ECON FINAL EXAM

Labor market variable In January, 2018 ​(thousands) Civilian population over 16: 256,780 Employment: 154,430 Unemployment: 6,684 In​, January, 2018​, the unemployment rate in the United States was ____percent.

4

Suppose an increase in the monetary base of ​$2​00,000 increases the quantity of money by ​$800,000. Calculate the money multiplier. The money multiplier is ____

4

The graph shows an economy that has no taxes or imports. AD0 is the aggregate demand curve when investment is​ $1.0 ​ trillion, and AD1 is the aggregate demand curve when investment is​ $1.5 trillion. What is the size of the multiplier in the short​ run? The size of the multiplier in the short run is ____

4

The table provides information about the money wage rate and the CPI in the United States for the past five years. Nominal Wage Rate and the CPI Month-year Wage rate CPI ​(dollars per​ hour) (1982-1984 =​ 100) Dec-2013 28.06 234.7 Dec-2014 28.86 236.3 Dec-2015 29.75 237.8 Dec-2016 29.74 242.8 Dec-2017 30.74 248.0 In December 2017​, the nominal wage rate was__ In December 2017​, the CPI was ___ ​ In December 2017​, the real wage rate was ​____

$30.74 per hour 248.0 $12.40 per hour.

When the Fed buys securities from a​ bank, a sequence of events begins. The events are listed below. Number each event in the order in which it occurs.

1. Banks have excess reserves 2. Banks lend excess reserves. 3. The quantity of money increases. 4.New money is used to make payments 5.Some of the new money remains on deposit 6.Some of the new money is a currency drain 7.Desired reserves increase because deposits have increased. 8. Excess reserves decrease.

The CPI in 2001 was 177.1. The CPI in 2002 was 179.9. The inflation rate in 2002 was __percent.

1.6 %

The table shows the quantities of the components of M1 and M2 in December 2017. Amount ​ (billions of dollars​) Money market funds 704.2 Small time deposits 405.9 Savings deposits 9,123.0 Checkable deposits 2,070.7 Currency and​ traveler's checks 1,529.3 In December 2017​, M1 was ​$________ In December 2017​, M2 was ​$_______

3600 billion. 13833.1 billion.

The bank plans to hold ​$6 for every​ $100 in deposits. The bank holds excess reserves of ​$13,000 and desired reserves of ​$8,000. What is the​ bank's desired reserve ratio and its actual reserves​? The​ bank's desired reserve ratio is ____percent. The banks actual reserves are _____

6 $21,000

Rahul​ Reddy, an Indian real estate​ entrepreneur, believes that​ "The United States is good for speculative​ higher-risk investment." He profited from earlier investment in Australia and a strong Australian dollar provided him with the funds to enter the U.S. real estate market at prices that he believed​ "we will probably not see for a long​ time." He​ said, "The United States is an economic powerhouse that I think will​ recover, and if the exchange rate goes back to what it was a few years​ ago, we will​ benefit." Read the news​ clip, then answer the following question. Mr. Reddy is investing in the U.S. real estate market because​ ______. A.the supply of U.S. dollars and the demand for U.S. dollars both increased B.the U.S. dollar depreciated and the price of U.S. investment properties to foreign investors like Mr. Reddy decreased C.the U.S. dollar appreciated and the price of U.S. investment properties to foreign investors like Mr. Reddy decreased D.the supply of U.S. dollars and the demand for U.S. dollars both decreased

B. the U.S. dollar depreciated and the price of U.S. investment properties to foreign investors like Mr. Reddy decreased

Economic growth is​ _______. A.the return to full employment in an expansion phase of the business cycle B.the expansion of production possibilities C.the annual percentage change in labor productivity D.the annual percentage change in the quantity of money

B. the expansion of production possibilities

The two broad sources of potential GDP growth are growth of​ ______ and growth of​ ______. A.exports; imports B.the supply of​ labor; labor productivity C.government; the private sector D.corporations; private firms

B.the supply of​ labor; labor productivity

Choose the statement about the Consumer Price Index that is incorrect. A.The CPI is measured by the Bureau of Labor Statistics. B.The CPI is calculated monthly. C.The CPI is defined to equal 1.00 for a period called the reference base period. D.The CPI is a measure of the average of the prices paid by urban consumers for a fixed basket of consumer goods and services.

C. The CPI is defined to equal 1.00 for a period called the reference base period.

A mortgage is​ _______. A.a legal contract that gives the lender claim to the​ homeowner's income until the home loan is paid in full B.a​ short-term loan C.a legal contract that gives ownership of a home to the lender in the event that the borrower fails to meet the agreed loan payments​ (repayments and​ interest) D.any loan that is available at a​ sub-prime rate

C.a legal contract that gives ownership of a home to the lender in the event that the borrower fails to meet the agreed loan payments​ (repayments and​ interest)

Over​ time, on average the demand for loanable funds​ ______, so the real interest rate​ ______. A.increases at a faster pace than the supply of loanable funds​ increases; trends upward B.increases at a slower pace than the supply of loanable funds​ increases; trends downward C.and the supply of loanable funds increase at a similar​ pace; has no trend D.increases and the supply of loanable funds​ decreases; trends upward

C.and the supply of loanable funds increase at a similar​ pace; has no trend

At arrow​ 2, the economy is in​ ______ full-employment equilibrium and the intersection of the AD and SAS curves is to the​ ______ of the LAS curve. A.a​ below; right B.an​ above; left C.an​ above; right D.a​ below; left

C.an​ above; right

The marginal propensity to consume is equal to​ ______, and the marginal propensity to save is equal to​ ______. A.DeltaC/by Upper DeltaY​; Upper DeltaS divided by Upper DeltaY B.1; 0 C.​0; 1 D. Upper DeltaC divided by Upper DeltaYD​; Upper DeltaS divided by Upper DeltaYD

D. DeltaC/Upper DeltaYD​;DeltaS/DeltaYD

Changes in consumption spending play a large role in the business cycle because​ _______ accounts for approximately​ ______ percent of GDP. A.U.S. consumer purchases of net​ exports; 70 B.U.S. consumer purchases of net​ exports; 50 C.consumption​ expenditure; 90 D.consumption​ expenditure; 70

D.consumption​ expenditure; 70

Everything else remaining the​ same, an increase in aggregate demand increases​ ______. A.short-run aggregate supply B.long-run aggregate supply C.potential GDP D.the quantity of real GDP supplied

D.the quantity of real GDP supplied

The graph shows an economy in​ long-run equilibrium. The world economy goes into an​ expansion, U.S. businesses expect future profits to​ rise, and the government increases its expenditure on goods and services in a time of war or increased international tension. Draw one new curve that shows the combined effect of the three events. Label it. Draw a point at the new​ short-run macroeconomic equilibrium.

Look at picture on phone

The graph shows the U.S. economy at full employment when potential GDP is​ $12.0 trillion. Draw a curve that shows the effect of a fall in consumption expenditure. Label it. Draw a point at the new​ short-run equilibrium real GDP and price level. Draw a horizontal arrow at the equilibrium price that shows the output gap that arises.

Look at picture on phone

The graph shows the aggregate demand curve and the​ short-run aggregate supply curve in the Indian economy. Draw a curve that shows the effect of inflation expectations in​ India's economy. Label it. Show the new​ short-run macroeconomic equilibrium

Look at picture on phone

Using PPP​ prices, China's standard of living in 2010 is ​

$11000

The graph to the right shows the data on the differences between various unemployment rate measures. The graph to the right shows the data on the differences between various unemployment rate measures. Match each variable with its correct description. The variable U6-U5 U3-U1 U5-U3 U4-U3

"economic part-time workers" "unemployed for less than 15 weeks" "all marginally attached workers" "discouraged workers" See picture on phone

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In an​ economy, when disposable income increases from​ $400 to​ $500, consumption expenditure increases from ​$420 billion to ​$500. What is the marginal propensity to​ consume, the change in​ saving, and the marginal propensity to​ save?

--

Using PPP​ prices, China's ranks as the​ world's number__economy in 2010.

1

The table shows the quantities of​ M1, M2, and the monetary base in December 2017. Amount December 2017 ​ (billions of​ dollars) M1 3,600.0 M2 13,833.1 Monetary base 3,115.6 What are the values of the M1 money multiplier and the M2 money multiplier in December 2017​? The M1 money multiplier is ____ The M2 money multiplier is ____

1.2 4.4

The table provides information about the nominal interest rate and the CPI inflation rate in the United States for the past five months. Nominal Interest Rate and the CPI Inflation Rate ​ Month, Year Nominal CPI interest rate inflation rate ​ (percent per​ year) (percent per​ year) Oct 2017 3.60 2.23 Nov 2017 3.57 2.03 Dec 2017 3.51 2.20 Jan 2018 3.55 2.11 Feb 2018 3.82 2.14 In February 2018​, the real interest rate was ____percent. Between October 2017 and February 2018​, the real interest rate____

1.68 increased

In Canada​, the currency drain ratio is 11 percent of deposits and the reserve ratio is 0.03 percent of deposits. The Canadian money multiplier is _____. In​ Australia, the quantity of M1 is​ $150 billion, the currency drain ratio is 33 percent of deposits and the reserve ratio is 8 percent. The monetary base in Australia is ​$__million.

