Umuc Econ201 Full Course Latest 2015 December 31st (All Homework, All Quizes, Both Data Exercise and Final

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umuc econ201 full course latest 2015 december 31st [ all homework , all quizes ,
both data exercise and final
Question
Data Exercise 1 and 2
DATA EXERCISE #1
Consists of four parts
Part 1: Expenditures Approach to Calculating GDP (weight 25% of the assignment
grade)
Complete the following exercise
Visit the Bureau of Economic Analysis Web site at www.bea.gov In U.S. Economic
Accounts under National click on Gross Domestic Product (GDP), then Interactive
Tables: GDP and the National Income and Product Account (NIPA) Historical
Tables, click Begin using the data, and use Section 1 - Tables 1.1.5 and
1.1.6 to identify the GDP (nominal GDP) and real GDP for the past four quarters.
a) Present the information that you received in your project as a table.
b) Write a report (1 page double - spaced), which contains the analysis of the
results you received.
In this report consider, but do not be limited to the following:Why was nominal
GDP greater than real GDP in each of those quarters?What was the percentage
change in Nominal GDP for the most recent quarter compared to the previous
quarter? What was the percentage change in Real GDP for the two quarters?What
accounts for the difference in the two percentages?
Part 2: Income Approach to Calculating GDP (weight 25% of the assignment grade)
Complete the following exercise:
Go to http://www.bea.gov/
Find the information on GDP in billions of current dollars for the past four
quarters. In U.S. Economic Accountsunder Nationalclick on Gross Domestic Product
(GDP), then click on Interactive Tables: GDP and the National Income and Product
Account (NIPA) Historical Tables click Begin using the data- choose
Section 1: Domestic Product and Income and find table 1.7.5
Create the table that contains the following information for the last year
quarterly. Omit the intermediate lines found in Table 1.7.5 on the web site.
Gross domestic product
Gross national product
Net national product
National income
Personal income
Write a report in your own words (1 page, double-spaced), which contains the
analysis of the results you received.In this report consider, but do not be
limited to the following:
1. What is the difference between gross domestic product (GDP) and gross
national product (GNP)? What is the difference in what GDP measures compared to
GNP?
2. Based on the table, what calculations must you make to determine GNP from
GDP?
3. What is national income (NI)? What does NI measure?
4. Which was higher in this year, GNP or NI? By how much?
5. What calculations must you make to determine NI from GNP?
6. NI is composed of a number of categories. What category makes up the largest
portion of NI?
Part 3: GDP in Different Countries (weight 25% of the assignment grade)
Go to World Development Indicators database:
http://databank.worldbank.org/data/views/variableSelection/selectvariables.aspx?
source=world-development-indicators
The countries for this part of the Data Exercise will be assigned by your
professor.
Select the 8 countries assigned for the project by checking the check boxes
under Country.(I have assigned 8 countries below)
Select the 2 data series GDP (current US$) and Population (Total) under Series.
Select the most recent year under Time.
You can now retrieve that data by clicking one of the options on the upper right
of the window. Clicking Table will allow you to view and copy the data for
each country. Clicking Download will allow you to download the data in
Excel, which can then be copied into your report table.
Fill in the table below. Calculate the per capita GDP for the most recent
available year for the countries with the equation given in the far right
column.
Country GDP Population Per Capita GDP
1 2 3 4 = 2/3
USA
Japan
China
Mexico
Russia
Switzerland
Sweden
Luxembourg
Write a short report in your own words (1 page, double-spaced), which contains
the analysis of the results you have gotten.In this report consider, but do not
be limited to the following:List the countries by highest per capita GDP to
lowest.Does the order remain the same for total GDP as for per capita GDP?If
not, explain why is it different?
Part 4: Index of Economic Freedom (weight 25% of the assignment grade)
Log onto the Heritage Foundation's website at http://www.heritage.org/Index/
Today, we live in the most prosperous time in human history. Poverty,
sicknesses, and ignorance are receding throughout the world, due in large part
to the advance of economic freedom. In 2014, the principles of economic freedom
that have fueled this monumental progress are once again measured in the Index
of Economic Freedom, an annual guide published by The Wall Street Journal and
The Heritage Foundation, Washingtons No. 1 think tank.
The Index covers 10 freedoms from property rights to entrepreneurship in
186 countries. Each of the ten economic freedoms within these categories is
graded on a scale of 0 to 100.
Click on COUNTRY RANKING to find the rank of economic freedom. IMPORTANT
Make sure you use the Rank and not the Overall Score.
