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Macro Exam 2
Macroeconomics TTU Alley
| Question | Answer |
|---|---|
| Inflation is the increase in the | Prices of all goods and services in general |
| Inflation rate formula using CPI? | (Year 2 - Year 1)/Year 1 |
| which index measures price increases that typical Amerrican sonsumers face when shopping? | CPI |
| Why do we use "real" prices of goods to measure how expensive things have become? | To see whether there have been any changes in our purchasing power. |
| Current forecasts say that mild inflation is expected next year. If, however, deflation occurs instead then ____________ | lenders on existing fixed rate loans will gain while borrowers lose, Next years CPI will be higher than this years, % growth of the CPI will be negative. |
| Unanticipiated high inflation always means | a loss in purchasing power for lenders. |
| According to CPI, since 1950 the averation US inflation rate has been | 3.9% |
| Inflation is best defined as an increase in | the average price level |
| When actual inflation is equal to expected inflation | no one benefits |
| Commodoity Consumption Indicator is or is not used by economics to measuer inflation | Is not |
| Velocity of money, money supply, inflation and GDP formula | M*V=P*Y y=gdp |
| which of the three price indexes measures theacerage price level of the largest total number of goods? | GDP deflator |
| If, in an economic panic, people decide to hold their money rather than spend it, the velocity of money will | become unpredictable |
| The quantity theory of money descrives the relationship between | money velocity, money, real output, prices |
| Money illusion is | Thinking you have more money than you do because of inflation. |
| When the government monetizes its debt, the results are | higher inflation and losses for holders of government bonds. |
| Wages are sticky when | Labor unions have set wages for a certain period of time They are not changed as often as prices, they, Set accoring to expected inflation rates that end up being different than actual rates. |
| Solow Growth rate is the rate of economic growth that occurs when _____ | prices and wages are flexible |
| The short-run aggregate supply curve shows a relationship between the real growth rate and the _______ inflation rate | actual inflation rate |
| Sticky wages amplify negative shocks if | wages do not fall quickly when there are declines in economic activity |
| The first major event of the Great Depression was | The stock market crash |
| Holding everything else contant, increase in growth rate of Money Supply will cause Dynamic AD curve to | shift outward |
| Dynamic AD curve is ________ sloping | downward |
| cost of changing prices in response to an economic chock is called | menu cose |
| When the fed reserve makes an open market purchase, the reserves of the banking system will | increase |
| The monetary base (MB) refers to | Currency plus total reserves held at the Fed. |
| A bank will become illiquid if | it has short-term liabilities that exceed its short term assets. |
| Accoriding to the quantity theory of money, increase in money supply causes an increase in | prices |
| If we expected inflation is high than actual inflation, then | wealth will be redistributed from BORROWERS to LENDERS. |
| Fed has direct control over which part of the money pyramid? | the monetary base |
| Suppose you deposit $1,000 in checking account, If the reserve ratio is 10 %, how much of your deposit can tha bank loan out? | $900 |
| The narrowest measure of US money supply is | monetary base |
| When the banks borrow directly from the Fed, the interest rate they pay is called the | discount rate |
| If the fed wants short-term interest rates to rise, it could | engage in a monetary contraction. |
| For a given level of reserves, a decrease in the money multiplier will cause the money supply to | decrease |
| When the Fed Reserve buys bonds, the supply curve for bonds | does not shift |
| An increase in money growth will cause output growth to increase in | Short run only |
| The members of the Board of Governors of the Fed Reserve are appointed for | 14 years |
| Amount by which money supply expands with easch additional dollar in reserve is the | money multiplie. |
Created by:
jparris42
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