macro exam 2

Which of the following is not an aspect of Keynesian economics

Unemployment above natural unemployment is always a brief and temporary phenomenon.

In a self-regulating economy, inflationary and recessionary gaps produce shifts of the

SRAS curve that move the economy to a long-run equilibrium point.

Suppose that nondurable goods spending is $200 billion, durable goods spending is $400 billion, new residential housing spending is $500 billion, and spending on services is $600 billion. What does consumption equal?

$1,200 billion

The price of a first class ticket on the Titanic was $3,650 in 1912 and the CPI that year was 9.0. If the CPI in 2014 was 250, what would the approximate price of a first class ticket on the Titanic be equivalent to in 2014 dollars?

$101,389....We have some sense that $3,650 was a very great deal of money in 1912. To determine how much that amount would be equivalent to in 2014 dollars the equation used would be: Price1912 x (CPI2014/CPI1912) = $3,650 x 250/9 = $101,389.

Suppose a person earned $10,000 in year 1, when the CPI was 213. It is now year 10 and the CPI is 243. The $10,000 in year 1 is equivalent to approximately what dollar amount in year 10?

$11,408

If the CPI was 245 in 2013 and 200 in 2000, by what percentage did prices rise during the period 2000-2013?

22.5 percent ... Changes in the CPI indicate changes in the price level. The percentage change in the price level during this time period would be calculated as follows: [(245 - 200)/200] x 100 = 22.5 percent.

Look at the following data: The frictional unemployment rate is 3 percent, the natural unemployment rate is 6.5 percent, and the cyclical unemployment rate is 2.2 percent. The structural unemployment rate is __________ percent and the actual unemployment rate (in this economy) is __________ percent.

3.5; 8.7

Refer to the above Exhibit. When TE is $500 billion, what will firms most likely do next?

Firms will cut back production to reduce inventories to their optimum levels.

If aggregate quantity demanded is greater than aggregate quantity supplied at a particular price level, then

a and b

Which of the following would not be included in the calculation of this year's GDP?

a headlight bulb purchased by General Motors Co. from a supplier

Suppose aggregate demand is too low to bring about the Natural Real GDP level. A Keynesian policy prescription would call for a(n) _____________________ to close this recessionary gap.

a or d

The frictional unemployment rate is 1.5 percent, the structural unemployment rate is 3.4 percent, and the economy's current unemployment rate is 5.9 percent. The economy is in

a recessionary gap producing less than Natural Real GDP.

Changes in which of the following factors can shift the AD curve?

a, b and c

Keynesian economists

b and c

To macroeconomists, investment is mainly the purchases of goods and services

by businesses

A rise in wage rates

causes the SRAS curve to shift leftward

To compute the CPI in the current year, you would

divide the total dollar expenditure on the market basket in the current year by the total dollar expenditure on the market basket in the base year and then multiply by 100.

Supply-side economists believe reductions in tax rates can

increase output and lower prices.

The classical economists believed __________ determined savings, while Keynes said it was __________.

interest rates; income

With complete crowding out, an increase in government spending

is completely offset by a reduction in private spending.

If the natural unemployment rate is 4.2 percent, then the economy is in an inflationary gap when the actual unemployment rate is

less than 4.2 percent.

Increases in import spending ______________, ceteris paribus.

lower GDP

If an individual pays an additional $0.38 in taxes as a result of a $1.00 increase in income, then that individual must have a(n) __________ tax rate of 38 percent.

marginal

According to Say's law, in a money economy a reduction in consumption spending causes a __________ shift of the saving curve and therefore a __________ in the interest rate.

rightward; fall

The ratio of the change in consumption to the change in disposable income is called the

marginal propensity to consume.

If the cyclical unemployment rate is negative, then the

natural unemployment rate is greater than the actual unemployment rate in the economy.

Foreign real national income rises. This raises U.S. ___________ which ________ aggregate demand (AD). The AD curve shifts ___________ as a result

net exports; raises; rightward

In a recessionary gap, the implications of downward wage inflexibility are that there will be

no rightward shifts of SRAS, allowing for the possibility of persistent high unemployment.

If nominal income is $50,000 and the CPI is 120, it follows that real income is equal to

none of the above

Which of the following is not consistent with a self-regulating economy?

none of the above (all are consistent with a self-regulating economy)

One measure of the inflation rate is the

percentage change in the CPI of adjacent years.

An aggregate demand (AD) curve shows the

real output (Real GDP) people are willing and able to buy at different price levels, ceteris paribus.

The cyclical unemployment rate is defined as the __________ unemployment rates.

the difference between the existing (actual) and the natural

Which of the following is counted in GDP?

the services of an accounting firm

Suppose that 1983 is the base year for the Consumer Price Index (CPI) and in 2015 the CPI is 237. What does this "237" mean?

what cost $100 in 1983 on average cost $137 more in 2015.

When the economy is at its natural unemployment rate, the cyclical unemployment rate is ______________ and the economy is said to be operating at _____________________.

zero, full employment