Page 1

ECO 372 Apply Week 4 Money and the Federal Reserve Homework (100% Correct) (All Possible Question/Answers)

For more course tutorials visit www.newtonhelp.com Money is: Use the following table to determine the levels of M1 and M2 in the United States. Money Categories in the United States Asset Amount (billions of dollars) Currency $82 Demand deposits 80 Money market funds 44 Other checkable deposits 37 Savings deposits 460 Small time deposits 22 Traveler's checks 4

The part of the Federal Reserve that determines and implements the nation's monetary policy and controls the money supply to promote stable prices and economic growth is the: a. Sam gives the grocery store clerk a $5 bill to pay for his purchase. b. Bill looks at the $20 price tag on a clock to see how much money he would need to purchase it. c. Maria writes a check to pay her electric bill.


d. Susan transfers some of her wealth from her checking account into a certificate of deposit that earns interest. • The Federal Reserve District Banks are divided:

The M1 measure of money consists of the sum of

The Federal Reserve System consists of which of the following? • Federal Deposit Insurance Corporation and Controller of the Currency Other things being equal, an expansion of commercial bank lending • changes the composition, but not the size, of the money supply. The reason for the Fed being set up as an independent agency of government is to

When a consumer wants to compare the price of one product with another, money is primarily functioning as a If the reserve requirement is 20% and commercial bankers decide to hold additional excess reserves equal to 5% of any newly acquired checkable deposits, then the effective monetary multiplier for the banking system will be


If you put a $20 bill in the pocket of your winter coat at the beginning of spring so that you will be surprised when you find it again next winter, you are using money as Which definition(s) of the money supply include(s) only items that are directly and immediately usable as a medium of exchange?

Money is "created" when The equilibrium rate of interest in the market for money is determined by the intersection of the The Federal Open Market Committee (FOMC) The required-reserve ratio is equal to a commercial bank’s

The coupon rate is the Money eliminates the need for a coincidence of wants in trading primarily through its role as a One hundred percent reserve banking refers to a situation in which banks' reserves equal One hundred percent of their Fractional reserve banking refers to a system where banks The functions of money are to serve as a A bank’s net worth is equal to its

What function is money serving when you deposit it in a savings account?


A wealthy executive is holding money, waiting for a good time to invest in the stock market. This action would be an example of the

If product prices were stated in terms of tobacco leaves, then tobacco leaves would be functioning primarily as

Which group is responsible for the policy decision of changing the money supply?

Cash held by a bank in its vault is a part of the bank’s Assume that the required reserve ratio is 20%. A business deposits a $50,000 check at Bank A; the check is drawn against Bank B. What happens to the reserves at Bank A and Bank B? ----------------------------------------------------------------------

ECO 372 Apply Week 5 Fiscal and Monetary Policy Homework (100% Correct) (All Possible Question/Answers)

For more course tutorials visit www.newtonhelp.com The existence of lags in designing and implementing fiscal policy helps illustrate some of the limitations of fiscal policy aimed at easing the burdens of a recession.


Which of the following statements best describes a situation when fiscal policy is more appropriate?

For each of the following scenarios, determine which time lag is most likely to result when designing and implementing fiscal policy.

The separation of power demonstrated between the legislative and executive branches of government combined with strong partisanship attitude among our elected politicians.

The fact that it takes economists working for the National Bureau of Economic Research months to declare the dates of peaks and troughs.


The time it takes to design and build new infrastructure after these projects have been passed by the legislature.

A key feature of all automatic stabilizers is that they:

Which of the following is an example of built-in stability? As real GDP decreases,

The intent of contractionary fiscal policy is to

Payments made by the government that do not require an exchange of economic activity in return are also known as The set of fiscal policies that would be most contractionary would be a(n)


Using fiscal policy to stabilize the economy is difficult because

As the economy declines into recession, the collection of personal income tax revenues automatically falls. This phenomenon best illustrates how a progressive income-tax system

If the U.S. Congress passes legislation to raise taxes to control demand-pull inflation, then this would be an example of a(n)

One timing problem in using fiscal policy to counter a recession is the "recognition lag" that occurs between the


One timing problem in using fiscal policy to counter a recession is the "legislative lag" that occurs between the

The time that elapses between the beginning of a recession or an inflationary episode and the identification of the macroeconomic problem is referred to as a(n)

When the federal government changes purchases and/or taxes to stimulate the economy or rein in inflation, such policy is

.

Fiscal policy is enacted through changes in

Fiscal policy is sometimes initiated on the advice of the


Which of the following serves as an automatic stabilizer in the economy?

If the government wishes to increase the level of real GDP, it might reduce

Due to automatic stabilizers, when the nation’s total income rises, government transfer payments

If taxes and government expenses did not vary with income, then income would


Automatic stabilizers smooth fluctuations in the economy because they produce changes in the government's budget that

Fiscal policy is sometimes initiated on the advice of the

One timing problem in using fiscal policy to counter a recession is the "implementation lag" that occurs between the

The lag between the time that the need for fiscal action is recognized and the time action is actually taken is referred to as the

When the federal government uses taxation and purchasing actions to stimulate the economy it is conducting


The discount rate is the:

If the Fed were to decrease the discount rate, banks will borrow:

When the federal funds rate increases, banks make:

Which of the monetary policy tools can alter both the level of excess reserves and the money multiplier?

Economic investment refers to _____.


An increase in the money supply, all else held constant, usually _____

the discount rate is the interest _____

The interest rate at which the Federal Reserve Banks lend to commercial banks is called the _____.

The purchase and sale of government securities by the Fed is called _____

The major purpose of the Federal Reserve buying government securities in open market operations is to _


financial markets pay close attention to changes in the federal funds rate because these changes _____.

If the Fed buys government securities from commercial banks in the open market _____.

A newspaper headline reads: "Fed Cuts Federal Funds Rate for Fifth Time This Year." This headline indicates that the Federal Reserve is most likely trying to _____.

The purpose of expansionary monetary policy is to increase _____.

The interest rate that the Fed charges on loans made directly to banks is called _____.


Traditionally, the Fed often communicated its intentions to restrict or expand monetary policy by announcing a change in its target for the _____.

The lending ability of commercial banks increases when the ____

f the Board of Governors of the Federal Reserve System increases the reserve requirement, this change will _____.

If the federal funds rate _____.


The federal funds rate is the interest rate that _______ charge(s) _______.

During the Christmas shopping season, the demand for money increases significantly. To offset the increase in money demand, the Fed must ______ the money supply, which will put ______ pressure on nominal interest rates.

Which of the following statements is true?

In an effort to stabilize the banking sector and keep banks lending, from October 2008 to September 2009, the Fed _____.

Reserves borrowed at the federal funds rate are usually repaid ____


The Fed directly sets _____.

When the Federal Reserve Banks decide to buy government bonds from banks and the public, the supply of reserves in the federal funds market

The fundamental objective of monetary policy is to assist the economy in achieving a _____.

Which of the following statements is true?

The graph below depicts an economy where an increase in aggregate demand has caused inflation. The economy's current level of real GDP (Y2) is above its long-run equilibrium. This is illustrated by the long-run aggregate supply curve (LRAS) and a price level (P2) above the equilibrium value of Pe.


Which of the following is an example of an automatic stabilizer that would help this economy move toward full employment again?

The existence of lags in designing and implementing fiscal policy helps illustrate some of the limitations of fiscal policy aimed at easing the burdens of a recession.

Which of the following statements best describes a situation when fiscal policy is more appropriate? ----------------------------------------------------------------

ECO 372 Assignment Week 1 Apply Output, Income, and Economic Growth Homework (100% Correct) (All Possible Question)

For more course tutorials visit www.newtonhelp.com


ECO 372 Week 1 Apply: Output, Income, and Economic Growth Homework – One Attempt Review the Week 1 Output, Income, and Economic Growth Quiz in preparation for this assignment. Complete the Week 1 Output, Income, and Economic Growth Assignment in McGraw-Hill Connect®. These are randomized questions. Note: You have only one attempt available to complete assignments. Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after your due date. Which of the following scenarios would be included in GDP? Darius unclogs the drain in his sink using the plunger he owns. Sandra is a waitress at Morton’s Steakhouse. She receives a cash tip of $50 that she pockets and does not report. Pam buys a new 40-inch television at Walmart. Miguel won $100 in his office fantasy football league. Which of the following expenditures is an example of a consumer durable good? Marcus buys some new soccer cleats at the sporting goods store. Arti buys a new refrigerator from Sears. Latisha gets a manicure from the nail salon in the mall. Colin buys a large coffee and a donut from Dunkin’ Donuts. The equation for net investment is written as: Net Investment = Nominal GDP – Gross Investment Net Investment = Gross Investment – Depreciation Net Investment = Consumption – Gross Investment Net Investment = Depreciation – Gross Investment Which of the following ly describes GDP using the income approach? GDP = Wages + Rents + Interest + Profits and Losses + National Income GDP = Consumption + Gross Investment + Net Exports + Government Purchases GDP = Wages + Rents + Interest + Profits and Losses GDP = National Income + Indirect Business Taxes + Depreciation + Net Foreign Factor Income


The major difference between nominal GDP and real GDP is: nominal GDP measures the value of output with constant output levels, while real GDP measures output using current-year output levels. nominal GDP measures the value of output in constant prices, while real GDP measures output using current-year prices. nominal GDP measures the value of output with current-year output levels, while real GDP measures output using constant output levels. nominal GDP measures the value of output in current-year prices, while real GDP measures output using constant prices. The U.S. produces and sells millions of different products. To aggregate them together into a single measure of domestic output, the quantity of each good produced is weighted by its _____. rev: 04_09_2018 Multiple Choice utility to consumers market price contribution to corporate profits cost of production A nation’s nominal gross domestic product (GDP) _____. rev: 04_09_2018 Multiple Choice is the dollar value of all final output produced within the borders of the nation during a specific period of time is the dollar value of all final output produced by its citizens, regardless of where they are living is always some amount less than C + I + G + NX can be found by summing C + I + S + NX Which of the following is not included in gross domestic private investment, as defined in national income accounts? rev: 04_09_2018 Multiple Choice Changes to business inventories The value of all new capital goods bought by business firms Domestic home construction undertaken by and for the private sector Government construction of new highways and dams GDP measured using current prices is called _____ deflated GDP constant GDP real GDP nominal GDP


Which of the following is a primary use for national income accounts? rev: 04_09_2018 Multiple Choice To analyze the environmental cost of economic growth To assess the economic efficiency of specific industries in the economy To determine whether there is a fair and equitable distribution of income in the economy To measure changes in the value of production and income in the economy Final goods and services refer to _____. rev: 04_09_2018 Multiple Choice

goods and services that are unsold and therefore added to inventories goods and services purchased by ultimate users, rather than for resale or further processing goods and services whose value has been adjusted for changes in the price level the excess of U.S. exports over U.S. imports Nominal GDP differs from real GDP because _____. rev: 04_09_2018 Multiple Choice nominal GDP is based on constant prices nominal GDP results from adjusting for changes in the price level real GDP results from adjusting for changes in the price level real GDP is based on current prices Which of the following is not an example of an intermediate good? rev: 04_09_2018 Multiple Choice an oven bought by a homeowner office supplies bought by an accounting firm gasoline bought by a trucking company flour bought by a bakery


In the treatment of U.S. exports and imports, national income accountants _____. rev: 04_09_2018 Multiple Choice subtract exports but add imports in calculating GDP subtract both exports and imports in calculating GDP add both exports and imports in calculating GDP add exports but subtract imports in calculating GDP The value of corporate stocks and bonds traded in a given year is _____. rev: 04_09_2018 Multiple Choice included in the calculation of net private domestic investment excluded from the calculation of GDP because it does not represent new production included in the calculation of GDP because it is a component of gross investment included in the calculation of gross private domestic investment Suppose that real GDP per capita in the United States is $49,000. If the long-term growth rate of real GDP per capita is 1.6% per year, how many years will it take for real GDP per capita to reach $98,000? Instructions: Enter your answer as a whole number. years The table below shows real GDP per capita for the United States between the years 1950–2016. Real GDP per Capita over Time Year Real GDP per Capita (dollars) 1950 $13,819 1975 24,601 2000 43,935 2016 52,172 Instructions: Round your answers to one decimal place. What is the growth rate in the standard of living from 1950 to 1975? What is the growth rate in the standard of living from 1975 to 2000? What is the growth rate in the standard of living from 2000 to 2016? Suppose that Italy can produce either goods or services with its resources, and that its PPF curve is shown on the graph as PPF1.


Using the graph, for each of the following situations, determine whether the PPF curve shifts. Suppose that Italy increases its spending on education, which increases the amount of human capital in Italy. Italy’s PPF curve would A recession causes Italy’s unemployment rate to increase above the natural rate of unemployment. Italy’s PPF curve would Italy experiences an influx of immigrants from surrounding countries, which causes the population of Italy to increase. Italy’s PPF curve would Which of the following is a measure of economic growth that is most useful for comparing changes in standards of living? rev: 05_30_2018 Multiple Choice increases in real GDP increases in real GDP per capita growth in nominal GDP decreases in the rate of unemployment The benefits of economic growth are _____, while the costs of economic growth are _____. rev: 05_30_2018 Multiple Choice increased output per person; the consumption sacrificed in exchange for capital formation increased output per person; less future consumption increased output per person; too small for concern more current consumption; less future consumption Use the following production possibilities frontiers to answer the next question. Curve (a) is the current frontier for the economy. Focusing on curve (a), point N suggests that the economy currently produces rev: 05_30_2018 Multiple Choice more goods for the future than at point P. less goods for the present than at point P. less goods for the future than at point P.


a combination of output that is less than its potential. The application of new technologies to the production process will increase rev: 05_30_2018 Multiple Choice labor productivity. the share of the population employed. the unemployment rate. the quantity of human capital. Real GDP per capita is found by rev: 05_30_2018 Multiple Choice dividing real GDP by population. subtracting population from real GDP. dividing population by real GDP. adding real GDP and population. Human capital is rev: 05_30_2018 Multiple Choice the financial resources available to humans for investment. the talents, training, and education of workers. the factories and machinery used by humans in the production process. the factories and machinery made by workers. To increase future living standards by pursuing higher current rates of investment spending, an economy must rev: 05_30_2018 Multiple Choice reduce the current capital stock. allow higher rates of current consumption. reduce current rates of consumption spending. decrease the amount of future research and development spending. Which of the following is a measure of economic growth that is most useful for measuring changes in the overall size of an economy? rev: 05_30_2018 Multiple Choice decreases in the rate of unemployment


increases in real GDP increases in real GDP per capita growth in nominal GDP Human capital refers to the rev: 05_30_2018 Multiple Choice amount of financing available to start-up firms. tools and equipment available to workers. education, training, and skills of workers. number of workers available in the economy. Economic growth can best be portrayed as a(n) rev: 05_30_2018 Multiple Choic outward shift of the production possibilities frontier. movement from a point inside to a point outside of the production possibilities frontier. inward shift of the production possibilities frontier. movement from a point near the vertical axis to a point near the horizontal axis on the production possibilities frontier. The cost of a higher living standard in the future is giving up rev: 05_30_2018 Multiple Choice current consumption. current investment. future consumption. future investment. The principle of diminishing returns to capital states that if the amount of labor and other inputs employed is held constant, then the greater the amount of capital in use the rev: 05_30_2018 Multiple Choice the less an additional unit of capital adds to production. less is produced. the more an additional unit of capital adds to production. less production is wasted. ----------------------------------------------------------------


ECO 372 Assignment Week 1 Practice Output, Income, and Economic Growth Quiz (100% Correct) (All Possible Question)

For more course tutorials visit www.newtonhelp.com

ECO 372 Week 1 Practice: Output, Income, and Economic Growth Quiz Complete the Week 1 Output, Income, and Economic Growth Quiz in McGraw-Hill ConnectÂŽby Day 5. These are randomized questions. Which of the following ly describes GDP using the income approach?GDP = Consumption + Gross Investment + Net Exports + Government PurchasesGDP = Wages + Rents + Interest + Profits and Losses GDP = National Income + Indirect Business Taxes + Depreciation + Net Foreign Factor Income GDP = Wages + Rents + Interest + Profits and Losses + National Income Which of the following statements ly explains exports versus net exports? Exports are goods, services, or resources produced domestically and sold abroad, while net exports are equal to exports minus imports. Exports are goods, services, or resources produced domestically and sold abroad, while net exports are equal to imports minus exports. Exports are goods, services, or resources produced abroad and sold domestically, while net exports are equal to exports minus imports. Exports are goods, services, or resources produced abroad and sold domestically, while net exports are equal to imports minus exports.


