Eco 1301

Imagine that it takes an average Australian miner 10 hours to mine a metric ton of coal and 20 hours to mine a metric ton of manganese. It takes the average South African miner 4 hours to mine a metric ton of coal and 12 hours to mine a metric ton of manganese Coal Maganese Australian 10 20 South African 4 12

2

CPI in the U.S was 245.1 in 2017 and 251.1 in 2018 What was the inflation rate in 2018?

2.45

Using the table below, what is the opportunity cost of reducing unemployment from 8% to 4%? Unemployment Inflation 10 3 8 4 6 5 5 7 4 10

6% points of inflation

Suppose the equilibrium unemployment rate is 3.8% Which of the following rates of unemployment would be most likely if the economy is in the trough of recession?

7.9%

Which individual is considered the father of economics?

Adam Smith

Choose one historical figure discussed in class and highlight their contribution to the discipline

Adam Smith, otherwise called the father of economics, credited for the creation of the main concepts behind classical economics including supply and demand

You purchase a new car (produced this year) for $38,000. After six months, you sell the car for $31,500. How much does GDP rise because of these two transactions?

GDP rises by $38,000

According IS-MP, if consumer confidence booms, incentivizing consumers to become more willing to buy high ticket items, which of the following occurs:

IS curve shifts right, GDP increases, real interest rate doesn't change

In the IS-MP analysis in the Fed model, contractionary fiscal policy will shift the:

IS curve to the left

Which of the following is a positive economic statement?

If the government raises taxes, people will have less income available for purchases and saving

What is the name of the jeweler featured in the Explained episode?

Jacob

The rational rule for buyers states that consumers will continue to buy until

P=MB

All the following shift the investment line except

Real interest rates

According to the rational rule, which of the following statements is false?

The rationale rule is an important part of the cost-benefit principle

What happens to the investment line if the real interest rate increases?

There is a movement up and to the left along the same investment line

The supply curve illustrates the minimum price a supplier is willing to accept for a good or service

True

Which of the following is a final good or service

a haircut

A spending shock is any change in:

aggregate expenditure at a given interest rate and level of income

Aggregate expenditure is sum of

consumption, planned investment, government expenditure, and net exports

All of the following are always true about Homo Economicus except:

cooperative

Suppose aluminum prices rise in international markets U.S firms that import aluminum face higher marginal costs and raise prices. The scenario describes:

cost push inflation

Each of the following is a function of banks except:

deposit insurance

Devina lost her job a while ago when the economy contracted. She no longer believes she can get a job and has lost hope of employment. She has several friends in the same scenario. They have all stopped looking for work. This scenario describes:

discouraged workers

When consumers become pessimistic about the state of the economy, the consumption function will shift

downward/out

Which of the following statements is true regarding economic efficiency?

efficient outcomes will not make everyone happy

The rational rule of market says to produce more of a good if its marginal benefit is less than its marginal cost

false

Lagging indicators are variables that:

follow the business cycle with a delay

A bank can make profit by:

giving you a particular interest return on your savings and then loaning out the same money at a higher rate of interest

How do interest rates affect consumption in the economy?

higher interest rates discourage consumers from making financed purchases, and this lowers consumption

In the talk by Steven Leviitt (author of freakonomics), he discusses supply and demand in what Vancouver market

housing

If the fed announces an increase in interest rates in response to an increase in inflation, say from 2% to 4% over the past quarter, how does the fed model approach of this action differ from AS-AD approach?

idk

All of the following shift the consumption function except:

income

Which of the following was not included as a strategy for DeBeers in the Explain episode

increase distribution

According to the most recent BEA GDP release, which of the aided in the increase in personal consumption expenditure (PCE)?

increases in food services

Which of following is not an argument for limiting international trade? An increase in international trade may:

lead to economic growth through specialization in comparative advantages

An efficient market will keep increasing production until:

marginal benefit equals marginal cost

From an economic perspective, the outcome that yields the greatest economic surplus is the:

most efficient outcome

_____ means the true value of something is often measured through the next best option

opportunity cost

Which of the following is not a component of GDP?

price

Several states have a minimum wage that is higher than the federal minimum. In those states that impose such a minimum wage, it is more likely that the minimum wage acts as binding:

price floor, causing excess supply in the market

The difference between nominal GDP and real GDP is that

real GDP adjusts the value of goods for changes in prices level (inflation) and nominal GDP does not

Ceteris Paribus, a decrease in imports lead to a

rights shift of the aggregate demand curve

If Fiji's GDP rises, demand for imports will ____, leading to a ___ shift in the supply of the Fijian dollar

rise, right

In the market for loanable funds, the supply curve represents

saving

Primarily, economics is the study of

scarcity

A sudden unexpected situation of stagflation (a situation of high inflation and high unemployment) is evidenced when the labor market Philip curve:

shifts outward

Which of the following is not one of the functions of money?

standard of well being

Technological change is most likely to affect:

structural inemployment

In AD-AS framework, price and quantity are represented by ____ respectively

the GDP deflator and the real GDP

economists think that everyone is better off when trade is enabled

true

What is measured on the y-axis on the Philips curve diagram

unexpected inflation

Even if inflation exists, your purchasing power from one period to the next will stay intact if:

your pay rise exactly matches the rate of inflation