Macroeconomics Final - LSU 2023 - Yang

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If there is a 4 percent frictional unemployment, 2 percent structural unemployment, and the actual rate of unemployment equals 9 percent, then the cyclical unemployment must be a) 3 percent b) 5 percent c) 4 percent d) 1 percent

a) 3 percent Actual rate of unemployment-frictional rate-structural rate= cyclical rate 9-4-2=3%

If bank reserves are 500, the public holds 300 in currency, and the desired reserve-deposit ratio is 0.1, the deposits are _________ and the money supply is _______. a) 5,000;5,300 b) 27,000; 30,000 c) 4,000; 4,000 d) 4,000; 16,000

a) 5,000;5,300 500/.10 = 5000 deposits 5000+300=5300 in money supply

Which of the following transactions would be included in the GDP of the United States? a) boeing builds a plane in seattle that is sold to Air Canada b) General Motors produces a car in Germany that is sold in Michigan c) Nestle produces a candy bar in Switzerland that is sold in San Francisco d) Planet Hollywood serves customers in a restaurant in Hong Kong

a) Boeing builds a plane in Seattle that is sold to Air Canada

Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point _________, if left to self correcting tendencies. a) d;b b) d;c c) b;c d) a;b

a) d;b Because since its moving from the AD1 line to the AD line it must move from (C,A) to (D,B)

If the nominal interest rate is below the equilibrium value, then the quantity demanded of money is ________ than the quantity supplied of money, bond prices will _________, and the nominal interest rate will __________. a) greater; fall; increase b) greater; fall; decrease c) greater; rise; increase d) less; fall; increase

a) greater; fall; increase

Economists refer to the talents, training, and education of workers as: a) human capital b) physical capital c) average labor productivity d) labor supply

a) human capital

If total output increases from 1,000 to 3,000 as population increases from 100 to 200, then output per person.... a) increases, but by less than 100 percent b) doubles c) triples d) remains constant

a) increases, but by less than 100 percent 1000/100= 10 3000/200=15 10 to 15 is not a 100 percent increase, but an increase none the less, therefore, a is the correct answer.

Which of the following is an example of the life-cycle motive for saving? a) Pat puts 400 per month in his 401k retirement account. b) jordan sets aside 200 per month incase she has to pay for a new roof for her house. c) gerry and terry put 2,000,000 in a trust fund that will go to their children when they die d) chris keeps 15,000 in a money market account to pay expenses in case he loses his job.

a) pat puts 400 per month in his 401k retirement account

a flow is a measure defined a) per unit of time b) at a point in time c) in real terms d) in nominal terms

a) per unit of time

Where Y is GDP, C is consumption, I is investment, (G) is government spending, (T) is net taxes, and there is no international trade, public saving equals: a) t-g b) y-t-c c) y+t-g d)y-c-t

a) t-g

The income-expenditure multiplier leads to greater than one-for-one changes in output when autonomous spending changes because: a) the direct changes in spending change the income of producers which leads to additional changes in spending b) multiple deposits are generated when new reserves are produced through fractional reserve banking c) autonomous spending supports more output than induced spending d) planned changes in inventories signal producers to adjust the level of output.

a) the direct changes in spending change the income of producers which leads to additional changes in spending

If workers and employers agree to a three-year wage contract under the expectation of 2.5 percent inflation, and inflation turns out to be 10.4 percent, then a) workers lose and employers gain b) workers gain and employers lose c) workers gain and employers gain d) workers lose and employers lose

a) workers lose and employers gain

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process: What is the value added of Fulton Family Farm? a) 0.00 b) 0.50 c) 1.50 d) 2.50

b) 0.50 Revenues-Cost 0.50-0=0.50

The data below describe the economy of Econland: Public saving in Econland equals a)-5 b)5 c) 16 d) 17

b) 5 42-25-12=5

If the CPI equaled 1.43 in 2008 and 1.56 in 2009, then between 2008 and 2009, inflation was ________ percent. a) 0.13 b) 9.09 c) 8.33 d) 8.79

