Exam 2 - Economics
Nominal GDP would rise, but real GDP would be unchanged
If the prices of all goods and services rose, but the quantity produced remained unchanged, what would happen to nominal and real GDP?
Not counted
In calculating GDP, governmental transfer payments, such as social security or unemployment compensation, are ____.
Ecluded
In calculating the unemployment rate, "discouraged" workers who are not actively seeking employment are ____.
Coins, paper currency, and checkable deposits
In the United States, the money supplied (M1) includes ____.
Fiscal Policy
Manipulation of government spending and taxes to stabilize domestic output, employment, and the price level
M1 increases and M2 stays the same
Mike transfers $4,000 from her savings account to her checking account. What effect is this change likely to have on M1 and M2?
Investment
Money spent on the purchase of a new house is included in the GDP as a part of _____.
Equilibrium level of real domestic output and prices
The intersection of the aggregate demand and supply curve determines the ____.
Vertical, and a graph of the short-run aggregate supply curve is upslopping
The long-run aggregate supply curve is ____.
Treasury bills, treasury notes, treasury bonds, and U.S. savings bonds
The public debt is held as ____.
Personal and corporate income tax collections automatically rise and transfers and subsides automatically decline as GDP rises
What best describes the built-in stabilizers as they function in the United States?
Increase in taxes and government spending
What combination of fiscal policy would most likely be offsetting?
Structural and frictional unemployment
What constitutes the types of unemployment occuring at the natural right of unemployment?
Aggregate expenditures of households, businesses, and government
What is an example of a demand factor in economic growth?
A check for $250 sent by a parent to a daughter at college
What is an example of a private transfer payment?
The purchase of baseball uniforms by a professional baseball team
What is an example of an intermediate good?
The actual reserves of a commercial bank equals its excess reserves plus its required reserves
What is correct?
An efficient allocation of resources
What is not a supply factor in economic growth?
Changes in real GDP or changes in real GDP per capita
What is one major measure of economic growth?
[(Unemployment)/(Labor force)] x 100
What is the correct way to calculate the unemployment rate?
An appreciation of the U.S. Dollar
What would most likely reduce aggregate demand (shift the AD curve to the left)?
An increase in price level
What would not shift the aggregate supply curve?
Built-in-stability
When government tax revenues change automatically and in countercyclical direction over the course of the business cycle, this is an example of ____.
Fiscal Policy
When the federal government uses taxation and spending actions to stimulate the economy, it is conducting _____.
Deficits during recessions and surpluses during periods of demand-pull inflation
Countercyclical discretionary fiscal policy calls for ___.
An increase in consumer wealth and a decrease in interest rates
Which combination of factors would most likely increase aggregate demand?
Unit of account
A $70 price tag on a sweater in a department store window is an example of money functioning as a ____.
A liability
A bank has $2 million in checkable deposits. In the bank's balance sheet, this would be an example of ____.
An Asset
A bank owns a 10-story office building. In the bank's balance sheet, this would be an example of _____.
Frictional Unemployment
A college graduate using the summer following graduation to search for a job would best be classified as ____.
$10,000 (20% * 50,000)
A commercial bank has checkable-deposit liabilities of $50,000 and a reserve ratio of 20%. What is the amount of required reserves?
Decrease in aggregate demand
A contractionary fiscal policy can be illustrated by a(n) ____.
Decrease in aggregate demand
A decrease in government spending on new public goods and services will cause a(n) ____.
Federal government spending exceeds tax revenues
A federal budget deficit exists when ____.
6% = 12 unemployed/100 labor force
A nation has a population of 260 million people. Of these, 60 million are retired, in the military, in institutions, or under 16 years old. There are 188 million who are employed and 12 million who are unemployed. What is the unemployment rate?
Can be found by summing C + Ig + G + Xn
A nation's gross domestic product (GDP) ____.
Is a temporary maximum point
A peak in the business cycle ____.
"Too much money chasing to few goods."
A statement that is often used to describe demand-pull inflation is ____.
An increase in the quantity of labor
A supply factor in economic growth would be ____.
Employment and output reach their lowest level
A trough in the business cycle occurs when ____.
Structural Unemployment
A worker who loses a job at a call center because business firms switch the call center to another country is an example of ____.
Be in the labor force
According to the Bureau of Labor statistics, to be officially unemployed a person must ____.
$0.10 (20+20+24=64/640)
An economy is employing 2 units of capital, 5 units of raw materials, and 8 units of labor to produce it's total output of 640 units. Each unit of capital costs $10; each unit of raw materials, $4; and each unit of labor, $3. The per-unit cost of production in this economy is ____.
Microcomputer purchased by an executive for personal use
An example of a final good in a national income accounts would be a new ____.
The tax rates on household income
An increase in aggregate demand would be most likely caused by a decrease in ____.
34%
Approximately what percentage of the U.S. public debt is held by foreign individuals and institutions (2015)?
Lenders are hurt, but borrowers benefit
Assume that there is a fixed rate of interest on contracts for borrowers and lenders. if unanticipated inflation in the economy, then _____.
8% = (100-92)/100
Assuming the total population is 200 million, the labor force is 100 million, and 92 workers are employed, the unemployment rate is ____.
Both M1 and M2
Currency in circulation is part of ____>
Okun's Law
For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point negative GDP gap occurs. This is a statement of ____.
Frictional and structural unemployment
Full employment means when the economy is only experiencing ____.
