AP Macroeconomics UCONN FINAL

(U5) 17. The least amount of beef Mexico must receive from the US if it exports 1 ton of vegetables to the US is

0.5 ton of beef

If an increase in government spending of $100 billion increases equilibrium output by a total of $500 billion, then the marginal propensity to consumer must be at least

0.8

A recession is generally characterized by 1. A decrease in real GDP 2. A decrease in employment 3. An increase in price level

1 and 2 only

Which of the following is most true regarding unanticipated inflation? 1. Workers with fixed wage rates are hurt by unanticipated inflation 2. Employers that charge fixed wages are hurt by unanticipated inflation 3. Lenders with fixed rate loans are helped by unanticipated inflation 4. Borrowers who have fixed rate loans are helped by unanticipated inflation

1 and 4 only

The formula to calculate the expenditures or simple multiplier is

1/1-MPC

If the CPI in the year 2010 is 200 and the CPI in year 2011 is 220, then the rate of inflation for the year 2011 was

10%

If on receiving a checking deposit of $500 a bank's excess reserves increased by $400, the require reserve must be:

20%

Which of the following is an example of direct foreign investment?

A Chinese company buying a microprocessor factory in Korea

Which of the following is the best example foreign direct investment?

A Japanese software company buying a factory in the US

A point outside the production possibilities curve would represent

A combination that cannot be achieved due to scarcity

Assume an economy is at full-employment equilibrium when a negative supply shock occurs. All the following will occur in the short-run except

A decrease in aggregate demand

An increase in net exports for country X will most likely be caused by which of the following?

A decrease in the international value f the currency in country X

According to the short-run Phillips curve, an increase in inflation will accompany

A decrease in unemployment

Which of the following true regarding international trade

A deficit in the current account is offset by a surplus in the financial account

Which of the following would decrease the U.S. financial account?

A ski chateau purchased in Switzerland by an American entrepreneur

(21) (Unit 2) Refer to Figure 1. What would be the effect of a price floor at $60.

A surplus of 100

Which of the following is the best example of physical capital

A truck for a delivery company

Poorer countries can achieve higher rates of economic growth than richer countries because poorer countries can

Adopt existing technologies

A decrease in government spending by a given amount accompanied by a decrease in taxes by the same amount will cause which of the following?

Aggregate demand to decrease

According to Keynesian analysis, if government expenditures and taxes are increased by the same amount, which of the following will occur?

Aggregate demand will increase

Which of the following would cause a rightward shift of the aggregate supply curve?

An across-the-board reduction of wages in the manufacturing sector

Which of the following will lead to an increase in the demand for loanable funds in the US?

An increase in US government borrowing

Which of the following would definitely move a country toward a current account deficit

An increase in imports

An increase in which of the following would cause an outward shift of the production possibilities curve for consumer goods and capital goods?

An increase in the resources to produce capital goods

An increase in Korea's demand for U.S. goods would cause the US dollar to

Appreciate because Korea would be buying more U.S. dollars

Atlantis can produce either 2 tons of grain or 4 cars with 10 units of labor. Zoltar can produce either 5 tons of grain or 25 cars with 10 units of labor. Based on this information, which of the following is true.

Atlantis has a comparative advantage in the production of grain, while Zoltae has a comparative advantage in the production of cars.

If the demand for the British Pound increases relative to the U.S. dollar, then the

British pound would appreciate

An increase in a country's interest rate relative to other country's interest rate will most likely cause which of the following?

Capital inflow into the country to exceed capital outflow

Most international trade is based on differences in

Comparative advantage

Gross Domestic Product is equivalent to the sum of:

Consumer spending, investment spending, government purchases and net exports

When the US places an import quota on imported sugar, we expect which of the following effects?

Consumers seek substitutes for sugar and products that use sugar

How will a decrease in personal income taxes and an increase in government spending affect consumer spending and unemployment in the short-run?

Consumption Increase / Employment Increase

If an American student purchases a personal computer made by a Korean owned company located in California, what would happen to consumption and the GDP of the USA as a result?

Consumption Increase / GDP will Increase

Country A: 10 tons of fish / 5 units of electronics Country B: 9 tons of fish / 3 units of electronics Given the data in the table above, which of the following statements is correct?

Country A has an absolute and comparative advantage in producing electronics

Country A: 10 tons of fish / 5 units of electronics Country B: 9 tons of fish / 3 units of electronics Given the data above, how should production occur in order to maximize the efficient use of resources?

