Econ Final Exam
All of the following are problems in measuring the unemployment rate except that part-time workers are included as employed. B. discouraged workers are not included in the labor force. C. people on active military service are included as unemployed. Your answer is correct. D. lack of verification of people's responses in the household survey.
people on active military service are included as unemployed.
If the GDP deflator in 2015 has a value of 97.0, then
prices have decreased 3 percent between the base year and 2015
A Penn State football fan with a Saquon Barkley football card wants to trade it for a Michael Jordan basketball card, but everyone the fan knows who has a basketball card doesn't want a football card. Economists characterize this problem as a failure of the
principle of a double coincidence of wants.
A Penn State football fan with a Saquon Barkley football card wants to trade it for a Michael Jordan basketball card, but everyone the fan knows who has a basketball card doesn't want a football card. Economists characterize this problem as a failure of the A. market clearing mechanism. B. principle of a double coincidence of wants. C. commodity money at work. D. fiat money cration.
principle of a double coincidence of wants.
If the Federal Reserve thinks there needs to be less economic activity due to higher levels of inflation, they can attempt to ________ interest rates to ______ the access to liquidity.
raise; slow down
At the new long-run equilibrium,
real GDP and the unemployment rate will remain the same, but price level will be higher compared to the initial equilibrium, prior to the increase in exports.
Sometimes, the inflation rate may be stable and the unemployment rate may be going up just slightly. It's tough to know if the economy is in a recession or not. This is an example of the:
recognition lag.
Stagflation occurs when the price level _____ and output _____.
rises; falls
What economic concept was used as an example in the Concrete Examples video you were required to watch?
scarcity
According to the multiplier effect an initial increase in government purchases increases real GDP by more than the initial increase in government purchases.
see
An increase in real GDP that increases the price level will cause the value of the multiplier to be smaller. An increase in the marginal propensity to consume will cause the value of the multiplier to be larger.
see
An increase in the labor force or capital stock is illustrated as a shift from A to B. An increase in the expected price of an important natural resource is indicated by a shift from B to A. An improvement in technology is shown as a shift from A to B. An increase in the expected future price level causes a shift from B to A
see
An increase in the real interest rate results in little increase in private saving by households. 4 b. A decrease in the real interest rate results in a substantial increase in spending on investment projects by businesses. 1 c. The federal government eliminates 401(k) retirement accounts. 2 d. The federal government reduces the tax on corporate profits (assume no change in the federal budget deficit or budget surplus). 3
see
Assume the tax multiplier is estimated to be 1.4 and the aggregate supply curve has its usual upward slope. Suppose the government lowers taxes by $115 million. Aggregate demand will increase by $161.0 million. (Enter your response rounded to one decimal place.)
see
Assuming that inflation has occurred over time, what is the relationship between nominal GDPLOADING... and real GDPLOADING... in each of the following situations? a. In years after the base year, nominal GDP is greater than real GDP. b. In the base year, nominal GDP is equal to real GDP. c. In years prior to the base year, nominal GDP is less than real GDP.
see
Consider each of the following events and then figure out how each of these events will affect the aggregate demandLOADING... curve. a. An increase in the price level will cause a movement up along the aggregate demand curve. b. An increase in government purchases will cause a rightward shift of the aggregate demand curve. c. An increase in state income taxes will cause a leftward shift of the aggregate demand curve. d. An increase in interest rates will cause a leftward shift of the aggregate demand curve. e. A faster income growth in other countries will cause a rightward shift of the U.S. aggregate demand curve.
see
Consider the per-worker production functionLOADING.... Equal increases in the quantity of capital per hour worked lead to diminishing increases in output per hour worked.
see
Cyclical unemployment is unemployment caused by a recession. As output (GDP) is increasing, the amount of cyclical unemployment would decre
see
Identify whether the following topics belong in microeconomics or macroeconomics: How does the price of corn change if the price of wheat increase? Microeconomics Identify the best measurement of total output in the US economy. Macroeconomics How will an increase in government spending impact the inflation rate? Macroeconomics The most efficient market structure is perfect competition. Microeconomics
see
If the marginal propensity to consume is 0.75, a $10 increase in disposable income will lead to a $7.50 increase in consumption and a $2.50 increase in savings. (Enter both responses rounded to two decimal places.)
see
In a closed economy, the MPC is 0.80. Investment changes by −200. The change in equilibrium GDP is - 1000.(negative)
see
Indicate whether each of the following transactions represents the purchase of a final goodLOADING.... 1. The purchase of wheat from a wheat farmer by a bakery. Is not the purchase of a final good 2. The purchase of two new elementary school buildings by the state government. Is the purchase of a final good 3. The purchase of French wine by a U.S. consumer. Is the purchase of a final good 4. The purchase of a new plane by American Airlines. Is the purchase of a final good
see
On a 45°-line diagram (or Keynesian Cross), the horizontal axis measures real GDP , while the vertical axis measures real aggregate expenditure .
see
Suppose the government increases expenditures by $20 billion and the marginal propensity to consume is 0.80. By how much will equilibrium GDP change? The change in equilibrium GDP is: $100.0 billion. (Round your solution to one decimal place.)
see
Suppose the government increases taxes by $150 billion and the marginal propensity to consume is 0.80. By how will equilibrium GDP change? The change in equilibrium GDP is: $ -600.0 billion.
see
When business taxes increase, the equilibrium interest rate decreases and the equilibrium quantity of loanable funds decreases
see
When there are part−time workers , the official BLS measure of the unemployment rate understates the true degree of unemployment.
see
Suppose there is a graph that shows the demand and supply of U.S. dollars in exchange for euros (with the exchange rate expressed as €/$). What would be the effect of an increase in interest rates in Europe by the European Central Bank (ECB) on the demand and supply of dollars? The demand for dollars will shift to the left. The supply of dollars will shift to the right. Due to the increase in European interest rates, the dollar has depreciated relative to the euro.
seee
trained workers. This will cause a shift of China's per-worker production function.
shift
Higher interest rates will:
shift the aggregate demand curve to the left.
Expansionary monetary policy will:
shift the aggregate demand curve to the right.
A technological change will cause the long-run aggregate supply curve to shift to the right .
shift to the right
An increase in interest rates affects aggregate demand by
shifting the aggregate demand curve to the left, reducing real GDP and lowering the price level.
When interest rates fall, the aggregate expenditure function:
shifts up.
The unemployment rate
shows the percentage of the labor force that is considered unemployed.
Economic growth will
slow down or stop if more capital per hour is used because of diminishing returns to capital.
Fiscal policy has a smaller effect on aggregate demand in an open economy.
smaller
In calculating GDP, which levels of government spending are included in government purchases?
spending by federal, state, and local governments
The type of unemployment most likely to result in hardship for the people who are unemployed is
structural because this type of unemployment requires retraining to acquire new job skills.
Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called
structural unemployment
The Federal Reserve is divided into two bodies:
the Board of Governors and 12 regional districts.
Monetary policy in the US is conducted by:
the Federal Reserve.
Romer's growth theorydiffers from Solow since
the Solow growth theory focuses on technological change and the quantity of capital available to workers whereas the new growth theory states that accumulation of knowledge capital is a key determinant of economic growth.
Which of the following does the aggregate expenditure macroeconomic model seek to explain?
the business cycle
The balance of payments is equal to
the current account plus the financial account.
When you see the term per-capita reported on a statistic that just means:
the data have been divided by population to get it per-person
Macroeconomics is the study of
the economy as a whole, including topics such as inflation, unemployment, and economic growth.
Why do economists believe that setting a goal of zero percent unemployment is not feasible or desirable? Creating a goal of zero percent unemployment for an economy is not feasible nor is it desirable because
the economy needs some short-term unemployment in order to allow for better matching of jobs with workers that possess the proper skill sets.
The part of the balance of paymentsLOADING... that records purchases of assets a country has made abroad and foreign purchases of assets in the country is called
the financial account.
Which of the following sets a ceiling on the federal funds rate?
the interest paid on reserves
In determining whether to borrow funds, firms compare the rate of return they expect to make on an investment with
the interest rate they must pay to borrow the necessary funds.
Capital can be differentiated between physical capital and human capital. Human capital is
the knowledge and skills workers acquire from education and training or from their life experiences
A movement from point A to point C could be the result of a change in
the labor force.
Gross Domestic Product (GDP) is
the market value of all final goods and services produced in a country during a period of time.
Gross domestic product is best defined as
the market value of all final goods and services produced in a country during a period of time, typically one year.
When the economy is at full employment, unemployment is equal to
the natural rate of unemployment.
The new short-run equilibrium will be where
the new aggregate demand curve intersects the original short-run aggregate supply curve.
The difference between the nominal interest rate and the real interest rate is
the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate minus the inflation rate.
The federal funds rate is:
the overnight interest rate banks pay to borrow funds from each other.
The inflation rate is equal to:
the percentage change in the price level over the past year.
The data we looked at from Our World in Data was:
the poverty gap
Which of the following is included in the economist's definition of investment?
the purchase of new machines, factories, or houses
Productivity refers to ____________, and increases in productivity are a key determinant of this variable's growth rate.
the quantity of goods and services that can be produced per worker or per hour of work
Which of the following sets a floor on the federal funds rate?
the reverse repo rate
The natural rate of unemployment is
the sum of structural unemployment and frictional unemployment.
Which of the following factors determines the supply of loanable funds?
the willingness of households and governments to save
If the price level increases, then
there will be a movement up along a stationary aggregate demand curve.
If a country pegs its exchange rate with the dollar below the equilibrium value,
there will be an excess demand for that country's currency.
To answer this question you must have watched Fear the Boom and Bustopens in a new tab on YouTube and taken notes. a. Hayek wants ________, Keynes wants________.
to set markets free; to steer markets
A decrease in taxes would cause a similar shift in the aggregate demand curve.
to the right
Transfer payments are not included in GDP calculations because
transfer payments are simply transfers of income from one group to another and not a purchase of a new good or service.
When the economy is experiencing a recession automatic stabilizers will cause:
transfer payments to increase and tax revenues to decrease.
Both Robert Solow and Paul Romer won Nobel Prizes for their work.
true
Consumption is the largest component of GDP in the US.
true
Crowding out is only when we see an increase in government purchases, not when we see a decrease.
true
Crowding out, with respect to fiscal policy, is when an increase in government purchases results in a decline in private expenditures.
true
Expansionary monetary policy results in lower interest rates.
true
Interest on reserves applies to both required reserves (IORR) and excess reserves (IOER).
true
Interleaving means you shouldn't study one idea for too long. Instead, you should change up your topics.
true
Interleaving will help you make connections across material.
true
Lower interest rates will increase economic activity.
true
Major health programs was the largest change, as a percentage of GDP from 1999-2019, out of all mandatory spending programs.
true
Net exports rises when interest rates fall because the dollar becomes weaker (depreciates).
true
Spacing out your studying is a better learning strategy than cramming.
true
The current Federal Debt in the United States is greater than the level of GDP in the United States.
true
The current Federal Debt, in total terms, is the highest it has ever been in the United States.
true
The reverse repurchasing rate is around because of primary dealers who are unable to hold deoposits at the Fed.
true
The unemployment rate never reaches 0%
true
When data are seasonally adjusted they are adjusted to remove seasonal variation in the data.
true
When interest rates rise, the dollar will become stronger (appreciate).
true
Women were 64 times more likely to be a secretary in 1980 and 4 times less likely to be a lawyer. Growth in LF participation plus growth in GDP per worker equals the growth in GDP per person.
true
According to your required reading titled, On the Persistence of the Black-White Unemployment Gap, the Black unemployment rate is consistently _______ the White unemployment rate in the US.
twice
The aggregate expenditures line will be
upward sloping with a flatter slope than the 45
If the Fed believes the inflation rate is about to increase, it should
use a contractionary monetary policy to increase the interest rate and shift AD to the left.
If the Fed believes the economy is about to fall into recession, it should
use an expansionary monetary policy to lower the interest rate and shift AD to the right.
The LRAS is
vertical because in the long run, changes in the price level do not affect potential GDP, as potential GDP depends on the size of the labor force, capital stock, and technology.
An important conclusion to draw from the circular-flow diagram is that
we can measure GDP by calculating the total value of expenditures on final goods and services, or we can measure GDP by calculating the value of total income.
Consider the downward-sloping aggregate demand (AD) curve to the right. Which of the following results in a movement from point A to point B (a movement up along the AD curve) or from point A to point C (a movement down along the ADcurve)? (Mark all that apply.)
wealth effect; interest effect
The wealth effect refers to the fact that
when the price level falls, the real value of household wealth rises, and so will consumption
When are additions to knowledge capital subject to diminishing returns?
when we look only at their effect on an individual firm
The macroeconomic equilibrium will be
where the AE line intersects the 45
A politician makes the following argument: "The economy would operate more efficiently if frictional unemployment were eliminated. Therefore, a goal of government policy should be to reduce the frictional rate of unemployment to the lowest possible level." Eliminating all frictional unemployment
will not be good for the economy since the presence of frictional unemployment increases economic efficiency.
There are ________ members of the Board of Governors, who the President of the United States appoints to ________. One of the Board members is appointed Chairman for ________.
7; 14-year nonrenewable terms; a 4-year renewable term
What are the four major components of expenditures in GDP?
