macro
If the public debt in some country is $300 billion, and 25 percent is held by the citizens in that country, and the rest held by citizens of foreign countries, how much is owned by each respectively?
$75 held by citizens of the country and $225 held by citizens of foreign countries.
If the effective federal funds rate is 1.64 percent, which of the following is most likely to be the Fed's target range for the federal funds rate?
1.50 to 1.75
In the accompanying table for a particular country, C is consumption expenditures, Ig is gross investment expenditures, G is government expenditures, X is exports, and M is imports. All figures are in billions of dollars. If the amounts of GDP supplied at the price levels shown (in descending order) are $27, $25, $22, $18, and $13, the equilibrium price level will be
125
Other things equal, if the national incomes of the major trading partners of the United States were to rise, the U.S.
aggregate demand curve would shift to the right.
The amount by which government expenditures exceed revenues during a particular year is the
budget deficit.
The public debt is the amount of money that
the federal government owes to holders of U.S. securities.
Which of the following would most likely shift the aggregate demand curve to the right? an increase in stock prices that increases consumer wealth increased fear that a recession will cause workers to lose their jobs an increase in personal income tax rates a reduction in household borrowing because of tighter lending practices
an increase in stock prices that increases consumer wealth
The short-run aggregate supply curve is steeper at outputs above the full-employment output. This is because the economy's
available resources are already employed and adding more workers to a fixed number of capital resources reduces the efficiency of workers leading to rising per-unit production costs.
Other things equal, an excessive increase in the money supply will
decrease the purchasing power of each dollar.
Which one of the following is presently a major deterrent to bank panics in the United States?
deposit insurance
Answer the question based on the following information for a bond having no expiration date: bond price ($1,000); bond fixed annual interest payment ($100); bond annual interest rate (10 percent). If the price of this bond increases to $1,250, the interest rate will
fall to 8 percent.
The crowding-out effect of expansionary fiscal policy suggests that
government spending increases at the expense of private investment.
The Federal Reserve System
is basically an independent agency.
Other things equal, if the supply of money is reduced,
bond prices will fall.
Refer to the diagram, in which Qf is the full-employment output. If aggregate demand curve AD2 describes the current situation, appropriate fiscal policy would be to
do nothing since the economy appears to be achieving full-employment real output.
Graphically, cost-push inflation is shown as a
leftward shift of the AS curve.
It is costly to hold money because
in doing so, one sacrifices interest income.
Assume that the MPC is 0.80 and that prices are fully flexible. If the Federal Reserve increases the money supply and investment spending increases by $10 billion, then aggregate demand is likely to
increase by $50 billion.
In the diagram, a shift from AS2 to AS3 might be caused by a(n)
increase in business taxes and costly government regulation.
An increase in the money supply will
lower interest rates and increase the equilibrium GDP.
Prior to the 2007-2009 financial crisis, the most frequently employed monetary policy tool was
open-market operations.
A rightward shift in the aggregate supply curve is best explained by an increase in
productivity
The pushing-on-a-string analogy makes the point that monetary policy may be better at
pulling the aggregate demand curve leftward than pushing it rightward.
The Fed, at the close of 2015, announced its intent to end monetary stimulus and return short-term interest rates to a normal range. Its plan was to
raise the IORB and ON RRP rates and begin quantitative tightening.
The accompanying table gives budget information for a hypothetical economy. Assume that all budget surpluses are used to pay down the public debt. The public debt declined in year
6
Which of the following best describes the effect of the zero interest rate policy implemented in December 2008?
Its effectiveness was limited by the zero lower bound problem.
The desire to hold money for transactions purposes arises because
receipts of income and expenditures are not perfectly synchronized.
Suppose the price level is fixed, the MPC is 0.5, and the GDP gap is a negative $80 billion. To achieve full-employment output (exactly), government should
reduce taxes by $80 billion.
The cyclically-adjusted budget deficit for the United States
rose to −7.5 percent of potential GDP in 2009.
The crowding-out effect is
strongest when the economy is at full employment.
An economy is employing 2 units of capital, 5 units of raw materials, and 8 units of labor to produce its total output of 640 units. Each unit of capital costs $10; each unit of raw materials, $4; and each unit of labor, $3. If the per-unit price of raw materials rises from $4 to $8 and all else remains constant, the aggregate
supply curve would shift to the left.
The equilibrium rate of interest in the market for money is determined by the intersection of the
supply-of-money curve and the total-demand-for-money curve
The Board of Governors of the Federal Reserve has _________blank members.
7
Which of the diagrams for the U.S. economy best portrays the effects of declines in the prices of imported resources?
A
The operational lag of fiscal policy is reflected in event(s)
Consumption spending begins to rise, aggregate demand increases, and the economy begins to recover.
In the accompanying table for a particular country, C is consumption expenditures, Ig is gross investment expenditures, G is government expenditures, X is exports, and M is imports. All figures are in billions of dollars. The interest-rate effect of changes in the price level is shown by columns
Price Level and Ig in the table.
If you write a check on a bank to purchase a used Honda Civic, you are using money pr
a medium of exchange.
The table gives aggregate demand and supply schedules for a hypothetical economy. If the price level is 250 and producers supply $450 of real output,
a surplus of real output of $150 will occur.
In defining money as M1, economists exclude time deposits because
they are not directly or immediately a medium of exchange.
The amount of money people want to hold for use as a medium of exchange is the
transactions demand for money.
The reason the long-run aggregate supply curve is vertical is
when both input prices and output prices are flexible, profit levels always adjust to give firms exactly the right profit incentive to produce the full-employment output level.
If aggregate demand increases and aggregate supply decreases, the price level
will increase, but real output may increase, decrease, or remain unchanged.
Suppose that technological advancements stimulate $20 billion in additional investment spending. If the MPC = 0.6, how much will the change in investment increase aggregate demand?
$50 billion
The U.S. public debt
consists of the historical accumulation of all past federal deficits and surpluses.
Which of the following is considered a legitimate concern of a large public debt?
crowding out of private investment
Other things equal, a restrictive monetary policy during a period of inflation will
increase the interest rate, reduce investment, and reduce aggregate demand.
A decrease in the money supply
increases the interest rate and decreases aggregate demand.
The M2 money supply includes
individual shares in money market mutual funds. Correct
A major advantage of the built-in or automatic stabilizers is that they
require no legislative action by Congress to be made effective.
If the inflation rate was on target at 2 percent and the unemployment rate was 3.4 percent, the Fed would likely adopt a(n)
neutral monetary policy
