Open AI Final Macro help

Susan sells a house built several years ago. The house sells for $300,000, and she pays 5% of the sale price to her real estate agent for the commission fee. How much does this transaction add to GDP?

$0. $300,000 $15,000. (correct answer) $315,000.

Jane earned $58,000 at her job 10 years ago and today she earns $76,560. Jane will have found that her purchasing power increased if the inflation rate across the 10-year period was less than _______%.

32%

GDP increased from $19.08 trillion to $20.1 trillion. What was the growth rate of GDP? ______% Enter a number rounded to two decimal places. Do not enter any other characters.

5.35

What typically causes an economy to enter a recession?

A. A decrease in aggregate demand (correct answer) B. An increase in aggregate demand C. A decrease in aggregate supply D. An increase in aggregate supply When aggregate demand decreases, the demand for goods and services declines. As a result, businesses may experience lower sales and profits, which can lead them to cut back on production and reduce their workforce. This decrease in production contributes to lower real GDP (Gross Domestic Product), which measures the total value of goods and services produced in an economy, adjusted for inflation.

What is most likely to cause an increase in the level of potential GDP?

A. A decrease in productivity B. An increase in the unemployment rate C. An increase in the labor force (correct answer) D. A decrease in the capital stock

What factor is most likely to lead to an increase in long-run aggregate supply?

A. A decrease in the labor force B. An increase in the rate of technological progress (correct answer) C. A decrease in the level of investment D. An increase in the rate of inflation

How does the level of education and skill in a country's workforce contribute to higher real wages?

A. A more educated and skilled workforce attracts more foreign investment. B. A more educated and skilled workforce is more productive, leading to higher real wages. (correct answer) C. A more educated and skilled workforce reduces the unemployment rate, leading to higher real wages. D. A more educated and skilled workforce increases the inflation rate, leading to higher real wages.

How does the Federal Reserve influence interest rates in the economy?

A. By adjusting the federal funds rate, which is the interest rate at which banks lend to each other overnight (correct answer) B. By directly setting interest rates for loans and mortgages offered by commercial banks C. By controlling the rate of inflation through fiscal policy D. By managing the supply and demand of goods and services

The money supply is controlled by:

A. Commercial banks B. The International Monetary Fund (IMF) C. The Federal Reserve (or central bank) (correct answer) D. The World Bank

The reserve requirement is a tool used by the Federal Reserve (or central bank) to:

A. Control inflation B. Stimulate economic growth C. Control the money supply (correct answer) D. Regulate interest rates

Which of the following is NOT a component of the money supply?

A. Currency B. Demand deposits C. Government bonds (correct answer) D. Traveler's checks

What is the primary reason that real wages are higher in some countries compared to others?

A. Differences in the cost of living B. Differences in productivity (correct answer) C. Differences in the unemployment rate D. Differences in the inflation rate

How does economic growth contribute to higher real wages in a country?

A. Economic growth increases the cost of living, leading to higher real wages. B. Economic growth increases productivity and generates more job opportunities, leading to higher real wages. (correct answer) C. Economic growth reduces the demand for labor, leading to higher real wages. D. Economic growth has no significant impact on real wages.

What is the primary difference between fiat money and commodity money?

A. Fiat money has no intrinsic value, while commodity money has intrinsic value. (correct answer) B. Fiat money has intrinsic value, while commodity money has no intrinsic value. C. Fiat money is issued by the government, while commodity money is not. D. Fiat money is not accepted as a medium of exchange, while commodity money is.

Which of the following is a tool used by central banks to influence the money supply?

A. Fiscal policy B. Open market operations(Correct answer) C. Taxation policy D. Trade policy

Which of the following is an example of fiat money?

A. Gold coins B. Silver coins C. U.S. dollar bills (correct answer) D. Cowrie shells

Which of the following is an example of commodity money?

A. Gold coins (correct answer) B. Euro banknotes C. Japanese yen banknotes D. U.S. dollar bills

Which of the following tools is used by central banks to implement monetary policy?

