Macro Final TTU

A decrease in the required reserve ratio

Will increase the money supply

Saving equals

Y-C

Inflation Rate

[CPI(year2) - CPI(year1)] / CPI(year1) X 100

As commercial banks keep more excess reserves, money creation

Decreases

The broadest-based price index available is the

GDP deflator

Unemployment Rate

Unemployed / Labor Force X 100%

Tax Multiplier

-MPC/MPS

Investment Multiplier

1 / 1-MPC

Government Spending Multiplier

1/MPS

A prolonged and deep recession is called

A depression

The government wants to encourage consumer spending through cutting income taxes. This is an example of

A fiscal policy

A price index is

A measurement showing how the average price of a bundle of goods changes over time.

A load made by a bank is considered _______ of that bank

An asset

Unemployment means that

At the going wage rate, there are people who want to work but cannot find work

Aggregate Output is always

Equal to Aggregate Income

If the changes in the business inventories is zero, then final sales are

Equal to GDP

A period during which aggregate output rises is known as a

Expansion

If output is rising and unemployment is falling, the economy MUST be in a

Expansion

The ____ an change the quantity of money in the economy.

Federal Reserve

Final Sales

GDP-Changes in Business Inventories

Net Investment

GDP-Consumption-Gov. Purchases-exports+imports-depreciation

Traveler's checks are

Included in M1 and M2

Inflation is a

Increase in the overall price level

During recessions, government spending usually

Increases because unemployment payments increase

Firms react to unplanned in inventory reductions by

Increasing output

Profits earned in the United States by foreign owned companies are included in

The U.S. GDP but not GNP

The main disadvantage of using money as a store of value is that

The value of money actually falls when the prices of goods and services rise

If planned investment exceeds actual investment

There will be a decline in inventories

The major lesson of the circular flow diagram is that

Total income in the economy must always equal total spending

An expansion is usually associated with rising price levels.

True

Depreciation is included in GDP, but excluded from NNP

True

For you to be considered out of the labor force, you can be

a full-time retiree, a full-time student, a full-time volunteer.

A period when the economy shrinks is known as

a recession, contraction, and slump

Gross national product is the total market value of

all final goods and services produced by resources owned by a country, regardless of where production takes place.

In a business cycle, a peak represents the end of ____ and a trough represents the end of _____

an expansion; a recession

GDP

consumption+investment+gov. consumption+Net Exports

Classifying discouraged workers as unemployed would

increase the unemployment rate.

Policies designed to affect the quantity of money are

monetary policies

Discouraged workers are

not considered as part of the labor force

In the goods-and-services market, households

only demand

Gross domestic product measured in terms of the prices of a fixed, or base, year is

real GDP

If autonomous consumption increases, the size of the multiplier would

remain constant

Unemployment generally _____ during recessions and _____ during expansions

rises; falls

Gross domestic product measures

the total income of everyone in the economy, the value of all output in the economy, the total spending of everyone in the economy.