econ 203 final-matthews
A U.S. firm exchanges dollars for yen and then uses them to buy Japanese goods. Overall as a result of these transactions A. both U.S. net capital outflow and U.S. net exports fall. B. U.S. net capital outflow rises and U.S. net exports fall. C. U.S. net capital outflow falls and U.S. net exports rise. D. both U.S. net capital outflow and U.S. net exports rise.
a
A country reported nominal GDP of $100 billion in 2010 and $75 billion in 2009. It also reported a GDP deflator of 125 in 2010 and 120 in 2009. Between 2009 and 2010, A. real output and the price level both rose. B. real output and the price level both fell. C. real output rose and the price level fell. D. real output fell and the price level rose. Hide Feedback
a
A creditor of a corporation holds A. bonds sold by the corporation. If the corporation experiences financial difficulties bond holders are paid before stock holders. B. stocks sold by the corporation. If the corporation experiences financial difficulties stock holders are paid before bond holders. C. bonds sold by the corporation. If the corporation experiences financial difficulties stock holders are paid before bond holders. D. stocks sold by the corporation. If the corporation experiences financial difficulties bond holders are paid before stock holders.
a
As the MPC gets close to 1, the value of the multiplier approaches A. infinity. B. 0. C. 1. D. None of the above is correct. Hide Feedback
a
Assume the multiplier is 5 and that the crowding-out effect is $30 billion. An increase in government purchases of $20 billion will shift the aggregate-demand curve to the A. right by $70 billion. B. right by $130 billion. C. right by $50 billion.
a
Between October 2014 and October 2015, the CPI in Canada rose from 120 to 124 and the CPI in Mexico rose from 210 to 229.1. What were the inflation rates for Canada and Mexico over this one-year period? A. 3.3 percent for Canada and 9.1 percent for Mexico B. 3.2 percent for Canada and 8.3 percent for Mexico C. 3.2 percent for Canada and 9.1 percent for Mexico D. 3.3 percent for Canada and 8.3 percent for Mexico
a
Darla puts her money into a bank account that earns interest. One year later she sees that the account has 6 percent more dollars and that her money will buy 7.5 percent more goods. A. The nominal interest rate was 6 percent and the inflation rate was -1.5 percent. B. The nominal interest rate was 13.5 percent and the inflation rate was 1.5 percent. C. The nominal interest rate was 6 percent and the inflation rate was 7.5 percent. D. The nominal interest rate was 13.5 percent and the inflation rate was 7.5 percent.
a
During a bank run, depositors decide to hold more currency relative to deposits and banks decide to hold more excess reserves relative to deposits. A. Both the decision to hold relatively more currency and the decision to hold relatively more excess reserves would make the money supply decrease. B. Both the decision to hold relatively more currency and the decision to hold relatively more excess reserves would make the money supply increase. C. The decision to hold relatively more currency would make the money supply increase. The decision to hold relatively more excess reserves would make the money supply decrease. D. The decision to hold relatively more currency would make the money supply increase. The decision to hold relatively more excess reserves would make the money supply decrease.
a
GDP is used as the basic measure of a society's economic well-being. A better measure of the economic well-being of individuals in society is A. GDP per person. B. government expenditures per person. C. saving per person. D. investment per business firm.
a
If the Kenyan nominal exchange rate declines, and prices are unchanged in Kenya and abroad, then the Kenyan real exchange rate A. declines B. does not change. C. rises. D. None of the above is necessarily correct.
a
If the U.S. has exports of $1.5 trillion and imports of $2.2 trillion, then the U.S. A. buys more from overseas then it sells overseas; it has a trade deficit. B. sells more overseas then it buys from overseas; it has a trade deficit. C. sells more overseas then it buys from overseas; it has a trade surplus. D. buys more from overseas then it sells overseas; it has a trade surplus.