Click on EXPLORE THE DATA to find the rank of business, trade, financial
freedom, and property rights.Find the rank in economic freedom (overall) of the
countries that you were using in part III of the assignment.Find the rank in
business, trade, financial freedom, and property rights of the countries that
you were using in part III of the assignment.Compare the rank in economic
freedom (overall) and other indicators with the order of the countries using the
per capita GDP in the table in part III of the assignment.
Write a report in your own words (1 page, double-spaced), which contains the
analysis of the results that you received.
Grading Rubric for the Data Exercise #1
DATA
EXERCISE #1
The project
Excellent and very
contains some
Part 1: Virtually no Good effort is thorough
Only a data for
Expenditures effort to made to present development and
superficial expenditure
Approach to complete and analyze the articulation in
effort to approach in
Calculating part 1 of the data in presenting and
complete calculating GDP,
GDP (25% of exercise; expenditure analyzing the data
part 1 of the but the analysis
the assignment not worthy approach in in expenditure
exercise. should be
grade) of credit. calculating GDP approach in
considerably more
calculating GDP
developed
The project Excellent and very

Virtually no contains some thorough
Part 2: Income Only a Good effort is
effort to data for Income development and
Approach to superficial made to present
complete approach in articulation in
Calculating effort to and analyze the
part 2 of the calculating GDP, presenting and
GDP (25% of complete data in Income
exercise; but the analysis analyzing the data
the assignment part 2 of the approach in
not worthy should be in Income
grade) exercise. calculating GDP
of credit. considerably more approach in
developed calculating GDP
The project
Very good effort Excellent and very
Virtually no contains required
Part 3: GDP in Only a in collecting the thorough
effort to data and
Different superficial required data, development and
complete calculations of
Countries (25% effort to calculating of articulation in
part 3 of the GDP in different
of the complete GDP in different presenting and
exercise; countries, but the
assignment part 3 of the countries, and analyzing the data
not worthy analysis should be
grade) exercise. analyzing the of GDP in different
of credit. considerably more
results coutries
developed
The project
contains some
data about index
of Economic
Freedom, but the
Virtually no
4. Part 4: Index Only a analysis should be
effort to
of Economic superficial considerably more
complete
Freedom (25% effort to deve
part 4 of the
of the complete
exercise;
assignment part 4 of the
not worthy
grade) exercise.
of credit.
DATA EXERCISE #2
Consists of three parts
Part 1: The Unemployment Rate (weight 30% of the assignment grade)
Complete the following exercise
Visit the Bureau of Labor Statistics Web Site,
www.bls.gov/news.release/empsit.toc.htm . Select Employment Situation Summary.
Write a report (1-2 pages double - spaced) to answer the questions:What month
(and year) is summarized? What was the unemployment rate for that month? How
does that rate compare with the rate in the previous month?What were the
unemployment rates for adult women, teenagers, blacks, Hispanics, and whites?
How did these rates compare with those a month earlier?What factors make it
difficult to determine the unemployment rate?Why is unemployment an economic
problem?What are the noneconomic effects of unemployment?Who loses from
unemployment?
Part 2: The Inflation Rate (weight 30% of the assignment grade)
Visit the Bureau of Labor Statistics Web Site,
www.bls.gov/news.release/cpi.toc.htm . Select Consumer Price Index Summary.
Write a report (1-2 pages double - spaced) to answer the questions:What month
(and year) is summarized? What was CPI-U for that month?What was the rate of
inflation (percentage change in the CPI-U) for the month? How does that rate of
inflation compare with the rate in the previous month?Which two categories of
goods or services had the greatest price increase for the month?Which two
categories of goods or services had the lowest price increase (or greatest price
decrease) for the month?Who loses from inflation?
Part 3: Unemployment Data by Labor Force Groups and Duration (40% of the project
grade)
Go to http://www.gpoaccess.gov/eop/ - the home page of the Economic Report of
the President. Click on the link to the most recent report.
a. Find unemployment data (Table B12.Civilian unemployment rate) for the
following four years 1995, 2000, 2005, and the last available year. Use four
labor force groups: males, and females, in each case 16 to 19 years of age,
versus 20 years of age or over. Present the result in your project as a table.
b. Use the Economic Report of the President (Table B13.Unemployment by
duration and reason) to find data on the duration of unemployment in 1995, 2000,
2005, and the last available year. Present the result in your project as a
table.
Write a report (1-2 pages double-spaced) about the results you received.
In this paper consider, but do not be limited to the following:Compare the
distribution of unemployment by duration over these years. What relationship, if
any, do you find?Starting in the early 1990s many U.S. firms downsized their
operations. In your opinion, how did this affect the duration of unemployment?