A. Government spending B. Taxation C. Open market operations (correct answer) D. Fiscal stimulus

When the Federal Reserve (or central bank) engages in expansionary monetary policy, interest rates will likely:

A. Increase B. Decrease (correct answer) C. Remain unchanged D. Fluctuate unpredictably

When the Federal Reserve (or central bank) increases the reserve requirement, the money supply will likely:

A. Increase B. Decrease (correct answer) C. Remain unchanged D. Fluctuate unpredictably

When the Federal Reserve (or central bank) sells government bonds, the money supply will:

A. Increase B. Decrease (correct answer) C. Remain unchanged D. Fluctuate unpredictably

When the Federal Reserve (or central bank) uses open market operations to purchase government bonds, interest rates will likely:

A. Increase B. Decrease (correct answer) C. Remain unchanged D. Fluctuate unpredictably

When the Federal Reserve (or central bank) buys government bonds, the money supply will:

A. Increase (correct answer) B. Decrease C. Remain unchanged D. Fluctuate unpredictably

When the Federal Reserve (or central bank) engages in contractionary monetary policy, interest rates will likely:

A. Increase (correct answer) B. Decrease C. Remain unchanged D. Fluctuate unpredictably

When the Federal Reserve (or central bank) lowers the discount rate, the money supply will likely:

A. Increase (correct answer) B. Decrease C. Remain unchanged D. Fluctuate unpredictably

When the Federal Reserve (or central bank) uses open market operations to sell government bonds, interest rates will likely:

A. Increase (correct answer) B. Decrease C. Remain unchanged D. Fluctuate unpredictably

Which of the following institutions typically participates in open market operations conducted by the central bank?

A. Individual investors B. Small businesses C. Commercial banks (Correct answer) D. Non-profit organizations

How does the federal funds rate influence other interest rates in the economy?

A. It directly sets interest rates for consumer loans and mortgages. B. It serves as a benchmark, affecting short-term interest rates and, indirectly, long-term interest rates. (correct answer) C. It has no impact on other interest rates, as it only applies to interbank lending. D. It affects only the interest rates on government bonds.

Why is fiat money accepted as a medium of exchange?

A. It has intrinsic value due to its composition. B. It is backed by a commodity, such as gold or silver. C. It is declared legal tender by the government and is generally accepted for transactions. (correct answer) D. It is easy to counterfeit and thus widely circulated.

How does contractionary fiscal policy typically affect the economy?

A. It increases government spending and/or reduces taxes to boost aggregate demand. B. It decreases government spending and/or increases taxes to reduce aggregate demand. (correct answer) C. It raises interest rates to discourage borrowing and spending. D. It lowers interest rates to encourage borrowing and spending.

How does expansionary fiscal policy typically affect the economy?

A. It increases government spending and/or reduces taxes to boost aggregate demand. (correct answer) B. It decreases government spending and/or increases taxes to reduce aggregate demand. C. It raises interest rates to discourage borrowing and spending. D. It lowers interest rates to encourage borrowing and spending.

How does expansionary monetary policy typically affect the economy?

A. It increases the money supply and lowers interest rates to encourage borrowing and spending. (correct answer) B. It decreases the money supply and raises interest rates to discourage borrowing and spending. C. It increases government spending and/or reduces taxes to boost aggregate demand. D. It decreases government spending and/or increases taxes to reduce aggregate demand.

How does contractionary monetary policy typically affect the economy?

A. It increases the money supply and lowers interest rates to encourage borrowing and spending. \ B. It decreases the money supply and raises interest rates to discourage borrowing and spending. (correct answer) C. It increases government spending and/or reduces taxes to boost aggregate demand. D. It decreases government spending and/or increases taxes to reduce aggregate demand.

How does the federal funds rate directly affect the financial market?

A. It is the interest rate at which commercial banks lend to each other overnight. (correct answer) B. It is the interest rate the central bank charges on loans to commercial banks. C. It is the interest rate the government pays on its issued bonds. D. It is the interest rate commercial banks charge their prime customers.

A booming economy leads to a significant increase in job opportunities, while a new government policy also encourages more people to join the workforce. How does this affect the labor market?

