test 4 econ

Using the rule of 70 formula, how many years will it take for the annual growth rate to double if the annual growth rate for India is 6.6?

10.61

The Federal Reserve was established in 1933 in response to the Great Recession.

False

The formula for real gross domestic product (GDP) per capita is the size of the population/real GDP.

False

The nonaccelerating inflation rate of unemployment (NAIRU) is another name for actual rate of unemployment.

Fase

Which of the following is an important factor that causes the supply of loanable funds curve to shift?

If there are changes in private savings behavior If there are changes in net capital inflows. A and c only

Discretionary monetary policy is still considered an area of dispute among the Modern Consensus.

True

John Maynard Keynes was a strong proponent of fiscal policy to help stabilize the economy.

True

The loanable funds market includes many financial markets such as stock and bond markets.

True

The money demand curve is negatively sloped, which indicates that a higher interest rate leads to a higher opportunity cost of holding money and reduces the nominal quantity of money demanded.

True

The nonaccelerating inflation rate of unemployment (NAIRU) refers to the unemployment rate where inflation does not change overtime.

True

Which of the following is considered a role of money?

a unit of account

Which of the following economists are associated with Classical macroeconomics?

adam smith and david ricardo

The short-run Phillips curve (SRPC)

all of the above

Which of the following explains differences in economic growth rates among countries?

all of the above

Which of the following are considered the two main parts of the Federal Reserve System?

board of governors and twelve regional banks

A bank's assets include bank deposits it holds.

false

According to the Fisher effect, the real interest rate is affected by changes in expected inflation.

false

An example of a short-term interest rate would be an interest rate on a five-year certificate of deposit.

false

An example of infrastructure would be a computer.

false

An investment bank is a type of deposit-taking bank that specializes in issuing home loans.

false

Economist Milton Friedman is associated with Keynesian Macroeconomics.

false

Interest rates on financial assets that mature several years in the future refer to short-term interest rates.

false

The Federal Open Market Committee is an institution that oversees and regulates the banking system and therefore controls the monetary base.

false

The Great Moderation refers to the period in the US economy from 2007 to 2009.

false

The aggregate production function can exhibit diminishing returns to physical capital when both human capital and technology are allowed to increase.

false

The demand curve for loanable funds slopes upward.

false

The long-run Phillips curve (LRPC) is downward sloping in the long run.

false

The money supply curve shows how the nominal quantity of the money demand varies with the interest rate.

false

The reserve ratio refers to the bank's reserves held over its required reserves.

false

There is an indirect relationship between the quantity of loanable funds supplied and the interest rate.

false

When deflation is unexpected, borrowers are benefited and lenders are hurt.

false

Which of the following is a function of the Federal Reserve System?

maintaining stability

An example of commodity money would be crude oil.

true

At the equilibrium interest rate, the quantity of loanable funds demanded equals the quantity of loanable funds supplied.

true

Economist David Ricardo contributed to Classical macroeconomics with his Principle of Comparative Advantage.

true

Gold, silver, tobacco, and shells have all been used as money at one time in the United States.

true

In the short run, there is a negative relationship between the inflation rate and the unemployment rate.

true

Labor productivity has increased overtime in the United States as a result of human capital.

true

Nearly all macroeconomists believe that the government should not seek to balance the budget.

true

Rules set by the Federal Reserve that determine the minimum reserve ratio for a bank are reserve requirements.

true

The Federal Open Market Committee consists of the Board of Governors, the President of the New York Federal Reserve Bank in addition to five other regional Federal Reserve Bank presidents.

true

The concept of crowding out reduces overall investment spending in the economy.

true

The discount rate is known as the interest rate that the Federal Reserve charges on loans to banks.

true

The equilibrium point in the money market model is determined where the money supply curve intersects the money demand curve.

true

The expected inflation rate is considered the most important factor affecting the inflation rate.

true

The formula for the rate of return is equal to (Revenue from project − Cost of project) divided by the Cost of project multiplied by 100.

true

The government can support, regulate, and pay for infrastructure.

true

The interest rate is determined by the supply and demand for money according to the liquidity preference model of the interest rate.

true

The opportunity cost of holding money is measured by the foregone return that could have been earned by holding other financial assets.

true

The size of the money multiplier is reduced when funds are held as cash rather than as checkable deposits.

true