The market value of unpaid work in the home
GDP excludes ____.
-$200 billion = $4600-($3500+$900+400)
GDP in an economy is $4600 billion. Consumer expenditures are $3500 billion, government purchases are $900 billion, and gross private domestic investment is $400 billion. Net exports are ____.
All final goods and services produced in an economy in a given year
GDP is the market value of ____.
Nominal GDP
GDP measured using current prices is called ____.
The underground economy
GDP tends to underestimates the productive activity in the economy because it excludes the value of output from ____.
Leftward shift of the AS curve
Graphically, cost-push inflation is shown as a ____.
Rightward shift of the AD curve along and upsloping AS curve
Graphically, demand-pull inflation is shown as ___.
Lessens the burden of scarcity
Growth is advantageous to a nation because it ____.
Remain constant
If a nation's real GDP increases from 100 billion to 106 billion and its population jumps from 200 million to 212 million, its real GDP per capita will ____.
Increase per-unit production costs and shift the aggregate supply curve to the left
If congress passed new laws significantly increasing the regulation of business, this action will tend to ___.
Actual GDP is less than potential GDP
If the GDP gap is negative, then ____.
Expansionary fiscal policy
If the congress passes legislation to increase government spending to counter the effects of a recession, then this would be an example of a(n) ___.
3.4% = [(172.2-166.6)]/166.6
If the consumer price index was 166.6 in one year and 172.2 in the next year, then the rate of inflation from one year to the next year was ____.
Aggregate demand decreases
If the dollar appreciates in value relative to foreign currencies _____.
Increased government spending or decreased taxation, or a combination of the two actions
If the economy is in a recession and prices are relatively stable, then the discretionary fiscal policy or policies that would most likely be recommended to correct this macroeconomic problem would be ____.
Taxes
If the government wishes to increase the level of real GDP, it might reduce ____.
Crowding-out-effect
Increases in government spending may raise the interest rate and thereby reduce private investment.
Cost-Push inflation
Inflation caused by a ride in price-unit production costs is referred to as ____.
The general level of prices over time
Inflation is the rise in ____.
A nation's imports of goods and services exceeds its exports
Net exports could be a negative number where _____.
A nation's exports of goods and services exceeds it's imports
Net exports is a positive number when ____.
Increase both aggregate demand and aggregate supply
Other things equal, a reduction in personal and business taxes can be expected to ___.
Aggregate supply curve would shift to the left
Other things equal, if the U.S. dollar were to depreciate, the ____.
Total input cost divided by units of output
Per-unit production cost is ____.
Recal GDP increases, while Nominal GDP decreases
Suppose a small economy produces only MP3 players. In year one, 10,000 players are produced and sold at a price of $100 each. In year two, 12,000 players are produced and sold ata price of $80 each. Which of the following statements is true?
$0.70 (10*15 + 4*50)/500
Suppose that an economy produces 500 units of outputs. It takes 10 units of labor at $15 a unit and 4 units of capital at $50 a unit to product this output. The per-unit cost of production is ____.
The official unemployment will remain unchanged
Suppose there are 10 million part time workers and 90 million full-time workers is an economy. 5 million of the part-time workers switch to full-time work. As a result, ____.
Decline
Suppose there are 5 million unemployed workers seeking jobs. After a period of time, 1 million of them become discouraged over their job prospects and cease to look for work. As a result of this, the official unemployment rate would ____.
Central banks, bankers' banks, and quasi-public banks
The 12 Federal Reserve Banks can best be characterized as ___.
Board of Governors and the 12 Federal Reserve Bonds
The Federal Reserve System consists of which of the following?
Last year's price index from this year's price index and dividing the difference by last year's price index
The annual rate of inflation can be found by subtracting ____.
Is in the process of voluntarily switching jobs
The best example of a "frictionally unemployed" worker is one who ____.
Increase in government spending and a decrease in taxes
The combination of fiscal policies that would reinforce each other and be most expansionary would be a(n) ____.
Budget deficit
The economy starts out with a balanced federal budget. If the government them implements expansionary fiscal policy, then there will be a ____.
Unit of account, store of value, and medium of exchange
The functions of money are to serve as a ____>
Horizontal
The immediate-short-run aggregate supply curve is ___.
The federal government owes to holders
The public debt is the amount of money that____.
Direct relationship between the price level and real GDP purchased
The short-run aggregate supply curve shows that ____.
Both input and output prices are fixed
The slope of the immediate-short-run aggregate supply curve is based on the assumption that ____.
Recognition Lag
The time that elapses between the beginning of a recession or an inflationary episode and the identification of the macroeconomic problem is referred to as a(n)____.
Expenditures approach and income approach
The two ways of looking at GDP are the ______.
Cyclical unemployment
The type of unemployment associated with recessions is called ____.
Technological advancements
This single most important source of productivity for economic growth for the United States has been ____.
The bulk of the public debt is owned by U.S. citizens and institutions
To say that "the U.S. public debt is mostly held internally" is to say that ___.
Is relatively scarce, is legal tender, and is generally acceptable in exchange for goods and services.
U.S. currency has value primarily because it ____.
Wages tend to be inflexible downward
Wage contracts, menu costs, and the minimum wage are explanations for why ____.
The U.S. government's ability to keep the value of money relative stable
What "backs" the money supply?
Increased taxation and decreased government spending
What are the contractionary fiscal policy?
The full employment of resources
Which is best considered a efficiency factor in economic growth?