Consumption, Investment, Government Purchases, and Net Exports
Read the following statement and indicate where you agree or disagree. "During times when individuals and investors buy many shares of stock, investment will be high and, in turn, GDP will be as well"
Disagree: Investment as a component of GDP refers to the purchase of physical and human capital and inventory, not stock purchases.
The following questions refer to the video you watched on MR University titled Game of Theories: The Keynesians. Which of the following is a reason for sticky wages
Long-term contracts
Currency ___________ occurs when the market value of a country's currency rises relative to the value of another country's currency, while currency ____________ occurs when the market value of a country's currency declines relative to value of another country's currency.
appreciation; depreciation
Long-run growth in GDP is determined by
capital, labor productivity, and technology.
As the interest rate increases,
consumption, investment, and net exports decrease; aggregate demand decreases.
Whenever banks gain reserves and make new loans, the money supply ___________; and whenever banks lose reserves, and reduce their loans, the money supply__________.
expands; contracts
The three types of unemployment are
frictional, structural, and cyclical unemploment.
Expansionary monetary policy to prevent real GDP from falling below potential real GDP would cause the inflation rate to be relatively ________ and real GDP to be relatively ________.
higher; higher
Scarcity means that resources are ______ and our wants as a society are _______.
limited; unlimited
The following questions refer to the video you watched on MR University titled Game of Theories: Real Business Cycle. According to real business cycle theory, negative real shocks initially affect
long-run aggregate supply.
When the Fed takes action, if there are _______ reserves in the system, interest rates will ______.
more; fall
When the exchange rate (measured as foreign currency per dollar) is above the equilibrium exchange rate, there is a ___________ of dollars and, consequently,____________ pressure on the exchange rate.
surplus; downward
Briefly explain whether you agree or disagree with the following statement: "I don't believe the government price statistics. The CPILOADING... for 2018 was 212, but I know that the inflation rateLOADING... couldn't have been as high as 112 percent in 2018.
"Disagree. The inflation rate is the percentage increase in the price level from the previous year, not the base year.
An increase in... will (increase/decrease) consumption. the price level decrease consumption. household wealth increase consumption. expected future income increase consumption. current disposable income increase consumption. the interest rate decrease consumption
---
You were required to complete an assignment using FRED. It was called FRED Activities in 10 Minutes.
10
The United States is divided into 12 (enter a number, not a wordFederal Resrve Districts. ) The Federal Reserve was established in 1913.
12; 1913
Please answer the following two questions based off of your required reading in The Economist titled Why a dawn of technological optimism is breaking. How many reasons did this article give as to why the "great stagnation" may be ending?
3
The video is a tale of how many different kinds of banks?
3
Suppose that there is a decrease in capital per worker. Which of the points on the graph could show the new capital per worker and output per worker? A.
4
According to the Freakonomics Podcast you were required to listen to titled How Deep Is the Shadow Economy?, roughtly 1 in how many dollars in the world is part of the shadow economy?
5
In the Spaced Practice video, they suggested studying how many days a week when showing you the schedule?
6
Approximately what percentage of doctors, lawyers, and managers were white men in the year 2010
60
If the marginal propensity to consume (MPC) is 0.9, how much additional consumption will result from an increase of $100 billion of disposable income?
90 billion
You were required to watch a YouTube video by Chad Jones of Stanford. Please answer the following questions based on that video. Approximately what percentage of doctors, lawyers, and managers were white men in the year 1960
90%
Technological progress is affected by (check all that apply) a. investment in capital Your answer is correct. B. private property rights Your answer is correct. C. population growth D. entrepreneurship E. new software developments
A B D E
Suppose the economy is initially in long-run equilibrium. The Fed enacts a policy to decrease the required reserve ratio. In the short-run, this expansionary monetary policy will cause:
A shift from AD1 to AD2 and a movement to point B, with a higher price level and higher output.
Suppose the economy is initially in long-run equilibrium. The Fed decides to increase the discount rate. In the short-run, this contractionary monetary policy willcause:
A shift from AD2 to AD1 and a movement to point D, with a lower price level and lower output.
The graph to the right illustrates the static AD-AS model. Suppose the economy is initially in long-run equilibrium at point A. The government decides to increase taxes. In the short-run, this contractionary fiscal policy will cause:
A shift from AD2 to AD1 and a movement to point D, with a lower price level and lower output.
The government decides to decrease government spending. In the short-run, this contractionary fiscal policy will cause:
A shift from AD2 to AD1 and a movement to point D, with a lower price level and lower output.
Find equilibrium GDP using the following macroeconomic model (the numbers, with the exception of the MPC, represent billions of dollars): C = 1,500 + 0.90Y Consumption function I = 1,250 Planned investment function G = 2,000 Government spending function NX = −250 Net export function Y = C + I + G + NX Equilibrium condition The equilibrium level of GDP is $45,000. (Round your answer to the nearest billion dollars.)
AE = 1,500 + .75Y + 1,250 + 1,250 - 500 AE = 3500 + .75Y In equilibrium, Y=AE, so Y = 3500 + .75Y Y - .75Y = 3500 (1 - .75) Y = 3500 Y = 3500/(1 - .75) Y = $14,000
The "normal" underlying level of unemployment in the economy is A. the natural rate of unemployment. B. the full-employment rate of unemployment. C. the sum of structural unemployment and frictional unemployment. D. All of the above.
All of the above.
The United Kingdom produces computers and sells them to Japan. At the same time Japan produces cars and sells them to the United Kingdom. Suppose there is an appreciation in the pound. This will cause:
An increase in imports into the United Kingdom and a decrease in exports to Japan, which will cause a decrease in aggregate demand and real GDP.
Which of the following is not a main determinant of net exports? A. The price level in the United States relative to price levels in other countries. B. Expectations of future profitability in the United States. Your answer is correct. C. The growth rate of GDP in the United States relative to the growth rates of GDP in other countries. D. The exchange rate between the dollar and other currencies.
B
The following questions refer to the video you watched on MR University titled Game of Theories: The Austrians. According to the Austrian theory of business cycles, how does the boom part of the business cycle lead to the bust? A. The increased production of short-term goods caused by distorted price signals is met with insufficient consumer demand. B. Malinvestments made in response to distorted price signals fail when met with insufficient consumer demand. Your answer is correct. C. Overconfidence caused by the boom leads entrepreneurs to further invest in short-term goods, past the amount required to meet consumer demand. D. The decrease in interest rates caused by distorted price signals creates an excess of consumer demand.
B.
The following questions refer to the video you watched on MR University titled Game of Theories: The Monetarists. Which of the following is not a reason that monetarists want to constrain the Fed? A. A stable inflation rate should be enough to stabilize business cycles. B. Policymakers have institutional incentives to keep business cycles unstable. Your answer is correct. C. The information of policymakers is limited. D. Policy implementation lags are long and variable.
