Final_Exam_Macro Question 1 (2 points) Purchasing-power panty theory does not hold at all times because many goods are not easily transported and the same goods produced in different countries may be imperfect substitutes. the same goods produced in different countries are perfect substitutes for each other. consumer preferences are different across countries prices are different across countries Question 2 (2 points) GDP is defined as the value of all goods and services produced within a country in a given period of time. value of all goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time. O value of all final goods and services produced within a country in a given period of time. value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time Question 3 (2 points) Figure 33-5 LRAS SRAS a a hp KIKI f7 f8 + f9 144 & 6 7 8LRAS SRAS PRICE LEVEL QUANTITY OF OUTPUT Refer to Figure 33-5. Suppose the economy starts at Point R. If aggregate demand increases from AD, to AD;, then in the short run the economy moves to Point O Point Q Point P Point S. Question 4 (2 points) One variable responsible for most significant explanation of variations in living standards around the world is a CRACKI KKNANNxam - Question 4 (2 points) One variable responsible for most significant explanation of variations in living standards around the world is O productivity O population. preferences prices. Question 5 (2 points) Efficiency means that society is conserving resources in order to save them for the future. OO society's goods and services are distributed equally among society's members. O society's goods and services are distributed fairly, though not necessarily equally, among society's members. O society is getting the most it can from its scarce resources. Question 6 (2 points) The shoeleather cost of inflation refers to the redistributional effects of unexpected inflation. time spent searching for low prices when inflation rises. 45 waste of resources used to maintain lower money holdings. O increased cost to the government of printing more money. Question 7 (2 points) a O hp VICKI KALKI 6 0 $7 1- f8 144 110 & 6 7 8 9Question 7 (2 points) At the broadest level, the financial system moves the economy's scarce resources from the rich to the poor. financial institutions to business firms and government. households to financial institutions. savers to borrowers. Question 8 (2 points) Two of the economy's most important financial intermediaries are suppliers of funds and demanders of funds. banks and the bond market. the stock market and the bond market. O banks and mutual funds. Question 9 (2 points) The income that households and noncorporate businesses receive is called personal income. net national product. O disposable personal income. national income a 0 hpCollective bargaining refers to the process by which the government sets exemptions from the minimum wage law. setting the same wage for all employees to prevent conflict among workers. firms colluding to set the wages of employees below equilibrium the process by which unions and firms agree on the terms of employment. Question 11 (2 points) In analyzing the gains and losses from international trade, to say that Moldova is a small country is to say that Moldova can only import goods, it cannot export goods Moldova's choice of which goods to export and which goods to import is not based on the principle of comparative advantage. only the domestic price of a good is relevant for Moldova; the world price of a good is irrelevant. Moldova is a price taker. Question 12 (2 points) The opportunity cost of an item is the number of hours needed to earn money to buy the item. what you give up to get that item. usually less than the dollar value of the item the dollar value of the item. Question 13 (2 points) a O hp NANANANAquestion 13 (2 points) Which of the following is correct? O Nominal and real interest rates always move together Nominal and real interest rates never move together O Nominal and real interest rates do not always move together Nominal and real interest rates always move in opposite directions. Question 14 (2 points) When inflation causes relative-price variability consumer decisions. O are distorted and the ability of markets to efficiently allocate factors of production is impaired. O are distorted, but markets are still able to efficiently allocate factors of production. are not distorted, but the ability of markets to efficiently allocate factors of production is impaired. are not distorted and markets are still able to efficiently allocate factors of production. Question 15 (2 points) A company in Panama pays a U.S. architect to design a factory building. By itself this transaction increases Panama's imports and so decreases the Panama's trade balance. mcreases Panama's exports and so decreases the Panama's trade balance. O decreases Panama's imports and so increases the Panama's trade balance. decreases Panama's exports and so increases the Panama's trade balance. Question 16 (2 points) a O hpIn the fourteenth century, the Western African Emperor Kankan Musa traveled to Cairo where he gave away gold, which was in use as a medium of exchange. We would predict that this increase in gold raised both the price level and the value of gold in Cairo. raised the price level and decreased the value of gold in Cairo. O lowered the price level and increased the value of gold in Cairo. O lowered both the price level and the value of gold in Cairo Question 17 (2 points) Trade O allows specialization, which increases costs. O allows specialization, which reduces costs. reduces specialization, which increases costs. reduces specialization, which reduces costs Question 18 (2 points) Which of the following is not a commonly-advanced argument for trade restrictions? O The jobs argument O The national-security argument O The infant-industry argument O The efficiency argument Question 19 (2 points) a hpO Search the web Fine X Q armyignited - Search