Econ 101 Online Quizzes for Final

An increase in business excise taxes will shift the aggregate supply curve leftward. Select one: True False

True

Deflation is when the inflation rate turns negative. Select one: True False

True

"Thrifts" refer to the following institutions, except: Select one: a. Commercial banks b. Credit unions c. Mutual savings banks d. Savings and loan associations

A

A decline in investment will shift the AD curve to the: Select one: a. left by a multiple of the change in investment. b. left by the same amount as the change in investment. c. right by the same amount as the change in investment. d. right by a multiple of the change in investment.

A

A nation's gross domestic product (GDP): Select one: a. is the dollar value of all final output produced within the borders of the nation. b. is the dollar value of all final output produced by its citizens, regardless of where they are living. c. can be found by summing C + In + S + Xn. d. is always some amount less than C + Ig + G + Xn.

A

The use of a debit card is most similar to: Select one: a. Paying with a check b. Using a stored-value card c. Using currency d. Obtaining a short-term loan

A

When was the Federal Reserve System established? Select one: a. 1913 b. 1933 c. 1945 d. 1955

A

Which definition(s) of the money supply include(s) only items which are directly and immediately usable as a medium of exchange? Select one: a. M1 b. M2 c. Neither M1 nor M2 d. M1 and M2

A

A trough in the business cycle occurs when: Select one: a. Cyclical unemployment is at a minimum point b. Employment and output reach their lowest levels c. The natural rate of unemployment is at a minimum point d. The inflation rate is at its lowest level

B

Core inflation refers to the inflation picture after stripping away the: Select one: a. Capital goods prices b. Food and energy prices c. Government-regulated prices d. Service-sector prices

B

Holding the money deposits of businesses and households and making loans to the public are the basic functions of: Select one: a. District banks of the Federal Reserve System b. Commercial banks and thrift institutions c. The Open Market Committee and the Board of Governors d. The Federal Deposit Insurance Corporation and the Federal Savings and Loan Insurance Corporation

B

Money in the U.S. are essentially debts of: Select one: a. Businesses and the banks b. The government and the banks c. The national and local governments d. Businesses and the government

B

The Federal Reserve System performs the following functions, except: Select one: a. Issuing the paper currency in the economy b. Providing banking services to the general public c. Providing financial services to the Federal government d. Lending money to banks and thrifts

B

When a consumer wants to compare the price of one product with another, money is primarily functioning as a: Select one: a. Store of value b. Unit of account c. Checkable deposit d. Medium of exchange

B

When the economy is at its equilibrium GDP level, all of the following will occur, except: Select one: a. Aggregate expenditures = GDP b. Inventories will be zero c. Saving equals planned investment d. There are no unplanned changes in inventories

B

A headline states: "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment? Select one: a. Structural b. Cyclical c. Frictional d. Natural

C

Money functions as a store of value if it allows you to: Select one: a. Measure the value of goods in a reliable way b. Make exchanges in a more efficient manner c. Delay purchases until you want the goods d. Increase your confidence in money

C

The Federal Reserve System of the U.S. is the country's: Select one: a. Financial adviser b. Comptroller or Accountant c. Central bank d. Deposit insurance provider

C

The amount of after-tax income received by households is measured by: Select one: a. discretionary income. b. national income. c. disposable income. d. personal income.

C

United States currency has value primarily because it: Select one: a. Is legal tender, is generally acceptable in exchange for goods or services, and is backed by the gold and silver of the Federal government b. Is generally acceptable in exchange for goods or services, is backed by the gold and silver of the Federal government, and facilitates trade c. Is relatively scarce, is legal tender, and is generally acceptable in exchange for goods and services d. Facilitates trade, is legal tender, and permits the use of credit cards and near-monies

C

When the Fed acts as a "lender of last resort", like it did in the financial crisis of 2007-2008, it is performing its role of: Select one: a. Controlling the money supply b. Setting the reserve requirements c. Being the bankers' bank d. Providing for check clearing and collection

