WorksheetsFinal Review
Total questions: 112
Worksheet time: 54mins
Name
Class
Date
1.
What is the focus of macroeconomics?
a)
Economic growth
b)
Unemployment
c)
Inflation
d)
Trade balance
2.
What type of economy does Cuba and North Korea have?
a)
market economy
b)
command economy
c)
mixed economy
3.
Who owns resources in a market economy?
a)
the government
b)
businesses
c)
households
d)
private individuals
4.
What percent of control does the government have in a socialist/communist economy?
a)
more than 50%
b)
less than 50%
5.
How much does private businesses control in free market economies?
a)
more than 50%
b)
less than 50%
6.
Outside of the U.S., what color is associated with leftist politics?
a)
Red
b)
Blue
7.
What color is assosciated with right leaning politics in countries outside the U.S.?
a)
Red
b)
Blue
8.
A primarily market oriented economy has less...?
a)
government subsidies and support
b)
government intervention and regulation
9.
What is equilibrium ?
a)
the combination of price and quantity where there is no economic pressure from surpluses or shortages that would cause price or quantity change.
b)
At the existing prequantity supplied exceeds tge quantity.
c)
The quantit demanded is equal ot quantity supplied
d)
Ultimate scarce source
10.
What is equilibrium price ?
a)
at the existing prequantity supplied exceeds the quantity demanded.
b)
A produce whose demand rises when income rises and vice versa
c)
The price where quantity demanded is euqal to quantity supplied.
d)
the quantity at which quantity demanded and quantity shipped are equal for a certain price level.
11.
What is equilibrium quantity ?
a)
The price where quantity demanded is equal to quantity supplied
b)
The quantity at which quantity demanded and quantity shipped are equal for a certain price level.
c)
The combination of price and quantity where there is no economic pressure from surpluses or shortages that would cause price or quantity change.
12.
What is the ultimate scarce resource
a)
Time
b)
Money
c)
Experience
d)
Wisedom
13.
What are price controls ?
a)
Time
b)
the combination of price and quantity where there is no economic prssure from supluses or shortages that would cause price or quantity change.
c)
The price where quantity demanded is euqal to quantity supplied.
d)
laws that governments enact to regulate prices
14.
A product whose demand falls when income rises, and vice versus
a)
complements
b)
normal good
c)
Inferior good
d)
substitue
15.
Good or services that are often used together
a)
subsitute
b)
Complements
c)
inferior good
d)
normal good
16.
A good or service that we can use in place of another good or service.
a)
Substitute good
b)
Normal good
c)
complements
d)
Inferior goood
17.
A product whose demand rises when income rises
a)
Normal good
b)
Inferior good
c)
subsitute
d)
complements
18.
Opportunity cost indicates what one must give up to obtain what he or she desires
a)
True
b)
False
19.
A fundamental principle of economics is that every choice has an opportunity cost
a)
True
b)
False
20.
Marginal analysis - examining the benefits and costs of choosing a little more or a little less of a good
a)
True
b)
False
21.
Utility is the satisfaction, usefulness, or value one obtains from consuming goods and services
a)
True
b)
False
22.
Law of diminishing marginal utility - as additional increments of resources to producing a good or service are added, the marginal benefit from those additional increments will decline
a)
True
b)
False
23.
PPF stands for Production possibilities frontier and shows the point in which a country's economy is at its most efficient
a)
True
b)
False
24.
The slope of the production possibilities frontier shows the opportunity cost of one item in terms of another
a)
True
b)
False
25.
Law of diminishing returns - when a person receives more of a good, the additional (or marginal) utility from each additional unit of the good declines
a)
True
b)
False
26.
Productive efficiency - when the mix of goods produced represents the mix that society most desires (or service)
a)
True
b)
False
27.
Allocative efficiency - when it is impossible to produce more of one good (or service) without decreasing the quantity produced of another good (or service)
a)
True
b)
False
28.
Chapter 6: What is the forumla for GDP per Capita?
a)
Population/GDP
b)
GDP/Exchange Rate
c)
(X-M)
d)
GDP/Population
29.
