Econ 104 Exam
The BLS would categorize a retiree who is not working as A) a discouraged worker B) out of the labor force C) unemployed D) employed
B
The Federal Reserve Bank of New York is always a voting member of the FOMC because A) it always has an employee as a member of the Board of Governors. B) it carries out the policy directives of the FOMC. C) it is the largest of the Federal Reserve districts. D) it has the most political affiliations of the Federal Reserve districts.
B
The average price of goods and services in the economy is also known as A) a market basket B) the price level C) the cost of living D) the inflation rate
B
The reading on the Federal Reserve says the Fed performs ________ general functions to promote the effective operation of the US economy. A) 3 B) 4 C) 5 D) 6
B
To calculate labor productivity, what two values are needed? A) value of goods and services produced & the # of hours worked B) quantity of goods and services produced & the # of hours worked C) quantity of goods and services produced & the # of workers working D) value of goods and services produced & the # of workers working
B
Unit of account is defined as A) anything sellers are willing to accept it in exchange for goods or services B) only one good is used as money C) not using all your dollars to buy goods and services today, so you can hold the rest to use in the future D) being able to facilitate exchange at a given point in time
B
What are the new tools of the Fed? A) open market operations, discount loans, reserve requirements B) paying banks interest on reserves and reverse repurchasing agreements
B
Which of the following is a true statement about real and nominal GDP? A) Nominal GDP is a better measure than real GDP in comparing changes in the production of goods and services year after year B) If real GDP increases from one year to the next, we know that production of goods and services has risen. C) Increases in average prices do not affect the calculation of nominal GDP. D) If nominal GDP increases from one year to the next, we know that production of goods and services has risen.
B
Which of the following is included in both US GDP and US GNP A) value of all cars produced by Nissan in Japan and US B) value of all cars produced by General Motors in the US C) value of all cars produced by Ford in Mexico D) value of all cars produced by Toyota in the US
B
increase in PERSONAL INCOME TAXES OR BUSINESS TAXES shifts the AD curve _____. A) right B) left
B
increase in PRODUCTIVITY shifts the SRAS curve ______ A) left B) right
B
increase in THE EXCHANGE RATE (the value of the dollar) RELATIVE TO FOREIGN CURRENCIES shifts the AD curve ______. A) right B) left
B
increase in THE GROWTH RATE OF DOMESTIC GDP RELATIVE TO THE GROWTH RATE OF FOREIGN GDP shifts the AD curve ______. A) right B) left
B
increase in THE LABOR FORCE OR THE CAPITAL STOCK shifts the SRAS curve ______ A) left B) right
B
increase in THE PRICE LEVEL RELATIVE TO FOREIGN PRICE LEVEL shifts the AD curve ______. A) right B) left
B
nominal interest equals the real interest rate _____ the inflation rate A) minus B) plus C) times D) divided by
B
unplanned increase in inventories A) AE > GDP; Planned > Actual B) AE < GDP; Planned < Actual
B
complementary good in production acronym
cooks produce rice
What are the variables that shift the demand curve? 1. 2. 3. 4. 5.
income prices of related goods tastes population and demographics expected future prices
Which way will an increase in the price of a complementary good shift the demand curve?
left
Which way will an increase in the price of a substitute good IN PRODUCTION shift the supply curve?
left
Which way will an increase in the price of a complementary good IN PRODUCTION shift the supply curve?
right
Which way will an increase in the price of a substitute good shift the demand curve?
right
substitute good in production acronym
sleazy people losers
A shortage is calculated by: A) seeing if the quantity demanded is more than the quantity supplied at a given price level. If so, take the difference between the two numbers. B) seeing if the quantity demanded is less than the quantity supplied at a given price level. If so, take the difference between the two numbers. C) seeing if the quantity demanded is greater than the equilibrium quantity. If so, take the difference between the two numbers. D) seeing if the quantity demanded is less than the equilibrium quantity. If so, take the difference between the two numbers.
A
According to the multiplier effect, an initial decrease in government purchases decreases real GDP by ______ the initial decrease in government purchases. A) more than B) less than
A
An example of business fixed investment spending is A) a purchase of a computer by an accounting firm B) a purchase of a bond by General Electric Corporation C) $200 million of unsold cars at a car dealership D) a purchase of a home by a household E) All of the above
A
An increase in the money supply will do what to AD? A) shift right B) shift left
A
Because workers in the United States work fewer hours per week, on average, than they did over 100 years ago A) GDP is lower than it would be if US workers worked the same workweek they had 100 years ago B) GDP is higher than it would be if US workers worked the same workweek they had 100 years ago C) workers in the US earn less income than they did 100 years ago D) workers in the US are worse off than they were over 100 years ago
A
Between Year X and Year Y, the CPI of a small nation rose from 182 to 185. If household incomes rose by 3% during that period of time, which of the following is true? A) purchasing power of household income rose between X and Y. B) purchasing power of household income stayed constant between X and Y. C) purchasing power of household income fell between X and Y. D) CPI cannot be used to determine how the purchasing power of household income changes over time.
