macro Econ final review
If you go to the bank and notice that a dollar buys more Mexican pesos than it used to, then the dollar has
appreciated. Other things the same, the appreciation would make Americans more likely to travel to Mexico
Canada and many European countries have had higher average unemployment rates than the US. The Phillip's curve suggests that these countries
have long-run Phillip's curves to the right of the US
Which of the following would shift the long-run phillip's curve to the right?
increases in unemployment compensation
Which of the following is not an automatic stabilizer?
Minimum wage
Fiscal policy refers to the idea that aggregate demand is affected by changes in
government spending and taxes
Which of the following correctly explains the crowding-out effect?
An increase in government expenditures increases the interest rate and so reduces investment spending
Keynes explained that recessions and depressions occur because of
inadequate aggregate demand
The source of hyperinflation is primarily
increases in money supply growth
Suppose the federal reserve pursues contractionary monetary policy. In the long run
inflation is lower and unemployment is the same as it was prior to the change in policy.
The misery index is calculated by the
inflation rate plus unemployment rate
Because a government budget deficit represents
negative public saving, it decreases national saving
International trade
raises to standard of living in all trading countries
The theory by which people optimally use all available information when forecasting the future is known as
rational expectations
In the first few years of the Great Depression, unemployment rose to about
25 percent, and prices fell about 22 percent
When Claudia, a U.S citizen, purchases a handbag made in France, the purchase is
A U.S. import and a French export
Closely watched indicators such as the inflation rate and unemployment are released each month by the
Bureau of Labor Statistics
Which of the following Fed actions would both increase the money supply?
Buy bonds and lower the reserve requirement
Which of the following is correct concerning the long-run Phillip's curve?
Its position depends on the natural rate of unemployment
The supply of money is determined by
The Federal Reserve System
If U.S exports are $150 billion and U.S imports are $100 billion, which of the following is correct?
The U.S has a trade surplus of $50 billion
which of the following will reduce the price level and real output in the short run?
a decrease in the money supply
Which of the following is vertical?
both the long run Phillip's curve and them long run aggregate supply curve
When the interest rate decreases, the opportunity cost of holding money
decreases, so the quantity of money demanded increases
If U.S. consumers increase their demand for apples from New Zealand, then other things the same New Zealand's
exports and net exports rise
The marginal propensity to consume (MPC) is defined as the fraction of
extra income that a household consumes rather than savs
During recession, taxes tend to
fall and thereby increase aggregate demand
A country's trade balance
is greater than zero only if exports are greater than imports
Other things the same, an increase in the price level makes the dollars people hold worth
less, so they can buy less
Disinflation is defined as a
reduction in the rate of inflation
The value of money falls as the price level
rises, because the number of dollars needed to buy a representative basket of goods rises
In the mid-1970's the price of oil rose dramatically. This
shifted aggregate supply left
There is a
short-run trade off between inflation and unemployment
Disinflation is like
slow a car down, wheres deflation is like putting the car into reverse gear.
The theory of purchasing power parity primarily explains
the determination of the real exchange rate
If you are vacationing in France and the dollar depreciates relative to the euro, then
the dollar buys fewer euros. It will take more dollars to buy a good that costs 50 euros
In order to maintain stable prices, a central bank must
tightly control the money supply
