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89 Cards in this Set
- Front
- Back
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If you apply your own values to judge economic decisions, which category of economics would you be applying?
A. Economic Theory B. Normative Economics C. Positive Economics D. Empirical Economics |
B. Normative Economics
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Suppose you went to your friends house and she offered you a soda. She has Coke, Mountain Dew and Diet Coke. You hate the taste of diet soda so after some thought you decide to take the Coke. What was the opportunity cost of your decision?
A. The Diet Coke B. The Mountain Dew C. The Diet Coke PLUS the Mountain Dew D. Nothing as the Coke was free |
B. The Mountain Dew
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Suppose I am thinking about going to a concert at Annenberg Park this weekend. The concert is free and I live right by that park so I would experience no expenses in going to that show.
I do have a free ticket to see the St. Louis Cardinals baseba;; team (my favorite team!) but it would cost me $80 to get to St. Louis. I would gain $130 worth of utility by watching the Cardinals. OR I could go visit my nephew in Dallas but that would cost me $220 and I would get only $200 in utility from going to visit him. As long as I value the concert at _________ or more I should go to the concert and not go to St. Louis or to visit my nephew. (Thinking like an economist at the margin) A. $50 B. $20 C. $100 D. $200 E. $330 F. There is no way I should go watch this concert. We are talking about the soon to be WORLD CHAMPION Cardinals! |
A. $50
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Suppose I left a job that paid $200,000 a year (I wish!) to start my own consulting business. I used a building I already owned for my office which I could have rented for $5,000 a year to someone else. I spent $20,000 on supplies and I paid my employees $100,000. I also spent $10,000 for my home food bill and for rent where I live (not where I work).
What is my true economic cost (including all opportunity costs) of my decision to work in this business for the year? A. $135,000 B. $125,000 C. $225,000 D. $235,000 E. $325,000 F. $335,000 G. $245,000 |
E. $325,000
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Refer to the figure below. Can you provide an estimate of the hourly wage rate from the information on the graph? You should note whether the wage is constant based off of the slope of the line.
http://imgur.com/FU4oIXr A. The hourly wage rate starts at $20, and then rises B. The hourly wage rate varies, from as little as $4.90 to as much as $6 C. The hourly wage rate cannot be estimated from the information on the graph D. The hourly wage rate equals $4. E. The hourly wage rate equals $6. |
D. The hourly wage rate equals $4.
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If you are in charge of Econland and you want to create the best situation for the economy to grow in the long term what situation would you like to see occur? (You must choose the best option. Think about the importance of the PPF and the four reasons it shifts away from the origin!)
A. The government can lower taxes and get people to spend money B. The government can raise taxes so they can collect more revenue C. The Central Bank decides to lower interest rates to encourage spending D. There is a technological advance that allows costs of produciton to fall E. Many immigrants decide to leave Econland. |
D. There is a technological advance that allows costs of produciton to fall
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"The most active December (wheat) contract set the record of $7.54 a bushedl during trading , exceeding the previous high of $7.50 set in March 1996."
Inflation (increase in the price level) averaged about 3% annually between 1996 and 2007. Would a good economist really believe that this is the most expensive wheat has ever been? A. Yes, the price is at an all time high, that is all you need to know B. No, economists focus on nominal prices not real prices C. No, economists focus on real prices not nominal prices D. Who cares! I don't buy wheat by the bushel anyway so it doesn't matter to me at all. (you might be tempted but don't put this answer!) |
C. No, economists focus on real prices not nominal prices
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Look at the PPF above. The opportunity cost of the twelfth space mission this year is ____________.
http://imgur.com/Bpc2rHA A. 2 bullet trains B. 3 bullet trains C. 7 bullet trains D. 3.67 bullet trains E. Can't be calculated from this PPF. |
A. 2 bullet trains
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Suppose that one pizza sells for 2.5 CD's on the world market. Which point (s) represent allocative efficiency? Remember the difference between PRODUCTIVE and ALLOCATIVE efficiency!
http://imgur.com/t72tWdd A. Point A B. Point B C. Point C D. Point D E. Point E F. Point F G. Points A, B, C, D, E and F |
C. Point C
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Using the figure below, what might cause the PPF to shift from PPF1 to PPF2?
http://imgur.com/Gi0DpMD A. Technology improves which lowers the cost of producing all goods. B. Society decides it wants more microwave popcorn and fewer micro computers. C. A large natural disaster occurs damaging the production base of the country D. Society decides to produce less today so they can produce more in the future. E. The unemployment rate decreases from 9% to 5% |
A. Technology improves which lowers the cost of producing all goods.
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(you may need to look at your notes I put on KSOL for this one).
