Macro Economics Chapter 20

Front 1

Fluctuations in the economy are often called

Back 1

Business cycle

Front 2

Real GDP measures

Back 2

the value of all final goods and services produced within a given period of time. It also measures the total income (adjusted for inflation) of everyone in the economy.

Front 3

the average level of prices, as measured

Back 3

Gdp deflator

Front 4

the model that most economists use to explain short-run fluctuations in economic activity around its long-run trend

Back 4

model of aggregate demand and aggregate supply

Front 5

shows the quantity of goods and services that households, firms, the government, and customers abroad want to buy at each price level.

Back 5

Aggregate demand curve

Front 6

shows the quantity of goods and services that firms produce and sell at each price level

Back 6

Aggregate supply curve

Front 7

Thus, when the price level falls, the dollars you hold rise in value, increasing your real wealth and your ability to buy goods and services.

Back 7

Wealth

Front 8

Theory X is a negative view

Back 8

people that assumes workers have little ambition, dislike work, want to avoid responsibility, and need to be closely controlled to work effectively.

Front 9

An improvement in technology would cause the long-run aggregate-supply curve to shift

Back 9

production costs will fall

Front 10

The quantity of domestically produced goods and services that households, firms, the government, and customers abroad want to buy at each price level is shown on the

Back 10

aggregate demand curve

Front 11

Which of the following would be included in aggregate demand?

Back 11

Firms' purchases of newly produced machinery

Front 12

How does the aggregate-demand curve shift when increased uncertainty and pessimism about the future of the economy lead firms to desire less investment spending?

Back 12

shift left

Front 13

If the government institutes an investment tax credit and decreases income taxes,

Back 13

real gdp and price levels rise

Front 14

If the interest rate rises and the supply of dollars in the market for foreign currency exchange shifts left, then the price must have

Back 14

risen

Front 15

When analyzing the economy as a whole, ________ substitution from one market to another is impossible

Back 15

microeconomic

Front 16

Suppose the economy is in long-run equilibrium. In a short span of time, there is a large emigration of skilled workers, a major depletion of oil fields, and a major new regulation limiting electricity production. In the short run, we would expect

Back 16

the price level will fall and real GDP will rise.

B. the price level and real GDP will both stay the same.

C. the price level will rise and real GDP will fall.

D. All of the above are possible.

Front 17

If wages are sticky, then a smaller than expected increase in the price level

Back 17

reduces the real costs of production, so the aggregate quantity of goods and services rises.

Front 18

If aggregate demand and aggregate supply both shift left, we can be sure that the price level is higher in the short run.

Back 18

false

Front 19

The best description of the economy in the long run comes from which macroeconomic theory?

Back 19

classical

Front 20

Although wages, incomes, and interest rates are most often discussed in real terms, what matters most are their nominal values

Back 20

true

Front 21

The aggregate-demand curve shows the quantity of goods and services that firms choose to produce and sell at each price level.

Back 21

false

Front 22

Imagine a hypothetical world in which, over the last fifty years, both real GDP and prices have trended downward in most countries. Continuing falls in the level of real GDP and the price level can be explained by

Back 22

iono

Front 23

An increase in the availability of an important major resource such as oil shifts the

Back 23

iono

Front 24

f countries that imported goods and services from the United States recovered from recession, we would expect that U.S. net exports would

Back 24

iono

Front 25

Most economists believe that real and nominal variables are highly intertwined, and that money can temporarily move real GDP away from its persistent trend in

Back 25

The short run

Front 26

A decrease in a supply of oil could _

Back 26

Decrease long-run aggregate supply

Front 27

During recessions, changes in investment spending are the biggest contributor to changes in

Back 27

Real GDP

Front 28

An upward-sloping short-run aggregate-supply curve is represented by which of the following equations?

