ap macro midterm
A
A bond is considered: a. an asset that is not part of the money supply b. M1 c. M2 d. a liability that is part of the money supply e. the same as a share of stock in a company
C
A decrease in the price of a good will result in: a. an increase in demand b. and increase in supply c. an increase in the quantity demanded d. more being supplied e. a rightward shift of the demand curve
B
A financial asset: a. the same as a physical asset like a car b. a claim that entitles the owner to future income from the seller c. the value of accumulated savings d. another term for capital e. the earnings potential of a college degree
D
A period of falling real gross domestic product is an indicator of a(n): a. peak b. trough c. expansion d. recession e. recovery
E
All of the following are responsibilities of the Fed EXCEPT: a. control the monetary base b. set the reserve requirement c. oversee & regulate the banking system d. set the discount rate e. mint bills & coins
E
All points of the production possibly curve represent: a. a shortage of econ resources b. inefficient production points c. nonfeasible production points d. econ growth e. efficient production points
C
An increase in govt transfers is considered to be an ex of ____________ bc it ______________. a. expansionary fiscal policy; shifts the aggregate demand curve to the left, increasing aggregate output b. contradictory fiscal policy; shifts the aggregate demand curve to the left, decreasing aggregate output c. expansionary fiscal policy; shifts the aggregate demand curve to the right, increasing aggregate output d. contradictory fiscal policy; shifts the aggregate demand curve to the right, decreasing aggregate output e. expansionary fiscal policy; shifts the aggregate demand curve to the right, decreasing aggregate output
A
An increase in real aggregate spending will shift the: a. money demand curve rightward b. money demand curve leftward c. money supply curve leftward d. money supply curve rightward e. both the money demand & money supply curve rightward
C
Assume that marginal propensity to consume is 0.8, & potential output is $800 billion. If current real GDP is $850, which of the following policies would bring the econ to potential output? a. increase taxes by $50 billion b. increase taxes by $10 billion c. increase taxes by $12.5 billion d. increase transfers by $12.5 billion e. increase govt spending by $10 billion
C
Deviations in the actual rate of unemployment away from the natural rate of unemployment are called: a.seasonal unemployment b. frictional unemployment c. cyclical unemployment d. structural unemployment e. operational unemployment
C
During a typical recession: a. unemployment & the growth rate of real GDP both decrease b. unemployment decreases & the growth rate of real GDP increases c. unemployment increases & the growth rate of real GDP decreases d. there is no relationship btw unemployment & the growth rate of real GDP e. unemployment increases& the growth rate of real GDP increases
B
Economists use ___________ as a model to show how savers & borrowers come tog to determine the equilibrium rate of interest. a. the money market b. the market for loanable funds c. aggregate demand & aggregate supply d. the financial system e. the foreign exchange market
B
Equilibrium in the market occurs at: a. the only price where every consumer purchases the same number of units b. the only price where every consumer purchases are willing to pay is the same as the lowest price sellers are willing to accept c. at the only price where quantity demanded is equal to zero d. at prices where there is excess demand e. at the only price where the quantity supplied is equal to zero
B
Fiscal policy refers to: a. the manipulation of interest rates b.the manipulation of govt spending& taxations c. the manipulation of the quantity of money d. the manipulation of interest rates & of govt spending e. the manipulation of imports & exports
A
Govt payments to households for which no good or service is provided in return are called: a. transfer payments b. govt purchases c. consumption expenditures d. investment expenditures e. tax revenues
D
Govt spending increases to help low- income student afford college. Which of the following is likely to result? a. automatic stabilizers will increase the contradictory impact of the decrease in aggregate demand b. automatic stabilizers will decrease the contradictory impact of the increase in aggregate demand c. automatic stabilizers will increase the expansionary impact of the increase in aggregate demand d. automatic stabilizers will decrease the expansionary impact of the increase in aggregate demand e. automatic stabilizers will have no impact on the increase in govt spending & aggregate demand
