every study plan and chapter test from chap 1-12
The labor force is the number of people employed plus the _____.
# unemployed
If saving is $850 billion, investment is $500 billion, government expenditure on goods and services is $600 billion, and net exports is $100 billion, then calculate private sector balance.
$350 billion
The U.K. pound is trading at 1.50 U.S. dollars per U.K. pound. There is purchasing power parity at this exchange rate. The interest rate in the United States is 1 percent a year and the interest rate in the United Kingdom is 2.0 percent a year. What is the U.S. interest rate differential? What is the U.K. pound expected to be worth in terms of U.S. dollars one year from now? The U.S. interest rate differential is nothing percent.
-1
The marginal propensity to consume is 0.8, the marginal tax rate is 0.25, and the marginal propensity to import is 0.2. The autonomous tax multiplier is _______.
-1.33
The marginal propensity to consume is 0.8, the marginal tax rate is 0.20, and the marginal propensity to import is 0.14. The autonomous tax multiplier is _______.
-1.6
Choose the statement about the long-run Phillips curve that is incorrect.
. An unexpected increase in aggregate demand shifts the long-run Phillips curve rightward.
A financial institution is a firm that operates on both sides of the markets for _____: It _____ in one market and _____ in another.
. financial capital; borrows; lends
A fall in the expected future exchange rate ______ the supply of U.S. dollars. Upper A decrease in the world demand for U.S. exports ______ the supply of U.S. dollars.
. increases; does not change
The demand for money is the relationship between the quantity of money demanded and the _____, when all other influences on the amount of money that people wish to _____ remain the same.
. nominal interest rate; hold
Inflation results when ______.
. the quantity of money increases rapidly
William Gregg owned a mill in South Carolina. In December 1862, he placed a notice in the Edgehill Advertiser announcing his willingness to exchange cloth for food and other items. Here is an extract: 1 yard of cloth for 1 pound of bacon 2 yards of cloth for 1 pound of butter 4 yards of cloth for 1 pound of wool 8 yards of cloth for 1 bushel of salt Calculate the relative price of 1 pound of bacon1 pound of bacon in terms of pounds of butterpounds of butter. If the price of butterbutter is $0.300.30 a pound, what do you predict is the money price of a pound of woolpound of wool? >>> Answer to 2 decimal places. If the price of butterbutter is $0.30 a pound, you would predict that the price of a pound of woolpound of wool is $ nothing
.5 .6
Amber, a computer science student, has noticed that for every problem she works, her grade increases by a half a percent. She decides to work 200 problems before her next exam and try for a perfect 100. The marginal benefit to Amber of working a problem is ________.
.5%
An economy with no income taxes or imports has a marginal propensity to consume of 0.75. The multiplier in the long run is _______.
0
If disposable income increases from $4 trillion to $7 trillion, saving increases from $1.5 trillion to $2 trillion, and nothing else changes, the marginal propensity to save is _____.
0.17
In one hour, Sue can produce 60 caps or 18 jackets and Tessa can produce 60 caps or 24 jackets. Sue's opportunity cost of producing a cap is ______ jackets and Tessa's opportunity cost of producing a cap is ______ jackets.
0.3; 0.40
If the US interest rate is 1.5 percent, Canada's interest rate is 1 percent, the US inflation rate is 1.2 percent, and Canada's inflation rate is 0.70 percent, then calculate the US interest rate differential.
0.5 percent
If equilibrium expenditure changes by $50 billion that results from an increase in autonomous taxes by $80 billion, find the autonomous tax multiplier.
0.625
If disposable income increases from $4 trillion to $7 trillion, consumption expenditure increases from $3.5 trillion to $5.5 trillion, and nothing else changes, the marginal propensity to consume is _____.
0.67
An economy has a consumption function of C = 15 + 0.7Y, investment of 8, government expenditure of 12, exports of 20, and an import function of M = 0.2Y. What is equilibrium real GDP?
110
An economy has a consumption function of C = 10 + 0.8Y, investment of 6, government expenditure of 10, exports of 10, and an import function of M = 0.1Y. What is equilibrium real GDP?
120
You plan to travel in Europe this summer. If you do, you won't be able to take your usual summer job that pays $9 comma 0009,000 for the summer, and you won't be able to live at home for free. The cost of transportation is $1 comma 0001,000, visas cost $300300, and living expenses are $2 comma 0002,000. What is the opportunity cost of your plan to travel in Europe?
12300 (ALL TOGETHER)
The figure shows the flows of expenditure and income in PacificaPacifica. During 2013, flow A was $13,134 billion, flow B was $9,162 billion, flow D was $3,340 billion, and flow E was negative $−$777 billion. Calculate GDP and government expenditure. >>> Answer to 1 decimal place. During 2013, GDP was $ gov expend was
13134 1409
An economy has a consumption function of C = 10 + 0.8Y, investment of 6, government expenditure of 10, exports of 10, and an import function of M = 0.1Y. If government expenditure increases to 15, what is the increase in equilibrium expenditure?
16.65
Over the past 100 years, growth was most rapid during the ______ and slowest during the ______.
1960s; Great Depression
The table provides official estimates of U.S. wealth and U.S. saving in three years. The change in U.S. wealth exceeds U.S. saving in ______. U.S. saving exceeds the change in U.S. wealth in ______.
1997 and 1998; none of the years in table
An economy has a consumption function of C = 15 + 0.7Y, investment of 8, government expenditure of 12, exports of 20, and an import function of M = 0.2Y. What is the multiplier for this economy?
2
If the money price of a cup of coffee is $1 and the money price of gum is 50 cents per pack, then the relative price of a cup of coffee in terms of a pack of gum is _____.
2
Over the past 100 years, the average growth rate of U.S. real GDP per person is _ percent.
2
If the monetary base increases by $1 million and the quantity of money increases by $2.5 million, then the money multiplier is _____.
2.5
An economy has a consumption function of C = 15 + 0.7Y, investment of 8, government expenditure of 12, exports of 20, and an import function of M = 0.2Y. If government expenditure increases by 10, what is the increase in equilibrium expenditure?
20
Suppose that in 2014 China's real GDP is growing at 7 percent a year and its population is growing at 0.5 percent a year. If these growth rates continue, then China's real GDP per person in ______ will be twice what it is in 2014.
2025
The money price of a pack of frozen burritos is $0.50 and the money price of a jar of pasta sauce is $1.50. The opportunity cost of a jar of a jar of pasta sauce is _______.
3.00 packs of frozen burritos, which is the relative price of a jar of pasta sauce
An economy has a consumption function of C = 10 + 0.8Y, investment of 6, government expenditure of 10, exports of 10, and an import function of M = 0.1Y. What is the multiplier for this economy?
3.33
Use the (approximate) facts about the U.S. economy to answer the following questions. What was the inflation rate in 2005 and 2009? How do you know? The inflation rates in 2005 and 2009 were _____ percent and _____ percent respectively because the inflation rate equals _____ . Use the (approximate) facts about the U.S. economy to answer the following questions. What happened to the price of a bond between 2005 and 2009? How do you know? The price of a bond _____ between 2005 and 2009 because the _____.
3;0 remained unchanged; nominal interest rate remained unchanged
Use the (approximate) facts about the U.S. economy to answer the following questions. 1. What was the inflation rate in 2005 and 2009? How do you know? The inflation rates in 2005 and 2009 were _____ percent and _____ percent respectively because the inflation rate equals _____ . What happened to the price of a bond between 2005 and 2009? How do you know? The price of a bond _____ between 2005 and 2009 because the _____. What happened to the demand for loanable funds between 2005 and 2009? How do you know? Between 2005 and 2009, the government budget deficit increased, so the demand for loanable funds _____ between 2005 and 2009. Did the change in the government budget deficit crowd out some investment? The change in the government budget deficit _____ crowd out some investment because the _____. What happened to the quantity of saving and investment? The quantity of saving _____ and the quantity of investment _____.
3;0 nominal remain unchanged increased did; real interest rate rose increased; decreased
An economy is at potential GDP and the price level is 100 in the figure. If aggregate demand unexpectedly increases, the inflation rate is ______.
4 percent a year
Suppose that the velocity of circulation of money is constant and real GDP is growing at a constant 4 percent a year. To achieve an inflation target of 1 percent a year, the central bank grows the quantity of money at nothing percent a year. Deflation will be created if the growth rate of the quantity of money is _______.
5% less than 4 percent a year
Hyperinflation is an inflation rate of _____ or higher that grinds the economy to a halt and causes a society to collapse.
50 percent a month
Both Mia and Mario produce only the item in which they have a comparative advantage. Then they trade one pasta for one pizza. Before specialization and trade started, Mia and Mario were each producing 6 dishes of pasta and 6 pizzas an hour. The total gains from trade are ______ dishes of pasta and ______ pizzas an hour.
6, 6
The Population Survey in Blogsville for the past month is given in the table: In Blogsville last month, ______ million people were in the labor force and ______ million people were in the working-age population.
75; 97
In 2013 and in 2014, consumers in Dexter consumed only books and pens. The prices and quantities for 2013 and 2014 are listed in the table. The reference base period for Dexter's CPI is 2013, and 2013 is also the year of the Consumer Expenditure Survey. The inflation rate in 2014 is ______ percent.
76
The real wage rate is $_____ when the money wage rate is $2,000 and the price level is $25.
80
In 2013 and in 2014, consumers in Dexter consumed only books and pens. The prices and quantities for 2013 and 2014 are listed in the table. The reference base period for Dexter's CPI is 2013 and 2013 is also the year of the Consumer Expenditure Survey. The CPI in 2014 is ______.
98.5
Consider the following events. Event 1: Growth in the world economy slows. Event 2: The world price of oil rises. Event 3: U.S. labor productivity declines. Choose the statement that is correct.
A classical macroeconomist and a monetarist recommend that taxes be kept low to avoid disincentive effects for all of the events and a Keynesian recommends active fiscal policy and monetary policy to offset all events.
Choose the statement about a crawling peg that is incorrect.
A crawling peg makes the exchange rate fluctuate wildly.
Choose the correct statement.
A credit card is not a means of payment.
Choose the statement that is incorrect.
A government budget surplus competes with investment for funds.
Choose the statement that is incorrect about the Eurozone economy.
A rise in the expected inflation rate shifts the short-run Phillips curve rightward.
Choose the statement about money that is incorrect.
A. Inflation brings a rising value of money.
Which of the following is an example of absolute advantage?
A. Tom does his math homework in 2 hours while Harry takes only 30 minutes to do the same task.
The PPF shows a tradeoff because when Hillary's Hobby Factory produces more model cars, ______.
A. it decreases the quantity of toy trains that it produces
In ______ cycle theory, the rational expectation of the price level, which is determined by potential GDP and expected aggregate demand, determines the money wage rate and the position of the SAS curve. In ______ cycle theory, past rational expectations of the current price level influence the money wage rate and the position of the SAS curve.
A. new Keynesian; new classical B.
An economy has a consumption function of C = 10 + 0.8Y, investment of 6, government expenditure of 10, exports of 10, and an import function of M = 0.1Y. What is the equation of the aggregate expenditure curve?
AE = 36 + 0.7Y
The equation of the aggregate expenditure curve is given by _______.
AE = A + [b(1minust)minusm]Y
Choose the statement that is incorrect.
Against the Chinese yuan, the dollar appreciated between 2005 and 2014.
Production efficiency occurs when we produce goods and services at the lowest possible cost.
Allocative efficiency occurs when goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit.
Choose the statement that is incorrect.
Along the LAS curve the money wage rate is constant and the real wage rate rises as the price level rises.
Choose the statement that is incorrect.
Along the SAS curve, the real wage rate and the price level change by the same percentage.
______ earns ______. Land earns rent. Labor earns wages. Capital earns interest. Entrepreneurship earns profit.
An oil deposit is an example of landland, which earns rentrent.
Choose the statement about the long-run Phillips curve that is incorrect.
An unexpected increase in aggregate demand shifts the long-run Phillips curve rightward.
Choose the statement that is incorrect.
An unexpected inflation or deflation has no effect on the economy.
2. The price of oil falls unexpectedly and aggregate supply increases by $50 billion. What type of output gap appears? If the central bank responds to close the output gap, does Shell Island experience inflation or deflation? _____ gap appears and the central bank closes the output gap, aggregate demand _____ and a _____ is created.
An inflationary; decreases; cost-push deflation
The table shows the aggregate demand and short-run aggregate supply schedules of Shell Island in which potential GDP is $600 billion. The economy is at full-employment. The price of oil falls unexpectedly and aggregate supply increases by $50 billion. What type of output gap appears? If the central bank responds to close the output gap, does Shell Island experience inflation or deflation? _____ gap appears and the central bank closes the output gap, aggregate demand _____ and a _____ is created.
An inflationary; decreases; cost-push deflation
Aqua Springs makes the following four statements about bottled spring water. Which statement best describes the firm's quantity supplied in the bottled water market?
At a price of $1 bottle, we plan to sell 2,000 bottles per day.
Jeb makes the following four statements about peanuts. Which statement best describes his quantity demanded in the peanut market?
At a price of $1 per pack, I plan to buy 2 packs of peanuts per week.
______ is triggered by a decrease in autonomous expenditure and ______ is triggered by an increase in autonomous expenditure.
A recession; an expansion
The Bureau of Labor Statistics reports six alternative measures of the unemployment rate. Choose the correct statements. a. Upper U dash 5 measures the job losers. b. Upper U dash 3 adds discouraged workers to the official unemployment rate. c. Upper U dash 1 measures those who are unemployed for 15 weeks or more. d. Upper U dash 3 is the official unemployment rate.
B and C
Choose the statement that is incorrect.
B. All unemployment at the natural unemployment rate is structural unemployment.
The natural unemployment rate ______.
B. fluctuates because the frictions and the amount of structural change fluctuate
The main influences on the quantity of money that people and businesses plan to hold include all of the following except ______.
B. the number of depository institutions in the economy
The quantity of U.S. dollars supplied in the foreign exchange market depends on all of the following except ______.
B. world demand for U.S. exports
Big Lobster sells lobster and fish, and so too does H Salt. If Big Lobster's opportunity cost of preparing lobster exceeds H Salt's opportunity cost of preparing lobster, then all the following are true except ______. If H Salt and Big Lobster decide to specialize and trade, then the source of the gains from the trade between H Salt and Big Lobster is _______.
Big Lobster has a comparative advantage in lobster divergent opportunity cost
Suppose the exchange rate is 90 yen per U.S. dollar and the United States wants to keep the exchange rate at a target rate of 90 yen per U.S. dollar. If the demand for U.S. dollars decreases, the Fed ______.
Buys dollars to raise the echange rate
The figure shows the aggregate demand, short-run aggregate supply, and long-run aggregate supply curves for the economy of Tomorrowland. The economy is currently at point A. A cost-push rise in the price level will initially move the economy to point ______ and to point ______.
C when the money prices of raw materials rise; D when aggregate demand increases
Choose the statement that is incorrect.
C. The CPI calculation assumes that everyone shops at discount stores and no one shops at convenience
Choose the statement that is incorrect.
C. The United States and Great Britain were the only countries who suffered the Great Depression
First Call, Inc. is a smartphone company. First Call expects its profit to crash next year. If everything else remains the same, how does this decrease in expected profit influence First Call's demand for loanable funds? This decrease in expected profit _______ the demand for loanable funds and brings _______ the demand for loanable funds curve.
C. decreases; a leftward shift of
The required reserve ratio is the ______. The Fed is the lender of last resort, which means _______.
C. minimum percentage of deposits that depository institutions are required to hold as reserves if depository institutions are short of reserves, they can borrow from the Fed
Read the news clip, then answer the following question. Using the news clip's definition of productivity, choose the statement that is incorrect.
Changing the number of hours employed changes the growth of productivity.
China's real GDP per person was 13,165 yuan in 2013 and 14,088 yuan in 2014. India's real GDP per person was 49,516 rupees in 2013 and 51,521 rupees in 2014. By maintaining their current growth rates, _______.
China will double its standard of living first
Choose the statement that is incorrect.
Classical growth theory tells us that technological change induces a level of saving and investment that makes capital per hour of labor grow indefinitely.
