Econ Final Version 3
The table gives information about the U.S. labor market in 2008. What is the unemployment rate?
5.8
the aggregate production function is the relationship that tells us how real GDP changes as the quantitiy of labour changes, when all other influences on production remain the same
58
growth accounting calculates the quantitative contribution to labour productivity of physical and human capital and technological advance
61
the pace of labour productivity growth is influenced by the discovery of new technologies, saving and investment in physical capital, investmetn in human capital
62
The table gives information about the U.S. labor market in 2002. What is the employment-to-population ratio?
62.7 (number employed/working age population * 100)
the real wage influences the quantity of labour supplied because what matters to households is not the number of dollars they earn but what they can buy with those dollars
64
The table gives information about the U.S. labor market in 2009. What is the labor force participation rate?
65.4
labour productivity growth is one factor that determines real GDP growth
66
labour supply growth is one factor that determines real GDP growth
68
During the 81 years from 1926 to 2007, real GDP per person in Canada grew at an average of 2.1 percent a year
69
When gdp in china is valued at 'the market exchange rate' Chinas income per person in 2008 is less than 4% of the US level
8
The Population Survey in Blogsville for the past month is given in the table: In Blogsville last month, ______ million people were in the labor force and ______ million people were in the working-age population.
85; 106
The table provides some data on real GDP and the population of Sudico in 2010 and 2011. What is the growth rate of real GDP in Sudico in 2011? What is the growth rate of real GDP per person in Sudico in 2011?
9; 5
Choose the statement that is incorrect.
A bias in the CPI gives workers with wage contracts linked to the CPI less real income than the firm intended.
Along the long-run Phillips curve, _______. A. the unemployment rate is constant at the natural unemployment rate B. an increase in the unemployment rate brings a lower inflation rate C. a fall in the inflation rate brings a higher unemployment rate D. the inflation rate is constant
A. the unemployment rate is constant at the natural unemployment rate
Choose the statement that is incorrect.
Along the LAS curve the money wage rate is constant and the real wage rate rises as the price level rises.
Using PPP prices, China's standard of living in 2010 is ___.
$11000
The personal consumption expenditure deflator is calculated as ______
(Nominal C / Real C) x 100
The graph shows the production function of an economy. Currently, the full-employment quantity of labor is 200 billion hours a year. Population increases and the new full-employment quantity of labor is 300 billion hours. Draw an arrow that shows the effect of this increase in population. Draw a point at the new value of full-employment and potential GDP. Label it B.
(pg 141 in book) arrow along function to 300 and new point at 300
The marginal propensity to consume is 0.8, the marginal tax rate is 0.25, and the marginal propensity to import is 0.2. The autonomous tax multiplier is _______.
-1.33
During the past decade, a nation's average annual rate of population growth was 4 percent, and its average annual real GDP growth rate was 1 percent. Thus, the average annual rate of growth in per capita real GDP was _____.
-3.0 percent
Depreciation is reduced from gross investment to achieve net investment
1
Using PPP prices, China's ranks as the world's number _ economy in 2010.
1
Real GDP per person in Canada doubled between 1971 and 2007
10
By measuring the standard of living by using real GDP per person we remove any influence from rising prices
11
The table gives information about the U.S. labor market in 2009. What is the number of people unemployed?
14.3 (labor force - employed)
real gdp does not include a measure of household production, underground economic activity, or life expectancy
16
Gdp using income approach $x and net domestic income at factor cost is $y then the diff x-y is the value of depreciation plus indirect taxes less subsidies
17
hdi combines measures fo real gdp, life expectancy and health , education
22
an economy is at full employment when there is no cyclical unemployment
25
If real GDP per person doubles in 20 years, then the annual growth rate of real GDP per person is ______ percent a year.
3.5
The natural unemployment rate is the unemployment rate when there is no cyclical unemployment
30
Distorts plans tied to the CPI
33
Once a month, Statistics Canada calculates the Consumer Price Index, which is a measure of the average of the prices paid by urban consumers for a fixed basket of consumer goods and services.
35
unemployment results in lost human capital
44
people who are laid off, perm or temp, are job losers
45
entrants and reentrants
46
Choose the statement that is incorrect.
An unexpected inflation or deflation has no effect on the economy
Which of the following correctly describes how price adjustments eliminate a shortage?
As the price rises, the quantity demanded decreases while the quantity supplied increases.
Choose the statement that is incorrect.
Changes in relative prices lead consumers to change the items they buy, and the CPI reflects this substitution.
Choose the statement that is incorrect.
Classical growth theory tells us that technological change induces a level of saving and investment that makes capital per hour of labor grow indefinitely.
If real GDP per person doubles in 20 years, then the annual growth rate of real GDP per person is ____ percent a year. A). 14.3 B). 14.0 C). 28.5 D). 3.5
D). 3.5
The (Economics in the News) news article reports that China is the second largest economy in the world based on ___. A). real GDP converted to U.S. dollars at the current exchange rate B). population C). real GDP in PPP prices D). GDP converted to U.S. dollars at the current exchange rate
D). GDP converted to U.S. dollars at the current exchange rate
A rational expectation _______. A. is a correct forecast B. predicts the inflation rate to be lower than it actually turns out to be C. predicts the inflation rate to be higher than it actually turns out to be D. will often turn out to be wrong, but no other forecast that could have been made with the information available could do better
D. will often turn out to be wrong, but no other forecast that could have been made with the information available could do better
If inflation is expected, _______. A. either a cost-push inflation or a demand-pull inflation occurs B. a demand-pull inflation occurs C. a cost-push inflation occurs D. neither a cost-push inflation nor a demand-pull inflation occur
D. neither a cost-push inflation nor a demand-pull inflation occur
Which of the following fiscal policies combats inflation?
Decreasing government spending
Choose the statement that is incorrect.
Each additional hour of labor increases real GDP by successively larger amounts.
T or F: Real GDP per person grows whenever real GDP grows.
FALSE
The liabilities of the Fed are ______, and these liabilities along with ______ make up the monetary base.
Federal Reserve notes held by households and businesses and reserves of depository institutions; coins issued by the Treasury
Consider the following statements and decide which is\are true I. Global saving glut is an increased saving in lower-income countries such as China and other developing countries II. As a result of global saving glut U.S.A became a net lender to many lower countries III. Global saving glut lead to a fall in global long-term interest rate IV. As a result of global saving glut China and other developing countries became net borrowers
I and III are true
Choose the statement about fixed exchange rates that is incorrect.
If the Fed wanted to fix the U.S. dollar exchange rate against the Japanese yen, the Fed would have to buy U.S. dollars to prevent the exchange rate from rising above the target value.
Starting from a monetary equilibrium condition, an increase in money supply
Increases the bond price and decreases the interest rate
Read the news clip, then answer the following questions. Economists from the ______ macroeconomic school of thought would recommend a second spending stimulus. Economists from the ______ macroeconomic school of thought would recommend a permanent tax cut.
Keynesian; classical or monetarist
Michael is an Internet service provider. On December 31, 2012, he bought an existing business with servers and a building worth $400,000. During his first year of operation, his business grew and he bought new servers for $500,000. The market value of some of his older servers fell by $50,000. Calculate Michael's gross investment, net investment, and depreciation during 2013.