Demographic studies show that the proportion of teenagers and minorities in the
U.S. population is likely to increase in the near future. In your opinion, what
implications, if any, will this trend have on the naturalrate of unemployment?
Grading Rubric for the Data Exercise #2
homeworkshomework 1
Your quiz has been submitted successfully.
Chapter 1 random
Question 1 1 / 1 point
In the ____________, households work and receive payment from firms.
a)
savings market
b)
financial capital market
c)
financial investment market
d)
labor market
In a command economy, the __________ either makes most economic decisions itself
or at least strongly influences how the decisions are made.
a)
government
b)
business sector
c)
firm
d)
market
Which of the following is generally accepted as a valid criticism of the
production of useful goods and services?
a)
environmental pollution
b)
the black market
c)
economic freedom
d)
government involvement
Which of the following best describes a fiscal policy tool?
a)
household spending
b)
bank lending
c)
financial capital markets
d)
government spending
In a discussion of economics, which of the following would exert the most
influence on an individual firm's decision to hire workers?
a)
wage levels
b)
household income
c)
the firm's income
d)
the macroeconomy
Macroeconomics:
a)
analyzes mergers and acquisitions between firms.
b)
is concerned with the expansion of a small business into a large corporation.
c)
is concerned with the expansion and contraction of the overall economy.
d)
is narrower in scope than microeconomics.
Which of the following best describes a monetary policy tool?
a)
taxes
b)
household savings
c)
government spending
d)
interest rates
Economic models like the _____________________ are not physical models, but
instead are diagrams or graphs or even mathematical equations that represent
economic patterns or theories.
a)
Specialization Model
b)
financial capital market
In
c)
financial investment market
d)
circular flow diagram
Because of their relatively small national economies, which of the following is
most likely considered to be the most important factor for Belgium, Korea, and
Canada to take full advantage of specialization?
division of labour
international trade
economies of scale
command economy
Chapter 6 Random
Which of the following is true?
a)
During the contractionary phase of the business cycle, the rate of unemployment
is generally quite low.
b)
A depression is a recession that is mild and relatively brief.
c)
The timing of business fluctuations is regular and therefore easily predictable.
d)
The expansions and contractions of real world business cycles last varying
lengths of time and often differ in magnitude.
Final goods or services used to compute GDP refer to:
a)
the factors of production used to produce output.
b)
the sum of all wages paid to laborers.
c)
goods and services purchased by the ultimate users.
d)
the value of outstanding shares of stock of manufacturing firms.
The difference between nominal GDP and real GDP is:
a)
nominal GDP adjusts for inflation
b)
real GDP excludes imports and exports
c)
real GDP adjusts for inflation
d)
nominal GDP measures actual productivity
Middle-income countries, which include much of Latin America, Eastern Europe,
and some countries in East Asia, have per capita GDP in the range of
___________.
a)
$6,000 to $12,000
b)
$60,000 to $120,000
c)
$600 to $1200
d)
$60 to $120
___________ is a small category that refers to the goods produced by one
business that have yet to be sold to consumers, and are either still sitting in
warehouses and on store shelves.
a)
Durable goods
b)
Services
c)
Inventories
d)
Structures
For most high-income countries of the world, GDP _________________ over time.
a)
has risen gradually
b)
has declined slightly
c)
has sharply risen
d)
has proven to be stable
On the demand side of GDP, consumption by _____________ is the largest component
of GDP, accounting for about two-thirds of the GDP in any year.
a)
government
b)
households
c)
services
d)
businesses
On the supply side of the GDP, Structures account for around __________ of U.S.
GDP.
a)
37%
b)
7%
c)
17%
d)
57%
Consumption in the United States is about ____________ of GDP, and it moves
relatively little over time.
a)
10%
b)
90%
c)
33%
d)
68%
The demand measure of GDP accounting adds together:
In
a)
wages and salaries, rent, interest, and profit.
b)
consumption, investment, government purchases, and trade balance.
c)
consumption, interest, government purchases, and trade balance.
d)
consumption, government purchases, wages and salaries, and trade balance.
Consumption is the purchase of goods and services by:
a)
government.
b)
foreign buyers.
c)
households.
d)
business firms.
