econ final Flashcards

1. Increase in the price of oil (an important input to production) will result in which of the following in the short run?

2. An economy operating at full employment; which would result in a recessionary gap in the short run?

3. If the price level in Thailand decreases relative to Malaysia, what happens to Thailand’s exports and aggregate demand?

4. Assuming year 1 is the base year, what is nominal and real GDP for year 2?

5. Which is a fiscal policy action aimed at reducing unemployment?

6. Increases in human capital can be achieved by which of the following?

1. Based on the PPCs, which statement is true?

1. According to the business cycle diagram, actual unemployment equals the natural rate when the economy is:

2. A fiscal policy action to reduce inflationary pressure would be to increase which of the following?

3. Nominal GDP of China in 2010 measures the total value of:

4. If the government reduces spending and raises income taxes, the most likely short-run result is an increase in:

5. Which statement about inflation and interest rates is true?

1. Economic growth is shown by a rightward shift in the:

2. During a period of stagnation, a nation is most likely experiencing:

3. If businesses become optimistic about investments in an economy, which of the following will happen in the loanable funds market in the short run?

4. If investment demand becomes less responsive to changes in interest rates, which of the following is true?

5. Which of the following measures the opportunity cost of holding currency?

6. A contractionary monetary policy combined with an expansionary fiscal policy will:

7. Ms. Smith withdraws $1,000 from her safe and deposits it in a bank. If the bank holds no excess reserves and the reserve requirement is 10 percent, how will this deposit increase the bank’s required reserves and the bank’s loans?

8. A country can have an increased surplus in its balance of trade as a result of:

9. Country X has a budget deficit. Which of the following changes in government budget outlays and tax revenues will result in a decrease in Country X’s government budget deficit?

1. The table shows the quantity of motorcycles and automobiles produced by two countries that use the same amount of resources. Which of the following is true?

2. Which of the following is an example of how the consumer price index (CPI) exhibits bias in its estimates of changes in the cost of living?

3. Fred Jones withdraws $1,000 in cash from his savings account. What immediate effect does this transaction have on the monetary aggregate measures of M1 and M2?

4. Which of the following is true about inflationary expectations?

5. Which of the following transactions is included in the financial account of Country X’s balance of payments accounts?

6. Assume a country’s government increases taxes and its central bank increases its administered interest rates. The actions will result in an increase in which of the following in the short run?

7. When there is excess demand in the loanable funds market, which of the following will occur?

1. If the marginal propensity to save is 0.25, a $15 billion increase in government spending will lead to an increase in national income by a maximum of:

2. Assume the banking system has limited reserves and the economy is currently in long-run equilibrium. An increase in the money supply will affect unemployment in the short run and in the long run in which of the following ways?

3. The term "value added" for a firm is best defined as which of the following?

4. An increase in a country’s current account surplus will result in which of the following in the short run?

5. Using 2010 as the base year, the gross domestic product (GDP) deflator in 2011 was 97. Which of the following must be true?