ECO 3315 MICRO

If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is $741, and government purchases are $1,098, then net exports are:

-$31

If the steady-state rate of unemployment equals 0.10 and the fraction of employed workers who lose their jobs each month (the rate of job separation) is 0.02, then the fraction of unemployed workers who find jobs each month (the rate of job findings) must be:

0.18

According to the Keynesian-cross analysis, if the marginal propensity to consume (MPC) is 0.6, and government expenditures and autonomous taxes are both increases by 100, equilibrium income will rise by:

100

Suppose that the IS curve is given by: Y = 1,700 - 100 * r, while the LM curve is given by (M/P)S = (M/P)D, where the money demand function is given by (M/P)D = Y - 100 * r, the nominal money supply M is 1,000, and the price level P is 2. With these equations, you can find Y and r. Then, if the nominal money supply M is raised to 1,400, the equilibrium income Y will rise by:

100 and the interest rate will fall by 1% point.

Given the information that you have about Consumption ($9,710 billion), Net Exports (-$708 billion), Investment ($2,130 billion), Government Spending ($2,675 billion), and Population (302 million) in the U.S., the GDP per capita for 2007 is

$45.7 thousand

Assume that the adult population of the United States is 191.6 million, total employment is 117.6, and 9.4 million are unemployed. Then the unemployment rate, as normally computed, is approximately ________ percent

7.4

According to Paul Douglas's observation, the division of national income between labor and capital is relatively constant for the 19th century. Specifically, the income shares of labor and capital are respectively _______

70% and 30%

You have just noticed that the dollar appreciated and you suspect that the American Policymakers were behind this change. Which would you choose as the most likely cause of this appreciation in the exchange rate?

A decrease in the money supply

2. Suppose that nominal GDP were $1200 billion in 2000 and $2000 billion in 2017. The implicit GDP deflator was 100 in 2000 and 166.7 in 2017. From this we can infer that, between 2000 and 2017

real GDP remained constant

In a small open economy, when the government reduces national saving, the equilibrium real exchange rate:

rises and net exports fall.

In a small open economy, if domestic saving equals $50 billion and domestic investment equals $50 billion, then there is _______and net capital outflow equals ________.

balanced trade; $0

According to the neoclassical theory of distribution, if firms are competitive and subject to constant returns to scale, total income in the economy is distributed

between the labor and capital used in production, according to their marginal productivities

If the productivity of farmers has risen substantially overtime because of technological progress, and workers can move freely between being farmers and barbers, the neoclassical theory of distribution predicts that the real wage(s) of:

both barbers and farmers should have risen overtime.

An example of increasing returns to scale is when capital and labor inputs:

both increase 5 percent and output increases 10 percent

In the.case of an unanticipated inflation:

creditors with an unindexed contract are hurt becayuse they get less than they expected in real terms.

According to the Keynesian theory of liquidity preference, tightening the money supply will _______ nominal interest rates in the short-run, and according to the Fisher effect, tightening the money supply will _______nominal interest rates in the long-run.

increase; decrease

Assume that the production function is Cob-Douglas with parameter α = 0.7. In the neoclassical model, if the labor force increases by 10 percent, then output

increases by about 7 percent.

According to the purchasing power parity (ε = eP/P* =1), with the nominal exchange rate expressed as units of the foreign currency per dollar, one can conclude that:

increases in the money supply that raise the domestic price level will lead to a depreciation of the domestic currency (dollar).

In the Keynesian cross, if the MPC is 0.75, then a $1 billion decrease in taxes _______ planned expenditures by _______ and _______ the equilibrium level of income by ________.

increases; $0.75 billion; increases; more than $0.75 billion

Crowding out occurs when an expansionary fiscal policy ___________ the interest rate and investment ____________.

increases; decreases

According to the quantity equation, if M increases by 3 percent and V increases by 2 percent, then

the price level increases by approximately 5 percent.

In the Keynesian-cross model, if the MPC equals 0.75, then a $1 billion increase in government spending increases planned expenditures by ______ and increases the equilibrium level of income by ________

$1 billion; more than $1 billion

If the GDP deflator in 2009 equals 1.25 and nominal GDP in 2009 equals $15 trillion, what is the value of real GDP in 2009?

$12 trillion

. If the implicit GDP deflator rose from 154.9 to 158.0 between 2015 and 2017, then what was the rate of inflation between these two years?

2%

The quantity theory of inflation indicates that if the aggregate output is growing at 3% per year and the growth rate of money is 5%, then inflation is

2%.

