Macroecon 2

Which of the following is included in M2 but not M1

. savings accounts

Based on the information in the table above, what is the unemployment rate?

25%

If the real interest rate is 4 percent and expected inflation is 3 percent, then the nominal interest rate is

7%

Based on the information in the table above, if you use this year as the base year, what was the GDP deflator for last year?

80

According to the preceding graph, which of the following is true about this economy in the long run?

A combination of increased government spending and an increase in the money supply could shift aggregate demand to the right and restore long-run equilibrium.

An increase in government spending combined with a decrease in personal income taxes will most likely cause aggregate demand and short-run aggregate supply to change in which of the following ways?

Aggregate Demand - Increase Short-run aggregate supply - No change

In the long run, increases in the money supply result in which of the following changes in aggregate demand and the long-run aggregate supply?

Aggregate demand_- Increase Long-run aggregate supply - No Change

Amanda and Stuart are trading partners. In a single day, Amanda can produce 10 turkeys or 5 mugs, I while Stuart can produce 3 turkeys or 9 mugs. Assuming that Amanda and Stuart both have constant opportunity costs, which of the following statements is true?

Amanda would be willing to trade with Stuart as long as she could purchase a mug for less than 2 turkeys.

If the real interest rate in Argentina has increased from 5% to 6% and the real interest rate in Brazil has increased from 4% to 6%, Brazilian capital flow and currency should change in which of the following ways?

Capital Flow - No Change Currency - No Change

Which of the following would cause an increase in the official unemployment rate

College students begin actively applying for employment.

Which is most likely to occur if the Federal Reserve sells treasury bonds on the open market?

Excess reserves in the banking system will decrease.

An increase in the demand for loanable funds will have which of the following effects on the exchange rate and net exports?

Exchange Rate -Appreciate Net Exports - Decrease

Which of the following has occurred if there is a rightward shift of the Phillips curve in the long run?

Expectations of inflation have increased and the unemployment rate has increased back to the natural rate of unemployment.

Which of the following combinations of fiscal and monetary policy would effectively reduce net exports and capital investment?

Fiscal policy - Expansionary Monetary Policy - Contractionary

Which of the following would lead to an increase in the United States' gross domestic product in the short run?

Households save less of their disposable income

If exchange rates are fixed and the United States' rate of inflation decreases relative to its trade partners, then the United States' imports and exports will most likely change in which of the following ways?

Imports - Decrease Exports- Increase

assuming a system of flexible exchange rates, an open-market purchase of bonds by the United States Federal Reserve while Japan does nothing will most likely affect the United States' rate of inflation and the international value of the Japanese yen in which of the following ways?

Inflation rate - Increase International value of the Japanese yen - Appreciate

Which best describes the mechanism by which interest rates influence economic growth?

Lower interest rates encourage gross private investment, capital formation, and economic growth.

Which of the following statements best describes the conditions for specialization in either Ostrichalia

New Zebrand should specialize in wool sweaters, according to its comparative advantage in them.

In the long run, decreases in aggregate demand lead to which of the following changes in nominal gross domestic product (GDP) and the price level?

Nominal GDP - Decrease Price Level - Decrease

An increase in banks' willingness and ability to lend excess reserves will most likely result in which of the following?

Nominal interest rate - Decrease Quantity of money - Increase

An increase in personal income taxes will most likely cause output and unemployment to change in which of the following ways?

Output - Decrease Unemployment - Increasse

Assuming that input prices are flexible, an economy operating above the natural rate of unemployment will experience which of the following changes in output and price level in the long run?

Output - Increase Place Level - Decrease

Assume that all input prices are flexible. An increase in labor productivity will have which of the following effects on output, price level, and real wages?

Output - Increase Price level - Decreases Real Wages - Increase

. A binding price floor is imposed in the market for gems. What effect will this price floor have on the quantity supplied, the quantity demanded, and the amount of gems actually exchanged?