Chapter 6: What are the 4 components of GDP?
a)
Consumption, National income, Investment, Net Exports
b)
Consumption, Investment, Government Spending, Net Exports
c)
Services, National income, Government Spending, Net Exports
d)
Services, Investment, Government Spending, Net Exports
30.
Chapter 6: What is the Definition of GDP?
a)
The value of the output of all final goods and services produced within a country in a given year.
b)
The total amount of money a country makes in one year.
c)
The estimated total of goods and services in a business cycle.
d)
The total amount of goods and services given to the people by the government in one year.
31.
Chapter 6:What is the forumla for real GDP?
a)
Nominal GDP*price indexTO/price indexFROM
b)
Nominal GDP*price indexFROM/price indexTO
c)
GDP/Exchange rate
d)
Neither
32.
Chapter 6: What is the formula for calculating GDP?
a)
C+I+G+(X+M)
b)
C-I+G-(X+M)
c)
C+I+G+(X-M)
d)
C+G+(X-M)
33.
Chapter 6: Which of these is NOT included in GDP?
a)
Intermediate Goods
b)
Final Goods
c)
Investments
d)
National Income
34.
Chapter 6: What is a Recession?
a)
Two or more consecutive quarters of decline in nominal GDP.
b)
One business cycle of decline in real GDP.
c)
One quarter of decline in real GDP.
d)
Two or more consecutive quarters of decline in real GDP.
35.
Chapter 6: How long is a Quarter?
a)
1 month
b)
4 months
c)
3 months
d)
2 months
36.
Chapter 6: What is the formula for converting GDP for Country B's currency to Country A's?
a)
Country B's GDP in B's Currency/ Country A's GDP in A's Currency
b)
Country B's GDP in B's Currency/ Exchange Rate (Currency A/Currency B)
c)
Exchange Rate (Currency A/Currency B)/ Country B's GDP in B's Currency
d)
Country A's GDP in A's Currency/ Exchange Rate (Currency B/Currency A)
37.
Chapter 6: What is the difference of measuring in Nominal terms vs Real terms
a)
Nominal: Statistic measured in actual prices that existed at time
b)
Real: Statistic measured in actual prices that existed at time
c)
Nominal: Same statistic, but adjusted for inflation
d)
Real: Same statistic, but adjusted for inflation
38.
CH. 15 - What does a central bank do?
a)
1. To conduct monetary policy
b)
2. To promote stability of the financial system
c)
3. To provide banking services to commercial banks and other depository institutions, and to provide banking services to the federal government.
d)
4. All of the above
39.
CH. 15 - Why is it important for the members of the Board of Governors of the Federal Reserve to have longer terms in office than elected officials?
a)
1. They don't serve longer terms.
b)
2. The purpose of the long and staggered terms is to insulate the Board of Governors as much as possible from political pressure so that governors can make policy decisions based only on their economic merits.
c)
3. The purpose is so that they hold the most power to make decisions without any repercussions.
d)
4. None of the above
40.
CH. 15 - What is a bank run?
a)
1. When the workers of a bank run a marathon to raise money.
b)
2. People who refuse to put their money in a bank and instead keep it with them at all times.
c)
3. When the fear and uncertainty created by the suggestion that a bank might fail leads to depositors to withdraw their money.
d)
4. A robbery of a bank where the money "runs" away.
41.
CH. 15 - Given the danger of bank runs, why do banks not keep the majority of deposits on hand to meet the demands of depositors?
a)
1. Banks make their money from issuing loans and charging interest. The more money that is stored in the bank’s vault, the less is available for lending and the less money the bank stands to make.
b)
2. So that they can keep the money for themselves.
c)
3. To make people pull out less money in cash.
d)
4. To make less money.
42.
CH. 15 - If the central bank sells $500 in bonds to a bank that has issued $10,000 in loans and is exactly meeting the reserve requirement of 10%, what will happen to the amount of loans and to the money supply in general?
a)
1. The money supply increases.
b)
2. The money supply stay the same.
c)
3. The bank has to hold $1,000 in reserves, so when it buys the $500 in bonds, it will have to induce its loans by $500 to make up the difference. The money supply increases by the same amount.
d)
4. The bank has to hold $1,000 in reserves, so when it buys the $500 in bonds, it will have to reduce its loans by $500 to make up the difference. The money supply decreases by the same amount.
