Econ Final Exam T/F
In economics, the term "free market" refers to a market where no sales tax is imposed on products sold.
false
In market economies, income distribution is always going to be completely equitable.
false
The inflation rate measures the average prices of goods and services in the economy.
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The main goal of monetary policy for recent Fed Chairmen has been to maintain high employment in labor markets.
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When the federal reserve increases the money supply, people spend more because interest rates fall
true
the marginal propensity to consume is the slope of the consumption function
true
A period of economic expansion ends with a business cycle trough
false
Accumulating a greater number of inputs will ensure that an economy will experience economic growth.
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An increase in quantity supplied is represented by a rightward shift of the supply curve.
false
An increase in the price level in the United States will shift the aggregate expenditure line upward.
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Consumers make all economic decisions in a mixed economy
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Contractionary monetary policy refers to the Fed's decreasing the money supply and decreasing interest rates to decrease real GDP.
false
Countries without well-developed financial systems are able to sustain high levels of economic growth
false
Eliminating frictional unemployment would be good for the economy.
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If Blake can pick more cherries in one hour than Cody, then Blake has a comparative advantage in cherry picking.
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If Gladys sells her 2003 Jeep Cherokee for $3,500 in 2018, the sale of her car contributes $3,500 to 2018 GDP.
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If bankers become more uncertain regarding future deposits and withdrawals and choose to hold more excess reserves against deposits, the money multiplier will increase.
false
If nominal GDP is less than real GDP then the GDP deflator will be greater than 100
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If planned investment is greater than actual investment, then aggregate expenditure is less than gdp
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If the CPI falls from 142 to 140 between two consecutive years, this implies that prices fell by 2% between those two years.
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If the demand curve for a product shifts to the right and the supply curve for a product shifts to the left, equilibrium price and equilibrium quantity will both increase
false
If the demand for a product decreases and the supply of the same product increases, the equilibrium quantity will increase.
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In the circular flow model, households supply resources such as labor services in the product market.
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Monetary policy is conducted by the US Treasury Department
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Most economists believe that labor unions significantly increase the overall unemployment rate in the United States.
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Nominal GDP measures the value of all final goods and services at base-year prices.
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Paying efficiency wages are a way for a company to cut costs and become more efficient, and are therefore lower than market wages.
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Paying efficiency wages are a way for a company to cut costs and become more efficient, and are therefore lower than the market wages
false
Peanut butter and jelly are complements. If the price of peanut butter increases, the demand for jelly will increase.
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Physical capital refers to stocks and bonds
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Policies based on normative economic ideas tend to increase economic efficiency and improve equity.
false
Rent control is an example of a price floor
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Residential investment includes spending by firms on office buildings.
false
The Fed can directly lower the inflation rate.
false
The Fed has complete control over the money supply.
false
The amount of national income in an economy equals the money supply in an economy.
false
The difference between consumer surplus and producer surplus in a market is equal to the deadweight loss.
false
The fed can directly lower the inflation rate
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The marginal propensity to consume measures the average amount of wealth that a consumer spends in a given period of time.
false
The natural rate of unemployment consists of frictional unemployment plus cyclical unemployment.
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The term "market" refers only to trading arrangements that have been approved by the government
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There is a shortage of every good that is scarce.
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To obtain real average hourly earnings, nominal average hourly earnings are multiplied by the CPI.
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Transfer payments are subtracted from national income to get to personal income
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countries without well developed financial systems are able to sustain high levels of economic growth
false
for most goods and services, the burden of a tax is on the sellers
false
the difference between consumer surplus and producer surplus in a market is equal to the dead weight loss
false
when the government faces a budget deficit, which usually causes crowding-in phenomena
false
A surplus is defined as the situation that exists when the quantity of a good supplied is 3eater than the quantity demanded.
true
An increase in the unemployment rate may be represented as a movement from a point on the PPF to a point inside the frontier
true
Consider a country that produces only two goods: pineapples and tractors. Suppose it is possible for this country to increase its production of pineapples without producing fewer tractors. In this case, its current output combination is inefficient.
true
Expansionary monetary policy enacted during a recession will cause the inflation rate to increase.
true
Financial markets and financial intermediaries comprise the financial system.
true
Housing is the largest component of the U.S. CPI market basket.
true
If aggregate expenditure is more than GDP, then inventories fall and GDP rises.
true
If income is unequally distributed in an economy, increases in GDP may not raise well-being in an economy.
true
If inflation expectations are increasing, we would expect that the nominal interest rate would also be increasing, holding all else constant.
true
If inflation is higher than expected, this helps borrowers (by reducing the real interest rate they pay) and hurts lenders (by reducing the real interest rate they receive)
true
If planned AE is less than real GDP, some firms will experience unplanned increases in inventories
true
If planned aggregate expenditure equals GDP, the economy is in macroeconomic equilibrium.
true
If the population increases and input prices increase, the equilibrium price of a product will definitely increase
true
If the rate of growth in real GDP exceeds the rate of growth in the money supply, the quantity theory of money predicts a price deflation.
true
In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it can still benefit by trading with the other country.
true
In an economy with money, as opposed to barter, people are more likely to specialize in the production of goods and services.
true
Increases in capital per hour worked cannot sustain high rates of economic growth unless accompanied by technological change.
true
Money will fail to serve as a medium of exchange if it ceases to be a store of value
true
Most U.S. currency held outside the U.S. banking system is held by foreigners.
true
The additional benefit to a consumer from consuming one more unit of a good or service is the marginal benefit.
true
The division of the burden of a tax between buyers and sellers in a market is called tax incidence
true
The household survey asks adults about their employment status and is used to compile the monthly unemployment rate
true
The household survey asks adults about their employment status and is used to compile the monthly unemployment rate.
true
The quantity equation becomes the basis for a theory when we assume that velocity of money is constant
true
if consumers believe that the price of hybrid vehicles will decrease in the future, this will cause the demand for hybrid vehicles to decrease now.
true
As population declines, scarcity eventually disappears
false