Question 1

Which of the following statements correctly highlights a difference between real GDP and nominal GDP?

Accepted Answer

A)  Real GDP includes the value of goods and services produced by foreign firms, while nominal GDP does not include the value of goods and services produced by foreign firms. 
B)  Real GDP includes the value of goods and services produced by domestic firms in foreign countries, while nominal GDP does not include the value of goods and services produced by domestic firms in foreign countries. 
C)  Real GDP strips out the effect of changing prices on the value of goods and services produced, while nominal GDP does not strip out the effect of changing prices on the value of goods and services produced. 
D)  Real GDP does not take into account the value of goods and services provided, while nominal GDP takes these into account. 
A)  Real GDP includes the value of goods and services produced by foreign firms, while nominal GDP does not include the value of goods and services produced by foreign firms. 
B)  Real GDP includes the value of goods and services produced by domestic firms in foreign countries, while nominal GDP does not include the value of goods and services produced by domestic firms in foreign countries. 
C)  Real GDP strips out the effect of changing prices on the value of goods and services produced, while nominal GDP does not strip out the effect of changing prices on the value of goods and services produced. 
D)  Real GDP does not take into account the value of goods and services provided, while nominal GDP takes these into account.

Question 2

If the Fed buys government bonds from the open market,it will cause ________.

Accepted Answer

A)  the supply curve for reserves to shift to the left 
B)  the supply curve for reserves to shift to the right 
C)  an upward movement along the supply curve for reserves 
D)  a downward movement along the supply curve for reserves 
A)  the supply curve for reserves to shift to the left 
B)  the supply curve for reserves to shift to the right 
C)  an upward movement along the supply curve for reserves 
D)  a downward movement along the supply curve for reserves

Question 3

Which of the following is true of fiat money?

Accepted Answer

A)  Fiat money is not backed by a physical commodity. 
B)  Fiat money is illegal and difficult to counterfeit. 
C)  The technology required to produce fiat money is not widely available. 
D)  The raw materials required for the production of fiat money are available only in a few countries. 
A)  Fiat money is not backed by a physical commodity. 
B)  Fiat money is illegal and difficult to counterfeit. 
C)  The technology required to produce fiat money is not widely available. 
D)  The raw materials required for the production of fiat money are available only in a few countries.

Question 4

A researcher finds that,for an economy,the nominal GDP in the year 2015 equaled the nominal GDP in the year 2016.She also finds that the output of the economy was the same over the two years.A situation like this is possible only if ________.

Accepted Answer

A)  the annual inflation rate in the economy is negative 
B)  the annual inflation rate in the economy is 0 percent 
C)  the annual interest rate in the economy is negative 
D)  the annual interest rate in the economy is 0 percent 
A)  the annual inflation rate in the economy is negative 
B)  the annual inflation rate in the economy is 0 percent 
C)  the annual interest rate in the economy is negative 
D)  the annual interest rate in the economy is 0 percent

Question 5

The prices of several essential goods in Agraria almost doubled over the past decade.To satisfy voters,the government of Agraria introduced price controls.What is likely to happen after the introduction of these price controls?

Accepted Answer

Inflation generates voter anger,and poli

Question 6

Scenario: An economy produces only cell phones. In 2015, the economy manufactured 275 cell phones, and each cell phone sold for $200. In 2016, the economy manufactured 280 cell phones, but the price of each cell phone fell to $180.
-Refer to the scenario above.What is the nominal GDP of the economy in 2015?

Accepted Answer

A)  $47,000 
B)  $49,500 
C)  $55,000 
D)  $56,000 
A)  $47,000 
B)  $49,500 
C)  $55,000 
D)  $56,000

Question 7

When examining the effects of interest rates on borrowing decisions,we distinguish between the short-term and the long-term.How long is the long-term in this context?

Accepted Answer

A)  100 years or more 
B)  10 years or more 
C)  1 year or more 
D)  Anything longer than an overnight (24-hour) loan 
A)  100 years or more 
B)  10 years or more 
C)  1 year or more 
D)  Anything longer than an overnight (24-hour) loan

Question 8

If the nominal interest rate in an economy is 9 percent and the expected inflation rate is 6 percent,then the expected real interest rate in the economy is ________.

Accepted Answer

A)  3 percent 
B)  6 percent 
C)  9 percent 
D)  15 percent 
A)  3 percent 
B)  6 percent 
C)  9 percent 
D)  15 percent

Question 9

The funds being lent in the federal funds market comprise ________.

Accepted Answer

A)  bank deposits of domestic households 
B)  reserves kept by commercial banks with the Fed 
C)  investments by foreign firms in domestic companies 
D)  tax revenues earned by the federal government 
A)  bank deposits of domestic households 
B)  reserves kept by commercial banks with the Fed 
C)  investments by foreign firms in domestic companies 
D)  tax revenues earned by the federal government

Question 10

The European counterpart of the Federal Reserve is called the ________.

Accepted Answer

A)  European Union Reserve 
B)  European Central Bank 
C)  European Reserve Bank 
D)  European Reserve 
A)  European Union Reserve 
B)  European Central Bank 
C)  European Reserve Bank 
D)  European Reserve

Question 11

If two variables have the same rate of growth over the long run,their ratio will ________.

Accepted Answer

A)  increase over the long run 
B)  decrease over the long run 
C)  remain constant over the long run 
D)  initially decrease and then increase over the long run 
A)  increase over the long run 
B)  decrease over the long run 
C)  remain constant over the long run 
D)  initially decrease and then increase over the long run

Which of the following statements correctly highlights a difference between real GDP and nominal GDP?

If the Fed buys government bonds from the open market,it will cause ________.

Which of the following is true of fiat money?

A researcher finds that,for an economy,the nominal GDP in the year 2015 equaled the nominal GDP in the year 2016.She also finds that the output of the economy was the same over the two years.A situation like this is possible only if ________.

The prices of several essential goods in Agraria almost doubled over the past decade.To satisfy voters,the government of Agraria introduced price controls.What is likely to happen after the introduction of these price controls?

When examining the effects of interest rates on borrowing decisions,we distinguish between the short-term and the long-term.How long is the long-term in this context?

If the nominal interest rate in an economy is 9 percent and the expected inflation rate is 6 percent,then the expected real interest rate in the economy is ________.

The funds being lent in the federal funds market comprise ________.

The European counterpart of the Federal Reserve is called the ________.

If two variables have the same rate of growth over the long run,their ratio will ________.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Employment and Unemployment

Credit Markets

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

Open Economy Macroeconomics

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Exam 11: The Monetary System

Which of the following statements correctly highlights a difference between real GDP and nominal GDP?

If the Fed buys government bonds from the open market,it will cause ________.

Which of the following is true of fiat money?

A researcher finds that,for an economy,the nominal GDP in the year 2015 equaled the nominal GDP in the year 2016.She also finds that the output of the economy was the same over the two years.A situation like this is possible only if ________.

The prices of several essential goods in Agraria almost doubled over the past decade.To satisfy voters,the government of Agraria introduced price controls.What is likely to happen after the introduction of these price controls?

When examining the effects of interest rates on borrowing decisions,we distinguish between the short-term and the long-term.How long is the long-term in this context?

If the nominal interest rate in an economy is 9 percent and the expected inflation rate is 6 percent,then the expected real interest rate in the economy is ________.

The funds being lent in the federal funds market comprise ________.

The European counterpart of the Federal Reserve is called the ________.

If two variables have the same rate of growth over the long run,their ratio will ________.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Employment and Unemployment

Credit Markets

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

Open Economy Macroeconomics

Filters