Economics Final Exam - Spring 2015 Undergrad

alternating rises and declines in the level of economic activity.

alternating rises and declines in the level of economic activity

peak; recession; trough; expansion

peak; recession; trough;

business activity has reached a temporary maximum.

business activity has reached a temporary maximum

A recession is a period of decline in total output, income, and employment.

a period of decline in total output, income, and employment

output and employment bottom out at their lowest levels

output and employment "bottom-out" at their lowest levels

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

Inflation is a rise in the general level of prices.

Inflation is a rise in the general level of prices

according to the Consumer Price Index

According to the Consumer Price Index

demand pull inflation and cost push inflation

demand-pull inflation and cost-push inflation

4

four

open market operations; the reserve ratio; the discount rate; interest on reserves

open-market operations; the reserve ratio; the discount rate; interest on reserves

frictional; structural; cyclical

structural; frictional; cyclical

A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs

unemployed workers between jobs

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

durable goods

durable-goods

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

non-durable goods

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

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

Automobiles; Computers; Refrigerators

automobiles; computers; refrigerators

Food; Clothing; Medical Services

food; clothing; medical services

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.

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

Federal Open Market Committee

federal open market committee

the federal open market committee

The Federal Open Market Committee

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

Expansionary Monetary Policy; Restrictive Monetary Policy

expansionary monetary policy; restrictive monetary policy

Expansionary monetary policy; Restrictive monetary policy

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

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.

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

Expansionary Fiscal Policy; Contractionary Fiscal Policy

expansionary fiscal policy; contractionary fiscal policy

Expansionary fiscal policy; Contractionary fiscal policy

Expansionary and Contractionary fiscal policy

The government

the government

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.

recognition lag; administrative lag; operational lag

Recognition lag; Administrative lag; Operational lag

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.

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

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

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

$18 trillion

As of 2015, the public debt is $18 trillion.

As of 2015, the public debt is $18 trillion

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.

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.

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.

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

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.

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.

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.

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.

4

four

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

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

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

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

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

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

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

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.

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

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

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

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.