ECON 2033 Final Exam Cole
False
An increase in price level shifts the long run aggregate supply curve to the right.
the short run aggregate supply curve to the left but does not affect the long run aggregate supply curve
An increase in the expected price level shifts
The price of pork does not change
Assume the market for pork is perfectly competitive. When one pork buyer exits the market,
Private saving is positive, public saving is negative.
Consider the equation S=(Y-T-C)+(T-G): You observe a closed economy that has a government deficit and positive investment. Which of the following is correct?
1500 , 500
If a country's GDP is 10,000 , its consumption is 6,500 , its government expenditures are 2,000 , and its net exports are 500 what are saving and net capital outflow?
the real exchange rate is greater than 1; a profit might be made by buying rice in China and selling it in the US
If a dollar buys more rice in China than in the US, then
right, so that at any inflation rate output is lower in the short run than before
If inflation expectations rise, the short run Phillips curve shifts
only the nominal exchange rate depreciates
If over the next six months inflation is higher in the US than in foreign countries then according to purchasing power parity
True
If the Fed were to increase the money supply, inflation would increase and unemployment would decrease in the short run.
False
If the Fed were to unexpectedly increase the money supply, creditors would gain at the expense of debtors.
the US dollar will buy fewer goods in the US and buy fewer Australian dollars in the market for foreign currency exchange
If the US inflation rate is positive and higher than the inflation rate in Australia over the next few years then
C to D
If the economy is in long run equilibrium, then an adverse shift in short run aggregate supply would move the economy from
W
If the economy starts at Y, then a recession occurs at
False ($312.5)
If the exchange rate is 80 yen per dollar, then a hotel room in Tokyo that costs 25,000 yen costs $200.
output would be lower and unemployment would be higher
If the minimum wage increased, then at any given rate of inflation
supply of money that is represented by the distance between points A and B.
If the money supply is MS2 and the value of money is 2, then there is an excess:
the quantity of money supplied is greater than the quantity demanded; the price level will rise.
If the money supply is MS2 and the value of money is 2, then:
4/3
If the price of a sofa is $800 in the U.S. and 2,400 pesos in Argentina, and the exchange rate is 4 pesos per dollar, what is the real exchange rate?
3/5 or 0.6 pounds per dollar
If the real exchange rate for coal is 1.5, the price of coal in the US is $50 per ton, and the price of coal in Britain is 20 British pounds per ton, what is the nominal exchange rate?
False
If the short run aggregate supply curve were to shift left prices and output would fall.
the U.S. price is $2, the foreign price is 5 pesos, and the exchange rate is 3 pesos
If the unit of foreign currency is the peso, in which case is the real exchange rate 1.2?
rise so the value of money would fall.
In 2010 and in more recent years, the US gov was running a large deficit. Some were concerned that pressures might be put on the Fed to purchase gov bonds to help the gov finance this deficit. If the Fed were to buy gov bonds to help the gov finance its expenditures, then the price level would:
Nominal GDP was equal to real GDP and the GDP deflater was equal to 100
In 2015, this country's:
real GDP was $780 and the GDP deflator was 112.8
In 2016, this country's
65.3% and 3.2%
In 2018 the bureau of labor statistics reported there were 57.4 million people over age 25 whose highest level of education was some college or an associates degree. Of this 36.3 million were employed and 1.2 million were unemployed. What were the labor force participation rate and unemployment rate for this group?
tax revenue that the gov has left after paying for its spending.
In a closed economy, public saving is the amount of:
reserves increase by $100mil and the money supply increases by more than that.
In a fractional reserve banking system with no excess reserves and no currency holdings, if the central bank buys $100 mil worth of bonds:
there is no item in the economy that is widely accepted in exchange for goods and services.
In an economy that relies upon barter:
True
In an ideal labor market wages would adjust to balance the quantity of labor supplied and demanded ensuring that all workers are always fully employed.
$735 billion
In an open economy, gross domestic product equals $2,450 billion, consumption expenditure equals $1,390 billion, government expenditure equals $325 billion, investment equals $510 billion, and net capital outflow equals$225 billion. What is national saving?