Choose the statement that is incorrect.
Commercial banks are financial institutions that accept deposits, provide payment services, and make loans to firms and households.
Choose the statement that is incorrect.
D. The bias in the CPI eliminates the need for people to shop in discount stores
A fall in the expected future exchange rate ______ the demand for U.S. dollars. Upper A decrease in the U.S. demand for imports _______ the demand for U.S. dollars.
D. decreases; does not change
Upper A decrease in current income taxes ______ the supply of loanable funds today because it ______. in expected future income ______.
D. increases; disposable income, which encourages greater saving decreases the supply of loanable funds today because households with larger expected future income will save less today
An economy is at full employment when ______.
D. the unemployment rate equals the natural unemployment rate
Who in the following statements is a discouraged worker?
Dan is available to work but has not looked for a job in the past eight weeks because of repeated applications but no single offer.
Which of the following is an example of comparative advantage?
Dave makes 4 pizzas giving up 6 jars of milk shakes while Rob makes 2 pizzas giving up 4 jars of milk shakes.
If real GDP and aggregate expenditure are less than equilibrium expenditure, firms' inventories decrease , Firms ______ production, and real GDP ______.
Decreases inc;inc
Choose the statement that is incorrect.
Deposits are not money because you cannot settle a debt with a deposit.
Choose the correct statement.
Deposits are money, checks are not money, and credit cards are not money.
Planned saving + Planned consumption expenditure = ______.
Disposable income
The figure shows the aggregate demand, short-run aggregate supply, and long-run aggregate supply curves for the economy of Tomorrowland. The economy is currently at point A. A demand-pull rise in the price level will initially move the economy to point _______ and to point _______.
E when aggregate demand increases; D when the money wage rate rises
Choose the statement that is incorrect.
Each additional hour of labor increases real GDP by successively larger amounts.
Choose the statement about real business cycle theory that is incorrect.
Economists have not been able to isolate the RBC theory impulse.
choose the correct statement
Entrepreneurship is the human resource that organizes labor, land, and capital.
The central bank of the United States is the ______. A central bank performs all of the following functions except ______.
Federal Reserve System it provides debt counseling for individuals
The liabilities of the Fed are ______, and these liabilities along with ______ make up the monetary base.
Federal Reserve notes held by households and businesses and reserves of depository institutions; coins issued by the Treasury
The monetary base is the sum of _______. The monetary base is equal to _______.
Federal Reserve notes, coins, and depository institution deposits at the Fed; the liabilities of the Fed plus coins issued by the Treasury
Read the news clip, then answer the following questions. The article defines productivity as ______. Real GDP per person is ______.
GDP divided by the number of people employed; real GDP divided by the population
Choose the statement that is incorrect.
Growth in average hours per worker increase labor productivity.
Which of the following statements describes a change in the quantity supplied and which describes a change in supply? I Farms are selling less chicken because the price of turkey has increased. II Farms are selling less chicken because the price of chicken has fallen. III Farms are selling more chicken because the price of chicken has risen. IV Farms are selling more chicken because the cost of chicken feed has fallen.
I and IV are changes in supply and II and III are changes in the quantity supplied.
Which of the following statements about the market for chicken describes a change in the quantity demanded and which describes a change in demand? I People are buying less chicken because the price of beef has fallen. II People are buying less chicken because the price of chicken has increased. III People are buying more chicken because the price of chicken has fallen. IV The cost of chicken feed has increased.
I is a change in demand and II and III are changes in the quantity demanded.
Which of the following statements is about a normal good, which is about an inferior good, which is about both, and which is about neither? I With incomes falling in the recession, people are buying more chicken. II People are buying more beef now that incomes have increased. III People are buying more chicken because the price of chicken has fallen. IV With higher incomes people are switching from chicken to beef.
I is inferior, II is normal, III is neither, and IV is both
Read the news clip, then answer the following questions. According to this news clip, consumption expenditure increased as household wealth decreased. This change in consumption expenditure could be attributed to ______ in disposable income or ______ in expected future income.
INCEASED an increase; an increase
Choose the statement that is incorrect.
If a depository institution fails, its deposits are guaranteed up to a maximum of $25,000 per depositor per bank.
Choose the statement that is incorrect.
If a financial institution's net worth is positive, the institution must be solvent and liquid.
Choose the correct statement about purchasing power parity.
If purchasing power parity does not prevail, the demand for U.S. dollars changes and the supply of U.S. dollars changes.
Choose the statement about fixed exchange rates that is incorrect.
If the Fed wanted to fix the U.S. dollar exchange rate against the Japanese yen, the Fed would have to buy U.S. dollars to prevent the exchange rate from rising above the target value.
Choose the statement that is incorrect.
If the demand for Treasury bonds increases, the interest rate on the Treasury bond rises.
Which of the following statements by Aqua Springs demonstrates that the firm's selling plans obey the law of supply?
If the price of bottled water falls and all the other influences on our selling plans remain the same, we will cut back on production and lay off some workers
If real GDP increases by $2 million and potential GDP increases by $3 million and the marginal propensity to import is 0.2, by how much do imports change?
Imports increase by $400,000
Choose the statement about the business cycle that is incorrect.
In a business cycle, real GDP shows steady growth and steady inflation.
Choose the statement that is incorrect.
In a deflation, the inflation rate is positive but decreasing in consequent years.
Choose the statement that is incorrect.
In the United States in 2009, 22 million fewer people had jobs than in 1989.
Choose the statement that is incorrect.
In the long run, China manages its exchange rate to keep its export prices low and to make it easier to compete in world markets.
Choose the statement that is incorrect.
In the long run, a change in the nominal exchange rate brings an equivalent change in the real exchange rate.
If real GDP and aggregate expenditure are greater than equilibrium expenditure, firms' inventories increase . Firms _______ production, and real GDP _______.
Increases dec;dec
If in the long run, the U.S. dollar appreciates against the Japanese yen, then ______.
Japan has created money at a faster pace than has the United States, and the price level in Japan has risen more rapidly than the U.S. price level
Deflation in Japan arose because _______.
Japan's money stock did not grow fast enough to accommodate the growth of potential GDP and a trend rise in velocity.
Read the news clip, then answer the following questions. The components of the 787 Dreamliner that Boeing produces in Japan are part of ______ GDP. The aircraft that are assembled in the United States and sold to All Nippon Airways are part of ______ GDP. The purchase of the 787 Dreamliner by ANA is recorded as an ______ in Japan's GDP and as an ______ in U.S. GDP.
Japans;US import;export
Which of the following is an example of money price?
Joe paid $15 to buy a pizza box from McDonald's.
Read the news clip, then answer the following question. Based on this news clip, Paul Krugman most likely follows the ______ school of thought and Ben Bernanke most likely follows the ______ school of thought.
Keynesian or new Keynesian; Keynesian or new Keynesian
Read the news clip, then answer the following question. Based on this news clip, Barack Obama most likely follows the ______ school of thought and John McCain most likely follows the ______ school of thought.
Keynesian or new Keynesian; classical or new classical
In ______ cycle theory, animal spirits are the main source of fluctuations in aggregate demand. In ______ cycle theory, fluctuations in both investment and consumption expenditure, driven by fluctuations in the growth rate of the quantity of money, are the main source of fluctuations in aggregate demand.
Keynesian; monetarist
In ______ cycle theory, fluctuations in investment driven by fluctuations in business confidence are the main source of fluctuations in aggregate demand. In ______ cycle theory, fluctuations in both investment and consumption expenditure, driven by fluctuations in the growth rate of the quantity of money, are the main source of fluctuations in aggregate demand.
Keynesian; monetarist
Choose the statement that is incorrect.
Labor hours are all equally productive.
Which of the following statements about the monetarist view of the macroeconomy is incorrect?
Left alone, the economy rarely operates at full employment.
Choose the statement that is incorrect.
Liquid assets have a higher interest rate than securities.
Read the news clip, then answer the following questions. The MPS in the United States is lower than the MPS in China, and the MPC in the United States is higher than the MPC in China. A reason for the difference in the values between the countries may be ______.
Lower Higher U.S. consumers are more confident about the future
The two main official measures of money in the United States today are ______. The two main official measures of money in the United States ______ really money.
M1 and M2; are
M2 consists of _____ plus _____ and _____ deposits, _____, and other deposits.
M1; savings deposits; small time; money market funds
Which of the following equations is incorrect?
MPC + MPS = Upper DeltaYD
The equation of exchange is ______ and it is true ______.
MV = PY; by definition
Choose the statement that is incorrect.
Malthusian growth theory holds that real GDP per person growth slows as the opportunity cost of women in the labor force increases.
Choose the statement that is incorrect.
Most economists believe that the Ricardo-Barro effect holds in the loanable funds market.
______ sees the economy as a perpetual motion machine.
New growth theory
Leisure Island has 50 hours of labor a day that it can use to produce entertainment and good food. The table shows the maximum quantity of each good that Leisure Island can produce with different quantities of labor. 1. Can Leisure Island produce 4 shows and 14 meals a week?
No
2. If Leisure Island produces 4 shows and 9 meals a week, is production efficient? 3. If Leisure Island produces 8 shows and 5 meals a week, do the people of Leisure Island face a tradeoff? 4. Suppose that Leisure Island produces 4 shows and 12 meals a week. Calculate the opportunity cost of producing 2 additional shows a week? The opportunity cost of producing 2 additional shows per week is
No Yes 3 meals per week
The table to the right shows the values of disposable income and consumption expenditure for each of the past four quarters. Could these levels of disposable income and consumption expenditure be on the same consumption function? ___ because consumption expenditure changed by _____ than disposable income in _______ .
No; more; 2017 comma Upper Q 4
Which of the following statements illustrates structural unemployment?
Outsourcing resulted in many job losses in the mid 2000s.
Choose the statement that is incorrect.
Over the business cycle, aggregate supply fluctuates around potential GDP.
Use the data reported by the Current Population Survey in July 2014 to answer the following question. 1. Who does the BLS classify as being unemployed, a part-time worker, an employed person, a discouraged worker, and not in the labor force? Explain your classification. ______ are unemployed, ______ is a part-time worker, _____ is a discouraged worker, and _____ is not in the labor force. How will the labor force change if the following events occur? 1. Sarah starts a second job 2. Pat finds a good job and is hired. 3. Mary takes a job at McDonald's while she waits to start her new job. How will the unemployment rate change if Sarah quits and starts to search for a full-time job? The unemployment rate will _____ if Sarah quits and starts to search for a full-time job. How will the labor force participation rate change if Kevin starts creating football apps in his garage and they turn out to be very popular? The labor force participation will _____ Kevin starts creating football apps in his garage and they turn out to be very popular.
Pat and Mary; Sarah; Kevin; Johnie Events 1, 2, and 3 will not change the labor force. rise rise
In September 2007 before the financial crisis and recession, the Fed had assets of $800 billion, mainly short-term government securities. In June 2012 after two rounds of quantitative easing, the Fed's assets totaled $2,600 billion. Many of those assets were long-term securities and not all of them were government securities. Choose the statement that is incorrect. Between 2007 and 2012 the monetary base _______.
Quantitative easing decreased bank reserves. increased
Defenders of RBC theory claim all of the following except _______.
RBC theory is consistent with a negligible intertemporal substitution effect
Which of the following is an example of financial capital?
Rachel has taken a loan to buy a new home.
Choose the statement that is incorrect.
Real GDP per person grows whenever real GDP grows.
Read the news clip, then answer the following questions. ______ cycle theory would say that the rise in unemployment is not cyclical but is a change in the natural unemployment rate.
Real business
Which of the following statements illustrates frictional unemployment?
Robin is quitting his current job to find another that has better prospects.
Choose the statement that is incorrect.
Slower economic growth is always better than rapid economic growth because of reduced environmental damage.
Choose the correct statements. 1. The unemployment that arises from normal labor turnover is frictional unemployment. nothing 2. Students who leave school and look for a job are frictionally unemployed. nothing 3. Structural unemployment increases during a recession and decreases during an expansion. nothing 4. Frictional unemployment increases during a recession and decreases during an expansion. nothing
Statements 1 and 2 are correct.
Choose the statements concerning neoclassical growth theory that are true. 1. As incomes increase both the birth rate and the death rate decrease. nothing 2. Economic growth will stop if technology stops advancing. nothing 3. Neoclassical growth theory was developed in the late 19 th century. nothing 4. Neoclassical growth theory states that growth in real GDP per person can persist indefinitely. nothing
Statements 1 and 2 are correct.
Choose the correct statements. 1. The Chicago Fed implements the policy decisions of the FOMC. 2. FOMC stands for Federal Open Market Committee. 3. The chairman and the other six members of the Board of Governors are members of the FOMC. 4. Current chairman of the Fed is Alan Greenspan.
Statements 2 and 3 are correct.
Choose the correct statements. 1. In a growing economy comma the exchange rate is always rising. nothing 2. The foreign exchange market is made up of thousands of people comma including international tourists and foreign exchange brokers. 3. The foreign exchange market is made up of thousands of people including international tourists and foreign exchange brokers. 4. Foreign currency is always in the form of notes or coins. nothing
Statements 2 and 3 are correct.
Choose the correct statements. a. There is no relationship between the opportunity cost of producing an additional good measured on the x dash axis andThere is no relationship between the opportunity cost of producing an additional good measured on the x-axis and the opportunity cost of producing an additional good measured on the y dash axis.the opportunity cost of producing an additional good measured on the y-axis. nothing b. Opportunity cost of a good cannot be accurately measured along a PPF because the PPF shows only two goods.Opportunity cost of a good cannot be accurately measured along a PPF because the PPF shows only two goods. nothing nothing c. The opportunity cost of producing more x comma illustrated as a movement between two points on the PPF is equal toThe opportunity cost of producing more x, illustrated as a movement between two points on the PPF is equal to the inverse of the opportunity cost of producing more y comma illustrated as a movement between the same two points in thethe inverse of the opportunity cost of producing more y, illustrated as a movement between the same two points in the nbsp opposite direction. opposite direction. d. Opportunity cost of a good is the decrease in the quantity produced of one good divided by the increase in the quantityOpportunity cost of a good is the decrease in the quantity produced of one good divided by the increase in the quantity produced of another good as we move along the PPF .produced of another good as we move along the PPF. nothing
Statements c and d are correct.
______ bring business cycle turning points.
Swings in autonomous expenditure
I = ______.
S + (TminusG) + (MminusX)
Which of the following statements about the Keynesian view of the macroeconomy is incorrect?
Technological change is the most significant influence on both aggregate demand and aggregate supply.
Which of the following illustrates an efficient outcome?
Ted cuts the price of his sausages and his profit increases.
Choose the statement about the Consumer Price Index that is incorrect. CPI = ______.
The CPI is defined to equal 1.00 for a period called the reference base period. (Cost of CPI basket at current-period prices divided by Cost of CPI basket at base-period prices) times 100
Which of the following economies is facing a stagflation?
The European economy is experiencing a decrease in real GDP for three quarters and a rise in the price level.
Which of the following statements illustrate monetary policy?
The Fed has raised the federal funds rate by 0.3 percent.
Which of the following statements illustrate fiscal policy?
The US government has proposed a hike in the corporate tax rate.
How can the change in U.S. wealth differ from U.S. saving?
The change in wealth includes changes in the prices of assets owned and saving excludes these items.
The left graph shows the consumption function and the right graph shows the saving function. Suppose there is a decrease in household wealth.
The consumption function shifts from A to B and the saving function shifts from C to D.
Choose the statement that is incorrect.
The demand for labor is the relationship between the quantity of labor demanded and the money wage rate.
Choose the statement about growth in labor productivity that is incorrect.
The demand for labor increases, the production function does not change, but a movement occurs along the production function.
The table gives the demand and supply schedules for hamburgershamburgers. What is the equilibrium price of a hamburgerhamburger and the equilibrium quantity of hamburgershamburgers per day?
The equilibrium quantity of hamburgers is 30 a day. The equilibrium price is $5 a hamburger.
Choose the statement that is incorrect.
The greater the default risk, the greater is the supply of loanable funds.
Choose the statement concerning firms' investment decisions that is incorrect.