C

Which of the following functions of money enables society to gain the benefits of geographic and labor specialization? Select one: a. Unit of account b. Store of value c. Medium of exchange d. Medium of deferred payment

C

An asset's liquidity refers to its ability to be: Select one: a. Bought and stored b. Increasing in value over time c. Used and enjoyed d. A means of payment

D

If product prices were stated in terms of tobacco leaves, then tobacco leaves would be functioning primarily as: Select one: a. Fiat money b. Legal tender c. A store of value d. A unit of account

D

Joe Rogers deposits $200 in currency in his checking account at a bank. This deposit is treated as: Select one: a. A subtraction of $200 from the money supply because the $200 in currency is no longer in circulation b. An addition of $200 to the money supply because of the creation of a checkable deposit of $200 c. An addition of $200 to the money supply because the bank holds $200 in currency and the checking account has been increased by $200 d. No change in the money supply because the $200 in currency has been converted to a $200 increase in checkable deposits

D

The Federal Open Market Committee (FOMC) of the Federal Reserve System is primarily for: Select one: a. Maintaining cash reserves that can be used to settle international transactions b. Supervising banks to make sure that markets are open to all and remain competitive c. Issuing currency and acting as the fiscal agent for the Federal government d. Setting the Fed's monetary policy and directing the purchase and sale of government securities

D

The use of a credit card is most similar to: Select one: a. Paying with a check b. An ACH (automatic clearinghouse) transaction c. Purchasing a certificate of deposit d. Obtaining a short-term loan

D

What function is money serving when you use it when you go shopping? Select one: a. A store of value b. A unit of account c. A medium of deferred payment d. A medium of exchange

D

When there is inflation in the economy, it implies that the: Select one: a. Price index is rising and the purchasing power of money is also rising b. Price index is falling and the purchasing power of money is also falling c. Price index is falling and the purchasing power of money is rising d. Price index is rising and the purchasing power of money is falling

D

Which group assists the Board of Governors of the Federal Reserve System in determining monetary policy? Select one: a. U.S. Treasury b. U.S. Congress c. Federal Advisory Council d. Federal Open Market Committee

D

An increase in wealth from a substantial increase in stock prices will move the economy along a fixed aggregate demand curve. Select one: True False

False

Anyone who is not employed is classified as unemployed in the Bureau of Labor Statistics data on the labor force. Select one: True False

False

Exports are subtracted from imports in calculating U.S. GDP because exports are not available for domestic consumption. Select one: True False

False

The Financial Crisis of 2007-2008 halted the consolidation in the U.S. financial industry that had caused a declining number but increasing size of firms in the industry prior to the crisis. Select one: True False

False

The M1 money supply is composed of currency, checkable deposits, and savings deposits. Select one: True False

False

The interest-rate effect is one of the factors that explain why the aggregate demand curve is upward-sloping. Select one: True False

False

Most economists agree that the immediate cause of the majority of cyclical changes in the level of real output is unexpected changes in the: Select one: a. Level of total spending b. Rate of unemployment c. Rate of inflation d. Stock market price indexes

A

What are the primary effects of cost-push inflation? Select one: a. It raises real output, and redistributes an increased level of real income b. It reduces real output and redistributes a decreased level of real income c. It raises real output, but redistributes a decreased level of real income d. It reduces real output, but redistributes an increased level of real income

B

When aggregate expenditure is greater than GDP, then there will be an: Select one: a. Unplanned increase in inventories and GDP will increase b. Unplanned decrease in inventories and GDP will increase c. Unplanned increase in inventories and GDP will decrease d. Unplanned decrease in inventories and GDP will decrease

B

Which of the following is not economic investment? Select one: a. the purchase of a new drill press by the Ajax Manufacturing Company b. the purchase of 100 shares of AT&T by a retired business executive c. construction of a suburban housing project d. the piling up of inventories on a grocer's shelf