The major difference between nominal GDP and real GDP is: nominal GDP measures the value of output with current-year output levels, while real GDP measures output using constant output levels. nominal GDP measures the value of output with constant output levels, while real GDP measures output using current-year output levels. nominal GDP measures the value of output in current-year prices, while real GDP measures output using constant prices. nominal GDP measures the value of output in constant prices, while real GDP measures output using current-year prices. Determine whether each of the following examples would be included in Gross Domestic Product (GDP). When Judy went to the grocery store yesterday, she bought three pounds of potatoes. Judy’s purchase of potatoes 1. Ford Motor Company buys four tires to put on a new Ford Mustang. The purchase of the tires 1. The U.S. Air Force purchases two new fighter jets from Boeing. The purchase of the two fighter jets 1. When Joey had his birthday last week, his grandmother sent him a $100 bill that he could spend. Joey’s birthday gift of $100 Henry and his girlfriend ate dinner at the new Thai restaurant that recently opened in his neighborhood. This expenditure would be included in: consumer durables. services. government purchases. consumer nondurables. The equation for net investment is written as: Net Investment = Nominal GDP – Gross Investment Net Investment = Gross Investment – Depreciation Net Investment = Depreciation – Gross Investment Net Investment = Consumption – Gross Investment Which of the following measures is most often used to compare the standards of living in different countries?


rev: 04_09_2018 Multiple Choice daily per capita calorie supply per capita income life expectancy at birth per capita energy consumption GDP tends to overstate economic well-being because it takes into account _____. rev: 04_09_2018 Multiple Choice expenditures undertaken topollution illegal activities of individuals and businesses nonmarket activities, such as the productive work of homemakers improvements in product quality over time One common measure of the “standard of living� in a nation is _____. rev: 04_09_2018 Multiple Choice real GDP per capita population size real GDP the unemployment rate What are net exports? rev: 04_09_2018 Multiple Choice That portion of consumption and investment goods sent to other countries Exports minus imports Exports plus imports Imports minus exports The U.S. produces and sells millions of different products. To aggregate them together into a single measure of domestic output, the quantity of each good produced is weighted by its _____. rev: 04_09_2018 Multiple Choice cost of production contribution to corporate profits


utility to consumers market price “Net foreign factor income” in the national income accounts refers to the difference between the _____. rev: 04_09_2018 Multiple Choice income Americans gain from supplying resources abroad and the income that foreigners earn by supplying resources in the U.S. income earned by Americans in the U.S. minus the income earned by foreigners in the U.S. value of investments that Americans made abroad and the value of investments made by foreigners in the U.S. value of products sold by Americans to other nations and the value of products bought by Americans from other nations. A nation’s nominal gross domestic product (GDP) _____. rev: 04_09_2018 Multiple Choice is the dollar value of all final output produced by its citizens, regardless of where they are living is always some amount less than C + I + G + NX can be found by summing C + I + S + NX is the dollar value of all final output produced within the borders of the nation during a specific period of time The value of corporate stocks and bonds traded in a given year is _____. rev: 04_09_2018 Multiple Choice excluded from the calculation of GDP because it does not represent new production included in the calculation of GDP because it is a component of gross investment included in the calculation of net private domestic investment included in the calculation of gross private domestic investment Government purchases include spending on _____. rev: 04_09_2018 Multiple Choice government purchases of final goods and government salaries


government salaries only government purchases of final goods only government purchases of final goods, government salaries, and transfer payments Which of the following is included in GDP? rev: 04_09_2018 Multiple Choice The value of an existing house sold during a year The value of a haircut The value of the steel and aluminum used to produce a new car The value of a homemaker’s services In the treatment of U.S. exports and imports, national income accountants _____. rev: 04_09_2018 Multiple Choice subtract both exports and imports in calculating GDP subtract exports but add imports in calculating GDP add exports but subtract imports in calculating GDP add both exports and imports in calculating GDP Which of the following is not included in the sum of national income? rev: 04_09_2018 Multiple Choice Rent Profits and losses Depreciation or consumption of fixed capital Interest The sale of a used automobile would not be included in GDP of the current year because it is _____. rev: 04_09_2018 Multiple Choice not a market transaction a private transfer payment not current production a purely financial transaction GDP measured using current prices is called _____. rev: 04_09_2018 Multiple Choice real GDP


deflated GDP nominal GDP constant GDP Answer the next question based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Year Units of Output Price per Unit 1 8 $2 2 10 3 3 15 4 4 18 5 5 20 6 In year 4, nominal GDP would be _____. rev: 04_09_2018 Multiple Choice $90 $120 $316 $60 In calculating GDP, governmental transfer payments, such as Social Security or unemployment compensation, are _____. rev: 04_09_2018 Multiple Choice counted as investment spending. counted as consumption spending. not counted. counted as government spending. If real GDP declines in a given year, nominal GDP _____. rev: 04_09_2018 Multiple Choice may either rise or fall is likely to remain constant must also be declining must also be increasing The broadest measure to adjust Nominal GDP for price changes is _____. rev: 04_09_2018 Multiple Choice the Consumer Price Index (CPI) the Producer Price Index (PPI) the GDP price index exchange rates Which of the


following is included in the expenditures approach to GDP? rev: 04_09_2018 Multiple Choice The value of stocks and bonds bought by businessmen Spending on meals by consumers at restaurants Spending on used clothing at garage sales Government spending on welfare payments GDP can be calculated by summing _____. rev: 04_09_2018 Multiple Choice consumption, investment, government purchases, exports, and imports consumption, investment, government purchases, and net exports consumption, investment, wages, and rents consumption, investment, government purchases, and imports What are the two ways of looking at GDP? rev: 04_09_2018 Multiple Choice Income approach and saving approach Output approach and consumption approach Expenditures approach and income approach Output approach and expenditures approach What do government purchases include in national income accounting? rev: 04_09_2018 Multiple Choice Purchases by the federal government only Government transfer payments Purchases by federal, state, and local governments Purchases of goods for consumption but not public capital goods Net exports is a positive number when a nation _____. rev: 04_09_2018 Multiple Choice simply exports goods and services to other nations exports fewer goods and services than it imports increases its exports of goods and services exports more goods and services than it imports Nominal GDP is _____. rev: 04_09_2018


Multiple Choice money GDP adjusted for inflation the sum of all monetary transactions that occur in the economy in a year the sum of all monetary transactions involving final goods and services that occur in the economy in a year the amount of production that occurs when the economy is operating at full employment Which of the following statements about economic growth is accurate? The world’s sustained economic growth has only been occurring over the last 300 to 400 years. Countries in Africa and South America are responsible for most of the economic growth in the world since the 1600s. Economic growth has been shared equally among all the countries in the world since the start of the most recent generation. Sustained economic growth has been occurring since the start of the Roman Empire. Suppose that real GDP per capita in the United States is $49,000. If the long-term growth rate of real GDP per capita is 1.6% per year, how many years will it take for real GDP per capita to reach $98,000? Instructions: Enter your answer as a whole number. years Suppose that Italy can produce either goods or services with its resources, and that its PPF curve is shown on the graph as PPF1. Using the graph, for each of the following situations, determine whether the PPF curve shifts. Suppose that Italy increases its spending on education, which increases the amount of human capital in Italy. Italy’s PPF curve would A recession causes Italy’s unemployment rate to increase above the natural rate of unemployment. Italy’s PPF curve would Italy experiences an influx of immigrants from surrounding countries, which causes the population of Italy to increase. Italy’s PPF curve would Which of the following is a measure of economic growth that is most useful for measuring changes in the overall size of an economy? rev: 05_30_2018


Multiple Choice increases in real GDP per capita decreases in the rate of unemployment increases in real GDP growth in nominal GDP Human capital refers to the rev: 05_30_2018 Multiple Choice amount of financing available to start-up firms. number of workers available in the economy. tools and equipment available to workers. education, training, and skills of workers. The number of years required for real GDP to double can be found by rev: 05_30_2018 Multiple Choice dividing the annual growth rate by .072. multiplying the annual growth rate by 72. dividing 72 by the annual growth rate. adding 72 to annual growth rate. Before the Industrial Revolution, living standards in the world rev: 05_30_2018 Multiple Choice were declining because of rapid increases in population. are not known, for lack of reliable records from that period. were already rising significantly for many decades. were relatively stagnant for long periods of time. Which of the following will not increase a nation’s real GDP? rev: 05_30_2018 Multiple Choice technological progress average price level number of workers labor productivity If labor becomes more productive, the production possibilities frontier will rev: 05_30_2018 Multiple Choice


remain constant, but output will increase as unemployment falls. shift to inward, toward the origin. shift to outward away from the origin. remain constant, but output will fall as less labor is needed to produce the same level of output. Alpha has $40,000 of capital per worker, while Beta has $5,000 of capital per worker. In all other respects, the two countries are the same. According to the principle of diminishing returns to capital, an additional unit of capital will ______ in Alpha compared to Beta, holding other factors constant. rev: 05_30_2018 Multiple Choice increase output by the same amount have no effect on output increase output more increase output less Use the following diagram to answer the next question. The most likely cause for a shift in the production possibilities frontier from AB to CD is rev: 05_30_2018 Multiple Choice the use of the economy’s resources in a less efficient way. an increase in government purchase of the economy’s output. an increase in the quantity and quality of labor resources. an increase in the spending of business and consumers. Human capital is rev: 05_30_2018 Multiple Choice the talents, training, and education of workers. the factories and machinery made by workers. the financial resources available to humans for investment. the factories and machinery used by humans in the production process. The principle of diminishing returns to capital states that if the amount of labor and other inputs employed is held constant, then the greater the amount of capital in use the rev: 05_30_2018


Multiple Choice less is produced. less production is wasted. the more an additional unit of capital adds to production. the less an additional unit of capital adds to production. Real GDP per capita is found by rev: 05_30_2018 Multiple Choice subtracting population from real GDP. adding real GDP and population. dividing real GDP by population. dividing population by real GDP. Between the U.S. and Nepal, Nepal invests less in new factories and equipment. This will likely cause rev: 05_30_2018 Multiple Choice Nepal’s production possibilities frontier to shift inward faster than the U.S’s. the U.S.’s production possibilities frontier to shift outward faster than Nepal’s. the U.S.’s production possibilities frontier to shift inward faster than Nepal’s. Nepal’s production possibilities frontier to shift outward faster than the U.S.’s. Most economists agree that ______ are the single most important source of economic growth. rev: 05_30_2018 Multiple Choice technological advances increases in physical capital increases in human capital discoveries of natural resources Providing a constant number of workers with additional capital with which to work will ______ labor productivity at a(n) ______ rate. rev: 05_30_2018 Multiple Choice increase; increasing


decrease; decreasing increase; constant increase; decreasing The cost of a higher living standard in the future is giving up rev: 05_30_2018 Multiple Choice current investment. future consumption. future investment. current consumption. Use the following diagram to answer the next question. If CD is the economy’s current production possibilities frontier, what is the most likely reason for operating at point X? rev: 05_30_2018 Multiple Choice increases in the quantity and the quality of resources unemployment and inefficient allocation of resources technological progress and industrial change improvement in labor productivity and the number of work-hours Increasing the capital available to the workforce, holding other factors constant, tends to ______ total output while ______ labor productivity. rev: 05_30_2018 Multiple Choice increase; not changing decrease; increasing increase; decreasing increase; increasing ----------------------------------------------------------------

ECO 372 Assignment Week 2 Apply Business Cycles, Unemployment, and Inflation Homework (100% Correct) (All Possible Question)


For more course tutorials visit www.newtonhelp.com

ECO 372 Week 2 Apply: Business Cycles, Unemployment, and Inflation Homework – One Attempt Review the Week 2 Business Cycles, Unemployment, and Inflation Quiz in preparation for this assignment. Complete the Week 2 Business Cycles, Unemployment, and Inflation Assignment in McGraw-Hill Connect®. These are randomized questions. Note: You have only one attempt available to complete the assignment. Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after your due date. For each of the following items, indicate to which major group of the CPI the item belongs: 1. Tuition payments to your university: 2. A new desk for your dorm room or apartment: 3. An airline ticket to Florida to be used during spring break: 4. A 12-pack of beer to be used during spring break: 5. Tickets to a local concert: 6. A late night visit to the emergency room: In each of the following examples, identify whether the person is counted in the official labor force or not. 1. Cynthia owns and operates her own retail store. Elder has recently moved to a retirement community in Florida where he enjoys his “golden years” as a retiree. 1. Drew lost his job at the bank last year. He spent 6 months applying for every job possible before giving up 2 months ago. 1. Katherine works part-time at a small retail store. She would like to work full-time, but her employer is unable to extend her hours. 1. Latisha is an ambitious 15-year-old who spends her summer working as a lifeguard at a local pool.