The higher the real interest rate, the greater is the demand for loanable funds, other things remaining the same.
Labor productivity is rising at a rapid rate in China and wages are rising at a similar rate. Choose the statement that is incorrect.
The increase in labor productivity has no effect on short-run aggregate supply.
Choose the correct statement.
The inflation rate is the annual percentage change in the price level.
Choose the correct statement.
The level of aggregate expenditure that occurs where the AE curve intersects the 45degrees line is equilibrium expenditure.
Every week, SallySally plays the pianoplays the piano for threethree hourshours, and herher grade on each FrenchFrench test is 8585 percent. Last week, after playing pianoplaying piano for threethree hourshours, SallySally considered playingplaying for another hour. SheShe decided to playplay for another hour and cut herher study time by one hour. But last week, herher FrenchFrench grade fell to 8080 percent. Given that SallySally spent a fourthfourth hour playing pianoplaying piano, what can you conclude about the marginal benefit and marginal cost of the thirdthird hour of playing pianoplaying piano?
The marginal benefit of the first hour of playing guitar exceeded its marginal cost.
Choose the statement that is incorrect.
The nominal interest rate is the real interest rate adjusted to remove the effects of inflation on the buying power of money.
Which of the following statements by Tom demonstrates that his buying plans obey the law of demand?
The only thing that's changed is the price of textbooks: they've become more expensive and now I'm not buying as many.
Pam, Pru, and Pat are deciding how they will celebrate the New Year. Pam prefers to go on a cruise, is happy to go to Hawaii, but does not want to go skiing. Pru prefers to go skiing, is happy to go to Hawaii, but does not want to go on a cruise. Pat prefers to go to Hawaii or to take a cruise, but does not want to go skiing. Their decision is to go to Hawaii. What is the opportunity cost of the trip to Hawaii for each of them?
The opportunity cost for Pam and Pat is a cruise and for Pru it is skiing.
Choose the statement about the Fed that is incorrect.
The policy decisions of the Federal Open Market Committee are implemented each month by a different Federal Reserve Bank.
Choose the statement that is incorrect.
The presence of a banking system in Britain in the middle 1700s started the Industrial Revolution.
Choose the statement that is incorrect.
The price level falls if aggregate supply increases at a persistently slower rate than aggregate demand.
Dairies make low-fat milk from full-cream milk. In the process of making low-fat milk, the dairies produce cream, which is made into ice cream. In the market for low-fat milk, which of the following events illustrates the law of supply?
The price of low-fat milk rises.
Choose the statement about an increase in the population that is incorrect.
The production function shifts upward.
Choose the correct statement.
The quantity of real GDP demanded is the sum of the real consumption expenditure, investment, government expenditure, and exports minus imports.
Choose the statement that is incorrect.
The return to full employment in an expansion phase of the business cycle is economic growth.
Choose the statement that is incorrect.
The unemployment rate includes all underutilized labor.
Choose the statement that is incorrect.
The unemployment rate is zero when the economy is at a business cycle peak.
Choose the statement that is incorrect.
The unemployment rate was lower during the recession in 1982 than it was during the recession of 1990-1991.
Mitsubishi Heavy Industries makes the wings of the new Boeing 787 Dreamliner in Japan. Toyota assembles cars for the U.S. market in Kentucky. Choose the statement that is incorrect.
The wings appear as imports in U.S. GDP. If any parts for the cars come from Japan, they are recorded as a positive entry in calculating U.S. GDP
Choose the statement about flexible exchange rates that is incorrect.
The world economy has operated a flexible exchange rate regime since the end of World War II.
Read the news clip, then answer the following question. Choose the statement that is incorrect.
The "Mexican peso is gaining on the greenback" because the demand for pesos is increasing at a slower pace than the supply of pesos is increasing.
Choose the statement that is incorrect.
The employment-to-population ratio fluctuates less than the labor force participation rate.
Choose the correct statement.
The long-run Phillips curve shifts rightward when the natural unemployment rises and leftward when the natural unemployment rate falls.
Read the news clip, then answer the following question. Choose the statement that is incorrect.
Treasury Secretary Timothy Geithner most likely follows the monetarist school of thought if he thinks that a falling money wage rate will respond quickly to changes in government tax policy.
Choose the statement that is incorrect.
Trends around which the exchange rate fluctuates are impossible to predict.
The quantity of U.S. dollars demanded in the foreign exchange market depends on all of the following except ______.
US demand for imports
The marginal propensity to consume is equal to ______, and the marginal propensity to save is equal to ______.
Upper DeltaC divided by Upper DeltaYD; Upper DeltaS divided by Upper DeltaYD
Choose the correct statement about the U.S. short-run Phillips curve.
We can interpret U.S. inflation and unemployment data in terms of a shifting short-run Phillips curve, which sometimes shifts upward and sometimes shifts downward.
Choose the correct statement.
When the price of an asset rises, the interest rate falls, everything else remaining the same.
According to the quantity theory of money, in the long run an increase in the quantity of money of 5 percent, brings _____ in the price level.
a 5 percent increase
The quantity theory of money tells us that _______.
a change in the money growth rate brings an equal change in the inflation rate Your answer is correct.D.
All of the following will change the demand for the onions except _______.
a change in the price of onions
A fixed exchange rate is an exchange rate that is determined by ______ and is achieved by central bank intervention in the foreign exchange market to block ____
a decision of the government or the central bank; the unregulated forces of demand and supply Your answer is correct.D.
An increase in labor productivity results in all of the following except ______.
a decrease in potential GDP per hour of labor because of diminishing returns
In the graph, the initial aggregate supply curve is SAS0 and the initial aggregate demand curve is AD0. Some events that could have changed aggregate demand from AD0 to AD1 are ______.
a decrease in taxes or a fall in the exchange rate
On March 30 comma 2012 the U.S. dollar was trading at 82 yen per dollar on the foreign exchange market. On August 30 comma 2012, the U.S. dollar was trading at 79 yen per dollar. The events in the foreign exchange market, everything else remaining the same that could have resulted in this change in the value of the U.S. dollar include _______.
a decrease in the U.S. interest rate and a fall in the expected future exchange rate of the U.S. dollar
Examples of monetary policy that decrease aggregate demand include ______.
a decrease in the quantity of money and an increase in interest rates
So, as the price level rises, there is ______.
a decrease in the quantity of real GDP demanded
A cost-push inflation begins with ______ as the result of an increase in the money wage rate or an increase in the money prices of raw materials.
a decrease in short-run aggregate supply
Classify each of the following items as a final good or service or an intermediate good or service and identify which is a component of consumption expenditure, investment, or government expenditure on goods and services: Item 1. The purchase of new computers for the office of Secretary of StateThe purchase of new computers for the office of Secretary of State Item 2. New kitchen equipment bought by Burger KingNew kitchen equipment bought by Burger King Item 3. Banking services bought by a studentBanking services bought by a student Item 4. Jet engines bought by Boeing item 1 is and item 2 is item 3 is and item 4 is
a final good which is gov expenditure; a final good that is investment a final good that is consumption expenditure and an intermediate good
With the strengthening of the yen against the U.S. dollar in 2012, Japan's central bank did not take any action. A Japanese politician called on the central bank to take actions to weaken the yen, saying it will help exporters in the short run and have no long-run effects. Japan's current exchange rate policy is ______.
a flexible exchange rate
A rise in the money wage rate with no change in potential GDP creates ______.
a leftward shift of the SAS curve and no change in the LAS curve
A mortgage is _______.
a legal contract that gives ownership of a home to the lender in the event that the borrower fails to meet the agreed loan payments (repayments and interest)
Eurozone Unemployment Hits Record High As Inflation Rises Unexpectedly Eurozone unemployment rose to 10.7 percent. At the same time, Eurozone inflation unexpectedly rose to 2.7 percent a year, up from the previous month's 2.6 percent a year. Source: Huffington Post, March 1, 2012 A very high unemployment rate can be accounted for by the Phillips curve model by all of the following except_______.
a movement up along the long-run Phillips curve if the natural unemployment rate increases
The United States is ______.
a net borrower and a debtor nation
Deflation is _______.
a persistently falling price level
The best forecast available, which is based on all the relevant information is called _______.
a rational expectation
You observe that unplanned inventories are increasing. You predict that there will be _______.
a recession
In the graph, the initial aggregate supply curve is SAS0 and the initial aggregate demand curve is AD0. The events which could have changed short-run aggregate supply from SAS0 to SAS1 are ______. Following the change in aggregate supply, the new macroeconomic equilibrium is at ______. If potential GDP is $1 trillion, the economy has ▼ an inflationary no output a recessionary gap.
a rise in the money wage rate or a rise in the money price of any other factor of production point A a recessionary
The table shows the demand schedule and supply schedule in the market for ricerice. If the price of rice is $1.40 a pound, there is ______ and the price of rice will ______.
a shortage of rice;rise
Excess reserves are a bank's _____ reserves minus its _____ reserves.
actual; desired
Choose the correct statement about interest rate parity.
adjusted for risk
A person is in the labor force if any one of the following statements is true except that he or she is ______.
aged 16 and over and not in jail, hospital, or some other form of institutional care
The business cycle occurs because ______.
aggregate demand and short-run aggregate supply fluctuate, but the money wage rate does not adjust quickly enough to keep real GDP at potential GDP
An inflation that starts because _____ is called demand-pull inflation.
aggregate demand increases
Deflation occurs when _______.
aggregate demand increases at a persistently slower rate than aggregate supply
Equilibrium expenditure is the level of aggregate expenditure that occurs when ______.
aggregate planned expenditure equals real GDP
Read the news clip, then answer the following question. Mexican goods might become more expensive to U.S. consumers because ______.
an appreciation of the Mexican peso against the U.S. dollar means that the U.S. dollar depreciates against the Mexican peso
During the 100 years from 1914 to 2014, real GDP per person in the United States grew at ______.
an average of 2 percent a year
In the United States, the CPI basket consists of items that ______ . ______ has the greatest weight in the CPI basket.
an average urban household buys; Housing
You observe that unplanned inventories are decreasing. You predict that there will be _______.
an expansion
The economy starts out on the curves AD0 and SAS0. Some events then occur that generate an expected inflation. Which of the following events would not cause an expected inflation?
an expected increase in taxes
A demand-pull inflation begins with _______.
an increase in aggregate demand
Examples of fiscal policy that increase aggregate demand include ______.
an increase in government expenditure, a decrease in taxes, and an increase in transfer payments
The economy starts out on the curves AD0 and SAS0. Some events then occur that generate a cost-push inflation. Which of the following events might cause a cost-push inflation?
an increase in the money wage rate or an increase in the money prices of raw materials
The growth rate is the _____ of a variable - the change in the level expressed as a percentage of the initial level.
annual percentage change
The graph shows Brazil's PPF for ethanol and food crops. Brazil faces ______ opportunity cost of a barrel of ethanol, which is shown by the _____________ of the PPF.
an increasing; bowed-out shape
If a euro deposit in a bank in Paris, France, earns interest of 0.7 percent a year and a yen deposit in Tokyo, Japan, earns 0.1 percent a year, other things remaining the same and adjusted for risk, what is the exchange rate expectation of the Japanese yen? The Japanese yen exchange rate is expected to appreciate against the euro by 0.6 percent.
apprecciate .6
Explain the effect of the two announcements on the U.S. dollardashyen exchange rate: Would the U.S. dollar appreciate or depreciate? The two announcements on the U.S. dollar-yen exchange rate would _____ the U.S. dollar.
appreciate
Social institutions such as firms, markets, property rights, and money _______.
are required for society to enjoy the benefits of specialization/trade
A Classical macroeconomist believes that the economy is self-regulating and always _____.
at full employment
The natural unemployment rate is the unemployment rate when the economy is _____.
at full employment
A monetarist is a macroeconomist who believes that the economy is self-regulating and that it will normally operate _____, provided that monetary policy is not erratic and that the pace of _____ is kept steady.
at full employment; money growth
A multiplier is the amount by which a change in any component of _____ is magnified or multiplied to determine the change in _____ and _____ that it generates.
autonomous expenditure; equilibrium expenditure; real GDP
The price level is the _____.
average level of prices
The reference base period for the CPI is 1982-1984. In April 2014, the CPI was 237.1. This number tells us that the ______ of the prices paid by urban consumers for a fixed basket of consumer goods and services was ______ .
average; 137.1 percent higher in April 2014 than the average of 1982-1984
The velocity of circulation is the _____ number of times in a _____ that each dollar of money gets used to buy final goods and services.
average; year
A central bank is ______. The central bank in the United States is the ______.
a bank's bank and a public authority that regulates a nation's depository institutions and conducts monetary policy; Federal Reserve System
The Fed is the lender of last resort, which means that if _____ is short of reserves, it can borrow from the _____.
a bank; Fed
A type of _____ is a mortgage-backed security, which entitles _____ to the income from a package of mortgages.
a bond; its holder
A problem with using a commodity as money is ______.
a commodity's value changes over time
If the government increases its expenditure on goods and services and as a result, the money wage rate increases, the economy has experienced _______.
a demand-pull rise in the price level
A rise in the price of oil creates _______.
a one-time cost-push rise in the price level
Cyclical unemployment is the fluctuating unemployment over the business cycle that increases during _____ and decreases during _____.
a recession; an expansion
Gross domestic product and gross investment are measured ______. Net domestic product and net investment are measured ______. Domestic product is _______. National product is _______.
before the depreciation of capital; after the depreciation of capital production within a country; the value of goods and services produced anywhere in the world by the residents of a nation
A business cycle can be described by the following sequence: ______ equilibrium, ______ equilibrium, ______ equilibrium.
below full-employment; full-employment; above full-employment
The marginal benefit of a good or service is the _____.
benefit received from consuming one more unit of it.
A country produces only pencils and erasers. Pencil production is efficient if the marginal _______ a pencil equals the marginal _______.
benefit from; cost of a pencil
Rational choice is a choice that uses the available resources to _____ of the person making the choice.
best achieve the objective
A debtor nation is a country that during its entire history has _____ the rest of the world than it has _____ the rest of the world.
borrowed more from; lent to
A depository institution creates liquidity by ______. ' Depository institutions pool risk because they use funds obtained from ______ depositors to make loans to ______ borrowers. Depository institutions minimize the cost of monitoring borrowers by ______.
borrowing short and lending long; many; many using specialized resources that have a much lower cost than what households would incur if they had to undertake the activity individually
The price of food increased during the past year. The law of demand applies to food because when the price of food rises, there is ______. The substitution effect influences food purchases because when the price of a certain food rises, other things remaining the same, ______. Consumers ______.
both a substitution effect and an income effect its relative price rises; purchase more of a different food that is less expensive
These events that resulted in this change in the value of the U.S. dollar changed _______.
both the demand for dollars and the supply of dollars
A market is an arrangement that brings _____ together and enables them to get information and do business with each other.
buyers and sellers
The production possibilities frontier is the boundary between the combinations of goods and services that _____, given the available factors of production and the state of technology.
can be produced and the combinations that cannot be produced
The graph shows Brazil's PPF. Brazil's PPF illustrates scarcity because Brazil ______. If Brazil produces 40 barrels of ethanol a day, it must produce _____ tons of food a day to achieve production efficiency.
cannot attain the points outside the PPF; 3
During 2008, the inflation rate increased and the unemployment rate increased. These events ______.
cannot be explained by a movement along the SRPC because along this curve the inflation rate and unemployment rate move in opposite directions
Economic growth results when there are increases in ______.
capital accumulation
Economic growth comes from _______.
capital accumulation and technological advance
The ______ account records ______ U.S. investment abroad.
capital and financial; foreign investment in the United States minus
The Federal Reserve System (the Fed) is the _____ of the United States.
central bank
The four price indexes that are alternatives to the CPI are ______. The chained CPI ______.
chained CPI, personal consumption expenditure deflator, GDP deflator, and core PCE Your answer is correct.C. overcomes the sources of bias in the CPI by incorporating substitutions and using current and previous period quantities
An increase in investment shifts the AE curve upward by an amount equal to the ______, and shifts the AD curve rightward by an amount equal to the ______.
change in investment; change in investment times the multiplier
Labor supply growth is influenced by all of the following except_______.
