ECON 1015 Final Exam - George Chikhladze

You bought stock in 2010 for $100 and you sold it in 2012 for $200. You used a broker to sell the stock for you, and he charged you $20. This transaction contributed ________ to gross domestic product (GDP).

$20

What will cause an increase in demand (rightward shift) for foreign currency? A. An increase in demand for foreign goods and services B. A decrease in foreign interest rates C. A financial instability in a foreign country D. A decrease in demand for foreign goods and services

A. An increase in demand for foreign goods and services

Which of the following will cause depreciation of dollar? A. There is an increase in global demand for California wine B. Federal Reserve conducts expansionary monetary policy C. ECB conducts expansionary monetary policy D. There is a decrease in American demand for German cars

B. Federal Reserve conducts expansionary monetary policy

Which of these two countries are the major importers of U.S. goods? China and Japan Canada and Japan Canada and Mexico Mexico and Japan China and Mexico

Canada and Mexico

If a bottle of Guinness costs 3 pounds in UK and $4 in US, then what should be exchange rate as implied by PPP? A. $0.75 per pound B. 1.33 pounds per dollar C. $4.4 per pound D. $1.33 per pound

D. $1.33 per pound

Which of the following will cause appreciation of yen? A. a decrease in demand for Japanese cars B. bank of japan conducts expansionary money policy C. a decrease in Japanese interest rates D. bank of Japan conducts contractionary monetary policy

D. bank of Japan conducts contractionary money policy

Suppose Big Mac costs 4 euros in Paris and $6 in NYC. Given the current exchange rate of the two currencies (1 euro to 1.33 $), the euro is _______ and the dollar is ______ A. overvalued, overvalued B. overvalued, undervalued C. undervalued, undervalued D. undervalued, overvalued

D. undervalued, overvalued

Which of the following people would be officially considered unemployed? Mitchell, who is a full-time student working part-time at the bookstore Ralph, who is a stay-at-home father and is not currently looking for a job Janice, who is actively seeking a full-time job while currently working at a part-time job Jade, who has stopped looking for a job because she feels there are no jobs available for her Jenna, who just graduated from college and is searching for a job that fits her graphic-design skills

Jenna, who just graduated from college and is searching for a job that fits her graphic-design skills

Which of the following explains why resource prices are often the slowest prices to adjust? Resource prices are not reported in the consumer price index (CPI). Resource prices are often set by lengthy contracts. Resource prices are all tied to inflation. Resource prices are not affected by inflation. Resource prices are often set by governments.

Resource prices are often set by lengthy contracts.

Which one of these statements is an accurate definition of trade balance? Trade balance is the sum of a nation's total exports and total imports. Trade balance is the difference between a nation's total exports and total imports. Trade balance is when a nation's imports are equal to its exports. Trade balance is when a nation's exports are greater than its imports. Trade balance is when a nation's imports are greater than its exports.

Trade balance is the difference between a nation's total exports and total imports.

Which of the following international organizations, founded in 1995, facilitates trade disputes between nations? European Union (EU) Asia Pacific Economic Cooperation (APEC) United Nations (UN) North American Free Trade Agreement (NAFTA) World Trade Organization (WTO)

World Trade Organization (WTO)

Which of the following would be entered into the U.S. capital account? a donation to a charity in the United States made by a Canadian citizen a Mexican government bond purchased by a U.S. citizen technical support received from a call center in India income earned by a U.S. citizen for a job in Australia the purchase of a computer made in China by a U.S. citizen

a Mexican government bond purchased by a U.S. citizen

Expansionary monetary policy occurs when Congress and the president increase taxes in an effort to stimulate the economy. Congress and the president decrease taxes in an effort to stimulate the economy. a central bank acts to increase the money supply in an effort to stimulate the economy. a central bank acts to increase government spending in an effort to stimulate the economy. a central bank acts to decrease the money supply in an effort to stimulate the economy.

a central bank acts to increase the money supply in an effort to stimulate the economy.

Expansionary monetary policy causes ________ the aggregate demand curve. a flattening of a leftward shift of a rightward shift of movement upward along movement downward along

a rightward shift of

If the economy is expanding beyond its long-run capabilities, we know that we are in a recession. real GDP is decreasing. actual unemployment is less than its natural rate. we are in a depression. actual unemployment is above its natural rate.

actual unemployment is less than its natural rate.

Macroeconomics includes the study of: the behavior of the consumer. individual markets. changes in national income. the behavior of the firm. changes in commodity prices.

changes in national income

Microeconomics includes the study of measures of the standard of living. changes in the price of commercial real estate. the unemployment rate. the overall level of prices in an economy. expansions and contractions of the economy.

changes in the price of commercial real estate.

