Final Study Guide – Eco/372

ECO/372 Final Examination Study melt down This study guide prepares you for the Final Examination you complete in the lastly workweek of the course. It contains practice questions, which are related to each weeks objectives. Highlight the correct response, and then refer to the answer key at the end of this Study Guide to check your answers. Use each weeks questions as a self-test at the start of a clean week to reflect on the previous weeks concepts. When you vex across concepts that you are unfamiliar with, refer to the Student Guide for that particular(prenominal) week. Week One Fundamentals of Macroeconomics aim Explain the economic interaction of resources among households, government, and businesses. 1. Which group has ultimate control over the U. S. economy? a. Business b. Households c. Multinationals d. Government 2. When a government intervenes in an economy in a way that influences the relationship between households and businesses, it is a. serving as an economic a ctor b. serving as an economic referee c. serving the public good d. reducing kindly offbeat by interfering with the invisible hand nonsubjective draw gross domestic product, inflation crop, unemployment rate, and interest rate. . Per capita real product would roughly likely summation if a. both real gross domestic product and population growing b. both real gross domestic product and population slump c. real GDP increases and population decreases d. real GDP decreases and population increases 4. In 2006, U. S. real GDP increased by 3. 3 percent. Based on this information, we can judge that the U. S. experienced a. a recessional in 2006 b. an expansion in 2006 c. a depression in 2006 d. a trough in 2006 Objective mention sources of historical economic data and economic forecasts. 5. The Bureau of Economic synopsis is responsible for which of the fol embarrasseding? a.Setting interest rates b. Managing the money supply c. compute U. S. gross domestic product d. Paying unemployment benefits. 6. The national check pull up stakes most likely _______ the money supply when the economy is experiencing a recession a. increase b. decrease c. poise d. manage Week Two merge Demand and Supply Models Objective Analyze the impact of various factors on compound take up and supply. 7. The AD curve a. leave behind pouch as much as the initial shift factor when the multiplier is greater than one b. exit shift by much than initial shift factor when the multiplier is greater than one c. ill shift by less than the initial shift factor due to leakages d. could shift by more or less than the initial shift factor 8. The enigma paradox of thrift occurs when a. an increase in saving raises output b. an increase in saving overthrows output c. saving is unrelated to output d. a decrease in saving reduces output 9. Suppose output exceeds potentiality output and a contractionary monetary insurance polity is enacted. According to the AS/AD model, in the long r un, this financial policy will produce a. a light output take aim and a lower price level than would other have occurred b. lower price level than would otherwise have occurred c. a lower output level than would otherwise have occurred d. neither a lower price level nor a lower output level than would otherwise have occurred 10. According to the AS/AD model, an expansionary monetary policy a. increases interest rates, raises investment, and increases income b. decreases interest rates, raises investment, and increases income c. increases interest rates, reduces investment, and decreases income d. decreases interest rates, reduces investment, and decreases incomeObjective Evaluate the effectiveness of channelizes in fiscal policies using Keynesian and Classical models 11. According to Keynes, the economy could change state stuck at a low income level if a. declines in entirety demand and coalesce supply reinforce one another b. declines in aggregate demand are not come with by declines in aggregate supply c. declines in aggregate supply are not accompanied by declines in aggregate demand d. aggregate demand and aggregate supply are independent of one another 12. The Classical economists argued that a. market place economy will not experience unemployment. b. if unemployment occurs, it will cure itself because struggle and prices will fall. c. aggregate expenditures whitethorn be too low. d. if inflation occurs it will cure itself because prices, wages, and interest rates will rise. Week Three monetary Policy Objective Assess the factors contributing to the establishment of general and precise rates of interest. 13. When the federal throw targets a higher interest rate, this change in policy involves open market a. purchases of government securities that decreased militia b. urchases of government securities that increased militia c. sales of government securities that reduced reserves d. sales of government securities that increased reserves 1 4. When the Federal sustain gives bonds, the a. Federal funds rate increases b. reserve requirement falls c. discount rate increases d. discount rate decreases Objective Explain the role of the Federal Reserve System in designing and implementing U. S. monetary policies. 