ECON 103 UIUC FINAL

If inflation expectations rise, the short run Phillips curve shifts a) right so that any inflation rate unemployment is higher in the short run than before b) left, so that at any inflation rate unemployment is higher in the short run than before c) right, so that at any inflation rate unemployment is lower in the short run than before d) left, so that at any inflation rate unemployment is lower in the short run than before

a

In the long run, if the Fed increases the growth rate of the money supply a)inflation will be higher b) unemployment will be lower c) real GDP will be higher d) all of the above

a

Micah buys a used car for 10,000 and spends 200 on a new radio that is made in the u.s. the end result of these two transactions is a) U.S. consumption purchases increase by 200 and U.S. GDP increases by $200 b) U.S. consumption purchases increase by $200 and U.S. and U.S. gDP increases by $10,000 c) U.S. consumption purchases increase by $10,000 and U.S. GDP increases by $10,200 d) U.S. consumption purchases increase by $10,200 and U.S. GDP increases by $10,200

a

Most economist use the aggregate demand and aggregate supply model primarily to analyze: a)short run fluctuation in the economy b) the effects of macroeconomic policy of the prices of individual goods c)the long run effects of international trade policies d)productivity and economic growth

a

a favorable supply shock causes output to a) rise to counter this a central bank would increase the money supply b) rise to counter this a central bank would decrease the money supply c) fall. to counter this the central bank will increase the money supply d) fall. to counter this the central bank would decrease the money supply

a

stock market fluctuations a) often go hand in hand with fluctuations in the economy more broadly b) rarely have anything to do with fluctuations in the economy more broadly c) have few, if any, macroeconomic implications d) are attributable to the widespread belief that the efficient markets hypotheses is correct

a

suppose a tax cut affects aggregate demand and aggregate supply which of the shifts will raise real GDP? a) both the shift in AD and the shift in aggregate supply b) the shift in AD but not the shift in AS c) the shift of aggregate supply, but not the shift of aggregate demand d) neither the shift in aggregate demand nor the shift in aggregate supply

a

the price elasticities of supply and demand affect a) both the size of the deadweight loss from a tax and the tax incidence b) the size of the deadweight loss from a tax but not the tax incidence c) the tax incidence but not the size of the deadweight loss from a tax d) neither the size of the deadweight loss from a tax nor the tax incidence

a

trade between the United States and Guatemala a) benefits both the United States and Guatemala b) is a losing proposition for the United States because Guatemalan labor is less expensive than U.S. labor c) is a losing proposition for Guatemala because capital is much more abundant in the U.S. than in Guatemala

a

when the consumer price index rises, the typical family a) has to spend more dollars to maintain the same standard of living b) can spend fewer dollars to maintain the same standard of living c) finds that its standard of living is not affected d) can offset the effects of rising prices by Saving more

a

when the government imposes taxes on buyers or sellers of a good, society a)loses some of the benefits of market efficiency b) gains efficiency but loses equality c) is better off because the government's tax revenues exceed the deadweight loss d) moves from an elastic supply curve to an inelastic supply curve

a

you put money into an account that earns an 8 percent nominal interest rate. The inflation rate is 5 percent, and your marginal tax rate is 10 percent. What is your after tax real rate of interest? a) 2.2 percent b) 2.7 percent c) 11.7 percent d) 7.7 percent

a

contractionary fiscal policy

a decrease in G and/or increase in. T, shifts AD left

expansionary fiscal policy

an increase in G and/or decrease in T, shifts AD right

For an economy such as the United States, what component of the demand for goods and services is most responsible for the decrease in output from Y1 to Y2 a) consumption b) investment c) net exports d) government spending

b

changes in the price level affect which components of aggregate demand a) only consumption and investment b) consumption, investment and net exports c)only consumption and net exports d)only investment

b

if a price ceiling is not binding, then a) the equilibrium price is above the price ceiling b) the equilibrium price is below the price ceiling c) it has no legal enforcement mechanism d) none of the above is correct because all price ceilings must be binding

b

if expected inflation increases which of the following shifts right? a) both the short run and the long run Phillips curve b) the short run but no the long run Phillips curve c) the long run but not the short run Phillips curve d) neither the long run nor the short run Phillips curve

b

in an economy where net exports are zero, if saving rises in some period, then in that period a) consumption and investment fall b) consumption falls and investment rises c) consumption rises and investment falls d) consumption rises and investment falls

b

suppose that college professors at public universities are unionized. If public university college professors change their minds and vote not to be unionized, the quantity of public university college professors demanded will a)rise. The supply of workers in other similar professions will also rise b) rise. The supply of workers in other similar professions will fall c) fall. the supply of workers in similar professions will rise. d) fall. the supply of workers in similar professions will fall.

b

the field of finance primarily studies a) how society manages its scarce resources b) the implication of time and risk for allocating resources over time c) firms decisions concerning how much to produce and what price to charge d) how society can reduce market risk

b

the long run aggregate supply curve will shift left if a) the capital stock increases b) there is a natural disaster c) the government removes some environmental regulations that limit production d( none of the above

b

trade a) allows specialization which increases costs b) allows specialization, which reduces costs c) reduces specialization, which increases costs d) reduces specialization, which reduces costs

b

which of the following correct a) the gdp deflator is better than the CPI at reflecting the goods and services bought by consumers b)the CPI is better than the GDP deflator at reflecting the goods and services bought by consumers c) the GDP deflator and the DPI are equally good at reflecting the goods and services bought by consumers d) the GDP deflator is more commonly used as a gauge of inflation than the CPI is.