B. Policymakers
c. Who had a mustache in this video?
Both
Which of the following governmental agencies released the Jobs Report?
Bureau of Labor Statistics
The _________ is the most well-known publisher for data on prices.
Bureau of Labor Statistics (BLS)
Changes in interest rates affect aggregate demand. Which of the following is affected by changes in interest rates and, as a result, impacts aggregate demand? (Mark all that apply.)
Business investment projects, the value of the dollar, consumption of durable goods
The following questions refer to the video you watched on MR University titled Game of Theories: Real Business Cycle. According to real business cycle theory, negative real shocks initially affect A. the money supply. B. wages. C. long-run aggregate supply. Your answer is correct. D. aggregate demand.
C. Long run aggregate supply
Milton Friedman argued that the Federal Reserve should adopt a ________ to reduce fluctuations in real GDP, employment, and inflation.
C. Monetary growth rule
The statement, "A burrito at the student center on campus is only $5!" represents money's function as a medium of exchange. B. a standard of deferred payment. C. a unit of account. D. a store of value.
C. a unit of account
All of the following are reasons the SRAS slopes upward except for one. Which one is that? A. in the short run, as prices of final goods and services increase, some firms are very slow to adjust their prices, thus their sales increase. B. in the short run, as prices of final goods and services increase, input prices react more slowly. C. in the short run, an unexpected change in the price of an important resource can change the cost to firms. Your answer is correct. D. in the short run, prices of final goods and services adjust slowly due to the existence of menu costs.
C. in the short run, an unexpected change in the price of an important resource can change the cost to firms.
Which of the following is not a lag in fiscal policy we spoke about this week? A. Recognition B. Implementation C. Information Your answer is correct. D. Data
C. information
Which one of the following is not a function of money? A. Unit of account. B. Store of value. C. Open market operation. Your answer is correct. D. Medium of exchange. If something is to be considered as money, it has to fulfill all four functions
C. open market operation
How does a decrease in the price level affect the quantity of real GDP supplied in the long run?
Changes in the price level do not affect the level of GDP in the long run.
Your week 5 reading titled, The Costs of Being Poor, was published by the Centre on Poverty & Social Policy from which university?
Columbia
The discussion this week about the deficit and debts were centered around an infographic released by the:
Congressional Budget Office (CBO)
In this lesson, we introduced one way of measuring the price level. That was by using the:
Consumer Price Index (CPI)
If production and prices steadily increase year over year, which of the following must be true? A. Nominal GDP is higher than real GDP in years after the base year. B. Real GDP will always increase year over year. C. Nominal GDP will always increase year over year. D. All of these are correct Your answer is correct. E. None of these are correct
D
The relationship between the marginal propensity to consume (MPC) and the marginal propensity to save (MPS) can best be described as A. MPC + MPS = 1. B. MPC = 1−MPS. C. MPS = 1−MPC. D. All of the above.
D
What are some problems with Keynesian business cycle theory? A. It does not predict stagflation. B. Falling aggregate demand may be a symptom, not cause, of recession. C. Wages are only sticky during recessions. D. a & b only Your answer is correct. E. b & c only
D
When is the GDP Deflator in a specific year equal to 100? When the prices in the specific year are equal to the prices in the base year. B. When the specific year is the base year. C. When nominal GDP in the year is equal to the real GDP in the specific year. D. All of the above are true.
D
Which of the following is not an explanation for why firms keep inventories? A. Firms keep inventories in order to provide customers with a wider selection of choices. B. Inventories allow firms a place to store excess production if they incorrectly estimate the quantity that consumers wish to purchase. C. Because customers do not purchase goods at regular intervals, inventories allow firms to have goods in stock when customers want to buy. D. Because goods are produced in quantities that match the exact amounts consumers want to purchase at a given time.
D
Which of the following statements regarding net exports is not correct? Net exports are the one component of aggregate expenditure that can have a negative value. B. Net exports are directly impacted by decisions made by consumers outside the domestic economy. C. Net exports consist of exports minus imports. D. Net exports are typically one of the largest components of aggregate expenditure.
D
The appreciation of the dollar is represented as a movement from
D to C.
Which of the following events would cause the supply curve in the foreign exchange market to shift? A. Increase in foreign interest rates. B. Changes in expectations of the future value of foreign currencies. C. Increased demand for foreign goods and services. D. All of the above.
D. All of the above.
Indicate which of the following is correct about the multiplier effect. A. The multiplier ignores the effect on real GDP of imports, inflation, and interest rates. B. The larger the MPC, the more additional consumption that occurs. C. A decrease in autonomous spending decreases real GDP by a multiple of the change. D. All of the above.
D. All above
Contractionary monetary policy will result in: A. lower consumption. B. lower investment. C. higher imports. D. all of the above. This is the correct answer. E. A & B only.
D. All of the above
The Romer model suggests that the accumulation of knowledge capital can be slowed because knowledge is both nonrival and nonexcludable. How does the federal government intervene in the market to increase the amount of knowledge capital? A. Public education B. Subsidies C. Patents D. All of the above E. A and B only
D. All of the above
The simple deposit multiplier equals A. the ratio of the amount of deposits created by banks to the amount of new reserves. B. the inverse, or reciprocal, of the required reserve ratio. C. the formula used to calculate the total increase in checking account deposits from an increase in bank reserves. D. All of the above.
D. All of the above
Which of the following causes the short-run aggregate supply curve to shift to the left? A. an increase in the expected price of an important natural resource Your answer is not correct. B. an decrease in the labor force C. an decrease in productivity D. All of the above E. B & C only.
D. All of the above
Which of the following will cause interest rates to fall? open market purchases Your answer is not correct. B. lowering the discount rate C. lowering the required reserve ratio D. all of the above E. B&C only
D. All of the above
Which groups tend to have above-average unemployment rates, and which groups tend to have below-average unemployment rates? Consider the following choices. Which one is not accurate? A. White adults have below-average unemployment rates. B. Black adults have above-average unemployment rates. C. Generally, teenagers as a group have higher unemployment rates than adults. D. Black teenagers as a group have lower unemployment rates than white teenagers.