10.06 46.24

Labor market variable In January, 2018 ​(thousands) Civilian population over 16: 256,780 Employment: 154,430 Unemployment: 6,684 In​, January comma January, 2018​, the labor force participation rate in the United States was ____ percent.

62.7

The unemployment rate peaked​ ______ after the 2001 recession. During the​ 2002-2008 recession, the unemployment rate reached its lowest point at the beginning of​ ______. A. 18​ months; 2007 B. 48​ months; 2006 C. 2​ months; 2004 D. 36​ months; 2005

A. 18​ months; 2007

U.S. Workers​ World's Most Productive Americans work longer hours than those in most other rich nations. Americans also produce more per person during the​ year, but only part of the U.S. productivity growth can be explained by the longer hours Americans work. Americans also create more wealth per hour of work. U.S. employees worked an average of​ 1,804 hours in​ 2006, compared to​ 1,564.4 for the​ French, but far less than the​ 2,200 hours that Asians worked. But the Asian countries the average labor productivity is lower. Read the news​ clip, then answer the following questions. The article defines productivity as​ ______. Real GDP per person is​ ______. . A.GDP divided by the number of people​ employed; real GDP divided by the population B.real GDP divided by the​ population; the quantity of real GDP produced by an hour of labor C.the quantity of real GDP produced by an hour of​ labor; real GDP divided by the population D.real GDP divided by the​ population; GDP divided by the number of people employed

A. GDP divided by the number of people​ employed;real GDP divided by the population

Choose the statement that is incorrect. A. The U.S. government cannot create jobs. Jobs are created by the private sector. B. To create more​ jobs, the U.S. government can offer retraining to unemployed workers who do not possess the​ high-tech skills required in​ today's labor force. This will address structural unemployment C. To create more​ jobs, the U.S. government can increase spending and make money available to firms to be used in job creation. This will address cyclical unemployment D. To create more​ jobs, the U.S. government can encourage students to follow a plan of study that will lead them to jobs in sectors of the economy where employment is available. This will address frictional unemployment

A. The U.S. government cannot create jobs. Jobs are created by the private sector.

Growth rates are calculated in a similar manner for all variables. Real GDP growth rate​ = [(Real GDP in​ ______ year-Real GDP in​ ______ ​year) divided by Real GDP in​ ______ year ​] x100. A.​current; previous; previous B.​previous; current; current C.current; previous; current D.previous; current; previous

A. current; previous; previous

The Rule of 70 states that the number of years it takes for the level of any variable to​ ______ is approximately​ ______. A.double; 70 divided by the annual percentage growth rate of the variable B.increase by a factor of​ 70; 1/70 multiplied by the annual percentage growth rate of the variable C.double; 70 multiplied by the annual percentage growth rate of the variable D.increase by a factor of​ 70; 70 divided by the annual percentage growth rate of the variable

A. double; 70 divided by the annual percentage growth rate of the variable

Choose the statement that is incorrect. Older unemployed workers might become marginally attached workers or discouraged workers during a recession because​ _______. A. given their long employment​ history, they are eligible for longer periods of unemployment benefits B. they take about five weeks longer than younger unemployed workers to find a job C. they often lack the skills to craft resumes and cover letters D. they take a longer time than younger unemployed workers to​ "transition" to a new job

A. given their long employment​ history, they are eligible for longer periods of unemployment benefits

A​ Half-Year of Job Losses Employers trimmed jobs in June for the sixth straight​ month, with the total for the first six months at​ 438,000 jobs lost by the U.S. economy. The job losses in June were concentrated in manufacturing and​ construction, two sectors that have been badly battered in the recession. According to the news​ clip, the main source of increased unemployment might be​ ______, and the main type of increased unemployment is​ ______. A. losses in manufacturing and construction​ jobs; cyclical B.losses in manufacturing and construction​ jobs; structural C.people entering the labor force to look for​ work; frictional D.people entering the labor force to look for​ work; structural

A. losses in manufacturing and construction​ jobs; cyclical

CPI​ = ______. A.(Cost of CPI basket at​ current-period prices divided by Cost of CPI basket at​ base-period ​prices) times 100 B.[(Cost of CPI basket at​ base-period pricesminusCost of CPI basket at​ current-period ​prices) divided by Cost of CPI basket at​ current-period ​prices] times 100 C.​(Cost of CPI basket at​ base-period prices divided by Cost of CPI basket at​ current-period ​prices) times 100 D.[(Cost of CPI basket at​ current-period pricesminusCost of CPI basket at​ base-period ​prices) divided by Cost of CPI basket at​ current-period ​prices] times 100

A. ​(Cost of CPI basket at​ current-period prices divided by Cost of CPI basket at​ base-period ​prices) times 100

If real GDP per person doubles in 20​ years, then the annual growth rate of real GDP per person is​ ______ percent a year. A.3.5 B.28.5 C.14.0 D.14.3

A.3.5

In 2013 and in​ 2014, consumers in Dexter consumed only books and pens. The prices and quantities for 2013 and 2014 are listed in the table. 2013 2014 Item Price Quantity Price Quantity Books ​$7 3 $6 8 Pens $5 4 $4 10 The reference base period for​ Dexter's CPI is 2013 and 2013 is also the year of the Consumer Expenditure Survey. The CPI in 2014 is​ ______. A.82.9 B.120.6 C.100.0 D.34.0

A.82.9

The table shows the quantities of​ M1, M2, and their components in December 2017. Measures and Components of Money in December 2017 Amount December 2017 ​(billions of​ dollars) M2 13,833.1 Money market funds 704.2 Small time deposits 405.9 Savings deposits 9,123.0 M1 3,600.0 Checkable deposits 2,070.7 Currency and​ traveler's checks 1,529.3 What is the largest component of​ M1? A.Checkable deposits B.Small time deposits C.Savings deposits D.Currency and​ traveler's checks What is the largest component of​ M2? A.Savings deposits B.Money market funds C.Small time deposits D.Checkable deposits

A.Checkable deposits A.Savings deposits

Choose the statement that is incorrect. A.Comparisons of real GDP between countries are most accurate when we use market prices. B.Using PPP prices calculates real GDP using the same prices for all countries. C.Market prices vary between countries. D.Using market prices calculates real GDP using prices that prevail in each country.

A.Comparisons of real GDP between countries are most accurate when we use market prices.

Choose the statement that is incorrect. A.The core PCE is a broader measure than the CPI that attempts to overcome biases by placing extra emphasis on food and​ fuel, two goods which are large components of household expenditure. B.The GDP deflator is a chained measure that attempts to overcome biases because it is a broader measure than the CPI and includes all goods and services that are counted as part of GDP. C.The chained CPI overcomes substitution and new goods bias by using current and previous period quantities. D.The personal consumption expenditure deflator is a chained measure that attempts to overcome biases because it is broader than the CPI and includes all consumption expenditure.

A.The core PCE is a broader measure than the CPI that attempts to overcome biases by placing extra emphasis on food and​ fuel, two goods which are large components of household expenditure.

Choose the statement about the Fed that is incorrect. A.The policy decisions of the Federal Open Market Committee are implemented each month by a different Federal Reserve Bank. B.The main​ policy-making organ of the Federal Reserve System is the Federal Open Market Committee. C.The Board of Governors has seven​ members, who each serve a​ 14-year term. D.There are 12 Federal Reserve banks and 12 Federal Reserve districts.

A.The policy decisions of the Federal Open Market Committee are implemented each month by a different Federal Reserve Bank.

