Macroeconomics Questions
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An increase in the real interest rate results in little increase in private saving by households. (which graph)
Potential real GDP isA.the level of GDP attained when only some firms have excess capacity.B.the level of GDP attained when all firms have excess capacity.C.the level of GDP attained when all firms are producing at capacity.D.the level of GDP attained when most firms are producing at capacity and unemployment is low.
A decrease in the real interest rate results in a substantial increase in spending on investment projects by businesses. (which graph)
The chapter explains that it is impossible to know whether a particular nominal interest rate is "high" or "low" becauseA.it all depends on the inflation rate.B.it all depends on the federal funds rate.C.it is controlled by the Fed's open market operations.D.it all depends on the Fed's monetary policy rule.
What is the best use of the rule of 70 among those listed below?A.to find the average annual growth rate of real GDPB.to forecast the duration of recessionsC.to calculate the difference between the growth rate in real GDP and the growth rate in real GDP per capitaD.to judge how rapidly real GDP per capita is growing over long time periods
The federal government eliminates 401(k) retirement accounts. (which graph)
The federal government reduces the tax on corporate profits (assume no change in the federal budget deficit or budget surplus). (which graph)
Which of the following are financial securities that represent promises to repay a fixed amount of funds?A.bondsB.both stocks and bondsC.neither stocks nor bondsD.stocks
Which of the following is not a service that the financial system provides for savers and borrowers?A.risk sharing among saversB.matching savers with borrowersC.increased liquidity for saversD.guaranteeing savers high rates of return
Since nominal incomes increase with inflation,A.expected inflation does not affect the purchasing power of the average consumer.B.expected inflation increases the purchasing power of the average consumer.C.expected inflation reduces the purchasing power of the average consumer.D.unexpected inflation does not affect the purchasing power of the average consumer.
Real GDP per capita in the country of Arcadia grew from about $4,932 in 1900 to about $42,678 in 2008, which represents an annual growth rate of 2.02 percent.If Arcadia continues to grow at this rate, calculate the number of years when its real GDP per capita will double. ______years. (Enter your response as an integer.)
The difference between the nominal interest rate and the real interest rate isA.the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate plus the inflation rate.B.the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate divided by the inflation rate.C.the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate minus the inflation rate.D.the real interest rate is the stated interest rate whereas the nominal interest rate is the real interest rate minus the inflation rate.
If inflation is unexpectedly high, borrowers will benefit and lenders will be harmed.A.TrueB.False
Nominal incomes generally increase with inflation becauseA.when inflation is anticipated, real incomes also increase by the same percentage as inflation.B.when inflation is unanticipated, average nominal incomes also increase by the same percentage as inflation.C.when inflation is anticipated, average nominal incomes also increase by the same percentage as the rate of inflation.D.even anticipated inflation causes average nominal incomes to fall as prices increase.
The computation of the average annual growth rate of real GDPA.involves simply averaging the growth rate for each year, but only if data for many years are available.B.is more complex when examining data for a long period of time than when examining data for only a few years.C.is the same for shorter periods of time as for longer periods of time.D.involves computing the percentage change in real GDP between the first year and the last year for the period being examined.
Suppose that the inflation rate turns out to be much lower than most people expected. In that case,A.a borrower will lose from the situation while a lender will gain.B.both borrower and lender will gain from the situation.C.a lender will lose from the situation while a borrower will gain.D.both borrower and lender will lose in this situation.
The following appeared in a newspaper article:"Inflation in the Lehigh Valley during the first quarter of [the year] was less than half the national rate...So, unlike much of the nation, the fear here is deflation-when prices sink so low that the CPI drops below zero."Source: Dan Shope, "Valley's Inflation Rate Slides," (Allentown, PA) Morning Call, July 9, 1996.Do you agree with the reporter's definition of deflationLOADING...?A.Yes. When prices fall too low, the CPI is negative.B.No. Deflation occurs when the nominal interest rate is greater than the real interest rate.C.Yes. Deflation is caused by a negative CPI.D.No. Deflation is defined as a negative inflation rate.
Which of the following is the best measure of the standard of living of the typical person in a country?A.real GDPB.the inflation rateC.real GDP per personD.the unemployment rate
If income rises more slowly than the rate of inflation, purchasing power will rise.A.TrueB.False
Suppose that the only good you purchase is premium bottled water and that at the beginning of the year, the price of a bottle is $2.00. Suppose you lend $1,000 for one year at an interest rate of 10.6 percent. At the end of the year, the price of premium bottled water has risen to $2.17.Calculate the real interest rate on the loan: (Enter your response as a percentage rounded to one decimal place.)