D. Black teenagers as a group have lower unemployment rates than white teenagers.
The following questions refer to the video you watched on MR University titled Game of Theories: The Keynesians. Which of the following is a reason for sticky wages? A. Fiscal Policy B. Aggregate Demand C. Monetary Policy D. Long-term contracts Your answer is correct. E. All of the above
D. Long term contracts
What are some problems with Keynesian business cycle theory? A. It does not predict stagflation. B. Falling aggregate demand may be a symptom, not cause, of recession. C. Wages are only sticky during recessions. D. a & b only Your answer is correct. E. b & c only
D. a & b only
What is a problem with monetarism? A. Stabilizing one measure of the money supply may destabilize other measures of it. B. It leaves the Fed unable to act in case of negative real shocks and velocity shocks. C. It only applies to times when inflation is too high, such as the 1970s. D. a & b only
D. a & b only
What is a problem with monetarism? A. Stabilizing one measure of the money supply may destabilize other measures of it. B. It leaves the Fed unable to act in case of negative real shocks and velocity shocks. C. It only applies to times when inflation is too high, such as the 1970s. D. a & b only
D. a&b only
Consider the figure to the right. Why does the short-run aggregate supply curve(SRAS) slope upward? a, Prices of final goods rise more quickly than the prices of inputs. B. Contracts keep wages "sticky". C. Firms and workers fail to predict changes in the price level. D. All of the above.
D. all above
To answer this question you must have watched Fear the Boom and Bustopens in a new tab on YouTube and taken notes. a. Hayek wants ________, Keynes wants________.
D. to set markets free; to steer markets
Suppose that currency traders expect that the value of
Demand for rubles will decrease and supply of rubles will increase.
Suppose that the U.S. government deficit causes interest rates in the United States to rise relative to those in the European Union. Assuming all else remains constant, how would this be represented?
Demand would increase and the economy moves from A to B.
Which of the following is not a Federal Reserve district? A. Philadelphia B. Denver Your answer is correct. C. Dallas D. Richmond
Denver
When we introduced employment in this lessons, we referenced Tweets by two US Politicians. Who were they?
Donald Trump & Bernie Sanders
If prices steadily increase year over year, which of the following must be true? A. Real GDP will always increase year over year. B. Nominal GDP will always increase year over year. Your answer is not correct. C. Nominal GDP is higher than real GDP in years before the base year. D. Real GDP is higher than nominal GDP in years after the base year. E. None of these are correct
E
We say that the economy as a whole is in macroeconomic equilibrium if A. total spending equals GDP. B. total spending equals total production. C. aggregate expenditure equals GDP. D. aggregate expenditure equals total production. E. all of the above
E. ALl of the above
Which of the following causes the short-run aggregate supply curve to shift to the right? A. a decrease in the capital stock B. a negative technological change C. a higher expected future price level D. All of the above E. None of the above.
E. None of the above
Which of the following will cause interest rates to rise? A. lowering the required reserve ratio B. lowering the discount rate C. open market purchases D. all of the above E. none of the above
E. None of the above
In the circular flow of expenditure and income, why must the total value of production in an economy equal the total value of income?
Every penny spent on a good or service must end up as someone's income.
What are the four main determinants of investment?
Expectations of future profitability, interest rates, taxes and cash flow.
If the Fed raises the required reserve ratio, liquid assets become scarcer and interest rates fall.
False
Member banks cannot receive interest on reserves as they are unable to hold deposits at the Fed.
False
The Austrian school is best known for arguing the superiority of government economic planning over the market system.
False
The Bureau of Economic Analysis (BEA) is part of the Department of Labor.
False
The real business cycle model focuses on changes in the quantity of money to explain fluctuations in real GDP.
False
The technology boom of the 1990s did not help business become more efficient because the benefits of tech innovations flow more to leisure activitys, such as social media and smartphone apps.
False
b. Many economists, including former Fed Chairman Ben Bernanke, blame the Fed for causing a deflationary spiral during the Great Depression by keeping monetary policy far too loose.
False
Currently, in the basket of good created by the BLS for the CPI, there are about 100 different types of goods and servies placed into 8 major categories.
False
Jaravel's research shows that, at least in recent years, inflation is steeper at the top of the income distribution.
False
What does the acronym FRED stand for?
Federal Reserve Economic Database
One definition of fiscal policy is:
Fiscal policy can be described as changes in government spending and taxes to achieve macroeconomic policy objectives.
Which of the following is considered to be a problem in using GDP as a measure of national well-being?
GDP is not adjusted to account for depletion of natural resources .
What happens if we measure GDP by adding up the value of every good and service produced in the economy?
GDP is overestimated because of double counting.
The term "crowding out" refers to a situation where:
Government spending increases interest rates and decreases private investment.
Which of the following equals the amount of public saving?
Government tax revenue minus the sum of government purchases and transfer payments to households.
In the video under the Introduction to FRED page on Canvas, what data were being looked at?
Gross Domestic Product
The main way economists measure output and production is through:
Gross Domestic Product (GDP)
GDP is an imperfect measure of economic well-being because it fails to measure what types of production?
Household production and the underground economy.
Suppose booming economies in the BRIC nations (Brazil, Russia, India, and China) causes net exports (NX) to rise by $100 billion in the United States. If the MPCLOADING... is 0.9, the change in equilibrium GDP will be $1000 billion.
If the MPC is 0.9, the change in equilibrium GDP will be $___ billion. To solve a problem of this type, recall that the multiplier is equal to 11−MPC. Thus, in the above example, the multiplier is equal to 11−0.9 = 1000 Therefore, for a $100 billion increase in net exports, the change in GDP = (change in net Exports) ×(multiplier) or ($100)(1,000) = $100000 billion.
The graph to the right shows a situation in which the economy was in equilibrium at potential GDP (at point A) when the demand for housing sharply declined. What actions can Congress and the president take to move the economy back to potential GDP?
Increase government spending or decrease taxes.
Which of the following categories was the largest for revenues in 2019?
Individual income taxes
Into which category of aggregate expendituresLOADING... would the following transaction fall? Prudential Insurance Company purchases 250 new computers from Dell. Investment expenditure
Investment expenditure
Who is the current chair of the Federal Reserve?
Jerome Powell
What is the Austrian solution to business cycles?
Limited government that doesn't interfere with market price signals.
What are the largest asset and the largest liability of a typical bank?
Loans are the largest asset and deposits are the largest liability of a typical bank.
The following questions refer to the video you watched on MR University titled Game of Theories: The Austrians. According to the Austrian theory of business cycles, how does the boom part of the business cycle lead to the bust?
Malinvestments made in response to distorted price signals fail when met with insufficient consumer demand.
Which of the following categories was the largest for outlays in 2019?
Mandatory spending
Which state did Professor Tierney grow up in?
New York
When we talk about economic growth (increases in real GDP per capita), we can break it down into two sources: inputs and productivity. Which of the follow statements is true?
One way to increase productivity is to improve allocative efficiency.
Which one of the following is not a function of money?
Open market operation.
c. Who was the chair of the Federal Reserve Board of Governors that raised interest rates to 20% in the early 1980s to try and tame inflation?
Paul Volcker
The following questions refer to the video you watched on MR University titled Game of Theories: The Monetarists. Which of the following is not a reason that monetarists want to constrain the Fed?