Michael's gross investment during 2013 was $500000. Michael's depreciation during 2013 was $50000. Michael's net investment during 2013 was $450000
Choose the statement about money that is incorrect.
Money is a completely stable store of value.
______ sees the economy as a perpetual motion machine.
New growth theory
the process by which competition for profits leads to technological progress and perpetual economic growth best fits which growth theory?
New growth theory
T or F: Real GDP per person equals real GDP divided by the population
TRUE
Choose the statement about the Consumer Price Index that is incorrect.
The CPI is defined to equal 1.00 for a period called the reference base period.
Choose the statement that is incorrect.
The greater the default risk, the greater is the supply of loanable funds.
Choose the statement that is incorrect.
The nominal interest rate is the real interest rate adjusted to remove the effects of inflation on the buying power of money.
Choose the statement that is incorrect.
The return to full employment in an expansion phase of the business cycle is economic growth.
______ is an example of U.S. consumption expenditure.
Your purchase of a coffee from Starbucks
An increase in labor productivity results in all of the following except ______.
a decrease in potential GDP per hour of labor because of diminishing returns
You observe that unplanned inventories are decreasing. You predict that there will be _______.
an expansion
The four price indexes that are alternatives to the CPI are ______.
chained CPI, personal consumption expenditure deflator, GDP deflator, and core PCE
The marginal propensity to consume is equal to ______, and the marginal propensity to save is equal to ______.
change in C/change in YD; change in S/ change in YD
The supply of loanable funds is influenced by all of the following except ______.
expected profit
The real interest rate ______, household saving ______,
falls; decreases and investment increases
When the unemployment rate is less than the natural unemployment rate, real GDP is ______ than potential GDP and the output gap is ______.
greater; positive
The Fed is the lender of last resort, which means _______.
if depository institutions are short of reserves, they can borrow from the Fed
A government budget ______ deficit the demand for loanable funds.
increases
An increase in the population ______aggregate labor hours, ______ potential GDP, and ______the real wage rate.
increases; increases; lowers
which of these is most likely to increase productivity?
investments in research and development
The natural unemployment rate _______.
is the unemployment rate at full employment
An increase in income taxes _______, everything else remaining the same.
makes the multiplier smaller
The unemployment rate might underestimate the underutilization of labor resources because it does not include ______.
marginally attached workers and part-time workers who want full-time jobs
Between 1960 and 2010, the gap between real GDP per person in the United States and real GDP per person in Japan ______.
narrowed
Growth can persist indefinitely, according to the ______theory
new classical
The key idea of classical growth theory that leads to the dismal outcome is that ______.
no matter how much technological change occurs, real GDP per person is always pushed back toward the subsistence level
If the CPI rises from 120 to 126, then ______.
on average, the price paid by urban consumers for a fixed basket of consumer goods and services rises by 5 percent
To increase the money supply, the Fed may conduct
open market purchases or decrease the discount rate
The chained CPI ______.
overcomes the sources of bias in the CPI by incorporating substitutions and using current and previous period quantities
Some unemployment is unavoidable because ______.
people are making transitions through the stages of life and businesses are making transitions
which of these government policies can help economic growth?
promoting higher rates of saving
Real GDP per person grows when ______.
real GDP grows at a FASTER RATE than the population grows.
Over the last several decades, the gap between real GDP per person in the U.S.and Europe Big 4_______. The gap between real GDP per person in the U.S. and Japan ______.
remained nearly constant or widened a small amount; narrowed
The price of a bond ______ and the interest rate ______.
rises; falls
If the interest rate is 5 percent, people will ______ bonds. Bond prices will ______.
sell; fall
A government budget surplus occurs, which increases the ____ loanable funds.
supply of
In the short run, the nominal exchange rate is determined by ______. And in the short run ______.
the demand for U.S. dollars and the supply of U.S. dollars in the foreign exchange market; a change in the nominal exchange rate brings an equivalent change in the real exchange rate
The quantity of U.S. dollars demanded in the foreign exchange market depends on many factors, the main ones being ______.
the exchange rate, world demand for U.S. exports, interest rates in the United States and other countries, and the expected future exchange rate
The marginal propensity to save is _______.
the fraction of a change in disposable income that is saved
If we count marginally attached workers as unemployed ______.
the labor force participation rate rises
As we move up along the short-run aggregate supply curve, ______.
the money wage rate, the prices of other resources, and potential GDP remain constant
All of the following statements are correct except _______.
the return to full employment in an expansion phase of the business cycle is economic growth
The two broad sources of potential GDP growth are growth of ______and growth of _____.
the supply of labor; labor productivity
If most prices increase in Japan and other countries but remain constant in the United States, ______.
then for purchasing power parity to hold, the demand for U.S. dollars increases and the supply of U.S. dollars decreases
If most prices have increased in the United States and not increased in Japan and other countries, ______.
then for purchasing power parity to hold, the value of the U.S. dollar in the foreign exchange market will fall
An economy is at full employment when ______.
there is no cyclical unemployment
The figure shows the demand for money curve in Epsilon. Draw the supply of money curve if the Fed wants the interest rate to be 6 percent a year. Label it. Draw a point at the equilibrium in the money market.
vertical MS line at 2.9 real money; point at intersection
The graph shows the unemployment rate and the natural unemployment rate from 1980 to 2014. Draw a point on the Unemployment rate curve that shows a year in which the economy experiences full employment.
where the unemployment curve and natural unemployment curve intersect
A government budget deficit _______ the real interest rate, increases ______.
increases; private saving and decreases investment
If the price level rises and the money wage rate remains constant, the quantity of real GDP supplied ______ and there is a movement up along the ______ aggregate supply curve.
increases; short-run
Purchasing power parity is equal value of _____ - a situation in which _____ buys the same amount of goods and services in different currencies.
money; money
The CPI places more weight on _______ than on _______.
transportation; medical care
An economy has a zero marginal tax rate. When real GDP increases, the change in consumption expenditure equals _______.
the marginal propensity to consume times the increase in real GDP
When real GDP increases, the change in imports equals _______.
the marginal propensity to import times the increase in real GDP
When cyclical unemployment increases and other things remain the same, ______
the natural unemployment rate does not change
When cyclical unemployment increases and other things remain the same, ______.
the natural unemployment rate does not change
The CPI tells us ______.
the price level in a given period expressed as a percentage of the price level in the base period, which is by definition equal to 100
according to the theory regarding labor productivity growth, workers will be more productive if ____.
they have more human capital
The demand for labor is the relationship between the quantity of labor demanded and the ______. The supply of labor is the relationship between the quantity of labor supplied and the ______.
real wage rate; real wage rate
Between 1914 and 2014, the average growth rate of real GDP per person in the United States was 2 percent a year. During this period, ______ grew at a faster rate than ______.
real GDP; the population
How will the labor force participation rate change if Kevin starts creating football apps in his garage and they turn out to be very popular? The labor force participation will _____ Kevin starts creating football apps in his garage and they turn out to be very popular.
rise
which of these factors contributes to economic growth?
technological progress
The quantity of labor supplied is the number of labor hours __________ during a given period.
that all the households in the economy plan to work
According to the rule of 70, if a nation's per capita real GDP doubled during the past 10 years, then its average annual rate of economic growth over that period was approximately ___.
