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Economics Final Exam - Spring 2015 Undergrad

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economics
Everett Averhart
Quiz by Everett Averhart, updated more than 1 year ago
Everett Averhart
Created by Everett Averhart almost 9 years ago
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Resource summary

Question 1

Question
Business Cycles are__________________________________?
Answer
  • alternating rises and declines in the level of economic activity.
  • alternating rises and declines in the level of economic activity

Question 2

Question
What are the 4 components of a business cycle? (Separate each item by a semi-colon, followed by a space)
Answer
  • peak; recession; trough; expansion
  • peak; recession; trough;

Question 3

Question
At a peak____________________________?
Answer
  • business activity has reached a temporary maximum.
  • business activity has reached a temporary maximum

Question 4

Question
What is a recession?
Answer
  • A recession is a period of decline in total output, income, and employment.
  • a period of decline in total output, income, and employment

Question 5

Question
In the trough of the recession or depression,______________________________.
Answer
  • output and employment bottom out at their lowest levels
  • output and employment "bottom-out" at their lowest levels

Question 6

Question
A recession is usually followed by ____________________________________.
Answer
  • a recovery and expansion, a period in which real GDP, income, and employment rise.
  • a recovery and expansion, a period in which real GDP, income, and employment rise

Question 7

Question
Define Inflation.
Answer
  • Inflation is a rise in the general level of prices.
  • Inflation is a rise in the general level of prices

Question 8

Question
How is inflation measured?
Answer
  • according to the Consumer Price Index
  • According to the Consumer Price Index

Question 9

Question
What are the two types of inflation?
Answer
  • demand pull inflation and cost push inflation
  • demand-pull inflation and cost-push inflation

Question 10

Question
How many tools of monetary control does the Fed have?
Answer
  • 4
  • four

Question 11

Question
The Fed has four main tools of monetary control it can use to alter the reserves of commercial banks. List them. (Separate each answer by a semi-colon, followed by a space.)
Answer
  • open market operations; the reserve ratio; the discount rate; interest on reserves
  • open-market operations; the reserve ratio; the discount rate; interest on reserves

Question 12

Question
List the three types of unemployment. (Separate each answer by a semi-colon, followed by a space.)
Answer
  • frictional; structural; cyclical
  • structural; frictional; cyclical

Question 13

Question
Define frictional unemployment.
Answer
  • A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs
  • unemployed workers between jobs

Question 14

Question
Define Structural unemployment.
Answer
  • unemployment of workers whose skills are not demanded by employers
  • workers who lack sufficient skill to obtain employment
  • workers who cannot easily move to locations where jobs are available
  • unemployment of workers whose skills are not demanded by employers, who lack sufficient skill to obtain employment, or who cannot easily move to locations where jobs are available

Question 15

Question
Firms that produce these goods are most affect by the business cycle.
Answer
  • durable goods
  • durable-goods

Question 16

Question
Why are firms that produce durable goods most affect by the business cycle?
Answer
  • because people forgo the opportunity to buy these goods in order to buy goods of necessity
  • because people forgo the opportunity to buy durable goods in order to buy goods of necessity
  • because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non durable goods
  • because people forgo the opportunity to buy durable goods in order to buy goods of necessity which would fall under the category of non durable goods
  • because people forgo the opportunity to buy durable goods in order to buy goods of necessity which would fall under the category of non-durable goods
  • because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non-durable goods

Question 17

Question
Firms that produce these goods are the least affected by the business cycle.
Answer
  • non-durable goods
  • non durable goods

Question 18

Question
Explain the cyclical impact of non-durable and durable goods.
Answer
  • Firms that produce durable goods are affected most by the business cycle because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non-durable goods.
  • firms that produce durable goods are affected most by the business cycle because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non-durable goods.
  • Firms that produce durable goods are affected most by the business cycle because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non durable goods.
  • firms that produce durable goods are affected most by the business cycle because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non durable goods.
  • Firms that produce durable goods are affected most by the business cycle because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non-durable goods
  • firms that produce durable goods are affected most by the business cycle because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non-durable goods
  • Firms that produce durable goods are affected most by the business cycle because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non durable goods
  • firms that produce durable goods are affected most by the business cycle because people forgo the opportunity to buy these goods in order to buy goods of necessity which would fall under the category of non durable goods

Question 19

Question
List 3 examples of durable goods. (Separate each answer by a semi-colon, followed by a space.)
Answer
  • Automobiles; Computers; Refrigerators
  • automobiles; computers; refrigerators

Question 20

Question
List 3 examples of non-durable goods. (Separate each answer by a semi-colon, followed by a space.)
Answer
  • Food; Clothing; Medical Services
  • food; clothing; medical services

Question 21

Question
What are the five causes of business cycles? (Separate each answer by a semi-colon, followed by a space.)
Answer
  • Irregular innovation; Productivity changes; Monetary factors; Political events; Financial instability
  • irregular innovation; productivity changes; monetary factors; political events; financial instability
  • Irregular Innovation; Productivity Changes; Monetary Factors; Political Events; Financial Instability
  • IPMPF
  • I.P.M.P.F.

