Unit 4 Test Review

The belief that expansionary is not all helpful with fighting recessions is consistent with __________.

Classical

Economist say that long-run economic growth is almost entirely due to: a) rising productivity b) population growth c) a democratically elected government d) a balance budget e) perfectly competitive markets

a

______________ are a government licensing system that limits the amount of foreign currencies an individual can buy.

Foreign exchange

Discretionary fiscal policy is favored by ___________.

Keysenian

The best currently available measure of the standard of living in a counry is ______________________.

The real gdp per capita

If the value of a U.S dollar changes from Y130 to Y105, it follows that ___________.

U.S goods become cheaper for Japanese consumers

Suppose a panel of economists are predicting that a nation's real GDP per capita will have an average annual growth rate of 2%. Based upon the Rule of 70 how many years will it take for this nation's real gdp per capita to double? a) 35 b) 70 c) 140

a

In the aggregate demand and aggregate supply model, the long-run aggregate supply curve show the relationship between the aggregate price level and the quantity of _________ ________ supplied when all prices including nominal wages are ____________.

aggregate output; flexible

Human capital refers to : a) output per worker b) the education and knowledge embodied in the work force c) society's investment in capital goods d) people working with capital goods e) management information systems

b

Workers tody are more productive than in the past becuase of ______________ .

better technology

Adopting a floating exchange rate regime makes the domestic economy less susceptible to ____________.

business cycles abroad

A currency has depreciated when that currency __________________.

buys fewer foriegn goods

If real gdp per capita grows at a rate of 5% per year consistently over time, how many years would it take for it to double in size? a) 5 b) 110 c) 14 d) 70 e) 20

c

The convergence hypothesis says that international differences in GDP per capita tend to ____________ over time.

decrease

When the value of a pound changes from U.S $1.50 to $2.00, it follows that the U.S dollar has _________.

depreciated

To find approximate number of years it takes the economy to double one would ________________________.

divide 70 by its growth rate

Investment in human capital shifts the aggregate production function: a) downward b) left c) inward d) right e) upward

e

The advantage of a fixed exchange rate is that it ______________________.

eliminates uncertainty

Kenyan banks buy shares in "Goats R Us" and Eritrean company. In the Eritrean balance of payments this would cause the balance on the _________ account to ____________.

financal; increase

A nation's statement that racks the purchase and sale of assets during a particular period is ________________.

financial account

A system where exchange rates are set by government policy is a ____________.

fixed exchange rate

Improvement in labor created by education and knowledge that is embodied in the work force is _____________.

human capital

Technology progess allows workers to produce more even when the amount of __________ capital and _________ capital are scarce.

human; physical

Nearly all economists agree that increases in government spending can ________ aggregate ______.

increase; demand

According to Macro-Consensus school, and unemployment rate of 7% when the natural is 5% should be countered by _________ in the rate of growth of the _________ supply.

increase;money

The nominal exchange rate is unadjusted for ___________.

inflation

An advantage to floating exchange rates is it __________________________.

isolates countries from recession starting in other countries.

Discrestionary fiscal policy maybe counter productive because of ______ in fiscal policy.

lags

____________ economic growth is sustained rise in the quantity of goods and services the economy produces, as opposed to the __________ up and downs of the business cycle.

long-run; short term

"Use monetary policy to stabilize the economy and use fiscal policy only when monetary policy is ineffective" is associated with the ________ _______ view of economy

modern consensus

"The government should avoid deficit spending because of the crowding-out effect on investment spending" is consistent with the ___________ view.

monetarist

Countries that follow floating exchange regimes give up the ability to use _________ as a stabilization tool.

monetary policy

A floating exchange rate retains the ability of _________ policy to help stabilize the __________.

monetary; economy

The formula for the rule of 70, where n is the number of years and r is growth rate, is expressed as ___________.

n x r = 70

A country has a financial account deficit if the balance on the account is ________.

negative

A current account deficit exist when the balance on the current acount is _______.

negative

International rates between countries tend to converge _____________________.

the foreign asset is as good as the domestic asset