8) The Federal Open Market Committee (FOMC) is composed of

A) Presidents of 5 Federal Reserve regional banks and the Board of Governors.

B) the 12 Presidents of the Federal Reserve regional banks.

C) the Board of Governors, the Vice-President of the United States, and the Secretary of Treasury for the United States.

D) representatives from the governors of all 50 states.

9) If an American firm produces goods in the United States that are sold to a German household, then

A) German GDP increases but not U.S. GDP.

B) net exports in the United States will not change because an export immediately generates an offsetting import

D) the transaction is considered an export in the German GDP accounts.

11) A highly liquid asset:

D) can be converted into a means of payment easily without loss of value.

B) has high transaction costs associated with its sale.

C) has a very limited market for its resale.

14) The Board of Governors of the Federal Reserve System is

A) appointed by the President of the United States and confirmed by the U.S. Senate.

D) elected by members of the American Banking Association.

17) Using the definition of unemployment, which of the following individuals would be unemployed?

D) All of these individuals are unemployed.

A) Because of a reduction in the military budget, your next door neighbor loses her job in a plant where nuclear warheads are made and must look for a new job.

B) Because of the increased level of automobile imports, an employee of General Motors is laid off but expects to be called back to work soon.

C) A full-time student quits school, enters the labor market for the first time, and searches for employment

18) Which of the following is NOT included in real GDP?

B) production that takes place in the underground economy

A) production of services, such as the services of hair stylists

C) production of goods that last less than a year, such as production of hot dogs

D) production of goods that last more than a year, such as a pair of skis

20) Depository institutions:

A) make profit from the spread between the interest rate they pay on deposits and the interest rate they receive on loans.

B) make a profit according to how much the Federal Reserve charges them to hold their reserves

C) make zero profit but receive compensation by the government because their services are so valuable.

D) make their profit by charging the government for their services.

21) If the unemployment rate is equal to the natural rate of unemployment then

D) real GDP equals potential real GDP.

A) real GDP cannot be equal to potential real GDP.

B) real GDP can be greater than, less than, or equal to potential real GDP.

C) nominal GDP equals potential real GDP.

22) Hyperinflation is defined as

B) rising but low inflation rates

23) Money is created when:

B) banks pay for depositor's insurance

24) The functions of money are:

D) medium of exchange, unit of account, and store of value.

A) medium of exchange and the ability to buy goods and services.

B) medium of exchange, unit of account, and means of lending

C) pricing, contracts, and store of value

26) Suppose that Matt quits a job with the XYZ Corporation in order to look for more rewarding employment. Matt would be best be considered as:

D) included in the economy's “hidden employment.”

29) Full employment occurs when:

D) there is no cyclical unemployment

B) there is no cyclical or frictional unemployment

C) there is no structural or frictional unemployment

30) In August 2012, the unemployment rate dropped from 8.3 percent to 8.1 percent. This change could have been caused by

C) unemployed workers giving up looking for a job

A) part-time workers getting a full-time job

B) workers who had previously given up looking for a job starting to look again

D) full-time workers becoming part-time workers

31) In any year, real GDP:

A) might be greater or less than potential real GDP.

B) will be greater than potential real GDP if the inflation rate is positive.

C) must always be less than potential real GDP.

D) always equals potential real GDP.

32) Suppose the population of Tiny Town is 100 people and the working age population is 70. If 10 of these people are unemployed, the unemployment rate in Tiny Town is:

D) There is not enough information provided to calculate the unemployment rate

33) Which statement correctly describes "structural unemployment?"

D) Structural unemployment occurs even when the economy is at the natural unemployment rate.

A) Structural unemployment is also called "frictional unemployment."

B) The amount of structural unemployment depends on the business cycle

C) Structural unemployment occurs mainly during recessions.

34) This type of unemployment reflects the normal amount of unemployed workers who possess skills that will enable them to find another job.

D) None of the above answers is correct

35) When the automobile replaced horse-drawn carriages as the principal means of transportation, firms producing horse-drawn carriages went bankrupt and permanently laid off all their workers, thereby increasing

C) frictional and cyclical unemployment.