B

Which of the following is the correct way to calculate the unemployment rate? Select one: a. [(unemployed)/(population)] x 100 b. [(unemployed)/(labor force)] x 100 c. [(labor force)/(population)] x 100 d. [(labor force)/(unemployed)] x 100

B

Which of the following measures the changes in the prices of a "market basket" of some 300 goods and services purchased by typical urban consumers? Select one: a. The GDP price index b. The Consumer Price Index c. The Retail Trade survey d. The Survey of Manufactures

B

Which phase of the business cycle would be most closely associated with an economic contraction? Select one: a. Peak b. Recession c. Trough d. Recovery

B

If aggregate demand decreases, and as a result, real output and employment decline but the price level remains unchanged, it is most likely that: Select one: a. the money supply has declined. b. the price level is inflexible downward and a recession has occurred. c. cost-push inflation has occurred. d. productivity has declined.

C

In national income accounting, consumption expenditures include: Select one: a. purchases of both new and used consumer goods. b. consumer durable goods and consumer nondurable goods, but not services. c. consumer durable goods, consumer nondurable goods, and services. d. changes in business inventories.

C

When oil and energy prices rise, the economy tends to experience: Select one: a. Natural inflation b. Demand-pull inflation c. Cost-push inflation d. Unanticipated inflation

C

In national income accounting, government purchases include: Select one: a. purchases by Federal, state, and local governments. b. purchases by the Federal government only. c. government transfer payments. d. purchases of goods for consumption, but not public capital goods.

A

In what circumstances would lenders most benefit? Select one: a. When there is an unanticipated decrease in inflation b. When there is an anticipated increase in inflation c. When there is an unanticipated increase in inflation d. When there is an anticipated decrease in inflation

A

The immediate-short-run aggregate supply curve represents circumstances where: Select one: a. both input and output prices are fixed. b. both input and output prices are flexible. c. input prices are fixed, but output prices are flexible. d. input prices are flexible, but output prices are fixed.

A

Official unemployment rate statistics may: Select one: a. Overstate the amount of unemployment by including part-time workers in the calculations b. Understate the amount of unemployment by excluding part-time workers in the calculations c. Overstate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment d. Understate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment

D

One major point that Keynes raised pertains to income and spending. He argued that: Select one: a. All income is often spent in the same period of time b. Oftentimes, people spend more than their incomes c. The marginal propensity to spend out of additional income is quite volatile d. Pessimism could cause aggregate spending to fall short of total output

D

In calculating GDP, governmental transfer payments, such as social security or unemployment compensation, are: Select one: a. not counted. b. counted as investment spending. c. counted as government spending. d. counted as consumption spending.

A

In the aggregate expenditures model of the economy, a downward shift in aggregate expenditures can be caused by a: Select one: a. Decrease in government spending or an increase in taxes b. Decrease in taxes or an increase in government spending c. Decrease in interest rates or a decrease in taxes d. Decrease in saving or an increase in government spending

A

The real-balances, interest-rate, and foreign purchases effects all help explain: Select one: a. why the aggregate demand curve is downsloping. b. why the aggregate supply curve is upsloping. c. shifts in the aggregate demand curve. d. shifts in the aggregate supply curve.

A

The system that measures the economy's overall performance is formally known as: Select one: a. National income accounting b. Business cycle measurement c. GDP assessment d. Final output and income statistics

A

In 2008, the Federal government provided tax rebate checks to taxpayers in the hope that: Select one: a. C would shift down b. C would shift up c. G would shift down d. G would shift up

B

Inflation that occurs when total spending is greater than the economy's ability to produce output at the existing price level is: Select one: a. Anticipated inflation b. Demand-pull inflation c. Cost-push inflation d. Unanticipated inflation

B

Other things being equal, a decrease in an economy's exports will: Select one: a. Increase domestic aggregate expenditures and the equilibrium level of GDP b. Decrease domestic aggregate expenditures and the equilibrium level of GDP c. Have no effect on domestic GDP because imports will offset the change in exports d. Increase the amount of imports consumed by the private sector

B

Suppose that nominal wages fall and productivity rises in a particular economy. Other things equal, the aggregate: Select one: a. demand curve will shift leftward. b. supply curve will shift rightward. c. supply curve will shift leftward. d. expenditures curve will shift downward.

