Macro Econ Final
A tariff placed on Chinese goods imported into the United States would immediately result in: A.) A decrease net export B.) A decrease in consumption C.) A decrease in investment spending D.) None of the above
A, A decrease in net exports
If something is good for an individual it must also be good for everyone. This statement best represents a: A.) A fallacy of composition B.) Correlation C.) Causation D.) Economies of scale E.) opportunity costs
A, A fallacy of composition
Goods and serv ices produced in one country that are then sold in other countries are called ___________. A.) Exports B.) Tradeable items C.) Surplus items D.) economic stimulants
A, Exports
An increase in personal income taxes A.) Moves the aggregate Demand curve inward B.) Moves the aggregate demand curve outward C.) Moves the aggregate supply curve inward D.) Moves the aggregate supply curve outward E.) None of the above
A, Moves the aggregate demand curve inward
Another term used to describe negative inflation is: A.) Counter inflation B.) deflation C.) hyperinflation D.) GDP deflator
B, Deflation
unexpected inflation will: A.) hurt borrowers B.) Hurt lenders C.) Hurt bowers and lenders equally D.) have no effect on either borrowers or lenders
B, Hurt lenders
An Increase in wealth A.) Moves the aggregate Demand curve inward B.) Moves the aggregate demand curve outward C.) Moves the aggregate supply curve inward D.) Moves the aggregate supply curve outward E.) None of the above
B, Moves the aggregate demand curve outward
Which of the following is not an economic concept that can be illustrated with a production possibilities frontier? A.) Choice and opportunity cost B.) Productive efficiency C.) Scarcity D.) Supply/Demand
D, Supply/Demand
A central bank that wants to increase the quantity of money in the economy will: A.) raise the discount rate B.) sell bonds in open market operations C.) reverse quantitative easing D.) buy bonds in open market operations
D, buy bonds in open market
When the central bank decides to increase the discount rate, the: A.) money supply increases B.) interest rates decrease C.) interest rates are unaffected D.) interest rates increase
D, interest rates increase
The neoclassical (or classical) perspective on macroeconomics emphasizes that in the long run, the economy seems to rebound back to its ______ and its ________. A.) long term growth; cyclical unemployment B.) potential GDP; natural rate of unemployment C.) natural level of output; cyclical unemployment rate D.) real GDP; natural rate of unemployment
D, real GDP; natural rate of unemployment
Economics is a physical science
False
Money reduces the transaction costs of making exchanges
True
Net capital inflows reduce the US interest rates.
True
The federal reserve's target inflation rate is 4%.
True
The interest rate effect causes movement on the aggregate demand curve
True
The national bank is the central bank of the United States
True
Transaction costs for the purchase of a car are likely to be higher than for the purchase of a cup of coffee
True
Monetary policy is defined as the manipulation of the money supply to achieve macroeconomic goals.
