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अब Quizwiz के साथ अपने होमवर्क और परीक्षाओं को एस करें!

The banking system creates money because​ ______.

a bank that has excess reserves can make loans. When a bank creates a​ loan, the bank increases the balance of the​ borrower's account and that increase in deposits is new money

m1

M1 is the sum of currency and​ traveler's checks, ​$1 comma 586.4 ​billion, and checkable deposits ​$2 comma 071.4 ​billion, which is ​$3 comma 657.8 billion.

real interest rate

Nominal interest rate - Inflation rate

he nominal wage rate is the average​ _____ wage rate measured in​ _____ dollars. The real wage rate is the average​ _____ wage rate measured in the dollars of​ _____ year.

hourly; current; ​hourly; a reference base

money The three vital functions that money performs are​ ______.

Both a checkable deposit at the Bank of America and a $ 10 bill serve as a medium of​ exchange, a unit of​ account, and a store of value. You are correct that ancient Roman coins are not money. They serve as a unit of account and a store of​ value, but not as a medium of exchange. And a blank check​, a Rembrandt painting​, plastic sheets used to make Visa cards​, and Cox Communications bonds are not money. Upper A Rembrandt painting and Cox Communications bonds act as a store of​ value, but not as a medium of exchange or a unit of account. A blank check and plastic sheets used to make Visa cards perform none of the three functions of money. They are not a medium of​ exchange, a unit of​ account, or a store of value. medium of​ exchange, unit of​ account, and store of value

Which of the following is an example of capital goods​

The government will open another public school in the area.

What is a characteristic of an economy at full​ employment?

The unemployment rate equals the natural unemployment rate.

National debt is the amount of government​ _____ -​ _____ that has arisen from past​ _____.

debtde ​ outstanding; debt; budget deficits

CPI bias is a problem because it​ ______.

distorts wage agreements linked to the CPI

Subsidies to producers result in​ ______. If the subsidies​ (and the taxes that pay​ them) are​ decreased, ______.

overproduction and​ inefficiency; the market for corn and the market for soybean becomes more efficient

The CPI measures the average prices paid by​ _______ for​ _______.

urban​ consumers; a fixed basket of consumption goods and services

The​ _____ that people devote to produce goods and services is labor

work​ time, and work effort

The U.S. economy is at full employment when the following events​ occur: 1. A deep recession hits the world economy. 2. The world oil price rises by a large amount. 3. U.S. businesses expect future profits to fall.

All three events decrease real GDP. Events 1 and 3 lower the price level and Event 2 raises the price​ level, so we​ can't tell whether the price level rises or falls.

Which of the following illustrates a tradeoff​?

I will study for my exam instead of going for the movie tonight.

CPI

The CPI in 2016 equals​ (Cost of the CPI market basket in 2016 divided by Cost of the CPI market basket in 2015 ​) times 100.

Marginal private benefit is the benefit from​ ______ of a good or service that the​ _____ of the good or service receives. Marginal external benefit is the benefit from​ _____ of a good or service that people other than the​ _____ of that good or service enjoy.

an additionalan ​ unit; consumer; an additional​ unit; consumer

The Consumer Price Index is a measure of the​ _____ of the prices paid by​ _____ consumers for a fixed market basket of consumption goods and services.

average; urban

Cyclical unemployment is the fluctuating unemployment over the business cycle that increases during​ _____ and decreases during​ _____.

a​ recession; an expansion

An externality is a​ _____ that arises from production and that falls on someone other than the​ producer; or a​ _____ that arises from consumption and that falls on someone other than the consumer.

cost or​ benefit; cost or benefit

The rise in the minimum wage​ _______. If the rise in the minimum wage increases the natural unemployment​ rate, potential GDP​ ______ and aggregate supply​ ______.

decreases aggregate supply because​ firms' costs increase decreases; decreases further

Explain how aggregate demand changes when the government increases taxes by​ $100 billion. Aggregate demand​ ______.

decreases by more than​ $100 billion because the tax increase has a multiplier effect

​Full-employment equilibrium occurs when equilibrium real GDP​ _____.

equals potential GDP

A medium of exchange is an object that is generally accepted in return for​ _____. Barter is the direct exchange of goods and services for​ _____, which ​ _____ a double coincidence of wants.

goods andgo ​ services; other goods and​ services; requires

The main sources of bias in the CPI are​ ______.

new goods​ bias, quality change​ bias, commodity substitution​ bias, and outlet substitution bias

Marginal social benefit is the benefit enjoyed by society​ - by the consumer of a good or service and by everyone else who benefits from it. It is the sum of marginal​ ______ and marginal​ ______.

privatepr ​ benefit; external benefit

If the Fed wants to increase the quantity of​ money, it makes an open market​ _______. Reserves in the banking system​ ______. Banks​ ______ loans. Bank deposits​ ______ and the quantity of money​ ______.

purchase increase​; make more increase​; increases

Aggregate demand is the relationship between the quantity of​ _____ demanded and the​ _____ when all other influences on expenditure plans remain the same.

realre ​ GDP; price level

The velocity of circulation is the​ _____ number of times in a​ _____ that each dollar of money gets used to buy final goods and services.