What is the key identity of the balance of payments? current account balance < capital account balance current account balance - capital account balance = 0 current account balance > capital account balance current account balance + capital account balance = 0 capital account balance - current account balance = 0

current account balance + capital account balance = 0

An economic downturn can lead mainly to which type of unemployment? structural frictional practical cyclical seasonal

cyclical

When participants in the economy are able to adjust their expectations regarding inflation, this promotes increased productivity. discourages capital investment. dampens the effects of monetary policy. makes interest rates less important. encourages households to save.

dampens the effects of monetary policy.

In the domestic market, following the imposition of an import quota, imports ________, domestic production ________, and prices ________. increase; increases; increase decrease; increases; increase increase; decreases; decrease decrease; decreases; increase decrease; increases; decrease

decrease; increases; increase

The sale of American-grown corn to China is included in the ________ category of the United States GDP. import investment export consumption government purchases

export

Which of the following two types of unemployment occur even when the economy is healthy and growing? cyclical and frictional structural and practical frictional and structural structural and cyclical frictional and practical

frictional and structural

Maria is a high school math teacher. When her husband is transferred to another state with his company, she quits her job so she can move with him and will look for another job at the new location. She can be classified as ________ unemployed. structurally seasonally rationally cyclically frictionally

frictionally

The Federal Reserve generally uses ________ to implement monetary policy. open market operations the discount rate government spending the reserve requirement ratio federal tax policy

open market operations

One explanation as to why monetary policy did not have the intended effects on the economy during the Great Recession is that the focus was on fiscal policy during the Great Recession. part of the recession was caused by a rightward shift in aggregate supply. the monetary policy conducted during the Great Recession was mostly unexpected. part of the recession was caused by a leftward shift in aggregate supply. monetary policy is ineffective in the short run.

part of the recession was caused by a leftward shift in aggregate supply.

Which of the following is included in the government purchases category of gross domestic product (GDP)? payments to people in the military Social Security payments payments to unemployed workers interest on the national debt welfare payments

payments to people in the military

An example of an intermediate good would be lumber used by a consumer to build a fence in his or her yard. an airplane purchased by the government. pencils purchased by a restaurant to be used to take orders. a new stove purchased by a consumer. Social Security payments made by the government.

pencils purchased by a restaurant to be used to take orders.

Economists refer to full-employment output as natural GDP. potential GDP. real GDP. nominal GDP. GDP per capita.

potential GDP.

The investment spending category of gross domestic product (GDP) does NOT include the value of changes to business inventory. purchases of new homes. purchases of computer software. purchases of stocks and bonds. purchases of new equipment.

purchases of stocks and bonds.

In the short run, expansionary monetary policy ________ real gross domestic product (GDP), ________ unemployment, and ________ the price level. raises; lowers; lowers raises; raises; lowers raises; lowers; raises lowers; lowers; raises lowers; raises; lowers

raises; lowers; raises

Which of the following is NOT one of the four main reasons for the persistence of trade barriers? protection of infant industries national security retaliation for dumping scarcity of natural resources favors to special interests

scarcity of natural resources

Workers who lose their jobs because the skill set they possess is no longer needed in the economy are considered to be structurally unemployed. phased out of the economy. frictionally unemployed. cyclically unemployed. marginally attached workers.

structurally unemployed.

There is a 5% average tax on imported goods in the United States. This tax is known as a(n) tariff. importer tax. income tax. sales tax. quota.

tariff

Suppose an American citizen purchases a TV from Sony (a Japanese company). Sony then uses the dollars to purchase U.S. Treasury bonds. How will this transaction enter into the Japanese balance of payments? the current account will increase; the capital account will decrease the current account will decrease; the capital account will decrease the current account will decrease; the capital account will increase there will be no net change in the current account or capital account. the current account will increase; the capital account will increase

the current account will increase; the capital account will decrease

Monetary neutrality is the idea that the money supply does not affect real economic variables in the long run. a central bank should not routinely pursue countercyclical monetary policy. there is no long-run correlation between inflation and unemployment rates. people are equally likely to underestimate or overestimate inflation. in the short run, shifts in aggregate demand and aggregate supply cancel each other out.

the money supply does not affect real economic variables in the long run.

Which of the following is a topic of macroeconomics? the profit earned by a firm the price of ice cream the number of unemployed people in the economy the income earned by a person production in the computer industry

the number of unemployed people in the economy

Since 1975, the U.S. economy has had a trade surplus. ban on imports. trade balance. ban on exports. trade deficit.

trade deficit.

Structural, frictional, and cyclical are all ______ job categories. types of unemployment. price levels. firm structures. stages of the business cycle.

types of unemployment.