Command Economies (as opposed to market economies) tend to answer the fundamental economic question of "What to produce" through what? How rapidly do these economies grow relative to market economies ceteris paribus? A. The interaction of supply and demand, more quickly B. The interaction of supply and demand, less quickly C. The decisions of a central planner, more quickly D. The decisions of a central planner, less quickly |
D. The decisions of a central planner, less quickly
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Suppose Bill can produce 300 Beers or 30 Pizzas in one day and Ron can produce 10 Beers or 5 Pizzas in one day then ______________ has the ABSOLUTE advantage in the production of Pizza and _____ has it in beer
A. Bill, Bill B. Ron, Ron C. Bill, Ron D. Ron, Bill |
A. Bill, Bill
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Suppose Bill can produce 300 Beers or 30 Pizzas in one day and Ron can produce 10 Beers or 5 Pizzas in one day then ______________ has the comparative advantage in the production of Pizza and _____ has it in beer
A. Bill, Bill B. Ron, Ron C. Bill, Ron D. Ron, Bill |
D. Ron, Bill
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Suppose Bill can produce 300 Beers or 30 Pizzas in one day and Ron can produce 10 Beers or 5 Pizzas in one day. If both Bill and Ron specialize in producing the good they have comparative advantage in (as we think they should), what is a price for one pizza that both Bill and Ron could be better off with?
A. 1 beer B. 5 beers C. 12 beers D. 14 beers E. 20 beers |
B. 5 beers
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NOTE FOR EXAM: You should be able to understand and answer questions about how the three fundamental economic questions are answered differently in market economies and in command economies.
Suppose we have discovered that the Production Possibility Frontier in Econland has shifted to the right (away from the origin as seen below). There are four distinct reasons this could occur. List each of those four reasons. Which of the reasons I have listed would NOT shift the PPF in Econland to the right? A. The technology used to produce both guns and butter improves B. There is a new discovery of fertile land in Econland C. The government of Econland decides to increase government spending D. There is a discovery of new oil reserves in Econland E. There is an influx of legal immigration to Econland and the population increases |
C. The government of Econland decides to increase government spending
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In his 1776 book "The Wealth of Nations", Adam Smith describes how perfeclty competitive industries can work well within a market economy. In a Market Economy how is the fundamental economic question of "What to produce" answered?
A. By the decisions of a central plannner B. By the interaction of supply and demand C. By tradition (a son enters the same job his father had, etc.) |
B. By the interaction of supply and demand
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Suppose that in Country A workers can produce 5 pizzas or 20 beers a day. In Country B workers can produce 10 pizzas or 100 beers a day.
Suppose that it has always been illegal for anyone in Country A to buy things from Country B and it has been illegal for anyone in Country B to buy anything from Country A. If this trade restriction was removed and free trade were allowed would any one be harmed by this free trade? If so who? (Hint: Think about who would have a more difficult time competing with this new competition. Think about what types of work we expect Country A to now specialize in and what type of work they will speicialize in Country B) A. No one is harmed by free trade, comparative advantage helps everyone! B. Beer makers in country A would be harmed C. Beer makers in country B would be harmed D. Pizza makers in Country A would be harmed |
B. Beer makers in country A would be harmed
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Suppose the demand function for My Bud Beer is as follows. QD = 360 - 4 P
While the supply function is as follows. QS = 2 P What is the equilibrium Price of My Bud Beer? Note if you write down a dollar sign or anything except a number this will be counted wrong. If your answer is ten dollars JUST WRITE 10 and nothing else. |
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Suppose the demand function for My Bud Beer is as follows. QD = 360 - 4 P
While the supply function is as follows. QS = 2 P What is the equilibrium quantity sold of My Bud Beer? Note if you write down a dollar sign or anything except a number this will be counted wrong. If your answer is ten units of My Bud Beer JUST WRITE 10 and nothing else. If you write something like 10 beers or ten this will be counted WRONG! |
120
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Suppose the Market for tennis balls is described as follows.