43.
CH. 15 - What would be the effect of increasing the banks' reserve requirements on the money supply?
a)
1. A decrease in reserve requirements would reduce the supply of money, since more money would be held in banks rather than circulating in the economy.
b)
2. An increase in reserve requirements would reduce the supply of money, since more money would be held in banks rather than circulating in the economy.
c)
3. An increase in reserve requirements would induce the supply of money, since more money would be held in banks rather than circulating in the economy.
d)
4. A decrease in reserve requirements would induce the supply of money, since less money would be held in banks rather than circulating in the economy.
44.
CH. 15 - What does it mean to have a higher or lower velocity of money supply?
a)
1. A higher velocity of money means that the average dollar circulates less times in a year. A lower velocity means that the average dollar circulates more times in a year.
b)
2. There is no such thing as velocity in economics.
c)
3. They both go at the samr rate.
d)
4. A higher velocity of money means that the average dollar circulates more times in a year. A lower velocity means that the average dollar circulates fewer times in a year.
45.
CH. 15 - What is the basic quantity equation of money?
a)
1. Money supply = Nominal GDP
b)
2. Money Supply × velocity = Nominal GDP = Price Level × Real GDP. (MV = PY)
c)
3. MY = PV
d)
4. None of the above
46.
CH. 15 - Why does contractionary monetary policy cause interest rates to rise?
a)
1. Contractionary policy induces the amount of loanable funds in the economy. As with all goods, greater scarcity leads a greater price, so the interest rate, or the price of borrowing money, decreases.
b)
2. Contractionary policy reduces the amount of loanable funds in the economy. As with all goods, greater scarcity leads a greater price, so the interest rate, or the price of borrowing money, decreases.
c)
3. Contractionary policy reduces the amount of loanable funds in the economy. As with all goods, greater scarcity leads a greater price, so the interest rate, or the price of borrowing money, rises.
d)
4. None of the above
47.
CH. 15 - Why does expansionary monetary policy causes interest rates to drop?
a)
1. An increase in the amount of available loanable funds means that there are more people who want to lend. They, therefore, bid the price of borrowing (the interest rate) down.
b)
2. A decrease in the amount of available loanable funds means that there are more people who want to lend. They, therefore, bid the price of borrowing (the interest rate) up.
c)
3. An increase in the amount of available loanable funds means that there are more people who want to lend. They, therefore, bid the price of borrowing (the interest rate) up.
d)
4. All of the above
48.
What is inflation?
a)
A general and ongoing rise in the level of price in an entire economy
b)
The measure of monetary value from goods and services
c)
How high the cost for borrowing is
d)
A process where prices of consumer goods and services fall and money increses in value
49.
What is the measure of inflation that U.S. government statisticians calculate based on the price level from a fixed basket of goods and services that represents the average consumer's purchases is?
a)
Adjustable Rate Mortgage (ARM)
b)
Cost-of-Living-Adjustments (COLAs)
c)
Consumer Price Index (CPI)
d)
Producer Price Index (PPI)
50.
What is deflation?
a)
An outburst of high inflation
b)
Severe negative inflation
c)
A period of economic decline
d)
When National Debt surpasses GDP.
51.
An outburst of high inflation
a)
Hyperinflation
b)
Deflation
c)
Stagflation
d)
Inflation
52.
How to measure changes in the cost of living?
a)
Consumer Price Index(CPI)
b)
Core inflation index
c)
Inflation
d)
Base year
53.
What is a measure of inflation based on prices paid for supplies and inputs by producers of goods and services?
a)
Consumer Price Index (CPI)
b)
Producer Price Index (PPI)
c)
Cost-of-Living-Adjustments (COLAs)
d)
Adjustable Rate Mortgage (ARM)
54.
What is a supply shock?
a)
When a supply surplus of a certain good happens randomly
b)
When the price of a certain suuply doubles
c)
When the amount of a certain suuply is more than the quantity demanded
d)
The supply of something goes scarce all of a sudden
55.
What is a measure of inflation based on the prices of all the GDP components?
a)
Total GDP
b)
Base Year
c)
Index Number
d)
GDP Deflator
56.