changes in labor productivity
In real business cycle theory, all of the following events can be sources of fluctuation in productivity except _______.
changes in the growth rate of money
Read the news clip, then answer the following questions. The Fed's policy tools include all of the following except ______ To increase its assets to $2.3 trillion in 2008, the Fed used ______.
changing government expenditure last resort loans
As a result of financial innovation, ______ have become ______.
checking deposits at thrift institutions; an increasing percentage of M1
Which of the following news headlines does not illustrate the potential for conflict between self-interest and the social interest?
college coaches are cashing in
The debtor nation status of the United States would be a concern if the borrowed funds were used to finance ______.
consumption
The components of aggregate expenditure that are influenced by real GDP are ______.
consumption expenditure and imports
Aggregate planned expenditure is the sum of planned _____.
consumption expenditure, investment, government expenditure, and exports minus imports
A stock market is a financial market in which shares of stocks of _____ are traded.
corporations
An inflation that is kicked off by an increase in _____ is called cost-push inflation.
costs
Stagflation occurs when _______.
costs increase
The politician wants a ______ in the short run. This policy would have no effect on the exchange rate in the long run because in the long run ______.
crawling peg; the price level and the nominal exchange rate are determined together
Depository institutions provide four benefits, which are ______.
creating liquidity, lowering the cost of borrowing, lowering the cost of monitoring borrowers, and pooling risk
The main components of money in the United States today are ______.
currency and deposits at banks and other depository institutions
an electrician who is laid off because of the economy is in a recession experiences ______.
cyclical unemployment
In February 2017, the U.S. unemployment rate LOADING... was 4.7 percent. In February 2018, the unemployment rate was 4.1 percent. Assuming that the labor force remained constant between February 2017 and February 2018, then unemployment _______.
dec
In March 2007, the U.S. unemployment rate was 4.4 percent. In August 2008, the unemployment rate was 6.1 percent. Assuming that unemployment remained constant between March 2007 and August 2008, then the labor force ______._.
dec
The Fed cuts the quantity of money and all other things remain the same. In the short run, aggregate demand _______.
dec
The effect of this decrease is ▼ an increase a decrease in the demand for labor, ▼ a decrease an increase in the supply of labor, ▼ a decrease an increase in employment, and ▼ an increase a decrease in the real wage rate.
dec all
The effect of this decrease is ▼ a decrease an increase in investment demand, ▼ a decrease an increase in the demand for loanable funds, and ▼ a decrease an increase in the real interest rate.
dec for all
Aggregate demand if fiscal policy ______ taxes or ______ transfer payments.
dec inc
Aggregate demand if the exchange rate ______ or foreign income ______.
dec inc
Suppose the Fed sells $50 million of government securities to the Bank of America. The Fed's total assets ______ and its total liabilities ______. The Bank of America's total assets ______ and its total liabilities ______.
decrease by $50 million; decrease by $50 million do not change; do not change
In January 2010, the price of gasoline was $2.70 a gallon. By spring 2010, the price had increased to $3.00 a gallon. Assume that there were no changes in average income, population, or any other influence on buying plans. Given the law of demand, you would expect the rise in the price of gasoline to ______ the quantity of gasoline demanded and ______ the demand for gasoline.
decrease;not change
Read the news clip, then answer the following questions. In both sectors, output fell while labor productivity increased. The quantity of labor (aggregate labor hours) in the nonfarm sector __
decreased
The following events have occurred at times in the history of the United States. 1. A deep recession hits the world economy 2. The world oil price rises sharply 3. U.S. businesses expect future profits to fall Event 1 ______. Event 2 ______. Event 3___
decreases aggregate demand; decreases short-run aggregate supply decreases aggregate demand
The following events have occurred at times in the history of the United States: 1. A deep recession hits the world economy 2. The world oil price rises sharply. 3. U.S. businesses expect future profits to fall. Starting from a position of long-run equilibrium, a deep recession ______, and a decrease in expected future profits ______.
decreases real GDP and lowers the price level; decreases real GDP and lowers the price level
Starting from a position of long-run equilibrium, a sharp increase in the world oil price ______.
decreases real GDP and raises the price level
An increase in the price of onions _______.
decreases the quantity of onions demanded and results in a movement up along the demand curve for onions
The following events occur one at a time: (i) The price of crude oil rises. (ii) The price of a car rises. (iii) All speed limits on highways are abolished. (iv) Robots cut car production costs. The supply of gasoline _______. The quantity of gasoline demanded _______. The quantity of gasoline supplied _______.
decreases when the price of a car rises decreases when the price of crude oil rises decreases when the price of crude oil rises increases when the speed limits are abolished
The multiplier increases when the marginal propensity to import ______ or the income tax rate ______.
decreases; decreases
A rise in the wage rate of dairy workers ______ the supply of low-fat milk. A rise in the price of cream ______ the supply of low-fat milk.
decreases; increases
An increase in the population ______ the real wage rate and ______ the equilibrium quantity of labor. Potential GDP ______ and potential GDP per hour of labor ______.
decreases; increases increases; decreases
The price of a PC comma a substitute for an MP 3 player comma fallsa PC, a substitute for an MP3 player, falls. As a result, you predict that the equilibrium quantity of MP3 players _______ and the equilibrium price _______.
decreases;falls
Chinese Premier Wen Jiabao has warned Japan that its companies operating in China should raise the pay for their workers. A rise in wages in China _______ aggregate supply.
decreases China's short-run
Read the news clip, then answer the following question. The "average overall increase across the board" wage increase _______.
decreases short-run aggregate supply
In the long run, the real exchange rate is determined by ______ and the nominal exchange rate is determined by ______.
demand and supply in the markets for goods and services; the quantities of money in two countries
A flexible exchange rate is an exchange rate that is determined by ______ in the foreign exchange market with no direct intervention by the _____.
demand and supply; central bank
Suppose a Canadian dollar bank deposit in Toronto earns 2 percent a year and a U.S. dollar bank deposit in Chicago earns 3 percent a year. What expectations do people hold if interest rate parity is to hold? For interest rate parity to hold, people expect that the U.S. dollar will ▼ depreciate appreciate by nothing percent a year.
depreciate by 1
The ratio of reserves to deposits that a bank plans to hold is its ______. If a bank has $10 million in actual reserves and $8 million in desired reserves, then it has ______.
desired reserve ratio; excess reserves
Potential GDP is ______.
determined by the full-employment quantity of labor
Use the (approximate) facts about the U.S. economy to answer the following questions. Did the change in the government budget deficit crowd out some investment? The change in the government budget deficit _____ crowd out some investment because the _____. What happened to the quantity of saving and investment? The quantity of saving _____ and the quantity of investment _____.
did; real interest rate rose increased; decreased
The consumption function is the relationship between consumption expenditure and _____, other things remaining the same.
disposable income
The relationship between saving and _____, other things remaining the same, is called the saving function.
disposable income
Real GDP per person is real GDP _____.
divided by the population
The Rule of 70 is the number of years it takes for the level of any variable to double. It is approximately 70 _____ by the annual percentage _____.
divided; growth rate of the variable
The Bank of America's total assets ______ and its total liabilities ______.
do not change; do not change
The expected inflation rate ▼ does not change falls rises .
does not change
A rise in the money wage rate ______.
does not change the LAS curve because along the LAS curve a rise in the money wage rate is accompanied by an equal percentage change in the price level
If the price level and the money wage rate rise by the same percentage, the quantity of real GDP supplied ______ and there is a movement up along the ______ aggregate supply curve.
does not change; long-run
3. The government of Shell Island announces an increase in spending of $50 billion a year and the central bank will increase the quantity of money to pay for the spending. Does the economy go into a boom? Will there be inflation? The economy _____ into a boom, real GDP _____ billion, and _____ arises.
does not go; remains at $600; inflation
The table shows the aggregate demand and short-run aggregate supply schedules of Shell Island in which potential GDP is $600 billion. The economy is at full-employment. The government of Shell Island announces an increase in spending of $50 billion a year and the central bank will increase the quantity of money to pay for the spending. Does the economy go into a boom? Will there be inflation? The economy _____ into a boom, real GDP _____ billion, and _____ arises.
does not go; remains at $600; inflation
The U.S. long-run Phillips curve ______ when the expected inflation rate rises. The U.S. long-run Phillips curve ______ when the natural unemployment rate increases.
does not shift; shifts rightwarddoes not shift; shifts rightward
The price of a Big Mac in different countries _______ provide a valid test of purchasing power parity because _______.
does not; purchasing power parity is determined by the price level not by individual prices
Economic growth ______ overcome scarcity because ______.
does not; we can produce more goods and services but it is still impossible to satisfy all our wants
The table provides some data on real GDP and the population of Pacifica in 2008 and 2009. If the growth rates of 2009 are maintained in future years, real GDP per person in Pacifica will ______.
double by 2023
The table provides some data on real GDP and the population of Atlantis in 2010 and 2011. If the growth rates of 2011 are maintained in future years, real GDP per person in Atlantis will ______.
double by 2046
A rational expectation is a forecast that results from the use of all the relevant data and _____. A.
economic science
A new Classical view is that business cycle fluctuations are the _____ responses of a well-functioning market economy that is bombarded by shocks that arise from the uneven pace of _____.
efficient; technological change
The main functions of markets include _______.
enabling buyers and sellers to get info about eachother
Interest rate parity means ______.
equal rates of return
Interest rate parity, which means _____ across currencies, means that for risk free transactions, there is _____ gain from choosing one currency over another.
equal rates of return; no
Arbitrage in the foreign exchange market and international loans market achieves all of the following except _______.
equal real exchange rates across the major currencies
Long-run macroeconomic equilibrium occurs when real GDP _____ potential GDP - equivalently, when the economy is on its _____ curve.
equals; LAS
The quantity theory of money is the proposition that when real GDP _____ potential GDP, an increase in the quantity of money brings _____ percentage increase in the _____.
equals; an equal; price level
The government expenditure multiplier equals the change in _____ that results from a change in government expenditure divided by the change in government expenditure.
equilibrium expenditure and real GDP
A below full-employment equilibrium is an equilibrium in which potential GDP _____ real GDP.
exceeds
When potential GDP _____ real GDP, the output gap is called a recessionary gap.
exceeds
An above full-employment equilibrium is an equilibrium when real GDP _____.
exceeds potential GDP
Households make saving decisions by considering all of the following factors except _______.
expected profit
The supply of loanable funds is influenced by all of the following except ______.
expected profit
Gross domestic product can be measured in two ways: By the total ______ or the total ______.
expenditure on goods and services; income earned producing goods and services
Potential GDP increases for all of the following reasons except ______.
exports increase
Property rights are legally established titles to the ownership, use and disposal of _____ and goods and services that are enforceable in the courts.
facotrs of prod
The consequences of deflation include all of the following except _______.
falling real wage rates for workers with long-term wage contracts
An economy at a full-employment equilibrium experiences an increase in aggregate demand. The unemployment rate ______ its natural rate, and to return to the long-run equilibrium, the money wage rate begins to ______.
falls below; rise
In December 2007, the exchange rate was 0.97 Canadian dollars per U.S. dollar. By December 2008, the exchange rate had risen to 1.06 Canadian dollars per U.S. dollar. As the exchange rate rises, the prices of foreign-produced goods and services to Americans ______ and the volume of U.S. imports ______.
fall; increases
In January 2010, the exchange rate was 91 yen per U.S. dollar. By September 2010, the exchange rate had fallen to 84 yen per U.S. dollar. As the exchange rate falls, prices of U.S.-produced goods and services to foreigners ______ and the volume of U.S. exports ______.
fall; increases
As fewerfewer people buy bicycles, the demand for bicycle helmets will decrease and the price of a helmet will increase. The rise in the price of a bicycle helmet will increase the supply of bicycle helmets." This statement is ______ because _____
false; a decreasea decrease in demand for bicycle helmetsbicycle helmets does not increaseincrease the price of a bicycle helmeta bicycle helmet and an increasean increase in the price of a bicycle helmeta bicycle helmet does not increaseincrease the supply of bicycle helmets
The loanable funds market is the aggregate of all the individual _____ markets.
financial
Bonds issued by _____ are traded in the bond market.
firms and governments
1. In the 1950s and 1960s, the United States operated a ______. Now the United States operates a ______ .
fixed exchange rate; flexible exchange rate
According to RBC theory, the source of the business cycle is _______, which result mainly from _______.
fluctuations in productivity; fluctuations in the pace of technological change
A crawling peg exchange rate policy is one that _______.
follows a path determined by a decision of the government or the central bank and is achieved by central bank intervention in the foreign exchange market
For each news item below, indicate whether it involves a what, how, or for whom question. "Oscar stars' swag dash bags may be taxableOscar stars' swag-bags may be taxable" involves a ______ question. "Cancer scientists hail breakthrough treatmentCancer scientists hail breakthrough treatment" involves a ______ question.
for whom;what
U.S. official reserves are the government's holding of _____.
foreign currency
The market in which the currency of one country is exchanged for the currency of another country is the ______. The price at which one currency exchanges for another currency is the ______.
foreign exchange market; exchange rate
The capital and financial account is the record of _____ minus U.S. investment abroad.
foreign investment in the United States
The official settlements account records the change in U.S. official reserves, which are the government's holdings of ______. If U.S. official reserves decrease, the official settlements account balance is ______.
foreign currency; positive
The unemployment that arises from normal labor turnover long dash from people entering and leaving the labor force long dash and from the ongoing creation and destruction of jobs is ______ unemployment.
frictional
a tradeoff is
giving up one thing to get something else.
The balanced budget multiplier equals the change in equilibrium expenditure and real GDP that results from equal changes in _____ divided by the change in government expenditure.
government expenditure and lump-sum taxes
An open market operation is the purchase or sale of _____ - _____ - by the _____ in the open market.
government securities; U.S. Treasury bills and bonds; New York Fed
In January 2010, the exchange rate was 91 yen per U.S. dollar. By September 2010, the exchange rate had fallen to 84 yen per U.S. dollar. Given the information above, for a given expected future exchange rate, the expected profit from holding U.S. dollars is ▼ in September 2010 than in January 2010.
greater
Read the news clip, then answer the following questions. The unemployment rate in May 2008 is ______ the estimated natural unemployment rate. This implies that real GDP is ______ potential GDP at this time.
greater than; less than
The quantity of U.S. dollars demanded is ______ in September 2010 than in January 2010. And the quantity of U.S. dollars supplied is ______ in January 2010 than in September 2010.
greater; greater
According to new growth theory, ______.
growth can persist indefinitely
In neoclassical growth theory, ______.
growth will stop if technology stops advancing
According to the Ricardo-Barro effect, a government budget deficit ______ the real interest rate. According to the Ricardo-Barro effect, when a government budget deficit occurs today, ______.
has no effect on saving increases, the supply of loanable funds increases, and the real interest rate does not change
A discouraged worker ______. An increase in discouraged workers ______ the official unemployment rate and ______ U-4.
has stopped looking for a job because of repeated failure to find one decreases; does not change
The quantity of labor demanded is the number of labor hours ▼ during a given period. The quantity of labor supplied is the number of labor hours ▼ hired by all the firms in the economy that all the households in the economy plan to work during a given period. The ▼ real money wage rate adjusts to bring the labor market to equilibrium.
hired by all firms in econ that all the households inn the econ plan to work real
A mortgage is a legal contract that gives ownership of a _____ to the _____ in the event that the _____ fails to meet the agreed loan payments (repayments and interest).
home; lender; borrower
A depository institution is a financial firm that takes deposits from _____.
households and firms
A depository institution takes deposits from ______ and earns most of its income by _______. The deposits of the following three types of depository institutions make up the nation's money: ______.
households and firms; making loans and buying securities that earn a higher interest rate than that paid to depositors commercial banks, thrift institutions, and money market mutual funds
The aggregate production function is the relationship that tells us ______, when all other influences on production remain the same.
how real GDP changes as the quantity of labor changes
The fundamental source of labor productivity growth is ______.
human capital
Read the news clip, then answer the following questions. Choose the statement that is incorrect. Starting from a long-run equilibrium, _______.
if the percentage change in the money wage rate equals the percentage change in the unemployment rate, the economy remains at full employment.