b) 9.09 1.56-1.43/1.43=9.09

If short-run equilibrium output equals 30,000 and potential output (Y*) equals 25,000, then this economy has a _________ gap that can be closed by __________. a) recessionary; increasing taxes b) expansionary; increasing taxes c) expansionary; increasing government purchases d) recessionary; increasing government purchases

b) expansionary; increasing taxes

A fiscal policy action to close a recessionary gap is to? a) increase taxes b) increase transfer payments c) decrease government purchases d) decrease the real interest rate

b) increase transfer payments

An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a _________ in the inflation rate, leading to a _________ in output a) increase; increase b) increase; decrease c) decrease; increase d) decrease; decrease

b) increase; decrease

The increase in wage inequality resulting from globalization can be reversed through: a) revoking the principle of comparative advantage b) increases in worker mobility c) decreases in worker mobility. d) making markets more competitive

b) increases in worker mobility

In an open economy, a decrease in capital inflows _______ the equilibrium domestic real interest rate and _________ the quantity of domestic investment. a) increases; increases b) increases; decreases c) decreases; decreases d) decreases; increases

b) increases; decreases

"U.S. exports will increase as a result of joined CAFTA," is an example of a _______ statement, while "The U.S. should join CAFTA," is an example of a __________ statement. a) monetary policy; fiscal policy b) positive; normative c) structural policy; fiscal policy d) normative; positive

b) positive; normative

If the fed wishes to increase nominal interest rates, it must engage in an open market _________ of bonds that __________ the money supply. a) sale;increases b) sale; decreases c) sale; does not change d) purchase; increases

b) sale; decreases

The introduction of word processing software that increases the demand for workers with computer skills relative to those without such skills is an example of: a) increasing reservation prices b) skill-biased technological change c) the diminishing marginal product of labor. d) globalization.

b) skill-biased technological change

If policymakers deem inflation as being too high, then the policy response should be monetary _______, which shifts aggregate demand __________. a) tightening; right b) tightening; left c) easing; right d) easing; a left

b) tightening; left

Suppose that the total expenditures for a typical hosuehold in 2015 equaled 2,500 per month, while the cost of purchasing exactly the same items in 2017 was 3,000. If 2015 is the base year, the CPI for 2017 equals: a) 0.83 b) 1.00 c) 1.20 d) 1.25

c) 1.20 3000/2500=1.20

Assume an economy produces only footballs and baseballs and the base year is 2016. Given the data in the table above, what is the value of real GDP in 2017? a) 9,000 b) 10,000 c) 12,000 d) 12,500

c) 12,000 300x20=6000 600x10=6000 6000+6000=12,000

Based on the labor makret diagram below, if the minimum wage is increased from 10 to 12 per hour, the numbered of unemployed workers will increase by ______ workers. a) 5 b) 8 c) 13 d) 15

c) 13

Based on the information, what is the unemployment rate? Population 16 and older: 1,300,000 Participation rate: 72% Employed workers: 810,000 a) 28 percent b) 37.7 percent c) 13.5 percent d) 6.2 percent

c) 13.5 percent 1,300,000x.72= 936,000 936,000-810,000=126,000 (126,000/936,000) x 100 = 13.4 or 13.5

If the marginal propensity to consume is 0.7, then a $300 increase in disposable income leads to a ________ increase in consumption a) 25.00 b) 250 c) 210 d) 160

c) 210 300 x 0.7 = 210

Starting from a long-run equilibrium, an increase in potential output leads to _________ gap in the short run and to ________ rates of inflation in the long run. a) an expansionary; higher b) an expansionary; lower c) a recessionary; lower d) a recessionary; higher

c) a recessionary; lower

When an American buys stock in a Japanese company, from the perspective of the United States this is a(n) a) import b) export c) capital outflow d) capital inflow

c) capital outflow

The interest rate the Federal Reserve charges commercial banks to borrow reserves is called the _________ rate. a) Fed funds b) prime c) discount d) federal

c) discount

Han pays 10,000 for a newly issued two-year government bond with a 10,000 dollar face value and a 7 percent coupon rate. One year later, after receiving the first coupon payment, Han sells the bond. If the current one-year interest rate on government bonds is 6 percent, then the price Han receives is a) 10,000 b) 700 c) greater than 10,000 d) less than 10,000

c) greater than 10,000 It has to be greater than 10,000 because he was given a bond with 10,000 face value, and given interest on top of the bond given, therefore, there is no way that it could be less than 10,000 or equal to 10,000.