When are people hurt by inflation?
a)
They are holding cash
b)
they have financial asset investments where the nominal return does not keep up with inflation (also can be exacerbated by taxes)
c)
wages lag beind inflation
d)
they are a retiree recieving a private company defined benefit pension
57.
What is a measure of inflation based on wages paid in the labor market?
a)
Employment Cost Index
b)
Producer Price Index
c)
Consumer Price Index
d)
Adjustable Rate Mortgage (ARM)
58.
What is it called when a price, wage, or interest rate is adjusted automatically for inflation?
a)
indexed
b)
CPI
c)
PPI
d)
Index number
59.
How can Aggregate Demand be Stimulated?
a)
Increasing consumption
b)
Decreasing investment
c)
Decreasing government spending
d)
Increasing exports and decreasing imports
60.
Why are there federal reserve districts and sub-branches?
a)
So they make more money
b)
So they have less work
c)
So they can be closer to the commercial banks they are overseeing
d)
So they can pay less in wages.
61.
What does the Central Bank do?
a)
To conduct monetary policy using open market operation, required reserves, and discount rate
b)
To provide banking services to commercial banks
c)
To make people more money
d)
To promote stability of the financial system
62.
Consumer and Business Spending can be Stimulated with:
a)
Lower interest rates and Lower taxes
b)
Higher Interest rates
c)
Higher taxes
d)
None
63.
Why does the bank not like to hold onto cash
a)
They dont earn interest on them.
b)
They want to invest it.
c)
They don't have enough room for it
d)
They don't want to flex too hard.
64.
Banks want to hold at least 10% of deposits in cash.
a)
True
b)
False
65.
What are the goals of the US Central Bank.
a)
Low inflation
b)
Make more money
c)
Low employment
d)
To drive inflation
66.
What is the difference between the Demand Siders view and the Keysian View.
a)
Demand siders think we should stimulate demand to move it to full employment, and Keynesian think they increase demand only with government spending.
b)
Keynesians think we should stimulate demand to move it to full employment, and Demand Siders think they should increase demand only with government spending.
c)
There is no difference
d)
Keynesians want to stimulate supply while Demand siders want to stimulate demand
67.
What is the difference between Fed Funds Rate and Discount Rate
a)
The fed funds rate is the rate commerical banks charge on other commerical banks. The discount rate is the rate the Central Bank charges on other banks
b)
The discount rate is the rate commerical banks charge on other commerical banks. The fed funds rate is the rate the Central Bank charges on other banks
c)
There is no difference
d)
They aren't even real
68.
What would happen to aggreate demand if commercial banks bought bonds from the central bank
a)
Shift to the right
b)
Shift to the left
c)
No change
d)
Not enough information
69.
Supply shocks cannot cause changes in the AS curve
a)
TRUE
b)
False
70.
What is Say's Law?
a)
Supply creates Demand
b)
Price follows supply
c)
Price follows demand
d)
Demand creates supply
71.
What side do neoclassicalists fall on?
a)
Demand
b)
Supply
c)
Both
d)
Equilibrium
72.
What is Keynes Law?
a)
Demand creates its own Supply
b)
Supply creates its own demand
73.
Which is NOT a shift in AD
a)
Investment spending
b)
Consumption spending
c)
Government spending
d)
Productivity growth
74.
Neoclassical economists are economists who generally emphasize the importance of aggregate supply in determining the size of the macroeconomy over the long run
a)
True
b)
False
75.
The equalatrial Point in where the Demand and Supply meet.
a)
True
b)
False
76.
Macroeconomists are sometimes divided into 2 groups, Supply and Demand
a)
True
b)
False
77.
Changes in taxes is a factor that can lead to shifts in the AS curve
a)
True
b)
False
78.
What is NOT a component of aggregate supply?
a)
Productivity growth
b)
Changes in taxes
c)
Supply shocks
d)
Maintaining input prices
79.
Do rational expectations tend to look back at past experience while adaptive expectations look ahead to the future?
a)
Yes
b)
No
80.
