5 Steps To A 5 Ap Macroeconomics 2022 Elite 1st Edition Eric Dodge - Solutions

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2. Which of the following statements describes a capitalist market economy? I. Economic resources are allocated based upon relative prices. II. Private property is fundamental to innova- tion, growth, and trade. III. A central government plans the production and distribution of goods. A. I only B.
1. Scarcity is best defined as A. the difference between limited wants and limited economic resources. B. the difference between the total benefit of an action and the total cost of that action. C. the difference between unlimited wants and limited economic resources. D. the opportunity cost of
Assume the expected inflation rate in a country is 2%, the current unemployment rate is 3%, and the natural rate of unemployment is 4%.(A) Draw a correctly labeled graph of the short-run and long-run Phillips curves. Label the current short-run equilibrium as point W and plot the numerical values
centerat"que-alphast">(A) The purchase of EU financial assets by American investors(B) The international value of the euro (EU currency)(C) EU exports of goods and services to the United States(D) EU imports of goods and services from the United States(E) Unemployment rates in the European Union.
The U.S. economy is experiencing a severe recession, and the budget is currently balanced.(A) One policy analyst advocates expansionary tax cuts, while another advocates expansionary government spending. Which of these policies will have the greatest impact on real domestic output?Explain how you
When a large increase in aggregate demand has an even greater increase in real GDP, economists refer to this as(A) the balanced budget multiplier.(B) the money multiplier.(C) the foreign substitution effect.(D) the wealth effect.(E) the spending multiplier.
An import quota on foreign automobiles is expected to(A) increase domestic efficiency and protect domestic producers at the expense of foreign producers.(B) decrease the price of automobiles and protect domestic consumers at the expense of foreign producers.(C) increase the price of automobiles and
Which component of a nation’s balance of payments recognizes the purchase and sale of physical and financial assets between nations?(A) The capital account(B) The official reserves account(C) The current account(D) The trade deficit account(E) The trade surplus account
If in a given year the government collects more money in net taxes than it spends, there would exist(A) a current account deficit.(B) a budget surplus.(C) a trade surplus.(D) a budget deficit.(E) a trade deficit.
U.S. dollars and the European Union’s (EU’s) euros are exchanged in global currency markets. Which of the following is true?(A) If inflation is high in the EU and the price level in the United States is stable, the value of the dollar appreciates.(B) If the Fed decreases the money supply, the
Suppose the President plans to cut taxes for consumers and also plans to increase spending on the military. How does this affect real GDP and the price level?(A) GDP increases and the price level decreases.(B) GDP decreases and the price level increases.(C) GDP stays the same and the price level
As the Japanese economy expands, in what ways do U.S. net exports, the values of the dollar and the yen change?
Suppose the economy is in long-run equilibrium when an expansionary supply shock is felt in the economy. This changes the short-run Phillips curve, the short-run unemployment rate, and the long-run unemployment rate in which of the following ways?
Which of the following is a predictable outcome of expansionary monetary policy in a recession?(A) It decreases aggregate demand so that the price level falls, which increases demand for the dollar.(B) It increases investment, which increases aggregate demand and increases employment.(C) It
Which of the following could limit the ability of a central bank to conduct expansionary monetary policy?(A) Money demand is nearly perfectly elastic.(B) Investment demand is nearly perfectly elastic.(C) Banks make loans with all excess reserves.(D) Households carry very little cash, holding their
Holding all else equal, which of the following monetary policies would be used to boost U.S. exports?(A) Increasing the discount rate(B) Increasing the reserve ratio(C) Buying government securities(D) Lowering tariffs(E) Removing import quotas
Which of the following is likely to shift the long-run aggregate supply curve to the right?(A) A nation that devotes more resources to nondurable consumption goods, rather than durable capital goods(B) Research that improves the productivity of labor and capital(C) More restrictive trade
Congress has embarked on another round of expansionary fiscal policy to boost employment and get reelected. As chair of the central bank, how would you reduce the “crowding-out” effect and what macroeconomic problem might your policy exacerbate?(A) Increase the reserve ratio, risking the
Suppose that elected officials and the central bank agree to combine fiscal and monetary policies to lessen the threat of inflation. Which of the following combinations would likely accomplish this goal?
For a given level of government spending, the federal government usually experiences a budget____during economic____and a budget ______during economic_______.(A) deficit, recession, surplus, expansion(B) surplus, recession, deficit, expansion(C) deficit, expansion, surplus, recession(D) surplus,
Of the following choices, which combination of fiscal and monetary policy would most likely reduce a recessionary gap?
