Macroeconomic Chapter 7, 8 , 10, 11 Q&A

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Nominal GDP in Year 4 is equal to: year units of output price per unit 1 40 $1 2 30 2 3 50 2 4 70 4 5 60 6 6 60 8

$280

Which of the following is considered to be an IOU?

bond

Unanticipated inflation:

reduces the value of money.

Menu costs are

the real costs of changing listed prices.

Use this scenario to answer questions 155-163. Scenario: Income-Expenditure Equilibrium GDP is $8,000, autonomous consumption is $500, and planned investment spending is $200. The marginal propensity to consume is 0.8. Reference: Ref 11-07 (Scenario: Income-Expenditure Equilibrium) If GDP is $3,000, planned aggregate spending is:

$3,100

The value of Year 4's output in nominal dollars is: year output price per unit 1 2 $2 2 3 4 3=based period 4 5 4 6 6 5 7 9

$36.

Suppose that Mr. Green Jeans sells $5,000 of wheat to Big Ben Bakery. Big Ben uses the wheat to make flour and then hamburger buns, which they sell to Hamburger Heaven for $11,000. Hamburger Heaven also buys $20,000 of beef from a rancher. Hamburger Heaven uses the beef and buns to make 10,000 hamburgers which are sold for $5 each. How much do these transactions add to GDP?

$50,000

Use this scenario to answer questions 155-163. Scenario: Income-Expenditure Equilibrium GDP is $8,000, autonomous consumption is $500, and planned investment spending is $200. The marginal propensity to consume is 0.8. Reference: Ref 11-07 (Scenario: Income-Expenditure Equilibrium) How much is consumption?

$6,900

Consider the information on the economy of Centralia. Centralia has no trade and no government. GDP = $25 trillion. Consumption Spending = $18 trillion. What is the level of investment spending in Centralia?

$7 trillion

If your disposable income increases from $10,000 to $15,000 and your consumption increases from $9,000 to $12,000, your MPC is:

0.6.

If the aggregate consumption equals $100,000,000 + .75 × YD, then the marginal propensity to consume is:

0.75.

Financial intermediaries are :

1. mutual funds. 2. pension funds. 3. insurance companies.

In a group of ten people, there are three retirees, two part time workers, two discouraged workers, one unemployed worker, and two full time workers. For this group, the unemployment rate is:

20%.

The labor force is: Fulled-time employed ------------ 20mill Not working but looking for work--2mill Part-Time employed---------------10mill Discouraged workers-------------1 mill

32 million.

If the slope of the aggregate expenditures curve = 0.75, the multiplier is equal to:

4.

If the MPC is 0.8, then the multiplier is:

5.

Use this scenario to answer questions 155-163. Scenario: Income-Expenditure Equilibrium GDP is $8,000, autonomous consumption is $500, and planned investment spending is $200. The marginal propensity to consume is 0.8. (Scenario: Income-Expenditure Equilibrium) The multiplier is:

5.

The equilibrium interest rate and total quantity of lending are:

6% and $3 trillion. graph and i just look at the equilibrium and easily identified the answer.

In an economy without government purchases, government transfers, or taxes, aggregate autonomous consumer spending is $250 billion, planned investment spending is $100 billion, and the marginal propensity to consume is 0.6. What is the expression for planned aggregate spending?

AEPlanned = $350 + 0.6 × YD

The binding minimum wage of P3 leads to unemployment of:

Q4 - Q1. graph...

An example of a government transfer is a(n):

Social Security payment.

Most recessions originate from:

a decrease in aggregate demand.

Which of the following qualify as an asset from the viewpoint of a household?

a house

If a country experiences a trade surplus, we can conclude that it is also experiencing:

a net capital outflow.

A liability is:

a requirement that you pay income in the future.

Anticipated inflation affects:

all aspects of the economy.

An increase in the wealth of households, all other things unchanged, may be expected to result in _______ the aggregate consumption function.

an upward shift in

To be counted as unemployed, one must:

be out of work and be actively looking for a job.

Real GDP is nominal GDP adjusted for:

changes in prices.

The ______ is the most widely used measure of inflation in the United States unit.

consumer price index

Which one of the following price indices measures the cost of living?

consumer price index

Physical capital is purchased through investment spending, which in turn is mostly financed out of:

domestic and foreign savings.

The natural rate of unemployment is:

equal to the sum of frictional and structural unemployment.

(Figure: Income-Expenditure Equilibrium) If investment spending decreases in this economy, then the:

graph... AE will shift down, decreasing the income-expenditure equilibrium.

If the interest rate is greater than ______, then the quantity supplied of loanable funds will _______ the quantity of loanable funds demanded.

graph... the interest rate on the graph is 8% and the quantity of loans is $300... The point is in the middle... the equilibrium .. answer is 8%; be greater than

A business will want to borrow to undertake an investment project when the rate of return on that project is:

greater than the interest rate.

Private savings is equal to:

income less consumption.

Disposable income equals:

income plus government transfers minus taxes.

Suppose that after some time with a minimum wage of WF, the government abolishes the minimum wage. Employment would:

increase to QE. graph...

Over the last year, Eli has been working very hard and his employer has taken notice by giving him a 6% raise in his salary. During this last year, overall prices in the economy have increased by 4%. Given this information, Eli's real wage has:

increased by 2%.

Shoe-leather costs refer to the costs of:

increased number of transactions as inflation increases.

When a corporation borrows money from lenders in exchange for a fixed share of the firm's assets and potential profits, the corporation is:

issuing stocks.

If the price of an asset is expected to rise in the future:

it will be more in demand today.

Spending on inputs is __________________ and spending on investment is _______________.

not a part of GDP, part of GDP

According to the official unemployment rate a person who is not working and is not looking for work is:

not counted in the unemployment statistics.

A country's living standard is best measured by the:

per capita real GDP.

GDP is the sum of:

personal consumption, investment, government purchases, and net exports.

Investment equals:

planned investment plus unplanned investment.

Rising inventories typically indicate _______ unplanned inventory investment and a _________ economy.

positive; slowing

In the closed economy of Sildavia, government spending during 2005 was $30 billion, consumption was $70 billion, taxes were $20 billion, and GDP was $110 billion. If investment spending in Sildavia during 2005 was $10 billion, we can conclude that:

private savings were equal to $20 billion.

Periods of recession are likely to be marked by:

rising unemployment.

Governments can engage in saving when:

taxes are greater than expenditures.

Among financial intermediaries are all of the following except:

the New York Stock exchange.

The marginal propensity to consume is equal to:

the change in consumer spending divided by the change in aggregate disposable income.

Nominal GDP is:

the current dollar GDP.

The market(s) that channel excess savings of households into investment spending by firms is(are) known as:

the financial markets.

When there is deflation in the economy:

the general price level falls.

The price determined in the market for loanable funds is:

the interest rate.

The slope of the planned aggregate spending line is determined by:

the marginal propensity to consume.

Which of the following is NOT included in investment spending in the national income accounts?

the purchase of stocks and bonds by a business

Structural unemployment is:

unemployment that results when there are more people seeking jobs than there are jobs available at the current wage rate.


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