question

Which of the following is not a criterion for judging the result of an economic policy

answer

Employment

question

Carlo discovers when he studies for his macroeconomics tests at the bar, he earns better grades. He advises all students to study at the bar for similar results. Carlo his guilty of committing

answer

The fallacy of composition

question

If a wealthy woman marries the butler, quits paying him even if he still does the same job, and does not hire a new butler, then

answer

GDP definitely decrease

question

Which of the following is a topic studies in Macroeconomics

answer

The effect on economic growth if the government raises taxes

question

Economic growth is measured by the growth rate of

answer

Real GDP

question

An undergraduate student pays $ 475 for a three- credit course at Monroe College. After the official withdrawal date has elapsed, he drops the course (and cannot get back the $475). At this time, the $ 475 represents

answer

A sunk cost

question

Lower ticket prices would lead to more people attending ball games." This statement is

answer

A positive statement

question

The function of money are

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Medium of exchange, unit of account, and store of value

question

Barter requires the

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Exchange of goods and services directly for other goods and services

question

The word "fiat" is

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Used to describe today's money because it is money set by law

question

Which of the following is money

answer

Bank deposits

question

An official measure of money in the use is M1, which consists of the sum of

answer

Currency plus traveler's checks plus checkable deposits

question

A commercial bank is defined as

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A firm that is chartered to accept deposits and make loans

question

A commercial bank's reserves are equal to the amount of

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Currencies in the bank's vault plus its reserve account at the Federal Bank

question

Out of total deposits, banks keep on reserve as cash an average of about----- in cash

answer

4%

question

The Federal Reserve System regulates

answer

the quantity of money in the United States

question

The discount rate i.d.

answer

Interest rate that banks must pay when they borrow reserves from the Fed

question

New money is created in the US economy by

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Banks that create checkable deposits

question

A public authority that provides banking services to commercial banks and regulates financial institutions and markets is called a

answer

Central Bank

question

Because the federal reserve system is a central bank, it provides banking services to

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Commercial banks

question

The federal reserved is organized into

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12 district, dividing up the United States

question

The boards of directors of the Federal Reserve (FOMC) is

answer

A seven- member board, each one serving a 14-year term

question

Open market operations are defined as

answer

The buying and selling of securities by the Fed

question

Which of the following Federal Reserve banks caries out the decisions of the FOMC?

answer

The New York Federal Reserve bank

question

The three main policy tools the Federal Reserve System uses to influence the interest rate are setting the

answer

Discount rate, open market operations, and setting the required reserve ratio

question

Which of the following reduces the money multiplier?

answer

Bank customers hold some of the loan proceeds as a currency outside the banking system

question

The quantity of money decreases if

answer

The currency drain increases

question

A currency drain is

answer

An increase in currency held outside banks

question

Money market mutual funds

answer

Are included in M2 but not M1

question

The working age population includes

answer

Employed and unemployed people over the age of 16

question

In the Current Population Survey, a person is considered unemployed if the person

answer

Does not have a job and is actively looking for a job

question

Labor force includes people who

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Are actively seeking a job but do not have a job

question

When calculating the unemployment rate, the BLS counts those over 16 and in jail as

answer

Institutionalized and therefore not in the working-age population

question

The labor force participation rate indicates

answer

The willingness of working-age people to take jobs

question

A discouraged worker is

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Someone who does not have a job but has given up looking

question

Discouraged workers

answer

Would increase the unemployment rate if they were added to the number of unemployed workers

question

Part time workers are defined as people who are working

answer

Less than 35 hours per week

question

During a recession, the unemployment rate generally ----- and----- during an expansion

answer

Rises; falls

question

During the Great depression, the unemployment rate rose to a maximum of about

answer

25 percent

question

A business cycle has two turning points

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Through and peak

question

Bill has graduated from Monroe College with a degree in Accounting. The College's Career Services submitted his resume to several companies that Bill will visit the next two weeks. Bill is considered

answer

Frictionally unemployed

question

After the passage of the North American Free Trade Agreement (NAFTA), which made it less expensive to import goods from Mexico workers in some industries found their factories being relocated to Mexico to take advantage of lower labor costs. These workers experience what type of unemployment?