1. Bill is currently serving a prison sentence, and works making license plates. 1. Tyrell just graduated college with a business degree. He is currently looking for a banking job in the major city he just moved to. 1. John and his wife just had their second child. They decided that it was best for John to leave his job and care for their new child. In each of the following examples, identify whether the individual is experiencing cyclical unemployment, frictional unemployment, structural unemployment, or no unemployment. 1. Eduardo has recently moved to a new city with his wife who was offered a great job there. He is trying to find a position in the same industry he worked in before relocating. 1. Derek worked for a large telecommunications firm that went bankrupt last year due to a recent recession. He has since tried to find work with one of the firm’s competitors, but good jobs are currently hard to come by. 1. Drew lost his job at a car manufacturer last year. He spent 6 months applying for every job possible before giving up 2 months ago. He now spends his day playing Xbox. 1. Paula has 20 years of experience in manufacturing. Her employer, and many other manufacturing firms, recently closed their U.S. plants. She would like to find a similar job but is unable to find anything that utilizes her skills. 1. Katherine works part-time at a small retail store. She would like to work full-time, but her employer is currently unable to extend her hours. 2. Tyrell just graduated from college with a business degree. He is currently looking for a job in banking in the major city he just moved to. 1. Mike is a contractor who has been unable to find work, since most businesses are delaying or canceling their construction plans due to economic uncertainty in the coming year. 1. Meg used to own and run her own bookstore. Her sales declined due to competition from online retailers. She has not been able to find any work related to her skills in the diminishing retail industry for books. Historical data show that during the recession of 1990–1991, the


natural rate of unemployment was about 5.9% while the actual unemployment rate was 7.0%. A decade later, during the 2001 recession, the natural rate of unemployment fell to 4.8% while actual unemployment was 6.0%. Using this information, which of the following statements isregarding these two short recessions? The actual unemployment rate was higher during the recession of 1990−1991, while cyclical unemployment was higher in 2001. Both the actual unemployment rate and cyclical unemployment were higher during the recession of 1990−1991. Both the actual unemployment rate and cyclical unemployment were higher during the 2001 recession. The actual unemployment rate was higher in 2001, while cyclical unemployment was higher from 1990−1991. The recurrent ups and downs in the level of economic activity extending over several years are referred to as rev: 05_30_2018 Multiple Choice noncyclical fluctuations. business cycles. economic phases. business startups. In the expansion phase of a business cycle rev: 05_30_2018 Multiple Choice employment and output increase. employment increases, but output decreases. the inflation rate and productive capacity decrease. the inflation rate decreases, but productive capacity increases. A mismatch between the geographic location of workers and the location of job openings would result in which type of unemployment? rev: 05_30_2018 Multiple Choice cyclical frictional


wait structural According to the Bureau of Labor Statistics, to be officially unemployed a person must rev: 05_30_2018 Multiple Choice be in the labor force. be waiting to be called back from a layoff. be 21 years of age or older. have lost a job. The labor force includes rev: 05_30_2018 Multiple Choice permanent employees but excludes temporary employees. full-time workers but excludes part-time workers. employed workers and persons who are officially unemployed. employed workers but excludes persons who are officially unemployed. The unemployment rate of full-employment is also called the rev: 05_30_2018 Multiple Choice potential rate of unemployment. frictional rate of unemployment. cyclical rate of unemployment. natural rate of unemployment. In calculating the unemployment rate, part-time workers are rev: 05_30_2018 Multiple Choice treated the same as “discouraged� workers who are not actively seeking employment. used to determine the size of the labor force, but not the unemployment rate. counted as employed because they are receiving payment for work. counted as unemployed because they are not working full-time. Wait unemployment and search unemployment are both types of rev: 05_30_2018 Multiple Choice


structural unemployment. cyclical unemployment. frictional unemployment. hidden unemployment. Use the table below to answer the next question. Year Employed Structural Frictional Cyclical Unemployed 2003 1,800 50 100 50 200 2004 2,400 100 100 300 2005 2,000 150 180 500 2006 2,660 40 0 140 Determine the number of people frictionally unemployed for the year 2006. rev: 05_30_2018 Multiple Choice 0 100 200 -100 Unemployment that occurs when there is deficient demand for the goods and services of an economy is called rev: 05_30_2018 Multiple Choice natural unemployment. frictional unemployment. structural unemployment. cyclical unemployment. In the United States, business cycles have occurred against a backdrop of a long-run trend of rev: 05_30_2018 Multiple Choice stagnant productivity growth. declining unemployment. rising real GDP. rising inflation. Which of the following is theway to calculate the unemployment rate? rev: 05_30_2018 Multiple Choice


(unemployed/labor force) x 100 (labor force/population) x 100 (labor force/unemployed) x 100 (unemployed/population) x 100 Search and wait unemployment is another way to describe rev: 05_30_2018 Multiple Choice frictional unemployment. noncyclical unemployment. structural unemployment. cyclical unemployment. Which of the following statements is true about causes of business cycle fluctuations? rev: 05_30_2018 Multiple Choice There are a wide range of theories as to the underlying causes of business cycle movements. Economists all agree that productivity shocks are the cause of most business cycle changes. Economists all agree that monetary changes are primarily responsible for business cycle fluctuations. Economists all agree that supply shocks are the cause of most business cycle fluctuations. Use the table below to answer the next question. Year Employed Structural Frictional Cyclical Unemployed 2003 1,800 50 100 50 200 2004 2,400 100 100 300 2005 2,000 150 180 500 2006 2,660 40 0 140 Determine the number of people structurally unemployed for the year 2005. rev: 05_30_2018 Multiple Choice 0 170 220 150


“Full employment” refers to the situation when there is rev: 05_30_2018 Multiple Choice no cyclical unemployment. no frictional or structural unemployment. 100% employment of the labor force. a 0% unemployment rate. What is an advantage of mild inflation according to some economists? Multiple Choice It helps to close the GDP gap. It reduces the inflation premium. It makes it easier for firms to adjust real wages downward as demand for their products falls. It reduces frictional, structural, and cyclical unemployment in the economy to make the economy more productive. The inflation rate measures the percentage growth rate of Multiple Choice the CPI from the base period 1982-84 to a given year. the CPI from one year to the next. real GDP from the base period 1982-84 to a given year. real GDP from one year to the next. Inflation that occurs when total spending is greater than the economy’s ability to produce output at the existing price level is rev: 05_02_2017_QC_CS-84894 Multiple Choice cost-push inflation. unexpected inflation. demand-pull inflation. expected inflation. The CPI compiled by the Bureau of Labor Statistics is used in the computations for the Multiple Choice interest rate. foreign exchange rate. inflation rate. unemployment rate. Which of the following groups has traditionally benefited from


unexpected inflation? rev: 05_02_2017_QC_CS-84894 Multiple Choice federal government foreign sector consumers business firms What is the main problem with mild inflation according to some economists? rev: 05_02_2017_QC_CS-84894 Multiple Choice It diverts productive time towards activities to hedge against inflation. It increases frictional and structural unemployment in the economy. It reduces the size of the GDP gap. It leads to unexpected deflation. Core inflation refers to the inflation picture after stripping away the Multiple Choice capital goods prices. service-sector prices. food and energy prices. government-regulated prices. Unexpected inflation arbitrarily rev: 05_02_2017_QC_CS-84894 Multiple Choice “benefits” those who save money. “taxes” those who receive fixed money incomes. “subsidizes” those who receive fixed money incomes. “penalizes” those who borrow money. Inflation caused by an increase in aggregate spending is referred to as rev: 05_02_2017_QC_CS-84894 Multiple Choice demand-pull inflation. cost-push inflation. expected inflation. hyperinflation. Inflation is a rise in Multiple Choice


real GDP over time. the general level of prices over time. unemployment over time. the standard of living over time. ----------------------------------------------------------------

ECO 372 Assignment Week 2 Practice Business Cycles, Unemployment, and Inflation Quiz (100% Correct) (All Possible Question)

For more course tutorials visit www.newtonhelp.com

ECO 372 Week 2 Practice: Business Cycles, Unemployment, and Inflation Quiz Complete the Week 2 Business Cycles, Unemployment, and Inflation Quiz In each of the following examples, identify whether the individual is experiencing cyclical unemployment, frictional unemployment, structural unemployment, or no unemployment. Eduardo has recently moved to a new city with his wife who was offered a great job there. He is trying to find a position in the same industry he worked in before relocating. Derek worked for a large telecommunications firm that went bankrupt last year due to a recent recession. He has since tried to find work


with one of the firm’s competitors, but good jobs are currently hard to come by. Drew lost his job at a car manufacturer last year. He spent 6 months applying for every job possible before giving up 2 months ago. He now spends his day playing Xbox. Paula has 20 years of experience in manufacturing. Her employer, and many other manufacturing firms, recently closed their U.S. plants. She would like to find a similar job but is unable to find anything that utilizes her skills. Katherine works part-time at a small retail store. She would like to work full-time, but her employer is currently unable to extend her hours. Tyrell just graduated from college with a business degree. He is currently looking for a job in banking in the major city he just moved to. Mike is a contractor who has been unable to find work, since most businesses are delaying or canceling their construction plans due to economic uncertainty in the coming year. Meg used to own and run her own bookstore. Her sales declined due to competition from online retailers. She has not been able to find any work related to her skills in the diminishing retail industry for books. For each of the following items, indicate to which major group of the CPI the item belongs: Tuition payments to your university: A new desk for your dorm room or apartment: An airline ticket to Florida to be used during spring break: A 12-pack of beer to be used during spring break:


Tickets to a local concert: A late night visit to the emergency room: Suppose Marcus eats nothing but burritos for dinner. He buys 30 burritos each month. During the last couple of weeks, Marcus noticed an increase in the price of burritos. The price of burritos rose from $5.50 per burrito last month to $6.60 per burrito this month. Assume that Marcus has a fixed income of $165 that he can spend on burritos. How many burritos can Marcus afford to buy at the new price of $6.60? Instructions: Enter your answer as a whole number. Burritos In each of the following examples, identify whether the person is counted in the official labor force or not. Cynthia owns and operates her own retail store. Elder has recently moved to a retirement community in Florida where he enjoys his “golden years� as a retiree. Drew lost his job at the bank last year. He spent 6 months applying for every job possible before giving up 2 months ago. Katherine works part-time at a small retail store. She would like to work full-time, but her employer is unable to extend her hours. Latisha is an ambitious 15-year-old who spends her summer working as a lifeguard at a local pool. Bill is currently serving a prison sentence, and works making license plates. Tyrell just graduated college with a business degree. He is currently looking for a banking job in the major city he just moved to.


John and his wife just had their second child. They decided that it was best for John to leave his job and care for their new child. Using the graph below, identify the different stages of the business cycle. Assume that A, B, and C represent consecutive years. A time period when the economy is growing toward full employment is known as It is depicted in the graph as A time period characterized by full or near-full employment is known as It is depicted in the graph as A time period with two consecutive quarters of declining output is known as It is depicted in the graph as A time period when employment and real output are at their lowest levels is known as It is depicted in the graph as Historical data show that during the recession of 1990–1991, the natural rate of unemployment was about 5.9% while the actual unemployment rate was 7.0%. A decade later, during the 2001 recession, the natural rate of unemployment fell to 4.8% while actual unemployment was 6.0%. Using this information, which of the following statements isregarding these two short recessions? Both the actual unemployment rate and cyclical unemployment were higher during the 2001 recession.


Both the actual unemployment rate and cyclical unemployment were higher during the recession of 1990−1991. The actual unemployment rate was higher during the recession of 1990−1991, while cyclical unemployment was higher in 2001. The actual unemployment rate was higher in 2001, while cyclical unemployment was higher from 1990−1991. The natural rate of unemployment rev: 05_30_2018 Multiple Choice means that the economy will always operate at that rate. is a fixed unemployment rate that does not change over time. means that the economy will always realize its potential output. is equal to the total of frictional and structural unemployment. Use the following diagram to answer the next question. The diagram illustrates the pattern of rev: 05_30_2018 Multiple Choice economic growth patterns. business cycles. wage movements over time. price level movements. Full employment” refers to the situation when there is rev: 05_30_2018


Multiple Choice 100% employment of the labor force. no cyclical unemployment. no frictional or structural unemployment. a 0% unemployment rate. The unemployment rate is interpreted as the percentage of the rev: 05_30_2018 Multiple Choice able-bodied population who are not working. adult population who are unemployed. workforce that have been laid off. labor force that are not employed. A recession is a decline in rev: 05_30_2018 Multiple Choice the inflation rate that lasts six months or longer. the unemployment rate that lasts six months or longer. real GDP that lasts six months or longer. potential GDP that lasts six months or longer. The rate of unemployment when the economy is fully employed is called the rev: 05_30_2018 Multiple Choice


frictional rate of unemployment. structural rate of unemployment. full-employment rate of unemployment. natural rate of unemployment. Use the table below to answer the next question. Year Employed Structural Frictional Cyclical Unemployed 2003 1,800 50 100 50 200 2004 2,400 100 100 300 2005 2,000 150 180 500 2006 2,660 40 0 140 Determine the number of people cyclically unemployed for the year 2004. rev: 05_30_2018 Multiple Choice -100 100 0 200 Use the table below to answer the next question. Year Employed Structural Frictional Cyclical Unemployed 2003 1,800 50 100 50 200 2004 2,400 100 100 300 2005 2,000 150 180 500


2006 2,660 40 0 140 Determine the number of people frictionally unemployed for the year 2006. rev: 05_30_2018 Multiple Choice 100 0 200 -100 A mismatch between the geographic location of workers and the location of job openings would result in which type of unemployment? rev: 05_30_2018 Multiple Choice cyclical structural wait frictional Unemployment that occurs when there is deficient demand for the goods and services of an economy is called rev: 05_30_2018 Multiple Choice cyclical unemployment. structural unemployment.


frictional unemployment. natural unemployment. A peak in the business cycle rev: 05_30_2018 Multiple Choice occurs when the unemployment rate is its greatest. is a temporary maximum point. is a temporary minimum point. occurs when the inflation rate is its lowest. Which of the following is theway to calculate the unemployment rate? rev: 05_30_2018 Multiple Choice (labor force/unemployed) x 100 (unemployed/labor force) x 100 (labor force/population) x 100 (unemployed/population) x 100 The Great Recession that started in 2007 was triggered by shocks in which of the following economic sectors? rev: 05_30_2018 Multiple Choice consumer and government spending international trade and foreign exchange markets real estate and financial markets


gold market and stock market In the expansion phase of a business cycle rev: 05_30_2018 Multiple Choice employment and output increase. the inflation rate and productive capacity decrease. the inflation rate decreases, but productive capacity increases. employment increases, but output decreases. In calculating the unemployment rate, part-time workers are rev: 05_30_2018 Multiple Choice treated the same as “discouraged� workers who are not actively seeking employment. counted as employed because they are receiving payment for work. counted as unemployed because they are not working full-time. used to determine the size of the labor force, but not the unemployment rate. The labor force includes rev: 05_30_2018 Multiple Choice permanent employees but excludes temporary employees. employed workers but excludes persons who are officially unemployed.


full-time workers but excludes part-time workers. employed workers and persons who are officially unemployed. Wait unemployment and search unemployment are both types of rev: 05_30_2018 Multiple Choice frictional unemployment. cyclical unemployment. hidden unemployment. structural unemployment.Use the table below to answer the next question. Year Employed Structural Frictional Cyclical Unemployed 2003 1,800 50 100 50 200 2004 2,400 100 100 300 2005 2,000 150 180 500 2006 2,660 40 0 140 Determine the number of people structurally unemployed for the year 2005. rev: 05_30_2018 Multiple Choice 220 170 0 150


Which of the following statements is true about causes of business cycle fluctuations? rev: 05_30_2018 Multiple Choice Economists all agree that monetary changes are primarily responsible for business cycle fluctuations. There are a wide range of theories as to the underlying causes of business cycle movements. Economists all agree that productivity shocks are the cause of most business cycle changes. Economists all agree that supply shocks are the cause of most business cycle fluctuations. In the United States, business cycles have occurred against a backdrop of a long-run trend of rev: 05_30_2018 Multiple Choice stagnant productivity growth. rising real GDP. rising inflation. declining unemployment. The unemployment rate of full-employment is also called the rev: 05_30_2018 Multiple Choice cyclical rate of unemployment.


natural rate of unemployment. potential rate of unemployment. frictional rate of unemployment. According to the Bureau of Labor Statistics, to be officially unemployed a person must rev: 05_30_2018 Multiple Choice be 21 years of age or older. be in the labor force. be waiting to be called back from a layoff. have lost a job. The recurrent ups and downs in the level of economic activity extending over several years are referred to as rev: 05_30_2018 Multiple Choice business cycles. economic phases. business startups. noncyclical fluctuations. In calculating the unemployment rate, “discouraged� workers who are not actively seeking employment are rev: 05_30_2018 Multiple Choice


included as part of the unemployed. excluded from the labor force. used to determine the size of the labor force. treated the same as part-time workers.The unemployed are those people who rev: 05_30_2018 Multiple Choice are not employed but are seeking work. are not working. do not have jobs. are not in the workforce. The GDP gap measures the amount by which rev: 11_14_2016_QC_CS-69055 Multiple Choice nominal GDP exceeds real GDP. actual GDP exceeds equilibrium GDP. potential GDP differs from actual GDP. actual GDP exceeds national income. Use the following diagram to answer the next question. The straight line E drawn through the wavy lines would provide an estimate of the rev: 05_30_2018 Multiple Choice


recession fluctuation. recovery trend. natural rate of unemployment. economic growth trend. Which of the following groups declares the start and end of recessions in the U.S.? rev: 05_30_2018 Multiple Choice The Business Cycle Dating Committee of the National Bureau of Economic Research. The Business Cycle Monitoring Committee of the Federal Reserve System. The Business Cycle Tracking Agency of the Department of Commerce. The Committee on Business Cycles of the Council of Economic Advisers. A trough in the business cycle occurs when rev: 05_30_2018 Multiple Choice the inflation rate is at its lowest level. employment and output reach their lowest levels. cyclical unemployment is at a minimum point. the natural rate of unemployment is at a minimum point. Search and wait unemployment is another way to describe


rev: 05_30_2018 Multiple Choice structural unemployment. noncyclical unemployment. frictional unemployment. cyclical unemployment. Unexpected inflation arbitrarily rev: 05_02_2017_QC_CS-84894 Multiple Choice “penalizes” those who borrow money. “taxes” those who receive fixed money incomes. “benefits” those who save money. “subsidizes” those who receive fixed money incomes. The CPI compiled by the Bureau of Labor Statistics is used in the computations for the Multiple Choice interest rate. unemployment rate. inflation rate. foreign exchange rate. What is an advantage of mild inflation according to some economists? Multiple Choice It reduces the inflation premium.