Back 28

Quantity of output supplied = Natural Level of output + a(actual price level - expected price level)

Front 29

Which of the following shifts short-run aggregate-supply curve to the right

Back 29

Decrease in the expected price leve

Front 30

in the context of the aggregate demand curve, when the price level increases, households increase their holdings of money, interest rates increase, and spending on investment goods decreases because of the

Back 30

Interest rate effect

Front 31

The long-run effect of a decrease in household consumption is to lower

Back 31

The price level and leave the real output unchanged

Front 32

Which of the following adjusts to bring aggregate demand and aggregate supply into balance

Back 32

The price level and leave the real output unchanged

Front 33

In the short run a decrease in the costs of production makes

Back 33

output fall and prices rise

Front 34

Tax increases shift aggregate-demand curve to the:

Back 34

left, while increases in government spending shift the aggregate-demand curve to the right.

Front 35

Most economists believe that money neutrality holds in

Back 35

the long run.

Front 36

if businesses in general decide that they have under built and so now have too little capital, their response to this would initially shift

Back 36

aggregate-demand curve to the right.

Front 37

Suppose the economy is in long-run equilibrium. If the government decreases its expenditures, eventually the decrease in aggregate demand causes price expectations to

Back 37

shifts the short-run aggregate supply curve to the left

Front 38

In the short run a decrease in the costs of production makes

Back 38

the quantity of goods and services households, firms, the government, and customers abroad want to buy.

Front 39

Which of the following both shift aggregate-demand curve to the right?

Back 39

A decrease in taxes and at a given price level consumers feel more wealth

Front 40

In the open-economy macroeconomic model, the source of the supply of loanable funds is

Back 40

public saving + personal saving

Front 41

if U.S. residents want to buy fewer foreign bonds, then in the market for foreign-currency exchange the equilibrium exchange rate

Back 41

rises and the quantity of dollars traded falls.

Front 42

If the fictional country of Joplait experienced capital flight 10 years ago, what should have happened to Joplait's net exports?

Back 42

They should have increased. When investors around the world observe political problems in a country, they usually decide to sell some of their assets

Front 43

From 1980 to 1987, U.S. net capital outflows decreased. According to the open-economy macroeconomic model, a decrease in the supply of loanable funds could have caused this.

Back 43

true

Front 44

If a government has a budget deficit, then public savings------

Back 44

is negative and decreases national saving.

Front 45

In the open-economy macroeconomic model, the supply of dollars (or any domestic currency) in the foreign-currency exchange is horizontal.

T or F

Back 45

FALSE

Front 46

The loanable funds market is in equilibrium for country A. Country A has national saving of $70 billion, government expenditures of $20 billion, domestic investment of $20 billion, and net capital outflow of $50 billion. What is the quantity supplied of loanable funds in country A?

Back 46

70 billion

Front 47

All else equal, a decrease in the domestic real interest rate causes

Back 47

the quantity of loanable funds supplied to fall because national saving falls.

Front 48

In the open-economy macroeconomic model, if the supply of loanable funds shifts left, then

Back 48

the supply of dollars in the market for foreign-currency exchange shifts left.

Front 49

Suppose that in the fictional country of Oflos, the real interest rate leads to a national saving level of $80 billion, domestic investment is $40 billion, and net capital outflow is $30 billion, then

Back 49

there is a surplus in the loanable funds market and the real interest rate will fall.

Front 50

The term "capital flight" refers to

Back 50

a large and sudden movement of funds out of a country.

Front 51

If a country raises its budget deficit then both its supply of and demand for loanable funds shift.

T OR F

Back 51

False A budget deficit creates negative public saving. Since public saving is a component of national saving, national saving decreases

Front 52

A policy that directly influences the quantity of goods and services that a country imports or exports is known as a

Back 52

trade policy

Front 53

If the fictional country of Joplait experienced capital flight 10 years ago, what should have happened to Joplait's net capital outflow?

Back 53

It should have increased.

Front 54

Other things the same, people in the U.S. would want to save less if the real interest rate in the U.S.

Back 54

FELL. The decreased saving would decrease the quantity of loanable funds supplied.

Front 55

Suppose that the real rate of return from operating clothing stores in Brazil falls relative to the real rate of return in the United States. Other things the same,

Back 55

his will decrease U.S. net capital outflow and increase Brazilian net capital outflow.

Front 56

Suppose the real exchange rate is 4/3 gallon of country A's milk per gallon of U.S. milk, a gallon of milk costs $4.00 in the U.S., and a gallon of milk in country A costs 10 units of their currency. What is the nominal exchange rate?