a
If there are constant returns to scale, the production function can be written as A. Y/L = A F( 1, K/L, H/L, N/L). B. Y/L = A F(xL, xK, xH, xN). C. xY = 2xAF(L, K, H, N). D. L = AF(Y, K, H, N).
a
In examining the national income accounts of the closed economy of Nepotocracy you see that this year it had taxes of $100 billion, transfers of $20 billion, and government purchases of goods and services of $70 billion. You also notice that last year it had private saving of $70 billion and investment of $50 billion. In which year did Nepotocracy have a budget deficit of $20 billion? A. last year but not this year B. this year and last year C. neither this year nor last year D. this year but not last year
a
In measuring the stock of money in the U.S., M1 includes A. traveler's checks. B. savings deposits. C. credit cards D. none of the above. Hide Feedback
a
Lucy quit her job because she was unhappy at work. Genevieve was fired because she frequently surfed the Internet rather than working on her assigned tasks. Who is eligible for unemployment insurance benefits? A. neither Lucy nor Genevieve B. both Lucy and Genevieve C. Genevieve but not Lucy D. Lucy but not Genevieve
a
Suppose that the nominal exchange rate is .80 euro per dollar, that the price of a basket of goods in the U.S. is $500 and the price of a basket of goods in Germany is 400 Euro. Suppose that these values change to .90 euro per dollar, $600, and 600 euro. Then the real exchange rate would A. depreciate which by itself would make U.S. net exports rise. B. depreciate which by itself would make U.S. net exports fall. C. appreciate which by itself would make U.S. net exports rise. D. appreciate which by itself would make U.S. net exports fall.
a
The price level rises if either A. money demand shifts leftward or money supply shifts rightward; this rise in the price level is associated with a fall in the value of money. B. money demand shifts leftward or money supply shifts rightward; this rise in the price level is associated with a rise in the value of money. C. money demand shifts rightward or money supply shifts leftward; this rise in the price level is associated with a rise in the value of money. D. money demand shifts rightward or money supply shifts leftward; this rise in the price level is associated with a fall in the value of money.
a
When Chile experiences investment from abroad, it experiences, as a result, A. an increase in productivity. B. lower wages for Chilean workers. C. a decrease in Gross National Product (GNP). D. None of the above is corre
a
When the U.S. real interest rate falls A. U.S. purchases of foreign assets rise and foreign purchases of U.S. assets fall B. U.S. purchases of foreign assets and foreign purchases of U.S. assets fall C. U.S. purchases of foreign assets and foreign purchases of U.S. assets rise D. U.S. purchases of foreign assets fall and foreign purchases of U.S. assets rise
a
When the money market is drawn with the value of money on the vertical axis, as the price level decreases the quantity of money A. demanded decreases. B. supplied decreases. C. demanded increases. D. supplied increases.
a
Which of the following are human capital and physical capital, respectively? A. for a restaurant: the chefs' knowledge about preparing food and the equipment in the kitchen B. for a brick layer: her bricks and her tools C. for a gas station: the pumps and the cash register D. for a medical office: the building and the doctors' knowledge of medicine
a
Which of the following does purchasing-power parity conclude should equal 1? A. the real exchange rate but not the nominal exchange rate B. the nominal exchange rate but not the real exchange rate C. both the nominal and the real exchange rate. D. neither the nominal exchange rate nor the real exchange rate
a
Which of the following shifts short-run aggregate supply right? A. a decrease in the price of oil B. an increase in the minimum wage C. more people migrate abroad than immigrate from abroad D. an increase in the price level
a
Which of the following will not help to prevent bank runs? A. fractional reserve banking B. 100% reserve banking C. government insurance of deposits D. All of the above prevent bank runs.
a
Which of the following would make the equilibrium real interest rate decrease and the equilibrium quantity of loanable funds increase? A. The supply of loanable funds shifts right. B. The demand for loanable funds shifts right. C. The demand for loanable funds shifts left D. The supply of loanable funds shifts left.
