econ 309 hasan

If currency held by the public equals $100 billion, reserves held by banks equal $50 billion, and bank deposits equal $400 billion, then the money supply equals:

$500 billion.

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $1.50 in 2009. If 4 apples were produced in 2002 and 5 in 2009, whereas 3 oranges were produced in 2002 and 4 in 2009, then real GDP (in 2002 prices) in 2009 was:

$6.50

Assume that total output consists of 4 apples and 6 oranges and that apples cost $1 each and oranges cost $0.50 each. In this case, the value of GDP is:

$7.

If rr is the ratio of reserves to deposits, and cr is the ratio of currency to deposits, then the money multiplier is equal to.

(cr + 1)/ (cr+ rr)

If the nominal interest rate is 3 percent and the inflation rate is 5 percent, the real interest rate is:

-2 percent.

All of the following transactions that took place in 2009 would be included in GDP for 2009 except the purchase of a:

2001 Jeep Cherokee.

If 7 million workers are unemployed, 143 million workers are employed, and the adult population equals 200 million, then the unemployment rate equals approximately ______ percent.

4.7

If the real return on government bonds is 2 percent and the expected rate of inflation is 3 percent, then the cost of holding money is ______ percent.

5

According to the quantity theory of money, a 5 percent increase in money growth increases inflation by ___ percent. According to the Fisher equation, a 5 percent increase in the rate of inflation increases the nominal interest rate by ____ percent.

5; 5

Percentage change in Pis approximately equal to the percentage change in:

M minus the percentage change in Y plus the percentage change in velocity.

Assume that a firm buys all the parts that it puts into an automobile for $10,000, pays its workers $10,000 to fabricate the automobile, and sells the automobile for $22,000. In this case, the value added by the automobile company is:

$12,000.

In the circular flow model, the flow of dollars from firms to households is paid _____, and the flow of dollars from households to firms is paid _____.

as wages, capital income, and profits; for goods and services

The two most important factors of production are:

capital and labor.

In a closed economy, the components of GDP are:

consumption, investment, and government purchases.

The money supply consists of:

currency plus demand deposits.

Nominal GDP means the value of goods and services is measured in ______ prices.

current

If the money supply is held constant, then an increase in the nominal interest rate will ______ the demand for money and ______ the price level.

decrease; increase

According to the definition used by the U.S. Bureau of Labor Statistics, people are considered to be unemployed if they:

do not have a job but have looked for work in the past four weeks.

With a Cobb-Douglas production function, the share of output going to labor:

does not depend on the amount of labor in the economy.

The total income of everyone in the economy is exactly equal to the total:

expenditure on the economy's output of goods and services.

A production function is a mathematical relationship between:

factors of production and the quantity of output produced.

The government purchases component of GDP includes all of the following except:

federal spending on transfer payments.

Assume that a bakery hires more workers and pays them wages and that the workers produce more bread. GDP increases in all of the following cases except when the bread:

grows stale and is thrown away.

National saving refers to:

income minus consumption minus government purchases.

The production function feature called "constant returns to scale" means that if we:

increase capital and labor by 10 percent each, we increase output by 10 percent.

According to the quantity theory of money, if money is growing at a 10 percent rate and real output is growing at a 3 percent rate, but velocity is growing at increasingly faster rates over time as a result of financial innovation, the rate of inflation must be:

increasing

An economy's factors of production and its production function determine the economy's:

output of goods and services.

A competitive, profit-maximizing firm hires labor until the:

price of output multiplied by the marginal product of labor equals the wage.

An increase in the price of imported goods will show up in:

the CPI but not in the GDP deflator.

In the United States, monetary policy is conducted by:

the Federal Reserve.

The CPI is determined by computing:

the price of a fixed basket of goods and services, relative to the price of the same basket in a base year.

Two equivalent ways to view GDP are as

total income of everyone in the economy or the total expenditure on the economy's output of goods and services

The real rental price of capital is the price per unit of capital measured in:

units of output.

The quantity theory of money assumes that:

velocity is constant.

All of the following are considered major functions of money except as a:

way to display wealth.

If the number of employed increases while the number of unemployed does not change, the unemployment rate:

will decrease.

The labor-force participation rate is the percentage of the:

working age population that is in the labor force.

The most frequently used tool of monetary policy is:

open-market operations.

If the GDP deflator in 2009 equals 1.25 and nominal GDP in 2009 equals $15 trillion, what is the value of real GDP in 2009?

$12 trillion

If the consumption function is given by the equation C = 500 + 0.5Y, the production function is Y = 25K0.5L0.5, where K= 100 and L = 100, then C equals:

1,750

If disposable income is 5,000, consumption is 3,000, government purchases is 1,000, and taxes minus transfers are 800, national saving is equal to:

1,800.

Total investment in the United States averages about ______ percent of GDP.

15

The economic statistic used to measure the level of prices is:

CPI

The marginal propensity to consume is:

Expected to be between zero and one.

The statistic economists use to measure the value of economic output is:

GDP

All of the following actions are investments in the sense of the term used by macroeconomists except:

Sandra Santiago's buying 100 shares of Apple stock.

The national income accounts identity for an open economy is:

Y = C + I + G + NX.

Other things equal, an increase in the interest rate leads to:

a decrease in the quantity of investment goods demanded.

When there is a fixed supply of loanable funds, an increase in investment demand results in:

a higher interest rate.

The marginal product of labor is:

additional output produced when one additional unit of labor is added.

In a system with fractional-reserve banking:

all banks must hold reserves equal to a fraction of their deposits.

Real money balances equal the:

amount of money expressed in terms of the quantity of goods and services it can purchase.

According to Goldin and Katz, the increasing income inequality of recent decades is the result of:

an increase in the rate of skill-biased technological advancement and a slowdown in educational advancement.

"Inflation tax" means that:

as the price level rises, the real value of money held by the public decreases.

If the Fed announces that it will raise the money supply in the future but does not change the money supply today,

both the nominal interest rate and the current price level will increase.

Private investment goods as measured in GDP are purchased by:

business firms and households.

To increase the money supply, the Federal Reserve:

buys government bonds.

According to the neoclassical theory of distribution, in an economy described by a Cobb-Douglas production function, workers should experience high rates of real wage growth when:

labor productivity is growing rapidly.

The opportunity cost of holding money is the:

nominal interest rate.