Macro Final
Which of these is included in gross private domestic investment?
an increase in business inventories
Which of these will shift the short-run aggregate supply curve to the right?
an increase in immigration from other countries
In February of 2010, the Central Bank of Brazil raised its reserve requirements. By raising these requirements, Brazil was
attempting to increase its money supply
In times of economic downturn, the federal reserve will engage in __________ monetary policy by _______ bonds.
expansionary; buying
Suppose the government increases aggregate demand to a level that increases GDP above its long-run equilibrium level. What sequence of events would follow?
prices rise; GDP increases; workers demand higher wages; short-run aggregate supply shifts to the left; GDP drops
Karls Keychain, 8,000, 900,000, 9,000, What was the value of Karl's total production and inventory investment in 2015
production= $901,000, inventory investment= $1,000
Which is a determinant of aggregate supply
productivity
If saving falls during booming times in the economy, then the equilibrium real interest rate ____ and the quantity of loanable funds ______
rises ; falls
Monetary policy is least effective in maintaining low inflation and high gdp when
there has been a supply shock
Last year, Megan's salary was $65,000 while the CPI increased from 109 to 115. If Megan received a cost-of-living adjustment, what would her salary be?
$68,578
Karl's Keychain, $1 each, 10,000 keychains, 900,000 keychains, 6,000, how much did Karl's output contribute to GDP in 2015
$896,000
Which scenario is the most likely effect of a decrease in the price of milk on the market for cereal?
increased equilibrium price of cereal and increased equilibrium quantity of cereal
In the long run, attempts to expand beyond an economy's natural rate of unemployment tend to result in
increased inflation
When the fed buys bonds, its demand ______ the price of bonds, _____ nominal rates
increases; decreasing
In Productovia, aggregate demand increases and aggregate supply decreases. Based on the shifts of these two curves, which of these is a likely outcome?
inflation
An expansionary fiscal policy can result in
inflation and higher GDP
A firm will most likely decrease the price of its output if the
quantity supplied of the good exceeds the quantity demanded
Assume the reserve requirement is 10ths % and all banks are fully loaned-up. If a new deposit of $10,0000 is made into bank x, that bank can make new loans of
$9,000
How much is a bond worth if it pays $55 per year in interest forever and the market interest rate is 8%?
687.50
Which of these would be an example of a situation associated with short-run economic growth?
A country reports that employment rises by 200,000 workers, reducing the unemployment rate
Given the form of a typical production function, which of these would have the greatest impact on the output of a country?
A increases by price 50%
An airline finds that its morning flights are half-empty, but the mid afternoon flights are full. Which would be the MOST plausible statement for an economist to make?
Cut the prices of early morning flights and raise the prices of afternoon flights
Whispering Valley Furniture hires 5 employees working eight hours each to produce 80 rocking chairs. Rocky Gap Furniture hires 10 employees working eight hours each to produce 100 rocking chairs. Which company's workers are more productive?
Whispering Valley Furniture's workers are more productive
Which of these would be included in GDP calculations?
a laptop computer purchased by a consumer
Which event causes an increase in aggregate demand?
falling interest rates
As market interest rates rise, the cost of public debt
rises, because the government must make larger interest payments
If monetary policy is tight
the value of the dollar will rise
What would cause the price level to rise and employment to increase?
A shift to the right of the aggregate demand curve
Assume initially that market interest rates are 7%, and the bondholder is receiving a $70 coupon payment per year on a perpetuity bond with a face value of $1,000. If market interest rates rise to 8%, the bond price
falls to $875
Over the past 10 years, laptop computer prices have decreased while their quantity has increased. This indicates that
supply has increased more than demand
If income increases all across Europe, what will happen to the aggregate demand curve for the United States?
