module 5-11 quizzes
Suppose a simple economy produces only four goods and services: jackets, oil changes, chocolate chips, and chocolate chip cookies. Assume half of the chocolate chips are used in the production of the cookies. quantity price jackets 60 $45 oil changes 30 $30 chocolate chips 10,000 $0.10 chocolate chip cookies 200 $2 using the information in the table, nominal GDP for this economy equals
$4500
consider the information in the table for Atlanta, a country that produces only two products: oranges and shirts year 2009 2012 quantity of oranges 1800 2000 price of oranges $0.90 $1 quantity of shirts 110 110 price of shirts $30 $35 Real GDP for Atlanta for 2009 using 2012 as the base year equals
$5650
Your father earned $34,000 per year in 1984. To the nearest dollar, what is that equivalent to in 2014 if the CPI in 2014 is 2015 and in 1984 was 104
$70,288
If the inflation rate is 6% in the nominal interest rate is 4%, then the real interest rate is
-2%, which is the nominal interest rate minus the inflation rate
Suppose the reserve requirement is 5%. What effect on total checkable deposits in the economy if bank reserves increase by $60 billion
1,200 billion increase
As the economy near the end of an expansion, which of the following occurs
1. Wages are usually rising faster than prices 2. The profits of firms will be falling 3. Interest rates are usually rising
If the CPI in 2002 was 180 end the CPI in 2003 was 184 what was the inflation rate between those two years
2.22%
Suppose that you are available to go to work but have not looked for a job for at least the last four weeks because you believe that there aren't any jobs available. You'll be counted as
A discouraged worker
When a firm pays a wage that is higher than the market wage in order to increase worker productivity, the wage is called
An efficiency wage
If there is an increase in aggregate demand, which of the following is most likely to occur in the short run
An increase in the price level
How does a decrease in the price level affect the quantity of real GFP supplied in the long run
Changes in the price level do not affect the level of GDP in the long run
which country has comparative advantage output per day of work food clothing country A 6 3 country B 1 2
Country A has a comparative advantage in the production of food
If the Federal Reserve wanted to expand the money supply it could
Decrease the reserve requirement
As the price level in the United States increases, exports from the United States will also increase
False
Government savings is always positive
False
When the real GDP is equal to potential real GDP, there is no unemployment
False
money that has value Independent of its use as money is called fiat money
False
The aggregate demand curve shows the relationship between the price level and the quantity of real GDP demanded by
Government Firms Households
Which of the following is not a service the financial system provides for savers and borrowers
Guaranteeing savers high rates of return
The only way that the standard of living of the average person in a country can increases is by
Increasing production faster than population growth
During periods of high and variable inflation, which of the following is unlikely to occur
Individuals will want to make long term contracts in order to enjoy the benefits of higher prices.
Saving account balances, small denomination time deposits, noninstitutional money market fund shares are a component of
M2
After September 11, 2001, the federal government increased military spending on wars in Iraq and Afghanistan. Is this increase in spending considered fiscal policy?
No. the increase in defense after that date was designed to achieve homeland security objectives
Compared to the narrow definition of the money supply, M1, the broader definition of the money supply, M2, also contains
Savings account deposits, small denomination term deposits, and balances individual investors hold in money market mutual funds
The larger the reserve requirement, the
Smaller the potential deposit multiplier
In the early 1990s, the US government substantially reduced defense expert dentures. The resulting unemployment of defense related workers who possess skills no longer needed by the economy, is an example of
Structural unemployment
Stagflation occurs when
The economy experiences a combination of inflation and recession, usually resulting from a supply shock
In determining whether to borrow funds, firms compare the rate of return to expect to make on an investment with
The interest rate they must pay to borrow the necessary funds
How does the quantity theory provide an explanation about the cause of inflation
The quantity equation shows that if the money supply grows at a faster rate than real GDP, then there will be inflation
What would be the impact of counting as unemployment both discouraged workers and those who work part time but would prefer to work full-time
The unemployment rate would increase
The value of money as a medium of exchange is determined primarily by
The willingness of people accept it
If the price level increase, then
There will be a movement up along a stationary aggregate demand curve
An increase in the equilibrium quantity of loanable funds will result in an increase in both saving and investment
True
Cyclical unemployment is caused by firms reducing employment Due to decreased demand for their products during a recession
True
Which of the following statements is most consistent with a view that the economy has a self correctieve mechanism
When the economy is in a recession, falling resource prices and declining interest rates will direct the economy back to full employment
which of the following is an example of an expansionary fiscal policy
a decrease in taxes
which of the following goods and services would be excluded from personal consumption expenditures in the bureau of economic analaysis (BEA) statistis
a new house
household production and the underground economy
are not accounted for in the Bureau of Economic Analysis' estimates of GDP.
Every time the federal government runs a budget deficit, the Treasury must
borrow funds from savers by selling treasury securities
an increase in the long run aggregate supply curve shifts
both LRAS and SRAS to the right.
An increase in the real interest rate will
cause a movement along the demand curve for loanable funds
which of the following has contributed to more international trade
cheaper and more reliable communication the falling costs of shipping fast, cheap, and reliable air transportation
the purchase of 50 shares of stock is an example of investment spending
false
when an industry receives tariff or quota protection, there is no effect on other domestic industries
false
which of the following is not true of gdp
gdp includes both intermediate and final goods
how does the size of a countrys GDP affect the quality of life of the countrys people
generally, the more goods and services people have, the better off they are
the crowding out effect implies that budget deficits will
increase real interest rates and lower the future stock of private capital
The federal reserve bank of New York is always a voting member of the FOMC because
it carries out the policy directives of the FOMC
if prices rise over time, then real GDP will be
larger than nominal GDP in years before the base year
an increase in the money supply will
lower interest rates and shift the aggregate demand curve to the right
Money serves as a standard of deferred payment when
payments agreed to today but made in the future are in terms of money.
What is the best measure we have of a countrys standard of living
real GDP per capita
attempts to ensure there will be an efficient flow of funds from savers to borrowers is the objective of which monetary policy goal
stability of financial markets
which of the following arguments is used to justify protectionism
tariffs and quotas protect infant industries tariffs and quotas save jobs tariffs and quotas protect national security
From a trough to a peak, the economy goes through
the expansionary phase of the business cycle.
the federal funds rate is
the interest rate banks charge each other for overnight loans
Potential GDP
the level of real GDP attained when all firms are producing at capacity
Gross domestic product is best defined as
the market value of all final goods and services produced in a country during a period of time, typically a year
if the price level decrease
the money demand curve shifts to the left
refer to the table to determine which of the following statements is true outputs per hour work phones fitness bracelet switz 88 1414 canada 55 77
the opportunity cost for canada to produce one smartphone is 1.4 fitness bracelets
The term external economies refers to
the reduction of costs resulting from increases in the size of an industry in a given area.
If oil prices rise unexpectedly
the short-run aggregate supply curve will shift to the left
GDP measures the value of final goods and services in an economy or the value of the income earned in producing those goods and services in that economy for a specific time period
true
an increase in the price level will cause the money demand curve to shift to the right resulting in a lower interest rate
true
barriers to international trade include health and safety requirements that are more strictly imposed on imported goods than goods produced by domestic firms
true
increases in government spending will tend to shift the aggregate demand curve to the right
true
In a properly operating, dynamic economy,
we would expect to have some unemployment due to normal structural and frictional factors
