Econ 111 Final Comprehensive Exam (Practice Exam 1-3)
A company sells steel to a scooter company for $150. The scooter company uses the steel to produce a scooter, which it sells for $290. Taken together, these two transactions contribute $150 to GDP. $290 to GDP. between $290 and $440 to GDP, depending on the profit earned by the bicycle company when it sold the bicycle. $140 to GDP.
$290 to GDP.
Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of deposits? $5,000 billion $4,937.5 billion $5,062.5 billion $4,995 billion
$4,937.5 billion
Suppose that a country imports $120 million worth of goods and services and exports $160 million worth of goods and services. What is the value of net exports? $10.0 million $20 million −$40 million $40 million
$40 million
A country has domestic investment of $235 billion. Its citizens purchase $610 billion of foreign assets and foreign citizens purchase $300 billion of its assets. What is national saving? $310 billion $545 billion $235 billion $300 billion
$545 billion
A country has national saving of $60 billion, government expenditures of $40 billion, domestic investment of $10 billion, and net capital outflow of $45 billion. What is its supply of loanable funds? $40 billion $100 billion $60 billion $105 billion
$60 billion
Suppose that in a closed economy GDP is equal to $33,000, consumption equal to $18,000, government purchases equal $6,500, and taxes equal $6,750. What are private saving, public saving, and national saving? $250, $8,250, and $8,500, respectively $15,000, $26,250, and $13,250, respectively $8,250, $250, and $8,500, respectively $26,250, $15,000, and $13,250, respectively
$8,250, $250, and $8,500, respectively
If M = 5,000, P = 5.5, and Y = 9,000, what is velocity? 10 2 2.75 0.55
10
If the price level increased from 130 to 150, then what was the inflation rate? 1.2 percent 0.9 percent 15.4 percent 20.0 percent
15.4 percent
Katarina puts money into an account. One year later she sees that she has 6 percent more dollars and that her money will buy 4 percent more goods. The nominal interest rate was 10 percent and the inflation rate was 6 percent. 6 percent and the inflation rate was 2 percent. 4 percent and the inflation rate was 2 percent. 10 percent and the inflation rate was 4 percent.
6 percent and the inflation rate was 2 percent.
Suppose that the Bureau of Labor Statistics reported that there were 62 million people over age 25 whose highest level of education was some college or an associate degree. Of these, 45.3 million were employed and 3.6 million were unemployed. What were the labor-force participation rate and the unemployment rate for this group? 7.4% and 78.9% 78.9% and 7.4% 126.8% and 7.4% 78.9% and 126.8%
78.9% and 7.4%
Which of the following is an example of barter? A parent gives a teenager a $10 bill in exchange for her babysitting services. A homeowner gives an exterminator a check for $50 in exchange for extermination services. A barber gives a plumber a haircut in exchange for the plumber fixing the barber's leaky faucet. A doctor performs surgery on a patient whose insurance pays 100% of the bill.
A barber gives a plumber a haircut in exchange for the plumber fixing the barber's leaky faucet.
Which of the following changes would not shift the supply curve for a good or service? A change in production technology A change in the price of the good or service A change in expectations about the future price of the good or service A change in input prices
A change in the price of the good or service
Which of the following changes would not shift the demand curve for a good or service? A change in income. A change in the price of the good or service. A change in expectations about the future price of the good or service. A change in the price of a related good or service.
A change in the price of the good or service.
An associate professor of physics gets a $200 a month raise. With her new monthly salary she can buy more goods and services than she could buy last year. Her real and nominal salary have risen. Her real and nominal salary have fallen. Her real salary has risen and her nominal salary has fallen. Her real salary has fallen and her nominal salary has risen.
Her real and nominal salary have risen.
Michael, a U.S. citizen, travels to Jamaica and buys a newly manufactured motorcycle made there. His purchase is included in both Jamaica's GDP and U.S. GDP. Jamaica's GDP, but it is not included in U.S. GDP. U.S. GDP, but it is not included in Jamaica's GDP. neither Jamaica's GDP nor U.S. GDP.