Country B should produce fish and import electronics

Nicole was laid off as a waitress when her restaurant closed down due to the slow economy. Nicole is considered

Cyclically unemployed

All of the following are counted in a nation's current account except a. $50,000 car imported from Italy b. $500 of cheese export from France c. A $50 million Chinese factory purchased by a Canadian d. $1 million donated in first aid supplies to Indonesia e. $1,000 sent to Russia from a Russian working in the US

D: $1 million donated in first aid supplies to Indonesia

Suppose business are fearful that thee will be a recession on the near future. Which of the following best describes the impact of this belief on demand for loanable funds and interest rate?

Decrease/ Decrease

(U5) 28. Real interest rates in the US increase. In the foreign exchange markets, the international demand for dollars, exchange rate for dollars, supply of pounds, and exchange rate for pounds change in the following ways

Demand for $ Increases / Exchange Rate (Euro/$) Increases / Supply of Euro Increases / Exchange Rate ($/Euro) Decreases

The US government increases government spending, which results in a significant deficit. The demand for loanable funds increases, increasing the real interest rates in the United States. In the foreign exchange markets, the international demand for dollars, exchange rate for dollars, supply of pounds, and exchange rate for pounds change in the following ways.

Demand for $ Increases / Exchange Rate (Euro/$) Increases / Supply of Euro Increases / Exchange Rate ($/Euro) Decreases

A crisis in US causes investors to prioritize opportunities in Europe and Japan. How does this affect the demand for the US dollar?

Demand for the dollar decreases and the value depreciates

The income that households have after taxes is called

Disposable income

Which of the following is true for all economies regardless of their economic system

Every economy must determine what to produce and how it will produce goods and services

All of the following are true regarding international trade except

Exports are considered a debit in a country's balance of trade

Which of the following scenarios could cause the value of the US dollar to increase in foreign exchange markets?

Foreign incomes increase at a higher rate than US incomes

Part of the reason that aggregate demand is downward sloping is because

Higher price levels decrease the purchasing power of money which decreases the quantity of consumption

Which of the following are included in a nation's balance of payments accounts? I. International trading II. International lending III. Domestic investment

I and II only

Which of the following would cause a leftward shift in aggregate demand? I. Congress increases personal income taxes II. An increase in government spending on public goods III. A recession in another country that is a close trading partner

I and III only

Nations specialize in trade based on their relative levels of I. natural resources II. labor resources III. capital resources IV. technology

I, II, III, and IV

The current account balance includes I. A nation's exports of goods and services II. A nation's imports of goods and services III. Net investment income IV. Net financial transfers V. Asset purchases and sales

I, II, III, and IV onlyf

Which of the following are true statements about the federal funds rate?

II and III only

(U5) 16. Based on the graphical data, which country will import beef and which will import vegetables?

Import Beef Mexico / Import Vegetables United States

Which of the following will be included in the current year's calculation of GDP?

Income earned as a lifeguard at a summer camp

Stagflation might be caused by

Increase in the price of raw materials

If the fed raises the discount rate, how are interest rates and real GDP affected?

Increase/ Decrease

If the Federal Reserve increases the money supply, how will the interest rate, the international value of the dollar, and imports be affected?

Interest Rate Decrease / International Value of the Dollar Decrease / Imports Decrease

The major difference between real and nominal GDP is that real GDP

Is adjusted for price-level changes using a price index

Suppose the Fred buys $400,000 worth of securities from the securities dealers on the open market. If the reserve requirement is 20 percents, and banks hold no excess reserves, what will happen to the total money supply?

It will expand by $2,000,000

If Mike can make 2 surfboards per hour or 10 bikes per hour and Joe can produce 4 surfboards per hour and 12 bikes. Which of the following is true?

Joe has a comparative advantage in the production of surfboards and bikes

Fractional reserve banking means that banks are required to

Keep part of their demand deposits as reserves

If purchases of education and medical care were counted as investment rather than consumption, GDP would:

NO change, because there is no change in total aggregate expenditures

Suppose price level increases more in the US than it does in Indonesia. What is the short-run impact on U.S. net export, the value of the U.S. dollar, and the value of the Indonesian rupee?

Net Exports Decrease / U.S. Dollar Depreciate / Indonesian Rupee Appreciate

If Congress wants to close an inflationary gap, which policy is matched to the change in policy, output and price level?

Policy Decrease Spending / Price Level Decrease / Output Decrease

If Congress wants to close a recessionary gap, which policy is matched to the change in policy, output and price level?