Monetary tools of the Federal Reserve do not include which of the following choices?(A) Buying Treasury securities from commercial banks(B) Changing tariffs and quotas on imported goods(C) Changing the reserve ratio(D) Changing the discount rate(E) Selling Treasury securities to commercial banks
If the economy were experiencing a recessionary gap, choose the option below that would be an appropriate fiscal policy to eliminate the gap, and the predicted impact of the policy on real GDP and unemployment.
The reserve ratio is 0.10, and Mommy Morebucks withdraws $1 million from her checking account and keeps it as cash in her refrigerator. How does this withdrawal potentially impact money in circulation?(A) Decreases it by $9 million(B) Decreases it by $1 million(C) Decreases it by $100,000(D)
Which of the following insures the value of the U.S. dollar?(A) The euro and other foreign currencies held by the Federal Reserve(B) Gold bars in secure locations like Fort Knox(C) The promise of the U.S. government to maintain its value(D) The value of the actual paper on which it is printed.(E)
What is the difference between how the short-run and long-run Phillips curves are drawn?(A) The short-run Phillips curve is downward sloping, and the long-run Phillips curve is upward sloping.(B) The short-run Phillips curve is upward sloping, and the long-run Phillips curve is vertical.(C) The
Daddy Morebucks withdraws $1 million from his savings account and puts the cash in his refrigerator. This affects M1 and M2 in which of the following ways?
The economy is in a deep recession. Given this economic situation, which of the following statements about monetary policy is accurate?(A) Expansionary policy would only worsen the recession.(B) Expansionary policy greatly increases aggregate demand if investment is sensitive to changes in the
Which of the following is an example of contractionary monetary policy?(A) The Fed lowers the reserve ratio.(B) The Fed lowers the discount rate.(C) The Fed increases taxes on household income.(D) The Fed decreases spending on welfare programs.(E) The Fed sells Treasury securities to commercial
Which of the following fiscal policy combinations would be most likely to slowly increase real GDP without putting tremendous upward pressure on the price level?(A) Increase government spending with a matching decrease in taxes.(B) Decrease government spending with a matching increase in taxes.(C)
Which of the following is an example of an expansionary supply shock?(A) Rapid increasing wages(B) A greatly depreciated currency(C) Declining labor productivity(D) Lower than expected agricultural harvests(E) Lower factor prices in major industries
If the economy is suffering from extremely high rates of inflation, which of the following fiscal policies would be an appropriate strategy for the economy?(A) Increase government spending and decrease taxes.(B) Decrease government spending and increase taxes.(C) Increase government spending with
Which of the following might worsen a nation’s trade deficit?(A) Lower wages relative to other nations.(B) Lower taxes on corporate profits relative to other nations.(C) A higher interest rate on financial assets relative to other nations.(D) A higher rate of inflation relative to other
Which of the following increases the size of the tax multiplier?(A) An increase in the marginal propensity to consume.(B) An increase in the reserve ratio.(C) An increase in the marginal propensity to save.(D) A decrease in the spending multiplier.(E) A decrease in the velocity of money.
Which of the following is true about the relationship between the M1 and M2 measures of money?(A) M1 minus M2 equals 0.(B) M1 includes checking deposits, while M2 includes checking and saving deposits.(C) M2 includes coin and paper money, but M1 does not.(D) M2 is more liquid than M1.(E) M1 is
If $100 of new autonomous private investment were added to an economy with a marginal propensity to consume of 0.90, by how much would aggregate demand shift to the right?(A) $190(B) $900(C) $1,000(D) $1,900(E) $90
Which of the following is most likely to produce stronger economic growth over time?(A) More rapid consumption of natural resources.(B) Higher adult illiteracy rates.(C) A falling stock of capital goods.(D) Investment tax credits.(E) Higher taxes on foreign capital investment.
Which of the following is true of a typical contraction of the business cycle?(A) Consumption is falling, but household wealth is rising.(B) Consumption is increasing.(C) Private investment is rising.(D) Employment and inflation are low.(E) Private saving rates are rising.