a
if the nominal interest rate is 5 percent and the rate of inflation is 9 percent, then the real interest rate is A. -4 percent. B. 14 percent. C. -0.44 percent. D. 4 percent.
a because 5-9 not d
cost of the basket
add/ multiply the items in the basket by the price/ amount
A company in Panama pays for a U.S. architect to design a factory building. By itself this transaction A. increases U.S. imports and so increases the U.S. trade balance. B. increases U.S. exports and so increases the U.S. trade balance. C. increases U.S. exports and so decreases the U.S. trade balance. D. increases U.S. imports and so decreases the U.S. trade balance.
b
According to purchasing-power parity, which of the following necessarily equals the ratio of the foreign price level divided by the domestic price level? A. the real exchange rate, but not the nominal exchange rate B. the nominal exchange rate, but not the real exchange rate C. the real exchange rate and the nominal exchange rate D. neither the real exchange rate nor the nominal exchange rate
b
Economists at the Congressional Budget Office estimated that for 2012, the U.S. natural rate of unemployment was A. 3.0%. B. 5.5%. C. 8.5%. D. 1.5%.
b
Exchange rates are 100 yen per dollar, 0.8 euro per dollar, and 12 pesos per dollar. A bottle of beer in New York costs 6 dollars, 500 yen in Tokyo, 6 euro in Munich, and 84 pesos in Cancun. Where is the most expensive and the cheapest beer, in that order? A. Tokyo, Munich B. Munich, Tokyo C. Cancun, New York D. New York, Cancun
b
If you put $1,000 in the bank today at an interest rate of 6% what is its value in two years? A. $2,000(1.06) B. $1,000(1.06)2 C. $1,000 + $(1.06)2 D. None of the above are correct.
b
Initially, the economy is in long-run equilibrium. The aggregate demand curve then shifts $50 billion to the left. The government wants to change its spending to offset this decrease in demand. The MPC is 0.80. Suppose the effect on aggregate demand from a change in taxes is 4/5 the size of the change from government expenditures. There is no crowding out and no accelerator effect. What should the government do if it wants to offset the decrease in aggregate demand? A. Raise taxes by $40 billion dollars and increase expenditures by $50 billion dollars. B. Reduce taxes by $5.56 billion dollars and increase expenditures by $5.56 billion dollars. C. Reduce taxes by $10 billion dollars and increase expenditures by $10 billion dollars. D. Raise both taxes and expenditures by $5.56 billion dollars.
b
Metropolis National Bank is currently holding 2% of its deposits as excess reserves. Metropolis National Bank Assets Liabilities Reserves $60,000 Deposits $500,000 Loans $440,000 Refer to Table 29-9. Metropolis National Bank is currently holding 2% of deposits as excess reserves. Assuming that all banks have the same required reserve ratio, and then none want to hold excess reserves what is the value of the money multiplier? A. 8.25 B. 10 C. 12 D. 20
b
Open-market purchases by the Fed make the money supply A. decrease, which makes the value of money decrease. B. increase, which makes the value of money decrease. C. increase, which makes the value of money increase. D. decrease, which makes the value of money increase.
b
Other things the same if reserve requirements are decreased, the reserve ratio A. decreases, the money multiplier increases, and the money supply decreases. B. decreases, the money multiplier increases, and the money supply increases. C. increases, the money multiplier increases, and the money supply increases. D. increases, the money multiplier increases, and the money supply decreases.
b
Other things the same, as the maturity of a bond becomes longer, the bond will pay A. a lower interest rate because it has more risk. B. a higher interest rate because it has more risk. C. the same interest rate, because there is no relationship between term and risk. D. a lower interest rate because it has less risk.
b
Scenario 34-1. Take the following information as given for a small, imaginary economy: • When income is $10,000, consumption spending is $6,500. • When income is $11,000, consumption spending is $7,250. Refer to Scenario 34-1. The multiplier for this economy is A. 2.85. B. 4.00. C. 1.53. D. 7.00.
