Econ Final
Long run aggregate supply curve formula
Y=A+K
aggregate demand curve formula
Y=M+V-P
short run aggregate supply formula
Ys=YL+(P-E[P])
CPI formula
(cost of basket in current year/cost of basket in base year) x 100
growth rate of productivity is represented by
A
Which of the following is an example of a negative real shock to an economy? A drought stifles crop growth for the season Consumer confidence in the future of the economy falls The government reduces taxes The government spends more money on a war
A drought stifles crop growth for the season
short run equilibrium formula
AD=SRAS
Households in the U.S. go on a binge of buying and eating U.S.-produced popcorn. Popcorn consumption goes up by $1 million. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?
C
The Federal Reserve is considered a powerful institution because it has the power to: Act as a lender of last resort, control money supply in the long term, and print money. Buy government bonds, act as a lender of last resort, and create money. Create money, buy government bonds, and control long-term economic growth. Control short-term growth, create money, and buy government bonds.
Buy government bonds, act as a lender of last resort, and create money.
What happens in the short run when spending increases? More spending makes prices sticky, so inflation skyrockets in the short run. More spending makes prices more volatile, so inflation drops and often turns into deflation. Increased spending doesn't immediately cause full inflation, so there is short run growth. Increased spending immediately causes inflation, so there is no growth.
Increased spending doesn't immediately cause full inflation, so there is short run growth.
P equals
Inflation Rate or Y axis
quantity theory of money formula
M × V = P × Y
A change in which variable in the quantity theory of money is most likely to cause large and sustained changes in prices? M, the money supply None of the above v, velocity of money Y, the real GDP
M, the money supply
The quantity theory of money is expressed by the identity equation: M×v=P×Y M×v=Y M×vP×Y M=P×Y×v
M×v=P×Y
J.B., who is a Canadian citizen living in Canada, buys a new car ($25,000) which was built by a firm based in Ohio. In which component of each country's GDP (C, I, G, or NX) will the transaction appear-UNITED STATES
NX
Miranda living in Cincinnati buys a supercomputer for $6,000. The computer has been built from $400 worth of computer chips produced in Korea in the same year. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?-KOREA
NX
The city of Cincinnati purchases a new, German-made bus for $150,000. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?-GERMANY
NX
US Steel Corporation purchases a new $10 million steel rolling machine for its factory. Assume the steel rolling machine was produced in Japan. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?-JAPAN
NX
Both sides of the quantity theory of money identity represent ____________. Nominal GDP The Money Supply Real GDP Inflation
Nominal GDP
Y equals
Real GDP or x axis
US Steel Corporation purchases a new $10 million steel rolling machine for its factory. Assume the steel rolling machine was produced in Japan. How is the GDP of the countries mentioned affected?-UNITED STATES
STAYS THE SAME
An economy's potential growth rate is also known as what? Real interest rate Solow growth rate Keynesian growth rate Inflation rate
Solow growth rate
Which of the following is a factor of production and best defined as ideas and inventions? Physical capital Human capital Technical knowledge Organization
Technical Knowledge
Households in the U.S. go on a binge of buying and eating U.S.-produced popcorn. Popcorn consumption goes up by $1 million. How is the GDP of the countries mentioned affected?
The GDP of the U.S. goes up by $1 million .
Your housemate spends 5 hours fixing the broken wheel on his car; a job that would have cost him $300 at the local service station. How is the GDP of the countries mentioned affected?
The GDP of the U.S. stays the same .
Here is a list of possible changes in the economy. Of the real shocks in this list, which of these changes is most likely to have caused the Great Recession? The growth rate of real consumption spending increases to 2 percent per year The growth rate of the money supply falls to -4 percent per year The growth rate of labor falls to -1 percent per year The growth rate of the capital stock increases to 3 percent per year
The growth rate of labor falls to -1 percent per year
Which of the following situations is an example of inflation occurring in a two-good economy? The price of apples and the price of pears have remained the same over the past 5 years, but wages for factory workers have increased since then. The price of apples is about 2% higher than it was five years ago, while the price of pears fell by about 2% over the same time period. The price of apples and the price of pears both decreased about 5% in the past 5 years. The price of apples and the price of pears both increased by about 2% in the last five years.
The price of apples and the price of pears both increased by about 2% in the last five years.
In the quantity theory of money, v represents: The value of a dollar The velocity of money The velocity of production The value of a good
The velocity of money
quantity theory of money(not formula)
a theory asserting that the quantity of money available determines the price level and that the growth rate in the quantity of money available determines the inflation rate
Nominal GDP in terms of _______ is represented by how much money there is and how many times it is spent, while Nominal GDP in terms of ________ is represented by all goods and services and their prices. imports & exports profit & loss domestic production & international production buyers & sellers
buyers & sellers
J.B., who is a Canadian citizen living in Canada, buys a new car ($25,000) which was built by a firm based in Ohio. In which component of each country's GDP (C, I, G, or NX) will the transaction appear-CANADA
consumption
US Steel Corporation purchases a new $10 million steel rolling machine for its factory. Assume the steel rolling machine was produced in Japan. How is the GDP of the countries mentioned affected?-JAPAN
goes up 10 million
V equals
growth in velocity C+I+G+NX
The following institution(s) promote(s) economic growth: Communism Redistributive justice Property rights Property rights and Redistributive justice Price controls and Redistributive justice Property rights and Price controls Price controls
property rights
The Consumer Price Index (CPI) is a weighted average of the prices of: the top ten goods and services bought by US consumers. thousands of goods and services bought by US consumers. only durable goods bought by US consumers. hundreds of grocery items bought by US consumers.
thousands of goods and services bought by US consumers.
