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5 Written questions

5 Matching questions

  1. Why will Currency Reserves not expand money supply by as much as the potential multiplier?
  2. Discount Rate
  3. Normative Economic Statement
  4. GDP
  5. Fiscal Policy Problems
  1. a only counts goods and services produced within the geographic borders of a country
    -does not count transfers (welfare, gifts of money)
  2. b -statement is not testable
  3. c -Some people decide to hold currency rather than deposit it in the bank
    -Banks fail to use all of the new excess reserves to extend loans
  4. d -ability to forecast is extremely limited
    -change in fiscal policy requires legislaive action
    -Change will not have an immediate effect on the economy
  5. e interest rate the Fed charges banking institutions to borrow funds

5 Multiple choice questions

  1. results from changes in the economy and imperfect information that prevents workers from being immediately matched up with existing job openings
  2. -Changes in real wealth
    -Changes in real interest
    -Changes in business and household expectations
    -Changes in expected rate of inflation
    -Changes in income abroad
    -Changes in Exchange rates
  3. Personal consumption expenditures + gross investment + governemnt consumption and gross investment + net exports
  4. unemployment due to recessions and inadequate labor demand
  5. consumption depends on their long run expected permanent inome rather than their current income

5 True/False questions

  1. Upward sloping supply curvedirect positive relationship between the price of a good or service and amount suppliers are willing to produce


  2. Actual Inflation > Anticipated Inflationborrowers gain, lenders lose


  3. Classical EconomistBelieve prices are flexible, Economy can correct itself, Soys law: supply curves demand (production matters)


  4. Labor force participation ratepercent of population age 16 and over who is in the civilian labor force


  5. Effect of Unanticipated expansionary monetary policy-Economy is in recession


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