Macro final Flashcards Quizlet PDF

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macro final Terms in this set (54) TRUE / FALSE: The inflation rate

true

measures the percentage increase in the price level from one year to the next.

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economy in 2014, and tax rate levels returned to their pre-tax 2014 level in 2015, how should this tax cut affect the economy? A. The tax cut would increase consumption spending by the same amount as would a permanent tax cut.Th B. The tax cut would increase consumption spending less than would a permanent tax cut. C. The tax cut would lower the price level in 2014. D. The tax cut would increase consumption spending more than would a permanent tax cut.

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A. What determines the wages and benefits of flight attendants? B. How is the production quantity of digital cameras determined? C. What factors determine the price of iPhones? D. What determines the unemployment rate?

The increase in the amount the

B. automatic stabilizers.

government collects in taxes when the economy expands and the decrease in the amount the government collects in taxes when the economy goes into a recession is an example of A. discretionary monetary policy. B. automatic stabilizers. C. discretionary fiscal policy. D. automatic monetary policy.

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A. there is a shortage of 200 units. B. there is a surplus of 300 units. C. there is a surplus of 200 units. D. there is a shortage of 300 units.

During the Great Depression,

A. expansionary; cyclically adjusted

what appeared to be ________ fiscal policy was actually not when the ________ budget deficit or surplus is examined. A. expansionary; cyclically adjusted B. contractionary; actual C. expansionary; actual D. contractionary; cyclically adjusted

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what the deficit or surplus would be if the economy were A. in an expansion. B. at potential tax revenue. C. in a recession. D. at potential GDP.

Lowering the interest rate will

D. increase investment projects by firms.

A. decrease spending on new homes. B. decrease spending on consumer durables. C. decrease the value of the dollar and lower net exports. D. increase investment projects by firms.

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initial increase in government purchases. A. by the same amount as B. by less than C. sometimes by more than and other times by less than D. by more than

Which of the following is a

B) If the debt drives up interest rates, crowding out

reason why we should

will occur.

consider the federal national debt a problem? A) If the debt was incurred to finance research and development, crowding out will occur. B) If the debt drives up interest rates, crowding out will occur. C) The federal government is in danger of defaulting on its debt. D) If the debt was incurred to finance improvements in infrastructure, crowding out will occur. h

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GDP, A. have fallen since the early 1950s. B. have risen since the early 1950s. C. rose from the early 1950s until the mid 1980s, and then fell. D. have remained roughly the same since the early 1950s.

The government purchases

B. equilibrium real GDP; government purchases

multiplier equals the change in ________ divided by the change in ________. A. consumption spending; government purchases B. equilibrium real GDP; government purchases C. government purchases; equilibrium real GDP D. government purchases; consumption spending

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increase, but real GDP to decrease? A. The price level rises and the quantity of final goods and services produced falls. B. The price level rises and the quantity of final goods and services produced rises. C. The price level falls and the quantity of final goods and services produced rises. D. The price level falls and the quantity of final goods and services produced falls.

During 1970-1997, the U.S.

A. in deficit every year.

federal government was A) in deficit every year. B) in surplus every year. C) in deficit most of those years. D) balanced every year.

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macro final Economic Analysis uses the

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adds them up.

sum of the market value of final goods and services produced. This means that the BEA A) values goods at their market prices, multiplies them by the quantity produced, and then adds them up. B) values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up. C) simply counts the total number of goods produced in the market place and then adds them up. D) simply counts the total number of goods and services produced in the marketplace and then adds them up.

True/False: The inflation rate

false

measures the average prices of goods and services in the economy.

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A. would increase B. may increase or decrease C. would decrease D. would not change

Rising prices erode the value

D. medium of exchange; store of value

of money as a ________ and as a ________. A. store of value; unit of barter B. store of value; unit of liquidity C. unit of barter; unit of account D. medium of exchange; store of value

True/False: The labor force

True

participation rates of women have rapidly increased since 1948.

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U.S. labor force participation rate? A. The labor force participation rate of adult women has risen since 1950. B. The labor force participation rate of adult women has fallen since 1950. C. The labor force participation rate of adult men not in school, but too young to retire has risen since 1950. D. The labor force participation rate of adult men has risen since 1950. E. The labor force participation rate of all adults has fallen since 1950.

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A. government purchases B. intermediate goods C. consumer goods D. investment expenditures

An increase in individual

D. decreases; decreases

income taxes ________ disposable income, which ________ consumption spending. A. decreases; increases B. increases; increases C. increases; decreases D. decreases; decreases

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policy goal was A. keeping employment high. B. preventing bank panics. C. promoting price stability. D. encouraging strong economic growth.

During a business cycle

D. increases; increases

expansion, total production ________ and total employment ___________. A. decreases; increases B.decreases; decreases C. increases; decreases D. increases; increases

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could result in a ________ policy that destabilizes the economy. A. procyclical B .fiscal C. budgetary D. countercylical

Jack just received a promotion

D. neither the unemployment rate nor the labor

at work and now works 50

force participation rate changed.

hours per week instead of 35. As a result, A. the unemployment rate increased. B. the unemployment rate decreased. C. the labor force participation rate increased. D. neither the unemployment rate nor the labor force participation rate changed.

