Rustici Econ 104 Exam 2

The final output of all consumer goods and services available for immediate consumption

Which of the following is include in gross national product (GNP) statistics?

None of the above

Which of the following would a classical macroeconomist agree with?

The real money supply is equal to the nominal money supply divided by a price index

Which of the following is true?

The variable determining supply and demand curves in microeconomic theory are generally independent from each other, whereas in aggregate supply and demand macroeconomics they are somewhat interrelated

Which of the following is true?

Frictional unemployment arises from a lack of information on the labor market

Which of the following is true?

Increasing the quantity of money (ceteris peribus) leads to the increase in its value in all three versions

What is not true with respect to various versions of the quantity theory?

Valuability

Metallic money did not solve which problem relative to livestock money?

Government controls money (group 1) - legal tender laws - rapid inflation of nominal prices - maximum price controls - shortages - velocity accelerates - disaster

Which of the following is the typical sequence of the hyperinflation pattern?

None of the above implied by Say’s Law

Say’s Law implies which of the following?

To integrate microeconomics and price theory with macroeconomics

What is a reason why Say’s Law is important for Macroeconomic theory?

The natural rate of unemployment is the amount of unemployment that exists when the economy is fully employed

What is true about jobs?

7%

Using income version of quantity theory of money, calculate the annual inflations rate if the following events occur: money supply increase 6%, velocity, of circulation increases 3%, and reality quantity output increases 2%

Paper money requires legal tender laws beofre people will trust and accept it

Which of the following about money is not true?

A repressed inflation actually magnifies inflation

Which of the following is true?

There may be insufficient money that is needed to buy the goods making up the index

Which of the following is not a serious problem associated with the calculation of CPI

The outstanding money supply is always held in form of cash balances

Which of the following is true?

Paper money originated in Europe in 1641 because of legal tender laws

Which of the following is not true with respect to money?

In the case of excess demand for cash-balances (at existsing nominal prices), competitive overbidding pushes nominal prices upward

Which of the following is not true?

Increasing inflation expectations

Which of the following would not increase real value of money ceteris paribus?

He is pointing to the debasement of coins for the inflation tax

In Adam Smith’s essay, “Origin and Use of Money”, what does this mean: I believe the avarice and injustice of princes and soverign states abusing the confidence of their subjects have by degrees diminsished the real quantity of metal, which may have originally been contained in the coin

Government mints using their position to use inflation to raise revenue

What does Copernicus mean by

“But what had over so long a period of time become the inveterate habit of adulterating, pilfering and cheapening the money, has not ceased in our day. For what it later became and what it is today, I am ashamed to say.”?

Difference: Interest was seen as the return to productivity of capital and the other the value of time. Agreed: Interest originates from real variables

In Classical Macro Model essay, there were disagreements concerning interest rate theories. What were the two different theories and what did they agree upon?

Special interest groups promoting the tariffs

In Who is protected by Tariffs, which group does Hazlitt identify benefits at the expense of others?

Tariffs destroy comparative advantage and econoimic deficiency

What is Hazlitt’s reasoning that tariffs reduce real wages on labor market?

Unexpected inflation

In “A Glance at the Money Illusion”, money illusion is caused by what?