Quantity Supplied - Increase Quantity Demanded - Decrease Quantity exchanged - Decrease

If the nominal interest rate is equal to 0%, which of the following statements is true?

The Federal Reserve cannot use open-market operations to increase the money supply.

Which combination of monetary and fiscal policies would be appropriate for an economy experiencing a recession?

The Federal Reserve purchases securities on the open market while government spending increases.

If an economy is experiencing a significant recession, then which of the following will cause employment and interest rates to increase?

The government increases spending and reduces taxes.

The Federal Reserve purchases securities on the open market while government spending increases.

The opportunity cost of consumer goods is zero

A production possibilities curve with a constant slope indicates which of the following

The opportunity cost of producing the first unit is the same as the opportunity cost of producing each successive unit.

Which would most likely be harmed by unanticipated inflation?

a bank that has made many long-term loans at fixed interest rates

Which of the following would cause a leftward shift in the aggregate demand curve?

a decrease in consumer confidence

An increase in the government's budget surplus will most likely result in

a decrease in the international value of the dollar

If the marginal propensity to consume is 0.8, then the largest change in consumption that would happen as a result of a $100 million decrease in taxes

a decrease of $400 million

Movement along an existing short-run Phillips curve corresponds to

a shift in aggregate demand

Increased business taxes would decrease real gross domestic product by decreasing which of the following?

aggregate supply and aggregate deman

Cost-push inflation occurs when there is

an increase in both inflation and unemployment.

Which fiscal policy action by government will shift aggregate demand to the left?

an increase in taxes

A decrease in taxes with an increase in the required reserve ratio will result in

an indeterminate change in real gross domestic product and an increase in the interest rate

Cost-push inflation results in

decreased short -run aggregate supply

An increase in government spending while the economy is fully employed will most likely result in

demand-pull inflation.

If the real interest rate in France decreased relative to the real interest rate in the United States while domestic prices remained unchanged, then the euro would

depreciate, making U.S. imports from France cheaper.

According to the theory of comparative advantage, Ostrichalia would find it advantageous to

export cotton shirts and import wool sweaters.

Which of the following is a combination of fiscal and monetary policy designed to reduce inflation in an economy?

increase taxes and sell Treasury bonds

Assume that the United States has a balance of trade deficit with China. What action by Chinese policymakers would offset the effects of the trade deficit on China's currency?

increase the purchase of United States' real and financial assets

A decrease in available technology will cause the

long-run aggregate supply curve to shift left.

Which of the following best describes the sequence of events that occurs when the Federal Reserve increases the required reserve ratio?

money supply decreases, interest rates increase, consumption and investment decrease, aggregate demand decreases, output and price level decreases

In order to increase the federal funds rate, the Federal Reserve

sell bonds on the open market

The inverse relationship between inflation and unemployment is shown by the

short-run Phillips curve

A decrease in resource prices will shift the

short-run aggregate supply to the right

Which type of unemployment would increase would increase if robot technology were widely adopted in

structural

If government wants to increase spending by $100 billion without increasing the price level, then

taxes must increase by more than $100 billion

Depreciation of the Japanese yen in the foreign exchange market could be caused by an increase in which of the following?

the U.S. real interest rate

The spending multiplier increases as

the marginal propensity to consume increases

Which of the following would be counted towards gross private investment in this year's gross domestic product?

the purchase of inventory

Assume that autonomous consumption is $500 and the marginal propensity to save is 0.05. If disposable income is $2,000, total consumption equals which of the following?

$2,400.00

Assume that the required reserve ratio is 20 percent. If coriander deposits in cash into her checking account, the maximum of new loans the banking system can create is

$400

If the aggregate price level is 1.1, the real gross domestic product is $10 trillion, and the income velocity of money is 2, then the money supply equals

$5.5 trillion

Assume that the Federal Reserve buys $1 billion worth of Treasury securities from a primary security dealer. If the required reserve ratio is 25 percent, then the initial change in excess reserves is

$750 million.