Macro Test 2
CPI = ___. (Cost of CPI backet at base-period prices/Cost of CPI backet at current-period prices) X 100, [(Cost of CPI backet at base-period prices - Cost of CPI backet at current-period prices)/Cost of CPI backet at current-period prices] X 100, (Cost of CPI backet at current-period prices/Cost of CPI backet at base-period prices) X 100, [(Cost of CPI backet at current-period prices - Cost of CPI backet at base-period prices)/Cost of CPI backet at current-period prices] X 100
(Cost of CPI backet at current-period prices/Cost of CPI backet at base-period prices) X 100
In 2014, a country's exports were 1,840 billion and imports were 2,357 billion. What was the value of net exports? 517, 518, -518, -517, 519
-517
On January 1, 2017, Sophie's Sun lounge owned 4 tanning beds valued at 20,000. During 2017, Sophie's bought 3 new beds at a total cost of 14,000. At the end of the year, the market value of al Sophie's beds was 26,000. Calculate Sophie's gross investment and depreciation during 2017. 17000/90000, 14000/7000, 14000/8000,16000/8000, 18000,6000
14000/8000
An economy produces only apples and oranges. The base year is 2015, and the table gives the quantities produced and the prices. Calculate GDP in 2015 and 2016 expressed in base-year prices. GDP in 2015 and 2016? 75/120, 1350/80, 90/405, 150/405, 150/300
150/405
The figure illustrates the components of aggregate planned expenditure on Turtle Island. Turtle Island has no imports or exports, no income taxes, and the price level is fixed. Calculate autonomous expenditure and the marginal propensity to consume in Turtle Island. A.)4 billion/0.60 B.) 2 billion/0.70 C.) 6 billion/0.65 D.) 2 billion/0.60
2 billion/0.60
The table shows three years of CPI data. Calculate the inflation rate for the years ended June 2000 and June 2001. What is the inflation rate in 2001? 4.37/3.57/decreased, 5.68/5.23/increased, 3.96/3.12/decreased, 4.50/3.20/increased, 3.73/3.24/decreased
3.73/3.24/decreased
Michael, an Internet service provider, bought an existing business worth 400,000 on December 31, 2017. During 2018, his business grew and he bought 300,000 of new servers. The market value of his older servers fell by 200,000. What was Michaels gross investment, depreciation, and net investment during 2018? 400000/250000/150000, 300000/200000/100000, 300000/350000/100000, 200000/300000/100000
300000/200000/100000
An economy produces only robots, pens, and pizza. The table gives the quantities produced and prices in 2016 and 2017. The reference base year is 2016. What is nominal GDP in 2016 and in 2017? 33/163, 33/173, 55/163, 44/193, 36/174
33/163
The table lists items in Dreamland's national accounts. 1.) Use the expenditure approach to calculate GDP. 2.) Calculate net domestic income at factor cost. 3.) Calculate net domestic income at market prices. 4.) Use the income approach to calculate GDP. 3300/2600/2800/3300, 3300/2500/2850/3300, 3100/2400/2850/3100, 3300/2000/3050/3300
3300/2500/2850/3300
The table gives information reported by the Bureau of Labor Statistics for 2006. Calculate the unemployment rate, the labor force participation rate, and the employment-to-population ratio. 6.7%/55.6%/45.1, 4.5%/66.8%/63.4, 6.4%/69.2%/65.3, 4.6%/66.2%/63.1
4.6%/66.2%/63.1
Use the data in the table to calculate aggregate expenditure and imports of goods and services? 80/60, 50/20, 90/30, 70/30, 90/40
90/30
During a year, a firm's net investment is 7200 and depreciation is 1800. What is the firm's gross investment? 10800,7200,9000,1800
9000 (add them together)
The CPI is a____? Measure of the price level of all goods and services hat are counted as part of GDP, Measure of inflation, List of the items that an average urban household buys and the percentage weight of total expenditures given to each item, A measure of the average of the prices paid by urban consumers for a fixed market basket of consumption goods and services.
A measure of the average of the prices paid by urban consumers for a fixed market basket of consumption goods and services.
***Fall 2019: Question 10. Suppose that the value of gross investment during 2019 was $9 billion. What was the value of depreciation during 2019? A. $2 billion B. $3 billion C. $4 billion D. $5 billion
A. $2 billion
***Spring 2020: Question 8. Suppose that the value of depreciation during 2019 was $3 billion. What was the value of net investment during 2019? A. $2 billion B. $3 billion C. $4 billion D. $5 billion E. $6 billion
A. $2 billion
Suppose that the marginal propensity to save is 0.4, and that there are no taxes or imports in the economy. A ____ increase in autonomous spending will lead Real GDP to increase by $50 billion. A. $20 billion. B. $30 billion. C. $55 billion. D. $75 billion
A. $20 billion.
The table shows the receipts and the outlays of a nation at each level of real GDP. What is the budget balance when real GDP is $4 trillion? A. 0.2 B. -0.3 C.-0.2 D. 0.3
A. 0.2
An example of automatic fiscal policy is A. Expenditure for unemployment compensation increasing as economic growth slows B. A change in taxes that has no multiplier effect C. The federal government expanding spending at the Department of Education D. Congress passing a tax rate reduction package E. The Federal Reserve reducing interest rate as economic growth slows
A. Expenditure for unemployment compensation increasing as economic growth slows
An open market operation is the purchase or sale of _____ - _____ - by the ____ in the open market. A. Government securities/US Treasury bills and bonds/ New York Fed B. Mortgages/personal and business/Bank of America C. Government securities/ US Treasury bill and bonds/Federal Reserve Bank of St. Louis D. Mortgages/personal and business/Federal Reserve
A. Government securities/US Treasury bills and bonds/ New York
Fiscal stimulus that increases an existing government budget deficit ___ loanable funds, which ___ investment. A. Increases the demand for/increases the real interest rate and decrease B. Decreases the supply of/increases the real interest rate and decreases C. Increases the demand for/decreases the real interest rate and increases D. Decreases the demand for/decreases the real interest rate and increase
A. Increases the demand for/increases the real interest rate and decrease
The two main official measures of money in the United States today are ____. The two main official measures of money in the United States ____really money. A. M1 and M2/are B. M1 and M2/ are not C. Currency and M2/are D. M2 and M3/ are not
A. M1 and M2/are
How do banks create money? A. Making loans B. Printing more $20 bills C. Sending out credit cards to depositors D. Increasing the desired reserve ratio
A. Making loans
***Fall 2019: Question 35. In the graph above, which of the following points depicts an Inflationary Gap? A. Point F B. Point K C. Point I D. Point G
A. Point F
Automatic stabilizers are defined as ___? A. Policy that stabilizes without the need for action by the government B. Actions taken by the President without Congressional consent to stabilize the economy C. Actions taken by an act of Congress to stabilize the economy D. Policy that has no multiplier effects E. Discretionary policy taken to stabilize the economy
A. Policy that stabilizes without the need for action by the government
If the Fed carries out an open market operation and sells US government securities, the federal funds rate ____ and the quantity of reserves ___. A. Rises/decreases B. Rises/does not change C. falls/decreases D. Falls/increases E. Rises/increases
A. Rises/decreases
True or False: If the economy is currently experiencing a recessionary gap, wages should fall and the Short-Run Aggregate Supply Curve should shift to the right in the long run. A. True B. False
A. True
True or False: The Aggregate Expenditure line shifts downward when the price level rises, and upward when the price level falls. A. True B. False
A. True
True or False: The existence of underground economic activity leads Gross Domestic Product to understate the actual value of production. A. True B. False
A. True
True or False: The four CPI biases lead the inflation rate to overstate the true burden of rising prices in the economy. A. True B. False
A. True
True or False: When the value of household wealth falls, the supply of loanable funds shifts to the right. This leads the real interest rate to fall. A. True B. False
A. True
Which of the following statements MUST be true? A. When relative prices change and people substitute to the lower priced good, the CPI ignores this substitution and the CPI overstates inflation. B. The CPI calculation assumes that everyone shops at discount stores and no one shops at convenience stores. C. Changes in relative prices lead consumers to change the items they buy, and the CPI reflects this substitution. D. When the quality of a good improves over time, the CPI does not include the portion of the price rise attributable to the higher quality in its calculation.
