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Macro Review
Macro Review
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Mr. McKay's Macro Review
Flashcards
31 cards
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Practice quiz
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Questions
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Answers
1
The best way to avoid a mountain of debt is to
use cash advances.
use a credit card for all purchases
find a credit card with a reasonable APR.
pay off your credit balance in full each month.
2
Labor unions were formed because workers wanted to change
the 1938 Fair Labor Standards Act, which banned child labor.
the practice of featherbedding in the railroad industry.
dangerous working conditions and long hours of factory jobs.
company efforts to hire the most highly skilled workers.
3
When the U.S. dollar is weaker than other countries . . .
Trump will use his $ to buy out the foreign countries.
it less expensive for foreign countries to buy US goods
other countries hate US goods
it more expensive for foreign countries to buy US goods
4
Why do low interest rates encourage business investment?
Inflation is lower when interest rates are low.
It is cheaper to borrow money when interest rates are low.
Lower interest rates cause the money supply to decrease.
Lower interest rates cause the money supply to stay the same
5
What is “absolute advantage”?
ability to produce more of a product using the same resource
desire to produce more of a product than a trading partner
the growth in trade between two countries over time
knowing a country’s resources are greater than another’s
6
Federal and state governments share the cost of which of the following programs?
Social Security
highway construction
military defense
Veterans benefits
7
Which group of people usually pays the highest insurance rates?
people who live in a small town
drivers with a good safety record
married women, ages 25-45
young people
8
A nation that imports more goods and services than it exports is said to have a
trade deficit.
positive balance of trade
balance of trade.
trade surplus.
9
What is an effect of the growth of free market and free trade?
decreased offshoring
increased pace of globalization
elimination of comparative advantage
reduction in number of multinational corporations
10
Which is NOT a function of the Federal Reserve (FED)?
process checks for the federal government
loan money to individuals and small businesses
regulate the money supply
clear checks
11
How can an economist compare the standard of living in two different countries?
by measuring physical capital
by looking at the quality of life
by seeing how the GDP is distributed
by comparing real GDP per capita
12
Which of the following describes an advantage of renting over owning?
no property to use as collateral
no return on the rental money
greater mobility
less privacy
13
What is considered one cause of inflation?
The money supply decreases
Producers raise prices to meet increased costs
Unemployment is increased
Demand and supply are in equilibrium.
14
What is the main advantage of buying a new car rather than a used one?
no need for a loan to buy it
lower purchase price
lower maintenance costs at first
no need to pay a registration fee
15
Since bonds are considered among the safest investments, they usually
take a long time to mature.
have low interest rates.
have high interest rates.
never mature.
16
What are two things that usually happen when interest rates go up?
Consumers spend more money, but businesses spend less money
Both consumers and businesses spend more money.
Consumers spend less money, but businesses spend more money
Both consumers and businesses spend less money
17
A downward turn in the economy causes Jane to lose her job is an example of
frictional unemployment.
cyclical unemployment.
structural unemployment.
seasonal unemployment
18
What do you have to pay when you borrow funds?
principal plus interest
twice the amount of the loan
the amount you borrowed
principal plus collateral
19
What can the Federal Open Market Committee do to increase the money supply?
raise the discount rate
buy government securities
raise reserve requirements
sell government securities
20
The New York Stock Exchange arranges . . . .
stock and bond trading of top U.S. and world companies
blue chip stocks trading only
stock but not bond trading
stock and bond trading on the Internet only
21
What type of policy should the Fed use to counteract high inflation?
tight money policy
money creation
easy money policy
money creation
22
Why is real GDP more accurate than nominal GDP?
It is adjusted for depreciation.
It is adjusted for price changes.
It includes unrecorded business.
It includes unpaid and paid work.
23
Which of the following people would be considered underemployed?
Mary is looking for work in a specialized field.
Frank is unemployed, but has stopped looking for a job.
Carlos is not earning as much money as he really needs.
Rochelle has a Ph.D., but is working in a low-skilled job.
24
Which of the following is included in gross domestic product (GDP)?
intermediate goods
goods made in another country by an American company
final goods
used goods
25
An American company hires a call center in India to handle its telemarketing is an example of?
offshoring
“brain drain”
remittance
a stabilization program
26
What is the major source of revenue for most state governments?
business income and licensing taxes
sales and individual income taxes
property and gasoline taxes
alcohol and tobacco taxes
27
Which of the following activities creates money?
depositing money into a checking account
withdrawing money from a checking account
putting money into a safe
paying off a loan to a friend
28
Your pay stub from your job show that money has been taken out for FICA. What does this mean?
$ is being withheld to fund Social Security and Medicare
$ is being withheld for federal, state, and city taxes.
$ is being withheld for personal exemptions and deductions
$ is being withheld for excise and estate taxes.
29
Why might you choose an investment with high risk instead of one with low risk?
for a higher return
for a lower return
to avoid losing money
for greater liquidity
30
What does the Consumer Price Index (CPI) measure?
amount of money consumers spend on goods and services
prices of necessary items a typical customer might buy
prices of all goods in the economy
core inflation rate
31
What is the purpose of a credit check?
to inform borrowers of their legal rights
to find out a borrower’s creditworthiness
to pay back the borrower’s loan in full
to offer credit cards to first-time borrowers
