Macro Final Exam
What is true about the circular flow diagram
Households are buyers of products and skillets of production factors
what is a difference between a change in quantity supplied and a change in supply
a change in market price affects the quantity supplied, but not the supply
when quantity supplied exceeds quantity demanded
a surplus occurs and prices are pushed down toward equilibrium
what will cause a decrease in demand
an increase in the price of a complementary good
at the peak of the business cycle, the economy is typically operating:
at its capacity
when the supply curve shifts out (to the right) and the demand curve shifts in (to the left), the equilibrium quantity will:
be indeterminate
an individuals valuation of a good or service:
can be expressed in the marketplace
economists have found the foreign trade zones:
can lead to greater investment and growth
what is an example of an inferior good
city bus
whats an example of contractionary fiscal policy
cutting spending on the military
most economists agree that ___ unemployment is the area in which public policymakers can have their greatest impact.
cyclical
when the economy is operating at the natural rate of unemployment:
cyclical unemployment is zero
if supply increases and at the same time demand decreases, equilibrium price
decreases and equilibrium quantity is indeterminate
Alfred Marshall is primarily responsible for:
developing the law of supply and demand
the GDP deflator shows that since the mid-1980's, the U.S. economy has had:
disinflation
the supply curve shift up and to the right:
due to increasing opportunity costs, producers must charge more to produce more in order to cover their costs
the supply curve slopes up and to the right because
due to increasing opportunity costs, producers must charge more to produce more in order to cover their costs
the two approaches used by the government in estimating GDP are
expenditure and income
an increase in supply causes the equilibrium price to ___ and the equilibrium quantity to ____
fall;rise
if both demand and supply decrease, but the decrease in demand is greater than the decrease in supply, then the equilibrium price ___ and equilibrium output ____
falls; falls
during the 2007-2009 recession, the money multiplier
fell to less than 1
what is a limitation of the infant industry argument?
it is difficult to remove the protection after an industry has matured
when production technology improves, supply increases and the equilibrium:
quantity rises, and the equilibrium price falls
when banks hold excess reserves, they:
reduce the actual money multiplier
when the economy is in a recession, welfare and unemployment compensation payments ___ and tax revenues ___
rise; decline
when the economy is below full employment, expansionary fiscal policy:
shifts the aggregate demand curve to the right
when demand increases, the demand curve:
shifts the the right
if the quantity demanded is greater than the quantity supplied:
some consumers will offer to pay more for the product
increased government _____ leads to a larger increase in GDP when compared to the same reduction in
spending; taxes
income payments to the rest of the world are:
subtracted from the GDP
the notion of functional finance says that:
the government should not focus on any deficits or surpluses caused by the budget and focus on maintaining the economy at full employment
when the quantity demanded in a market equals the quantity supplied:
the market is in equilibrium
supply is defined as:
the maximum amount of a product that sellers are willing and able to provide for sale over some time period at various prices, holding all other relevant factors constant
if there is a surplus un a given market then:
the price will decrease
at any price below equilibrium price:
the quantity demanded exceeds the quantity supplied in the market
if the government borrows money from the federal reserve:
the quantity of money in circulation will rise
if the procedures of cotton shirts face higher cotton price, what is most likely to occur?
the supply of cotton shirts decrease, the equilibrium price of cotton shirts rises, and the equilibrium quantity falls
during a typical economic recovery
unemployment drops
an individuals valuation of a good or service is known as:
willingness to pay
the main policymaking arm of the fed is the:
Federal Open Market Committee
the ____ is the central bank of the united states:
Federal reserve system
what would cause a change in demand
-an increase in the price of a complement -a decrease in income -an increase in the number of consumers
the expenditures approach to calculating GDP sums
-consumer spending -gross private domestic investment -government spending -exports minus imports
examples of expansionary fiscal policies
-decrease in unemployment compensation -increase in government spending -increase in transfer payments
what actions are performed by the federal reserve regional banks?
-distributing coins and currency -regulating and supervising member banks -providing a nationwide payments system
the three types of consumption are
-durables -nondurables -services
what statements about the weekly jobs report are true?
-it is released by the department of labor -it is used as a way to estimate trends in layoffs -it is used as a way to estimate trends in hiring
international trade accounts for what percentage of the total u.s. GDP?
30%
unemployment rates over the past 50 years have tended to hover around:
5-6%
what country has the largest public debt percentage of GDP
Japan
in the circular flow diagram, the counterclockwise direction shows the flow of ___, where households supply _____ and businesses supply _____
Money; labor; goods and services
Expenditures by individuals for durable goods, nondurable goods and services is known as:
Personal consumption expenditure
which city is the federal reserves board of governors in?
Washington, DC
in the national income and product accounts system the two main approaches to measuring the size of the economy are
income and expenditures
rom a macroeconomic perspective, consumers benefit from international trade, but from the view of industries at a comparative disadvantage:
individual workers in those industries are likely to lose their jobs
the time policy makers must wait for the collection of economic data is known as:
information lag
in the short run, once an equilibrium has reached equilibrium
price and quantity will be stable