Jamaica's GDP, but it is not included in U.S. GDP.
You receive money as payment for mowing your neighbor's lawn. Which function of money does this best illustrate? Medium of exchange Unit of account Store of value Liquidity
Medium of exchange
If Mike can produce more donuts in one day than Sue can produce in one day, then Mike has a comparative advantage in the production of donuts. Sue has a comparative advantage in the production of donuts. Mike has an absolute advantage in the production of donuts. Sue has an absolute advantage in the production of donuts.
Mike has an absolute advantage in the production of donuts.
A U.S. citizen uses euros it already owned to purchase bonds issued by a company in Germany. Which of these countries has an increase in net capital outflow? Germany and the U.S. Germany but not the U.S. The U.S. but not Germany Neither Germany nor the U.S.
Neither Germany nor the U.S.
Where can an economy not produce? Inside its production possibilities frontier On its production possibilities frontier Outside its production possibilities frontier At the endpoints of its production possibilities frontier
Outside its production possibilities frontier
PRACTICE EXAM 2
PRACTICE EXAM 2
Suppose private saving in a closed economy is $21b and investment is $8b. National saving must equal $21b. Public saving must equal $13b. The government budget surplus must equal $13b. The government budget deficit must equal $13b.
The government budget deficit must equal $13b.
The line that relates the price of a good and the quantity demanded of that good is called the demand schedule, and it usually slopes upward. schedule, and it usually slopes downward. curve, and it usually slopes upward. curve, and it usually slopes downward.
curve, and it usually slopes downward.
If the natural rate of unemployment is 4.7 percent and the actual rate of unemployment is 5.5 percent, then by definition there is cyclical unemployment amounting to 0.8 percent of the labor force. frictional unemployment amounting to 0.8 percent of the labor force. structural unemployment amounting to 0.8 percent of the labor force. search unemployment amounting to 0.8 percent of the labor force.
cyclical unemployment amounting to 0.8 percent of the labor force.
One of the widely acknowledged problems with using the consumer price index as a measure of the cost of living is that the CPI fails to account for consumer spending on housing. accounts only for consumer spending on food, clothing, and energy. fails to account for the fact that consumers spend larger percentages of their incomes on some goods and smaller percentages of their incomes on other goods. fails to account for the introduction of new goods.
fails to account for the introduction of new goods.
The purchase of U.S. government bonds by Japanese is an example of U.S. imports. U.S. exports. foreign portfolio investment by Japanese. foreign direct investment by Japanese.
foreign portfolio investment by Japanese.
Providing training for unemployed individuals is primarily intended to reduce frictional unemployment. seasonal unemployment. structural unemployment. cyclical unemployment.
frictional unemployment.
Sandy has graduated from college and is devoting her time to searching for a job. She has seen plenty of openings but has not yet been offered one that best suits her tastes and skills. Sandy is structurally unemployed. Structural unemployment exists even in the long run. structurally unemployed. There is no structural unemployment in the long run. frictionally unemployed. Frictional unemployment can exist even in the long run. frictionally unemployed. There is no frictional unemployment in the long run.
frictionally unemployed. Frictional unemployment can exist even in the long run.
If the real exchange rate for the dollar is above the equilibrium level, the quantity of dollars supplied in the market for foreign-currency exchange is greater than the quantity demanded and the dollar will appreciate. greater than the quantity demanded and the dollar will depreciate. less than the quantity demanded and the dollar will appreciate. less than the quantity demanded and the dollar will depreciate.
greater than the quantity demanded and the dollar will depreciate.
s-flow diagram is a model that helps to explain how consumers and the government interact with one another. explains how countries trade with each other. incorporates all aspects of the real economy. helps to explain how the economy is organized.
helps to explain how the economy is organized.
A popular celebrity that is paid highly for her time should probably not mow her own lawn because her opportunity cost of mowing her lawn is higher than the cost of paying someone to mow it for her. she has a comparative advantage in mowing her lawn relative to a landscaping service. she has an absolute advantage in mowing her lawn relative to a landscaping service. she might sprain her ankle.
her opportunity cost of mowing her lawn is higher than the cost of paying someone to mow it for her.
