MACROECONOMICJeopardy

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The graph below shows a nation’s PPF curve for the production of good Y2 and Y1. Which of the following is true?

A. The OC of producing more of Y2 is decreasing amount of Y1

B. Point D represents unemployed economic resources

C. The OC of more Y2 is constant Y1

D. Point D represents an unproductive labor force

E. The OC of more Y1 is an increasing amount of Y2

E

Which of the following transactions would be counted in GDP? A. The wage you receive from babysitting your

neighbor’s kids B. The sale of illegal drugs C. The sale of cucumbers to a pickle manufacturer D. The sale of a pound of tomatoes at a supermarket E. The resale of a sweater you received for

Christmas on EBAY

D

If Real GDP = $200 billion and the price index = 200 nominal GDP is A. $4 billion B. $400 billion C. $200 billion D. $ 2 billion E. Indeterminable with information given

B

When disposable income increases by $X

A. Consumption increases by more than $X B. Saving increases by less than $X C. Saving increases by exactly $X D. Savings remain constant E. Savings decrease by more than $X

B

Which of the following is true about the consumption function? A. The slope = to the MPC B. The slope is equal to MPS C. The slope is equal to MPS + MPC D. It shifts upward when consumers are

pessimistic E. It shifts downward when consumer wealth

increases in value.A

Which of the following most likely increases real GDP? A. An increase in real rate of interest B. An increase in taxes C. A decrease in net exports D. An increase in government spending E. A lower value of consumer wealth

D

Which of the following choices is most likely to create the greatest decrease in real GDP?

A. The govt decreases spending, matched with a decrease in taxes

B. The government increases spending with no increase in taxes

C. The government decreases spending with no change in taxes

D. The government holds spending constant while increasing taxes

E. The government increases spending matched with an increase of taxes

C

The tax multiplier increases in magnitude when A. The MPS increases B. The spending multiplier falls C. The MPC increases D. Government spending increases E. Taxes increase

C

Which of the following is the source of the supply of loanable funds? A. The stock market B. Investors C. Net exports D. Banks and mutual funds E. Savers

E

You don’t like your job in a market bagging groceries and you quit then start looking for a new job what type of unemployment

is this?

A. Cyclical B. Structural C. Seasonal D. Frictional E. Underemployed

D

Which of the following best describes the LRAS curve? A. Always vertical in the long run B. Always upward sloping b/c it follows the

Law of Supply C. Always horizontal D. Always downward sloping E. Can’t be determined w/out more

informationA

Stagflation most likely results from A. Increasing AD with constant AS B. Decreasing AS with constant AD C. Decreasing AD with constant AS D. A decrease in both AS and AD E. Increase in both AS and Ad

B

Equilibrium and real GDP is far below full employment and the govt lowers household taxes. Which is the

likely result? A. Unemployment falls with little inflation B. Unemployment rises with little inflation C. Unemployment falls with rampant

inflation D. Unemployment rises with high inflation E. No change in either unemployment or

inflationA

The effect of the spending multiplier is lessened if A. The price level is constant with an increase in

AD B. The price level falls with an increase in AS C. The price level is constant with an increase in

long run AS D. The price level falls with an increase in both AD

and AS E. The price level rises with an increase in ADE

Which of the following would NOT be an example of contractionary fiscal policy?

A. Decreasing money spent on social programs B. Increasing income taxes C. Canceling the annual cost of living raises for

government employees D. Increasing money spent to pay for government

programs E. Doing nothing with a temporary budget surplus

D

The crowding out effect from government borrowing is best described as

A. The rightward shift of AD in response to decreasing real interest rates from contractionary fiscal policy

B. The leftward shift in AD in response to rising real interest rates from expansionary fiscal policy

C. The effect of the President increasing money supply, which decreases real interest rates

D. The effect on the economy of hearing the chairman of the Fed saying that the economy is in a recession

E. The lower exports due to appreciating dollar versus other currencies

B

Which of the following fiscal policies is likely to be most effective when the economy is experiencing an

inflationary gap? A. The government decreases taxes and keeps

spending unchanged B. The govt increases spending and keeps taxes

unchanged C. The govt increases government spending

matched with an increase in taxes D. The govt decreases spending and keeps taxes

unchanged E. The govt increases taxes and decreases spendingE

Which of the following would likely slow a nation’s economic growth? A. Guaranteed low interest loans for college

students B. Removal of a tax on income earned on saving C. Removal of the investment tax credit D. More research grants given to medical schools E. Conservation policies to manage the renewable

harvest of timber.