A. When relative prices change and people substitute to the lower priced good, the CPI ignores this substitution and the CPI overstates inflation.
When calculating Gross Domestic Product using the Income Approach, we must ____ the value of net taxes, because Gross Domestic Product ____. A. add/ is calculated at market prices B. subtract/ includes gross investment C. subtract/ is calculated at market prices D. add/ includes gross investment
A. add/ is calculated at market prices
Underemployed workers ____ considered employed. They are one reason that the unemployment rate ____ the problem of joblessness in the economy. A. are/ understates B. are/ overstates C. are not/ overstates D. are not/ understates
A. are/ understates
Which of the following is NOT an effect from a change in the federal funds rate? A. change in government expenditures B. change in the quantity of money C. change in investment D. change in the real interest rate E. change in aggregate demand
A. change in government expenditures
Suppose that the value of household wealth decreases after stock prices fall. As a result, Real GDP will _____ in the short run, and the price level will _____ in the short run. A. decrease/ decrease B. decrease/ increase C. increase/ decrease D. increase/ increase
A. decrease/ decrease
If the exchange rate rises, then the quantity of dollars demanded ________ because with the higher U.S. exchange rate, U.S. exports ________. A. decreases/ decreases B. increases/ decrease C. increases/ increase D. does not change/ do not change E. decreases/ increase
A. decreases/ decreases
The required reserve ratio is the minimum percentage of _____ that _____ are required to hold as reserves. A. deposits/ depository institutions B. savings/ depository institutions C. deposits/ governments D. savings/ firms
A. deposits/ depository institution
The required reserve ratio is the minimum percentage of _____ that _____ are required to hold as reserves. A. deposits/ depository institutions B. savings/ depository institutions C. savings/ firms D. deposits/ governments
A. deposits/ depository institutions
An example of automatic fiscal policy is ___? A. expenditure for unemployment compensation increasing as economic growth slows. B. a change in taxes that has no multiplier effect. C. the federal government expanding spending at the Department of Education. D. Congress passing a tax rate reduction package. E. The Federal Reserve reducing interest rates as economic growth slows.
A. expenditure for unemployment compensation increasing as economic growth slows.
Suppose that business taxes rise. As a consequence, the real interest rate will ____, and the amount of business investment will ____. A. fall/ decrease B. fall/ increase C. rise/ decrease D. rise/ increase
A. fall/ decrease
The capital and financial account is the record of _____ minus US investment abroad. A. foreign investment in the United States B. interests and transfers to foreign countries C. foreign exchange reserves in the United States D. official lending to foreign countries
A. foreign investment in the United States
An open market operation is the purchase or sale of _____ - _____ - by the _____ in the open market. A. government securities/ U.S. Treasury bills and bonds/ New York Fed B. mortgages/ personal and business/ Bank of America C. government securities/ U.S. Treasury bills and bonds/ Federal Reserve Bank of St Louis D. mortgages/ personal and business/ Federal Reserve
A. government securities/ U.S. Treasury bills and bonds/ New York Fed
Suppose that the economy is experiencing an expansionary gap. This means that Real GDP is currently ____ than potential GDP. In the long run, we can expect the wage rate to ____, and real GDP to ____. A. greater/ rise/ decrease B. less/ rise/ decrease C. greater/ fall/ increase D. greater/ fall/ decrease E. less/ fall/ increase
A. greater/ rise/ decrease
Which of the following does NOT increase the productivity of labor? A. increases in the number of workers B. technological advances C. human capital growth D. physical capital growth
A. increases in the number of workers
Why might fiscal stimulus crowd out investment? Fiscal stimulus that increases an existing government budget deficit ______ loanable funds, which ______ investment. A. increases the demand for/ increases the real interest rate and decreases B. decreases the supply of/ increases the real interest rate and decreases C. decreases the demand for/ decreases the real interest rate and increases D. increases the demand for/ decreases the real interest rate and increases
A. increases the demand for/ increases the real interest rate and decreases
Consider the market for labor. An increase in labor productivity ____ the real wage rate and ____ the equilibrium quantity of labor. A. increases/ increases B. increases/ decreases C. decreases/ increases D. decreases/ decreases
A. increases/ increases
A fixed exchange rate is one that _______. A fixed exchange rate is achieved _______. A. is set by the government or the central bank/ by central bank intervention in the foreign exchange market B. is determined by demand and supply in the foreign exchange market/ with no direct intervention by the central bank C. follows a path determined by the government or the central bank by the central bank buying or selling domestic currency in the foreign exchange market D. is set by the government or the central bank/ by the intervention of market traders in the foreign exchange market
A. is set by the government or the central bank/ by central bank intervention in the foreign exchange market
An increase in taxes on labor income shifts the labor supply curve ________ and the ________. A. leftward/ after - tax wage rate falls B. leftward/ after - tax wage rate rises C. leftward/ before - tax wage rate does not change D. rightward/ before - tax wage rate rises E. leftward/ after - tax wage rate does not change
A. leftward/ after - tax wage rate falls
When Real GDP and Aggregate Expenditure are less than their equilibrium values, the value of Real GDP is ____ than the value of Aggregate Expenditure, and inventories are ____. A. less/ shrinking B. less/ growing C. greater/ shrinking D. greater/ growing
A. less/ shrinking
How do banks create money? Banks create money by ______. A. making loans B. printing more $20 bills C. sending out credit cards to depositors D. Increasing the desired reserve ratio
A. making loans
When calculating GDP, we add up the ____ goods and services, which ____. A. market value of/ serves to weight the values of different goods B. cost of producing/ resolves the double counting problem C. market value of/ resolves the double counting problem D. cost of producing/ serves to weight the values of different goods
A. market value of/ serves to weight the values of different goods
Gross Domestic Product is calculated using ____ in order to ____. A. market values/ differently weight different goods B. market values/ avoid double counting C. factor costs/ avoid double counting D. factor costs/ differently weight different goods
A. market values/ differently weight different goods
Suppose that Sara just graduated from UF Law School. When she was in law school, Sara was an excellent student and has very strong references. While she applies for jobs as an attorney, she works part time at Just Salad. Sara is ____. A. not unemployed B. structurally unemployed C. cyclically unemployed D. frictionally unemployed
A. not unemployed
The Consumer Price Index (CPI) is a measure of the ____ based on the goods and services consumed by the average ____. A. price level/ urban household of four B. interest rate/ urban worker C. interest rate/ urban household of four D. price level/ urban worker
A. price level/ urban household of four
Suppose that the U.S. economy is initially in Long Run Macroeconomic Equilibrium. A reduction in the real interest rate will lead the price level to ____ in the short-run, and Real GDP to ____ in the short run. A. rise/ increase B. rise/ decrease C. fall/ increase D. fall/ decrease
A. rise/ increase
If the Fed carries out an open market operation and sells U.S. government securities, the federal funds rate ________ and the quantity of reserves ________. A. rises/ decreases B. rises/ does not change C. falls/ decreases D. falls/ increases E. rises/ increases
A. rises/ decreases
When aggregate expenditure is greater than Real GDP, inventories are ____, and firms respond by ____ production and employment. A. shrinking/ increasing B. shrinking/ reducing C. growing/ increasing D. growing/ reducing
A. shrinking/ increasing
Consider the market for loanable funds. When the value of household wealth rises, the ____ will shift to the ____, and the real interest rate will ____. A. supply of loanable funds/ left/ rise B. supply of loanable funds/ right/ rise C. demand for loanable funds/ right/ rise D. supply of loanable funds/ right/ fall E. demand for loanable funds/ left/ fall
A. supply of loanable funds/ left/ rise
If the Fed buys U.S. government securities, A. the federal funds rate will fall. B. bank reserves will decrease. C. the discount rate will fall D. the federal funds rate will rise. E. the discount rate will rise.
