Moskwa Final Practice

  1. The Industries or sectors of the economy in which business cycle fluctuations tend to affect output the most are:
    capital goods and durable consumer goods
  2. A recession is a period in which:
    real domestic output falls.
  3. The immediate determinant of the volume of output and
    employment is the:
    level of total spending.
  4. the immediate cause of most business cycle variation is:
    an unexpected change in the level of total spending.
  5. the natural rate of unemployment is
    that rate of unemployment occuring when the economy is at its potential output.
  6. the natural rate of unemploment is the
    full-employment unemployment rate
  7. kyle is temporarily unemployed because kyle has voluntarily quit his job with company A and will begin a better job next weel with company B. Kyle will be considered as
    frictionally unemployed
  8. the official unemployment rate:
    is the percentage of the labor force that is unemployed
  9. cyclical unemplyment results from
    deficiency of spending on goods and services
  10. structural unemployment
    may involve a locational mismatch between unemployed workers and job openings.
  11. the US unemployment rate is 9 percent, we can infer that:
    potential GDP is in excess of actual GDP.
  12. Okun's law:
    shows the relationship between the unemployment rate and the size of the negative GDp gap.
  13. Demand-pull inflation:
    occurs when total spending in the economy is excessive.
  14. "too much money chasing too few goods" best describes
    demand-pull inflation
  15. inflation initiated by increases in wages or other resource prices is labeled:
    cost-push inflation
  16. rising per-unit production costs are mostly directly associated with:
    cost-push inflation.
  17. unanticipated inflation:
    reduces the real burden of the public debt to the federal government
  18. the most important determinant of consumer spending is:
    the level of income.
  19. the MPC can be defined as that fraction of a:
    change in income that is spent.
  20. the 45-degree line on a graph relating comsumption and income shows:
    all the points at which consumption and income are equal.
  21. the consumption schedule shows:
    a direct relationship between aggregate comsumption and aggregate income.
  22. which of the following is correct?
    APC + APS = 1.
  23. as disposable income increases, consumption:
    and saving both increase
  24. which of the following is correct?
    MPC + MPS = APC + APS
  25. if a consumption schedule shifts upward, this necessarily means that the:
    APC is now higher at each level of disposable income.
  26. other things equal, a decrease in the real interest rate will:
    move the economy downward along its existing investment demand curve.
  27. the investment demand curve suggests
    there is an inverse relationship between the real rate of interest and the level of investment spending.
  28. if the real interest rate in the economy is i and the expected rate of return from additional investment is r, then more investment will b e forthcoming when:
    r is greater than i.
  29. the real interest rate is:
    the percentage increase in purchasing power that the lender recieves on a loan.
  30. the aggregate demand curve is the relationship between the:
    price level and purchasing of real domestic output.
  31. the aggregate demand curve shows the:
    inverse relationship between the price level and real GDP purchased.
  32. which effect best explains the downward slope of the aggregate demand curve:
    A real -balances effect.
  33. other things being equal, the higher the price level, the lower the level of domestic output purchased. this occurs because of:
    the real-balances effect.
  34. when the price level falls:
    holders of financial assets with fixed money values increase their spending.
  35. which of the following would lead to an increase in aggregate demand:
    an increase in national incomes abroad.
  36. Which would most likely increase aggregate supply?
    an increase in productivity.
  37. menu costs will:
    make prices inflexible downward.
  38. when the federal government uses taxation and spending actions to stimulate the economy it is conducting:
    Fiscal Policy.
  39. when changes to taxes and spending occur in the economy without explicit action by the federal government, such policy is:
  40. which group has direct responsibility for providing analysis, advice, and assistance to the US president on economic maters?
    the Council of Economic Advisors.
  41. the set of fiscal policies that would be most contradictionary would be a:
    decrease in government spending and increase in taxes
  42. in an aggregate demand and aggregate supply graph, a contradictionary fiscal policy can be illustrated by a:
    leftward shift in the aggregate deamnd curve
  43. if congress passes legislation to to cut taxes and increase government spending to counter the effects of a severe recession, this would be an example of an:
    expansionary fiscal policy.
  44. when governemnt tax revenues change automatically an in a countercyclical direction over the course of the business cycle, this is an example of:
    built-in stability
  45. the time wich elapses between the beginning of a recession or an inflationary episode and the identification of the macroeconomic is referred to as a:
    recognition lag
  46. one of the timing problems with fiscal policy is an "operational lag" that occurs between the:
    time that fiscal action is taken and the time that action has an impact on output, employment, and the price level.
  47. crowding-out is the notion that:
    deficit financing will increase the demand for money, increase the interest rate, and reduce level of investment spending in the economy.
  48. the crowding-out effect suggests that:
    increases in government spending may raise the interest rate and thereby reduce investment
  49. the crowding-out effect works through interest rates to:
    decrease the effectiveness of expansionary fiscal policy.
  50. a federal budget deficit exists when:
    federal government spending exceeds tax revenues.
  51. a budget surplus means that:
    governemnt revenues are greater than expenditures in a given year.
  52. the functions of money are to serve as a:
    unit of account, store of value, and medium of exchange
  53. what function is money serving when you take it on a trip and keep it in yur wallet in case you need it?
    a store of value
  54. if product prices were stated in terms of gallons of milk, then milk would be functioning primarily as:
    a unit of account
  55. the largest component of the money supply (M1) is:
  56. one reason that "near monies" are important is because:
    they can be easily converted into money or vice-versa, and thereby, and therefore can influence the stability of the economy.
  57. what "bacls" the money supply?
    the US governments ability to keep the value of money relatively stable.
  58. the use of a credit card is most similar to:
    obtaining a short-term loan from a financial institution
  59. the fractional reserve system of banking started when goldsmiths began:
    issuing paper recipts in excess of the amount of gold held
  60. which are liabilities to a bank?
    capital stock and demand deposits
  61. a commercial bank has actual reserves of $50,000 and checkable deposits of $200,000, and the required reserve ratio is 20%. the excess reserves of the bank are:
  62. suppose a commercial banking system has $240,000 of oustanding checkable deposits and actual reserves of $85,000. if the reserve ratio is 25 percent, the banking system can expand the supply of money by a maximum of:
  63. the transactions demand for money will shift to the:
    left when nominal GDP decreases.
  64. a consumer holds money to meet spending needs, this would be an example of the:
    transactions demand for money
  65. the asset demand for money and the rate of interest are:
    inversely related
  66. there is an asset demand for money primarily because of which function of money?
    store of value.
  67. an increase in nominal GDP will:
    increase the transactions demand and and total demand for money.
  68. which one of the following is a tool of monetary policy for altering the reserves of commercial banks?
    open-market operations
  69. which of the following is to be a tool of monetary policy for altering the reserves of commercial banks?
    discount rate
  70. suppose the economy is at full employment with a high inflation rate. Which combination of government policies is most likely to reduce the inflation rate?
    sell government securities in the open market and and decrease government spending
  71. suppose the economy is at full employment with a high inflation rate.
    Which combination of government policies is least likely to reduce the
    inflation rate?
    buy governement securities in the open market and decrease taxes
  72. the economy is experiencing fluctuation and the federal reserve decides to persue a restrictive money policy. which actions by the fed would be most consistent with this policy?
    selling government securities.
  73. changes in the rate of interest will most likely affect:
    investment spending.
Card Set
Moskwa Final Practice
final exam 120 questions