7 percent
which of these factors inhibit economic growth?
discouraging international trade
The Bank of America's total assets ______ and its total liabilities ______.
do not change; do not change
A fall in the expected future exchange rate ______ the demand for U.S. dollars. An increase in the U.S. demand for imports _______ the demand for U.S. dollars.
decreases; does not change
The required reserve ratio is the minimum percentage of _____ that _____ are required to hold as reserves.
deposits; depository institutions
If the Fed raised the interest rate while the Brazilian interest rate remained at 8.75 percent, the Brazilian real would ______.
depreciate by a smaller amount than if the Fed left the interest rate unchanged
The Brazilian real is expected to ________ by ______ percent.
depreciate; 8.75
A new Classical view is that business cycle fluctuations are the _____ responses of a well-functioning market economy that is bombarded by shocks that arise from the uneven pace of _____.
efficient; technological change
An increase in labor productivity increases potential GDP because
employment increases and a given amount of employement produces more real GDP
An increase in labor productivity increases potential GDP because ______.
employment increases and a given amount of employment produced more real GDP.
An increase in labor productivity increases potential GDP because ______.
employment increases and a given amount of employment produces more real GDP
Long-run macroeconomic equilibrium occurs when real GDP _____ potential GDP - equivalently, when the economy is on its _____ curve.
equals; LAS
The government expenditure multiplier equals the change in _____ that results from a change in government expenditure divided by the change in government expenditure.
equilibrium expenditure and real GDP
Suppose the exchange rate rises from 80 yen per U.S. dollar to 90 yen per U.S. dollar. What is the effect of this change on the quantity of U.S. dollars that people plan to sell in the foreign exchange market? The quantity of U.S. dollars that people plan to sell in the foreign exchange market _______.
increases and a movement up along the supply curve of U.S. dollars occurs
When the unemployment rate ______ the natural unemployment rate, real GDP ______ potential GDP.
is greater than; is less than
The bias in the CPI is a problem because ______ .
it distorts wage agreements linked to the CPI
According to new growth theory, ______ experience diminishing returns.
knowledge is capital that does not
Suppose the Fed increases the quantity of money. In the long run, supply and demand in the ______ market determines the real interest rate. The ______ adjusts to make the quantity of real money supplied equal to the quantity demanded.
loanable funds; price level
The three main types of markets for financial capital are _______.
loan markets, bond markets, and stock markets
Money is any commodity or token that is generally acceptable as a ______.
means of payment
The inflation rate in 2014 ______
might be higher, lower, or the same as in 2013
The required reserve ratio is the _____.
minimum percentage of deposits that depository institutions are required to hold as reserves
Which of these factors does NOT contribute to economic growth
nationalization of foreign investments
The main sources of bias in the CPI are ______.
new goods bias, quality change bias, commodity substitution bias, and outlet substitution bias
A ______ macroeconomist believes that business cycle fluctuations are the efficient responses of a well-functioning market economy that is bombarded by shocks that arise from the uneven pace of technological change. A ______ macroeconomist believes that the short-run aggregate supply curve is horizontal at a fixed price level.
new classical; new Keynesian
Which of the people described in the table is unemployed because of labor market mismatching? (1. Michael has unemployment benefits of $450 a week and he turned down a full-time job paying $7.75 an hour. 2. Tory used to earn $60,000 a year and he turned down a low-paid job to search for one that pays at least $50,000 a year. 3. David turned down a temporary full-time job paying $15 an hour because it was an hour's drive away and the gas cost would be high.)
only Tory and David
The price level is ______.
the average level of prices, and the value of money
All of the following statements are included in new growth theory except ______.
the forces of competition destroy incentives to make new discoveries
The U.S. interest rate differential rises if ______, and the larger the U.S. interest rate differential, the ______ is the demand for U.S. dollars in the foreign exchange market.
the foreign interest rate falls; greater
The marginal propensity to consume is ______.
the fraction of a change in disposable income that is spent on consumption
Potential GDP is determined by ______
the full-employment quantity of labor.
The velocity of circulation is the average number of times a dollar of money is used annually to buy ______. The formula used to measure the velocity of circulation, V, is ______, where P is the price level, Y is real GDP, and M is the quantity of money.
the goods and services that make up GDP; V = (P *Y) / M
Sarah works 10 hours a week at McDonald's. She is available to work more hours but hasn't looked for extra work. bullet Kevin spent the first six months of 2014 actively searching for a job but he didn't get hired. He believes there are no jobs, so he has given up looking. How will the unemployment rate change if Sarah quits and starts to search for a full-time job? The unemployment rate will _____ if Sarah quits and starts to search for a full-time job.
rise
The fundamental precondition for labor productivity growth is _______.
the incentive system created by firms, markets, property rights, and money
real gdp per person does NOT tell us the value of real GDP when all the economy's labour, capital, land and entrepreneurial ability are fully employed
13
market prices and factor cost diverge because of indirect taxes subsidies
14
FACTOR COST DEFINITION?
15
potential gdp grows at a steady pace but not at a constant pace
18
real gdp per person is 23230 less than it would be with no growth slowedown in the 70s
19
gdp using income approach
20
purchasing power parity of china in 2008 was 12.5% compared to US
23
the inflastion rate might be higher, lower, or the same as the prior year (is this wrong?)
24
a discouraged worker is a marginally attached worker
26
how to calculate the cpi
27
In Canada, the CPI basket consists of items that an average urban household buys. Shelter has the greatest weight in the CPI basket.
28
the cpi tells us the price level, in a given period expressed as a percentage of the price level in the base period, which is by definition equal to 100%
29
The higher than normal unemployment that arises at a business cycle trough and the unusually low unemployment that exists at a business cycle peak is cyclical unemployment.
31
Main biases for CPI are, new goods bias, quality change bias, commodity substitution bias, and outlet substitution bias
32
When the unemployment rate equals the natural unemployment rate, real GDP equals potential GDP.
34
transportation is the second most important item in the CPI basket
36
today's CPI basket is based on data gathered in the 2005 survey of consumer expenditure
37
27 percent of the total expenditure in the CPI basket is on shelter
38
a slightly larger number of people leave their jobs in good times than in bad times
39
job losers are the biggest sources of unemployment\
40
the number of job leavers is relatively constant
41
unemployment results in lost production and lost incomes
42
on a typical day, more than one million people in Canada are unemployed
43
many private agreements, such as wage contracts, are liked to CPI
50
a bias in the CPI gives workers with wage contracts linked to CP more real income than the firm intended
51
close t a third fo fed govt outlays are linked directly to the CPI
52
Bias I guess is always in the increase price direction
53
if the cpi rises from 120 to 126, then on average, the price paid by urban consumers for a fixed basket of consumer goods and services rises by 5 percent
54
suppose that the number of jobs in the fishing industry decreases but the travel increases, initially structural unemployment increases
55
when the unemployment rate is less than the natural unemployment rate, real GDP is greater than potential GDP and the output gap is positive.