In a private closed economy, which of the following statements is true?(A) Household saving can never be negative.(B) Investment is always greater than savings.(C) The economy is in equilibrium when consumption equals saving.(D) Saving is equal to zero when consumption equals disposable income.(E)
If the short-run aggregate supply curve is horizontal, it is because(A) there exist many unemployed resources so that output can be increased without increasing wages and prices.(B) any increase in output requires a corresponding increase in wages and prices.(C) increases in output cause prices to
Stagflation is the result of(A) a leftward shift in the short-run aggregate supply curve.(B) a leftward shift in the aggregate demand curve.(C) a leftward shift in both the short-run aggregate supply and aggregate demand curves.(D) a rightward shift in the short-run aggregate supply curve.(E) a
When we observe an unplanned decrease in inventories, we can expect(A) prices to begin to fall.(B) output to begin to rise.(C) saving to begin to fall.(D) output to begin to fall.(E) planned investment to begin to rise.
Suppose that current disposable income is $10,000 and consumption spending is $8,000. For every $100 increase in disposable income, saving increases $10. Given this information,(A) the marginal propensity to consume is 0.80.(B) the marginal propensity to save is 0.20.(C) the marginal propensity to
Suppose that the federal government reclassified the purchase of a new home as consumption spending rather than investment spending.This decision would(A) increase aggregate demand and decrease real GDP.(B) decrease aggregate demand and decrease real GDP.(C) decrease aggregate demand and increase
Of the following choices, the most direct exchange in the circular flow model of a private closed economy is when(A) households provide goods to firms in exchange for wage payments.(B) households provide resources to firms in exchange for goods.(C) households provide revenues to firms in exchange
According to the quantity theory of money, increasing the money supply serves to(A) stimulate short-run production and employment with very little long-run inflation.(B) increase short-run output, but it is the source of long-run inflation.(C) lower the unemployment rate while also lowering the
A policy supported by supply-side economists would be(A) higher taxes on corporate profits.(B) lower tax rates on interest earned from savings.(C) removal of investment tax credits.(D) a longer duration of unemployment benefits.(E) higher marginal income tax rates to fund social welfare programs.
Which of the following is not included in the U.S. GDP?(A) The U.S. military opens a new base in a foreign country with 1,000 U.S. personnel.(B) Japanese consumers buy thousands of CDs produced in the United States.(C) An American pop singer performs a sold-out concert in Paris.(D) A French
The figure above shows aggregate demand (AD) and supply (AS) for the economy. Assuming that aggregate demand remains constant, which of the following best predicts the short-run price level, the long-run price level, and the long-run level of output?
Which of the following would increase the aggregate demand function?(A) Higher levels of imported goods(B) Lower levels of consumer wealth(C) A higher real interest rate(D) Lower taxes on personal income(E) Lower levels of exported goods
Which of the following is true of money and financial markets?(A) As the demand for bonds increases, the interest rate increases.(B) For a given money supply, if nominal GDP increases, the velocity of money decreases.(C) When demand for stocks and bonds increases, the asset demand for money
The table above summarizes the local labor market. Based on this information, which of the following is an accurate statement?(A) The number of discouraged workers has fallen from 2003 to 2004.(B) Although the population has grown, the labor force has remained constant from 2003 to 2004.(C) The
Which choice produces a faster rate of long-term economic growth for the United States?(A) Institution of higher tariffs on imported goods(B) More investment in capital infrastructure and less consumption of nondurable goods and services(C) Elimination of mandatory school attendance laws(D) Annual
Which of the following is not an addition to national income?(A) Wages(B) Salaries(C) Interest(D) Depreciation of physical capital(E) Profits
Suppose the price level in the United States has risen in the past year, but the production of goods and services has remained constant. Based on this information, which of the following is true?
How does an increasing national debt impact the market for U.S.dollars and the value of the dollar with respect to other currencies?
Which of the following is not a scarce economic resource?(A) Labor(B) Capital(C) Human wants(D) Land(E) Natural resources
Theo loses his job at the public swimming pool when the pool closes for the winter. This is an example of(A) cyclical unemployment.(B) discouraged worker.(C) seasonal unemployment.(D) frictional unemployment.(E) structural unemployment.