x ArmylgnitED X + tempt/quiz_start_frame_auto.d21?ou=133503&ispry= &qi= 1138198.cfgl=08.dnb=0&.fromQB=0&inProgress-0 Which of the following statements is correct about the relationship between the nominal interest rate and the real interest rate? O The real interest rate is the nominal interest rate times the rate of inflation. The real interest rate is the nominal interest rate minus the rate of inflation. O The real interest rate is the nominal interest rate plus the rate of inflation The real interest rate is the nominal interest rate divided by the rate of inflation. Question 20 (2 points) Figure 34-1 MS 5.25 1.25 25 INTEREST RATE (Percent) Money Demand QUANTITY OF MONEY Bafor to Himon 41 1. There is go aveers demand a hp NANAIUCSLIUII 2V (2 PUILILS Figure 34-1 MS 5 35 4.25 3.25 INTEREST RATE ( Percent) Money Demand QUANTITY OF MONEY Refer to Figure 34-1. There is an excess demand for money at an interest rate of O 3.25 percent. O 4.25 percent. O 5.25 percent. O 6.25 percent. Question 21 (2 points) Quer the last century JI.S real (DD ner nerson srent at a rate of about a O hpOver the last century, U.S. real GDP per person grew at a rate of about 2 percent per year, so that it is now 2 times as high as it was a century ago. 2 percent per year, so that it is now 8 times as high as it was a century ago. 4 percent per year. so that it is now 2 times as high as it was a century ago 4 percent per year, so that it is now & times as high as it was a century ago. Question 22 (2 points) Suppose a country increases trade restrictions. This country would be pursing O an inward-oriented policy, which most economists believe has beneficial effects on the econom an inward-oriented, which most economists believe has adverse effects on the economy. an outward-oriented policy, which most economists believe has beneficial effects on the econom an outward-oriented policy, which most economists believe has adverse effects on the economy. Question 23 (2 points) The measure of the money stock called M1 includes O wealth held by people in currency wealth held by people in their savings accounts. O wealth held by people in money market mutual funds. O everything that is included in M2 plus some additional items. Question 24 (2 points) a hpattempt/quiz_start_Tran An associate professor of physics gets a $200 a month raise. With her new monthly salary she can buy more services than she could buy last year Her real and nominal salary have risen C Her real and nominal salary have fallen O Her real salary has risen and her nominal salary has fallen Her real salary has fallen and her nominal salary has risen. Question 25 (2 points) To open a print shop you need printers, computers, and furniture. Economists call these expenditures O capital investment investment in human capital. O business consumption expenditures. personal saving. Question 26 (2 points) Figure 9-4 Domestic Supply A World Price P B E (Dollars per barrel P a O hpDomestic Supply World Price PRICE (Dollars per Barra!) Domestic Demand QUANTITY (Barrels of crude oil) Refer to Figure 9-4. The change in total surplus in this market because of trade is D, and this area represents a loss of total surplus because of trade. D. and this area represents a gain in total surplus because of trade. B+ D, and this area represents a loss of total surplus because of trade. B+ D, and this area represents a gain in total surplus because of trade. Question 27 (2 points) Economists sometimes give conflicting advice because O graduate students in economics are encouraged to argue with each other. scononusis have different values and scientific judgments. scoupmusts acting as scientists do not like to agree with economists acting as policy advisers. B hp KAL KI 16 f7 f8 144 10am Question 28 (2 points) During recessions, taxes tend to O rise and thereby increase aggregate demand O rise and thereby decrease aggregate demand fall and thereby increase aggregate demand fall and thereby decrease aggregate demand Question 29 (2 points) Cash, fine art, and silver are all media of exchange. O units of account. O stores of value. extremely liquid assets. Question 30 (2 points) A problem that the Fed faces when it attempts to control the money supply is that O the 100-percent-reserve banking system in the United States makes it difficult for the Fed to carry out its monetary policy. the Fed has to get the approval of the U.S. Treasury Department whenever it uses any of its monetary policy tools 45 the Fed does not have a tool that it can use to change the money supply by either a small amount or a large amount the Fed does not control the amount of money that households choose to hold as deposits in banks. a O hp KAWhich of the following statements about models is correct? Economic models are built to mirror reality exactly. O O Because economic models omit many details, they allow us to see what is truly important. Economic models are useful, but they should not be used for the purpose of improving public policies. O Economic models are usually plastic representations of the economy. Question 32 (2 points) An increase in the price of bread produced domestically will be reflected in both the GDP deflator and the consumer price index. O neither the GDP deflator nor the consumer price index. O the GDP deflator but not in the consumer price index. O the consumer price index but not in the GDP deflator. Question 33 (2 points) According to liquidity preference theory, if there were a surplus of money, then the interest rate would be above equilibrium and the quantity of money demanded would be too large for equilibrium. the interest rate would be above equilibrium and the quantity of money demanded would be too small for equilibrium the interest rate would be below equilibrium and the quantity of money demanded would be too small for equilibrium. the interest rate would be below equilibrium and the quantity of money demanded would be too large for equilibrium a O hp 1/171/17