b
Sectoral shifts in demand for output A. create structural unemployment. B. increase unemployment due to job search. C. do not affect demand for labor. D. immediately reduce unemployment.
b
Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage. They may infer that the reward to working is A. temporarily high and so supply a larger quantity of labor. B. temporarily low and so supply a smaller quantity of labor. C. temporarily low and so supply a larger quantity of labor. D. temporarily high and so supply a smaller quantity of labor.
b
Table 29-5. The First Bank of Roswell Assets Liabilities Reserves $30,000 Deposits $200,000 Loans 170,000 Refer to Table 29-5. If the bank faces a reserve requirement of 20 percent, then it A. just meets its reserve requirement. B. needs $10,000 more reserves to meet its reserve requirements. C. has $10,000 of excess reserves. D. needs $20,000 more reserves to meet its reserve requirements.
b
The sale of bonds A. to raise money is called equity finance, while the sale of stocks to raise funds is called debt finance. B. to raise money is called debt finance, while the sale of stocks to raise funds is called equity finance. C. and stocks to raise money is called equity finance. D. and stocks to raise money is called debt finance.
b
Which of the following both reduce net exports? A. exports rise, imports rise B. exports fall, imports rise C. exports fall, imports fall D. exports rise, imports fall
b
Which of the following is correct concerning diversification? A. It only reduces firm-specific risk, but most of the reduction comes from increasing the number of stocks in a portfolio to well above 30. B. It only reduces firm-specific risk; much of the reduction comes from increasing the number of stocks in a portfolio from 1 to 30. C. It only reduces market risk, but most of the reduction comes from increasing the number of stocks in a portfolio to well above 30.
b
A decrease in government spending A. increases the interest rate and so investment spending increases. B. increases the interest rate and so decreases investment spending decreases. C. decreases the interest rate and so investment spending increases. D. decreases the interest rate and so investment spending decreases.
c
According to classical macroeconomic theory, changes in the money supply affect A. real GDP but not the price level. B. real GDP and the price level. C. the price level, but not real GDP. D. neither the price level nor real GDP.
c
An economic expansion caused by a shift in aggregate demand remedies itself over time as the expected price level A. falls, shifting aggregate supply right. B. rises, shifting aggregate demand left. C. rises, shifting aggregate supply left. D. falls, shifting aggregate demand right.
c
Because the CPI is based on a fixed basket of goods, the introduction of new goods and services in the economy causes the CPI to overestimate the cost of living. This is so because A. new goods and services cost less than existing goods and services. B. new goods and services are always of higher quality than existing goods and services. C. when a new good is introduced, it gives consumers greater choice, thus reducing the amount they must spend to maintain their standard of living. D. new goods and services cost more than existing goods and services.
c
Currently a country has real GDP per person of 500. Raising capital per worker by one would increase output per worker by 4. Other things the same, which of the following long-run combinations are consistent with the effects of this country increasing its saving rate? A. real GDP per person is 480 and raising capital per worker by one would increase output per worker by 5 B. real GDP per person is 520 and raising capital per worker by one would increase output per worker by 5 C. real GDP per person is 520 and raising capital per worker by one would increase output per worker by 3 D. real GDP per person is 480 and raising capital per worker by one would increase output per worker by 3
c
If the interest rate is below the Fed's target, the Fed should A. buy bonds to decrease bank reserves. B. sell bonds to increase bank reserves. C. sell bonds to decrease bank reserves. D. buy bonds to increase bank reserves.
c
If there is excess demand for money, then people will A. deposit more money into interest-bearing accounts, and the interest rate will rise. B. withdraw money from interest-bearing accounts, and the interest rate will fall. C. withdraw money from interest-bearing accounts, and the interest rate will rise. D. deposit more money into interest-bearing accounts, and the interest rate will fall.
