econ222 final

The supply of money curve is... A) upward sloping, showing the influence of the interest rate. B) horizontal because interest rates are fixed at any one moment. C) vertical because the quantity of money is fixed at any one moment. D) downward sloping, showing the negative influence of the interest rate.

C

When the real interest rate ________ the equilibrium real interest rate, there is a ________ of loanable funds and the real interest rate ________. A) exceeds; surplus; rises B) is less than; surplus; rises C) exceeds; shortage; rises D) is less than; shortage; rises

D

A newspaper headline reads "A New Wave of Workers Enters the Job Market!" This wave of young, new entrants to the labor market is likely to lead to... A) an increase in the natural unemployment rate. B) a decrease in the unemployment rate. C) no effect on the unemployment rate. D) a decrease in the country's potential GDP.

A

Consumption goods and services include... A) washing machines and tickets to football games. B) new homes and existing homes (as long as improvements have been made to the existing home). C) tickets to "Maroon 5"concerts and medical care provided to veterans by the government. D) new and used textbooks as long as they are sold via stores or online.

A

Diminishing returns along a production function means that each additional hour of labor employed... A) produces a successively smaller additional amount of real GDP. B) produces a successively larger additional amount of real GDP. C) produces a constant additional amount of real GDP. D) does not produce any additional real GDP.

A

Economists define investment to include purchases of... A) capital goods and inventories. B) capital goods, household durable goods, and inventories. C) capital goods, such as tools, instruments, and buildings. D) capital goods, equity stocks, and bonds. E) capital goods, equity stocks, and inventories.

A

Gross Domestic Product is equal to the market value of all the final goods and services ________ in a given period of time. A) produced within a country B) consumed within a country C) consumed by the citizens of a country D) produced by the citizens of a country

A

If real GDP grows at a faster rate than does population, then the standard of living, as measured by real GDP per person, A) improves. B) worsens. C) remains the same. D) cannot be measured.

A

If the interest rate is greater than the equilibrium, the quantity of money demanded is... A) less than the quantity of money supplied, and the interest rate will change. B) greater than the quantity of money supplied, and the interest rate will change. C) less than the quantity of money supplied, and the demand curve for money will shift. D) greater than the quantity of money supplied, and the demand curve for money will shift.

A

In the money market, if real GDP increases, then the demand for money ________ and the equilibrium nominal interest rate ________. A) increases; rises B) increases; falls C) decreases; rises D) decreases; falls

A

In the money market, if the nominal interest rate is below the equilibrium level, A) the quantity of money demanded exceeds the quantity of money supplied. B) the quantity of money supplied exceeds the quantity of money demanded. C) asset prices will rise. D) the demand for money curve will shift leftward.

A

In the money market, if the price level rises, then the demand for money ________ and the equilibrium nominal interest rate ________. A) increases; rises B) increases; falls C) decreases; rises D) decreases; falls

A

In which of the following cases would the supply of loanable funds curve shift rightward? A) Ryan is worried about cutbacks at his firm, so his expected future income falls. B) Olivia learns that at year's end she will receive a bonus that will double her current salary. C) The stock market booms, so people's wealth increases. D) None of the above.

A

Most economists use the aggregate demand and aggregate supply model primarily to analyze A) short-run fluctuations in real GDP in the economy. B) the effects of macroeconomic policy on the prices of individual goods. C) the long-run effects of international trade policies. D) labor productivity and economic growth.

A

Other things remaining the same, the ________ the real interest rate, the ________. A) lower; greater the quantity of loanable funds demanded B) lower; greater the demand for loanable funds C) higher; greater the quantity of loanable funds demanded D) lower; greater the quantity of loanable funds supplied

A

Potential GDP is the level of... A) real GDP that the economy would produce if it was at full employment. B) nominal GDP that the economy would produce if it was at full employment. C) real GDP that the economy would produce if there was no inflation. D) nominal GDP that the economy would produce if there was no inflation.