QS = 2P QD = 100 - 8 P Is a price of $12 the equilibrium price for tennis balls? If not, why not? A. Yes B. No, there is a shortage of 4 tennis balls C. No, there is a shortage of 8 tennis balls D. No, there is a shortage of 20 tennis balls E. No, there is a surplus of 4 tennis balls F. No, there is a surplus of 8 tennis balls G. No, there is a surplus of 20 tennis balls |
G. No, there is a surplus of 20 tennis balls
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Suppose you were asked to explain what happened in the market for the Office DVD's when the price fell from $40 to $30. What would be your best answer
. The demand must have fallen B. The demand must have increased C. The supply must have decreased D. Nothing happens in this market E. Nothing happens to the demand function but the quanitty demanded increases in this case |
E. Nothing happens to the demand function but the quanitty demanded increases in this case
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In the "Office" video we watched in class, Dwight convinced Andy to sell him his car for $7200. It was quickly obvious that $7200 was ___________ for this Xterra and that there was a _____________ in the market at the price of $7200..
A. The equilibrium price, no shortage or surplus B. below the equilibrium price, surplus C. below the equilibrium price, shortage D. above the equilibrium price, surplus E. above the equilibrium price, shortage |
C. below the equilibrium price, shortage
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Here is KU football coach Charlie Weis. Let's suppose that Charlie is getting ready to lose his job as football coach (because let's face it, I know he just started but he ku football team is pretty bad!). After that happens and his salary falls from over $2 million a year to let's say $25,000 a year what do we expect to happen?
A. His SUPPLY of computers will increase B. His demand for Armani suits will increase C. His demand for Spam (canned meat) will decrease D. His demand for Dandy Flakes (Cereal in a bag, an imitation version of Frosted Flakes) will increase |
D. His demand for Dandy Flakes (Cereal in a bag, an imitation version of Frosted Flakes) will increase
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For practice you should draw a complete supply curve and a complete demand curve and label the equilibrium price and quantity. We will go over this in class on Sep. 25.
Show what happens in this market if the price of rubber used to make tennis balls increases while at the same time peoples income goes up and tennis balls are considered a normal good. If both of these events occur at the same time what do we KNOW happens to equilibrium price and equilibrium quantity A. Price goes up and quantity sold goes up B. Price goes up and quanity sold has an unknown change C. Price has an unknown change and quanitty sold goes up D. Price goes up and quanitty sold goes down E. Price goes down and quantity sold has an unknown change F. Price has an unknown change and quanity sold falls G. We don't know what happens to price or quantity sold H. Price goes down and quanity sold goes up |
B. Price goes up and quanity sold has an unknown change
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Suppose that because the K State teams were so great this year that many people want to be just like this guy (pictured below). What will happen to the supply or demand for K-State masks?
A. Supply will decrease B. Supply will increase C. Demand will decrease D. Demand will increase |
D. Demand will increase
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Suppose that the technology used in producing K-State masks also improved. This would cause the _____________ of K-State masks to __________.
A. Supply will decrease B. Supply will increase C. Demand will decrease D. Demand will increase |
B. Supply will increase
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Suppose the changes described in questions 11 and 12 take place at the same time. If this occurs we KNOW that the ____________ of K-State masks will _________.
A. Quantity sold, increase B. Quantity sold, decrease C. Price, increase D. Price, decrease |
A. Quantity sold, increase
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You MAY have to read ahead to Chapter 4 to answer this question.
Rent controlled apartments when they are a binding price control serve as a price __________ which creates a ____________ in the market. A. ceiling, shortage B. ceiling, surplus C. floor, shortage D. floor, surplus |
A. ceiling, shortage
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Suppose the market for Iced Tea is defined as follows.