Raised the price level and decreased the value of gold in Cairo
In the 14th century, the Western African Emperor Kankan Musa traveled to Cairo where he gave away a lot of gold, which was in use as a medium of exchange. We would predict that this increase in gold:
purchasing bonds on the open market, which would have lowered the value of money
In the 1970s, in response to recessions caused by an increase in the price of oil, the central banks in many countries increased their money supplies. The central banks might have done this by:
Households, firms, and the government
In the actual economy, goods and services are purchased by:
divide their income among spending, taxes, and saving
In the actual economy, households:
The expected price level rises. Bargains are struck for higher wages.
Optimism: Imagine that the economy is in long run equilibrium. Then, perhaps because of improved international relations and increased confidence in policy makers, people become more optimistic about the future and stay thus way for some time. What happens to the expected price level and what's the result for wage bargaining?
aggregate demand shifts right
Optimism: Imagine that the economy is in long run equilibrium. Then, perhaps because of improved international relations and increased confidence in policy makers, people become more optimistic about the future and stay thus way for some time. Which curve shifts and in which direction?
gradually decreased
Over the past several decades the difference between the labor force participation rates of men and women in the US has
An increase in demand and an increase in quantity supplied
Panel A shows which of the following?
decreases, making the opportunity cost of holding money fall
People are likely to want to hold more money if the interest rate
frictional unemployment
People who are unemployed because they are in search of a job that suits their skills are included within
Part owners of General Electric, so the benefits of holding the stock depend on General Electric's profits
People who buy stock in a corporation such as General Electric become:
the government has a budget deficit and investment is 2000
S=(Y-T-C)+(T-G) - in a closed economy, if Y = 10,000, T = 1000, G=3000, and C=5000, then:
raise both US net exports and US net capital outflows
Suppose that foreign citizens decide to purchase more US pharmaceuticals and US citizens decide to buy stock in foreign corporations. Other things the same, these actions
reduce the inflation rate and raise the unemployment rate
Suppose that in the first half of June 2028, the effects of a housing and financial crisis and an increase in world prices of oil and food were affecting the economy. In the short run the effects of the housing and financial crises
raised the price level and reduced output
Suppose that in the first half of June 2028, the effects of a housing and financial crisis and an increase in world prices of oil and food were affecting the economy. In the short run the increases prices of world commodities
demand for existing shares of the stock and the price will both fall.
Suppose the government finds a major defect in one of a company's products and demands that the product be taken off the market. We would expect that the:
people will respond by selling interest-bearing bonds
Suppose the money demand curve is currently MD1. If the current interest rate is r2, then
higher unemployment rate, which means if a larger portion of the adult population were teenagers the natural rate of unemployment would be higher
Teenagers have more frequent unemployment spells and spend more time searching for jobs. Other things the same this means that teenagers have a
consumption of services
The Carter's oldest son attends Big State University. He and his parents pay all his fees and tuition. These payments count in GDP as:
The prices of all final goods and services currently produced domestically while the CPI reflects the prices of a fixed basket of goods and services purchased by a typical consumer.
The GDP deflater reflects:
shows an inverse relationship between the price level and the quantity of all goods and services demanded
The aggregate demand curve
decreases the real value of households' money holdings
The wealth effect along an aggregate demand curve stems from the idea that a higher price level
The slope of the aggregate demand curve
The wealth effect, interest rate effect, and exchange rate effect are all explanations for
A decrease in the price level
Which of the following events could explain a decrease in the equilibrium interest rate from r1 to r3?
The tax code is reformed to encourage greater investment.
Which of the following events could explain a shift of the demand for loanable funds curve from D1 to D2?
in response to tax reform, households are encouraged to save more than they previously saved.
Which of the following events would shift the supply curve from S1 to S2?
A U.S. company opens an auto parts factory in Canada
Which of the following is an example of U.S. foreign direct investment?
more pesos. Your hotel room in Mexico will require fewer dollars.
You are planning a graduation trip to Mexico. Other things the same, if the dollar appreciates relative to the peso, then the dollar buys
The amount you value the first movie + $3
You go to the movieplex where movies ordinarily cost $9. You are intending to see a movie for which you have a $3 off coupon good for only that movie at that time. However, when you get there you see a friend who asks if you would rather see a new release. Both movies start and end at the same time. If you decide to see the new release with your friend, what is your opportunity cost?
