GDP per capita is the best measurement for determining the:
Impact of the marginal tax rate on AS.
Rule of 72.
Standard of living.
Productivity of the work force.
The Board of Governors of the Federal Reserve System is the key decision maker for monetary policy.
True
False
An increase in the value of one currency relative to another is referred to as:
Currency appreciation.
Currency depreciation.
Terms of trade.
Comparative advantage.
A change in the reserve requirement is the tool used least often by the Fed because it:
Does not affect bank reserves.
Can cause abrupt changes in the money supply.
Does not affect the money multiplier.
Has no impact on the lending capacity of the banking system.
Which group does not benefit from trade when the U.S. imports leather?
Workers in the foreign leather industry.
U.S. consumers who purchase leather products.
Foreign leather producers.
Workers in the U.S. leather industry.
If the United States has a trade deficit with the rest of the world, then the rest of the world must have a trade deficit also.
True
False
Discretionary policy calls for continual adjustments to the money supply and is associated with the monetarist perspective.
True
False
The interest rate private banks charge each other for lending reserves is called the federal funds rate.
True
False
Crowding out occurs when the government:
Increases taxes, thus causing a decrease in consumption.
Borrows money, thus making it more difficult for the private sector to borrow.
Prints money, which displaces currency.
Encourages saving, which makes more dollars available for borrowing.
The key decision maker for general Federal Reserve policy is the:
Federal Open Market Committee.
Board of Governors.
Federal Advisory Council.
Regional Federal Reserve banks
As the terms of trade approach the domestic opportunity costs of a product, a country will experience:
Smaller gains from trade.
Greater comparative advantage from trade.
Greater absolute advantage from trade.
Greater balance-of-trade surpluses.
According to the aggregate supply drawn under the monetarist view, which of the following would lead to a higher price level?
The purchase of bonds in the open market by the Fed.
An increase in the discount rate.
An increase in the reserve requirement.
A decrease in the money multiplier.
Some U.S. industries are very dependent on sales of goods to other countries.
True
False
There is an inverse relationship between the growth rate of capital and the growth rate of an economy.
True
False
Long-run economic growth policies focus on:
Shifting the aggregate demand curve to the left.
Moving the economy along the production possibilities curve.
Shifting the production possibilities curve outward.
Moving the economy onto the production possibilities curve.
When the terms of trade are between the opportunity costs for two countries, then both countries benefit if they:
Consume inside their production possibilities curves.
Specialize in production but do not trade.
Impose trade barriers.
Specialize in production and trade.
Government policies that support education and job training cause:
A decrease in GDP per capita, since dollars are not being spent on output.
An increase in the size of the labor force.
An increase in productivity.
An increase in the ratio of capital to labor.
According to the monetarist view, the aggregate supply curve is:
Upward sloping to the right.
Perfectly vertical at the natural rate of unemployment.
Flat or horizontal until full employment is reached.
Flat or horizontal at all levels of output.
One News Wire article in the text has the title "Fed Cuts Key Interest Rate Half-Point to 1 Percent." Assuming the economy is in the upward sloping portion of the eclectic aggregate supply curve, what should happen to the price level and output as a result of the Fed's action, ceteris paribus?
The equilibrium price level and equilibrium output should both increase.
The equilibrium price level should increase and equilibrium output should decrease.
The equilibrium price level should decrease and equilibrium output should increase.
The equilibrium price level and equilibrium output should both decrease.
The amount by which the value of imports exceeds the value of exports in a given time period is a:
Trade surplus.
Trade deficit.
Consumption possibility.
Trade embargo.
GDP per capita measures worker productivity.
True
False
The growth rate refers to the change in _______ from one period to another.
Standard of living.
Population.
Nominal GDP.
Real GDP.
The Federal Reserve banks clear checks between private banks, hold bank reserves, provide currency for banks, and make loans to private banks.
True
False
If a country has the ability to produce a specific good with fewer resources than other countries, then it has:
A comparative advantage.
