macro professor kim
the interest rate and investment would rise
suppose congress institutes an investment tax credit. what would happen in the market for loanable funds the interest rate and investment would fall the interest rate and investment would rise the interest rate would rise and investment would fall non of the above is necessarily correct
store of value , unit of account, medium of exchange
you save 500 dollars in currency in your piggy bank to purchase a new laptop. 500 you kept in your piggy bank illustrates moneys function as a ______. the laptop price is 500. the 500 price illustrates moneys function as ______. you use the 500 to purchase the laptop. this transaction illustrates moneys function as a _____. store of value, medium of exchange, unit of account store of value , unit of account, medium of exchange medium of exchange , unit of account, store of value medium of exchange store of value, unit of account
constant returns to scale
you sell cupcakes. One day you double the time you spend and double all your inputs, and make twice as many cupcakes. Your cupcake production function has decreasing returns to scale zero returns to scale constant returns to scale increasing returns to scale
the first but nit the second
A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth . the first is to decrease barriers to trade. the second is to restrict fro reign portfolio investment. which of these policies do most economists say promote growth? both the first and the second the first but not the second the second but not the first neither the first nor the second
bonds sold by the corporation. if the corp. experiences financial difficulties bond holders are paid before stock holders .
A creditor of a corporation holds bonds sold by the corporation. if the corporation experiences difficulties stock holders are paid before bind holders bonds sold by the corporation. if the corp. experiences financial difficulties bond holders are paid before stock holders . stocks sold by the corporation. if the corporation experiences financial difficulties stock holders are paid before bond holders stocks sold by the corporation.if the corporation experiences financial difficulties bond holders are paid before stock holders
is in a position to make a loan of 18000
Assets liabilities Reserves 30000 deposits 200000 loans 170000 if the bank faces a reserve requirement of 6 %, then th bank is in a position to make a new loan of 12000 is in a position to make a loan of 18000 has excess reserves of 12000 none of the above is correct
budget deficit of 3000
GDP = 100000 taxes= 22000 government purchases = 25000. national saving = 15000 this economies government is running a budget surplus of 3000 budget surplus of 12000 budget deficit of 3000 budget deficit pf 12000
knowledge and skills that workers acquire through education, training, and experience
Human capital is: knowledge and skills that workers acquire through education , training and experience stock of equipment and structures that is used to produce goods and services total number of hours worked in an economy same thing as technological knowledge
neither real GDP per person nor productivity
If a country increases its savings rate , which of the following permanently grow at a higher rate productivity and real GDP per person productivity but not real GDP per person real GDP per person but not productivity neither real GDP per person nor productivity
buying bonds. this buying would increase the money supply
If the federal funds rate were above the level of the federal reserve had targeted, the Fed could move the rate back towards the target by buying bonds. this buying would increase the money supply buying bonds. this buying would reduce the money supply selling bonds. this selling would increase the money supply selling bonds. this selling would reduce the money supply
private goods, and increase the incentive to engage in research
Patents turn ideas into public goods, and increase the incentive to engage in research public goods, and decrease the incentive to engage in research private goods, and increase the incentive to engage in research private goods, and decrease the incentive to engage in research
it has 800 in reserve and 9200 in loans
a bank has an 8 % reserve requirement , 10000 in deposits and has loaned out all it can given the reserve requirement it has 80$ in reserves and 9920 in loans it has 800 in reserve and 9200 in loans it has 1250 in reserve and 8750 in loans none of the above is correct
reduces the governments debt
a budget surplus occurs when the government has debt equal to zero causes government debt to increase exists when government spending is greater than tax revenues reduces the governments debt
sold bonds in ab attempt to increase the federal funds rate
a decrease in the money supply might indicate that the fed purchased bonds in an attempt to increase the federal funds rate purchased bonds in an attempt to reduce the federal funds rate sold bonds in ab attempt to increase the federal funds rate sold bonds in an attempt to reduce the federal funds rate
inflation and nominal interest rate, but does nit change real interest rates
