final exam

Question 1

t/f: It’s better to have a 5% increase in output and no inflation instead of the opposite.

Answer 1

TRUE

Question 2

Which of the following is considered a open market activity?

Answer 2

Selling government bonds

Question 3

Inflation is measured by…

Answer 3

Consumer Price Index (CPI)

Question 4

You probably wouldn’t be bothered by inflation if (3)

Answer 4

1. you owned a house.
2. you owed lots of money.
3. your paycheck was linked to the CPI.

Question 5

A period of temporary economic decline during which trade and industrial activity are reduced.

Answer 5

RECESSION

Question 6

Which of these are considered part of M1? 3)

Answer 6

1. Federal Reserve Notes
2. coins
   checkable deposits

*anything BANK

Question 7

Which of these is a substitute good?

Answer 7

tuna and salmon

Question 8

T/F: Fiscal policy can be either expansionary or contractionary.

Answer 8

TRUE

Question 9

If we need a shift right in the aggregate demand model, what point are we in the Business Cycle?

Answer 9

Trough Point

Question 10

T/F: Price floors are set below the market price..

Answer 10

false

Question 11

The Laffer curve illustrates that

Answer 11

A decrease in tax rates can cause an increase in tax revenues

Question 12

WHAT IS A decrease in tax rates can cause an increase in tax revenues

Answer 12

the LADDER CURVE

Question 13

Which of these is not included as a determinant of supply?

Answer 13

allocation of tax revenues

Question 14

WHAT IS ..
1. A change in producer expectations
2. Change in technology

3. A change in taxes and subsidies

Answer 14

determinant of supply

Question 15

T/F: To an economist, an increase in quantity demanded is the same thing as an increase in demand…

Answer 15

FALSE

Question 16

Which of these is not included in the labor force?

Answer 16

discouraged workers

Question 17

The unemployment rate is the…

Answer 17

Percentage of the Labor force unemployed

Question 18

The smallest expenditure component of GDP is

Answer 18

Net Exports

Question 19

The three functions of money are

Answer 19

Medium of exchange, unit of account, and store of value

Question 20

Medium of exchange, unit of account, and store of value
ARE WHAT????

Answer 20

FUNCTIONS OF MONEY

Question 21

The US banking sector uses a ___ banking system, allowing banks to expand the money supply by creating loans.

Answer 21

Fractional Reserve

Question 22

T/F: More than anything else, a nation’s wealth depends upon its natural resources.

Answer 22

False