Choose the statement that is incorrect.
in 2012 about 700 banks operated in US
A government budget surplus ▼ the supply of loanable funds.
inc
Canada trades with the United States. Explain the effect of each of the following events on Canada's aggregate demand. The government of Canada cuts income taxes. Canada's aggregate demand ___ .
inc
In February 2017, the U.S. unemployment rate LOADING... was 4.7 percent. In February 2018, the unemployment rate was 4.1 percent. Assuming that unemployment was constant between February 2017 and February 2018, then the labor force _______.
inc
Use the (approximate) facts about the U.S. economy to answer the following questions. What happened to the demand for loanable funds between 2005 and 2009? How do you know? Between 2005 and 2009, the government budget deficit increased, so the demand for loanable funds _____ between 2005 and 2009.
inc
Aggregate demand if monetary policy ______ the quantity of money and ______ interest rates.
inc dec
Suppose the Fed buys $50 million of government securities from the Bank of America. The Fed's total assets ______ and its total liabilities ______.
increase by $50 million; increase by $50 million
As the average income in China continues to increase, we would expect the demand for beef to _______ and the demand for rice to _______.
increase if beef is a normal good; decrease if rice is an inferior good
The multiplier matters because we can use it to determine by how much we should change autonomous expenditure to ______.
increase real GDP by a given amount
In March 2007, the U.S. unemployment rate was 4.4 percent. In August 2008, the unemployment rate was 6.1 percent. Assuming that the labor force remained constant between March 2007 and August 2008, then the number unemployed _______.
increased
Ann currently produces at point A in the figure. If Ann moves from point A to point C, her opportunity cost of a brownie _______.
increases
The multiplier increases when the marginal propensity to consume
increases
The multiplier increases when the marginal propensity to consume ▼ increases decreases . The multiplier increases when the marginal propensity to import ______ or the income tax rate ______.
increases decreases; decreases
When Mexico increases the quantity of money, Mexico's aggregate demand ______. When the price level in Mexico rises, ▼
increases and its AD curve shifts rightward the quantity of real GDP demanded decreases .
Read the news clip, then answer the following questions. In real business cycle theory, an increase in productivity ______ the demand for labor by more than it ______ the supply of labor. A. increases; decreases B. increases; increases Your answer is correct.C. increases; increases D. decreases; increases In the news clip, productivity gains exceed pay increases because the demand for labor ______ than the ______ in the supply of labor.
increases by less; increase
Read the news clip, then answer the following question. Lowering the required reserve ratio ______, which ______ the quantity of loans that China's banks can make and the quantity of money created.
increases excess reserves; increases
A government budget deficit occurs, which ______. The real interest rate ______. Private saving ▼ increases decreases and investment ▼ decreases increases .
increases the demand for loanable funds; rises inc dec
Unanticipated deflation does all of the following except _______.
increases the velocity of circulation
Why does the PPF bow outward and what does that imply about the relationship between opportunity cost and the quantity produced? The PPF bows outward because as we move from point A to point B to point C, the opportunity cost of producing a blanket ______.
increases. Resources are not equally productive in all activities
An open market purchase ______ the monetary base. An open market sale ______ the monetary base.
increases; decreases
During wedding season, the demand for gold ________ and the supply of gold _______. Expectations of a rising gold price during wedding season in India ______ the supply of gold and ______ the demand for gold prior to wedding season. When the wedding season begins, the price rises by less than it would have done if the wedding season was a surprise.
increases; does not change decrease; increase true
Geithner Urges Action on Economy Treasury Secretary Timothy Geithner is reported as having said that the United States can no longer rely on consumer spending to be the growth engine of recovery from recession. Washington needs to plant the seeds for business investment and exports. "We can't go back to a situation where we're depending on a near short-term boost in consumption to carry us forward," he said. Source: The Wall Street Journal, September 12, 2008 In the short run, an increase in consumer spending ______ real GDP and ______ the price level. In the short run, an increase in business investment ______ real GDP and ______ the price level. In the short run, an increase in exports ______ real GDP and ______ the price level.
increases; increases increases; increases increases; increases
If the price level rises and the money wage rate remains constant, the quantity of real GDP supplied ______ and there is a movement up along the ______ aggregate supply curve.
increases; short-run
An increase in U.S. demand for imports ______ the supply of U.S. dollars. A fall in the U.S. interest rate differential ______ the supply of U.S. dollars.
increases; increases
An increase in world demand for U.S. exports ______ the demand for U.S. dollars. A rise in the U.S. interest rate differential ______ the demand for U.S. dollars.
increases; increases
Aggregate demand increases if expected future income, inflation, or profits ______. And aggregate demand if fiscal policy ______ government expenditure.
increase; increases
Deflation can be ended by _______.
increasing the growth rate of the quantity of money
The short-run Phillips curve is a curve that shows the relationship between the _____ rate and _____ when _____ and the _____ remain constant.
inflation; the unemployment rate; the natural unemployment rate; expected inflation rate
In the short run, the quantity of real money and real GDP are given and the ______ adjusts to achieve equilibrium. In the long run, supply and demand in the loanable funds market determines the ______. In the long run, ▼ financial innovation the price level adjusts to make the quantity of real money supplied equal the quantity demanded.
interest rate; real interest rate the price level
Balance of payments accounts are the accounts in which a nation records its _____.
international trading, borrowing, and lending
If aggregate planned expenditure exceeds real GDP, then _______.
inventories decrease, and as real GDP increases a movement up along the AE curve occurs
If aggregate planned expenditure is less than real GDP, then _______.
inventories increase, and as real GDP decreases a movement down along the AE curve occurs
A creditor nation is a country that during its entire history has _____ the rest of the world than other countries have _____ it.
invested more in; invested in
In monetarist cycle theory, fluctuations in both _____, driven by fluctuations in the growth rate of the quantity of money, are the main source of fluctuation in aggregate demand.
investment and consumption expenditure
A supply curve _______.
is a minimum-supply-price-curve
A demand curve _______.
is a willingness-and-ability-to-pay curve
One consequence of China operating a crawling peg is that China ______. China fixes its exchange rate ______.
is accumulating U.S. dollars as a way of achieving a low inflation rate
A flexible exchange rate is one that _______.
is determined by demand and supply in the foreign exchange market with no direct intervention by the central bank
A demand curve that illustrates the law of demand ______.
is downward sloping
The opportunity cost of economic growth _______.
is fewer consumption goods today
When the unemployment rate ______ the natural unemployment rate, real GDP ______ potential GDP.
is greater than; is less than
Read the news clip, then answer the following question. FOMC members are predicting that the U.S. economy ______.
is on a short-run Phillips curve to the right of the LRPC and will move leftward up along the SRPC
A fixed exchange rate is one that _______.
is set by the government or the central bank and is achieved by central bank intervention in the foreign exchange market
Arbitrage _______.
is the practice of seeking to profit by buying in one market and selling for a higher price in another related market
The natural unemployment rate _______.
is the unemployment rate at full employment
The firm that printed your textbook bought the paper from XYZ Paper Mills. This purchase of paper ______ part of GDP because the paper is ______ good. The value of the paper is counted in GDP as ______.
is not; an intermediate part of the value of the textbook
Brazil faces a tradeoff on its PPF because if it increases the quantity of food produced _______.
it decreases the quantity of ethanol that it produces
During times of uncertainty, it might be necessary for a bank to hold large cash reserves and to have a large percentage of its assets purchased by its own capital because ______.
its depositors may decide to make large withdrawals
The key proposition of new growth theory that makes growth persist is that ______ is not subject to diminishing returns.
knowledge capital
According to new growth theory, ______ experience diminishing returns.
knowledge is capital that does not
A dog trainer is an example of the factor of production _______.
labor
The unemployment rate is the percentage of the people in the _____ who are unemployed.
labor force
Factors of production are grouped into four categories, which are _______.
land, labor, capital, and entrepreneurship
RBC theorists believe the when-to-work effect is large .
large
Suppose the Fed increases the quantity of money. In the long run, supply and demand in the ______ market determines the real interest rate. The ______ adjusts to make the quantity of real money supplied equal to the quantity demanded.
loanable funds; price level
The three main types of markets for financial capital are _______.
loan markets, bond markets, and stock markets
The exports effect is the result that the lower the exchange rate, other things remaining the same, the ______.
lower are the prices of U.S.-produced goods and services to foreigners and the greater is the volume of U.S. exports
The imports effect is the result that the higher the exchange rate, other things remaining the same, the ______.
lower are the prices of foreign-produced goods and services to Americans and the greater is the volume of U.S. imports
Read the news clip, then answer the following question. The unemployment rate in May, 2008 is ______.
lower than the unemployment rates that occurred in recessions since 1980 This is the correct answer.D.
Inflation ______ the real wage rate, everything else remaining the same. People are more likely to accept a real wage cut that arises from an increase in the price level than a cut in their nominal wage rate because ______.
lowers inflation decreases the real wage rate gradually and a cut in the nominal wage decreases the real wage rate suddenly
The Federal Open Market Committee is the Fed's _____ committee.
main policy making
A decrease in the marginal propensity to import _______, everything else remaining the same.
makes the multiplier larger
An increase in income taxes _______, everything else remaining the same.
makes the multiplier smaller
Banks create money by ______.
making loans
The marginal benefit curve is a curve that shows the relationship between the _____.
marginal benefit from a good and the quantity consumed of that good
Money is any commodity or token that is generally acceptable as a ______. Choose the correct statements. 1. Most people know the price of gum comma so it could serve as money because it is a unit of account. 2. Gum does not serve as money because it is not a good store of value. 3. Gum does not serve as money because it is not generally accepted in exchange for goods and services. 4. Because most people buy gum comma it can be used as money because it is a useful tool in barter.
means of payment Statements 2 and 3 are correct.
The unemployment rate is supposed to ______. It is an imperfect measure because ______.
measure underutilized labor; it does not include marginally attached workers and part-time workers who want full-time jobs
The quantity demanded of a good or service is ______.
measured as an amount per unit of time
Money serves as a ______.
medium of exchange, which means that it is generally accepted in exchange for goods and services
The inflation rate in 2014 ______.
might be higher, lower, or the same as in 2013
An increase in the demand for tank tops together with an increase in the supply of tank tops ______ create a surplus or a shortage of tank tops at the original price. The price of tank tops ______.
might; might fall, rise, or not change
Long-run aggregate supply is the relationship between the quantity of real GDP supplied and the price level when the _____ changes in step with the price level to maintain full employment.
money wage rate
The money multiplier is the ratio of the change in the quantity of ______ to the change in the quantity of ______.
money; monetary base
The multiplier is greater than 1 because the change in autonomous expenditure leads to _______.
more induced expenditure
A net lender is a country that is lending _____ to the rest of the world _____ it is borrowing to the rest of the world.
more; than
Monday Island produces only potatoes and bananas. The marginal cost of a potato is the number of bananas that ______ to get one more ______.
must be forgone; potato
Choose the statement that is incorrect.
n a deflation, the inflation rate is positive but decreasing in consequent years.
Between 1960 and 2010, the gap between real GDP per person in the United States and real GDP per person in Japan ______.
narrowed
When the economy goes into recession, the output gap is _______.
negative
If inflation is expected, _______.
neither a cost-push inflation nor a demand-pull inflation occur
China, Japan, and Saudi Arabia are ▼ net borrowers net lenders . The United States is a ▼ net lender net borrower .
net lenders net borrower
A country that is borrowing more from the rest of the world than it is lending to the rest of the world is a ______, and a country that during its entire history has borrowed more from the rest of the world than it has lent to it is a ______. Currently, the United States is a ▼ debtor nation net borrower .
net borrower; debtor nation debtor nation
A country that is lending more to the rest of the world than it is borrowing from the rest of the world is a ______. A country that during its entire history has invested more in the rest of the world than other countries have invested in it is a ______.
net lender; creditor nation
The main sources of bias in the CPI are ______. The bias in the CPI is a problem because ______ .
new goods bias, quality change bias, commodity substitution bias, and outlet substitution bias it distorts wage agreements linked to the CPI
The table shows three years of CPI data. The bias in these CPI numbers might arise from ______. Choose the statement that is incorrect.
new goods bias, quality change bias, commodity substitution bias, and outlet substitution bias The core PCE is a broader measure than the CPI that attempts to overcome biases by placing extra emphasis on food and fuel, two goods which are large components of household expenditure.
A ______ macroeconomist believes that business cycle fluctuations are the efficient responses of a well-functioning market economy that is bombarded by shocks that arise from the uneven pace of technological change. A ______ macroeconomist believes that the short-run aggregate supply curve is horizontal at a fixed price level.
new classical; new Keynesian
In ______ cycle theory, the rational expectation of the price level, which is determined by potential GDP and expected aggregate demand, determines the money wage rate and the position of the SAS curve. In ______ cycle theory, past rational expectations of the current price level influence the money wage rate and the position of the SAS curve.
new classical; new Keynesian
The key idea of classical growth theory that leads to the dismal outcome is that ______.
no matter how much technological change occurs, real GDP per person is always pushed back toward the subsistence leve
The demand for money is the relationship between the quantity of real money demanded and the ▼ nominal interest rate inflation rate when all other influences on the amount of money that people wish to hold remain the same. When the nominal interest rate rises, the opportunity cost of holding money ______ and the quantity of real money demanded ______.
nominal interest rate rises; decreases
Read the news clip, then answer the following questions. If the only change that occurred was that all the newly hired people had been unemployed in October, then the labor force would ______ and unemployment would _______. If the only change that occurred was that people gave up job searching, then the labor force would _______ and unemployment would _______.
not have changed; have decreased have decreased; have decreased
Indicate whether the following items are money or not money in the United States today. Cash in Citibank's cash machines ▼ Your loan to pay for school fees ▼ Coins inside a vending machine ▼ Your Visa card ▼
not money not money money not money
Currency consists of _____.
notes (dollar bills) and coins
Saving is the amount of income that is _____ in net taxes or spent on _____ goods and services.
not paid; consumption
Long-run macroeconomic equilibrium ______.
occurs when real GDP equals potential GDP, and the LAS, SAS, and AD curves intersect
Foreign currency is the money _____ regardless of whether that money is in the form of notes, coins, or bank deposits.
of other countries
The official settlements account is the record of the change in U.S. _____.
official reserves
Which of the people described in the table is unemployed because of labor market mismatching?
only Tory and David
A bakery uses flour to produce bread. When calculating GDP, we include ______, because when we add the value of the flour to the value of the loaf of bread to calculate GDP, the result is ______.
only the value of the bread sold in a store; double counting
If the CPI rises from 120 to 126, then ______.
on average, the price paid by urban consumers for a fixed basket of consumer goods and services rises by 5 percent
The marginal cost of a good or service is the _____.
opportunity cost of producing one more unit of it
The private sector balance and the government sector balance tend to move in ______. Net exports respond ______.
opposite directions; to the sum of the government sector and private sector balances
The U.S. dollar exchange rate fluctuates in part because a change in the U.S. interest rate differential changes the demand for U.S. dollars and the supply of U.S. dollars in ______ and a change in the expected future exchange rate changes the demand for U.S. dollars and the supply of U.S. dollars in ______.
opposite directions; opposite directions
Wealth is the value of all the things that people _____.
own
The equilibrium price is the best deal available for both buyers and sellers because buyers ______ and sellers ______.
pay the highest price they are willing to pay; receive the lowest price at which they are willing to sell
China was the largest economy for centuries because everyone had the same type of economylong dashsubsistencelong dashand so the country with the most people would be economically biggest. Then the Industrial Revolution sent the West on a more prosperous path. Now the world is returning to a common economy, this time technology-and information-based, so once again population triumphs. China was the world's largest economy until 1890 because ______. In 1890, the United States surpassed China to become the world's largest economy because ______.
people in all countries had approximately the same subsistence level of income the benefits of the Industrial Revolution were greater in the United States than in China
Unemployment arises for all of the following reasons except ______. Some unemployment is unavoidable because ______.
people leave the labor force people are making transitions through the stages of life and businesses are making transitions
Depository institutions balance risk and return by _______.
