Exam 1
The role of the entrepreneur in society is to Macroeconomics approaches the study of economics from the viewpoint of
bring the factors of production together and take the risks of producing.
One common measure of the "standard of living" in a nation is
real GDP per capita.
The Long Run Aggregate Supply curve represents the goal of the economy, and it is represented by a vertical line. What kind of output is it displaying?
Full employment output
Fiscal policy is enacted through changes in
taxation and government purchases
The purchase and sale of government securities (bonds) by the Fed is called
Open Market Operations
When economists describe "a market," they mean
any place where, or mechanism by which, buyers and sellers interact to trade goods, services, or resources.
Gordon is a person who sells narcotics "on the street." Is this activity included in GDP?
It is excluded from GDP figures.
The Short Run Aggregate Supply curve represents where the economy is currently. Is it a (1) Downward sloping curve (2) Upward Sloping curve or (3) a vertical line?
(3) Upward Sloping Curve
If an economy is operating at the natural rate of unemployment, it is
producing at its full employment real GDP
If the Federal Reserve increases the discount rate from 10 percent to 12 percent banks will borrow
fewer reserves from the Fed and lending will decrease
Adam Smith wrote in his book "The Wealth of Nations" that competition ____Blank the entrepreneur.
regulates
A headline reads "Lumber Prices Up Sharply." In a competitive market, this situation would lead to a(n)
increase in the price of new homes and decrease in quantity.
Suppose the reserve requirement is set at 11 percent and excess reserves are $28 million. What is the money multiplier?
9.09
The goal of expansionary fiscal policy is to increase
real GDP
Financial markets pay close attention to changes in the federal funds rate because these changes affect
other interest rates in the economy
How did production improvements like an assembly line help the production of Model T cars?
increased the supply of Model T cars
New college graduates still looking for their first jobs would be classified in the BLS data as
frictionally unemployed.
Suppose the marginal propensity to consume is 0.81. What is the tax multiplier?
-4.26
If the MPC in an economy is 0.8, the government could shift the aggregate demand curve rightward by $60 billion by
decreasing taxes by $15 billion
If the reserve requirement is 4% percent and the Federal Reserve increases reserves by $50 million the money supply will
Increase by $1,250
Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students. This example illustrates
opportunity costs.
What might happen to the equilibrium price and quantity of Disney World tickets if Universal Studios offers discounts to families?
Price of Disney World tickets decreases, and quantity bought decreases
An individual deposits $12,000 in a commercial bank. The bank is required to hold 10 percent of all deposits on reserve. The deposit increases the loan capacity of the bank by
$10,800
A country’s government plans a $2 billion increase in government purchases in hopes of increasing real GDP in the economy by $40 billion. The plan would work if the MPS for this economy is
0.05
Assume that there is a 2.5% percent reserve requirement and that the Federal Reserve buys $4 billion worth of government bonds. This action has the potential to increase the money supply by a maximum of how much?
$160 billion