C

What function of money best defines $1.25 as the price of a 20oz bottle of pop?

A. Medium of exchange B. Unit of account (also called standard of value)

C. Store of value D. Transfer of ownership E. Fiat money

B

If a bank has $500 in checking deposits & the bank is required to reserve $50 what is the reserve ratio. How

much does the bank have in excess reserves? A. 10%, $450 in excess reserves B. 90%, $50 in excess reserves C. 90%, $450 in excess reserves D. 10%, $50 in excess reserves E. 10%, $500 in excess reserves

A

If the money supply increases, what happens in the money market? Assume downward sloping D curve

A. The nominal interest rate rises B. The nominal interest rate falls C. The nominal interest rate does not change D. Transaction demand for money falls E. Transaction demand for money rises

B

Which of the following is a predictable advantage of expansionary monetary policy in a recession?

A. Decreases aggregate demand so that the price level falls

B. Increases aggregate demand which increases real GDP and increases employment

C. Increases unemployment, but low prices negate this effect

D. It keeps interest rates high, which attracts foreign investment

E. It boosts the value of the dollar in foreign currency markets

B

The US produces rice in a competitive market. With free trade, the world price is lower than the domestic

price, what must be true?

A. The US begins to import rice to make up for domestic shortage

B. The US begins to export rice to make up for domestic shortage

C. The US begins to import rice to eliminate a domestic surplus

D. The US begins to export rice to eliminate a domestic surplus

E. There is no incentive to import or exportA

If the US dollar and Chinese Yuan are traded in flexible currency markets, which of the following causes an appreciation of the $$

relative to the Chinese Yuan?

A. Lower interest rates in the US relative to China B. Lower price levels in China relative to the US C. Growing American preference to consumer more

Chinese made goods D. Rising per capita GDP in China increasing

imports from the US E. Speculation that the Chinese will decrease the

money supplyD

You hear that the US has a negative balance in the

current account. With this information we conclude that A. There is a trade deficit B. There is a capital account deficit C. There is capital account surplus D. More US dollars are being sent abroad

than foreign currencies coming into the US E. there is a trade surplus

D

Which of the following is a consequence of a protective tariff on imported steel?

A. Net exports fall B. Income is transferred from steel

consumers to steel producers C. Allocative efficiency is improved D. Income is transferred from domestic steel

to foreign steel producers E. Aggregate supply increasesB

In recent years, firms that produce cameras produce less 35-mm cameras and more digital cameras. This trend is an example of A. How central planners dictate which goods are

produced B. The market system answering the question of

how cameras are produced C. The market system answering the question of

what should be produced D. The market system answering the question of

who gets what is produced E. How firms fail to respond to changes in

consumer demandC

A policy supported by supply side economists would be A. Higher taxes on corporate profits B. Lower tax rates on interest earned from saving

accounts C. Removal of investment tax credits D. A longer duration of unemployment benefits E. Higher marginal income tax rates to fund social

welfare programs

B

Which of the following is likely to shift the LRAS curve to the right? A. A nation devotes more of its resources to

nondurable consumption rather than durable goods B. Research that improves the productivity of labor

and capital C. More restrictive trade policies D. Annual limits on immigration E. A permanent increase in the price of energy

B

Which monetary policy would be used to boost US exports? A. Increasing the discount rate B. Increasing the reserve ratio C. Buying Treasury securities D. Lowering tariffs E. Removing import quotas

C

Which component of a nation’s balance of payments recognizes the purchase and sale of real and financial

assets between nations?

A. The capital account B. The official reserves account C. The current account D. The trade deficit account E. The trade surplus account

A

The RR is .10 and Mr. Rich withdraws $1Million from his checking account and puts it in his freezer. How does this impact the potential amount of $ in circulation?

A. Decreases by $9 million B. Decreases by $1 million C. Decreases by $100,000 D. Increases by $1 million E. Decreases by $10 million

A