Suppose that Sara withdraws​ $1,000 from her savings account at the Lucky​ S&L, keeps​ $50 in​ cash, and deposits the balance in her checking account at the Bank of Illinois. The immediate change is​ ______ in M1 of​ $1,000 and​ ______ in M2. A.an​ increase; no change B.a​ decrease; a decrease C.a​ decrease; no change D.an​ increase; an increase

A.an​ increase; no change

The multiplier is the amount by which a change in​ ______ expenditure is magnified or multiplied to determine​ ______. A.autonomous; the change in equilibrium expenditure and real GDP B.autonomous; the change in investment C.consumption; the change in investment D.​consumption; the change in equilibrium expenditure and real GDP

A.autonomous; the change in equilibrium expenditure and real GDP

An increase in potential GDP increases​ ______. A.both​ long-run aggregate supply and​ short-run aggregate supply B.the price level C.the money wage rate D.​long-run aggregate supply but does not increase​ short-run aggregate supply unless technology advances

A.both​ long-run aggregate supply and​ short-run aggregate supply

If the interest rate is 5​ percent, people will​ ______. A.buy​ bonds, bid up their​ price, and the interest rate will fall B.buy​ bonds, bid up their​ price, and the interest rate will rise C.sell​ bonds, lower their​ price, and the interest rate will rise D.sell​ bonds, lower their​ price, and the interest rate will fall

A.buy​ bonds, bid up their​ price, and the interest rate will fall

Aggregate demand increases if fiscal policy​ ______ taxes or​ ______ transfer payments. A.decreases​; increases B.increases​; decreases C.increases​; increases D.decreases​; decreases

A.decreases​; increases

Aggregate demand increases if the exchange rate​ ______ or foreign income ​______. A.decreases​; increases B.increases​; increases C.increases​; decreases D.decreases​; decreases

A.decreases​; increases

When the interest rate falls​, other things remaining the​ same, the opportunity cost of holding money​ ______ and​ ______. A.falls​; the quantity of money demanded increases B.rises​; the demand for money decreases C.falls​; the demand for money increases D.rises​; the quantity of money demanded decreases

A.falls​; the quantity of money demanded increases

A crawling peg exchange rate policy is one that​ _______. A.follows a path determined by a decision of the government or the central bank and is achieved by central bank intervention in the foreign exchange market B.is determined by demand and supply in the foreign exchange market with no direct intervention by the central bank C.is determined by a decision of the government or the central bank and is achieved by central bank intervention in the foreign exchange market to block the unregulated forces of demand and supply D.operated in the world economy from the end of World War II to the early 1970s

A.follows a path determined by a decision of the government or the central bank and is achieved by central bank intervention in the foreign exchange market

Governor Plans to Boost Economy with Ecofriendly Jobs ​Oregon's 5.6 percent unemployment rate hovers close to the national average of 5.5 percent. A few years​ ago, Oregon had one of the highest unemployment rates in the nation. To avoid rising​ unemployment, Oregon Governor Kulongoski introduced a plan that provides public schools and universities with enough state funds to meet growing demand for skilled workers. Also Kulongoski wants to use state and federal money for​ bridges, roads, and buildings to stimulate more construction jobs. The main type of unemployment that Governor Kulongoski is using policies to avoid is​ ______. A.frictional and structural B.cyclical C.natural D.structural only

A.frictional and structural

Aggregate demand increases if monetary policy​ ______ the quantity of money and​ ______ interest rates. A.increases​; decreases B.decreases​; decreases C.decreases​; increases D.increases​; increases

A.increases​; decreases

A fixed exchange rate is one that​ _______. A.is set by the government or the central bank and is achieved by central bank intervention in the foreign exchange market B.is determined by demand and supply in the foreign exchange market with no direct intervention by the central bank C.follows a path determined by the government or the central bank and is achieved by central bank buying or selling domestic currency in the foreign exchange market D.is not influenced by market traders and can only be changed by the government

A.is set by the government or the central bank and is achieved by central bank intervention in the foreign exchange market

The three main types of markets for financial capital are​ _______. A.loan​ markets, bond​ markets, and stock markets B.loan​ markets, bond​ markets, and commercial banks C.bond​ markets, stock​ markets, and commercial banks D.investment​ banks, commercial​ banks, and insurance companies

A.loan​ markets, bond​ markets, and stock markets

An increase in income taxes​ _______, everything else remaining the same. A.makes the multiplier smaller B.has no effect on the multiplier C.sometimes increases the multiplier and sometimes decreases the multiplier D.makes the multiplier larger

A.makes the multiplier smaller

The table shows three years of CPI data. CPI June 1998 163.0 June 1999 166.2 June 2000 172.4 The bias in these CPI numbers might arise from​ ______. A.new goods​ bias, quality change​ bias, commodity substitution​ bias, and outlet substitution bias B.new goods bias and quality change bias only C.commodity substitution bias and outlet substitution bias only D.new goods bias only

A.new goods​ bias, quality change​ bias, commodity substitution​ bias, and outlet substitution bias

Some unemployment is unavoidable because​ ______. A.people are making transitions through the stages of life and businesses are making transitions B.often people become discouraged workers C.many people in the​ working-age population attend school and are unemployed D.many​ part-time workers would like to have​ full-time work

A.people are making transitions through the stages of life and businesses are making transitions

The fundamental precondition for labor productivity growth is the incentive system created by all of the following except​ ______. A.population growth B.property rights C.firms and markets D.money

A.population growth

An increase in labor productivity​ ______ A.shifts the demand for labor curve rightward and the production function upward B.decreases the real wage​ rate, increases potential​ GDP, and increases potential GDP per hour of labor C.increases potential GDP and decreases potential GDP per hour of labor D.increases the supply of​ labor, increases potential​ GDP, and decreases potential GDP per hour of labor

A.shifts the demand for labor curve rightward and the production function upward

The U.S. interest rate differential rises if​ ______, and the larger the U.S. interest rate​ differential, the​ ______ is the demand for U.S. dollars in the foreign exchange market. A.the foreign interest rate​ falls; greater B.the U.S. interest rate​ rises; smaller C.the U.S. interest rate​ falls; smaller D.the foreign interest rate​ rises; greater

A.the foreign interest rate​ falls; greater

The marginal propensity to save is​ _______. A.the fraction of a change in disposable income that is saved B.the percentage of a​ household's income that is not spent on consumption goods and services C.greater than the slope of the 45degrees line D.equal to the slope of the 45degrees line

A.the fraction of a change in disposable income that is saved

The marginal propensity to consume is​ ______. A.the fraction of a change in disposable income that is spent on consumption B.the percentage of a​ household's income that is not saved C.equal to the slope of the 45degrees line D.greater than the slope of the 45degrees line

A.the fraction of a change in disposable income that is spent on consumption

One of the​ Fed's main policy tools is​ ______. A.the last resort​ loan, which means that if a bank is short of​ reserves, it can borrow from the Fed B.the discount​ ratio, which is the minimum percentage of deposits that depository institutions are required to hold as reserves C.the open market​ sale, which is a means of increasing bank reserves and increasing stability in the banking system D.the open market​ purchase, which is the purchase of money from the government

A.the last resort​ loan, which means that if a bank is short of​ reserves, it can borrow from the Fed

As we move up along the​ short-run aggregate supply​ curve, ______. A.the money wage​ rate, the prices of other​ resources, and potential GDP remain constant B.the real wage​ rate, the prices of other​ resources, and potential GDP remain constant C.potential GDP increases D.the money wage rate and the prices of other resources change by the same percentage

A.the money wage​ rate, the prices of other​ resources, and potential GDP remain constant

An open market operation is​ ______. A.the purchase or sale of securities by the Federal Reserve System in the loanable funds market B.any transaction conducted by the Federal Reserve System in a transparent and open manner C.the purchase or sale of U.S. dollars in the foreign exchange market by the Federal Reserve System D.the depositing of U.S. dollars in commercial banks by the Federal Reserve System

A.the purchase or sale of securities by the Federal Reserve System in the loanable funds market

The change in the unemployment rate over the past year suggests that the U.S. economy​ ______. A.was in an expansion B.was in a recession C.went through a business cycle trough D.went through a business cycle peak

A.was in an expansion

If speculation like that made by Mr. Reddy becomes​ widespread, the demand for U.S. dollars will​ ______ and the supply of U.S. dollars will​ ______. A.​increase; decrease B.increase; increase C.decrease; decrease D.decrease; increase The U.S. dollar exchange rate will ____

A.​increase; decrease rise

Examples of physical capital are​ ______. Examples of financial capital are​ ______. A.inventories of steel and glass at​ Boeing; the​ $20 in your pocket B.ovens used by Pizza Hut and lawn mowers used by​ Larry's Mowing; bonds issued by​ Wal-Mart and stocks issued by Boeing C.bonds issued by​ Wal-Mart and stocks issued by​ Boeing; the​ $20 in your pocket D.the​ $20 in your​ pocket; bonds issued by​ Wal-Mart and stocks issued by Boeing

B. ovens used by Pizza Hut and lawn mowers used by​ Larry's Mowing; bonds issued by​ Wal-Mart and stocks issued by Boeing

In a standard of living​ comparison, China ranks​ ______ in the world. This rank is​ ______. A.1st; not changing because it depends on population and China has the​ world's largest population B.105th; rising because physical capital and human capital growth and technological change are proceeding rapidly and​ China's real GDP is growing C.2nd; rising because physical capital and human capital growth and technological change are proceeding rapidly and​ China's real GDP is growing D.105th; falling because​ China's population is growing faster than real GDP is growing

B. 105th; rising because physical capital and human capital growth and technological change are proceeding rapidly and​ China's real GDP is growing

The price index with the greatest bias is​ ______ because​ ______. A.the PCE excluding food and​ fuel; food and fuel prices rise faster than other prices on average B.the​ CPI; it​ isn't based on current period actual expenditure weights C.the​ CPI; it omits the effects of changes in interest rates D.the​ PCE; it is subject to the most new goods bias

B. the​ CPI; it​ isn't based on current period actual expenditure weights

Over the past 100​ years, the average growth rate of U.S. real GDP per person is 2 percent. Over the past 100​ years, growth was most rapid during the​ ______ and slowest during the​ ______. A.​2000s; 1920s B.1960s; Great Depression C.1990s; 1970s D.1960s; 1980s

B.1960s; Great Depression

Choose the statement that is incorrect. A.While a check is in​ circulation, the quantity of money does not increase by the amount of the check. B.Deposits are not money because you cannot settle a debt with a deposit. C.A credit card is an ID card that lets you take out a loan at the instant you buy​ something, but it is not money. D.A check is an instruction to transfer​ money, but it is not money.