Trade can make everyone better off
Dee is an accomplished actress and a homeowner who pays a landscaper to maintain her lawn rather than do it herself. Dee has determined that she can earn more in the hour it would take her to work on her lawn than she must pay her landscaper. This scenario is an example of which principle of economics?
4.6%
For an imaginary economy, the value of the CPI was 140 in 2013, and 146.5 in 2014. The economy's inflation rate for 2014 was:
True
For the US economy, the most important reason for the downward slope of the aggregate demand curve is the interest rate effect.
Capital equipment, inventories, and structure, including household purchases of new housing.
For the purpose of calculating GDP, investment is spending on:
doubles.
If Y and V are constant and M doubles, the quantity equation implies that the price level:
0.8 and the multiplier is 5
If a $1,000 increase in income leads to an $800 increase in consumption expenditures, then the marginal propensity to consume is
True
Unexpectedly high inflation reduces unemployment in the short run, but as inflation expectations adjust the unemployment rate returns to it's natural rate.
The bond market, and we associate the term equity finance with the stock market.
We associate the term debt finance with:
154
What belongs in space A?
Riskier than short-term bonds, and so interest rates on long-term bonds are usually higher than interest rates on short-term bonds
longterm bonds are:
Is the central bank of the United States.
The Fed:
Efficiency
refers to how much a society can produce with its resources.
the nominal interest rate adjusts one for one with the inflation rate
Consider the equation nom. int rate = real int rate + inflation - the fisher effect says that:
0
At the equilibrium wage how many workers are unemployed
The purchase of bananas decreases U.S. net exports and the payment with dollars decreases U.S. net capital outflow
A U.S. grocery chain buys bananas from Honduras and pays for them with U.S. dollars
It has $800 in reserves and $9200 in loans.
A bank has 8% reserve requirement, $10,000 in deposits, and has loaned out all it can given the reserve.
Jane's nominal income increased this year, but her real income decreased.
Last year, Jane spent all of her income to purchase 200 units of corn at $5 per unit. She spent all of her income this year to purchase 180 units of corn at $6 per unit.
The $750 is a nominal variable, the 300 cups of coffee is a real variable.
On a Sunday morning, Tom sold 300 cups of coffee for a total of $750.
180.6
Suppose Will's year 2 food expenditures in year 3 dollars amounts to $6235. Then x, the CPI, for year 3 has a value of:
110.0
Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. In 2012, the basket's cost was $50; in 2014, the basket's cost was $52; in 2016, the basket's cost was $55. The value of the CPI in 2016 was:
The economy would move up and to the left along a given short run Phillips curve
Suppose expected inflation and actual inflation are both low, and unemployment is at its natural rate. If the Fed then pursues an expansionary monetary policy, which of the following results would be expected in the short run?
buy more new equipment and buildings. This response helps explain why the demand for loanable funds is downward sloping.
As the real interest rates fall, firms desire to:
fall from 10-5%
If the reserve ratio increased from 10-20%, the money multiplier would:
the nominal exchange rate is 12 pesos per dollar, the price in Mexico is 36 pesos, and the US price is $3
In which of the following cases does purchasing power parity hold?
increases income and thereby increases consumer spending
The multiplier effect states that there are additional shifts in aggregate demand from fiscal policy , because it
False
The term "crowding out" refers to decreases in the interest rate caused by gov budget surpluses.
12.5%
The unemployment rate of Aridia in 2010 was
Sells gov bonds and in doing so decreases the money supply
When conducting an open-market sale, the Fed:
Erica a U.S. resident buys bonds issued by the Swiss government.
Which of the following is an example of U.S. foreign portfolio investment?