Which of the following transactions would be included in the official computation of gross domestic product?(A) Josh buys a new pair of running shoes.(B) Nancy offers to babysit her granddaughter.(C) Max buys his dad’s used car.(D) Eli cannot go to a concert, so he resells his ticket to a
In the last 20 years, firms that produce cameras have begun to produce very few 35-mm cameras and more digital cameras. This trend is an example of(A) how central planners dictate which cameras are produced.(B) the market system answering the question of “how” cameras should be produced.(C) the
Which of the following is a consequence of removal of a protective tariff on imported steel?(A) Imports fall.(B) Income is transferred from steel consumers to domestic steel producers.(C) Income is transferred from foreign steel producers to domestic steel producers.(D) Allocative efficiency is
If Nation A can produce a good at lower opportunity cost than Nation B can produce the same good, it is said that(A) Nation A has comparative advantage in the production of that good.(B) Nation B has comparative advantage in the production of that good.(C) Nation A has absolute advantage in the
The price of gasoline has recently increased, while at the same time gasoline consumption has also increased. What is happening in the gasoline market?(A) This is evidence that contradicts the law of demand.(B) The price of crude oil has fallen, shifting the supply of gasoline to the right.(C) A
Now that the economy is operating on PPF2, what has happened to the opportunity cost of producing these goods?(A) The opportunity cost of producing tractors has decreased, while the opportunity cost of producing corn has increased.(B) The opportunity cost of producing tractors has increased, while
Suppose that the production possibility frontier (PPF) of this nation moves from PPF1 to PPF2. Which of the following could be the cause of this movement?(A) Technological improvements in the production of tractors(B) A long-lasting and destructive drought(C) A more efficient use of steel, an
Ecuador and Paraguay use equal quantities of economic resources to produce consumption goods (C) and technological research (R). The table below shows the maximum possible consumption and research that can be attained by each nation.(A) Draw a correctly labeled graph of the production possibilities
Assume that firms in Fundlandia become quite pessimistic about the state of the economy.(A) Using a correctly labeled graph of the loanable funds market, show how corporate pessimism will affect the equilibrium real interest rate.(B) Based only on the real interest rate change identified in part
It is January 1, 2018, and the U.S. economy is operating at the level of real output that corresponds to full employment. The U.S. government is operating with a balanced budget and net exports are equal to zero:(A) Draw a correctly labeled graph of the long-run aggregate supply, short-run
Lower interest rates in the United States cause the value of the dollar and exports to change in which of the following ways?
Which of the following likely results in a permanent increase in a nation’s productive capacity?(A) A decline in the birth rate(B) Declining adult literacy rates(C) Widespread relocation of manufacturing firms to low-wage nations(D) National program of child immunization(E) A global increase in
When a nation is operating at the natural rate of unemployment,(A) there is no cyclical unemployment.(B) the inflation rate is zero.(C) there is no structural unemployment.(D) the nation is experiencing a recession.(E) the unemployment rate is zero.
A negative, or contractionary, supply shock will(A) shift the short-run Phillips curve to the left.(B) shift the investment demand curve to the right.(C) shift the money demand curve to the right.(D) shift the money supply curve to the left.(E) shift the short-run Phillips curve to the right.
The short-run Phillips curve depicts the ____ relationship between ____ and ____.(A) positive, price level, interest rate(B) negative, interest rate, private investment(C) negative, the inflation rate, the unemployment rate(D) positive, price level, real GDP(E) negative, interest rate, money demand
Labor productivity and long-term economic growth increase if(A) a nation subsidizes education for all citizens.(B) a nation imposes tariffs and quotas on imported goods.(C) a nation removes penalties for firms that pollute natural resources.(D) a nation ignores societal barriers like
Which of the following is an example of expansionary monetary policy for the Federal Reserve?(A) Increasing the discount rate(B) Increasing the reserve ratio(C) Buying Treasury securities from commercial banks(D) Lowering income taxes(E) Removal of import quotas
Which of the following is true of automatic fiscal policy stabilizers?(A) For a given level of government spending, they produce a deficit during a recession and a surplus during an expansion.(B) They serve to prolong recessionary and inflationary periods.(C) The regressive tax system is a
Economic growth is best described as(A) an increase in the production possibility curve and an increase in the natural rate of unemployment.(B) an increase in the production possibility curve and a leftward shift in long-run aggregate supply.(C) a decrease in the production possibility curve and a
A nation that must consistently borrow to cover annual budget deficits risks(A) a depreciation of the nation’s currency as foreigners increase investment in the nation.(B) a decline in net exports as the nation’s goods become more expensive to foreign consumers.(C) lower interest rates that
Which of the following would likely contribute to faster rates of economic growth?(A) A more restrictive immigration policy(B) Negative net investment(C) Higher taxes on households and firms(D) Higher government funding of research on clean energy supplies(E) Protective trade policies
If the Federal Reserve was concerned about the “crowding-out” effect, they could engage in(A) expansionary monetary policy by lowering the discount rate.(B) expansionary monetary policy by selling Treasury securities.(C) contractionary monetary policy by raising the discount rate.(D)
Which of the following is a predictable consequence of import quotas?(A) Increased competition and lower consumer prices(B) Increased government tax revenue from imported goods(C) Rising net exports and a rightward shift in aggregate supply(D) An improved allocation of resources away from
The “crowding-out” effect refers to which of the following?(A) Lower interest rates that result from borrowing to conduct expansionary monetary policy(B) Higher interest rates that result from borrowing to conduct contractionary fiscal policy(C) Higher interest rates that result from borrowing
Which of the following best describes a key difference between the short-run and long-run aggregate supply curve?(A) Short-run aggregate supply is upward sloping as nominal wages quickly respond to price-level changes.(B) Long-run aggregate supply is upward sloping as nominal wages quickly respond
Suppose a nation is experiencing an annual budget surplus and uses some of this surplus to pay down part of the national debt. One potential side effect of this policy would be to(A) increase interest rates and throw the economy into a recession.(B) increase interest rates and depreciate the
If $1,000 is deposited into a checking account and excess reserves increase by $700, the reserve ratio must be(A) 70%.(B) 30%.(C) 40%.(D) 90%.(E) 75%.