B.Deposits are not money because you cannot settle a debt with a deposit.

The news article reports that China is the second largest economy in the world based on​ ______. A.population B.GDP converted to U.S. dollars at the current exchange rate C.real GDP in PPP prices D.real GDP converted to U.S. dollars at the current exchange rate

B.GDP converted to U.S. dollars at the current exchange rate

Choose the statement that is incorrect. A.An increase in the quantity of labor and a corresponding decrease in leisure hours will increase real GDP. B.Labor hours are all equally productive. C.An increase in the quantity of labor and a corresponding decrease in leisure hours create a movement along the production function. D.The aggregate production function is the relationship that tells us how real GDP changes as the quantity of labor​ changes, when all other influences on production remain the same.

B.Labor hours are all equally productive.

Which of the following statements about the monetarist view of the macroeconomy is ​incorrect? A.The money wage rate is sticky. B.Left​ alone, the economy rarely operates at full employment. C.All recessions result from inappropriate monetary policy. D.Taxes should be kept low to avoid disincentive effects that decrease potential GDP.

B.Left​ alone, the economy rarely operates at full employment.

Choose the statement that is incorrect. A.The quantity of real GDP supplied is the total quantity of goods and​ services, valued in constant​ base-year (2009)​ dollars, that firms plan to produce during a given period. B.Over the business​ cycle, aggregate supply fluctuates around potential GDP. C.Aggregate supply is the relationship between the quantity of real GDP supplied and the price level. D.At any given​ time, the quantity of capital and the state of technology are​ fixed, but the quantity of labor is not fixed.

B.Over the business​ cycle, aggregate supply fluctuates around potential GDP.

Choose the correct statement. A.The core inflation rate is always greater than the CPI inflation rate. B.The inflation rate is the annual percentage change in the price level. C.The CPI inflation rate is always greater than the core inflation rate. D.By​ definition, the inflation rate is always positive.

B.The inflation rate is the annual percentage change in the price level.

Choose the correct statement. A.The higher the price​ level, the greater is the quantity of real GDP demanded. B.The quantity of real GDP demanded is the sum of the real consumption​ expenditure, investment, government​ expenditure, and exports minus imports. C.The aggregate demand curve slopes downward because of the wealth effect and the money wage rate. D.The quantity of real GDP demanded depends on the quantity of real GDP supplied.

B.The quantity of real GDP demanded is the sum of the real consumption​ expenditure, investment, government​ expenditure, and exports minus imports.

In the United​ States, the CPI basket consists of items that​ ______ . ​______ has the greatest weight in the CPI basket. A.all households​ buy; Recreation B.an average urban household​ buys; Housing C.an average American household​ buys; Apparel D.a​ middle-income household​ buys; Education and communication

B.an average urban household​ buys; Housing

The multiplier increases when the marginal propensity to import​ ______ or the income tax rate​ ______. A.​increases; increases B.decreases; decreases C.decreases; increases D.​increases; decreases

B.decreases; decreases

An increase in the population​ ______ the real wage rate and​ ______ the equilibrium quantity of labor. A.decreases; decreases B.decreases; increases C.increases; increases D.​increases; increases

B.decreases; increases

U.S. Bank Earnings up​ 21% as Loan Losses​ Decline, FDIC Says For the 12th straight​ quarter, U.S. bank profits increased. At​ $34.5 billion, they were 21 percent higher than a year​ earlier, and according to the Federal Deposit Insurance Corporation​ (FDIC), balance sheets were less risky. FDIC Acting Chairman Martin Gruenberg said​ "Levels of troubled assets and troubled institutions remain​ high, but they are continuing to​ improve." The number of institutions on​ FDIC's list of banks deemed to be at greater risk of collapse fell for a fifth straight quarter. By​ August, 40 banks had failed in 2012. The​ FDIC's deposit insurance​ fund, which protects customer accounts up to​ $250,000 against bank​ failure, increased. Read the news​ clip, then answer the following questions. FDIC insurance helps to minimize bank failures and bring more stability to the banking system because​ _______. A.FDIC insurance requires banks to eliminate all risky loans B.depositors know that money they have deposited with a bank will be repaid C.FDIC insurance requires banks to hold all deposits as either reserves or liquid assets D.depositors will take out more loans and​ mortgages, which increases bank profits

B.depositors know that money they have deposited with a bank will be repaid

The market in which the currency of one country is exchanged for the currency of another country is the​ ______. The price at which one currency exchanges for another currency is the​ ______. A.foreign exchange​ market; currency rate B.foreign exchange​ market; exchange rate C.money​ market; exchange rate D.money​ market; currency rate

B.foreign exchange​ market; exchange rate

The multiplier matters because we can use it to determine by how much we should change autonomous expenditure to​ ______. A.maximize real GDP B.increase real GDP by a given amount C.minimize taxes and maximize transfer payments D.make inventories equal to their target levels

B.increase real GDP by a given amount

The exports effect is the result that the lower the exchange​ rate, other things remaining the​ same, the​ ______. A.higher are the prices of​ foreign-produced goods and services to Americans and the greater is the volume of U.S. imports B.lower are the prices of​ U.S.-produced goods and services to foreigners and the greater is the volume of U.S. exports C.higher are the prices of​ U.S.-produced goods and services to foreigners and the greater is the volume of U.S. imports D.lower are the prices of​ foreign-produced goods and services to Americans and the greater is the volume of U.S. exports

B.lower are the prices of​ U.S.-produced goods and services to foreigners and the greater is the volume of U.S. exports

The imports effect is the result that the higher the exchange​ rate, other things remaining the​ same, the​ ______. A.higher are the prices of​ foreign-produced goods and services to Americans and the greater is the volume of U.S. exports B.lower are the prices of​ foreign-produced goods and services to Americans and the greater is the volume of U.S. imports C.lower are the prices of​ U.S.-produced goods and services to foreigners and the greater is the volume of U.S. exports D.higher are the prices of​ U.S.-produced goods and services to foreigners and the greater is the volume of U.S. imports

B.lower are the prices of​ foreign-produced goods and services to Americans and the greater is the volume of U.S. imports

The money multiplier is the ratio of the change in the quantity of​ ______ to the change in the quantity of​ ______. A.money; bank deposits B.money; monetary base C.currency; bank deposits D.M1; M2

B.money; monetary base

Rapid inflation in Brazil in the early 1990s caused the cruzerio to lose its ability to function as money. Which of the following commodities do you think would most likely have taken the place of the cruzeiro in the Brazilian​ economy? A.tractor parts because they are a store of value B.packs of cigarettes because they are a good medium of exchange C.loaves of bread because the price of bread is relatively constant D.Impressionist paintings because paintings are a good store of value

B.packs of cigarettes because they are a good medium of exchange

Unemployment arises for all of the following reasons except​ ______. A.firms​ close, people lose their jobs and search for new jobs B.people leave the labor force C.students enter the labor force to search for a job D.people leave their jobs and spend time searching for another job that better suits their abilities

B.people leave the labor force

The quantity of U.S. dollars demanded in the foreign exchange market depends on many​ factors, the main ones being​ ______. A.the exchange​ rate, world demand for U.S.​ exports, the previous path of the exchange​ rate, and the expected future exchange rate B.the exchange​ rate, world demand for U.S.​ exports, interest rates in the United States and other​ countries, and the expected future exchange rate C.the price level in the United​ States, world demand for U.S.​ exports, interest rates in the United States and other​ countries, and the expected future exchange rate D.the exchange​ rate, U.S. demand for​ imports, interest rates in the United States and other​ countries, and the previous path of the exchange rate

B.the exchange​ rate, world demand for U.S.​ exports, interest rates in the United States and other​ countries, and the expected future exchange rate

An economy has a zero marginal tax rate. When real GDP​ increases, the change in consumption expenditure equals​ _______. A.(1+ the marginal propensity to ​consume) times the increase in real GDP B.the marginal propensity to consume divided by the increase in real GDP C.the marginal propensity to consume times the increase in real GDP D.the increase in real GDP divided by the marginal propensity to consume

C.the marginal propensity to consume times the increase in real GDP

As we move up along the​ long-run aggregate supply​ curve, ______. A.the money wage rate remains constant B.the prices of goods and services increase and the money wage rate decreases C.the real wage rate remains constant D.the prices of goods and services remain constant

C.the real wage rate remains constant

How can the change in U.S. wealth differ from U.S.​ saving? A.The change in wealth equals income minus​ consumption, which is not equal to saving. B.The change in wealth always equals saving. C.The change in wealth includes changes in the prices of assets owned and saving excludes these items. D.Saving exceeds the change in wealth when consumption expenditure exceeds income.

