Econ 2105 Exam 1 Review

Suppose an economy has historically grown at a rate of 1.25%. Economic activity decreased every quarter over the past year, but the decline stopped this quarter. The economy is expected to grow at a rate of 1.4% in the near future, but monetary authorities are concerned that inflation may increase. Currently, this economy is probably in the _____ stage of the business
Click the card to flip ๐Ÿ‘†
1 / 24
Terms in this set (24)
Suppose an economy has historically grown at a rate of 1.25%. Economic activity decreased every quarter over the past year, but the decline stopped this quarter. The economy is expected to grow at a rate of 1.4% in the near future, but monetary authorities are concerned that inflation may increase. Currently, this economy is probably in the _____ stage of the business
Suppose that anticipated inflation is 6% for the coming year. The loan contracts are set at 10% with the expectation of a 4% return after inflation. If the actual inflation rate at the end of the year is 7% Debtors (borrowers); Creditors (lenders) Think about real interest rate (return) and who will benefit from it.debtors gain at the expense of creditorsSuppose that anticipated inflation is 5% for the coming year. The loan contracts are set at 8% with the expectation of a 3% return after inflation. If the actual inflation rate at the end of the year is 4%creditors gain at the expense of debtors.What is a person's classification if he or she has given up actively looking for work?a discouraged worker/discouraged job seekerTaylor resigned from the job and decided to stay at home for a while. What is the impact of Taylor's decision on the labor-force participation rate? Labor force participation rate=Labor force/Populationit decreasesIf the consumer price index (CPI) was 97 in 2017, 100 in 2018, 102 in 2019, then the base year must be:2018If the consumer price index (CPI) in 2015 was 114.7 and the CPI in 2016 was 124.5, then the rate of inflation between 2015 and 2016 was8.5%.Which of the following is not considered capital? a tractor produced by John Deere factory a company builds to produce other output 10,000 U.S. dollars the knowledge an individual acquires through education10,000 us dollars_______ unemployment is the result of changes in the business cycle.CyclicalIf planned investment falls by $2,000 and the MPC is 0.8, the total effect on the economy is a decrease of _____ in income or output *โˆ†๐‘Œ =โˆ†๐ผ๐‘ฅ 1/1โˆ’๐‘€๐‘ƒ๐ถ10,000Find the equilibrium level of output (Y) for the economy, where the consumption function is given as C=200+0.8Y and the Planned Investment= 40? *Use formula Y=C+I$1,200If income rises from $9,000 to $12,000 and investment increases from $8,000 to $9,200, then MPS is ____ and MPC is _______. *โˆ†๐‘Œ =โˆ†๐ผ๐‘ฅ 1/๐‘€๐‘ƒ๐‘† MPC=โˆ†๐‘ช/โˆ†๐’€; MPS=โˆ†S/โˆ†๐’€ MPC+MPS=10.4; 0.6Assume there is no government or foreign sector. If the MPS is 0.40, the multiplier is *1/1-MPC or 1/MPS2.5The unemployment rate is equal toUnemployment rate= ๐‘ˆ๐‘›๐‘’๐‘š๐‘๐‘™๐‘œ๐‘ฆ๐‘’๐‘‘/๐ธ๐‘š๐‘๐‘™๐‘œ๐‘ฆ๐‘’๐‘‘+๐‘ˆ๐‘›๐‘’๐‘š๐‘๐‘™๐‘œ๐‘ฆ๐‘’๐‘‘=๐‘ˆ๐‘›๐‘’๐‘š๐‘๐‘™๐‘œ๐‘ฆ๐‘’๐‘‘/๐ฟ๐‘Ž๐‘๐‘œ๐‘Ÿ๐‘“๐‘œ๐‘Ÿ๐‘eLabor force participation rate is equal to๐ฟ๐‘Ž๐‘๐‘œ๐‘Ÿ๐‘“๐‘œ๐‘Ÿ๐‘๐‘’๐‘๐‘Ž๐‘Ÿ๐‘ก๐‘–๐‘๐‘–๐‘๐‘Ž๐‘ก๐‘–๐‘œ๐‘›๐‘Ÿ๐‘Ž๐‘ก๐‘’ =๐ฟ๐‘Ž๐‘๐‘œ๐‘Ÿ๐‘“๐‘œ๐‘Ÿ๐‘๐‘’/Population