A. the federal funds rate will fall
The existence of discouraged workers leads the unemployment rate to ____ the actual problem of jobless in the economy, because discouraged workers ____ considered unemployed. A. understate/ are not B. understate/ are C. overstate/ are D. overstate/ are not
A. understate/ are not
The labor force participation rate is the percentage of the ____ who are members of the labor force. A. working-age population B. part-time workforce C. number of women D. unemployed
A. working-age population
The table shows the aggregate demand and short-run aggregate supply schedules of Lizard Island in which potential GDP is 600 billion. 1.) Calculate the short-run equilibrium real GDP and price level. 2.) Does the country have an inflationary gap or a recessionary gap and what is its magnitude? 3.) If real GDP demanded at each price level increases by 50 billion, what is the new short-run macroeconomic equilibrium and the output gap? A.) 575/110/recess of 25/600/120/no B.) 570/120/expansion of 50/ 700/130/ yes C.) 750/100/recess of 25/600/300/yes D.) 570/150/expansion of 25/650/130
A.) 575/110/recess of 25/600/120/no
The following events have occurred at times in the history of the United States: 1.) A deep recession hits the world economy 2.) The world oil price rises sharply 3.) US businesses expect future profits to fall. Event 1 and 2: A.) Decrease aggregate demand/decrease short-run aggregate supply B.) Increase short-run aggregate supply/decrease short-run aggregate supply. C.) Decrease aggregate demand and short-run aggregate supply/increase short-run aggregate supply and decrease long-run aggregate supply D.) Decrease aggregate demand/increase short-run aggregate supply.
A.) Decrease aggregate demand/decrease short-run aggregate supply
If real GDP and aggregate expenditure are greater than equilibrium expenditure, what happens to firms? Inventories? How do firms change their production? And what happens to real GDP? A.) Increase/decrease B.) Decrease/increase C.) Increase/increase D.) Decrease/decrease
A.) Increase/decrease ****Answer is not correct.
If real GDP and aggregate expenditure are less than equilibrium expenditure, what happens to firms? Inventories? How do firms change their production? And what happens to real GDP? Firm's inventories Increase/decrease so they ____ production, and real GDP ____. A.) Increase/increase B.) Increase/decrease C.) Decrease/increase D.) Decrease/decrease
A.) Increase/increase
An increase in income taxes ____, everything else remaining the same. A.) Makes the multiplier smaller B.) Makes the multiplier larger C.) Has no effect on the multiplier D.) Sometimes increases the multiplier and sometimes decreases the multiplier
A.) Makes the multiplier smaller
The Multiplier is greater than 1 because the change in autonomous expenditure leads to ____. A.) More induced expenditure B.) More investment C.) Less consumption D.) More saving
A.) More induced expenditure
A final good is____. An example of a final good is_____. An item that is bought by its final user during a specified time period/ bread sold to a consumer, The last item of a given type that a consumer will buy/ a house that is purchased by a retired couple, An item that is bought by its final user during a specified time period/the ice cream parlor buys to make milkshakes, An item that is bought by its final user or an item that is a component of a final good/ tires
An item that is bought by its final user during a specified time period/ bread sold to a consumer
An intermediate good is ____. An example of an intermediate good is____. An item that is produced by one firm, bought by another firm, and used as a component of a final good or service/ wheat sold to a baker to make bread, An item that is produced by one firm bought by another firm, and used as a component of a final good or service/ a used car, An item that is used for a given period of time and then must be replaced/winter boots, A good that is used for only part of the year/snow tires
An item that is produced by one firm, bought by another firm, and used as a component of a final good or service/ wheat sold to a baker to make bread
****Need to fix: Gross domestic product is? The market value of all final goods and services produced within a country in a given time period, The market value of all the consumption goods and services produced within a country in a given period of time, The factor cost of all the consumption goods and services produced by all citizens of a country in a given time period, The factor cost of all the final goods and services produced by all citizens of a country in a given time period.
Answer is not: The market value of all final goods and services produced within a country in a given time period
A marginally attached worker is a person who does not have a job, is ____ and ____ to work, has ___ specific effects to find a job within the previous ___ weeks, but has looked for work sometime in the recent past. Available/willing/not made/six, Available/willing/ not made/four, Available/ willing/made/six, Not available, not willing, not made, four.
Available/willing/ not made/four
***Fall 2019: Question 13. The value of Net Exports is ____. A. $1 billion B. $2 billion C. $3 billion D. $5 billion E. $7 billion
B. $2 billion
***Summer 2019: Question 17. Refer to the table above. Suppose that 2017 is the base year. The value of Real GDP is ____ in 2018. A. $2,202.50 B. $2,360.00 C. $2,373.75 D. $2,542.50
B. $2,360.00
***Summer 2019: Question 12. Refer to the table above. Suppose that the value of depreciation is $2 billion during 2018. What is the value of net investment during 2018? A. $2 billion B. $4 billion C. $6 billion D. $8 billion
B. $4 billion
The US dollar exchange rate increased from $0.89 Canadian in June 2009 to $0.96 Canadian in June 2010, and it decreased from 83.8 euro cents in January 2009 to 76.9 euro cents in January 2010. The value of the Canadian dollar in June 2009 was ___? The value of the Canadian dollar in June 2010 was ___? Did the Canadian dollar depreciate or appreciate? A. 1.13/1.05/appreciated B.) 1.12/1.04/depreciated C. 1.12/1.04/appreciated D. 1.13/1.05/depreciated
B. 1.12/1.04/depreciated
Suppose that Real GDP is growing at 4.3% per year, and that Real GDP Per Capita is growing at 2.9% per year. This implies that the population is growing at an approximate rate of ____. A. 0.4% per year B. 1.4% per year C. 4.6% per year D. 5.8% per year E. 7.2% per year
B. 1.4% per year
***Spring 2020: Question 24. In the table above, what inflation rate belongs in Space A? All answers are rounded to the nearest tenth. A. 1.0% B. 1.5% C. 2.0% D. 2.5% E. 3.0%
B. 1.5%
***Fall 2019: Question 25. The inflation rate in 2019 is approximately ____. Round your answer to the nearest one-tenth of one percent. A. 5.69% B. 9.40% C. 13.03% D. 18.80% E. 24.93%
B. 9.40%
Which components of aggregate expenditure are influenced by Real GDP? A. Consumption expenditure, government expenditure, investment, and imports B. Consumption expenditure and imports C. Investment, exports, and imports D. Consumption expenditure, investment, and imports
B. Consumption expenditure and imports
True or False: If the Real GDP growth rate is greater than the population growth rate, Real GDP per person is shrinking. A. True B. False
B. False
True or False: The production of marijuana is not included in GDP calculations, because it is considered immoral. A. True B. False
B. False
True or False: When an individual retires after the age of 65, they are no longer counted as part of the working-age population. A. True B. False
B. False
What is fiscal policy, who makes it, and what is it designed to influence? ______—the use of the federal budget to achieve macroeconomic objectives such as full employment sustained economic growth, and price level stability—is made by ______ on an annual timeline. A. Fiscal policy and monetary policy are/ the President, Chairman of the Fed, and Congress. B. Fiscal policy is/ the President and Congress. C. Fiscal policy is/ the President, Vice-President, Cabinet, Chairman of the Fed, and Congress D. Fiscal policy and monetary policy are/ the President, Vice-President, Cabinet, Chairman of the Fed, and Congress
B. Fiscal policy is/ the President and Congress
How can the federal government use discretionary fiscal policy to stimulate the economy? An economy is experiencing a recessionary gap. The government can ____. A. Increase expenditure or cut taxes to increase short-run aggregate supply. B. Increase expenditure or cut taxes to increase aggregate demand. C. Raise taxes to decrease long-run aggregate supply. D. Raise taxes or decrease the quantity of money to decrease long-run aggregate supply.