Which of the following are most likely classified by economists as consumer
durable goods?
a)
automobiles, furniture
b)
stocks, bonds
c)
drugs, toys, magazines, books
d)
food, clothing
To compare the GDP of two different countries with different currencies, it is
necessary to use _________________________.
a)
currency rates
b)
foreign currency
c)
an exchange rate
d)
per capita GDP
_________ are now the largest single component of the supply side of GDP,
representing over half of GDP.
a)
Nondurable goods
b)
Structures
c)
Services
d)
Durable goods
Chapter 6 Problems
In 1980 Denmark had a GDP of $70 billion (measured in U.S. dollars) and a
population of 5.1 million. In 2000, Denmark had a GDP of $160 billion (measured
in U.S. dollars) s and a population of 5.3 million. By what percentage did
Denmarks GDP per capita rise between 1980 and 2000?
a)
45.4%
b)
120%
c)
219%
d)
128%
In 1990, the GDP of Canada was $680 billion as measured in Canadian dollars, and
the exchange rate was that $1 Canadian was worth 85 U.S. cents. In 2000, the GDP
of Canada was $1000 billion as measured in Canadian dollars, and the exchange
rate was that $1 Canadian was worth 69 U.S. cents. By what percentage did the
GDP of Canada increase from 1990 to 2000 in Canadian dollars?
a)
19.4%
b)
47%
In
c)
68%
d)
147%
homwork 2
Submission View
Chapter 7 random
Which of the following factors contribute to economic growth?
a) an increase in the standard of living
b) a decrease in the productivity of labor
c) an increase in the average wage rate paid to workers
d) an increase in the proportion of the population that is college educated
In the long run, the most important source of increase in a nation's standard of
living is a:
a) zero rate of population growth.
b) high rate of economic growth.
c) high rate of consumption.
d) high rate of labor force growth.
Some prominent members of the slow-economic growth country club include a high-
income country like _________.
a) Bolivia
b) Somalia
c) Nigeria
d) Germany
Which of the following is most likely to contribute to economic growth as
measured by GDP per capita?
a) the imposition of tariffs and quotas on imported goods
b) rapid population growth
c) increased capital formation
d) an increase in marginal tax rates
To achieve a high standard of living, a nation should:
a) promote economic growth.
b) increase the tax deduction for child dependents.
c) increase welfare payments to the poor.
d) use less capital and more labor in the production process.
_____________________ is a term which refers to the widespread use of power-
driven machinery and the economic and social changes that resulted in the first
half of the 1800s.
a) Investment and inventions
b) GDP per capita
c) The Industrial Revolution
d) The living standard
____________ is a term which refers to the widespread use of power-driven
machinery and the economic and social changes that resulted in the first half of
the 1800s.
a) Industrial Revolution
b) Capital deepening
c) Technology
d) Living standard
Chapter 7 Problems
Country Alpha and Country Beta initially have the same real GDP per capita.
Country Alpha experiences no economic growth, while Country Beta grows at a
sustained rate of 5 percent. In 14 years, Country Alpha's GDP will be
approximately _________ that of Country Beta.
a) triple
b) double
c) one-half
d) one-fourth
Chapter 8 Random
Frictional unemployment is:
a) unemployment caused by automation in the workplace.
b) unemployment that is due to the friction of competing ideological systems.
c) unemployment that is due to normal turnover in the labor market.
d) unemployment caused by lack of training and education.
The definition of market equilibrium states that at the _______________, the
quantity of labor demanded by employers will equal the quantity supplied.
a) equilibrium wage
b) natural rate of unemployment
c) sticky wage
d) efficiency wage
The extent of _______________________ will depend on how easy it is for workers
to learn about alternative jobs, which may reflect the ease of communications
about job prospects in the economy.
A. frictional unemployment
B. cyclical unemployment
C. seasonal unemployment
D. cyclical employment
The most significant real economic cost of high unemployment is:
a) the money cost of unemployment insurance payments to the unemployed.
b) the lost tax revenue that might have been paid by persons if they had worked.
c) the money cost of retraining persons to obtain new jobs.
d) the potential goods and services that might have been produced but weren't.
The unemployment rate measures:
a) unemployed workers as a percentage of the labor force.
b) unemployed workers as a percentage of the population.
c) unemployed workers as a percentage of the population age over-sixteen.
d) the number of people unemployed divided by the number of people employed.
If a nation's labor force receives a significant influx of young workers:
a) the natural rate of unemployment is unlikely to change
b) the natural rate of unemployment is likely to decrease.
c) the natural rate of unemployment is likely to increase.
d) frictional unemployment will likely decrease to zero.
Chapter 8 Problems
Craigburg has a working age population of 20 million. Of those, 11 million are
employed and 1 million are unemployed. The unemployment rate is ________ and the
participation rate is __________.
a) 8.3%; 60%.
b) 5%; 55%.
c) 8.3%; 55%.
d) 5%; 60%.
Reginald looked for work for six months but could not find a job to his liking.
He now spends his time at the beach. For purposes of employment he is
considered:
a) unemployed.
b) employed in the underground economy.
c) underemployed.
d) out of the labor force.