It reduces frictional, structural, and cyclical unemployment in the economy to make the economy more productive. It makes it easier for firms to adjust real wages downward as demand for their products falls. It helps to close the GDP gap. Core inflation refers to the inflation picture after stripping away the Multiple Choice government-regulated prices. service-sector prices. capital goods prices. food and energy prices Which of the following groups has traditionally benefited from unexpected inflation? rev: 05_02_2017_QC_CS-84894 Multiple Choice federal government foreign sector consumers business firms Which of the following measures the changes in the prices of a “market basket� of some 300 goods and services purchased by typical urban consumers? Multiple Choice the Consumer Price Index


the GDP Price Index the Wholesale Price Index the Retail Trade survey Inflation caused by an increase in aggregate spending is referred to as rev: 05_02_2017_QC_CS-84894 Multiple Choice demand-pull inflation. cost-push inflation. hyperinflation. expected inflation. Inflation caused by a rise in the prices of inputs is referred to as rev: 05_02_2017_QC_CS-84894 Multiple Choice hyperinflation. demand-pull inflation. unexpected inflation. cost-push inflation. The inflation rate measures the percentage growth rate of Multiple Choice the CPI from one year to the next. real GDP from one year to the next. the CPI from the base period 1982-84 to a given year.


real GDP from the base period 1982-84 to a given year. Inflation is a rise in Multiple Choice the general level of prices over time. the standard of living over time. real GDP over time. unemployment over time. In an economy, the total expenditures for a market basket of goods in year 1 (the base year) was $5,000 billion. In year 2, the total expenditure for the same market basket of goods was $5,500 billion. What was the Consumer Price Index for the economy in year 2? Multiple Choice 100 115 110 120 What is the main problem with mild inflation according to some economists? rev: 05_02_2017_QC_CS-84894 Multiple Choice It leads to unexpected deflation. It diverts productive time towards activities to hedge against inflation. It increases frictional and structural unemployment in the economy. It reduces the size of the GDP gap.


Inflation that occurs when total spending is greater than the economy’s ability to produce output at the existing price level is rev: 05_02_2017_QC_CS-84894 Multiple Choice demand-pull inflation. expected inflation. unexpected inflation. cost-push inflation. Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unexpected inflation occurs in the economy, then rev: 05_02_2017_QC_CS-84894 Multiple Choice both lenders and borrowers benefit. both lenders and borrowers are hurt. borrowers are hurt, but lenders benefit. lenders are hurt, but borrowers benefit. ----------------------------------------------------------------

ECO 372 Assignment Week 3 Practice Public Finance and Aggregate Demand and Supply Quiz (100% Correct) (All Possible Questions)

For more course tutorials visit www.newtonhelp.com


Which of the following descriptions is most representative of the mix of revenues and expenditures of a local government? • Revenue is predominantly from property taxes but may include sales taxes or income taxes. Expenditures include investments in education and public welfare. • Revenue is predominantly from excise taxes and property taxes. Expenditures include investments in infrastructure and national defense. • Revenue is predominantly from income taxes and payroll taxes. Expenditures include income security and interest on debt. • Revenue is predominantly from sales taxes and may include personal or corporate income taxes. Expenditures include investments in education and infrastructure. Explanation A local government’s predominant revenue source is from property taxes (e.g., homeowners and businesses pay property taxes for owning real estate). The revenue is spent for different expenditures, which include investments in education (e.g., libraries and other venues) and public welfare (e.g., providing services to the homeless).

Which of the following descriptions is most representative of the mix of revenues and expenditures of the federal government? • Revenue is predominantly from income taxes and payroll taxes. Expenditures include income security and interest on the national debt. •


Revenue is predominantly from excise taxes and property taxes. Expenditures include investments in infrastructure and national defense. • Revenue is predominantly from property taxes but may include sales taxes or income taxes. Expenditures include investments in education and public welfare. • Revenue is predominantly from sales taxes and may include personal or corporate income taxes. Expenditures include investments in education and infrastructure. Explanation The federal government’s predominant revenue sources are income taxes (taxes paid on income from profits, interest, dividends, etc.) and payroll taxes (mainly taxes from employee income). The revenue is spent for different expenditures, which include income security and interest on the national debt. Both are payments resulting from government debt. Public finance is the subdiscipline of economics that studies the various ways in which rev: 06_21_2018 Multiple Choice • the general public acquires financing for their purchases. • firms in the financial sector provide services to households and firms. • governments may regulate and promote the stability of the financial sector. • governments raise and expend money.

How is the public debt calculated? rev: 06_21_2018 Multiple Choice •


By subtracting current government spending from current government tax revenues • By summing the annual government purchases over time • By subtracting the government’s total liabilities from its total assets • By summing the annual difference between tax revenues and government spending over the years

0.04/0.04 points awarded Item Scored eBook References Item 5 Item 5 0.04 of 0.04 points awarded Item Scored To track the public debt over time and understand its significance to the economy, it is best rev: 06_21_2018 Multiple Choice • to compare it to imports, exports, and the trade deficit. • measured relative to the gross domestic product. • calculated relative to the money supply. • examined relative to budget surpluses.

A federal budget deficit exists when federal government rev: 06_21_2018 Multiple Choice • assets are less than liabilities in a given year. •


spending exceeds tax revenues in a given year. • taxation is decreasing in a given year. • spending is increasing in a given year.

The two largest sources of tax revenue for the U.S. federal government are rev: 06_21_2018 Multiple Choice • personal income taxes and corporate income taxes. • personal income taxes and payroll taxes. • excise taxes and customs duties. • payroll taxes and excise taxes.

Many states in the U.S. acquire significant amounts of funds from the following, except rev: 06_21_2018 Multiple Choice • property taxes. • state-run lotteries. • grants from the Federal government. • personal income taxes.


Which of the following is the largest expenditure item of local governments? rev: 06_21_2018 Multiple Choice • Education • Welfare • Highways • Public safety

A tax is regressive if it rev: 06_21_2018 Multiple Choice • takes the same percentage of income regardless of income level. • takes a smaller percentage of income as income increases. • is levied on consumers. • takes a higher percentage of income as income increases.

The Social Security tax is regressive because rev: 06_21_2018 Multiple Choice • no Social Security tax is collected for incomes in excess of a "cap" income level.


• the Social Security tax rate applied does not rise with the salary level. • as income increases, the Social Security tax rate increases at a decreasing rate. • each individual must pay a set percentage of his or her income in Social Security taxes.

Social Security contributions are part of rev: 06_21_2018 Multiple Choice • excise taxes. • payroll taxes. • indirect taxes. • reverse taxes.

The largest proportion of the U.S. public debt is held by rev: 06_21_2018 Multiple Choice • U.S. government agencies. • the Federal Reserve System. • foreign individuals and institutions. • the U.S. public (individuals, businesses, financial institutions, and government).


Which of the following is not a government activity that is involved in public finance? rev: 06_21_2018 Multiple Choice • Providing public goods and services such as national defense and education. • Regulating the activities of firms in the financial sector of the economy. • Redistributing income through various taxes and income-transfer payments. • Running government-owned enterprises such as hospitals, utilities, and lotteries.

A public debt that is owed to foreigners can be burdensome because rev: 06_21_2018 Multiple Choice • foreign interest rates are persistently higher than domestic interest rates. • the payment of interest reduces the volume of goods and services available for domestic uses. • the payment of interest will conflict with a nation's foreign aid programs. • the payment of interest will necessarily have a deflationary effect on prices in the paying nation.


Which of the following statements about payroll taxes is false? rev: 06_21_2018 Multiple Choice • They are lump-sum taxes not based on wages/salaries. • They provide funds for Social Security. • Both employers and employees pay these taxes. • They include Medicare taxes.

Which of the following is the largest expenditure item of state governments? rev: 06_21_2018 Multiple Choice • Education • Highways • Public welfare • Health and hospitals

Which one of the following is not an excise tax of the federal government? rev: 06_21_2018 Multiple Choice • General sales tax


• Gasoline tax • Alcoholic beverage tax • Tobacco tax

Which of the following is not a significant source of revenue for the U.S. federal government? rev: 06_21_2018 Multiple Choice • Property taxes • Personal income taxes • Corporate income taxes • Payroll taxes

For each of the following scenarios, determine the effect on aggregate supply. a. There is an unexpected decrease in oil prices. This causes: • a movement along the aggregate supply curve to the right, indicating an increase in the quantity of real GDP supplied. • an increase in aggregate supply, shifting the aggregate supply curve to the right. • a movement along the aggregate supply curve to the left, indicating a decrease in the quantity of real GDP supplied. •


a decrease in aggregate supply, shifting the aggregate supply curve to the left. b. The government increases the amount that all producers are required to contribute to health insurance coverage. This causes: • an increase in aggregate supply, shifting the aggregate supply curve to the right. • a decrease in aggregate supply, shifting the aggregate supply curve to the left. • a movement along the aggregate supply curve to the left, indicating a decrease in the quantity of real GDP supplied. • a movement along the aggregate supply curve to the right, indicating an increase in the quantity of real GDP supplied. Explanation a. As oil prices decline, all producers will experience a decrease in the cost of production, as they will spend less on inputs using oil. When costs across the board decrease, it means producers can produce more goods and services at every price level. This will cause aggregate supply to increase. An increase in aggregate supply is shown as a shift in the aggregate supply curve to the right. Use the graph of Remi's economy to complete the following statements. a. Point B is referred to as a trough . b. The movement from point A to point E is called a business cycle . c. Point D is referred to as a peak . d. The movement from point B to point D is called an expansion . Explanation A business cycle is the short-term fluctuations experienced in the economy due to changes in levels of economic activity. It occurs from


the economy moving between expansions and recessions. An expansion is a phase of the business cycle characterized by increasing real GDP, income, and employment. A peak is the point in the business cycle where real GDP reaches a maximum. The peak marks the end of an expansion. A recession is a decline in real output for at least two consecutive quarters. A trough is the lowest point of economic activity in the business cycle, where real GDP reaches a minimum; the trough marks the end of a recession.

The long-run aggregate supply curve is vertical because: • all input prices are flexible in the long run. • some input prices are sticky in the long run. • firms cannot change prices or input prices in the long run. • all input prices are sticky in the long run. Explanation The long-run aggregate supply curve is vertical because all input prices are flexible in the long run. An increase in the price level will cause the cost of inputs to rise, and as the input prices adjust firms will not increase output as the price level increases. Therefore, output remains the same, but at a higher price.

The long-run aggregate supply curve is vertical because: • all input prices are flexible in the long run. • some input prices are sticky in the long run. • firms cannot change prices or input prices in the long run. • all input prices are sticky in the long run. Explanation


The long-run aggregate supply curve is vertical because all input prices are flexible in the long run. An increase in the price level will cause the cost of inputs to rise, and as the input prices adjust firms will not increase output as the price level increases. Therefore, output remains the same, but at a higher price. For each of the following scenarios, determine whether the situation described can be attributed to the real-balances effect, the interest-rate effect, or the foreign-purchases effect. a. As a result of an increase in the price level, the cost of borrowing increases, which causes people to buy fewer cars. • Foreign-purchases effect • Real-balances effect • Interest-rate effect b. When the price level decreases, restaurants become busier as more people purchase restaurant meals. • Foreign-purchases effect • Interest-rate effect • Real-balances effect Explanation a. Interest-rate effect: When the price level rises, the demand for money increases, which causes interest rates to rise, resulting in a decrease in investment and consumption spending, thus reducing the aggregate quantity of real GDP demanded. If the cost of borrowing, or the interest rate, increases as a result of a price level increase and people buy fewer cars, it is an example of the interest-rate effect. Determine the effect on aggregate demand for each of the scenarios described below.


a. All European countries experience an economic expansion, raising incomes in each of the European countries. This causes: • a decrease in aggregate demand, shifting the aggregate demand curve to the left. • a movement along the aggregate demand curve to the right, indicating an increase in the quantity of real GDP demanded. • an increase in aggregate demand, shifting the aggregate demand curve to the right. • a movement along the aggregate demand curve to the left, indicating a decrease in the quantity of real GDP demanded. b. The government decides to decrease the amount it spends on the military. This causes: • a movement along the aggregate demand curve to the right, indicating an increase in the quantity of real GDP demanded. • a decrease in aggregate demand, shifting the aggregate demand curve to the left. • a movement along the aggregate demand curve to the left, indicating a decrease in the quantity of real GDP demanded. • an increase in aggregate demand, shifting the aggregate demand curve to the right. Explanation a. As foreign countries have higher incomes, those countries will increase spending for all goods and services, including goods and services from other countries. Therefore, they will buy more goods and services from other countries, which are exports for aggregate demand. This increase in spending will increase the amount of goods and services purchased at every price level, causing aggregate demand to increase. An increase in aggregate demand is shown as a shift in the aggregate demand curve to the right.


