Final_Exam_Macro Question 1 (2 points) Purchasing-power panty theory does not hold at all times because many goods are not easily transported and the same goods produced in different countries may be imperfect substitutes. the same goods produced in different countries are perfect substitutes for each other. consumer preferences are different across countries prices are different across countries Question 2 (2 points) GDP is defined as the value of all goods and services produced within a country in a given period of time. value of all goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time. O value of all final goods and services produced within a country in a given period of time. value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time Question 3 (2 points) Figure 33-5 LRAS SRAS a a hp KIKI f7 f8 + f9 144 & 6 7 8LRAS SRAS PRICE LEVEL QUANTITY OF OUTPUT Refer to Figure 33-5. Suppose the economy starts at Point R. If aggregate demand increases from AD, to AD;, then in the short run the economy moves to Point O Point Q Point P Point S. Question 4 (2 points) One variable responsible for most significant explanation of variations in living standards around the world is a CRACKI KKNANNxam - Question 4 (2 points) One variable responsible for most significant explanation of variations in living standards around the world is O productivity O population. preferences prices. Question 5 (2 points) Efficiency means that society is conserving resources in order to save them for the future. OO society's goods and services are distributed equally among society's members. O society's goods and services are distributed fairly, though not necessarily equally, among society's members. O society is getting the most it can from its scarce resources. Question 6 (2 points) The shoeleather cost of inflation refers to the redistributional effects of unexpected inflation. time spent searching for low prices when inflation rises. 45 waste of resources used to maintain lower money holdings. O increased cost to the government of printing more money. Question 7 (2 points) a O hp VICKI KALKI 6 0 $7 1- f8 144 110 & 6 7 8 9Question 7 (2 points) At the broadest level, the financial system moves the economy's scarce resources from the rich to the poor. financial institutions to business firms and government. households to financial institutions. savers to borrowers. Question 8 (2 points) Two of the economy's most important financial intermediaries are suppliers of funds and demanders of funds. banks and the bond market. the stock market and the bond market. O banks and mutual funds. Question 9 (2 points) The income that households and noncorporate businesses receive is called personal income. net national product. O disposable personal income. national income a 0 hpCollective bargaining refers to the process by which the government sets exemptions from the minimum wage law. setting the same wage for all employees to prevent conflict among workers. firms colluding to set the wages of employees below equilibrium the process by which unions and firms agree on the terms of employment. Question 11 (2 points) In analyzing the gains and losses from international trade, to say that Moldova is a small country is to say that Moldova can only import goods, it cannot export goods Moldova's choice of which goods to export and which goods to import is not based on the principle of comparative advantage. only the domestic price of a good is relevant for Moldova; the world price of a good is irrelevant. Moldova is a price taker. Question 12 (2 points) The opportunity cost of an item is the number of hours needed to earn money to buy the item. what you give up to get that item. usually less than the dollar value of the item the dollar value of the item. Question 13 (2 points) a O hp NANANANAquestion 13 (2 points) Which of the following is correct? O Nominal and real interest rates always move together Nominal and real interest rates never move together O Nominal and real interest rates do not always move together Nominal and real interest rates always move in opposite directions. Question 14 (2 points) When inflation causes relative-price variability consumer decisions. O are distorted and the ability of markets to efficiently allocate factors of production is impaired. O are distorted, but markets are still able to efficiently allocate factors of production. are not distorted, but the ability of markets to efficiently allocate factors of production is impaired. are not distorted and markets are still able to efficiently allocate factors of production. Question 15 (2 points) A company in Panama pays a U.S. architect to design a factory building. By itself this transaction increases Panama's imports and so decreases the Panama's trade balance. mcreases Panama's exports and so decreases the Panama's trade balance. O decreases Panama's imports and so increases the Panama's trade balance. decreases Panama's exports and so increases the Panama's trade balance. Question 16 (2 points) a O hpIn the fourteenth century, the Western African Emperor Kankan Musa traveled to Cairo where he gave away gold, which was in use as a medium of exchange. We would predict that this increase in gold raised both the price level and the value of gold in Cairo. raised the price level and decreased