c
Last year the imaginary nation of Panglossia had real GDP of 400 billion. This year it had real GDP of 472.5 billion. Which of the following changes in population is consistent with a 5 percent growth rate of real GDP per person over the last year? A. The population decreased from 60 million to 50 million. B. The population increased from 70 million to 80 million. C. The population increased from 80 million to 90 million. D. The population decreased from 75 million to 72 million.
c
Lydia, a citizen of Italy, produces scarves and purses that she sells to department stores in the United States. Other things the same, these sales A. increase U.S. net exports and have no effect on Italian net exports. B. increase U.S. net exports and decrease Italian net exports. C. decrease U.S. net exports and increase Italian net exports. D. decrease U.S. net exports and have no effect on Italian net exports.
c
Michael decides to hire some additional workers for his roofing company. The equilibrium wage is $17 per hour. Efficiency wage theory suggests that it is reasonable for Michael to offer A. less than $17 per hour because some people would be willing to work for less. B. $17 per hour. C. more than $17 per hour in order to attract a better pool of applicants. D. less than $17 an hour to prevent shirking.
c
Most economists believe that fiscal policy A. only affects aggregate demand and not aggregate supply. B. only affects aggregate supply and not aggregate demand. C. primarily affects aggregate demand. D. primarily effects aggregate supply.
c
Scenario 26-3. Assume the following information for an imaginary, open economy. Consumption = $1,000; investment = $200; net exports = -$50; taxes = $230; private saving = $225; and national saving = $150. Refer to Scenario 26-3. For this economy, GDP equals A. $1,480. B. $1,505. C. $1,455. D. $1,460
c
Suppose banks decide to hold fewer excess reserves relative to deposits. Other things the same, this action will cause the A. money supply to rise. To reduce the impact of this the Fed could buy Treasury bonds. B. money supply to fall. To reduce the impact of this the Fed could sell Treasury bonds. C. money supply to rise. To reduce the impact of this the Fed could sell Treasury bonds. D. money supply to fall. To reduce the impact of this the Fed could buy Treasury bonds.
c
Suppose you win a small lottery and you are given the following choice: You can (1) receive an immediate payment of $10,000 or (2) three annual payments, each in the amount of $3,600, with the first payment coming one year from now, the second two years from now, and the third three years from now. You would choose to take the three annual payments if the interest rate is A. 5 percent, but not if the interest rate is 6 percent. B. 4 percent, but not if the interest rate is 5 percent. C. 3 percent, but not if the interest rate is 4 percent. D. 2 percent, but not if the interest rate is 3 percent.
c
The Federal Reserve A. is not responsible for conducting the nation's monetary policy, and it plays a role in regulating banks. B. is responsible for conducing the nation's monetary policy, but it plays no role in regulating banks. C. is responsible for conducting the nation's monetary policy, and it plays a role in regulating banks. D. is not responsible for conducing the nation's monetary policy, and it plays no role in regulating banks.
c
The Federal Reserve was created A. as a result of the Great Depression B. according to the standards enforced by NATO C. in 1913 by Congress D. by President Kennedy
c
The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi. The local unit of currency is the taz. Aggregate banking statistics show that collectively the banks of Tazi hold 300 million tazes of required reserves, 75 million tazes of excess reserves, have issued 7,500 million tazes of deposits, and hold 225 million tazes of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all money is on deposit at the bank. Refer to Scenario 29-2. Suppose the Bank of Tazi loaned the banks of Tazi 10 million tazes. Suppose also that both the reserve requirement and the percentage of deposits held as excess reserves stay the same. By how much would the money supply change? A. 250 million tazes B. 125 million tazes C. 200 million tazes D. None of the above is correct.
c
The length of time until a bond matures is called the A. maturity. B. intermediation. C. term. D. perpetuity.
c
Velocity is computed as the A. price level times the money supply divided by real GDP. B. real GDP times the money supply divided by the price level. C. price level times real GDP divided by the money supply. D. real GDP times the money supply divided by the rate at which money changes hands.