Policymakers have institutional incentives to keep business cycles unstable.
An article in the Wall Street Journal notes, "Productivity improvements are a key ingredient for the U.S. economy to maintain a 3% growth rate, a goal of the Trumpadministration." Source: Eric Morath, "U.S. Worker Productivity Advances at Best Rate since 2010," Wall Street Journal, May 2, 2019. a. What economic variable was the Trump administration hoping would grow at a rate of 3 percent per year?
Real GDP
If production steadily increases year over year, which of the following must be true?
Real GDP will always increase year over year.
How would an increase in interest rates affect investment?
Real investment spending declines.
Which of the following best explains how the economy will adjust back to long-run equilibrium?
Short-run aggregate supply will decrease (shift leftward) as firms and workers adjust to the new price level.
Which famous celebrity did I take an awkward picture with?
Snoop Dogg
Which Federal Reserve Bank hosts FRED?
St. Louis
Currency speculators believe that the value of the Euro will increase relative to the dollar. Assuming all else remains constant, how would this be represented?
Supply would increase, demand would decrease and the economy moves from C to B to A.
Which of the following is not a limitation to fiscal policy we spoke about this week? A. Lags B. Crowding Out C. Term limits Your answer is correct. D. Deficits and the debt E. All of the above were limitations we spoke about this week.
Term limits
b. What movie is being filmd in New Orleans while this podcast is being recorded?
The Big Short
Which committee sets the position of monetary policy?
The Federal Open Market Committee
In the Medium article Professor Tierney wrote titled GDP Doesn't Tell the Whole Story, which alternate to GDP was the artcle about?
The Gross National Happiness Index
In the elaboration video, what world event did they use as an example?
The World Wars
What is the difference between the federal budget deficit and federal government debt?
The federal budget deficit is the year-to-year short fall in tax revenues relative to government spending (T < G + TR), financed through government bonds. The federal government debt is the accumulation of all past deficits.
Fscal policy is conducted by:
The federal government controls fiscal policy.
A way to achieve more economic growth is by increasing the knowledge capital of firms. Suppose policymakers wanted to assist in this increase. Which of the following policies would not help?
The government could reduce corporate tax rates for service and retail companies.
A company lowered the prices of its products, expecting an increase in demand and sales by at least 10 percent. However, sales increased by only 4 percent. Which of the following, if true, can explain this outcome?
The government increased personal income tax rates earlier this year.
Which of the following is not a limitation to monetary policy mentioned in the lesson?
The information lag
is the percentage of the working-age population in the labor force.
The labor force participation rate
Use the graph to the right to help determine which of the following statements regarding the labor force participation rates of adult men and women since 1950 is false.
The labor force participation rates of adult men and adult women were equal in 1990.
Why might cutting government spending as a fiscal policy be a more difficult policy than the use of monetary policy to slow down an economy experiencing inflation?
The legislative process experiences longer delays than monetary policy.
According to the Page One Economics article posted by the St. Louis Fed titled How Do Imports Affect GDP that you were required to read for this week, addressed which of the following topic?
The misconceptions about how imports affect overall GDP.
What will be the effect of an increase in business taxes on the quantity of investment by firms and the economy's capital stock in the future?
The quantity of investment will decrease and the economy's future capital stock will decrease.
Real GDP per capitaLOADING... is often used as a measure of generalwell-being. While increases in real GDP often do lead to increases in thewell-being of thepopulation, why is real GDP not a perfect measure ofwell-being?
The value of leisure is not included. B. GDP does not include crime rates or income distribution. C. The costs of pollution are not included. D. All of the above. (right)
Have poor countries been catching up to rich countries?
There has been catch-up by some poor but industrialized countries.
c. According to this podcast, how did the rich Italians get so rich?
They charged interest on loans.
Why do few economists argue that it would be a good idea to balance the federal budget every year?
To keep a balanced budget during a recession, taxes would have to increase and government expenditures would have to decrease, which would further reduce aggregate demand and deepen the recession.
Before the Great Recession, almost all monetary policy in the U.S. was done through open market operations.
True
GDP doesn't measure many things such as happiness or equality.
True
Open market purchases will add liquid assets to the system and cause interest rates to fall.
True
The findings of this study shows that, when adjusted for inflation, we see 3.2 million more people living in poverty in 2018.
True
This article believes that governments should play an important role in seeing the future increase in techology and productivity.
True
When the BEA reports the GDP data from a quarter, they are reporting what a full year would look like (again, adjusting for both inflation and seasonality effects) if this quarterly production occurred.
True
he following questions are related to the Wall Stree Journal article/interactive titled, A Brief History of US Inflation Since 1775. a. From the US Revolutionary War to WWII, inflation swung around much more dramatically than it does today.
True
Indicate whether the following statement is true or false and why. "A wage rising slower than the rate of inflation is actually falling."
True. If wages are increasing slower than the average price of goods and services, purchasing power falls.
What source does FRED get the GDP data from?
US Bureau of Economic Analysis
Our World in Data (ourworldindata.org) is maintained by researchers at:
University of Oxford
Dual Coding means which of the following?
Using both words and visuals while studying concepts.
How do the banks "create money"?
When there is an increase in checking account deposits, banks gain reserves and make new loans, and the money supply expands.
In the aggregate expenditure model, when is planned investment greater than actual investment?
When there is an unplanned decrease in inventories.
Which equation represents the relationship between GDP and the four major expenditure components?
Y = C + I + G + NX
Suppose that the inflation rateLOADING... turns out to be much higher than most people expected. In that case,
a borrower will gain from the situation while a lender will lose.
A government that collects more in taxes than it spends experiences
a budget surplus.
Which of the following factors does not cause the aggregate demand curve to shift?
a change in the price level
The international-trade effect refers to the fact that an increase in the price level will result in
a decrease in exports and an increase in imports.
If the government cuts taxes in order to increase aggregate demand, the action is called
a discretionary fiscal policy.
Payroll taxes were temporary cut by Congress and the president.
a discretionary fiscal policy.
When countries agree to keep the value of their currencies constant, there is
a fixed exchange rate system.
When a central bank intervenes into the foreign exchange market to set a country's exchange rate over long periods of time, it is called
a fixed exchange rate.
A country that allows demand and supply to determine the value of its currency has
a floating currency.
When a local restaurant accepts your $20 bill when you purchase a to-go order of pasta, the $20 bill serves as:
a medium of exchange.
Which of the following is the definition of the new growth theory?
a model of long-run economic growth that emphasizes that technological change is influenced by economic incentives
On the graph of the consumption function, the horizontal axis measures _______, while the vertical axis measures _______.
a real national income or real GDP; real consumption spending
Your university gives you an education each year in exchange for money in the future through student loans. This illustrates which function of money?
a standard of deferred payment.