E
Gross domestic product or GDP is: a. the total dollar value of intermediate goods& services produced in the econ in a given time pd b. the total dollar value of wages paid to producing workers in a given time pd c. the total dollar value of household income earned in a given time pd d. the total dollar value of govt production in a given time pd e. the total dollar value of final goods & services produced in the econ in a given time pd
C
If a country has a working- age population of 200 million, 135 million people w jobs & 15 million ppl unemployed & seeking employment, then its unemployment rate is: a. 4% b.7.5% c. 10% d. 67.5% e. 30%
B
If disposable income increases by $5 billion & consumer spending increases by $4 billion, the marginal propensity to consume is equal to: a. 20 b. 0.8 c. 1.25 d. 9 e. 0.2
A
If the circular flow model is in equilibrium (the sum of money flows into each box is equal to the sum of the money flows out of that box), which of following is likely to happen if there is a decrease in exports? a. a decrease in the nominal GDP b. an increase in the real GDP c. a decrease in the unemployment rate d. an increase in the inflation rate e. a decrease in imports
A
If the cost of a market basket is $150 in Year 1 & $200 in Year 2, the price index for Year 1 w a Year 2 base is: a. 75 b. 100 c. 133 d. 150 e. 95
B
If the price of an asset is expected to rise in the future: a. asset owners will be more willing to sell it now b. it will be more in demand today c. the price of the asset will fall today d. the supply of the asset will increase today e. the demand for the asset will decrease today
D
In a closed econ suppose that GDP is $12 trillion. Consumption is $8 trillion & govt spending is $2 trillion. Taxes are $0.5 trillion. How much is national saving? a. $3.5 trillion b. $3 trillion c. $2.5 trillion d. $2 trillion e.$1.5 trillion
C
In a single growing season, the country of Pastoral can raise 100 tons of beef of produce 1000 boxes of tulips. In the same growing season, the country of Bucolic can raise 50 tons of beef or produce 750 boxes of tulips. At which of the prices below will trade occur btw the two countries? a. one ton of beef costs 20 boxes of tulips b. one ton of beef costs 5 boxes of tulips c. one ton of beef costs 12 boxes of tulips d. one ton of beef costs 8 boxes of tulips e. one ton of beef costs 1 box of tulips
A
In lending to Vanessa, Alison expects the inflation rate to be 8% over the next year. Vanessa agrees to pay Alison a 10% interest rate on the loan, but Vanessa expects inflation to be 9%. At the end of the year, if the inflation rate is 9%, then: a. Alison's real rat elf interest is 1% b. Alison's real rate of interest is 9% c. Vanessa ends up paying a lower real interest rate than she had expected d. Alison ends up receiving a higher real interest rate than she had expected e. Alison's real rate of interest is 2%
C
In the short run, the equilibrium price level & the equilibrium level of total output are determined by the intersection of : a. LRAS & SRAS b. LRAS & aggregate demand c. SRAS & aggregate demand d. potential output & LRAS e. potential output & aggregate demand
C
Increases in the average level of prices is called: a.depreciation b. deflation c. inflation d.expectations e. speculation
E
Opportunity cost is: a. about half the monetary cost of a product b. the monetary payment for a product c. the benefit derived from a product d. the minimum price a consumer would be willing to pay for a product e. the value of the best alternative forgone in making any choice
D
Suppose GDP is $8,000, autonomous consumption is $500, & planned investment spending is $200. The marginal propensity to consume is 0.8. At the current level of GDP, how much is consumption? a. $500 b. $8,000 c. $700 d. $6,900 e. $7,100
D
Suppose Ronny decides to withdraw all the cash out of his checking account & open a savings account at the same bank. As a result of this transaction: a. M2 falls but M1 remains unchanged b. M1 &M2 both fall c. M1& M2 both remain unchanged d. M1 falls but M2 remains unchanged e. M1 & M2 both rise
D
Suppose a seat on the Fed's Board of Governors becomes vacant. How is this vacant filled? a. the president creates a ballot of qualified candidates to be voted upon by the general public b. the president creates a list of qualified candidates &the Senate votes to elect the winner c. The secretary of the US Treasury fills the vacant d. a qualified candidate is nominated by the president & confirmed by the Senate e. the chair of the New York Stock Exchange fills the vacancy
