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1. A recession is often considered to be: (Points : 2)

Customer Question

1. A recession is often considered to be: (Points : 2)
an economic downturn that persists for more than two consecutive quarters of the year.
an economic downturn that persists for more than four consecutive quarters of the year.
any period of more than six months in which unemployment is rising.
any period in which the unemployment rate exceeds 6%.


2. In developing countries, individuals often grow their own food and take part in many activities that do not occur in the market. This would make the GDP figure of those countries ____________ the GDP figure of a developed country where many of these activities are part of a market transaction. (Points : 2)
higher than
lower than
more accurate than
the same as


3. A bank has a reserve requirement of 0.10. If it has demand deposits of $100,000 and is holding $12,000 in reserves: (Points : 2)
all the bank's reserves are excess reserves.
the bank is not meeting its reserve requirement.
the bank is holding $2,000 in excess reserves.
all reserves are required reserves.


4. If the reserves in U.S. banks totaled $8,000 and total deposits were $100,000, the banking system's reserve ratio would be: (Points : 2)
.08.
.10.
.80
.92


5. In an inflationary gap, if the Fed wanted to enact contractionary monetary policy it would (Points : 2)
Purchase government securities
Sell government securities
Increase government spending
Decrease government spending


6. M2 is the component of the money supply that consists of M1 plus other relatively liquid assets. (Points : 2)
True.
False.


7. What shifts the LAS curve? (Points : 2)
Sudden change sin C, I, G, NX
Increases in input prices
Anything that increases potential output
All of the above


8. What is exchanged in the financial sector? (Points : 2)
money only.
goods and services.
all financial assets.
all assets with a money price.


9. Which of the following would increase this year's GDP? (Points : 2)
A mother quits her job to take care of her newborn child.
A commission charged by your broker when you sold 100 shares of Borden stock.
A $10,000 inheritance from Aunt Mary.
Receipts from a yard sale.


10. The financial sector channels saving back into the spending stream. (Points : 2)
True.
False.


11. Transfers of assets, such as stock sales are: (Points : 2)
included in GDP because they raise domestic production.
included in GDP because they increase domestic wealth.
not included in GDP because they do not increase domestic production.
not included in GDP because they do not increase domestic wealth.


12. Cyclical unemployment is defined as unemployment that results from: (Points : 2)
fluctuations in economic activity.
structural changes in the economy.
changes in technology.
the aging of the population.


13. Calculate GDP using the information provided.
(Points : 2)
5570
5600
6050
6320


14. An increase in the price level: (Points : 2)
increases the purchasing power of money, and leads to lower interest rates and increases investment.
increases the purchasing power of money, and leads to higher interest rates and decreases investment.
decreases the purchasing power of money, and leads to lower interest rates and increases investment.
decreases the purchasing power of money, and leads to higher interest rates and decreases investment.


15. When Ben Bernanke (who succeeded Alan Greenspan) steps down as chairman of the Federal Reserve’s Board of Governors, his successor will be: (Points : 2)
elected by the public.
selected by commercial banks.
appointed by the President.
appointed by the Board of Governors.


16. The paradox of thrift occurs when: (Points : 2)
an increase in saving raises output.
an increase in saving reduces output.
saving is unrelated to output.
a decrease in saving reduces output.


17. According to your text, during wars (using World War II as a good example): (Points : 2)
government budget deficits have increased significantly
unemployment has fallen
GDP has risen enormously
all of the above


18. All of the following are characteristics of money except: (Points : 2)
it must be difficult to counterfeit.
it must be available in unlimited supply.
it must be durable.
it must be divisible.


19. The Substitution bias of the CPI: (Points : 2)
tends to contribute to inflation being overstated, because the CPI does not account for consumer’s ability to substitute between goods
tends to contribute to inflation being understated, because the CPI only considers goods whose prices do not change much from year to year
has no effect on the CPI since we can substitute between price indices
has no effect on the CPI since consumers always substitute to a cheaper product and the fixed basket allows for substitution


20. If the Fed printed too little money, the value of money would: (Points : 2)
fall, which is a way of saying there would be inflation.
rise, which is a way of saying there would be deflation.
fall, which is a way of saying there would be deflation.
rise, which is a way of saying there would be inflation.


21. Which of the following statements about aggregate income accounting is false? (Points : 2)
It provides a way of measuring total, or aggregate, production.
It provides a way of measuring how much a nation is producing and consuming.
It did not exist before the 1930s because economists focused on microeconomics before the 1930s.
It provides the only way to measure social welfare.


22. In order to function as a medium of exchange, money must: (Points : 2)
be backed by gold.
maintain a constant value over an extended period of time.
be backed by some precious commodity.
be generally accepted in exchange for goods and services.


23. According to Okun's rule of thumb, if the unemployment rate rises from 6 to 9%, then we can expect that output will: (Points : 2)
fall by 3 percent.
rise by 6 percent.
fall by 6 percent.
rise by 3 percent.


24. U.S. economic growth in output since about 1860 has averaged: (Points : 2)
0 to 1 percent.
1 to 2.5 percent.
2.5 to 3.5 percent.
5 to 5.5 percent.


