ECON 144 Final

assume we are at the intersection of curve b and curve y. which of the following headlines would cause a shift from curve y to curve x, taking us to point 3?

"US (and World) Sees Massive Drop in Oil Prices"

based on the data in the table (exam 1), what is the value of "I" in GDP?

$10 million

as discussed in lecture, what is the current reserve requirement for a bank that has exactly $100 million in assets? What is it if the bank has $200 million in assets?

$100 million: 3%; $200 million: 10%

based on the data from in the table (exam 1), what is the value of the "G" in GDP?

$11 million

based on the data in the table (exam 1), what is the value of NX?

-$2 million

assume that full employment output is $20 trillion, and current GDP is $17.5 trillion. if the government believes they can successfully fill the gap between those two with an initial injection of $500 billion of spending, what is the value that they believe the MPC is?

0.8

As discussed in class, list 4 ways the CPI differs from the GDP deflator

1. they have different formulas 2. they are calculated by different groups 3. they have different base years 4. CPI only cares about price of objects, not the amount sold

if the nominal interest rate on a mortgage is 4.2%, and inflation is the currently annual measure of inflation as reported in the CPI, what is the real interest rate on the same mortgage?

1.7%

Assuming 2013 is the base year (exam 2), which comes closest to the value of the GDP deflator for 2014?

102.9

the value of the GDP deflator in 2014 comes closest to...

108.8

as discussed in class, what is the actual current value for the GDP deflator?

112.2

if the unemployment rate were calculated for this population (on exam 2) using the BLS' standard approach (U3) it would come closest to...

16%

if the value of GDP deflator in 2015 is exactly 110.7, and the value of nominal GDP in 2015 is 19.7 trillion, what is the value of real GDP in 2015?

17.8 trillion

if U6 we calculated for this population (in exam 2) using the BLS' standard approach, how many people would be in the same numerator of U6?

2

What was the value of real GDP in 2014 (based off of the table on exam 2)?

324,000

what was the name of the index, discussed in lecture, created by Dr. Alberto Cavallo from MIT that tracks changes in 5 million online prices every day?

Billion Prices Project

what is the name of the organization that calculate GDP and what is the year that is currently used as the base year when calculating real GDP and the GDP deflator

Bureau of Economic Analysis; 2009

as discussed in class and in the textbook, the entity that calculates the CPI is the ____, while the entity that determines the beginning and ends of business cycles is____

Bureau of Labor Statistics; National Bureau of Economic Research

as discussed in the text and in lecture, if aggregate expenditure (AE) is different from GDP it is primarily because of ___ and, specifically, because of ___

I; changes to inventories

keep in mind the formula for the multiplier as you answer this question: assumed that an initial injection of $750 billion dollars into the economy ultimately increased GDP from $17 trillion to $20 trillion. For this to happen, what would the value of MPC have to be? what would the value of the multiplier be?

MPC: 0.75; Multiplier: 4

assume that prices in all other countries are increasing, while prices of goods in the US are not. based on your discussion of AE in chapter 12 this would cause...

NX to increase; which ultimately move AD to the right

in class you were asked to memorize the four largest components (in terms of weight) in the CPI market basket. Which of the following was not one of those 4 largest components?

Recreation

the graph depicts the concept of "diminishing marginal returns" (or "diminishing marginal productivity", all the same thing). Consider these two statements regarding the concept of diminishing returns... 1. all inputs are variables 2. at least one input is fixed which of the following is more accurate?

only at least one input being fixed is a part of the description of diminishing returns

consider these two statements: 1. in reality, the fed often changes the reserve requirement if it wants to adjust the money supply 2. in reality, the fed often buys/sells government bonds if it wants to adjust the money supply which of the following is most accurate

only the fed often buys/sells government bonds if it wants to adjust the money supply

consider these three statements regarding "Quantitative Easing" that we discussed in class: 1. if the interest rate on long term bonds decreases, other long term interest rates will decrease as well 2. if the price of long term bonds decreases, the interest rate on long term bonds will decrease as well 3. the fed's goal was to reduce the prices of long term bonds which is most accurate?

only the interest rate on long term bonds decreasing causing other long term interest rates to decrease as well is correct

consider these three purchases that take place in 2016: 1. a house sold in Overland Park, Kansas that was originally built and sold in 1992. 2. the highway patrol for the state of Kansas purchases 100 brand new cars for its officers 3. a newlywed couple in Kansas City purchases a new, custom-built bed from Unruh Furniture (a local company)

only the new cars and custom-built bed would be included in 2016 GDP, but only the custom-built bed would be part of "durable goods"

you are looking at the market for diet coke. Consider these two things happening separately: 1. the price of diet coke decreases 2. the incomes of buyers of diet coke increase, and diet coke is a normal good

only the price of diet coke decreasing would cause the demand curve for diet coke to shift left

consider the following two statements: 1. the value of leisure is not included in GDP 2. the purchase of financial assets, such as stocks and bonds, is not included in GDP which is correct?