56
if cpi is 104.7, then this number tells us that the average of the prices paid by urban consumers for a fixed basket of consumer goods and services was 4.7 percent per year
57
an increase in the quantity of labour and a corresponding decrease in leisure hours brings an increase in real GDP
59
lucas wedge is the dollar value of the accumulated gap between what real GDP per person would have been if the 1960's growth rate had persisted and what real GDP per person turned out to be
6
an increase in the quanitity of labour and a corresponding decrease in leisure hours bring a movement along the production function
60
if there is a shortage of labour, the real wage rate rises to eliminate the shortage
63
the quantity of labour demanded is the number of labour hours hired by all the firms in the economy during a given period
65
real GDP per person growth depends on real GDP growth
67
expenditure approach to calculating GDP
7
The following are included in the income approach to calculating GDP: interest and misc investment income; wages, salaries and supplementary labour income; corporate profits
9
Economic Growth is ___. A). the expansion of production possibilities B). the return to full employment in an expansion phase of the business cycle C). the annual percentage change in labor productivity D). the annual percentage change in the quantity of money
A). the expansion of production possibilities
Choose the statement about the long-run Phillips curve that is incorrect. A. An unexpected increase in aggregate demand shifts the long-run Phillips curve rightward. B. It is vertical at the natural unemployment rate. C. It shows the relationship between inflation and unemployment when the actual inflation rate equals the expected inflation rate. D. It tells us that any expected inflation rate is possible at the natural unemployment rate.
A. An unexpected increase in aggregate demand shifts the long-run Phillips curve rightward.
The best forecast available, which is based on all the relevant information is called _______. A. a rational expectation B. a rational forecast C. a correct forecast D. a correct expectation
A. a rational expectation
If the government increases its expenditure on goods and services and as a result, the money wage rate increases, the economy has experienced _______. A. a demand-pull rise in the price level B. demand-push inflation C. cost-push inflation D. demand-pull inflation
A. a demand-pull rise in the price level
A rise in the price of oil creates _______. A. a one-time cost-push rise in the price level B. a one-time demand-pull rise in the price level C. a persistent increase in the price level D. a recession that can be eliminated only by a decrease in potential GDP
A. a one-time cost-push rise in the price level
An economy at a full-employment equilibrium experiences an increase in aggregate demand. The unemployment rate ______ its natural rate, and to return to the long-run equilibrium, the money wage rate begins to ______. A. falls below; rise B. rises above; rise C. rises above; fall D. falls below; fall
A. falls below; rise
If the expected inflation rate increases and the natural rate of unemployment remains constant, then _______. A. the short-run Phillips curve shifts upward and the long-run Phillips curve does not shift B. the long-run Phillips curve shifts rightward and the short-run Phillips curve does not shift C. the long-run Phillips curve shifts rightward and the short-run Phillips curve shifts rightward D. neither the long-run Phillips curve nor the short-run Phillips curve shifts
A. the short-run Phillips curve shifts upward and the long-run Phillips curve does not shift
In ______ cycle theory, animal spirits are the main source of fluctuations in aggregate demand. In ______ cycle theory, fluctuations in both investment and consumption expenditure, driven by fluctuations in the growth rate of the quantity of money, are the main source of fluctuations in aggregate demand. A. Keynesian; monetarist B. new classical; new Keynesian C. monetarist; Keynesian D. new Keynesian; new classica
A. Keynesian; monetarist
When costs increase and the Fed wants to return the economy to full employment, the Fed responds by ______ the quantity of money. If the Fed continually responds to successive increases in costs, a ______ inflation evolves. A. increasing; cost-push B. decreasing; cost-push C. increasing; demand-pull D. decreasing; demand-pull
A. increasing; cost-push
Choose the statement about real business cycle theory that is incorrect. A. The impulse in RBC theory is generated mainly by the process of research and development. B. Economists have not been able to isolate the RBC theory impulse. C. The impulse in RBC theory is the growth rate of productivity that results from technological change. D. Productivity fluctuations are correlated with real GDP fluctuations.
B. Economists have not been able to isolate the RBC theory impulse.
Choose the statement that is incorrect. A. During a period of deflation, the inflation rate is negative. B. The price level falls if aggregate supply increases at a persistently slower rate than aggregate demand. C. A one-time fall in the price level is not deflation. D. An economy experiences deflation when it has a persistently falling price level.
B. The price level falls if aggregate supply increases at a persistently slower rate than aggregate demand.
Choose the correct statement. A. The long-run Phillips curve shifts rightward when the inflation rate rises. B. The long-run Phillips curve shifts rightward when the natural unemployment rises and leftward when the natural unemployment rate falls. C. The long-run Phillips curve shifts leftward when the expected inflation rate falls. D. The long-run Phillips curve shifts rightward when the expected inflation rate rises.
B. The long-run Phillips curve shifts rightward when the natural unemployment rises and leftward when the natural unemployment rate falls.
Choose the correct statement about the U.S. short-run Phillips curve. A. U.S. inflation and unemployment data cannot be interpreted in terms of the short-run Phillips curve. B. We can interpret U.S. inflation and unemployment data in terms of a shifting short-run Phillips curve, which sometimes shifts upward and sometimes shifts downward. C. The U.S. short-run Phillips curve has been shifting steadily downward since 2001. D. The U.S. short-run Phillips curve has been shifting steadily upward since 2001.
B. We can interpret U.S. inflation and unemployment data in terms of a shifting short-run Phillips curve, which sometimes shifts upward and sometimes shifts downward.
