ECON Final Exam
The short run aggregate supply curve has a(n) ________ slope because as prices of ________ rise, prices of ________ rise more slowly.
positive; final goods & services; inputs
The Federal Reserve's four goals of monetary policy are...
price stability, high employment, economic growth, and stability of financial markets and institutions.
If Ebenezer Scrooge spends rather than saves his vast wealth he will...
slow economic growth because he is reducing the amount of funds available for investment.
If whole tomatoes were money, what function of money would be the hardest for tomatoes to satisfy?
store of value
We say that the economy is at full employment if the unemployment rate is equal to...
the natural rate of unemployment.
Increases in real GDP since 1900 can actually underestimate growth in the standard of living for Americans since 1900 because...
the quality of health care that exists today was not available in 1900.
Real GDP will increase only if...
the quantity of final goods & services produced rises
If labor productivity growth slows down in a country, this means that the growth rate in ________ has declined.
the quantity of goods or services that can be produced by one hour of work
Gross Domestic Product is calculated by summing up...
the total market value of final goods and services produced in the economy during a period of time.
Suppose, in 2018, you purchased a house built in 2003. Which of the following would be included in the gross domestic product for 2018?
the value of the services of the real estate agent
Actual investment will equal planned investment only when...
there is no unplanned change in inventories.
In a closed economy, private saving is equal to which of the following? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers)
Y - C- T + TR
The quantity theory of money predicts that in the long run, inflation results from the...
money supply growing at a faster rate than real GDP.
Suppose you withdraw $500 from your checking account and bury it in a jar in your backyard. If the required reserve ratio is 10 percent, checking account deposits in the banking system as a whole would drop up by a maximum of...
$5,000
Suppose the working-age population of a fictional economy falls into the following categories: 90 are retired or homemakers; 60 have full time employment; 20 parttime employment; 20 do not have employment and are actively looking; and 10 would like employment but do not have employment. The official unemployment rate as calculated by the U.S. Bureau of Labor would equal
(20/100) x 100
The Soviet Union's economy grew rapidly in terms of GDP per hour worked in the 1950s, but eventually this growth slowed. Why did this occur?
Capital per hour worked grew rapidly from 1950 to 1980, but technological change occurred very slowly.
Which of the following explains why employment only rises at a slow pace at the end of a recession?
Firms are hesitant to rehire laid off workers as they continue to operate below capacity.
In 2008, the Treasury and Federal Reserve took action to save large financial firms such as Bear Stearns and AIG from failing. Which of the following is one reason why these measures weretaken?
The bankruptcy of a large financial firm would force the firm to sell its holdings of securities, which could cause other firms that hold these securities to also fail.
If the economy is slipping into a recession, which of the following would be an appropriate fiscal policy?
a decrease in taxes
Suppose you decide to borrow money from an online peer-to-peer lending site. On the T-account for the funder of the loan for this transaction, the funds from the investor would be classified as________, and the loan made to you would be classified as ________.
a liability; an asset
A bank will consider a car loan to a customer __________ and a customer's checking account to be ____________.
an asset; a liability
When actual inflation is less than expected inflation...
borrowers lose & lenders gain.
The largest proportion of M1 is made up of...
checking account deposits.
If the price level rose in three consecutive years from 100 to 120 to 140, then the annual inflation rate over those years would...
decrease.
Borrowers are ________ of loanable funds, and lenders are ________ of loanable funds.
demanders; suppliers
What causes the unemployment rate as measured by the Bureau of Labor Statistics to understate the true extent of joblessness?
discouraged workers
From an initial long−run macroeconomic equilibrium, if the Federal Reserve anticipated that next year aggregate demand would grow significantly faster than long−run aggregate supply, then the Federal Reserve would most likely...
increase interest rates
If workers and firms know that the Federal Reserve is following an expansionary monetary policy, workers and firms will expect inflation to ________ and will adjust wages so that the real wage________.
increase; remains unchanged
Policies to promote growth by increasing saving and investment work through...
increasing the supply of loanable funds, lowering the interest rate, raising the level of investment in physical capital.
Commodity money has value...
independent of its use as money.
If the per−worker production function shifts down...
it now takes more capital per hour worked to get the same amount of real GDP per hour worked.
Because of the slope of the aggregate demand curve we can say that a decrease in the price level...
leads to a higher level of real GDP demanded.
The Fed seeks to promote stability of financial markets because...
lower output occurs over time when there is not an efficient matching of savers and borrowers.
U.S. net export spending rises when...
the growth rate of U.S. GDP is slower than the growth rate of GDP in other countries.