A. Labor demand shifts left and labor supply shifts left B. Labor demand shifts left and labor supply shifts right C. Labor demand shifts right and labor supply shifts left D. Labor demand shifts right and labor supply shifts right (correct answer)

A decline in the number of high-paying jobs in a region causes some workers to leave the area in search of better opportunities elsewhere. How does this affect the labor market?

A. Labor demand shifts left and labor supply shifts left (correct answer) B. Labor demand shifts left and labor supply shifts right C. Labor demand shifts right and labor supply shifts left D. Labor demand shifts right and labor supply shifts right

An increase in immigration leads to a substantial influx of skilled workers in a country. How does this affect the labor market?

A. Labor demand shifts right B. Labor demand shifts left C. Labor supply shifts right (correct answer) D. Labor supply shifts left

A major technological advancement makes many low-skilled jobs obsolete, leading to a decrease in the number of available jobs. How does this affect the labor market?

A. Labor demand shifts right B. Labor demand shifts left (correct answer) C. Labor supply shifts right D. Labor supply shifts left

A new government policy significantly reduces taxes for small businesses, encouraging more entrepreneurs to start new companies. How does this affect the labor market?

A. Labor demand shifts right (correct answer) B. Labor demand shifts left C. Labor supply shifts right D. Labor supply shifts left

A recession causes many companies to go out of business, resulting in a decrease in available jobs. At the same time, many workers become discouraged and stop looking for work. How does this affect the labor market?

A. Labor demand shifts right (correct answer) B. Labor demand shifts left C. Labor supply shifts right D. Labor supply shifts left

The government introduces a comprehensive job training program that increases the skills of the workforce, making workers more productive. How does this affect the labor market?

A. Labor demand shifts right (correct answer) B. Labor demand shifts left C. Labor supply shifts right D. Labor supply shifts left

A large number of workers in a region decide to retire earlier than planned. How does this affect the labor market?

A. Labor demand shifts right B. Labor demand shifts left C. Labor supply shifts right D. Labor supply shifts left (correct answer)

How do strong labor unions contribute to higher real wages in some countries?

A. Labor unions negotiate better working conditions and higher wages on behalf of their members. (correct answer) B. Labor unions increase the unemployment rate, leading to higher real wages. C. Labor unions promote the use of technology, leading to higher productivity and real wages. D. Labor unions have no significant impact on real wages.

Cashing a check and holding the funds as currency

A. M1 B. M2 C. Both A. M1

Converting funds from a time deposit account to a demand deposit account

A. M1 B. M2 C. Both A. M1

Exchanging currency for traveler's checks

A. M1 B. M2 C. Both A. M1

Withdrawing funds from a savings account and keeping them as cash

A. M1 B. M2 C. Both A. M1

Depositing cash into a money market deposit account

A. M1 B. M2 C. Both B. M2

Purchasing a certificate of deposit (CD) using funds from a checking account

A. M1 B. M2 C. Both B. M2

Transferring money from a checking account to a money market deposit account

A. M1 B. M2 C. Both B. M2

Depositing cash into a checking account

A. M1 B. M2 C. Both C. Both

Transferring money from a savings account to a checking account

A. M1 B. M2 C. Both C. Both

Depositing traveler's checks into a savings account

A. M1 B. M2 C. Both M2

Which of the following is a component of fiscal policy?

A. Monetary policy B. Government spending (correct answer) C. Central bank reserves D. Open market operations

When the central bank conducts open market operations by selling government securities, what is the likely impact on the money supply and interest rates?

A. Money supply increases, and interest rates decrease B. Money supply decreases, and interest rates increase (correct answer) C. Money supply increases, and interest rates increase D. Money supply decreases, and interest rates decrease

Michael used to work as an accountant but has been unable to find a job in his field for over a year. He has stopped searching for a job, believing that there are no suitable positions available. How would he be classified in the labor market?

A. Part of the labor force B. Employed C. Unemployed D. Discouraged worker (correct answer)

John lost his job as a marketing manager last month and is currently searching for a new job. How would he be classified in the labor market?

A. Part of the labor force B. Employed C. Unemployed (correct answer) D. Discouraged worker

Sarah has a full-time job as a software engineer but is actively looking for a new job in the same field. How would she be classified in the labor market?