according to monetary neutrality and the fisher effect, an increase in the money supply growth rate eventually increases inflation and nominal interest rate, but does nit change real interest rates inflation, nominal interest rates, and real interest rates inflation, and real interest rates, but does not change nominal interest rates nominal interest rates and real interest rates, but does not change inflation
the price level and nominal wages
according to the classical dichotomy, when the money supply doubles, which of the following also doubles the price level and nominal wages the price level but not the nominal wages the nominal wage but not the price level neither the nominal wage nor the price level
his real salary has fallen and his nominal salary has risen
an assistant manager at a restaurant get s a 100 a month rise. he figures that with this new monthly salary he cannot buy as many goods and services as he could last year his real and nominal salary have risen his real and nominal salary have fallen his real salary has risen and his nominal salary has fallen his real salary has fallen and his nominal salary has risen
brings with it more scientists, inventors, and engineers
an increase in a countries population may contribute to the rate of technological progress because a larger population forces the capital stock to b sped more thinly forces natural resources to be spread more thinly brings with it more scientists, inventors,and engineers brings with it more favorable recognition from other countries
16.7
assets liabilities reserves 3000 deposits loans 47000 50000 there is reserve requirement and the bank is exactly in compliance with that requirement. assume the same is true for all otter banks. lastly, assume people hold only deposits and no currency. what is the money multiplier 6 16.7 15.6 6.4
4.5
based on the quantity equation if M=8000, P=3, and Y=12000 then V= .33 2.0 4.5 0.5
investment declines because a budget deficit makes interest rates rise
crowding out occurs when investment declines because a budget deficit makes interest rates rise investement declines because a budget deficit makes interest rates fall investment increases because a budget surplus makes interest rates rise investment increases because a budget surplus makes interest fall
decreased by about 5.3 percent
daniel owns a coffee kiosk. al of his employees work 8 hours per day. in 2011 he employed 6 people who produced a total of 912 cups per day. in 2012 he hired a seventh worker and pro ducting increased to 1008 cups per day . daniels kiosks productivity decreased by about 5.3 percent increased by about 10.5 % increased by 9.5% decreased by about 5.6 %
checking account
demand deposits are a type of checking account time deposit money market mutual fund savings deposit
has no intrinsic value
fiat money has no intrinsic value is backed by gold is a medium of exchange but nit a unit of account is any close substitute for currency such as checkable deposits
fell because the Fed got inflation under control
from the early 1980s through the 1990s the nominal interest rate fell because the Fed got inflation under control fell because the fed let inflation get out of control rose because the Fed got inflation under control rose because the fed let inflation get out of control
20 bats per hour
hit it produces 320 baseball bats per day using 2 workers who each work 8 hours per day. what is hit its productivity. 320 bats 160 bats per hour 20 bats per hour none of the above is correct
commodity money but not fiat money
if an economy used gold as money , its money would be commodity money but not fiat money fiat money but not commodity money both fiat and commodity money functioning as a store of value and as a unit of account but not as a medium of exchange
debtors receive a higher real interest rate than they they had expected
if inflation is lower than what was expected creditors receive a lower real interest rate than they had expected creditors pay a lower real interest rate than they had expected debtors receive a higher real interest rate than they they had expected
increases and so the value of money falls
if the CPI rises, the number of dollars needed to buy a representative basket of goods increases and so the value of money rises increases and so the value of money falls decreases and so the the value of money rises decreases and so the value of money falls
borrowing directly from the public
if the apple corp. sells a bond it is borrowing directly from the public borrowing indirectly from the public selling shares of ownership directly to the public selling shares of ownership indirectly to the public
shortage so the interest rate will fall
if the demand for loanable funds shifts to the right , then initially there is a surplus so the interest rate will fall surplus so the interest rate will rise shortage so the interest rate will rise shortage so the interest rate will fall
25%
if the price level increased from 200 to 250 then what is the inflation rate 50% 25% 20% none of the above
there is a surplus and the interest rate is above the equilibrium level
if the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded there is a surplus and the interest rate is above the equilibrium level there is a surplus and the interest rate is below the equilibrium there is a shortage and the interest rate is above the equilibrium there is a shortage and the interest rate is below the equilibrium
runs a budget deficit
