Econ Final

Long run aggregate supply curve formula

Y=A+K

aggregate demand curve formula

Y=M+V-P

short run aggregate supply formula

Ys=YL+(P-E[P])

CPI formula

(cost of basket in current year/cost of basket in base year) x 100

growth rate of productivity is represented by

A

Which of the following is an example of a negative real shock to an economy? A drought stifles crop growth for the season Consumer confidence in the future of the economy falls The government reduces taxes The government spends more money on a war

A drought stifles crop growth for the season

short run equilibrium formula

AD=SRAS

Households in the U.S. go on a binge of buying and eating U.S.-produced popcorn. Popcorn consumption goes up by $1 million. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?

C

The Federal Reserve is considered a powerful institution because it has the power to: Act as a lender of last resort, control money supply in the long term, and print money. Buy government bonds, act as a lender of last resort, and create money. Create money, buy government bonds, and control long-term economic growth. Control short-term growth, create money, and buy government bonds.

Buy government bonds, act as a lender of last resort, and create money.

What happens in the short run when spending increases? More spending makes prices sticky, so inflation skyrockets in the short run. More spending makes prices more volatile, so inflation drops and often turns into deflation. Increased spending doesn't immediately cause full inflation, so there is short run growth. Increased spending immediately causes inflation, so there is no growth.

Increased spending doesn't immediately cause full inflation, so there is short run growth.

P equals

Inflation Rate or Y axis

quantity theory of money formula

M × V = P × Y

A change in which variable in the quantity theory of money is most likely to cause large and sustained changes in prices? M, the money supply None of the above v, velocity of money Y, the real GDP

M, the money supply

The quantity theory of money is expressed by the identity equation: M×v=P×Y M×v=Y M×vP×Y M=P×Y×v

M×v=P×Y

J.B., who is a Canadian citizen living in Canada, buys a new car ($25,000) which was built by a firm based in Ohio. In which component of each country's GDP (C, I, G, or NX) will the transaction appear-UNITED STATES

NX

Miranda living in Cincinnati buys a supercomputer for $6,000. The computer has been built from $400 worth of computer chips produced in Korea in the same year. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?-KOREA

NX

The city of Cincinnati purchases a new, German-made bus for $150,000. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?-GERMANY

NX

US Steel Corporation purchases a new $10 million steel rolling machine for its factory. Assume the steel rolling machine was produced in Japan. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?-JAPAN

NX

Both sides of the quantity theory of money identity represent ____________. Nominal GDP The Money Supply Real GDP Inflation

Nominal GDP

Y equals

Real GDP or x axis

US Steel Corporation purchases a new $10 million steel rolling machine for its factory. Assume the steel rolling machine was produced in Japan. How is the GDP of the countries mentioned affected?-UNITED STATES

STAYS THE SAME

An economy's potential growth rate is also known as what? Real interest rate Solow growth rate Keynesian growth rate Inflation rate

Solow growth rate

Which of the following is a factor of production and best defined as ideas and inventions? Physical capital Human capital Technical knowledge Organization

Technical Knowledge

Households in the U.S. go on a binge of buying and eating U.S.-produced popcorn. Popcorn consumption goes up by $1 million. How is the GDP of the countries mentioned affected?

The GDP of the U.S. goes up by $1 million .

Your housemate spends 5 hours fixing the broken wheel on his car; a job that would have cost him $300 at the local service station. How is the GDP of the countries mentioned affected?

The GDP of the U.S. stays the same .

Here is a list of possible changes in the economy. Of the real shocks in this list, which of these changes is most likely to have caused the Great Recession? The growth rate of real consumption spending increases to 2 percent per year The growth rate of the money supply falls to -4 percent per year The growth rate of labor falls to -1 percent per year The growth rate of the capital stock increases to 3 percent per year

The growth rate of labor falls to -1 percent per year

Which of the following situations is an example of inflation occurring in a two-good economy? The price of apples and the price of pears have remained the same over the past 5 years, but wages for factory workers have increased since then. The price of apples is about 2% higher than it was five years ago, while the price of pears fell by about 2% over the same time period. The price of apples and the price of pears both decreased about 5% in the past 5 years. The price of apples and the price of pears both increased by about 2% in the last five years.

The price of apples and the price of pears both increased by about 2% in the last five years.

In the quantity theory of money, v represents: The value of a dollar The velocity of money The velocity of production The value of a good

The velocity of money

quantity theory of money(not formula)

a theory asserting that the quantity of money available determines the price level and that the growth rate in the quantity of money available determines the inflation rate

Nominal GDP in terms of _______ is represented by how much money there is and how many times it is spent, while Nominal GDP in terms of ________ is represented by all goods and services and their prices. imports & exports profit & loss domestic production & international production buyers & sellers

buyers & sellers

J.B., who is a Canadian citizen living in Canada, buys a new car ($25,000) which was built by a firm based in Ohio. In which component of each country's GDP (C, I, G, or NX) will the transaction appear-CANADA

consumption

US Steel Corporation purchases a new $10 million steel rolling machine for its factory. Assume the steel rolling machine was produced in Japan. How is the GDP of the countries mentioned affected?-JAPAN

goes up 10 million

V equals

growth in velocity C+I+G+NX

The following institution(s) promote(s) economic growth: Communism Redistributive justice Property rights Property rights and Redistributive justice Price controls and Redistributive justice Property rights and Price controls Price controls

property rights

The Consumer Price Index (CPI) is a weighted average of the prices of: the top ten goods and services bought by US consumers. thousands of goods and services bought by US consumers. only durable goods bought by US consumers. hundreds of grocery items bought by US consumers.

thousands of goods and services bought by US consumers.