QD = 40 - 2P QS = 3 P. At which of the following prices would a PRICE FLOOR be-binding and create a disequilibrium? A. $5 B. $8 C. $10 |
C. $10
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Suppose the price index in Econland increases from 300 to 360 in the past year. The inflation rate must have been
A. 5 percent B. 10 percent C. 20 percent D. 30 percent E. 60 percent |
C. 20 percent
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When Michael buys a new home it is classified as a GDP expenditure. What category of GDP spending does this fall under?
A. Consumption B. Investment C. Government D. Net Exports |
B. Investment
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A trade deficit occurs when
A. Exports are greater than imports B. Exports are less than imports C. Net Exports are positive D. Anytime Trade is growing |
B. Exports are less than imports
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Suppose a price floor is set on cane sugar that is approximately three times the equilibrium price. One of the effects is a(n):
(Note: This is close to an accurate description of what actually happens to the sugar market in the U.S.) A. drop in the quantity of sugar consumed. B. increase in the efficiency of the market. C. shortage of sugar. D. shift by food manufacturers from the use of corn syrup to cane sugar. |
A. drop in the quantity of sugar consumed.
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From 1975 to 1976 Real GDP increased by about 5 percent while Nominal GDP increased by about 11 percent.
What was the inflation rate from 1975 to 1976? A. 6 percent B. 16 percent C. 55 percent D. 3 percent E. We had negative inflation or deflation |
A. 6 percent
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During which of the following years did the U.S. suffer a recession? (The best way to test yourself is to look at real GDP from the file we have on the content page with changes in GDP data and see during which year Real GDP fell). You can also look at the PDF with the recession data on the course content page.
A. 1956 B. 1962 C. 1974 D. 1984 E. 1994 |
C. 1974
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Suppose the year 2000 is our base year. In the year 2000 apples cost $1 and oranges cost $2. In Farm land 200 apples were produced in the year 2000 and 300 oranges.
In the year 2013 350 apples were produced in Farm land and those apples sold for $2.00 each. 400 oranges were produced in Farm Land and those oranges sold for $2.50 each. What is the REAL GDP in Farm Land in 2013? A. $500 B. $490 C. $1700 D. $1250 E. $1050 F. $1150 |
F. $1150
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Suppose the year 2000 is our base year. In the year 2000 apples cost $1 and oranges cost $2. In Farm land 200 apples were produced in the year 2000 and 300 oranges.
In the year 2013 350 apples were produced in Farm land and those apples sold for $2.00 each. 400 oranges were produced in Farm Land and those oranges sold for $2.50 each. What is the GDP Deflator in Farm Land in 2013? A. 100 B. 142.9 C. 168.6 D. 147.8 E. 200 |
D. 147.8
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According to those economists who felt we had experienced "The Great Moderation" recessions from 1982 on
. Would be expected to be no longer than six months B. Would be expected to be less severe than they had been previously C. Would be expected to occur more frequently than they had since 1945 D. Would never occur |
B. Would be expected to be less severe than they had been previously
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Suppose in Econland there are 1000 people working. There are 200 people who are not working and are actively seeking work and there are 300 people who are either retired, children or discouraged workers.
There are 1500 people in Econland. Using our method of calculating unemployment, what is the unemployment rate in Econland? (round to the nearest 1%) A. 10% B. 13% C. 17% D. 20% E. 33% F. 50% |
C. 17%
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Suppose there are 400 people living in Econland. There are 20 retired people, 100 kids under the age of sixteen and 30 discouraged workers. There are 210 people working and 40 people who are not working who are actively seeking employment.
The Labor Force Participation rate in Econland is ____________ percent. DO NOT WRITE IN THE WORD PERCENT OR INCLUDE A "%" SIGN OR THIS WILL BE COUNTED WRONG!!!!! IMPORTANT PUT IN A WHOLE NUMBER ONLY. IF THE LABOR FORCE PARTICIPATION RATE IS FIFTY PERCENT YOU MUST ENTER 50 AS YOUR ANSWER! If you have to round to the nearest percent. |
83
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Here Tony Soprano and Christopher are talking about one of their "friends" who is structurally unemployed. Which of these folks are structurally unemployed?