c
When inflation rises, the nominal interest rate A. falls, and people desire to hold less money B. falls, and people desire to hold more money. C. rises, and people desire to hold less money. D. rises, and people desire to hold more money. Hide Feedback
c
When the money market is drawn with the value of money on the vertical axis, if the money supply rises A. the price level and the value of money rise. B. the price level and the value of money fall. C. the price level rises and the value of money falls. D. the price level falls and the value of money rises.
c
When the money market is drawn with the value of money on the vertical axis, long-run equilibrium is obtained when the quantity demanded and quantity supplied of money are equal due to adjustments in A. nominal interest rates. B. the money supply. C. the value of money. D. real interest rates.
c
Which of the following is not correct? A. During a recession firms cut back production and workers are laid off. B. The model of aggregate demand and aggregate supply is used by most economists to analyze short-run fluctuations. C. A recession is a period of declining real incomes and declining unemployment. D. A depression is a severe recession.
c
Which of the following statements is correct? A. Expectations about the business cycle have no impact on stock prices. B. A general, persistent decline in stock prices may signal that the economy is about to enter a recession because low stock prices mean that corporations have had low profits in the past. C. A general, persistent decline in stock prices may signal that the economy is about to enter a recession because low stock prices may mean that people are expecting low corporate profits. D. A general, persistent decline in stock prices may signal that the economy is about to enter a boom period because people will be able to buy stock for less money.
c
Yvonne takes out a fixed-interest-rate loan and then inflation turns out to be higher than she had expected it to be. The real interest rate she pays is A. higher than she had expected, and the real value of the loan is lower than she had expected. B. higher than she had expected, and the real value of the loan is higher than she had expected. C. lower then she had expected, and the real value of the loan is lower than she had expected. D. lower than she had expected, and the real value of the loan is higher than she had expected.
c
hat is measured along the horizontal axis of the left-hand graph? A. the opportunity cost of holding money B. real output C. the quantity of money D. nominal output Hide Feedback
c
GDP is not a perfect measure of well-being; for example, A. GDP incorporates a large number of non-market goods and services that are of little value to society. B. GDP fails to account for the quality of the environment. C. GDP places too much emphasis on the value of leisure. D. All of the above are correct.
correct is b, you put d
consumer price index
current price over the base price divided by 2
A country has domestic investment of $200 billion. Its citizens purchase $600 of foreign assets and foreign citizens purchase $300 of its assets. What is national saving? A. $600 billion B. $400 billion C. $800 billion D. $500 billion
d
A person who believes strongly in the use of fundamental analysis to choose a portfolio of stocks A. has a better chance of outperforming the market if stock prices follow a random walk than if they do not follow a random walk. B. is spending his or her time wisely if the efficient markets hypothesis is correct. C. almost always chooses to hold index funds in his or her portfolio rather than actively-managed funds. D. is interested in the likely ability of a corporation to pay dividends in the future.
d
According to the theory of efficiency wages, if a firm stops paying efficiency wages it is likely to see a(n) A. decrease in the number of job applicants and an increase in how long workers stay on the job. B. increase in the number of job applicants and an increase in how long workers stay on the job. C. increase in the number of job applicants and a decrease in how long workers stay on the job. D. decrease in the number of job applicants and a decrease in how long workers stay on the job.
d
Amy discovers a way to produce water heaters so they are less expensive and use less natural gas. Amy's discovery is A. physical capital. If Amy's discovery leads to lower natural gas prices, it has made natural gas less scarce. B. physical capital. If Amy's discovery leads to lower natural gas prices, it has made natural gas scarcer. C. technological knowledge. If Amy's discovery leads to lower natural gas prices, it has made natural gas scarcer. D. technological knowledge. If Amy's discovery leads to lower natural gas prices, it has made natural gas less scarce.
