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Ellie decides to spend two hours taking a nap rather than attending class. her opportunity cost of napping is:

the value of the knowledge she would have received had she attended class

a suplus exist in a market if

the current price is above the equilibrium price, quantity supplied exceeds quantity demanded, and there is an excess supply of goods

if muffins and bagels are substitues, a higher price for bagels would result in an

INCREASE in DEMAND for muffins

the signals that guide the allocation of resources in a market economy are


suppose the incomes of buyers in a market for a particular normal good decrease and there is also a reduction in input prices. what would we expect to occur in this market?

equilibrium price would DECREASE, but the impact on equilibrium quantity would be ambiguous

buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at

the equilibrium price but not above or below the equilibrium price

suppose there is an earthquake that destroys several corn canneries. which of the following would NOT be a direct result of this event?

buyers would not be willing to buy as much as before at each relevant price

productivity is defined as the quantity of

goods and services produced from each unit of labor input

which of the following are human capital and physical capital, respectively?

for a restaurant, the chefs knowledge about preparing food and the equiptment in the kitchen

if the price of italian shoes inported into the USA increases, then

the consumer price index will increase, but the GDP deflator will NOT increase

when the quality of a good improves while its price remains the same, the purchasing power of the dollar

increases, so the CPI overstates the change in the cost of living if the quality change is not accounted for.

which of the following growth rates of real income per person for different countries over the past 100 years would provide the highest standard of living, all else constant?

2.5 percent per year

if the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied

there is a shortage so interest rates will rise

an increase in the minimum wage

decreases the quantity of labor demanded but increases the quantity of labor supplied

if a firm wants to borrow it can

supply bonds by selling them

when a country saves a larger portion of its GDP than itdid before, it will have

more capital and higher productivity

which of the following is NOT a reason economies experience structural unemployment?

job search

a budget surplus is created if

a. the govenment sells more bonds than it buys back
b. the government spend more than it receivers in tax revenue
c. private savings is greater than zero

which of the following best illistrates the medium of exchange function of money?

you pay for your oil change using currency

in the first part of the decade that begain in 2000, the US government went from a surplus to a deficit. other things the same, this means

the supply of loanable funds shifted to the left

other things the same, a higher interest rate induces people to

save more, so the supply of loanable funds slopes upward

the primary difference between commodity money and fiat money is that

commodity money has intrinsic value that fiat money does not

the interest rate the Fed charges on loans it makes to banks is called

the discount rate

if congress instituted an investment tax credit to increase the amount of investment in the economy, the interest rate would

rise and saving would rise

unemployment insurance

reduces search effort which raises unemployment

when we measure and record economic value, we use money as a

unit of account

if the public decides to hold more currency and fewer deposits in banks, bank reserves

decrease and the money supply eventually decreases.

which tool of monetary policy does the federal reserve use most often?

open-market operations

meredith wants to be a computer programmer. her prospects are good but she hasnt taken a job. Julie is looking for work in a steel mill. everytime she shows up for an interview, they are more people looking for work than for openings someone waiting in line with her tellsher it has been that way for a long time.

meredith is frictionally unemployed and julie is structurally unemployed.

which of the following shifts aggregate demand to the right?

the fed purchases government bonds on the open market

which of the following in NOT a determinant of the long-run level of real GDP?

the price level

which of the following would cause prices and real GDP to rise in the short run?

aggregate demand shifts right

which of the following shifts short-run aggregate supply right?

a decrease int he price of oil

when taxes decrease, consumption

increases, so aggregate demand shifts right

an economic contraction caused by the shift in aggregate demand causes prices to

fall in the short run, and fall even more in the long run

which of the following will reduce the price level and real output in the short run?

a decrease in the money supply

which part of real GDP fluctuates most over the course of the business cycle?

investment expenditures

in which of the following cases does the aggregate demand curve shift to the right?

the money supply increases causing interest rates to fall

the position of the long run aggregate supply curve

is determined by the things that determine output in the classical model

other things the same, continued increases in technology lead to

continued increases in read GDP but not continued increases in the price level

an increase in the MPC

increases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand

if the government provides an investment tax credit and increases income taxes,

a. real GDP rises, and the price level could rise, fall, or stay the same
b. real GDP falls, and the price level could rise, fall, or stay the same
c. the price level rises and real GDP could rise, fall or stay the same

other things the same, if the capital stock increases, then in the long run

output is higher and prices are lower

which of the following is NOT an automatic stablizer?

the minimum wage

which of the following policies would be advocated by someone who wants the government to follow an active stabilization policy when the economy is experiencing severe unemployment?

increase government expenditures

the most important reason for the slope of the aggregate-demand curve is that as the price level

increases, interest rates increases, and investment decreases.

the multiplier for changes in government spending is calculated as


assuming a mulitiplier effect, but no crowding-out or investment-accelerator effects, a $100 billion increase in

demand rightward by more than $100 billion

an aide to US congressman computes the effect on aggregate demand of a $20 billion tax cut. the actual increase in aggregate demand is less than the aide expected. which of the following erros in the aide's computation would be consistant with an overestimation of the impact on aggregate demand?

the aide thought the tax cut would be permanent, but the actual tax cut was temporary

suppose the MPC is 0.9. there are no crowding out or investment accelerator effects. if the government increases its expenditures by $30 billion, then by how much does aggregate demand shift to the right? if the government decreases taxes by $30 billion, then by how far does the aggregate demand shift to the right?

$300 billion and $270 billion

a tax cut shifts aggregate demand

a. by more than the amount of the tax cut
b. by the same amount as the tax cut
c. by less than the tax cut

according to the current event article in the money blog post under the low interest rare policies link, the fed maintained that it will keep interest rates at "exceptionally ____ levels" of ____ through late ______ and ______ member(s) of the committee voted _____ keeping rates until this time

low; 0-.25%; 2014; 1; against

according to the current event article in money blog post under the "op-ed article" link, expansion of credit by the _____ is not distributed evenly among everyone and this leads to _____. The _______ school of economics discusses these distortions as creating ______ in the economy.

Fed; disparities; Austrian; malinvestments

According to the current event article in the money blog post under the "5.2% over March of last year" link, sales of ____ were up 5.2% over the the last year, but total economic output (real GDP) _____ by about _____% in the first quarter. We would like for this to be closer to or above _____%.

homes; increased; 2; 3

According to the "Those dirty oil speculators" blog post, for every buyer of a futures contract there is a ______ and much of the increase in the price of oil was from growth in _____ over the last decade. Before we cast _____, we should understand the ______.

seller; Asia; blame; market

According to the "President fiscal policy comparison" blog post, the reagan administration _____ tax rates ______. President George W. Bush cut taxes twice as wel in 2001 and ______, which lowered the top tax rate to ____%. President Obama has proposed to _____ taxes to reduce the ______.

cut; twice; 2003; 35; raise; deficit

Per our discussion of the market indicators since the beginning of the year in class, the Dow is up ___%, oil prices are ___ 1%, the dollar has _____ by .8% and the 10-yr note yield has increased by ___%

6; up; depreciated; 1.5

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