Essay on Final Eco/372

1484 Words Oct 21st, 2012 6 Pages
ECO/372– Principles of Macroeconomics – Final Exam Study Guide 2012

1. the market where business sell goods and services to households and the government is called
a. goods market XXX
b. factor market
c. capital market
d. money market

2. Real gross domestic product is best defined as
a. the market value of intermediate goods and services produced in an economy including exports
b. all goods and services produced in an economy, stated in prices in a given year and multiplied by quantity
c. the market value of all final goods and services produced in an economy stated in the prices of a given year XXX
d. the market value of goods and services produced in an economy stated in current year prices

3. underemployment
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more than before, increasing the money supply
B. less than before, decreasing the money supply XXX
C. more than before, decreasing the money supply
D. less than before, increasing the money supply 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 XXX
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

A. increase both the money multiplier and the money supply
B. increase the money multiplier but decrease the money supply
C. decrease the money multiplier but increase the money supply XXX
D. decrease both the money multiplier and the money supply

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

A. purchase foreign assets
B. make loans to other countries
C. borrow from or sell assets to foreigners XXX
D. produce more than it consumes. 20. A weaker dollar

A. raises inflation and contracts the economy.
B. reduces inflation and

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