d
Household spending on education is counted in which component or subcomponent of GDP? A. consumption of nondurable goods B. consumption of durable goods C. investment D. consumption of services
d
If Germany purchased more goods and services abroad than it sold abroad last year, then it had A. negative net exports which is a trade surplus. B. positive net exports which is a trade surplus. C. positive net exports which is a trade deficit. D. negative net exports which is a trade deficit. Hide Feedback
d
If a country had a trade surplus of $100 billion and then its exports rose by $40 billion and its imports rose by $30 billion, its net exports would now be A. $90 billion. B. $60 billion. C. $70 billion. D. $110 billion Hide Feedback
d
If a government has a budget surplus, then public saving A. is negative but increases national saving. B. is positive but decreases national saving. C. is negative and decreases national saving. D. is positive and increases national saving.
d
If the CPI was 68 in 1965 and is 285 today, then $100 today purchases the same amount of goods and services as A. $419.12 purchased in 1965. B. $68.00 purchased in 1965. C. $32.47 purchased in 1965. D. $23.86 purchased in 1965.
d
If traveler's checks were $1000 higher and saving deposits were $500 higher, M1 would be A. M2 and M1 would be $1,500 higher. B. $500 higher and M2 would be $1,500 higher. C. $1,000 high and M2 would be $500 higher.. D. $1,000 higher and M2 would be $1,500 higher.
d
In 2010, the imaginary nation of Mainland had a population of 6,000 and real GDP of 120,000. In 2011 the population was 6,200 and real GDP of 128,960. Over the year in question, real GDP per person in Mainland grew by A. 2 percent, which is high compared to average U.S. growth over the last one-hundred years. B. 4 percent, which is about the same as average U.S. growth over the last one-hundred years. C. 2 percent, which is about the same as average U.S. growth over the last one-hundred years. D. 4 percent, which is high compared to average U.S. growth over the last one-hundred years.
d
In the open-economy macroeconomic model, the market for loanable funds equates national saving with A. national consumption minus domestic investment. B. net capital outflow. C. domestic investment. D. None of the above is correct.
d
Sam has no job but keeps applying to get a job with a business that is unionized. He is qualified and he finds the pay attractive, but the firm is not hiring. Sam is A. structurally unemployed. Structural unemployment does not exist in the long run. B. frictionally unemployed. Frictional unemployment exists even in the long run. C. frictionally unemployed. Frictional unemployment does not exist in the long run. D. structurally unemployed. Structural unemployment exists even in the long run.
d
Suppose monetary neutrality holds and velocity is constant. A 4 percent increase in the money supply A. increases the price level by more than 4 percent. B. increases the price level by less than 4 percent. C. increases real GDP by 4 percent. D. increases the price level by 4 percent.
d
The reserve requirement is 4 percent, banks hold no excess reserves and people hold no currency. If the Fed sells $10,000 worth of bonds, what happens to the money supply? A. it increases by $200,000 B. it decreases by $200,000 C. it increases by $250,000 D. it decreases by $250,000 Hide Feedback
d
The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected, some firms will have A. higher than desired prices, which leads to a decrease in the aggregate quantity of goods and service supplied. B. higher than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied. C. lower than desired prices, which leads to a decrease in the aggregate quantity of goods and services supplied D. lower than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied.
d
When he was 18, Hussam put $100 into an account at an interest rate of 8 percent. He now has $158.69 in this account. For how many years did Hussam leave this money in his account? A. 7 years B. 8 years C. 5 years D. 6 years
d
When looking at a graph of aggregate demand, which of the following is correct? A. There are real variables on both the vertical and horizontal axes. B. The variable on the vertical axis is real; the variable on the horizontal axis is nominal C. There are nominal variables on both the vertical and the horizontal axes. D. The variable on the vertical axis is nominal; the variable on the horizontal axis is real
d
When the Fed conducts open-market purchases, A. banks buy Treasury securities from Fed, which increases the money supply. B. banks buy Treasury securities from the Fed, which decreases the money supply. C. it buys Treasury securities, which decreases the money supply. D. it buys Treasury securities, which increases the money supply.
