ECON 1200 Final Studyguide

If an increase in the monetary base of $8 billion Increases the quantity of money by $64 billion, And the money multiplier is equal to -64 billion -8 -8 billion -1/8

Eight

The law demand and the foreign exchange market refers to the relationship between the Exchange rate and the quantity of US dollars demand Interest rate and exchange rate Interest rate and the quantity of US dollars demanded US price level and exchange rate

Exchange rate and the quantity of US dollars demanded

Which of the following is the central bank of the US?

Federal Reserve System

The quantity of dollars demanded by foreign nations increases as US residents purchase more foreign goods Foreigners purchase more US goods More US residents travel abroad US exports fall

Foreigners purchase more US goods

Checks ________ money and credit cards ___________ money. are;are not are;are are not;are arenot;are not

are; are not

Money is created by

banks making loans

in an open market purchase, the FED _________ government securities, which _______ bank reserves. buys increases Buys decreases Sells increases Sells decreases

buys; increases

the fundamental force that drives international trade is... absolute advantage comparative advantage law of diminishing returns law of increasing costs

comparative advantage

An increase in the currency drain Leads to an increase in excess reserves Decreases the size of money multiplier Results and an increase in deposits Results in an increase in required reserves

decreases the size of the money multiplier

Compared to the situation before international trade, after the United States imports a good, then production in the United States __________ and consumption in the United States _____________. increase;increase increase; decrease dec;inc dec;dec

decreases; increases

if the dollars value changes from 120 yen per dollar to 110 yen per dollar, the dollar Depreciated Appreciated Demanded Devalued

depreciated

A major purpose of tariffs is to... encourage imports encourage exports discourage imports discourage exports

discourage imports

If the United States sells beef to Japan, the US beef producer is paid with

dollars

Who benefits from a tariff on a good? domestic consumers of the good foreign gov domestic produces of the good foreign producers of the good

domestic producers of the good

with international trade, a country will specialize by producing only.. -goods with highest opportunity cost -goods with lowest opportunity cost -goods for which production takes fewer worker-hour than another country -goods for which production costs are more than average total cost

goods with lowest opportunity costs

M1 is a measure of money and includes currency and checking deposits liquidity and most liquid asset is money money and includes saving and currency monwy and includes savings and money market mutual funds

money and includes both currency and checking deposits

Is a country imposes a tariff on imported good, the tariff the price ________ in the importing country and ____________ the quantity of imports rasies;dec rasies;inc lowers;no change lowers;no change

raises; decreases

Which of the following statements about the gains from international trade is correct? everyone gains from international trade some win some lose, but gains outweigh losses some win some lose, but losses outweigh gains everyone loses from international trade

some people gain form international trade and some lose; though overall the gains exceed the losses

For a commercial bank, the term "reserves" refers to a bankers concern in making loans the profit that the bank contains at the end of the year The cash in its vaults and deposit the Federal Reserve The net interest that it earns on loans

the cash in it's vaults and its deposits at the Federal Reserve.

the required reserve ratio... Is the amount of money that things require borrowers to reserves in their accounts Is the fraction of the things total deposits that is required to be held in reserves Increases from withdrawals from a bank are made

is the fraction of a bank's total deposits that is required to be held in reserves

The United States has a comparative advantage in producing cotton is the US price of cotton before international trade is _________ The world price Less than Equal to Greater than Not comparable to

Less than

The slope of the planned aggregate expenditure is -Less than the slope of the 45° line not equal to zero -Greater than the slope of the 45° line -equal to slope of 45 degree line -equal to zero

Less than the slope of a 45° line but not equal to zero

The slope of the aggregate expenditure curve equals the change in Planned expenditures divided by the changing real GDP -Autonomous expenditure divided by the change real GDP -Government expenditure divided by the change real GDP -Real GDP divided by the change in planned expenditure

Planned expenditure divided by the change in real GDP.

It's a marginal propensity to consume Is 0.8,Every $10 increase in disposable income increases -consumption expenditure by 0.08 -consumption expenditure by $80 -saving by $0.20 -saving by $2.00

Saving by $2

"Dissaving" Occurs when -Income exceeds consumption expenditure -Saving is negative -The consumption function is below the 45° line drawn from the origin -Saving positive

Saving is negative

The banking system has just experienced an increase in deposits of $50,000. The currency drain ratio is 20% and the desired reserve ratio is 10%. How much is the increase in quantity of money? -200,000 -150,000 -180,000 -160,000

$180,000

When bank deposits increase from $1 million to $2 million, banks' required reserves increase from $100,000 to $200,000. The required reserve ratio is ________. 10.0 0.10 1.00 0.25

0.10

In Zealand, Banx desired reserve ratio is 20% and the currency drain also equals 20% the money multiplier equals -2.18 -3.33 5.0 3.0

3.0

in the above figure consumption and disposable income are equal at Any point along the consumption function -Saving the level one dollar trillion and disposable income $4 trillion -Disposable income at $0 A disposable income $2 trillion

A disposable income level of 2 trillion

Which of the following statements concerning tariffs is NOT true? results in a loss for domestic consumers of the good creates revenue for the gov decreases international trade leave the price of good unchanged

A tariff leaves the price of imports unchanged

The demand curve for us dollars slopes downward because as the dollar __________ US goods become_________ Expensive to foreign residents so they purchased fewer US goods and the quantity of dollars demanded decreases. Appreciates more Appreciates list Depreciates more depreciates less

Appreciates;More

The some of the components of aggregate expenditure that are not influenced by real GDP is called Induced expenditures The MPC Autonomous expenditures Autonomous consumption

Autonomous expenditures

Suppose the equilibrium level of expenditure is $13 trillion. If the real GDP Is $12 trillion, Then inventories are _______ Their target levels in real GDP will _______. Above; increase Above, decrease Below, increase below, decrease

Below;Increase

Which of the following statements is false? Disposable income-Savings=Consumption expenditure Consumption expenditure+ saving=disposable income Saving=Disposable income-Consumption expenditure Consumption expenditure=Saving-Disposable income

Consumption expenditure= Saving - Disposable income

The graph of the consumption function has consumption expenditure on the vertical axis and The interest rate on the horizontal axis Time on the horizontal axis Disposable income on the horizontal axis The consumer price index horizontal axis

Disposable income on the horizontal axis

What is the marginal propensity to consume? -The change in consumption expenditure dividing the change in disposable income -The percentage of disposable income that is consumed -One minus the fraction total disposable income that is saved -Percentage of total income that is consistent

The change in consumption and expenditure divided by the change in disposable income

Which of the phone and creates a demand for US dollars? Toyota Japanese firm purchasing land in Texas A US restaurant purchasing Mexican tomatoes A US tourist catching show in London The Japanese tourists catching a show in London

Toyota a Japanese firm purchasing land in Texas

Suppose that you find out from Amy L.L. Bean catalog that a sweater cost $30,In this case money is serving as a... Medium of exchange Unit of account Store of value Double coincidence of want

Unit of account

Suppose the world price of a good is $4. Based on the table below, the country will -import 20 export 20 import 10 export 10

import 20 units

The Fed's purchase of government securities could increase loans made by banks Be an effective anti-inflationary policy Decreased the price level and have no effect on real GDP Decrease bank reserves

increase loans made by banks