A. Part of the labor force B. Employed (correct answer) C. Unemployed D. Discouraged worker

Emily is a stay-at-home parent who does not have a job and is not currently looking for one. How would she be classified in the labor market?

A. Part of the labor force (correct answer) B. Employed C. Unemployed D. Discouraged worker

If a government is running a budget surplus, what is the relationship between public saving and private saving?

A. Public saving is positive, and private saving is negative. B. Public saving is negative, and private saving is positive. C. Both public saving and private saving are positive. (correct answer) D. Both public saving and private saving are negative.

If a government is running a budget deficit, what is the relationship between public saving and private saving?

A. Public saving is positive, and private saving is negative. B. Public saving is negative, and private saving is positive. (correct answer) C. Both public saving and private saving are positive. D. Both public saving and private saving are negative.

In an expansionary monetary policy, what type of open market operations would the central bank likely conduct?

A. Purchasing government securities to increase the money supply and lower interest rates (correct answer) B. Selling government securities to decrease the money supply and raise interest rates C. Purchasing government securities to decrease the money supply and raise interest rates D. Selling government securities to increase the money supply and lower interest rates

Which of the following is a function of the Federal Reserve?

A. Setting tax rates and government spending B. Regulating the stock market and securities trading C. Supervising and regulating banks and other financial institutions (correct answers) D. Managing the federal budget and debt

How do technological advancements impact real wages in a country?

A. Technological advancements increase unemployment, leading to lower real wages. B. Technological advancements decrease productivity, leading to lower real wages. C. Technological advancements increase productivity, leading to higher real wages. (correct answer) D. Technological advancements have no significant impact on real wages.

Which institution is responsible for setting the target federal funds rate?

A. The U.S. Treasury B. The U.S. Congress C. The Federal Open Market Committee (FOMC) (correct answer) D. The International Monetary Fund (IMF)

Which of the following is an example of fiscal policy?

A. The central bank setting interest rates B. The government adjusting tax rates (correct answer) C. The central bank conducting open market operations D. The government regulating commercial banks

When firms produce goods but they do not sell them in the current time period, how do we record the unsold goods in GDP?

A. The goods are added to the inventory investment category and valued at the expected selling price. B. The goods are added to inventory investment and valued at the cost of production. (correct answer) C. The goods are added to consumption spending and valued at the cost of production. D. The unsold goods are not counted in GDP until they are sold

What is national saving?

A. The portion of a government's tax revenue that is not used for government purchases B. The portion of households' income that is not used for consumption or taxes C. The total amount of saving in an economy, including both private and public saving (correct answer) D. The amount of money saved by non-profit organizations and charities

What is public saving?

A. The portion of a government's tax revenue that is not used for government purchases B. The portion of households' income that is not used for consumption or taxes C. The total amount of saving in an economy, including both private and public saving (correct answer) D. The amount of money saved by non-profit organizations and charities

What is private saving?

A. The portion of a government's tax revenue that is not used for government purchases (correct answer) B. The portion of households' income that is not used for consumption or taxes C. The total amount of saving in an economy, including both private and public saving D. The amount of money saved by non-profit organizations and charities

What is the primary goal of fiscal policy?

A. To control the money supply and interest rates B. To manage government revenue and expenditure to influence the economy (correct answer) C. To regulate the banking system and ensure financial stability D. To maintain exchange rate stability

What is the primary role of the Federal Reserve?

A. To enforce federal laws and regulations B. To manage the U.S. government's fiscal policy C. To act as the central banking system of the United States and conduct monetary policy (correct answer) D. To oversee international trade agreements

What is the primary purpose of open market operations conducted by a central bank?

A. To regulate the stock market and protect investors B. To control the money supply and influence interest rates in the economy (correct answer) C. To manage government spending and taxation policies D. To oversee international trade and currency exchange rates

What is the primary goal of the central bank when adjusting the federal funds rate?

A. To stabilize the stock market and encourage investment B. To manage government spending and budget deficits C. To control inflation and support economic growth by influencing borrowing and spending in the economy (correct answer) D. To maintain a fixed exchange rate with other currencies

Suppose real GDP is $5,245 billion, taxes collected by the government are $523 billion, government spending is $665 billion, and consumption spending is $3,870 billion. What is the value of private saving? Enter a whole number with no dollar sign and please do not include the word billion. Assume we have a closed economy.

