AP Econ Final Study

A decrease in short-run aggregate supply will likely cause which of the following?

An increase in price level.

Monetary policy decisions are ultimately made by the

C. FOMC.

GDP is an indicator of a nationś production of goods and services in a given year. Which of the following would cause an increase in a nation's GDP?

Carpenters build a dining room table for his daughterś apartment.

Which of the following policy combinations is most likely to be associated with a decrease in exported goods?

Contractionary fiscal and contractionary monetary policy.

Lending by commerical banks

Creates money.

A contractionary fiscal policy is illustrated by a(n)

Decrease in aggregate demand.

When increased levels of total spending drive prices up, we call it this:

Demand-pull inflation.

Congress passes new legislation which decreases marginal tax rates at all levels of income. What type of fiscal policy is this?

Discretionary fiscal policy.

Congressional action aimed at achieving full employment by manipulation government spending and taxation is called

Fiscal policy.

Require reserves of a commercial bank must be kept in one of two places: as cash in that bank's vault or deposited at

That bank's district Federal Reserve bank.

Part time workers

count the same as full time workers when calculating the unemployment rate.

If the price of hot dogs goes up, we can expect the demand for mustard to

decrease because hot dogs and mustard are complementary goods.

An increase in marginal income tax rates will shift

e.aggregate demand to the left due to decreased levels of consumer spending.

With fixed rates of interest, unanticipated inflation

hurts lenders but helps borrowers.

Which of the following is a positive economic statement?

Prices of new homes decreased 2 percent last month.

Assume a new tax is designed which automatically increases as an individual's income level increases. What kind of tax is this?

Progessive Tax.

Assume expansionary fiscal policies have led to high federal deficits and crowding out. Which of the following would be considered an accommodative policy action by the federal reserve?

Raising the reserve ratio.

Assume no taxes. If the MPC is 0.8, assuming the full multiplier effect, the result of an increase in autonomous investment spending of $200 billion should be an increase in real output of

$1,000 billion.

In a given year, real GDP in Country Y was $1,000 billion. Government spending totaled $150 billion, investment was $200 billion and a $150 billion trade deficit existed. How much consumption spending occurred that year?

$500

The consumer price index was 100 one year and 104.5 the next. What was the inflation rate that year?

4.5 percent.

Consider a nation with an adult population of 100 million. If the 6 million adults are considered unemployed, how many are employed?

54 Million.

Which of the following is best described as a certificate of indebtedness? B.

A bond.

Which of the following would be considered an addition to the United States GDP for a given year?

A local retailer sees annual inventories increase $10,000.

The best example of cyclical unemployment is

A worker loses his/hers job during a recession.

More than one person can have a claim on each dollar in a commercial bank. This fact is representative of the

A. Fractional reserve system.

Which of the following may be a reason why the maximum increase in money supply predicted by the money multiplier may not happen?

Banks do not lend their entire excess reserves.

Assume inflation expectations have become a problem in the economy. How might the Federal reserve combat the problem?

Buy securities on the open market, which will decrease the demand for loanable funds,

A major advantage of automatic stabilizers in fiscal policy is that they

Go into effect without passage of new legislation.

Which of the following fiscal policy measures is designed to increase aggregate demand?

I only, decrease of personal income taxes.

Assume commercial banks have been buying government bonds from the federal reserve on the open market. What effect will this have on the graph for the money market?

Increase money supply and decrease interest rates.

Assumes the Federal Reserve enacts an expansionary policy intended to increase money supply and encourage banks to lend. What effect would this have on the graph for the loanable funds market?

Increase supply of loanable funds.

Unemployment is high but so is inflation. What set of policy actions by congress and the fed would have offsetting effects on the economy due to misaligned intentions?

Increased taxes and raising the discount rate.

Price level rises and unemployment falls. Which of the following events may have been a cause of this?

Interest rates fall in response to easy money policies at the central bank.

Unemployment is studied as part of

Macroeconomics.

If the maximum combination of consumer and capital goods potentially produced by an economy has increased over time, which of the following is true?

Marginal tax rates have increased due to contractionary fiscal policy.

The nation Maritime is capable of producing 25 naval ships per month while its neighbor Terracotta produces only 15. From this information we can conclude

Maritime has a comparative advantage in producing naval ships.

What function is money serving when you purchase food at the grocery store?

Medium of exchange.

When the aggregate demand-aggregate supply model indicates increased price level and decreased output, the following change will occur on the graph of the Phillips curve

Movement up the short-run Phillips curve,

Which of the following is not generally considered a factor in determining economic growth?

Natural resources per worker.

A federal open market committee press release states that policymakers intend to "increase the target for the federal funds rate". Based on that statement, what does the Fed consider to be the most pressing economic problem at the time?

The federal deficit.

Which of the following describes where commercial banks borrow money from the federal reserve?

The open market.

The short-run aggregate supply is likely to shift to the left when there is an increase in

a.the cost of productive resources.

Consumers expect to see their income rise significantly in the near future. This will cause

aggregate demand to increase.

Productivity is best described as:

average output per unit of labor.

The most commonly used measure for standard of living comparisons between economies is an increase in the

real GDP per capita.

THe law of supply indicates that producers

will produce more of a good when markets dictate a higher price.