Econ 202 Final Practice Exam
If the nominal exchange rate between the American dollar and the Canadian dollar is ).89 Canadian dollars per American dollar, how many American dollars are required to buy a product that costs 2.5 Canadian dollars?
$2.81
Based on the following info, what is the balance on the financial account? -exports= $5 billion -imports= $3 billion -net income= -$2 billion -net transfers= -$2 billion -increase in foreign holdings of assets in US= $4 billion -increase in US holdings of assets in foreign countries= $1 billion
$3 billion
Suppose the government increases expenditures by $60 billion and the marginal propensity to consume is 0.80; by how much will equilibrium GDP change?
$300 billion.
Suppose you deposit $1700 cash into your checking account; by how much will checking deposits in the banking system increase as a result when the required reserve ratio is 0.20?
$8500
If the balance on the current account is $346 billion and the balance on the financial account is -$204 billion, what is the balance on the capital account, assuming no statistical discrepancy?
-$142 billion
What is the tax multiplier if a $200 billion tax increase results in a $300 billion in GDP, holding all else constant?
-1.5
Suppose that real GDP for 2015 was $10,000 billion and real GDP 2016 was $10,200 billion; what is the rate of growth of real GDP between 2015-2016?
2%
If the number employed is 190 million, the working-age population is 230 million, and the number unemployed is 10 million, then the unemployment rate is...
5%.
Which of the following would cause the money demand curve to shift to the left?
a decrease in real GDP.
Contractionary monetary policy on the part of the Fed results in...
a decrease in the money supply, an increase in interest rates, and a decrease in GDP.
A recession occurs when an economy experiences a period in which there is...
a decrease in total production.
Which of the following would be considered a fiscal policy action?
a tax cut is designed to stimulate spending during a recession.
If the dollar appreciates, how will aggregate demand in the US be affected?
aggregate demand will shift to the left as imports increase.
Which of the following would increase the current account balance of the United States?
an increase in the balance of trade.
The cyclically adjusted budget deficit or surplus measures what the deficit or surplus would be if the economy were...
at potential GDP.
Which of the following policies would reduce frictional unemployment?
building an online job database that helps workers find jobs.
An underground economy involves all of the following except...
buying and selling of goods and services by obtaining a permit from the government.
Expansionary monetary policy will have what effect on the components of aggregate demand?
consumption, investment, and net exports will rise.
If you have trouble finding a job because of a recession in the US economy, we would say that you are...
cyclically unemployed.
To combat a recession with discretionary fiscal policy; Congress and the president should...
decrease taxes to increase consumer disposable income.
An increase in individual income taxes _____ disposable income, which ______ consumption spending,
decreases; decreases.
Currency traders expect the value of the dollar to fall. What effect will this have on the demand and supply of dollars in the foreign exchange market?
demand for dollars will decrease, and supply of dollars will increase.
When additions of capital to a fixed quantity of another input lead to progressively smaller increases in output, we say we are facing...
diminishing returns.
An increase in the demand for American-made goods will...
increase the demand for dollars on the foreign exchange market.
A recession tends to cause the federal budget deficit to ______ because tax revenues ______ and government spending on transfer payments _______.
increase; fall; rise.
Which of the following would NOT be considered an automatic stabilizer?
legislation increasing funding for job retraining passed during a recession.
Enforcing property rights in an economy will...
raise the level of investment.
Monetary policy refers to the actions the Federal Reserve takes to manage...
the money supply and interest rates to pursue its economic objectives.
Sarah is a full-time student who is not looking for work; what kind of unemployment is Sarah experiencing?
Sarah is not experiencing unemployment of any kind, because she is not currently part of the labor force.
An economy that does not have interactions in trade or finance with other economies is referred to as...
a closed economy.
Fiscal policy refers to changes in...
federal taxes and purchases that are intended to achieve macroeconomic policy objectives.
An increase in government purchases will increase aggregate demand because...
government expenditures are a component of aggregate demand.
If the economy is falling below potential real GDP, which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply? An increase in...
government purchases.
The percent increase in the CPI from one year to the next is a measure of the...
inflation rate.
In a closed economy, public saving plus private saving is equal to...
investment.
An appreciating yen makes Japanese products...
more expensive in foreign markets.
Economists refer to the series of induced increases in consumption spending that result from an initial increase in autonomous expenditures as the ______ effect.
multiplier.
If net exports are positive,...
net foreign investments is also positive.
Disease, poor nutrition, and substandard health care in developing nations can reduce growth in an economy by...
reducing human capital.
A lumberjack loses his job because timber cutting restrictions are imposed by the EPA to protect the spotted owl habitat; this lumberjack would be...
structurally unemployed.
Which of the following describes what the Fed would do to pursue an expansionary monetary policy?
use open market operations to buy Treasury bills.
What two factors are keys to determining labor productivity?
technology and the quantity of capital per hour worked.
Which of the following is an example of foreign direct investment in China?
the US company Wal-Mart buys a warehouse in Shanghai.
When the market value of the dollar rises relative to other currencies around the world, we say that...
the dollar has appreciated.
If the exchange rate changes from 1pound=$2 to 1pound=$2.01, then...
the dollar has depreciated.
Which of the following would increase net exports in the United States?
the government of Mexico purchases 500 Ford F-150 pickup trucks from the United States.
Which of the following is an example of foreign portfolio investment?
the purchase of a US Treasury bond by a German citizen.