A

Stagflation is a combination of: A) decreasing output and increasing inflation. B) decreasing unemployment and increasing inflation. C) increasing output and decreasing deflation. D) increasing unemployment and decreasing deflation.

A

The idea of "diminishing returns" means that real GDP ________ as the quantity of labor increases. A) increases at a slower rate B) decreases at a slower rate C) increases at a faster rate D) decreases at a faster rate

A

The slope of the aggregate supply curve shows that the ________ the price level, the ________. A) higher; greater is the quantity of real GDP supplied B) higher; smaller is the quantity of real GDP supplied C) lower; greater is the quantity of real GDP supplied D) higher; is the quantity of potential GDP supplied

A

The supply of loanable funds is from... A) households and the government if it has a budget surplus. B) households and the government if it has a budget deficit. C) firms and the government if it has a budget surplus. D) firms and the government if it has a budget deficit.

A

To be considered unemployed, a worker must have had... A) no employment during the week before the survey and be actively looking for a job. B) part-time employment while actively looking for a full-time job. C) employment during the week before the survey and be actively looking for a job while a student. D) no employment during the day before the survey and be actively looking for a job.

A

When the Fed increases the quantity of money, the A) equilibrium nominal interest rate falls. B) equilibrium nominal interest rate rises. C) demand for money curve shifts rightward. D) supply of money curve shifts leftward.

A

Which of the following best describes the effect on the SRAS curve if political negotiations result in a substantial decrease in the price of oil? A) The SRAS curve shifts rightward. B) The SRAS curve does not shift but there is an upward movement along it. C) The SRAS curve does not shift but there is a downward movement along it. D) The SRAS curve shifts leftward.

A

Which of the following is not included in aggregate demand? A) purchases of stock and bonds B) purchases of services such as visits to the doctor C) purchases of capital goods such as equipment in a factory D) purchases by foreigners of consumer goods produced in the United States

A

Which of the following is true regarding the measurement of GDP? A) Wages and profit income are used in the income approach to GDP. B) Wages and consumption are used in the expenditure approach to GDP. C) Consumption and investment are used in the income approach to GDP. D) Government expenditure is only counted in the income approach to GDP.

A

A cut in income taxes ________, therefore shifting the aggregate demand curve to the ________. A) decreases government transfers and consumption; right B) increases personal disposable income and consumption; right C) decreases government purchases and consumption; left D) increases corporate profits and investment; left

B

A nation's standard of living is best measured by its... A) real GDP. B) real GDP per person. C) nominal GDP. D) nominal GDP per person.

B

All of the following are examples of fiscal policy, EXCEPT when the: A) government spends on building and repairing the nation's bridges and roads. B) Fed lowers the interest rate by increasing the money supply. C) taxpayers receive a $1500 per family rebate. D) government reduces purchases of new weapon systems.

B

Holding all other influences constant, the quantity of labor supplied in a given time period depends... A) inversely on the real wage rate so that a higher real wage decreases the quantity of labor supplied. B) directly on the real wage rate so that a higher real wage increases the quantity of labor supplied. C) inversely on the quantity of labor demanded. D) on the money wage rate not the real wage rate.

B

If the real interest rate is less than the equilibrium real interest rate, there is a ________ of loanable funds, and ________. A) surplus; some borrowers cannot find the funds they want B) shortage; some borrowers cannot find the funds they want C) surplus; borrowers have an easy time finding the funds they want D) shortage; borrowers have an easy time finding the funds they want

B

If there is a rise in the price level, there is a(n) ________ movement along the SRAS curve because there is ________ in the quantity of real GDP supplied. A) downward; a decrease B) upward; an increase C) downward; an increase D) upward; a decrease

B

In addition to raising the discount rate to reduce the money supply, the Fed could also: A) purchase bonds on the open market and raise reserve requirements. B) sell bonds on the open market and raise reserve requirements. C) purchase bonds on the open market and lower reserve requirements. D) sell bonds on the open market and lower reserve requirements.

