Finals ECO 201
If the MPC is 0.8 and there are no crowding-out or accelerator effects, then an initial increase in aggregate demand of $120 billion will eventually shift the aggregate demand curve to the right by
a. $216 billion.
The long-run aggregate supply curve shifts right if
a. Immigration from abroad increases b. The capital stock increases c. Technology advances d. All of the above are correct
Which of the following would cause prices to decrease and real GDP to increase in the short run?
a. Short-run aggregate supply shifts right.
According to the theory of liquidity preference, money demand
a. and the money supply are positively related to the interest rate.
When the Fed decreases the discount rate, banks will
a. borrow more from the Fed and lend more to the public. The money supply increases.
If the money multiplier is 3 and the Fed wants to increase the money supply by $900,000, it could
a. buy $300,000 worth of bonds.
At any given time, the voting members of the Federal Open Market Committee include
a. five of the presidents of the regional Federal Reserve banks. b. the president of the Federal Reserve Bank of New York. c. the seven members of the Board of Governors. d. All of the above are correct.
Which of the following explains why production rises in most years?
a. increases in the labor force b. increases in the capital stock c. advances in technological knowledge d. All of the above are correct.
Government purchases are said to have a
a. multiplier effect on aggregate supply.
Which of the following is not included in aggregate demand?
a. purchases of stock and bonds
Which of the following would cause prices and real GDP to rise in the short run?
a. short-run aggregate supply shifts right
Economic expansions in Europe and China would cause
a. the U.S. price level and real GDP to rise.
A bank has an 8 percent reserve requirement, $10,000 in deposits, and has loaned out all it can given the reserve requirement.
b. It has $800 in reserves and $9,200 in loans.
Which of the following would cause "stagflation"?
b. aggregate demand shifts left.
The change in aggregate demand that results from fiscal expansion changing the interest rate is called the
b. crowding-out effect.
In the short run, open-market sales
b. decrease the price level and real GDP.
The wealth effect stems from the idea that a higher price level
b. decreases the real value of households' money holdings.
Fiscal policy refers to the idea that aggregate demand is affected by changes in
b. government spending and taxes.
If businesses and consumers become pessimistic, the Federal Reserve can attempt to reduce the impact on the price level and real GDP by
b. increasing the money supply, which lowers interest rates.
When the Fed conducts open-market sales,
b. it sells Treasury securities, which decreases the money supply.
Assume the MPC is 0.8. Assuming only the multiplier effect matters, a decrease in government purchases of $100 billion will shift the aggregate demand curve to the
b. left by $500 billion.
Assume the MPC is 0.8. Assuming only the multiplier effect matters, a decrease in government purchases of $100 billion will shift the aggregate demand curve to the
b. left by $500 billion. Equation
Which tool of monetary policy does the Federal Reserve use most often?
b. open-market operations
Which of the following is correct concerning the FOMC?
b. the New York Federal Reserve Bank District President is always a voting member
Which of the following is not a reason the New York Federal Reserve Bank president always gets to vote at the Federal Open Market Committee meetings?
c. New York has higher population than other cities in the U.S
When a minimum-wage law forces the wage to remain above the equilibrium level, the result is
c. a surplus of labor and a shortage of jobs.
A decrease in money supply will:
c. increase aggregate demand
The discount rate is the interest rate that
c. the Fed charges banks for loans.
A bank which must hold 100 percent reserves opens in an economy that had no banks and a currency of $150. If customers deposit $50 into the bank, what is the value of the money supply?
c.$150
At a given price level, an increase in which of the following shifts aggregate demand to the right?
d. All of the above are correct
The Bureau of Labor Statistics places people in the "employed" category if they
d. All of the above are correct.
Which of the following is not correct?
d. All of the above are correct.
Who is included in the labor force by the Bureau of Labor Statistics?
d. All of the above are correct.
When we have BOTH high inflation and high unemployment at the same time, it is called: short run Phillips curve.
d. Stagflation
Banks are able to create money only when
d. only a fraction of deposits are held in reserve.
The idea that a decrease in the price level raises the real value of households' money holdings, which increases consumer spending and the quantity of goods and services demanded is known as
d. the wealth effect.