the value of gold in Cairo. O lowered the price level and increased the value of gold in Cairo. O lowered both the price level and the value of gold in Cairo Question 17 (2 points) Trade O allows specialization, which increases costs. O allows specialization, which reduces costs. reduces specialization, which increases costs. reduces specialization, which reduces costs Question 18 (2 points) Which of the following is not a commonly-advanced argument for trade restrictions? O The jobs argument O The national-security argument O The infant-industry argument O The efficiency argument Question 19 (2 points) a hpO Search the web Fine X Q armyignited - Search x ArmylgnitED X + tempt/quiz_start_frame_auto.d21?ou=133503&ispry= &qi= 1138198.cfgl=08.dnb=0&.fromQB=0&inProgress-0 Which of the following statements is correct about the relationship between the nominal interest rate and the real interest rate? O The real interest rate is the nominal interest rate times the rate of inflation. The real interest rate is the nominal interest rate minus the rate of inflation. O The real interest rate is the nominal interest rate plus the rate of inflation The real interest rate is the nominal interest rate divided by the rate of inflation. Question 20 (2 points) Figure 34-1 MS 5.25 1.25 25 INTEREST RATE (Percent) Money Demand QUANTITY OF MONEY Bafor to Himon 41 1. There is go aveers demand a hp NANAIUCSLIUII 2V (2 PUILILS Figure 34-1 MS 5 35 4.25 3.25 INTEREST RATE ( Percent) Money Demand QUANTITY OF MONEY Refer to Figure 34-1. There is an excess demand for money at an interest rate of O 3.25 percent. O 4.25 percent. O 5.25 percent. O 6.25 percent. Question 21 (2 points) Quer the last century JI.S real (DD ner nerson srent at a rate of about a O hpOver the last century, U.S. real GDP per person grew at a rate of about 2 percent per year, so that it is now 2 times as high as it was a century ago. 2 percent per year, so that it is now 8 times as high as it was a century ago. 4 percent per year. so that it is now 2 times as high as it was a century ago 4 percent per year, so that it is now & times as high as it was a century ago. Question 22 (2 points) Suppose a country increases trade restrictions. This country would be pursing O an inward-oriented policy, which most economists believe has beneficial effects on the econom an inward-oriented, which most economists believe has adverse effects on the economy. an outward-oriented policy, which most economists believe has beneficial effects on the econom an outward-oriented policy, which most economists believe has adverse effects on the economy. Question 23 (2 points) The measure of the money stock called M1 includes O wealth held by people in currency wealth held by people in their savings accounts. O wealth held by people in money market mutual funds. O everything that is included in M2 plus some additional items. Question 24 (2 points) a hpattempt/quiz_start_Tran An associate professor of physics gets a $200 a month raise. With her new monthly salary she can buy more services than she could buy last year Her real and nominal salary have risen C Her real and nominal salary have fallen O Her real salary has risen and her nominal salary has fallen Her real salary has fallen and her nominal salary has risen. Question 25 (2 points) To open a print shop you need printers, computers, and furniture. Economists call these expenditures O capital investment investment in human capital. O business consumption expenditures. personal saving. Question 26 (2 points) Figure 9-4 Domestic Supply A World Price P B E (Dollars per barrel P a O hpDomestic Supply World Price PRICE (Dollars per Barra!) Domestic Demand QUANTITY (Barrels of crude oil) Refer to Figure 9-4. The change in total surplus in this market because of trade is D, and this area represents a loss of total surplus because of trade. D. and this area represents a gain in total surplus because of trade. B+ D, and this area represents a loss of total surplus because of trade. B+ D, and this area represents a gain in total surplus because of trade. Question 27 (2 points) Economists sometimes give conflicting advice because O graduate students in economics are encouraged to argue with each other. scononusis have different values and scientific judgments. scoupmusts acting as scientists do not like to agree with economists acting as policy advisers. B hp KAL KI 16 f7 f8 144 10am Question 28 (2 points) During recessions, taxes tend to O rise and thereby increase aggregate demand O rise and thereby decrease aggregate demand fall and thereby increase aggregate demand fall and thereby decrease aggregate demand Question 29 (2 points) Cash, fine art, and silver are all media of exchange. O units of account. O stores of value. extremely liquid assets. Question 30 (2 points) A problem that the Fed faces when it attempts to control the money supply is that O the 100-percent-reserve banking system in the United States makes it difficult for the Fed to carry out its monetary policy. the Fed has to get the approval of the U.S. Treasury Department whenever it uses any of its monetary policy tools 45 the Fed does not have a tool that it can use to change the money supply by either a small amount or a large amount the Fed does not control the amount of money that households choose