Econ final

Automatic stabilizers act like:

automatic expansionary fiscal policy when the economy is in a recession

In the long run, changes in the money supply_____ the aggregate price level and ____aggregate output.

affect;do not affect

The federal budget tends to move toward _____ as the economy______

deficit;contracts

The _____ tractors will increase if gasoline prices fall.

demand for

As unexpected increase in commodity prices causes a ____shock

negative supply

If the economy is at potential output, and the Fed decreases the money supply, in the long run, real GDP will likely:

remain the same.

.

shift from D1 toD 2

If the actual unemployment rate= 3%, while the natural rate=7%, the cyclical unemployment is _____ and the labor force is ______

-4%, less than fully employed

Consider an economy that produces only smartphones and laptops. Last year, 10 smartphones were sold at $800 each, and 5 laptops were sold at $1,000 each, while this year, 15 smartphones were sold at $900 each, and 10 laptops were sold at $1,100 each. Real GDP this year, using last year as a base year, is:

$22,000

Suppose that the consumption function is C=$500+0.8YD is disposable income. The marginal propensity to save is:

0.2

The U.S. government has subsidized ethanol production since 1978. With the advent of affordable electric cars, policymakers are considering wether to allow the subsidy to expire

Demand for ethanol will not change, supply of ethanol will decrease.

Suppose that a bank wishes to earn a 5% real rate of return on a one-year loan but expects inflation over the course of the loan to be roughly 3%. Which statement is TRUE?

If the bank charges 8%, and the inflation rate is less than 3%, then the bank will have earned a higher real rate of retur than expected.

.

Increase in the economy's ability to produce automobiles and cell phones.

Which of the following is a government transfer?

Social Security payment to retired auto workers

Aggregate demand will increase if:

The public becomes more optimistic about future income.

If the price of a hockey puck goes up from 7.99 to 14.99, what can be expected from suppliers of hockey pucks as a result?

There will be an increase in quantity suppplied

Linking savers and investors is an important role of :

a well functioning financial system

The smapple Corporation produced 24,00 smartphones in 2019. Only 4000 smartphones remained unsold at the end of 2019. As a result:

all 24,00 smartphones will be included in GDP in 2011,20,00 as consumption expenditure and 4000 as investment expenditure

Workers today are more productive than they were in the past because they:

are better educated and so have more human capital.

If the economy is at potential output, and the Fed decreases the money supply, in the short run, real GDP will likely:

decrease

If the economy is at potential output, and the Fed decreases the money supply, in the long run, the price level will likely:

decrease.

Three consequences of the decline in demand during the Great Depression were ____ prices, ____ output, and a surge in unemployment

falling; falling

Investment spending is undertaken when the rate of return is:

higher than the equilibrium interest rate

A government policy that does NOT promote economic growth is:

implementing a monetary policy that causes prices to fall.

Given a recessionary gap, the Federal Reserve will use monetary policy to ___ real GDP and ____ aggregate demand.

increases; inceese

Suppose that the U.S. deficit is decreasing from $3.1 trillion in 2020 to $2.8 trillion in 2021 to $1.4 trillion in 2022. What does this imply about US debt from 2020 till 2022? Us debt is______

increasing at a decreasing rate

Assume that the marginal propensity to consume is 0.8 and that potential output is $900 billion. IF REAL GDP IS $700 BILLION,______government spending by_____ would bring the economy to potential output.

increasing; $40 billion

The trough of the business cycle:

is a temporary minimum level of real GDP

Investment spending:

is financed by the savings of domestic or foreign households.

cyclical unemployment is a result of_____

recessions and economic downturns

Amina has a calculus exam tomorrow. However, a free lecture by one of her favorite authors is taking place this evening. Amina decides to attend the lecture instead of studying for her exam. Aminah's opportunity cost of attending the lecture is:

the transportation and time cost of getting to the lecture itself plus the reduction in her physics exam grade as a result of not studying tonight.