B. Increase expenditure or cut taxes to increase aggregate demand.
An increase in taxes on labor income shifts the labor supply curve ____ and the ____. A. Rightward/before-tax wage rate rises B. Leftward/after-tax wage rate falls C. Leftward/ before-tax wage rate does not change D. Leftward/after-tax wage rate rises E. Leftward/after-tax wage rate does not change
B. Leftward/after-tax wage rate falls
***Fall 2019: Question 36. In the graph above, which of the following points depicts an economy that is in Long-Run Macroeconomic Equilibrium? A. Point F B. Point K C. Point I D. Point H
B. Point K
When calculating U.S. GDP according to the Expenditure Approach, newly constructed homes are included as ____. A. Government Purchases B. Private Investment Spending C. Net Exports D. Consumer Spending
B. Private Investment Spending
An individual is considered unemployed if she does not have a paid job and one of three conditions is met. Which of the options below is NOT one of those three conditions? A. She has applied for a job in the past four weeks. B. She is receiving unemployment benefits from the government. C. She is waiting to start a new job within the next 30 days. D. She is waiting to hear back from an employer who recently laid her off.
B. She is receiving unemployment benefits from the government
Courtney does not currently have a paid job, but she is waiting to start a new job next week. Courtney is classified as ____. A. Employed B. Unemployed C. Not in the Labor Force D. Not in the Working-Age Population
B. Unemployed
The U.S. dollar exchange rate increased from $0.89 Canadian in June 2009 to $0.96 Canadian in June 2010, and it decreased from 83.8 euro cents in January 2009 to 76.9 euro cents in January 2010. Between June 2009 and June 2010, the U.S. dollar ______ against the Canadian dollar. Between January 2009 and January 2010, the U.S. dollar ______ against the euro. A. depreciated/ appreciated B. appreciated/ depreciated C. depreciated/ depreciated D. appreciated/ appreciated
B. appreciated/ depreciated
Suppose that the economy is initially in long-run macroeconomic equilibrium, and that the real interest rate rises. As a result, Real GDP will _____ in the short run and _____ in the long run. A. decrease/ decrease even further B. decrease/ increase back toward its initial position C. increase/ increase even further D. increase/ decrease back toward its initial position
B. decrease/ increase back toward its initial position
A fall in the expected future exchange rate ______ the demand for U.S. dollars. A decrease in the U.S. demand for imports _______ the demand for U.S. dollars. A. decreases / increases B. decreases / does not change C. increases / decreases D. increases / does not change
B. decreases / does not change
What makes the demand for U.S. dollars change? A decrease in world demand for U.S. exports ______ the demand for U.S. dollars. A fall in the U.S. interest rate differential ______ the demand for U.S. dollars. A. increases/ increases B. decreases/decreases C. does not change/ decreases D. decreases/increases
B. decreases/decreases
Even if Gross Domestic Product were a perfect measure of production, it would not be a perfect measure of the standard of living for three reasons. Which of the following is NOT one of these three reasons? A. leisure time B. depreciation C. crime D. pollution
B. depreciation
Intermediate goods are not directly included in GDP calculations in an attempt to avoid ____. A. capturing government transfer payments B. double counting C. capturing physical capital D. A and B E. A and C
B. double counting
Suppose that the value of household wealth decreases due to falling stock prices. As a consequence, the equilibrium real interest rate will ____, and the equilibrium quantity of loanable funds will ____. A. fall/ decrease B. fall/ increase C. rise/ decrease D. rise/ increase
B. fall/ increase
A ____ can issue bonds, and a ____ can issue shares of stock. A. government or a corporation/ government or a corporation B. government or a corporation/ corporation C. government/ government or a corporation D. government/ corporation
B. government or a corporation/ corporation
GDP calculations include the value of ____ investment, because GDP should capture ____. A. net/ all physical capital that is produced B. gross/ all physical capital that is produced C. net/ only new (not replacement) physical capital that is produced D. gross/ only new (not replacement) physical capital that is produced
B. gross/ all physical capital that is produced
When calculating Gross Domestic Product, the value of ____ investment is included, because GDP should capture ____. A. net/ the total amount of physical capital produced B. gross/ the total amount of physical capital produce C. net/ only the increase in the size of the physical capital stock D. gross/ only the increase in the size of the physical capital stock
B. gross/ the total amount of physical capital produced
How can the federal government use discretionary fiscal policy to stimulate the economy? An economy is experiencing a recessionary gap. The government can ______. A. increase expenditure or cut taxes to increase short-run aggregate supply B. increase expenditure or cut taxes to increase aggregate demand C. raise taxes to decrease long-run aggregate supply D. raise taxes or decrease the quantity of money to decrease long-run aggregate supply
B. increase expenditure or cut taxes to increase aggregate demand
Hiring a neighbor's high school-aged son to babysit, but not reporting it for tax purposes, does not get counted in GDP, because... A. it is household production. B. it is underground economic activity C. it is on the "black market." D. it occurs during the babysitter's leisure time.
B. it is underground economic activity.
When production and the price level are both rising, Real GDP will increase by ____ than Nominal GDP, because ____ captures both the increase in production and the increase in the price level. A. more/ Real GDP B. less/ Nominal GDP C. more/ Nominal GDP D. less/ Real GDP
B. less/ Nominal GDP
When calculating GDP according to the Expenditure Approach, which of the following items should appear in the consumer spending category? A. purchasing a new home B. paying a college tuition bill C. purchasing a historic home D. buying a used textbook on Amazon
B. paying a college tuition bill
The working-age population is the total number of ____ aged ____ years and over who are not in jail, hospital, or some other form of institutional care or in the U.S. Armed Forces. A. graduates/ 20 B. people/ 16 C. people/ 18 D. workers/ 18
B. people/ 16
Automatic stabilizers are defined as ___? A. actions taken by an act of Congress to stabilize the economy. B. policy that stabilizes without the need for action by the government. C. discretionary policy taken to stabilize the economy. D. actions taken by the President without Congressional consent to stabilize the economy. E. policy that has no multiplier effects.
B. policy that stabilizes without the need for action by the government.
Whenever inflation is taking place, the value of Real GDP will grow ____ than the value of Nominal GDP, because Real GDP calculations ____ the effect of inflation. A. more quickly/ remove B. slower/ remove C. slower/ include D. more quickly/ include
B. slower/ remove
Suppose that Kyle has just lost his job as a bagger at Target, because Target and other retail stores decide to eliminate the bagger position in an attempt to cut down on plastic waste. He is ____. A. naturally unemployed B. structurally unemployed C. cyclically unemployed D. frictionally unemployed
B. structurally unemployed
Suppose that Tracy just lost her job as a cashier at Publix, because Publix and other grocery stores shift toward to mandatory self-checkout. Tracy is ____. A. not unemployed B. structurally unemployed C. cyclically unemployed D. frictionally unemployed
B. structurally unemployed
Which of the following is an example of investment? A. a person adding money to her retirement fund B. the purchase of a new espresso machine by Starbucks C. a person depositing $100 a week into her savings account D. a person's annual medical checkup
B. the purchase of a new espresso machine by Starbucks
The United States' Gross Domestic Product includes all products that are produced ____, and the United States' Gross National Product includes all products that are produced ____. A. within the United States/ within the United States B. within the United States/ by U.S. firms C. by U.S. firms/ within the United States D. by U.S. firms/ by U.S. firms
B. within the United States/ by U.S. firms
Which components of aggregate expenditure are influenced by real GDP? A.) Consumption expenditure, investment, and imports B.) Consumption expenditure and imports C.) Consumption expenditure, government expenditure, investment, and imports D.) Investment, exports, and imports.