In November 2010 the labor force in Siouxtown, was 14,800. There were 14,483
persons employed. The local unemployment rate:
a) was 7.1%.
b) was 5.6%.
c) was 2.1%.
d) was 1.2%.
Chapter 9 random
The basket of goods in the Consumer Price Index consists of about _________
products; that is, several hundred specific products in over __________ broad-
item categories.
a) 800; 200
b) 80,000; 200
c) 200; 800
d) 80,000; 400
Which of the following is the name used to describe the price index that
consists of intermediate goods and finished goods?
a) Employment Cost Index
b) Consumer Price Index
c) Producer Price Index
d) Processing Price Index
One of the reasons that a rise in the price of a fixed basket of goods over time
tends to overstate the rise in a consumers true cost of living, is:
a) substitution bias
b) complimentary bias
c) attribution bias
d) preference bias
A payment is said to be ________________ if it is automatically adjusted for
inflation.
a) indexed
b) cross referenced
c) maintained
d) matched
The percentage change in the price level from one time period to the next,
whether the price level is measured in terms of money or as a price index, will
be the _____________.
a) consumer price index
b) producer price Index
c) price index rate
d) inflation rate
While one occasionally sees references to inflation over short time periods, the
term typically implies a(n)_____________ in prices.
a) short term decrease
b) short term rise
c) ongoing decrease
d) ongoing rise
Chapter 9 Problems
Nancy's union has negotiated a three-year wage contract that provides for a 2.4%
increase indexed to inflation. The rates of inflation are forecast to be 1.62%,
1.93% and 2.21% respectively. How will Nancy's wage increase be expressed in the
new contract?
a) COLA plus 2.2%
b) COLA plus 1.6%
c) COLA plus 2.4%
d) COLA plus 1.9%
An analyst needs to adjust the nominal GDP for the years 2000 and 2010 into real
terms to conclude his comparison analysis. The nominal GDP in 2000 was $672
billion and $1,690 billion for 2010; the real interest rate was 6.79% in 2000
and 3.71% in 2010; the 2000 deflator was 24 and 51 in 2010. What is the real
gain?
a) 18.34%
b) 70.61%
c) 151.48%
d) 38.58%
________________________________________homework 3
Chapter 11 Random
As the aggregate price level in an economy decreases,
a) consumer demand decreases.
b) investment decreases.
c) interest rates decrease.
d) imports decrease.
In an AD/ASAD/AS model:
a) the GDP deflator is shown on the vertical axis.
b) the Consumer Price Index always slopes upwards.
c) real GDP is shown on the horizontal axis.
d) the potential GDP always slopes downwards.
The _________________ means that a higher price level leads to lower real
wealth.
a) foreign price effect
b) employment effect
c) wealth effect
d) interest rate effect
_______________________ are economists who generally emphasize the importance of
aggregate supply in determining the size of the macroeconomy over the
_____________.
a) Keynesian economists; short run
b) Neoclassical economists; short run
c) Neoclassical economists; long run
d) Keynesian economists; long run
When prices of outputs in an economy become sufficiently high causing production
to exceed potential GDP, the resulting:
a) downward slope in aggregate supply curve will be short run.
b) hyper-intense production will be unsustainable in the long run.
c) lower prices will lead to a lower quantity of demand.
d) higher wages will encourage workers to produce more at high prices.
Economic production has fallen to less than full potential due to inadequate
incentives for firms to produce. The duration of this economic condition will
likely be:
a) unknown
b) short-term
c) long-term
d) indefinite
The maximum quantity that an economy can produce, given its existing levels of
labor, physical capital, technology, and institutions, is called:
a) real GDP.
b) aggregate demand.
c) potential GDP.
d) aggregate supply.
The ____________ describes a situation where sufficient credit is available, but
the economy experiences a reduction in consumption and investment.
a) wealth effect
b) interest rate effect
c) price effect
d) inflation rate effect
In an AD/AS model, the point where the economy has excess capacity is called
the:
a) crossing point of the potential GDP line
b) intermediate zone of the AS curve
c) neoclassical zone of the AS curve
d) Keynesian zone of the AS curve
Changes in the price level of the different components of aggregate demand are
reflected in the AD/ASAD/AS macroeconomic model by a ________________________.
a) flatter top portion of AD curve
b) downward sloping AD curve
c) shorter distance to equilibrium point
d) longer distance to equilibrium point
Chapter 11 Problems
The graph above reflects a significant increase in world oil prices. What will
the impact on aggregate supply most likely lead to?
a) an increase in economic growth
b) a decrease in the natural unemployment rate
c)
less inflationary pressures
d) an increase in input prices
The following table shows the aggregate supply and demand data for a country.