only the value of leisure is not included in GDP was listed in the textbook as a "Shortcoming of GDP as a Measure of Well-Being"

Consider the graph above, shown in lecture, found throughout chapter 11, of the "per worker production function". What is depicted on the vertical axis of this graph?

output (or real GDP) per hour worked

as discussed in class, what is the current value of Real GDP for the US right now (be sure to indicate thousands, millions, billions, or trillions) and also, as discussed in class, what is the rate at which the US economy is currently growing?

real GDP: $16.8 trillion; currently growing at 1.9%

as discussed in your text and in lecture, what is the term for taking a bunch of financial assets like mortgages and bundling them together to create a new investment instrument?

securitization

Richard was fired 2 months ago from his job as an architect because he refuses to use a computer and architectural software to do his designs and blueprints; he insists on creating all his designs and blueprints using paper and pencil. That is the specific reason that the design firm fired him. Richard's situation would be best characterized as...

structural unemployment

as discussed in the text, sometime the CPI market basket contains one good, such as a ticket t a movie in a theatre, and an increase in the price of the movie ticket causes people to shift their purchases to something else instead, like streaming a movie on Netflix (and the Netflix streaming is not part of the market basket). This is called ___ and it means that the CPI may ___ how price changes affect consumers

substitution bias; overstate

you are looking at the market for apple pies. you see that the price of apples (which is obviously an input to apple pies) has increased significantly. In the market for apple pies we see...

supply shift left, producing a lower equilibrium quantity and a higher equilibrium price

in chapter 12 we examined the factors that affect the different parts of Aggregate Expenditure (AE). which of the following is correct as we learned in chapter 12?

taxes affected the "planned investment" part of AE but not the "Net Exports" part

which of the following would not shift SRAS to the left?

technology advances significantly and quickly

Assuming 2013 is the base year (exam 2), and assuming the CPI market basket contains exactly one of each good or service in the table, which of the following is a correct statement? Based on the data on the table (exam 2)...

the GDP deflator showed a much larger cumulative price increased than the CPI showed for the years 2013-2015 (a difference greater than 4.00)

if you believe you can successfully fill a gap between current GDP of $17.6 trillion and potential GDP of $20 trillion of EITHER a tax cut of $800 billion or an injection of government spending of $600 billion you must believe that

the MPC is 0.75

in the country of Brianlandia there are 78 million people currently working; this includes people working both fulltime and part-time. There are 4 million people who are not working but have looked for a job in the past 4 weeks. There are 58 million people who are 16 years old or older, are not working, have not looked in the past 4 weeks, are not in the hospital, are not in prison, and are not in the military. Which of the following is correct?

the U3 in Brianlandia is identical or nearly identical to the current value of U3 for the United states (within 0.5% in either direction)

this is the market for loanable funds. Which of the following is not part of the graph?

the amount of net exports that makes up (X-M) in GDP

consider the following three statements: 1. reducing taxes is one example of monetary policy 2. monetary policy decisions made by the Federal Reserve must be approved by Congress 3. The Chairman (or Chairwoman) of the Federal Reserve must be approved by the Senate Which statement below is most accurate?

the chairman (or chairwoman) of the Federal Reserve must be approved by the Senate

in the market for loanable funds, if there is a decrease in corporate taxes we would we...

the demand for loanable funds shift right, producing a higher interest rate

consider the following two phenomena: 1. the dollar gets stronger compared to other currencies 2. (X-M) decreases because M increases as discussed in lecture, which of the following is most accurate if interest rates rise in the US (compared to interest in other countries)?

the dollar gets stronger compared to other currencies

as discussed in lecture, if unemployment is being caused by the existence of a minimum wage it must be that...

the minimum wage is above the "market" wage (or "going" wage, same thing)

the difference between a nominal and a real interest rate is...

the nominal rate equals the real rate plus the interest rate is...

assume the current number of "discouraged workers" in the US in February (according to the BLS) is 6 million. assume in March that 1 million of these "discouraged workers" start looking for a job. they do not find a job, but they start looking. which of the following is correct assuming nothing else changes?

the numerator of U6 will be unchanged between February and March

as discussed in lecture, which of the following parts of US debt is the largest?

the portion of the debt that we owe to individual investors (like Dr. Staihr)

what is the term, discussed in your textbook, for government payments such as unemployment checks and social security payments for which the government receives no goods or services in return?