C. The change in wealth includes changes in the prices of assets owned and saving excludes these items.

The effect of the United States returning millions of workers to their countries of origin is​ _____ the U.S. PF and​ _____ in potential GDP. A.a movement down​ along; no change B.a downward shift​ of; a decrease C.a movement down​ along; a decrease D.a downward shift​ of; no change

C. a movement down​ along; a decrease

The slow job growth and rise in unemployment after​ mid-2007 is most likely​ ______. A. structural B. frictional C. cyclical

C. cyclical

Physical capital is​ ______. Financial capital is​ ______. A.inventories of raw materials and semifinished​ goods; the​ tools, instruments,​ machines, buildings, and other items that have been produced in the past and that are used today to produce goods and services B.the funds that firms use to buy physical​ capital; the stocks that can be purchased on the stock market and the bonds that can be purchased on the bond market C.the​ tools, instruments,​ machines, buildings, and other items that have been produced in the past and that are used today to produce goods and​ services; the funds that firms use to buy physical capital D.the stocks that can be purchased on the stock market and the bonds that can be purchased on the bond​ market; money in the bank

C. the​ tools, instruments,​ machines, buildings, and other items that have been produced in the past and that are used today to produce goods and​ services; the funds that firms use to buy physical capital

Suppose that in 2014​ China's real GDP is growing at 10 percent a year and its population is growing at 2.0 percent a year.If these growth rates​ continue, then​ China's real GDP per person in​ ______ will be twice what it is in 2014. A.2084 B.2016 C.2023 D.2021

C.2023

Choose the correct statement. A.Currency is money and credit cards are money because they are means of​ payment, but deposits are not money. B.A check is money because while it is in circulation the quantity of money increases by the amount of the check. C.Deposits are​ money, checks are not​ money, and credit cards are not money. D.A credit card is money because it allows you to take a loan at the instant you buy something.

C.Deposits are​ money, checks are not​ money, and credit cards are not money.

Choose the statement that is incorrect. A.A financial institution is illiquid if it has made​ long-term loans with borrowed funds and is faced with a sudden demand to repay more of what it has borrowed than its available cash. B.A financial institution can be solvent but illiquid. C.If a financial​ institution's net worth is​ positive, the institution must be solvent and liquid. D.A financial​ institution's net worth is the market value of what it has lent minus the market value of what it has borrowed.

C.If a financial​ institution's net worth is​ positive, the institution must be solvent and liquid.

Consumers sought the biggest bang for their economic stimulus bucks in​ June, sending the sales of discount merchants such as​ Wal-Mart and Costco surging. ... As the economy remains weak ... shopperslong dashrich and poorlong dashare flocking to discounters for​ low-cost goods. ...​ Wal-Mart Stores Inc. trounced analyst expectations Thursday with a 5.8 percent jump in June​ sales, ... attributing the increase to the​ government's economic stimulus payments. ... The retailer said sales jumped across the board. But the most dramatic increases were in​ entertainment, particularly for​ flat-screen televisions, and​ apparel, especially in swimwear and sportswear. ... Another major​ retailer, the warehouse club Costco​ Wholesale, beat analyst expectations with a 9 percent increase in​ same-store sales for June. ...​ Target, a top competitor to​ Wal-Mart, said that its​ same-store sales edged up 0.4​ percent, well above the 0.5 percent decline projected by analyst consensus. Read the news​ clip, then answer the following question. The​ ______ macroeconomic school of thought justifies the policy discussed in this news clip. A.monetarist B.new classical C.Keynesian D.classical

C.Keynesian

If an economy is at a​ full-employment equilibrium and a decrease in consumption expenditure​ occurs, the new​ short-run equilibrium is​ _____ and​ _____ gap emerges. A.an above​ full-employment equilibrium; an inflationary B.an above​ full-employment equilibrium; a recessionary C.a below​ full-employment equilibrium; a recessionary D.a below​ full-employment equilibrium; an inflationary

C.a below​ full-employment equilibrium; a recessionary

When labor productivity​ increases, there is​ _____ the production function and​ _____ in potential GDP. A.a movement up​ along; an increase B.a movement up​ along; no change C.an upward shift​ of; an increase D.an upward shift​ of; no change

C.an upward shift​ of; an increase

At arrow 1 in the​ graph, the economy is in​ ______ full- employment equilibrium and the intersection of the AD and SAS curves is to the​ ______ of the LAS curve. A.a​ below; right B.an​ above; left C.a​ below; left D.an​ above; right

C.a​ below; left

Inflation expectations​ "become self-fulfilling" because consumers decide to​ _____, which​ ______. A.produce fewer goods and services at​ today's lower​ prices; decreases​ short-run aggregate supply B.buy fewer goods and services until prices return to lower​ levels; decreases aggregate demand C.buy more goods and services at​ today's lower​ prices; increases aggregate demand D.produce more goods and services at​ today's lower​ prices; increases​ short-run aggregate supply

C.buy more goods and services at​ today's lower​ prices; increases aggregate demand

A​ ______ macroeconomist believes that the economy is​ self-regulating and always at full employment. A​ ______ macroeconomist believes the economy requires active help from fiscal policy and monetary policy to maintain full employment. A.Keynesian; new Keynesian B.new​ classical; monetarist C.classical; Keynesian D.classical; monetarist

C.classical; Keynesian

An increase in expected future income​ ______. A.increases the supply of loanable funds today because households with larger expected future income will save more today B.increases the supply of loanable funds because it increases wealth C.decreases the supply of loanable funds today because households with larger expected future income will save less today D.has no effect on the supply of loanable funds

C.decreases the supply of loanable funds today because households with larger expected future income will save less today

The ratio of reserves to deposits that a bank plans to hold is its​ ______. If a bank has​ $10 million in actual reserves and​ $8 million in desired​ reserves, then it has​ ______. A.planned reserve​ ratio; a currency drain B.planned deposit​ ratio; a shortage of currency C.desired reserve​ ratio; excess reserves D.desired deposit​ ratio; a shortage of deposits

C.desired reserve​ ratio; excess reserves

Potential GDP is​ ______. A.the value of final goods and services produced in a given year when valued at constant prices B.the value of the final goods and services produced in a given year valued at the prices that prevailed in that same year C.determined by the​ full-employment quantity of labor D.a more precise name for GDP

C.determined by the​ full-employment quantity of labor

Interest rate parity means​ ______. A.that if interest rates are higher in a developing nation than in the United​ States, U.S. investors will move their assets from the United States into that developing nation B.equal value of money C.equal rates of return D.interest rates in Canada and the United States are the same

C.equal rates of return

A government budget surplus​ occurs, which increases the supply of loanable funds. The real interest rate​ ______, household saving​ ______, A.rises; decreases and investment increases B.falls; increases and investment decreases C.falls; decreases and investment increases D.rises; increases and investment decreases

C.falls; decreases and investment increases

Starting from a position of​ long-run equilibrium, an increase in government expenditures​ ______ real GDP and​ ______ the price level. A.decreases real GDP and raises the price level B.increases; real GDP and lowers the price level C.increases real GDP and raises the price level D.decreases real GDP and lowers the price level

C.increases real GDP and raises the price level

The following events have occurred at times in the history of the United​ States: 1. The world economy goes into an expansion. 2. Canadian businesses expect future profits to rise. 3. The government increases its expenditure on goods and services in a time of war or increased international tension. Starting from a position of​ long-run equilibrium, a world expansion​ ______, and an increase in expected future profits​ ______. A.decreases real GDP and raises the price​ level; decreases real GDP and raises the price level B.increases real GDP and lowers the price​ level; increases real GDP and raises the price level C.increases real GDP and raises the price​ level; increases real GDP and raises the price level D.increases real GDP and raises the price​ level; increases real GDP and lowers the price level

C.increases real GDP and raises the price​ level; increases real GDP and raises the price level

In the short​ run, the quantity of real money and real GDP are given and the​ ______ adjusts to achieve equilibrium. In the long​ run, supply and demand in the loanable funds market determines the​ ______. A.demand for​ money; quantity of money B.inflation​ rate; inflation rate C.interest​ rate; real interest rate D.price​ level; price level In the long​ run, _______adjusts to make the quantity of real money supplied equal the quantity demanded.