B

The growth of GDP may understate changes in the economy's economic well-being over time if the: Select one: a. distribution of income becomes increasingly unequal. b. quality of products and services improves. c. environment deteriorates because of pollution. d. amount of leisure decreases.

B

In an inflationary expenditure gap, the equilibrium level of real GDP would be: Select one: a. Greater than planned investment b. Equal to full-employment GDP c. Greater than full-employment GDP d. Less than full-employment GDP

C

In the aggregate expenditure model, which of the following variables is assumed to be independent of real GDP? Select one: a. Profit b. Saving c. Investment d. Consumption

C

In which industry or sector of the economy is output least likely to be affected by the business cycle? Select one: a. Housing construction b. Automobile production c. Agricultural commodities d. Capital goods production

C

Leakages from the income-expenditure stream are: Select one: a. Consumption, saving, and transfers b. Saving, taxes, and transfers c. Saving, taxes, and imports d. Imports, taxes, and transfers

C

The aggregate supply curve (short-run) is upsloping because: Select one: a. wages and other resource prices match changes in the price level. b. the price level is flexible upward but inflexible downward. c. per-unit production costs rise as the economy moves toward and beyond its full-employment real output. d. wages and other resource prices are flexible upward but inflexible downward.

C

The best example of a "frictionally unemployed" worker is one who: Select one: a. Reduces productivity by causing frictions in a business b. Is laid off during a recessionary period in the economy c. Is in the process of voluntarily switching jobs d. Is discouraged and not actively seeking work

C

The factors that affect the amounts that consumers, businesses, government, and foreigners wish to purchase at each price level are the: Select one: a. real-balances, interest-rate, and foreign purchases effects. b. determinants of aggregate supply. c. determinants of aggregate demand. d. sole determinants of the equilibrium price level and the equilibrium real output.

C

For a person to keep his real income steady at a certain level from one year to the next, his nominal income must: Select one: a. Rise if the price index falls b. Stay the same as the price index rises c. Fall if the price index rises d. Rise as fast as the price index

D

Real GDP refers to: Select one: a. the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income. b. GDP data that embody changes in the price level, but not changes in physical output. c. GDP data that reflect changes in both physical output and the price level. d. GDP data that have been adjusted for changes in the price level.

D

The aggregate demand curve: Select one: a. is upsloping because a higher price level is necessary to make production profitable as production costs rise. b. is downsloping because production costs decline as real output increases. c. shows the amount of expenditures required to induce the production of each possible level of real output. d. shows the amount of real output that will be purchased at each possible price level

D

The investment demand curve relates planned investment spending to: Select one: a. Real GDP or income, whereas the investment expenditure schedule relates planned investment to interest rates b. Real GDP and income, whereas the investment expenditure schedule relates planned investment to consumption c. The general price level, whereas the investment expenditure schedule relates planned investment to interest rates d. Real interest rates, whereas the investment expenditure schedule relates planned investment to GDP or income

D

The real-balances effect indicates that: Select one: a. an increase in the price level will increase the demand for money, increase interest rates, and reduce consumption and investment spending. b. a lower price level will decrease the real value of many financial assets and therefore reduce spending. c. a higher price level will increase the real value of many financial assets and therefore increase spending. d. a higher price level will decrease the real value of many financial assets and therefore reduce spending

D

The stimulus package enacted by the Federal government in 2009 was intended to: Select one: a. Shift the aggregate expenditures schedule down b. Close an inflationary expenditures-gap c. Bring inflation down d. Push the aggregate expenditures schedule upward