​​average; year

Reserves consist of the currency in the​ _____ plus the balance on its​ _____ account at​ _____.

​​bank's vaults;​ reserve; a Federal Reserve Bank

Rent is the income paid for the use of​ _____. Wages are income paid for the services of​ _____. Profit ​(or loss) is the​ _____ earned by an entrepreneur for running a business. Interest is the income paid for the use of​ _____.

​​land; ​labor; ​income; capital

unemployment rate

The unemployment rate is the percentage of the people in the labor force who are unemployed. The number of people unemployed equals the labor force minus the number​ employed, which equals ​(157.8minus149.9​). The unemployment rate is calculated as the number of people unemployed divided by the labor​ force, all multiplied by 100. The unemployment rate is​ [ ​(157.8minus149.9​)/157.8​] times ​100, which is 5.0​%.

people; 16

The ​working-age population is the total number of​ _____ aged​ _____ years and over who are not in​ jail, hospital, or some other form of institutional care or in the U.S. Armed Forces.

Which of the following is an example of absolute advantage​?

Tom does his math homework in 2 hours while Harry takes only 30 minutes to do the same task.

Human capital is​ _______.

the knowledge and skill that people obtain from​ education, on-the-job​ training, and work experience

Deadweight loss is the decrease in​ _____ that results from an inefficient​ _____ or​ _____.

total​ surplus; underproduction; overproduction

Allocative efficiency is a situation in which the quantities of goods and services produced are those that people​ _____ - it is not possible to produce more of a good or service​ _____ some of another good that people​ _____.

value mostva ​ highly; without giving​ up; value more highly

An increase in expected future profit ​_______ aggregate demand​ today, and an increase in expected future income ​_______ aggregate demand today.

​​increases; increases

CPI

The CPI is a measure of the average of the prices paid by urban consumers for a fixed market basket of consumption goods and services.

Which of the following statements illustrates monetary policy​

The Fed has raised the federal funds rate by 0.3 percent.

List the sequence of events in the transition from a fall in the federal funds rate to a change in the inflation rate.

The Fed lowers the federal funds rate. Other​ short-term interest rates fall and the exchange rate falls . The quantity of money and supply of loanable funds increase The​ long-term real interest rate falls . Consumption​ expenditure, investment, and net exports increase . Aggregate demand increases . Real GDP growth rate increases Inflation rate increases .

What is the Fed and what is the​ FOMC?

The Fed provides banking services to banks and governments and the FOMC is the Fed's main policy dash making committee.

Which of the following statements illustrates fiscal policy​

The US government has proposed a hike in the corporate tax rate.Th

percentage of the household budget

The average household spent ​$196 on firecrackers and ​$9 on bandages in the base​ year, so the total budget is ​$205. So the percentage of the household budget spent on firecrackers in the base year is ​($196 divided by ​$205​) times ​100, which is 95.6 percent.

potential GDP line to the right of X(vertical). equilibrium price on X.

The graph shows the aggregate demand​ curve, AD​, and the​ short-run aggregate supply​ curve, AS​, in the economy of Artica

labor force participation rate

The labor force participation rate is the percentage of the​ working-age population in the labor force. The labor force participation rate is calculated as the labor force divided by the​ working-age population, all multiplied by 100. The labor force participation rate is ​(157.8 divided by 252.0​) times ​100, which is 62.6​%.

wage

The nominal wage rate is the average hourly wage rate measured in current dollars. The real wage rate is the average hourly wage rate measured in the dollars of a reference base year.

The interest rate is 23 percent a year in The Gambia and 8.6 percent a year in South Africa. The inflation rate is 6.8 percent a year in The Gambia and 4.6 percent a year in South Africa. Calculate the real interest rate in The Gambia and South Africa.

The real interest rate in The Gambia is 16.2 percent a year. The real interest rate in South Africa is 4 percent a year.

The reference base period is a period for which the​ _____ is defined to equal​ _____. Currently, the reference base period is​ 1982-1984.

CPI; 100

Which of the following is an example of comparative advantage​?

