ECON FINAL

all of the following describe trends in labor markets EXCEPT:

substantial growth in real ages during the last century.

the amount of money in the United States is determined by

the combined behavior of commercial banks and the public, as well as actions of the Federal Reserve.

In reference to short-term economic fluctuations, the "trough" refers to:

the low point of economic activity prior to a recovery.

If Country A and Country B have the same population size, then the standard of living in these two countries can still be different depending on:

the relative sizes of total output

Structural unemployment occurs because

there are long-term mismatches between workers' skills and available jobs.

Commercial Banks create new money

through multiple rounds of lending.

Major macroeconomic questions include all of the following EXCEPT?

what causes differences in wages between men and women?

according to Okun's law, when cyclical unemployment increases from 0.5 percent to 1 percent the recessionary Gap increases from

-1 to -2 ; -2(x&y)

If potential output for an economy equals $8 billion, and actual output equals $7 billion, then the economy's output gap should be expressed as:

-12.5% (actual-potential/potential)*100

If the natural rate of unemployment equals 5 percent and the actual rate of unemployment equals 6 percent, then cyclical unemployment equals:

1% Actual-Natural

If the desired reserve/deposit ratio is 0.25 and the banking system receives an additional $10 million in reserves, bank deposits will increase by:

40 Million BR/Ratio 10/0.25

If real GDP per person was equal to $2000 in 1900 and grew at a 1% annual rate, what would be the value of real GDP per person 100 years later?

5,410 GDP(1+%)^time

Which of the following does not describe a characteristic of short-term economic fluctuations?

Durable-goods industries are less sensitive to short-term fluctuations than service and non-durable industries.

The central bank of the United States

Federal Reserve System

Which one of the following activities is most likely to be counted in GDP?

Gail buys paper and crayons to donate to poor children in need of school supplies.

If the public switches from using cash for most transactions to using checks instead, then all else equal, the money supply will:

Increase

m1 differs from m2 in that

M2 includes savings deposits, small-denomination time deposits, and money market mutual funds that are not included in M1.

Finding both parties to a trade who have something the other party wishes to trade for.

double coincidence of wants

The Consumer Price Index measures the cost of:

a fixed basket of goods and services.

ALL of the following describe economic conditions during the Great Depression in the United States EXCEPT

high rates of inflation.

Each of the following increases average labor productivity EXCEPT

more central planning.

When there is a recessionary gap, capital and labor resources are:

not being fully utilized.

All of the following are nominal quantities EXCEPT the:

number of houses built in one month.

In Macroland potential GDP equals $20 billion and real GDP equals $19.5 billion. Macroland has a(n) ________ gap equal to ________ percent of potential GDP.

recessionary; -2.5 (RealPotential/Potential)x100

If total output increases from $1 trillion to $2 trillion as population increases from 100 million to 200 million, then output per person:

remains constant

In an open-market sale the federal reserve _______ government bonds and the supply of bank reserves _______ .

sells;decreases

the three functions of money are

serving as a medium of exchange, unit of account, and store of value.

CPI in year one equaled 1.55. CPI in year two equaled 1.64. the rate of inflation between years one and two was ______?

(CPI 2 - CPI 1/CPI 1) x 100

Based on the following information, the value of the M1 measure of the money supply is ______ and the value of the M2 measure of the money supply is ______. (all in billions of dollars)

530 billion; 4230 billion M1= Currency+Demand Deposits+Travelers Check+ Other Checkable Deposits M2= Everything added together

Which of the following would increase the investment component of U.S. GDP?

Disney World purchases tires for the monorail from a firm in Ohio

In the figure, which interval represents a business cycle expansion?

C to D

The four components of planned expenditure are:

Consumption, Planned investment, Government purchases, Net exports

if the rate of unemployment equals the natural rate of unemployment then:

Potential output equals real GDP

A measure of the average price of a given class of goods or services relative to the price of the same goods or services in a base year.

Price Index

Globalization ________ the wages of workers and the exporting Industries and __________ the wages of workers and import-competing Industries

Raises; Lowers

Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process:

Revenue-Cost

The assumption that firms meet the demand for their products at preset prices is the key assumption upon which ______ is built.

The basic Keynesian model.

If real GDP equals 5,000, nominal GDP equals 25,000, and the price level equals 5, then what is velocity if the money stock equals 5,000?

Velocity=Nominal/Moneystock 5

menu cost are the costs of:

changing prices

The largest component of aggregate expenditure is

consumption

According to Okun's Law, each extra percentage point of ______ unemployment is associated with a ______ percentage point increase in the output gap.

cyclical; 2

If banks' desired reserve ratio increases from 0.10 to 0.15, the public still desires to hold the same amount of currency, the money supply will

decrease

As the real wage decreases, the quantity of labor demanded ______ and the quantity of labor supplied _______.

increases; decreases

The value of unpaid work by a homemaker ______ included in GDP and the value of housekeeping services sold in a market ______ included in GDP.

is not; is

Because of diminishing returns to capital, there is a limit to the increases in average labor productivity that can be gained from additional or improved

physical capital

Unplanned inventory investment equals zero when

planned investment equals actual investment.

A recession occurs when ______, when ______, or when both of these occur.

potential output grows slowly; actual output falls below potential output.