to hold as deposits in banks. a O hp KAWhich of the following statements about models is correct? Economic models are built to mirror reality exactly. O O Because economic models omit many details, they allow us to see what is truly important. Economic models are useful, but they should not be used for the purpose of improving public policies. O Economic models are usually plastic representations of the economy. Question 32 (2 points) An increase in the price of bread produced domestically will be reflected in both the GDP deflator and the consumer price index. O neither the GDP deflator nor the consumer price index. O the GDP deflator but not in the consumer price index. O the consumer price index but not in the GDP deflator. Question 33 (2 points) According to liquidity preference theory, if there were a surplus of money, then the interest rate would be above equilibrium and the quantity of money demanded would be too large for equilibrium. the interest rate would be above equilibrium and the quantity of money demanded would be too small for equilibrium the interest rate would be below equilibrium and the quantity of money demanded would be too small for equilibrium. the interest rate would be below equilibrium and the quantity of money demanded would be too large for equilibrium a O hp 1/171/17m Prior to the collapse of communism, communist countries worked on the premise that economic well-being could be best attained by a market economy O a strong reliance on prices and individuals' self interests a system of large privately owned firms the actions of government central planners Question 35 (2 points) Last year, you earned a nominal wage of $10 per hour and the price level was 120. This year your nominal wage is $11 per hour, but you are unable to purchase the same amount of goods as last year. The price level this year must be 135 132 O 125 121 Question 36 (2 points) Suppose a closed economy had public saving of -$7 trillion and private saving of $16 trillion What are national saving and investment for this country? $9 trillion, $9 trillion O $9 trillion, $23 trillion O $23 trillion, $9 trillion $73 trillion $73 trillion a hp 10 I+ 144 F10 II &attempt/quiz start_frame_auto.d21?ou=133503&cisprv=&qi=113819&cfql=0&dnb=0&fromQB=0&inProgress=0 n The "unfair-competition" argument might be cited by an American who believes that almost every country has a comparative advantage, relative to the United States, in producing almost all goods. young industries should be protected against foreign competition until they become profitable. the American automobile industry should be protected against Japanese firms that are able to produce automobiles at relatively low cost O the French government's subsidies to French farmers justify restrictions on American imports of French . agricultural products. Question 38 (2 points) Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that in order to consume beyond its PPF, the United States should produce more pork than what it requires and export some of it to Mexico. in order to consume beyond its PPF, the United States should produce a moderate quantity of pork and import the remainder of what it requires from Mexico. in order to consume beyond its PPF, the United States should refrain altogether from producing pork and import all of what it requires from Mexico Mexico has nothing to gain from importing United States pork. Question 39 (2 points) Figure 3-4 500 500 450 450 Jane's PPF 400 Alvina's PPF 400 350 350 30 300 a ? hparmyignited - Search X ArmylgnitED * + ot/quiz_start_frame_auto.d21?ou=133503&tisprv=&qi=113819&cfql=0&dnb=0&fromQB=0&inProgress=0 0:05:00 Question 39 (2 points) Figure 3-4 500 500 450 460 Jane's PPF 400 Alvina's PPF 400 350 350 300 300 250 250 4 200 B (180, 180) 150 150 100 100 50 50 50 100 150 200 250 300 350 400 450 500 50 100 150 200 250 300 350 400 450 PIZZAS PIZZAS Refer to Figure 3 4. If point A represents Alvina's production and point B represents Jane's production, Alvina produces 200 pitchers of lemonade and 100 pizzas while Jane produces 180 pitchers of lemonade and 180 pizzas Alvina produces 180 pitchers of lemonade and 180 pizzas while Jane produces 200 pitchers of lemonade and 100 pizzas Alvina produces 100 pitchers of lemonade and 200 pizzas while Jane produces 180 pitchers of lemonade and 180 pizzas Only Alvina can benefit from specialization and trade. Question 40 (2 points) ? hp KIKOKN f9 144 f10 ort setempt/quiz_start_frame_auto.d21?ou=133503&ispry-8qi=113819&cefal=08cdnb=08.fromQB=0&inProgress=0 QuesLIUII 40 12 PUIS Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot O The cost of the parking permit is not part of the opportunity cost of attending college if you would not have to pay for parking otherwise. The cost of the parking permit is part of the opportunity cost of attending college if you would not have to pay for parking otherwise. Only half of the cost of the parking permit is part of the opportunity cost of attending college. The cost of the parking permit is not part of the opportunity cost of attending college under any circumstances. Question 41 (2 points) Economists who are primarily responsible for advising Congress on economic matters work in which agency? The Federal Reserve The Department of the Treasury The Congressional Budget Office The