Dave makes 4 pizzas giving up 6 jars of milk shakes while Rob makes 2 pizzas giving up 4 jars of milk shakes.

m2

M2 is the sum of​ M1, savings​ deposits, small time​ deposits, and money market​ funds.

Real interest rate​ =

Nominal interest rate minus Inflation rate

Which of the following statements illustrates structural unemployment​?

Outsourcing resulted in many job losses in the mid 2000s.

Which of the following statements illustrates frictional unemployment​?

Robin is quitting his current job to find another that has better prospects.

Which of the following is an example of entrepreneurship​?

Sam Walton created the multinational retail corporation brand Walmart in 1962.Sa

aggregate

When aggregate demand​ decreases, real GDP decreases and the price level falls. When aggregate supply​ decreases, real GDP decreases and the price level rises.

Tax incidence is the division of the burden of a tax between the​ _____ and the​ _____.

buyer; seller

The production possibilities frontier is the boundary between the combinations of goods and services that​ _____, given the available factors of production and the state of technology.

can be produced and the combinations that cannot be produced

Economic growth is defined as the ​ _____

sustained expansion of production possibilitiessu

The​ Fed's chief executive is​ ______ and the​ Fed's main policy tools are​ ______.

the Chairman of the Board of​ Governors; required reserve​ ratios, discount​ rate, and open market operations. In unusual​ times, extraordinary crisis measures are an additional tool

Which of the following items are examples of fiscal policy that increase aggregate​ demand?

An increase in government expenditure, a decrease in​ taxes, and an increase in transfer payments

The U.S. economy is at full employment when the following events​ occur: Event​ 1: A deep recession hits the world economy. Event​ 2: The world oil price rises by a large amount. Event​ 3: U.S. businesses expect future profits to fall.

Event 1 and Event 3 decrease aggregate demand and Event 2 decreases aggregate supply. Event 1​ _______ real GDP and​ _______ the price level. decreases; lowers Event 2​ _______ real GDP and​ _______ the price level. decreases; raises Event 3​ _______ real GDP and​ _______ the price level. decreases; lowers

A central bank is​ ______. The​ ______ is the central bank of the United States.

a public authority that provides banking services to banks and governments and regulates financial institutions anda ​ markets; Federal Reserve System

If the economic recovery slows and the economy slips back into​ recession, and if the Fed decides not to change the federal funds​ rate, we would expect​ ______.

a smaller recessionary gap than would occur with a rise in the federal funds rate

Production efficiency is a situation in which the economy is getting all that it can from its resources and​ _____ produce more of one good or service without producing​ _____ of something else.

cannot; less

The Federal Reserve System ​(the Fed) is the​ _____ of the United States.

central bank

Which of the following is money​?

charlie's checking account deposit at the Bank of America

Total surplus is the sum of​ _____ and​ _____.

consumer​ surplus; producer surplus

The decrease in nonresidential investment​ ______ aggregate demand. The decrease in federal government spending​ ______ aggregate demand. The change in exports and imports​ _______ aggregate demand because​ _______

decreases; decreases increase; an increase in exports increases aggregate demand and a decrease in imports increases aggregate demand

Classify each of the following items as discretionary fiscal policy or automatic fiscal policy or neither.

neither: The imposition of huge fines on tobacco companies discretionary: A cut in the gas tax rate discretionary: A cut in​ cross-border (custom) tax rates automatic: The increase in the total amount paid in unemployment benefits as more workers lose their jobs.

As more people in India have access to higher education​ ______ and in the long run​ ______.

human capital​ increases; both potential GDP and aggregate supply increase

Between 1960 and​ 1999, the labor force participation rate​ ______.

increased mainly because the number of women who entered the labor force increasedin

Explain how aggregate demand changes when government expenditure on national defense increases by​ $100 billion. Aggregate demand​ ______.

increases by more than​ $100 billion because the government expenditure has a multiplier effect

The federal funds rate is the​ _____ rate on​ _____ loans.

interest; interbank

Human capital​ _____ that people obtain from​ education, on-the-job​ training, and work experience. ​_____ that have been produced in the past and that businesses now use to produce goods and services is capital.

is the knowledge andis ​ skill; ​Tools, instruments,​ machines, buildings, and other items

Aggregate supply is the relationship between the quantity of​ _____ supplied and the​ _____ when all other influences on production plans remain the same.

real​ GDP; price level

Macroeconomic equilibrium occurs when the quantity of​ _____ demanded equals the quantity of​ _____ supplied at the point of intersection of the​ _____ curve and the​ _____ curve.

real​ GDP; real​ GDP; AD​; AS

A means of payment is a method of ​ _____ a debt.

settling

A cost of living index is a measure of the change in the amount of money that people need to spend to achieve a given​ _____.

standard of living


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