macro Econ final review

If you go to the bank and notice that a dollar buys more Mexican pesos than it used to, then the dollar has

appreciated. Other things the same, the appreciation would make Americans more likely to travel to Mexico

Canada and many European countries have had higher average unemployment rates than the US. The Phillip's curve suggests that these countries

have long-run Phillip's curves to the right of the US

Which of the following would shift the long-run phillip's curve to the right?

increases in unemployment compensation

Which of the following is not an automatic stabilizer?

Minimum wage

Fiscal policy refers to the idea that aggregate demand is affected by changes in

government spending and taxes

Which of the following correctly explains the crowding-out effect?

An increase in government expenditures increases the interest rate and so reduces investment spending

Keynes explained that recessions and depressions occur because of

inadequate aggregate demand

The source of hyperinflation is primarily

increases in money supply growth

Suppose the federal reserve pursues contractionary monetary policy. In the long run

inflation is lower and unemployment is the same as it was prior to the change in policy.

The misery index is calculated by the

inflation rate plus unemployment rate

Because a government budget deficit represents

negative public saving, it decreases national saving

International trade

raises to standard of living in all trading countries

The theory by which people optimally use all available information when forecasting the future is known as

rational expectations

In the first few years of the Great Depression, unemployment rose to about

25 percent, and prices fell about 22 percent

When Claudia, a U.S citizen, purchases a handbag made in France, the purchase is

A U.S. import and a French export

Closely watched indicators such as the inflation rate and unemployment are released each month by the

Bureau of Labor Statistics

Which of the following Fed actions would both increase the money supply?

Buy bonds and lower the reserve requirement

Which of the following is correct concerning the long-run Phillip's curve?

Its position depends on the natural rate of unemployment

The supply of money is determined by

The Federal Reserve System

If U.S exports are $150 billion and U.S imports are $100 billion, which of the following is correct?

The U.S has a trade surplus of $50 billion

which of the following will reduce the price level and real output in the short run?

a decrease in the money supply

Which of the following is vertical?

both the long run Phillip's curve and them long run aggregate supply curve

When the interest rate decreases, the opportunity cost of holding money

decreases, so the quantity of money demanded increases

If U.S. consumers increase their demand for apples from New Zealand, then other things the same New Zealand's

exports and net exports rise

The marginal propensity to consume (MPC) is defined as the fraction of

extra income that a household consumes rather than savs

During recession, taxes tend to

fall and thereby increase aggregate demand

A country's trade balance

is greater than zero only if exports are greater than imports

Other things the same, an increase in the price level makes the dollars people hold worth

less, so they can buy less

Disinflation is defined as a

reduction in the rate of inflation

The value of money falls as the price level

rises, because the number of dollars needed to buy a representative basket of goods rises

In the mid-1970's the price of oil rose dramatically. This

shifted aggregate supply left

There is a

short-run trade off between inflation and unemployment

Disinflation is like

slow a car down, wheres deflation is like putting the car into reverse gear.

The theory of purchasing power parity primarily explains

the determination of the real exchange rate

If you are vacationing in France and the dollar depreciates relative to the euro, then

the dollar buys fewer euros. It will take more dollars to buy a good that costs 50 euros

In order to maintain stable prices, a central bank must

tightly control the money supply