if the tax revenue of the federal government is less than its spending, then the federal government necessarily runs a budget deficit runs a budget surplus runs a national debt will increase taxes
the quantity demanded is greater than the quantity supplied and the interest rate will rise
if there is a shortage of loanable funds, then the quantity demanded is greater than the quantity supplied and the interest rate will rise the quantity demanded is greater than the quantity supplied and the interest rate will fall the quantity supplied is greater than the quantity demanded and the interest rate will rise the quantity supplied is greater than the quantity demanded and the interest rate will fall
supply of loanable funds shifted to the left
in 2009 the us governments budget deficit increased substantially. other things the same this means the supply of loanable funds shifted to the right supply of loanable funds shifted to the left demand for loanable funds shifted to the right demand for loanable funds shifted to the left
both national and private saving would fall
in a closed economy if Y remained the same but G rose T rose by the same amount as G , and C fell but by less than the increase in T what would happen to private and national saving national saving would fall and private saving would rise national saving would rise and private saving would fall both national and private saving would fall nine of the above is correct
give depositors a safe place to keep their money
in a system of 100% reserve banking , the purpose of a bank is to make loans to households influence the money supply give depositors a safe place to keep their money buy and sell gold
1/8 cabinet per hour
in one day alpha cabinet company made 40 cabinets with 320 hours of labor. what was alpha cabinets productivity. 1/8 cabinet per hour 8 hours per cabinet 40 cabinets none of the above is correct
the level of productivity must rise
in order for the standard of living within a country to be enhanced overtime, which of the following is essential? the role of the countrys government in th economy becomes much larger the population of the country must increase more domestic natural resources must be discovers and used the level of productivity must rise
private goods and increasing the incentive to engage in research
inventors often obtain patents on new products and processes , thereby turning new ideas into : private goods and increasing the incentive to engage in research private goods but decreasing the incentive to engage in research public goods and increasing the incentive to engage in research public goods but decreasing the incentive to engage in research
135
last year you earned a nominal wage of 10 per hour and the price level was 120. this year your nominal wage is 11 per hour , but you are unable to purchase the same amount of goods as last year. the price level this year can be 135 132 125 121
the cost of more frequent price changes induced by higher inflation
menu cost refers to resources used by people to maintain lower money holdings when inflation is high resources used to price shop during times of high inflation the distortion in incentives created by inflation when taxes do not adjust for inflation the cost of more frequent price changes induced by higher inflation
does not change real GDP. most economists think this is a good description of the economy in the long run but not the short run
monetary neutrality means that a change in the money supply does not change real GDP. most economists think this is a good description of the economy in the short run and in the long run does not change real GDP. most economists think this is a good description of the economy in the long run but not the short run does change real GDP. Most economists think this is a good description of the economy in the short run and the long run does change del GDP. Most economists thunk this is a good description of the economy in the along run but nit the short run
the us government bonds are generally pay a higher rate of interest than corporate bonds
morgan, a finical advisor, has told her clients the following things. which of her statements is not correct? the us government bonds are generally pay a higher rate of interest than corporate bonds the interest received on corporate bonds is taxable us government bonds have the lowest default risk if you purchase a municipal bond you can sell it before it matures
increase, which makes the value of money decrease
open-market purchases by the fed make the money supply increase, which makes the value of money increase increase, which makes the value of money decrease decrease, which makes the value of money decrease decrease, which makes the value of money increase
an increase in either human or physical capital
other things the same, which of the following would increase productivity an increase in either human or physical capital an increase in human capital but not an increase in physical capital an increase in physical capital but not an increase in human capital neither an increase in human capital nor an increase in physical capital
money supply to fall. to reduce the impact of this the fed could buy treasury bonds