placing some funds into safe low interest-earning assets and other funds into high-interest risky assets
Following the change in aggregate demand, the new equilibrium is at ______. If potential GDP is $1 trillion, the economy has moved to ▼ a full-employment a below full-employment an above full-employment equilibrium.
point C an above full-employment
The initial short-run aggregate supply curve is SAS0 and the initial aggregate demand curve is AD0. Some events change aggregate demand from AD0 to AD1, and short-run aggregate supply from SAS0 to SAS1. The new macroeconomic equilibrium is at ______.
point D
Keynesian macroeconomists recommend ______.
policies that actively offset changes in aggregate demand that bring recession
Monetarist macroeconomists recommend ______.
policies that keep taxes low to avoid disincentive effects that decrease potential GDP
Classical macroeconomists recommend ______.
policies that minimize the disincentive effects of taxes on employment, investment, and technological change
Assume that the preconditions for labor productivity growth are in place. The pace of labor productivity growth is influenced by all of the following except ______.
population growth
The fundamental precondition for labor productivity growth is the incentive system created by all of the following except ______.
population growth
Indicate whether each of the following news items is a positive or a normative statement. 1. Nuclear energy is cleaner than coal and oilNuclear energy is cleaner than coal and oil based energybased energy. 2. More police on inner dash city streets willMore police on inner-city streets will lower the crime ratelower the crime rate. 3. Flat screen is better than traditionalFlat screen is better than traditional televisiontelevision. 4. The PlayStation has a larger range of gamesThe PlayStation has a larger range of games than the XBoxthan the XBox. Statement 1 is a ______ statement, and statement 2 is a ______ statement. Statement 3 is a ______ statement, and statement 4 is a ______ statement.
positive;positive normative;positive
A recessionary gap eventually emerges even if aggregate demand remains constant because over time ______.
potential GDP increases
Economic growth is the persistent increase in ______. Economic growth is accompanied by inflation when the ______.
potential GDP; AD curve shifts rightward at a faster rate than the LAS curve shifts rightward
According to mainstream business cycle theory, ______ grows at a steady rate and ______ grows at a fluctuating rate.
potential GDP; aggregate demand
The mainstream business cycle theory is that ______ grows at a steady rate while ______ grows at a fluctuating rate. In mainstream business cycle theory, the money wage rate is ▼ not sticky sticky .
potential GDP; aggregate demand Sticky
The output gap is real GDP minus _____ expressed as a percentage of _____.
potential GDP; potential GDP
An exchange rate is the _____ at which one currency exchanges for another in the foreign exchange market.
price
Read the news clip, then answer the following question. A shortage in the market for oil implies that ______.
price adjustments are being prevented from playing their role as the regulator of buying and selling plans
The inflation rate is the percentage change in the _____ from one year to the next. Deflation is a situation in which the _____ is _____ and the inflation rate is _____.
price level; price level; falling; negative
The combination of a rising _____ and decreasing _____ is called stagflation.
price level; real GDP
The sum of _____ is called national saving.
private saving and government saving
For 50 years, Cuba has had a centrally planned economy in which government makes the big decisions on how resources will be allocated. We would expect Cuba's production possibilities (per person) to be smaller than those of the United States because Cuba _______. _______ is the social institution that helps the U.S. economy achieve allocative efficiency that Cuba might lack.
produces a greater proportion of consumption goods than capital goods, so its PPF does not shift outward as quickly as the PPF in the United States Property rights
All points on the PPF are points of ______ efficiency. When we produce at the point on the PPF that we prefer above all other points we achieve ______ efficiency.
production; allocative
The newest theory of the business cycle, known as real business cycle theory (or RBC theory), regards random fluctuations in _____ as the main source of economic fluctuations.
productivity
Read the news clip, then answer the following question. Workers in developing Asian economies who work more hours than Americans are not the world's most productive workers because ______.
productivity depends on how much real GDP each hour of labor can produce
According to RBC theory, the main source of economic fluctuations is a decrease in ______
productivity growth
The functions of depository institutions include all of the following except ______.
providing credit ratings
A demand curve shows the relation between the _____ and _____ when all other influences on buying plans remain the same.
quantity demanded of a good; its price
The quantity of real GDP supplied depends on all of the following except the _______.
quantity of real GDP demanded
A supply curve shows the relationship between the ______ and _____ when all other influences on selling plans remain the same.
quantity supplied of a good; its price
Which of the following is an example of consumption expenditure?
rachel buying a tv
In the long run, an increase in the quantity of money _______.
raises the price level and lowers the value of money
In real business cycle theory, _______ are the main source of economic fluctuations.
random fluctuations in productivity
The defining feature of the Keynesian view of macroeconomics is that the economy is ______.
rarely at full employment
The output gap is the gap between _______.
real GDP and potential GDP
The gap between ______ is the output gap. When _____, the output gap is called an inflationary gap.
real GDP and potential GDP; real GDP exceeds potential GDP
In the short run, ______ and ______ adjusts to achieve equilibrium.
real GDP determines the demand for money curve and the Fed determines the quantity of real money supplied; the nominal interest rate
When _____ there is a full-employment equilibrium.
real GDP equals potential GDP
Real GDP per person grows when ______.
real GDP grows at a faster rate than the population grows
By measuring ______, we can see that the economy of Singapore has caught up to and surpassed the economy of the United States, but that the economies of Central and South America have not.
real GDP per person
Neoclassical growth theory is the proposition that _____ grows because technological change induces saving and investment that make _____ grow.
real GDP per person; capital per hour of labor
Classical growth theory is the view that the growth of _____ is temporary and that when it rises above the subsistence level, a population explosion _____.
real GDP per person; eventually brings it back to the subsistence level
New growth theory holds that _____ grows because of the choices people make in the pursuit of profit and that growth will _____.
real GDP per person; persist indefinitely
The main criticisms of RBC theory include all of the following except ______.
real business cycle theory relies too heavily the role of money in the economy to make its predictions
The crowding-out effect is the tendency for a government budget deficit to raise the _____ and _____ investment.
real interest rate; decrease
The sources of labor productivity growth include all of the following except ______.
real wage rate growth
The demand for labor is the relationship between the quantity of labor demanded and the ______. The supply of labor is the relationship between the quantity of labor supplied and the ______.
real wage rate; real wage rate
The aggregate production function is a relationship that tells us how _____ changes as the quantity of _____ changes when all other influences on production remain the same.
real GDP; labor
Aggregate demand is the relationship between the quantity of _____ demanded and the _____ when all other influences on expenditure plans remain the same.
real GDP; price level
Short-run aggregate supply is the relationship between the quantity of _____ supplied and the _____ when the money wage rate, the prices of other resources, and potential GDP remain constant.
real GDP; price level
Short-run macroeconomic equilibrium occurs when the quantity of _____ demanded equals the quantity of _____ supplied at the point of intersection of the _____ curve and the _____ curve.
real GDP; real GDP; AD; SAS
Between 1914 and 2014, the average growth rate of real GDP per person in the United States was 2 percent a year. During this period, ______ grew at a faster rate than ______.
real GDP; the population
Over the last several decades, the gap between real GDP per person in the United States and Canada ______. The gap between real GDP per person in the United States and Africa ______.
remained nearly constant or widened a small amount; widened
Read the news clip, then answer the following questions. A bank's "balancing act" balances _______. The over-pursuit of profit or underestimation of risk can lead to bank failure because _______.
return against risk; some borrowers default and never repay, which can lead to bank insolvency
USe the data reported by the Current Population Survey in July 2014 to answer the following question. 3. How will the unemployment rate change if Sarah quits and starts to search for a full-time job? The unemployment rate will _____ if Sarah quits and starts to search for a full-time job. How will the labor force participation rate change if Kevin starts creating football apps in his garage and they turn out to be very popular? The labor force participation will _____ Kevin starts creating football apps in his garage and they turn out to be very popular.
rise rise
On average in the United States, the inflation rate and the money growth rate minus the real GDP growth rate ______.
rise and fall together
As the price level rises, interest rates ▼ rise fall and real wealth ▼ decreases increases . People substitute goods in the ▼ future present for goods in the ▼ future present .
rise dec future present
According to classical growth theory, when real GDP per person ______, the population grows.
rises above the subsistence level
The table shows the aggregate demand and short-run aggregate supply schedules of Shell Island in which potential GDP is $600 billion. The economy is at full-employment. 1. An unexpected increase in exports increases aggregate demand by $50 billion. What happens to the price level and real GDP? Has Shell Island experienced inflation or deflation and what type of output gap does it now have? The price level _____ and real GDP _____ billion. Shell island has experienced _____ .
rises to 130; increases to $625; a one-time change in the price level and has an inflationary gap
The table shows the aggregate demand and short-run aggregate supply schedules of Shell Island in which potential GDP is $600 billion. The economy is at full-employment. An unexpected increase in exports increases aggregate demand by $50 billion. What happens to the price level and real GDP? Has Shell Island experienced inflation or deflation and what type of output gap does it now have? The price level _____ and real GDP _____ billion. Shell island has experienced _____ .
rises to 130; increases to $625; a one-time change in the price level and has an inflationary gap
The demand for loanable funds increases and the supply of loanable funds increases. As a result, the equilibrium real interest rate ______ and the equilibrium quantity of loanable funds ______. The demand for loanable funds increases and the supply of loanable funds decreases. As a result, the equilibrium real interest rate ______ and the equilibrium quantity of loanable funds ______.
rises, falls, or remains the same; increases rises; increases, decreases, or remains the same
A country has a lower inflation rate than all other countries, and it has more rapid economic growth. The central bank does not intervene in the foreign exchange market. To preserve purchasing power parity, the exchange rate ______. If investment from foreigners increases due to the rapid economic growth, the current account balance is becoming more ______.
rises; negative
It is expected that in the future the exchange rate will ______. The interest rate differential is ______.
rise; negative
In 1998, the price of a barrel of oil was $20. In 2012, the price of a barrel of oil was $106. In 1998, the price of a loaf of bread was $0.86. In 2012, the price of a loaf of bread was $2.32. Between 1998 and 2012, the relative price of a barrel of oil with respect to a loaf of bread _______ and the relative price of a loaf of bread with respect to a barrel of oil _______.
rose;fell
A ______ is a depository institution that accepts savings deposits and makes mostly home-purchase loans. A ______ is a depository institution owned by a social or economic group such as a firm's employees that accepts savings deposits and makes mostly personal loans.
savings bank; credit union
In the short run, when the Fed decreases the quantity of money, people enter the loanable funds market and ▼ buy sell bonds.
sell
The Fed "counters disorderly conditions in exchange markets" by doing all of the following except ______.
selling foreign reserves, which raises the U.S. exchange rate when the supply of dollars dramatically decreases
A means of payment is a method of _____ a debt.
settling
A rise in the price level _______.
shifts the AE curve downward and brings a movement up along the AD curve
An increase in labor productivity ______.
shifts the demand for labor curve rightward and the production function upward
An increase in the population ______.
shifts the supply of labor curve rightward and creates a movement along the production function
If the natural unemployment rate increases, the long-run Phillips curve _______ and the short-run Phillips curve ______.
shifts rightward; shifts rightward
The U.S. short-run Phillips curve ______ when the expected inflation rate rises. The U.S. short-run Phillips curve ______ when the natural unemployment rate increases.
shifts upward; shifts rightward
The table sets out the demand and supply schedules for roses on a normal weekend. 1. If the price of a rose is $6, describe the situation in the rose market. Explain how the price adjusts. If the price of a rose is $6, there is a _____ of roses and the price of a rose_____.
shortage; rises
A supply curve that illustrates the law of supply _______.
shows that the quantity supplied decreses as the price falls
Read the news clip, then answer the following question. Growth rates over the past few decades indicate that gaps in real GDP per person around the world are ______.
shrinking between some countries and growing or staying the same between other countries
Read the news clip, then answer the following question. Potential sources for faster economic growth in India suggested in this news clip include all of the following except ______.
slowing population growth
In RBC theory, the lower the real interest rate, other things remaining the same, the ______ today.
smaller is the supply of labor
An economy is at potential GDP when it experiences an increase in costs. The economy experiences _______.
stagflation
A government budget surplus occurs, which increases the ▼ supply of demand for loanable funds. The real interest rate ______, household saving ______,
supply of falls; decreases and investment increases
The long-run historical evidence and international evidence show us that the relationship between money growth and the inflation rate ______.
supports the quantity theory, but the correlation is not perfect
If the price of a rose is $9, describe the situation in the rose market. Explain how the price adjusts. If the price of a rose is $9, there is a _____ of roses and the price of a rose _____. What is the market equilibrium? At the market equilibrium, the price of a rose is ______ and _____ roses per week are bought and sold.
surplus; falls 7;100
According to neoclassical growth theory, the fundamental cause of economic growth is ______.
technological change, which induces saving and investment that make capital per hour of labor grow
When the price level, the money wage rate, and other factor prices rise by the same percentage, there is a movement along ______. Potential GDP ______. When the price level rises but the money wage rate and other factor prices remain the same, there is a movement along ______. The quantity of real GDP supplied ______.
the LAS curve; does not change the SAS curve; increases
If a U.K. bank deposit earns 4 percent a year and a U.S. bank deposit earns 5 percent a year, then people expect that ______.
the U.S. dollar will depreciate by 1 percent a year
The region with the highest inflation rate in 2010 is ______. The region with the highest inflation rate in 2011 is ______. Describe the path of the price level in Japan. The price level ______.
the United States; the United States decreased in both years
The loanable funds market is ______.
the aggregate of all the individual financial markets
The quantity supplied of a good or service is ______.
the amt producers plan to sell during a given time period
Dress for Less Since 1998, the price of the Louis Vuitton "Speedy" handbag has more than doubled, to $685, while the price of Joe Boxer's "licky face" underwear has dropped by nearly half, to $8.99. As luxury fashion has become more expensive, mainstream apparel has become markedly less so. Clothing is one of the few categories in the CPI in which overall prices have declinedlong dashabout 10 percentlong dashsince 1998. Apparel comprises ______ percent of the CPI basket. Although luxury clothing prices have increased dramatically since the late 1990s, the clothing category of the CPI has actually declined by about 10 percent because ______.
the apparel component of the CPI is weighted more heavily toward moderately-priced clothing, and the price of moderately-priced clothing has decreased
The price level is ______.
the average level of prices, and the value of money
Read the news clip, then answer the following question. A lower required reserve ratio increases bank profits because ______.
the banks hold fewer reserves
Net taxes are taxes paid to the government minus _____.
the cash transfers received from governments
To calculate the multiplier, we divide ______ by ______.
the change in equilibrium expenditure; the change in autonomous expenditure
The marginal propensity to import is equal to _______.
the change in imports divided by the change in real GDP, other things remaining the same
Choose the statement that is incorrect.
the congressional advisory commison on the cpi in 1996 said that the cpi overstates inflation
In the short run, the nominal exchange rate is determined by ______. And in the short run ______.
the demand for U.S. dollars and the supply of U.S. dollars in the foreign exchange market; a change in the nominal exchange rate brings an equivalent change in the real exchange rate
Read the news clip, then answer the following questions. Aggregate demand will increase if ______.
the effect of the tax rebates and the change in the foreign exchange rate outweigh the effect of the housing, credit, and financial crises
The quantity of U.S. dollars supplied in the foreign exchange market depends on many factors, the main ones being ______.
the exchange rate, U.S. demand for imports, interest rates in the United States and other countries, and the expected future exchange rate
The quantity of U.S. dollars demanded in the foreign exchange market depends on many factors, the main ones being ______.
the exchange rate, world demand for U.S. exports, interest rates in the United States and other countries, and the expected future exchange rate
Economic growth is _______. Growth rates are calculated in a similar manner for all variables. Real GDP growth rate = [(Real GDP in ______ yearminusReal GDP in ______ year) divided by Real GDP in ______ year ] times 100.
the expansion of production possibilities current; previous; previous
Along the short-run Phillips curve, ______.
the expected inflation rate and the natural unemployment rate are constant
Aggregate income earned is equal to the total amount paid for ______ to produce final goods and services. Aggregate expenditure is equal to ______.
the factors of production used; C + I + G + (Xminus−M)
All of the following statements are included in new growth theory except ______.