True
Which of the following government policies would be supported by neoclassical (or classical) macroeconomic assumptions? A.) allowing the economy to return to equilibrium without government intervention B.) focus on short-term recession and controlling inflation C.) focus on combating depression and cyclical unemployment D.) focus on real GDP and cyclical unemployment
A, allowing the economy to return to equilibrium without government intervention
Which of the following is a valid criticism of the use of money as a store of value in modern economies? A.) annual inflationary loss of buying power B.) money supply is too narrowly defined C.) storing money is wasteful D.) imperfect as a unit of account
A, annual inflationary loss of buying power
If macroeconomics looks at the economy as a whole, which of the following is not a focus? A.) Business Firms B.) Employment C.) inflation D.) Standard of living
A, business firms
In the 1970s and 1980s, labor unions commonly negotiated wage contracts that has __________________ which guaranteed that their wages would keep up with inflation. A.) cost of living adjustments B.) inlflation protection plans C.) inflation ceiling gurantees D.) wage protection clauses
A, cost of living adjustments
What term is used to describe the interest rate charged by the central bank when it makes loans to commercial banks? A.) discount rate B.) reserve requirement C.) Fed rate D.) open market rate
A, discount requirement
The term ____________ describes the proportion of deposits that the bank must hold in the form of reserves that are not loaned out of invested in bonds. A.) reserve ratio B.) reserve funds C.) term deposits D.) bond reserves
A, reserve ratio
When a central bank expands the moeny supply to move an economy out of a recessionary gap they are expecting A.) the AD curve to move outward B.) the AD curve to move inward C.) the SRAS curve to move outward D.) The SRAS curve to move inward
A, the AD curve to move outward
The most cited measures of inflation if the united states is: A.) the consumer price index (CPI) B.) the deflationary price index (DPI) C.) the Cumulative price index (CPI) D.) the inflationary price index (IPI)
A, the Consumer Price Index
Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is: A.) the benefit to his grades from studying for an hour B.) the increase in skill he obtains from playing basketball for that hour C.) nothing, because he enjoys playing basketball more than studying D.) nothing, because he had a free pass into the sports complex to play basketball
A, the benefit to his grades from studying for an hour
In neoclassical theory which curve shifts to bring the economy into equilibrium? A.) The short run supply curve B.). The aggregate demand curve C.) The long run aggregate supply curve D.) none of the above
A, the short run supply curve
If a Phillips Curve is a vertical line it suggests A.) There is no relationship between inflation and unemployment B.) That inflation and unemployment are inversely related C.) The inflation is constant D.) None of the above
A, there is no relationship between inflation and unemployment
Aggregate supply (AS) denotes the relationship between the _________ that firms choose to produce and sell and the ________, holding the price of inputs fixed. A.) total quantity; price level for output B.) type of good; input price of raw materials C.) price of goods; number of employees D.) total inputs; types of goods
A, total quantity; price level for output
If the required reserves ration is .2, the multiplier would be: A.) 2 B.) 5 C.) 10 D.) 20
B, 5
An increase in wealth A.) Increases consumption B.) Decreases consumption C.) Increases investment D.) Decreases investments E.) None of the above
B, Decreases consumption
An index inflation can be to calculate inflation in terms of how the overall cost of ____________ changes over time. A.) all goods B.) a basket of goods C.) all foods and services D.) all services
B, a basket of goods
When a central bank takes action to decrease the money supply and increase the interest rate, it is following: A.) a loose monetary policy B.) a contractionary monetary policy C.) a expansionary monetary policy D.) a quantitative easing policy
B, a contractionary monetary policy
Which of the following is not a component of an economic model? A.) Assumptions B.) Correlates C.) Exogenous variable D.) Hypothesis`
B, correlates
An increase in personal income taxes A.) increases consumption B.) decreases consumption C.) increases investment D.) decreases investment E.) none of the above
B, decreases consumption
If Bill performs plumbing upgrades for Alice in exchange for her incorporating his business, then their __________ will be satisfied A.) balance of trade B.) double coincidence of wants C.) convenience of exchange D.) division of labor
B, double coincidence of wants
When banks hold excess reserve because they don't see good lending opportunities: A.) it negatively affects contrationary monetary policy B.) it negatively affects expansionary monetary policy C.) expansionary monetary policy is unaffected D.) contrationary monetary policy is unaffected