Back 56

10/3 of a unit of country A's currency per U.S. dollar.

Front 57

A country has positive net exports in one year, and the next year it still has positive net exports but imports have risen more than exports. Which of the following has occurred?

Back 57

A country has positive net exports in one year, and the next year it still has positive net exports but imports have risen more than exports. Which of the following has occurred?

Front 58

If purchasing-power parity holds, all of the following are true except

Back 58

The nominal exchange rate is the ratio of U.S. prices to foreign prices.

Front 59

If a bank has just enough reserves to meet the required reserve ratio of 25 percent, and receives a deposit of $800, it has initially experienced a

Back 59

600 increase in excess reserves and a $200 increase in required reserves.

Front 60

To decrease the money supply the Fed can conduct open-market sales. Alternatively, the Fed can

Back 60

increase the discount rate.

Front 61

If the reserve ratio is 5 percent, then $500 of new reserves can generate

Back 61

$10,000 of new money in the economy.

Front 62

Assume banks hold no excess reserves. If the Fed decreases the reserve ratio from 20 percent to 10 percent, then the money multiplier

Back 62

increases from 5 to 10.

Front 63

The amount of reserves banks must hold against deposits is known as

Back 63

reserve requirement.

Front 64

The manager of the bank where you work tells you that the bank has $500 million in deposits and $350 million dollars in loans. If the reserve requirement is 5 percent, how much is the bank holding in excess reserves?

Back 64

$125 million

TOTAL RESERVE - REQUIRED RESERVE

REQUIRED RESERVE= 500*.05%= 25

TOTAL RESERVE= 500-350=150

Front 65

Suppose that in a country people lose confidence in the banking system and so hold relatively more currency and less deposits. As a result, bank reserves will

Back 65

decrease and the money supply will eventually decrease.

Front 66

Back 66

The required reserve ratio is 10 percent, which means that of the $10,000 in deposits the bank is only required to hold $1,000 in reserves. Since it is now holding $2,000 in reserves the bank's excess reserves amount to $1,000 and its reserves ratio is $2,000/$10,000 = 20 percent. If the bank sells $200 of its short term securities, its reserves will increase by that same amount ($200). Since the additional reserves have not yet been loaned out, the bank's excess reserves increase by $200 from $1,000 to $1,200.

Front 67

The money supply increases if

Back 67

households decide to hold relatively less currency and relatively more deposits and banks decide to hold relatively less excess reserves and make more loans.

Front 68

Unionization in one industry causes wages to

Back 68

ise in that industry causing labor supply to rise in industries that are not unionized.

Front 69

The unemployment that results from the job search is

Back 69

frictional.

Front 70

The official government unemployment rate (U-3) fails to fully capture labor utilization because it does not capture

Back 70

people who are working part-time and would like to work full-time.

Front 71

The unemployment that results from minimum-wage laws is _

Back 71

structural.

Front 72

Unemployment generated by the existence of labor unions is frictional unemployment and so contributes to the natural rate of unemployment.

Back 72

false

Front 73

If the minimum wage were currently above the equilibrium wage, then a decrease in the minimum wage that kept it above equilibrium would _____ the _______ of labor.

Back 73

iomo

Front 74

According to the theory of efficiency wages, it cannot be profitable for firms to keep wages above equilibrium.

Back 74

false

Front 75

People who are unemployed because wages are, for some reason, set above the level that brings labor supply and demand into equilibrium are best classified as

Back 75

structurally unemployed.

Front 76

Suppose that the inflation rate is 2% and the real interest rate is 4%. What is the nominal interest rate?

Back 76

2

Front 77

A corporation will borrow directly from the public by

Back 77

issuing bonds

Front 78

Suppose that the nominal interest rate is 6.5% and the real interest rate is 3%. What is the inflation rate?

Back 78

Nominal interest rate= (real interest rate + inflation rate)

3.5

Front 79

Suppose that Bonds A and B have identical characteristics except that Bond A has a term of 10 years and Bond B has a term of 1 year. Which of the following is true about these bonds?

Back 79

Bond A pays a higher interest rate than Bond B.