Policy Decrease Taxes / Price Level Increase / Output Increase

When the economy is operating at potential output, then the unemployment rate is

Positive, it includes both frictional and structural unemployment, and the economy is operating at the natural rate of unemployment (NRU)

A positive supply shock, such as a decrease in the price of oil, is most likely to have which of the following short-run effects on the price level and output?

Price Level Decrease / Output Increase

A decrease in the wages and production cost will most likely cause the price level and real GDP to change in which of the following ways in the short-run?

Price Level Decrease / Real GDP Increase

If the economy is operating in the intermediate range of the aggregate supply curve and if aggregate demand increases due to an increase in net exports, then the price level, output, & the unemployment rate most likely to change in which of the following ways?

Price Level Increase / Output Increase / Unemployment Rate Decrease

An increase in consumer spending will most likely cause the price level and real GDP to change in which of the following ways in the short-run?

Price Level Increase / Real GDP Increase

Nations impose trade barriers for the purpose of

Protecting domestic industries

If the price of cars significantly increases, then the

Quantity supplied of cars will increase

If exports from the United States increased, what would most likely happen to real gross domestic product and price level?

Real GDP Increase / Price Level Increase

The intersection of the aggregate demand and aggregate supply curve occurs at the economy's equilibrium level of

Real domestic output and the price level

An increase in which of the following will decrease aggregate demand?

Real interest rates

Economic growth is an important goal because it

Reduces the burden of scarcity among people

Economic growth can be represented on a graph by

Shifting the production possibilities curve outward

(U5) 29. Inflation builds in the United States but does not develop in Britain. In the foreign exchange markets, the international supply of dollars, exchange rate for dollars, demand for pounds, and exchange rate for pounds change in the following ways

Supply of $ Increases / Exchange Rate (Euro/$) Decreases / Demand for Euro Increases / Exchange Rate ($/Euro) Increases

If the nominal GDP for a given year is $500 Billion and the real GDP for that year is $400 Billion, then which of the following must be true

The GDP deflator is 125

Which of the following is true regarding the short-run Phillips curve (SRPC)?

The SRPC shows the inverse relationship between inflation and unemployment

Suppose incomes fall in the US, but not in Japan. Which of the following will occur?

The US dollar will appreciate and the Japanese Yen will depreciate

Assume the CPI increases from 100 to 120 between 2014 and 2015. Which of the following must be true?

The average price of a specific market basket increased 20%

If there is a large increase in the number of Europeans traveling to the US while US citizens' travel to Europe remains unchanged, which of the following is true

The euro will depreciate because the supply of euros will increase

According to the long-run Phillips curve, which of the following is true?

The natural rate of unemployment is independent of inflation

The official unemployment rate is not always the most accurate indicator of actual unemployment in the economy because

The official rate does not include persons who have given up looking for work

Which of the following is true regarding nominal and real GDP?

The only thing that can increase real GDP is an increase in output

A nation's real GDP could increase at the same time that its real GDP per capita decreases because

The population growth rate increases more quickly than real GDP increases

Net exports as a factor in U.S. GDP have been negative since the 1980s because

The value of imports has exceeded the value of exports

Demand-Pull inflation is most likely to occur when

There is an increase in consumer spending

Which if the following is true for the money market graph

There is an inverse relationship between the nominal interest rate and the quantity of money demanded

If the Consumer Price Index changes from 100 to 90, economists will know that:

There was deflation in the economy

If the Japanese economy suffers a deeps, prolonged recession, in what ways would US net exports and the values of the dollar and yen change?

US Net Exports Decrease / Value of $ Decrease / Value of Yen Increase

(U5) 14. Based on the graphical data above, the opportunity cost of producing vegetables (v) and beef (b) for the US and Mexico is

US Opportunity Cost 1v-1b / Mexico Opportunity Cost 1v-0.5b

Suppose interest rates fall in the US, but they don't fall in Mexico. What is the short-run impact of the value of the U.S. dollar (USD) and the value of the Mexican Peso (Peso)?

USD Depreciate / Peso Appreciate

Suppose interest rates fall in the US, but they don't fall in Mexico. What is the short-run impact on the value of the US dollar (USD) and the value of the Mexican Peso (Peso)?

USD Depreciate / Peso Appreciate

According to classical economists, which of the following will occur to move this economy to long-run equilibrium

Wages will decrease causing aggregate supply to increase

When government spending cause an increase in real interest rates, gross private domestic investment....