Price Level Aggregate Demand Aggregate Supply
100 10,000 4,000
200 9,000 5,000
300 8,000 5,000
400 7,000 7,000
500 6,000 8,500
600 5,000 9,000
700 4,000 9,500
What is the equilibrium output?
a) 8,000
b) 7,000
c) 9,000
d) 4,000
Chapter 12 Random
The Keynesian economic framework is based on an assumption that:
a) people can afford a high level of government services.
b) an increase in government spending will cause the aggregate demand curve to
shift to the left.
c) an increase in government spending will cause the aggregate demand curve to
shift to the left.
d) prices and wages are sticky and do not adjust rapidly.
The sum of all the income received for contributing resources to GDP is called
___________________.
a) marginal revenue (X)
b) national revenue (Y)
c) marginal income (X)
d) national income (Y)
35. Which of the following data would be analyzed to determine whether any shift
in the MPI has occurred over the course of the past 5 year period?
a) foreign income
b) MPS
c) interest rates
d) exchange rates
If a Keynesian expenditure-output model shows that aggregate demand for both
goods and labor has shifted to the left to D1, while wages remained at w0 and
prices remained at P0, what will be the result?
a) excess supply
b) coordinated wage reductions
c) depression
d) natural rate of unemployment
When an economy is experiencing higher real interest rates, business firms will
most likely be discouraged from investing in:
a) mechanical devices.
b) specialized services.
c) computer or other technologies.
d) tangible and/or intangible capital.
Consumption, investment, government spending, exports, and imports are:
a) some of the building blocks of Keynesian analysis.
b) some of the opposing elements found in a market-orientated economy.
c) all components of aggregate demand.
d) all complementary elements of a market-orientated economy.
Which of the following is a distinguishing characteristic of a Keynesian cross
diagram?
a) real GDP on the horizontal axis
b) several different Phillips curves
c) 45-degree line
d) a flat line
If a Phillips curve shows that unemployment is high and inflation is low in the
economy, then that economy:
a) is producing at its potential GDP.
b) is producing at a point where output is less than potential GDP.
c) is producing at its equilibrium point.
d) is producing at a point where output is more than potential GDP.
If markets throughout the global economy all have flexible and continually
adjusting prices, then:
a) all changes in prices and wages will create additional employment.
b) all market-oriented economies will implement coordinated wage reductions.
c) each economy must shift in aggregate demand and create additional employment.
d) each economy will always head for its natural rate of unemployment.
In a Keynesian cross diagram, what name is given to the distance between an
output level that is below potential GDP and the level of potential GDP?
a) inflationary gap
b) expenditure-output
c) national income (Y)
d) recessionary gap
Chapter 12 Problems with graphs
Refer to the graph shown below. At point B:
a) economic growth it low or even negative.
b) output is expanding.
c) businesses may raise prices.
d) unemployment is very low.
Chapter 12 Problems
When the economy is in a recession, the government will want to increase output.
If the multiplier equals 2.5 and the government increases spending by 200, how
much will output increase by?
a) 900
b) 300
c) 100
d) 500
Suppose that out of the original 100 increase in government spending, 33 will be
recycled back into purchases of domestically produced goods and services in the
second round and 10.89 is spent in the third round. Following this multiplier
effect, what value would be recycled in the fourth round of this cycle?
a) 3.37
b) 9.89
c) 5.23
d) 3.59
________________________________________
homework 4
Chapter 14 Random
In uncertain economic times, ____________________ serves as a way of preserving
economic value that can be spent or consumed in the future.
a) owning gold
b) obtaining a credit card
c) refinancing your home mortgage
d) buying a new car
In an economy with _______________, money loses some buying power each year, but
it remains money.
a) inflation
b) currency
c) deflation
d) a market orientation
__________________ pool the deposits of many investors together and invest them
in a safe way like short-term government bonds.
a) Money market funds
b) Savings deposits
c) Time deposits
d) Certificates of deposit
If Bill performs plumbing upgrades for Alice in exchange for her incorporating
his business, then their _________________________ will be satisfied.
a) division of labor
b) balance of trade
c) convenience of exchange
d) double coincidence of wants
Banks can protect themselves against an unexpectedly high rate of loan defaults
and against the risk of ____________________ by adopting a strategy that will
______________.
a) an increased reserve requirement; provide loans to a variety of customers
b) an asset-liability time mismatch; diversify its loans
c) rising interest rates; provide loans to a variety of customers
d) rising interest rates; diversify its loans
Which of the following is a valid criticism of the use of money as a store of
value in modern economies?