Front 80

According to the definitions of private and public saving, if Y, C, and G remained the same, a decrease in taxes would

Back 80

reduce public saving and raise private saving.

Front 81

. Behavior

Back 81

the actions of people

Front 82

Organizational behavior:

Back 82

the study of the actions of people at work

Front 83

a performance measure of both efficiency and effectiveness

Back 83

employee productivity

Front 84

the failure to show up for work•

Back 84

absenteeism

Front 85

the voluntary and involuntary permanent withdrawal from an organization

Back 85

turnover

Front 86

discretionary behavior that is not part of an employee’s formal job requirements, but whichpromotes the effective functioning of the organization

Back 86

organizational citizenship behavior

Front 87

an employee’s general attitude toward his or her job

Back 87

job satisfaction

Front 88

an employee’s general attitude toward his or her job

Back 88

job satisfaction

Front 89

any intentional employee behavior that is potentially damaging to the organization or to individuals within the organization

Back 89

counterproductive workplace behavior

Front 90

evaluative statements, either favorable or unfavorable, concerning objects, people, or events

Back 90

attitudes

Front 91

made up of the beliefs, opinions, knowledge or information

Back 91

cognitive component

Front 92

the emotional or feeling part of an attitude

Back 92

affective component

Front 93

an intention to behave in a certain way toward someone or something

Back 93

behavioral component

Front 94

high level of satisfaction= positive attitude

dissatisfaction= negative attitude

Back 94

linked to:

Front 95

the degree to which an employee identifies with his or her job, actively participates in it, and considers his or her job performance to be important to self-worth

Back 95

job involvement

Front 96

the degree to which an employee identifies with a particular organization and its goals and wishes to maintain membership in that organization

Back 96

organizational commitment

Front 97

the degree to which an employee identifies with a particular organization and its goals and wishes to maintain membership in that organization

Back 97

organizational commitment

Front 98

employees’ general belief that their organization values their contribution and cares about their well-being

Back 98

perceived organizational support

Front 99

Employee engagement:

Back 99

when employees are connected to, satisfied with, and enthusiastic about their jobs

Front 100

Cognitive dissonance

Back 100

any incompatibility or inconsistency between attitudes or between behavior and attitudes

Front 101

attitude surveys

Back 101

present the employee with a set of statements

or questions eliciting how they feel about their jobs, work groups, supervisors, or the organization

Front 102

big five modes

Back 102

personality trait model that includes extraversion, agreeableness, conscientiousness, emotional stability, and openness to experience

Front 103

personality

Back 103

a unique combination of emotional, thought, and behavioral patterns that affect how a person reacts to situations and interacts with others

Front 104

an individuals degree of like or dislike for himself or herself

Back 104

self esteem

Front 105

personality trait that measures the ability to adjust behavior to external situational factors

Back 105

self-monitoring

Front 106

a personality trait that describes individuals who are more prone to take actions to influence their environments

Back 106

proactive personality

Front 107

intense feelings that are directed at someone or something

Back 107

emotions

Front 108

the ability to notice and to manage emotional cues and information

-- self - awareness

-- self-management

-- self- motivation

-- empathy

-- social skills

Back 108

emotional intelligence

Front 109

a number of factors act to shape and sometimes distort perception including:

Back 109

perceiver

target

situation

Front 110

attribution theory

Back 110

developed to explain how we judge people differently depending on what meaning we attribute to a given behavior.

when we observe an individual's behavior, we attempt to determine whether it was internally or externally caused

Front 111

the tendencey to underestimate the influence of external factors and to overestimate the influence of internal or personal factors

i.g blaming sales on laziness instead innovative products produced by competitor

Back 111

fundamental attribution error

Front 112

the tendency of individuals to attribute their successes to internal factors while blaming personal failures on external factors

Back 112

self- serving bias

Front 113

the assumption that others are like oneself

i.g. assuming everyone wants the same responsibilities and challenges as you

Back 113

assumed similarity

Front 114

judging a person based on a perception of a group to which that person belongs

Back 114

stereotyping

Front 115

general impression of an individual based on a single characteristic

Back 115

halo effect

Front 116

managers need to recognize that their employees react to perceptions, not to reality