B in the short run and A in the long run
A decrease in taxes would move the economy from C to
more domestic goods and fewer foreign goods
A depreciation of the US real exchange rate induces US consumers to buy
both the short run and the long run Phillips curve to the right
A policy that raised the natural rate of unemployment would shift
True
An increase in the interest rate increases the opportunity cost of holding money; so the quantity of money demanded falls.
reduce interest rates, increasing investment and aggregate demand
An increase in the money supply will
point B on the left hand graph
Assuming the price level in the previous year was 100, point F on the right hand graph corresponds to
Surplus of 400 units
At a price of $35, there would be a:
$30
At what price would there be an excess supply of 200 units of the good?
rises so unemployment falls
If the central bank increases the money supply, in the short run, output
moves to D
If the economy is at A and there is a reduction in aggregate demand, in the short run the economy
an increase in the money supply
If the economy is at point b, a policy to restore full employment would be
to C in the long run
If the economy starts at A, a decrease in the money supply moves the economy
the short run aggregate supply curve would shift right
If the long run aggregate supply curve was unchanged, but prices and output fell, how would the economy move back to long run equilibrium?
XYZ corporation bonds carry less default risk than do ABC corporation bonds.
Potential buyers of ABC corporation bonds are concerned about ABC declaring bankruptcy. Potential buyers of XYZ corporation bonds are not concerned that XYZ may declare bankruptcy. Which of the following statements is correct?
$30 million
Quality Motors is a Japanese owned company that produces automobiles: all of its automobiles are produced in American plants. In 2010, Quality Motors produced 30 million dollars worth of automobiles, with 17 million dollars in sales to Americans, 9mil in sales to Canadians, and 4 mil worth of automobiles added to Quality Motors inventory. The transaction just described contributes how much to US GDP for 2010?
the CPI
SS payments are indexed for inflation using:
True
Some long run unemployment may be explained by the fact that the number of jobs available in some labor markets may be insufficient to give a job to everyone who wants one.
a rising price level and a falling level of output, as the economy moves to point A.
Starting from point B and assuming that aggregate demand is held constant, in the long run the economy is likely to experience a
80 florin
The nominal exchange rate is 2 Aruban florin per dollar. If the basket of goods in the US costs $40, how many florin must a basket of goods in Aruba cost for purchasing power parity to hold?
Investment, since GDP aims to measure the value of the economy's production that year
The value of goods added to a firm's inventory in a certain year is treated as:
True
When the CPI falls, the typical family has to spend fewer dollars to maintain the same standard of living.
both an increase in expected inflation and an adverse supply shock
Which of the following shift the short run Phillips curve right?
100% reserve banking
Which of the following will help to prevent bank runs?
high growth of output in foreign economies
Which of the following would shift the aggregate demand curve to the right?
Panel A
Which of the four panels represents the market for pizza delivery in a college town as we go from summer to the beginning of the fall semester?
Panel B
Which of the four panels represents the market for winter coats as we progress from winter to spring?
Only Tim with Amy
Which, if any, pair of traders has a double coincidence of wants?
112.5
Year 1: 3 meat 2 toy, year 2: 1 meat 7 toy, year 3: 4 meat, 5 toy: if the base year is year 1, then the CPI in year 2 was:
is greater than zero only if exports are greater than imports
A country's trade balance
a decrease in money demand
An example of an automatic stabilizer is
$1,208,421
Babe Ruth's 1931 salary was $80,000. Government statistics show a CPI of 15.2 for 1931 and 229.6 for 2012. Ruth's 1931 salary was equivalent to a 2012 salary of about:
True
Banks cannot influence the money supply if they are required to hold all deposits in reserve.
inflation but not unemployment
Classical theory points to money supply growth as the primary determinant of
left by $500 billion
Consider the equations Multiplier = 1/(1-MPC) and deltaY = Multiplier(deltaG) Assume the MPC is 0.8. Assuming only the multiplier effect matters, a decrease in government purchases of $100 billion will shift eh aggregate demand curve to the
False
Currently, bank runs are a major problem for the US banking system and the Fed.
fall, which reduces the magnitude of economic fluctuations
During recessions tax revenues
unemployment was high and inflation was low
During the financial crisis and recession of 2008-2009
$25 and 400 units
Equilibrium price and quantity are, respectively,
are equal to its domestic production
Expenditures on a nation's domestic production...
True
If inflation is higher than expected, then borrowers make real interest payments that are less than they expected
right which raises the interest rate.
