question

Mathematically, how do you find the unemployment rate?

answer

Unemployment / Labor Force

question

The rate of unemployment when the economy is at its potential output is called the:

answer

Natural Rate of Unemployment

question

You have lost your job in an automobile plant because of the use of robots for welding on the assembly line. What type of unemployment are you experiencing?

answer

Structural Unemployment

question

In which phase of the business cycle will the economy most likely experience rising real output and falling unemployment?

answer

Expansionary Phase

question

A college graduate using the summer following graduation to search for a job would be what type of unemployment?

answer

Frictional Unemployment

question

What does MPC stand for?

answer

Marginal Propensity to Consume

question

The size of the MPC is assumed to be what?

answer

0-1

question

The multiplier effect means that:

answer

A small change in spending can be a big change in GDP.

question

An increase in business taxes would be what kind of effect on investment?

answer

Negative.

question

A real interest rate decrease would be what kind of effect on investment?

answer

Positive.

question

If business taxes are reduced, and the real interest rate increases, then

answer

It is in determinant because one is positive and one is negative.

question

As disposable income decreases, consumption:

answer

decreases.

question

If the consumption function shifts downward, and the shift was not caused by a tax change, then the saving schedule:

answer

increases.

question

Which would shift the consumption schedule upward?

answer

1. Change in weath 2. Expectations 3. Interest Rate

question

An inverse relationship between the rate of interest and the level of:

answer

Investment that is illustrated by the demand curve.

question

What could decrease the investment demand?

answer

1. Expected Rate of Return -Operating costs, business taxes -Bad things shift it to the left

question

The greater the MPS, the

answer

1. Small the multiplier 2. Smaller the MPC

question

A private closed economy includes:

answer

households and consumers

question

The equilibrium level of GDP in a private closed economy is where:

answer

Aggregate Expenditures = Aggregate Supply (GDP)

question

An increase in the investment demand curve will shift the curve to the:

answer

Right

question

Savings are considered:

answer

Leakages.

question

Investments are considered:

answer

Injections.

question

If GDP (output) exceeds Aggregate Expenditures, then

answer

there is more saving than investment.

question

Over time, an increase in the real output and incomes of the trading partners of the U.S. will do what to international trade?

answer

increase exports and imports.

question

The amount by which an Aggregate Expenditures schedule must shift downward to eliminate demand-pull inflation and still achieve full-employment GDP is the:

answer

Inflationary Expenditure Gap

question

A rightward shift of the Aggregate Demand Curve in the very steep upper part of the up-sloping Aggregate Supply curve will:

answer

Slightly increase output and inflation.

question

The fears of unwanted price wars might explain why many firms are reluctant to:

answer

Reduce prices when a decline in demand occurs.

question

The foreign purchases effect suggests that an increase in the US price level relative to other counties will:

answer

Import more and export less.

question

What decreases Aggregate Demand?

answer

A decrease in: 1. Consumption 2. Investment 3. Government spending 4. Exports

question

A decrease in the price of capital goods will shift the:

answer

Aggregate Supply Curve to the right.

question

A decrease in the quantity of real output demanded along the aggregate demand curve is caused by:

answer

A increase in the price level.

question

Efficiency wages contributes to:

answer

1. Higher productivity 2. Reduction of per unit production

question

If Aggregate Supply is greater than Aggregate Demand:

answer

Inventories will rise.

question

Changes in taxes and government spending without explicit action by the Federal Government is known as:

answer

Non-discretionary.

question

As the economy declines, personal income tax revenue dramatically falls. This describes ow the progressive income tax system has what:

answer

Built in stability.

question

If the cyclically-adjusted budget a deficit of $100 billion and the actual budget shows a deficit of $150 billion. It can be concluded that the government is in what phase?

answer

Expansionary.

question

If the government wants to reduce consumption by $36 billion in order to reduce inflation. If the MPC is .75 by how much should the government raise taxes to achieve its objective?

answer

MPC/MPS=Tax Multiplier. SOOO you take the TM x Change Desired = Answer

question

If Congress cuts taxes to counter the effects of a severe recession, this would be in what phase:

answer

Expansionary.

question

The amount by which government expenditures exceed revenues during the YEAR is the:

answer

Deficit.

question

The purchasing power of money and the price level vary:

answer

Inversely.

question

Stabilizing a nation's price level and the purchasing power of its money can be achieved by what kind of policies?

answer

Fiscal and Monetary policy.

question

The basic policy-making body in the U.S. banking system is the:

answer

Board of Governors of the Federal Reserve.

question

The Federal Open Market Committee (FOMC) is made up of how many people?

answer

12 people.

question

Currency is circulation is a part of:

answer

M1 and M2.

question

Moral hazard was created during the financial crisis occurred because:

answer

Banks know the Federal Reserve will lend money.

question

Bank panics are not....

answer

Impossible, but not likely either.

question

If the required reserve ration is lowered, then what goes up?

answer

The Money Multiplier.

question

On a bank's balance sheet, its office building is:

answer

an asset.

question

What is one characteristic of fractional reserve banking?

answer

It's percentage of checking accounts.

question

The excess reserves of a bank are the:

answer

Reserve Ratio (RR) x Checking Deposits = Required Reserves Required Reserves - Actual Reserves = Excess Reserves

question

When a check is cleared, the bank loses:

answer

Checkable Deposits

question

Maximum checkable deposit expansion is equal to:

answer

Excess Reserves x Money Multiplier

question

If the required reserve ration is 15% and banks hold addition excess reserves equal to 5% of any new deposit, then the money multiplier is:

answer

15% x 5%

question

If a bank has checkable deposits of $400,000 and reserves of $150,000 and a required reserve ration of 25%, then how much can the bank lend and how much can the banking system lend?

answer

Reserve Ratio x Checking account

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