Question 22

Question
Define Monetary Policy.
Answer
  • Monetary policy is policy which is enacted by the Federal Open Market Committee that consists of deliberate changes in the money supply to influence interest rates and thus the total level of spending in the economy.
  • Monetary policy is policy which is enacted by the Federal Open Market Committee that consists of deliberate changes in the money supply to influence interest rates and thus the total level of spending in the economy
  • policy enacted by the Federal Open Market Committee that consists of deliberate changes in the money supply to influence interest rates and thus the total level of spending in the economy
  • policy which is enacted by the Federal Open Market Committee that consists of deliberate changes in the money supply to influence interest rates and thus the total level of spending in the economy
  • policy enacted by the Federal Open Market Committee that consists of deliberate changes in the supply of money to influence interest rates and thus the total level of spending in the economy

Question 23

Question
What does (FOMC) stand for?
Answer
  • Federal Open Market Committee
  • federal open market committee
  • the federal open market committee
  • The Federal Open Market Committee

Question 24

Question
What is the goal of monetary policy?
Answer
  • The goal of monetary policy is to achieve and maintain price level stability, full employment, and economic growth.
  • The goal of monetary policy is to achieve and maintain price level stability, full employment, and economic growth
  • to achieve and maintain price level stability, full employment, and economic growth

Question 25

Question
What are two types of monetary policy enacted by the FOMC? (Separate each answer by a semi-colon, and a space.)
Answer
  • Expansionary Monetary Policy; Restrictive Monetary Policy
  • expansionary monetary policy; restrictive monetary policy
  • Expansionary monetary policy; Restrictive monetary policy

Question 26

Question
Describe Expansionary Monetary Policy.
Answer
  • Expansionary Monetary Policy is that which lowers the interest rate to bolster borrowing and spending, which will increase aggregate demand and expand real output.
  • Expansionary monetary policy is that which lowers the interest rate to bolster borrowing and spending, which will increase aggregate demand and expand real output.
  • Expansionary Monetary Policy is policy which lowers the interest rate to bolster borrowing and spending, which will increase aggregate demand and expand real output.
  • Expansionary Monetary Policy is policy which lowers the interest rate to bolster borrowing and spending, which will increase aggregate demand and expand real output
  • Expansionary Monetary Policy is that which lowers the interest rate in order to bolster borrowing and spending, which will increase aggregate demand and expand real output.
  • Expansionary Monetary Policy is that which lowers the interest rate in order to bolster borrowing and spending, which will increase aggregate demand and expand real output

Question 27

Question
Describe Restrictive Monetary Policy.
Answer
  • Restrictive Monetary Policy is that which will increase the interest rate to reduce borrowing and spending, which will curtail the expansion of aggregate demand and hold down price-level increases.
  • Restrictive Monetary Policy is that which will increase the interest rate to reduce borrowing and spending, which will curtail the expansion of aggregate demand and hold down price-level increases
  • Restrictive Monetary Policy is policy which will increase the interest rate in order to reduce borrowing and spending, which will decrease aggregate demand and hold down price level increases.
  • Restrictive Monetary Policy is policy which will increase the interest rate to reduce borrowing and spending, which will decrease aggregate demand and hold down price level increases.
  • Restrictive Monetary Policy is policy which will increase the interest rate in order to reduce borrowing and spending, which will decrease aggregate demand and hold down price level increases
  • Restrictive Monetary Policy is that which will increase the interest rate in order to reduce borrowing and spending, which will decrease aggregate demand and hold down price level increases.
  • Restrictive Monetary Policy is policy which will increase the interest rate in order to reduce borrowing and spending, which will curtail the expansion of aggregate demand and hold down price level increases.