Department of Commerce Question 42 (2 points) In the early 19th century, the Russian government sent doctors to southern Russian villages to provide assistance during a cholera epidemic. The villagers noticed that wherever doctors appeared, people died. Therefore, many doctors were chased away from villages, and some were even killed This reaction to the correlation between doctors and deaths is most likely a problem of omitted variables bias xeverso causality hpcam 40 36 32 28 24 PRICE (Dollars per pound) 16 2 6 8 10 12 14 16 18 20 QUANTITY (Dozens of pounds of grapes) Refer to Figure 2-8. The slope of the curve between points A and B is O - 2 39 2 42 O NI 45 Question 44 (2 points) Marginally attached workers are people who are looking for a better job than they currently have. a hp 16 10 17 144empt/quiz start fran Question 44 (2 points) Marginally attached workers are people who are looking for a better job than they currently have. not working and are not looking for work, but would work if asked. O working part-time while they go to school or get training for a better job. O only a few years from retirement. Question 45 (2 points) The CPI and the GDP deflator O generally move together O generally show different patterns of movement O always show identical changes. always show different patterns of movement. Question 46 (2 points) Suppose the U.S. offered a tax credit for firms that built new factories in the U.S. Then the demand for loanable funds would shift rightward, initially creating a surplus of loanable funds at the original interest rate. demand for loanable funds would shift rightward. initially creating a shortage of loanable funds at the original interest rate. 45 supply of loanable funds would shift rightward. initially creating a surplus of loanable funds at the original nterest rate. supply of loanable funds would shift rightward, initially creating a shortage of loanable funds at the original interest rate. a hp KIKI FKDKALKI 18 140Question 47 (2 points) Both Jarek and Sachi produce hair bands and rings. However, Sachi is better at producing both goods. In this ca trade could benefit both Sachi and Jarek benefit Sachi, but not Jarek benefit Jarek, but not Sachi O benefit neither Sachi nor Jarek Question 48 (2 points) Which of the following can be measured by the level of real GDP per person? O Productivity and the standard of living Productivity but not the standard of living The standard of living but not productivity Neither the standard of living nor productivity Question 49 (2 points) For a very long time the country of Tofu has had an inflation rate of 8 percent Suddenly its inflation rate drops to 3 percent. The drop in the inflation rate could be due to slower money supply growth. We would expect unemployment to be higher could be due to slower money supply growth. We would expect unemployment to be lower. could be due to higher money supply growth. We would expect unemployment to be higher could he due to higher money supply growth We would expect unemployment to be lower a hpquestion 49 (2 points) For a very long time the country of Tofu has had an inflation rate of 8 percent. Suddenly its inflation rate drops to 3 percent. The drop in the inflation rate could be due to slower money supply growth. We would expect unemployment to be higher. could be due to slower money supply growth. We would expect unemployment to be lower. could be due to higher money supply growth. We would expect unemployment to be higher. could be due to higher money supply growth We would expect unemployment to be lower. Question 50 (2 points) An economy's production of two goods is efficient if O the opportunity cost of producing more of one good is zero. O the economy is producing at a point outside the production possibilities frontier. O it is impossible to produce more of one good without producing less of the other. O it is not possible to produce more of any good at any cost. Question 51 (2 points) To improve living standards. policymakers should impose restrictions on foreign competition OOO formulate policies designed to increase productivity. impose tougher immigration policies O provide tax breaks for the middle class a hp VI VI KI KIX KIKIQuestion 52 (2 points) A recession has traditionally been defined as a period during which C nominal GDP declines for two consecutive quarters nominal GDP declines for four consecutive quarters real GDP declines for two consecutive quarters real GDP declines for four consecutive quarters Question 53 (2 points) Instead of conducting laboratory experiments to generate data to test their theories, economists often rely upon hypothetical data that were previously concocted by other economists. do without data. gather data from historical episodes of economic change. O substitute assumptions for data when data are unavailable Question 54 (2 points) Figure 34-6 MS INTEREST RATE MD a O hpsuusuture assumpuvis ivi udid WIGH udid did ullavalidVIG. Question 54 (2 points) Figure 34-6 MS INTEREST RATE MDL MD QUANTITY OF MONEY Refer to Figure 34 6. A shift of the money-demand curve from MD, to MD1 is consistent with which of the following sets of events? The government cuts taxes, resulting in an increase in people's incomes. OO The government reduces government spending, resulting in a decrease in