Econ 2213 Final

If you are earning $60,000 this year and the CPI is 150 your real income in base year prices is

40,000

With a reserve requirement of 20%, the money multiplier is

5

BLS data shows that the working age population is 150,000, 50,000 people are considered as 'not in labor force', 95,000 are employed and 5,000 people are counted as unemployed. What is the unemployment rate?

5%

Which of the following is an example of a positive statement?

An increase in the price of gasoline will cause a reduction in the amount purchased.

If the CPI was 200 last year and it increased to 220, what was the inflation rate?

10%

The United States is divided into __________ Federal Reserve districts, each with a district bank.

12

If your bank charges you nominal interest rate of 3% but inflation is 1%, what is the real interest rate you are paying?

2%

If the economy is experiencing demand-pull inflation, the Federal Reserve will adopt

contractionary money policy

All of the following are included in measurement of money supply except

credit cards

When workers are out of work because the economy is in a recession, their unemployment is considered to be

cyclical unemployment

Suppose you deposit $500 cash to your savings deposit account, what is the overall effect on M1 and M2?

Neither M1 nor M2 change

If the Commerce department announces that US economic growth was 2%, it means that

Real GDP growth was 2%

An increase in the price of an important factor of production causes

a leftward shift in the supply curve.

Which of the following people would be counted as unemployed?

a retired school teacher looking for work to supplement her pension

Ceteris paribus, when interest rates fall,

aggregate demand increases

Core inflation is calculated based on the Consumer Price Index that ___________________ bought by typical urban consumers.

all items except food and energy

z is a Canadian citizen working in the U.S. Her income is included in _____________ National Income and _______ GDP.

canada; US

Privately owned resources and unregulated markets is the main feature of

capitalist economy

The study of economics is primarily concerned with

choices that are made to make the best use of resources to satisfy wants .

When the Keynesian simple spending multiplier is equal to 2, an initial decrease in investment spending of $10 billion, will

decrease Aggregate Demand by $20 billion.

An appropriate fiscal policy response to reduce inflation would be to

decrease government expenditures and increase taxes.

If half of all unemployed individuals suddenly gave up looking for work, the unemployment rate would ________ and the labor force participation rate would ________

decrease; decrease

If inflation in Japan increases compared to the US inflation,

demand for US dollars will increase and supply of US dollars will decrease

Vanilla and chocolate ice cream are substitutes of each other. If the price of vanilla ice cream decreases, an economist would explain that

demand for chocolate ice cream will decrease

The interest rate that banks charge other banks for borrowing reserves is the:

federal funds rates

Within the Federal Reserve who is in charge of the monetary policy decisions?

federal open market committee

Which of the following is an example of capital?

glue

Government budget surplus occurs when

government expenditures are less than tax revenue.

the size of the labor force is

greater than the number of employed workers as long as there are some unemployed workers.

The unique feature of a progressive income tax is that the higher one's income, the __________ proportion of income is paid in taxes.

higher

Improvement in production technology will

increase aggregate supply

Given aggregate supply, when there is an increase in aggregate demand, it leads to

increase in RGDP and price level.

Cost push inflation occurs because of

increase in cost or production

Crowding out is a potential problem for expansionary fiscal policy, It could happen as a result of

increase in interest rate following increase in budget deficit.

When an economy experiences stagflation, there is

increase in unemployment along with rising prices.

A fall in prices of resources will

increase short run aggregate supply.

Which of the following would be most likely to increase the demand for downtown parking in a large city?

more freeways leading to the downtown area

If the Federal Reserve wants to use expansionary monetary policy, it will do all the following except

open market sales

keynesiain

sticky

The idea that every choice has an opportunity cost is expressed as

there is no such thing as free lunch

How does the federal government finance budget deficit?

treasury securities

Short Run Aggregate Supply curve is _____________ and Long Run Aggregate Supply curve is ______

upward sloping; vertical

There is scarcity in the world because

wants are unlimited, resources are limited

Look at the following data: Consumption = $813 billion; Exports = $43 billion; Imports = $33 billion; Investment = $423 billion; Government purchases = $320 billion; Depreciation of capital = $10 billion and Tax revenue= $10 billion. What is the GDP by expenditure approach?

$1566 bil

If you deposit $100 in your bank when the reserve requirement is 20%, what is the maximum loan your bank can offer a borrower from your deposit?

$80

Suppose the US population is 300 million. If 200 million people are of working age, 145 million are employed, and 5 million are unemployed, what is the labor force participation rate?

75%

When the disposable income rises by $2000 and consumption rises by $1600, the marginal propensity to consume is __________ %.

80%

Which of the following demonstrates the Law of Demand?

Dave buys more donuts at $0.25 each than at $0.50 each.

Demand for US dollars in foreign exchange market comes from

Foreign consumers buying American goods and services.

Which of the following would not be included in the calculation of GDP?

Sandy, who is unemployed receives $400 of unemployment compensation.

Which of the following will result in the Aggregate Demand curve shifting to its left?

Weak consumer confidence

If the economy is experiencing recession, the Federal Reserve will adopt

expansionary monetary policy

If there is unexpected inflation,

lenders lose and borrowers gain

An increase in supply of chocolate chip cookies, ceteris paribus, would result in a

lower equilibrium price and a higher equilibrium quantity

Banks create money when they:

make loans & create money

Which of the following is not a function of the Federal Reserve System?

making loans to the public

Gross Domestic Product equals the

market value of all final goods and services produced in the country

An economy exhibits productive efficiency if it produces

maximum output with given resources and technology.

John paid $600 to buy an Apple iPad. He used that $600 of money as

medium of exchange

The phase of a business cycle when Real Gross Domestic Product is decreasing is called a/an

recession

In the simple Circular Flow model, households

sell resources and buy goods and services.

Which of the following is not a monetary policy tool of the Federal Reserve?

setting the tax rates

The Natural Unemployment rate for the US economy is estimated to be 5%. If the BLS announces that the unemployment rate this month is 7.9%, it means

the cyclical unemployment rate is 2.9%

The basic idea of opportunity cost is that

the decision to use resources in one activity means that they cannot be used elsewhere.