GDP = Consumption (C) + Investment (I) + Government Spending (G) Step 1 We can calculate the government's budget balance (public saving) using the following equation: Public Saving = Taxes (T) - Government Spending (G) Public Saving = $523 billion - $665 billion Public Saving = -$142 billion Step 2 Now, to find the national saving, we can use the equation: National Saving = Private Saving + Public Saving or National Saving = GDP - Consumption (C) - Government Spending (G) National Saving = $5,245 billion - $3,870 billion - $665 billion National Saving = $710 billion Step 3 Private Saving = National Saving - Public Saving Private Saving = $710 billion - (-$142 billion) Private Saving = $852 billion Value of private saving is $852 billion

Suppose real GDP is $6,056 billion, taxes collected by the government are $741 billion, government spending is $827 billion, and consumption spending is $4,525 billion. What is the value of national saving? Enter a whole number with no dollar sign and please do not include the word billion. Assume we have a closed economy.

National Saving = GDP - Consumption (C) - Government Spending (G) National Saving = $6,056 billion - $4,525 billion - $827 billion National Saving = $704 billion $704 national spending

You go to the mall in Orlando and buy a new pair of jeans that were made in Vietnam. Which spending categories are affected when calculating U.S. GDP?

None because the jeans were not made in America. Consumption spending and net export spending. (correct answer) Net export spending because the jeans were imported. Consumption spending because you bought the jeans in America.

Suppose real GDP is $5,016 billion, taxes collected by the government are $501 billion, government spending is $816 billion, and consumption spending is $3,640 billion. What is the value of public saving? Enter a whole number with no dollar sign and please do not include the word billion. If appropriate, please enter a negative (-) sign. Assume we have a closed economy.

Public Saving = Taxes (T) - Government Spending (G) Public Saving = $501 billion - $816 billion Public Saving = -$315 billion -$315

Suppose people deposit $600 into Bank 1. The banking system has a reserve ratio of 13%. The policy of all banks is to make as many loans as possible. Each time a loan is made, the entire amount is spent, and it is then deposited into the next bank. If banks continue to make as many loans as possible, what is the total value of deposits in the banking system? Round to the nearest whole number

Step 1 First, find the money multiplier: Money multiplier = 1 / Reserve ratio Money multiplier = 1 / 0.13 Money multiplier ≈ 7.69 Total deposits = Initial deposit * Money multiplier Total deposits = $600 * 7.69 Total deposits ≈ $4,614 $4614

In some cultures children are rewarded when they lose their baby teeth. The child places the lost tooth under the pillow and the tooth fairy takes the tooth and leaves money in return. In 1980 the tooth fairy left 30 cents for every tooth lost. The CPI in 1980 was 82.4 and the CPI in 2020 was 258. How much should the tooth fairy leave in 2020 to maintain the same real value of the payment? The tooth fairy should leave ........ cents. Enter a whole number. Round to the nearest whole number.

Step 1 CPI ratio = CPI in 2020 / CPI in 1980 CPI ratio = 258 / 82.4 CPI ratio ≈ 3.13 Step 2 2020 payment = 1980 payment * CPI ratio 2020 payment = 30 cents * 3.13 2020 payment ≈ 93.9 cents

Suppose people deposit $747 into Bank 1. The banking system has a reserve ratio of 13%. The policy of all banks is to make as many loans as possible. Each time a loan is made, the entire amount is spent, and it is then deposited into the next bank. Bank 1 makes the largest loan possible, and this amount is deposited into Bank 2. What is the largest loan Bank 2 can make? Round to the nearest whole number.