the forces of competition destroy incentives to make new discoveries
The demand for U.S. dollars changes when there is a change in any of the following except _____
the foreign exchange rate
The supply of U.S. dollars changes when there is a change in any of the following except ______.
the foreign exchange rate
The U.S. interest rate differential rises if ______, and the larger the U.S. interest rate differential, the ______ is the demand for U.S. dollars in the foreign exchange market.
the foreign interest rate falls; greater
The marginal propensity to save is _______.
the fraction of a change in disposable income that is saved
The marginal propensity to consume is ______.
the fraction of a change in disposable income that is spent on consumption
The velocity of circulation is the average number of times a dollar of money is used annually to buy ______. The formula used to measure the velocity of circulation, V, is ______, where P is the price level, Y is real GDP, and M is the quantity of money.
the goods and services that make up GDP; V = (P times Y) divided by M
The impulse in RBC theory is _______.
the growth rate of productivity that results from technological change
The fundamental precondition for labor productivity growth is _______.
the incentive system created by firms, markets, property rights, and money
When the price of an asset rises, ______.
the interest rate falls
One of the Fed's main policy tools is ______.
the last resort loan, which means that if a bank is short of reserves, it can borrow from the Fed
You can spend the evening studying or you can go to see a movie You have an incentive to spend the evening studying if ______.
the marginal benefit of spending the evening studying is greater than the marginal cost of spending the evening studying
An economy has a zero marginal tax rate. When real GDP increases, the change in consumption expenditure equals _______.
the marginal propensity to consume times the increase in real GDP
When real GDP increases, the change in imports equals _______.
the marginal propensity to import times the increase in real GDP
Gross domestic product is ______.
the market value of all the final goods and services produced within a country in a given time period
The quantity of money that the banking system can create is limited by _______.
the monetary base, desired reserves, and desired currency holdings
The relative price of a gallon of gasoline in terms of a pound of bananas is ______.
the money price of a gallon of gasoline divided by the money price of a pound of bananas
The economy starts out on the curves AD0 and SAS0. Some events then occur that generate a demand-pull inflation. All of the following events except an increase in ______ might cause a demand-pull inflation.
the money wage rate
According to mainstream business cycle theory, _______.
the money wage rate is sticky and consequently if aggregate demand grows faster than potential GDP, an inflationary gap emerges
A cost-push rise in the price level can arise from an increase in _______.
the money wage rate or money prices of raw materials
When cyclical unemployment increases and other things remain the same, ______.
the natural unemployment rate does not change
Read the news clip, then answer the following question. The unemployment rate tends to actually underestimate the unemployment problem, especially during a recession, because ______.
the number of marginally attached workers increases, but these workers are not included in the official unemployment rate
The table shows some of Brazil's production possibilities for ethanol and food crops. Marginal cost of a good is _______.
the opportunity cost of producing one more unit of it
The aggregate demand curve shows the relationship between the quantity of real GDP demanded and ______, when everything else remains the same.
the price level
A movement along the aggregate demand curve occurs if _______.
the price level changes and all other factors remain unchanged
The CPI tells us ______.
the price level in a given period expressed as a percentage of the price level in the base period, which is by definition equal to 100
Firms are institutions that organise _____ of goods and services.
the production
An open market operation is ______.
the purchase or sale of securities by the Federal Reserve System in the loanable funds market
The equilibrium price is the price at which _____ and the equilibrium quantity is the _____.
the quantity demanded equals the quantity supplied; the quantity bought and sold at the equilibrium price
The quantity of DVD players that firms plan to sell this month depends on all of the following except _______ because ______.
the quantity of DVD players that consumers plan to buy this month; a change in the quantity of DVD players that consumers plan to buy this month changes the quantity supplied
At the equilibrium exchange rate _______.
the quantity of dollars demanded equals the quantity of dollars supplied
The demand for loanable funds is the relationship between _____ demanded and the _____ when all other influences on borrowing plans remain the same.
the quantity of loanable funds; real interest rate
The supply of loanable funds is the relationship between _____ supplied and the _____ when all other influences on lending plans remain the same.
the quantity of loanable funds; real interest rate
A stagflation can turn into a cost-push inflation process when _______.
the quantity of money persistently increases
The flows in the market economy that go from firms to households are _______. The flows in the market economy that go from households to firms are _______.
the real flows of goods and services and the income flows of wages, rent, interest, and profit; the real flows of labor, land, capital, and entrepreneurship and the flow of expenditure on goods and services
The demand for loanable funds is determined by ______. The demand for loanable funds changes when ______ changes.
the real interest rate and expected profit; expected profit
Demand is _____, when all other influences on buying plans remain the same.
the relationship between the quantity demanded of a good and the price of the good
Supply is _____, when all other influences on buying plans remain the same.
the relationship between the quantity supplied of a good and the price of the good
The relative price of a jar of pasta sauce is an opportunity cost because ______.
the relative price tells us how many packs of frozen burritos we must give up to get a jar of pasta sauce
All of the following statements are correct except _______.
the return to full employment in an expansion phase of the business cycle is economic growth
The current account is the record of receipts from _____ other countries, minus _____ other countries, plus the net amount of _____ received from and paid to other countries.
the sale of goods and services to other countries; payments for goods and services bought from; interest and transfers
The two broad sources of potential GDP growth are growth of ______ and growth of ______.
the supply of labor; labor productivity
Gross investment is ______. Net investment is ______.
the total amount spent on new capital; the change in the value of capital
Along the long-run Phillips curve, _______.
the unemployment rate is constant at the natural unemployment rate
Depository institutions have made innovations that have changed the composition of money in all of the following ways except ______.
the use of currency has fallen significantly
If most prices increase in Japan and other countries but remain constant in the United States, ______.
then for purchasing power parity to hold, the demand for U.S. dollars increases and the supply of U.S. dollars decreases
If most prices have increased in the United States and not increased in Japan and other countries, ______.
then for purchasing power parity to hold, the value of the U.S. dollar in the foreign exchange market will fall
Read the news clip, then answer the following question. Choose the statement that is incorrect. If the labor market is working properly, there is still unemployment because ______.
there are always discouraged searchers
International evidence shows us that ______.
there is a general tendency for money growth and inflation to be correlated but the quantity theory does not predict inflation precisely
People specialize and trade for all of the following reasons except _______.
they can obtain an absolute advantage
Read the news clip, then answer the following questions. European banks need more capital because _______. The "capital" that is referred to in the news clip is _________. Requirements to hold more capital make banks safer because _______.
they risk failing if loans they hold are not repaid or if other assets lose value; owners' investment in the bank the requirement to hold more capital makes the possibility of failure less likely
When the Fed buys securities from a bank, ______.
the bank's reserves increase but its deposits do not change
The foreign exchange market is the market in which _____ of one country is exchanged for _____ of another.
the currency; the currency
G-20 Leaders Look to Shake off Lingering Economic Troubles The G-20 aims to take stock of the economic recovery. One achievement in Pittsburgh could be a deal to require that financial institutions hold more capital. Source: USA Today, September 24, 2009 The "capital" referred to in the news clip is ______. The financial institutions that the G-20 might require to hold more capital are ______. The requirement to hold more capital can make financial institutions safer because by using more of its own funds and less borrowed funds, a financial institution ______.
the institutions' own funds; banks and insurance companies decreases its risk of insolvency
If the natural unemployment rate increases and the expected inflation rate remains constant, then ______.
the long-run Phillips curve shifts rightward and the short-run Phillips curve shifts rightward
If the expected inflation rate increases and the natural rate of unemployment remains constant, then _______.
the short-run Phillips curve shifts upward and the long-run Phillips curve does not shift
Physical capital is ______. Financial capital is ______. Examples of physical capital are ______. Examples of financial capital are ______.
the tools, instruments, machines, buildings, and other items that have been produced in the past and that are used today to produce goods and services; the funds that firms use to buy physical capital ovens used by Pizza Hut and lawn mowers used by Larry's Mowing; bonds issued by Wal-Mart and stocks issued by Boeing
Disoposable income is aggregate income minus taxes plus _____.
transfer payments
The CPI basket consists of items that __ households buy. The CPI places more weight on _______ than on _______.
transportation; medical care
The United States is a debtor nation, and since 1980 it has piled up trade deficits that total $9 trillion. At its peak in 2006, the current account deficit was almost 6 percent of GDP. To pay for the $9 trillion of goods and services we've imported in excess of our exports, we have borrowed from the rest of the world. Foreigners have purchased large amounts of U.S. assets. A current account deficit means we must borrow more from abroad than we lend abroad or use our official reserves to cover the shortfall.
true
If we count marginally attached workers as unemployed ______.
unemployment rate rises
Allocative efficiency is a situation in which the quantities of goods and services produced are those that people _____ - it is not possible to produce more of a good or service _____ some of another good that people _____.
value most highly; without giving up; value more highly
An unemployed person ______.
wants work, has made specific efforts to find a job within the previous four weeks, or is waiting to be called back to a job from which he or she has been laid off, or is waiting to start a new job within 30 days
The graph shows a production possibilities frontier. Production efficiency is achieved at points A, B, and C because to increase the production of x as we move from A to B to C, _______ .
we are giving up the minimum amount of y possible to increase the production of x
Allocative efficiency occurs when ______.
we are producing at a point on the PPF that we prefer above all other points
1.1 The what, how, and for whom questions in economics are questions about ______.
what goods and services do we produce, how do we use the factors of production to produce these goods, and who consumes the goods and services that are produced
A rational expectation _______.
will often turn out to be wrong, but no other forecast that could have been made with the information available could do better
The labor force participation rate is the percentage of the _____ who are members of the labor force.
working age pop
Read the news clip, then answer the following question. Choose the correct statement.
"Slowing growth" can reduce inflationary pressure if aggregate demand growth slows.
If real GDP is $1,000,000, exports are $200,000, imports are $300,000, and aggregate labor hours are 100,000, labor productivity is _____.
$10 per hour
If saving is $850 billion, investment is $500 billion, government expenditure on goods and services is $700 billion, net exports is $50 billion, and net taxes is $800 billion, then calculate government sector balance.
$100 billion
The marginal propensity to consume is 0.8, the marginal tax rate is 0.20, and the marginal propensity to import is 0.14. The government increases government expenditure and autonomous taxes each by $50 billion. What is the resulting change in equilibrium expenditure?
$20 billion
An economy has no imports and no taxes. The marginal propensity to save is 0.4. A ______ increase in autonomous expenditure increases equilibrium expenditure by $60 billion. The multiplier is ______.
$24 billion; 2.50
The marginal propensity to consume is 0.8, the marginal tax rate is 0.25, and the marginal propensity to import is 0.2. The government raises autonomous taxes and government expenditure by $100 million each. The resulting change in equilibrium expenditure is _______.
$33.3 million
In an economy, there is $75 million in currency held outside banks, $150 million in traveler's checks, $275 million in currency held inside the banks, $200 million in checking deposits, $400 million in savings deposits, $1 comma 400 million in time deposits, and $1 comma 000 million in money market mutual funds and other deposits. The value of M1 is ______ and the value of M2 is ______.
$425 million; $3 comma 225 million
The table gives the aggregate expenditure schedule. Equilibrium expenditure is equal to _______. A. $ 6 trillion B. $3 trillion C. $5 trillion D. $4 trillion Y C I G X M (trillions of 2009 dollars) 1.0 1.00 0.5 0.7 0.45 0.05 2.0 1.65 0.5 0.7 0.45 0.10 3.0 2.30 0.5 0.7 0.45 0.15 4.0 2.95 0.5 0.7 0.45 0.20 5.0 3.60 0.5 0.7 0.45 0.25 6.0 4.25 0.5 0.7 0.45 0.30
$5 trillion
Using a Federal grant of $150,000, a research lab buys equipment for $75,000 that has depreciated by $11,000 after two years. Calculate gross investment and net investment.
$75,000; $64,000.
The personal consumption expenditure deflator is calculated as _______.
(Nominal C divided by Real C) times 100
Net exports equals ______. If the government sector deficit increases, with no change in the private sector surplus, net exports ______.
(T minus G) + (S minus I) decrease
If the trend rate of change of velocity is 1 percent a year, potential GDP grows by 4 percent a year, and the money growth rate is 2 percent a year, what is the trend inflation rate?
-1 percent a year
If the annual interest paid on a $500 loan is $25, the nominal interest rate is _____ percent per year. If the nominal interest rate is 5 percent per year and the inflation rate is 2 percent a year, the real interest rate is _____ per year.
5; 3
______ has a comparative advantage in producing caps. If Sue and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 33 caps, ______.
;sue both Sue and Tessa gain
Starting at point A, the initial effect of a cost-push inflation is a move to point ______. As a cost-push inflation spiral proceeds, it follows the path ______.
B; E, G, I
Starting at point A, the initial effect of a demand-pull inflation is a move to point ______. As a demand-pull inflation spiral proceeds, it follows the path ______.
C; E, H, I
Which of the following is money?
Charlie's checking account deposit at the Bank of America.
Choose the statement that is incorrect.
Coins, which are issued by the Treasury are an asset of the Fed and a component of the monetary base.
Starting at point A, the initial effects of an expected inflation is a movement to point ______. As an expected inflation proceeds, it follows the path ______.
E; I
Once a month, the Bureau of ______ Statistics calculates the Consumer Price Index, which is a measure of the ______ consumers for a fixed basket of consumer goods and services.
Labor; average of the prices paid by urban
Mexico trades with the United States. When the U.S. economy goes into an expansion, ______.
Mexico's exports to the United States increase, Mexico's aggregate demand increases, and Mexico's AD curve shifts rightward
The core inflation rate is the annual percentage change in the _____ price index _____ the prices of food and energy.
PCE; excluding
The real exchange rate is the relative price of _____ to _____.
