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tealelephant71Lv1

28 Sep 2019

51. Gross national product equals:
A) the aggregate output of the citizens & businesses of aneconomy in a 1-year period.
B) the aggregate final output of the citizens & businesses ofan economy in a 1-year period.
C) the total market value of all goods & services produced inan economy in a 1-year period.
D) the total market value of all final goods & servicesproduced in an economy in a 1-year period.

52. Which of the following is not included in GNP but is includedin GDP?
A) The value of a Portuguese company's production in the UnitedStates.
B) The income of a U.S. citizen working in Portugal.
C) The value of a U.S. company's production in Portugal.
D) The sales of a U.S. company to U.S. citizens.

53. To calculate GDP, multiply the of each final goodand service produced in an economy in a year by its andthen sum the result.
A) quantity; share in total output C) price, share in totaloutput
B) quantity; price D) price, quality

54. Counting both the value of the flour used to make a loaf ofbread and the value of the loaf of bread as part of GDP:
A) is necessary to accurately compute GDP.
B) is incorrect because bread is an intermediate product.
C) is incorrect because flour is an intermediate good.
D) is incorrect because flour is a final good.

55. Suppose the value of your home increases from $100,000 to$125,000. If you continue to live in your home, the increase in itsvalue:
A) adds nothing to GDP. C) increases GDP by $100,000.
B) increases GDP by $25,000. D) increases GDP by $125,000.

56. If a used car dealer buys a car for $6000 and resells it for$6500, how much has been added to GDP?
A) nothing. B) $500. C) $6000. D) $6500

57. Which of the following is not a part of this year's GDP?
A) The value of a product produced last year but sold thisyear.
B) The value of a haircut.
C) The value of a new car produced and purchased during theyear.
D) The value of new homes built this year, regardless of whetherthey are sold.

58. Which of the following would not increase this year'sGDP?
A) Home repairs performed by the owner.
B) A commission charged by your broker when you sold 100 shares ofBorden stock.
C) The sales of a corporation.
D) The value of a doctor's services to his or her patients.

59. The circular flow model shows:
A) the movement of expenditures and factor payments through theeconomy.
B) how national income is distributed to individuals.
C) how national income changes over time.
D) the movement of goods from one business to another.

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1. Gross Domestic Product equals the :
total output of all goods and services produced by resourceslocated in the U.S.
market value of all goods and services produced by resourceslocated in the U.S.
market value of all final goods and services produced by resourceslocated in the U.S.
value added to the economy by intermediate goods and services minusoriginal cost

2. Which of the following is not considered a component ofinvestment when calculating GDP?
new residential construction
construction of new factories
net increases in inventory
purchases of corporate stock

3. Which is true of leakages and injections in the circularflow?
Leakages minus injections equal GDP.
Injections minus leakages equal GDP.
Leakages minus injections equal zero in equilibrium.
Domestic leakages must equal domestic injections.

4. Because of activity in the underground economy,
GDP statistics understate the true volume of economicactivity
GDP statistics overstate the true prices in the economy
consumers are not as well off as GDP statistics indicate
firms' profits are higher than GDP statistics indicate

5. The consumer price index measures changes in
the prices of all goods and services
the prices of goods that are sold
the total cost of a specific market basket of consumer goods andservices
the total costs of all goods and services

6. The unemployment rate is the
percentage of people in the economy who do not hold jobs
percentage of the labor force that does not have a job
number of people in the economy who have given up looking foremployment
number of people in the labor force without jobs

7. Which of the following people would be classified asunemployed?
a person who wants a job as a fashion model but cannot find work inthat field
someone who quits a part-time job to attend school full-time
someone who gives up looking for a job
a person who works at a job that underemploys his or herskills

8. Frictional unemployment refers to unemployment that resultsfrom
a mismatch of skills
being in the wrong geographical location
taking the time to find the best job
seasonal decreases in demand for labor

9. If the aggregate demand curve shifts rightward,
the price level increases and output decreases
the resulting increase in the price level is usually calledcost-push inflation
the resulting increase in the price level is usually calleddemand-pull inflation
the price level increases only if there is also a leftward shift ofthe aggregate supply curve

10. The Consumer Price Index measures the cost of
all goods and services produced in the U.S. economy
all goods produced in the U.S. economy
a fixed market basket of consumer goods and services produced inthe U.S. economy
a fixed market basket of producer goods and services

Urgent! I need help with these questions, please.