people's incomes O The Federal Reserve increases the supply of money, which decreases the interest rate. O The Federal Reserve decreases the supply of money, which increases the interest rate a hp KI KKANANY 144 &Question 55 (2 points) Scenario 33-2 Imagine that in the current year the economy is in long-run equilibrium. Then stock prices fall about 90%, depressing household wealth and consumer spending Refer to Scenario 33-2. In the short run what happens to the price level and real GDP? Both the price level and real GDP fall Both the price level and real GDP rise. O The price level falls and real GDP rises The price level rises and real GDP falls. Question 56 (2 points) Aiden and Zaria charge people to park on their lawn while attending a nearby craft fair. At the current price of $10, six people park on their lawn. If they raise the price to $15, they know that only five people will want to park on their lawn. Whether they have six or five cars parked on their lawn does not affect their costs. From this information it follows that O they should leave the price at $10 O it does not matter if they charge $10 or $15 O they would do better charging $15 than $10 O they should raise the price even more Question 57 (2 points) Table 24-3 The following table lists the per gallon prices of gas and milk for the months of September. October, and November. a hp KIKI18 Question 57 (2 points) Table 24-3 20 21 The following table lists the per gallon prices of gas and milk for the months of September, October, and November. Assume that the typical consumer buys 100 gallons of gas and 7 gallons of milk each month, and that September is the base period. 23 24 Price of Gas Price of Milk 26 27 Month (Dollars per gallon) (Dollars per gallon) September 4.00 3.50 18 29 30 October 4.40 3.52 November 4 60 3 58 31 32 33 Refer to Table 24-3. What is the inflation rate for November? 34 35 36 4 39% O 4.81% 3 38 39 4.21% O 4.39% 40 41 42 Question 58 (2 points) 43 44 45 Figure 33-5 LRAS SRAS 4:49 PM 58.F Cloudy 5/2/2024 astion 58 (2 points) Figure 33-5 20 21 LRAS 23 24 SRAS 26 27 PRICE LEVEL R AD 29 30 AD. AD 32 QUANTITY OF OUTPUT 35 38 39 Refer to Figure 33-5. Suppose the economy starts at Point R. If there is a reduction in aggregate demand, then in the long run the economy moves to 41 42 O Point O. O 44 45 Point P. O Point Q Point S 4:49 PM a ? 58.F Cloudy 5/2/202418 Question 59 (2 points) Figure 1 20 400 360 22 23 24 320 280 Pounds 240 Peru's PPF 25 26 2 200 CASHEWS 160 120 80 18 29 30 3 8 9 10 32 33 PEANUTS (Pounds) 35 36 38 39 Refer to Figure 1. The fact that the line slopes downward reflects the fact that O for Peru, it is more costly to produce peanuts than it is to produce cashews. 41 42 Peru will produce more peanuts and fewer cashews as time goes by. Peru faces a trade-off between producing peanuts and producing cashews 44 45 O Peru should specialize in producing cashews.Question ou (2 points Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage. They may infer that the reward to working is temporarily 21 low and so supply a smaller quantity of labor. 24 () low and so supply a larger quantity of labor. high and so supply a smaller quantity of labor. 27 ( high and so supply a larger quantity of labor. Question 61 (2 points) 30 Suppose that a large number of people who used to work or seek work no longer do either. Other things the same, this makes 3 3 the number of people unemployed rise but does not change the labor force. the number of people unemployed rise but makes the labor force fall. 36 both the number of people unemployed and in the labor force fall. the number of people unemployed fall but does not change the labor force. Question 62 (2 points) 42 What basket of goods and services is used to construct the CPI? A random sample of all goods and services produced in the economy 45 The goods and services that are typically bought by consumers as determined by government surveys Only food, clothing, transportation, entertainment, and education The least expensive and the most expensive goods and services in each major category of consumer expendituresWeek 8 Final Exam 0:07:51 elapsed X 16 17 18 Question 60 (2 points) Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage. They may infer that the reward to working is temporarily 19 20 21 low and so supply a smaller quantity of labor. 22 23 24 low and so supply a larger quantity of labor. - - high and so supply a smaller quantity of labor. + 25 26 27 high and so supply a larger quantity of labor. Question 61 (2 points) 28 29 30 Suppose that a large number of people who used to work or seek work no longer do either. Other things the same, this makes 31 32 33 the number of people unemployed rise but does not change the labor force. O the number of people unemployed rise but makes the labor force fall. 34 35 36 O both the number of people unemployed and in the labor force fall. O the number of people unemployed fall but does not change the labor force. 37 38 39 Question 62 (2 points) 40 41 42 What basket of goods and services is used to construct the CPI? A random sample of all goods and services produced in the economy 43 44 45 The goods and services that are typically bought by consumers as determined by government surveys Only food, clothing, transportation, entertainment, and education The least expensive and the most expensive goods and services in each major category of consumer expenditures 4:49 PM a O ? 