Question 28

Question
Expansionary Monetary Policy is enacted when the economy is doing bad.
Answer
  • True
  • False

Question 29

Question
The FOMC enacts a Restrictive Monetary Policy when the economy is rapidly expanding.
Answer
  • True
  • False

Question 30

Question
Define Fiscal Policy.
Answer
  • Fiscal Policy is that which consists of deliberate changes in government spending and tax collections designed to achieve full employment, control inflation, and encourage economic growth.
  • Fiscal Policy is that which consists of deliberate changes in government spending and tax collections designed to achieve full employment, control inflation, and encourage economic growth
  • Fiscal policy is policy which consists of deliberate changes in government spending and tax collections in order to achieve full employment, control inflation, and encourage economic growth.
  • Fiscal policy is that which consists of deliberate changes in government spending and tax collections designed to achieve full employment, control inflation, and encourage economic growth
  • Fiscal policy is that which consists of deliberate changes in government spending and tax collections designed to achieve full employment, control inflation, and encourage economic growth.
  • Fiscal Policy is policy which consists of deliberate changes in government spending and tax collections in order to achieve full employment, control inflation, and encourage economic growth

Question 31

Question
Identify the two types of fiscal policy enforced by the federal government. (Separate each answer by a semi-colon, and a space.)
Answer
  • Expansionary Fiscal Policy; Contractionary Fiscal Policy
  • expansionary fiscal policy; contractionary fiscal policy
  • Expansionary fiscal policy; Contractionary fiscal policy
  • Expansionary and Contractionary fiscal policy

Question 32

Question
Who enacts fiscal policy?
Answer
  • The government
  • the government

Question 33

Question
The Government enacts Restrictive Fiscal Policy
Answer
  • True
  • False

Question 34

Question
The tools of fiscal policy include_____________________________.
Answer
  • The tools of fiscal policy include increasing or decreasing government spending, increasing or decreasing taxes, or some combination of the two. By manipulating these aspects of the economy the government can increase or decrease aggregate demand, and/or raise real GDP, as well as, inflation.
  • increasing or decreasing governmental spending, increasing or decreasing taxes, or some combination of the two, By manipulating these aspects of the economy, the government can increase or decrease aggregate demand and/or raise real GDP, as well as, inflation.
  • increasing or decreasing governmental spending, increasing or decreasing taxes, or some combination of the two. By manipulating these aspects of the economy the government can increase or decrease aggregate demand thereby raising real GDP or lowering or eliminating inflation.

Question 35

Question
What are the limitations to fiscal policy? (Separate each by a semi-colon, followed by a space.)
Answer
  • recognition lag; administrative lag; operational lag
  • Recognition lag; Administrative lag; Operational lag

Question 36

Question
Describe the recognition lag.
Answer
  • The recognition lag is the time between the beginning of recession or inflation and the certain awareness that it is actually happening.
  • The recognition lag is the time between the beginning of recession or inflation and the certain awareness that it is actually happening
  • the recognition lag is the time between the initial beginning of recession or inflation and the certain awareness that it is happening.

Question 37

Question
Describe the administrative lag.
Answer
  • The administrative lag is represented by the time fiscal action is initially needed and the time action is actually taken.
  • The administrative lag is represented by the time fiscal action is initially needed and the time action is actually taken
  • the administrative lag occurs between the time fiscal policy is initially needed and the time when action is actually taken

Question 38

Question
Describe the operational lag.
Answer
  • The operational lag occurs between the time fiscal policy is taken and the time that action actually affects output, the employment rate, or the price level.
  • The operational lag occurs between the time fiscal action is taken and the time that action actually affects output, the employment rate, and the price level.
  • The operational lag occurs between the time fiscal action is initially taken and the time that action actually affects output, the employment rate, and the price level.
  • The operational lag occurs between the time fiscal action is initially taken and the time that action actually affects output, the employment rate, and the price level

Question 39

Question
Describe the U.S. National Debt.
Answer
  • The U.S. national debt or public debt is the accumulation off all past federal deficits and surpluses.
  • The U.S. national debt or public debt is an accumulation of all past federal deficits and surpluses
  • The U.S. national debt, otherwise known as the public debt, is an accumulation of all past federal deficits and surpluses.
  • The U.S. national debt is an accumulation of all past federal deficits and/or surpluses

Question 40

Question
As of 2015, what is the U.S. national debt?
Answer
  • $18 trillion
  • As of 2015, the public debt is $18 trillion.
  • As of 2015, the public debt is $18 trillion

Question 41

Question
Assess the actual burden of the national debt.
Answer
  • The primary burden of the debt is the interest accruing on the bonds sold to finance the debt.
  • The primary burden of the debt is the interest accruing on the bonds sold to finance the debt
  • The interest accruing on the bonds sold to finance the debt is the primary burden of the national debt.
  • The primary burden of the national debt is the interest accruing on the bonds that are sold to finance the debt.

