question

Anything from which individuals receive utility or satisfaction

answer

Good

question

The satisfaction one receives from a good

answer

Utility

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Leftward shifter of

answer

Expectation of lower future income by households is a __ the AD curve

question

Increase; right

answer

Business optimism about future sales tends to __ investment expenditures, shifting the AD curve to the __

question

(8,742-8509/8509) x 100

answer

If Real GDP was $8,742 bil in year 2 and it had been $8,509 bil in year 1, what was the approximate economic growth rate during that period?

question

sum of the frictional unemployment rate and the structural

answer

An economy is producing its Natural Real GDP when the rate of unemployment is equal to the __ unemployment rate

question

What cost $100 in 1982 will on average cost $150 MORE in 2013

answer

Suppose that 1982 is the base year for the Consumer Price Index (CPI) and in 2013 the CPI was 250. What does "250" mean

question

Structurally

answer

Juan lost his job as a nuclear physicist working for a defense contractor. He can not find a job because no firms in the defense industry or any other industry are hiring people with his skills. Juan is __ Unemployed

question

SRAS Curve that move the economy to a long- run equilibrium point

answer

In a self- regulating economy, inflationary and recessionary gaps produce shifts of the

question

$1300

answer

Suppose that nondurable goods spending is $200 bil, durable goods spending is $400 bil, new residential housing spending is $500 bil and spending on services is $700 bil what does consumption equal?

question

see card

answer

Look at the following data: the frictional unemployment rate is 2%, the structural unemployment rate is 3.5%, and the actual unemployment rate is 9.5%. the natural unemployment rate is ( 3.5+2) % and the cyclical unemployment rate is (9.5-5.5)

question

increased

answer

Assume that Ms. Sawyers salary is $75,000 up from $70,000 last year, while the CPI is 225 this year, up from 220 last year. This means that Ms. Sawyers real income has __ since last year

question

The services of a real estate broker

answer

Which of the following is counted in GDP?

question

Producing less Real GDP than it does full employment

answer

If the natural unemployment rate is 5% and the current unemployment rate is 6%, then the economy is

question

Exports Minus Imports

answer

Net Exports equals

question

1750 to the early 1900's

answer

Classical economics refers to an era in the history of economics thought that stretched from about

question

a leftward shift of

answer

Suppose that a drop in stock prices makes people feel less wealthy. This would cause ___ the economy's AD curve

question

false

answer

As interest rates drop, households tend to borrow more and businesses tend to borrow less

question

False

answer

Countries with large GDP must also have a large per- capita GDP

question

False

answer

"Full employment" is said to exist when the actual unemployment rate is zero

question

false

answer

Discouraged workers are not counted as unemployed because they are working

question

False

answer

When foreign real national income rises, domestic real GDP falls, Ceteris Paribus

question

true

answer

In the US, compensation of employees is the largest component of national income

question

True

answer

Depreciation of the dollar against the Japanese yen makes Japanese goods more expensive for Americans

question

14, 7, 12

answer

Each of the governors of the Federal Reserve System is appointed for a term of ___ years. The Board of Governors is comprised of __ members and the FOMC is comprised of ___ members

question

Sell; Decrease

answer

Suppose that the current federal funds rate is below the federal funds target rate. in order to raise the feeral funds rate the Fed will ___ securities on the open market which will ___ the supply of reserves in the market for reserves, pushing the rate closer to the target rate

question

Shortage, Surplus, Down, Rise

answer

Suppose that the bond market and the money market both start out in equilibrium, then the Fed Reserve decreases the money supply. the result will be a __ in the money market and a ___ in the bond market, which will push bond prices___ and interest rates will ___ until a new equilibrium is reached

question

Store of Value, Medium of exchange, unit of account

answer

Which of the following is a correct listing of Money's functions?