C.interest​ rate; real interest rate the price level

Money serves as a​ ______. A.store of​ value, which is a function unique to money B.unit of​ account, which means that it can be held and exchanged later for goods and services C.medium of​ exchange, which means that it is generally accepted in exchange for goods and services D.store of value because even during a period of inflation its value does not change

C.medium of​ exchange, which means that it is generally accepted in exchange for goods and services

The graph shows demand for loanable funds curve. Suppose the real interest rate falls. Draw either an arrow along the demand curve showing the direction of change or a new demand curve. When the real interest rate falls​, the​ ______ because the​ ______ is the opportunity cost of loanable funds. A.demand for loanable funds decreases​; real interest rate B.demand for loanable funds increases​; inflation rate C.quantity of loanable funds demanded increases​; real interest rate D.quantity of loanable funds demand

C.quantity of loanable funds demanded increases​; real interest rate

The demand for labor is the relationship between the quantity of labor demanded and the​ ______. The supply of labor is the relationship between the quantity of labor supplied and the​ ______. A.real interest​ rate; real interest rate B.money wage​ rate; money wage rate C.real wage​ rate; real wage rate D.nominal interest​ rate; nominal interest rate

C.real wage​ rate; real wage rate

An increase in the population​ ______. A.increases potential GDP and increases potential GDP per hour of labor B.shifts the production function upward C.shifts the supply of labor curve rightward and creates a movement along the production function D.increases the real wage​ rate, increases potential​ GDP, and decreases potential GDP per hour of labor

C.shifts the supply of labor curve rightward and creates a movement along the production function

When the price​ level, the money wage​ rate, and other factor prices rise by the same​ percentage, there is a movement along​ ______. Potential GDP​ ______. A.the LAS curve and the SAS curve​; decreases B.the LAS curve​; decreases C.the LAS curve​; does not change D.the LAS curve and the SAS curve​; does not change and the quantity of real GDP supplied increases

C.the LAS curve​; does not change

The price level is​ ______. A.equal to the inflation rate B.the average level of prices paid by urban consumers C.the average level of​ prices, and the value of money D.the average level of prices paid by urban consumers for all goods excluding food and energy

C.the average level of​ prices, and the value of money

Choose the statement that is incorrect. A.Real GDP per person growth rate is approximately equal to the real GDP growth rate minus the population growth rate. B.Real GDP per person equals real GDP divided by the population. C.The standard of living depends on real GDP per person. D.Real GDP per person grows whenever real GDP grows.

D. Real GDP per person grows whenever real GDP grows.

The expansion of​ 2002-2008 created jobs at​ ______ rate. The first two years of the expansion created few jobs because​ ______. A. an unusually​ fast; most expansions do not create many jobs in the first two years B. an unusually​ slow; the first jobs that were created eliminated cyclical​ unemployment, and cyclical unemployment is a very small portion of total unemployment C. an​ average; the first jobs that were created eliminated cyclical​ unemployment, and cyclical unemployment is a very small portion of total unemployment D. an unusually​ slow; the expansion was very​ weak, so employment growth was weak

D. an unusually​ slow; the expansion was very​ weak, so employment growth was weak

In January 2017​, the U.S. unemployment rate 4.8 percent. In January 2018​, the unemployment rate was 4.1 percent. Assuming that the labor force remained constant between January 2017 and January 2018​, then unemployment​ _______. A.increased B.didn't change C.either increased or decreased but we​ can't predict which D.decreased

D. decreased

Choose the statement that is incorrect. A.China, although one of the​ world's largest​ economies, is ranked much lower in terms of standard of living because of its very large population. B.The size of an economy is measured by its real GDP. C.The standard of living in a country is measured by real GDP per person. D.A country with a large population cannot have a high standard of living.

D.A country with a large population cannot have a high standard of living.

Choose the correct statement. A.Fannie Mae is a commercial bank. B.Freddie Mac is a commercial bank. C.The Federal Reserve is the U.S. central bank that also acts as a commercial bank. D.Commercial banks are financial institutions that accept​ deposits, provide payment​ services, and make loans to firms and households.

D.Commercial banks are financial institutions that accept​ deposits, provide payment​ services, and make loans to firms and households.

Choose the statement that is incorrect. A.Liquid assets include overnight loans made by one bank to other​ banks, U.S. government Treasury​ bills, and commercial bills. B.Liquid assets are the​ banks' first line of defense if they need reserves. C.Liquid assets can be sold and instantly converted into cash with virtually no risk of loss. D.Liquid assets have a higher interest rate than securities.

D.Liquid assets have a higher interest rate than securities.

Choose the correct statements. 1. The unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs is frictional unemployment. 2. Structural unemployment usually lasts longer than frictional unemployment. nothing 3. The unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs is structural unemployment. 4. The fluctuating unemployment over the business cycle is structural unemployment. nothing A.Statements 1 and 4 are correct. B.Statements 3 and 4 are correct. C.Statements 1 and 3 are correct. D.Statements 2 and 3 are correct.

D.Statements 2 and 3 are correct.

Choose the statement that is incorrect. A.Close to a third of federal government outlays are linked directly to the CPI. B.The bias in the CPI distorts private contracts. C.Accumulated over a decade comma a CPI bias of 1 percent a year adds up to almost a trillion dollars of additional expenditures. D.The bias in the CPI decreases government outlays.

D.The bias in the CPI decreases government outlays.

Choose the statement about an increase in the population that is incorrect. A.The real wage rate falls. B.Potential GDP per hour of labor decreases. C.Potential GDP grows. D.The production function shifts upward.

D.The production function shifts upward.

Choose the statement that is incorrect. A.The size of an economy matters when we are interested in military power B.The size of an economy matters when we are interested in diplomatic negotiations C.The size of an economy matters when we are interested in the resources devoted to environmental​ protection, science, and technology D.The size of an economy is irrelevant.

D.The size of an economy is irrelevant.

U.S. Bank Earnings up​ 21% as Loan Losses​ Decline, FDIC Says For the 12th straight​ quarter, U.S. bank profits increased. At​ $34.5 billion, they were 21 percent higher than a year​ earlier, and according to the Federal Deposit Insurance Corporation​ (FDIC), balance sheets were less risky. FDIC Acting Chairman Martin Gruenberg said​ "Levels of troubled assets and troubled institutions remain​ high, but they are continuing to​ improve." The number of institutions on​ FDIC's list of banks deemed to be at greater risk of collapse fell for a fifth straight quarter. By​ August, 40 banks had failed in 2012. The​ FDIC's deposit insurance​ fund, which protects customer accounts up to​ $250,000 against bank​ failure, increased. Read the news​ clip, then answer the following question. A​ bank's attempts to pursue profit can sometimes lead to bank failure because​ _______. A.the bank will minimize its reserves because reserves pay low or zero interest B.depositors can become concerned that the bank will not be able to repay the funds deposited in the bank C.a large number of depositors may request the return of their funds D.a combination of all of the above

D.a combination of all of the above

The multiplier is the amount by which the change in​ ______ expenditure is magnified or multiplied to determine the change in equilibrium expenditure and real GDP. For every dollar increase in​ ______ expenditure, the multiplier determines the increase in real GDP. A.induced; autonomous B.induced; induced C.autonomous; induced D.autonomous; autonomous

D.autonomous; autonomous

A central bank is​ ______. The central bank in the United States is the​ ______. A.a bank that provides banking services for the domestic government and foreign​ governments; United Nations B.any bank that provides general banking services for businesses and individual​ citizens; Bank of America C.a bank centrally located within a country that keeps the​ country's gold on deposit and prints​ money; Federal District System D.a​ bank's bank and a public authority that regulates a​ nation's depository institutions and conducts monetary​ policy; Federal Reserve System

D.a​ bank's bank and a public authority that regulates a​ nation's depository institutions and conducts monetary​ policy; Federal Reserve System

The tables to the right show the unemployment rate and the natural unemployment rate from January 2017 to January 2018​, and real GDP ​, and potential GDP from the fourth quarter of 2016 to the fourth quarter of 2017. In January 2018​, the U.S. the unemployment rate was​ ______ the natural unemployment rate and in the fourth quarter of 2017 the output gap was​ ______. A.below​; positive B.equal to​; negative C.above​; zero D.below​; zero

D.below​; zero See picture on phone

The components of aggregate expenditure that are influenced by real GDP are​ ______. A.consumption​ expenditure, investment, and imports B.​investment, exports, and imports C.consumption​ expenditure, government​ expenditure, investment, and imports D.consumption expenditure and imports

D.consumption expenditure and imports

The requirement to hold more capital can make financial institutions safer because by using more of its own funds and less borrowed​ funds, a financial institution​ ______. A.can charge a higher price for its bonds B.becomes larger C.increases the value of its stock D.decreases its risk of insolvency

D.decreases its risk of insolvency

If these policies are​ successful, we would expect to see​ Oregon's natural unemployment rate​ ______. A.not change B.rise C.fall to zero percent D.fall

