Macroeconomics Extra Credit

The curve that shows how much GDP is demanded at various price levels is called:

aggregate demand.

Developing countries can achieve higher productivity per unit of capital because they can use technologies developed by other countries. This is known as the:

catch-up effect.

Which are determinants of short-run aggregate supply?

changes in government spending, taxes, and business and inflationary expectations

Which one of the following actions is NOT a tool of monetary policy?

changing government spending and taxes

Which of the following results is NOT expected when the Federal Reserve lowers its federal funds target rate?

decreased exports

The supply curve slopes up and to the right because:

due to constant opportunity costs, producers feel that people will buy more if they charge a higher price.

If an economy is producing at a point inside its PPF:

it is possible to produce more of one good without sacrificing some of the other good.

Infrastructure is defined as a country's:

public capital

Which of the following activities would NOT qualify a person as being in the labor force?

reading help wanted ads

An increase in demand causes the equilibrium price to __________ and the equilibrium quantity to ____________.

rise; rise

The quantity of loanable funds supplied by ________ is ________ related to the real interest rate.

savers; positively

The Fed's Board of Governors consists of _____ members who are appointed by the _____ and confirmed by the _____.

seven; President; Senate

Improvements in production capacity will:

shift the PPF outward

GDP can be found either by adding up all of the __________ or all of the __________ in the economy.

spending; income

Suppose the government implements a policy reducing the rewards earned by savers. In this case the ________ loanable funds shifts _________.

supply of; left

Because it consists of _____ items, a nation's infrastructure is difficult to measure.

tangible and intangible

Classical economists claim that ______ is the primary determinant of saving, and Keynes claimed that ______ is the primary determinant of saving.

the interest rate; income

The idea that new spending creates more new spending is known as:

the multiplier effect.

When the Fed sells bonds, it is:

tight money policy.

Production levels to the right of the PPF are:

unattainable

If an economy is operating at a point that is inside of its production possibilities frontier, then it can be assumed that its resources are:

underutilized.

______ refers to the way an economy allocates goods and services to consumers.

Distribution

Which of the following is TRUE about business cycles?

Every cycle is unique.

Markets differ in:

Geographic location and Product offered and Size

Unemployment rates over the past 50 years have tended to hover around:

5% to 6%.

The Fed's monetary policies, like fiscal policy, are subject to _____ lags.

All of the above

The fractional reserve banking system:

All of the answers are correct.

The study of macroeconomics as a specific discipline is due primarily to:

John Maynard Keynes.

Which of the following statements about monetary rules is CORRECT?

Monetary rules assume the economy is inherently stable.

In the market economy, the primary channel through which buyers and sellers communicate with each other is:

Price

______ is the total accumulation of past budget deficits less surpluses.

The public debt

According to the Taylor rule, the lower the inflation rate, other things equal, the:

higher the federal funds target rate.

In the national income and product accounts system the two main approaches to measuring the size of the economy are:

income and expenditures.

Economists generally define institutions as all of these, EXCEPT as a:

legal system that enforces contracts and laws.

Some analysts blame the last economic crisis on Fed policy. They argue that:

low interest rates encouraged excessive mortgage borrowing, leading to the housing bubble.

If both demand and supply decrease, but the decrease in demand is greater than the decrease in supply, then the equilibrium price _________________ and equilibrium output _____________.

may rise, fall, or stay the same; rises

Dave brags to his dad that his $45,000 starting salary as a computer programmer is much higher than his dad's $28,000 starting salary some years ago. If the consumer price index the year Dave begins work is 180.5 and the year his dad started work it was 110.8, Dave is:

mistaken. Adjusting for price changes, his salary is less than his dad's salary.

Increasing opportunity costs occur along the PPF because:

not all resources are equally well suited to produce all goods.

Roughly half of unemployment normally consists of:

people who lost their job.

Production efficiency occurs when goods are:

produced with the lowest possible resource cost