15. Who buys and sells in the Federal Reserve funds market? a. Commercial banks and depository institutions b. Large financial institutions c.Financial institutions and wide-ranging corporations d. Anyone with a computer and an Internet connection can participate 16. The Federal fund rate is always _______ compared to the discount a. higher b. lower c. equal d. comparable Objective Analyze how the money multiplier effect facilitates the invention of money. 17. If the multiplier effect is 4, a $15 one million million million increase in government expenditures will shift the AD curve a. to the sound by $15 billion b. to the left by $15 billion c. to the right by $60 billion d. to the left by $60 billion 18. Su ppose the money multiplier in the U. S. s 4. If the Federal Reserve wants to expand the money supply by 600 it should a. buy government securities worthy 150. b. buy government securities worth 600. c. sell government securities worth 150. d. sell government securities worth 600. Week Four Fiscal Policy Politics, Deficits, and Debt Objective Analyze the influence of deficit, sur add-on, and debt on the health of the U. S. macroeconomy. 19. When the government runs a deficit, it will a. buy bonds to finance the deficit b. sell bonds to finance the deficit c. reduce the money supply to finance the deficit d. raise taxes immediately 0. Deficits may be desirable in the short run if they a. help to stabilize the economy when the economy falls below potential output b. increase savings necessary for future investment and growth c. increase savings necessary for future consumption and demand d. help to stabilize the economy when the economy is above potential output 21. The structural def icit a. rises as the economy expands and falls when it contracts b. falls as the economy expands and rises when it contracts c. changes as veritable income changes regardless of potential income d. oes not change when income changes, but changes only when potential income changes 22. Government debt is defined as a. a shortfall of incoming tax income nether outgoing payment b. a shortfall of outgoing payments under incoming revenue c. accumulated deficits minus accumulated surpluses d. accumulated deficits plus accumulated surpluses Week Five International Trade and Finance Objective Analyze the effects of international slyness on the U. S. macroeconomy. 23. According to relative advantage, specialization means that a country is producing the goods a. that it wants to consume b. or which it has a relatively high opportunity hail c. for which it has a relatively low opportunity cost d. that it can produce at zero cost 24. Globalization represents a. a return to isolationism b. t he opposite of isolationism c. the economic complement of governmental isolationism d. the political complement of economic isolationism 25. If the U. S. wants to strengthen the value of the vaulting horse, it should use a. contractionary fiscal policy b. expansionary fiscal policy c. contractionary monetary policy d. expansionary monetary policy 26. Which of the following would most likely cause an increase in the upply of dollar sign marks? a. An expansionary fiscal policy that raised U. S. income and increased U. S. imports b. An expansionary fiscal policy that raised U. S. income and reduced U. S. imports c. A contractionary fiscal policy that reduced U. S. income and lowered U. S. imports d. A contractionary fiscal policy that reduced U. S. income and increased U. S. imports Objective Explain how foreign turn rates are determined. 27. Suppose a basket of goods costs 60,000 pesos in Mexico. If, at the surviveing exchange rate, it costs less than 60,000 pesos to buy the ali ke(p) basket of goods in the U.S. , then purchasing power parity implies that the a. dollar is overvalue b. peso is undervalue c. dollar should cost fewer pesos d. dollar should cost more pesos 28. If a basket of goods costs $10 in the U. S. and 100,000 rubles in Russia, then purchasing power parity will exist if the exchange rate between the ruble and the dollar is a. 1,000 rubles per dollar b. 10,000 rubles per dollar c. 0. 01 dollars per ruble d. 0. 1 dollars per ruble Objective Analyze the impact of trade restrictions, tariffs, and quotas on the U. S. macroeconomy. 29. A quota differs from a tariff in that quotas a. imit the volume of imports more than tariffs b. do not increase the price of imports as much as tariffs c. do not generate tax revenues, unlike tariffs d. reduce consumer welfare more than tariffs 30. Threats to put tariffs on a nation in an adjudicate to get that nation to reduce its restrictions on trade are called a. strategic trade policies b. trade adjustment a ssistance programs c. learning by doing d. inactivity and cachet Answer Key 1. b 2. b 3. c 4. b 5. c 6. a 7. b 8. b 9. b 10. b 11. a 12. b 13. c 14. a 15. a 16. b 17. c 18. a 19. b 20. a 21. d 22. c 23. c 24. b 25. c 26. a 27. d 28. b 29. c 30. a