D.fall

The aggregate production function is the relationship that tells us​ ______, when all other influences on production remain the same. A.how the real wage rate changes as the quantity of labor changes B.how potential GDP changes as the labor market moves from surplus or shortage to equilibrium C.how real GDP changes as the quantity of leisure changes D.how real GDP changes as the quantity of labor changes

D.how real GDP changes as the quantity of labor changes

A government budget deficit​ occurs, which​ ______. The real interest rate​ ______. A.decreases the supply of loanable​ funds; falls B.decreases the supply of loanable​ funds; rises C.decreases the demand for loanable​ funds; falls D.increases the demand for loanable​ funds; rises Private saving __and investment ___

D.increases the demand for loanable​ funds; rises increases decreases

Potential GDP​ ______ and potential GDP per hour of labor​ ______. A.increases; increases B.decreases; decreases C.​increases; increases D.increases; decreases

D.increases; decreases

A decrease in current income taxes​ ______ the supply of loanable funds today because it​ ______. A.decreases​; decreases expected future disposable income B.has no effect​ on; doesn't change expected future disposable income C.decreases​; increases disposable​ income, which decreases saving D.increases​; increases disposable​ income, which encourages greater saving

D.increases​; increases disposable​ income, which encourages greater saving

Aggregate demand increases if expected future​ income, inflation, or profits​ ______. And aggregate demand increases if fiscal policy​ ______ government expenditure. A.increase​; decreases B.decrease​; increases C.decrease​; decreases D.increase​; increases

D.increase​; increases

Stagflation​ ______. A.has not been experienced in the United States since the Great Depression B.occurs when aggregate demand decreases by more than​ short-run aggregate supply increases C.is another name for an inflationary gap D.is a combination of recession and inflation

D.is a combination of recession and inflation

A flexible exchange rate is one that​ _______. A.operated in the world economy from the end of World War II to the early 1970s B.is determined by a decision of the government or the central bank and is achieved by central bank intervention in the foreign exchange market to block the unregulated forces of demand and supply C.follows a path determined by a decision of the government or the central bank and is achieved by central bank intervention in the foreign exchange market D.is determined by demand and supply in the foreign exchange market with no direct intervention by the central bank

D.is determined by demand and supply in the foreign exchange market with no direct intervention by the central bank

From​ Paper-Clip to​ House, in 14 Trades A​ 26-year-old Montreal man appears to have succeeded in his quest to barter a​ single, red paperclip all the way up to a house. It took almost a year and 14 trades. ... Read the news​ clip, then answer the following questions. Barter​ ______ a means of payment. When trading on​ e-Bay, barter​ _______. A.is​ not; is not as efficient as money because barter requires a double coincidence of wants B.is​ not; is as efficient as money because sellers on​ e-Bay don't necessarily expect to be paid in cash C.is; is as efficient as money because sellers on​ e-Bay don't necessarily expect to be paid in cash D.is; is not as efficient as money because barter requires a double coincidence of wants

D.is; is not as efficient as money because barter requires a double coincidence of wants

Suppose the Fed increases the quantity of money. In the long​ run, supply and demand in the​ ______ market determines the real interest rate. The​ ______ adjusts to make the quantity of real money supplied equal to the quantity demanded. A.money; bond price B.money; inflation rate C.loanable​ funds; nominal interest rate D.loanable​ funds; price level

D.loanable​ funds; price level

When the price level rises but the money wage rate and other factor prices remain the​ same, there is a movement along​ ______. The quantity of real GDP supplied​ ______. A.the SAS​ curve; decreases B.the LAS curve and the SAS curve​; decreases C.the LAS curve​; decreases D.the SAS​ curve; increases

D.the SAS​ curve; increases

To calculate the​ multiplier, we divide​ ______ by​ ______. A.the change in equilibrium​ expenditure; autonomous expenditure B.equilibrium​ expenditure; autonomous expenditure C.equilibrium​ expenditure; the change in autonomous expenditure D.the change in equilibrium​ expenditure; the change in autonomous expenditure

D.the change in equilibrium​ expenditure; the change in autonomous expenditure

When real GDP​ increases, the change in imports equals​ _______. A.the marginal propensity to import divided by the increase in real GDP B.​(1+ the marginal propensity to ​import) times the increase in real GDP C.the increase in real GDP divided by the marginal propensity to import D.the marginal propensity to import times the increase in real GDP

D.the marginal propensity to import times the increase in real GDP

When the Fed buys securities from a​ bank, ______. A.the​ bank's deposits decrease B.the​ bank's reserves decrease but its deposits do not change C.the​ bank's deposits increase D.the​ bank's reserves increase but its deposits do not change

D.the​ bank's reserves increase but its deposits do not change

​G-20 Leaders Look to Shake off Lingering Economic Troubles The​ G-20 aims to take stock of the economic recovery. One achievement in Pittsburgh could be a deal to require that financial institutions hold more capital. The​ "capital" referred to in the news clip is​ ______. The financial institutions that the​ G-20 might require to hold more capital are​ ______. A.physical​ capital; ​government-sponsored mortgage lenders and pension funds B.physical​ capital; banks and insurance companies C.the​ institutions' own​ funds; ​government-sponsored mortgage lenders and pension funds D.the​ institutions' own​ funds; banks and insurance companies

D.the​ institutions' own​ funds; banks and insurance companies

An increase in households' expected future disposable income occurs. Draw a curve that shows the effect of this event. Draw a point at the new equilibrium quantity of loanable funds and the new equilibrium real interest rate.

Look at picture on phone

Draw a labor supply curve and a labor demand curve for the United States. Label the curves LS0 and LD0. Draw a point at the equilibrium quantity of labor and the equilibrium real wage rate. Label it 1. Now suppose the United States returns millions of illegal immigrant workers to their home countries. Draw and label a curve that shows the effect of this return of workers. Draw a point at the new equilibrium quantity of labor and the equilibrium real wage rate. Label it 2.

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Draw a labor supply curve and a labor demand curve. Label them LS0 and LD0. Draw a point at the equilibrium quantity of labor and the equilibrium real wage rate. Label the point 1. Now suppose a large increase in investment increases labor productivity. Draw a curve that shows the effect of this increase in labor productivity. Label the curve. Draw a point at the new equilibrium quantity of labor and the equilibrium real wage rate. Label the point 2.

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Draw a​ short-run aggregate supply curve. Label it.

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Draw the​ long-run aggregate supply curve when potential GDP is ​$12.5 trillion. Label it.

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In 2010​, the Lee family had a disposable income of ​$70​,000, wealth of ​$210​,000, and an expected future income of ​$70​,000 a year. The graph shows the Lee​ family's supply of loanable funds curve.In 2011​, suppose the stock market crashes and default risk increases.Draw a new curve to show the effect of the change in default risk on the Lee​ family's supply of loanable funds curve. Label it.

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In the​ graph, draw a point that shows the outcome if the Fed wants to lower the interest rate to 0.705 percent and label it B. Draw and label the curve that the Fed shifts to achieve its desired outcome.

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Show the effect on the real interest rate and equilibrium quantity of loanable funds of a decrease in the demand for loanable funds and an even larger decrease in the supply of loanable funds. Draw a demand for loanable funds curve. Label it DLF0. Draw a supply of loanable funds curve. Label it SLF0. Draw a point at the equilibrium real interest rate and quantity of loanable funds. Label it 1. Draw a curve that shows a decrease in the demand for loanable funds. Label it DLF1. Draw a curve that shows an even larger decrease in the supply of loanable funds. Label it SLF1. Draw a point at the new equilibrium real interest rate and quantity of loanable funds. Label it 2.

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The figure shows the demand for money curve in Epsilon. The quantity of money is​ $3.1 trillion. Draw the supply of money curve. Label it. Draw a point at the equilibrium in the money market.

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The graph gives a​ long-run aggregate supply curve and a​ short-run aggregate supply curve. Technology advances and the​ full-employment price level remains constant. Draw the new​ long-run aggregate supply curve and the new​ short-run aggregate supply curve. Label the curves. Draw a point at the​ full-employment price level and the new potential GDP.

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The graph shows a business cycle. Draw a vertical arrow that​ shows: ​1) a recessionary gap. Label it 1. ​2) an inflationary gap. Label it 2. Draw a point that shows the economy at full employment.

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The graph shows aggregate​ demand, short-run aggregate​ supply, and​ long-run aggregate supply when the U.S. economy is at a​ long-run macroeconomic equilibrium. Draw a curve that shows the effect of the fiscal stimulus payments. Label it 1. Draw a point at the new​ short-run macroeconomic equilibrium. Label it E1. Draw a curve that shows the economy in the long​ run, with no intervention from the government or the central bank. Label it 2. Draw a point at the new​ long-run macroeconomic equilibrium. Label it E2.