Will experience crowding out

which of the following will not cause the demand for video games to change?

a change in price of video games

which of the following most undermines the ability of a nation's currency to store value?

a decrease in the purchasing power of the currency

If average household income rises and we observe that the demand for pork chops increases, pork chops must be

a normal good

Land refers to

all natural resources

The Feds Reserve can increase the money supply by

buying bonds on the open market

An economist for a computer company predicts that a rise in consumer incomes will increase the demand for computers. This prediction assumes that:

computers are normal goods

if the supply for loanable funds increases, what will happen to real interest rates and investment?

decrease/ increase

(19) (Unit2) Assuming Ramen noodles are an inferior good, a decrease in income will shift the

demand curve for ramen noodles to the right

Which of the following would be included as a liability on a commercial bank's balance sheet

demand deposit

the relationship between quantity supplied and price is __________ and the relationship between quantity demanded and price is _______.

direct, inverse

Which of the following indicates that the macro economy is achieving its economic goals?

economic growth

A point under the production possibilities curve would represent

full employment of resources in the economy

Crowding out occurs when

government borrowing to finance its spending decreases private sector investment

Which of the following statements is correct?

if supply increases and demand decreases, equilibrium price will fall

if required reserves is 10% and that bank receives a new demand deposit of $300. Which of the following will most likely occur in the bank's balance sheet?

increase by $30/ No change

if the velocity of money is stable, the quantity theory of money predicts that an increase in the money supply will lead to a proportional....

increase in the nominal output

assume the supply of bananas decreases due to rising costs of production, while demand increases due to consume preferences, what will happen to the new equilibrium price and quantity?

increase price, indeterminate quantity

Assume that a perfectly competitive financial market the loanable funds is in equilibrium. Which of the following is most likely to occur to the quantity demanded and the quantity supplied off loanable funds if the government puts a cap (ceiling) on the interest rate?

increase/ decrease

Which of the following is an example of fiscal policy?

increasing government expenditures to build highways

Which of the following actions by the Federal Reserve reduces the ability of the banking system to create money?

increasing the reserve requirement

If the Fed institutes a policy to reduce inflation, which of the following is most likely to increase?

interest rates

Which of the following is most likely to occur when the Federal Reserve buys government bonds on the open market

interest rates will decrease

Which of the following will most likely occur in an economy if more money is demanded than is supplied?

interest rates will increase

Which of the following is true of a horizontal aggregate supply curve?

it suggest that increases in output can occur without increases in price levels.

according to the theory of comparative advantage, a good should be produced where

its opportunity costs are least

Which of the following is true about an import quota? It

limits quantity of imports allowed into a country

When an economy is at full employment, an expansionary monetary policy will lead to

lower interest rates and more investment

if there is an increase demand for a good, what will most likely happen to the price and quantity of the good exchanged?

price increase, quantity increase

other things equal, nit the price of a key resource used to produce product X falls, the :

product supply curve of X will shift to the right

When the price of pears increases, we expect the following

quantity demanded of pears falls

if the production possibilities curve is concave from the origin (or bowed out) , then economists say that

resources are not equally suited for the production of both goods

Which of the following is NOT part of M1

saving deposits

To eliminate an inflationary gap, the Federal Reserve might

sell bonds on the open market

The Fed can decrease the money supply by....

selling bonds on the open market

Which of the following government policies can reduce the are of inflation in the short run?

selling bonds on the open market

(20) (Unit 2) Refer to Figure 1. At price $20, which of the following would occur?

shortage of 100

A leftward shift of a supply curve for avocados ( a normal good) might be caused by

some avocado farmers leaving the market

(U5) 15. Based on the graphical data above,

the US has a comparative advantage in the production of beef and Mexico will specialize in the production of vegetables

(U5) 13. Based on graphical data above,

the United States has an absolute advantage in the production of both beef and vegetable

Open market operations refer to which of the following activities?

the buying and selling of government securities by the Federal Reserve

if consumers are advised that multigrain bread will substantially lessen the risk of cancer, which of the following will happen in the market for multigrain bread?

the demand curve will shift to the right, increasing the price of multigrain bread.

If German citizens increase investment in US bonds,

the euro would depreciate in foreign exchange markets

The value of a country's currency relative to another country's currency is called

the exchange rate

When making a decision, the next best alternative is called

the opportunity cost

which of the following must be true if an individual's next alternative to going to the beach is studying for an economics exam?

the opportunity cost of going to the beach is being better prepared for the exam

If the government subsidizes the production of corn

the supply curve will shift to the right

If the Fed conducts an open market purchase of bonds, we can expect which of the following to occur in the short run?

there will be a movement to the left along a short- run Philips Curve

Which of the following characteristics of money could be found in bars of gold?

uniformity and durability

the invisible hand

works in a capitalist society