Other things the same an increase in the price level shifts money demand
increase unemployment due to job search
Structural shifts in demand for output
more profitable and employment and output rises
The sticky wage theory of the short run aggregate supply curve says that when the price level rises more than expected, production is
Protection against inflation
Which of the following is not a function of money?
the unemployment rate occasionally falls to zero
Which of the following is not correct?
A movement from point C to point F
Which of the following movements shows the effects of households' decision to save more?
Increase taxes
Which of the following policies would Keynes's followers support when an increase in business optimism shifts the aggregate demand curve away from long run equilibrium?
The government sends your grandfather his SS check.
Which of the following represents a transfer payment?
a decrease in net exports
The aggregate demand curve could shift from AD1 to AD2 as a result of
True
The classical notion of monetary neutrality is consistent both with a vertical long run aggregate supply curve and with a vertical long run Phillips curve.
menu costs
The costs of changing price tags and price listings are known as:
supply of money increases, the value of money falls, and prices rise.
The economy of Mainland uses gold as its money. If the gov discovers a large reserve of gold on their land, the:
decreased both from 2010 to 2011 and 2011 to 2012
The labor force participation rate of Aridia
63.3%
The labor force participation rate of Aridia in 2011 was
is a general representation of the classical dichotomy , is vertical , indicates monetary neutrality in the long run
The long run aggregate supply curve
$10,000 of new money.
If the reserve ratio is 5%, then $500 of additional reserves can create up to:
there will be an increase in the equilibrium quantity of goods and services demanded
Suppose the current equilibrium interest rate is r1. If the Federal Reserve increases the money supply, and the price level does not change,
as many goods in foreign countries as it does in the United States
If purchasing-power parity holds, a dollar will buy
an increase in customers and so increase production
If some firms have sticky prices and the price level rises more than had been anticipated then in the short run those firms with sticky prices will have
the real interest rate in year 2 was 3%
If the nominal interest rate was 8% in year 2, then:
minimum wage, while the inflation rate depends upon the money supply growth rate
One determinant of the long run average unemployment rate is the
$1600
The FED purchases $200 worth of gov bonds from the public, the reserve req. is 12.5%, people hold no currency, and the banking system keeps no excess reserves. The US money supply eventually increase by:
$150
A bank which must hold 100% reserves opens in an economy that had no banks and a currency of $150. If customers deposit $50 into the bank, what is the value of the money supply?
The value of the goods and services produced by the restaurant is included in French GDP but not in US GDP.
An American company operates a fast food restaurant in Paris, France. Which of the following statements is accurate?
False
An increase in nominal US GDP necessarily implies that the US is producing a larger output of goods and services.
right by $68 billion
Consider the equations Multiplier = 1/(1-MPC) and deltaY = Multiplier(deltaG) Assume the MPC is 0.625. Assume there is a multiplier effect and that the total crowding out effect is $12 billion. An increase in government purchases of $30 billion will shift the aggregate demand to the
120, and this indicates that the price level has increased by 20% since the base year.
If nominal GDP is 12 trillion dollars, and real GDP is 10 trillion, then the GDP deflater is:
real exchange rate is equal to zero
If purchasing power parity holds, then the value of the
falls. Other things the same it will cost fewer euros to buy US goods
If the exchange rate is expressed as euros/dollar, the dollar is said to depreciate against the euro if the exchange rate
4,000
If the government imposes a minimum wage of $8 then how many workers will be unemployed?
2%
If the nominal interest rate is 7%, and the real interest rate is 5%, then the inflation rate is:
the long run Phillips curve to the left and the long run aggregate supply curve to the right
Improved functioning of the labor markets will shift
financial system
Institutions that help to match one person's saving with another person's investment are collectively called the:
Only Joe and Jim's grocery store purchases were included in GDP.
