Macro Econ Final

A tariff placed on Chinese goods imported into the United States would immediately result in: A.) A decrease net export B.) A decrease in consumption C.) A decrease in investment spending D.) None of the above

A, A decrease in net exports

If something is good for an individual it must also be good for everyone. This statement best represents a: A.) A fallacy of composition B.) Correlation C.) Causation D.) Economies of scale E.) opportunity costs

A, A fallacy of composition

Goods and serv ices produced in one country that are then sold in other countries are called ___________. A.) Exports B.) Tradeable items C.) Surplus items D.) economic stimulants

A, Exports

An increase in personal income taxes A.) Moves the aggregate Demand curve inward B.) Moves the aggregate demand curve outward C.) Moves the aggregate supply curve inward D.) Moves the aggregate supply curve outward E.) None of the above

A, Moves the aggregate demand curve inward

Another term used to describe negative inflation is: A.) Counter inflation B.) deflation C.) hyperinflation D.) GDP deflator

B, Deflation

unexpected inflation will: A.) hurt borrowers B.) Hurt lenders C.) Hurt bowers and lenders equally D.) have no effect on either borrowers or lenders

B, Hurt lenders

An Increase in wealth A.) Moves the aggregate Demand curve inward B.) Moves the aggregate demand curve outward C.) Moves the aggregate supply curve inward D.) Moves the aggregate supply curve outward E.) None of the above

B, Moves the aggregate demand curve outward

Which of the following is not an economic concept that can be illustrated with a production possibilities frontier? A.) Choice and opportunity cost B.) Productive efficiency C.) Scarcity D.) Supply/Demand

D, Supply/Demand

A central bank that wants to increase the quantity of money in the economy will: A.) raise the discount rate B.) sell bonds in open market operations C.) reverse quantitative easing D.) buy bonds in open market operations

D, buy bonds in open market

When the central bank decides to increase the discount rate, the: A.) money supply increases B.) interest rates decrease C.) interest rates are unaffected D.) interest rates increase

D, interest rates increase

The neoclassical (or classical) perspective on macroeconomics emphasizes that in the long run, the economy seems to rebound back to its ______ and its ________. A.) long term growth; cyclical unemployment B.) potential GDP; natural rate of unemployment C.) natural level of output; cyclical unemployment rate D.) real GDP; natural rate of unemployment

D, real GDP; natural rate of unemployment

Economics is a physical science

False

Money reduces the transaction costs of making exchanges

True

Net capital inflows reduce the US interest rates.

True

The federal reserve's target inflation rate is 4%.

True

The interest rate effect causes movement on the aggregate demand curve

True

The national bank is the central bank of the United States

True

Transaction costs for the purchase of a car are likely to be higher than for the purchase of a cup of coffee

True

Monetary policy is defined as the manipulation of the money supply to achieve macroeconomic goals.

True

Which of the following government policies would be supported by neoclassical (or classical) macroeconomic assumptions? A.) allowing the economy to return to equilibrium without government intervention B.) focus on short-term recession and controlling inflation C.) focus on combating depression and cyclical unemployment D.) focus on real GDP and cyclical unemployment

A, allowing the economy to return to equilibrium without government intervention

Which of the following is a valid criticism of the use of money as a store of value in modern economies? A.) annual inflationary loss of buying power B.) money supply is too narrowly defined C.) storing money is wasteful D.) imperfect as a unit of account

A, annual inflationary loss of buying power

If macroeconomics looks at the economy as a whole, which of the following is not a focus? A.) Business Firms B.) Employment C.) inflation D.) Standard of living

A, business firms

In the 1970s and 1980s, labor unions commonly negotiated wage contracts that has __________________ which guaranteed that their wages would keep up with inflation. A.) cost of living adjustments B.) inlflation protection plans C.) inflation ceiling gurantees D.) wage protection clauses

A, cost of living adjustments

What term is used to describe the interest rate charged by the central bank when it makes loans to commercial banks? A.) discount rate B.) reserve requirement C.) Fed rate D.) open market rate