James took out a fixed-interest-rate loan when the CPI was 200. He expected the CPI to increase to 206 but it actually increased to 204. The real interest rate he paid is higher than he had expected, and the real value of the loan is higher than he had expected. higher than he had expected, and the real value of the loan is lower than he had expected. lower than he had expected, and the real value of the loan is higher than he had expected. lower then he had expected, and the real value of the loan is lower than he had expected.
higher than he had expected, and the real value of the loan is higher than he had expected.
A likely example of substitute goods for most people would be tennis balls and tennis rackets. televisions and subscriptions to cable television services. coffee and sugar. iced tea and lemonade.
iced tea and lemonade.
Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that in order to consume beyond its PPF, the United States should produce more pork than what it requires and export some of it to Mexico. in order to consume beyond its PPF, the United States should produce a moderate quantity of pork and import the remainder of what it requires from Mexico. in order to consume beyond its PPF, the United States should refrain altogether from producing pork and import all of what it requires from Mexico. Mexico has nothing to gain from importing United States pork.
in order to consume beyond its PPF, the United States should produce more pork than what it requires and export some of it to Mexico.
A Texas household receives a Social Security check for $1500, which it uses to purchase a $40 pair of shoes made in Thailand by a Thai firm, a $1240 television made by a Korean firm in Korea, and $220 on groceries from a local store. As a result, U.S. GDP increases by $40. increases by $220. increases by $280. increases by $1500.
increases by $220.
A country's trade balance must be zero. must be greater than zero. is greater than zero only if exports are greater than imports. is greater than zero only if imports are greater than exports.
is greater than zero only if exports are greater than imports.
Suppose that real interest rates in the U.S. rise relative to real interest rates in other countries. This increase would make foreigners more willing to purchase U.S. bonds, so U.S. net capital outflow would fall. more willing to purchase U.S. bonds, so U.S. net capital outflow would rise. less willing to purchase U.S. bonds, so U.S. net capital outflow would fall. less willing to purchase U.S. bonds, so U.S. net capital outflow would rise.
more willing to purchase U.S. bonds, so U.S. net capital outflow would fall.
Other things the same, when the interest rate rises, people would want to lend more, making the supply of loanable funds decrease. less, making the supply of loanable funds increase. more, making the quantity of loanable funds supplied increase. less, making the quantity of loanable funds supplied decrease.
more, making the quantity of loanable funds supplied increase.
A competitive market is a market in which an auctioneer helps set prices and arrange sales. there are only a few sellers. the forces of supply and demand do not apply. no individual buyer or seller has any significant impact on the market price.
no individual buyer or seller has any significant impact on the market price.
According to the assumptions of the quantity theory of money, if the money supply increases by 7 percent, then nominal and real GDP would rise by 0.70 percent. nominal GDP would rise by 7 percent; real GDP would be unchanged. nominal GDP would be unchanged; real GDP would rise by 7 percent. neither nominal GDP nor real GDP would change.
nominal GDP would rise by 7 percent; real GDP would be unchanged.
When recommending specific policies to undertake, economists make positive statements. claims about how the world is. normative statements. descriptive statements
normative statements.
The residents of Ireland earn $250 million of income from abroad. Residents of other countries earn $120 million in Ireland. Therefore, Ireland's net factor payments from abroad are negative, and its GDP is lower than its GNP. negative, and its GDP is higher than its GNP. positive, and its GDP is lower than its GNP. positive, and its GDP is higher than its GNP.
positive, and its GDP is lower than its GNP.
The dollar is said to appreciate against the euro if the exchange rate rises. Other things the same, it will cost fewer euros to buy U.S. goods. falls. Other things the same, it will cost more euros to buy U.S. goods. falls. Other things the same, it will cost fewer euros to buy U.S. goods. rises. Other things the same, it will cost more euros to buy U.S. goods.
rises. Other things the same, it will cost more euros to buy U.S. goods.