D

Which of the following transactions would be included in GDP? Select one: a. Mary buys a used book for $5 at a garage sale. b. Nick buys $5000 worth of stock in Microsoft. c. Olivia receives a tax refund of $500. d. Peter buys a newly constructed house

D

GDP can be calculated by summing: Select one: a. consumption, investment, government purchases, exports, and imports. b. consumption, investment, government purchases, and net exports. c. consumption, investment, wages, and rents. d. consumption, investment, government purchases, and imports

B

Historically, real GDP has increased less rapidly than nominal GDP because: Select one: a. price indices have not reflected improvements in product quality. b. the general price level has increased. c. technological progress has resulted in more efficient production. d. the general price level has decreased.

B

If aggregate demand increases and aggregate supply decreases, the price level: Select one: a. will decrease, but real output may increase, decrease, or remain unchanged. b. will increase, but real output may increase, decrease, or remain unchanged. c. and real output will both increase. d. and real output will both decrease.

B

"Full employment" refers to the situation when there is: Select one: a. 100% employment of the labor force b. 0% unemployment rate c. No frictional or structural unemployment d. No cyclical unemployment

D

A mismatch between the geographic location of workers and the location of job openings would result in what type of unemployment? Select one: a. Wait b. Cyclical c. Frictional d. Structural

D

Cost-push inflation tends to be characterized by all of the following, except: Select one: a. Rising general price level b. Falling real output c. Automatically self-limiting d. Falling unemployment

D

Net exports are negative when: Select one: a. Net exports exceed imports b. Depreciation exceeds exports c. Exports exceed imports d. Imports exceed exports

D

In calculating the unemployment rate, "discouraged" workers who are not actively seeking employment are: Select one: a. Excluded from the labor force b. Included as part of the unemployed c. Treated the same as part-time workers d. Used to determine the size of the labor force

A

Inflation caused by a rise in the prices of inputs is referred to as: Select one: a. Cost-push inflation b. Demand-pull inflation c. Unanticipated inflation d. Hyperinflation

A

Inflation is a rise in: Select one: a. The general level of prices over time A b. The standard of living over time c. Industrial production over time d. Real GDP over time

A

Okun's law indicates that for: Select one: a. Every 1 percent that the actual unemployment rate exceeds the natural unemployment rate, a 2 percent GDP gap is generated b. Every 1 percent that the actual unemployment rate exceeds the natural unemployment rate, a 5 percent GDP gap is generated c. A 5 percent GDP gap, a 1 percent increase in the natural unemployment rate is generated d. A 2 percent GDP gap, a 2 percent increase in the actual unemployment rate is generated

A

Over time, an increase in the real output and incomes of the trading partners of the United States will most likely: Select one: a. Increase U.S. exports b. Decrease U.S. exports c. Increase imports of the U.S. d. Decrease imports of the U.S.

A

The shape of the immediate-short-run aggregate supply curve implies that: Select one: a. total output depends on the volume of spending. b. increases in aggregate demand are inflationary. c. output prices are flexible, but input prices are not. d. government cannot bring an economy out of a recession by increasing spending.

A

Unanticipated inflation tends to penalize: Select one: a. People who save money in financial institutions b. Individuals who borrow money from financial institutions c. Businesses which borrow money from financial institutions d. Governments which have a progressive personal income tax

A

Unemployment rates for skilled workers compared to unemployment rates for unskilled workers are: Select one: a. Lower, because skilled workers tend to be employed in less cyclically vulnerable industries, such as the services and nondurable goods industries b. Higher, because skilled workers tend to be employed in more cyclically vulnerable industries, such as the durable goods industry c. Higher, because businesses are less likely to retain the more costly skilled workers no matter what type of industry d. Lower, because skilled workers tend to be primarily employed by government at the local, state, and Federal levels

A

Which measure of inflation would include consumer goods and capital goods? Select one: a. The GDP price index b. The Consumer Price Index c. The Retail Trade Survey d. The Survey of Manufactures