25. What two numbers do you need to compute the unemployment rate? (Points : 2)
the number of unemployed persons and the size of the population.
the number of unemployed persons and the number of discouraged workers.
the number of employed persons and the number of unemployed persons.
the number of persons in the labor force and the size of the population.


26. Monetary policy directly affects: (Points : 2)
social spending.
tax rates.
the availability of credit.
the antitrust laws.


27. Money doesn't have to have any inherent value to function as a medium of exchange. (Points : 2)
True.
False.


28. The chairperson of the Federal Reserve Bank (Points : 2)
is appointed for a 4 year term
can serve multiple terms
is part of the Federal Open Market Committee (FOMC)
All of the above


29. The largest component of aggregate income is: (Points : 2)
interest.
rents.
employee compensation.
profits.


30. The primary tool of monetary policy is: (Points : 2)
the discount rate.
the reserve requirement.
the prime rate.
open market operations.


31. As the reserve ratio goes up, the simple money multiplier goes: (Points : 2)
up, and more money will be created.
down, and less money will be created.
up, and less money will be created.
down, and more money will be created.


32. If the Fed increases required reserves, financial institutions will likely lend out: (Points : 2)
more than before, increasing the money supply.
less than before, decreasing the money supply.
more than before, decreasing the money supply.
less than before, increasing the money supply.


33. Suppose prices in the U.S. are expected to decline. This is likely to: (Points : 2)
shift the AD curve to the left.
shift the AD curve to the right.
make the AD curve flatter.
make the AD curve steeper.


34. If nominal output is $4.4 trillion and the GDP deflator is 110, then real output is: (Points : 2)
$4.84 trillion.
$4.4 trillion.
$4 trillion.
$3.84 trillion.


35. A price index in its base year: (Points : 2)
is always greater than 100.
is always equal to 100.
is always less than 100.
cannot be determined without knowing the price level in the base year.


36. Using the Taylor rule, if inflation is 3 percent, desired inflation is 2 percent and output is 2 percentage points below potential, the Fed will target a Fed funds rate of: (Points : 2)
6.5
4.5
3.5
3


37. Autonomous expenditures are defined as expenditures that: (Points : 2)
occur only in equilibrium.
equal income.
occur regardless of the level of income.
change as income changes.


38. Which of the following statements best characterizes the Classical view of business cycles? (Points : 2)
Fluctuations in business activity occur in regular and predictable patterns.
Fluctuations in business activity are to be expected and should be accepted just as changes in the seasons are accepted.
Expansions and recessions are symptoms of underlying problems and should be addressed by macroeconomic policy.
The appropriate macroeconomic policy can eliminate fluctuations in business activity.


39. If expected inflation is greater than zero, then the real interest rate is: (Points : 2)
positive.
negative.
greater than the nominal interest rate.
less than the nominal interest rate.


40. If the required reserve ratio is 0.12, the amount a bank can lend out is equal to: (Points : 2)
12 percent of its deposits.
12 percent of its reserves.
88 percent of its deposits.
88 percent of its reserves.


41. The number of people looking for a job, divided by the labor force, is known as the: (Points : 2)
labor force.
labor force participation rate.
unemployment rate.
employment rate.


42. If autonomous expenditures equal $600 and the mpe is 0.80, then equilibrium income in the multiplier model will be $3,000. (Points : 2)
True
False


43. Refer to the graphs. Which of the graphs accurately depicts the aggregate production curve?

(Points : 2)
A.
B.
C.
D.


44. Gross domestic product equals the sum of consumption, investment, and government purchase. (Points : 2)
True.
False.


45. If the multiplier effect is 4, a $15 billion increase in government expenditures will shift the AD curve: (Points : 2)
to the right by $15 billion.
to the left by $15 billion.
to the right by $60 billion.
to the left by $60 billion.


46. The top of the business cycle is called: (Points : 2)
an expansion.
a recession.
an upturn.
a peak


47. M1 consists primarily of cash in the hands of the public and: (Points : 2)
savings account balances.
commercial paper.
demand (checking) deposits.
certificates of deposit.


48. A shift in the long run aggregate supply curve will change: (Points : 2)
output but not the price level.
the price level but not output.
both output and the price level.
neither output nor the price level.


49. Net foreign factor income is: (Points : 2)
the income earned from the domestic economy by foreign factors.
the income earned abroad by domestic factors.
the difference between the income earned abroad by domestic factors and the income earned domestically by foreign factors.
the difference between the value of a country's exports and imports.


50. In 2004, the dollar depreciated sharply against the euro and the yen. The dollar’s depreciation should result in: (Points : 2)
an increase in U.S. exports and an outward shift of the U.S. aggregate demand curve.
an increase in U.S. exports and an inward shift of the U.S. aggregate demand curve.
a decrease in U.S. exports and an outward shift of the U.S. aggregate demand curve.
a decrease in U.S. exports and an inward shift of the U.S. aggregate demand curve.
Submitted: 2 years ago.
Category: Multiple Problems
Expert:  FiveStarLaw replied 2 years ago.

Hi,

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Did you see the answers that I posted for you here:
http://www.justanswer.com/business-finance-homework/71pdu-1-bank-reserve-requirement-10-percent-means.html

Expert:  FiveStarLaw replied 2 years ago.
Hi Sophie,

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