MACROECONOMIC Jeopardy Have Fun The graph below shows

MACROECONOMIC Jeopardy Have Fun!

The graph below shows a nation’s PPF curve for the production of good Y 2 and Y 1. Which of the following is true? o o o E A. The OC of producing more of Y 2 is decreasing amount of Y 1 B. Point D represents unemployed economic resources C. The OC of more Y 2 is constant Y 1 D. Point D represents an unproductive labor force E. The OC of more Y 1 is an increasing amount of Y 2

Which of the following transactions would be counted in GDP? o o o D A. The wage you receive from babysitting your neighbor’s kids B. The sale of illegal drugs C. The sale of cucumbers to a pickle manufacturer D. The sale of a pound of tomatoes at a supermarket E. The resale of a sweater you received for Christmas on EBAY

If Real GDP = $200 billion and the price index = 200 nominal GDP is o o o B A. B. C. D. E. $4 billion $400 billion $200 billion $ 2 billion Indeterminable with information given

When disposable income increases by $X o o o B A. B. C. D. E. Consumption increases by more than $X Saving increases by less than $X Saving increases by exactly $X Savings remain constant Savings decrease by more than $X

Which of the following is true about the consumption function? o o o A A. The slope = to the MPC B. The slope is equal to MPS C. The slope is equal to MPS + MPC D. It shifts upward when consumers are pessimistic E. It shifts downward when consumer wealth increases in value.

Which of the following most likely increases real GDP? o o o D A. B. C. D. E. An increase in real rate of interest An increase in taxes A decrease in net exports An increase in government spending A lower value of consumer wealth

Which of the following choices is most likely to create the greatest decrease in real GDP? o o o C A. The govt decreases spending, matched with a decrease in taxes B. The government increases spending with no increase in taxes C. The government decreases spending with no change in taxes D. The government holds spending constant while increasing taxes E. The government increases spending matched with an increase of taxes

The tax multiplier increases in magnitude when o o o C A. B. C. D. E. The MPS increases The spending multiplier falls The MPC increases Government spending increases Taxes increase

Which of the following is the source of the supply of loanable funds? o o o E A. B. C. D. E. The stock market Investors Net exports Banks and mutual funds Savers

You don’t like your job in a market bagging groceries and you quit then start looking for a new job what type of unemployment is this? o o o D A. B. C. D. E. Cyclical Structural Seasonal Frictional Underemployed

Which of the following best describes the LRAS curve? o o o A A. Always vertical in the long run B. Always upward sloping b/c it follows the Law of Supply C. Always horizontal D. Always downward sloping E. Can’t be determined w/out more information

Stagflation most likely results from o o o B A. B. C. D. E. Increasing AD with constant AS Decreasing AS with constant AD Decreasing AD with constant AS A decrease in both AS and AD Increase in both AS and Ad

Equilibrium and real GDP is far below full employment and the govt lowers household taxes. Which is the likely result? o o o A A. Unemployment falls with little inflation B. Unemployment rises with little inflation C. Unemployment falls with rampant inflation D. Unemployment rises with high inflation E. No change in either unemployment or inflation

The effect of the spending multiplier is lessened if o o o E A. The price level is constant with an increase in AD B. The price level falls with an increase in AS C. The price level is constant with an increase in long run AS D. The price level falls with an increase in both AD and AS E. The price level rises with an increase in AD

Which of the following would NOT be an example of contractionary fiscal policy? o o o D A. Decreasing money spent on social programs B. Increasing income taxes C. Canceling the annual cost of living raises for government employees D. Increasing money spent to pay for government programs E. Doing nothing with a temporary budget surplus

The crowding out effect from government borrowing is best described as o o o B A. The rightward shift of AD in response to decreasing real interest rates from contractionary fiscal policy B. The leftward shift in AD in response to rising real interest rates from expansionary fiscal policy C. The effect of the President increasing money supply, which decreases real interest rates D. The effect on the economy of hearing the chairman of the Fed saying that the economy is in a recession E. The lower exports due to appreciating dollar versus other currencies

Which of the following fiscal policies is likely to be most effective when the economy is experiencing an inflationary gap? o A. The government decreases taxes and keeps spending unchanged o B. The govt increases spending and keeps taxes unchanged o C. The govt increases government spending matched with an increase in taxes o D. The govt decreases spending and keeps taxes unchanged o E. The govt increases taxes and decreases spending E

Which of the following would likely slow a nation’s economic growth? o o o C A. Guaranteed low interest loans for college students B. Removal of a tax on income earned on saving C. Removal of the investment tax credit D. More research grants given to medical schools E. Conservation policies to manage the renewable harvest of timber.