B, it negatively affects expansionary monetary policy
The theory of _____________ holds that people will use all information available to them to form the most accurate possible expectation about the future. A.) adaptive expectations B.) rational expectations C.) store of value D.) neoclassical economics
B, rational expectations
______ are funds that the bank keeps on hand that are not loaned out or invested in bonds. A.) certificates of deposit B.) reserves C.) time deposits D.) demand deposits
B, reserves
The short-run Phillip's curve is most relevant when A.) the previous quarters GDP report is above projection B.) the previous GDP report is below rejection C.) weekly employment is better than expected D.) weekly employment is worst than expected
B, the previous GDP report is below projection
According to the basic quantity equation of money, if price and output fall while velocity is constant, then: A.) the quantity of money will rise B.) the quantity of money will fall C.) the quantity of money will rise before it falls D.) the quantity of money will rise slowly
B, the quantity of money will fall
If the marginal propensity to consume is 0.5 then the marginal propensity to save is A.) 2 B.) 1 C.) 0.5 D.) None of the above
C, 0.5
A marginal propensity to consume of 0.5 corresponds to a multiplier of A.) 0.5 B.) 1 C.) 2 D.) None of the above
C, 2
If John got a 5% raise in nominal income last year and the inflation rate was 2.5%, John's real wage increase was: A.) 7.5% B.) 2% C.) 2.5% D.) 5%
C, 2.5%
If a US resident purchased a new German car and the German company that manufactured the car invests the proceeds in US real estate, the net effect on US GDP is: A.) A decrease in the US trade deficit and a capital inflow into the US B.) A decrease in the US trade deficit and a capital outflow from the US C.) An increase in the US trade deficit and a capital inflow into the US D.) An increase in the US trade deficit and a capital outflow from the US
C, An increase in the US trade deficit and a capital inflow into the US
inflation implies that the level of all prices __________. A.) Decrease B.) Stay the same C.) Increase D.) none of the above
C, Increase
A decrease in business taxes A.) increases consumption B.) decreases consumption C.) increases investment D.) decreases investment E.) none of the above
C, Increases investments
The President of which Federal Reserve bank has a permanent seat on the FMOC? A.) Atlanta B.) Boston C.) New York D.) Philadelphia E.) Washington, DC
C, New York
The term ___________ despribes circumstances where a country's exports exceed its imports. A.) Trade deficit B.) Trade imbalance C.) Trade surplus D.) Trade balance
C, Trade surplus
Which of the following is most likely to be a purchase with third-party effects? A.) A museum ticket B.) A pair of slacks C.) A pack of cigarettes D.) A quart of milk E.) All of the above
C, a pack of cigarettes
Which of the following represents a Keynesian point of view of macroeconomics? A.) focus on long-term growth in the economy B.) aggregate supply is the primary determinate of economic output C.) creating increases in aggregate demand to reduce unemployment D.) vertical aggregate supply
C, creating increases in aggregate demand to reduce unemployment
Which of the following would be classified in the M1 category of the money supply? A.) savings deposits B.) money market deposits C.) demand deposits D.) certificates of deposit
C, demand deposits
According to the instructor, the $880 billion fiscal package administered bu the Obama administration to revers the effects of the 2008 recession failed because: A._) it was too small B.) it did not focus on productive investments C.) in a global economy fiscal stimulus spending leaks out of the US economy D.) none of the above
C, in a global economy fiscal stimulus spending leaks out of the US economy
If a US resident purchased a new German car and the German company that manufactured the car purchases US goods with the proceeds of the sale, the net effect on US GDP is: A.) an increase in the US trade deficit B.) a decrease in the US trade deficit C.) no change in the US trade deficit D.) none of the above
C, no change in the US trade deficit
Which of the following is a traditional tool used by the Fed during recessions? A.) quantitative easing B.) higher interest rates C.) open market operations D.) coins and paper currency
C, open market operations
The shape of the ______________ involves a tradeoff between unemployment and inflation. A.) aggregate demand curve B.) aggregate supply curve C.) philips curve D.) keynesian demand curve
C, phillips curve
Which of the following terms is used to describe the proportion of deposits that banks are legally required to deposit with the central bank? A.) discount requirements B.) deposit requirements C.) reserve requirements D.) monetary requirements
C, reserve requirements
if GDP is 3600 and the money supply is 300, what is the velocity? A.) 18 B.) 8 C.) 4.57 D.) 12
D, 12