When the Federal Reserve reduces its target rate of inflation, it will set a _______ real interest rate at every inflation rate and the aggregate demand curve will ________. a) higher; shift to the right b) lower; shift to the right c) higher; shift to the left d) lower; shift to the left

c) higher; shift to the left

If all prices, including the price of a gallon of gasoline at the pump increased by 8 percent. Then nominal price of gasoline ______, and the relative price of gasoline ________. a) increased; increased b) increased; decreased c) increased; did not change d) decreased; increased

c) increased; did not change

One shortcoming of real GDP as an indicator of society's social well-being is that it fails to take into account the... a) growth in productivity b) increase in the quantity of goods c) non-market production d) change in the price level

c) non-market production

Bank C promises to pay a compound annual interest rate of 6 percent, while Bank S pays a 10 percent simple annual interest rate on deposits. If you deposit 1,000 in each bank, after 10 years, your deposit in Bank C equals _______, while your deposit in Bank S equals _________

d) 1791; 2,000 Bank C: 1,000(1+0.06)^10= 1791 Bank S: 1,000(1+0.1x10)=2,000

The country of Southland produced 2,000 billion of output in one year. The population of Southland was 100 million, of whom 60 million were employed. What was average labor productivity in Southland? a) 20 b) 33 c) 20,000 d) 33,333

d) 33,333 2,000 billion / 60 million= 33,333

The following table provides information about production at the XYZ-TV Company. How many workers will XYZ-TV Company hire if the going wage for TV production workers is 28,000? a) 1 b) 2 c) 3 d) 4

d) 4

If 30 percent of the population in a country is employed and average labor productivity equals 20,000, then real GDP per person equals? a) 1,500 b) 3,000 c) 5,000 d) 6,000

d) 6,000 20,000 x .30 = 6,000

Based on the diagram, if potential output equals 8,000 and the real interest rate is 2 percent, then there is _______ gap and the Fed must ________ the real interest rate so that output will equal potential output. a) a recessionary; raise b) an expansionary; reduce c) no output; not change d) an expansionary; raise

d) an expansionary; raise Since at 8,000 the PAE reaches only 4% on the expenditure line when the real interest rate is 2%, it must increase, therefore it must be an expansionary gap and they must raise the interest rate

In an open economy with a given level of real interest rates and risk, an increase in real interest rates abroad will ________ domestic net capital inflows and ___________ the equilibrium domestic real interest rate.... a) increase; increase b) decrease; decrease c) increase; decrease d) decrease; increase

d) decrease; increase

In the short-run Keynesian model where the marginal propensity to consume is 0.75, to offset an expansionary gap resulting from a 1 million dollar increase in autonomous expenditure, government spending must be ________ by ___________ a) increased; 1 million b) increased; 1.33 million c) decreased; 1.33 million d) decreased; 1 million

d) decreased; 1 million

Two groups of workers not counted as unemployed in the official unemployment statistics are ______ workers. a) chronically unemployed and short-term unemployed b) chronically unemployed and discouraged c) chronically unemployed and involuntary part-time d) discouraged and involuntary part-time

d) discouraged and involuntary part-time

An increase in interest rates by the Fed based on a given and unchanged policy reaction function represents a ______ the aggregate demand curve, and higher interest rates resulting from an upward shift in the Fed's policy reaction function represents a ________ the aggregate demand curve. a) shift left of; movement up b) shift left of; shift right of c) movement up; movement down d) movement down; shift left of

d) movement down; shift left of

To close a recessionary gap, the Fed ______ interest rates which _______ planned aggregate spending and ________ short-run equilibrium output. a) raises; increases; increases b) raises; decreases; increases c) reduces; decreases; decreases d) reduces; increases; increases

d) reduces; increases; increases

The demand for labor depends on ________ and _________. a) the supply of labor; the marginal product of labor b) the supply of labor; the price of output produced c) the rate of price inflation; the price of the output produced d) the marginal product of labor; the price of output produced

d) the marginal product of labor; the price of output produced


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