expansion of the US Potential GDP throughout the 20th century. These historical occurrences were:

A rise in the rate of women participating in the workforce and an increase in birth rates leading to baby booms

Which asset is near-money

A traveler's check

In the Aggregate Demand/Aggregate Supply (AD/AS) model, when there is a significant increase in government spending, in the short-run, the ________ curve will shift to the ______

AD; right

A recessionary gap occurs when:

Aggregate output is below potential output

Suppose the required reserve ratio initially is 10% of bank deposits and is increased by the FED to 40% of bank deposits. Holding everything else constant, this will:

All answers are correct

The problem of scarcity applies to

All countries, regardless of income levels

The demand curve for Nike shoes has shifted to the right what could have caused this?

An increase in enthusiasm among costumers for Nike shoes as an exercise shoe

An increase in income will be reflected in the market for passionfruit as :

An increase in the demand for passionfruit if passionfruit is a normal good

Which factor will NOT cause an increase in the supply of rice krispies

An increase in the price of rice krispies

Cyclical unemployment:

Arises from a deviation of the actual unemployment rate from the natural rate of unemployment. In general, it increases during recessions and falls during economic booms

Any point inside a production possibility frontier is:

Attainable but inefficient

Why is long-run aggregate supply (LRAS) perfectly vertical in the AD/AS model

Because the LRAS does not depend on the price level

Included in M1 are:

Checkable bank deposits

The demand for bottled water decreases at a time when people believed bottled water prices will soon fall. The change in demand is most likely attributed to a change in:

Consumer expectations

The monetary base is _____ in circulation plus _____

Currency; bank reserves

An aggregate output level below potential output means

Cyclical unemployment

Contractionary fiscal policy

Decreases aggregate demand

Over the past several years, sushi has become increasingly popular among consumers. This means that the ______ sushi has ______

Demand for; increased

One factor discussed in class that affects potential Real GDP is:

Demographics

An example of a structurally unemployed worker is a(n):

Developer analyst who is laid off because his skills now can be executed by ChatGPT

The interest rates banks charge one another for overnight loans is known as:

Fed Funds rate

Reducing taxes in response to a recession is an example of _____ policy

Fiscal

Nominal GDP

Has not been adjusted for changes in prices over time

GDP counts the dollar value of only final goods and services because:

If we counted the value of all goods, we would count inputs, such as the value of steel in a new automobile, more than once

The production possibility frontier will shift outward due to a(n):

Improvement in technology

A rise in interest rates due to a decrease in the money supply will ____ aggregate demand

Increase

A rise in productivity will MOST likely result in a(n):

Increase in aggregate supply

If the interest rate on Certificate of Deposits (CDs) rises from 5% to 10%, the opportunity cost of holding money ______, and the quantity demanded of money will _____

Increase; decrease

Scarcity exists when:

Individuals can have more of a good only by giving up something else

Government purchases of goods and services _____, while changes in taxes and transfer payments _______

Influence aggregate demand directly; influence aggregate demand indirectly

If the Federal Open Market Committee conducts an open market purchase:

Interest rates will fall

The money multiplier and the required reserve ratio are:

Inversely related

What about gross domestic product is false?

It is the total output of all final and intermediate goods and services

Among the assets of the bank are:

Loans

Government borrowing will crowd out private spending if unemployment is _____ and the fiscal expansion causes a(n) ______ in incomes

Low; decrease

If the Federal Reserve wanted to increase the money supply, it could ______ the required reserve ratio and _____ government bonds through open market operations

Lower; purchase

In the Aggregate Demand/Aggregate Supply (AD/AS) model, what would be an appropriate policy response by the government given an inflationary gap

Raise tax rates to close the inflationary gap

Dividing real GDP by the population results in:

Real GDP per capita

An example of a frictionally unemployed worker is a(n):

Real estate agent who leaves a job in Texas and searches for a similar higher-paying job in California

The inflation-adjusted measure of aggregate output typically used by economists is called:

Real gross domestic product

Examples of fiscal policy DO NOT include:

Reducing interest rates by increasing the money supply

A negative supply shock leads to a(n) _______ in aggregate output and a(n) _______ in the aggregate price level

Reduction; increase

The three main monetary policy tools employed by the Federal Reserve are:

Reserve requirement, the discount rate and open market operations

In terms of dollar cost, in the United States, the three primary transfer payments are:

Social Security, Merdicare, and Medicaid

In the short-run, wages and some prices are:

Sticky

When we keep part of our wealth in a savings account, money plays the role of a(n)

Store of Value

If people demand fewer Netflix subscriptions when the price of Hulu subscriptions falls, the Netflix and Hulu are:

Substitutes

Decisions about monetary policy are made by:

The Federal Open Market Committee

In the United States during the 1970's, oil prices increased dramatically and shifted;

The SRAS curve to the left

Macroeconomics entails the study of:

The aggregate economy as a whole

If goods A and Z are compliments, a decrease in the price of good Z will cause:

The demand for good A to increase

Good X is a normal good if:

The demand for good X increases when income rises

When the Federal Reserve decreases banks' reserves through open-market operations:

The monetary base decreases, loans decrease, and the money supply decreases

If the price of pepperoni increases:

The quantity of pizza supplied will fall

We have to make choices because:

The resources available to us are scarce