A. Someone who lost their job because of personality conflicts with their employers. B. Someone who is unemployed because a technological breakthrough made their skills less important or obsolete to their employer. C. Someone who is out of work while they are changing jobs D. Someone who is unemployed because they got laid off during a recession E. Someone who is unemployed because of discrimination in hiring practices. |
B. Someone who is unemployed because a technological breakthrough made their skills less important or obsolete to their employer.
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Suppose this guy just found out he lost his job at the chemistry lab because of an overall slowdown in the economy. We would say he is/was ______________ unemployed
A. Structurally B. Cyclically C. Rationally D. Frictionally |
B. Cyclically
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The Natural Rate of Unemployment can be found by adding together the _____________ and the __________ amounts of unemployment.
A. Rational, Cyclical B. Structural, Cyclical C. Frictional, Rational D. Frictional, Structural E. Frictional, Cyclical |
D. Frictional, Structural
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Let's suppose that many currently unemployed baseball players in Econland become so depressed because David Freese is so great that they give up their dream of playing baseball for their employment and they no longer look for work. Go Cards!!!
Because of this the unemployment rate in Econland will ___________ and the labor force participation rate in Econland will ____________. A. Rise, Stay the same B. Fall, Stay the same C. Rise, Fall D. Fall, Fall E. Rise, Rise F. Fall, Rise |
D. Fall, Fall
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The Bureau of Labor Statistics counts a person as unemployed if he or she is
A. without a job B. qualified for employment but unable to find it. C. in the labor force but unable to find work D. in the labor force but unable to find full time work E. in the labor force but working less than 22 hours per week. |
C. in the labor force but unable to find work
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Suppose there are 400 people living in Econland. There are 50 retired people, 80 kids under the age of sixteen and 50 discouraged workers. There are 180 people working and 40 people who are not working who are actively seeking employment.
The unemployment rate is _______ percent. A. 10 B. 13 C. 18 D. 28 E. 42 |
C. 18
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Suppose there are 400 people living in Econland. There are 50 retired people, 80 kids under the age of sixteen and 50 discouraged workers. There are 180 people working and 40 people who are not working who are actively seeking employment.
The labor force participation rate is approximately ______ percent. A. 50 B. 56 C. 67 D. 69 E. 75 |
D. 69
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Frictional unemployment can best be described as
A. The unemployment associated with workers quitting their job and looking for a better job or those workers first entering the workforce. B. The unemployment that exists when people retire. C. The unemployment that exists because old industries disappear to create new ones, and the workers in the old industries don't have the required skills to work in the new industries. D. The increase in unemployment that occurs during recessions and depressions. |
A. The unemployment associated with workers quitting their job and looking for a better job or those workers first entering the workforce.
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Cyclical unemployment exists because
A. certain skills tend to become obsolete as the economy continually changes B. sometimes there is a slowdown in the economy's total demand for goods and services. C. it takes some time for new entrants into the labor force to find employment D. as workers become older, they become less attractive to businesses. E. domestic producers have lost out to foreign competition. |
B. sometimes there is a slowdown in the economy's total demand for goods and services.
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Since the Econ Club started collecting data for the Student Price Index in 2002, the average K-State student has been ________________ by inflation than the average American.
A. Harmed more by inflation B. Harmed about the same amount by inflation C. Harmed less by inflation |
A. Harmed more by inflation
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Suppose the Consumer Price Index is currently 230 (that's a pretty close estimate)
In 1983 the CPI was equal to 100. Suppose Claudia is making $60,000 in 2012 and in 1983 she was making $30,000. We would say Claudia's _____________________________ A. real wage has increased since 1983 but her nominal wage fell B. nominal wage increased since 1983 but her real wage fell C. nominal and real wage fell since 1983 D. real and nominal wage increased since 1983 E. nominal wage increased but we cannot tell what happened to her real wage |
B. nominal wage increased since 1983 but her real wage fell
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Suppose according to the CPI consumers in Econland purchase 10 units of Good X and 20 units of Good Y each year.