question

M1+ Time deposits+ savings deposits+ money Market mutual funds

answer

M2 is comprised of

question

to set Tax rates

answer

Which of the following is not a function of the fed

question

Inverse; the interest rate

answer

The demand for $ curve illustrates the ___ relationship between the quantity demanded of money and ___

question

excess

answer

Reserves held beyond the required amount are called __ Reserves

question

the Fed, and now it is as if the money doesn't exist

answer

Suppose the Fed sells a 50k US Treasury security to martha, a member of the public. If martha writes a check to the fed in order to buy this security, the money in her checking will be transferred to

question

lower, rise, raises

answer

According to the Keynesian transmission mechanism, a rise in the money supply will __ the interest rate, causing a __ in investment demand, which then ___ real GDP

question

1914

answer

The Fed Reserve System began in

question

Expansionary Monetary Policy

answer

Suppose the money market is in the liquidity trap and that the economy is experiencing a recessionary gap. A Keynesian economist would advocate

question

Bank deposits at the Federal Reserve + Vault Cash

answer

Total Bank reserves =

question

increase by the amount of the purchase

answer

If the Fed purchases gov securities from abnks, the reserves of the banking system will immediately

question

Bank B; Remain Constant

answer

When a check is written on an account at Bank A and deposited in Bank B, the reserve account of __ will rise and reserves of the entire banking system will__

question

the Federal Reserve Bank of NY

answer

Open Market Operations are conducted by

question

%2.7 trillion

answer

In March 2014, M1 in the United States was $___ trillion

question

false

answer

The Federal Open Market Committee (FOMC) mets each and every month, each time on a tuesday

question

true

answer

The Price of bonds and interest rates have an inverse relationship

question

FALSE

answer

When a bank borrows money from the Fed, the interest rate that the bank pays the fed for that loan is called the Federal Fund Rate

question

False

answer

When a check is cleared against a bank, the bank will lose checkable deposits and gain reserves

question

True

answer

For a given bank, bank captial (net worth) equals assets minus liabilities

question

true

answer

Excess reserves are the amount by which total reserves exceed required reserves

question

False

answer

Required reserves are a set percentage of total reserves that must be held in cash in a banks vault or in the banks reserve account at the Fed

question

false

answer

The supply Curve for $ is usually horizontal

question

...

answer

Lowering the required reserve ratio raises the simple deposit multiplier

question

Increasing; decreasing; decreasing; increasing

answer

Expansionary fiscal policy actions include__ government spending and/or ___ taxes, while contractionary fiscal policy actions include __ government spending and/or __ taxes

question

gov expenditures are greater than tax revenue

answer

A budget deficit occurs when

question

Consumption is dependent upon disposable income

answer

Which of the following is a basic point in Keynes made about consumption?

question

1/(1-MPC)

answer

How is the multiplier expressed in terms of MPC

question

changes in gov expenditures and taxation to achieve particular economic goals

answer

Fiscal Policy refers to

question

Progressive; Proportional; Regressive; Regressive

answer

In the US, income taxes are a __ tax and medicare is a ___ tax, Sales are a ___ tax and property taxes are a ___ tax

question

increase output and lower prices

answer

Supply side economists believe reductions in marginal tax rates can

question

Transmission

answer

The period that elapses between the passage of legislation reducing taxes and the time the tax cut is put into effect is called the ___ lag

question

Consumption rises by less than disposable income rises

answer

Which statement is consistant with what Keynes believed about consumption and disposable income

question

Rise; Fall

answer

The AD curve shifts to the right with a __ in government purchases or a __ in taxes

question

Contractionary Fiscal policy

answer

Suppose Congress increases income taxes, this is an example of

question

17 trillion

answer

In April 2014, the public debt in the United States is approximately

question

Increases; AD to the left

answer

Suppose the economy's current AD and SRAS curves intersect to the right of Natural Real GDP, Keynesians might advise a policy of tax ___ to shift___

question

3%

answer

If the bottom half of all U.S. income tax payers were allowed to stop paying the income tax entirely and the top 50% continued to pay as they do now, tax revenues to the gov would drop by about

question

Away from; can

answer

John Maynard Keynes drew many economists ___ the classical view. the classical view held that a market economy___ regulate itself to avoid periods of excessive unemployment

question

true

answer

According to Keynes, the economy is inherently unstable and may get stuck in a recessionary gap.

