ECON FINAL
A new assembly line robot with a price tag of $2.5 million is expected to depreciate by 3% at the end of next year. The real interest rate is 2.5%. What is the user cost of the robot for one year?
$137,500
Consumption is $151 billion, government expenditure is $70.2 billion, investment is $65.8 billion, and net exports amount to -$21 billion. What is aggregate expenditure in this economy?
$266 billion
In the IS-MP analysis in the Fed model, if the Federal Reserve lowers the federal funds rate, the:
mp curve shift to the right
Is military spending the primary government expenditurre?
no
Once you have identified the point of equilibrium in the IS-MP graph in the Fed model, the horizontal axis will show you the:
output gap
12 regional banks
semi-private, presidents internally appointed
federal open market committee
sets monetary policy, sets interest rates every 6 weeks
In 2017, nearly 3.5% of Vietnamese imports constituted of refined oil. If the price of oil rises significantly, what effect does this have on the Phillips curve in Vietnam?
shift to the right
What is the Federal Reserve's mandate?
to ensure maximum employment while maintaining stable prices
To maximize economic surplus, you will continue to increasing output as long as
total benefits equal total costs
Marx Perfect Equality The 19th century economist, Karl Marx, author of the Communist Manifesto, was in favor of complete equality.
true
What is excess demand?
when quantity demanded is more than quantity supplied;shortage
If inflation in the United States was 1.9% in 2014, and the growth rate of real GDP was 2.5%, what was the nominal GDP growth rate?
4.4%
(Figure: Leonard's Demand for Pecan Pie) Look at Leonard's weekly demand curve for slices of pie. How many slices of pie is Leonard willing to buy at $3 per slice?
5 slices
If expected inflation is 3% and actual inflation is 4.2%, then unexpected inflation is:
1.2%
If government spending rises by $62 billion and GDP rises by $110 billion, then the multiplier in the economy is approximately:
1.77
The working age population includes people who are:
15-64
Suppose that in a given country, the line of best fit approximates the Phillips curve shown here. Suppose for next year, you expect GDP to be equal to potential GDP. Current inflation expectations are at 2%. How much does your salary have to change, in nominal terms, in order to maintain your purchasing power at the current level?
2%
What is the Federal Reserve's the long run inflation target?
2%
The standard deduction is $13,850 for a single person. Suppose you file as a single person, and your current income is $40,000. This means that your taxable income is:
26150
What is the current inflation rate What is the current inflation rate? (Write your answer in percentage terms. Ex: 5.5%, rather than 0.055)
3.1%
What is the current unemployment rate? What is the current unemployment rate? (Write your answers in percentage terms. ex: 5.5%, rather than 0.055)
3.7%
If the interest rate is 5%, what is the approximate future value of $500 in three years?
578.81
Assume that a country with total income of $160,000 has a population of 10 households whose incomes are listed in Table: Income of Households. What percentage of income is earned by the top quintile (20%) of the population?
69%
board of governors
7 members appointed directly by congress
The table shows statistics for three Canadian cities at several different points in time. What was the unemployment rate in Toronto in January 2009?
8.1%
In a 2011 to 2012 labor force survey, the working age population in Uganda was 15,764,000. The labor force was 12,623,000. What was the labor force participation rate in Uganda?
80.01%
Consider the data in the table below. In 2018, the country with the highest economic growth rate was:
Consider the data in the table below. In 2018, the country with the highest economic growth rate was:
A major technological advancement occurs in transportation technology, which leads to faster and more efficient train systems. Which graph depicts the effect on the supply of train rides?
Graph D
Which of the following shows the correct effect on the IS-MP framework if there is a sharp increase in loan default rates in an economy?
MP curve shifts upwards
Forward guidance
Providing information about the future course of monetary policy in order to influence market expectations of future interest rates
Quantitative easing
Purchasing longer term government bonds and other securities in an effort to lower long-term interest rates.
A negative shock causes a decrease in the level of technology in a country. Which of the following production functions shows the impact of this shock?
a
Economists use money equivalents to compare costs and benefits because money is
a common measuring stick that can be used to measure opportunity costs
An upward-sloping supply curve shows that
a higher price leads to a higher quantity supplied
A bank run occurs when:
a large group of depositors withdraw their money from banks at the same time
A fiscal policy contraction would lead to:
a left shift in the IS curve, tightening of credit through increased interest rates, increased unemployment, reduced business investment, and reduced consumer spending.
