Macro Final

Technological Progress and Productivity Growth. If there is an increase in physical capital per worker (all other factors remaining unchanged), it is BEST indicated by a move from:

A to B.

Other things equal, rising interest rates lead to a _____ in investment spending and a _____ in _____ spending.

fall; fall; consumer

The value of a euro goes from US$1.25 to US$1.50. In the United States, exports will _____ and imports will _____.

increase; decrease

The aggregate production function does NOT depend on:

the amount of natural resources.

Money is neutral in _____ since it cannot alter _____.

the long run; real aggregate output

Which item would not be included in this year's GDP?

the purchase of your neighbor's house, which was built in 1994

If supply is upward sloping, an increase in demand, all other things unchanged, will result in a(n) _____ in equilibrium price and a(n) _____ in equilibrium quantity.

increase; increase

If the exchange rate is ¥200 per U.S. dollar, the U.S. price level is 120, and the Japanese price level is 600, then the real exchange rate is:

¥40.

Countries that trade on the basis of comparative advantage have __________ than countries that do not.

more goods and services available to them

Real per capita GDP is:

real GDP divided by the population.

In an economy whose aggregate real output is growing faster than the total population:

real GDP per capita is rising.

f the economy is at point X, there is a(n) _____ gap with _____ unemployment.

recessionary; high

Examples of fiscal policy do NOT include:

reducing the interest rate by increasing the money supply.

An example of an intermediate good is:

steel purchased by aircraft manufacturers.

Assume the United States imposes a new tariff on wines imported from France. Who benefits from this action?

U. S. winemakers

What would likely happen if the amount of capital per worker grew?

Wages would rise because workers would become more productive.

A survey reveals that, on a small island, 40 people have jobs, 10 people are not working but are looking for jobs, and 30 people are neither working nor looking for work. The unemployment rate on the island is _____%.

20

Suppose that a panel of economists predicts that a nation's real GDP per capita will double in approximately 20 years. According to the rule of 70, what must be the predicted annual growth rate of real GDP per capita?

3.5%

Which statement about GDP is false?

GDP can be calculated by summing government spending and tax revenues.

Consider the market for iPads. What happens if a fantastic new alternative tablet is developed by Samsung and, at the same time, a boat carrying a large shipment of iPads is attacked by pirates and sunk?

The change in price is indeterminate and quantity decreases.

Consider the market for corn. What happens if there is an increased demand for corn tortillas and, at the same time, a new corn seed becomes available that dramatically increases the yield per acre?

The change in price is indeterminate; quantity increases.

Suppose that supply increases and demand decreases. What is the most likely effect on price and quantity?

The price will decrease, but quantity may increase, decrease, or stay the same.

Raising taxes shifts the _____ curve to the _____.

aggregate demand; left

If a country has a population of 1,000 people, an area of 100 square miles, and a GDP of $5 million, then its GDP per capita is:

$5,000.

If the labor force totals 100 million workers and 90 million are working, then the unemployment rate is _____%.

10

The table below shows that a worker in Australia can produce 20 units of food or 10 units of electronics in a day, and a worker in Korea can produce 5 units of food or 15 units of electronics in a day. Which of the following statements about comparative advantage is true?

Australia has a comparative advantage in the production of food while Korea has a comparative advantage in the production of electronics.

An improvement in technology with everything else remaining unchanged is shown on the diagram as a movement from:

B to C.

If the inflation rate is higher than a borrower expects it to be during the duration of a loan, which of the following is true?

B. The borrower will pay a lower real interest rate on the loan than expected.

Suppose you buy a Big Mac in El Paso this morning for $4.00 and that the same Big Mac across the border in Juarez, Mexico costs 40 pesos. What is the relative cost of a Big Mac between the countries if the nominal exchange rate is $1 = 10 pesos?

Big Macs cost the same in Mexico as they do in the U.S.

If the pound sterling appreciates against the dollar:

British exports have become more expensive but the price of U.S. exports to Britain has fallen.

When a currency depreciates, the prices of its exports to other countries will:

Decrease

The quantity equation, M•V = P•Y, where M is the quantity of money, V is the velocity of money, P is the price of output, and Y is the amount of real output/G.D.P. If V and Y are constant and M doubles, the quantity equation implies that the price level

Doubles

s the size of the labor force increases over time, the _____ curve will shift to the _____.

LRAS; right

Monetary Policy and the AD-SRAS Model. If the economy is in an inflationary gap at point h, it can move to point i as a result of:

a decrease in the money supply.

The intersection of AD with SRAS in panel (b) indicates:

a short-run equilibrium.

Diminishing returns to physical capital implies that, when the human capital per worker and the state of technology remain fixed, each successive increase in physical capital leads to _____ productivity

a smaller increase in

An increase in capital stock would:

cause a movement to the right along a stationary production function.

Gross domestic product is defined as:

consumer spending + government purchases of goods and services + investment spending + exports - imports.

If the economy is at potential output and the Fed decreases the money supply so that actual output is less than potential output, eventually nominal wages will_____ and short-run aggregate supply will _____.

decrease; increase

Suppose the economy is operating in long-run equilibrium and a positive demand shock hits. We expect a short-run increase in real GDP and the price level and a long-run _____ in real GDP and _____ the price level.

decrease; increase

A decrease in demand and a decrease in supply will lead to a(n) _____ in equilibrium quantity and a(n) _____ in equilibrium price.

decrease; indeterminate change

Discouraged workers:

have given up looking for a job.

A positive demand shock leads to:

higher prices and higher employment.

The economy is in a recession. The desired FISCAL policy is a(n):

increase in government purchases of goods and services.

If the U.S. dollar appreciates relative to currencies in other countries, then U.S. imports will _____ and exports will _____.

increase; decrease

eanut Butter and Jelly Economy. Between 2010 and 2011, nominal GDP _____ by _____%.

increased; 31.25

Assume the Mexican economy is initially at full-employment equilibrium. An economic expansion in the U.S. ______ the demand for U.S. imports from Mexico. This will also result in an increase in Mexican aggregate demand in Mexico and a(n) ________ output gap in Mexico.

increases; inflationary

If the economy is in equilibrium at Y1 in panel (a) and government spending increases, the result will likely be:

inflation.

When actual output is above potential output, over time:

nominal wages will increase, and the short-run supply curve will shift to the left.

Purchases of imported products are:

not a part of the GDP calculation.

A person who is NOT working or looking for work is:

not counted in the unemployment rate.

Investment spending is spending on:

productive physical capital.

Productivity is equal to:

real GDP divided by the number of workers.

An inflationary gap will be eliminated because there is _____ pressure on wages, shifting the _____.

upward; short-run aggregate supply curve to the left