In ______ cycle theory, the rational expectation of the price level, which is determined by potential GDP and expected aggregate demand, determines the money wage rate and the position of the SAS curve. In ______ cycle theory, past rational expectations of the current price level influence the money wage rate and the position of the SAS curve. A. Keynesian; monetarist B. new classical; new Keynesian C. monetarist; Keynesian D. new Keynesian; new classical
B. new classical; new Keynesian
In real business cycle theory, _______ are the main source of economic fluctuations. A. unexpected changes in government expenditure B. random fluctuations in productivity C. random fluctuations in investment D. unexpected changes in the full-employment quantity of labor
B. random fluctuations in productivity
When inflation is correctly anticipated, _______. A. the unemployment rate is zero B. the economy remains at full employment C. potential GDP increases D. the economy moves between recession and expansion
B. the economy remains at full employment
The impulse in RBC theory is _______. A. future sales and profits B. the growth rate of productivity that results from technological change C. unanticipated changes in aggregate demand D. the growth rate of the quantity of money
B. the growth rate of productivity that results from technological change
According to mainstream business cycle theory, _______. A. the money wage rate is sticky and consequently if aggregate demand grows faster than potential GDP, a recessionary gap emerges B. the money wage rate is sticky and consequently if aggregate demand grows faster than potential GDP, an inflationary gap emerges C. the economy is always at full employment D. in a business cycle expansion, short-run aggregate supply increases by more than aggregate demand
B. the money wage rate is sticky and consequently if aggregate demand grows faster than potential GDP, an inflationary gap emerges
When aggregate demand unexpectedly increases, ______. A. the expected inflation rate increases B. the natural unemployment rate does not change C. the natural unemployment rate decreases D. the inflation rate decreases
B. the natural unemployment rate does not change
In an expansion, an increase in the rate of technological change _______ investment demand. The real interest rate _______. A. increases; falls B. increases; rises C. decreases; rises D. decreases; falls
B. increases; rises
In RBC theory, the lower the real interest rate, other things remaining the same, the ______ today. A. larger is the demand for labor B. larger is the supply of labor C. smaller is the supply of labor D. higher is the money wage rate
C. smaller is the supply of labor
A cost-push rise in the price level can arise from an increase in _______. A. government expenditure B. the quantity of money C. the money wage rate or money prices of raw materials D. exports
C. the money wage rate or money prices of raw materials
A stagflation can turn into a cost-push inflation process when _______. A. the money wage rate decreases B. the quantity of money persistently decreases C. the quantity of money persistently increases D. taxes consistently increase
C. the quantity of money persistently increases
A stagflation can turn into a cost-push inflation process when _______. A. the quantity of money persistently decreases B. taxes consistently increase C. the quantity of money persistently increases D. the money wage rate decreases
C. the quantity of money persistently increases
If the trend rate of change of velocity is 1 percent a year, potential GDP grows by 4 percent a year, and the money growth rate is 2 percent a year, what is the trend inflation rate? A. 1 percent a year B. -5 percent a year C. -1 percent a year D. 7 percent a year
C. -1 percent a year
A movement ______ along the short-run Phillips curve occurs when there is an ______ increase in aggregate demand. A. down; expected B. up; expected C. up; unexpected D. down; unexpected
C. up; unexpected
If the natural unemployment rate increases and the expected inflation rate remains constant, then _________. A. the short-run Phillips curve shifts rightward and the long-run Phillips curve does not shift B. neither the long-run Phillips curve nor the short-run Phillips curve shifts C. the long-run Phillips curve shifts rightward and the short-run Phillips curve shifts rightward D. the long-run Phillips curve shifts rightward and the short-run Phillips curve does not shift
C. the long-run Phillips curve shifts rightward and the short-run Phillips curve shifts rightward
The figure shows the aggregate demand, short-run aggregate supply, and long-run aggregate supply curves for the economy of Tomorrowland. The economy is currently at point A. A demand-pull rise in the price level will initially move the economy to point _______ and to point _______. A. E; A when aggregate demand changes B. C when the money wage rate rises; D when aggregate demand increases C. B when aggregate demand decreases; C when the money wage rate rises D. E when aggregate demand increases; D when the money wage rate rises
D. E when aggregate demand increases; D when the money wage rate rises
In real business cycle theory, all of the following events can be sources of fluctuation in productivity except _______. A. the pace of technological change B. climate fluctuations C. natural disasters D. changes in the growth rate of money
D. changes in the growth rate of money
An economy is at potential GDP when it experiences an increase in costs. The economy experiences _______. A. a rise in the price level and an increase in real GDP B. a fall in the price level and a decrease in real GDP C. a rise in the price level and a decrease in potential GDP D. stagflation
D. stagflation
Deflation in Japan arose because _______. A. investment decreased and the capital stock increased more slowly than anticipated B. money wage rates decreased C. real wage rates decreased and the country's debt increased D. Japan's money stock did not grow fast enough to accommodate the growth of potential GDP and a trend rise in velocity.
D. Japan's money stock did not grow fast enough to accommodate the growth of potential GDP and a trend rise in velocity.
According to mainstream business cycle theory, ______ grows at a steady rate and ______ grows at a fluctuating rate. A. aggregate demand; long-run aggregate supply B. potential GDP; short-run aggregate supply C. short-run aggregate supply; long-run aggregate supply D. potential GDP; aggregate demand
D. potential GDP; aggregate demand
Along the short-run Phillips curve, ______. A. the expected inflation rate varies and the natural unemployment rate is constant B. the expected inflation rate and the natural unemployment rate vary C. the expected inflation rate and the natural unemployment rate are constant D. the expected inflation rate is constant and the natural unemployment rate varies
D. the expected inflation rate is constant and the natural unemployment rate varies
entrants are mainly people who have just left school
47
A government budget surplus_____ the supply of loanable funds.
increases
When cyclical unemployment increases and other things remain the same, the natural rate of unemployment does not change
48
full employment is at a time when natural unemployment rate = unemployment rate
49
CPI = ______.
(Cost of CPI basket at current-period prices / Cost of CPI basket at base-period prices) x 100
The graph shows the private demand for loanable funds curve and the supply of loanable funds curve. Draw a curve that shows the effect on the loanable funds market when the government has a budget deficit. Label it C1. Draw a curve that shows the Ricardo-Barro effect on the loanable funds market. Label it C2. Draw a point at the new real interest rate and quantity of loanable funds.
(page 173)
If disposable income increases from $4 trillion to $7 trillion, saving increases from $1.5 trillion to $2 trillion, and nothing else changes, the marginal propensity to save is _____.
0.17
The graph shows the loanable funds market when there is neither a government budget surplus nor a government budget deficit. Draw a point at the equilibrium quantity of loanable funds and the equilibrium real interest rate. Label it 1. Now suppose that the government has a budget surplus of $1 trillion. Draw a curve that shows the effect of this surplus in the loanable funds market. Label it. Draw a point at the new equilibrium real interest rate and quantity of investment. Label it 2. Draw a point to show private saving when the government budget surplus is $1 trillion. Label it 3.
1. where PSLF and DLF intersect new SLF curve to right of PSLF 2. where SLF and DLF intersect 3. at same y value as 2, but on PSLF curve
Real GDP per person is real GDP divided by the population
12
An economy has a consumption function of C = 10 + 0.8Y, investment of 6, government expenditure of 10, exports of 10, and an import function of M = 0.1Y. What is equilibrium real GDP?
120
If a country's real GDP is growing at a rate of 5 percent per year, how long will it take for the real GDP to double?
14 years
The people who live on Second Life Island consume only juice and cloth. Last year, which was the CPI base year, the price of juice was $5 a bottle, the price of cloth was $6 a length, and the average urban household spent $35 on juice and $42 on cloth. This year, the price of juice is $10 a bottle and the price of cloth is $8 a length. What is the CPI in the current year?
163.6
In 2013 and in 2014, consumers in Dexter consumed only books and pens. The prices and quantities for 2013 and 2014 are listed in the table. The reference base period for Dexter's CPI is 2013 and 2013 is also the year of the Consumer Expenditure Survey. The CPI in 2014 is ______.
192.9 (disregard current year quantity in table)
Over the past 100 years, the average growth rate of U.S. real GDP per person is ____ percent.
2
Over the past 100 years, the avg. growth rate of U.S. real GDP per person is _____. Growth was most rapid during the _____ and slowest during the ______.
2 percent; 1960s; Great Depression
1. To keep pace with a growing population, approximately _______ jobs must be created each month.
200,000
On January 1, 2014, Sophie's Sunlounge owned 4 tanning beds valued at $20,000. During 2014, Sophie's bought 3 new beds at a total cost of $8,000, and at the end of the year the market value of all of Sophie's beds was $24,000. What was Sophie's net investment?
4000
The table provides some data on real GDP and the population of Atlantis in 2010 and 2011. What was the growth rate of real GDP in Atlantis in 2011? What was the growth rate of real GDP per person in Atlantis in 2011?