Legislation proposes that the government should use macroeconomic policy to achieve an unemployment rate of zero percent, by increasing aggregate demand for as much and as long as necessary to accomplish this goal. From a neoclassical perspective, how will this policy affect output and the price level in the short run and in the long run?
a)
The policy will decrease output and lower the price level in the short run, but may lead to economic growth in the long run.
b)
The policy will have no impact on output and the price level in the short run, but may lead to increased productivity in the long run.
c)
The policy will decrease output and raise the price level in the short run, but may lead to deflation and economic stability in the long run.
d)
The policy will increase output and raise the price level in the short run, but may lead to inflation and inefficiencies in the long run.
81.
Would it make sense to argue that rational expectations economics is an extreme version of neoclassical economics?
a)
The statement is accurate. Rational expectations can be thought of as a version of neoclassical economics because it argues that potential GDP and the rate of unemployment are shaped by market forces as wages and prices adjust.
b)
No, this statement is false. It would be more accurate to say that rational expectations seek to predict the future as accurately as possible, using all of past experience as a guide. Adaptive expectations are largely backward looking; that is, they adapt as experience accumulates, but without attempting to look forward.
c)
An unemployment rate of zero percent is presumably well below the rate that is consistent with potential GDP and with the natural rate of unemployment. As a result, this policy would be attempting to push AD out to the right.
d)
the amount and kind of machinery and equipment available to help a person produce a good or service
82.
Summarize the Keynesian and Neoclassical models.
a)
Keynesian model focuses on free markets and Neoclassical model emphasizes government intervention.
b)
Keynesian model focuses on supply and Neoclassical model emphasizes demand.
c)
Keynesian model focuses on individual choices and Neoclassical model emphasizes collective decision-making.
d)
Keynesian model focuses on government intervention and Neoclassical model emphasizes free markets.
83.
Rational expectations- the theory that people predict the future as accurately as possible, using all of past experience as a guide. How does this differ from adaptive expectations?
a)
Rational expectations are forward-looking, using all available information to predict the future, while adaptive expectations are backward-looking, adapting as experience accumulates without attempting to predict the future.
b)
Rational expectations and adaptive expectations are the same, both use past experiences to predict future outcomes.
c)
Rational expectations are based on the neoclassical model, while adaptive expectations are based on the Keynesian model.
d)
Rational expectations are based on the Keynesian model, while adaptive expectations are based on the neoclassical model.
84.
Deflation expectation- Deflation expectation is the future rate of deflation that is considered by individuals and businesses during their current decision-making process
a)
True
b)
False
85.
According to the neoclassical perspective, the business cycle will eventually stabilize around the potential or full-employment level of output. Is this statement true or false?
a)
True
b)
False
86.
Human capital per person- the skills and knowledge that make a worker productive
a)
True
b)
False
87.
According to the theory of rational expectations, individuals make forecasts about the future based on all available information. Is this statement true or false?
a)
True
b)
False
88.
What is the biggest contributor to labor productivity?
a)
Human Capital
b)
Physical Capital
c)
Technology
89.
Economies with high per capita incomes grow faster than those with low per capita incomes.
a)
True
b)
False
90.
How does population growth impact productivity?
a)
Increases Productivity
b)
Decreases Productivity
91.
Rapid and sustained economic growth is a relatively recent experience for the human race.
a)
TRUE
b)
False
92.
What is the standard rate of economic growth?
a)
0.42
b)
0.25
c)
1
d)
0.03
93.
What is labor productivity comprised of?
a)
Technology
b)
Human Capital
c)
Physical Capital
d)
All of the them
94.
Low per captita economies have an easier time growing because they can use existing technologies rather than putting resources into innovating.
a)
TRUE
b)
False
95.
What is the most important factor for the standard of living?
a)
Sustained Economic Growth
b)
Keynesian Policies
c)
The Stock Market
d)
Discount Rate
96.
The economic growth rate has fallen just below 3% because of the decline in population growth.
a)
TRUE
b)
False
97.