transfer payments

assume we are sitting at point 3, where unemployment is 5% and GDP is $18 trillion. which of the following is most likely an accurate description of point 2 in the graph above?

unemployment is 8% and GDP is 16 trillion or unemployment is 6% and GDP is 17 trillion

you are looking at the AD/SRAS/LRAS model and AD and SRAS are currently intersecting to the right of LRAS. now, you open up the paper and read that real wages (labor costs) are declining. which of the following is most accurate regarding what you could expect to see on the graph as a result of this?

unemployment was at 4% and it decreases to 3.5%

in the spaces below, write down any 4 of the 5 components of GDP when it is calculated using the "income" approached that we discussed in class and was discussed in the textbook:

wages, interest, rent, and profit

which of the following will not result in a lower equilibrium price in the market you're looking at?

you're looking at the market for motorcycle helmets and the price of motorcycles decreases

in the Quantity Theory of Money, what exactly does "PY" represent?

nominal GDP

assume that GDP is 6% below where we want it to be, and inflation is 2% above where we want it to be. also assume current inflation is 1% and the real Fed Funds Rate is 1%. according to the Taylor Rule, if the weights on the output gap and inflation gap are each 0.5, what should the nominal Fed Funds Rate be set at?

none of the above

consider the following: 1. the exchange rate 2. the unemployment rate 3. the price level which of the following is correct? as discussed in chapter 12...

none of the above

on March 15th, the Federal Reserve's Federal Open Market Committee voted to do what?

none of the above

regarding the Quantity Theory of Money that we discussed in class, if real GDP is $12 trillion and the price level is "2" and the money supply is 8 trillion what must the value of velocity be?

none of the above

suppose a tax cut successfully close the gap between "current" GDP of $16.3 trillion and "potential" GDP of $19 trillion. if the MPC = 0.75 how much was the original tax cut?

none of the above

this past month the Federal Reserve made a decision (and an announcement) that we discussed extensively in class. knowing what you know from lecture and the text, how would that show up on the graph above?

none of the above

consider the following 2 item: 1. A Ford F-150 pick-up truck made and sold in Mexico (Ford is a US company) 2. A Mitsubishi Mirage made and sold in Alabama (Mitsubishi is a Japanese company) which of the following is correct?

none of the above is correct

consider these three statements: 1. the current level of Federal debt is approximately $20 trillion 2. the current level of Federal debt is too high 3. the current level of Federal debt should be lowered through a government austerity program which is correct?

none of these statements are correct

consider the following: GDP is the market fo value of all goods and services produced in a country during a given period of time As discussed in class, is this definition accurate and if it's not, what's wrong with it?

not accurate; it is the market value of all FINAl goods

consider these three statements: 1. fiscal policy is enacted by the Federal Reserve 2. one example of fiscal policy would be a reduction in taxes 3. one example of fiscal policy would be raising interest rates which is most accurate?

one example of fiscal policy would be a reduction in taxes

consider the following purchases: 1. a new Toyota Prius is built and sold in Alabama in 2016 (Toyota is a Japanese company) 2. a new Ford Figo is built and sold in India in 2016 (Ford is a US company)

only a new Toyota Prius would be included in a calculation of US GDP for 2016

as discussed in lecture, what is the current value of M2?

$13.35 trillion

assume the current reserve requirement is 10%. also assume people keep 15% out as currency. assume a $30,000 initial deposit is made into a bank. if the bank loans out all that it can, and all loans are re-deposited into the same bank, taking into account what people keep out as currency, which of the following comes closest to the total amount of deposits -- including the initial deposit -- once the money has worked its way entirely through the system?

$138,000

assume the current reserve requirement is 6%. also assume people keep 20% out as currency. assume a $40,000 initial deposit is made into a bank. if the bank loans out all that it can, and all loans are re-deposited into the same bank, taking into account what people keep out as currency, which of the following comes closest to the total amount of deposits -- including the initial deposit -- once the money has worked its way entirely through the system?

$184,000

based only on the data in the table (exam 3), if we calculate M1 as we learned in lecture, what is the value of M1?

$209 million

based only on the data in the table (exam 3), if we calculate M2 as we learned in lecture, what is the value of M2?

$356 million

in the country of Brianlandia there are 78 million people currently working; this includes people working both fulltime and part-time. There are 4 million people who are not working but have looked for a job in the past 4 weeks. There are 58 million people who are 16 years old or older, are not working, have not looked in the past 4 weeks, are not in the hospital, are not in prison, and are not in the military. If Brianlandia calculated U3 exactly as the BLS does for the United States which of the following comes closest to the value of U3 in Brianlandia?