d
When the Fed sells government bonds, A. the money supply increases and the federal funds rate decreases. B. the money supply increases and the federal funds rate increases. C. the money supply decreases and the federal funds rate decreases. D. the money supply decreases and the federal funds rate increases.
d
Which of the following items is included in M2? A. large time deposits B. corporate bonds C. credit cards D. money market mutual funds
d
You put $75 in the bank one year ago and forgot about it. The bank sends you a notice that you now have $81 in your account. What interest rate did you earn? A. 5 percent B. 6 percent C. 7 percent D. 8 percent
d
he amount of revenue a firm receives for the sale of its products minus its costs of production as measured by its accountants is the firm's A. dividend. B. retained earnings. C. economic, or real, profit. D. earnings.
d
Dollar prices and relative prices are both nominal variables. a. TRUE b. FALSE
false
Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left. a. TRUE b. FALSE
false
Fractional reserve banking is a system where banks must hold an amount of cash based on a percentage of its loans. a. TRUE b. FALSE
false
Most economist agree that money changes real GDP in both the short and long run. a. TRUE b. FALSE
false
Over the past several decades, the difference between the labor-force participation rates of men and women in the U.S. has gradually increased. a. TRUE b. FALSE
false
The future value of $1 saved today is $1/(1 + r). a. TRUE b. FALSE
false
The recessions associated with the business cycle come at regular intervals. a. TRUE b. FALSE
false
The theory of liquidity preference is largely at odds with the basic ideas of supply and demand. a. TRUE b. FALSE
false
The theory of liquidity preference was developed by Irving Fisher. a. TRUE b. FALSE
false
marginal utility in a graph looks like..
it raises the levels out like the top left of a circle
how to calculate reserve ratio
onverting the percentage of deposit required to be held in reserves into a fraction, which will tell you what fraction of each dollar of deposits must be held in reserves.
calculating the number of uneployed
people that are in the working force but have been looking for a job and cant find one
inflation rate
price from new year times the CPI / base CPI
net exports
refer to the value of a country's total exports minus the value of its total imports. It is used to calculate a country's aggregate expenditures, or GDP, in an open economy.
when the quantity of money supplied is great than the demanded the price level with
rise
net national production
the total market value of all final goods and services produced by the factors of production of a country or other polity during a given time period, minus depreciation.
According to the rule of 70, if you earn an interest rate of 3.5 percent, your savings will double about every 20 years. a. TRUE b. FALSE
true
For the U.S. economy, the most important reason for the downward slope of the aggregate-demand curve is the interest-rate effect. a. TRUE b. FALSE
true
If a firm produces a good and then adds it to its inventory rather than selling it, for the purposes of GDP accounting the firm is considered to have "purchased" the good so it will count as part of that period's investment expenditures. a. TRUE b. FALSE
true
Minimum-wage laws matter most for the least skilled and least experienced members of the labor force, such as teenagers. a. TRUE b. FALSE
true
Skeptics of government policy to reduce taxes on saving argue that it would primarily benefit the rich. a. TRUE b. FALSE
true
The unemployment rate equals the percentage of the labor force that is unemployed. a. TRUE b. FALSE
true
When unions raise wages in one part of the economy, the supply of labor increases in other parts of the economy, which reduces wages in industries that are not unionized. a. TRUE b. FALSE
true
Every unit of good x that is produced in the United States is exported to other countries. An increase in the price of good x shows up A. in the consumer price index and in the GDP deflator. B. in the GDP deflator, but not in the consumer price index. C. in neither the consumer price index nor in the GDP deflator. D. in the consumer price index, but not in the GDP deflator. Hide Feedback
you put a correct awnser is b