If 5 Swiss Francs trade for $1, the U.S. price level equals $1 per good, and the Swiss price level equals 2 Francs per good, then the real exchange rate between Swiss goods and U.S. goods is ______ Swiss goods per U.S. good.

2.5

If purchasing power parity held, if a Big Mac costs $2 in the United States, and if 10 Mexican pesos trade for $1 dollar, then a Big Mac in Cancun, Mexico, should cost:

20 pesos

Suppose there's been a real depreciation of the dollar over the past month. In the long run, you would expect the quantity of

American imports to fall and the quantity of American exports to rise.

Which of the following decreases the nominal demand for money?

An increase in the interest rate

Which of the following is the best example of structural unemployment?

Kirby is seeking a job as an airline pilot, but the high union wages in the airline industry have limited the number of jobs available

Which of the following would most likely be called a hyperinflation?

Price increases averaged above 300 percent per year

We observed that the unemployment rate in the U.S. dropped from 4.3 % in May 2017 to 4.1% in January 2018. You should conclude that

Some caution with this number should be exercised, since discouraged workers leaving the labor market could be driving this decline in the unemployment rate

You know that the current nominal interest rate is 4.3% per year, that the real interest rate is 2.2% per year, and that the inflation rate is 2.1% per year (this inflation rate is the result of a consistent increase in M1 of 1.98% per year). If you knew that the Fed was going to double the growth rate of M1, which will double the inflation in our economy, then according to the Fisher Effect

The nominal interest rate will increase to 6.4% per year but will not affect the real interest rate.

The classical approach to macroeconomics assumes that

Wages, and prices adjust quickly to balance quantities supplied and demanded in markets

. The recent move towards an easier flow of goods and services around the world has led to an increase in U.S exports to the rest of the world but a larger increase in our imports from the rest of the world. This has led to

a decline of our Net Exports

The recent move towards an easier flow of goods and services around the world has led to an increase in U.S exports to the rest of the world but a larger increase in our imports from the rest of the world. This has led to:

a decline of our Net Exports

If the real exchange rate depreciates from 1 Japanese good per U.S. good to 0.5 Japanese goods per U.S. good, then U.S. exports ______and U.S. imports ________

a decline of our Net Exports.

Assume that a country experiences a reduction in productivity that shifts the labor demand curve downward and to the left. If the labor market were always in equilibrium, this would lead to:

a lower real wage and no change in unemployment.

If a U.S. corporation purchases a product made in Europe and the European producer uses the proceeds to purchase a U.S. government bond, then U.S. net exports _________ and net capital outflows _________.

decrease; decrease

If inflation is 6 percent and a worker received a 4 percent nominal wage increase, then the worker's real wage

decreased by 2 percent

Starting from a small open economy with balanced trade, if large foreign countries increase their domestic government purchases, this policy will tend to increase:

exports by the small open economy

The IS curve provides combinations of interest rates and income that satisfy equilibrium in the market for _______, and the LM curve provides combinations of interest rates and income that satisfy equilibrium in the market for ______.

goods and services; real money balances

If in 2011 the real GDP was $1000 and the nominal GDP was $1250, and in 2012, they were $1000 and $800, respectively, the GDP deflator in 2011 is ___________ the GDP deflator in 2012.

greater than

According to the classical theory of money, inflation does not make workers poorer because nominal wages increase:

in proportion to the increase in the overall price level.

Equilibrium levels of income and interest rates are _________ related in the goods and services market, and equilibrium levels of income and interest rates are _________ related in the market for real money balances.

negatively; positively

Trade protectionist policies implemented in a small open economy with a trade deficit, such as levying tariffs on imports, have the effect of _________the trade deficit and __________the quantity of imports and exports

not changing; decreasing

If earthquake destroys some of the economy's capital stock, the neoclassical theory of distribution predicts :

the real wage will fall and real rental price of capital will rise

International businesses like a fixed-exchange-rate system because

they can plan better if they know what the exchange rate will be.

If a dollar bought 1,000 Chilean pesos ten years ago and 1,500 pesos now, and inflation for that period was 25 percent in the United States and 100 percent in Chile, then:

traveling in Chile is more expensive now than it was ten years ago.

If the real exchange rate between the United States and Japan remains unchanged, and the inflation rate in the United States is 6 percent and the inflation rate in Japan is 3 percent, the:

yen will appreciate by 3 percent against the dollar.