ECON Cumulative
If nominal GDP is $10 trillion and real GDP is $8 trillion, the GDP deflator is
125
Imagine that you borrow $2,000 for one year and at the end of the year you repay the $2,000 plus $200 of interest. If the inflation rate was 8%, what was the real interest rate you paid?
2 percent
Refer to Table 9-8. Suppose the date in the table above reflect the price levels in the economy. What is the inflation rate in between 2019 and 2020?
20%
Refer to table 8-15. Consider the data on nominal GDP and real GDP (values are in billions of dollars). The base year used for calculating real GDP is
2020
A Ford Fusion car is produced in 2021 but sold (new) in 2022 to a family. According to the definition of GDP, in which year's GDP should it be counted?
2021 as part of Investment
If you invest $20,000 in a bond that earns 8% interest per year, how many years will it take to double your money?
8 years and 9 months
Countries with high rates of economic growth tend to have
a labor force that is more productive
A fractional reserve banking system is one in which baks hold less that 1-- percent of ______ as reserves
deposits
According to the World Bank, Albania does one of the worst jobs as a country enforcing the rule of law. The consequence of a weak rule of law is
difficulty in attracting investment and low economic growth
The labor force equals the number of people
employed plus unemployed
The purchase or building by a corporation of a facility in a foreign country is called
foreign direct investment
When firms benefit from the results of research and development they didn't pay for, we say firms
free ride
A student who just graduated from college but has not found a job would most likely be
frictionally unemployed
Countries that are more globalized tend to have
higher growth rates in real GDP per capita.
All of the following policies are ways for a country to promote long-run economic growth except
imposing stricter regulations to limit foreign direct investment
Stagflation occurs when
inflation rises and GDP falls.
The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off
investment and consumption spending
Which of the following information about fiat money is false? Fiat money
is backed by gold.
In a closed economy, which of the following components of GDP is not included?
net exports
The stated interest rate on a loan is the
nominal interest rate
Foreign direct investment occurs when a Chinese corporation
opens a new factory in France
In the United Staes, currency includes
paper money and coins in circulation
According to the text, there are three ways the government can help increase the accumulation of knowledge capital. What are they?
protecting intellectual property rights, subsidizing research and development, and subsidizing education
In terms of economic growth, the key measure of the standard of living is
real GDP per capita
Suppose the labor force stays constant, and the working-age population stays constant, but a greater number of persons who were unemployed become employed. The labor force participation rate will
remain constant
The basic aggregate demand and aggregate supply curve model helps explain
short-term fluctuations in real GDP and the price level
According to the text, economists consider full employment (also called the natural rate of unemployment) to occur when
the unemployment rate consists of only frictional and structural unemployment
Real GDP is GDP in a given year
valued in the prices of the base year
In calculating (nominal) GDP, the bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA
values final goods and final services at their market prices, multiplies them by the quantity produced, and then adds them up
discouraged workers are
workers who have stopped looking for work because they believe there are no jobs for them
Which of the following is a function that money serves?
All of the above are correct.
in a closed economy, which of the following equations reflects investment?
Y-C-G
Which of the following equations correctly measures GDP in an open economy (includes global exchanges)? Let GDP be noted as Y
Y=C+I+G+NX
Which of the following transactions represents the purchase of a final good?
Your family buys a new snowblower.
Most recessions in the United States since World War II have begun with
a decline in residential construction
On the long-run aggregate supply curve,
a decrease in the price level has no effect on the aggregate quantity of GDP supplied.
As a result of Kristy's deposit, Bank A's excess reserves increase by
$9,600
If real GDP in a closed economy is $40 billion, consumption is $20 billion, and government purchases are $10 billion, what is investment?
$10 billion
As a result of Kristy's deposit, Bank A's required reserves increase by
$2,400
The federal open market committee consist of seven members of the _____ and _______
Federal reserve's board of governors; five presidents from the other 11 federal reserve banks
Starbucks has 32,000 stores globally with 6,500 stores in the US and 750 stores in Mexico. The value of what the US-owned Starbucks companies produce in Mexico is included in the US ______ and the Mexican ______
GNP; GDP
The percent increase in the CPI from one year to the next is a measure of the
Inflation rate
Which of the following describes the growth in real GDP per person in the United States from 1900 to the present?
It has increased by more than eight times
What is potential GDP?
It is the level of real GDP in the long run.
Between 2020 and 2021, if an economy's exports rise by $8 million and its imports fall by $8 billion, by how much will GDP change between the two years, all else equal?
Net exports will increase GDP by $16 billion
During the month of May, 10 million workers moved from being classified as "unemployed" to being classified as "employed." As a result
The unemployment rate fell
How do lower household income taxed affect aggregate demand?
They increase disposable income, increase consumption, and increase aggregate demand
Short-run macroeconomics equilibrium occurs when
aggregate demand and short-run aggregate supply intersect
a bank will consider a college loan to a customer ______ and a customer's checking account to be _______
an asset; a liability
The process of an economy adjusting from a recession back to potential GDP in the long run without any government intervention is known as
an automatic mechanism
The international trade effect states that
an increase in the price level will lower net exports.
An increase in cyclical unemployment will result in
an increase in the unemployment rate
In economics, money is defined as
any asset people generally accept in exchange for goods and services
In 1912, Congress established the Federal Reserve system with the intention to putting an end to
bank panics
The period of expansion ends with a ________ and the period of recession ends with a ________.
business cycle peak; business cycle trough
An economic growth model explains
changes in real GDP per capita in the long run.
Which of the following price indices comes closest to measuring the cost of living of the typical household?
consumer price index
If you have trouble finding a job because of a downturn (contraction phase) in the overall economy, we would say that you are
cyclically unemployed
When the price of gasoline rises, some consumers begin riding their bikes more frequently or riding the bus instead of driving their cars. The fact that the CPI does not fully account for such changes in consumer behavior is called
substitution bias
an increase in the government budget surplus will shift the _______ curve for loanable funds to the ______ and the equilibrium real interest rate will _______.
supply; right; fall
Human capital refers to which of the following
the accumulated knowledge and skills workers acquire from education and training or from their life experiences
A negative supply shock in the short run causes
the aggregate supply curve to shift to the left
There is a federal budget deficit when
the government spends more that it collects in taxes
Which of the following would you expect to result in faster economic growth?
the invention of new computers that increase labor productivity
Potential GDP refers to
the level of GDP attained when all firms are producing at capacity.
What two factors are the keys to determining labor productivity?
the level of technology and quantity of capital per hour worked
Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy. As a result,
the long-run aggregate supply curve will shift to the right