In year 1 Good X costs $8 and Good Y costs $8 In year 2 Good X costs $16 and Good Y costs $10. In year 2 consumers in Econland purchase 5 units of Good X and 25 units of Good Y. If there is a fixed bundle in Econland (a substitution bias exists) what is the stated inflation rate in Econland? A. 20 percent B. 30 percent C. 37.5 percent D. 50 percent E. 55 percent F. 62.5 percent G. 70 percent |
D. 50 percent
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Suppose according to the CPI consumers in Econland purchase 10 units of Good X and 20 units of Good Y each year.
In year 1 Good X costs $8 and Good Y costs $8 In year 2 Good X costs $16 and Good Y costs $10. In year 2 consumers in Econland purchase 5 units of Good X and 25 units of Good Y. If there is no substitution bias in Econland what is the stated inflation rate in Econland? A. 20 percent B. 30 percent C. 37.5 percent D. 50 percent E. 55 percent F. 62.5 percent G. 70 percent |
C. 37.5 percent
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Suppose that nominal GDP increased in Econland from $10 Billion to $11 Billion (what is that percentage change? You will need to figure that out to answer the rest of the question!)
The inflation rate in Econland during this time was 2% and the popuation increased by 4%. What happened to real per capita GDP Growth in Econland (which is THE most important measurement of economic prosperity)? A. 10% B. 2% C. 4% D. 6% E. 12% F. 16% |
C. 4%
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Suppose there are 1000 people living in Econland.
Population grows at 10% a year annually. Four years from now how many people do we think will live in Econland? A. 1400 B. 1440 C. 1464 D. 1477 E. 1523 F. 1900 |
C. 1464
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Suppose the K-State basketball team starts scoring 5% more points each game! (constant growth rate of 5% a game)
Suppose K-State is currently only scoring 20 points each game! We expect the team to score approximately 160 points a game in approximately _________ games. (Use the rule of 70) A. 14 B. 28 C. 34 D. 42 E. 70 F. 56 G. 140 |
D. 42
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How much cyclical unemployment do we actually currently have in the U.S. Economy? (We are ignoring things like the discouraged worker effect here and assuming our numbers are accurate)
A. 0% B. 2% C. 4% D. 8% |
B. 2%
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According to "Say's Law". How much cyclical unemployment do we expect to see in the U.S. Economy?
A. 0% B. 1% C. 2% D. 4% E. 8% |
A. 0%
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According to classical economic theory, which of the following changes would NOT increase the Real GDP produced in an economy?
A. An increase in government spending B. An increase in available land C. An improvement in technology in a society D. An increase in the number of workers due to immigration. |
A. An increase in government spending
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According to the Fear the Boom and Bust Video
http://econstories.tv/2010/06/22/fear-the-boom-and-bust/ John Maynard Keynes would best be described as a(n) ____________ economist while F.A. Hayek would be best described as a(n) _________________ economist at least when it comes to the recent stimulus plan. A. nonactivist, activist B. conservative, liberal C. laissez-faire, activist D. activist, nonactivist E. nonactivist, laissez-faire |
D. activist, nonactivist
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What is the Marginal Propensity to Consume in the graph shown below? Remember that investment does not change as income increases!
Note that total spending is illustrated by the purple line. The 45 degree line is not relevant to this question. http://imgur.com/JdLSXgq A. 0.60 B. 0.75 C. 0.80 D. 0.90 E. 1.0 |
B. 0.75
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Suppose Consumption spending is C = 2000 + 0.80 YD. Investment spending = 1000. Government spending = 1000 and taxes =0.
What is the level of equlibrium in this Keynesian model? A. 2000 B. 3000 C. 4000 D. 8000 E. 16000 F. 20000 G. 24000 H. 40000 |
F. 20000
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Suppose Consumption spending is C = 2000 + 0.80 YD. Investment spending = 1000. Government spending = 1000 and taxes =0.