What is the difference between a budget deficit and a budget surplus?
a)
A budget deficit occurs when government spending exceeds tax revenues, while a budget surplus occurs when tax revenues exceed government spending.
b)
A budget deficit occurs when tax revenues exceed government spending, while a budget surplus occurs when government spending exceeds tax revenues.
c)
A budget deficit occurs when the government borrows more than it repays, while a budget surplus occurs when the government repays more than it borrows.
d)
A budget deficit occurs when the government repays more than it borrows, while a budget surplus occurs when the government borrows more than it repays.
98.
What is the formula for calculating the debt/GDP ratio?
a)
Debt divided by GDP
b)
GDP divided by debt
c)
Debt minus GDP
d)
GDP minus debt
99.
Which of the following is an example of an automatic stabilizer?
a)
A stimulus package passed by Congress to boost the economy.
b)
A tax cut for the middle class to increase consumer spending.
c)
An increase in unemployment benefits for those who lose their jobs.
d)
A decrease in interest rates by the Federal Reserve to lower the cost of borrowing.
100.
What is the main goal of expansionary fiscal policy?
a)
To increase aggregate demand and output.
b)
To decrease aggregate demand and output.
c)
To increase aggregate supply and output.
d)
To decrease aggregate supply and output.
101.
What is the main goal of contractionary fiscal policy?
a)
To increase aggregate demand and output.
b)
To decrease aggregate demand and output.
c)
To increase aggregate supply and output.
d)
To decrease aggregate supply and output.
102.
What is the crowding out effect?
a)
The effect of government borrowing on private investment.
b)
The effect of government spending on private consumption.
c)
The effect of government regulation on private innovation.
d)
The effect of government taxation on private saving.
103.
What is the multiplier effect?
a)
The effect of an initial change in aggregate demand on the final level of output.
b)
The effect of an initial change in aggregate supply on the final level of output.
c)
The effect of an initial change in interest rates on the final level of investment.
d)
The effect of an initial change in taxes on the final level of consumption.
104.
What is the difference between discretionary and nondiscretionary fiscal policy?
a)
Discretionary fiscal policy is enacted by Congress and the president, while nondiscretionary fiscal policy is enacted by the Federal Reserve.
b)
Discretionary fiscal policy is enacted by the Federal Reserve, while nondiscretionary fiscal policy is enacted by Congress and the president.
c)
Discretionary fiscal policy is deliberate and requires legislative action, while nondiscretionary fiscal policy is automatic and does not require legislative action.
d)
Discretionary fiscal policy is automatic and does not require legislative action, while nondiscretionary fiscal policy is deliberate and requires legislative action.
105.
What is the difference between a balanced budget and a cyclically balanced budget?
a)
A balanced budget is when government spending equals tax revenues in every year, while a cyclically balanced budget is when government spending equals tax revenues over the course of the business cycle.
b)
A balanced budget is when government spending equals tax revenues over the course of the business cycle, while a cyclically balanced budget is when government spending equals tax revenues in every year.
c)
A balanced budget is when government spending equals tax revenues in nominal terms, while a cyclically balanced budget is when government spending equals tax revenues in real terms.
d)
A balanced budget is when government spending equals tax revenues in real terms, while a cyclically balanced budget is when government spending equals tax revenues in nominal terms.
106.
What is the difference between a public good and a private good?
a)
A public good is nonrival and nonexcludable, while a private good is rival and excludable.
b)
A public good is rival and excludable, while a private good is nonrival and nonexcludable.
c)
A public good is nonrival and excludable, while a private good is rival and nonexcludable.
d)
A public good is rival and nonexcludable, while a private good is nonrival and excludable.
107.
Which coontinents specificaly had a spectacular long-run economic growth in the eraly nineteenth century?
a)
North and South America
b)
Europe and Australia
c)
South America and Europe
d)
North America and Western Europe
108.
Do compound interst and compound growth rates behave in the same way as productivity rate?
a)
True
b)
False
109.
What determines the GDP per worker or GDP Per Hour
a)
Produced per worker
b)
Per hour worked
c)
A and B
110.
An increase by society in the average level of physical and/or human capital per person is?
a)
Aggregate production function
b)
Capital deepening
c)
Convergence
d)
Human capital
111.
Population Growth is Declining
a)
True
b)
False
112.
Lower income countries have a faster GDP growth than higher income countries
a)
TRUE
b)
False
100 %