C
Suppose that consumer expectations about the future improve. How will this affect the aggregate demand curve? a. aggregate demand shifts to the left b. there will be movement upward along the fixed aggregate demand curve c. aggregate demand shifts to the right d. there will be a movement downward along the fixed aggregate demand curve e. the aggregate demand curve will become steeper & nearly vertical
B
Suppose you manage a corner grocery store. If peanut butter is an inferior good, what do you suppose would happen to the price & quantity of peanut butter as incomes fall during an econ recession? a. the price would increase & the quantity would decrease b. the price & quantity would both increase c. the price & quantity would both decrease d. the price would decrease & the quantity would increase e. the price would decrease w no change in the quantity
B
The US production possibility curve will ________ if there is a large influx of immigrants to the labor force a. shift in b. shift out c. not change d. become more concave in shape e. become more linear in shape
D
The ________ the _____________, the ____________ the multiplier a. smaller; level of wealth;greater b. greater; MPS; greater c. greater;MPC; smaller d. greater;MPC; greater e. smaller; MPC; greater
C
The central bank has set the reserve ratio at 10%. When Theo withdraws $1000 from the first madison bank, the bank's excess reserves will initially fall by a. $1000 b. $10,000 c.$900 d.$9000 e.$0
B
The consumption function shifts when: a. current disposable income changes b. expected future disposable income changes c. people receive a pay raise d. current disposable income goes down e. the weather gets warmer in summer months
C
The cost of going to college, rather than working full time instead, is: a. tuition & the cost of housing b. tuition, the cost of housing & the cost of books c. tuition, the cost of housing, the cost of books & forgone income d. forgone income only e. tuition only
B
The federal funds rate is the interest rate at which: a. banks borrow funds directly from the Federal reserve b. banks borrow excess reserves from other banks c. influential companies borrow from banks d. households' savings are invested in the federal reserve e. the government borrows funds from the federal reserve
E
The govt of Foxystan has a balanced budget this year & operates in an open econ w exports greater than imports. How will net exports affect capital investment? a. capital investment decrease bc net exports is positive b. capital investment decreases bc the budget balance is negative c. capital investment increases bc the budget balance is positive d. capital investment increases bc the capital inflow is positive e. capital investment decreases bc the capital inflow is negative
B
The labor force is considered to be: a. all those employed b. those who are employed plus those who are unemployed c. the population of the nation d. those not frictionally unemployed plus all others employed e. the population of the nation above the age of 16
A
The narrowest definition of money excludes: a. currency in the vault at the bank b. traveler's check c. currency in circulation d. checkable bank deposits e. coins in circulation
C
The sequence of business cycle phases is: a. business cycle peak, business cycle trough, expansion, recession b. business cycle peak, expansion, business cycle trough, recession c. business cycle peak, recession, business cycle trough d. business cycle peak, expansion, recession, business cycle trough e. business cycle peak, recession, expansion, business cycle trough
B
To help increase investment spending, the govt can: a. lower taxes on consumption, so that disposable income rises b. lower taxes on the returns from savings, so that total savings increase & the interest rate falls c. raise taxes on the returns from bonds while lowering taxes on stock dividends d. lower taxes on investment spending while raising taxes on savings, so the total tax revenue remains constant e. increase the size of the annual budget deficit
D
We have to make choices bc: a. we have unlimited income b. resources are freely available c. choices have no consequences d. resources are scarce &bc choices involve a trade off e. marginal benefits never exceed marginal costs
C
When countries replaced gold & silver coins w paper money exchangeable for certain amounts of precious metals, the monetary system evolved from: a. using commodity money to using fiat money b. using commodity-backed money to using fiat money c. using commodity money to using commodity-backed money d. using fiat money to using commodity-backed money e. using fiat money to using commodity money