A, discount requirement

The term ____________ describes the proportion of deposits that the bank must hold in the form of reserves that are not loaned out of invested in bonds. A.) reserve ratio B.) reserve funds C.) term deposits D.) bond reserves

A, reserve ratio

When a central bank expands the moeny supply to move an economy out of a recessionary gap they are expecting A.) the AD curve to move outward B.) the AD curve to move inward C.) the SRAS curve to move outward D.) The SRAS curve to move inward

A, the AD curve to move outward

The most cited measures of inflation if the united states is: A.) the consumer price index (CPI) B.) the deflationary price index (DPI) C.) the Cumulative price index (CPI) D.) the inflationary price index (IPI)

A, the Consumer Price Index

Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is: A.) the benefit to his grades from studying for an hour B.) the increase in skill he obtains from playing basketball for that hour C.) nothing, because he enjoys playing basketball more than studying D.) nothing, because he had a free pass into the sports complex to play basketball

A, the benefit to his grades from studying for an hour

In neoclassical theory which curve shifts to bring the economy into equilibrium? A.) The short run supply curve B.). The aggregate demand curve C.) The long run aggregate supply curve D.) none of the above

A, the short run supply curve

If a Phillips Curve is a vertical line it suggests A.) There is no relationship between inflation and unemployment B.) That inflation and unemployment are inversely related C.) The inflation is constant D.) None of the above

A, there is no relationship between inflation and unemployment

Aggregate supply (AS) denotes the relationship between the _________ that firms choose to produce and sell and the ________, holding the price of inputs fixed. A.) total quantity; price level for output B.) type of good; input price of raw materials C.) price of goods; number of employees D.) total inputs; types of goods

A, total quantity; price level for output

If the required reserves ration is .2, the multiplier would be: A.) 2 B.) 5 C.) 10 D.) 20

B, 5

An increase in wealth A.) Increases consumption B.) Decreases consumption C.) Increases investment D.) Decreases investments E.) None of the above

B, Decreases consumption

An index inflation can be to calculate inflation in terms of how the overall cost of ____________ changes over time. A.) all goods B.) a basket of goods C.) all foods and services D.) all services

B, a basket of goods

When a central bank takes action to decrease the money supply and increase the interest rate, it is following: A.) a loose monetary policy B.) a contractionary monetary policy C.) a expansionary monetary policy D.) a quantitative easing policy

B, a contractionary monetary policy

Which of the following is not a component of an economic model? A.) Assumptions B.) Correlates C.) Exogenous variable D.) Hypothesis`

B, correlates

An increase in personal income taxes A.) increases consumption B.) decreases consumption C.) increases investment D.) decreases investment E.) none of the above

B, decreases consumption

If Bill performs plumbing upgrades for Alice in exchange for her incorporating his business, then their __________ will be satisfied A.) balance of trade B.) double coincidence of wants C.) convenience of exchange D.) division of labor

B, double coincidence of wants

When banks hold excess reserve because they don't see good lending opportunities: A.) it negatively affects contrationary monetary policy B.) it negatively affects expansionary monetary policy C.) expansionary monetary policy is unaffected D.) contrationary monetary policy is unaffected

B, it negatively affects expansionary monetary policy

The theory of _____________ holds that people will use all information available to them to form the most accurate possible expectation about the future. A.) adaptive expectations B.) rational expectations C.) store of value D.) neoclassical economics

B, rational expectations

______ are funds that the bank keeps on hand that are not loaned out or invested in bonds. A.) certificates of deposit B.) reserves C.) time deposits D.) demand deposits

B, reserves

The short-run Phillip's curve is most relevant when A.) the previous quarters GDP report is above projection B.) the previous GDP report is below rejection C.) weekly employment is better than expected D.) weekly employment is worst than expected

B, the previous GDP report is below projection

According to the basic quantity equation of money, if price and output fall while velocity is constant, then: A.) the quantity of money will rise B.) the quantity of money will fall C.) the quantity of money will rise before it falls D.) the quantity of money will rise slowly