answer

Structural

question

Every summer Sarah works as a lifeguard at the YMCA. One summer ends, she returns to college as a full time student. After summer ends, Sarah is

answer

Not in the labor force

question

The type of unemployment that arises from a decrease in real GDP is called

answer

Cyclical unemployment

question

During a recession

answer

cyclical unemployment increases and real GDP decreases

question

Stagflation is defined as a period when

answer

real GDP decreases and the price level increases

question

The natural unemployment rate is the unemployment rate that exists when there is no

answer

Cyclical unemployment

question

The federal government has a budget surplus when

answer

Tax receipts exceeds government spending

question

When the tax revenue are equal to government spending, the situation is referred to

answer

A balanced budget

question

The annual budget is decided upon by the

answer

President of the United States and United State Congress

question

Discretionary fiscal policy is define as fiscal policy

answer

Initiated by act of Congress

question

When the economy faces an inflationary gap, an appropriate fiscal policy is to

answer

Decrease government expenditures

question

An example of automatic fiscal policy is

answer

Expenditure for unemployment compensation increasing as economic growth slows

question

To change the federal funds rate , the Fed

answer

Uses open market operations to change the quantity of money

question

When the Fed worries about inflation, it ----- federal funds rate and, in the short run---- the real interest rate

answer

Raises; raises

question

President Reagan often states that he preferred supply sides policies. Which of the following federal government policies would be supply side

answer

Lower taxes

question

When the economy is at full employment

answer

Real GDP is equal to potential GDP

question

For a household, the opportunity cost of not working is

answer

Real wage rate

question

The supply of labor is defined as the relationship between the real wage and the

answer

Quantity of labor supplied by households

question

Many economists argue that an incentive to save is

answer

A tax on consumption rather than on income

question

Encouraging international trade will

answer

Speed economic growth as workers specialize and trade with others

question

If the government increases unemployment benefits, then labor

answer

Supply curve shifts leftward

question

If the government raises income taxes, then the labor

answer

Supply curve shifts leftward

question

As technology advances

answer

The PPF shift outward

question

If a country is operating at a point of production efficiency

answer

It produces on its production possibility frontier curve

question

To help unscramble cause and effect, economists

answer

Must use the ceteris paribus assumption

question

Consider the market fur turkeys. In the US, because of Thanksgiving in the month of November

answer

There is an upward movement along the supply curve for turkeys

question

A regulation that sets the highest price at which it is legal to trade a good is a

answer

Price ceiling

question

Producers favor

answer

Price support; total revenue increases

question

The regulation that sets the lowest price at which it is legal to trade a good is

answer

Price floor

question

In 2002, President Bush imposed a tariff on imported steel. He did so in response to rent seeking by

answer

Domestic steel producers

question

What is the prisoners' dilemma

answer

Two prisoners acting in their own best interest harm their join interest

question

Depreciation is

answer

The decrease in the value of capital resulting from its use and obsolescence

question

If the real GDP increases over time, the cost of living will

answer

More information is needed to determine how the cost of living changes

question

If both the production of goods and services increase and prices rise, then the change in nominal GDP

answer

Definitely overstates the change in production

question

If the nominal interest rate is greater than the real interest rate

answer

Inflation must be occurring

question

the real interest rate is negative if the inflation rate

answer

Exceeds the nominal interest rate

question

Union introduced new costly regulations in the tuna market to protect workers. We would expect the equilibrium cost of tuna to---------- and the equilibrium quantity of tuna to--------

answer

Increase; decrease

question

For Jill to have a comparative advantage in the production of pins means that, relative to Jack, with the same resources

answer

Jill is relatively better at producing pins than at producing needles

question

A production possibility frontier diagram illustrates all of the following concepts except

answer

Unlimited wants

question

The price of Good C increases and as a result, the demand for good D increases. The two goods are

answer

Substitutes

question

If income increases and the demand for train rides decreases,

answer

Train rides are inferior good

question

For a commodity or token to be money, it must

answer

Be accepted in exchange for all other goods and services

question

During a recession, the unemployment rate generally------ and--------during an expansion

answer

Rises; falls

question

A production possibility frontier (PPF) diagram illustrates all of the following concepts except

answer

Unlimited wants

question

The price of good C increases and as a result, the demand for good D also increases. The two good C and D are

answer

Substitutes

question

Which of the following is a topic studied in macroeconomics

answer

The effect on economic growth if the government increases taxes

question

Monopolies arise when there are

answer

No close substitutes but there are entry barriers to the industry

question

Social interest

answer

regulation of a natural monopoly results in an inefficient level of output

question

A cartel is

answer

A collusive agreement among a number of firms

question

If the supply of money increases as a result of an open market--- of securities by the Fed, the interest rate will---

answer

purchase; decrease

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