Joe and Jim purchase vegetables at a grocery store but Jim also grows vegetables in his backyard. Regarding these two practices, which of the following statements is correct?
must be described either in terms of the money supply or in terms of the interest rate
Monetary policy
real wealth rises
Other things the same, the aggregate quantity of goods demanded in the US increases if
D2
Regard the position of the supply curve as fixed, as on the graph. If the real interest rate is 8%, the inflation rate is 3%, and the market for loanable funds is in equilibrium, then the position of the demand for loanable funds curve must be:
shifting the short run Phillips curve right
Suppose that in the first half of June 2028, the effects of a housing and financial crisis and an increase in world prices of oil and food were affecting the economy. The short run effects of rising world commodity prices are shown by
moving to the right along the short run Phillips curve
Suppose that in the first half of June 2028, the effects of a housing and financial crisis and an increase in world prices of oil and food were affecting the economy. The short run effects of the housing and financial crisis are shown by
$500 billion
Suppose that the marginal propensity to consume is 0.6, taxes decrease $600 billion, and the crowding out effect is $400 billion. By how much does the aggregate demand curve shift?
-1.9%
Suppose the CPI was 184 in year 1 and 198.17 in year 2. The nominal interest rate during this period was steady at5.8%. What was the real interest rate during this period?
interest rate at which banks lend reserve to each other overnight
The federal funds rate is the:
both frictional and structural unemployment
The natural rate of unemployment includes
how fast the number of dollars in your bank account rises over time
The nominal interest rate tells you:
What you give up to get that item
The opportunity cost of an item is:
The level of public saving, level of national saving, and decisions made by people who have extra income they want to save and lend out.
The position and/or slope of the supply curve are influenced by:
aggregate demand shifts right or aggregate supply shifts left
The price level rises in the short run if
demand for the stock rises
The price of a stock will rise if the:
commodity money has intrinsic value but fiat money does not.
The primary difference between commodity money and fiat money is that:
how fast the purchasing power of your bank account rises over time
The real interest rate tells you:
formulate policies designed to increase productivity
To improve living standards, policymakers should
8.7%
What belongs in space C?
12%
What belongs in space D?
3.9%
What belongs in space E?
a US import and a Irish export
When Jamie a U.S. citizen purchases a wool jacket made in Ireland the purchase is
Job search
Which of the following is an explanation for the existence of frictional unemployment?
if the economy is left alone then as the economy moves from point b to long run equilibrium the price level will fall further , unemployment rises as the economy moves from point a to point b , either fiscal or monetary policy could be used to move the economy form point b to point a
Which of the following is correct?
resources are limited
The phenomenon of scarcity stems from the fact that
downward pressures on prices and wages
A basis for the slope of the short run Phillips curve is that when unemployment is high there are
False
Dollar prices and relative prices are both nominal variables.
falling employment and income
During a recession the economy experiences
true
Net capital outflow = net exports
Many government programs use the CPI to adjust for changes in the overall level of prices.
The problems with using CPI as a measure of the cost of living are important because:
$5250
Will's year 1 food expenditures in year 2 dollars amount to:
increased from year 1 to year 2 and increased from year 2 to year 3
Year 1: 3 meat 2 toy, year 2: 1 meat 7 toy, year 3: 4 meat, 5 toy: The cost of the basket
Equality
refers to how evenly the benefits from using resources are distributed among members of society.
Inflation
An increase in the overall level of prices in an economy is referred to as
the price level
Which of the following is not a determinant of the long run level of real GDP?
decreased money supply
According to the Phillips curve, policymakers would reduce inflation but raise unemployment if they
1,600
The labor force of Aridia in 2010 was
False
A market economy cannot produce a socially desirable outcome because individuals are motivated by their own selfish interests.
True
Bottles of very fine wine are less liquid than demand deposits.
decrease in quantity demanded
A movement upward and to the left along a demand curve is called a(n)
a decrease in the supply of loanable funds
A shift of the supply curve from S1 to S2 is called:
80%
The labor force participation rate of Aridia in 2010 was
Pens and pencils
A likely example of substitute goods for most people would be:
False
According to Friedman and Phelps it is appropriate to view the Phillips curve as a menu of options available to policymakers.
either the revenue firms receive from the sales of goods and services or the payments they make to factors of production
According to the circular flow diagram, GDP can be computed as:
$382.50
Consider the equations MPC = deltaC/deltaY and Multiplier = 1/(1-MPC) In a certain economy, when income is $500, consumer spending is $375. The multiplier in the economy is 4. It follows that, when income is $510, consumer spending is
sectoral shifts are always happening
Frictional unemployment is inevitable because
will be able to use this deposit to make new loans amounting to $450, must increase required reserves by $50, and will initially see reserves increase by $500.
