Econ Qs Ch: 6 8 11 12 13

Front 1

In measuring gross domestic product, goods produced by foreign firms in the United States are

Back 1

Counted, but goods produced by American firms in foreign countries are not counted.

Front 2

Gross domestic product is counted using two methods: one which counts all the ways people ________ money and another which counts all the ways people __________ money.

Back 2

Earn, spend

Front 3

Inflation is measured using _________ in a price index.

Back 3

The percentage year to year increase.

Front 4

In early 2005, inflation increased unexpectedly because of an increase in oil prices. This helped

Back 4

Borrowers.

Front 5

The consumer price index is a heavily criticized measure of inflation because

Back 5

It consistently overstates the increase in the cost of living.

Front 6

One problem using real gross domestic product as a measure of social welfare is that

Back 6

It fails to count home production

Front 7

In 2005, General Motors announced a 20 percent reduction in its staffing levels and the closure of many assembly plants. Those laid off as a result would likely be classified as

Back 7

cyclically unemployed

Front 8

On a graph of real gross domestic product over time, recessions appear as

Back 8

relatively short and shallow drops on an otherwise increasing path

Front 9

of these, economists consider this the worst

Back 9

Depression

Front 10

Any event that creates a "crisis in confidence" is likely to lead to

Back 10

Lower aggregate prices

Front 11

Use the aggregate supply-aggregate demand model to determine which of the following will lead to higher prices

Back 11

An increase in government spending.

Front 12

Use the aggregate supply-aggregate demand model to determine which of the following will lead to higher aggregate output

Back 12

A cut in interest rates

Front 13

Congress and the president have control of the tax system and government spending. As a result their policies will directly impact

Back 13

aggregate demand

Front 14

The Federal Reserve has indirect control over short-term interest rates and as a result their ability to control economic activity is through

Back 14

aggregate demand

Front 15

An economist worrying about the economic impact of environmental regulations would model that impact with a

Back 15

Decrease in aggregate supply.

Front 16

Disagreements about the shape of the aggregate supply curve focus on the degree of ________ in the economy

Back 16

Unemployment

Front 17

The use of a backward-L shaped aggregate supply curve allows us to _______ in a way that other shapes would not.

Back 17

Consider different macroeconomic points of view.

Front 18

The existence of the federal income tax and the welfare system serve as the primary elements of

Back 18

Non-discretionary fiscal policy

Front 19

Adjustments to tax and spending policies serve as primary elements of

Back 19

discretionary fiscal policy

Front 20

Discretionary fiscal policy is the purview of

Back 20

Congress and the president collectively through law

Front 21

Nondiscretionary fiscal policy has its impact by

Back 21

Dampening the economic ups and downs already occurring.

Front 22

The aggregate demand-aggregate supply model examines the impact of discretionary fiscal policy and nondiscretionary fiscal policy by focusing on movements of

Back 22

Aggregate demand

Front 23

One typical response to a recession for those interested in discretionary fiscal policy is to

Back 23

Lower taxes and increase spending

Front 24

One typical response to an overheated economy for those interested in discretionary fiscal policy is to

Back 24

raise taxes and cut spending

Front 25

Discretionary fiscal policy as a tool for making things better is

Back 25

considered by many to be effective but subject to several concerns over timing and motive.

Front 26

The oil price increases of 2002-2005 are an example of a

Back 26

negative aggregate supply shock

Front 27

The Constitution of the United States grants to Congress the power of monetary policy in Article 1, Section 8. Since 1913, Congress has

Back 27

Delegated this power to the Federal Reserve.

Front 28

When engaging in monetary policy, the impact of expansionary policy on an aggregate demand-aggregate supply model is to

Back 28

Increase aggregate demand

Front 29

The most precise tool of monetary policy is

Back 29

the use of open market operations

Front 30

Federal Reserve independence is

Back 30

subject to congress's desire to keep it independent

Front 31

The "creation" of money is

Back 31

formally the purview of the Federal Reserve, constitutionally the purview of Congress, but banks have a practical means of creating money.

Front 32

During 1999 through 2005 the Federal Reserve

Back 32

Reacted actively to deal with the recession and to quell potentially inflationary expansions

Front 33

The ability of the Federal Reserve to control interest rates is

Back 33

Limited almost entirely to short-term rates

Front 34

Which of the following tools would have likely had the impact of raising short-term interest rates the most?

Back 34

Raising the reserve requirement from 8 percent to 15 percent

Front 35

America's most significant trading partner is

Back 35

Canada

Front 36

In 2005, which country had the largest trade surplus with the United States

Back 36

China

Front 37

Theoretically speaking, all trade is based on

Back 37

comparative advantage

Front 38

The trends in U.S international trade are such that

Back 38

Both imports and exports are increasing

Front 39

Using simple linear production possibilities frontiers in a simple two-good, two-country model, comparative advantage is evident when

Back 39

The slopes of the two production possibilities frontiers are different.

Front 40

Using simple linear production possibilities frontiers in a simple two-good, two country model, absolute advantage is evident when

Back 40

One country can make more of a good than the other country can.

Front 41

Of the following justifications for limiting trade, which one would economists be least likely to endorse? Some goods should not be imported because

Back 41

Their production employs many people (eg., cars)

Front 42

When choosing to limit trade, a country can impose a tax on imported goods. This is called

Back 42

a tariff

Front 43

Economists are concerned about nontariff (regulatory) barriers when they are used to prevent imports when a good

Back 43

is produced via more efficient use of labor