What is the value of the Keynesian TAX Multiplier? A. 3 B. -3 C. 4 D. -4 E. 5 F. -5 G. 6 H. -6 |
D. -4
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The classical economists believed that unemployment could not persist because
A. the government would step in and stimulate the economy by increasing government spending. B. rising prices would make up for any deficiency in spending and make it profitable to rehire workers. C. falling wages would cause businesses to expand employment. D. unemployment benefits would eventually run out, and voluntarily unemployed workers would return to their jobs. E. workers would move abroad, reducing the unemployment ranks. |
C. falling wages would cause businesses to expand employment.
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Demand-pull inflation is caused by
A. increases in the cost of raw materials B. increases in the level of total spending in the economy C. reductions in aggregate supply. D. demands for wage increases in excess of productivity gains. E. reductions in the demand for consumer goods. |
B. increases in the level of total spending in the economy
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Which of the following would tend to increase aggregate demand?
A. a reduction in the overall wealth of the society B. pessimistic expectations about the future C. a reduction in the money supply D. a reduction in tax rates E. a reduction in government spending |
D. a reduction in tax rates
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Suppose that the President and the Congress have decided to engage in expansionary fiscal policy. All other things being equal we expect this policy to _____________ while fighting __________. You should be able to understand what expansionary fiscal policies are for your exam.
A. Lower the federal deficit/debt, inflation B. Lower the federal deficit/debt, unemployment C. Make the federal deficit/debt worse, inflation D. Make the federal deficit/debt worse, unemployment E. Not affect the deficit, inflation or unemployment whichever is a bigger problem when the policy is implemented. |
D. Make the federal deficit/debt worse, unemployment
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A decrease in aggregate demand, coupled with an increase in aggregate supply, would tend to
A. increase both real GDP and the price level. B. decrease both real GDP and the price level. C. decrease the level of real GDP, but the impact on the price level is indeterminate D. increase the level of real GDP, but the impact on the price level is indeterminate. E. decrease the price level, but the impact on real GDP is indeterminate |
E. decrease the price level, but the impact on real GDP is indeterminate
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A supply shock which reduces aggregate supply
A. may increase the level of equilibrium output as it raises the price level. B. may lower the price level and the level of equilibrium output. C. may reduce the equilibrium output as it raises the price level. D. is represented by shifting the aggregate supply curve downward. E. is represented by shifting the aggregate demand curve to the right. |
C. may reduce the equilibrium output as it raises the price level.
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Out of the categories listed below, the largest listed category of government expenditures is
A. non defense purchases of goods and services. B. transfer payments C. the salaries of government economists. D. debt interest. E. defense spending. |
B. transfer payments
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The largest single source of federal tax revenue is (see the power point or ch. 15 in your textbook)
A. personal income taxes B. corporate income taxes C. estate and gift taxes D. Excise taxes E. customs taxes |
A. personal income taxes
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The idea that Art Laffer had which motivated the use of the Laffer Curve was that the U.S. should __________ to increase aggregate supply.
A. Lower Marginal Tax Rates B. Increase Marginal Tax Rates C. Lower interest rates D. Raise interest rates |
A. Lower Marginal Tax Rates
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Deficit spending exists when
A. government tax revenues exceed government spending. B. government tax revenues are declining. C. government spending exceeds government revenue. D. the government fails to earn enough tax revenue to pay off the public debt. E. government revenue exceeds government spending. |
C. government spending exceeds government revenue.
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Which of the following listed countries has the largest real debt issue (highest debt to GDP ratio)?
A. United States B. Japan C. Canada D. Germany E. Norway |
B. Japan
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Suppose that the President and the Congress have decided to engage in expansionary fiscal policy. All other things being equal we expect this policy to _____________ while fighting __________. You should be able to understand what expansionary fiscal policies are for your exam.
A. Lower the federal deficit/debt, inflation B. Lower the federal deficit/debt, unemployment C. Make the federal deficit/debt worse, inflation D. Make the federal deficit/debt worse, unemployment E. Not affect the deficit, inflation or unemployment whichever is a bigger problem when the policy is implemented. |
D. Make the federal deficit/debt worse, unemployment
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Which of the following would tend to increase aggregate demand?