the aggregate demand curve will shift to the right
If a country's population increases at a higher rate than the growth rate of its real GDP
the standard living in the country has decreased
If the producers of cotton shirts face higher cotton prices, which scenario is likely to occur
the supply of cotton shifts decreases, the equilibrium price of cotton shirts rises, and the equilibrium quantity falls
In the market for widgets, more sellers exit the market at the same time that consumer preferences are changing, such that people like widgets a lot less than before. If the rate at which sellers are exiting the market is slower than the rate that consumer preferences are changing, we can expect
a decrease in the equilibrium price and quantity of widgets
Arlina got a 5% raise while the rate of inflation was 6%. Arlina's standard of living
fell by 1%
If the British pound sterling depreciates against the U.S. dollar, England buys ______ U.S. goods, causing the U.S. aggregate demand curve to shift to the _______
fewer; left
Institutions that serve as the bridge between savers and borrowers are known as
financial intermediaries
The opportunity costs of attending college do not include
food expenditures
Jennifer did not work during college. She just obtained a bachelor's degree in marketing, and she is now looking for a marketing job in the retail industry. Jennifer is considered:
frictionally unemployed
In counteracting a negative supply shock, the federal reserve could achieve ______ by using _______ monetary policy
full employment but not price stability; expansionary
Gasoline is produced from crude oil. Ceteris paribus, if the supply of crude oil falls, the equilibrium price of gasoline will ___________ and the equilibrium quantity will _________.
increase; decrease
When current real output exceeds potential real output, the Federal Reserve will ________ interest rates in an effort to fight _______
increase; inflation
Investment tax credits are intended to ____________ productivity, shifting the __________ curve to the __________.
increase; long-run aggregate supply; right
Suppose the economy is at full employment, and consumers spend more than usual. In the short run, output will ___________; in the long run, output will ____________.
increase; remain unchanged
Economic growth is most commonly measured by
real GDP per capita
Suppose a perpetuity bond with a face value of $1,000 has a 10% coupon rate. If market interest rates fall to 8%, the price of the bond
rises to 1,250
Janet is receiving a 5% pay raise. If the rate of inflation is 2%, then Janet's purchasing power is
rising
The quantity of loanable funds supplied by _________ is __________ related to the real interest rate
savers; positively
The supply of loanable funds includes
saving by the public, government entities, and business firms
When the fed wants to decrease money supply, it will
sell bonds
Which action the federal reserve most likely to take to curb inflation
sell securities in the open market
Aggregate supply increases when
there is a decrease in firms' market power
Suppose that a store sells candy bars for $0.89 for one and $the 1.50 for two. The marginal cost of the second candy bar is
$0.61
If personal consumption is $100, investment is $25, government purchases total $25, imports equal $20, and exports equal $10, then GDP equals:
$140
The Fed buys a bond from Sumit and deposits $1,500 cash into his checking account. The reserve requirement is 25%. How many dollars worth of loans can the banking system create?
$4,500
Say someone gave you a used phone valued at $500 as a gift. Unfortunately, you were hoping for a model that sells for $800. The opportunity cost to you keeping the phone is
$500
If Kim's salary was $50,000 last year, and this year she receives a cost-of-living increase tied to the CPI, what will her salary be this year assuming the CPI has risen from 110 to 114?
$51,818
Rocky Gap Furniture hires 10 employees working eight hours each to produce 100 rocking chairs. What is the productivity of these workers?
1.25 chairs per hour
What is the yield of a perpetuity bond sold for $1850 that pays $25.50 in interest annually?
1.38%
There are 15 million people living in Marketstan, of whom 9 million are working and 1 million are actively looking for work. What is Marketstan's unemployment rate?
10%
ZZZ corporation
10%; 20%
Suppose in 2021, the cost of purchasing a basket of goods was $50. That same basket cost $70 in 2022. If 2022 is the base year, the CPI for 2022 is
140
If the reserve requirement is 2.5%, the potential money multiplier is
40
An economy has a population of 226,5000 people of whom 12,500 are unemployed and actively seeking work, and 35,000 have given up looking for a job. Also, 28,000 people work part-time and 151,000 people work full time. This economy's unemployment rate is
6.5%
Expansionary monetary policy shifts the _____ curve to the ______
AD; right
What happens if business expectations improve?
Aggregate supply shifts to the right
Which of these would shift the short-run aggregate supply curve but not have any impact on the long-run aggregate supply curve?
