macro economics

Bank C promises to pay a compound annual interest rate of 6 percent, while Bank S pays a 10 percent simple annual interest rate on deposits. If you deposit $1,000 in

$1,791; $2,000

Pat earns $1,000 per week and spends $850 per week on living expenses, puts $50 in a savings account, and buys $100 worth of shares in a stock mutual fund. Pat's saving is ________, and Pat's saving rate is ________.

$150; 15%

If you left $2,500 on deposit with a bank promising to pay you a 6 percent compound annual rate of interest, then after 50 years your deposit would be worth approximately:

$46,050

If real GDP per person were equal to $2,000 in 1900 and grew at a one percent annual rate, what would be the value of real GDP per person 100 years later?

$5,410

In Macroland there is $10,000,000 in currency. The public holds half of the currency and banks hold the rest as reserves. If banks' desired reserve/deposit ratio is 10%, deposits in Macroland equal ________ and the money supply equals ________.

$50,000,000; $55,000,000

If Alex deposits $1,000 from her paycheck into her checking account and, at the same time, increases her credit card balance by $1,500, then her saving is ________, and her wealth ________.

-$500; decreases by $500

If potential output for an economy equals $8 billion and actual output equals $7 billion, then this economy's output gap should be expressed as:

-12.5 percent.

According to Okun's law, when cyclical unemployment increases from 2 to 3 percent, the recessionary gap widens from ________.

-4 percent to -6 percent

If the natural rate of unemployment equals 5 percent and the actual rate of unemployment equals 6 percent, then cyclical unemployment equals:

1 percent.

The Boy Scouts have so far sold 100 tickets for their upcoming raffle, but they sell a constant additional 12 tickets every day. After three more days of selling tickets, the stock of tickets sold will be ________, and the flow of tickets sold will be ________.

136; 36

If the money supply equals 1,000, velocity equals 5, and real GDP equals 2,500, then the price level equals:

2.

One year before maturity, the price of a bond with a principal amount of $1,000 and a coupon rate of 5% paid annually fell to $981. The one-year interest rate must be:

7.0%

If bank reserves are 200, the public holds 400 in currency, and the desired reserve/deposit ratio is 0.25, the deposits are ________ and the money supply is

800; 1,200

The dates of the "official" peaks and troughs of business cycles in the United States are determined by the:

National Bureau of Economic Research

The link between the money supply and prices is strongest in:

The link between the money supply and prices is strongest in:

A depression is:

a particularly severe and protracted recession

If you post your car on eBay with a Buy-It-Now price of $1,800, you are using money as:

a unit of account.

The M1 measure of money consists of the sum of:

currency, checking deposits, and travelers' checks.

If banks' desired reserve ratio increases from 0.10 to 0.15, the public still desires to hold the same amount of currency, and the Fed takes no actions, the money supply will:

decrease.

Savings deposits are ________ the M1 measure of money and ________ the M2 measure of money.

excluded from; included in

Saving is a(n) ________ and wealth is a(n) ________.

flow; stock

Recessions tend to be ________ by ________ the rate of inflation.

followed; a decrease in

Other things equal, the combination of a ________ saving rate and a ________ real interest rate will result in the largest accumulation of wealth over time.

high; high

Economists refer to the talents, training, and education of workers as:

human capital.

An increase in net taxes (taxes paid by the private sector to the government less transfer payments and interest payments made by the government to the private sector) will:

increase public saving.

Holding other factors constant, if new technology becomes available that allows machines to produce manufactured goods more quickly and with fewer defects, then the real interest rate will ________ and the equilibrium quantity of national saving and investment will ________.

increase; increase

Increasing the capital available to the workforce, holding other factors constant, tends to ________ total output while ________ average labor productivity.

increase; increasing

In the long run, increases in output per person arise primarily from:

increases in average labor productivity.

According to Okun's law, when the output gap is positive, cyclical unemployment:

is negative.

When government runs a budget deficit, it makes up the difference by:

issuing government bonds.

Countries with small amounts of capital per worker tend to have ________ levels of real GDP per person and ________ levels of average labor productivity.

low; low

The main disadvantage of using money as a store of value is that:

other assets pay relatively higher rates of interest than money.

The duration of a recession is measured from:

peak to trough.

Economic activity moves from a period of expansion to a ________ and then moves into a period of ________ until it reaches a ________.

peak, recession; trough

Saving for protection against unexpected setbacks-such as the loss of a job or a medical emergency-is called ________ saving.

precautionary

Net taxes equal the amount that the:

private sector pays the government minus the amount the private sector receives from the government.

The value of the marginal product of new capital increases when the:

productivity of new capital increases.

A period in which the economy is growing at a rate significantly below normal is called a(n):

recession.

Savers may prefer to use financial intermediaries rather than lending directly to borrowers because financial intermediaries:

reduce the cost of gathering information about borrowers.

The change in wealth during a period equals:

saving + capital gains - capital losses.

Changes in the growth rate of potential output and deviations of actual output from potential output are two logical explanations for:

short-term economic fluctuations.

Firms will invest in new equipment whenever:

the expected cost of the equipment is less than the expected benefit

The introduction of new technologies to production is ________ source of productivity improvement.

the most important

Commercial banks create new money:

through multiple rounds of lending.

Nominal GDP divided by the money stock equals:

velocity

According to Okun's law, when cyclical unemployment increases by one percentage point, the recessionary gap ________ by ________ percent of potential output.

widens; two