suppose banks decide to hold more excess reserves relative to deposits. other things the same the action will cause the money supply to fall. to reduce the impact of this the fed could sell treasury bonds money supply to fall. to reduce the impact of this the fed could buy treasury bonds money supply to rise .to reduce the impact of this the fed could sell treasury bonds money supply to rise. to reduce the impact of this the fed could buy treasury bonds
gradually raise the level of real GDP per person
suppose that the us undertakes a policy to increase its savings rate. this policy will likely have no impact on the level of GDP per person immediately and permanently decrease the level of real GDP per person immediately and permantely increase the level of real GDP per person gradually raise the level of real GDP per person
affect nominal variables, but not real variables
the classical dichotomy argues that changes in the money supply affect both nominal and real variables affect neither nominal nor real variables affect nominal variables, but not real variables do not affect nominal variables, but do affect real variables
the price level
the data hyperinflation show a clear link between the quantity of money and the price level growth rate of Gdp unemployment rate velocity
the supply of money increases and the value of money falls
the economy of mainland uses gold as it money. if th government discovers a large reserve of gold on their land the supply of money decreases and the value of money rises the supply of money increases and the value of money falls the demand for money increases and the value of money rises the demand for money decreases and the value of money falls
are positively related, which is consistent with the quantity theory of money
the evidence from hyperinflation indicates that money growth and inflation are positively related, which is consistent with the quantity theory of money are positively related which is not consistent with the quantity theory of money are not related in a discernible fashion, which is consistent with the quantity theory of money are not related in a discernible fashion, which is not consistent with the quantity theory of money
makes trade easier
the existence of money reduces specialization makes trade easier allows for barter hinders production
increasing the money supply. to increase the money supply it could buy bonds
the fed can reduce the federal fund rate by decreasing the money supply. to decrease the money supply it could sell bonds decreasing the money supply. to decrease the money supply it could buy bonds increasing the money supply. to increase the money supply it could sell bonds increasing the money supply. to increase the money supply it could buy bonds
the nominal interest rate
the fisher effect is crucial for understanding changes overtime in the nominal interest rate the real interest rate the inflation rate the unemployment rate
the tables and chairs in the restaurant
the karmic deed restaurant uses all of the following to produce vegetarian meals. which of them is an example of physical capital the owners knowledge of how to prepare vegetarian entrees the money in the owners account at the bank from which she borrowed money the tables and chairs in the restaurant the fresh fruit vegetables and grains the restaurant uses to prepare its meals
buys bonds . the increase will be larger the smaller the reserve ratio
the money supply increases when the fed buys bonds . the increase will be larger the smaller the reserve ratio buys bonds. the increase will be larger the larger the reserve ratio sells bonds. then increase will be larger the smaller the reserve ratio sells bonds. the increase will be larger , the larger is the reserve ration\
the demand for the stock rises
the price of a stock will rise if: the managers of a stock exchange decide the price should be higher the demand for the stock rises the supply of the stock increases non of the above are correct
decrease the reserve requirement
to increase then money supply , the fed could sell government bonds increase the discount rate decrease the reserve requirement none of the above is correct
p x y / M and increases if dollars are exchanged more frequently
velocity is Y/(M x P) and increases if dollars are exchanged less frequently Y/(M x P) and increases if dollars are exchanged more frequently. P x Y / M and increases if dollars are exchanged less frequently p x y / M and increases if dollars are exchanged more frequently
emersons productivity and output is greater than waldos
waldo works 8 hours a day and produces 7 units of goods per hour. emerson works 6 hours per day and produces 10 units of goods per hour: waldos productivity and output are greater than emersons waldos productivity is greater that emersons but his output is less emersons productivity and output is greater than waldos emersons productivity is greater than waldos but his output is less
3.5 % and a real interest rate of 2%
walter puts money in as savings account at his bank earning 3.5 %.one year later he takes his money out and notes that while his money was earning interest, prices rose 1.5 percent. walter earned a nominal interest rate of 3.5 percent and a real interest rate of 5 percent 3.5 % and a real interest rate of 2% 5 % and a real interest rate of 3.5% 5% and a real interest rate of 2%
he supply of loanable funds would shift left
