EC 202 Assignment#4, EC 202 Assignment#3, Economics chapter 7, EC 202 Assignment#2, Quiz 1, EC 202 Assignment #1 (Q&A 2023 Updated) A+

EC 202 Assignment#4, EC 202 Assignment#3, Economics chapter 7, EC 202 Assignment#2, Quiz 1, EC 202 Assignment #1 (Q&A 2023 Updated) A+ Suppose you have $200 to invest at a nominal interest rate of 8%. If the inflation rate is 3%, then the real return on your investment is: - ANSWER-$10 If Table 11.3 represents all the investments available to the economy, the nominal interest rate is 10%, and there is no inflation, what will be the level of investment in the economy? (Note that the Cost represents the level of investment for each investment project.) - ANSWER-$100 The present value of a given payment in the future _______ when interest rates rise. - ANSWER-decreases Which of the following is not included in M1? - ANSWER-savings accounts Assume the following information about the DUCK BANK: Bank deposits are $30,000; Loans are $20,000; Reserves are $5,000; and the reserve requirement is 10%. The DUCK BANK is holding _______ in excess reserves. - ANSWER-$2,000 If the banking system has a required reserve ratio of 5 percent, then the money multiplier is: - ANSWER-20 If the FED sells $7.5 million of US bonds and the reserve requirement is 25%, M1 will eventually: - ANSWER-decrease by $30 million If the quantity of money demanded exceeds the quantity of money supplied, then the: - ANSWER-interest rate will increase If the FED has a major policy objective to decrease unemployment, it should: - ANSWER-decrease the reserve requirement and/or conduct an open market purchase. Refer to Fig. 13.1. Assume the initial equilibrium point is the intersection of the solid money demand and supply lines. Which point is a likely equilibrium outcome if the FED conducts an open market sale and real income decreases? - ANSWER-E When money is used to express the value of goods and services, it is functioning as a: - ANSWER-unit of account An open market purchase by the Fed: - ANSWER-Increases both investment and output Suppose consumer tastes and preferences shift from a desire to go skiing to an interest in snowboarding. If skis and snowboards are produced by different firms, then firms that produce snowboards will experience: - ANSWER-a rise in prices, which will induce them to increase production and increase the number of workers. Assuming a long-run Classical aggregate supply curve, a decrease in the money supply results in _______ in output and _______ in prices. (Note there is a typo in the ANS9 answer to question 20 in QUES9, as the answer should state that the long-run Classical supply is perfectly INELASTIC, not perfectly ELASTIC.) - ANSWER-no change; a decrease Assuming a short-run Keynesian aggregate supply curve, a decrease in taxes results in _______ in output and _______ in prices. - ANSWER-a substantial increase; a slight or no increase Consider Fig. 9.2. A simultaneous increase in the labor force due to an increase in immigration and an increase in government spending would cause a movement from ________ . - ANSWER-B to C If the government wants to reduce unemployment, government spending should be ________ and/or taxes should be _________. - ANSWER-increased; decreased In a situation where the government is operating on a budget surplus, it can reduce its overall debt by ________ . - ANSWER-buying back bonds it has sold to the public. If firms experience an unplanned increase in inventories, they are likely to: - ANSWERdecrease production. If the consumption function is C = 50 + 0.75 y, where C is consumption and y is output, then the marginal propensity to consume is _______ and the Keynesian multipler is _____. - ANSWER-0.75; 4 Let C = 100 + 0.6 y, and I = 150, where I is investment. Assume no government or foreign sectors. Then the equlibrium level of output y* equals: - ANSWER-625 Refer to Fig. 10.4. Which diagram illustrates the effect of an increase in the income tax rate? - ANSWER-A Although running a budget deficit during a recession should not be a source of concern, running a deficit when there is no recession is a bad policy due to: - ANSWERCrowding out. If the demand for goods and services is less than output, then there should be: - ANSWER-an increase in inventories Continues...