A

Which of the following is a final good or service? Select one: a. a haircut purchased by a father for his 12 year-old son b. fertilizer purchased by a farm supplier c. diesel fuel bought for a delivery truck d. Chevrolet windows purchased by a General Motors assembly plant

A

Which one of the following would not shift the aggregate demand curve? Select one: a. a change in the price level b. depreciation of the international value of the dollar c. a decline in the interest rate at each possible price level d. an increase in personal income tax rates

A

If depreciation exceeds gross investment: Select one: a. the economy's stock of capital may be either growing or shrinking. b. the economy's stock of capital is shrinking. c. the economy's stock of capital is growing. d. net investment is zero.

B

If the expected rate of return on investment decreases, then most likely the: Select one: a. Investment schedule will shift upward b. Investment schedule will shift downward c. Consumption schedule will shift upward d. Consumption schedule will shift downward

B

In an effort to avoid recession, the government implements a tax rebate program, effectively cutting taxes for households. We would expect this to: Select one: a. affect neither aggregate supply nor aggregate demand. b. increase aggregate demand. c. reduce aggregate demand. d. reduce aggregate supply.

B

In calculating the unemployment rate, part-time workers are: Select one: a. Counted as unemployed because they are not working full-time b. Counted as employed because they are receiving payment for work c. Used to determine the size of the labor force, but not the unemployment rate d. Treated the same as "discouraged" workers who are not actively seeking employment

B

In the flow of income and spending, saving and investment are, respectively: Select one: a. An injection and a leakage b. A leakage and an injection c. Wealth and income d. Income and wealth

B

John Maynard Keynes developed the aggregate expenditures model in order to understand the: Select one: a. Second World War b. Great Depression c. Oil crises of the 1970s and 1980s d. Great Recession of 2007-2009

B

National income accountants can avoid multiple counting by: Select one: a. including transfer payments in their calculations. b. only counting final goods. c. counting both intermediate and final goods. d. only counting intermediate goods.

B

Nominal GDP is: Select one: a. the sum of all monetary transactions that occur in the economy in a year. b. the sum of all monetary transactions involving final goods and services that occur in the economy in a year. c. the amount of production that occurs when the economy is operating at full employment. d. money GDP adjusted for inflation

B

Other things equal, if the U.S. dollar were to depreciate, the: Select one: a. aggregate demand curve would remain unchanged. b. aggregate supply curve would shift to the left. c. aggregate supply curve would shift to the right. d. aggregate demand curve would shift to the left.

B

The amount by which actual GDP falls short of potential GDP is one measure of the: Select one: a. Natural rate of unemployment b. Macroeconomic cost of unemployment c. Difference between real and nominal GDP d. Potential to produce outside the nation's PPC

B

The rate of unemployment when the economy is at its potential output is called the: Select one: a. Full-employment rate of unemployment b. Natural rate of unemployment c. Structural rate of unemployment d. Frictional rate of unemployment

B

The value added of a firm is the market value of: Select one: a. a firm's output plus the value of the inputs bought from others. b. a firm's output less the value of the inputs bought from others. c. the firm's output. d. the firm's inputs bought from others.

B

Transfer payments are: Select one: a. excluded when calculating GDP because they only reflect inflation. b. excluded when calculating GDP because they do not reflect current production. c. included when calculating GDP because they are a category of investment spending. d. included when calculating GDP because they increase the spending of recipients.

B

Which one of the following is considered to be a stock rather than a flow? Select one: a. Income b. Money c. Wages d. Profits

B

Kevin has lost his job in an automobile plant because of the use of robots for welding on the assembly line. Kevin plans to go to technical school to learn how to repair microcomputers. The type of unemployment Kevin is faced with is: Select one: a. Cyclical b. Frictional c. Structural d. Natural

C

Net exports are: Select one: a. that portion of consumption and investment goods sent to other countries. b. exports plus imports. c. exports less imports. d. imports less exports.

