macro final

Which of the following describes the process through which a major decline in the stock market leads to a change in aggregate demand?

reductions in consumer wealth produces a negative AD shock

An increase in expected inflation will cause the economy's aggregate demand curve to:

remain unchanged

In the AD-AS model, M represents the

the rate of money supply growth.

What is the Fisher effect?

the tendency of nominal interest rates to rise with higher expected inflation rates.

In 2010, real GDP was $13.2 trillion and the GDP deflator was 110.6. What was nominal GDP for that year?

$14.6 trillion

If the money supply is $1 million, the velocity of money is 10, and the price level is 100, what is real GDP?

100,000

If a nation doubles its GDP per capita in 20 years, what is its annual growth rate?

3.5%

The maximum amount of time that a person can receive welfare payments is _____ during a lifetime.

5 years

If GDP was $10 billion in 2010 and $11 billion in 2011 and the population grew 5% between 2010 and 2011, the growth rate of GDP per capita between 2010 and 2011 was:

5%

If the adult population of a country is 200 million, 100 million are employed, and 10 million are unemployed, this country's labor force participation rate is:

55%

Research by Solow indicated that about _____ of the increases in U.S. GDP per capita are due to better ideas.

75%

When consumers suddenly become more pessimistic about the economy, a negative aggregate demand shock shifts the:

AD inward reducing the real growth rate in the short run.

Which of the following would be included in U.S. GNP?

Cars produced in a Ford plant located in Canada.

Which does NOT explain why the 1997-2006 housing boom increased aggregate demand?

During the boom, some builders were working 60 or 80 hours a week instead of 40.

The market value of all final goods and services produced by a country's residents in a year, whether at home or abroad, is called:

GNP.

Which statement best describes the economic growth patterns in the world since World War II?

Japan and South Korea experienced rapid growth while Argentina and Nigeria experienced slow growth.

As market interest rates rise:

a banks opportunity cost of holding reserves rises

Other things equal, will an individual tax rebate or a cut in tax rates provide the largest stimulus?

a cut in tax rates

If the goal of a government policy change is to increase the incentive for taxpayers to work and/or invest, which policy is MOST likely to be successful?

a decrease in marginal tax rates.

The sale of sugar will contribute to GDP when the buyer is:

a mother who is baking cookies at home.

The largest single shock to aggregate demand in U.S. history occurred in the early 1930s. What was it?

a one third drop in money supply.

What type of shock could be responsible for an increase in growth and a decrease in the inflation rate?

a positive real shock

A binding interest rate ceiling creates _____ savings.

a shortage of savings

Collateral is:

a viable assest that is pledged to lender to secure a loan.

Suppose the Fed reacts to an economic shock and quickly restores the economy to its long-run potential growth rate. It is most likely that this shock was:

an aggregate demand shock

The inflation rate is the rate of change of the:

average level of prices

The consumer price index measures the:

average price of a basket of goods and services bought by a typical consumer.

Although the Federal Reserve may increase the monetary base, the larger monetary aggregates (M1 and M2) and thus aggregate demand won't increase very much in response if:

banks are slow to lend.

This summer you have a paid internship at the South Korean carmaker Kia Motors at their offices located in Canada. For which nation, or nations, are you contributing to GDP? Assume you are a U.S. citizen.

canada

Which of the following is NOT a kind of institution that encourages investment and the efficient organization of resources?

closed markets.

Why did the tax rebate of $78 billion in 2008 have few net stimulus benefits?

consumers used much of the rebate to pay off existing taxes.

M2 refers to:

currency, checkable deposits savings deposits, money market mutual funds and small time deposits.

To reduce inflation in response to a negative real shock, the Federal Reserve would:

decrease the money growth rate which will lower inflation and economic growth rate.

When banks borrow directly from the Fed, the interest rate on those loans is the:

discount rate

The long-run aggregate supply curve shows that long-run economic growth:

does not depend on the inflation rate.

The highest debt-to-GDP ratio in U.S. history occurred:

during ww2

In the Solow model with constant technological knowledge (A), if the economy is initially above its steady-state capital stock:

economic decline will occur

A country increases its physical capital by engaging in:

education and training.

If 2009 prices are used in the calculation of real GDP, then nominal GDP will be ____ real GDP in 2009.

equal to

In the Solow model with constant technological knowledge (A), when the economy reaches a steady state:

growth stops.

Suppose the central bank targets a low rate of unemployment. If a negative real shock occurs, the real growth rate will be:

higher if the central bank counters the shock than if it does not react.

Increases in the minimum wage will most likely lead to:

higher unemployment

An increase in the demand for borrowing will cause the equilibrium quantity of saving to:

increase

Which would be most effective in ensuring sustained long-term economic growth?

increase in technological knowledge

Sticky wages and prices:

increase the impact of positive shocks.

As income rises, the marginal tax rate for married couples

increases in steps.

As a result of a positive shock to :C

inflation and output growth increase in the short run, but in the long run they return to the rates before the shock.

In the absence of monetary intervention following a negative shock to aggregate demand:

inflation. real growth and nominal wage growth will all decrease

The difference between per capita GDP in North Korea and South Korea is due to:

institutions

New capital is created in the economy by:

investments

Fiscal policy:

is federal government policy on taxes, spending, and borrowing that is designed to influence business fluctuations.

The alternative minimum tax has become an added tax burden on many upper-middle class families because:

it is not indexed to inflation.

The realized real rate of return for lenders is equal to the nominal rate of return:

minus the inflation rate

Which of the following is an example of an active labor market policy?

paying unemployed workers who find a job

The stock of tools, including machines, structures, and equipment, used to produce output is called:

physical capital

Which is NOT a function of the Federal Reserve?

providing loans to small businesses

An expansion is a period of significant, widespread increases in:

real income and employment

The economy's potential or "Solow" growth rate fluctuates over time because of:

real shocks

The lifecycle theory of savings predicts individuals will save during:

the middle years of there lives.

When workers lose their jobs and become officially unemployed, the number of people in the labor force:

remains constant

When the Fed wants to increase interest rates, it:

sells bons in the open market

Which of the following statements about Medicare and Medicaid is NOT correct?

social security and medicare together make up about 15% of the federal budget

For a given aggregate demand curve, the specified rate of spending growth is the growth rate of money:

supply plus the growth in velocity

Which refers to the decrease in private spending when government spending increases?

the crowding out effect.

Which of the following best explains the crowding-out effect?

the decrease in investment from higher interest rates that results from increased government borrowing to finance larger budget deficits

Diminishing returns to capital implies that _____ diminishes as more capital is added.

the marginal product of capital

From an initial equilibrium in the basic model that includes the AD and LRAS curves only, an increase in money supply growth will cause inflation:

to increase and real growth to remain the same

When the U.S. government borrows, it sells:

treasury bonds

Research and development of new ideas that lead to spillover effects tend to be:

under provided in markets