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can say your real wage has ________ and the purchasing power of your income has ________. A. fallen; fallen B. risen; fallen C. fallen; risen D. risen; risen

f the probability of losing your

A. low; lowers

job remains _________, a recession would be a good time to purchase a home because the Fed usually _________ interest rates during this time. A. low; lowers B. high; lowers C. high; raises D. low; raises E. low; does not change

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federal government cuts spending by $40 billion. What is the change in GDP if the price level is not held constant? A. a decrease of more than $80 billion B. an increase equal to $80 billion C. an increase of greater than $80 billion D. an increase of less than $80 billion E. a decrease of less than $80 billion

what is the MPC formula?

what is the formula to find the

= change in Consumption (C) / change in real GDP (Y)

= C + I + G + NX

aggregate expenditure?

what is the multiplier formula?

how can you find the change in

= 1 / (1-MPC)

= change in expenditure x multiplier

equilibrium?

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The largest liability on the

E. checking account and savings account deposits

balance sheet of most banks is

of its customers.

its A. vault cash. B. deposits with the Federal Reserve. C. loans. D. holdings of securities. E. checking account and savings account deposits of its customers.

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checking account deposit at Bank A and that the required reserve ratio is 20%. Refer to the scenario above. As a result of Kristy's deposit, Bank A's excess reserves increase by A. $2,000. B. $10,000. C. $8,000. D. $50,000.

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checking account deposit at Bank A and that the required reserve ratio is 20%. Refer to the scenario above. If the required reserve ratio is 10 percent, an increase in bank reserves of $1,000 can support an increase in checking account deposits (including the original deposit) in the banking system as a whole of up to A. $100. B. $1,000. C. $100,000. D. $10,000.

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on a typical day withdrawals _________ deposits. A. less than 100%; are about the same as B. exactly 100%; are much greater than C. less than 100%; are much greater than D. exactly 100%; are about the same as E. more than 100%; are much greater than

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System or the "Fed"? A. acting as a lender of last resort B. taking actions to control the money supply C. insuring deposits in the banking system D. acting as a banker's bank E. performing check clearing services

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seven members of the ________, the president of the Federal Reserve Bank of New York, and ________. A. Federal Reserve's Board of Governors; four members of the Council of Economic Advisors B. Council of Economic Advisors; four members of the U.S. Banking Committee C. Federal Reserve's Board of Governors; four presidents from the other 11 Federal Reserve banks D. Council of Economic Advisors; four presidents from the 11 Federal Reserve banks

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A. savings account deposits. B. checking account deposits. C. traveler's checks. D. time deposits. E. currency.

If a person withdraws $500

C. increase; not change

from his/her savings account and puts it in his/her checking account, then M1 will ________ and M2 will ________. A. not change; not change B. not change; increase C. increase; not change D. not change; decrease E. increase; decrease

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for dollars and the value of the dollar, and net exports should __________. A. decrease; increase B. decrease; decrease C. increase; increase D. increase; not change E. increase; decrease

In November 2008, the Fed

B. 3

began its first round of quantitative easing. In total, the Fed conducted ________ rounds of quantitative easing before ending the program in October 2014. A. 2 B. 3 C. 4 D. 5

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in a recession and the Fed pursues an expansionary monetary policy. Using the static AD-AS model, this would be depicted as a movement from A) C to D. B) C to B. C) B to C. D) A to B. E) A to E.

Refer to the diagram to the

A. C to B.

right. Suppose the economy is in short run equilibrium above potential GDP, the unemployment rate is very low, and wages and prices are rising. Using the static ADminusAS model, the correct Fed policy for this situation would be depicted as a movement from A. C to B. B. C to D. C. A to E. D. A to B. E. B to C.

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its target for the federal funds rate. Using the static ADminusAS model, this situation would be depicted as a movement from A. C to B. B. A to B. C. B to A. D. C to D. E. E to A.

Refer to the diagram to the

D. C to B.

right. Suppose the Fed sells Treasury Bills in pursuit of contractionary monetary policy. Using the static AD-AS model, this situation would be depicted as a movement from A. C to D. B. A to B. C. B to C. D. C to B. E. B to A.

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in a recessionary gap and no policy is pursued. Using the static ADminusAS model, this situation would be depicted as a movement from A. B to A. B. C to D. C. C to B. D. A to E. E. A to B.

In the dynamic model of

B. increase interest rates.

ADminusAS in the diagram to the right, if the economy is at point A in year 1 and is expected to go to point B in year 2, the Federal Reserve would most likely A. not change interest rates. B. increase interest rates. C. decrease interest rates. D. increase the inflation rate.

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the right, if the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues no policy, then at point B A. the unemployment rate is greater than the natural rate of unemployment. B. there is pressure on wages and prices to fall. C.firms are producing above capacity. D. incomes and profits are falling.

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the right, the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues policy. This will result in A. unemployment rates higher than what would occur if no policy had been pursued. B. potential real GDP levels lower than what would occur if no policy had been pursued. C. inflation rates higher than what would occur if no policy had been pursued. D. real GDP levels higher than what would occur if no policy had been pursued.

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for potential real GDP, real GDP, and the price level in 2016 and in 2017 if the Federal Reserve does not use monetary policy. If the Fed wants to keep real GDP at its potential level in 2017, it should A. increase income taxes. B. increase the required reserve ratio. C. buy Treasury securities. D. sell Treasury securities.

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for potential real GDP, real GDP, and the price level in 2016 and in 2017 if the Federal Reserve does not use monetary policy. If the Fed uses monetary policy successfully to keep real GDP at its potential level in 2017, which of the following will be higher than if the Fed had taken no action? A. real GDP and the inflation rate B. real GDP and the unemployment rate C. real GDP and potential GDP D. potential GDP and the inflation rate

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