1- The GDP of Mexico in current US dollars according to the World Bank was the US $0.683 Trillion in 2000 and had grown to the US $1.151 Trillion in 2015. Calculate the GDP percentage change from 2000 to 2015. Show your work.

2- In the expenditure approach to GDP, government purchases include all spending on goods, services, and transfer payments by government agencies.

A- True
B- False

3- The economy is considered at full employment when:
A. the unemployment rate is zero.
B. structural unemployment is zero.
C. cyclical unemployment is zero.
D. frictional unemployment is zero.

4- Which of the following would be considered 'private investment' in GDP?
A. A computer printer purchased by a law firm
B. A computer printer purchased by a student
C. A computer printer purchased by the St. Louis police department
D. All of these

5- Goods that are not sold during the year are included as part of that year's investment in calculating GDP.
A-True
B- False

6- When the nominal GDP has increased in the United States, we know that:

A- the U.S. price level has increased
B- the U.S. price level has decreased.
C- U.S. output of goods and services has increased.
D- Either U.S. output of goods and services or the price level has increased.
E- Both U.S. output of goods and services and the price level have increased.

7- Fill in the blank: GDP is the total value of ________ produced for the marketplace during a given year, within the nation's borders

A- all goods
B- all goods and services
C- all final goods
D- all final goods and services
E- all final and intermediate goods and services

8- Structural unemployment is considered a microeconomic problem.

A- True
B- False

9- The unemployment rate in the United States is defined as the number of unemployed divided by _____.
A- the U.S. population
B- the number of employed plus the number of unemployed
C- the U.S. population over the age of 16
D- the number of employed
E- the number of employed minus the number of unemployed

10- If Americans buy $500 billion worth of foreign goods and services, and foreigners buy $200 billion worth of American goods and services, then net exports for the United States are equal to _____.
A. $100 billion
B. $200 billion
C. -$300 billion
D. $500 billion
E. $700 billion

11- Discouraged workers are people who used to work, but no longer want a job.

A- True
B- False

12- In the expenditure approach, GDP is equal to _____.

A. C + I + G + exports - imports

B. C + I + G

C. C + I + G + exports

D. C + I + G + imports

E. C + I + G + exports + imports

13- U.S. GDP measures the production of goods and services by Americans, regardless of which country they reside in when they produce those goods and services.

A- True
B- False

roseguinea-pig543

TRUE / FALSE

1. True False In the aggregate expenditures model presented in the textbook,

investment is assumed to rise with increases in real GDP and fall with decreases in real GDP.

2. True False When C + I_g = GDP in a private closed economy, S = I_g and there are no unplanned changes in inventories.

3. True False The risk-free interest rate is the rate on long-term U.S. government bonds.

4. True False Bond prices and interest rates are directly or positively related.

5. True False The public debt is the accumulation of all deficits and surpluses that have occurred through time.

6. True False The M₂ money supply may be larger or smaller than the M₁ money supply depending on the size of small-denominated time deposit balances and Money Market Mutual Fund balances held by individuals.

7. True False Excess reserves are the amount by which required reserves exceed actual reserves.

8. True False The public debt is held as Treasury bills, Treasury notes, Treasury bonds, and U.S. savings bonds.

9. True False The equilibrium price level and equilibrium level of real GDP occur at the intersection of the aggregate demand curve and the aggregate supply curve.

10. True False Investment is highly stable; it increases over time at a very steady rate.

MULTIPLE CHOICE

11. A recessionary expenditure gap is:

A. the amount by which the full-employment GDP exceeds the level of aggregate expenditures.

B. the amount by which equilibrium GDP falls short of the full-employment GDP.

C. the amount by which investment exceeds saving at the full-employment GDP.

D. the amount by which aggregate expenditures exceed the full-employment level of GDP.

12. The multiplier effect indicates that:

A. a decline in the interest rate will cause a proportionately larger increase in investment.

B. a change in spending will change aggregate income by a larger amount.

C. a change in spending will increase aggregate income by the same amount.

D. an increase in total income will generate a larger change in aggregate expenditures.

13. Which one of the following is true about the U.S. Federal Reserve System?

There are 12 regional Federal Reserve Banks.