A. a reduction in the overall wealth of the society B. pessimistic expectations about the future C. a reduction in the money supply (higher interest rates) D. a reduction in tax rates E. a reduction in government spending |
D. a reduction in tax rates
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Suppose Consumption spending is C = 3000 + 0.60 YD. Investment spending = 2000. Government spending = 1000 and there are no taxes. What is the equilibrium level of GDP in this example for our macro economy? (Use the simple Keynesian formula for equilibrium)
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15,000
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Suppose Consumption spending is C = 3000 + 0.60 YD. Investment spending = 2000. Government spending = 1000 and there are no taxes. What is the equilibrium level of GDP in this example for our macro economy? (Use the simple Keynesian formula for equilibrium)
If TAXES increase by 1000 how much do we expect to see GDP rise or fall based on the Keynesian tax multiplier? A. GDP increases by 1000 B. GDP decreases by 1000 C. GDP increases by 1500 D. GDP decreases by 1500 E. GDP increases by 2000 F. GDP decreases by 2000 G. GDP increases by 2500 H. GDP decreases by 2500 |
D. GDP decreases by 1500
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"Sin taxes" such as per unit taxes on cigarettes and gasoline tend to be ______________ type taxes.
A. Regressive B. Flat or Proportional C. Progressive |
A. Regressive
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Which of the following is the largest component of the M-1 money supply?
A. Currency B. Checkable Deposits C. Savings Deposits D. NOW Accounts |
B. Checkable Deposits
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Which of the following is not a part of M2? (be careful on this one!)
A. Checkable Deposits B. Currency C. Savings Accounts D. Credit Cards |
D. Credit Cards
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The rate banks pay to borrow reserves from one another is called
A. The Federal Funds Rate B. The Open Market Rate C. The Discount Rate D. The Commerical Bank Rate E. The Instiutional Rate |
A. The Federal Funds Rate
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The existence of money enables us to avoid barter. In this capacity, money is functioning as a
A. unit of account B. source of status C. medium of exchange D. store of value |
C. medium of exchange
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The idea that prices convey easily accesible information that everyone can understand best describes money as a ______
This function of money makes it easy to compare the relative worth of say a candy bar and compare it to a new big screen TV. A. unit of account B. source of status C. medium of exchange D. store of value |
A. unit of account
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The Federal Reserve System was established in
A. 1776 B. 1913 C. 1936 D. 1952 E. 1929 |
B. 1913
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Which of the following cities does NOT have a Federal Reserve Central Bank?
A. Richmond, VA B. Los Angeles, CA C. Kansas City, MO D. Atlanta, GA |
B. Los Angeles, CA
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The SPECULATIVE demand for holding money suggests that people will wish to hold ________ money when _______________________________
A. less, the interest rate falls B. more, the interest rate falls C. less, their income increases D. more, their income increases |
B. more, the interest rate falls
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If the Federal Reserve buys $500 in bonds from commercial banks and the reserve requirement is 0.10, the eventual impact on the money supply (assuming no excess currency or reserves are held by consumers or banks) will be. Assume a FULL money multiplier. You should also remember what weakens the money multiplier for upcoming quizzes and exams!
A. The money supply will increase by $2500 B. The money supply will decrease by $2500 C. The money supply will increase by $5000 D. The money supply will decrease by $5000 E. The money supply will increase by $10,000 F. The money supply willl decrease by $10,000 |
C. The money supply will increase by $5000
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According to activists, if the Fed wanted to reduce inflationary pressures, which of the following combinations of policies should it pursue? (Remember these polices must come from the Fed!)
A. increase the reserve requirement, decrease the discount rate, and sell government securities B. increase the reserve requirement, increase the discount rate, and sell government securities C. increase the reserve requirement, increase the discount rate, and buy government securities D. decrease the reserve requirement, decrease the discount rate, and buy government securities E. reduce government spending and increase taxes. |
B. increase the reserve requirement, increase the discount rate, and sell government securities
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