economic 3

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chapter 9chapter 10chapter 11chapter 12


 
  
Created Dec 7, 2010
by
mgonzales

 

 
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1
thestudy of aggregate economic behavior is referred to as
 
macroeconomics
2
alternating periods of growth and contraction
 
business cycles
3
which of the following is a basic measure of macroeconomic performance
 
output growth unemploymentinflation
4
which is of the following is a downturn in the business cycle
 
higher unemployment rates
5
which of the following is true during the expansionary phase of the business cycle
 
real GDP increases
6
as the economy falls from the peak to the trough of the business cycle
 
cyclical unemployment should increase and real GDP should decline
7
the total value of goods and services produced within a nations boarders measured in constant...
 
real GDP
8
a decline in an economy's level of output can lead to
 
a lower standard of loving
9
a decline in the real gdp for at least two consecutive quarters is referred to as
 
recession
10
which of the following is likely if an economy is in a recession or headed for 1"?
 
a decrease in consumer confidencea decrease in the rate of inflationan increase in unemployment
11
if the population of a country is 1000000 people its labor force consists of  800000 and...
 
unemployment rate
unemployment rate= number of unemployed /size of labor...
12
a stock person who is laid off by  a department store because retail stores across the...
 
cyclically


13
full employment in the U.S. economy means
 
the total employment rate has been reduced to zero
14
inflation is defined as 
 
an increase in the average level of prices
15
inflation functions as a redistribution mechanism  because people 
 
have different abilities and incomes
16
real income
 
is real income adjusted for inflationis the amount of money income measured in constant dollars
reflects the...
17
the consumer price index
 
a measure of changes in the average price of consumer goods
18
which of the following are internal market forces
 
innovation
population spending behavior
19
external shocks to the economy
 
disruptions  in trade
war, natural disasters
20
which of the following are policy levers
 
government regulation, tax policy, availability of money
21
which of the following concepts is consistent with classical theory
 
self adjustment of the economy\flexible priceslack of goverment intervention
22
the classical view of the economy is built on the concept 
 
flexible wages and pricesself adjustment
23
says law sates that 
 
supply creates its own demand
24
according to Keynes
 
small disturbances in prices or output were likely to be magnified by the market
government...
25
any influences on macro outcomes must be transmitted through
 
aggregate supply and demand
26
the various quantities of output that all market participants are willing and able to buy at...
 
aggregate demand
27
which of the following is not a reason for the downward slope of the aggregate demand curve
 
the income effect
28
the aggregate supply curve is upward sloping because 
 
a higher price means wider profit margins and more incentive to produce
29
in macro equilibrium 
 
buyers and sellers intentions are compatible
30
even if the economy is in macro equilibrium it is possible that the equilibrium
 
output is not optimal
31
which of the following is likely to occur if the U.S. government significantly increases spending...
 
aggregate demand will increase or shift to the right 
32
if an economy is experiencing a recession the keynesian approach to achieving full employment...
 
employ expansionary fiscal policy including tax cuts  and more government spending
33
Keynes viewed the economy as inherently unstable and suggested that during a...
 
cut taxes and or increase government spending
34
which of the following ia an example of fiscal policy
 
a change in the government spending on goods and services;a change in taxes that affects consumer...
35
monetary policy involves
 
the use of money and interest rates to influence the macro economy
36
a supply side policy approach to achieve both lower prices and full employment would be to 
 
decrease marginal tax rates and reduce government regulation
37
fiscal policy involves 
 
the use of government spending and taxes
38
inflation occurs when
 
aggregate demand increases faster than output
39
the four components of aggregate demand are
 
consumption,investment, government spending, and net exports
40
the largest component of aggregate demand for the U.S. economy is
 
consumption
41
expenditures on new plant and equipment plus changes inventories is known as
 
investment
42
net exports are 
 
negative if american exports  less goods that they import
43
which of the following will occur if aggregate demand is below full employment gdp
 
recession
44
the marginal propensity to consume
 
the percentage of disposable income spent on consumption
45
the multiplier is equal to
 
1/1-MPC
46
if consumers spend 80 cents out of every dollar received 
 
multiplier =1/1-.80                ...
47
assume an MPC of .75. the change in total spending for the economy as a result of $20 billion...
 
multiplier=1/1-.75                 =4total...
48
when we compare the total impact o aggregate demand of a 100 billion increase in government expenditures...
 
increase on governt expenditures will have a greater total impact on aggregate demand
49
fiscal restraint
 
is used to reduce inflationary pressures results in leftward shift of aggregate demand includes...
50
m1 
 
includes the most liquid forms of money;the narrowest definition of money supply;largely...
51
one of the main functions of the bank is
 
creating money
52
if the banking system has a required reserve ratio of 25% then the money multiplier is
 
money multiplier=1/.25                ...
53
when money serves as a mechanism for transforming current income into future purchases it is...
 
store of value
54
which of the following defines the money multip[lier
 
1/R
55
the term fractional reserve refers to
 
reserves being a fraction of total deposits
56
a firms variable cost
 
the level of output
57
which of the following are constraints on the ability of the banking system to create new money
 
willing borrowers;willing lenders;government regulation
58
the alternate measures of the money supply such as m1 m2 etc are all intended to reflect 
 
variations in liquidity and accessibility of assets;whether deposits are domestic or international;how...
59
in the case of wide spread unemployment in the economy fiscal policy would call for the government...
 
deficit
60
the policy tools
 
fiscal  tax cuts          changes in government spendingmonetary...
61
automatic stabilizer
 
federal expenditure or revenue item that automatically responds counter cyclically to changes...
62
fiscal year
 
the 12th month period used for accounting purposes : begins October 1 for federal...
63
stagflation 
 
when the economy suffers from both inflation and unemployment at the same time
64
modern Keynesian's acknowledge that monetary policy might help
 
increases in the money supply may lower interest rates and give investment spending a boost
65
monetarists
 
believe the only response to a recession is patience
66
supply siders
 
-emphasize the need to improve production incentives.-urge cuts in marginal tax rates on investment...
67
four obstacles to policy success
 
goal conflicts ;measurement problems;design problems;implementation problems
68
in designing policy policy makers must depend on economic forecasts that is
 
informed guesses about what the economy will look like in the future

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