B, the quantity of money will fall

If the marginal propensity to consume is 0.5 then the marginal propensity to save is A.) 2 B.) 1 C.) 0.5 D.) None of the above

C, 0.5

A marginal propensity to consume of 0.5 corresponds to a multiplier of A.) 0.5 B.) 1 C.) 2 D.) None of the above

C, 2

If John got a 5% raise in nominal income last year and the inflation rate was 2.5%, John's real wage increase was: A.) 7.5% B.) 2% C.) 2.5% D.) 5%

C, 2.5%

If a US resident purchased a new German car and the German company that manufactured the car invests the proceeds in US real estate, the net effect on US GDP is: A.) A decrease in the US trade deficit and a capital inflow into the US B.) A decrease in the US trade deficit and a capital outflow from the US C.) An increase in the US trade deficit and a capital inflow into the US D.) An increase in the US trade deficit and a capital outflow from the US

C, An increase in the US trade deficit and a capital inflow into the US

inflation implies that the level of all prices __________. A.) Decrease B.) Stay the same C.) Increase D.) none of the above

C, Increase

A decrease in business taxes A.) increases consumption B.) decreases consumption C.) increases investment D.) decreases investment E.) none of the above

C, Increases investments

The President of which Federal Reserve bank has a permanent seat on the FMOC? A.) Atlanta B.) Boston C.) New York D.) Philadelphia E.) Washington, DC

C, New York

The term ___________ despribes circumstances where a country's exports exceed its imports. A.) Trade deficit B.) Trade imbalance C.) Trade surplus D.) Trade balance

C, Trade surplus

Which of the following is most likely to be a purchase with third-party effects? A.) A museum ticket B.) A pair of slacks C.) A pack of cigarettes D.) A quart of milk E.) All of the above

C, a pack of cigarettes

Which of the following represents a Keynesian point of view of macroeconomics? A.) focus on long-term growth in the economy B.) aggregate supply is the primary determinate of economic output C.) creating increases in aggregate demand to reduce unemployment D.) vertical aggregate supply

C, creating increases in aggregate demand to reduce unemployment

Which of the following would be classified in the M1 category of the money supply? A.) savings deposits B.) money market deposits C.) demand deposits D.) certificates of deposit

C, demand deposits

According to the instructor, the $880 billion fiscal package administered bu the Obama administration to revers the effects of the 2008 recession failed because: A._) it was too small B.) it did not focus on productive investments C.) in a global economy fiscal stimulus spending leaks out of the US economy D.) none of the above

C, in a global economy fiscal stimulus spending leaks out of the US economy

If a US resident purchased a new German car and the German company that manufactured the car purchases US goods with the proceeds of the sale, the net effect on US GDP is: A.) an increase in the US trade deficit B.) a decrease in the US trade deficit C.) no change in the US trade deficit D.) none of the above

C, no change in the US trade deficit

Which of the following is a traditional tool used by the Fed during recessions? A.) quantitative easing B.) higher interest rates C.) open market operations D.) coins and paper currency

C, open market operations

The shape of the ______________ involves a tradeoff between unemployment and inflation. A.) aggregate demand curve B.) aggregate supply curve C.) philips curve D.) keynesian demand curve

C, phillips curve

Which of the following terms is used to describe the proportion of deposits that banks are legally required to deposit with the central bank? A.) discount requirements B.) deposit requirements C.) reserve requirements D.) monetary requirements

C, reserve requirements

if GDP is 3600 and the money supply is 300, what is the velocity? A.) 18 B.) 8 C.) 4.57 D.) 12

D, 12

Which of the following is not a function of money? A.) Medium of exchange B.) Unit of account C.) Store of value D.) A storage of debt

D, A storage of debt

Which of the following is not an economic question about production? A.) For whom will the goods be produced? B.) How will the goods be produced? C.) What goods will be produced? D.) All of the above E.) None of the above

