Econ HW 8.2
(Table: The Definition of the Money Supply) Refer to the table. What is the M2 money supply?
$535 million
(Figure: U.S. Marginal and Average Tax Rates) According to the tax rates shown in the figure, an individual who earns $63,700 a year, has no deductions, and claims no exemptions will pay income tax of:
$8,772.50.
If velocity is stable, then V equals
0%
This figure shows how real output growth reacts to a shock of a 10% increase in the price of oil. How long does it take for the economy to return to normal?
2.5 years
(Figure: Three AD Curves) Beginning at Point A in the accompanying diagram, a positive money shock could result in a short-run growth rate of:
3%.
For an aggregate demand curve with M = 10% and V = 0%, if inflation is 6%, then real growth is:
4%.
In the AD-AS model, an unexpected decrease in the growth rate of the money supply causes:
a leftward shift of the AD curve and then a downward shift of the SRAS curve.
From an initial equilibrium in the AD-AS model, an increase in consumption growth will initially cause inflation:
and real growth to increase.
Currently, marginal tax rates are:
Lower than in the past
In a regressive tax system, income tax as a share of income:
decreases as income increases.
As a result of a positive shock to C
inflation and output growth increase in the short run, but in the long run they return to the rates before the shock.
A bank is considered illiquid if
it has short-term liabilities greater than its short-term assets, but overall assets greater than liabilities.
Capital gains taxes are paid:
only when an asset is actually sold
A temporary positive shock to spending growth will lead to an increase in:
output and prices in the short run, but no change in either in the long run.
During the Great Depression, the long-run aggregate supply curve:
shifted inward.
An increase in money growth will cause output growth to increase in:
the short run only.
In the AD-AS model, money is not neutral in the short run if:
wages and prices are sticky.
If π < πe:
firms will reduce their output.
According to the quantity theory of money, an increase in money supply causes an increase in:
prices.
If the Fed wants to increase the money supply, it will typically:
purchase additional government bonds.
Deflation:
raises the real value of debts.
An aggregate demand shock is a:
rapid and unexpected shift in spending.
A major hurricane hitting the East Coast of the United States is an example of a:
real shock.
A tax with lower tax rates applied to people with higher incomes is called:
regressive.
An increase in expected inflation will cause the economy's long-run aggregate supply curve to:
remain unchanged.