For each of the examples below, determine the effect on aggregate demand. a. In order to reduce the deficit, the government decides to increase the level of taxes in the economy. This causes: • a decrease in aggregate demand, shifting the aggregate demand curve to the left. • a movement along the aggregate demand curve to the left, indicating a decrease in the quantity of real GDP demanded. • an increase in aggregate demand, shifting the aggregate demand curve to the right. • a movement along the aggregate demand curve to the right, indicating an increase in the quantity of real GDP demanded. b. The economy experiences a sustained expansion in stock prices for the majority of companies in the country. This causes: • a movement along the aggregate demand curve to the right, indicating an increase in the quantity of real GDP demanded. • a decrease in aggregate demand, shifting the aggregate demand curve to the left. • a movement along the aggregate demand curve to the left, indicating a decrease in the quantity of real GDP demanded. • an increase in aggregate demand, shifting the aggregate demand curve to the right. Explanation a. When there is an increase in taxes, it causes the amount of disposable income that consumers have to decrease. As income decreases, people will buy fewer goods and services at every price


level, causing aggregate demand to decrease. A decrease in aggregate demand is shown as a shift in the aggregate demand curve to the left. The foreign purchases, interest rate, and real-balances effects explain why the ____________. rev: 06_12_2018 Multiple Choice • aggregate demand curve may shift to the left or right • aggregate demand curve is downward-sloping • aggregate expenditures schedule may shift up or down • economy will adjust towards equilibrium

The intersection of the aggregate demand and aggregate supply curves determines the _____. rev: 06_12_2018 Multiple Choice • productivity level in the economy • equilibrium level of real domestic output and prices • shape of the aggregate demand curve • per-unit cost of production in the economy

The labels for the axes of an aggregate supply curve should be _____. rev: 06_12_2018 Multiple Choice •


aggregate demand for the vertical axis and real national output for the horizontal axis • real domestic output for the vertical axis and price level for the horizontal axis • real employment for the vertical axis and price level for the horizontal axis • real domestic output for the horizontal axis and price level for the vertical axis

Use the following graph to answer the next question.

A shift from AD2 shifts to AD1 would be consistent with what economic event in U.S. history? rev: 06_12_2018 Multiple Choice • cost-push inflation in the mid-1970s • World War II in the 1940s • Great Recession of 2007-2009 • demand-pull inflation in the late 1960s

Use the following graph to answer the next question.

If AD1 shifts to AD2, then the equilibrium output increases from _____.


rev: 06_12_2018 Multiple Choice • Q1 to Q3 while the price level falls from P2 to P1 • Q1 to Q2 while the price level falls from P2 to P1 • Q1 to Q3 while the price level rises from P1 to P2 • Q1 to Q2 while the price level rises from P1 to P2

Use the following graph, which shows an aggregate demand, to answer the next question.

If the economy is at point C and the price level increases by 100, then the real balances, interest-rate, and foreign purchases effects will _____. rev: 06_12_2018 Multiple Choice • move the economy to point D • move the economy to point B • move the economy to point A • shift the AD curve to the left

Which would most likely shift the aggregate supply curve? A change in the prices of _____. rev: 06_12_2018 Multiple Choice


• foreign products • resources • domestic products • financial assets

The long-run aggregate supply curve is _____. rev: 06_12_2018 Multiple Choice • vertical • horizontal • upward-sloping and becomes steeper at output levels above the fullemployment output • upward-sloping and becomes flatter at output levels above the fullemployment output

A decrease in expected returns on investment will most likely shift the AD curve to the _____. rev: 06_12_2018 Multiple Choice • right because Ig will increase • right because C will increase • left because Ig will decrease


• left because C will decrease The aggregate demand curve shows the _____. rev: 06_12_2018 Multiple Choice • inverse relationship between interest rates and the quantity of real GDP produced • direct relationship between real-balances and the quantity of real GDP purchased • inverse relationship between the price level and the quantity of real GDP purchased • direct relationship between the price level and the quantity of real GDP produced

If at a particular price level, real output from producers is greater than real output desired by purchasers, then there will be a general _____. rev: 06_12_2018 Multiple Choice • shortage and the price level will fall • surplus and the price level will fall • surplus and the price level will rise • shortage and the price level will rise A decrease in labor costs will cause aggregate _____.


rev: 06_12_2018 Multiple Choice • demand to decrease • demand to increase • supply to increase • supply to decrease Use the following graph, which shows an aggregate demand curve, to answer the next question. If the price level increases from 150 to 250, the real output demanded will _____. rev: 06_12_2018 Multiple Choice • decrease by $600 billion • increase by $200 billion • increase by $800 billion • decrease by $200 billion Use the following graph to answer the next question.

The short-run equilibrium for this economy is at _____. rev: 06_12_2018 Multiple Choice • point e


• point g • none of these points • point f The aggregate demand curve or schedule shows the relationship between the total demand for output and the _____. rev: 06_12_2018 Multiple Choice • income level • price level • interest rate • real GDP The long-run aggregate supply analysis assumes that _____. rev: 06_12_2018 Multiple Choice • both input and product prices are variable • input prices are variable while product prices are fixed • both input and product prices are fixed • input prices are fixed while product prices are variable Use the following graph to answer the next question.


Which of the following factors does NOT explain a movement along the AD curve? rev: 06_12_2018 Multiple Choice • The foreign purchases effect • The expenditure multiplier effect • The interest-rate effect • The real-balances effect

Use the following graph, which shows an aggregate demand curve, to answer the next question,

If the price level decreases from 200 to 100, the real output demanded will _____. rev: 06_12_2018 Multiple Choice • increase by $800 billion • decrease by $600 billion • increase by $200 billion • decrease by $200 billion An aggregate supply curve represents the relationship between the _____.


rev: 06_12_2018 Multiple Choice • price level and the production of real domestic output • real domestic output bought and the real domestic output sold • price level that producers are willing to accept and the price level buyers are willing to pay • price level and the buying of real domestic output Which would most likely increase aggregate supply? rev: 06_12_2018 Multiple Choice • A decrease in personal income taxes • An increase in the prices of imported products • An increase in productivity • A decrease in business subsidies

Which of the following factors does not explain the inverse relationship between the price level and the total demand for output? rev: 06_12_2018 Multiple Choice • An interest-rate effect • A substitution effect •


A foreign-purchases effect • A real-balances effect Use the following graph to answer the next question. When output increases from Q1 and the price level decreases from P1, this change will _____. rev: 06_12_2018 Multiple Choice • • result in a movement along the aggregate demand curve from e3 to e1 • result in a movement along the aggregate demand curve from e1 to e2 • be caused by a shift in the aggregate supply curve from AS1 to AS2 The short-run version of aggregate supply assumes that product prices are _____. rev: 06_12_2018 Multiple Choice • fixed while resource prices are flexible • An increase in expected future income will _____. rev: 06_12_2018 Multiple Choice • increase aggregate demand • decrease aggregate demand and aggregate supply • increase aggregate demand and aggregate supply • increase aggregate supply flexible while resource prices are fixed


• both input and product prices are flexible • both input and product prices are fixed An increase in expected future income will _____. rev: 06_12_2018 Multiple Choice • increase aggregate demand • decrease aggregate demand and aggregate supply • increase aggregate demand and aggregate supply • increase aggregate supply Which of the following descriptions is most representative of the mix of revenues and expenditures of a local government? Revenue is predominantly from property taxes but may include sales taxes or income taxes. Expenditures include investments in education and public welfare. Which of the following descriptions is most representative of the mix of revenues and expenditures of the federal government? Revenue is predominantly from income taxes and payroll taxes. Expenditures include income security and interest on the national debt Which of the following is the largest expenditure item of local governments? Education Which is the most important source of tax revenue for local governments?


Property taxes Which of the following is the largest expenditure item of state governments? Education Which one of the following is not an excise tax of the federal government? General Sales tax The circular flow model with government included would show that government

provides goods and services to businesses and households and pays for them with net taxes. A budget surplus means that

government revenues are greater than expenditures in a given year.

How is the public debt calculated? By summing the annual difference between tax revenues and government spending over the years One important reason why the United States government is not likely to go bankrupt even with a large public debt is that it has ----------------------------------------------------------------


ECO 372 Assignment Week 4 Practice Money and the Federal Reserve Quiz (100% Correct) (All Possible Questions/Answers)

For more course tutorials visit www.newtonhelp.com

1. Determine which of the Federal Reserve entities controls each of the following policy tools. 2. a. The reserve requirement is determined by the Board of Governors.

3. b. Open market operations are determined by the: Federal Open Market Committee. 4. suppose that Ava withdraws $300 from her savings account at Second Bank. The reserve requirement facing Second Bank is 10%. Assume the bank does not wish to hold any excess reserves of new deposits.

5. Use this information to complete the balance sheet below to show how Second Bank's assets and liabilities change when Ava withdraws the $300 from the bank.


6. Suppose the Federal Reserve increases the amount of reserves by $100 million and the total money supply increases by $500 million.

7. Instructions: Enter your answers as a whole number.

a. What is the money multiplier?

b. Using the money multiplier from part a, how much will the money supply change if the Federal Reserve increases reserves by $50 million?

8. The part of the Federal Reserve that determines and implements the nation's monetary policy and controls the money supply to promote stable prices and economic growth is the:

9. Money is:

10. For each of the following scenarios, determine whether money is being used as a medium of account, store of value, or unit of account.


a. Sam gives the grocery store clerk a $5 bill to pay for his purchase b. Bill looks at the $20 price tag on a clock to see how much money he would need to purchase it.

c. Maria writes a check to pay her electric bill.

d. Susan transfers some of her wealth from her checking account into a certificate of deposit that earns interest.

11. Explain the changes in M1 and M2 for each of the following scenarios.

12. If you put a $20 bill in the pocket of your winter coat at the beginning of spring so that you will be surprised when you find it again next winter, you are using money as

13. The equilibrium rate of interest in the market for money is determined by the intersection of the

14.

Which of the following are liabilities to a bank?

15. The reason for the Fed being set up as an independent agency of government is to


16. Money eliminates the need for a coincidence of wants in trading primarily through its role as a

17.

The Federal Open Market Committee (FOMC)

18. Which definition(s) of the money supply include(s) only items that are directly and immediately usable as a medium of exchange?

19.

M1

20.

The M2 measure of money consists of the sum of

21. M1, savings deposits, small time deposits, and money market mutual funds. 22.

A checkable deposit at a commercial bank is a(n)

23.

asset to the depositor and a liability to the bank.

24.

Assets of the commercial banking system include

25. The Federal Reserve System was established by the Federal Reserve Act o


26. The Federal Open Market Committee (FOMC) of the Federal Reserve System is primarily for

27.

Money is "created" when

28. The Federal Reserve System consists of which of the following?

29.

The required-reserve ratio is equal to a commercial bank’s

30.

The M1 measure of money consists of the sum of

31.

Members of the Federal Reserve Board of Governors are

32. Other things being equal, an expansion of commercial bank lending

33. If the reserve requirement is 20% and commercial bankers decide to hold additional excess reserves equal to 5% of any newly acquired checkable deposits, then the effective monetary multiplier for the banking system will b

34.

4.


35. When a consumer wants to compare the price of one product with another, money is primarily functioning as a

36.

unit of account.

37.

The coupon rate is the

38.

Use the following graph to answer the next question.

39. Which line in the graph would best illustrate the supply of money curve 40. If the reserve requirement were 15% percent, the value of the monetary multiplier would be

41.

A bank's required reserves can be calculated by

42. A bank has $2 million in checkable deposits. In the bank's balance sheet, this would be part of

43.

Use the following graph to answer the next question.

44. Which line in the graph above would best illustrate the asset demand for money curve?


45. f product prices were stated in terms of tobacco leaves, then tobacco leaves would be functioning primarily as

46. A consumer holds money to meet spending needs. This would be an example of the 47. Traditionally, the Federal Reserve can give emergency loans only to

48. Which group is responsible for the policy decision of changing the money supply?

49. Credit card balances are not considered to be money primarily because they 50.

Fractional reserve banking refers to a system where banks

51. One hundred percent reserve banking refers to a situation in which banks' reserves equal One hundred percent of their

52. The transactions demand for money is least likely to be a function of the

53.

The main function of the Federal Reserve System is to

54.

A bank’s net worth is equal to its


55.

An increase in nominal GDP will

56.

The functions of money are to serve as a

57. Which of the following items are included in money supply M2 but not M1?

58. What function is money serving when you deposit it in a savings account?

59. Assume that the required reserve ratio is 20%. A business deposits a $50,000 check at Bank A; the check is drawn against Bank B. What happens to the reserves at Bank A and Bank B?

60. One year before maturity the price of a bond with a principal amount of $1,000 and a coupon rate of 5% paid annually fell to $981. The one year interest rate must be

61.

The Federal Reserve District Banks are divided:

62.

Money functions as a store of value if it allows you to


63. A wealthy executive is holding money, waiting for a good time to invest in the stock market. This action would be an example of the

64. Use the following table to determine the levels of M1 and M2 in the United State 65.

Money Categories in the United States

a. Calculate the M1 money supply.

b. Calculate the M2 money supply. ----------------------------------------------------------------

ECO 372 Assignment Week 5 Practice Fiscal and Monetary Policy Quiz (100% Correct) (All Possible Question/Answer)

For more course tutorials visit www.newtonhelp.com

The existence of lags in designing and implementing fiscal policy helps illustrate some of the limitations of fiscal policy aimed at easing the burdens of a recession.


Which of the following statements best describes a situation when fiscal policy is more appropriate?

hen an economy contracts. Automatic stabilizers help to make a recession or inflation less severe, without any direct or new government action.

For each of the following scenarios, determine which time lag is most likely to result when designing and implementing fiscal policy.

a. The separation of power demonstrated between the legislative and executive branches of government combined with strong partisanship attitude among our elected politicians.


b. The fact that it takes economists working for the National Bureau of Economic Research months to declare the dates of peaks and troughs.

c. The time it takes to design and build new infrastructure after these projects have been passed by the legislature.

Fiscal policy is enacted through changes in

One timing problem in using fiscal policy to counter a recession is the "implementation lag" that occurs between the


The time that elapses between the beginning of a recession or an inflationary episode and the identification of the macroeconomic problem is referred to as a(n)

Using fiscal policy to stabilize the economy is difficult because

If the government wishes to increase the level of real GDP, it might reduce

Fiscal policy is sometimes initiated on the advice of the


Automatic stabilizers smooth fluctuations in the economy because they produce changes in the government's budget that

When the federal government cuts taxes and increases purchases to stimulate the economy during a period of recession, such actions are designed to be

If the U.S. Congress passes legislation to raise taxes to control demand-pull inflation, then this would be an example of a(n)

Unemployment compensation is


One timing problem in using fiscal policy to counter a recession is the "legislative lag" that occurs between the

Due to automatic stabilizers, when the nation’s total income rises, government transfer payments

When the federal government changes purchases and/or taxes to stimulate the economy or rein in inflation, such policy is

One timing problem in using fiscal policy to counter a recession is the "recognition lag" that occurs between the

The lag between the time that the need for fiscal action is recognized and the time action is actually taken is referred to as the


If Congress passes legislation to increase government purchases to counter the effects of a recession, then this would be an example of a(n)

Payments made by the government that do not require an exchange of economic activity in return are also known as

If taxes and government expenses did not vary with income, then income would

Which of the following is an example of built-in stability? As real GDP decreases,


When changes in taxes and government purchases occur in the economy without explicit action by Congress, such changes are referred to as

a. The discount rate is the:

b. If the Fed were to decrease the discount rate, banks will borrow:

Explanation

a. The discount rate is the interest rate at which banks can borrow reserves from the Federal Reserve. When banks find themselves without enough reserves, they can borrow additional reserves from the Fed. However, banks will incur the discount rate as a cost for borrowing the funds.


b. When the Fed decreases the discount rate, it becomes cheaper to borrow reserves if a bank needs them. Because it is less costly to borrow reserves, banks may take on additional risk to make more loans. As a result, banks may hold fewer reserves since they can borrow reserves from the Fed at a lower cost than before.