An increase cost of land
Given the form of a typical production function which of these would have the greatest impact on the output of a country?
Entrepreneurial ability/tech incenses by 12%
Which statement about fiscal policy and aggregate supply is correct?
Fiscal policies that influence aggregate supply do not always require tradeoffs between price level and output
Martin purchases 500 shares of stock in ABC company at a price of $10 per share. He pays his stockbroker a commission of $50 for helping with the transaction. How much does GDP change as a result of Martin's commission payment?
GDP rises by $50
In the market for loanable funds, which of these would cause the equilibrium rate to rise, but would have an uncertain impact on the equilibrium quantity?
Job security for employees increases, and there is an advancement in technology that would reduce costs if adapted
A perpetuity bond is sold with the following terms: coupon= 5%, face value = $1,000
The bond will sell for about $833.33
Which event will shift the aggregate demand curve to the right?
a new government program implemented to eliminate poverty
In the market for electric vehicles, more vehicle manufacturers are releasing electric models at the same time that consumer preferences are changing towards EVs. If manufacturers are releasing new electric models at a faster rate than consumer preferences are changing toward EVs, we can expect
a decrease in equilibrium price and an increase in the equilibrium quantity of EVs
What would cause the price level to rise and employment to increase
a shift to the right of the aggregate demand curve
The price of apples has recently fallen in the market place. From this information we can safely infer that
a surplus of apples must have existed at the previous price
labor includes all of these factors except the
ability to use physical resources in creative ways to produce goods and services
Which strategy is an example of increasing the capital-to-labor ratio?
adding more tractors in the corn fields
Assume that butter is a substitute for margarine. What would be the result in a drop in price of margarine?
both the price of butter and quantity of butter fall
The __________ is the amount by which annual tax revenues exceed government expenditures
budget surplus
The ___________ is the amount by which annual tax revenues exceed gov expenditures
budget surplus
Which measure would increase the money supply?
buying government bonds
supply shocks are not caused by
changes in money supply
Increasing taxes to combat inflation is an example of ___________ policy
contractionary fiscal
If the supply of a good increases while the demand for that good decreases, the equilibrium price will
decrease
Decreasing the accessibility in college in order to funnel workers into the workforce faster will
decrease productivity in the economy
In the short run, a decrease in market power (or monopolization) will
decrease the price level
A higher interest rate _____________ consumption, investment, and _________, which _________ aggregate demand.
decreases; exports; decreases
jody purchases a stock from her employer, acme corporation. this is an example of ________ finance
direct
If the inflation rate decreases from 5% to 3%, the economy is undergoing
disinflation
Suppose three years ago a nation's inflation rate was 8%, two years ago it was 5%, and last yea it was 2%. The nation is undergoing
disinflation
Capital productivity is a major determinant of
gdp per capita
The capital-to-labor ratio is
high in rich countries
A stronger dollar will shift the U.S. aggregate demand curve to the ___________ and __________ output demanded
left; decrease
When the interest rate falls, American bonds become ______ attractive to foreign investors, often leading to a _____ in the value of the U.S. dollar in foreign exchange markets
less; decrease
Developed countries tend to have
limited labor supplies but lots of capital
If the British pound sterling appreciates against the U.S. dollar, England buys ___________ U.S. goods, causing the U.S. aggregate demand curve to shift to the ___________
more; right
Suppose the economy is in full employment equilibrium. Then a positive supply shock, caused by a fall in oil prices, hits the economy. A contractionary monetary policy will
move the economy back to full employment output but at a much lower price level
Which is not a source of productivity growth?
moving resources from production to pension benefits
The _______ is the sum of past ______ less surpluses
national debt; budget deficits
An economy is operating at long-run equilibrium. What is the most likely result of an aggressive expansionary fiscal policy?
no change in long-run GDP and employment
In the national income accounts, which of these is not classified as government spending?
