The one variable that stands out as the most significant explanation of large variations in living standards around the world is
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23 years
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During the past decade the average growth rate of U.S. real GDP per person is around 3%, suppose, in the future, that the U.S. economy keeps growing at this speed, how many years is needed for the GDP per capita to double (rule of 70)
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physical capital
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The equipment and structures available to produce goods and services are called
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knowledge learned from reading books
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Which of the following is an example of human capital?
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more than inflation, so it became more scarce
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Suppose over the last year that the price of iron ore increased from $1,200 a ton to $1,275 a ton. Over the same time a measure of the overall price level increased from 150 to 156. The price of iron ore increased by
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is in effect deciding to consume fewer goods and services in the present
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When a society decides to increase its quantity of physical capital, the society
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diminishing returns
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The traditional view of the production process is that capital is subject to
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output will rise but by less than it did when the previous unit was added
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All else equal, if there are diminishing returns, then which of the following is true if a country increases its capital by one unit?
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productivity will definitely rise
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All else equal, if there are diminishing returns, then what happens to productivity if capital and labor both increase but capital increases by more?
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In the long run, a higher saving rate leads to a higher level of productivity.
In the long run, a higher saving rate leads to a higher level of income.
In the long run, a higher saving rate leads to neither a higher growth rate of productivity nor a higher growth rate of income.
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The shape of the curve is consistent with which of the following statements about the economy to which the curve applies?
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the quantity of physical capital doubles; the number of workers doubles; and human capital, natural resources, and technology remain constant.
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Choose a point anywhere on the curve and call it point A. If the economy is at point A in 2011, then it will definitely remain at point A in 2012 if, between 2011 and 2012
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may depress economic prosperity by reducing the amount of capital which each worker has to work with
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rapid population growth
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technological advances such as those during the Industrial Revolution
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Thomas Malthus's predictions turned out to be wrong due to
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makes trade easier
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The existence of money
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a store of value, but not a unit of account nor a medium of exchange
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Most financial assets other than money function as
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money, bonds, cars, houses
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Which list ranks assets from most to least liquid?
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has no intrinsic value
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money, bonds, cars, houses
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It makes loans to any qualified business that requests one
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.Which of the following does the Federal Reserve not do?
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MI would not change
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In a 100-percent-reserve banking system, if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits, then
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only a fraction of deposits are held in reserve
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Banks are able to create money only when
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$4,937.5 billion
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Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of deposits?
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1/R
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If R represents the reserve ratio for all banks in the economy, then the money multiplier is
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1 and banks do not create money
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In the special case of the 100 percent-reserve banking, the money multiplier is
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12.5 percent
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The reserve ratio for this bank is
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liabilities will increase by $800
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If $800 is deposited into the First Bank of Fairfield, and the bank takes no other actions, its
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$437.50
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Starting from the situation as depicted by the T-account, if someone deposits $500 into the First Bank of Fairfield, and if the bank makes new loans so as to keep its reserve ratio unchanged, then the amount of new loans that it makes will be
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increase First National's reserves by $120. Its excess reserves are $240
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The required reserve ratio is 12 percent and First National Bank sells $120 of its short-term securities to the Federal Reserve. This action will
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50
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This bank's leverage ratio is
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will result in a 60 percent increase in owner's equity
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Suppose a bank is operating with a leverage ratio of 10. A 6 percent increase in the value of assets
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buys government bonds from the public
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When the Federal Reserve conducts open-market operations to increase the money supply, it
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decrease and the money supply decreases
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If the Fed sells government bonds to the public, then reserves
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the Fed charges banks for loans
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The discount rate is the interest rate that
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buy government bonds or decrease the discount rate
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To increase the money supply, the Fed can
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more reserves, so the money multiplier will fall
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If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold
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the amount of reserves banks must hold against deposit
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Reserve requirements are regulations concerning
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decreases the money multiplier, but increases the money supply
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In a fractional-reserve banking system, an increase in reserve requirements
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decrease by $25.5 million and the money supply eventually decreases by $170 million
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If the reserve ratio is 15 percent, and banks do not hold excess reserves, and people hold only deposits and no currency, then when the Fed sells $25.5 million worth of bonds to the public, bank reserves
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decreases, so the value of money rises
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When the price level falls, the number of dollars needed to buy a representative basket of goods
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the federal reserve system
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The supply of money is determined by
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the value of money but not the real interest rate
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In the long run, money demand and money supply determine
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shifts left, causing the price level to fall
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.When the money market is drawn with the value of money on the vertical axis, if the Federal Reserve sells bonds, then the money supply curve
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the quantity of money
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What quantity is measured along the horizontal axis?
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0.5 and the equilibrium price level is 2
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If the relevant money-demand curve is the one labeled MD1, then the equilibrium value of money is
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when the money market is in equilibrium, one dollar purchases one-half of a basket of goods and services.
when the money market is in equilibrium, one unit of goods and services sells for 2 dollars.
there is an excess demand for money if the value of money in terms of goods and services is 0.375.
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If the relevant money-demand curve is the one labeled MD1, then
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none of these: an increase in the value of money
a decrease in the price level
an open-market purchase of bonds by the Federal Reserve
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Which of the following events could explain a shift of the money-demand curve from MD1 to MD2?
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10,000
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Suppose the relevant money-demand curve is the one labeled MD1; also suppose the velocity of money is 4. If the money market is in equilibrium, then the economy's real GDP amounts to
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8
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Suppose the relevant money-demand curve is the one labeled MD1; also suppose the economy's real GDP is 20,000 for the year. If the money market is in equilibrium, then how many times per year is the typical dollar bill used to pay for a newly produced good or service?
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75%
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At the end of 2009 the relevant money-demand curve was the one labeled MD2. At the end of 2010 the relevant money-demand curve was the one labeled MD1. Assuming the economy is always in equilibrium, what was the economy's approximate inflation rate for 2010?
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