Question 42

Question
Discuss the issue of government securities as it relates to the national debt.
Answer
  • The distribution of government securities is highly uneven.
  • The distribution of government securities is highly uneven
  • Government securities are severely unevenly distributed.
  • The distribution of government securities is very uneven.

Question 43

Question
Discuss the relevance of interests as it pertains to the public debt.
Answer
  • The current public debt necessitates annual interests payments of $360 billion.
  • The current public debt necessitates annual interest payments of $360 billion
  • the current national debt necessitates annual interest payments of $360 billion
  • The current national debt necessitates annual interest payments of $360 billion.

Question 44

Question
Discuss the relevance of foreign institutions and citizens as they pertain to the U.S. national debt.
Answer
  • The 33 percent of the U.S. public debt held by citizens and institutions of foreign countries is an economic burden to Americans.
  • The 33 percent of the U.S. national debt held by citizens and institutions of foreign countries is an economic burden to Americans
  • Citizens and institutions of foreign countries hold approximately 33 percent of the U.S. national debt. This is an economic burden to Americans
  • The 33 percent of the U.S. national/ public debt held by citizens and institutions of foreign countries is an economic burden to Americans

Question 45

Question
Discuss how the continual refinancing of the U.S. national debt can impact future generations.
Answer
  • The continual refinancing of the large U.S. national debt can transfer a real economic burden to future generations by passing on to them a smaller stock of capital goods.
  • The continual refinancing of the large public debt can transfer a real economic burden to future generations by passing on to them a smaller stock of capital goods
  • A smaller stock of capital goods can be passed on to future generations as a result of the continual refinancing of the large public debt.
  • The continual refinancing of the huge national/public debt can transfer a real economic burden to future generations by passing on to them a smaller stock of capital goods.

Question 46

Question
Describe the federal funds rate.
Answer
  • The federal funds rate is the rate of interests that banks charge one another on overnight loans made from temporary excess reserves.
  • The federal funds rate is the rate of interests that banks charge one another for overnight loans made from temporary excess reserves
  • the federal funds rate is the rate of interest that banks charge other banks for overnight loans deriving from temporary excess reserves
  • the federal funds rate is the rate of interest that banks charge other banks for overnight loans taken from temporary excess reserves.

Question 47

Question
How does the Fed directly influence the federal funds rate?
Answer
  • The Fed, by using its influence on the Federal Reserve Bank of New York, can force it to undertake whatever open- market operations may be necessary to achieve and maintain the targeted rate.
  • The Fed, by using its influence on the Federal Reserve Bank of New York, can force it to undertake whatever open-market operations may be necessary to achieve and maintain the targeted rate
  • By using its influence on the Federal Reserve Bank of New York, the Fed can force it too undertake whatever open-market operations necessary to achieve and maintain the targeted rate.
  • In order to achieve and maintain the targeted rate, the Fed, by using its influence on the Federal Reserve Bank of New York, can force it to undertake whatever open-market operation it deems necessary.

Question 48

Question
Explain the effectiveness of Monetary Policy.
Answer
  • The effectiveness of monetary policy arises from its speed and flexibility as a process. Monetary policy also gains effectiveness from the fact that its isolated from political pressures.
  • The effectiveness of monetary policy arises from its speed and flexibility as a process. Monetary policy also gains effectiveness from the fact that its isolated from political pressures
  • The speed and flexibility of monetary policy are the main forces behind its effectiveness. It also gains considerable effectiveness from the fact that it is isolated from political pressures.
  • Monetary policy is made effective by its speed and flexibility as a process. Its also made effective by the fact that it is isolated from political pressures.