A
Ceteris paribus, increases in the interest rate will make _____ shift to the ______. A) AD, left B) SRAS, left C) LRAS, right D) AD, right E) SRAS, right
A
Expansionary fiscal policy is A) steps taken by the legislature to shift AD to the right B) steps taken by the legislature to shift AD to the left C) actions the Federal Reserve takes to manage the money supply and interest rates to achieve macroeconomic policy objectives. D) a decline in private expenditures as a result of an increase in government expenditures
A
Gross National Product (GNP)? A) is the value of final goods and services produced by residents of the United States, even if the production takes place outside the United States. B) the total quantity of good and services produced in the economy during a period of time C) the total market value of all intermediate goods and services in the economy D) the total market value of all final goods and services in the economy
A
If inflation increases unexpectedly, then: A) lenders receive a lower real interest rate B) neither borrowers nor lenders lose C) lenders gain and borrowers gain D) borrowers pay a higher real interest rate than they expected
A
Increase in GOVERNMENT PURCHASES shifts the AD curve _____. A) right B) left
A
Is actual investment included in GDP? A) True B) False
A
Is planned investment included in AE? A) True B) False
A
Knowledge capital = Non rivalrous A) True B) False
A
M1 is defined as A) Currency and coin held by the public, value of checking account balances, value of traveler's checks B) small denomination time deposits with a value less than $100,000, value of savings accounts balances, money market deposit accounts in banks, non-institutional money market fund shares
A
Medium of exchange is defined as A) anything sellers are willing to accept it in exchange for goods or services B) only one good is used as money C) not using all your dollars to buy goods and services today, so you can hold the rest to use in the future D) being able to facilitate exchange at a given point in time
A
Physical capital = Rivalrous A) True B) False
A
Stagflation is A) combination of inflation and recession resulting from a supply shock B) percentage increase in the price level from one year to the next C) decline in the price level D) significant reduction in the price level
A
Steeper SRAS Curve means that A) prices are less sticky B) prices are more sticky
A
The cost incurred from the production of an additional unit of a product A) is a marginal cost to the firm B) is called a loss C) is called opportunity cost D) must be zero for a firm to be efficient E) Both A & C
A
The first governor of Tennessee received a salary of what? A) 1000 deerskins per year B) 1000 otterskins per year C) 450 deerskins per year D) 450 otterskins per year
A
The production possibilities frontier model shows that: A) if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good B) if consumers decide to buy more of a product, its price will increase C) economic growth can only be achieved by free market economies D) All of the above E) none of the above
A
What are the three old tools that the FOMC uses to increase the money supply? A) open market purchases, lowering the discount rate, reducing the required reserve ratio B) open market purchases, raising the discount rate, reducing the required reserve ratio C) open market sales, raising the discount rate, raising the required reserve ratio
A
Which of the following statements about positive economic analysis is true? A) positive analysis uses an economic model to estimate the costs and benefits of different course of actions B) there is much less disagreement among economists over normative economic analysis than over positive economic analysis C) there is much less disagreement among economists over positive economic analysis than over normative economic analysis D) unlike positive economic analysis, normative economic analysis can be tested
A
Which of the following would NOT shift the supply curve for a normal good? A) increase in income B) increase in number of firms C) decrease in price firms expect to be able to sell the good for D) technological advancement E) all of the above statements would shift the supply curve for a normal good
A
increase in EXPECTED FUTURE PRICE LEVEL shifts the SRAS curve _____ A) left B) right
A
increase in FIRMS EXPECTATIONS OF THE FUTURE PROFITABILITY OF INVESTMENT SPENDING shifts the AD curve _____. A) right B) left
A
increase in HOUSEHOLD EXPECTATIONS OF THEIR INCOME shifts the AD curve _____. A) right B) left
A
increase in THE PRICE OF AN IMPORTANT NATURAL RESOURCE shifts the SRAS curve ______. A) left B) right
A
increase in WORKERS AND FIRMS ADJUSTING TO HAVING PREVIOUSLY UNDERESTIMATED THE PRICE LEVEL shifts the SRAS curve ______. A) left B) right
A
unplanned decrease in inventories A) AE > GDP; Planned > Actual B) AE < GDP; Planned < Actual
A
"In the dynamic AD and AS model, contractionary monetary policy causes the price level to fall." This statements is ______. A) True. When the AD curve shifts to the left, the price level falls and real GDP increases. B) False. Contractionary policy causes the price level to rise by less than it would have without the policy. C) False. Contractionary monetary policy shifts the AD curve to the right: the price level and real GDP rise. D) True. When the AD curve shifts to the left, the price level and real GDP fall.
