Which of the following macroeconomic variables is procyclical and coincident with the business cycle?
a. Industrial production
b. Residential investment
c. Nominal interest rates
d. Unemployment
Answer: A
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FIN201 Chapter 2
- Which market adjusts the quickest in response to shocks to the economy?
- An increase in taxes (when Ricardian equivalence doesn't hold) causes the real interest rate to ________ and the price level to ________ in general equilibrium.
- Vault cash is equal to $2 million, deposits by depository institutions at the central bank are $1 million, the monetary base is $15 million, and bank deposits are $35 million. Currency held by the nonbank public is
- Assume that the currency-deposit ratio is 0.2 and the reserve-deposit ratio is 0.1. The Federal Reserve carries out open-market operations, purchasing $1 million worth of bonds from banks. This action will increase the money supply by
- Over the past year, productivity grew 2%, capital grew 1%, and labor grew 1%. If the elasticities of output with respect to capital and labor are 0.2 and 0.8, respectively, how much did output grow?
- In the Solow model, if f(k) = 2k^0.5, s = 0.1, n = 0.1, and d = 0.05, what is the value of f(k) at equilibrium?
- GDP differs from GNP because
- Which of the following is included in U.S. GDP?
- In the short run, an increase in export sales would cause output to ________ and the price level to ________.
- There's been a real depreciation of the dollar over the past month. In the long run, you would expect the quantity of
- Currency unions are rare because
- Increases in the debt-GDP ratio are primarily caused by
- Consider an economy that has the following monetary data.
- The average cost of the distortion created by taxes
- In goods market equilibrium in an open economy,
- An economy is considered a small open economy if it
- If the price level was 100 in 2009 and 102 in 2010, the inflation rate was
- The number of unemployed divided by the labor force equals
- Suppose your company is in equilibrium, with its capital stock at its desired level. A permanent increase in the depreciation rate now has what effect on your desired capital stock?
- Desired national saving equals
- Money demand is given by M(d)/P = 1000 + 0.2Y - 1000i. Given that P = 200, Y = 2000, and i = 0.10, real money demand is equal to
- An increase in expected inflation is likely to cause
- The amount of output lost when the inflation rate is reduced by one percentage point is called
- If the expected inflation rate is unchanged, a fall in the natural rate of unemployment would
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