Macro Economics 2105 Danns UNG Test Study Set

progressive tax

A ___ policy will cause a greater share of income to be collected from those with high incomes than from those with lower incomes.

proportional tax

A _______is calculated as a flat percentage of income earned, regardless of level of income.

Tend to increase economic growth if accompanied by proper investment in human capital and tech

High rates of saving and investment in a country

5.3 percent.

Hometown, USA, has a labor force of 78,567 persons and employment of 74,382. The unemployment rate for the city is:

It issues debt to government agencies, private institutions, and private investors.

How does the government finance budget deficits?

NOT decrease the dollar volume of loans made by the banking system + decrease the money supply + decrease aggregate demand

Reducing reserve requirements, other things being equal, would tend to

are received by firms in the factor market.

Refer to Figure 1. In the circular flow diagram, payments for goods and services:

involves sacrificing wine in order to produce a greater quantity of bread.

Refer to Figure 2 A movement from Point B to Point C:

Consumers have lost faith in the economy and as a result have begun buying fewer goods.

Refer to Figure 2 What might one of the reasons that aggregate demand has shifted from AD0 to AD1?

involves no sacrifice of output, as both more wine and bread can be produced if available resources are used more efficiently.

Refer to Figure 2. A movement from Point G to Point F:

C to F

Refer to Figure 2. An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in the movement from:

E

Refer to Figure 2. Currently, Point __________ is impossible to achieve.

Point G

Refer to Figure 2. The most inefficient point depicted is:

The new short-run equilibrium is at point E0.

Refer to Figure 2. This graph depicts a shift of aggregate demand from AD0 to AD1. Which of the following is not true about this situation?

a short-run equilibrium but not necessarily a long-run equilibrium.

Refer to Figure 2. Wherever SRAS and AD intersect is:

The quantity supplied would be 50 units.

Refer to Figure 3 . Based on the price of $2.50, which of the following would result?

decrease in supply.

Refer to Figure 4. A change from Point A to Point E represents a(n):

increase in demand.

Refer to Figure 5 Using the graph and beginning on D1, a shift to D2 would indicate a(n):

decrease in quantity demanded.

Refer to Figure 6. A change from Point A to Point B represents a(n):

decrease in demand.

Refer to Figure 6. A change from Point A to Point E represents a(n):

17 points on the economics exam.

Refer to Table 1. A student has only a few hours to prepare for two different exams this afternoon. The above table shows alternative possible exam scores with three alternative uses of the student's time. The opportunity cost of scoring a 91 on the history exam rather than a 76 is:

deposits

Required reserves of a bank are a specific percentage of their

leftward shift of the demand curve for vodka.

Vodka and whiskey are considered by consumers to be substitutes. The likely economic impact of a decrease in the price of whiskey is a:

False

(T/F) Both the initial development process and the sustained growth of an economy are dependent on a large natural resource base.

True

(T/F) Economists presume that when making a decision, individuals consider both the current action and the future consequences of that action.

True

(T/F) One topic that microeconomics explores is how prices are determined in individual markets, while macroeconomics is concerned with issues such as the economy's overall rate of inflation, economic growth and unemployment.

$1,737.4 billion.

(Table) From the information in the table, M1 for June 2010 was:

the purchase of leather by a shoe manufacturer.

An example of an intermediate product is

increase M1 but have no impact on M2.

An increase in demand deposits combined with an equal decrease in saving deposits in the banking system would

AD would increase.

An increase in government purchases, combined with an increase in investment, would have what effect on aggregate demand?

leave consumers with less disposable income and decrease aggregate demand

An increase in personal income taxes, other things being equal, will

decreases, increases

As the price level increases, the quantity of RGDP demanded __________, and when the price level decreases, the quantity of RGDP demanded in the economy __________.

between every pair of currencies.

At any given moment there is one exchange rate:

buy government bonds on the open market.

In order to increase the rate of growth of the money supply, the Fed can

in combination with a rise in the price level.