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The graph shows an aggregate demand curve. Draw a curve that shows the effect on aggregate demand of an increase in expected future income. Label it.

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The graph shows an economy in​ long-run equilibrium. The price of oil rises. Draw a curve that shows the effect of this event. Label it 1. Draw a point at the new​ short-run equilibrium. Label it E1. Draw a curve that shows the economy returning toward a​ full-employment equilibrium with no action by the central bank or the government. Label it 2. Draw a point at the new​ short-run equilibrium. Label it E2.

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The graph shows the demand for money curve. Draw a point to show the interest rate and quantity of money demanded when the interest rate is 5 percent a year. Draw an arrow to show the effect of an increase in the interest rate above 5 percent a year. Label it 1. Draw an arrow to show the effect of a decrease in the interest rate below 5 percent a year. Label it 2.

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The graph shows the effects on the U.S. economy of a decrease in consumption expenditure. Draw a curve that shows the return to a​ full-employment equilibrium with no interference by the government or central bank. Label the curve. Draw a point at the new​ long-run macroeconomic equilibrium.

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The graph shows the loanable funds market when there is neither a government budget surplus nor a government budget deficit. Draw a point at the equilibrium quantity of loanable funds and the equilibrium real interest rate. Label it 1. Now suppose that the government has a budget deficit of​ $1 trillion. Draw a curve that shows the effect of this deficit in the loanable funds market. Label it. Draw a point at the new equilibrium real interest rate and quantity of saving. Label it 2. Draw a point to show investment when the government budget deficit is​ $1 trillion. Label it 3.

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The graph shows the loanable funds market when there is neither a government budget surplus nor a government budget deficit. Draw a point at the equilibrium quantity of loanable funds and the equilibrium real interest rate. Label it 1. Now suppose that the government has a budget surplus of​ $1 trillion. Draw a curve that shows the effect of this surplus in the loanable funds market. Label it. Draw a point at the new equilibrium real interest rate and quantity of investment. Label it 2. Draw a point to show private saving when the government budget surplus is​ $1 trillion. Label it 3.

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The graph shows the loanable funds market. During the​ 1990s, the invention and use of​ fiber-optic technologies required billions of dollars to be spent laying new cables under the oceans and launching communications satellites. Draw a curve that shows the effect of this event. Label it. Draw a point to show the new equilibrium quantity of loanable funds and real interest rate.

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n 2012​, the Lee family had disposable income of ​$110​,000, wealth of ​$440​,000, and an expected future income of ​$110​,000 a year.At a real interest rate of 4 percent a​ year, the Lee family saves ​$20​,000 a​ year; at a real interest rate of 6 percent a​ year, they save ​$25​,000 a​ year; and at a real interest rate of 8 ​percent, they save ​$30​,000 a year.

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​Real-Time Data Analysis​ Exercise* ​*Real-time data provided by Federal Reserve Economic Data​ (FRED), Federal Reserve Bank of Saint Louis. In December 2017​, the quantity of M2 was ​$13 comma 833 billion and the nominal interest rate was 1.41 percent. In the graph to the​ right, draw a point that shows the money market in December 2017 and label it A. Draw and label the M2 demand curve in December 2017. Draw and label the M2 supply curve in December 2017.

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The BLS reported the CPI data shown in the table to the right. Date CPI December 2015 237.8 December 2016 242.8 December 2017 248.0 Calculate the inflation rates for the years ended December 2016 and December 2017. How did the inflation rate change in the year ended December 2017​? The inflation rate​ _____ . A.didn't change B.increased C.decreased

The inflation rate in the year ended December 2016 was 2.1 percent per year. The inflation rate in the year ended December 2017 was 2.1 percent per year A.didn't change

A typical family on Sandy Island consumes only juice and cloth.Last​ year, which was the base​ year, the family spent ​$12 on juice and ​$42 on cloth. In the base​ year, juice was ​$4 a bottle and cloth was ​$6 a length.This​ year, juice is ​$3 a bottle and cloth is ​$7 a length. What is the CPI​ basket? What is the CPI and the inflation rate in the current​ year?

The CPI basket is 3 bottles of juice and 7 lengths of cloth. The CPI in the current year is 107.4. The inflation rate in the current year is 7.4 percent.

The Bureau of Labor Statistics reported the following data for January 2018January 2018. Labor force 161,115 Employed 154,430 Working-age population 256,780

Unemployment rate 4.1 percent Labor force participation rate 62.7 percent Employment to population ratio 60.1 percent

Classify each of the following into the appropriate category of unemployment. Your choices​ are: Frictional Cyclical Structural Seasonal Not unemployed ​ a.An unemployed auto assembly line worker during a sales slump. ​b.A snow plow driver during the summer. ​c.A record player repairman who has not learned the latest laser disk player repair technology. d. A computer programmer who quits his job to look for a job with better benefits. e.A high school dropout with few skills who has been looking for a job unsuccessfully for weeks. ​f.A person who leaves their job to attend graduate school full time. g.A recent business school graduate looking for her first job. h.A person whose job has been automated out of existence. ​i.A vendor who sells beer at major league baseball games during the winter months. ​j.A welder who finds that robots have replaced most of the welding jobs on assembly lines. ​k.A top salesman for a computer company who quit because he did not like his boss. ​l.A parent who quit to care for his or her child at home. This person has removed themself from the labor force

a. Cyclical b. Seasonal c. Structural d. Frictional e. structural f. Not unemployed g. frictional h. Structural i. Seasonal j. Structural k. Frictional l. Not unemployed

If inflation is anticipated to be 5 percent per year and actual inflation for that year turns out to be 7​ percent, identify whether each of the following groups would be helped or hurt by​ this, or if the effort is indeterminate. ​ a. People who are living on fixed incomes. ​b. Banks that have made​ long-term fixed rate loans. ​c. People who have purchased bonds. ​d. A person who has purchased real estate with a bank loan. ​e. A recent college graduate with many loans to pay back. ​f. People who have purchased stock. ​g. Governments that have sold bonds. ​h. Savers with open passbook accounts. ​i. People who have purchased precious metals. ​j. Wage earners who are members of a strong union.

a. hurt b. hurt c. hurt d. helped e.helped f.helped g. helped h. hurt i. helped j. indeterminate

In​ Japan, potential GDP is 600 trillion yen and the graph shows the aggregate demand​ curve, the​ short-run aggregate supply​ curve, and the​ long-run aggregate supply curve. The graph shows that Japan has an output gap that is____ gap. Draw a horizontal arrow at the equilibrium price that shows the output gap. The size of the_____gap is gap is yen _____

an inflationary look at picture on phone inflationary, 100 trillion

The U.S. dollar exchange rate decreased from ​$1.34 Canadian in March, 2017 to ​$1.29 Canadian in March,2018​, and it decreased from 112.92 Japanese yen in March,2017 to 106.09 yen in March,2018. ​*Real-time data provided by Federal Reserve Economic Data​ (FRED), Federal Reserve Bank of Saint Louis. Did the U.S. dollar appreciate or depreciate against the Canadian​ dollar? The U.S. dollar______against the Canadian dollar. Did the U.S. dollar appreciate or depreciate against the Japanese​ yen? The U.S. dollar______against the Japanese yen.

depreciated depreciated

The quantity of labor demanded is the number of labor hours _____ during a given period. The quantity of labor supplied is the number of labor hours___during a given period. The ____wage rate adjusts to bring the labor market to equilibrium.

hired by all the firms in the economy that all the households in the economy plan to work real

What are the three sources of global investment​ funds? (Separate with a​ comma, no plurals or​ abbreviations.)

household saving, government budget surplus, borrowing from the rest of the world

Month, year Employment Unemployment ​(thousands) January, 2017 152,076 7,642 December, 2017 154,021 6,576 January, 2018 154,430 6,684 In January, 2018 the number employed ____and the unemployment rate ____.did not change . Over the year since January, 2017 the number employed ___and the unemployment rate ____. .

increased, did not change increased, decreased

The multiplier increases when the marginal propensity to consume___

increases

An increase in expected future income_____aggregate demand. An increase in the expected future inflation rate ____aggregate demand. An increase in expected future profits ______ aggregate demand.

increases increases increases

The graph shows demand for loanable funds curve. Suppose the real interest rate falls. Draw either an arrow along the demand curve showing the direction of change or a new demand curve.

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The table provides information about the U.S. CPI for December each year from 2011 to 2017. The U.S. CPI Month-year CPI Dec -2011 227.2 Dec -2012 231.2 Dec-2013 234.7 Dec-2014 236.3 Dec-2015 237.8 Dec-2016 242.8 Dec-2017 248.0 The numbers in the table are____ The reference base year for the CPI is _____ The CPI for December 2017 tells us that since the reference base​ year, the price level has increased by_____ In the year to December 2017​, the inflation rate measured by the CPI was___

price levels 1982-1984 148.0 % 2.1 %