B
A parallel shift to the left in a production possibilities frontier: A) represents an increase in the maximum attainable amount of production of both goods B) represents a decrease in the maximum attainable amount of production of both goods C) changes the opportunity cost of both goods D) a & c E) b & c
B
According to the text, economists consider full employment to occur when A) frictional unemployment equals zero B) the unemployment rate consists of only frictional and structural unemployment C) everyone who wants a job has a job D) the sum of frictional unemployment and structural unemployment equals zero
B
An increase in the amount of excess reserves that banks keep _________ the value of the real-world deposit multiplier. A) eliminates B) decreases C) leaves unchanged D) increases
B
Changes in taxes and spending that happen without actions by the government are called A) transfer payments B) automatic stabilizers C) autonomous fiscal expenditures D) autonomous fiscal policy changes
B
Contractionary fiscal policy is A) steps taken by the legislature to shift AD to the right B) steps taken by the legislature to shift AD to the left C) actions the Federal Reserve takes to manage the money supply and interest rates to achieve macroeconomic policy objectives. D) a decline in private expenditures as a result of an increase in government expenditures
B
Flatter SRAS Curve means that A) prices are less sticky B) prices are more sticky
B
For class, you were required to read an article titled, "Study, schools that give away condoms see more teen births, not fewer." What was the main takeaway regarding schools giving away condoms? A) giving away condoms led to more risky behavior B) schools need to also provide counseling regarding the use of condoms C) schools need to provide birth control to both males and females D) taxpayer dollars should not be spent on birth control
B
If price level rose in three consecutive years from 100 to 120 to 140, then annual inflation rate would, A) equal 20% B) decrease C) increase D) remain the same
B
If prices are rising on average, then A) real GDP will be less than nominal GDP in the years before the base year B) real GDP will be greater than nominal GDP in the years before the base year C) real GDP will always be equal to nominal GDP D) real GDP will be greater than nominal GDP in the years after the base year
B
If the quantity of goods and services produced in the economy decreases A) real GDP would certainly decrease B) it may be possible for real GDP to decrease C) it may be possible for real GDP to increase D) nominal GDP would certainly increase
B
If your nominal wage rises faster than the price level, we can say your real wage has ________ and the purchasing power of your income has ________. A) fallen; fallen B) risen, risen C) risen; fallen D) fallen; risen
B
Increase in INTEREST RATES shifts the AD curve ______. A) right B) left
B
Increasing money supply does what to the interest rate? A) increases B) decreases
B
Suppose in 2018, you purchase a house built in 2003. Which of the following would be included in the GDP for 2018? A) the value of the house in 2003 B) value of the services of the real estate agent C) value of the house in 2018 D) value of the house in 2018 minus depreciation E) none of the above
B
Suppose labor movement has a revival in the US and the majority of workers join labor unions. As a result we would expect A) unemployment rate to fall B) unemployment rate to rise C) the labor force participation rate to fall D) no change in the unemployment rate or labor force participation rate
B
Suppose the labor force stays constant, and the working-age population stays constant, but a greater number of persons who were unemployed become employed. The labor force participation rate will A) decrease B) remain constant C) increase D) not change in a way that can be predicted
B
Suppose you borrow 1000 at an interest rate of 12%. if expected real interest rate is 5 percent, then the rate of inflation over the upcoming year that would be most beneficial to you would be a rate of inflation A) less than 7 percent B) greater than 7 percent C) equal to 0 percent D) equal to 7 percent
B
The BLS would categorize a person as ________ if they were temporarily away from their job because they were ill. A) unemployed B) employed C) out of the labor force D) a discouraged worker
B
According to a recent study, "Stricter college alcohol policies, such as raising the price of alcohol, or banning alcohol on campus, decreases the number of students who use marijuana" On the basis of this information, how would you describe alcohol and marijuana? A) two goods are substitutes in consumption B) no relationship between the two goods C) two goods are complements in consumption D) they are both luxury goods
C
An initial increase in a bank's reserves will increase checkable deposits A) by an amount less than the increase in reserves. B) by an amount equal to the increase in reserves. C) by an amount greater than the increase in reserves. D) An initial increase in reserves will decrease checkable deposits.