36) If a nation’s population grows, then

A) growth in real GDP per person will be less than the growth of real GDP.

B) there can be no economic growth.

C) growth in real GDP per person will be greater than the growth of real GDP.

D) there must be an increase in real GDP per person.

E) None of the above answers are correct.

40) The historical record for the United States for the past 120 years shows

A) growth in real GDP per person during most years.

B) economic growth for about half the years and economic decline for the other half

C) growth until 1970 and then a period of constant per person real GDP.

D) continuous decline in real GDP per person.

44) Potential real GDP per labor hour can increase due to

A) increases in labor productivity

B) increases in the quantity of money.

D) decreases in the quantity of capital.

46) The money multiplier determines how much

C) the quantity of money will be expanded given a change in the monetary base.

A) real GDP will be expanded given an increase in autonomous investment

B) the monetary base will be expanded given a change in the quantity of money.

D) money demand will expand given a change in the quantity of money.

47) When the nominal interest rate rises, the amount that people give up by holding real money:

D) rises and people want to hold less real money.

A) rises and people want to hold more real money.

B) falls and people want to hold less real money.

C) falls and people want to hold more real money.

48) The nominal interest rate equals which of the following?

B) the real interest rate plus the inflation rate

A) the real interest rate minus the growth rate of real GDP

C) the real interest rate plus the growth rate of real GDP

D) the real interest rate minus the inflation rate

49) Our study of the equation of exchange in the longer run suggests that an increase in the quantity of money:

D) will lead to an equal percentage increase in the price level in the longer run.

A) will decrease the price level by an offsetting amount in the longer run

B) by n percent will eventually lead to an increase in the price level by n + 1 percent

C) will lead to an equal percentage increase in real GDP in the longer run.

50) Over shorter-run periods of time, an increase in the nominal supply of money by the Fed will:

B) cause the real interest rate to fall

A) cause the real interest rate to increase

D) cause the price level to fall

Econ 202 UO midterm

Authored by Campbell Schlecht

Social Studies

University

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46 questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The most direct way in which money replaces barter is through its use as a:

A) medium of exchange.

B) recording device.

C) store of value.

D) unit of account.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

2) The capital stock increases whenever:

A) gross investment exceeds net investment.

. B) net investment exceeds gross investment.

C) gross investment is negative.

D) net investment is positive.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

3) The labor force is defined as:

A) all people capable of work.

B) workers with jobs plus unemployed workers.

C) people with full time jobs.

D) All of the above answers are correct.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Last year's price level was 120 and this year the inflation rate was 5 percent. This year's price level is:

126

130

125

none

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

5) In an open market purchase, the Federal Reserve financial assets, which bank reserves.

A) buys; increases

B) buys; decreases

C) sells; increases

D) sells; decreases

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The Federal Reserve's purchase of U.S. Treasury Bonds could

A) increase loans made by banks.

B) decrease bank reserves.

C) be an effective anti-inflationary policy

D) decrease the price level and have no effect on real GDP.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

7) The part of the Federal Reserve System that sets monetary policy is called the:

A) Board of Governors.

B) Federal Open Market Committee.

C) Joint Congressional Committee on Monetary Policy

D) Federal Reserve bank presidents.

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Econ 202 UO midterm

The most direct way in which money replaces barter is through its use as a:

2) The capital stock increases whenever:

3) The labor force is defined as:

Last year's price level was 120 and this year the inflation rate was 5 percent. This year's price level is:

5) In an open market purchase, the Federal Reserve ________ financial assets, which ________ bank reserves.

The Federal Reserve's purchase of U.S. Treasury Bonds could

7) The part of the Federal Reserve System that sets monetary policy is called the:

8) The Federal Open Market Committee (FOMC) is composed of

9) If an American firm produces goods in the United States that are sold to a German household, then

10) The largest component of the M2 monetary aggregate is

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5) In an open market purchase, the Federal Reserve financial assets, which bank reserves.