Step 1 First, we need to calculate the required reserve for Bank 1: Required reserve = Initial deposit * Reserve ratio Required reserve = $747 * 0.13 Required reserve ≈ $97.11 Loan amount (Bank 1) = Initial deposit - Required reserve Loan amount (Bank 1) = $747 - $97.11 Loan amount (Bank 1) ≈ $649.89 Step 2 Required reserve (Bank 2) = Loan amount (Bank 1) * Reserve ratio Required reserve (Bank 2) = $649.89 * 0.13 Required reserve (Bank 2) ≈ $84.49 Loan amount (Bank 2) = Loan amount (Bank 1) - Required reserve (Bank 2) Loan amount (Bank 2) = $649.89 - $84.49 Loan amount (Bank 2) ≈ $565.40 $565

Suppose people deposit $621 into Bank 1. The banking system has a reserve ratio of 18%. The policy of all banks is to make as many loans as possible. Each time a loan is made, the entire amount is spent, and it is then deposited into the next bank. When the initial deposit is made into Bank 1, this bank can make a loan of how much? Round to the nearest whole number.

Step 1 First, we need to calculate the required reserve: Required reserve = Initial deposit * Reserve ratio Required reserve = $621 * 0.18 Required reserve = $111.78 Now, we can find out how much Bank 1 can loan out by subtracting the required reserve from the initial deposit: Loan amount = Initial deposit - Required reserve Loan amount = $621 - $111.78 Loan amount ≈ $509.22 Rounding to the nearest whole number, Bank 1 can make a loan of $509.

Suppose people deposit $630 into Bank 1. The banking system has a reserve ratio of 19%. The policy of all banks is to make as many loans as possible. Each time a loan is made, the entire amount is spent, and it is then deposited into the next bank. Bank 1 makes the largest loan possible, and this amount is deposited into Bank 2. Bank 2 makes the largest loan possible, and this amount is deposited into Bank 3. What is the largest loan Bank 3 can make? Round to the nearest whole number.

Step 1 Required reserve (Bank 1) = Initial deposit * Reserve ratio Required reserve (Bank 1) = $630 * 0.19 Required reserve (Bank 1) ≈ $119.70 Now, we can find out how much Bank 1 can loan out by subtracting the required reserve from the initial deposit: Loan amount (Bank 1) = Initial deposit - Required reserve (Bank 1) Loan amount (Bank 1) = $630 - $119.70 Loan amount (Bank 1) ≈ $510.30 Step 2 Now, this loan amount is deposited into Bank 2. We need to calculate the required reserve for Bank 2: Required reserve (Bank 2) = Loan amount (Bank 1) * Reserve ratio Required reserve (Bank 2) = $510.30 * 0.19 Required reserve (Bank 2) ≈ $96.96 Loan amount (Bank 2) = Loan amount (Bank 1) - Required reserve (Bank 2) Loan amount (Bank 2) = $510.30 - $96.96 Loan amount (Bank 2) ≈ $413.34 Step 3 Now, this loan amount from Bank 2 is deposited into Bank 3. We need to calculate the required reserve for Bank 3: Required reserve (Bank 3) = Loan amount (Bank 2) * Reserve ratio Required reserve (Bank 3) = $413.34 * 0.19 Required reserve (Bank 3) ≈ $78.53 Loan amount (Bank 3) = Loan amount (Bank 2) - Required reserve (Bank 3) Loan amount (Bank 3) = $413.34 - $78.53 Loan amount (Bank 3) ≈ $334.81 Answer $335

Labor force participation rate

labor force/ adult population X 100 employed + unemployed/ adult population X 100

To assess the wellbeing of the average person in a country from year to year it is best to calculate the percentage change in

nominal GDP. real GDP per capita. (correct answer) consumption spending. the consumer price index.

The GDP deflator is used to measure:

the dollar value of the goods and services produced in the economy. the inflation rate. (correct answer) the growth rate of real GDP. the growth rate of nominal GDP.

Real GDP increased from $12.5 trillion in 2005 to $14 trillion in 2009. This means that:

the prices of all goods and services were higher in 2009 than in 2005. Either of these could be true. people in the U.S. produced more goods and services in 2009 than in 2005. (correct answer) Both of these must be true

Net exports is defined as

the value of exports plus the value of imports the value of imports minus the value of exports the value of goods produced in the U.S. and sold to foreigners the value of exports minus the value of import (correct answer)

Unemployment rate equation

unemployed/ labor force X 100 Unemployed/ (employed + unemployed) X 100