58.F Cloudy 5/2/202418 Question 63 (2 points) In 2009, Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. 21 Which of these shifts aggregate demand right? Only the increased funding for states 24 O Only the tax cuts C Both the increased funding for states and the tax cuts 27 C Neither the increased funding for states nor the tax cuts 30 Question 64 (2 points) Figure 33-3 33 LRAS SRAS. 36 SRAS. PRICE LEVEL 39 B 42 AD QUANTITY OF OUTPUT18 Question 64 (2 points) Figure 33-3 19 20 21 LRAS SRAS 22 23 24 SRAS. PRICE LEVEL 25 26 27 B D3 28 29 30 AD 31 32 33 Y Y2 QUANTITY OF OUTPUT -- 34 35 36 Refer to Figure 33-3. In Figure 33-3, Point B represents a 37 38 39 O short-run equilibrium and a long-run equilibrium. 40 41 42 short-run equilibrium, and Point A represents a long-run equilibrium. long-run equilibrium, and Point A represents a short-run equilibrium. 42 O 44 45 long-run equilibrium, and Point C represents a short-run equilibrium Question 65 (2 points)17 18 Question 65 (2 points) Long-term bonds are 19 20 21 riskier than short-term bonds, and so interest rates on long-term bonds are usually lower than interest rates on short-term bonds. riskier than short-term bonds, and so interest rates on long-term bonds are usually higher than interest rates on 22 23 24 short-term bonds less risky than short-term bonds, and so interest rates on long-term bonds are usually lower than interest rates on short-term bonds. 25 26 27 O less risky than short-term bonds, and so interest rates on long-term bonds are usually higher than interest rates on short-term bonds 28 29 30 Question 66 (2 points) In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily, 31 32 33 O values of goods and services based on surveys of consumers. O market prices 34 35 36 quantities purchased by a typical urban household. OO profits from producing goods and services. 37 38 39 Question 67 (2 points) 40 41 42 Communist countries worked under the premise that people, when left on their own without government intervention, will find the best use of available resources 43 44 45 central planners were in the best position to determine the allocation of scarce resources in the economy. households and firms, guided by an "invisible hand," could achieve the most efficient allocation of scarce O resources. O allowing the market forces of supply and demand to operate with no government intervention would achieve the a 58.F CloudyQuestion 68 (2 points) 19 20 21 Scenario 29-1 The Monetary Policy of Jaune is controlled by the country's central bank known as the Bank of Jaune. The local unit of currency is the Jaunian dollar Aggregate banking statistics show that collectively the banks of Jaune hold $220 22 23 24 million of required reserves, $55 million of excess reserves, have issued $5,500 million of deposits, and hold $440 million of Jaunian Treasury bonds. Jaunians prefer to use only demand deposits and so all money is on deposit at the bank. 25 26 27 Refer to Scenario 29-1. Suppose the Bank of Jaune loaned the banks of Jaune $50 million. Suppose also that both the reserve requirement and the percentage of deposits held as excess reserves stay the same. By how much would the 28 29 30 money supply change? O $1020 million 31 32 33 $1000 million O 34 35 36 $50 million 37 38 39 Question 69 (2 points) During the 1970s, U.S. prices rose by 7.8 percent per year and real GDP increased. Holding velocity constant and using the quantity equation, we conclude that 40 41 42 O money growth must have been greater than the growth of real income 43 44 45 O money growth must have been less than the growth of real income. O prices fell during the 1970s. O output fell during the 1970s. e to search a ? 58 F Cloudy16 17 18 Question 70 (2 points) Figure 30-1 19 20 21 -- MS. MS 22 23 24 B C 25 26 27 VALUE OF MONEY -- 28 29 30 D A Money Demand 31 32 33 QUANTITY OF MONEY 34 35 36 37 38 39 Refer to Figure 30-1. When the money supply curve shifts from MS, to MS. the equilibrium value of money decreases. 40 41 42 O the equilibrium price level decreases. the supply of money has decreased 43 44 45 O the demand for goods and services will decrease. Question 71 (2 points) Figure 33-6 Type here to search a O| i Vil QUANTITY OF OUTPUT e 33-6. Suppose the economy starts at K. Stagflation would be 18 A Question 72 (2 points) When the government implements programs such as progressive income tax rates, which of the following is likely to occur? 19 20 21 O Equality is increased and efficiency is increased. 22 23 24 Equality is increased and efficiency is decreased O Equality is decreased and efficiency is increased. 25 26 27 Equality is decreased and efficiency is decreased. Question 73 (2 points) 28 29 30 Assume the bonds below have the same term and principal and that the state or local government that issues the municipal bond has a good credit rating. Which list has bonds correctly ordered from the one that pays the highest interest rate to the one that pays the lowest interest rate? 31 32 33 O Corporate bond, municipal bond, U.S. government bond 34 35 36 Corporate bond, U.S. government bond, municipal bond O Municipal bond, U.S. government bond, corporate bond 37 38 39 U.S. government bond, municipal bond, corporate bond Question 74 (2 points) 40 41 42 Which of the following statements is correct? A large, well-known corporation such as Proctor and Gamble would generally use financial intermediation to 43 44 45 finance expansion of its factories. O On average, index funds outperform managed funds. O Unlike corporate bonds and stocks, checking accounts are a store of value. 