B

Spending on financial assets ________ counted as part of GDP ________. A) are; because the cash exchanged represents an expenditure B) are not; because their purchase is not spending on goods or services C) are; as long as their purchase produces income D) are not; because interest must be paid on them

B

The demand for loanable funds curve illustrates... A) the quantity of loanable funds demanded at any given level of disposable income. B) the quantity of loanable funds demanded at any given level of the real interest rate. C) the quantity of loanable funds supplied to the loanable funds market at any given level of disposable income. D) how the quantity of loanable funds demanded changes when the people's expectations about their future income changes.

B

The AD curve is a graph depicting the A) relationship between the price level and the quantity of real GDP supplied. B) business cycle during expansions and recessions. C) relationship between the price level and the quantity of real GDP demanded. D) relationship between the price level and potential GDP.

C

The labor force consists of... A) the number of people who unemployed and who are actively seeking work. B) the number of people in the working-age population who are employed or unemployed. C) all people in the population aged 16 and over who are not in jail, a hospital, or an institution or in the U.S. Armed Forces. D) the number of people who are employed minus the number of the people who are unemployed.

B

The presence of efficiency, minimum and union wages... A) can explain job rationing because they lower the natural unemployment rate. B) can explain job rationing because they raise the real wage rate above equilibrium. C) can explain job rationing because they lower the real wage rate below equilibrium. D) does not affect job rationing because they affect only the amount of job search.

B

The purpose of the Current Population Survey is to determine the... A) number of people in the population. B) employment status of the population. C) age structure of the population. D) income level of the population.

B

The quantity of money demanded is the... A) average daily volume of bank account withdrawals. B) amount that people and businesses choose to hold. C) fraction of cash holdings in an average investment portfolio. D) income and volume of profits that people and businesses would like to receive.

B

The relationship between the nominal interest rate, the real interest rate, and the inflation rate is that the... A) real interest rate is equal to the nominal interest rate plus the inflation rate. B) nominal interest rate is equal to the real interest rate plus the inflation rate. C) real interest rate is equal to the nominal interest rate multiplied by the inflation rate. D) nominal interest rate is equal to the real interest rate divided by the inflation rate. E) nominal interest rate is equal to the real interest rate minus the inflation rate.

B

When the nominal interest rate increases, the... A) quantity of money demanded increases and there is a movement upward along the demand for money curve. B) quantity of money demanded decreases and there is a movement upward along the demand for money curve. C) demand for money increases and the demand for money curve shifts rightward. D) demand for money decreases and the demand for money curve shifts leftward.

B

Which of the following events would result in higher equilibrium interest rate and greater equilibrium quantity of loanable funds? A) The supply of loanable funds shifted leftward. B) The demand for loanable funds shifted rightward. C) The demand for loanable funds shifted leftward. D) The supply of loanable funds shifted rightward.

B

Which of the following is included in the U.S.'s GDP? A) The purchase of 1,000 shares of Microsoft stock B) The purchase of a ticket to a Taylor Swift concert C) The purchase of a 1965 Ford Mustang D) Social Security payments from the U.S. government to retired people

B

Which of the following should be included in U.S. GDP? A) a computer manufactured in Mexico and sold in the United States B) a computer manufactured in the United States and sold in Mexico C) a computer manufactured in Mexico by a U.S. firm and sold in the United States D) a used computer manufactured in the United States and sold in Mexico

B

A surplus of labor is eliminated by ________ in the real wage rate and a shortage of labor is eliminated by ________ in the real wage rate. A) an increase; an increase B) an increase; a decrease C) a decrease; an increase D) a decrease; a decrease

C

Adding wages, interest, rent, and profits yields... A) gross domestic product. B) gross domestic product at factor cost. C) net domestic product at factor cost. D) gross national product.

C

An increase in government transfers is considered to be an example of ________ because it ________. A) expansionary fiscal policy; shifts the aggregate demand curve to the left, increasing real GDP B) contractionary fiscal policy; shifts the aggregate demand curve to the left, decreasing real GDP C) expansionary fiscal policy; shifts the aggregate demand curve to the right, increasing real GDP D) contractionary fiscal policy; shifts the aggregate demand curve to the right, decreasing real GDP

C

Emily is a 25 year old, full-time student. She works part time in her school library and is paid $7 an hour. She is considered to be... A) unemployed. B) not in labor force. C) employed. D) not in the working-age population because she is in college.

