Econ 2020 Midterm 1 Study Guide

C to D.

According to Figure 2.4, a decrease in unemployment may be represented by the movement from

prices in 2012 are higher than prices in 2011.

If real GDP in 2012 using 2011 prices is lower than nominal GDP of 2012, then

vertical.

If the Fed sets the money supply independent of the interest rate, then the money supply curve is

-1.

If the MPC is 0.5, the tax multiplier is

a recession.

In a business cycle, a trough represents the end of

decrease M1 and not change M2.

Jaime transfers $2,500 from his checking account to his savings account. This transaction will

-$400 million.

Refer to Table 8.5. At an aggregate output level of $4,000 million, the unplanned inventory change is

$6,000 million.

Refer to Table 8.5. The equilibrium level of aggregate output equals

to increase.

Refer to Table 9.1 At an output level of $1,200 billion, there is a tendency for output

$250,000.

The Intracoastal Bank has $5 million in deposits and $500,000 in reserves. If the required reserve ratio is 5%, excess reserves are equal to

negatively related.

The price of bonds and the interest rate are

its debt increases.

When a government runs a deficit

positive.

Refer to Figure 1.3. The slope of the line is

demand curve D3.

Refer to Figure 3.7. If pizza and beer are complementary goods, a decrease in the price of beer will cause a movement from Point B on demand curve D2 to

greater than; greater than

Refer to Figure 8.1. At income level $1,500, this household's saving is ________ than (to) zero and this household's consumption is ________ zero.

0.5; 0.5

Refer to Figure 8.1. The MPS for this household is ________ and the MPC is ________.

S = -500 + 0.5Y.

Refer to Figure 8.1. The equation for this household's saving function is

$400.

Refer to Figure 8.1. This household saves -$300 at an income level of

$240 million.

Refer to Figure 8.11. A $10 million increase in investment changes equilibrium output to

increases to $250 million.

Refer to Figure 8.11. If MPC increases to 0.8, equilibrium aggregate output

saving is positive.

Refer to Figure 8.2. Along the line segment AC, Jerry's

A.

Refer to Figure 8.2. Jerry's consumption equals his income at Point

consumption when income equals zero.

Refer to Figure 8.2. The line segment BD represents Jerry's

C = 60 + 0.7Y.

Refer to Figure 8.3. The equation for the aggregate consumption function is

3,075.

Refer to Table 6.1. The value of gross domestic product in billions of dollars is

0.9.

Refer to Table 8.2. Society's MPC is

the supply of pizza would decrease and the price of pizza would increase.

The price of mozzarella cheese, which is used in making pizza, increases. In the market for pizza you would expect that

S + T = I + G S + 50 = 100 + 100 S + 50 = 200 S = 150

What is saving in the US economy at the equilibrium level of output in the US economy?

The impact on the equilibrium interest rate is ambiguous.

What will happen to the equilibrium interest rate when both money supply and nominal aggregate output increase?

decrease; decreases

When the Fed raises the required reserve ratio, the banks' excess reserves will initially ________ and the money supply ________.

store of value.

When you keep your savings in a saving account, you are using money as a(n)

medium of exchange.

When you pay $8 for salad you ordered for lunch, you are using money as a(n)

time deposits

Which of the following is considered a liability to a bank?

Fiscal policy

the spending and taxing policies used by the government to influence the economy

F

According to Figure 2.4, which point cannot be produced with the current state of technology?

making loans.

Commercial banks create money through

20%.

Crescent City Bank has $200 million in deposits. Crescent City Bank is meeting its reserve requirement and has no excess reserves. It has $40 million in reserves. Crescent City Bank faces a required reserve ratio of

750.

If C = 100 + 0.8Y and I = 50, then the equilibrium level of income is

500.

If Lily's consumption function is of the form C = 100 + 0.8Y, her saving equals zero at an income level of

2,000; 500

If Logan received a $2,500 bonus and his MPS is 0.20, his consumption rises by $________ and his saving rises by $________.

-3%.

If Mr. Garrison is paid an interest rate of 4% on his savings, but the inflation rate is 7%, the real interest rate Mr. Garrison earns is

0.75.

If consumption is $30,000 when income is $35,000, and consumption increases to $36,000 when income increases to $43,000, the MPC is

the country's GNP will tend to exceed its GDP.

If no foreign companies produce in a country, but many of the country's companies produce abroad, then

133.33.

If nominal GDP is $8 trillion and real GDP is $6 trillion, the GDP deflator is

structural deficit.

If the economy's full-employment output is $9 trillion, actual output is $9 trillion, and the budget deficit is $20 billion, the deficit in this case is known as a

10%.

If the labor force is 500 and employment is 450, then the unemployment rate is

4.8%

If the number of people classified as unemployed is 20,000 and the number of people classified as employed is 400,000, what is the unemployment rate?

increase by 2.

If the slope of a straight line is -3. and if Y (the variable on the vertical axis) decreases by 6, then X (the variable on the horizontal axis) will

planned aggregate spending must be less than aggregate output.

