Unit 5 - Macroeconomics and Globalization

Question 1

The 4 phases of the business cycle in order of occurrence is

Answer 1

1- Peak - economy that is at or near full employment, and at or near the maximum output for the current level of resources and technology
2 - Recession (AKA Contraction)
3 - Trough - lowest point in terms of productivity
4 - Recovery

P R T R

Question 2

The full unemployment rate is

Answer 2

Sum of frictional and structural unemployment

Question 3

For GDP - the multiplier equals to

Answer 3

Multiplier equals = 1 / Marginal Propensity to Save (MPS)

and MPS = 1 - minus Marginal Propensity to Consume (MPC)

Question 4

Federal Reserve System’s reserve ratio is

Answer 4

the % of the customer deposits that banks must keep on hand or deposit with the Fed.

Question 5

What is the difference between tariffs and quotas?

Answer 5

A tariff is a tax imposed on imports.
A quota is a restriction on the quantity of a good which may be imported.