a) storing money is wasteful
b) imperfect as a unit of account
c) annual inflationary loss of buying power
d) money supply is too narrowly defined
The term ___________________ describes the proportion of deposits that the bank
must hold in the form of reserves that are not loaned out or invested in bonds.
a) bond reserves
b) term deposits
c) reserve funds
d) reserve ratio
If loans become far less available, then sectors of the economy that
______________ like business investment, home construction, and car
manufacturing can be dealt a crushing blow.
a) failed to diversify risk
b) make loans to financial capital markets
c) depend on borrowed money
d) typically generate extraordinary gains
In modern economies, _____________________ receive money from savers and provide
funds to borrowers.
a) governments
b) banks
c) credit unions
d) financial intermediaries
If mollusk shells were accepted as a method of payment in modern-day markets,
what economic role would they play in the financial system?
a) unit of exchange
b) medium of exchange
c) currency exchange
d) capital exchange
_____________ are a form of financial instrument through which corporations and
governments borrow money from financial investors and promise to repay with
interest.
a) Time deposits
b) Money market funds
c) Certificates of deposit
d) Bonds
____________ is a completely inadequate mechanism ____________________ in a
modern advanced economy.
a) Money; to use as a unit of account
b) Barter; for trying to coordinate trades
c) Currency; for providing a medium of exchange
d) Money; for providing a store of value
The money multiplier is equal to the _______________ in the economy divided by
the original _________________.
a) original quantity of reserves; reserve ratio
b) quantity of money; total money
c) total money; quantity of money
d) reserve ratio; original quantity of reserves
Which of the following is omitted in a barter transaction?
a) medium of exchange
b) trade
c) money
d) store of value
________________ serves society in three functions: medium of exchange, unit of
account, and store of value.
a) A double coincidence of wants
b) Money
c) Currency
d) Barter
The process of banks making loans in financial capital markets is intimately
tied to the:
a) financial stress levels of banks.
b) home construction industry.
c) creation of money.
d) redistribution of wealth.
In modern economies, credit cards are a _________________ because of their wide
acceptance as a method of payment for both goods and services.
a) unit of exchange
b) medium of exchange
c) unit of account
d) store of value
In macroeconomics, ___________________________ describes a situation in which
two people each want to exchange some good or service that the other can
provide.
a) the usefulness of money
b) a medium of exchange
c) a double coincidence of wants
d) interrelated banking
The market where loans are made to borrowers is called the:
a) loan market.
b) money market.
c) secondary loan market.
d) primary loan market.
Antonio tries to limit his risk of overexposure to debt by using a
________________ to store a certain amount of value that he then uses to make
purchases.
a) debit card
b) smart card
c) chip card
d) credit card
Banks typically come under financial stress because of:
a) a widespread decline in the value of their assets.
b) the money multiplier effect.
c) risks associated with extraordinary economic gains.
d) diversification of loan assets.
Chapter 14 money
Lance paid $175,000 for his house in 2003 and sold it for $325,000 in 2006. What
function did the house serve during the time Lance owned it?
a) store of value
b) unit of exchange
c) unit of account
d) medium of exchange
Chapter 14 Bank balance sheet
Stealth bank has deposits of $700 million. It holds reserves of $20 million and
has purchased government bonds worth $350 million. The bank's loans, if sold at
current market value, would be worth $600 million. What does Stealth banks
net worth equal?
a) $1.02 billion
b) $270 million
c) $970 million
d) $120 million
Stealth bank has deposits of $600 million. It holds reserves of $30 million and
government bonds worth $80 million. If the bank sells its loans at market value
of $400 million, what will its total assets equal?
a) $710 million
b) $480 million
c) $110 million
d) $510 million
Chapter 14 Money multiplier
The people in an economy have $10 million in money. There is only one bank that
all the people deposit their money in and it holds 5% of the deposits as
reserves. What is the money multiplier in this economy?
a) 5
b) 1
c) 10
d) 20
_______________
homewrk 5
Chapter 13 Random
Which of the following represents a Keynesian point of view of macroeconomics?
a) aggregate supply is the primary determinate of economic output
b) creating increases in aggregate demand to reduce unemployment
c) focus on long-term growth in the economy
d) vertical aggregate supply
Which of the following government policies would be supported by neoclassical
macroeconomic assumptions?
a) focus on combating depression and cyclical unemployment
b) focus on real GDP and cyclical unemployment
c) focus on short-term recession and controlling inflation
d) focus on long-term growth and on controlling inflation
________________ economists place an emphasis on __________ run economic
performance.
a) Keynesian; long
b) Neoclassical; long
c) D. Says; short
d) Phillips; short
At a macroeconomic level, the theory of rational expectations points out that if
the ______________________ is vertical over time, then people should rationally
expect this pattern.
a) GDP
b) aggregate demand curve
c) Phillips curve
d) aggregate supply curve
From a neoclassical viewpoint, government should focus less on:
a) aggregate supply.
b) long-term growth.
c) controlling inflation.
d) cyclical unemployment.
