Quiz 5 Flashcards
(15 cards)
If banks were required to keep 100 percent in reserves, and if all the currency in the economy was in the bank, then:
money supply would not change
If individuals hold less currency because it is easy to get currency from automatic teller machines, and everything else is the same, will the money supply be larger or smaller?
Larger, because banks will be able to make more loans given the amount of reserves.
Liquidity means:
how quickly something can be converted to currency
The simple money multiplier will ______________ as the required reserve ratio ______________.
increase; decreases
If inventories are rising, we can assume that which of the following is true?
Production is greater than consumption and investment, suggesting output will fall
If nothing else changes, an increase in interest rates will __________.
lower investment spending because it raises the opportunity cost of funds
An increase in net exports will cause GDP to ______________. Assume that the marginal propensity to consume increases from .9 to .95. An increase in net exports will now have a ______________ effect on GDP.
increase; larger
An increase in real GDP will be most likely to cause further increases in __________.
consumption and investment, but a decrease in net exports
Suppose that a developing country successfully implements reforms to decrease corruption in the court system. Which determinant of economic growth will this impact most directly?
Physical capital
Which of the following options will be most likely to help real GDP per capita grow in the long run?
Research and development of new technology
The meaning of economic growth to an economist is best described in which of the following options?
A shift outward in the production possibilities frontier
Which of the following would be counted as unemployed?
A lawyer who just resigned from her firm, and is looking for a new position
We have reached full employment when which of the following is true?
Cyclical unemployment is zero, but frictional and structural unemployment are positive.
Consider Jolly Old England in which there are just three new, domestically produced goods and services: Soused Hog’s Face, Porter and Suet Pudding. Listed below are the prices and quantities of these goods in the base year and the current year in dollars rather than pounds. The growth rate in England’s price level is:
50% which is disinflation
Indicate what category the purchase of services of a U.S. lawyer in the U.S. by a Japanese citizen in Japan would fall under in regards to the U.S. GDP.
Exports