5; 3
The demand for labor is the relationship between the quantity of labor demanded and the _____. The supply of labor is the relationship between the quantity of labor supplied and the ____. A). real wage rate; real wage rate B). money wage rate; money wage rate C). real interest rate; real interest rate D). nominal interest rate, nominal interest rate
A) real wage rate; real wage rate
The article U.S. Workers World's Most Productive defines productivity as _____. and Real GDP per person is _____. A). GDP divided by the number of people employed; real GDP divided by the population B). the quantity of real GDP produced by an hour of labor; real GDP divided by the population C). real GDP divided by the population; GDP divided by the number of people employed D). real GDP divided by the population; the quantity of real GD produced by an hour of labor
A). GDP divided by the number of people employed; real GDP divided by the population
Choose the statement that is incorrect. A). Labor hours are all equally productive B). An increase in the quantity of labor and a corresponding decrease in leisure hours will increase real GDP C). An increase in the quantity of labor and a corresponding decrease in leisure hours create a movement along the production function D). the aggregate production function is the relationship that tells us how real GDP changes as the quantity of labor changes, when all other influences on production remain the same.
A). Labor hours are all equally productive
Choose the statement that is incorrect. A). Comparisons of real GDP between countries are most accurate when we use market prices B). Using market prices calculates real GDP using prices that prevail in each country C). market prices vary between countries D). using PPP prices calculates real GDP using the same prices for all countries
A). comparisons of real GDP between countries are most accurate when we use market prices
Potential GDP is ____. A). determined by full-employment quantity of labor B). the value of the final goods and services produces in a given year valued at the prices that prevailed in that same year C). a more precise name for GDP D). the value of final goods and services produced in a given year when valued at constant prices
A). determined by the full-employment quantity of labor
Potential GDP ___ and potential GDP per hour of labor ___. A). increases; decreases B). increases; increases C). increases; increases D). decreases; decreases
A). increases; decreases
The fundamental precondition for labor productivity growth is the incentive system created by all of the following except ___. A). population growth B). property rights C). money D). firms and markets
A). population growth
An increase in labor productivity ___. A). shifts the demand for labor curve rightward and production function upward B). increases potential GDP and decreases potential GDP per hour of labor C). increases the supply of labor, increases potential GDP, and decreases, potential GDP per hour of labor D). decreases the real wage rate, increases potential GDP, and increase potential GDP per hour of labor
A). shifts the demand for labor curve rightward and the production function upward
The two broad sources of potential GDP growth are growth of ___ and growth of ___. A). the supply of labor; labor productivity B). government; the private sector C). corporations; private firms D). exports; imports
A). the supply of labor; labor productivity
Over the past 100 years, growth was most rapid during the ____ and slowest during the ______. A). 1960s; 1980s B). 1960s; Great Depression C). 2000s; 1920s D). 1990s; 1970s
B). 1960s; Great Depression
The Rule of 70 states that the number of years it takes for the level of any variable to ____ is approximately ____. A). increase by a factor of 70; 70 divided by the annual percentage growth rate of the variable B). double; 70 divided by the annual percentage growth rate of the variable C). increase by a factor of 70; 1/70 multiplied by the annual percentage growth rate of the variable D). double; 70 multiplied by the annual percentage growth rate of the variable
B). double; 70 divided by the annual percentage growth rate of the variable
The aggregate production function is the relationship that tells us ___, when all other influences on production remain the same. A). how real GDP changes as the quality of leisure changes B). how real GDP changes as the quantity of labor changes C). how potential GDP changes as the labor market moves from surplus or shortage to equilibrium D). how the real wage rate changes as the quantity of labor changes
B). how real GDP changes as the quantity of labor changes
In a standard of living comparison, China ranks ___ in the world. This rank is ____. A). 1st; not changing because it depends on population and China has the world's largest population B). 105th; falling because China's population is growing fast than real GDP is growing C). 105th; rising because physical capital and human capital growth and technological change are proceeding rapidly and China's real GDP is growing D). 2nd; rising because physical capital and human capital growth and technological change are proceeding rapidly and China's real GDP is growing.
C). 105th; rising because physical capital and human capital growth and technological change are proceeding rapidly and China's real GDP is growing
Suppose that in 2014, China's real GDP is growing at 9 percent a year and its population is growing at 2.0 percent a year. If these growth rate continue, then China's real GDP per person in _____ will be twice what it is in 2014. A). 2022 B). 2085 C). 2024 D). 2017
C). 2024
Choose the statement that is incorrect (based off of the Economics in the News article). A). the standard of living in a country is measured by real GDP per person B). the size of the economy is measured by its real GDP C). a country with a large population cannot have a high standard of living D). China, although one of the world's largest economies, is ranked much lower in terms of standard of living because of its very large population
C). a country with a large population cannot have a high standard of living
The effect of the United States returning million of workers to their countries of origin is ___ the U.S. PF and ___ in potential GDP. A). a downward shift of; no change B). a downward shift of; a decrease C). a movement down along; a decrease D). a movement down along; no change
C). a movement down along; a decrease
Real GDP growth rate = [(Real GDP in ____ year - Real GDP in ____ year) / Real GDP in ____ year] x 100 A). previous; current; current B). current; previous; current C). current; previous; previous D). previous; current; previous
C). current; previous; previous
An increase in population ___ the real wage rate and ___ the equilibrium quantity of labor. A). increases; increases B). decreases; decreases C). decreases; increases D). increases; decreases
C). decreases; increases
Choose the statement that is incorrect. A). Real GDP per person equals real GDP divided by the population B). Real GDP per person growth rate is approximately equal to the real GDP growth rate minus the population growth rate C). Real GDP per person grows whenever real GDP grows D. the standard of living depends on real GDP per person
C). real GDP per person grows whenever real GDP grows
An increase in the population ___. A). increases the real wage rate, increases potential GDP, and decreases potential GDP per hour of labor B). increases potential GDP and increases potential GDP per hour of labor C). shifts the supply of labor curve rightward and creates a movement along the production function D). shifts the production function upward
C). shifts the supply of labor curve rightward and creates a movement along the production function
Choose the statement about an increase in the population that is incorrect. A). potential GDP grows B). the real wage rate falls C). the production function shifts upward D). potential GDP per hour of labor decreases
C). the production function shifts upward
Choose the statement that is incorrect A). the size of an economy matters when we are interested in diplomatic negotiations B). the size of an economy matters when we are interested in the resources devoted to environmental protection, science, and technology C). the size of an economy is irrelevant D). the size of an economy matters when we are interested in military power
C). the size of an economy is irrelevant
When labor productivity increases, there is ___ the production function and ___ in potential GDP. A). an upward shift of; no change B). a movement up along; an increase C).a movement up along; no change D). an upward shift of; an increase
D). an upward shift of; an increase
Read the news clip, then answer the following questions. The article defines productivity as ______. Real GDP per person is ______.
GDP divided by the number of people employed; real GDP divided by the population
Which of these government policies can help economic growth?
Improving the quality of education
A debtor nation is a country that during its entire history has _____ the rest of the world than it has _____ the rest of the world.
borrowed more from; lent to
Choose the statement that is incorrect.
In the United States in 2009, 22 million fewer people had jobs than in 1989.
Choose the statement that is incorrect.
In the long run, China manages its exchange rate to keep its export prices low and to make it easier to compete in world markets
The key proposition of new growth theory that makes growth persist is that ______ is not subject to diminishing returns.
Knowledge capital
Choose the statement that is incorrect.
Labor hours are all equally productive.