The city of Cincinnati purchases a new, German-made bus for $150,000. How is the GDP of the countries mentioned affected?-GERMANY
up 150k
How does the Quantity Theory of Money help us understand the limitations of the Federal Reserve's power to control economic growth? Increases in the money supply result in increases in velocity in the long run. Increases in the money supply result in price increases in the long run. Increases in the money supply result in increases in output in the long run. The velocity of money does not adjust to monetary policy.
Increases in the money supply result in price increases in the long run.
How does inflation affect the long-run real growth? Inflation does not have an effect on long-run real growth. Inflation causes long-run real growth to decrease. There are many other factors to consider before determining how inflation will affect long-run real growth. Inflation causes long-run real growth to increase
Inflation does not have an effect on long-run real growth.
All of the following factors are fundamental to an economy's potential growth rate except for: Money supply Labor Ideas Capital
Money supply
If P+Y represents inflation plus the real growth rate, then can M+V be interpreted as the growth rate of spending in the economy, also known as: Consumption Real GDP growth rate Nominal GDP growth rate Inflation
Nominal GDP growth rate
gdp deflator
Nominal GDP/Real GDP x 100
The inflation rate is measured as the percentage change in the index over a time period. What variable should be plugged in for the denominator? Inflation rate=(P2−P1◻)×100 P1 P2 π x2
P1
nom gdp formula
Price x number of items
In the quantity theory of money, P and Y represent the price and quantity of: all raw materials and natural resources sold in an economy. all finished goods and services sold in an economy. all durable capital (tractors, manufacturing equipment) purchased in the economy. all financial services sold in an economy.
all finished goods and services sold in an economy.
Miranda living in Cincinnati buys a supercomputer for $6,000. The computer has been built from $400 worth of computer chips produced in Korea in the same year. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?-UNITED STATES
consumption and NX
A negative real shock to the economy shifts the LRAS curve to the left, causing a(n) ____________ in growth and a(n) ____________ in inflation. increase / decrease decrease / decrease decrease / increase increase / increase
decrease / increase
J.B., who is a Canadian citizen living in Canada, buys a new car ($25,000) which was built by a firm based in Ohio. How is the GDP of US affected?
goes up 25k
The city of Cincinnati purchases a new, German-made bus for $150,000. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?-UNITED STATES
government spending and NX
The phrase that "money is neutral in the long run," means: money is just a middle-man for the barter system. after enough time, money is worthless. currency exchange rates are always fluctuating. if the money supply triples, prices will triple.
if the money supply triples, prices will triple.
A positive shock to the AD curve will cause inflation to __________ in the short run and growth to ___________ in the short run. decrease / decrease increase / decrease increase / increase decrease / increase
increase / increase
The growth rate in prices is also called: GDP spread the velocity of prices inflation escalation
inflation
what happens to inflation rate and rgdp for recession to occur
inflation less than rgdp demand shock
US Steel Corporation purchases a new $10 million steel rolling machine for its factory. Assume the steel rolling machine was produced in Japan. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?-UNITED STATES
investment and NX
Inflation occurs when more money chases the same amount of goods and services. If ______________ increase, we can expect a corresponding decrease inflation, because more money will be chasing more goods. Real growth Money supply Unemployment Velocity
real growth
growth rate formula
new-old/old x 100
You sell your textbook back to the bookstore for $15 after a very successful semester. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?
none
Your housemate spends 5 hours fixing the broken wheel on his car; a job that would have cost him $300 at the local service station. In which component of each country's GDP (C, I, G, or NX) will the transaction appear?
none
Real GDP formula
old price x number of items
An increase in spending growth will shift the AD curve ______________, while a decrease in spending growth will shift the AD curve ______________. outward / inward inward / outward inward / upward outward / upwar
outward / inward
If the CPI is 93 in 2014 and 97 in 2015, calculate the rate of inflation from 2014 to 2015. how to calculate
p2-p1/p1 . 97-93/93=4.3
J.B., who is a Canadian citizen living in Canada, buys a new car ($25,000) which was built by a firm based in Ohio. How is the GDP of Canada affected?
stays same
The city of Cincinnati purchases a new, German-made bus for $150,000. How is the GDP of the countries mentioned affected?-UNITED STATES
stays same
You sell your textbook back to the bookstore for $15 after a very successful semester. How is the GDP of the countries mentioned affected?
stays same
Miranda living in Cincinnati buys a supercomputer for $6,000. The computer has been built from $400 worth of computer chips produced in Korea in the same year. How is the GDP of the countries mentioned affected?-KOREA
up 400
Miranda living in Cincinnati buys a supercomputer for $6,000. The computer has been built from $400 worth of computer chips produced in Korea in the same year. How is the GDP of the countries mentioned affected?-UNITED STATES
up 5,600
