Test 4 Macro
Using the rule of 70 formula, how many years will it take for the annual growth rate to double if the annual growth rate for India is 6.6?
10.61
Which of the following are considered the two main parts of the Federal Reserve System?
A. and C. only
Which of the following is an important factor that causes the demand for loanable funds curve to shift? Changes in business opportunities Changes in real gross domestic product (GDP) Changes in the government's borrowing Changes in the aggregate price level A. and C. only
A. and C. only
Which of the following is an important factor that causes the supply of loanable funds curve to shift? If there are changes in private savings behavior If there are changes in the governments borrowing If there are changes in net capital inflows A. and C. only None of the above
A. and C. only
According to Monetarism,
All of the Above
In the 1960s, From January 1960 to January 1965, inflation was low. From January 1966 to January 1970, inflation was high. From January 1960 to January 1965, the unemployment rate was high. From January 1965 to January 1970, the unemployment rate was low. All of the above None of the above
All of the Above
The short-run Phillips curve (SRPC): Theory held true during the 1960s. Includes supply shocks and expected inflation rates. Is named after William Phillips. All of the above
All of the Above
Which of the following can a bank do?
All of the Above
Which of the following explains differences in economic growth rates among countries?
All of the Above
Which of the following is an important factor that causes the money demand curve to shift? Changes in banking institutions Changes in Real gross domestic product (GDP) Changes in banking technology Changes in the aggregate price level All of the above
All of the Above
Which of the following is an example of a long-term interest rate?
An interest rate on a two-year certificate of deposit
Which of the following economists are associated with Classical macroeconomics?
B. & D only ( Adam Smith and David Ricardo)
A bank's assets include bank deposits it holds
F
According to the Fisher effect, the real interest rate is affected by changes in expected inflation.
F
According to the convergence hypothesis, international differences in real gross domestic product (GDP) per capita will narrow overtime as long as countries have equal access to physical capital, human capital, and technology.
F
An example of a short-term interest rate would be an interest rate on a five-year certificate of deposit.
F
An example of infrastructure would be a computer.
F
An investment bank is a type of deposit-taking bank that specializes in issuing home loans.
F
Changes in government transfers and taxes has a direct effect on the economy.
F
Disinflation occurs when the overall aggregate price level decreases.
F
Economist Milton Friedman is associated with Keynesian Macroeconomics.
F
Interest rates on financial assets that mature several years in the future refer to short-term interest rates.
F
Money refers to the total value of financial assets in the economy.
F
The Federal Open Market Committee is an institution that oversees and regulates the banking system and therefore controls the monetary base.
F
The Federal Reserve was established in 1933 in response to the Great Recession.
F
The Great Moderation refers to the period in the US economy from 2007 to 2009.
F
The M2 is considered the narrowest definition of the overall money supply since it includes the most liquid assets.
F
The aggregate production function can exhibit diminishing returns to physical capital when both human capital and technology are allowed to increase.
F
The demand curve for loanable funds slopes upward.
F
The formula for real gross domestic product (GDP) per capita is the size of the population/real GDP.
F
The long-run Phillips curve (LRPC) is downward sloping in the long run.
F
The money supply curve shows how the nominal quantity of the money demand varies with the interest rate.
F
The nonaccelerating inflation rate of unemployment (NAIRU) is another name for actual rate of unemployment.
F
The reserve ratio refers to the bank's reserves held over its required reserves.
F
The supply of loanable funds curve is downward sloping
F
There is an indirect relationship between the quantity of loanable funds supplied and the interest rate.
F
When deflation is unexpected, borrowers are benefited and lenders are hurt.
F
Which of the following is a function of the Federal Reserve System?
NOT all of the Above
Which of the following is considered a role of money?
NOT currency in circulation
A commercial bank accepts deposits and is covered by the Federal Deposit Insurance Corporation (FDIC)
T
A function of the Federal Reserve System is to provide financial services to commercial banks such as clearing checks and holding reserves.
T
An example of commodity money would be crude oil.
T
At the equilibrium interest rate, the quantity of loanable funds demanded equals the quantity of loanable funds supplied.
T
Discretionary monetary policy is still considered an area of dispute among the Modern Consensus.
T
Economist David Ricardo contributed to Classical macroeconomics with his Principle of Comparative Advantage.
T
Gold, silver, tobacco, and shells have all been used as money at one time in the United States.
T
In the short run, there is a negative relationship between the inflation rate and the unemployment rate.
T
John Maynard Keynes was a strong proponent of fiscal policy to help stabilize the economy.
T
Labor productivity has increased overtime in the United States as a result of human capital.
T
Labor productivity is also referred to as real gross domestic product (GDP) per worker.
T
Long-run economic growth can be sustainable as long as technology is effective at finding alternatives to limited natural resources.
T
Nearly all macroeconomists believe that the government should not seek to balance the budget.
T
Rules set by the Federal Reserve that determine the minimum reserve ratio for a bank are reserve requirements.
T
The Federal Open Market Committee consists of the Board of Governors, the President of the New York Federal Reserve Bank in addition to five other regional Federal Reserve Bank presidents.
T
The concept of crowding out reduces overall investment spending in the economy.
T
The discount rate is known as the interest rate that the Federal Reserve charges on loans to banks.
T
The equilibrium point in the money market model is determined where the money supply curve intersects the money demand curve.
T
The expected inflation rate is considered the most important factor affecting the inflation rate
T
The federal funds market allows banks who fall short of the reserve requirement to borrow funds from banks with excess reserves.
T
The formula for the rate of return is equal to (Revenue from project − Cost of project) divided by the Cost of project multiplied by 100.
T
The government can support, regulate, and pay for infrastructure.
T
The interest rate is determined by the supply and demand for money according to the liquidity preference model of the interest rate.
T
The liquidity preference model shows how monetary policy works.
T
The loanable funds market includes many financial markets such as stock and bond markets.
T
The money demand curve is negatively sloped, which indicates that a higher interest rate leads to a higher opportunity cost of holding money and reduces the nominal quantity of money demanded.
T
The nonaccelerating inflation rate of unemployment (NAIRU) refers to the unemployment rate where inflation does not change overtime.
T
The opportunity cost of holding money is measured by the foregone return that could have been earned by holding other financial assets.
T
The size of the money multiplier is reduced when funds are held as cash rather than as checkable deposits.
T
Today, nearly all macroeconomists accept the natural rate hypothesis.
T
When there is deflation in the economy, it is more likely that interest rates will approach the zero bound.
T
