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Econ Final

Terms in this set (14)

If an economy is operating efficiently:
it is not possible to produce more of one good without less of another good.
An effective price ceiling creates a:
shortage
According to national income accounting, which of the following is included in the personal consumption expenditures component of GDP?
purchasing a newly-built home for a personal residence
The GDP price index:
identifies the level of prices relative to a base year.
An outward shift of a nation's production possibilities curve:
does not ensure the nation of an increase in real GDP.
If your nominal income increases by 5% and the price index rises from 125 to 130, then your real income will:
increase by 1%.
The aggregate demand curve:
slopes downward because of the real-balances, interest-rate, and foreign-purchases effects.
Appreciation of the dollar:
will increase the prices of American exports and decrease the prices of American imports.
Which of the following changes in economic circumstance will decrease short-run aggregate supply?
an increase in wages
A wave of consumer and business optimism stimulates the economy. As a result GDP exceeds the economy's full-employment real GDP and the unemployment rate falls to 3%. The economic boom causes demand-pull inflation. In this situation proper counter-cyclical discretionary fiscal policy would involve:
running a budget surplus.
The economy is initially operating at its potential real GDP. Because of a deteriorating international political situation the federal government decides to increase military spending by $21 billion. At the same time policymakers decide to change the level of taxes to maintain full-employment, non-inflationary real GDP. Assume the MPC = 0.75 and the full multiplier effect is in effect. The level of taxes should be:
increased by $28 billion.
Checkable deposits are:
liabilities of commercial banks
Which of the following, cetreis paribus, would increase the money supply?
Commercial banks buy government bonds from the public.
The commercial banking system can lend by a multiple of its excess reserves because:
reserves lost by one bank will be gained by some other bank
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