Macroeconomics 2 (OFFICIAL) Flashcards
With sticky nominal wages an unexpected decline in aggregate demand can be expected to cause:
Both price and Real decrease in the Short-Run
Following shifts can explain an increase in the price level and decrease in real output:
A leftward shift in the Short-Run Aggregate Supply Curve.
Privet property rights:
As they see and help their neighbors.
Technological refers to:
Knowledge of current value of GDP and CPI
Real interest rate will decrease if:
Expected inflation increases
Merchandise trade deficit:
Foreign investors see opportunities in US Net export
Physical capital:
The stock of equipment and building that used to produce goods and service
Reserve ratio is 10% bank receives new checkable deposit of $2000
Will be able to make loans up to a max $2000
Reserve ratio is 10% and a bank receive a new checkable deposit 1,000
Require to increase by 100
1000*.10 = 100
Real wages are equal to:
Nominal wage divided by a price index
Which of the following is an example of active fiscal policy?
Congress passes a tax cut after the beginning of a recession with the aim of stimulating the economy.
Negative net exports means that:
The country buys more goods from other countries than it sells to other countries.
Which of the following is not an example of an automatic stabilizer?
the reduction in income tax revenues during a recession
To decrease the money supply, the Fed would
Increase the discount rate.
The aggregate supply-aggregate demand model predicts that an unexpected increase in government spending will have what short-run effects?
An increase in both the price level and real output.
Which of the following would be included in Gross National Product (GNP) but not in Gross Domestic Product (GDP) of the United States?
the earnings of an American-owned factory in Germany
In economics, “National Saving” is calculated by:
Subtracting private and government consumption from total income.
Which of the following is NOT one of the components of aggregate demand?
Money supply.
In the long-run, higher saving leads to:
Temporarily faster growth.
Which of the following statements are correct?
Economists using the classical dichotomy distinguish between variables measured in monetary units from those measured in physical units.
The quantity equation relates a measure of the money supply (M), to the velocity of money (V), the GDP deflator (P) and real GDP (Y). Which of the following expression accurately describes the quantity equation?
MV = PY
An increase in the minimum wage will likely:
Increase structural unemployment.
According to the loanable funds framework, if businesses reduce their willingness to spend money on new capital equipment:
Interest rates will decrease.
Governments can increase the likelihood of economic development by:
Supporting smooth transitions from one set of office-holders to another.
If there is excess demand in the loan able fund market?
Interest Rates are below equilibrium
Can be expected to rise
If there is excess Supply in the loanable funds
Interest Rates are above equilibrium.