If whole avocados were used as a society's money, which of the following functions would be the hardest to satisfy?
a store of value.
The statement, "A burrito at the student center on campus is only $5!" represents money's function as
a unit of account.
Which of the following is the best example of human capital?
a worker gets a college degree
Even if GDP included these types of production, why would it still be an imperfect measure of economic well-being?
a. The value of leisure is not included in GDP. B. GDP is not adjusted for pollution and it does not account for unequal income distribution. C. GDP is not adjusted for crime or other social problems. D. All of the above
A student says the following: "I understand why the Fed uses expansionary policy but I don't understand why it would ever use contractionary policy. Why would the government ever want the economy to contract?" The government would want the economy to contract when real GDP is
above potential GDP and the price level is rising.
Use an aggregate demand and aggregate supply graph to explain how the eurozone could experience both lower unemployment and higher inflation. Assume the eurozone is initially in long-run equilibrium. The aggregate demand curve will shift right
aggregate demand; right
If something is to be considered as money, it has to fulfill all four functions
all four functions
Business cycles are
alternating periods of expanding and contracting economic activity, which are usually illustrated using movements in real GDP.
The revenue the federal government collects from the individual income tax declines during a recession. This is an example of
an automatic stabilizer.
Total unemployment insurance increases during an recession. This is an example of
an automatic stabilizer.
The following questions refer to the WSJ video you were required to watch titled: How Interest Rates Are Set: The Fed's New Tools Explained. In the video, what does the WSJ use to demonstrate the new tools?
an elevator inside a skyscraper
From June 2009 to June 2019, the Standard & Poor's Index of 500 stock prices increased by more than 300 percent, while the consumer price index increased by less than 18 percent. These changes would have caused
an increase in the real value of household wealth, which shifted the aggregate demand curve to the right.
Keynes blames ___________ whiles Hayek blames _______ for the boom and bust cycle.
animal spirits; low interest rates
The fact that the equilibrium quantity of loanable funds may increase along with an increase in the real rate of interest
assumes that demand for loanable funds increases with supply remaining unchanged
Government spending and taxes that change without actions by the government are called
automatic stabilizers.
d. In 1974, the economist Herbert Stein called inflation:
a Hydra-headed monster.
To answer this question you must have listened to the podcast Surprisingly Awesome -- Interest Ratesopens in a new tab and taken notes. a. After the Dutch legalized interest and set up borrowing and lending areas, they
became the richest country in the world.
Some economies are able to maintain high growth rates despite diminishing returns to capital by using
better or enhanced technology, along with accumulating capital; these economies are growing because technology, unlike capital, is subject to increasing returns.
c. Who had a mustache in this video?
both
At the firm level,
both knowledge capital and physical capital exhibit decreasing returns.
How can government policies shift the aggregate demand curve to the right?
by increasing government purchases
Why does inflation make nominal GDPLOADING... a poor measure of the increase in total production from one year to the next? A. Nominal GDP separates increases in GDP as a result of price changes from increases in GDP as a result of quantity changes. B. GDP is a measure of production in quantity terms. C. When nominal GDP increases from year to year, the increase is due partly to changes in prices and partly to changes in quantities. Your answer is correct. D. All of the above E. A and B only
c
Look carefully at the following list. a. The coins in your pocket. b. The funds in your checking account. c. The funds in your savings account. d. The traveler's check that you have left over from a trip. e. Your Citibank Platinum MasterCard. Which of the things above are NOT included in the M1LOADING... definition of the money supply?
c & e
Look carefully at the following list. a. The coins in your pocket. b. The funds in your checking account. c. The funds in your savings account. d. The traveler's check that you have left over from a trip. e. Your Citibank Platinum MasterCard. Which of the things above are NOT included in the M1definition of the money supply?
c & e
A movement from point A to point C could be the result of a
change in the expectations of households.
Consider the short-run aggregate supply curves in the graph at right. A movement from point A to point B on SRAS1 could be the result of a
change in the price level
Consider the two aggregate demand curves in the graph at right. A movement from point A to point B on AD1 could be the result of a
change in the price level.
What index is used to measure the average prices paid by a typical family? An average of the prices of the goods and services purchased by a typical family is the:
consumer price index (CPI).
The line that represents the relationship between consumption and disposable income is called the __________. The slope of the this line is the __________.
consumption function; marginal propensity to consume
How does real GDPLOADING... deal with the problem inflation causes with nominal GDP? A. Real GDP separates price changes from quantity changes. B. Real GDP uses the prices of goods and services in the base year to calculate the value of goods in all other years. C. By keeping prices constant, we know that changes in real GDP represent changes in the quantity of output produced. D. All of the above. Your answer is correct. E. A and C only.
d
Unemployment data comes out the following month and is revised twice. GDP data takes several months to come out and also goes through revisions. Because of this, we see a ______ when it comes to monetary policy.
data lag
Holding all else constant, a federal government budget deficit will
decrease the supply of loanable funds and increase the equilibrium real interest rate.
A higher required reserve ratio _________ the value of the simple deposit multiplier.
decreases
An increase in the amount of excess reserves that banks keep _________ the value of the real-world deposit multiplier.
decreases
The LRAS curve is
determined by the number of workers, the amount of capital, and the available technology.
Monetary policy _______ are willing to sacrifice higher inlfation for lower levels of unemployment.
doves
Monetary policy _______ would shift aggregate demand to the right when an economy is experiencing stagflation.
doves
Indicate whether each of the following is a final good, an intermediate good, or neither. Coffee beans purchased by a coffee shop Intermediate good One share of Google stock Neither A new pick-up truck purchased by a consumer Final good A new home purchased by a family Final good
e
We refer to data on the economy as:
economic indicators
Which of the following is not a government policy that will increase the accumulation of knowledge capital?
encouraging the growth of labor unions
A good is said to be rival if the person or firm owning the good can keep others from using it in some way.
false
An increase in the discount rate makes it easier for banks to borrow from the Fed.
false
BLS employees then visit 23,000 stores across 87 cities to record the prices every 6 months to update the CPI.
false
Before the 2007 financial crises, we would say that the banking system has ample reserves.
false
Crowding out makes it easier to estimate the actual multiplier effect.
false
For the first time in the Trump adminstration, the US ran a budget surplus in 2019
false
In most countries, political stability has little to do with economic growth.
false
Inflation focuses on individual prices and not the price level as a whole.
false
Inflation occurs when prices in an economy rise as a whole (deflation is when they stay constant).
false
RGDP in the US declined at an annualized rate by about 31% in the second quarter, 2020. It then increases at an annualized rate by about 33% in the third quarter. Thus, the US RGDP has increases slightly over the 2nd and 3rd quarters of 2020.
false
Retrieval practice must be done alone and cannot be done by working with a classmate.
false
Retrieval practice requires you to have your notes and book handy to quickly recite information you've retained from the class.
false
The Austrian school is best known for arguing the superiority of government economic planning over the market system.
false
The real business cycle model focuses on changes in the quantity of money to explain fluctuations in real GDP.
false
Under the Trump administration, the total Federal Debt in the United States decreased.
false
When reading about endogenous growth theory you will likely run into physical capital being referred to as ideas and knowledge capital being referred to as objects.
false
When the government starts running a larger deficit—which it does when it increases spending or decreases taxes (expansionary policy)—the supply curve shifts to the right and the interest rate increases.
false
d. The base interest rate in the US is called the:
federal funds rate.