B. The head of the U.S. Treasury also chairs the Federal Reserve Board.

C. There are 14 members of the Federal Reserve Board.

D. The Open Market Committee is smaller in size than the Federal Reserve Board.

14. If the nominal interest rate is 18 percent and the real interest rate is 6 percent, the inflation rate is:

A. 18 percent.

B. 24 percent.

C. 12 percent.

D. 6 percent.

15.

Refer to the above diagram for a private closed economy. The equilibrium level of GDP is:

A. $400.

B. $300.

C. $200.

D. $100.

16. Which of the following represents the most expansionary fiscal policy?

A. a $10 billion tax cut

B. a $10 billion increase in government spending

C. a $10 billion tax increase

D. a $10 billion decrease in government spending

17.

Refer to the above table. The economy shown is a:

A. private economy.

B. private open economy.

C. mixed closed economy.

D. mixed open economy.

18. Currency held in the vault of First National Bank is:

A. counted as part of M₁.

B. counted as part of M₂, but not M₁.

C. only counted as part of M₁ if it was deposited into a checking account.

D. not counted as part of the money supply.

19. If the dollar appreciates relative to foreign currencies, we would expect:

A. the multiplier to decrease.

B. the country's exports and imports to both fall.

C. the country's net exports to rise.

D. the country's net exports to fall.

20. The most important determinant of consumption and saving is the:

A. level of bank credit.

B. level of income.

C. interest rate.

D. price level.

21. The multiple by which the commercial banking system can increase the supply of money on the basis of each dollar of excess reserves is equal to:

A. the reciprocal of the required reserve ratio.

B. 1 minus the required reserve ratio.

C. the reciprocal of the income velocity of money.

D. 1/MPS.

22. Which one of the following would not shift the aggregate demand curve?

A. a change in the price level

B. depreciation of the international value of the dollar

C. a decline in the interest rate at each possible price level

D. an increase in personal income tax rate

23. The cyclically-adjusted budget tells us:

A. that in a full-employment economy the Federal budget should be in balance.

B. that tax revenues should vary inversely with GDP.

C. what the size of the Federal budget deficit or surplus would be if the economy was at full

employment.

D. the actual budget deficit or surplus realized in any given year.

24. The aggregate supply curve:

A. is explained by the interest rate, real-balances, and foreign purchases effects.

B. gets steeper as the economy moves from the top of the curve to the bottom of the curve.

C. shows the various amounts of real output that businesses will produce at each price level.

D. is downsloping because real purchasing power increases as the price level falls.

25.

Refer to the above diagram. If the equilibrium price level is P₁, then:

A. aggregate demand is AD₂.

B. the equilibrium output level is Q₃.

C. the equilibrium output level is Q₂.

D. producers will supply output level Q₁

26. Discretionary fiscal policy refers to:

A. any change in government spending or taxes that destabilizes the economy.

B. the authority that the President has to change personal income tax rates.

C. intentional changes in taxes and government expenditures made by Congress to stabilize the economy.

D. the changes in taxes and transfers that occur as GDP changes.

27.

Refer to the above diagram. Which tax system has the most built-in stability?

A. T₄

B. T₃

C. T₂

D. T₁

28.

Refer to the given graph. A shift of the consumption schedule from C₁ to C₂ might be caused by a(n):

A.	recession.

B.	wealth effect of an increase in stock market prices.

C.	increase in income tax rates.

D.	increase in saving.

29. When a bank loan is repaid the supply of money:

A. is constant, but its composition will have changed.

B. is decreased.

C. is increased.

D. may either increase or decrease.

30. The Federal budget deficit is found by:

A. subtracting government tax revenues plus government borrowing from government spending in a particular year.

B. subtracting government tax revenues from government spending in a particular year.

C. cumulating the differences between government spending and tax revenues over all years since the nation's founding.

D. subtracting government revenues from the noninvestment-type government spending in a particular year.

31.

Refer to the above information. Money supply M₁ for this economy is:

A. $ 60.

B. $ 70.

C. $ 130.

D. $ 140.

32. Which of the following statements is true as a result of Federal Reserve efforts to rescue the financial industry from the financial crisis of 2007 and 2008?

From February 2008, to May 2009, the Fed oversaw the consolidation of 20 major financial institutions into fewer than a dozen.