question

false

answer

A structural deficit refers to that part of the deficit that exists as a result of a downturn in economic activity.

question

True

answer

When congress and the president agree to increase income taxes, this is an example of contractionary fiscal policy

question

false

answer

The Laffer curve shows the exclusively direct relationship that exists between tax rates and tax revenues.

question

shows relationship between interest rates and consumption

answer

Consumption Function

question

false

answer

A flat tax is another word for a regressive tax

question

true

answer

A simple Keynesian model is representative of a closed economy, with no foreign sector

question

false

answer

The wait and see lag is the period that elapses between the time fisca policy is enacted and the time it is put into effect

question

False

answer

A tax rate increase always leads to an increase in tax revenue for the government

question

better suited for the production of some goods than others

answer

A PPF is more likely to be a downward sloping curve that is bowed outward than a downward- sloping straight line because most resources are

question

decrease; increase

answer

An increase in the number of sellers of a product will__ the products market equilibrium price and___ the product's market equilibrium quantity

question

uses the word "demand" when he should use the word " quantity demanded"

answer

As the price of apples goes up, the demand for apples goes down" the author of this statement

question

Labor consists of the physical, but not mental, talents of people

answer

Which of the following statements is false

question

wants are greater than the limited resources available to satisfy these wants

answer

Scarcity

question

attainable but inefficient

answer

Points below the PPF are

question

decrease; increase

answer

A decrease in the wages paid to the workers producing good X will tend to __ good X's equilibrium price and __ good X's equilibrium quantity

question

the minimum wage will create a surplus of labor

answer

If the minimum wage law sets a wage floor above the equilibrium wage in the unskilled labor market,

question

attainable and productive efficient

answer

The point where the PPF intersects the horizontal axis(the horizontal intercept) represents a combination of goods that is

question

Supply; Leftward; Increase; Decrease

answer

Resource X is necessary to the production of good Y. if the price of resource X rises, the __ curve for good Y will shift __resulting in a ___ in the equilibrium price of Y and a ___ in the equilibrium quantity of Y

question

place more oil on the market this year, this shifting the present supply curve of oil rightward

answer

Oil producers expect that oil prices next year will be lower than oil prices this year, as a result, oil producers are most likely to

question

Market; Government

answer

in pure capitalism, economic decisions are determined by the ____ In pure socialism, economic decisions are made by the __

question

a; straight line if constant opportunity costs exist b; curve that is bowed outward if increasing opportunity costs exist.

answer

The PPF between goods X and Y will be a downward sloping

question

the highest valued alternative one forfeits to attend college

answer

the opportunity cost of attending college is

question

Marginal

answer

the synonym for additional

question

false

answer

A decrease in unemployment causes the PPF to shift outward ( to the right)

question

false

answer

Macroeconomics deals with issues involving large corporations, while microeconomics exclusively deals with issues involving small businesses

question

False

answer

Supply curves are always upward sloping

question

true

answer

If the government increased licensing requirements foe beauty salons, the supply curve for salon services would shift to the left.

question

False Mutha****a!

answer

Production possibility curves can shift outward but they do not shift inward

question

false

answer

In order for a price floor to be effective it must be set below the equilibrium price

question

false

answer

in economics, Capital is defined as financial assets such as stocks and bonds

question

true

answer

If variable X rises as variable Y falls, then X and Y have an inverse relationship

question

false

answer

An increase in demand means the same thing as an increase in quantity demanded

question

false

answer

When the price of bananas rises, the demand for bananas falls, all else constant

Macro – Flashcard Test Questions

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