In the neoclassical view, changes in ____________________ can only have a short-
run impact on output and on unemployment.
a) wage levels
b) aggregate demand
c) tax levels
d) aggregate supply
From a neoclassical view, which of the following is a true statement?
a) A surge in aggregate demand ends up as a rise in output, but does not
increase price levels.
b) Because wages are flexible, they are unaffected by high rates of
unemployment.
c) Lower wages will cause an economy-wide increase in the price of a key input.
d) The economy cannot sustain production above its potential GDP in the long
run.
A typical Keynesian aggregate supply (AS) curve _______________ and a typical
Keynesian Phillips curve _____________.
a) slopes downward; slopes downward
b) slopes upward; slopes upward
c) slopes upward; slopes downward
d) is vertical; is vertical
A vertical AS curve means that the level of aggregate supply (or potential GDP)
will determine the real GDP of the economy, regardless of the level of:
a) aggregate demand.
b) real unemployment.
c) inflationary pressures.
d) cyclical unemployment.
If aggregate supply is vertical, then aggregate demand does not affect:
a) inflationary pressures that accompanies any rise in output.
b) the causes of inflationary changes in price level.
c) either wages or prices.
d) the quantity of output.
In the neoclassical model, the AS curve shifts to the right over time
as_______________________ and potential GDP expands.
a) productivity increases
b) the level of real output drops
c) the macroeconomy adjusts back to real GDP
d) aggregate demand increases
Chapter 13 mandatory
Referring to the diagram, complete the following sentence: Any increase in
aggregate demand in the short-run will lead to:
a) a 45 degree supply curve, which will lead to increasing unemployment.
b) an increase in output (Q1 to Q2), but it will also lead to prices increasing.
c) a 45 degree supply curve, which will lead to recession.
d) an increase in output (Q1 to Q2), but it will also lead to a recession.
Chapter 15 Random
Regardless of the outcome in the long run, ______________________ always has the
effect of stimulating the economy in the short run.
a) tight monetary policy
b) contractionary monetary policy
c) expansionary monetary policy
d) reverse quantitative easing policy
____________________________ will often cause monetary policy to be considered
counterproductive because it makes it hard for the central bank to know when the
policy will take effect?
a) Altering the discount rate
b) Long and variable time lags
c) Quantitative easing
d) Reserve requirements
Which of the following is considered to be a relatively weak tool of monetary
policy?
a) quantitative easing
b) altering the discount rate
c) reserve requirements
d) reducing the money supply
Which of the following institutions determines the quantity of money in the
economy as its most important task?
a) Federal Open Market Committee
b) Federal Reserve Board of Governors
c) U.S. Department of the Treasury
d) Central Bank
If the economy is in recession with high unemployment and output below potential
GDP, then __________________ would cause the economy to return to its potential
GDP?
a) a loose monetary policy
b) fewer loanable funds
c) higher interest rates
d) a tight monetary policy
Which of the following is a traditional tool used by the Fed during recessions?
a) higher interest rates
b) open market operations
c) coins and paper currency
d) quantitative easing
If the original level of aggregate demand is AD0, then an expansionary monetary
policy that shifts aggregate demand to AD1 will only:
a) create a deflationary loss in price level.
b) create an inflationary increase in price level.
c) create an increase in unemployment.
d) create an increase in GDP.
What term is used to describe the interest rate charged by the central bank when
it makes loans to commercial banks?
a) Fed rate
b) reserve requirement
c) open market rate
d) discount rate
Chapter 15 important
A central bank that desires to reduce the quantity of money in the economy can:
a) raise the reserve requirement.
b) buy bonds in open market operations.
c) engage in quantitative easing.
d) lower the discount rate.
A central bank that wants to increase the quantity of money in the economy will:
a) buy bonds in open market operations.
b) raise the discount rate.
c) reverse quantitative easing.
d) sell bonds in open market operations.
When banks hold excess reserves because they dont see good lending
opportunities:
a) it negatively affects contractionary monetary policy.
b) contractionary monetary policy is unaffected.
c) expansionary monetary policy is unaffected.
d) it negatively affects expansionary monetary policy.

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