Suppose the reserve requirement is 10%.

a. If the Federal Reserve decreases the reserve requirement, banks can lend out:

b. The Federal Reserve:


If the Fed sells government securities to the general public in the open market, the _____.

The discount rate is the interest _____.

Financial markets pay close attention to changes in the federal funds rate because these changes _____.

If the Fed buys government securities from commercial banks in the open market _____.

Which of the monetary policy tools can alter both the level of excess reserves and the money multiplier?


A newspaper headline reads: "Fed Cuts Federal Funds Rate for Fifth Time This Year." This headline indicates that the Federal Reserve is most likely trying to _____.

•

The discount rate

Traditionally, the Fed often communicated its intentions to restrict or expand monetary policy by announcing a change in its target for the _____.

The purpose of expansionary monetary policy is to increase _____.


Which of the following Fed actions increases the excess reserves of commercial banks?

The purchase and sale of government securities by the Fed is called _____.

The major purpose of the Federal Reserve buying government securities in open market operations is to _____.

The interest rate at which the Federal Reserve Banks lend to commercial banks is called the _____.

An increase in the money supply, all else held constant, usually _____.


The lending ability of commercial banks increases when the _____.

The Fed directly sets _____.

Which of the following statements is correct?

The federal funds rate is the interest rate that _______ charge(s) _______.

The demand curve for federal funds is _____.


In an effort to stabilize the banking sector and keep banks lending, from October 2008 to September 2009, the Fed _____.

During the Christmas shopping season, the demand for money increases significantly. To offset the increase in money demand, the Fed must ______ the money supply, which will put ______ pressure on nominal interest rates.

The fundamental objective of monetary policy is to assist the economy in achieving a _____.

Reserves borrowed at the federal funds rate are usually repaid _____.

The interest rate that banks use as a reference point for interest rates on a wide range of loans to businesses and individuals is the _____.


When the Fed wants to lower the federal funds rate, it _____. ----------------------------------------------------------------

ECO 372 Final Exam (New)

For more course tutorials visit www.newtonhelp.com

1. News Story: Workers at a car-manufacturing plant in Flint, Michigan are laid off because the economy is weak and GM cars aren't selling well. GM isn't sure when the plant will reopen. What type of unemployment describes the workers' situation? ยง Frictional unemployment ยง Structural unemployment ยง Full unemployment ยง Cyclical unemployment

2. Globalization that allows governments to pursue expansionary policies can be dangerous because it can lead to: ยง A reduction in the debt ceiling


§ Goods price inflation § Asset price inflation § Goods price deflation

3. Macroeconomics is: § The study of aggregate economic relationships. § An analysis of economic reality that proceeds from the parts to the whole. § The study of pricing policies of firms and the purchasing decisions of households. § The study of individual choice and how that choice is influenced by economic forces.

4. Which of the following types of unemployment is considered to be the most controllable through demand-side macroeconomic policy? § Frictional unemployment § Cyclical unemployment § Structural unemployment § Natural unemployment

5. If banks hold excess reserves whereas before they did not, the money multiplier: § Will become smaller


§ Will become larger § Might increase or might decrease § Will be unaffected

6. Using the expenditure approach, gross domestic product equals: § The sum of consumption, investment, government purchases, and net exports § Gross national product minus net exports § The sum of consumption, investment, and government purchases § Gross national product

7. How do investment in technology and investment in capital differ? § They have similar effects on output so they have no important differences from an economic point of view. § They have the same effects on output but investments in technology are much more closely tied to the level of saving than investments in capital. § They have different effects on output because of the positive externalities associated with investments in capital. § They have different effects on output because of the positive externalities associate with investments in technology.


8. The interest rate is the price paid for use of a: § Real asset. § Financial liability. § Financial asset. § Real liability.

9. If the reserve requirement is 20 percent, and banks keep no excess reserves, an increase in an initial inflow of $100 into the banking system will cause an increase in the money supply of: § $50 § $100 § $500 § $20

10. Suppose farmers can use their land to grown either wheat or corn. The law of supply predicts that an increase in the market price of wheat will cause: § Farmers to substitute wheat for the production of corn. § Farmers to raise the production of corn and wheat. § Farmers to lower the production of corn and wheat. § Farmers to substitute corn for the production of wheat.

11. According to Keynes, why might deflation create problems for an economy?


§ In expectation of increased spending, too many entrepreneurs would begin businesses and most would fail. § The cost of repricing goods would increase costs, and therefore reduce profits, for businesses and they would cut production. § People would drop out of unions because unions would become ineffective at keeping wages of members high. § Consumers might expect prices to fall further and cut back consumption now.

12. When interest rates rise, people are: § More likely to borrow, that is, purchase a financial asset. § More likely to borrow, that is, sell a financial asset. § Less likely to borrow, that is, sell a financial asset. § Less likely to borrow, that is, purchase a financial asset.

13. According to the Classical growth model, an economy that increases its saving will grow: § Quickly since the increase in saving will permit greater investment. § Quickly since the increase in saving will permit more rapid technological progress. § Slowly because interest rates will fall, causing investment to decline. § Slowly because consumption and aggregate demand will be reduced.


14. Suppose that consumer spending is expected to decrease in the near future. If output is at potential output, which of the following policies is most appropriate according to the AS/AD model? § A reduction in government spending § An increase in taxes § An increase in government spending § No change in taxes or government spending

15. Which of the following topics is best characterized as a macroeconomic issue? § The effect of a drought on the price of corn § The decision by Apple to produce fewer Macintosh computers § The effect of an increase in federal spending on the unemployment rate § The choice a student makes in selecting college course

16. If income increases more rapidly than expected, then: § Estimates of the target rate of employment are likely to increase. § The budget is less likely to be in surplus. § Tax revenues will be lower than expected. § Spending on income-support programs will likely be lower than expected.


17. In which of the following situations is a budget surplus most likely to occur? § When fiscal policy is contractionary and the economy is expanding § When fiscal policy is expansionary and the economy is contracting § When fiscal policy is expansionary § When the economy is contracting

18. The largest expenditure component of GDP is: § Government spending § Net exports § Investment § Consumption

19. Which of the following is the path through which contractionary monetary policy works? § Money down implies interest rate up implies investment up implies income down. § Money down implies interest rate down implies investment down implies income down. § Money down implies interest rate up implies investment down implies income down.


§ Money down implies interest rate down implies investment up implies income down.

20. As a country develops economically, what changes usually take place in the goods it exports? § There is little change because comparative advantage does not change. § Exports go from being diversified to being specialized in whatever the country finds to its comparative advantage. § Services and manufactured goods decline in importance and are replaced by raw materials and agricultural products. § Raw materials and agricultural products decline in importance and are replaced by services and manufactured goods.

21. What would make foreigners want to buy more from the United States? § Higher tariffs § Higher interest rates in the United States § Inflation in the United States § A fall in the value of the dollar in the foreign exchange market

22. The depreciation of currency will: Balance a trade surplus. § Have no impact on a country's comparative advantage. § Worsen a country's comparative advantage.


§ Improve a country's comparative advantage.

23. The government of Crossland wants to influence its exchange rate. It will do so by buying and selling: § Currencies in its official reserves § Commodities § Goods and services from the current account § Transfers

24. If a country wants to prevent its exchange rates from falling, it could: § Place restrictions on imports § Pursue easier monetary policy § Remove any subsidies on exports § Remove restrictions on imports

25. Central banks are responsible for: § Both monetary policy and fiscal policy § Monetary policy but not fiscal policy § Neither monetary policy nor fiscal policy § Fiscal policy but not monetary policy

26. Quotas and tariffs can:


§ Never have the same effect on imports and import prices. § Have the same effect on the price of domestically produced goods if they are set appropriately. § Yield the same amount of tax revenue if they are set appropriately. § Both increase international trade by the same amount if set appropriately.

27. Between 2007 and 2009, the U.S. unemployment rate rose from under 5 percent to over 8 percent. A Keynesian economist would most likely blame this increase in unemployment on: § An increase in the minimum wage. § An increase in the bargaining power of labor unions. § A decline in the level of aggregate demand. § A decline in aggregate supply.

28. U.S. imports involve an: § Inflow of foreign currency from foreigners to the U.S. economy § Inflow of dollars from foreigners to the United States economy § Outflow of foreign currency from the United States to foreigners § Outflow of dollars from the United States to foreigners


29. The law of demand states that quantity demanded of a good is inversely related to the price of that good. Therefore, as the price of a good goes: § Up, the quantity demanded goes down. § Down, the quantity demanded stays the same. § Up, the quantity demanded also goes up. § Down, the quantity demanded goes down.

30. According to Keynes, market economies: § Never experience significant declines in aggregate demand. § Are constantly experiencing significant declines in aggregate demand. § May recover slowly after they experience a significant decline in aggregate demand. § Quickly recover after they experience a significant decline in aggregate demand.

-------------------------------------------------------------ECO 372 Final Exam Guide (New 2019)

For more course tutorials visit www.newtonhelp.com


1. Martha lends $200 to a friend who promises to return it after a year. Instead of lending it to her friend, Martha could have put the money in a bank where she could have earned an interest rate of 2 percent per annum. Martha’s opportunity cost of lending the money is _____. 2 The exhibit given below shows the short-run aggregate demand and supply curves in an economy, AD1 and AS1, and the long-run aggregate supply curve, LRAS. The economy was initially in equilibrium when there was a decrease in aggregate demand, causing a shift of the aggregate demand curve from AD1 to AD2. Which of the following is true in this case? The economy will move from point B to point A in the short run and then to point C in the long run. The economy will move from point C to point B in the short run and then eventually to point A. The economy will move from point D to point A in the short run and then to point C in the long run. The economy will move from point D to point C in the long run. 3 Suppose an economy is in long-run equilibrium. An increase in consumption expenditure will:

a) shift the short-run aggregate supply curve rightward and increase both the price level and real output in the long run. b) decrease both the price level and real gross domestic product in the long run.


c) increase the price level in the long run but have no effect on real gross domestic product. d) shift the aggregate demand curve rightward and increase the real output in the long run.

4 In the long run, a higher saving rate: always leads to a higher level of productivity because of increasing returns to scale. does not lead to a higher level of income because of deterioration in labor productivity. always leads to a higher growth rate of output because of improvement in the stock of human capital. does not always lead to a higher growth rate of output because of diminishing returns to capital. 5. Suppose the net foreign investment in Italy is positive. This implies that: Italians are buying more foreign assets than foreigners are buying Italian assets. foreigners are buying relatively more Italian assets. Italy is experiencing a net capital inflow. foreign direct investment in Italy is higher than foreign portfolio investment in the country. 5)


Suppose the net foreign investment in Italy is positive. This implies that: Italians are buying more foreign assets than foreigners are buying Italian assets. foreigners are buying relatively more Italian assets. Italy is experiencing a net capital inflow. foreign direct investment in Italy is higher than foreign portfolio investment in the country.

6) The circular-flow diagram shows that: firms receive wages and profits from households in the products market. households sell the factors of production to firms in the inputs market. households supply resources to firms in the products market. firms supply labor and other resources to the government in the factor market.

7) The table given below shows the total amount of spending in the country of Mesodonia. Mesodonia’s gross domestic product is:


8 The country of Merilya exported goods and services worth $1.2 million and imported goods and services worth $2.7 million. The net exports of the country was _____.

9 Suppose the Fed purchases government bonds through open-market operations. All other things remaining equal, this is likely to: decrease the price level and increase the real wealth of consumers. decrease the price level and make domestic goods less expensive relative to foreign goods. increase the price level and eventually decrease the interest rate and investment spending. increase the price level and eventually decrease the demand for money as well as goods and services.

10 A rise in the price of bacon from $14 per pound to $16 per pound will reduce the purchasing power of the dollar by: 0.55 pounds of bacons. 0.06 pounds of bacon. 5 pounds of bacon. 2 pounds of bacon.


11. A difference between commodity money and fiat money is that: fiat money cannot be used as a unit of account. commodity money is used in a barter economy. fiat money does not have any intrinsic value. commodity money cannot be used as a unit of account.

12 Suppose the net capital outflow from Zenovia is negative. This implies that: the real interest rate in Zenovia is high. the real interest rate in foreign countries is higher than in Zenovia. foreigners are not interested in buying assets in Zenovia. the citizens of Zenovia are investing more in foreign assets than foreigners are investing in assets in Zenovia.

13 There is an increase in human capital when _____. Shiroh persuades the management of her company to offer more perks to employees Sue rents a laser printer to teach her employees how to fix it


Samantha receives training in quality management after joining a new firm Susie puts in more than 8 hours of work at her workplace every day

14 After retirement, Molly deposits $500,000 in a local bank in Merrina. At an interest rate of 4 percent, she will receive approximately _____ after 3 years.

15 Ruth wants to calculate the present value of a sum of money that she will receive after the demise of her grandparents. To calculate the present value, she should use the:

expenditure method. discounting method. value-added method. compounding method.

16 The buyers and sellers in the country of Perylia use corn as a medium of exchange. This means that: Perylia uses commodity money. corn cannot be used as a store of value or as a unit of account in Perylia. Perylia uses fiat money.


corn can be used as a store of value but not as a unit of account in Perylia. 17 Scarcity occurs because of: the excess of quantity supplied over quantity demanded. overutilization of labor. limited human needs and wants. the limited supply of resources.

18 The Phillips curve shows:

the negative relationship between inflation and unemployment. the positive relationship between the interest rate and the supply of money. the positive relationship between the price level and aggregate supply.

the negative relationship between the interest rate and the demand for money.

19 Ephlon Inc., an Italian bike manufacturer, opens a factory in the United States. This is an example of:


the accumulation of human capital. the catch-up effect. a foreign direct investment. a foreign portfolio investment.

20 Jack is an out-of-work sculptor. He has been looking for a job for the last two years. Unable to find any, he has given up his job search. Which of the following is true in this case?

This is an example of frictional unemployment. This is an example of structural unemployment. He is a part of the unemployed labor force. He is a discouraged worker and will not be included in the calculation of the unemployment rate. 21 Suppose the central bank of a country undertakes an expansionary monetary policy. Which of the following is most likely to be the effect of such a policy, all other things remaining unchanged? An increase in the price level that reduces the real value of households’ money holdings and stimulates consumer spending An increase in the price level that stimulates spending on net exports and increases the demand for money A decrease in the price level that reduces the amount of money that people want to hold and decreases the interest rate.


A decrease in the price level that reduces the interest rate and lowers the real value of the domestic currency foreign-exchange market. 22 Following the unexpected good performance of Leathex, all its employees were given a one-time bonus. This consequently led to a rightward shift of the demand curve for shoes manufactured by the company and a leftward shift of the demand curve for socks. This shows that shoes are:

inferior goods. substitutes. normal goods. complementary goods. 23 23 A higher interest rate in a country:• encourages citizens to buy foreign assets. makes domestic bonds less attractive to foreigners. lowers saving in the country and decreases the quantity of loanable funds supplied.• discourages investment and decreases the quantity of loanable funds demanded.