C
When the econ suffers a downturn, vacationers are more likely to take car trips than to fly. Which of the following provides the most reasonable explanation for this phenomenon? a. air travel & vacation travel by car are complementary goods b. air travel & vacation travel are both normal goods c. air travel is a normal good & vacation travel by car is an inferior good d. air travel is an inferior good& vacation travel by car is a normal good e. air travel & vacation travel by car are both inferior goods
B
When the price of a good increases & the quantity demanded decreases, this is often referred to as: a. efficiency b. the law of demand c. the supply schedule d. the production possibilities frontier e. the budget constraint
A
Whenever a choice is made: a. the cost of that choice could be referred to as opp cost b. the cost is easy to measure in dollar terms c. efficiency is always improved d. scarcity is not a problem e. marginal costs are greater than marginal benefits of that choice
B
Which of the following actions would allow banks to lend out more money? a. an increase in the required reserve ratio b. a decrease in the discount rate c. an increase in the federal funds rate d. an increase in the required reserve ratio coupled w an increase in the federal funds rate e. an open market sale of Treasury securities
D
Which of the following annual rates of inflation would most likely be called hyperinflation? a. 5% b. 13% c. 25% d. 2000% e. 15%
A
Which of the following demonstrates how ppl respond to incentives to make themselves better off? a. more students major in economics when they hear that salaries for economists are rising b. students are assigned dorm rooms through a lottery system c. students are encouraged to donate blood bc its the "right thing to do" d. students & faculty are encouraged to wear college apparel to support the college athletic teams e. the govt randomly selects some travelers at airports for more thorough security screenings
C
Which of the following describe 2 goods that are most likely substitutes in consumption? a. loaves of bread & sticks of butter b. loaves of bread & toasters c. loaves of bread & hamburger buns d. loaves of bread & peanut butter e. loaves of bread & textbooks
D
Which of the following is an ex of a normative statement? a. the rate of unemployment is 4% b. a high rate of econ growth creates more jobs for the country c. the fed govt spends half of its budget on national defense d. everyone in america deserves to be covered by a national health insurance e. high school graduation rates in the us are lower than they are in some european nations
B
Which of the following is an ex of normative economics? a. the min wage has not kept pace w inflation b. the min wage is an important tool in fighting poverty & should be increased c. the min wage creates higher unemployment for teens & unskilled workers d. a higher min wage is expected to increase the price of a fast food cheeseburger e. the purchasing power of min wage has declined over time
E
Which of the following statements would be a part of macroeconomics? a. a severe drought in the american midwest has reduced the corn harvest & increased corn prices b. a local hardware store has closed due to a lack of customers c. consumers have increased demand for tomatoes due to their healthy properties d. two large airlines are merging to become one firm e. the us gross domestic product has risen sharply, indicating that the recession might be near an end
E
Which of the following will cause a decrease in unplanned inventory investment? a. an increase in interest rates b. a rapid increase in the unemployment rate c. a decrease in the growth rate of real GDP d. a sudden decrease in consumer wealth e. an unexpected increase in consumer spending
C
With trade, a country may: a. consume outside its production possiblity curve b. consume inside its production possibility curve c. find that it's production possibility curve will shift outward d. avoid opp costs e. product outside its production possibility curve
E
if the econ were operating at point X, producing 180 units of cars & 20 units of computers per pd, a decision to move to point Y( move along the curve) & produce 100 units of computers a. indicates you can have more computers & cars simultaneously b. makes it clear that this econ experiences decreasing opp costs c. involves a loss of 50 units of cars per pd d. involves a loss of 40 units of cars per pd e. involves a loss of 80 units of cars per pd
A
macroeconomics focuses on: a. the econ as a whole b. individual decisions c. wages for a specific industry d. profit maximizing behavior e. consumer behavior