Suppose today’s headline is that private investment has decreased as a result of an action by the Federal Reserve. Which of the following choices is the most likely cause?(A) Selling Treasury securities to commercial banks(B) Lowering of the discount rate(C) Decreasing the reserve ratio(D)
If the reserve ratio is 10 percent and a new customer deposits $500, what is the maximum amount of money created?(A) $500(B) $4,500(C) $5,000(D) $50(E) $5,500
All else equal, when the United States exports more goods and services,(A) the value of the dollar falls as the supply of dollars increases.(B) the value of the dollar rises as demand for dollars increases.(C) the value of the dollar falls as demand for dollars decreases.(D) the value of the dollar
The fractional reserve banking system’s ability to create money is lessened if(A) households that borrow redeposit the entire loan amounts back into the banks.(B) banks hold excess reserves.(C) banks lend all excess reserves to borrowing customers.(D) households increase checking deposits in
Assuming that households save a proportion of disposable income, which of the following relationships between multipliers is correct?(A) Tax multiplier > Spending multiplier > Balanced budget multiplier(B) Spending multiplier = Tax multiplier > Balanced budget multiplier(C) Spending multiplier >
Which of the following is a component of the M1 measure of money supply?(A) Savings deposits(B) Gold bullion(C) Cash and coins(D) 30-year Treasury certificates(E) 18-month certificates of deposits
If the economy is operating at full employment, which of the following policies will create the most inflation in the short run?(A) An increase in government spending matched by an equal increase in taxes(B) An increase in government spending with no change in taxes(C) A decrease in government
Expansionary monetary policy is designed to(A) decrease the interest rate, increase private investment, increase aggregate demand, and increase domestic output.(B) decrease the interest rate, increase private investment, increase aggregate demand, and increase the unemployment rate.(C) increase the
If a nation is operating at full employment, and the central bank engages in contractionary monetary policy, the nation can expect the interest rate, the purchases of new homes, and the unemployment rate to change in which of the following ways?
If current real GDP is $5,000 and full employment real GDP is at$4,000, which of the following combinations of policies is the most likely to have brought the economy to this point?(A) A decrease in taxes and a lower discount rate(B) An increase in government spending and an increase in taxes(C) A
U.S. real GDP most likely falls when(A) income taxes are lowered.(B) investment in human capital is high.(C) the money supply is increased.(D) there is a trade surplus in goods and services.(E) the value of the dollar, relative to foreign currencies, is high.
If households are more optimistic about the future, how would the consumption function be affected?(A) The marginal propensity to consume would increase, increasing the slope of the consumption function.(B) The entire consumption function would shift downward.(C) The entire consumption function
Suppose that households increase the demand for U.S. Treasury bonds as financial assets. Which of the following accurately describes changes in the money market, the interest rate, and the value of the dollar in foreign currency markets?
At the peak of a typical business cycle, which of the following is likely the greatest threat to the macroeconomy?(A) Unemployment(B) Bankruptcy(C) Declining labor productivity(D) Falling real household income(E) Inflation
Investment demand most likely increases when(A) real GDP decreases.(B) the cost of acquiring and maintaining capital equipment rises.(C) investor optimism improves.(D) the real rate of interest rises.(E) taxes on business investment rise.

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5 Steps To A 5 Ap Macroeconomics 2022 Elite 1st Edition Eric Dodge - Solutions

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