450 PM a O ? 58 F Cloudy16 17 18 Question 75 (2 points) Table 29-2 19 20 21 The information in the following table pertains to the hypothetical economy of Florencial. 22 23 24 Amount Type of Money (Billions of dollars) 25 26 27 120 -- -- Large time deposits Small time deposits 80 Demand deposits 300 28 29 30 Other checkable deposits 50 Savings deposits 65 Traveler's checks 5 31 32 33 Money market mutual funds 200 Currency 150 Credit card balances 300 34 35 36 Miscellaneous categories of M2 -- 30 37 38 39 Refer to Table 29-2. What is the M1 money supply in Florencial? 40 41 42 $705 billion $570 billion 43 44 45 O $505 billion $585 billion Type here to search Quaction 74 (? nointel a O 58 F Cloudy16 17 18 Question 76 (2 points) Figure 3 19 20 21 1,000 900 22 23 24 800 700 LL 600 25 26 27 500 MICROWAVE 400 B 300 200 28 29 30 --P- 100 D 100 200 300 400 500 600 700 800 900 1,000 31 32 33 BLENDERS 34 35 36 37 38 39 40 41 42 Refer to Figure 3. Consider the production possibilities frontier for an economy that produces only microwaves and blenders. When society moves from point A to point B. 43 44 45 the opportunity cost is the same as when society moves from point B to point C. it is giving up blenders to get microwaves. the opportunity cost is increasing. e here to search a 58.F Cloudy17 18 Question 77 (2 points) Figure 26-3 19 20 21 The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. 22 23 24 S 25 26 27 F 28 29 30 31 32 33 D. 34 35 36 37 38 39 Refer to Figure 26-3. Which of the following movements shows the effects of households' decision to save more? 40 41 42 O A movement from Point A to Point B O A movement from Point F to Point A 43 44 45 O A movement from Point C to Point F O A movement from Point F to Point C 58.F Cloudy17 18 Question 78 (2 points) Sam has no job but keeps applying to get a job with a business that is unionized. He is qualified and he finds the pay 19 20 21 attractive, but the firm is not hiring. Sam is O structurally unemployed. Structural unemployment exists even in the long run 22 23 24 O structurally unemployed. Structural unemployment does not exist in the long run. O frictionally unemployed. Frictional unemployment exists even in the long run. 25 26 27 O frictionally unemployed. Frictional unemployment does not exist in the long run. 28 29 30 Question 79 (2 points) Figure 2-3 31 32 33 100 90 ....j.... 80 34 35 36 70 Ly 60 :50 ...... 37 38 39 40 ....j....!' 30 20 40 41 42 10 10 20 30 40 50 60 70 80 90 100 42 44 45 FORKS16 17 18 A Question 79 (2 points) Figure 2-3 19 20 21 100 90 22 23 24 KNIVES 25 26 27 Di 28 29 30 10 ...... -...-. 31 32 33 10 20 30 40 50 60 70 80 90 100 FORKS -- 34 35 36 37 38 39 Refer to Figure 2-3. It is not possible for this economy to produce at point 40 41 42 OB 43 44 45 Oc OD OA Type here to search a ? 58'F Cloudy16 17 18 Question 83 (2 points) Figure 30-1 19 20 21 MS MS. 22 23 24 B C 25 26 27 VALUE OF MONEY 28 29 30 D A Money Demand 31 32 33 QUANTITY OF MONEY -- 34 35 36 -- Refer to Figure 30-1. If the money supply is MS, and the value of money is 4, then the quantity of money 37 38 39 O demanded is greater than the quantity supplied; the price level will rise. 40 41 42 demanded is greater than the quantity supplied; the price level will fall. O supplied is greater than the quantity demanded; the price level will rise. 43 44 45 supplied is greater than the quantity demanded; the price level will fall. Question 84 (2 points) Which of the following is correct?16 17 18 Question 84 (2 points) Which of the following is correct? 19 20 21 O Union membership in the United States peaked in the 1940s and 1950s. Unions play a larger role in the United States than in European countries such as Belgium, France, and Germany. 22 23 24 Because of the popularity of unions, most workers in the United States discuss their wages, benefits, and working conditions with their employers as a group. 25 26 27 Individuals have more market power over their wages than a group of individuals in a union. 29 30 Question 85 (2 points) 28 - - The Carters' oldest son attends Big State University. He and his parents pay all his fees and tuition. These payments count in GDP as 31 32 33 investment. O government spending. 34 35 36 O consumption of services. O consumption of durable goods. 31 38 39 Question 86 (2 points) 40 41 42 Scenario 26-1. Assume the following information for an imaginary, closed economy. -- 43 44 45 GDP $170,000 Taxes $23,000 Government Purchases $31,000 National Saving $17,000 Type here to search a 58 F Cloudy16 17 18 Question 86 (2 points) Scenario 26-1. Assume the following information for an imaginary, closed economy 19 20 21 GDP $170,000 22 23 24 Taxes $23,000 Government Purchases $31,000 National Saving $17,000 25 26 27 28 29 30 Refer to Scenario 26-1. For this economy, investment amounts to O $8,000. 31 32 33 $23,000. OOO $31,000. 