24


If the price level in an economy is 120 and the equilibrium price level is 100, _____.• people will want to hold more money than is supplied by the central bank• the demand for money curve will shift to the left the purchasing power of money will increase the supply of money is likely to exceed the demand for money

25 25 A recent survey showed the health benefits of cranberry juice for treating heart and other respiratory disorders. The exhibit below shows that the initial demand curve for cranberry juice is D1. Which of the following is likely to be a consequence of the publication of the survey?

The demand curve will shift from D1 to D3. There will be a movement from point A to point C on D1. The demand curve will shift from D1 to D2. There will be a movement from point A to point B on D1.

26 Keynesian economists believe that when an economy is in a recession, the government should:•


decrease tax rates rather than increase government spending because households always view such tax cuts as permanent and increase their current consumption. increase its purchases rather than decrease taxes because households save a part of the increase in their income as a result of tax cuts. increase the money supply in the economy so that interest rates decline, reducing the cost of borrowing to finance new investment projects. • increase the money supply in the economy so that an excess supply of money can induce households to increase their consumption expenditure.

27 The Marions purchased a Persian rug worth $5,000 from an Iranian textile mill. Everything else remaining unchanged, this will: decrease the consumption expenditure in the domestic country by $5,000. decrease the net imports of the domestic country by $5,000. reduce the net exports of the domestic country by $5,000. increase the gross domestic product of the domestic country by $5,000.

28 As more capital is used in the production process, the amount of other inputs being fixed, the production function becomes: •


flat because the extra output produced from an additional unit of capital decreases. steep because the extra output produced from an additional unit of capital decreases. steep because the extra output produced from an additional unit of capital increases. flat because the extra output produced from an additional unit of capital increases.

29 The natural rate of unemployment in a country is 4 percent. This implies that:• the country has an unemployment rate of 4 percent in the short run.• the country has a 4 percent unemployment rate when the labor market is in equilibrium. • 4 percent of the labor force is unemployed at any given point of time.

the unemployment rate is constant at 4 percent over time.

30

Which of the following is true according to the circular-flow diagram? •


Firms receive wages, rent, and profit from the government. Firms receive income from households. Households receive revenue from the government. Households receive wages, rent, and profit from firms. -------------------------------------------------------------

ECO 372 Week 1 Assignment Ten Principles of Economics and the Data of Macroeconomics (2 Papers)

For more course tutorials visit www.newtonhelp.com

This Tutorial contains 2 Papers

Your organization’s CEO is concerned that members of the strategic planning committee are not familiar with current economic thought and principles. The CEO has assigned you the task of developing an 875-word report to introduce some of these thoughts and principles. Use Chapters 1, 2, 3, 4, 5, 6 and 7 in Principles of Macroeconomics as your only source. Explain the following information in your report to members of the strategic planning committee: How economists are both scientists and policymakers and what principles society uses to allocate its scarce resources


Using the circular flow model, explain the flow of money and goods in an economy. How the economy coordinates society’s independent economic actors A country’s gross domestic product (GDP) and how it is defined and calculated How the consumer price index (CPI) is constructed and why it is an imperfect measurement of the cost of living Format consistent with APA guidelines. Click the Assignment Files tab to submit your assignment. -------------------------------------------------------------

ECO 372 Week 1 Discussion Question 1

For more course tutorials visit www.newtonhelp.com

What is the difference between real and nominal GDP? Does GDP accurately reflect our nation’s well being? Explain.nt. -------------------------------------------------------------

ECO 372 Week 1 Discussion Question 2

For more course tutorials visit


www.newtonhelp.com

Unemployment rate measures the number of unemployed workers in the labour force. List and explain three types of unemployment. Find the most recent unemployment rate of your state. From a personal perspective, can you explain your view of the current job market in your local area? -------------------------------------------------------------

ECO 372 Week 1 Individual Assignment Economic Definitions Worksheet (New)

For more course tutorials visit www.newtonhelp.com

Complete the Macroeconomic Terms Worksheet. Click the Assignment Files tab to submit your assignment. ------------------------------------------------------------ECO 372 Week 1 Individual Assignment Macroeconomic Terms


For more course tutorials visit www.newtonhelp.com

Complete the Macroeconomic Terms. ------------------------------------------------------------ECO 372 Week 1 Knowledge Check

For more course tutorials visit www.newtonhelp.com

1.The two frameworks conventional economists generally use to analyze macroeconomic issues are 2.The relationship between real and nominal interest rate can be expressed by 3.Which of the following economic activities would be included in the U.S. domestic gross product (GDP)? 4.Cyclical unemployment is defined as unemployment that results from


5.The longest business cycle expansion in U.S. history occurred in the 10 years from 6.Economics is the study of how 7.Given that diesel cars get much better gas mileage than the typical car, an increase in the price of gasoline would be expected to ------------------------------------------------------------ECO 372 Week 1 Worksheet

For more course tutorials visit www.newtonhelp.com ECO 372 Week 1 Worksheet Complete the Worksheet. Click the Assignment Files tab to submit your assignment. Week 1 Worksheet 1. Use the information in the table below to calculate Net Exports (NX) and gross domestic product (GDP), in billions of dollars. Consumption Spending. . . . . .. . . . . . . . . . $12,000 billion Gross Investment Spending . . . . . . . . . . . . $3,100 billion Government Purchases. . . . . . . . . . . . . . . $3,400 billion Exports . . . . . . . . . . . . . . . . . . . . . . $2,200 billion Imports . . . . . . . . . . . . . . . . . . . . . . $2,700 billion


1. Net Exports = $

1. Is this economy experiencing a trade surplus or a trade deficit?

1. c) Gross Domestic Product (GDP) = $ a) Give an example of an activity that is not included in GDP estimates (a non-market activity or an activity in the underground economy):

1. b) Is GDP designed to measure happiness? Discuss.

3. Suppose nominal GDP is equal to $16,000 billion and the GDP Deflator is equal to 125; calculate real GDP, in billions of dollars. Real GDP = $ -------------------------------------------------------------

ECO 372 Week 2 Assignment The Real Economy in the Long Run (2 Papers)

For more course tutorials visit www.newtonhelp.com


This Tutorial contains 2 Papers

Select your organization and a product produced by that organization from IndustryWeek. The organization’s strategic plan calls for an aggressive growth plan, requiring investment in facilities and equipment, growth in productivity, and labor over the next five years. It is your team’s task to determine where, outside the United States, your organization should locate its new manufacturing plant. Write a 1,050-word report recommending an off-shore country and support your choice with the following data: The factors that determine the country’s productivity How the country’s policies influence its productivity growth How the country’s financial system is related to key macroeconomic variables How your organization can reduce the risk they would face in relocating The current and projected unemployment over the next five years Cite a minimum of 3 peer-reviewed sources not including your textbook.


Format consistent with APA guidelines. Click the Assignment Files tab to submit your assignment. ------------------------------------------------------------ECO 372 Week 2 Discussion Question 1

For more course tutorials visit www.newtonhelp.com How do Classical and Keynesian economists differ in their view of the aggregate supply curve?How does this influence what Classical and Keynesian economists believe about fiscal policy? Do you think the current President and Congress were taking Classical approach in their fiscal policies? Explain your answer. ------------------------------------------------------------ECO 372 Week 2 Group Discussion Question

For more course tutorials visit www.newtonhelp.com


What is the difference between contractionary and expansionary fiscal policies? Which is more appropriate today? Explain your answer. How might contractionary and expansionary fiscal policies affect your organization? ------------------------------------------------------------ECO 372 Week 2 Individual Assignment Product Purchases and the Economy

For more course tutorials visit www.newtonhelp.com You've been debating on making a purchase for yourself. This is a product you've wanted for a while, but one that requires budgeting because you will be making monthly payments. Select a product in which the demand for the product is clearly affected by the strength or weakness of the overall economy such as new homes, cars, appliances, smart phones, etc. Write a 1,050- to 1,400-word paper in which you address the following: ¡ Identify and define two economic indicators that reflect the strength of the economy (e.g. real GDP, unemployment rate, inflation rate, interest rate, housing starts, etc.).


路 With these economic indicators in mind, how has the economy affected the demand for and supply of your selected product over the last 2 years? 路 What was the impact on the supply of the product and the impact on the demand for the product? 路 Explain the impact on the price of the product and your decision on whether or not to buy the product. 路 Include responses to the following: o How might you apply what you learned about supply and demand to your work place or your understanding of the product you are considering purchasing? o How do the concepts of macroeconomics help you understand the factors that affect shifts in supply and demand on the price of the product? Cite a minimum of three peer-reviewed sources not including your textbook. Click the Assignment Files tab to submit your assignment. ------------------------------------------------------------ECO 372 Week 2 knowledge Check

For more course tutorials visit www.newtonhelp.com


1.The globalized AS/AD curve is the standard AS/AD model with an added 2.According to Say's Law, people 3.A shift in the long-run aggregate supply curve will change 4.The hypothesis about the macroeconomy that sees the recent problems with the U.S. economy directly related to the structural problems caused by globalization is referred to as the __________ hypothesis. 8.The central difference between the standard theory and the structural stagnation hypothesis when it comes to growth is 5.In 2009, the personal savings rate rose. If the additional savings were not translated into investment, Keynes would predict that aggregate income would 6.According to the Keynesian model, 7.The study of economic growth focuses on the factors that cause an ------------------------------------------------------------ECO 372 Week 2 Principles of Economics and the Data of Macroeconomics (2 Papers)

For more course tutorials visit


www.newtonhelp.com

This Tutorial contains 2 Papers

Your organization's CEO is concerned that members of the strategic planning committee are not familiar with current economic thought and principles. The CEO has assigned you the task of developing an 875-word report to introduce some of these thoughts and principles. Use Chapters 1, 2, 3, 4, 5, 6 and 7 in Principl0065s of Macroeconomics as your only source. Explain the following information in your report to members of the strategic planning committee: 路 How economists are both scientists and policymakers and what principles society uses to allocate its scarce resources 路

Using the circular flow model, explain the flow of money and goods in an economy.

How the economy coordinates society's independent economic actors

A country's gross domestic product (GDP) and how it is defined and calculated


¡

How the consumer price index (CPI) is constructed and why it is an imperfect measurement of the cost of living Format consistent with APA guidelines. ------------------------------------------------------------ECO 372 Week 2 Worksheet

For more course tutorials visit www.newtonhelp.com ECO 372 Week 2 Worksheet Complete the Worksheet. Click the Assignment Files tab to submit your assignment. Week 2 Worksheet 1. What are discouraged workers? Are there likely to be more discouraged workers when the economy is booming or when the economy is in recession?

2. Even when the economy is strong, there will be some people who are unemployed because they recently entered the labor force or lost/left a job and are engaged in job search. What does this imply about the economy’s natural or full-employment rate of unemployment? Be specific.


3. Use the hypothetical data in the table below to calculate the Labor Force (in millions) and the rate of unemployment (as a percentage) in each year. Unemployed Employed Year 1 9.6 million 150.4 million Year 2 12.4 million 142.6 million Year 1 Labor Force = unemployment rate = Year 2 Labor Force = unemployment rate = -------------------------------------------------------------

ECO 372 Week 3 Apply Public Finance and Aggregate Demand and Supply Homework (100% Correct) (All Possible Question)

For more course tutorials visit www.newtonhelp.com

Which of the following descriptions is most representative of the mix of revenues and expenditures of a local government? Which of the following statements about payroll taxes is false?

A tax is regressive if it

Which of the following is not a government activity that is involved in public finance


Most economists believe that property taxes

A federal budget deficit exists when federal government

To track the public debt over time and understand its significance to the economy, it is best Which is the most important source of tax revenue for local governments?

Many states in the U.S. acquire significant amounts of funds from the following, except

Which of the following is the largest expenditure item of state governments? A public debt that is owed to foreigners can be burdensome because One important reason why the United States government is not likely to go bankrupt even with a large public debt is that it has Which of the following is not a significant source of revenue for the U.S. federal government? A budget surplus means that Public finance is the subdiscipline of economics that studies the various ways in which How is the public debt calculated


The Social Security tax is regressive because The circular flow model with government included would show that government The two largest sources of tax revenue for the U.S. federal government are Determine the effect on aggregate demand for each of the scenarios described below. an increase in aggregate demand, shifting the aggregate demand curve to the right. a decrease in aggregate demand, shifting the aggregate demand curve to the left The long-run aggregate supply curve is vertical because: all input prices are flexible in the long run For each of the following scenarios, determine whether the situation described can be attributed to the real-balances effect, the interest-rate effect, or the foreign-purchases effect. As a result of an increase in the price level, the cost of borrowing increases, which causes people to buy fewer cars. Interest-rate effect Correct When the price level decreases, restaurants become busier as more people purchase restaurant meals. Real-balances effect Correct a. In the short run, when the price level increases, the quantity of real GDP supplied will increase and the aggregate supply curve will not shift .


b. In the short run, some input prices are said to be sticky. This means that: • some input prices will remain constant even as the price level changes. Correct • all prices will remain constant in the economy. • some firms will not be able to change the prices they charge. Use the graph of Remi's economy to complete the following statements. a. Point B is referred to as a trough . b. The movement from point A to point E is called a business cycle . For each of the examples below, determine the effect on aggregate demand.

a. In order to reduce the deficit, the government decides to increase the level of taxes in the economy. This causes: a decrease in aggregate demand, shifting the aggregate demand curve to the left b. The economy experiences a sustained expansion in stock prices for the majority of companies in the country. This causes: The foreign purchases, interest rate, and real-balances effects explain why the ____________. An increase in productivity will ____ increase aggregate supply


If at a particular price level, real output from producers is greater than real output desired by purchasers, then there will be a general _____ The long-run aggregate supply analysis assumes that ____ both input and product prices are variable The short-run version of aggregate supply assumes that product prices are _____ flexible while resource prices are fixed The aggregate supply curve (short run) ____ A decrease in expected returns on investment will most likely shift the AD curve to the ___ The short-run equilibrium for this economy is a point g Use the following graph to answer the next question.

A shift from AD2 shifts to AD1 would be consistent with what economic event in U.S. history Great Recession of 2007-2009 Use the following graph, which shows an aggregate demand, to answer the next question move the economy to point A An increase in expected future income will __ Which of the following would not shift the aggregate demand curve In the diagram, the economy's short-run AS curve is line _____ and its long-run AS curve is line _____


2; 1 The economy's long-run aggregate supply curve ____ is vertical The intersection of the aggregate demand and aggregate supply curves determines the ____ equilibrium level of real domestic output and prices An expected increase in the prices of consumer goods in the near future will ___ Which of the following factors does not explain the inverse relationship between the price level and the total demand for output The upward slope of the short-run aggregate supply curve is based on the assumption that ____ wages and other resource prices do not respond to price level changes If the price level increases from 150 to 250, the real output demanded will ____ decrease by $200 billion A decrease in government spending will cause a(n) ___ decrease in aggregate demand An increase in personal income taxes will cause a(n) ___ decrease (or shift left) in aggregate demand A decrease in labor costs will cause aggregate ____ supply to increase Which of the following events would most likely reduce aggregate demand


If the national incomes of our trading partners increase, then our aggregate demand ____ Which of the following transactions best represents the government making a transfer payment to a household or business The federal government’s Supplemental Nutritional Assistance Program assists low-income families with purchasing food The Social Security tax is regressive because no Social Security tax is collected for incomes in excess of a "cap" income level Which one of the following is not an excise tax of the federal government Social Security contributions are part of Which of the following is the largest expenditure item of local governments The largest proportion of the U.S. public debt is held by the U.S. public (individuals, businesses, financial institutions, and government). For each of the following scenarios, determine the effect on aggregate supply. a. There is an unexpected decrease in oil prices. This causes: • a movement along the aggregate supply curve to the left, indicating a decrease in the quantity of real GDP supplied. • a decrease in aggregate supply, shifting the aggregate supply curve to the left. • a movement along the aggregate supply curve to the right, indicating an increase in the quantity of real GDP supplied. •


an increase in aggregate supply, shifting the aggregate supply curve to the right. b. The government increases the amount that all producers are required to contribute to health insurance coverage. This causes: • a decrease in aggregate supply, shifting the aggregate supply curve to the left. • a movement along the aggregate supply curve to the right, indicating an increase in the quantity of real GDP supplied. • an increase in aggregate supply, shifting the aggregate supply curve to the right. • a movement along the aggregate supply curve to the left, indicating a decrease in the quantity of real GDP supplied.