B.) Consumption expenditure and imports
The following events have occurred at times in the history of the United States: 1.) A deep recession hits the world economy 2.) The world oil price rises sharply 3.) US businesses expect future profits to fall. Event 3: A.) Increases aggregate demand B.) Decreases aggregate demand C.) Increase short-run aggregate supply D.) Decreases aggregate demand and short-run aggregate supply
B.) Decreases aggregate demand
Canada trades with the United States. Explain the effect of each of the following events in Canada's aggregate demand. When the government of Canada cuts income taxes, Canada's aggregate demand _____. When the United States experiences strong economic growth, Canada's aggregate demand____. When Canada sets new environmental standards that require power utilities to upgrade their production facilities, Canada's aggregate demand ____. A.) Increase/does not change B.) Increase/increases C.) Decreases/does not change D.) Decreases/increases
B.) Increase/increases
Canada trades with the United States. Explain the effect of each of the following events in Canada's aggregate demand. When Canada sets new environmental standards that require power utilities to upgrade their production facilities, Canada's aggregate demand ____. A.) Does not change B.) Increases C.) Decreases
B.) Increases
Short-run macroeconomic equilibrium occurs when the quantity of ____ demanded equals the quantity of ____ supplied at the point of intersection of the ___ curve and the ____curve. A.) Output/output/MD/MS B.) Real GDP/real GDP/AD/SAS C.) Loanable funds/loanable funds/DLF/SLF D.) Reserves/reserves/RD/RS
B.) Real GDP/real GDP/AD/SAS
Choose the correct statement about the LAS curve. A.) The LAS curve shifts rightward when the money wage rate falls B.) The LAS curve is vertical because potential GDP is independent of the price level C.) The LAS shifts rightward when the SAS curve shifts rightward and shifts leftward when the SAS curve shifts leftward D.) Along the LAS curve the money wage rate is constant and the real wage rate rises as the price level rises.
B.) The LAS curve is vertical because potential GDP is independent of the price level
***Spring 2020: Question 29. Assuming that nothing else changes, an increase in the price level is represented by a movement from... A.) point A to point B. B.) point B to point A. C.) AD1 to AD2. D.) AD2 to AD1.
B.) point B to point A
In an economy, when disposable income increases from 400 to 500, consumption expenditure increases from 420 billion to 500 billion. Calculate the marginal propensity to consume, the change in saving, and the marginal propensity to save. A.)0.60/30/0.30 B.) 0.80/20/0.20 C.)0.75/25/0.25 D.) 0.80/45/0.20
B.)0.80/20/0.20 *******Partial
***Summer 2019: Question 30. Refer to the table above. Suppose that the value of disposable income is $30,000. The value of saving will be ____. A. $0 B. - $4,000 C. - $2,000 D. $4,000
C. - $2,000
The table shows the receipts and the outlays of a nation at each level of real GDP. What is the budget deficit when real GDP is $4 trillion? When real GDP is $4 trillion, the budget deficit is $0.2 trillion. A. -0.2 B. 0.3 C. 0.2 D. -0.3
C. 0.2
***Fall 2019: Question 24. The CPI in 2019 is approximately _____. Round your answer to the nearest one-tenth of one percent. A. 107.32 B. 113.03 C. 118.80 D. 124.93 E. 127.60
C. 118.80
Suppose that Real GDP is growing at 7.3% per year, and that the population is growing at 2.3% per year. This implies that Real GDP per person will double in approximately ____ years if current trends continue. A. 10 B. 12.5 C. 14 D. 17.5 E. There is too little information.
C. 14
The table shows the amounts held as the various components of M1 and M2. A. 265/1330 billion B. 275/1200 billion C. 285/1220 billion D. 285/1200 billion
C. 285/1220 billion
***Fall 2019: Question 18. Based on the information provided above, the labor force participation rate is approximately ____. Round your answer to the nearest one-tenth of one percent. A. 42.9% B. 51.2% C. 66.7% D. 71.3% E. 76.8%
C. 66.7%
***Spring 2020: Question 18. Refer to the macroeconomic data provided above. What is the employment-to-population ratio? All answers are rounded to the nearest tenth of a percent. A. 40.0% B. 50.0% C. 66.7% D. 75.0% E. 80.0%
C. 66.7%
***Summer 2019: Question 18. Refer to the table above. Suppose that 2017 is the base year. The growth rate of Real GDP is ____ in 2018. Round your answer to the nearest one-hundredth of one percent. A. 5.67% B. 6.89% C. 7.15% D. 7.78% E. 15.44%
C. 7.15%
The Fed is the lender of last resort, which means that if ____ is short of reserves, it can borrow from the ____. A. The Fed/government B. A bank/ government C. A bank/Fed D. The Fed/Bank of the International System
C. A bank/Fed
Fiscal policy attempts to achieve all of the following objectives except ______. A. Sustained economic growth B. Full employment C. A stable money supply D. Price level stability
C. A stable money supply
Suppose that the U.S. economy is initially in Long Run Macroeconomic Equilibrium. An increase in the value of the U.S. Dollar will lead the U.S. ____ curve to shift and create a(n) ____ in the short run. A. Short Run Aggregate Supply/ recessionary gap B. Short Run Aggregate Supply/ expansionary gap C. Aggregate Demand/ recessionary gap D. Aggregate Demand/ expansionary gap
C. Aggregate Demand/ recessionary gap
General Motors, an American company, produces cars at a factory in Colombia. Cars produced at this factory will be counted in the ____ GDP and the ____ GNP. A. American/ American B. American/ Colombian C. Colombian/ American D. Colombian/ Colombian
C. Colombian/ American
The two main official measures of money in the United States ______ really money. A. currency and M2/ are B. M1 and M2/ are not C. M1 and M2/ are D. M2 and M3/ are not
C. M1 and M2/ are
Professor Knight's grandmother is 99 years old and does not have a paid job. She is also not looking for work. She is classified as ____. A. Employed B. Unemployed C. Not in the Labor Force D. Not in the Working-Age Population
C. Not in the Labor Force
Control of monetary policy rests with...? A. Congress B. The US Treasury C. The Federal Reserve D. The controller of the currency E. The President
C. The Federal Reserve
If the Fed buys U.S. government securities, A. Discount rate will rise B. The federal funds rate will rise C. The federal funds rate will fall D. Bank reserves will decrease E. The discount rate will fall
C. The federal funds rate will fall
The Fed is the lender of last resort, which means that if _____ is short of reserves, it can borrow from the _____. A. the Fed/ government B. a bank/ government C. a bank/ Fed D. the Fed/ Bank of International System
C. a bank/ Fed
Which of the following goods is considered an intermediate good? A. a factory that produces batteries for electric cars B. a work computer that is used by a data scientist C. a flat panel display that is installed in a new tablet D. a newly constructed home E. None of the above
C. a flat panel display that is installed in a new tablet
Fiscal policy attempts to achieve all of the following objectives except ______. A. sustained economic growth B. full employment C. a stable money supply D. price level stability
C. a stable money supply
The central bank of the United States performs many functions, one of which is that it _______. A. provides debt counseling for individuals B. acts as a bank to the Congress and Administration C. acts as a bank's bank. D. provides safety deposit boxes for citizens with assets over $ 200 million
C. acts as a bank's bank.
Professor Knight sends his ironing to a local dry cleaners each week. His sister's ironing is done by her husband. The ironing services that Professor Knight consumes ____ in GDP calculations, and the ironing services that his sister consumes ____ in GDP calculations. A. are included/ are included B. are not included/ are not included C. are included/ are not included D. are not included/ are included
C. are included/ are not included
Goods and services such as environmental quality, leisure time, and household production are not included in GDP because they are not ___. A. for consumption B. productive activities C. bought in markets D. really durable goods
C. bought in markets
Consider the market for loanable funds. When the government spends more than it collects in taxes and runs a budget deficit, the ____ will shift to the ____, and the real interest rate will ____. A. supply of loanable funds/ left/ rise B. supply of loanable funds/ right/ rise C. demand for loanable funds/ right/ rise D. supply of loanable funds/ right/ fall E. demand for loanable funds/ left/ fall
C. demand for loanable funds/ right/ rise
The exchange rate between the United States and Japan A. consistently decreases over time. B. does not exist. C. fluctuates, sometimes rising and sometimes falling. D. is fixed so it does not change. E. consistently increases over time.