U.S.-produced goods and services; foreign-produced goods and services
A choice on the margin is a choice that is made by comparing all the relevant _____ systematically and _____. Marginal cost is the _____ that arises from one unit _____ in an activity. Marginal benefit is the _____ that arises from one unit _____ in an activity.
alternatives; incrementally; opportunity cost; increase; benefit; increase
If the U.S. exchange rate changes from $1.00 Canadian to $1.05 Canadian, then the U.S. dollar has _______ and the Canadian dollar has _______.
appreciated; depreciated
The U.S. dollar exchange rate increased from $0.97 Canadian in 2007 to $1.06 Canadian in 2008, and it decreased from 115 Japanese yen in 2007 to 107 Japanese yen in 2008. Between 2007 and 2008, the U.S. dollar ______ against the Canadian dollar. Between 2007 and 2008, the U.S. dollar ______ against the Japanese yen.
appreciated; depreciated
The multiplier is the amount by which the change in ______ expenditure is magnified or multiplied to determine the change in equilibrium expenditure and real GDP. For every dollar increase in ______ expenditure, the multiplier determines the increase in real GDP.
autonomous; autonomous
The multiplier is the amount by which a change in ______ expenditure is magnified or multiplied to determine ______.
autonomous; the change in equilibrium expenditure and real GDP
The multiplier is the amount by which a change in ______ expenditure is magnified or multiplied to determine ______. To calculate the multiplier, we divide ______ by ______.
autonomous; the change in equilibrium expenditure and real GDP the change in equilibrium expenditure; the change in autonomous expenditure
A marginally attached worker is a person who does not have a job, is _____ and _____ to work, has _____ specific efforts to find a job within the previous _____ weeks, but has looked for work sometime in the recent past.
available; willing; not made; four
The Consumer Price Index is a measure of the _____ of the prices paid by _____ consumers for a fixed market basket of consumption goods and services.
average; urban
Reserves consist of the currency in the _____ plus the balance on its _____ account at _____.
bank's vaults; reserve; a Federal Reserve Bank
Arbitrage is the practice of seeking to profit by _____ in one market and __ in another related market
buying; selling for a higher price
Production efficiency is a situation in which the economy is getting all that it can from its resources and _____ produce more of one good or service without producing _____ of something else.
cannot; less
A ______ macroeconomist believes that the economy is self-regulating and always at full employment. A ______ macroeconomist believes the economy requires active help from fiscal policy and monetary policy to maintain full employment.
classical; Keynesian
The monetary base is the sum of _____, _____, and _____ at the Fed.
coins; Federal Reserve notes; banks' reserves
Read the news clip, then answer the following question. Pakistan is experiencing ______ inflation.
cost-push
Read the news clip, then answer the following questions. The news clip refers to ______ inflation when it discusses rising production costs. "Rising labor productivity" can neutralize the effect on the inflation rate of "higher input costs" because ______.
cost-push; it increases short-run aggregate supply and long-run aggregate supply with no slowdown in aggregate demand growth
We call the leakage of bank reserves into currency the currency drain, and we call the ratio of _____ to _____ the currency drain ratio.
currency; deposits
The ______ account records receipts from exports of goods and services sold abroad, payments for imports of goods and services from abroad, and ______.
current; net interest income paid abroad and net transfers
Full employment is when there is no _____ unemployment or, equivalently, when all the unemployment is _____ or _____.
cyclical; frictional; structural
In a speech at the CFA Society of Nebraska in February 2007, William Poole, former Chairman of the St. Louis Federal Reserve said: Over most of the post-World War II period, the personal saving rate averaged about 6 percent, with some higher years from the mid 1970s to mid 1980s. The negative trend in the ... saving rate started in the mid 1990s, about the same time the stock market boom started. Thus it is hard to dismiss the hypothesis that the decline in the measured saving rate in the late 1990s reflected the response of consumption to large capital gains from corporate equity [stock]. Evidence from panel data of households also supports the conclusion that the decline in the personal saving rate since 1984 is largely a consequence of capital gains on corporate equities [stocks]. U.S. household income has grown considerably since 1984. U.S. saving has ______ because wealth has ______. Households preferred to buy corporate equities rather than bonds because ______.
decreased; increased due to capital gains corporate equities deliver capital gains, which increases wealth
The tables describe an economy's labor market and its production function in 2014. In 2015, the population increases and labor hours supplied increase by 40 at each real wage rate. The economy's standard of living ______ in 2015 because ______.
decreased; real GDP per person is smaller in 2015 than in 2014
The gap between real GDP per person in the United States and Hong Kong has ______ since 1960. During this period, the growth rate of real GDP per person in the United States has been ______ than in Hong Kong.
decreased; slower
The table shows the demand and supply schedules for boxes of chocolates. The price of chocolates is $17.00 a box. To reach equilibrium, the quantity supplied ______, the quantity demanded ______. The price ______ until the ______ is eliminated.
decreases; increases falls; surplus
Read the news clip, then answer the following questions. An economy experiences _______ inflation when "wages tend to feed inflation."
demand-pull
"Wages typically track inflation, soaring higher when prices take off." In this situation, the economy is experiencing _______ inflation.
demand-pull
Read the news clip, then answer the following question. China is experiencing a ______ inflation caused by ______.
demand-pull; loose monetary policy, which increases aggregate demand
In new classical cycle theory, the rational expectation of the price level, which is determined by potential GDP and expected aggregate _____, determines the _____ and the position of the SAS curve.
demand; money wage rate
The required reserve ratio is the minimum percentage of _____ that _____ are required to hold as reserves.
deposits; depository institutions
For three years, there was no technological change in Longland but capital per hour of labor increased from $10 to $20 to $30 and real GDP per hour of labor increased from $3.80 to $5.70 to $7.13. Then, in the fourth year, capital per hour of labor remained constant but real GDP per hour of labor increased to $10. Longland ______ experience diminishing returns because ______.
does; as capital per hour of labor increases, real GDP per hour of labor increases but by smaller amounts
The Rule of 70 states that the number of years it takes for the level of any variable to ______ is approximately ______. If real GDP per person doubles in 20 years, then the annual growth rate of real GDP per person is ______ percent a year.
double; 70 divided by the annual percentage growth rate of the variable 3.5
The components of the CPI basket that are experiencing price increases faster than the 12-month average include ______. And those components that are experiencing price increases below the 12-month average include ______. The core CPI is the CPI excluding ______ prices. Core CPI is a useful measure because ______. Core CPI is a misleading measure because ______.
energy, transportation and food; clothing food and fuel it smooths out short-term fluctuations that arise from the volatility in food and fuel prices; it does not include food and fuel prices price rises
Between 1960 and 2010, growth rates in real GDP per person in Hong Kong, Korea, Singapore, and China ______ the growth rate of real GDP in the United States. China's real GDP per person in 2010 is approximately equal to real GDP per person in Hong Kong in ______.
exceeded; 1976
Could the change in the exchange rate on June 2 have resulted from the two announcements or must some other influence have changed too? If so, what might that influence have been? On June 2, the U.S. dollar depreciated rather than appreciated because a fall in U.S. _____ decreased the demand for U.S. dollars or an increase in U.S. _____ increased the supply of U.S. dollars.
exports; imports
Net exports is _____ of goods and services minus _____ of goods and services.
exports; imports
Net exports of goods and services is the value of _____ of goods and services _____ the value of _____ of goods and services.
exports; minus; imports
The night before an economicsan economics test, you decide to watch televisionwatch television instead of working your MyEconLab study planworking your MyEconLab study plan. You get 8585 percent on your test compared with the 9090 percent that you normally score. You ______ a tradeoff ______, and the opportunity cost of your evening watching televisionwatching television was ______.
faced; between a higher test score and an evening watching televisionwatching television; the 55 percent fall in your grade
If all (or most) prices have increased in the United States and not increased in Japan, then people will generally expect that the foreign exchange value of the dollar will ______. The demand for dollars ______.
fall; decreases and the supply of dollars increases
Between 2007 and 2012, the U.S. exchange rate ______ against the Japanese yen because the U.S. interest differential _______ ______ against the yen. The expectations about the exchange rate ______ the demand for U.S. dollars and ______ the supply of U.S. dollars.
fell; decreased and because currency traders expected the dollar to depreciate decreased; increased
Gross domestic product (GDP) is the market value of all the _____ goods and services produced _____ a country in a given time period.
final; within
When the unemployment rate is less than the natural unemployment rate, real GDP is ______ than potential GDP and the output gap is ______.
greater; positive
Suppose that the business cycle in the United States is best described by RBC theory. An advance in technology increases productivity. The when-to-work decision depends on the real interest rate. The _____ the real interest rate, other things remaining the same, the _____ is the supply of labor today.
higher; larger
Read the news clip, then answer the following question. The news clip states that huge trade deficits "seem like a pretty good indication that the dollar was overvalued in global currency markets and needed to come down". This statement is ______ because ______.
inaccurate; the current account balance is determined by the private sector balance and the government sector balance
A bank manager tells you that she doesn't create money. She just lends the money that people deposit. The bank manager is ______ because ______.
incorrect; every new loan creates a new deposit
Explain the effect of the Bank of Japan's announcement on the demand for and supply of U.S. dollars. The Bank of Japan's announcement would _____ the demand for U.S. dollars and _____ the supply of U.S. dollars on June 2.
increase; decrease
Explain the effect of the Fed's announcement on the demand for and supply of U.S. dollars. The demand for U.S. dollars would _____ and the supply of U.S. dollars would _____ on June 2.
increase; decrease
Use the information provided to answer the following questions. 1. Explain the effect of the Fed's announcement on the demand for and supply of U.S. dollars. The demand for U.S. dollars would _____ and the supply of U.S. dollars would _____ on June 2.
increase; decrease
Starting from a full-employment equilibrium, an increase in aggregate demand ______ real GDP, and creates ______ gap.
increases; an inflationary
The increase in investment ______ aggregate demand. The decrease in government spending _______ aggregate demand.
increases; decreases
Starting from a full-employment equilibrium, a decrease in short-run aggregate supply ______ the price level and ______ real GDP. ▼ is created.
increases; decreases A stagflation
Read the news clip, then answer the following questions. The fall in the average weekly wage rate ______ short-run aggregate supply and ______ long-run aggregate supply.
increases; does not change
The first table describes an economy's labor market in 2014 and the second table describes its production function in 2014. Suppose that labor productivity increases in 2014. The increased labor productivity ______ the demand for labor and ______ the supply of labor. The increased labor productivity ______ potential GDP, and ______ real GDP per person.
increases; does not change increases; increases;
Read the news clip, then answer the following questions. In real business cycle theory, an increase in productivity ______ the demand for labor by more than it ______ the supply of labor.
increases; increases
Read the news clip, then answer the following questions. The increase in the personal consumption expenditures ______ aggregate demand. The increase in exports ______ aggregate demand.
increases; increases
The fall in the minimum wage ______ short-run aggregate supply and ______ long-run aggregate supply.
increases; increases
An increase in labor productivity ______ the real wage rate and ______ the equilibrium quantity of labor. Potential GDP ______ and potential GDP per hour of labor ______.
increases; increases; increases; increases
An increase in real GDP ______ the demand for money and financial innovation ______.
increases; might increase the demand for some types of deposits and decrease the demand for others
In an expansion, an increase in the rate of technological change _______ investment demand. The real interest rate _______.
increases; rises
When costs increase and the Fed wants to return the economy to full employment, the Fed responds by ______ the quantity of money. If the Fed continually responds to successive increases in costs, a ______ inflation evolves.
increasing; cost-push
M1 consists of currency held by _____ and _____, _____, and _____ owned by individuals and businesses.
individuals; businesses; traveler's checks; checkable deposits
The long-run Phillips curve is the relationship between _____ and _____ when the economy is at full employment. The long-run Phillips curve is a _____ line at the _____ unemployment rate.
inflation; unemployment; vertical; natural
The federal funds rate is the _____ rate on _____ loans.
interest; interbank
In Keynesian cycle theory, fluctuations in _____ driven by fluctuations in business confidence - summarized by the phrase "animal spirits" - are the main source of fluctuations in _____.
investment; aggregate demand
For a given increase in aggregate demand, the steeper the slope of the short-run aggregate supply curve, the ______ is the increase in the price level and the ______ is the multiplier effect on real GDP in the short run.
larger; smaller
Net worth is the total market value of what a financial institution has _____ minus the market value of what it has _____.
lent; borrowed
The opportunity cost of catching a pound of tunatuna is ______ for JimJim than for DavidDavid, and the opportunity cost of picking a pound of orangesoranges is ______ for JimJim than for DavidDavid. So ______ has a comparative advantage in producing ______.
lower; higher Jim; tuna
Purchasing power parity is equal value of _____ - a situation in which _____ buys the same amount of goods and services in different currencies.
money; money
A net borrower is a country that is borrowing _____ from the rest of the world _____ it is lending to the rest of the world.
more; than
Read the news clip, then answer the following question. The ______ growth theory best corresponds to the explanation given by Mr. Greenspan because Mr. Greenspan's explanation shows ______.
new; the economy as a perpetual motion machine
A stock is a certificate of _____ and claim to the _____ that a firm makes.
ownership; profits
The new Keynesian cycle theory emphasizes the fact that today's money wage rates were negotiated at many past dates, which means that _____ rational expectations of the _____ price level influence the money wage rate and the position of the SAS curve.
past; current
The working-age population is the total number of _____ aged _____ years and over who are not in jail, hospital, or some other form of institutional care or in the U.S. Armed Forces.
people; 16
The Federal Reserve (usually called the Fed) is the central bank of the United States, a _____ authority whose main role is the regulation of _____.
public; banks and money
A central bank is a banks bank and a _____ authority that regulates a nation's depository institutions and conducts _____ policy, which means that it adjusts the _____ and influences _____.
public; monetary; quantity of money in circulation; interest rates;
The crowding-out effect is the tendency for a government budget deficit to ______ the real interest rate and decrease ______. A government budget deficit ______ the real interest rate because ______.
raise; investment raises; the demand for loanable funds increases
Convergence between real GDP per person in the United States and Japan was relatively ______ during the 1960s; convergence has recently been ______.
rapid; decreasing
A Keynesian macroeconomist believes that left alone, the economy would _____ operate at full employment and that to achieve and maintain full employment, active help from fiscal policy and monetary policy is required. A modern version of the Keynesian view, known as the new Keynesian view, holds not only that the money wage rate is _____ but also that prices of goods and services are _____.
rarely; sticky; sticky
The ______ interest rate is the opportunity cost of loanable funds because ______.
real; the real interest paid on borrowed funds is the opportunity cost of borrowing and the real interest rate forgone is the opportunity cost of not saving or not lending those funds
Read the news clip, then answer the following question. The analysis of macroeconomic performance in the news clip reflects the ______ business cycle theory because it discusses ______.
real; factors that change potential GDP Your answer is correct.C.
The quantity of desired reserves depends on the level of deposits and is determined by the desired reserve ratio - the ratio of _____ to _____ that the _____ plan to hold.
reserves; deposits; banks
Stagflation is a combination of a ______ in the price level and ______ in real GDP.
rise; a decrease
In the long run, the money wage rate ______, short-run aggregate supply ______, and the economy returns to a full-employment equilibrium.
rises; decreases
If the interest rate is greater than 4 percent a year, the price of a bond ______, and the interest rate ______ If the interest rate is less than 4 percent a year, the price of a bond ______, and the interest rate ______.
rises; falls falls; rises
Between 2012 and 2014, the U.S. exchange rate ______ against the Japanese yen because the U.S. interest rate differential was expected to _______
rose; increase
The defining feature of the classical view of macroeconomics is that the economy is ______.
self-regulating and always at full employment
The defining feature of the monetarist view of macroeconomics is that the economy is______.
self-regulating and that it will normally operate at full employment, provided that monetary policy is not erratic and that the pace of money growth is kept steady
Suppose a country has a crawling peg exchange rate policy against the U.S. dollar and the equilibrium exchange rate in units of foreign currency per U.S. dollar is above the target rate. To keep the exchange rate pegged at its target level, the country's central bank must ______ U.S. dollars and ______ its foreign currency reserves.
sell; decrease
The business cycle is actually a continuous series of different ______.
short-run macroeconomic equilibriums
Recession? Maybe. Depression? Get Real. The unemployment rate during the Great Depression peaked at nearly 25 percent in 1933, after an initial spike from 3 percent in 1929 to nearly 8.7 percent in 1930. The unemployment rate is just 5 percent, only up from 4.5 percent a year ago. Also during the Great Depression there was deflation, which is not happening today. Source: CNN, May 28, 2008 The inflation and unemployment trends during the Great Depression can be explained by a movement along the ______ Phillips curve that ______.
short-run; lowers the inflation rate and increases the unemployment rate
If the price of a rose is $6, describe the situation in the rose market. Explain how the price adjusts. If the price of a rose is $6, there is a _____ of roses and the price of a rose_____. If the price of a rose is $9, describe the situation in the rose market. Explain how the price adjusts. If the price of a rose is $9, there is a _____ of roses and the price of a rose _____. What is the market equilibrium? At the market equilibrium, the price of a rose is ______ and _____ roses per week are bought and sold.
shortage; rises surplus; falls 7;100 $8 $9
A bond is a promise to pay _____ sums of money on _____ dates.
specified; specified
Read the news clip, then answer the following question. The 5 million workers who cannot find jobs because of mismatching in the labor market are counted as part of the economy's ______ unemployment because ______.
structural; there is a mismatch between their skills and the skills required for the available jobs
In 2013, the price of corn fell and in 2014 some corn farmers will switch from growing corn to growing soybeans. This statement illustrates the law of _________because the fall in the price of corn results in _________. A corn farmer would grow soybean because _______.
supply; a decrease in the quantity of corn supplied soybean is a substitute in production for corn, and when the relative price of corn falls, farmers plant more soybeans
When the Chips are Down The Economist magazine uses the price of a Big Mac to determine whether a currency is undervalued or overvalued. In July 2012, the price of a Big Mac was $4.33 in New York, 15.65 yuan in Beijing, and 6.50 Swiss francs in Geneva. The exchange rates were 6.37 yuan per U.S. dollar and 0.98 Swiss francs per U.S. dollar. Source: The Economist, July 22, 2010 The yuan was ______ relative to purchasing power parity and the Swiss franc was ______ relative to purchasing power parity.
undervalued; overvalued
A movement ______ along the short-run Phillips curve occurs when there is an ______ increase in aggregate demand.
up; unexpected