Back 116

LEARNING

Front 117

The process by which a person's efforts are energized, directed, and sustained toward attaining a goal

Back 117

motivation

Front 118

hierarchy of needs theory

Back 118

physiological

safety

social

esteem

self- actualization

Front 119

hygiene factors

--salary

--company policy

-- relationship with supervisor

Back 119

factors that eliminate job dissatisfaction, but dont motivate

Front 120

motivators

Back 120

factors that increase job satisfaction and motivation

=== achievement

-- recognition

--- work itself

--growth

Front 121

three needs theory

Back 121

the motivation theory that says threee acquired needs-- achievement, power, and affiliation--are major motives in work

Front 122

need for acheivement

Back 122

the drive to succeed and excel in relation to a set of standards

Front 123

need for power

Back 123

the need to make others behave in a way that they would not have behaved otherwise

Front 124

need for affiliation

Back 124

the desire for friendly and close interpersonal relationships

Front 125

that specific goals increase performance and those difficult goals when accepted, result in higher performance than do easy goals

Back 125

goal setting theory

Front 126

self-efficacy

Back 126

an individual's belief that he or she is capable of performing a task

Front 127

the theory that behavior is a function of its consequence

Back 127

reinforcement theory

Front 128

reinforcers

Back 128

consequences immediatelyfollowing a behavior, which increase theprobability that the behavior will be repeated

Front 129

the way tasks are combined to form complete jobs

Back 129

job design

Front 130

the number of different tasks required in a job and the frequency with those tasks are repeated

Back 130

job scope

Front 131

the horizontal expansion of a job by increasing job scope

== doesnt seem to work

Back 131

job enlargement

Front 132

the vertical expansion of a job by adding planning and evaluating respnsibilities

Back 132

job enrichment

Front 133

the degree of control employees have over their work

==taking over roles of their managers

Back 133

job depth

Front 134

a framework for analyzing and designing jobs that identifies five primary core job dimensions, their interrelationships, and their impact on outcomes

Back 134

job characteristics model

Front 135

SKILL VARIETY

TASK IDENTITY

TASK SIGNIFICANCE

AUTONOMY

Back 135

THE FIVE CORE JOB DIMENSTIONS

Front 136

The degree to which a job requires completion of a whole and identifiable piece of work

Back 136

task identity

Front 137

the degree to which a job has a substantial impact on the lives or work of other people

Back 137

TASK SIGNIFICANCE

Front 138

the degree to which a job provides substantial freedom, independence, and discretion to the individual in scheduling the work and determining the procedures to be used in carrying it out

gives the jobholder a feeling of personal responsibility for the results and that if a job provides feedback, the employee will know how effectively he or she is performing

Back 138

autonomy

Front 139

equity theory

Back 139

the theory that an employee compares his or her jobs inputs--outcomes ratio with that of relevant others and then corrects any equity

comparing what they get from a job in relation to what they put into it, and later compare it to others

Front 140

referent

Back 140

the other person, systems, or selves' individuals compare themselves against in order to assess equity

Front 141

perceived fairness of the amount and allocation of rewards among individuals

Back 141

procedural justice

Front 142

perceived fairness of the process used to determine the distribution of rewards

Back 142

procedural justice

Front 143

expectancy theory

Back 143

the theory that an individual tends to act in a certain way based on the expectation that the act will be followed by a given outcome and on the attractiveness of that outcome to the individual

Front 144

effort performance linkage``

Back 144

probability perceived by the individual that exerting a given amount of effort will lead to a certain level of performance

Front 145

instrumentality or performance reward linkage

Back 145

individual believes that performing at a particular level is instrumental in attaining the desired outcome

Front 146

attractiveness of reward

Back 146

importance an individual places on the potential outcome or reward that can be acheived on the job

Front 147

A closed economy does not engage in international trade of goods and services, but it does engage in international borrowing or lending.

t or f

Back 147

false

Front 148

As the term to maturity of a bond increases, the interest rate

Back 148

iono

Front 149

Consider a closed economy with a government deficit and positive investment. Which of the following is correct?

Back 149

private saving is positive; public saving is negative

Front 150

n

Back 150

a