The financial system of a country is important for long-run economic growth because
firms need the financial system to acquire funds from households.
Endogenous growth theory (the Romer model) states that
firms will add to an economy's stock of knowledge capital by engaging in research and development or by contributing to technological change.
A change in the price level causes a movement along the short-run aggregate supply (SRAS) curve. In the figure, this is shown by moving from point A to B. A change in any other factor causes a shift in the SRAS curve. In thefigure, this is shown by moving from point B to C.
graph
Monetary policy _______ are willing to sacrifice higher unemployment for lower levels of inflation.
hawks
Monetary policy _______ would shift aggregate demand to the left when an economy is experiencing stagflation.
hawks
The interest rate effect refers to the fact that a higher price level results in
higher interest rates and lower investment.
According to the graph, prices are higher and GDP is higher
higher; higher
In the circular-flow diagram, who supplies factors of production in exchange for income?
households
Microeconomics is the study of
how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices.
According to your required reading titled, What full employment really means, the phenomenon short-term unemployment coulse become long-term unempllyment is known as:
hysteresis
Even after it is decided to take on monetary policy, the FOMC will need to meet and hash out exactly what needs to be done, and that takes time. Because of this, we see a ______ when it comes to monetary policy.
implementation lag
Credit cards are
included in neither the M1 definition of the money supply nor in the M2 definition.
Which of the following income quintile's did not experience inflation inequality when it came to measuring their income growth?
income quintile 5
With the shift in the demand for loanable fundsLOADING..., the equilibrium real interest rate increases and the equilibrium quantity of loanable funds increases .
increase 2x
How would an increase in the growth rate of GDP in Canada and Mexico affect U.S. net exports? An increase in the growth rate of GDP in Canada and Mexico will
increase U.S. net exports by increasing exports to these countries.
In terms of its effect on the long-run growth rate of real GDP, it is likely to matter more if the additional government spending involves
increased spending on highways and bridges.
Expansionary fiscal policy is less effective in an open economy because
increases in government spending can increase interest rates, which increases the value of the dollar and crowds out net exports.
Expansionary monetary policy is more effective in an open economy because
interest rate decreases also reduce the value of the dollar, which increases net exports and further increases aggregate demand.
Government policy can increase the accumulation of knowledge capital in all the following ways except by:
investing in physical capital accumulation.
Some economists argue that because increases in government spending crowd out... private spending, increased government spending will reduce the long-run growth rate of real GDP. a. This is most likely to happen if the private spending being crowded out is investment spending.
investment spending
What is the rule of 70? The rule of 70
is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to double.
The balance of payments
is always zero.
The real interest rate
is equal to the nominal interest rate minus the inflation rate.
The unemployment rate that includes discouraged workers and people working part-time who would prefer full-time jobs
is higher than the official unemployment rate, and the difference between the two grows larger in recessions.
In the figure, the exchange rate between the Japanese yen and the U.S. dollar increased because demand increased by more than supply. As a result, what happens to U.S. real GDP?
it decreases
At the macro-economy level,
knowledge capital exhibits increasing returns and physical capital exhibits decreasing returns.
The accumulation of knowledge capital can slow down due to firms underinvesting in research and development. This can then cause slowing of economic growth. Which of the following would be a reason for this to happen?
knowledge capital is both nonrival and nonexcludable; other firms can freely access the research and development of one particular firm.
Suppose now that instead of 4.25%, the inflation rate unexpectedly reaches 5.5%. Who gains and who loses from this unanticipated inflation? (Mark all that apply.)
lenders lose from a lower interest rate; borrowers gain from a lower interest rate
Refer to the diagram to answer the following: a. The movement from point A to point B represents: more capital per hour worked b. The movement from point B to point C represents: technological change c. The movement from point A to point C represents: technological change and more capital per hour worked
lets just hope this isn't on there
Economic growth models predicts that the
level of per capita GDP in poor countries will increase faster than rich countries and the poor nations will catch up with the rich nations.
If the Fed thinks there needs to be more economic activity, they will want to:
lower interest rates.
In the figure to the right, if the economy is at point A, the appropriate monetary policy by the Federal Reserve would be to
lower interest rates.
The level of total investment by firms in new machinery and equipment helps to determine how rapidly the economy grows. This is a issue. However, to understand how much new machinery and equipment firms decide to purchase, one must analyze the incentives individual firms face, which is a issue.
macroeconomic; micro
The difference between microeconomics and macroeconomics is
microeconomics studies smaller parts of the economy such as markets and individuals, while macroeconomics studies the economy as a whole.
Milton Friedman argued that the Federal Reserve should adopt a ________ to reduce fluctuations in real GDP, employment, and inflation.
monetary growth rule
Which of the following was not one of the three biggiest in macroeconomics talked about in the Canvas readings?
money
Consider the per-worker production function graph. If there is an increase in capital per hour worked, holding technology constant, then A. there is a movement from B to D. B. there is a movement from A to B. Your answer is correct. C. there is a movement from D to C. D. there is a movement from A to C. If there is an increase in technology, holding constant the quantity of capital per hour worked, then A. there is a movement from A to B. B. there is a movement from C to D. C. there is a movement from A to C. Your answer is correct. D. there is a movement from D to B.
muh
The current account records
net exports, net investment income, and net transfers.
The Fed buys bonds. This is an example of
not a fiscal policy.
The government increases gasoline mileage requirement for new cars to try and help with the environment. This is an example of
not a fiscal policy.
The shoreline in New Jersey gets destroyed by a hurricane. The federal government increases spending to help rebuild. This is an example of
not a fiscal policy.
Refer to the graph. According to the economic concept of catch-upLOADING..., which of the following is CORRECT? A. Poorer countries should grow more slowly and will be at point B. B. Richer countries should grow more slowly and will be at point A. C. Poorer countries should grow more quickly and will be at point A. Your answer is correct. D. Richer countries should grow more quickly and will be at point B.
oh boy
The financial account records
only net capital flows.