If unplanned inventory investment is positive, then

the total of your consumption and saving will increase by $500.

If you earn additional $500 in disposable income one week for painting your neighbors house,

are $270 billion.

In 2012 the change in business inventories is -$70 billion and GDP is $200 billion. Final sales in 2012

planned aggregate expenditure equals aggregate output.

In macroeconomics, equilibrium is defined as that point at which

20% tax rate and $90,000 average income

In which case will the government collect more tax revenue?

demand deposits.

Included in M2 are

Equilibrium

when quantity demanded equals quantity supplied it is in

$650.

Bill's income is $1,000 and his net taxes are $350. His disposable income is

change in demand; shift of the demand curve

A change in income, preferences, or prices of other goods or services leads to a ________ that causes a ________.

token money.

A currency that is not backed by gold, silver, or any other precious commodity equal to the face value of the money is known as

an asset

A loan made by a bank is considered ________ of that bank.

decrease in supply.

A movement along the demand curve to the left may be caused by a

M2 - Savings Accounts - Money Market Accounts - Other Near Monies.

An equation for M1 is

less; risen

As the interest rate rises, people hold ________ money instead of bonds because the opportunity cost of holding money has ________.

-$20 billion.

Assume that in Scandia, planned investment is $80 billion but actual investment is $60 billion. Unplanned inventory investment is

$100 million.

Assume there is no leakage from the banking system and that all commercial banks are loaned up. The required reserve ratio is 10%. If the Fed buys $10 million worth of government securities from the public, the change in the money supply will be

1/MPS.

Assuming no government or foreign sector, the formula for the multiplier is

$3.2 million.

Napoli National Bank has liabilities of $3 million and net worth of $200,000. Napoli National Bank's assets are

3

Refer to Figure 1.3. The slope of the line between Points B and D is

3

Refer to Figure 1.3. The slope of the line between Points D and C is

an increase in the interest rate.

Refer to Figure 11.1. A movement from Point A to Point C can be caused by

an increase in nominal aggregate output.

Refer to Figure 11.1. A movement from Point A to Point D can be caused by

remains at 4 %.

Refer to Figure 11.5. Assume the interest rate equals 4% and the money supply decreases from Ms1 to Ms0. There will be an excess demand for money of 200 if the interest rate

C3.

Refer to Figure 8.4. Which consumption function has the largest MPC?

$75 million unplanned increase in inventories.

Refer to Figure 8.9. At aggregate output level $300 million, there is a

AE = 150 + 0.25Y.

Refer to Figure 8.9. What is the equation for the aggregate expenditure function (AE)?

$600,000.

Refer to Table 10.2. First Commercial Bank's excess reserves equal

$1,700,000.

Refer to Table 10.2. First Commercial Bank's total loans equal

is 10%.

Refer to Table 10.2. The required reserve ratio

10%.

Refer to Table 10.4. First Charter Bank could make additional, first round loans of $400,000 if the required reserve ratio were

is loaned up.

Refer to Table 10.4. If the required reserve ratio is 15%, First Charter Bank

2,000.

Refer to Table 6.1. Personal consumption expenditures in billions of dollars are

425.

Refer to Table 6.1. The value for gross private domestic investment in billions of dollars is

S = -100 + 0.1Y.

Refer to Table 8.2. The equation for the aggregate saving function is

$3,600.

Refer to Table 8.5. At an aggregate output level of $3,000 million, planned expenditure equals

$1,300 billion.

Refer to Table 9.1. At an output level of $1,200 billion, the level of aggregate expenditure is

negative $100 billion.

Refer to Table 9.1. At an output level of $1,200 billion, there is an unplanned inventory change of

$1,600

Refer to Table 9.1. The equilibrium level of output is ________ billion.

$200 million.

Suppose the required reserve ratio is 20%. A $40 million cash deposit will, at most, allow an expansion of the money supply to

2,000 sleds.

The Tiny Tots Toy Company manufactures only sleds. In 2012 Tiny Tots manufactured 10,000 sleds, but sold only 8,000 sleds. In 2012 Tiny Tots' change in inventory was

assisting banks that are in a difficult financial position

Which of the following activities is one of the responsibilities of the Federal Reserve?

the federal tax code

Which of the following instruments is NOT used by the Federal Reserve to change the money supply?

they increase during recessions

Which of the following is INCORRECT regarding tax revenues?

unemployment rises, income falls, tax revenue falls, unemployment benefits rise, and the budget deficit rises

Which of the following is a CORRECT sequence of events during a recession?

a computer purchased by Federal Express to track shipments

Which of the following is an example of a final good or service?

income

Which of the following is held constant along the demand curve?

selling government securities in the open market

Which of the following represents an action by the Federal Reserve that is designed to decrease the money supply?

the value of a 2008 boat you purchase from a boat dealer in 2013

Which of the following would NOT be counted in 2013's GDP?

money

anything that is generally accepted as a medium of exchange.

labor force participation rate

ratio of the labor force to the total population 16 years old or older.

economics

the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided

Inflation and unemployment

these 2 terms are a focus of macroeconomics