econ 101 part 2

Refer to Exhibit 11-4. If a person's taxable income is $50,000, how much does he pay in taxes

$10,110

Suppose the economy is in a recessionary gap. If government expenditures are currently $700 billion and tax revenues are currently $450 billion, the (total) budget deficit is _____________. Assume that economists estimate that if the economy were operating at full employment then government expenditures would be $600 billion and tax revenues would be $500 billion. The structural deficit is _________________ and the cyclical deficit is _______________

$250 billion; $100 billion; $150 billion

Suppose that consumption spending is $3,200 billion, spending on durable goods is $800 billion, and spending on services is $1,800 billion. What does spending on nondurable goods equal?

$600 billion

Refer to Exhibit 34-9. For country Y, the opportunity cost of producing one unit of good B is __________ unit(s) of good A

1.5

Refer to Exhibit 7-5. What was Country Z's economic growth rate between year 3 and year 4

2.3%

Refer to Exhibit 6-2. The employment rate in year 4 is

72 percent

Refer to Exhibit 3-12. Fill in blanks (C) and (D) respectively with the market quantity supplied at each given price.

73; 88

Refer to Exhibit 6-2. How many unemployed persons are there in year 4?

80 million

Refer to Exhibit 10-4. If the present level of disposable income is Yd1, autonomous consumption is equal to

C0

Corporate profits is the largest category of national income

False

Say's law states that demand creates its own supply

False

The aggregate demand (AD) curve is the graphical representation of production in the short run

False

The part of consumption that is dependent on disposable income is called autonomous consumption

False

Who would be most likely to agree that "People do not always save more as interest rates rise"?

John Maynard Keynes

Refer to Exhibit 9-5. Point A on graph (2) would correspond to the intersection of an AD curve and a SRAS curve at which point(s) on graph (1)

K

At the time of Carol's 10 year high school reunion she was earning $30,000 and the CPI was 90. Now that it is time for her to attend her 20 year high school reunion, Carol's income has risen to $65,000 and the CPI is 200. At her 20 year reunion, can Carol rightfully brag that her real income has risen since the last time she saw her former classmates ten years ago

No, Carol's real income fell during that 10 year period

Which of the following illustrates the effectiveness lag

Policymakers implement policy X, but it will be a few months before it starts working

Refer to Exhibit 10-1. At Q3

TP > TE, and there are increases in inventory

Which scenario best explains the Keynesian transmission mechanism when the money supply increases while the money market is in a liquidity trap

The interest rate and investment are not affected; there is no shift in the AD curve

According to classical economists, most, if not all, markets are competitive

True

Economists who believe that the economy is self-regulating are more likely to be nonactivists than activists

True

One of the arguments in favor of trade restrictions is the foreign export subsidies argument.

True

Refer to Exhibit 7-4. Did Country A experience a recession (based on the standard definition) in 2019?

Yes, because its Real GDP declined during two consecutive quarters in 2019

Nonactivists hold that

a and c

The monetary policy most likely to be favored by monetarists is

a constant and slow rate of monetary growth

Stagflation implies that

a tradeoff between inflation and unemployment may not always exist

The answer is: "A reduction in consumers' surplus." What is the question

a, b, and c

The effects of a quota include

a, b, and c

Which of the following is a characteristic of consumption according to Keynes

a, b, and c

Nonactivists hold that

all of the above

A rules-based monetary policy

b and c

If the current unemployment rate is equal to the natural unemployment rate, then current Real GDP is

b and c

Which of the following statements is false

b and c

The ability to produce a good at a lower opportunity cost than others is called a(n) __________ advantage

comparative

As income taxes rise, disposable income __________, causing __________ the AD curve

decreases; a leftward shift of

The law of supply states that price and quantity supplied are

directly related, ceteris paribus.

Some economists believe that because the government ______________ discouraged workers as unemployed, the unemployment rate is biased ________________

does not count; downward

Refer to Exhibit 15-4. In the row of this table containing blank (C), people are holding ______________ of their wealth in bonds and ________________ of their wealth in money

just the right amount; just the right amount

From the Patterns of Sustainable Specialization and Trade (PSST) perspective, expansionary monetary and fiscal policies that are designed to boost aggregate demand

may not work if buyers and sellers are out of sync with one another, and may end up making the economy worse

The real balance effect works through a change in the value of

monetary assets in response to changes in the price level.

Tax revenues can be found by

multiplying the tax base by the (average) tax rate

Persons who argue against the deliberate use of fiscal and monetary policies to smooth out the business cycle are referred to as

nonactivists

If the investment demand curve is vertical, a decrease in the interest rate will __________ investment, and therefore aggregate demand will __________

not affect; remain unchanged

According to rational expectations theory

past experience is a good guide for decision making, but so is information related to possible future outcomes

The Samuelson-Solow version of the Phillips curve showed the relationship between unemployment rates and

price inflation rates

According to new classical theory, if the public correctly anticipates a government policy to increase aggregate demand, then the

short- and long-run Phillips curves will be vertical

Wage rates fall. This increases __________ and the __________ curve shifts rightward

short-run aggregate supply (SRAS); SRAS

Suppose that the bond market and the money market both start out in equilibrium, then the Federal Reserve decreases the money supply. The result will be a ______________ in the money market and a _________________ in the bond market, which will push bond prices _________________ and interest rates will ___________________ until a new equilibrium is reached

shortage; surplus; down; rise

Refer to Exhibit 16-1. According to new classical macroeconomists, if decreases in aggregate demand are unanticipated, then the economy will move from point C to

some point on SRPC2, below C

According to economist Arnold Kling's perspective on the economy, economic activity is best viewed by focusing on

specialization and trade

The deficit that exists when the economy operates at full employment is called the __________ deficit

structural

Juan lost his job as a nuclear physicist working for a defense contractor. He can not find a job because no firms in the defense industry or any other industry are hiring people with his skills. Juan is ______________ unemployed

structurally

Refer to Exhibit 3-8. A price of $5 will result in a ___________________ in this market which will cause the price of the product to gravitate _______________

surplus; downward

Suppose that the bond market and the money market both start out in equilibrium, then the Federal Reserve increases the money supply. The result will be a ______________ in the money market and a _________________ in the bond market, which will push bond prices _________________ and interest rates will ___________________ until a new equilibrium is reached

surplus; shortage; up; fall

Changes in which of the following will not cause the SRAS curve to shift

the price level

In moving along a demand curve for good X, which of the following is NOT held constant?

the price of good X

Refer to Exhibit 9-4. Assuming the economy is in an inflationary gap at a short-run equilibrium point with the price level at P2, the movement toward long-run equilibrium will be

up and along AD2

Suppose Smith wants one iPhone no matter what the price is between $0 and $350, Jones wants one iPhone no matter what the price is between $0 and $200, and Griffith wants one iPhone no matter what the price is between $0 and $450. In this case, each individual buyer's demand curve will be __________________ and the market demand curve will be __________________

vertical; downward sloping