econ final
Suppose a house is built and sold in the year 2006. If the house is resold in the year 2017, is the value of the house included in Gross Domestic Product (GDP) for 2017?
A.No. GDP for 2017 includes only production that occurs during 2017.
How does real GDP deal with the problem inflation causes with nominal GDP?
A.Real GDP uses the prices of goods and services in the base year to calculate the value of goods in all other years. B. By keeping prices constant, we know that changes in real GDP represent changes in the quantity of output produced. C. Real GDP separates price changes from quantity changes. D.All of the above.
Which equation represents the relationship between GDP and the four major expenditure components?
A.Y = C + I + G + NX
Gross domestic product (GDP) is
C.the total value of all final goods and services produced for the marketplace during a given period, within a nation's borders
The price index which is used to measure changes in the cost of living is the
D.Consumer Price Index
Would the services of a real estate agent who helped sell (or helped buy) the house be included in GDP for 2017?
D.Yes. GDP for 2017 includes the market value of final goods and services. This includes real estate services.
In a closed economy, national saving equals
a) investment. b) income minus the sum of consumption and government purchases. c) private saving plus public saving. d) All of the above are correct.
Bill, a U.S. citizen, pays a Spanish architect to design a metal casting factory. Which country's exports increase?
a. Spain's
Which of the following is a function of money?
a. a unit of account b. a store of value c. medium of exchange d. All of the above are correct.
Other things the same, an increase in the amount of capital firms wish to purchase would initially shift
a. aggregate demand right.
Other things the same, when the government spends more, the initial effect is that
a. aggregate demand shifts right.
Most economists use the aggregate demand and aggregate supply model primarily to analyze
a. short-run fluctuations in the economy.
Mia puts money into a piggy bank so she can spend it later. What function of money does this illustrate?
a. store of value
Which of the following shifts aggregate demand to the left?
a. the Federal Reserve sells bonds.
The federal funds rate is
a. the interest rate that banks charge each other for overnight loans.
Fiscal policy is determined by
a. the president and Congress and involves changing government spending and taxation.
Which of the following is true about the calculation of the consumer price index?
b) It assumes that consumers purchase the same amount of each product in the market basket each period.
Which of the following would be included in the GDP deflator, but not the Consumer Price?
b) The price of a new computer for the lecture hall at Cal Poly
A nation's standard of living is best measured by its
b) real GDP per person.
Which of the following is likely to increase measured GDP?
c) The BEA starts to track the value of illegal activity.
Investment, as defined by economists in the calculation of GDP, would include the purchase of
c) a new lecture hall at Cal Poly Pomona.
Gross domestic product (GDP) is
c) the total value of all final goods and services produced for the marketplace during a given period, within a nation's borders.
Which of the following is not included in M1?
c. $500 in your savings account
In a closed economy, what does (Y - T - C) represent?
d) private saving
In a closed economy, what does (T - G) represent?
d) public saving
Why does inflation make nominal GDP a poor measure of the increase in total production from one year to the next?
B. When nominal GDP increases from year to year, the increase is due partly to changes in prices and partly to changes in quantities.
What is the base year CPI?
a) 100
Suppose a house was build and sold in the year 2016. If the house is resold in the year 2019, is the value of the house included in Gross Domestic Product (GDP) for 2019?
a) No. GDP for 2019 includes only production that occurs during 2019.
A closed economy
a) does not trade with other economies.
If the tax revenue of the federal government is less than its spending, then the federal government
a) runs a budget deficit
When conducting an open-market purchase, the Fed
a. buys government bonds, and in so doing increases the money supply
Which of the following lists is included in what economists call "money"?
a. cash
When interest rates fall
a. firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding
Money
a. is more efficient than barter. b. makes trades easier. c. allows greater specialization. d. All of the above are correct
The Federal Reserve
a. is responsible for conducting the nation's monetary policy, and it plays a role in regulating bank
You receive money as payment for babysitting your neighbors' children. This best illustrates which function of money?
a. medium of exchange
When the price level falls
a. people want to hold less money. b. the interest rate falls. c. investment spending rises. d. All of the above are correct.
Tax cuts shift aggregate demand
a. right as do increases in government spending
The variables on the vertical and horizontal axes of the aggregate demand and supply graph are
a. the price level and real output
When the Fed buys bonds
a. the supply of money increases and so aggregate demand shifts right.
What do economists mean by the demand for money?
b. It is the amount of money—currency and checking account deposits-that individuals hold
The confidence you have that a retailer will accept dollars in exchange for goods is based primarily on money
b. being a medium of exchange.
Currently, U.S. currency is
b. fiat money with no intrinsic value
Net exports of a country are the value of
b. goods and services exported minus the value of goods and services imported.
Fiat money
b. has no intrinsic value.
The Federal Reserve carries out Open Market Operations and purchases Treasury Bonds. The following will occur:
b. the money supply will rise, interest rates will decrease, consumption & investment will increase, equilibrium output will increase.
Which of the following does the Federal Reserve not do?
c. It makes loans to any qualified business that requests one.
Which of the following is not a central bank?
c. The Bank of America
Any item that people can use to transfer purchasing power from the present to the future is called
c. a store of value.
. If the U.S. has exports of $1.5 trillion and imports of $2.2 trillion, then the U.S
c. buys more from overseas then it sells overseas; it has a trade deficit.
An important function of the U.S. Federal Reserve is to
c. control the supply of money.
A central bank's setting (or altering) of the money supply is known as
c. monetary policy.
Commodity money is
c. money with intrinsic value.
The effect of an increase in the price level on the aggregate-demand curve is represented by a
c. movement to the left along a given aggregate-demand curve
According to the AS-AD model, an increase in the money supply causes
c. prices to rise in the long run.
The aggregate-demand curve
c. shows an inverse relation between the price level and the quantity of all goods and services demanded
The agency responsible for regulating the money supply in the United States is
c. the Federal Reserve.
According to money neutrality theory, changes in the money supply affect
c. the price level, but not real GDP.
The wealth effect, interest-rate effect, and exchange-rate effect are all explanations for
c. the slope of the aggregate-demand curve.
M1 equals currency plus demand deposits plus
c. traveler's checks plus other checkable deposits.
When we measure and record economic value, we use money as the
c. unit of account.
The multiplier effect
d. amplifies the effects of an increase in government expenditures, while the crowding-out effect diminishes the effects.
Which of the following both shift aggregate demand left?
d. an increase in taxes and at a given price level consumers feel less wealthy
Which of the following is not included in M1?
d. credit cards
During a recession the economy experiences
d. falling employment and income
In the context of the aggregate-demand curve, the interest-rate effect refers to the idea that, when the price level increases,
d. households increase their holdings of money; in turn, interest rates increase, which reduces spending on investment goods.
When taxes decrease, consumption
d. increases as shown by a shift of the aggregate demand curve to the right.
Monetary policy and fiscal policy influence
d. output in the short run only.
The aggregate-demand curve shows the
d. quantity of domestically produced goods and services that households, firms, the government, and customers abroad want to buy at each price level.
When conducting an open-market sale, the Fed
d. sells government bonds, and in so doing decreases the money supply.
Monetary policy is determined by
d. the Federal Reserve and involves changing the money supply.