C
As a result of crowding out in the short run, the effect on real GDP of an increase in government spending is often ________. A) equal to the increase in government spending. B) unrelated to the increase in government spending. C) less than the increase in government spending. D) more than the increase in government spending.
C
Ceteris paribus, if the supply and demand curves both shift to the right, we can say with certainty that: A) price will increase B) price will decrease C) quantity will increase D) a & c E) b & c
C
For Lesson 2, you were required to read an article about an idea that David Ricardo first came up with 200 years ago. What economic idea is that? A) opportunity cost B) absolute advantage C) comparative advantage D) supply and demand E) unintended consequences
C
If there is an increase in capital per hour worked, holding technology constant, then we would which of the following happen to the per-worker production function graph? A) upward shift B) downward shift C) movement along to the right D) movement along to the left E) Both A & C
C
In order to calculate opportunity cost with a simple chart of two goods with only two producers of both, you would need to know that the marginal opportunity costs were: A) increasing B) decreasing C) constant D) equal to zero
C
Increase in price level will: A) shift demand to the left B) shift supply the right C) increase the number of sellers willing to enter the market D) increase marginal benefit of purchasing the product E) all of the above
C
M2 is defined as A) Currency and coin held by the public, value of checking account balances, value of traveler's checks B) small denomination time deposits with a value less than $100,000, value of savings accounts balances, money market deposit accounts in banks, non-institutional money market fund shares C) M1 + small denomination time deposits with a value less than $100,000, value of savings accounts balances, money market deposit accounts in banks, non-institutional money market fund shares
C
Monetary policy is A) steps taken by the legislature to shift AD to the right B) steps taken by the legislature to shift AD to the left C) actions the Federal Reserve takes to manage the money supply and interest rates to achieve macroeconomic policy objectives. D) a decline in private expenditures as a result of an increase in government expenditures
C
On the AE diagram, for points that lie above the 45-degree line A) planned AE is less than aggregate income B) planned AE is equal to GDP C) planned AE is greater than GDP D) planned AE is less than GDP
C
Store of value is defined as A) anything sellers are willing to accept it in exchange for goods or services B) only one good is used as money C) not using all your dollars to buy goods and services today, so you can hold the rest to use in the future D) being able to facilitate exchange at a given point in time
C
There are ____ Federal Reserve Districts A) 10 B) 11 C) 12 D) 13
C
Tierney's office? A) forum B) business C) kern D) willard E) keller
C
What does FOMC stand for? A) Federal Open Monetary Committee B) Federal Open Monetary Commission C) Federal Open Market Committee D) Federal Open Market Commission
C
Which of the following cause the unemployment rate as measured by the BLS to overstate the true extent of joblessness? A) counting people as employed who are working part time, although they would prefer to be working full time B) inflation C) unemployed persons falsely report themselves to be actively looking for a job D) discouraged workers
C
Why is the Fed sometimes said to have a "dual mandate"? The Fed is said to have a" dual mandate" because A) the two most important goals of the Fed are controlling inflation and the budget deficit. B) the Employment Act of 1946 empowers the Fed to maintain low taxes and high employment. C) maintaining price stability and high employment are the two most important goals of the Fed that are explicitly mentioned in the Employment Act of 1946. D) the Fed is entrusted by Congress to maintain price stability and low taxes.
C
You lend 5,000 to a friend for one year at a nominal interest rate of 10%. the CPI over that year rises from 180 to 190. What is the real interest rate you will earn. A) 0% B) 4.4% C) 5.5 % D) 5.8%
C
according to, "In Arctic Bay, Nunavut, precious pop sells online for stomach-churning prices," what was the reason for the high prices of soda pop? A) increase in demand B) increase in supply C) decrease in supply D) decrease in demand
C
The variables that cause the aggregate demand curve to shift fall into three categories: 1. 2. 3.
