If labor productivity growth slows down in a country, this will
A) accelerate the increase in real GDP per capita.
B) accelerate the increase in nominal GDP.
C) slow down the increase in real GDP per capita.
D) slow down the increase in nominal GDP.
The M2 measure of the money supply equals
A) savings account balances plus small-denomination time deposits plus traveler’s
checks.
B) savings account balances plus small-denomination time deposits plus
noninstitutional money market fund shares.
C) M1 plus savings account balances plus small-denomination time deposits.
D) M1 plus savings account balances plus small-denomination time deposits plus
noninstitutional money market fund shares.
If the Fed lowers its target for the federal funds rate, this indicates that
A) the Fed is pursuing an expansionary monetary policy.
B) the Fed is pursuing a contractionary monetary policy.
C) the Fed is attempting to combat inflation.
D) the Fed is concerned that the growth in aggregate demand will exceed potential
GDP.
When a central bank works makes joint decisions with the government’s Treasury
department,
A) the central bank risks losing credibility.
B) the central bank is asserting its independence.
C) the government enhances its credibility.
D) the government loses its ability to conduct fiscal policy.
While many analysts defended the actions taken by the Fed and the Treasury to respond
to the financial crisis in 2008, others were critical of these actions. The critics were
concerned that by not allowing large firms to fail,
A) smaller firms will resent not receiving similar assistance.
B) stockholders and bondholders of these firms were not allowed to receive the
proceeds from the sale of assets that would have occurred if the firms had declared
bankruptcy.
C) there is an increased likelihood that other firms will engage in risky behavior in the
future with the expectation that they will also not be allowed to fail.
D) there will be less competition in the U.S. economy, which could led to higher prices
for consumers.
If the consumption function is defined as C = 5,500 + 0.9Y, what is the value of the
multiplier?
A) 0.1
B) 0.9
C) 9
D) 10
What is the name of the organization that defines business cycle peaks and troughs in
the United States?
A) the Bureau of Labor Statistics
B) the Federal Reserve
C) the National Bureau of Economic Research
D) the National Peak and Trough Committee
If rapid increases in oil prices caused price levels to increase and real GDP to decrease
in the short run, the economy would experience
A) stagflation.
B) long-run economic decline.
C) hyperinflation.
D) an increase in the natural rate of unemployment.
Value added equals the market price of the firm’s product minus
A) wages and salaries.
B) the price of intermediate goods.
C) the price of all factors of production.
D) depreciation on plant and equipment.
The exchange rate system agreed to in 1944, in which the U.S. government agreed to
buy or sell gold at a fixed price of $35 per ounce, is referred to as
A) the gold standard.
B) the Bretton Woods System.
C) a floating currency standard.
D) a flexible exchange rate system.
If net foreign investment in the United States is negative, how must national saving and
domestic investment be related?
A) Domestic investment and national saving must also be negative.
B) Domestic investment must be greater than national saving.
C) Domestic investment must be less than national saving.
D) Domestic investment can be greater than or less than national saving.