If the reserve requirement is 10%, a bank desires to hold no excess reserves, and it receives a new deposit of $500, it:
True
Other things equal, in countries with higher level of real GDP per person, life expectancy and literacy rates are higher than in countries with lower levels of real GDP/person
makes saving more attractive.
The slope of the supply of loanable funds is based on the logic that an increase in interest rate:
lower than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied.
The sticky price theory of the short run aggregate supply curve says that if the price level rises by 5% while firms were expecting it to rise by 2% then some firms with high menu prices will have
rational expectations
The theory by which people optimally use all available information when forecasting the future is known as
increased from 2010 to 2011 but decreased from 2011 to 2012
The unemployment rate of Aridia
$250 to GDP
A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute:
right. To offset this change, the Fed should decrease the money supply
A stock market boom would shift the aggregate demand curve to the
increased, so it would increase production.
According to the misperceptions theory of short run aggregate supply, if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent, then the firm would believe that the relative price of what it produced had
Her real and nominal salary have risen.
An associate prof of physics gets a $200/month raise. With her new monthly salary, she can buy more goods and services than she could buy last year.
True
Communist countries were based on the premise that government officials were in the best position to allocate for the economy's scarce resources.
the price level is 4 and the velocity is 8
Consider the equation MV=PY. The money supply in Muckland is $100 billion. Nominal GDP is $800 billion, and real GDP is $200 billion. What are the price level and velocity in Muckland?
True
GDP excludes the purchases of sliced bread by a sandwich shop because the bread is an intermediate good in this case.
positive net capital outflow and positive net exports
If a country has Y > C + I + G, then it has
inflation is higher than expected and unemployment falls
If aggregate demand shifts right farther than expected then
Meredith is frictionally unemployed and Julie is structurally unemployed.
Meredith is looking for work as a computer programmer. Her prospects are good but so far she has not taken a job. Julie is looking for work in a steel mill. Every time Julie shows up for an interview there are more people looking for work than there are openings, she realizes that it has been that way for a long time.
more expensive relative to foreign goods, so US net exports decrease
Other things the same if the US dollar appreciates then US goods become
increases the price level by 4%
Suppose monetary neutrality holds and velocity is constant. A 4 percent increase in the money supply:
100 in 2019
Suppose points F and G on the right-hand graph represent two possible outcomes for an imaginary economy in the year 2020, and those two points correspond to points B and C, respectively, on the left- hand graph. Then it is apparent that the price index equaled
Z in the long run
Suppose the economy starts at Y. If there is a fall in aggregate demand then the economy moves to
classical dichotomy
The idea that nominal variables are heavily influenced by the quantity of money and that money is largely irrelevant for understanding the determinants of real variables is called the:
is the unemployment rate that the economy tends to move to in the long run
The natural rate of unemployment
Rises, because the number of dollars needed to buy a representative basket of goods rises.
The value of money falls as the price level:
the price you pay for the ticket and the value of your time
When computing the opportunity cost of attending a concert you should include
a unit of account
When in France, you notice that prices are posted in euros and the amounts are different than what you would expect to pay in the US. This best illustrates money's function as:
the money supply decreases and the federal funds rate increases.
When the Fed sells gov bonds:
False :(
When the US government is in debt during a given year, it is always the case that the gov had a budget deficit during that year.
increases, so the quantity of money demanded decreases
When the interest rate increases, the opportunity cost of holding money
the equilibrium value of money decreases.
When the money supply curve shifts from MS1 to MS2,
FALSE
When you purchase a rundown, 1965 Ford Mustang to restore and resell, the purchase of the vehicle and all restoration expenditures are included in current GDP.
sell bonds and raise the reserve requirement
Which of the following Fed actions would both decrease the money supply?
Jaden buys more donuts at 25 cents/donut than at 50 cents/donut, all other things equal.
Which of the following demonstrates the law of demand?