Refer to the graph shown. An economy is in both short- and long-run equilibrium at _____. Use the following graph to answer the next question.

Which of the following factors does NOT explain a movement along the AD curve? The expenditure multiplier effect he labels for the axes of an aggregate supply curve should be ____ If current output is Q1 and full-employment output is Q3, then in the long run the short aggregate supply schedule is __ AS3 An increase in aggregate demand is most likely to be caused by a(n) _____


If aggregate supply shifts from AS1 to AS2, then the price level will ___ The long-run aggregate supply curve is _____ Vertical The labels for the axes of the aggregate demand graph should be ____ real domestic output on the horizontal axis and the price level on the vertical axis An aggregate supply curve represents the relationship between the ____ When the price level decreases, ___ the demand for money falls and the interest rate fall The aggregate demand curve or schedule shows the relationship between the total demand for output and the ____ price level The economy's long-run AS curve assumes that wages and other resource prices If current output is Q1 and full-employment output is Q2, then in the long run the short aggregate supply schedule is ___ AS2 If the economy is at point C and the price level increases by 100, then the real balances, interest-rate, and foreign purchases effects will ___ Which of the following effects best explains the downward slope of the aggregate demand curve In the aggregate demand-aggregate supply model, the economy’s price level is assumed to be ___ Determine the effect on aggregate demand for each of the scenarios described below. a. All European countries experience an economic expansion, raising incomes in each of the European countries. This causes The government decides to decrease the amount it spends on the military. This causes


Aggregate demand is best described as the relationship between the When output increases from Q1 and the price level decreases from P1, this change will __ be caused by a shift in the aggregate supply curve from AS1 to AS3If the price level decreases from 200 to 100, the real output demanded will ___ Which would most likely increase aggregate supply An increase in productivity In the diagram, the economy's relevant aggregate demand and long-run aggregate supply curves, respectively, are lines ___ 4 and 1 Use the following table which shows the aggregate demand and aggregate supply schedules for a hypothetical economy to answer the next question. Real Domestic Output Demanded (in billions) Price Level (index value) Real Domestic Output Supplied (in billions) $3,000 350 $9,000 4,000 300 8,000 5,000 250 7,000 6,000 200 6,000 7,000 150 5,000 8,000 100 4,000 The equilibrium price and output levels will be _ If current output is Q1 and full-employment output is Q2, then in the long run the short aggregate supply schedule is ____

Use the following graph to answer the next question.


If AD1 shifts to AD2, then the equilibrium output increases from _____. --------------------------------------------------------------

ECO 372 Week 3 Discussion Question 1

For more course tutorials visit www.newtonhelp.com What is the difference between contractionary and expansionary monetary policy? Which is more appropriate today? What are the impacts of this policy on US economy? -------------------------------------------------------------ECO 372 Week 3 Group Discussion Question

For more course tutorials visit

www.newtonhelp.com

What are the uses of money?Describe how rapid inflation can undermine money’s ability to perform its three basic functions. Will current Fed's policy


hinder money's ability to perform its three basic functions? Explain your rational. -------------------------------------------------------------ECO 372 Week 3 knowledge Check

For more course tutorials visit www.newtonhelp.com

1.If you expect interest rates to rise, you will want to be holding

2.The interest rate is the price paid for the use of a

3.Which of the following do policy makers tend to target when setting monetary policy?

4.If the Federal Reserve reduced its reserve requirement from 6.5 percent to 5 percent, this policy would most likely

5.If banks hold excess reserves whereas before they did not, the money multiplier


6.The process of money multiplier depends on

7.Quantitative easing refers to

8.If the Fed wants an easier monetary policy, it might

9.When the Fed raised the interest rates between 2004 and 2007, the Federal Reserve -------------------------------------------------------------ECO 372 Week 3 Team Assignment Fiscal Policy Paper

For more course tutorials visit www.newtonhelp.com

Select an organization with which the team is familiar. Write a 1,400- to 1,750-word paper in which you include the following:


· Research federal government spending and taxes over the last 3-5 years (fiscal policy). Has total government spending increased or decreased? Explain. Have income tax rates increased or decreased? Explain. · Describe the impact of these fiscal policies on the U.S. economy · Describe the impact of these fiscal policies on your team's selected organization. · Have other macroeconomic events impacted the economy and/or your selected organization? If so, explain. · What are expectations regarding the strength of the economy in the next 2 years? · Make recommendations for your organization regarding how to best compete in the expected economy. Include a minimum of 3 peer reviewed sources not including your textbook. Click the Assignment Files tab to submit your assignment. -------------------------------------------------------------ECO 372 Week 3 Team Assignment Money and the Prices in the Long Run and Open Economies (2 Papers)


For more course tutorials visit www.newtonhelp.com

This Tutorial contains 2 Papers

The organization's strategic plan you wrote about in Week 2 calls for an aggressive growth plan, requiring investment in facilities and equipment, growth in productivity, and labor over the next five years. It is your responsibility to determine how the U.S economy during this five year period will impact such an aggressive growth plan. To do so, you should: Develop a 2,100-word economic outlook forecast that includes the following: 路 Analyze the history of changes in GDP, savings, investment, real interest rates, and unemployment and compare to forecast for the next five years. 路 Discuss how government policies can influence economic growth. 路 Analyze how monetary policy could influence the long-run behavior of price levels, inflation rates, costs, and other real or nominal variables. 路 Describe how trade deficits or surpluses can influence the growth of productivity and GDP.


¡ Discuss the importance of the market for loanable funds and the market for foreign-currency exchange to the achievement of the strategic plan. ¡ Recommend, based on your above findings, whether the strategic plan can be achieved and provide support. Use a minimum of 3 peer-reviewed sources from the University Library. Format your paper consistent with APA guidelines. Click the Assignment Files tab to submit your assignment. -------------------------------------------------------------ECO 372 Week 3 Team Assignment Money and the Prices in the Long Run and Open Economies PRESENTATION

For more course tutorials visit www.newtonhelp.com

Money and the Prices in the Long Run and Open Economies

Purpose of Assignment


Week 3 will help students develop an understanding of what money is, what forms money takes, how the banking system helps create money, and how the Federal Reserve controls the quantity of money. Students will learn how the quantity of money affects inflation and interest rates in the long run, and production and employment in the short run. Students will find that, in the long run, there is a strong relationship between the growth rate of money and inflation. Students will review the basic concepts macroeconomists use to study open economies and will address why a nation's net exports must equal its net capital outflow. Students will demonstrate the relationship between the prices and quantities in the market for loanable funds and the prices and quantities in the market for foreign-currency exchange. Student will learn to analyze the impact of a variety of government policies on an economy's exchange rate and trade balance. Assignment Steps Resources: National Bureau of Economic Research Develop a 12- to 15-slide Microsoft® PowerPoint® presentation for economic outlook forecast that includes the following: • Analyze the history of changes in GDP, savings, investment, real interest rates, and unemployment and compare to forecast for the next five years.


• Discuss how government policies can influence economic growth. • Analyze how monetary policy could influence the long-run behavior of price levels, inflation rates, costs, and other real or nominal variables. • Describe how trade deficits or surpluses can influence the growth of productivity and GDP. • Discuss the importance of the market for loanable funds and the market for foreign-currency exchange to the achievement of the strategic plan. • Recommend, based on your above findings, whether the strategic plan you talked about in your week 2 presentation can be achieved and provide support. Make use of Speaker Notes for explanations. Use a minimum of three peer-reviewed sources from the University Library. Format your presentation consistent with APA guidelines. Click the Assignment Files tab to submit your assignment. -------------------------------------------------------------ECO 372 Week 3 Team Paper

For more course tutorials visit


www.newtonhelp.com

ECO 372 Week 3 Team Paper Each team member, other than the Team Leader, should select one of the five topics below. If a team has fewer than 6 members, you may leave off one or more topics so no one has to cover more than one. After selecting your topic and indicating your choice in the Team Discussion Forum, use the textbook and other sources to conduct your research, write your section, and edit your work (approximately 150 words in length). Follow the Team Leader’s guidance regarding how and when to post your portion and when to approve the final version of the paper. Topics to be addressed in the paper: 1. Provide some historical information about when and why the U.S. Federal Reserve was created. 2. Describe the structure of the Federal Reserve System, including the Board of Governors, the Federal Open Market Committee, and the 12 District Banks. 3. Why are the 12 Federal Reserve District Banks referred to as bankers’ banks (what functions do these banks perform)? 4. Explain how the Fed can cause the money supply to grow at a faster rate and how such expansionary policy is likely to affect interest rates, employment, output, and prices. 5. Explain how monetary policy can be used to slow down spending and bring inflation under control. Team Leader: After combining the sections written by each team member, format the paper according to APA standards. Include a cover page and add an introduction and conclusion. Add section headings to separate each team member’s contributions. Include properly-formatted citations on the last


page. Post the final draft to be approved by each team member. Click the Assignment Files tab to submit your team’s paper. --------------------------------------------------------------

ECO 372 Week 3 Worksheet

For more course tutorials visit www.newtonhelp.com ECO 372 Week 3 Worksheet Complete the Worksheet. Click the Assignment Files tab to submit your assignment. Week 3 Worksheet 1. List and briefly describe the functions of money.

2. What are the main components of M1 and M2?

3. What is the value of the deposit multiplier if the required reserve ratio is 20 percent?

4. Define the discount rate and the federal funds rate. --------------------------------------------------------------

ECO 372 Week 4 Discussion Question 1


For more course tutorials visit www.newtonhelp.com

Who benefits from a tariff or quota? Who loses? What are the positives and negatives of protectionist trade policies? Which policy is best right now? -------------------------------------------------------------ECO 372 Week 4 Group Discussion Question

For more course tutorials visit www.newtonhelp.com

Define trade surplus and trade deficit? How do trade deficits and surpluses affect exchange rate and the industry in which you work? -------------------------------------------------------------ECO 372 Week 4 Individual Assignment International Economics Paper

For more course tutorials visit


www.newtonhelp.com

Select an organization that both U.S. and international presences. Write a 1,050- to 1,400-word paper in which you answer address the following: · What does the president and congress do to stimulate the economy? What does the president and congress do to contract the economy? · What does the Federal Reserve do to stimulate the economy? What does the Federal Reserve do to contract the economy? · What motivates policymakers to stimulate the economy or contract the economy? · Based on your research, what does the Federal Reserve say about its policy goals? · What does the Federal Reserve say about the strength of the economy? · How does the strength of other economies outside of the U.S. affect your organization? · Based on your research, recommend changes in your organization's competitive strategies or supply chain.


Use a minimum of 3 peer reviewed sources not including your textbook. Click the Assignment Files tab to submit your assignment. -------------------------------------------------------------ECO 372 Week 4 Team Assignment Short-Run Economic Fluctuations (2 PPT)

For more course tutorials visit www.newtonhelp.com

This Tutorial contains 2 Presentations

Select an organization your team is familiar with or an organization where a team member currently works. Create a 15- to 20-slide Microsoft® PowerPoint® presentation that will be presented to the organization's Executive Committee. The presentation should cover the following items: · Identify the three key facts about short-run economic fluctuations and how the economy in the short run differs from the economy in the long run.


· Explain economic fluctuations and how shifts in either aggregate demand or aggregate supply can cause booms and recessions using the model of aggregate demand and aggregate supply. · Explain how monetary policy affects interest rates and aggregate demand. · Analyze how fiscal policy affects interest rates and aggregate demand. · Evaluate why policymakers face a short-run tradeoff between inflation and unemployment. · Evaluate why the inflation-unemployment trade-off disappears in the long run. Cite a minimum of 3 peer-reviewed sources not including your textbook. Format consistent with APA guidelines. Click the Assignment Files tab to submit your assignment.gnment. -------------------------------------------------------------ECO 372 Week 4 Team Reflection Supply Chain and Demand Model

For more course tutorials visit www.newtonhelp.com


Discuss the relationship between supply chain and the supply and demand model. Prepare a 350- to 1,050- word paper detailing the findings of your discussion. -------------------------------------------------------------ECO 372 Week 5 knowledge Check

For more course tutorials visit www.newtonhelp.com

1.In the U.S. current account, most of the trade deficit results from an excess of imported 2.What is the difference between the balance of trade and the balance of payments? 3.If a government has implemented significantly higher trade tariffs, but does not want this action to affect the value of its currency, it will 4. During 2007, the United States and Japan announced possible limits on Chinese imports through higher tariff rates on Chinese products. To avoid these limits, China would have to


5.If a country wants to prevent its exchange rate from falling, it could 6.All other things being equal, an increase in trade restrictions on imports will -------------------------------------------------------------ECO 372 Week 5 Team Assignment Deficit and Debt Presentation

For more course tutorials visit www.newtonhelp.com

Create a 15- to 18-slide PowerPoint® presentation including detailed speaker notes in which you include the following: · Research the direction of monetary policy over the last 3-5 years. Has the money supply increased or decreased? Explain. Have interest rates increased or decreased? Explain. · Describe the impact of these monetary policies on the U.S. economy · Describe the impact of these monetary policies on your team's selected organization.


路 Have events in the economies of other countries impacted the U.S. economy? If so, explain. 路 What are expectations regarding the strength of the U.S. economy in the next 2 years? 路 How do changes in the value of the U.S. dollar impact your selected organization? 路 Make recommendations for your organization regarding how to best compete in the expected global economy. Include a minimum of 3 peer reviewed sources not including your text. Click the Assignment Files tab to submit your assignment. -------------------------------------------------------------ECO 372 Week 5 Team Assignment Major Debates over Macroeconomic Policy (2 Papers)

For more course tutorials visit www.newtonhelp.com

This Tutorial contains 2 Papers


Select two subjects from the following list of topics and write a 1,050-word analysis: · Active monetary and fiscal policy · Increased government spending to fight recessions · Reducing federal government's discretionary powers · Zero-inflation target · Balanced government budget · Tax incentives for saving Evaluate both the advocates' position and the critics' position. Determine which position you support and defend your position. Cite a minimum of 3 peer-reviewed sources not including your textbook. Format consistent with APA guidelines. Click the Assignment Files tab to submit your assignment. --------------------------------------------------------------

Profile for c.nelumbon.uciferanelumbo

ECO 372 Start With a Dream/newtonhelp.com  

For more course tutorials visit www.newtonhelp.com Money is: Use the following table to determine the levels of M1 and M2 in the United S...

ECO 372 Start With a Dream/newtonhelp.com  

For more course tutorials visit www.newtonhelp.com Money is: Use the following table to determine the levels of M1 and M2 in the United S...

Advertisement