In the short run, expansionary fiscal policy can cause a rise in real GDP

a surplus of 20 units takes place.

In the table above, at a price of $12:

a shortage of 40 units occurs.

In the table, at a price of $5:

amount of a product sellers are willing and able to sell at various prices.

"Supply" refers to the:

an increase in income.

(Figure 7) A shift to the right of the demand curve for shoes could be caused by:

False

(T/F) A limited resource base is no obstacle to economic growth.

expansion, peak, contraction, and trough

A business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle in order are

$300

A customer makes a deposit of $2,000. The reserve ratio is 15%. What is the amount in required reserves?

decrease; depreciate

A decrease in foreign demand for U.S. exports will ____ the demand for U.S. dollars and cause the U.S. dollar to ______ in value.

have an indeterminate effect on AD

A decrease in taxes combined with a decrease in government purchases would

always trend towards equilibrium.

A market will:

aggregate demand + real output + the price level + employment

A policy which increased the federal government deficit would tend to increase which of the following in the short run, other things being equal?

measures changes in the prices of a particular bundle of goods and services from one period to another

A price index:

once on the frontier, it is only possible to increase production of one good by reducing production of the other.

A production possibilities curve is negatively sloped because:

4

A reserve requirement of 25 percent means a money multiplier of

contractionary

A typical _______ fiscal policy allows government to decrease the level of aggregate demand, through increases in taxes.

it produces less ice cream.

An economy is producing two goods, ice cream and cookies, and is currently operating efficiently. This economy can produce more cookies if:

consist of land, labor, capital, and entrepreneurial skills.

An economy's resources:

any of the above circumstances exist.

AD will shift to the right, other things being equal, when

quantity supplied changes as price changes.

Along a supply curve:

strengthening; more

An appreciating U.S. dollar is ______ because it is worth ______ in terms of other currencies.

supply increases; quantity supplied increases; price decreases.

Better technology lowers the cost of producing computers so that:

government tax revenues exceed its spending.

Budget surpluses are created when

vary in duration and intensity

Business cycles

both the price of butter and the quantity of butter traded rise.

Butter is a substitute for margarine. If the price of margarine increases, we would expect to see:

in accumulated government debt

By June, 2010, the U.S. government owed $13.6 trillion dollars _____ that, over time, has remained unpaid.

No, if one currency appreciates relative to another, the other depreciates.

Can the U.S. dollar and the Indian Rupee both appreciate relative to each other?

demand decreases; quantity demanded decreases; price decreases

Consumers expect the price of milk to decrease shortly. What happens in the short run?

Decrease the money supply and increase interest rates

Contractionary monetary policy will tend to have what effect?

a measure of the income households have to spend after paying taxes.

Disposable income is

fall; increases

During a inflationary boom, government transfer payments automatically ____ and tax revenue automatically ____.

aggregate demand curve will shift to the right.

During a recession, if a government uses an expansionary fiscal policy to increase GDP, the:

Scarcity

Economic choices or tradeoffs are the result of:

government protects property rights + more resources are devoted to R&D + greater freedom to trade freely

Economic growth tends to be greater in countries where

real GDP per capita.

Economists typically measure economic growth by tracking

increased government spending and decreased taxes.

Expansionary fiscal policy consists of

unemployment that is due to normal turnover in the labor market.

Frictional unemployment is

the value of all final goods and services produced in an economy within a given period.

GDP measures

decreased taxes and increased government purchases.

In order for the economy pictured here to return to RGDPNR, this economy could use

increase

If a country's GDP decreases, but its debt increases during that year, then the country's debt to GDP ratio for the year will _____ in proportion to the magnitude of the changes.

expansionary

If a government reduces taxes in order to increase the level of aggregate demand, what type of fiscal policy is being used?

the velocity of money.

If an economist divides the level of nominal GDP by the number of dollars in the money supply, she has computed

automatic stabilizers will cause tax revenue to decrease and government spending to increase.

