ECON Cumulative

If nominal GDP is $10 trillion and real GDP is $8 trillion, the GDP deflator is

125

Imagine that you borrow $2,000 for one year and at the end of the year you repay the $2,000 plus $200 of interest. If the inflation rate was 8%, what was the real interest rate you paid?

2 percent

Refer to Table 9-8. Suppose the date in the table above reflect the price levels in the economy. What is the inflation rate in between 2019 and 2020?

20%

Refer to table 8-15. Consider the data on nominal GDP and real GDP (values are in billions of dollars). The base year used for calculating real GDP is

2020

A Ford Fusion car is produced in 2021 but sold (new) in 2022 to a family. According to the definition of GDP, in which year's GDP should it be counted?

2021 as part of Investment

If you invest $20,000 in a bond that earns 8% interest per year, how many years will it take to double your money?

8 years and 9 months

Countries with high rates of economic growth tend to have

a labor force that is more productive

A fractional reserve banking system is one in which baks hold less that 1-- percent of ______ as reserves

deposits

According to the World Bank, Albania does one of the worst jobs as a country enforcing the rule of law. The consequence of a weak rule of law is

difficulty in attracting investment and low economic growth

The labor force equals the number of people

employed plus unemployed

The purchase or building by a corporation of a facility in a foreign country is called

foreign direct investment

When firms benefit from the results of research and development they didn't pay for, we say firms

free ride

A student who just graduated from college but has not found a job would most likely be

frictionally unemployed

Countries that are more globalized tend to have

higher growth rates in real GDP per capita.

All of the following policies are ways for a country to promote long-run economic growth except

imposing stricter regulations to limit foreign direct investment

Stagflation occurs when

inflation rises and GDP falls.

The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off

investment and consumption spending

Which of the following information about fiat money is false? Fiat money

is backed by gold.

In a closed economy, which of the following components of GDP is not included?

net exports

The stated interest rate on a loan is the

nominal interest rate

Foreign direct investment occurs when a Chinese corporation

opens a new factory in France

In the United Staes, currency includes

paper money and coins in circulation

According to the text, there are three ways the government can help increase the accumulation of knowledge capital. What are they?

protecting intellectual property rights, subsidizing research and development, and subsidizing education

In terms of economic growth, the key measure of the standard of living is

real GDP per capita

Suppose the labor force stays constant, and the working-age population stays constant, but a greater number of persons who were unemployed become employed. The labor force participation rate will

remain constant

The basic aggregate demand and aggregate supply curve model helps explain

short-term fluctuations in real GDP and the price level

According to the text, economists consider full employment (also called the natural rate of unemployment) to occur when

the unemployment rate consists of only frictional and structural unemployment

Real GDP is GDP in a given year

valued in the prices of the base year

In calculating (nominal) GDP, the bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA

values final goods and final services at their market prices, multiplies them by the quantity produced, and then adds them up

discouraged workers are

workers who have stopped looking for work because they believe there are no jobs for them

Which of the following is a function that money serves?

All of the above are correct.

in a closed economy, which of the following equations reflects investment?

Y-C-G

Which of the following equations correctly measures GDP in an open economy (includes global exchanges)? Let GDP be noted as Y

Y=C+I+G+NX

Which of the following transactions represents the purchase of a final good?

Your family buys a new snowblower.

Most recessions in the United States since World War II have begun with

a decline in residential construction

On the long-run aggregate supply curve,

a decrease in the price level has no effect on the aggregate quantity of GDP supplied.

As a result of Kristy's deposit, Bank A's excess reserves increase by

$9,600

If real GDP in a closed economy is $40 billion, consumption is $20 billion, and government purchases are $10 billion, what is investment?

$10 billion

As a result of Kristy's deposit, Bank A's required reserves increase by

$2,400

The federal open market committee consist of seven members of the _____ and _______

Federal reserve's board of governors; five presidents from the other 11 federal reserve banks

Starbucks has 32,000 stores globally with 6,500 stores in the US and 750 stores in Mexico. The value of what the US-owned Starbucks companies produce in Mexico is included in the US ______ and the Mexican ______

GNP; GDP

The percent increase in the CPI from one year to the next is a measure of the

Inflation rate

Which of the following describes the growth in real GDP per person in the United States from 1900 to the present?

It has increased by more than eight times

What is potential GDP?

It is the level of real GDP in the long run.

Between 2020 and 2021, if an economy's exports rise by $8 million and its imports fall by $8 billion, by how much will GDP change between the two years, all else equal?

Net exports will increase GDP by $16 billion

During the month of May, 10 million workers moved from being classified as "unemployed" to being classified as "employed." As a result

The unemployment rate fell

How do lower household income taxed affect aggregate demand?

They increase disposable income, increase consumption, and increase aggregate demand

Short-run macroeconomics equilibrium occurs when

aggregate demand and short-run aggregate supply intersect

a bank will consider a college loan to a customer ______ and a customer's checking account to be _______

an asset; a liability

The process of an economy adjusting from a recession back to potential GDP in the long run without any government intervention is known as

an automatic mechanism

The international trade effect states that

an increase in the price level will lower net exports.

An increase in cyclical unemployment will result in

an increase in the unemployment rate

In economics, money is defined as

any asset people generally accept in exchange for goods and services

In 1912, Congress established the Federal Reserve system with the intention to putting an end to

bank panics

The period of expansion ends with a ________ and the period of recession ends with a ________.

business cycle peak; business cycle trough

An economic growth model explains

changes in real GDP per capita in the long run.

Which of the following price indices comes closest to measuring the cost of living of the typical household?

consumer price index

If you have trouble finding a job because of a downturn (contraction phase) in the overall economy, we would say that you are

cyclically unemployed

When the price of gasoline rises, some consumers begin riding their bikes more frequently or riding the bus instead of driving their cars. The fact that the CPI does not fully account for such changes in consumer behavior is called

substitution bias

an increase in the government budget surplus will shift the _______ curve for loanable funds to the ______ and the equilibrium real interest rate will _______.

supply; right; fall

Human capital refers to which of the following

the accumulated knowledge and skills workers acquire from education and training or from their life experiences

A negative supply shock in the short run causes

the aggregate supply curve to shift to the left

There is a federal budget deficit when

the government spends more that it collects in taxes

Which of the following would you expect to result in faster economic growth?

the invention of new computers that increase labor productivity

Potential GDP refers to

the level of GDP attained when all firms are producing at capacity.

What two factors are the keys to determining labor productivity?

the level of technology and quantity of capital per hour worked

Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy. As a result,

the long-run aggregate supply curve will shift to the right