Long-term bonds are riskier than short-term bonds, and so interest rates on long-term bonds are usually lower than interest rates on short-term bonds. riskier than short-term bonds, and so interest rates on long-term bonds are usually higher than interest rates on short-term bonds. less risky than short-term bonds, and so interest rates on long-term bonds are usually lower than interest rates on short-term bonds. less risky than short-term bonds, and so interest rates on long-term bonds are usually higher than interest rates on short-term bonds.
riskier than short-term bonds, and so interest rates on long-term bonds are usually higher than interest rates on short-term bonds.
If the United States raised its tariff on tires, then at the original exchange rate there would be a surplus in the market for foreign-currency exchange, so the real exchange rate would appreciate. surplus in the market for foreign-currency exchange, so the real exchange rate would depreciate. shortage in the market for foreign-currency exchange, so the real exchange rate would appreciate. shortage in the market for foreign-currency exchange, so the real exchange rate would depreciate.
shortage in the market for foreign-currency exchange, so the real exchange rate would appreciate.
In the market for foreign-currency exchange, capital flight shifts the demand curve right. demand curve left. supply curve right. supply curve left.
supply curve right.
The explanation for the slope of the supply of loanable funds curve is based on the logic that a higher real interest rate leads to higher saving. demand for loanable funds curve is based on the logic that a higher interest rate leads to higher saving. supply of loanable funds curve is based on the logic that a higher real interest rate leads to lower saving. demand for loanable funds curve is based on the logic that a higher interest rate leads to lower saving.
supply of loanable funds curve is based on the logic that a higher real interest rate leads to higher saving.
If saving is greater than domestic investment, then there is a trade deficit and Y > C + I + G. deficit and Y < C + I + G. surplus and Y > C + I + G. surplus and Y < C + I + G.
surplus and Y > C + I + G.
In the long run, money demand and money supply determine the value of money and the real interest rate. the value of money but not the real interest rate. the real interest rate but not the value of money. neither the value of money nor the real interest rate.
the value of money but not the real interest rate.
In the open-economy macroeconomic model, the market for loanable funds identity can be written as S = I. S = NCO. S = I + NCO. S + I = NCO.
S = I + NCO.
In a closed economy, what does the difference between the tax revenue and government purchases, (T − G), represent? National saving Investment Private saving Public saving
Public saving
The unemployment rate is computed as the number of unemployed divided by the labor force, all times 100. divided by the number of employed, all times 100. divided by the adult population, all times 100. times the labor-force participation rate, all times 100.
divided by the labor force, all times 100.
Suppose a country's net capital outflow does not change, but its investment declines by $420 billion. Its saving must have fallen by $420 billion, so its net exports have risen. fallen by $420 billion, but its net exports are unchanged. risen by $420 billion, so its net exports have fallen. risen by $420 billion, but its net exports are unchanged.
fallen by $420 billion, but its net exports are unchanged.
If traveler's checks were $1000 higher and saving deposits were $500 higher, M1 would be $500 higher and M2 would be $1,500 higher. $1,000 higher and M2 would be $1,500 higher. M2 and M1 would be $1,500 higher. $1,000 high and M2 would be $500 higher.
$1,000 higher and M2 would be $1,500 higher.
If the exchange rate is 9 Pound sterlings per U.S. dollar and a meal in London costs 225 Pound sterlings, then how many U.S. dollars does it take to buy a meal in London? $34 and your purchase will increase the United Kingdom's net exports. $25 and your purchase will increase the United Kingdom's net exports. $25 and your purchase will decrease the United Kingdom's net exports. $34 and your purchase will decrease the United Kingdom's net exports.
$25 and your purchase will increase the United Kingdom's net exports.
Nate collected Social Security payments of $220 a month in Year 1. If the price index rose from 90 to 108 between Year 1 and Year 2, then his Social Security payments for Year 2 should have been $228. $238. $257. $264.
$264.