If an economy moves into a recession, causing that country to produce less than potential GDP, then:

increase the budget surplus

If government policymakers were worried about the recessionary potential of the economy, which of the following would not be a correct fiscal policy change?

regressive

If government tax policy requires Peter to pay $15,000 in tax on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is:

6

If nominal GDP is $4,800 billion and M1 is $800 billion, then velocity is

will fall.

If real GDP increases and population increases at a faster rate, then real GDP per capita

-0.5 billion.

If the United States imported $1.8 billion worth of goods and services and sold $1.3 billion worth of goods and services outside its borders, net exports would equal

other currencies depreciate.

If the dollar appreciates, it can be said that:

increase unemployment, but have little effect on inflation.

If the economy is at equilibrium as shown in the diagram above, then a contractionary monetary policy will

reduce unemployment, but have little effect on inflation.

If the economy is at equilibrium as shown in the diagram above, then an expansionary monetary policy will:

Euro 40

If the exchange rate between euros and dollars were 1 euro per 2 dollars, when a French tourist buys a good valued at $80, its cost in euros would be:

$6

If the exchange rate between yen and dollars were 130 yen per dollar, when an American purchases a good valued at 780 yen, its cost in dollars would be:

decrease government purchases + increase taxes.

If the government wanted to offset the effect of a boom in consumer and investor confidence on AD, it might

20

If the marginal propensity to consume is 0.95, the multiplier is

32 percent.

If the number of employed persons in a country equals 24 million, the number of unemployed persons equals 8 million, and the number of persons over age 16 in the population equals 40 million, the unemployment rate equals:

both the money supply and the outstanding loans of banks would tend to decrease.

If the required reserve ratio were increased, then

unit of account.

If you are estimating the amount you plan to spend on a vacation, money is serving as a:

2010: .13 U.S. dollars; 2012: .16 U.S. dollars

In 2010, $1.00 U.S. bought 7.64 Chinese yuan and in 2012 it bought 6.14 Chinese yuan. How many U.S. dollars could 1 Chinese yuan purchase in 2010 and 2012?

2010: 119.0 yen, 2013: 104.2 yen

In 2010, 100 Japanese yen purchased .84 U.S. dollars and in 2013, it purchased .96 U.S. dollars. How much was 1 U.S. dollar worth in Japanese yen, in 2010 and 2013?

False

In a market economy, government officials make most production decisions in a centralized manner.

positive

In a market economy, there is a(n) _____ relationship between price and quantity supplied.

buy; increase

In a recession, appropriate monetary policy would tend to be for the Fed to ____ bonds to ____ AD.

can decrease the value of a nation's currency relative to other nations.

Inflation:

can be acquired through on-the-job training +is an important source of economic growth

Investment in human capital

fixed investment plus additions to business inventories.

Investment includes

is not part of the labor force.

Kathryn chooses to go to college full-time rather than to work. Kathryn:

9.2%.

Last year the CPI was 115 and this year's CPI is 125.58. The rate of inflation is:

choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.

Marginal thinking is best demonstrated by:

a medium of exchange.

Money's principal role is to serve as

is anything that is accepted in exchange for other goods and services.

Money:

$20 billion

New deposits of $1 billion are placed in a bank. The reserve requirement is 5%. How much does the money supply increase, assuming no leakages?

.714

On May 16, 2009, the U.S. dollar was worth 1.40 Canadian dollars. How many U.S. dollars did it take to buy one Canadian dollar?

a Californian travel firm that arranges vacation tours for local seniors to Hawaii

One of the following groups is not participating in the foreign exchange markets. Which one?

increase $50 billion; not change

Starting at full employment, if MPC = 4/5, an increase in government purchases of $10 billion would lead AD to ____ and ____ real output in the long run.

countercyclical

The central bank uses a ______ monetary policy to offset business related economic contractions and expansions?

reduced output and increased unemployment.

