ECO 202 Exam Multiple Choice

An example of an intermediate good would be

The rims on a new car.

Frictional unemployment is the result of

The search process of matching workers with jobs.

When the labor market is at full employment

There is no cyclical unemployment in the economy.

The demand for U.S dollars in the foreign exchange markets is a demand for

U.S. goods, services,assets

which of the following would cause the money demand curve to shirt to the right

an increase in real GDP

Which would shift the supply of the U.S. dollars to the right

and increase in foreign exchange rates

In economics, money is defined as

any asset people generally accept in exchange for goods and services.

M2 includes (ignoring traveler's checks)

currency in circulations, checking account deposits, and savings-type account deposits.

during the 2007-2009 crisis the "run" on investment banks took the form of

lenders to investment banks not renewing their short term loans

The federal reserves four goals of monetary policy are

price stability, high employment, economic growth, and stability of markets and institutions

The quantity theory of money seeks to explain the connection between money and

prices

in money demand and money supply model, the opportunity cost of holding money is the

short-term nominal interest rate

M1 includes (ignoring travelers checks)

the currency in circulation and checking accounts deposits in banks

For purposes of monetary policy, the FED has targeted the interest rate known as

the federal funds rate

During bank panics, banks have liquidity problems because of

the maturity mismatch between their deposits and loans

the federal government debt equals

the total value of U.S. treasury bonds outstanding

We accept dollar bills (paper currency) as the medium of exchange because

we have confidence that the dollar bills will be accepted by others.

Which of the following describes the accuracy of the Consumer Price Index?

Changes in the CPI overstate the true value of inflation.

Labor productivity will increase if the ____________ increases and ______________.

Quantity of capital; technology improves.

Which of the following would be the best measure of the standard of living?

Real GDP per capita.

Recessions cause the unemployment rate to _____ and the inflation rate to typically ______.

Rise; fall.

Expansionary fiscal policy will

Shift the aggregate demand curve to the right

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called

Structural unemployment

If an economy is growing at a rate of 2% per year, approximately how long will it take the economy to double in size?

35 years.

Cyclical unemployment is the result of

A slowdown in the economy.

________________ in taxes will decrease consumption spending, and ___________ in transfer payments will increase consumption spending.

An increase; an increase

A compounded tariff is calculated

As a combination of add valorem and specific tariff

The interest rate that banks charge other banks for loans is the

Federal funds rate

Which of the following equations correctly measures GDP in an economy?

GDP = G + C + NX + I

Who is the Chair of the Federal Reserve System?

Janet Yellen

An increase in government purchases of $200 billion will shift the aggregate demand curve to the right by

More than $200 billion

In a production possibilities frontier model, a point inside the frontier is

Productively inefficient.

In the basic aggregate demand - aggregate supply model, a decrease in the price of oil will in the short run lead to ____________ in the UNEMPLOYMENT RATE and ____________ in the price level.

a decrease; a decrease

Which statement describes how banks create money

banks create checking account deposits when making lans from excess reserves

Technological advances in the economy would shift

both the short-run aggregate supply curve and the long-run aggregate supply curve to the right.

Which statement describes the accuracy of the consumer price index

changes in cpp overstate the true cost of living and the inflation rate

deflation can have negative effects on the economy because consumers may

delay spending waiting for prices to fall further, and higher real interest rates, if the deflation is unexpected, increase burden on borrowers

in circular flow model, the value of total income for an economy______the value of total production

equals

The natural rate of unemployment is made up of

frictional and structural unemployment

a recession tends ro cause the federal budget deficit to ______becasue tax revenues_______and government spending on transfer payments_____

increase,fall,rise

If the Fed buys U.S. Treasury securities, then this

increases reserves, encourages banks to make more loans, and increases the money supply.

the real rate of interest is the nominee interest rate___the inflation rate

minus

According to the quantity theory of money, (holding velocity constant) deflation will occur if the

money supply grows at a slower rate than real GDP.

a depreciation in the value of the U.S. dollar in the foreign exchange market makes imports into the U.S. _____expensive and makes______U.S. exports _____expensive

more,less