The city of Cincinnati purchases a new, German-made bus for $150,000. How is the GDP of the countries mentioned affected?-GERMANY

up 150k

How does the Quantity Theory of Money help us understand the limitations of the Federal Reserve's power to control economic growth? Increases in the money supply result in increases in velocity in the long run. Increases in the money supply result in price increases in the long run. Increases in the money supply result in increases in output in the long run. The velocity of money does not adjust to monetary policy.

Increases in the money supply result in price increases in the long run.

How does inflation affect the long-run real growth? Inflation does not have an effect on long-run real growth. Inflation causes long-run real growth to decrease. There are many other factors to consider before determining how inflation will affect long-run real growth. Inflation causes long-run real growth to increase

Inflation does not have an effect on long-run real growth.

All of the following factors are fundamental to an economy's potential growth rate except for: Money supply Labor Ideas Capital

Money supply

If P+Y represents inflation plus the real growth rate, then can M+V be interpreted as the growth rate of spending in the economy, also known as: Consumption Real GDP growth rate Nominal GDP growth rate Inflation

Nominal GDP growth rate

gdp deflator

Nominal GDP/Real GDP x 100

The inflation rate is measured as the percentage change in the index over a time period. What variable should be plugged in for the denominator? Inflation rate=(P2−P1◻)×100 P1 P2 π x2

P1

nom gdp formula

Price x number of items

In the quantity theory of money, P and Y represent the price and quantity of: all raw materials and natural resources sold in an economy. all finished goods and services sold in an economy. all durable capital (tractors, manufacturing equipment) purchased in the economy. all financial services sold in an economy.

all finished goods and services sold in an economy.

Miranda living in Cincinnati buys a supercomputer for $6,000. The computer has been built from $400 worth of computer chips produced in Korea in the same year. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?-UNITED STATES

consumption and NX

A negative real shock to the economy shifts the LRAS curve to the left, causing a(n) ____________ in growth and a(n) ____________ in inflation. increase / decrease decrease / decrease decrease / increase increase / increase

decrease / increase

J.B., who is a Canadian citizen living in Canada, buys a new car ($25,000) which was built by a firm based in Ohio. How is the GDP of US affected?

goes up 25k

The city of Cincinnati purchases a new, German-made bus for $150,000. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?-UNITED STATES

government spending and NX

The phrase that "money is neutral in the long run," means: money is just a middle-man for the barter system. after enough time, money is worthless. currency exchange rates are always fluctuating. if the money supply triples, prices will triple.

if the money supply triples, prices will triple.

A positive shock to the AD curve will cause inflation to __________ in the short run and growth to ___________ in the short run. decrease / decrease increase / decrease increase / increase decrease / increase

increase / increase

The growth rate in prices is also called: GDP spread the velocity of prices inflation escalation

inflation

what happens to inflation rate and rgdp for recession to occur

inflation less than rgdp demand shock

US Steel Corporation purchases a new $10 million steel rolling machine for its factory. Assume the steel rolling machine was produced in Japan. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?-UNITED STATES

investment and NX

Inflation occurs when more money chases the same amount of goods and services. If ______________ increase, we can expect a corresponding decrease inflation, because more money will be chasing more goods. Real growth Money supply Unemployment Velocity

real growth

growth rate formula

new-old/old x 100

You sell your textbook back to the bookstore for $15 after a very successful semester. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?

none

Your housemate spends 5 hours fixing the broken wheel on his car; a job that would have cost him $300 at the local service station. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?

none

Real GDP formula

old price x number of items

An increase in spending growth will shift the AD curve ______________, while a decrease in spending growth will shift the AD curve ______________. outward / inward inward / outward inward / upward outward / upwar

outward / inward

If the CPI is 93 in 2014 and 97 in 2015, calculate the rate of inflation from 2014 to 2015. how to calculate

p2-p1/p1 . 97-93/93=4.3

J.B., who is a Canadian citizen living in Canada, buys a new car ($25,000) which was built by a firm based in Ohio. How is the GDP of Canada affected?

stays same

The city of Cincinnati purchases a new, German-made bus for $150,000. How is the GDP of the countries mentioned affected?-UNITED STATES

stays same

You sell your textbook back to the bookstore for $15 after a very successful semester. How is the GDP of the countries mentioned affected?

stays same

Miranda living in Cincinnati buys a supercomputer for $6,000. The computer has been built from $400 worth of computer chips produced in Korea in the same year. How is the GDP of the countries mentioned affected?-KOREA

up 400

Miranda living in Cincinnati buys a supercomputer for $6,000. The computer has been built from $400 worth of computer chips produced in Korea in the same year. How is the GDP of the countries mentioned affected?-UNITED STATES

up 5,600