C. fluctuates, sometimes rising and sometimes falling
When the Fed buys government securities, banks' reserves ________, the quantity of money ________, and the federal funds rate ________. A. increase/ increases/ rises B. increase/ decreases/ rises C. increase/ increases/ falls D. decrease/ decreases/ rises E. decrease/ increases/ falls
C. increase/ increases/ falls
Balance of payments accounts are the accounts in which a nation records its _____. A. inflation rate and interest rate B. foreign exchange reserves, borrowing and lending C. international trading, borrowing and lending D. foreign exchange reserves
C. international trading, borrowing and lending
When calculating GDP, the value of intermediate goods ____ directly included in an attempt to ____. A. is/ avoid double counting B. is/ properly weight the value of different goods C. is not/ avoid double counting D. is not/ properly weight the value of different goods
C. is not/ avoid double counting
When households expect their incomes to rise in the near future, they tend to save ____, and the ____ loanable funds ____. A. less/ demand for/ decreases B. more/ supply of/ increases C. less/ supply of/ decreases D. less/ supply of/ increases E. more/ demand for/ increases
C. less/ supply of/ decreases
Suppose that the marginal propensity to consume is 0.8. If there is an increase in autonomous spending of $50 billion, equilibrium aggregate expenditure will increase by... A. no less than $250 billion. B. exactly $250 billion. C. no more than $250 billion. D. More than two answers above must be true. E. None of the above answers is true.
C. no more than $250 billion.
A financial institution that uses retirement contributions of firms and workers to purchase stocks and bonds is referred to as a(n) ____. A. commercial bank B. insurance company C. pension fund D. government-sponsored mortgage lender
C. pension fund
Gross Domestic Product is most specifically a measure of ____. A. national wealth B. business profitability C. production D. the standard of living
C. production
***Spring 2020: Question 31. Refer to the graph above. Suppose that investments in infrastructure increase Potential GDP by $0.2 trillion. This would create a(n) _____ gap, and wages paid to productive inputs would be expected to ____. A. inflationary/ fall B. inflationary/ rise C. recessionary/ fall D. recessionary/ rise
C. recessionary/ fall
***Spring 2020: Question 32. Refer to the graph above. Suppose, instead, that there is an increase in personal income taxes. This would create a(n) _____ gap, and wages paid to productive inputs would be expected to ____. A. inflationary/ fall B. inflationary/ rise C. recessionary/ fall D. recessionary/ rise
C. recessionary/ fall
Suppose that the wealth of households increases. In the market for loanable funds, the equilibrium real interest rate ____, and the equilibrium quantity of loanable funds ____. A. falls/ decreases B. falls/ increases C. rises/ decreases D. rises/ increases
C. rises/ decreases
Suppose that a waiter becomes unemployed, because his skillset becomes obsolete with the rising popularity of online ordering. This waiter is _____. A. cyclically unemployed B. frictionally unemployed C. structurally unemployed D. seasonally unemployed
C. structurally unemployed
Control of monetary policy rests with __? A. Congress. B. the U.S. Treasury. C. the Federal Reserve. D. the Comptroller of the Currency. E. the President.
C. the Federal Reserve.
4. BMW (a German company) produces cars in the United States. These cars are included in ____ GDP calculations and in ____ GNP calculations. A. German/ German B. German/ the United States' C. the United States'/ German D. the United States'/ the United States'
C. the United States'/ German
The Consumer Price Index (CPI) suffers from a number of biases. Which of the following is NOT one of the CPI biases? A. the new goods bias B. the quality improvement bias C. the average pricing bias D. the commodity substitution bias
C. the average pricing bias
The Consumer Price Index suffers from a number of biases. Which of the following is NOT one of the CPI biases? A. new goods bias B. quality change bias C. the average pricing bias D. the commodity substitution bias
C. the average pricing bias
You are given the following data about an economy that has a fixed price level, no imports, and no taxes. 1.) Calculate the marginal propensity to consume 2.) Calculate the autonomous consumption expenditure 3.) Calculate saving at each level of disposable income 4.) Calculate the marginal propensity to save. A.) 0.60/10/-10/30/40/0.40 B.) 0.70/5/5/30/50/0.30 C.) 0.75/5/-5/20/45/0.25 D.) 0/75/10/-10/25/35/55/0.25
C.) 0.75/5/-5/20/45/0.25
Long-Run macroeconomic equilibrium occurs when real GDP ____ potential GDP - equivalently, when the economy is on its ___ curve. A.) exceeds/SAS B.) Exceeds/LAS C.) Equals/LAS D.) is less than/AD
C.) Equals/LAS
The multiplier means that an increase investment results in ____ aggregate expenditure that is ____ the increase in investment. A.) Decrease/smaller than B.) Increase/the same size as C.) Increase/larger than D.) Decrease/larger than E.) Increase/smaller than
C.) Increase/larger than
The aggregate demand curve slopes downward because____. A.) As the price level falls, expected future income increases B.) Of the wealth effect and the price level effect C.) Of the wealth effect and the substitution effect D.) As the price level falls, expected future profits increase.
C.) Of the wealth effect and the substitution effect
Suppose that there are NO taxes or imports. If the marginal propensity to consume is 0.75, a(n) ____ in autonomous spending will result in a $20 billion increase in equilibrium Real GDP. A. $5 billon decrease B. $20 billon increase C. $80 billon decrease D. $5 billon increase E. $80 billon increase
D. $5 billon increase
Suppose that the marginal propensity to consume is 0.8, and that there are no taxes and imports in the economy. A $10 billion decrease in autonomous spending will lead Real GDP to decrease by ____. A. $10 billion B. $12.5 billion C. $25 billion D. $50 billion
D. $50 billion
***Summer 2019: Question 13 Refer to the table above. Suppose that the value of depreciation is $3 billion during 2019. What is the value of gross investment during 2019? A. $3 billion B. $5 billion C. $6 billion D. $9 billion
D. $9 billion
***Summer 2019: Question 31. Refer to the table above. The value of the marginal propensity to consume is ____, and the value of the marginal propensity to save is ____. A. 0.5/ 0.5 B. 0.2/ 0.8 C. 0.6/ 0.4 D. 0.8/ 0.2 E. 0.4/ 0.6
D. 0.8/ 0.2
Suppose that the annual Real GDP growth rate is 5.2%, and the annual population growth rate is 2.1%. Real GDP per person will double in approximately ____ years. A. 9.59 B. 13.46 C. 19.37 D. 22.58 E. 33.33
D. 22.58
The table shows the amounts held as the various components of M1 and M2. The value of M1 is ____ billion and the value of M2 is ____ billion. A. 285/1200 B. 270/1201 C.275/1240 D. 280/1220
D. 280/1220
***Fall 2019: Question 19. Based on the information provided above, the employment-to population is approximately ____. Round your answer to the nearest one-tenth of one percent. A. 40.3% B. 51.2% C. 59.3% D. 62.7% E. 68.9%
D. 62.7%
***Spring 2020: Question 19. Refer to the macroeconomic data provided above. What is the labor force participation rate? All answers are rounded to the nearest tenth of a percent. A. 45.8% B. 55.0% C. 66.7% D. 73.3% E. 76.9%
D. 73.3%
Which of the following goods are NOT directly included when calculating US GDP? A. an iPhone that Apple produces in China B. American lumber that is used to produce new homes in Florida C. a Harley Davidson motorcycle that is produced in Wisconsin, but sold in Canada D. A and B E. A and C
D. A and B
The central bank of the United States performs many functions, one of which is that it ___? A. Provides debt counseling for individuals B. Provides general banking services for businesses and individual citizens C. Is responsible for paying all government employees D. Acts as a bank's bank
D. Acts as a bank's bank
Suppose that the U.S. economy is initially in Long Run Macroeconomic Equilibrium. A decrease in the real interest rate will lead the U.S. ____ curve to shift and create a(n) ____ in the short run. A. Short Run Aggregate Supply/ recessionary gap B. Short Run Aggregate Supply/ expansionary gap C. Aggregate Demand/ recessionary gap D. Aggregate Demand/ expansionary gap
D. Aggregate Demand/ expansionary gap
Suppose that the U.S. economy is initially in Long Run Macroeconomic Equilibrium. A reduction in the capital gains tax rate will lead the U.S. ____ curve to shift and create a(n) ____. A. Short Run Aggregate Supply/ recessionary gap B. Short Run Aggregate Supply/ inflationary gap C. Aggregate Demand/ recessionary gap D. Aggregate Demand/ inflationary gap
D. Aggregate Demand/ inflationary gap
