Final Exam Macroeconomics 101

47. If the MPC is .6, the multiplier will be:

1/1-.6 = 1/.4 = 2.5

49. The multiplier is:

1/[1-MPC]

7. Which of the following is a tool of monetary policy?

Open Market Operations

24. Refer to the above diagram, which shows demand and supply conditions in the competitive market for product X. If the initial demand and supply curves are D0 and S0, equilibrium price and quantity will be:

A) 0F and 0C respectively.

9.A tariff can best be described as:

A) an excise tax on an imported good.

4.The Federal Reserve Banks sell government securities to the public. As a result, the checkable deposits:

A) and reserves of commercial banks both decrease

36. To be officially unemployed a person must:

A) be in the labor force.

33. GDP is: *

A) is the dollar value of all goods and services producd within the borders of a nation.

5.The Federal Reserve Banks buy government securities from commercial banks. As a result, the checkable deposits:

A) of commercial banks are unchanged, but their reserves increase.

6. The commercial banking system borrows from the Federal Reserve Banks. As a result, the checkable deposits:

A) of commercial banks are unchanged, but their reserves increase.

11. An excise tax on an imported good that is also produced by domestic firms is called a:

A) protective tariff.

2.Which of the following will increase commercial bank reserves?

A) the purchase of government bonds in the open market by the Federal Reserve Banks

34.In the United States, the rate of unemployment is highest for:

B) African American teenagers

1.Federal Reserve Notes in circulation are:

B) a liability as viewed by the Federal Reserve Banks.

38.The labor force includes:

B) employed workers and persons who are officially unemployed.

50. The multiplier applies to: Answer B

B) investment, net exports, and government spending.

25. Refer to the above diagram, which shows demand and supply conditions in the competitive market for product X. Given D0, if the supply curve moved from S0 to S1, then:

B) supply has decreased and equilibrium quantity has decreased.

44.Which of the following formulas is correct? Percentage change in:

B. real income approximatespercentage change in nominal income minuspercentage change in price level.

17. Citrus College is best described as:

C) A place to waste your time in order to get a meaningless associates degree

22. Other things equal, an increase in the price level will:

C) Cause a movement up along a short-run aggregate supply curve

35.Kimberly voluntarily quit her job as an insurance agent to return to school full-time to earn an MBA degree. With degree in hand she is now searching for a position in management. Kimberly presently is:

C) Frictionally unemployed

30.Suppose the total market value of all final goods and services produced in a particular country in 2004 is $500 billion and the total market value of final goods and services sold is $450 billion. We can conclude that:

C) GDP in 2004 is $500 billion.

10. An excise tax on an imported good that is not produced domestically is called a:

C) Revenue tariff

42. Cost-push inflation may be caused by:

C) a negative supply shock.

40. Inflation initiated by increases in wages or other resource prices is labeled

C) cost-push inflation.

32.Gross domestic product (GDP) measures and reports output:

C) in dollar amounts.

41. Cost-push inflation:

C) moves the economy inward from its production possibilities curve.

31. National income accountants can avoid multiple counting by:

C) only counting final goods.

37. The natural rate of unemployment is

C) that rate of unemployment occurring when the economy is at its potential output.

8. Commercial banks and thrifts usually hold only small amounts of excess reserves because:

C) the Fed does not pay interest on reserves.

3.When a commercial bank borrows from a Federal Reserve Bank:

C) the commercial bank's lending ability is increased.

43. Real income is found by:

D) (nominal income / price index) X 100

29. Suppose Smith pays $100 to Jones. We can say with certainty that the GDP has

D) We need more information to determine whether GDP has changed.

45. Real income can be determined by:

D) deflating nominal income for inflation.

39. The unemployment rate of:

D) teenagers is much higher than that of adults.

23. Other things equal, a decrease in the price level will:

D. cause a movement down an aggregate supply curve.

12. Country A limits other nation's exports to Country A to 1,000 tons of coal annually. This is an example of a(n):

Import Quota

48.Assume the MPC is 2/3. If investment spending increases by $2 billion, the level of GDP will increase by:

MPS is 1/3 Flip 1/3 around and get 3. Multiply that by the amount spent (2 billion) = 6 billion

An excise tax on an imported good that is also produced by domestic firms is called a:

Protective Tariff

46. The multiplier effect:

the process by which an increase in autonomous expenditure leads to a larger increase in real GDP