Which of the following is not a function of money? A.) Medium of exchange B.) Unit of account C.) Store of value D.) A storage of debt
D, A storage of debt
Which of the following is not an economic question about production? A.) For whom will the goods be produced? B.) How will the goods be produced? C.) What goods will be produced? D.) All of the above E.) None of the above
D, All of the above
Which of the following is not a role of price in a free market? A.)Conveys information B.)Give incentives C.)Provides working Capital D.)All of the above are roles of price
D, All of the above are roles of Price
A Price index in years after the vase year: A.) is never 100 B.) Is always greater than 100 C.) Is always less than 100 D.) Can be less than, hreater than, or equal to 100
D, Can be less than, greater than, or equal to 100
The ________ measures price levels of consumption and the _____ measures price levels of production. A.) Chain-Weighted index, Consumer Price Index B.) Consumer Price Index, Chain-Weighted index C.) GDP deflator, Consumer Price Index D.) Consumer Price Index, GDP deflator
D, Consumer Price Index, GDP deflator
Which of the following institutions determines the quantity of money in the economy as its most important task? A.) US department if the treasury B.) Federal open markets committee C.) Central bank D.) Federal reserve board of governors
D, Federal reserve board of governors
The inflation rate in Venezuela is expected to exceed 3000% in 2018. During that time, we can say that, as a result of those inflation rates, Venezuela will be experiencing ___________. A.)_ Perpetual inflation B.) ultra inflation C.) hypo inflation D.) hyperinflation
D, Hyperinflation
Which of the following is not caused by inflation? A.) It Breeds Uncertainty B.) It diminishes buying power C.) It erodes savings D.) It moves the short-run aggregate supply curve outward E.) It alters social traditions
D, It moves the short-run aggregate supply curve outward
If the president places a tariff on imported cars the first component of the expenditure GDP formula to be effected would be: A.) Consumption B.) Investment C.) Govt spending D.) Net exports
D, Net exports
John Maynard Keynes is notable for explaining why recessions and depressions occur, as well as offering a ___________ for minimizing their effects A.) Pricing strategy B.) Macro economic model C.) Set of menu cost D.) policy prescription
D, Policy prescription
One of the reasons that a rise in the price of a fixed basket of goods over time tends to overstate the rise in a consumer's true cod of living, is: A.) attribution bias B.) complimentary Bias C.) preference bias D.) Substitution bias
D, Substitution Bias
Which of the following institutions oversees the safety and stability of the US banking system? A.) Office of the comptroller of the currency B.) Federal financial insitiutions examination council C.) Federal open market committee D.) The federal reserve
D, the federal reserve
Which of the following causes a change in consumption? A.) Wealth B.) Expectation of future prices C.) Interest rates D.) Income taxes E.) All of the above
E, All of the above
Which of the following is the economic focus of the Federal Reserve? A.) GDP B.) Inflation C.) Employment D.) A and B E.) B and C`
E, B and C
A command economy is the freest form of an economy
False
A simple line graph shows the relationship between 3 variables.
False
Among consumers those on fixed income are least vulnerable to inflation.
False
An increase in risk in the US reduces US interest rates
False
In investment increases the aggregate demand curve moves inward.
False
In the horizontal portion of a kaybesian short-run aggregate supply curve if demand is stimulated by autonomous spending it will result in an increase in inflation
False
Menu costs Cause the Aggregate Supply curve to shift.
False
Phillips derived the phillips curve after studying historical macroeconomics performance for the United States
False
Positive economics is the study of what should be
False
Supply-push inflation is characterized by too much money chasing too few goods
False
The marginal propensity to consume describes base-level consumption experienced when a person is unemployed
False
The real balance effect causes movement of the aggregate supply curve.
False
All inflation is bad.
False, Not all inflation is bad
Keynesian economics was first used in the great depression.
True
A change in price level causes movement on the aggregate demand cure
True
A decrease in exports causes a decrease in aggregate demand
True
A key difference between short-run and long-run aggregate supply is the availability of perfect information
True
Capital inflows increase the domestic savings pool
True
Ex Ante is the period of time before a transaction
True
Expectation theory can negate the intended effects of both keynesian and monetary policy.
True
Keynesian economics relies on autonomous spending by the government to shift the aggregate demand curve and move an economy out of a recessionary gap
True
When a worker loses his job his consumption drops to zero
false