ECON
In which of the periods below was the inflation-adjusted deficit largest?
In 2009-2011
Federal Spending in 2013 was
$3.8 trillion
If a market basket was defined in 2005, it cost $10,000 to purchase the items in that basket in 2005 and cost $11,000 to purchase those identical goods in 2006, then the inflation rate from 2005 to 2006 is
(110-100)/100 *100% = 10%
Between 1955 and 2006, Federal Spending as a percentage of GDP ranged between
16% and 22%
Use the Aggregate Supply - Aggregate Demand model to determine which of the following will lead to higher aggregate output
A cut in interest rates
Which of the following will increase macroeconomic equilibrium prices
An increase in input prices
Fiscal Policy is controlled by
Congress and the President
Real Gross Domestic Product adjusts Gross Domestic Product
by adjusting for inflation
Suppose the Federal Reserve wanted to fight inflation by increasing interest rates. Doing so would
decrease aggregate demand
Suppose the U.S. was to experience a series of terrorists' attacks aimed at the electricity grid. This would likely
decrease aggregate supply
An economist worrying about the economic impact of environmental regulations would model that impact with a
decrease in aggregate supply
The tax cuts of 2001 and 2003 that came in the form of tax rebate checks are good examples of _____ fiscal policy
discretionary
The portion of the Obama stimulus package that cut taxes is best thought of as
discretionary (and expansionary) fiscal policy
One of the reasons that Real Gross Domestic Product is not synonymous with social welfare is
domestic production (cooking, laundry and such) are not counted
If it costs ConEd approximately $20 per additional ton of air pollution abated, but it costs PG&E only $10 per additional ton of air pollution abated, a marketable pollution permit trading for $14 per ton could
earn PG&E $4 per ton and save ConEd $6 per ton
Tradable emmission permits
encourage polluting companies to look at the value of reducing pollution just as they look at they value of increase production
If the unemployment rate rises because the number of people not working but searching for work rises, economists would attribute this to the
encouraged worker effect
One of the reasons that Real Gross Domestic Product is not synonymous with social welfare is
environmental quality is ignored
The tax cuts of 2001 and 2003 that came in the form of tax rebate checks are good examples of
fiscal policy
Economists assume that early in the process of cleaning a dirty environment there are relatively
high benefit-low cost things than can and should be done first
If, in response to a weak employment picture, a law was passed to increase the number of lanes on all interstate highways by at least on lane this would likely
increase aggregate demand
in reaction to the recession of 2001, a tax cut was passed in which tax rebate checks were sent to millions of American families. This was intended to
increase aggregate demand
One of the reasons that Real Gross Domestic Product is not synonymous with social welfare is
it ignores the value of leisure
Any event that creates a "crisis in confidence" is likely to lead to
lower aggregate prices
In the diagram above, if the monopolist produced at output Q*, they would
make a positive profit
The reason given why the CPI overstates the cost of living is it
makes no attempt to control for substitution to cheaper goods
The concept of "clean enough" to an economist means the
state of cleanliness where the marginal cost of cleaning equals the marginal benefit of cleaning
The aggregate supply-aggregate demand diagram models
the economy as a whole
The inflation rate is
the percentage increase in the price index from one year to the next
An indicator of the degree of competition in an industry is the concentration ratio. It measures
the percentage of sales in the industry by the largest firms
the key difference(s) between perfect competition and monopolistic competition is
the products sold are slightly different in monopolistic competition
One of the reasons that Real Gross Domestic Product is not synonymous with social welfare is
the underground economy (unreported and illegal income and sales) is not counted
The national debt is the
total amount owed by the federal government
A reason why the CPI overstates the cost of living is it
updates the market basket infrequently thereby missing the steep price decline in the early adoption period
Using marginal analysis, an economist would judge the proper distribution of government spending by comparing
whether the last dollar spent on one program would have been better spent on another
Using marginal analysis, an economist would judge the proper size of government by comparing
whether the last dollar spent would have been better left in private hands
One of the consequences of the overstatement of the CPI is that
Social Security taxes are higher than they would otherwise be
Which of the following will increase macroeconomic equilibrium real gross domestic product
a decrease in input prices
Which of the following will increase macroeconomic equilibrium real gross domestic product
a decrease in taxes
Congress and the President have control of the tax system and government spending. As a result their policies will exactly impact
aggregate demand
The Federal Reserve has indirect control over short term interest rates and as a result their ability to control economic activity is through
aggregate demand
The argument that a Balanced Budget Amendment would be "pro-cyclical" means that it would cause
bad times to be worse than they would otherwise be
In 2014, the largest item in the Federal Budget was
national defense & homeland security
According to the Bureau of Labor Statistics, the Consumer Price Index was
never intended to measure increases in the cost of living but many use it that way
... year old that wants a job but can't find one is
not counted at all
With 125 million people working, 8 million out of work and looking for work, and 147 million neither working nor looking for work, underemployment would be illustrated by people in the
part of the 125 million holding low-skill jobs when they wanted high-skill jobs
With 125 million people working, 8 million out of work and looking for work, and 147 million neither working nor looking for work, underemployment would be illustrated by people in the
part of the 125 million holding part time jobs when they wanted full-time jobs