payments to social security recipients
A breakthrough in solar energy research that halves the cost of energy will
shift the aggregate supply curve to the right
If national incomes of foreign countries fall at the same time the dollar appreciates, then in the United States, the aggregate demand curve
shifts to the left
The solution to the simultaneous presence of inflation and unemployment is to implement policies that shift the
short-run aggregate supply curve to the right
Which of these will cause the supply of loanable funds curve to shift rightward
stock prices fall
Which of these is not a form of U.S. public debt?
stocks
Which of the following would be correct if the gov wants to use fiscal policy in order to reduce inflation, but without increasing unemployment
the gov could reduce taxes
If a market is not at equilibrium
the price will change and, in response, market participants will move along the existing supply and demand curves until the market reaches equilibrium
When prices are falling, real GDP tend to be _______ than nominal GDP for the same year
the same
Which transaction would not be included in the gdp calculation of a country
unemployment insurance paid by the government to a person that recently lost her job
In the market for cable television, fewer people aresubscribing to cable while the cost of providing cable televisionhas increased. As a result, we can expect a(n):
unknown change in the equilibrium price but a decrease in the equilibrium quantity of cable television
in the market for electric vehicles, more vehicle manufacturers are releasing electric models at the same time that EVs are becoming more popular with consumers. As a result, we can expect an
unknown change in the equilibrium price, but an increase in the equilibrium quantity of TVs
assume that the reserve requirement is 20%. A bank has $20 billion in demand deposits. How much money does the bank have to keep in reserves?
$4 billion
If then economy is facing inflationary pressures, the federal reserve will
raise interest rates
Opportunity cost exist because
using resources for one activity means that their use elsewhere must be given up
Assume that a student attends a four-year college with tuition costs of $20,000 per year, room and board costs of $5,000 per year, and books/entertainment costs of $1,000 per year. If the student did not go to college, she would work at a job that pays $25,000 per year but still face the same room and board and entertainment expenses. The opportunity cost of attending college for this student for four years is:
$100,000
A sheep ranch produces $30 worth of wool. A suit manufacturer produces $60 worth of suits. A retail outlet sells a suit to a customer for $180. The change in GDP would be:
$180
Admission prices to Dollywood are $50 for a one-day ticket, $80 for a two day ticket, and $100 for an annual pass. Based on these prices, the marginal cost of visiting Dollywood the second day is ______, the third day is _________, and the fourth day is __________.
$30; $20; $0
When perpetual bond with a face value of $1,000 is issued, general interest rates are 3%, so the annual interest payment is _______. After the bond is issued, market interest rates rise to 4%, which forces the price of the bond to _______ to ________
$30; fall; $750
Sumit deposits $1,500 cash into his checking account, which the bank holds in its vault. The reserve requirement is 25%. What is the change in his bank's required reserves?
$375
If the reserve requirement is 25%, a new deposit of $1,000 leads to a potential increase in the money supply of
$4,000
Callie withdraw $600 from her bank account, which the bank had already loaned out to customers. If the reserve requirement is 15%, by how many dollars must her bank reduce its lending
$510
Suppose the market for iPhones, the following two changes take place. 1 the cost of making iPhones falls, and 2 the price of smartphone data plans falls. What happens to the equilibrium price and the equilibrium quantity?
The equilibrium price is indeterminate, but the equilibrium quantity rises
Which of these will increase aggregate supply?
The president asks congress for $200 billion for rebuilding roads and bridges
In the market for widgets, more sellers enter the market at the same time that consumer preferences are changing, such that people like widgets a lot more than before. If the rate at which sellers are exiting the market is faster than the rate that consumer preferences are changing, we can expect
a decrease in the equilibrium price and an increase in the equilibrium quantity of widgets
what is likely to happen if the government runs a budget surplus
additional loanable funds are provided to the market, leading to lower interest rates
The solution to simultaneous deflation and unemployment is to shift the
aggregate demand curve to the right
Which fiscal policy will increase aggregate supply?
allocating more money for federal student loans
Which resource is an example of infrastructure
an elementary school
Which of these will cause the demand for loanable funds curve to shift leftward?
an end to a program that provides investment tax credits
The opportunity cost of undertaking an activity is defined as the _________ activity.
