Macro UNIT 2 MILESTONE 2 – In economic terms, which of the following

 

In economic terms, which of the following happened when cupcakes went from being homemade treats to beingIsLpecEialSizeTd gOourNmetEgoodies with multiple TV shows devoted to them and people waiting in line for

A change in the quantity of cupcakes demanded caused movement along the demand curve.

As the price of cupcakes rose, so did demand.

Changes in public tastes created a shift in the demand curve.

Changing tastes created a shift in the supply curve.

 

Which of the following is NOT a step in the process of lending federal funds?

At the end of the day, deposits and withdrawals in?uence the reserve level.

The Fed gives short term loans to banks to help them meet reserve requirements.

The FOMC sets a target for the federal funds rate.

 Banks with excess reserves loan money for one night to banks who cannot meet the reserve.

 

Select the statement that corresponds to a shift in the supply curve.

A movement that occurs due to factors such as ?rms having more or less access to resources

The amount of goods and services that may be purchased at a certain moment in time at a speci?c income level

The amount of goods and services that are available at different prices at a certain moment in time

Occurs when the price for a certain good changes and in?uences the quantity supplied

 

Which statement below regarding Corporate Social Responsibility (CSR) is true?

CSR is an emerging area of study that many people still do not know about.

CSR refers to practices that are self-regulating and include philanthropy and volunteer work.

Critics claim that CSR can damage brand image.

CSR includes lowering prices to make goods more affordable to consumers.

 

Which of the following would be true of policies taken during times of BOTH high and low unemployment?

The multiplier effect will magnify the in?uence of policies.

Cutting taxes will cause an increase in GDP.

Increasing government spending will stimulate the economy.

Reducing the money supply will reduce in?ation.

 

Which of the following is an example of contractionary monetary policy?

Lowering interest rates

Policies taken in response to the housing crisis

Open market sale of treasury securities

Reducing reserve requirement

 

If the MPC is 0.75 and the government increases spending by $20 billion, which of the following will be the effect this change has on the economy?

It will increase the economy by $80 billion.

It will increase the economy by $26.6 billion.

It will increase the economy by $20 billion.

It will increase the economy by $15 billion.

 

Using the expenditure approach and the information shown here, which of the following is the GDP?

Individual Purchases: $5 billion

Government purchases: $10 billion Business investments: $5 billion Imports: $5 billion

Exports: $10 billion

$35 billion

$25 billion

$45 billion

$15 billion

 

Which of the following statements are true regarding unemployment?

 It is possible to eliminate natural unemployment.

Frictional unemployment is due to changes in the economy.

Full employment is natural unemployment minus 100%.

People who lost their jobs during the recession experienced cyclical unemployment.

 

 

 

Select the statement below that is true of BOTH price ceilings AND price ?oors.

To be effective it has to be below equilibrium.

When this is binding, it can cause a surplus.

Nothing happens if it is placed above equilibrium.

This is a form of government policy that alters the market.

 

Which of the following is one of the problems with using ?scal policy to reduce the severity of business cycles?

Policies that are implemented could interfere with business investments of capital.

It is often implemented too late to be effective.

 It takes too long for consumers to respond to ?scal policy.

It should be based on rules that allow the money supply to grow at a consistent rate.

 

Which of the following is false about budget de?cits?

They represent the difference between tax revenue and government expenditures.

They can affect long run RGDP.

They typically happen when using contractionary ?scal policy.

They are ?nanced with tax revenue or new debt.

 

Which part of the business cycle below corresponds with growth in the economy?

Trough

Expansion

Peak

Recession

 

If college tuition for one year cost $2,500 in 1976 and $11,000 in 2007, the price has increased by which of the following factors?

4.4

-44

44

-4.4

 

Determine which statement below regarding economic indicators is FALSE.

Retail sales measure the current outlook for the economy.

CPI measures in?ation from the perspective of a consumer.

Building permits are an example of leading indicators.

Consumer con?dence can be volatile and inconsistent over time.

 

Assuming ceteris paribus, what principle behind the law of demand is this graph is illustrating?

Barring special circumstances, a decrease in price will have no effect on an increase or decrease in quantity.

Barring special circumstances, an increase in price will always lead to an increase in quantity.

Barring special circumstances, an increase in price will always lead to a decrease in quantity.

Barring special circumstances, an decrease in price will always lead to a decrease in quantity.

 

A popular smartphone consistently sold out until a study was released. It found that users of that particular brand were ten times more likely to get brain cancer than users of other smartphone brands.

Which of the graphs below best represents what happened to demand for the smartphones associated with a higher risk of brain cancer?

 

Which statement below regarding expansions is true?

They happen when GDP reaches its lowest point.

They occur during times of high rates of unemployment.

They occur when the economy is experiencing GDP growth.

They happen when GDP reaches its highest point.

 

If one dollar can purchase 0.74 euros, what is the exchange rate when using U.S. dollars as the base currency?

1.35

0.85

1.25

0.65

 

 

 

Which of the following is NOT a way that the Fed uses the open market to control the money supply?

To remove money from circulation, the Fed sells U.S. Treasury securities for cash.

The Fed gives bondholders cash in exchange for securities.

The Fed buys U.S. Treasury securities.

The Fed dictates the amount of money that banks must keep in their vaults.

 

Which of the following will lead to a surplus if implemented?

Binding price ?oor

Non-binding price ceiling

Binding price ceiling

Non-binding price ?oor

 

Which of the following re?ects price changes for goods in various stages of production, from raw to intermediate and ?nal goods?

Consumer con?dence

CPI

Nonfarm payroll

PPI

 

Select the TRUE statement below regarding aggregate supply in the long and short run.

If production is below the LRAS, it will eventually have to fall back.

In the short run, there is no relationship between price level and RGDP.

The discovery of new resources can cause the LRAS curve to move.

In the long run, changes in price will affect output.

 

GDP is useful in evaluating which of the following?

Increases in domestic consumption

The quality of life or the well-being of a population

An economy of a country producing a signi?cant amount abroad

The production of ?rms that are owned by domestic nationals but located overseas

 

Determine which scenario would NOT call for the Fed to intervene.

The economy is reaching hyperin?ation.

Prices are increasing rapidly; real value of the currency is falling.

Annual in?ation is around 2%.

Prices are decreasing quickly; real value of the currency is rising.