If banks were NOT required to hold reserves

the Fed. would have less control of the MS.

A tax cut will have a smaller impact than an increase in gov. spending because

a portion of a tax cut will be saved

Who is structurally unemployed?

a worker who has obsolete skills

GDP is best defined as a measure of

the value of final output produced by an economy

Which of the following is "investment?"

a clothing company purchasing 67 new sewing machines

Which statement about scarcity is correct?

Unlimited resources would eliminate scarcity.

gov. borrowing reduces private borrowing

Which would shift the AD right?

decrease in personal income tax

The simple multiplier is useful in determining the

change in equilibrium GDP caused by a change in spending

The VERTICAL portion of the SRAS curve suggests that

no increase of output is possible

The velocity of money

is the average number of transactions a $$ is involved in

The gov. defines someone as unemployed if the person

is without a job but is looking

Which relationship is INVERSE, or opposite?

investment spending and interest rate

If Verity deposits $100 in a bank, the bank will

will keep a fraction and then lend or invest the rest

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AP Macro Final Exam Prep

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Final exam review.

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Questions 29

Answers

1
If REAL GDP is increasing 3% per year but nominal is increasing by 7%, which is true?
Exports exceed imports
Price level is decreasing
Price level is increasing
recession, on NOOOOOOOOOO
2
If banks were NOT required to hold reserves
monetary control would be easier for the Fed.
the Fed. would have less control of the MS.
they would not hold ANY reserves.
they would hold 100% of their deposits on reserve.
3
A tax cut will have a smaller impact than an increase in gov. spending because
a portion of the tax cut will offset state and local taxes
taxes vary directly with income
gov. spending increases consumption, tax cuts do not
a portion of a tax cut will be saved
4
Who is structurally unemployed?
a worker who has obsolete skills
a recent college grad looking for employment
a teenager looking for part time employment
a high school teacher during the summer
5
GDP is best defined as a measure of
the value of consumption in an economy
economic welfare
monetary transactions taking place within the black market
the value of final output produced by an economy
6
Demand pull will most likely be seen during
decreasing consumer confidence
low unemployment
recession
stagflation
7
Which of the following is "investment?"
A farmer purchasing gov. bonds
a clothing company purchasing 67 new sewing machines
Mason buying stocks of Dell
newly weds moving in to mom and dads basement
8
Which statement about scarcity is correct?
Working together eliminates scarcity.
New reserves of resources eliminates scarcity
Producing within the PPC eliminates scarcity.
Unlimited resources would eliminate scarcity.
9
Which of the following would most likely cause stagflation?
increase in labor productivity
steady growth of the money supply
a decline in union membership
increase in price of inputs
10
Which of the following is most likely to result in inflation?
inward shift of AS
inward shift of AD
an economy operating within the PPC
the horizontal portion of the AS curve
11
Crowding out =
gov. borrowing reduces private borrowing
restrictive monetary policy causes interest rates to rise
high and rising unemployment results in reduced inflation
monetary policy reduces effectiveness of fiscal policy
12
The opportunity cost of holding money (M1) is
convenience
forgone liquidity
interest earnings forgone
a decreased ability to buy goods and services
13
Which would shift the AD right?
decrease in personal income tax
decrease in price level
decrease in gov. spending
decrease in exports
14
The simple multiplier is useful in determining the
total level of foreign business outputs according to Kalie
rate of interest
full-employment unemployment rate
change in equilibrium GDP caused by a change in spending
15
If the price for good X goes up, causing a drop in demand for good Y, good Y is
a luxury good
a necessary good
a complement good
an inferior good
16
The VERTICAL portion of the SRAS curve suggests that
increased output results in NO price change
a rise in output will be joined by a slight rise in price
no increase of output is possible
someone draw it to prove it
17
If nominal interest is 6% and expected inflation is 4%, real interest is
10%
6%
4%
2%
18
Why does this PPC bow outwards?
Opportunity cost decreases
Opportunity cost increases
Opportunity cost is constant
Indeterminate
19
The velocity of money
is set by Congress
is equal to 1 minus the MPS
is the average number of transactions a $$ is involved in
indicates how quickly the Fed can burn damaged money
20
The gov. defines someone as unemployed if the person
works part time but wants full time work
does not hold a paying job
is without a job but is looking
has been recently fired
21
Which point is undesirable?
R
P
S
Q
22
Who would benefit from UNanticipated inflation?
Lenders
Amanda
Borrowers
Savers
23
The purchase of securities on the open market by the Fed will most likely
increase the supply of money
increase the discount rate
decrease the reserve requirement
increase the interest rate
24
If demand increases while supply decreases, then price
stays the same
always increases
always decreases
indeterminate
25
Which point is currently unattainable?
Q
P
R
S
26
Which relationship is INVERSE, or opposite?
savings and rate of interest
consumption spending and income
investment spending and interest rate
investment spending and GDP
27
If Verity deposits $100 in a bank, the bank will
keep all on hand for when Verity comes back
will keep a fraction and then lend or invest the rest
will instantly loan it out to someone looking to invest
none of the above
28
Zach could buy a computer, shoes or a vacay to Cancun, he goes to Cancun. Opportunity cost =
all 3 alternatives
the alternative he values most
nothing, Cancun is awesome
the alternative he values least
29
What is an automatic stabilizer?
Both
Progressive income tax
Neither
Unemployment compensation

AP Macro Final Exam Prep Flashcards | StudBud