C

If the population of Country A is 400 and the real GDP per capita of Country A is $200,000, then the real GDP in country A is: A) $500. B) $50. C) $80,000,000. D) $8,000,000.

C

The working-age population consists of all the people in the population... A) aged 16 and over. B) aged 16 to 65. C) aged 16 and over who are not in jail, hospital, or an institution or in the U.S. Armed Forces. D) aged 21 and over who are not in jail, hospital, or an institution or in the U.S. Armed Forces.

C

Which of the following statements about GDP is correct? A) Nominal GDP values production at constant prices, whereas real GDP values production at current prices. B) Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process. C) Nominal GDP values production at current prices, whereas real GDP values production at constant prices. D) Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.

C

Which of the following would not be included in Germany's GNP? A) the production of BMWs (made by a German-based company) in South Carolina B) the production of BMWs in Germany C) the production of Michelin tires made in France by a French company and then sold to BMW in Germany for use in BMW cars D) All of the above

C

A change in financial technology that reduces the need to hold cash balances ________ the demand for money and ________ the equilibrium nominal interest rate. A) increases; raises B) increases; lowers C) decreases; raises D) decreases; lowers

D

A measure of a country's production is its... A) gross daily production. B) general daily product. C) general domestic production. D) gross domestic product.

D

Net exports of goods and services is equal to the value of... A) exports plus the value of imports. B) imports minus the value of exports. C) domestic consumption minus the value of imports. D) exports minus the value of imports.

D

Other things the same, if the Fed decreases the quantity of money, the ________ because ________. A) interest rate decreases; the supply of money curve shifts rightward B) interest rate decreases; the supply of money curve shifts leftward C) interest rate does not change; only the real interest rate is effected D) interest rate increases; the supply of money curve shifts leftward

D

Suppose the equilibrium aggregate price level is falling and the equilibrium level of real GDP is rising. Which of the following most likely caused these changes? A) Labor unions successfully negotiate an increase in nominal wages for their workers. B) Congress decides to reduce purchases of new weapon systems. C) A recession overseas causes foreigners to buy fewer U.S. goods. D) Congress decreases the minimum wage from $7.50 to $6.50 per hour.

D

Suppose the population of Timmy Town is 1,000 people and the working-age population is 800. If 200 of these people are unemployed, the unemployment rate in Timmy Town is... A) 2 percent. B) 1/5 × 100. C) 1/8 × 100. D) There is not enough information provided to calculate the unemployment rate.

D

The demand for labor curve is... A) a vertical line because firms have to hire labor. B) upward sloping, showing that as the real wage rate increases, more workers are hired. C) a horizontal line because we assume that the real wage rate is fixed. D) downward sloping, showing that the quantity of labor demanded increases when the real wage falls.

D

The growth rate of real GDP per person equals the... A) population growth rate plus the growth rate of real GDP. B) change in the economic growth rate divided by the change in the population growth rate. C) the economic growth rate per person divided by the change in the population growth rate. D) growth rate of real GDP minus the growth rate of the population.

D

The quantity of real GDP supplied decreases if the price level ________ because it ________ profits. A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases

D

Which of the following is true? A) To be classified as employed, you must be a full-time worker at a paid job. B) To be classified as employed, you must work at least 20 hours per week at a paid job. C) Part-time workers are all those who work less than 40 hours per week. D) To be classified as employed, you must work at least 1 hour per week at a paid job or 15 hours or more as an unpaid worker in your family business.

D

When the labor market is in equilibrium, i. the quantity demanded of labor equals the quantity supplied. ii. there is full employment. iii. potential GDP is produced.

i, ii and iii

Which adjustment(s) must be made to convert net domestic product to GDP? i. add indirect taxes ii. subtract subsidies iii. add depreciation

i, ii and iii