Econ Final

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If the government sets floor prices for wheat or corn that guarantee farmers an above-market price for that product, the most probable result would be what

overproduction

The federal minimum wage is an example of a

price floor

A nation achieves economic growth when its

production possibilities frontier shifts outward

A contractionary monetary policy reduces GDP by

raising interest rates and discouraging investment and consumption spending

A decrease in taxes will shift the AD curve to the ________, while a decrease in government expenditure will shift the curve to the ________.

right; left

When the supply of loanable funds shifts its position to the right, interest rates will ________ because loanable funds will be

rise, more scarce rise, scarcer

If the Fed raises reserves requirements, then interest rates will ________ and the money supply will ________

rise; decrease

If the Fed wants to decrease the quantity of money in the economy, it can

sell bonds

A country's government should ________ when inflation begins to climb to unacceptable levels in the economy

shift aggregate demand to the left by using contractionary fiscal policy

In order to satisfy as many wants as possible, it is necessary to achieve allocative efficiency

since otherwise output may go to where it is less valued

When prices do not respond quickly to bring forces of supply and forces of demand to the equilibrium point, they are called:

sticky prices

Which of the following is considered a Federal Reserve monetary policy tool?

varying the discount rate

The required reserve ratio for Jack's bank is 10 percent. If Jack deposits $2,000 cash in his checking account, what is the amount of new money the bank would create when it lends out its excess reserves

$1,800

If a macroeconomy has the money supply and aggregate demand increased by the Central Bank, what monetary policy is the Central Bank following

An expansionary monetary policy

Which of the following scenarios would be MOST beneficial to a bank?

Kim and Micah decide to move most of their money from a checking account into a savings account

Which of the following best describes a business cycle?

Periods of increasing and decreasing real GDP

If an economy moves into a recessionary period, examples of fiscal policies that act as automatic stabilizers include

an increase in transfer spending, such as unemployment benefits

Kayden decided to attend college and gain a degree in accounting. He is now starting his degree. The yearly cost of tuition is $10,000 and he left his auto mechanic shop management job giving up a $32,000 a year to attend college. Kayden's decision resulted in

an opportunity cost to attend college of $42,000 per year.

From a neoclassical perspective, when the economy is in a recession if the government increases its spending it is

at the risk of crowding out private investment.

A common complaint with trade policies is the act of

dumping

Excess supply will result in suppliers ________ prices, which encourages consumers to demand ________

lowering; more

The term "full employment GDP" is synonymous with which of the following?

macroeconomic equilibrium

One of the goals of monetary policy

maintaining price stability

Suppose that there are only two types of output in a country: nuclear missiles and consumer goods. All else being constant, as the nation produces more missiles,

the greater the opportunity cost will be of satisfying consumer wants

When Ian experiences diminishing marginal utility when buying shirts

the personal value of each additional shirt he purchases starts to fall

Assuming that Brazil can produce 100 pounds of beef or 10 autos and the United States can produce 40 pounds of beef or 30 autos, what is the opportunity cost of producing one pound of beef in Brazil

1/10 of an auto

Suppose, in the graph below, there is a price ceiling of $3. Then there is a shortage of

3

Country A's real GDP is growing at a rate of 2 percent per year. Using the rule of 72, it will take country A ________ to double its GDP

36 years

The standard of living for country Y is affected by compounded growth. If the economy for country Y starts with a GDP of 200 and a growth rate of 4% per year, what will its GDP be in 20 years?

438

Which is a factor that drives economic growth

Increased human capital

In India one person can produce 330 pounds of rice or 110 shirts in one year. In China one person can produce 400 pounds of rice or 200 shirts in one year. Which of the following statements is true?

India has a comparative advantage in the production of rice

What happens to the money supply if the Fed lowers the discount rate

It increases

The production possibilities model illustrates an inverse relationship between two goods or services because

Production of different types will compete for limited resources

When the economy is at full employment, what is the relationship between real GDP and real potential GDP

Real GDP is equal to real potential GDP

How would you interpret a graph of a nation when its production possibilities frontier shifts outward

The country is achieving economic growth

How do central bank policies affect interest rates

When the central bank decides to increase the discount rate, then interest rates increase

A key part of the Income-Expenditure model is understanding that as GDP (or national income) rises, so does ________.

aggregate expenditure

An expansionary fiscal policy can increase the level of aggregate demand by all of the following EXCEPT

decreasing government purchases

A broad reason that intra-industry trade between similar nations produces economic gains involves ________ because it allows producers to supply the market and variety to consumers

economies of scale

The idea that firms will get the most for their money when they pay wages higher than the equilibrium wage is called

efficiency wage theory

There are certain types of unemployment that exist at all times and determine the natural rate of unemployment. Which of the following types fit this description

frictional unemployment and structural unemployment

A welder who quits his job and moves from Pittsburgh to Madison to try to get a better welding job is said to be

frictionally unemployed

The country of Andorrata's Gross Domestic Product in 2016 was $31,000 per capita. The GDP grew by 4% in 2017 while the population grew by 2%. What would the per capita GDP in 2017 be

gdp per capita for 2017 would be higher

In the AS-AD model depicting economic growth, the vertical line that represents potential GDP will

gradually shift to the right in the long run.

In order to ________ the money supply, government should ________ bonds in open market operations

increase; buy

Which of the following actions by the Fed will increase the money supply

increasing the reserve requirement and buying bonds

The main risk of quantitative easing is

inflation

When a Central Bank decides to make a policy intervention it must be mindful of the trade off between

inflation and unemployment.

Inflation increases uncertainty in the markets because:

it is more difficult to stay aware of how one product compares in cost to another

An economy is considered to be in a recession if

it is moving from the peak toward the trough of the business cycle

A decision by the Federal Reserve to change reserve requirements for banks is an example of

monetary policy

If productivity increases from one year to the next

nominal and real gross domestic product would increase

During a recession, what is a traditional tool used by the Fed to boost the economy

open market operations

In the long run, the most important factor that shifts the aggregate supply curve is

technological change

Individuals and countries will continue to trade airplanes for cars until

the value of each additional airplane and car is equal for both countries or individuals.

For productivity to increase

the value of the production per hour worked has to increase

To measure a real increase in wages

the wages would have to be adjusted for inflation overtime

When quantity demanded increases in response to a change in price

there is a movement from one point to another along the demand curve


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