Change in government policies Change in expectations of households and firms Change in foreign variables
An unemployment insurance program has which of the following effects? A) lowers the overall unemployment rate B) increases the severity of a recession because it makes it more difficult for the unemployed to find jobs C) decreases the amount of personal income of the unemployed D) increases the amount of time spent searching for a job
D
Ceteris paribus, which of the following would cause the demand for hotdogs in Tokyo to increase? A) increase in income assuming that hotdogs in Tokyo is an inferior good B) a decrease in the price of hotdogs in Tokyo C) increase in the price of a complement good for hotdogs in Tokyo D) none of the above E) a & c only
D
Efficiency wages cause unemployment A) firms pay wages that are above the market wage, causing the quantity of labor demanded to be greater than the quantity of labor supplied B) firms pay wages that are below the market wage, causing the quantity of labor demanded to be greater than the quantity of labor supplied C) firms pay wages that are below the market wage, causing the quantity of labor demanded to be less than the quantity of labor supplied D) firms pay wages that are above the market wage, causing the quantity of labor demanded to be less than the quantity of labor supplied
D
For a barter trade to take place between two people, each person must want what the other has. Economists refer to this requirement as a ___________. A) specialization of skills B) a trade making each party better off C) necessity of trade D) double coincidence of wants
D
GDP understates the total production of final goods and services because of the omission of A) exports B) intermediate goods C) inflation D) household production E) all of the above
D
Gross domestic product (GDP) is calculated by summing up A) the total quantity of good and services produced in the economy during a period of time B) the total quantity of goods and services in the economy C) the total market value of goods and services in the economy D) the total market value of final goods and services produced in the economy during a period of time
D
If inventories decline by more than analysts predict they will decline, this implies that A) no relationship between actual investment spending and planned investment spending B) actual investment spending > planned investment spending C) actual investment spending = planned investment spending D) actual investment spending < planned investment spending
D
In class we spoke about the income and substitution effect to explain which of the following economics concepts? A) what shifts the demand curve B) what shifts the supply curve C) why the supply curve is upward sloping D) why the demand curve Is downward sloping
D
In order to show on a Trade Chart that everyone can be at least as well off when they specialize and trade, consumption after trade must be: A) greater than zero B) greater than or equal to zero C) greater than the consumption before trade D) greater than or equal to consumption before trade
D
Standard of deferred payment is defined as A) anything sellers are willing to accept it in exchange for goods or services B) only one good is used as money C) not using all your dollars to buy goods and services today, so you can hold the rest to use in the future D) being able to facilitate exchange at a given point in time
D
The (FOMC) Federal Open Market Committee A) determines the target federal funds rate and the direction of open market operation policies. B) includes the Board of Governors and the presidents of the 12 Federal Reserve regional banks (though not all are voting members). C) makes decisions that are voted on by all 7 members of the Board of Governors but only 5 of the 12 regional bank presidents. D) All of the above. E) A and B only.
D
Which of the following is true about the CPI? A) accounts for people switching to goods whose prices have fallen B) frequently updates the price changes of new products added to the market basket, as these have a tendency to fall C) filters out the part of the price increases that occurs because of quality improvements in products D) assumes that consumers purchase the same amount of each product in the market basket each month
D
which of the following would shift a production possibilities frontier inward? A) discovering a cheap way to convert sunshine into electricity B) producing more capital equipment C) increase in the unemployment rate D) a law requiring workers to retire at age 50 E) c & d are both correct
D
Ceteris paribus, increases in technology will make _____ shift to the ______. A) AD, right B) SRAS, right C) LRAS, right D) All of the above E) B & C only
E
D = Demand, S = Supply, P = equilibrium price, and Q = equilibrium quantity. What happens in market for walnuts if the CDC announces that consuming a half cup of walnuts each week increases levels of bad cholesterol? A) D increases, S no change, P and Q increase B) D no change, S increase, P decreases, Q increases C) S decreases, D no change, P decrease, Q increase D) D and S decrease, P and Q decrease E) D decreases, S no change, P and Q decrease (draw a Supply and Demand graph)
E
If there ends up being more inventories than expected, then we know that A) more production than spending B) GDP was higher than AE C) expect GDP to decrease D) expect employment to decrease E) all are correct
E
If you had to summarize economics into one simple word, what would it be? A) incentives B) supply C) consequences D) demand E) choices
E
In class there was a video clip from Project Runway to show the idea of specialization. In this clip, Blake was much better than anyone else at doing what? A) sewing B) presenting C) modeling D) ironing E) Painting flowers
E
The topic of unemployment, Starbuck's pricing strategy, taxes on cigarettes, and defense spending are ________ respectively. A) macro, micro, micro, micro B) macro, micro, macro, macro C) micro, micro, micro, macro D) micro, micro, macro, macro E) macro, micro, micro, macro
E
people can write checks against their saving accounts True False
False
What three tools does the Fed use to manage the money supply?
Open Market Operations, Discount policy, Reserve requirements
What are the five criteria that make an asset suitable for use as a medium of exchange?
acceptable, standardized quality, durable, valuable, divisible
What are the four functions of money?
medium of exchange, unit of account, store of value, standard of deferred payment
What are the four goals of monetary policy?
price stability, high employment, stability of financial markets and institutions, economic growth
What are the variables that shift the supply curve? 1. 2. 3. 4. 5.
prices of inputs technological change prices of related goods in production number of firms in the market expected future prices