C

Other things equal, an improvement in productivity will: Select one: a. shift the aggregate demand curve to the left. b. shift the aggregate supply curve to the left. c. shift the aggregate supply curve to the right. d. increase the price level.

C

Suppose the total monetary value of all final goods and services produced in a particular country in 2010 is $500 billion and the total monetary value of final goods and services sold is $450 billion. We can conclude that: Select one: a. GDP in 2010 is $450 billion. b. NDP in 2010 is $450 billion. c. GDP in 2010 is $500 billion. d. inventories in 2010 fell by $50 billion.

C

The aggregate supply curve: Select one: a. is explained by the interest rate, real-balances, and foreign purchases effects. b. gets steeper as the economy moves from the top of the curve to the bottom of the curve. c. shows the various amounts of real output that businesses will produce at each price level. d. is downsloping because real purchasing power increases as the price level falls.

C

The interest-rate effect suggests that: Select one: a. a decrease in the supply of money will increase interest rates and reduce interest-sensitive consumption and investment spending. b. an increase in the price level will increase the demand for money, reduce interest rates, and decrease consumption and investment spending. c. an increase in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending. d. an increase in the price level will decrease the demand for money, reduce interest rates, and increase consumption and investment spending.

C

Which one of the following would increase per unit production cost and therefore shift the aggregate supply curve to the left? Select one: a. a reduction in business taxes b. production bottlenecks occurring when producers near full plant capacity c. an increase in the price of imported resources d. deregulation of industry

C

In a recessionary expenditure gap, the equilibrium level of real GDP is: Select one: a. Less than planned aggregate expenditures b. Greater than planned aggregate expenditures c. Greater than full-employment GDP d. Less than full-employment GDP

D

John Maynard Keynes developed the ideas underlying the aggregate expenditures model: Select one: a. In the 1960s b. In the 1980s c. As a reinforcement of Say's Law d. As a critique of classical economics

D

The Federal Reserve System consists of which of the following? Select one: a. Federal Open Market Committee and Office of Thrift Supervision b. Federal Deposit Insurance Corporation and Controller of the Currency c. U.S. Treasury Department and Bureau of Engraving and Printing d. Board of Governors and the 12 Federal Reserve Banks

D

The Financial Crisis of 2007-2008 started in which sector of the economy? Select one: a. Foreign trade sector b. Consumer durables sector c. Dot.com and technology sector d. Real estate and housing sector

D

The concept of net domestic investment refers to: Select one: a. the amount of machinery and equipment used up in producing the GDP in a specific year. b. the difference between the market value and book value of outstanding capital stock. c. gross domestic investment less net exports. d. total investment less the amount of investment goods used up in producing the year's output.

D

When inflation occurs: Select one: a. All prices are rising b. Each dollar of income will buy more output than before c. The purchasing power of money increases d. The purchasing power of money decreases

D

Which of the following activities is excluded from GDP, causing GDP to understate a nation's production? Select one: a. the services of health care workers b. the services of military personnel c. the construction of new buildings d. goods and services produced in the underground economy

D

Unemployment that is the result of deregulation, corporate downsizing, and the closure of military bases is best categorized as frictional unemployment. Select one: True False

False

When you use money to purchase groceries, money is functioning as a store of value. Select one: True False

False

Gross private domestic investment exceeds depreciation in an economy that experiences expanding production capacity. Select one: True False

True

In the Great Recession of 2007-2009, consumption C and investment Ig fell while government G expanded. Select one: True False

True

One basic assumption of the aggregate expenditures model is that the price level in the economy is fixed. Select one: True False

True

Positive net exports increase aggregate expenditures beyond what they would be in a closed economy and thus have an expansionary effect on domestic GDP. Select one: True False

True

The equilibrium price level and equilibrium level of real GDP occur at the intersection of the aggregate demand curve and the aggregate supply curve. Select one: True False

True

Within the circular flow model, the level of total resource income and total spending on output will be approximately equal. Select one: True False

True