Once a month, the Bureau of ______ Statistics calculates the Consumer Price Index, which is a measure of the ______ consumers for a fixed basket of consumer goods and services.
Labor; average of the prices paid by urban
Which of the following equations is incorrect?
MPC + MPS = change in YD
Assume that the graphs in this figure represent the demand and supply curves for mustard and that bratwurst and mustard are complements. What panel describes what happens in this market when the price of bratwurst falls?
Panel (c) (demand curve shifts to right)
In May 2012, real personal consumption expenditures (PCE) was $9,588 billion and the PCE deflator was 115.4. In June 2012, real personal consumption expenditure was $9,576 billion and personal consumption expenditure was $11,062 billion. Calculate personal consumption expenditure in May 2012 and the PCE deflator in June 2012. Was the percentage change in real personal consumption expenditure greater or smaller than that in personal consumption expenditure?
Personal consumption expenditure in May 2012 was $11065 billion. The PCE deflator in June 2012 was 115.5. The percentage change in real personal consumption expenditure between May 2012 and June 2012 was -0.13 percent. The percentage change in personal consumption expenditure between May 2012 and June 2012 was -.03 percent. The percentage change in real personal consumption expenditure is greater than the percentage change in personal consumption expenditure.
Choose the statement that is incorrect.
President Roosevelt's "New Deal" minimized the role of government in economic life.
The economic growth rate is the annual percentage change of _____.
Real GDP
In developing countries with less developed capital markets, which of the following monetary policy rule works the best
Required reserve ratios
Choose the correct statements. 1. Gum does not serve as money because it is not a good store of value. 2. Most people know the price of gum, so it could serve as money because it is a unit of account. 3. Because most people buy gum, it can be used as money because it is a useful tool in barter. 4. Gum does not serve as money because it is not generally accepted in exchange for goods and services.
Statements 1 and 4 are correct.
Choose the statements concerning neoclassical growth theory that are true. 1. Neoclassical growth theory was developed in the late 19 th century. nothing 2. Technological change results from the choices people make in the pursuit of profit. nothing 3. The rate of technological change influences the economic growth rate but economic growth does not influence the pace of technological change. 4. Neoclassical growth theory is the proposition that real GDP per person grows because technological change induces a level of saving and investment that makes capital per hour of labor grow.
Statements 3 and 4 are correct.
The Bureau of Labor Statistics reports six alternative measures of the unemployment rate. Choose the correct statements. a. U-4 is the official unemployment rate. b. U-2 measures the job losers. c. U-3 is the official unemployment rate. d. U-5 measures the job losers.
Statements b and c are correct.
T or F: The standard of living depends on real GDP per person.
TRUE
Rob takes a summer job with a landscaping firm. During the summer, he earns an after-tax income of $4,000 and he spends $1,500 on living expenses. Everything else remaining the same, what was the change in Rob's wealth during the summer?
The change in Rob's wealth is $2500.
Choose the statement that is incorrect.
The demand for labor is the relationship between the quantity of labor demanded and the money wage rate.
Choose the statement about growth in labor productivity that is incorrect.
The demand for labor increases, the production function does not change, but a movement occurs along the production function.
The CPI in 2013 is 170 and the CPI in 2014 is 183.6.
The inflation rate in 2014 is 8.0 percent.
Choose the correct statement.
The inflation rate is the annual percentage change in the price level.
The table gives information reported by the Bureau of Labor Statistics for May, 2014. What is the labor force participation rate?
The labor force participation rate is 62.9 percent.
The table gives information about the U.S. labor market in 2008. What is the number of people not in the labor force?
The number of people not in the labor force is 79.6 million.
Choose the statement that is incorrect.
The presence of a banking system in Britain in the middle 1700s started the Industrial Revolution.
Choose the statement about an increase in the population that is incorrect
The production function shifts upward.
The U.S. price level rises.
The quantity of U.S.real GDP demanded decreases.
Choose the correct statement.
The quantity of real GDP demanded is the sum of the real consumption expenditure, investment, government expenditure, and exports minus imports.
Choose the statement that is incorrect.
The unemployment rate includes all underutilized labor.
The table gives information reported by the Bureau of Labor Statistics for 2010. What is the unemployment rate, the labor force participation rate, and the employment-to-population ratio?
The unemployment rate is 9.5 percent. The labor force participation rate is 64.6 percent. The employment-to-population ratio is 58.5 percent.
The table gives information reported by the Bureau of Labor Statistics for February, 2014. What is the unemployment rate?
The unemployment rate is 7.1 percent.
The bank plans to hold $4 for every $100 in deposits. The bank holds actual reserves of $15,000 and desired reserves of $11,000. What is the bank's desired reserve ratio and its excess reserves?
The bank's desired reserve ratio is 4 percent. The banks excess reserves are $4000.
Explain for each event whether it changes the quantity of real GDP demanded or aggregate demand in the United States. U.S. exports in the European Union boom.
U.S. aggregate demand increases.
The U.S. inflation rate is expected to rise next year.
U.S. aggregate demand increases.
U.S. firms build new gas-fuel utilities.
U.S. aggregate demand increases.
The quantity of U.S. dollars demanded in the foreign exchange market depends on all of the following except ______.
U.S. demand for imports
which of these will cause the quantity of goods and services that can be produced by one worker, or in one hour of work, to increase?
a technological change
The bank's total assets ______, its reserves ______.
are the same; decrease
During the 100 years from 1914 to 2014, real GDP per person in the United States grew at ______.
an average of 2 percent a year
In the United States, the CPI basket consists of items that ______ . ______ has the greatest weight in the CPI basket.
an average urban household buys; Housing
Consider the figure showing supply curves for soft drinks. Suppose the economy is at point a. A movement to point d would be the result of
an increase in the relative price of a soft drink.
The reference base period for the CPI is 1982-1984. In March 2014, the CPI was 236.3. This number tells us that the ______ of the prices paid by urban consumers for a fixed basket of consumer goods and services was ______ .
average; 136.3 percent higher in March 2014 than the average of 1982-1984
In the short run, when the Fed increases the quantity of money, people enter the loanable funds market and _____ bonds.
buy
An increase in investment shifts the AE curve upward by an amount equal to the ______, and shifts the AD curve rightward by an amount equal to the ______.
change in investment; change in investment times the multiplier
Labor supply growth is influenced by all of the following except_______.
changes in labor productivity
As a result of financial innovation, ______ have become ______.
checking deposits at thrift institutions; an increasing percentage of M1
The components of aggregate expenditure that are influenced by real GDP are ______.
consumption expenditure and imports
Real GDP growth rate = [Real GDP in _______ - Real GDP in _______year) / Real GDP in _____] x 100
current year; previous year; previous year
An electrician who is laid off because the economy is in a recession experiences ______.
cyclical unemployment
Suppose the Fed sells $50 million of government securities to the Bank of America. The Fed's total assets ______ and its total liabilities ______.
decrease by $50 million; decrease by $50 million
The tables describe an economy's labor market and its production function in 2014. In 2015, the population increases and labor hours supplied increase by 150 at each real wage rate. The economy's standard of living ______ in 2015 because ______.
decreased; real GDP per person is smaller in 2015 than in 2014
The gap between real GDP per person in the United States and Hong Kong has ______ since 1960. During this period, the growth rate of real GDP per person in the United States has been ______ than in Hong Kong.
