economics test 3
if you transfer money from your savings account to your checking account what effect does it have on M1 and M2?
M1 increases and M2 stays the same.
the federal reserve system performs many functions but its most important one is...
controlling the money supply
a headline states "real GDP falls again as the economy slumps" this condition is most likely to produce what type of employment?
cyclical
if a persons nominal income increases by 4% while the price level increases by 9% then that persons real income...
decreases by 5%
inflation caused by an increase in aggregate spending is referred to as...
demand pull inflation
a decrease in the interest rate will cause an...
increase in the amount of money held as an asset.
Henry deposits 2,00 in currency in the First Street Bank. later that same day Jane Harris negotiates a loan for 5,000 at the same bank. after these transactions, the supply of money has...
increased by 5,000
a recession is a decline in..
real GDP that lasts 6 months or longer
if everyone pays a fixed dollar amount of tax, then the tax is a...
regressive tax
which tax is most likely to be regressive?
sales tax
a tax is progressive if it...
takes a higher percentage of income as income increases
transfer payments can be thought of as...
taxes in reverse
which of the following measures the change in the prices of a "market basket" of some 300 goods and services purchased by typical urban consumers?
the Consumer Price Index
a statement that is often used to describe demand pull inflation is...
"too much money chasing too few goods"
a tax structure is called progressive when...
average tax rate decreases if income decreases
which of the following is a major category for the Consumer Price Index?
housing
the GDP gap measures the amount by which...
potential GDP exceeds actual GDP
if the GDP gap is negative then...
potential GDP is greater than actual GDP
assuming the total population is 120 million, the labor force is 70 million, and 63 million workers are employed, the unemployment rate is...
10%
if taxes are 2,000 when income is 15,000 and they are 2,500 when income is 20,000 then thr marginal tax rate is...
10%
in an economy the total expenditures for a market basket of goods in year 1 (base year) was 5,000 billion. in year 2 the total expenditures for the same market basket of goods was 5,800 billion. what was the Consumer Price Index for the economy in year 2?
116
the unemployment rate in an economy is 6%. the total population of the economy is 250 million and the size of the civilian labor force is 200 million. the number of unemployed workers in this economy is...
12 million
if the marginal tax rate is 30% by how much must income have increased if your tax bill increases by 150?
500
you are given the following information about the economy: the nominal interest rate =16% the real rate of interest =9%. the inflation premium is...
7%
an assets liquidity refers to its ability to be...
a means of payment
in calculating the unemployment rate "discouraged" workers who are not actively seeking employment are..
excluded from the labor force
in which phase of the business cycle will the economy most likely experience increasing real output and falling unemployment rates?
expansion
for a given amount of income the real income will
fall if the price level rises
which of the following interest groups has traditionally benefited from unanticipated inflation?
federal government
public finance Is the sub-discipline of economics that studies the various ways in which...
governments raise and expend money
if both the real interest rate and the nominal interest rate are 3% then the
inflation premium is zero
the natural rate of unemployment...
is equal to the total of frictional and structural unemployment
one of the potential consequences of pubic debt is that it may...
lead to additional future taxes that reduce economic incentives
which function of money enables society to gain the benefits of geographic and labor specialization?
medium of exchange
for a given real interest rate the nominal interest rate...
must increase if expected inflation increases
the full-employment rate of unemployment is also called the...
natural rate of unemployment
what varies directly with interest rate?
the opportunity cost of holding money
a public dept that is owned to foreigners can be burdensome because...
the payment of interest reduces the volume of goods and services available for domestic users
when a consumer wants to compare the price of one product with another, money is primarily functioning as a...
unit of account