The nominal exchange rate is about 2 Aruban florin per dollar. If a basket of goods in the United States costs $50, how many florins must a basket of goods in Aruba cost for purchasing-power parity to hold? 52 florin 25 florin 48 florin 100 florin
100 florin
If the price index was 90 in Year 1, 100 in Year 2, and 95 in Year 3, then the economy experienced 10 percent inflation between Years 1 and 2, and 5 percent inflation between Years 2 and 3. 10 percent inflation between Years 1 and 2, and 5 percent deflation between Years 2 and 3. 11.1 percent inflation between Years 1 and 2, and 5 percent inflation between Years 2 and 3. 11.1 percent inflation between Years 1 and 2, and 5 percent deflation between Years 2 and 3.
11.1 percent inflation between Years 1 and 2, and 5 percent deflation between Years 2 and 3.
Which of the following would shift the demand curve for gasoline to the right? A decrease in the price of gasoline An increase in consumer income, assuming gasoline is a normal good An increase in the price of cars, a complement for gasoline A decrease in the expected future price of gasoline
An increase in consumer income, assuming gasoline is a normal good
Other things the same, which of the following would cause the real exchange rate to rise? Both an increase in the real interest rate and an increase in foreign demand for U.S. goods and services. An increase in the real interest rate, but not an increase in foreign demand for U.S. goods and services. An increase in foreign demand for U.S. goods and service, but not an increase in the U.S. real interest rate. Neither an increase in the U.S. real interest rate nor an increase in the demand for U.S. goods and services.
Both an increase in the real interest rate and an increase in foreign demand for U.S. goods and services.
Which of the following does the Federal Reserve not do? Conduct monetary policy Act as a lender of last resort Conduct fiscal policy Serve as a bank regulator
Conduct fiscal policy
Assume the bonds below have the same term and principal and that the state or local government that issues the municipal bond has a good credit rating. Which list has bonds correctly ordered from the one that pays the highest interest rate to the one that pays the lowest interest rate? Corporate bond, municipal bond, U.S. government bond Corporate bond, U.S. government bond, municipal bond Municipal bond, U.S. government bond, corporate bond U.S. government bond, municipal bond, corporate bond
Corporate bond, U.S. government bond, municipal bond
Which list ranks assets from most to least liquid? Currency, houses, stocks Currency, stocks, houses Houses, currency, stocks Houses, stocks, currency
Currency, stocks, houses
Which of the following correctly orders U.S. income measures from largest to smallest? Disposable personal income, gross national product, national income, net national product, personal income Personal income, net national product, national income, gross national product, disposable personal income Gross national product, net national product, national income, personal income, disposable personal income Disposable personal income, personal income, national income, net national product, gross national product
Gross national product, net national product, national income, personal income, disposable personal income
Which of the following statements about a country with a trade deficit is not true? Exports<Imports Net Capital Outflow<0 Investment<Savings Y < C+I+G
Investment<Savings
PRACTICE EXAM 3
PRACTICE EXAM 3
Which of the following is not included in M1? Currency Demand deposits Savings deposits Traveler's checks
Savings deposits
Which of the following is correct? The GDP deflator is better than the CPI at reflecting the goods and services bought by consumers. The CPI is better than the GDP deflator at reflecting the goods and services bought by consumers. The GDP deflator and the CPI are equally good at reflecting the goods and services bought by consumers. The GDP deflator is more commonly used as a gauge of inflation than the CPI is.
The CPI is better than the GDP deflator at reflecting the goods and services bought by consumers.
Which of the following best represents fiat money? The euro A gold bar Monopoly money Baseball cards
The euro
What basket of goods and services is used to construct the CPI? A random sample of all goods and services produced in the economy The goods and services that are typically bought by consumers as determined by government surveys Only food, clothing, transportation, entertainment, and education The least expensive and the most expensive goods and services in each major category of consumer expenditures
The goods and services that are typically bought by consumers as determined by government surveys
According to the classical dichotomy, which of the following increases when the money supply increases? The real interest rate The real GDP The real wage The nominal wage
The nominal wage
Which of the following items is the one type of household expenditure that is categorized as investment rather than consumption? Spending on education The purchase of stocks and bonds The purchase of a new house The purchase of durable goods such as stoves and washing machines
The purchase of a new house
Which of the following is included in the calculation of GDP? The purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the country. The purchase of a new edition of a foreign textbook that was produced in a different nation. The purchase of ink and paper supplies by a textbook company for the production of new textbooks. The purchase of a used textbook from a friend who took the same class last year.
The purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the country.
Which of the following statements is correct about the relationship between the nominal interest rate and the real interest rate? The real interest rate is the nominal interest rate times the rate of inflation. The real interest rate is the nominal interest rate minus the rate of inflation. The real interest rate is the nominal interest rate plus the rate of inflation. The real interest rate is the nominal interest rate divided by the rate of inflation.
The real interest rate is the nominal interest rate minus the rate of inflation.
What would happen, all else equal, in the market for loanable funds if the government were to decrease the tax rate on interest income? There would be an increase in the equilibrium quantity of loanable funds. There would be a reduction in the equilibrium quantity of loanable funds. There would be no change in the equilibrium quantity of loanable funds. The change in loanable funds is uncertain.
There would be an increase in the equilibrium quantity of loanable funds.
If real interest rates rose more in Canada than in the United States, then other things the same U.S. citizens would buy more Canadian bonds and Canadians would buy more U.S. bonds. U.S. citizens would buy more Canadian bonds and Canadians would buy fewer U.S. bonds. U.S. citizens would buy fewer Canadian bonds and Canadians would buy fewer U.S. bonds. U.S. citizens would buy fewer Canadian bonds and Canadians would buy more U.S. bonds.
U.S. citizens would buy more Canadian bonds and Canadians would buy fewer U.S. bonds.
If Year 1 is the base year and Year 2 is the following year, then the inflation rate in Year 2 equals [(CPI in Year 2 − CPI in Year 1)/CPI in Year 1] × 100. [(CPI in Year 2 − CPI in Year 1)/CPI in Year 2] × 100. [(CPI in Year 1 − CPI in Year 2)/CPI in Year 1] × 100. [(CPI in Year 1 − CPI in Year 2)/CPI in Year 2] × 100.
[(CPI in Year 2 − CPI in Year 1)/CPI in Year 1] × 100.
The "law of one price" states that a good must sell at the price fixed by law. a good must sell at the same price at all locations. a good cannot sell for a price greater than the legal price ceiling. nominal exchange rates will not vary.
a good must sell at the same price at all locations.
You bought some shares of stock and, over the next year, the price per share increased by 5 percent, as did the price level. Before taxes, you experienced both a nominal gain and a real gain, and you paid taxes on the nominal gain. both a nominal gain and a real gain, and you paid taxes only on the real gain. a nominal gain, but no real gain, and you paid taxes on the nominal gain. a nominal gain, but no real gain, and you paid no taxes on the transaction.
a nominal gain, but no real gain, and you paid taxes on the nominal gain.
You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be a substitute good. an inferior good. a normal good. a complementary good.
a normal good.
Trade between countries allows each country to consume at a point outside its production possibilities frontier. limits a country's ability to produce goods and services on its own. must benefit both countries equally; otherwise, trade is not mutually beneficial. can best be understood by examining the countries' absolute advantages.
allows each country to consume at a point outside its production possibilities frontier.
When Mexico suffered from capital flight in 1994, Mexico's net capital outflow and net exports decreased. and net exports increased. increased while net exports decreased. decreased while net exports increased.
and net exports increased.
When the Fed decreases the discount rate, banks will borrow more from the Fed and lend more to the public. The money supply increases. borrow more from the Fed and lend less to the public. The money supply decreases. borrow less from the Fed and lend more to the public. The money supply increases. borrow less from the Fed and lend less to the public. The money supply decreases.
borrow more from the Fed and lend more to the public. The money supply increases.
Suppose that a large number of people who used to work or seek work no longer do either. Other things the same, this makes the number of people unemployed rise but does not change the labor force. the number of people unemployed rise but makes the labor force fall. both the number of people unemployed and in the labor force fall. the number of people unemployed fall but does not change the labor force.
both the number of people unemployed and in the labor force fall.
Domestic saving must equal domestic investment in both closed and open economies. closed, but not open economies. open, but not closed economies. neither closed nor open economies.
closed, but not open economies.