decreased; slower
The Fed cuts the quantity of money and all other things remain the same. In the short run, aggregate demand _______.
decreases
An increase in the population ______the real wage rate and _____the equilibrium quantity of labor. Potential GDP ______ and potential GDP per hour of labor _______.
decreases; increases; increases; decreases
A government budget surplus _______ the real interest rate, decreases ______.
decreases; private saving and increases investment
The Fed makes an open market sale of securities to a bank. The monetary base ______ and the Fed's assets ______.
decreases; decrease
Brazil's Overvalued Real The Brazilian real has appreciated 33 percent against the U.S. dollar and has pushed up the price of a Big Mac in Sao Paulo to $US4.60, higher than the New York price of $US3.99. Despite Brazil's interest rate being at 8.75 percent a year compared to the U.S. interest rate at near zero, foreign funds flowing into Brazil surged in October. Interest rate parity ______ hold between Brazil and the United States.
does
The table provides some data on real GDP and the population of Eastiana in 2009 and 2010. If the growth rates of 2010 are maintained in future years, real GDP per person in Eastiana will ______.
double by 2020 (calculate real GDP per person growth rate and use rule of 70)
The table provides some data on real GDP and the population of Asiana in 2010 and 2011. If the growth rates of 2011 are maintained in future years, real GDP per person in Asiana will ______.
double by 2023
The Rule of 70 states that the number of years it takes for the level of any variable to ______ is approximately ______.
double; 70 divided by the annual percentage growth rate of the variable
Bonds issued by _____ are traded in the bond market.
firms and governments
According to new growth theory, ______.
growth can persist indefinitely
In neoclassical growth theory, ______.
growth will stop if technology stops advancing
In neoclassical growth theory, _______.
growth will stop if technology stops advancing.
The quantity of labor demanded is the number of labor hours ________ during a given period.
hired by all the firms in the economy
The quantity of labor DEMANDED is the number of labor hours _____during a given period. The quantity of labor SUPPLIED is the number of labor hours ______during a given period. The _____ adjusts to bring the labor market equilibrium.
hired by all the firms in the economy; that all the households in the economy plan to work; money wage rate
The aggregate production function is the relationship that tells us _______, when all other influences on production remain the same.
how real GDP changes as the quantity of labor changes
The aggregate production function is the relationship that tells us ______, when all other influences on production remain the same.
how real GDP changes as the quantity of labor changes
In 2013 and in 2014, consumers in Dexter consumed only books and pens. The prices and quantities for 2013 and 2014 are listed in the table. The reference base period for Dexter's CPI is 2013, and 2013 is also the year of the Consumer Expenditure Survey. The inflation rate in 2014 is ______ percent.
https://image.slidesharecdn.com/chapter24measuringthecostofliving-151005141821-lva1-app6892/95/chapter-24-measuring-the-cost-of-living-5-638.jpg?cb=1444054823 19.1
The fundamental source of labor productivity growth is ______.
human capital
which of these terms refers to the accumulated knowledge and skills workers acquire from education and training, or with life experiences?
human capital
A problem with neoclassical growth theory is its
inability to explain persistent differences between countries' GDP growth rates.
4. We would expect the labor force participation rate to _______ in response to job creation in excess of population growth.
increase
An increase in labor productivity _____ the real wage rate and ______the equilibrium quantity of labor. Potential GDP_____ and potential GDP per hour of labor _____.
increases: increases; increases; increases
An increase in the population ______ potential GDP and ______ potential GDP per hour of labor.
increases; decreases
An increase in the population ______ the equilibrium quantity of labor, ______ and potential GDP.
increases; increases
An increase in world demand for U.S. exports ______ the demand for U.S. dollars. A fall in the U.S. interest rate differential ______ the demand for U.S. dollars.
increases; decreases
The only way that the standard of living of the average person in a country can increase is by
increasing production faster than population growth
When the Federal Reserve Bank increases the federal funds rate, other
interest rates rise, and consumption, firms' private investment and net exports decrease
Unemployment arises for all of the following reasons except ______.
people leave the labor force
the role of technological progress in determining economic growth can be described by which statement?
per capita output will rise when we discover new and more effective uses of capital and labor
Depository institutions balance risk and return by _______.
placing some funds into safe low interest-earning assets and other funds into high-interest risky assets
Assume that the preconditions for labor productivity growth are in place. The pace of labor productivity growth is influenced by all of the following except ______.
population growth
Draw a short-run aggregate supply curve. Label it.
positive slope like this /
Convergence between real GDP per person in the United States and Japan was relatively ______ during the 1960s; convergence has recently been ______.
rapid; decreasing
The ____ wage rate adjusts to bring the labor market to equilibrium.
real
Real GDP per person grows when ______.
real GDP grows at a faster rate than the population grows
because the focus of long-run economic growth is on the standard of living of the average person, we measure the standard of living in terms of
real GDP per captia
By measuring ______, we can see that the economy of Singapore has caught up to and surpassed the economy of the United States, but that the economies of Central and South America have not.
real GDP per person
Classical growth theory is the view that the growth of _____ is temporary and that when it rises above the subsistence level, a population explosion _____.
real GDP per person; eventually brings it back to the subsistence level
The interest rate will
rise
According to classical growth theory, when real GDP per person ______, the population grows.
rises above the subsistence level
According to classical growth theory, when real GDP per person ______, the population grows.
rises above the subsistence level
the defining characteristic of long-run economic growth is
rising productivity
An increase in labor productivity ______.
shifts the demand for labor curve rightward and the production function upward
An increase in the population ______.
shifts the supply of labor curve rightward and creates a movement along the production function
In June 2011, the exchange rate was 0.69 euros per U.S. dollar. By June 2012, the exchange rate had risen to 0.79 euros per U.S. dollar. Given the information above, for a given expected future exchange rate, the expected profit from holding U.S. dollars is smaller in June 2012 than in June 2011. The quantity of U.S. dollars demanded is ______ in June 2012 than in June 2011. And the quantity of U.S. dollars supplied is ______ in June 2011 than in June 2012.
smaller; smaller
The unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the location of jobs is ______ unemployment.
structural
which of these will ensure that an economy experiences labor productivity growth?
technological change
According to neoclassical growth theory, the fundamental cause of economic growth is_____.
technological change, which induces saving and investment that make capital per hour of labor grow.
The CPI basket consists of items that _______ households buy.
urban
In an economy, there is $150 million in currency held outside banks, $100 million in traveler's checks, $200 million in currency held inside the banks, $350 million in checking deposits, $500 million in savings deposits, $2,000 million in time deposits, and $800 million in money market mutual funds and other deposits. The value of M1 is ______ and the value of M2 is ______.
$600 million; $3,900 million
The table provides official estimates of U.S. wealth and U.S. saving in three years. The change in U.S. wealth exceeds U.S. saving in ______. U.S. saving exceeds the change in U.S. wealth in ______.
1996 and 1997; none of the years in the table
M2 consists of _____ plus _____ and _____ deposits, _____, and other deposits.
M1; savings deposits; small time; money market funds
Full employment is when there is no _____ unemployment or, equivalently, when all the unemployment is _____ or _____.
cyclical; frictional; structural