D, All of the above

Which of the following is not a role of price in a free market? A.)Conveys information B.)Give incentives C.)Provides working Capital D.)All of the above are roles of price

D, All of the above are roles of Price

A Price index in years after the vase year: A.) is never 100 B.) Is always greater than 100 C.) Is always less than 100 D.) Can be less than, hreater than, or equal to 100

D, Can be less than, greater than, or equal to 100

The ________ measures price levels of consumption and the _____ measures price levels of production. A.) Chain-Weighted index, Consumer Price Index B.) Consumer Price Index, Chain-Weighted index C.) GDP deflator, Consumer Price Index D.) Consumer Price Index, GDP deflator

D, Consumer Price Index, GDP deflator

Which of the following institutions determines the quantity of money in the economy as its most important task? A.) US department if the treasury B.) Federal open markets committee C.) Central bank D.) Federal reserve board of governors

D, Federal reserve board of governors

The inflation rate in Venezuela is expected to exceed 3000% in 2018. During that time, we can say that, as a result of those inflation rates, Venezuela will be experiencing ___________. A.)_ Perpetual inflation B.) ultra inflation C.) hypo inflation D.) hyperinflation

D, Hyperinflation

Which of the following is not caused by inflation? A.) It Breeds Uncertainty B.) It diminishes buying power C.) It erodes savings D.) It moves the short-run aggregate supply curve outward E.) It alters social traditions

D, It moves the short-run aggregate supply curve outward

If the president places a tariff on imported cars the first component of the expenditure GDP formula to be effected would be: A.) Consumption B.) Investment C.) Govt spending D.) Net exports

D, Net exports

John Maynard Keynes is notable for explaining why recessions and depressions occur, as well as offering a ___________ for minimizing their effects A.) Pricing strategy B.) Macro economic model C.) Set of menu cost D.) policy prescription

D, Policy prescription

One of the reasons that a rise in the price of a fixed basket of goods over time tends to overstate the rise in a consumer's true cod of living, is: A.) attribution bias B.) complimentary Bias C.) preference bias D.) Substitution bias

D, Substitution Bias

Which of the following institutions oversees the safety and stability of the US banking system? A.) Office of the comptroller of the currency B.) Federal financial insitiutions examination council C.) Federal open market committee D.) The federal reserve

D, the federal reserve

Which of the following causes a change in consumption? A.) Wealth B.) Expectation of future prices C.) Interest rates D.) Income taxes E.) All of the above

E, All of the above

Which of the following is the economic focus of the Federal Reserve? A.) GDP B.) Inflation C.) Employment D.) A and B E.) B and C`

E, B and C

A command economy is the freest form of an economy

False

A simple line graph shows the relationship between 3 variables.

False

Among consumers those on fixed income are least vulnerable to inflation.

False

An increase in risk in the US reduces US interest rates

False

In investment increases the aggregate demand curve moves inward.

False

In the horizontal portion of a kaybesian short-run aggregate supply curve if demand is stimulated by autonomous spending it will result in an increase in inflation

False

Menu costs Cause the Aggregate Supply curve to shift.

False

Phillips derived the phillips curve after studying historical macroeconomics performance for the United States

False

Positive economics is the study of what should be

False

Supply-push inflation is characterized by too much money chasing too few goods

False

The marginal propensity to consume describes base-level consumption experienced when a person is unemployed

False

The real balance effect causes movement of the aggregate supply curve.

False

All inflation is bad.

False, Not all inflation is bad

Keynesian economics was first used in the great depression.

True

A change in price level causes movement on the aggregate demand cure

True

A decrease in exports causes a decrease in aggregate demand

True

A key difference between short-run and long-run aggregate supply is the availability of perfect information

True

Capital inflows increase the domestic savings pool

True

Ex Ante is the period of time before a transaction

True

Expectation theory can negate the intended effects of both keynesian and monetary policy.

True

Keynesian economics relies on autonomous spending by the government to shift the aggregate demand curve and move an economy out of a recessionary gap

True

When a worker loses his job his consumption drops to zero

false