If tax revenue is 230 billion and the government's outlays are 235 billion, then the budget...? A. Deficit is 5 billion and government debt will remain the same B. Surplus is 5 billion and government debt will decrease by 5 billion. C. Deficit is 5 billion and government debt will decrease by 5 billion D. Deficit is $5 billion and the government debt will increase by $5 billion E. Surplus is 230 billion and the budget deficit is 230 billion
D. Deficit is $5 billion and the government debt will increase by $5 billion
The central bank of the United States is the ___? A. Bank of the United States B. Bank of America C. Federal Reserve Bank of New York D. Federal Reserve System
D. Federal Reserve System
What is the central bank of the United States and what functions does it perform? The central bank of the United States is the ______. A. Bank of the United States B. Bank of America C. Federal Reserve Bank of New York D. Federal Reserve System
D. Federal Reserve System
What is fiscal policy, who makes it, and what is it designed to influence? ______long dash the use of the federal budget to achieve macroeconomic objectives such as full employment, sustained economic growth, and price level stability long dash is made by ______ on an annual timeline. A. Fiscal policy and monetary policy are/ the President, Vice-President, Cabinet, Chairman of the Fed, and Congress B. Fiscal policy is/ the President, Vice-President, Cabinet, Chairman of the Fed, and Congress C. Fiscal policy and monetary policy are/ the President, Chairman of the Fed, and Congress D. Fiscal policy is/ the President and Congress
D. Fiscal policy is/the President and Congress
Which of the following BEST describes why imports enter negatively in U.S. GDP calculations under the Expenditure Approach? A. Imports are not produced by American companies or workers. B. Imports compete with American produced goods C. Imports are not produced within the United States D. Imports appear in other components of Aggregate Expenditure, but represent production that does not occur in the U.S.
D. Imports appear in other components of Aggregate Expenditure, but represent production that does not occur in the U.S.
Which of the following statements best describes why GDP is calculated using market values of the goods and services that are included? A. Exports exhibit many different final prices, because they are sold in several different countries with different currencies. B. Production includes gross investment, which has a clear market price C. Imports are sold at a unique price, denominated in U.S. Dollars. D. Many different goods and services are produced, and a single measure of production requires a way to weight "apples and oranges"
D. Many different goods and services are produced, and a single measure of production requires a way to weight "apples and oranges"
Which of the following is a reason that the unemployment rate overstates the problem of joblessness in the economy? A. underemployment B. marginally attached workers C. discouraged workers D. None of the above
D. None of the above
An individual who does not have a paid job may be counted as unemployed for all of the following reasons EXCEPT ... A. They have applied for a job within the past four weeks. B. They are waiting to hear from an employer who recently laid them off. C. They are waiting to start a new job in 30 days D. They are working for free in a household job.
D. They are working for free in a household job.
If tax revenue is $230 billion and the government's outlays are $235 billion, then the budget A. deficit is $5 billion and government debt will remain the same. B. surplus is $5 billion and government debt will increase by $5 billion. C. deficit is $5 billion and government debt will decrease by $5 billion. D. deficit is $5 billion and government debt will increase by $5 billion. E. surplus is $230 billion and the budget deficit is $235 billion.
D. deficit is $5 billion and government debt will increase by $5 billion.
Stella Artois (a Belgian company) produces beer in Colombia. This beer ____ in the Belgian GDP, and it ____ in the Belgian GNP. A. counts/ does not count B. counts/ count C. does not count/ does not count D. does not count/ counts
D. does not count/ counts
Suppose that the U.S. economy is initially in Long Run Macroeconomic Equilibrium. An appreciation of the U.S. Dollar will lead the U.S. price level to ____ in the short-run, and the U.S. price level to ____ in the long run. A. rise/ rise further B. rise/ fall back toward its initial level C. fall/ rise back toward its initial level D. fall/ fall further
D. fall/ fall further
Suppose that Carlos just graduated from UF with his Master's in Economics. He earned a 3.95 GPA, and his resume is full of impressive internship experience. Carlos is currently unemployed, but is looking for the right first full-time job. Carlos is ____. A. not unemployed B. structurally unemployed C. cyclically unemployed D. frictionally unemployed
D. frictionally unemployed
A person is NOT in the labor force if they are ____. A. unemployed B. between the ages of 16 and 19 C. over 65 years of age D. in the working-age population, but neither employed nor unemployed
D. in the working-age population, but neither employed nor unemployed
A flexible exchange rate is one that _______. It works _______. A. follows a path determined by a decision of the government or the central bank/by central bank intervention in the foreign exchange market B. sets the exchange rate by decision of the government or the central bank/ by central bank intervention in the foreign exchange market to block the unregulated forces of demand and supply C. is determined by demand and supply in the foreign exchange market/ with no direct intervention by the central bank unless the exchange rate falls below or rises above a target value D. is determined by demand and supply in the foreign exchange market/ with no direct intervention by the central bank
D. is determined by demand and supply in the foreign exchange market/with no direct intervention by the central bank
When calculating Gross Domestic Product, the value of the milk that is used to make a latte ____ directly included, and the value of new tires that are installed on a new Ford truck ____ directly included. A. is/ is B. is/ is not C. is not/ is D. is not/ is not
D. is not/ is not
When calculating GDP according to the Expenditure Approach, the value of government assistance to needy families ____ included, because these payments are referred to as _____. A. is/ government purchases B. is not/ government purchases C. is/ transfer payments D. is not/ transfer payments
D. is not/ transfer payments
When Real GDP is greater than equilibrium Real GDP, aggregate expenditure is ____ than Real GDP, and inventories are ____. A. greater/ growing B. greater/ shrinking C. less/ shrinking D. less/ growing
D. less/ growing
Consider the market for loanable funds. When the interest rate falls, ____ investment projects are profitable, leading to a(n) ____ in the quantity of loanable funds demanded. A. less/ decrease B. less/ increase C. more/ decrease D. more/ increase
D. more/ increase
The current account is the record of receipts from ___ other countries, minus ___ other countries, plus the net amount of ___ received from and paid to other countries. A. record of foreign investment in/transfer payments to/ capital B. the sale of goods and services to other countries/ payments for goods and services bought from/ interest and transfers C. payments for goods and services bought from/ the sale of goods and services to other countries/ wages and transfers D. official lending to/ record of foreign investment in/ interest and rents
D. official lending to/ record of foreign investment in/ interest and rents
When calculating GDP according to the Income Approach, the value of net taxes enters ____, and the value of depreciation enters ____. A. negatively/ negatively B. positively/ negatively C. negatively/ positively D. positively/ positively
D. positively/ positively
Deflation is a situation in which the ____ is ____, and the inflation rate is ____. A. input cost/ rising/ positive B. interest rate/ falling/ negative C. interest rate/ rising/ positive D. price level/ falling/ negative
D. price level/ falling/ negative
Suppose that consumers expect their incomes to rise in the coming months. This will lead the aggregate expenditure line to shift ____ and the equilibrium value of Real GDP to ____. A. downward/ decrease B. downward/ increase C. upward/ decrease D. upward/ increase
D. upward/ increase
The Aggregate Expenditure line has a positive vertical intercept, because.... A. when there is more disposable income, individuals and firms spend more. B. the fraction of disposable income that consumers spend is the mpc. C. the mpc and the mps must sum up to one. D. when there is no disposable income, individuals and firms still spend.