Question 49

Question
How many shortcoming does monetary policy involve?
Answer
  • 4
  • four

Question 50

Question
What are the shortcomings of monetary policy?
Answer
  • The shortcomings of monetary policy include a recognition lag and an operational lag. Other shortcomings include: Cyclical asymmetry; Liquidity trap
  • The shortcomings of monetary policy include a recognition lag and an operational lag. Other shortcomings include: Cyclical asymmetry; Liquidity trap.
  • a recognition lag; an operational lag; liquidity trap; cyclical asymmetry.
  • a recognition lag; an operational lag; cyclical asymmetry; liquidity trap

Question 51

Question
In the aggregate, households increase their spending as their ______________________________rises, and spend a larger portion of a _________________ disposable income than that of a _____________________ disposable income.
Answer
  • income; large; small
  • want; unneeded; needed
  • income; needed; small
  • disposable income; large; small
  • interest rate; small; large
  • disposable income; small; large
  • disposable loan; small; large
  • opportunity; unearned; earned

Question 52

Question
If households consume a smaller and smaller proportion of DI as DI increases, then ________________________________________________________________.
Answer
  • they must be saving a larger and larger proportion.
  • they must be saving a larger and larger proportion
  • they must be saving a larger and larger proportion of DI.
  • they must be saving a larger and larger proportion of DI

Question 53

Question
The more money households receive, the more they are able to _____________________________________ and the less they are encouraged to __________________________.
Answer
  • save; spend
  • spend; invest
  • produce; consume
  • consume; save
  • consume; produce
  • produce; invest
  • invest; spend
  • shop; buy
  • invest; produce

Question 54

Question
Define Average Propensity to Consume.
Answer
  • Average propensity to consume is the fraction, or percentage, of total income that is consumed
  • Average propensity to consume is the fraction, or percentage, of total income that is consumed.
  • Average Propensity to Consume is that fraction, or percentage, of income that is consumed
  • Average propensity to consume is the percentage, or fraction of income that is consumed

Question 55

Question
Define Average propensity to save.
Answer
  • Average propensity to save is that fraction, or percentage, of total income that is saved.
  • Average propensity to save is that fraction of total income that is saved
  • Average propensity to save is that percentage of total income that is saved.
  • Average propensity to save is represented by that fraction or portion of total income that is saved

Question 56

Question
_________________________________________________________________________ is called the marginal propensity to consume.
Answer
  • the proportion, or fraction, or any change in income consumed
  • The proportion, or fraction, or any change in income consumed
  • The proportion, fraction, or any change in the amount of income consumed
  • The proportion, or fraction, or any change in the amount if income consumed

Question 57

Question
Define Marginal Propensity to Consume.
Answer
  • the MPC is the ratio of a change in consumption to a change in the income that caused the consumption change
  • The MPC is the ratio of change in consumption to a change in the income that caused the consumption change.
  • The Marginal Propensity to Consume is the ratio of a change in consumption to a change in the income that caused the consumption change
  • The Marginal Propensity to Consume is the ratio of change in consumption to a change in the income that caused the change in consumption

Question 58

Question
What determines the cost of investment?
Answer
  • The real interest rate determines the cost of investment.
  • the real interest rate determines the cost of investment.
  • the cost of investment is determined by the real interest rate
  • the real interest rate determines the cost of investment

Question 59

Question
What does the interest rate represent?
Answer
  • the interest rate represents either the cost of borrowing funds or the opportunity cost of investing your own funds which is forgone
  • the interest rate represents, either the cost of borrowing funds, or the opportunity cost of investing your own funds, which is forgone.
  • the interest rate represents either the opportunity costs of investing your own funds, which is forgone, or the cost of borrowing money.
  • the interest rate represents either the cost of borrowing money, or the opportunity costs of investing your own money, which is forgone.

Question 60

Question
Explain the multiplier effect.
Answer
  • the multiplier effect is when changes ripple through the economy to generate even larger changes in real GDP
  • the multiplier effect is when changes ripple through the economy to generate even larger changes in real GDP.
  • The multiplier effect is when changes ripple through the economy to generate even larger changes in GPD
  • the multiplier effect is when changes ripple through the economy with the effect of even larger changes which occur in real GDP

Question 61

Question
Multiplier effect equals______________________.
Answer
  • Change in real GDP/ initial change in spending
  • Change in real GDP / initial change in spending.
  • the change in real GDP/ the initial change in spending
  • the change in real GDP / initial change in spending

Question 62

Question
change in real GDP equals___________________________________
Answer
  • initial change in spending x multiplier
  • the initial change in spending x multiplier
  • multiplier x initial change in spending
  • the multiplier x initial change in spending

Question 63

Question
Why is the initial change in spending usually associated with investment during the multiplier effect?
Answer
  • The initial change in spending is usually associated with investment because it is so volatile. but changes in consumption are also subject to the multiplier effect .
  • the initial change in spending is usually associated with investment because it is so volatile. But, changes in consumption which is unrelated to income are also subject to the multiplier effect.
  • The initial change in spending is usually associated with investment because it is so volatile but changes in consumption are also subject to the multiplier effect.
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