The contractionary phase of the business cycle is characterized by

states the price of one currency in terms of another currency.

The exchange rate:

Aggregate demand will increase $100 million.

The federal government buys $20 million worth of computers from Dell. If the MPC is 0.80, what will be the impact on aggregate demand, other things being equal?

an expansionary fiscal policy; an increase in government spending

The government can use _____ in the form of _____ to increase the level of aggregate demand in the economy.

False

The law of increasing opportunity costs implies that a society's production possibilities curve will be a straight line.

measures the maximum amount the money supply can increase when new deposits enter the banking system.

The money multiplier:

consumer Price Index

The most closely watched measure of inflation is the:

the cost of haircuts received during the school term

The opportunity cost of attending college is likely to include all except which of the following?

the rate of population growth exceeds the rate of growth of real GDP.

The standard of living will decline if

increase; decrease

To offset an inflationary boom, appropriate Fed policy could be to _____ reserve requirements to _____ AD

durable goods + nondurable goods + services.

Total personal consumption in an economy is the sum of:

The M1 went down by $5,000 but the M2 was unchanged.

Yolanda took $5,000 from her checking account and put the money in her savings account at the same bank.

cyclical unemployment.

Unemployment caused by a contraction in the economy is called:

Borrowers with fixed mortgage rates.

Unexpected inflation generally benefits

No nation has a pure market economy

What country is an example of a pure market economy?

taxes

What is not a payment made to households in exchange for the use of factors of production?

use contractionary fiscal policy to shift aggregate demand to the left.

When inflation begins to climb to unacceptable levels in the economy, the government should:

producing less of another good.

When resources are used efficiently, you can produce more of one good, ceteris paribus, only by:

increases; increases

When taxes are decreased, disposable income ___________, and hence consumption ____________.

receives reserves that can be used to make additional loans.

When the Fed purchases government bonds from a commercial bank, the bank

discretionary fiscal policy.

When the government passes a new law that explicitly changes overall tax or spending levels, it is enacting:

regressive

When the share of individual income tax collected by the government from people with higher incomes is smaller than the share of tax collected from people with lower incomes, then the tax is _____

durable consumer goods

Which category of consumption spending tends to be the most unstable over the business cycle?

decreased equilibrium price and decreased equilibrium quantity

Which is the most likely effect of an increase in the price of computer software upon the market for laptop computers?

Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.

Which of the following best characterizes the circular flow of income?

a rise in the price of oil + a natural disaster + wage increases without increases in labor productivity

Which of the following could be expected to shift the short-run aggregate supply curve upward?

IBM, Judy's employer, wants to buy a small computer firm in Australia.

Which of the following examples would lead to a demand for the Australian Dollar?

open market operations

Which of the following is a traditional tool used by the Fed during recessions?

a fishing boat

Which of the following is an example of a capital resource?

government protection of property rights +increased specialization of labor + R&D + improved efficiencies through economies of scale

Which of the following is considered a factor that contributes to economic growth?

altering the discount rate

Which of the following is considered to be a relatively weak tool of monetary policy?

setting currency exchange rates

Which of the following is not a function of the Federal Reserve System?

Both a and c are included in government purchases.

Which of the following is/are included in the "G" category for the GDP expenditure equation

Clem, a skilled corset maker, lost his job when his factory shut down due to a permanent reduction in the demand for corsets.

Which of the following people is structurally unemployed?

An increase in labor costs will increase the additional cost of producing another airplane.

Which of the following statements most likely lies within the realm of microeconomics?

Any finished goods from the current year

Which of the following will be counted as part of this year's U.S. GDP?

an increase in the nation's inflation rate

Which of the following would most likely cause a nation's currency to depreciate?

National Bureau of Economic Research

Which organization dates business cycles?

recession

Which phase of the business cycle occurs immediately before a trough?

Investments made by entrepreneurs.

the income approach to measuring GDP, factor payments do not include