4.9%

nominal GDP in 2013 is...

400,000

real GDP in 2014 is...

405,200

nominal GDP in 2014 is...

441,000

if the labor force participation rate were calculated for this population (on exam 2) using the BLS' standard approach it would be come closest to...

60-65%

calculate the GDP deflator for 2015 and tell me, in percentage, how much prices have increased from the base year

GDP deflator: 116.83; price have increased: 16.83

consider these three statements: 1. M1 gets bigger 2. M2 gets bigger 3. M2 stays the same assume you take $1000 out of your savings account and keep it as currency. which of the following is most accurate regarding how this will affect the monetary aggregates we discussed in class?

M1 will get bigger and M2 will stay the same; but M2 will not get bigger

you are looking at the market for smartphones. Consider these 2 things happening at the same time: 1. the technology used to produce smartphones improves significantly 2. the incomes of buyers of smart phones increases, and smartphones are a normal good After any and all curve has shifted, what happens to the market?

a higher equilibrium quantity, and we cannot say about equilibrium price

this is the market for loanable funds. if Congress votes to increase the corporate tax rate which would we see?

a left shift in the supply curve

which of the following could cause a shift from curve #3 to curve #4 (exam 1)?

a reduction in the price of the demand substitute

which of the following could cause a shift from curve #1 to curve #2 (exam 1)?

a reduction in the price of the input

the opposite of government budget deficit is a government budget surplus. if the government DID run a budget surplus which would we see?

a right shift in the supply curve

which of the following is correct based on our discussion of the Federal government's budget in lecture? on the revenue side (money flowing in to the government)...

actually neither options are correct

you are looking at the AD/SRAS curves and they are intersecting to the left of LRAS. which of the following would cause a shift in AD in such a way as to move the intersection closer to LRAS?

all of the above

in our discussion of the Philips Curve which of these cause the short-run Phillips Curve to shift upward?

an increase in expected inflation

consider these three statements: 1. signed into law by President Bush 2. approximately $840 billion 3. included both tax cuts and government spending

approximately $840 billion and included both tax cuts and government spending describe ARRA; signed into law by President Bush describes TARP

assuming 2013 is the base year, and assuming the CPI market basket contains exactly one of each good or service in the table, which comes closest to the value of the CPI in 2015 (exam 2)?

approximately 112.3

according to the textbook, economists estimate the size of the US "underground economy" to be...

at most, 10% of GDP

Consider the following two statements regarding the business cycle: 1. if we're in a recession we know prices are falling 2. if we're in an expansion we know unemployment is declining Which is most accurate?

both statements are incorrect

if buyers of jet skis expect the price to decrease in the future we will see ____ today, and if sellers of set skis also expect the price to decrease in the future we will see ____ today

demand shift left; supply shift right

you are looking at the market for tortilla chips. two things happen at the same time: the price of corn, an input to tortilla chips, decreases. and also the price of salsa, a complement to tortilla chips, decreases. in the market for tortilla chips we will see:

demand shift right, supply shift right, a higher equilibrium quantity and we cannot say about equilibrium price

products a and b are complements on the demand side. if the price for product A decreases what will we see in the market for product b?

demand shifting right which is an increase in quantity demanded

which of the following is not a component of "I" in GDP?

durable goods

assume the MPC= 0.75. which of the following is correct? an initial injection of $500 billion into the economy, after it "ripples" through, ultimately will increase overall output...

from $18 trillion to $20 trillion

in class you learned three names for the vertical line on the graph above. in the spaces below, tell me those three names

full employment output, long regestered aggregated spenditure, potential gpd

the US dollar becomes weaker compared to all other majors currencies in the world. on an SRAS/AD/LRAS graph we would see (as a result)...

higher price levels and a rightward shift in AD

following directly from above, Richard has been looking for a new job every single day since he was fired. He has never missed a day looking. In a normal calculation of U6 by the BLS Richard would be...

included in both the numerator and the denominator

as discussed in lecture, the basic idea behind supply side economics is that lowering the taxes on an activity will do what?

increase the amount people do/use said activity

throughout 2008 and 2009 the Federal Reserve spent billions of dollars buying bonds. the goal of this actions was to ____ which would have the effect of ____ ultimately producing a ___ level of output

increasing the money supply; pushing AD to the right; higher

which of the following was not listed in the book and in lecture are one of the answers to the question "why don't more low-income countries experience rapid growth?" (or, as Brian puts it, "why isn't the whole world rich?")

insufficient natural resources

based on the data from the table (exam 1), what is the largest component of "C"?

it's a trick question, services and durable goods are the same in the table