what would happen in the market for loanable funds if the government were to increase the tax on interest income the supply of loanable funds would shift right the demand for loanable funds would shift right the supply of loanable funds would shift left the demand for loanable funds would shift left
the real interest rate is greater than the nominal interest rate
when deflation exists the real interest rate is less than the nominal interest rate the real interest rate is greater than the nominal interest rate the real interest rate and inflation are less than the nominal interest rate prices rise
then money supply decreases and the federal funds rate increases
when the feds sell bonds the money supply increases and the federal funds rate increases the money supply increases and the federal funds rate decreases then money supply decreases and the federal funds rate increases the money supply decreases and the federal funds rate decreases
is made under the assumption that the quantities of human capital, natural resources, and technology are being held constant
when workers already have a large quantity of capital to use in producing goods and services , going them an additional unit of capital increases their productivity only slightly. This statement represents an unconventional view of the production process is an assertion that capital is subject to increasing returns is made under the assumption that the quantities of human capital, natural resources, and technology are being held constant all the above are correct
her previous truing in a survival course
which of the following bets illustrates the human capital of a survivor stranded on an island? the fishing poles she has produced the invention of a better fishing lure the fresh fruit and fish on and around the island her previous training in a survival course
South Korea
which of the following countries benefited significantly from the catch-up effect in the last half of the twentieth century ethipopia the U.S. canada south Korea
firms become more optimistic about the future and they plan to increase their purchases of new equipment and construction of factories
which of the following events would shift the demand curve from D1 to D2 the government goes from running a budget deficit to running a budget surplus firms become more optimistic about the future and they plan to increase their purchases of new equipment and construction of factories a change in the tax laws encourages people to consume less and save more a change in the tax laws encourages people to to consume more and save less
divide the quantity of output by the number of hours worked
which of the following is a correct way to measure productivity divide the number o hours worked by the quantity of output divide the quantity of output by the number of hours worked determine how much output is produced in a given time determine how much time it takes to produce a unit of output
cash but not stocks
which of the following is both a store of value and regularly used as a medium of exchange cash and stocks cash but not stocks stocks but not cash neither cash nor stocks
human capital per worker is a determinant of productivity
which of the following is correct human capital per worker is a determinant of productivity a nation cannot be highly productive in producing goods and services without abundant quantities of natural resources human capital and technological knowledge are the same thing all technological knowledge is proprietary
all of the above is correct
which of the following is included in both M1 and M2 currency demand deposits other checkable deposits all of the above is correct
american families save a larger fraction of their incomes than their counter parts in many other countries such as germany and japan
which of the following is not correct american families save a larger fraction of their incomes than their counter parts in many other countries such as germany and japan saving is an important long run determinant of a nations standard of living a change in tax laws that encouraged greater saving would lower interest rates taxes on interest income can substantially decrease the future value of current saving
savings deposits
which of the following is not included in M1 currency demand deposits savings deposits travelers checks
term
which of the following numbers is not associated with shares of a comonays stock term dividend price price earning ratio
in response to tax reform, households are encouraged to save more than they previously saved
which of the following would shift the supply curve from S1 to S2? in response to tax reform, firms are encouraged to invest more than they previously invested in response to tax reform, households are encouraged to save more than they previously saved government goes from running a balanced budget to running a budget deficit any of the above events would shift the supply curve from S1 to S2
open market policies
which tool of monetary policy does the federal reserve use most often term auctions open market policies changes in reserve requirements changes in the discount rate
the funds shareholders
who accepts all of the risk associated with a mutual funds portfolio of stocks and or bonds the funds managers the funds shareholders the federal government the corporations that originally issued the stocks and or bonds held by the fund