b

which of the following is not correct about most economic models a) they are composed of equations and diagrams b) they contribute very little to economists understanding of the real world c) they omit many features of the real world economy d) in constructing models, economists make assumptions

b

Tim mows the yard for his neighbors. He spends $1 on gas and charges them $20 for each lawn he mows. What's the total contribution to GDP each time Tim mows a yard? a) 1 b) $19 c) $20 d) $21

c

a favorable supply shock causes the price level to a) rise. To counter this a central bank would increase the money supply b) rise. To counter this is a central bank would decrease the money supply c) fall. to counter this a central bank would increase the money supply d) fall. to counter this a central bank would decrease the money supply

c

because the open economy macroeconomic model focuses on the long run it is assumed that a) GDP but not the price level is given b) the price level, but not the GDP is given c) both the price level and the GdP are given d) the price level and the gdp are variables to be determined by the model

c

consumer surplus a) is closely related to the supply curve for a product b) is represented by a rectangle on a supply-demand graph when the demand curve is a straight, downward sloping line c) is measured using the demand curve for a product d) does not reflect economic well being in most markets

c

if the Fed increases the rate at which it increases the money supply then unemployment is lower a) in the long run and the short run b) in the long run but not the short run c) in the short run but not the long run d) in neither the short run nor the long run

c

most financial decisions involve two related elements: a) advice and consent b) investment and taxes c) time and risk d) saving and consumption

c

sectoral shifts in demand for output a) create structural unemployment b) immediately reduce unemployment c)increase unemployment due to job search d) do not affect demand for labor

c

suppose that u.s. citizen s purchase more cars made I Korea and Koreans purchase more bonds issued by u.s. corporations other things the same, these actions a) raise both u.s. net exports and u.s. net capital outflows b) raise u.s. net exports and lower u.s. net capital outflows c) lower both u.s. net exports and u.s. net capital outflows d) lower u.s. net exports and raise us. net capital outflows

c

the banking system currently has 100 billion of reserves none of which are excess people hold only deposits and no currency and the reserve requirement is 10 percent if the fed lowers the reserve requirement to 5 percent and at the same time buys 10 billion worth of bonds then by how much does the money supply change? a) it rises by 200 billion b) it rises by 800 billion c) it rises by 1200 billion d) none of the above are correct

c

the price elasticity of demand for a good will be relatively large when a) there are no good substitutes available for the good b) the time period in question is relatively short c) the good is a luxury rather than a necessity d) all of the above

c

which of the following fed actions would both decrease the money supply a) buy bonds and raise the reserve requirement b)buy bonds and lower the reserve requirement c) sell bonds and raise the reserve requirements d) sell bonds and raise the reserve requirements

c

which of the following rise when the price level falls? a) interest rates b) the value of the dollar in the market for foreign exchange currency c) real wealth d) all of the above

c

which of the following would cause the real exchange rate of the U.S. dollar to appreciate a) the U.S. government budget deficit decreases b) capital flight from the U.S. c) the U.S. imposes import quotas d)none of the above

c

The effect of budget deficits on interest rates a) increases private investment, so eventually the capital stock rises b) increases private investment, so eventually the capital stock falls c) decreases private investment so eventually the capital stock rises d) decreases private investment so eventually the capital stock falls

d

When the Fed sells government bonds, the reserves of the banking system a)increase, so the money supply increases b) increase, so the money supply decreases c) decrease, so the money supply increases d) decrease, so the money supply decreases

d

Which of the following can tax cuts influence a) aggregate demand b) aggregate supply c) investment spending d) all of the above

d

over time a continued budget deficit leads to a) a higher capital stock and higher productivity b) a higher capital stock and lower productivity c) a lower capital stock and higher productivity d( a lower capital stock and lower productivity

d

the long run aggregate supply curve shifts right if a)immigration from abroad increases b) the capital stock increases c) technology advances d)all of the above are correct

d

the value of money rises as the price level a) rises, because the number of dollars needed to buy a representative basket of goods rises b) rises, because the number of dollars needed to buy a representative basket of goods falls c) falls, because the number of dollars needed to buy a representative basket of goods rises d) falls because the number of dollars needed to buy a representative basket of goods

d

which of the following is not correct a)the consumer price index gives economists a way of turning dollar figures into meaningful measures of purchasing power b) the consumer price index is used to monitor changes in the cost of living over time c) the consumer price index is used by economists to measure the inflation rate d) the consumer price index is used to measure the quantity of goods and services that the economy is producing

d

which of the following leads to a lower level of unemployment in the long run? a) both an increase in the size of the money supply and an increase in the money supply growth rate b) an increase in the size of the money supply but not an increase in the money supply growth rate c) an increase in the money supply growth rate but not an increase in the size of the money supply d) neither an increase in the size of the money supply nor an increase in the money supply growth rate

d

which of the following would shift the long run aggregate supply to the right? a) increased immigration from abroad b) a decrease in an imported natural resource c) opening the economy to international trade d) all of the above

d