A downward-sloping demand curve implies:
a negative relation between price and quantity
FFR Mechanism You are now Fed Chair. Inflation is rising, and therefore, you need to raise the Federal Funds Rate. How do you do it?
adjusting interest on reserve balances rate
Inflation is a:
an increase in the average level of prices
An equilibrium in a market occurs:
at the price at which quantities demanded and supplied are equal
federal reserve system
central bank of US, independent, ample government oversight, responsible for setting monetary policy, uses interest rates to influence economy
Variable costs are the costs that
change based on how much a company produces and sells
If the U.S. government lowers personal income tax rates:
disposable income increases
Real GDP is calculated by:
dividing nominal GDP by a GDP deflator.
Diminishing marginal benefit:
each additional unit of gain leads to an ever-smaller increase in subjective value
What is the primary cause for the increasing house prices over the past decade?
more housing demand, stagnant housing supply
How might deflation set off further deflation?
falling prices my cause people to defer spending in expectation of futher lower prices
If debt increases ______________ than GDP, the ratio of debt to GDP will ______________.
faster, increase
Who is on the Federal Open Market Committee?
fed governors and district bank presidents
Why is it important for the central bank of a country to be independent? (i) The central bank needs to be free from political pressures. (ii) Research has shown that inflation tends to be lower where central banks have greater independence. (iii) The central bank needs to ensure that it has the freedom to set the federal funds rate at one fixed level. (iv) The central bank needs to ensure that the Federal Reserve governor never has to testify before Congress.
freedom from political pressures
Which of the figures shown here correctly represents the shape of the MP curve?
going up to right
A coffee shop opens next to an existing coffee shop. Which of the following graphs shows the effect of this new coffee shop on the market supply curve for coffee in this area?
graph A
If the economy is at full employment, expansionary fiscal policy is MOST likely to lead to:
higher inflation rates
With a progressive tax, those with ______________ income tend to pay a ______________.
more income tend to pay a higher share of their income in taxes
Bowing to political pressures, a central bank decides to print money. What can this scenario lead to?
inflation
The price in the loanable funds market is the:
interest rate
Consider the following graph. Why did government spending rise during the 2007 to 2009 period?
introduction of the Affordable Care Act (ACA), also known as Obamacare
What is a regressive tax?
low income taxpayers pay a disproportionate share of taxes
The consumer price index is an index that tracks the:
overall change in consumer prices based on a representative basket of goods and services over time
The CPI changes from 100 to 200. This means that:
overall prices have doubled
Which of the following graphs correctly represents a positive supply shock on the Phillips curve?
phillips curve shift to the left
Consider the Phillips curve. A negative supply shock will cause ______________ the Phillips curve.
phillips curve to shift to the right
The percentage of the population that falls below the poverty line is called the:
poverty rate
What is the Fed's dual mandate?
price stability and maximum employment
The tax system is used to reduce income inequality through the use of ______________ taxes.
progressive taxes
why is central bank independence important for macroeconomic stability?
protection from short-term political pressures
inflation targeting
publicly stated goal for inflation rate
If inflation is 4% and a firm gives its workers a 1.5% nominal wage raise, then:
purchasing power fall by 2.5%
A recessionary gap can be closed with:
real wages return to equilibrium, and the quantity of labor demanded equals the quantity supplied. using expansionary fiscal policy
The Phillips curve is:
represented the average relationship between unemployment and wage behavior over the business cycle.
The Philippines government provides retirement benefits, unemployment benefits, maternity leave benefits, death and funeral benefits, and other benefits. These are examples of:
social insurance
GDP is defined as the:
standard measure of the value added created through the production of goods and services in a country during a certain period.
The government has a budget deficit if:
the federal government's spending exceeds its revenues
What is the equilibrium price
the price at which the quantity demanded equals the quantity supplied
Monetary policy
the process of setting interest rates in an effort to influence economic conditions
A production function is:
the relationship between the quantity of inputs a firm uses and the quantity of output it produces.