benefit forgone by not undertaking the next best
The quantity of loanable funds demanded by ____ is ____ related to the real interest rate
borrowers; negatively
In counteracting demand shocks, the federal reserve can achieve
both full employment and price stability
The ability to use physical resources in creative ways to produce goods and services is known as
entrepreneurial ability, technology, and ideas
When the economy is at full employment, expansionary fiscal policy result in a new long-run equilibrium at an output level _______ full employment and a _______ price level
equal to; higher
Suppose the market for iPhones, the following two changes take place. 1 the cost of making iPhones rises, and 2 the customers begin to prefer Android-platform smartphones over iPhones. What happens to the equilibrium price and the equilibrium quantity?
equilibrium price is indeterminate, but the equilibrium quantity falls
A person will decide not to attend a concert if the marginal cost of attending the concert
exceeds the marginal benefit
an individual bank can, at most, lend out all of its
excess reserves
A lower interest rate increase consumption, investment, and _____, which ______ aggregate demand
exports; increases
If Abigail withdraws $300 cash from her checking account, her bank's assets
fall by $300 and liabilities fall by $300
Loosening monetary policy causes interest rates to _______, and consumption and investment to
fall; increase
When the interest rate falls, the value of the US dollar in foreign exchange markets tends to ________ and net exports tend to ______
fall; increase
If interest rates fall, the burden of a nation's public debt will __________ and it will be __________ difficult to service its debt.
fall; less
When the value of the dollar rises against foreign currencies, exports _______ and imports ______.
fall; rise
Joan is trying to gather information of the membership at her Zen Center. She estimates that it will cost around $1,000 to gather the information but expects the information to lead to increased membership venue of $1,100. Based on this information, Joan should
gather the information since the next gain will be $100.
Investment in structures, equipment, software, and net inventory is known as
gross private domestic investment
In general, the higher the capital-to-labor ratio, the
higher the wages
When the economy is underperforming and policymakers pursue expansionary fiscal policy, they express a willingness to trade off __________ output for a _________ price level.
higher; higher
Which group benefits from an unanticipated rise in the inflation rate?
homeowners with fixed-rate mortgages
which group is most likely to favor a tight monetary policy?
importers
Which of these would cause a movement along a country's aggregate demand curve, but not a shift in its aggregate demand curve?
increase in a country's CPI, meaning that household income does not buy as much
With a negative supply shock, the federal reserve has to decide whether to
increase inflation and decrease unemployment, or decrease inflation and increase unemployment
Which of these is an alternative to monetary policy and aims to reduce inflation?
increase taxes
A lower reserve requirement
increase the ability of banks to make loans
The _________ curve is vertical at full employment
long-run aggregate supply
Rising productivity will increase economic growth and raise the average standard of living, shifting the __________ curve to the __________
long-run aggregate supply; right
Physical capital includes
manufactured products that are used to produce other good and services
A person will decide to take the day off work if the
marginal cost is less than the marginal benefit
When Main Street Bank buys new automatic teller machines, the quantity of __________ in the economy increases.
physical capital
The __________ is the total accumulation of past budget deficits less surpluses
public debt
If the economy has high levels of unemployment, the federal reserve will
reduce interest rates
Which of these is an alternative to monetary policy and also aims to reduce short-run unemployment?
reduce taxes
If oil prices decline, the short-run aggregate supply curve shifts ______ and output supplied will ______
right; increase
When the supply of coffee decreases and the demand for coffee increases simultaneously, the price of coffee will
rise
If Zachary deposits $500 cash into his checking account, his bank's assets then
rise by $500 and liabilities rise by $500
If technology is held constant, an increase in capital concurrent with a decrease in labor input causes output to
rise, fall, or stay the same
Tightening monetary policy causes interest rates to ________ and aggregate _______ to _________.
rise; demand; decrease
If the fed increase the supply of money in the market through open market operations, bond prices will ________ and interest rates will _______.
rise; fall
An increase in demand causes the equilibrium price to ________ and the equilibrium quantity to ______
rise; rise