The most obvious benefit of specialization and trade is that they allow us to work more hours per week than we otherwise would be able to work. consume more goods than we otherwise would be able to consume. spend more money on goods that are beneficial to society, and less money on goods that are harmful to society.
consume more goods than we otherwise would be able to consume.
In the United States, if the price of imported oil rises so that the prices of gasoline and heating oil rise, then the GDP deflator rises much more than does the consumer price index. consumer price index rises much more than does the GDP deflator. GDP deflator and the consumer price index rise by about the same amount. consumer price index rises slightly more than does the GDP deflator.
consumer price index rises much more than does the GDP deflator.
If the Federal Open Market Committee decides to increase the money supply, it creates dollars and uses them to purchase government bonds from the public. sells government bonds from its portfolio to the public. creates dollars and uses them to purchase various types of stocks and bonds from the public. sells various types of stocks and bonds from its portfolio to the public.
creates dollars and uses them to purchase government bonds from the public.
Suppose you like to make, from scratch, pies filled with bananas and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would decrease. increase. be unaffected. change but you don't know how without more information.
decrease.
Other things the same, if reserve requirements are decreased, the reserve ratio increases, the money multiplier increases, and the money supply increases. decreases, the money multiplier increases, and the money supply increases. increases, the money multiplier decreases, and the money supply decreases. decreases, the money multiplier decreases, and the money supply increases.
decreases, the money multiplier increases, and the money supply increases.
Net exports of a country are the value of goods and services imported minus the value of goods and services exported. goods and services exported minus the value of goods and services imported. goods exported minus the value of goods imported. goods imported minus the value of goods exported.
goods and services exported minus the value of goods and services imported.
Gross domestic product includes all legal final goods and services, but it excludes illegal final goods and services. legal and illegal final goods, but it excludes all legal and illegal final services. legal and illegal final goods and all legal and illegal final services. legal and illegal final goods and legal final services, but it excludes illegal final services.
legal final goods and services, but it excludes illegal final goods and services.
If a country has a positive net capital outflow, then on net it is purchasing assets from abroad. This adds to its demand for domestically generated loanable funds. on net it is purchasing assets from abroad. This subtracts from its demand for domestically generated loanable funds. on net other countries are purchasing assets from it. This adds to its demand for domestically generated loanable funds. on net other countries are purchasing assets from it. This subtracts from its demand for domestically generated loanable funds.
on net it is purchasing assets from abroad. This adds to its demand for domestically generated loanable funds.
The use of theory and observation is more difficult in economics than in sciences such as biology due to the difficulty in performing an experiment in an economic system. applying mathematical methods to economic analysis. analyzing available data. formulating theories about economic events.
performing an experiment in an economic system.
Given that Sarah's income exceeds her expenditures, Sarah is best described as a saver or as a supplier of funds. borrower or as a demander of funds. saver or as a demander of funds. borrower or as a supplier of funds.
saver or as a supplier of funds.
A country's trade balance will fall if either investment or saving rise. investment falls or saving rises. saving falls or investment rises. investment or saving fall.
saving falls or investment rises.
If the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied, there is a shortage and the interest rate is below the equilibrium level. surplus and the interest rate is above the equilibrium level. surplus and the interest rate is below the equilibrium level. shortage and the interest rate is above the equilibrium level.
shortage and the interest rate is below the equilibrium level.
A problem that the Fed faces when it attempts to control the money supply is that the 100-percent-reserve banking system in the United States makes it difficult for the Fed to carry out its monetary policy. the Fed has to get the approval of the U.S. Treasury Department whenever it uses any of its monetary policy tools. the Fed does not have a tool that it can use to change the money supply by either a small amount or a large amount. the Fed does not control the amount of money that households choose to hold as deposits in banks.
the Fed does not control the amount of money that households choose to hold as deposits in banks.
The inflation tax refers to the revenue a government creates by printing money. higher inflation which requires more frequent price changes. the idea that, other things the same, an increase in the tax rate raises the inflation rate. taxes being indexed for inflation.
the revenue a government creates by printing money.