ECO 372 Final Exam Guide

1) The largest source of household income in the U.S. is obtained from

   

 
2) The market where business sell goods and services to households and the government is called the


    
3) Real gross domestic product is best defined as

  
4) Underemployment includes people

    A.   who work "off-the-books" to avoid tax liabilities    B.   who are working part time, or not using all their skills at a full-time

job
   
5) The Bureau of Economic Analysis is responsible for which of the following?

  
   
6) The Federal Reserve provides which of the following data?

   
7) Consider if the government instituted a 10 percent income tax surcharge. In terms of the AS/AD model, this change should have

  
8) If the depreciation of a country's currency increases its aggregate expenditures by 20, the AD curve will

    A.   shift right by more than 20    B.   shift right by less than 20    C.   shift right by exactly 20    D.   not shift at all    
9) Aggregate demand management policies are designed most directly to

   
10) Suppose that consumer spending is expected to decrease in the near future. If output is at potential output, which of the following

policies is most appropriate according to the AS/AD model?

   


11) According to Keynes, market economies

  
12) The laissez-faire policy prescription to eliminate unemployment was to

  
13) In the AS/AD model, an expansionary monetary policy has the greatest effect on the price level when it

  
14) The Federal funds rate

   
15) What tool of monetary policy will the Federal Reserve use to increase the federal funds rate from 1% to 1.25%?

   
16) If the Federal Reserve increases the required reserves, financial institutions will likely lend out

 
17) Suppose the money multiplier in the U.S. is 3. Suppose further that if the Federal Reserve changes the discount rate by 1 percentage

point, banks change their reserves by 300. To increase the money supply by 2700 the Federal Reserve should

    A.   reduce the discount rate by 3 percentage points    B.   reduce the discount rate by 10 percentage points
    C.   raise the discount rate by 3 percentage points    D.   raise the discount rate by 10 percentage points    
18) If the Federal Reserve reduced its reserve requirement from 6.5 percent to 5 percent. This policy would most likely

   
19) A country can have a trade deficit as long as it can

  
   
20) A weaker dollar

  

21) In the short run, a trade deficit allows more consumption, but in the long run, a trade deficit is a problem because


    
22) Considering an economy with a current trade deficit and considering only the direct effect on income, an expansionary monetary policy

tends to

   
23) The balance of trade measures the

 
24) When a country runs a trade deficit, it does so by:

 
25) Expansionary fiscal policy tends to

   
26) In considering the net effect of expansionary fiscal policy on the trade deficit, the

 
27) If U.S. interest rates fall relative to Japanese interest rates and Japanese inflation falls relative to U.S. inflation, then the

   
    
28) Expansionary monetary policy tends to

  
    
29) The U.S. has limits on Chinese textile imports. Such limits are an example of

   
30) Duties imposed by the U.S. government on imported Chinese frozen and canned shrimp are an example of