34 35 36 $17,000 37 38 39 Question 87 (2 points) Productivity is defined as the 40 41 42 amount of goods and services produced from each unit of labor input. number of workers required to produce a given amount of goods and services. 43 44 45 amount of labor that can be saved by replacing workers with machines. actual amount of effort workers put into an hour of working time. Question 88 (2 points) Type here to search aWeek 8 Final Exam 16 1/ 18 Question 88 (2 points) When a union bargains successfully with employers, in that industry, 19 20 21 O both wages and unemployment increase. O wages increase and unemployment decreases. 22 23 24 O wages decrease and unemployment increases. O both wages and unemployment decrease. 25 26 27 Question 89 (2 points) The slow growth of U.S. incomes during the 1970s and 1980s can best be explained by 28 29 30 O unstable economic conditions in Eastern Europe. 31 32 33 increased competition from abroad. -- a decline in the rate of increase in U.S. productivity. 34 35 36 O a strong U.S. dollar abroad, hurting U.S. exports. 37 38 39 Question 90 (2 points) Suppose the cost of flying a 350-seat plane for an airline is $350,000 and there are 10 empty seats on a flight. The marginal cost of flying a passenger is 40 41 42 $350. $3,500. 43 44 45 $350,000. This cannot be determined from the information given.16 17 18 Question 91 (2 points) Last year real GDP per person in the imaginary nation of Olympus was $4,260. The year before it was $4,100. By about what percentage did real GDP per person grow during the period? 19 20 21 16 percent 2Z 23 24 O 0.04 percent 4 percent OO 25 26 27 1 percent Question 92 (2 points) 28 29 30 As the interest rate falls to equilibrium in the market for money, 31 32 33 O the quantity of money demanded falls, which would reduce a shortage of money. O the quantity of money demanded falls, which would reduce a surplus of money. 34 35 36 O the quantity of money demanded rises, which would reduce a shortage of money. the quantity of money demanded rises, which would reduce a surplus of money. 37 38 39 Question 93 (2 points) People had been expecting the price level to be 120 but it turns out to be 122. In response Robinson Tire Company 40 41 42 increases the number of workers it employs. What could explain this? Both sticky price theory and sticky wage theory 43 44 45 O Sticky price theory but not sticky wage theory O Sticky wage theory but not sticky price theory Neither sticky wage theory nor sticky price theoryWeek 8 Final Exam 16 17 18 Question 94 (2 points) Who of the following is not included in the Bureau of Labor Statistics "employed" category? 19 20 21 O Those who worked in their own business O Those who worked as unpaid workers in a family member's business 22 23 24 O Those waiting to be recalled to a job from which they had been laid off -- O Those who were temporarily absent from work because of vacation 25 26 27 Question 95 (2 points) 28 29 30 Which of the following shifts aggregate demand to the left? -- O An increase in the price level 31 32 33 O An increase in the money supply O A decrease in the price level 34 35 36 O A decrease in the money supply 37 38 39 Question 96 (2 points) Table 29-3 40 41 42 The First Bank of Roswell Assets Liabilities Reserves $30,000 Deposits $200,000 43 44 Loans 45 170,000 Type here to search16 17 18 Question 96 (2 points) Table 29-3 19 20 21 The First Bank of Roswell Assets Liabilities Reserves $30,000 Deposits $200,000 170,000 22 23 24 Loans 25 26 27 28 29 30 Refer to Table 29-3. If the bank faces a reserve requirement of 6 percent, then the bank 31 32 33 -- O is in a position to make new loans equal to a maximum of $12,000. O is in a position to make new loans equal to a maximum of $18,000. 34 35 36 - - -- O has excess reserves of $12,000. has excess reserves of $30,000. 37 38 39 -- Question 97 (2 points) 40 41 42 Suppose that in 2018, the producer price index increases by 1.5 percent. As a result, economists most likely will -- predict that 43 44 45 GDP will increase in 2019. the producer price index will increase by more than 1.5 percent in 2019. O interest rates will decrease in the future. Type here to search Ei a O ? 58.F Cloudy16 1/ 18 Question 98 (2 points) Unions contribute to 19 20 21 O frictional unemployment but not the natural rate of unemployment O the natural rate of unemployment but not frictional unemployment. 22 23 24 both frictional unemployment and the natural rate of unemployment. neither frictional unemployment nor the natural rate of unemployment. 25 26 27 Question 99 (2 points) 28 29 30 An increase in the government's budget surplus means public saving is positive and increasing. 31 32 33 OO -- positive and decreasing. negative and increasing. 34 35 36 negative and decreasing. 37 38 39 Question 100 (2 points) If the marginal propensity to consume is 0.75, and there is no investment accelerator or crowding out, a $120 billion 40 41 increase in government expenditures would shift the aggregate demand curve right by 42 O $480 billion, but the effect would be larger if there were an investment accelerator. 43 44 45 O $480 billion, but the effect would be smaller if there were an investment accelerator. O $360 billion, but the effect would be larger if there were an investment accelerator. $360 billion, but the effect would be smaller if there were an investment accelerator. Type here to search a 58 F Cloudy