What function of money best defines $1. 25 as the price of a 20 oz bottle of pop? o o o B A. B. C. D. E. Medium of exchange Unit of account (also called standard of value) Store of value Transfer of ownership Fiat money

If a bank has $500 in checking deposits & the bank is required to reserve $50 what is the reserve ratio. How much does the bank have in excess reserves? o o o A A. 10%, $450 in excess reserves B. 90%, $50 in excess reserves C. 90%, $450 in excess reserves D. 10%, $50 in excess reserves E. 10%, $500 in excess reserves

If the money supply increases, what happens in the money market? Assume downward sloping D curve o o o B A. B. C. D. E. The nominal interest rate rises The nominal interest rate falls The nominal interest rate does not change Transaction demand for money falls Transaction demand for money rises

Which of the following is a predictable advantage of expansionary monetary policy in a recession? o o o B A. Decreases aggregate demand so that the price level falls B. Increases aggregate demand which increases real GDP and increases employment C. Increases unemployment, but low prices negate this effect D. It keeps interest rates high, which attracts foreign investment E. It boosts the value of the dollar in foreign currency markets

The US produces rice in a competitive market. With free trade, the world price is lower than the domestic price, what must be true? o o o A A. The US begins to import rice to make up for domestic shortage B. The US begins to export rice to make up for domestic shortage C. The US begins to import rice to eliminate a domestic surplus D. The US begins to export rice to eliminate a domestic surplus E. There is no incentive to import or export

If the US dollar and Chinese Yuan are traded in flexible currency markets, which of the following causes an appreciation of the $$ relative to the Chinese Yuan? o o o D A. Lower interest rates in the US relative to China B. Lower price levels in China relative to the US C. Growing American preference to consumer more Chinese made goods D. Rising per capita GDP in China increasing imports from the US E. Speculation that the Chinese will decrease the money supply

You hear that the US has a negative balance in the current account. With this information we conclude that o o o D A. There is a trade deficit B. There is a capital account deficit C. There is capital account surplus D. More US dollars are being sent abroad than foreign currencies coming into the US E. there is a trade surplus

Which of the following is a consequence of a protective tariff on imported steel? o o o B A. Net exports fall B. Income is transferred from steel consumers to steel producers C. Allocative efficiency is improved D. Income is transferred from domestic steel to foreign steel producers E. Aggregate supply increases

In recent years, firms that produce cameras produce less 35 -mm cameras and more digital cameras. This trend is an example of o A. How central planners dictate which goods are produced o B. The market system answering the question of how cameras are produced o C. The market system answering the question of what should be produced o D. The market system answering the question of who gets what is produced o E. How firms fail to respond to changes in consumer demand C

A policy supported by supply side economists would be o o o B A. Higher taxes on corporate profits B. Lower tax rates on interest earned from saving accounts C. Removal of investment tax credits D. A longer duration of unemployment benefits E. Higher marginal income tax rates to fund social welfare programs

Which of the following is likely to shift the LRAS curve to the right? o o o B A. A nation devotes more of its resources to nondurable consumption rather than durable goods B. Research that improves the productivity of labor and capital C. More restrictive trade policies D. Annual limits on immigration E. A permanent increase in the price of energy

Which monetary policy would be used to boost US exports? o o o C A. B. C. D. E. Increasing the discount rate Increasing the reserve ratio Buying Treasury securities Lowering tariffs Removing import quotas

Which component of a nation’s balance of payments recognizes the purchase and sale of real and financial assets between nations? o o o A A. B. C. D. E. The capital account The official reserves account The current account The trade deficit account The trade surplus account

The RR is. 10 and Mr. Rich withdraws $1 Million from his checking account and puts it in his freezer. How does this impact the potential amount of $ in circulation? o o o A A. B. C. D. E. Decreases by $9 million Decreases by $100, 000 Increases by $1 million Decreases by $10 million