D. when there is no disposable income, individuals and firms still spend.
An economy has no imports and no taxes. The marginal propensity to save is 0.4. A ____ increase in autonomous expenditure increases equilibrium expenditure by 60 billion. The multiplier is ____. A.) 38 billion/24 B.) 96 billion/0.63 C.) 150 billion/2.50 D.) 24 billion/2.50
D.) 24 billion/2.50
***Spring 2020: Question 28. Assuming that nothing else changes, an increase in personal income taxes is represented by a movement from ... A.) point A to point B. B.) point B to point A. C.) AD1 to AD2. D.) AD2 to AD1.
D.) AD2 to AD1
Who in the following statements is a discouraged worker? Rachel does not find her current job profile interesting and is looking for alternate opportunities, Nick is changing his job because he has had differences with his co-workers in his current company, Ned is available to work and has been sending job applications whenever he sees any suitable opportunity, Dan is available to work but has not looked for a job in the past eight weeks because of repeated applications but no single offer.
Dan is available to work but has not looked for a job in the past eight weeks because of repeated applications but no single offer.
Household production, such as baking bread at home, is not included in GDP because it? Is not really production, Does not ad anything of value to GDP, Has better quality than the bread in the store, Has lower quality than the bread in the store, Does not involve market transaction
Does not involve market transaction
***Summer 2019: Question 8. Refer to the table above. Based on the information provided above, Gross Domestic Product equals ____, according to the ____ approach. A. $104 million/ expenditure B. $111 million/ income C. $118 million/ expenditure D. $136 million/ expenditure E. $143 million/ income
E. $143 million/ income
***Summer 2019: Question 39. Refer to the graph above. The economy is currently experiencing a(n) ____, and we should expect wages and the prices of other critical input goods to ____ as a result. A. $50 billion recessionary gap/ fall B. $650 billion expansionary gap/ rise C. $650 billion recessionary gap/ rise D. $600 billion expansionary gap/ fall E. $50 billion expansionary gap/ rise
E. $50 billion expansionary gap/ rise
***Fall 2019: Question 9. Suppose that the value of depreciation during 2018 was $2 billion. What was the value of gross investment during 2018? A. $2 billion B. $3 billion C. $4 billion D. $5 billion E. $6 billion
E. $6 billion
***Spring 2020: Question 9. Suppose that the value of depreciation during 2020 was $2 billion. What was the value of gross investment during 2020? A. $2 billion B. $3 billion C. $4 billion D. $5 billion E. $6 billion
E. $6 billion
***Spring 2020: Question 25. In the table above, what price index value belongs in Space B? All answers are rounded to the nearest tenth. A. 254.2 B. 255.0 C. 256.2 D. 256.9 E. 258.0
E. 258.0
The people of Coral Island buy only juice and cloth. The CPI basket contains the quantities bought in 2013 (the reference base year). The average household spent $16 on juice and $16 on cloth in 2013 when the price of juice was $2 per bottle, and the price of cloth was $4 per yard. In 2014, the price of juice is $7 per bottle, and the price of cloth is $8 per yard. The CPI in 2014 is ____. A. 175 B. 200 C. 225 D. 250 E. 275
E. 275
Which of the following is NOT as effect from a change in the federal funds rate? A. Change in the real interest rate B. Change in investment C. Change in aggregate demand D. Change in the quantity of money E. Change in government expenditures
E. Change in government expenditures
Suppose that there are taxes and/or imports. If the marginal propensity to save is 0.2, a $40 billion increase in autonomous spending will lead Real GDP to ____. A. increase by more than $200 billion B. decrease by less than $8 billion C. decrease by less than $200 billion D. increase by less than $8 billion E. increase by less than $200 billion
E. increase by less than $200 billion
When the Fed buys government securities, banks' reserves ________, the quantity of money ________, and the federal funds rate ________. A. decrease/ increases/ falls B. increase/ increases/ rises C. decrease/ decreases/ rises D. increase/ decreases/ rises E. increase/ increases/ falls
E. increase/ increases/ falls
How do households make saving decisions? The ____, the greater is the amount that a household decides to save. Greater a household's disposable income and the smaller a household's expected future income, Smaller the default risk and the greater a household's wealth, Higher the expected profit and the greater a household's disposable income, Smaller a household's expected future income and the greater a household's wealth.
Greater a household's disposable income and the smaller a household's expected future income
The firm that printed your textbook bought the paper from XYZ Paper Mills. This purchase of paper ____ part of GDP because paper is ____ good. Is not/an intermediate, Is/an intermediate, Is not/ a final, Is/a final
Is not/an intermediate
The unemployment rate is the percentage of the people in the ___who are unemployed. Age group of 20-60, Number of disabled, Number of women and children, Labor force
Labor force
Choose the correct equation. Net investment = gross investment - depreciation, Net investment- gross investment = depreciation, Net investment - depreciation = gross investment, Net investment = gross investment + depreciation
Net investment = gross investment - depreciation
The labor force is the number of people employed plus the____. Number unemployed, Working-age population, Number of women unemployed
Number unemployed
The firm that printed your textbook bought the paper from XYZ Paper Mills. The value of the paper is counted in GDP as _____? An intermediate good, An import because most paper is imported into the US, Investment, Part of the value of the textbook.
Part of the value of the textbook
The working-age population is the total number of ____ aged__ years and over who are not in jail, hospital, or some other form of institutional care or in the US Armed Forces. People/16, Graduates/20, Workers/18, People/15
People/16
The inflation rate is the percentage change in the ____ from one year to the next. Deflation is a situation in which the ___ is ___ and the inflation is ____. Price level/price level/falling/negative, Interest rate/interest rate/rising/positive, Price level/input cost/rising/positive, Interest rate/interest rate/falling/negative
Price level/price level/falling/negative
The sum of ____ is called national saving. Government budget surplus and subsidies, Private investment and government saving, Private saving and government saving, Consumption spending and household saving
Private saving and government saving
The crowding-out effect is the tendency for a government budget deficit to ___ the real interest rate and decrease ____. Lower/saving, Lower/saving by the full amount of the government budget surplus, Raise/investment, Raise/Investment by the full amount of the government budget deficit
Raise/investment
A government budget deficit ___ the real interest rate because ____. Raises/the supply of loanable funds decreases, Lowers/the supply of loanable funds increases, Raises/the demand for loanable funds increases, Lowers/the demand for loanable funds decreases
Raises/the demand for loanable funds increases
Although imperfect, which of the following is used as a measure of the standard of living? Nominal GDP X population, Real GDP/ population, Nominal GDP / person, Real GDP X population, Nominal GNP X population.
Real GDP/ population
Which of the following statement illustrates frictional unemployment? Robin is quitting his current job to find another that has better prospects, Thousands of employees were laid off during the 2008-09 recession, Many bank tellers lost their jobs due to the installation of ATM machines, Dave lost his job as he did not possess the technical skills required to do his duty.
Robin is quitting his current job to find another that has better prospects.
Net taxes are taxes paid to the government minus_____? Consumption expenditure of households, The cash transfers received from governments, Capital expenditure, Subsidies
The cash transfers received from governments
The labor force participation rate is the percentage of the ____ who are members of the labor force. Number of women, Working-age population, Number unemployed, Part-time workers
Working-age population
Give an example of US consumption expenditure. ____ is an example of US consumption expenditure. The Purchase of office supplies for a government office, Tuition paid by a student from Hong Kong to a University, The addition of flowers to a florist's inventory in anticipation of Valentine's Day, Your purchase of a tire for your car
Your purchase of a tire for your car
As measured, GDP omits which of the following? i. illegal sales of goods and services ii. Changes in the amount of leisure time iii. Household production of goods and services. i and ii, ii and iii, i and ii and iii, i only.
i and ii and iii