B. From March 2008, to February 2009, the Fed experienced a 50 percent decline in the value of assets held.

C. From February 2008, to March 2009, Fed assets more than doubled to nearly $2 trillion.

D. From February 2008, to March 2009, Fed lending caused the U.S. public debt to rise by over $1 trillion.

33. Which of the following is the basic economic policy function of the Federal Reserve Banks?

holding the deposits or reserves of commercial banks

B. acting as fiscal agents for the Federal government

C. controlling the supply of money

D. the collection or clearing of checks among commercial banks

34. In a fractional reserve banking system:

A. bank panics cannot occur.

B. the monetary system must be backed by gold.

C. banks can create money through the lending process.

D. the Federal Reserve has no control over the amount of money in circulation.

35.

Refer to the diagram that applies to a private closed economy. The APC is equal to 1 at income level:

36. Assume the Continental National Bank's balance statement is as follows:

Assuming a legal reserve ratio of 20 percent, how much in excess reserves would this bank have after a check for $10,000 was drawn and cleared against it?

A. $ 3,000

B. $ 24,000

C. $ 6,000

D. $ 16,000

37. Answer the question on the basis of the following table for a commercial bank or thrift:

Refer to the above table. When the legal reserve ratio is 25 percent, the excess reserves of this single bank are:

A. $0.

B. $1,000.

C. $5,000.

D. $30,000.

38. Which of the following is a tool of monetary policy?

A. open market operations

B. changes in banking laws

C. changes in tax rates

D. changes in government spending

39. An increase in nominal GDP increases the demand for money because:

A. interest rates will rise.

B. more money is needed to finance a larger volume of transactions.

C. bond prices will fall.

D. the opportunity cost of holding money will decline.

40. Answer the next question on the basis of the following table:

At equilibrium in the above market for money, the total amount of money demanded is:

A. $500.

B. $480.

C. $460.

D. $440.

41. For most financial assets investors must be compensated for:

A. non-diversifiable and diversifiable risk.

B. diversifiable risk and time preference.

C. non-diversifiable risk and time preference.

D. non-diversifiable and diversifiable risk, and time preference.

42. Reserves must be deposited in the Federal Reserve Banks by:

A. only commercial banks which are members of the Federal Reserve System.

B. all depository institutions, that is, all commercial banks and thrift institutions.

C. state chartered commercial banks only.

D. federally chartered commercial banks only.

43.

Refer to the diagrams. Assuming a constant price level, an increase in aggregate expenditures from AE₁to AE₂ would:

A.	move the economy from A to C along AD₁.

B.	move the economy from C to A along AD₁.

C.	increase aggregate demand from AD₁ to AD₂.

D.	decrease aggregate demand from AD₂ to AD₁.

44. The discount rate is the interest:

A. rate at which the central banks lend to the U.S. Treasury.

B. rate at which the Federal Reserve Banks lend to commercial banks.

C. yield on long-term government bonds.

D. rate at which commercial banks lend to the public.

45. What concept describes how quickly an investment increases in value when interest is paid not only on the original amount invested, but also on the accumulated interest payments?

A. present value

B. future value

C. compound interest

D. real rate of interest

46. The aggregate demand curve:

A. is upsloping because a higher price level is necessary to make production profitable as production costs rise.

B. is downsloping because production costs decline as real output increases.

C. shows the amount of expenditures required to induce the production of each possible level of real output.

D. shows the amount of real output that will be purchased at each possible price level.

47. The Security Market Line depicts the relationship between the:

A. average expected rate of return on stocks and the average expected rate of return on bonds.

B. average expected rate of return of a financial asset and the discount rate.

C. risk level of a financial asset and the prime interest rate.

D. average expected rate of return and risk level of a financial asset.

48. Arbitrage causes all financial assets:

A. of the same risk level to have the same price.

B. to have the same expected rate of return.

C. to have the same beta.

D. of the same risk level to have the same average expected rate of return.

49.

Refer to the diagrams. The numbers in parentheses after the AD₁, AD₂, and AD₃ labels indicate the levels of investment spending associated with each curve. All figures are in billions. If the money supply is MS₁ and the goal of the monetary authorities is full-employment output Q_f, they should:

A.	increase the money supply from $80 to $100.

B.	increase the money supply from $80 to $120.

C.	maintain the money supply at $80.

D.	decrease the money supply from $80 to $60.

50. Given the expected rate of return on all possible investment opportunities in the economy:

A. an increase in the real rate of interest will reduce the level of investment.

B. a decrease in the real rate of interest will reduce the level of investment.

C. a change in the real interest rate will have no impact on the level of investment.

D. an increase in the real interest rate will increase the level of investment.

END OF THE EXAM

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