A trade surplus.
Favorable terms of trade.
An absolute advantage.
Which of the following is used to measure labor productivity?
Labor input divided by total output.
Output per labor hour.
Hourly wage rate divided by output per labor hour.
Dollar value of inputs per unit of output.
Which of the following does the United States import?
Video-game machines, cell phones, and steel.
Cell phones, but not steel.
Steel, but not video-game machines.
Video-game machines, but not cell phones.
Supply-side economists believe that:
Government regulation is necessary to ensure the correct mix of output.
A decrease in regulation will shift the aggregate supply curve to the right.
A decrease in regulation will allow producers to abuse consumers.
Government regulation encourages long-run economic growth.
GDP per capita measures worker productivity.
True
False
Congress and the president are the key decision makers for U.S. monetary policy.
True
False
Which of the following is the best measure of living standards for an economy?
GDP per worker.
Nominal GDP.
GDP per capita.
Population growth.
The United States is less dependent on foreign trade, as measured by the ratio of exports to GDP, than most other nations.
True
False
When the U.S. dollar appreciates in value, the United States will export fewer goods, ceteris paribus.
True
False
Government policies that support education and job training cause:
A decrease in GDP per capita, since dollars are not being spent on output.
An increase in the size of the labor force.
An increase in productivity.
An increase in the ratio of capital to labor.
An increase in our production possibilities is known as:
Inflation.
Crowding out.
GDP per capita.
Economic growth.
All persons over age 16 who are either working for pay or actively seeking paid employment defines:
Labor force.
Employment rate.
GDP per capita.
Productivity rate.
The production possibilities curve represents the:
Actual GDP that is being produced.
Potential output that could be produced.
Potential GDP per capita that could be attained.
Actual population growth that is occurring.
Over the last decade, the world has experienced:
Decreased living standards in some of the poorest countries.
Increased living standards in all countries.
Growth in output for all countries.
Improvements in technology but little change in output.
Sustained increases in total output are possible if aggregate supply shifts to the left.
True
False
Which of the following measures the actual quantity of goods and services produced in the United States?
Nominal GDP.
GDP per worker.
Real GDP per capita.
Real GDP.
Long-run economic growth requires an increase in potential GDP.
True
False
Fiscal and monetary policies are used to shift the:
Aggregate demand curve.
Aggregate supply curve.
Production possibilities curve.
Real GDP curve.
When an economy experiences long-run growth there will be:
An increase in potential GDP.
An increase in the use of existing productive capacity.
A shift in aggregate supply to the left.
A commitment to expansionary fiscal policy.
Exchange rates are affected by changes in:
The supply of a currency only.
The demand for a currency only.
Both the demand for and supply of a currency.
The export of goods only.
Proponents of monetary policy based on fixed rules base their position on the assumption of a vertical aggregate supply curve.
True
False
Output per labor hour is used to measure:
Production possibilities.
Nominal GDP.
Employment rate.
Productivity.
Which of the following is not true about the members of the Federal Reserve Board of Governors?
They are appointed to fourteen-year terms by the president of the United States.
They are relatively immune to short-term political pressures.
They may not be reappointed after serving a full term.
They each serve as chairman of the Board of Governors on a rotating basis.
If the Fed sells more bonds to the public, then the money supply will:
Decrease and the aggregate demand curve will shift to the right.
Increase and the aggregate demand curve will shift to the right.
Increase and the aggregate demand curve will shift to the left.
Decrease and the aggregate demand curve will shift to the left.
Tariffs on imported coffee will result in all of the following except:
Higher prices for imported coffee.
Higher prices for domestic coffee.
Gains for workers in the domestic coffee industry.
Gains for workers in the foreign coffee market.
Ceteris paribus, if the labor force becomes more educated, then productivity increases.
True
False
Continual increases in GDP per capita are most likely to come from:
Increases in output per worker.
Increases in the employment rate.
Decreases in population growth.
Increases in inflation.
