Econ 101 Exam 2

Refer to the diagram of the circular flow of income. Based on the diagram, the arrow going FROM box 2 to box 1 must be:

output bought by households.

Which of the following encourages the development of new ideas and inventions?

patents

Consider the data shown in the table. Assume that the economy produces only textbooks. What is the growth rate of real GDP between the two years using last year as the base year?

5%

Consider the following graphs, which are discussed in the textbook. Focus on the graph that looks at the relationship between GDP per person and infant deaths per 1,000 live births. What can explain this relationship?

As real GDP per person rises, maternal and fetal health increase due to better health care, education, sanitation, and nutrition.

In 2017, the total population of Africa was estimated to be about 1,250,000,000 people. This number, in billions, is:

1.25

Consider the data shown in the table. Assume that the economy produces only frozen fish. What is the real GDP for last year using this year as the base year?

185,000

A constant returns to scale production function means that if all inputs are increased by 75%, this should lead to output:

rising by 75%.

Technological advancement is NOT represented by which of the following?

the adoption of an existing technology by new firms

Refer to the table below that shows data for Panama. What was Panama's real GDP per person in the year 2002?

$5,435.17

Based on the following statistics, how much are net exports?

-$0.575 trillion

The aggregate production function is represented as:

Y = f(L, H, K).

Dale is a stay-at-home-parent whose typical day consists of getting the kids ready for school, doing the laundry, cooking three meals, and cleaning the house. How are Dale's home activities counted in GDP?

They are not counted

Refer to the table, which shows data for Ireland. Based only on the data in this table, in which year(s) did Ireland experience a fall in the standard of living?

2008 and 2009

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?

38,000

Property rights refer to:

control over a tangible or intangible resource.

Which of the following is an example of a durable good? - a soft drink - your haircut - fresh flowers from the florist - your new car

your new car

What is the difference between spending from a microeconomic standpoint versus spending from a macroeconomic standpoint?

In microeconomics, spending refers to spending by you, or your family, or your company, whereas in macroeconomics, spending refers to the spending by all consumers, all businesses, and the government in the economy.

Which of the following countries enjoyed significant catch-up economic growth in the second half of the twentieth century?

South Korea

The moral of the story of the Solow growth model is that:

capital accumulation alone cannot lead to sustainable economic growth.

Which of the following is a scaled number? - total tax revenues in the economy - government budget deficit as a percentage of GDP - the sum of all incomes earned in the economy - the country's national debt

government budget deficit as a percentage of GDP

In 2010, Canada's GDP was approximately $1,357 billion, and its population was about 34.12 million. What was Canada's approximate GDP per person in 2010?

39,770

Below is U.S. economic data for 2018. What was total spending?

$20.58 trillion

Refer to the table below, which shows data for the United Arab Emirates (UAE). What was the economic growth rate in UAE in 2010?

-5.91%

Refer to the table below, which shows data for the United Arab Emirates (UAE). Based only on the data in this table, in which year(s) did the UAE experience an increase in the standard of living?

2011 and 2012

Consider the data shown in the table. Assume that the economy produces only textbooks. What is the nominal GDP for last year?

250,000

The government passes a new investment tax credit initiative. Which input in the production function changes, and what is the effect on economic growth in the country?

The capital stock increases, and economic growth is positively affected.

A decreasing returns to scale production function is one where increasing all inputs by a certain proportion leads to output rising by:

a smaller proportion.

Along the same aggregate production function, the level of _____ is the same.

technology

Which of the following would lead to a slowdown in economic growth?

an increase in the dependency ratio

What is the difference between microeconomics and macroeconomics?

Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of the economy as a whole.

Refer to the diagram of the circular flow of income. The key lessons from this diagram are that: (i) all flows of resources are matched by flows of money. (ii) the market value of total output must be equal to total spending. (iii) total spending must equal total income. (iv) all inputs are provided by businesses.

(i), (ii), and (iii)

Which of the following is (are) included in investment? (i) military spending (ii) the purchase of an aircraft by a domestic airline (iii) the purchase of $45,000 worth of bonds (iv) the purchase of $32,000 worth of stock (v) social security payments (vi) the construction of a highway by the federal government

(ii) only

The aggregate production function Y = f(L, H, K) shows that economic growth can occur if: (i) more labor is employed. (ii) human capital is reduced. (iii) the dependency ratio rises. (iv) the capital stock stays constant.

(i) only

Southeast Asian countries experience high temperatures and high humidity during the monsoon seasons. This makes working conditions difficult. Because air conditioners are expensive and consume a lot of electricity, an alternative air cooler called an Eco-cooler was invented. This device does not use electricity, is made from readily available soda bottles, and works by funneling air into a room. This scenario is an example of:

a technological innovation that can increase labor productivity and thus increase economic growth.

The table below shows data for Central African Republic (CAR). What was this country's real GDP per person in 2010?

$487.95

Based on the following statistics, how much is consumption?

$6.49 trillion

The aggregate production function Y = f(L, H, K) shows that economic growth can occur if: (i) human capital increases. (ii) labor productivity falls. (iii) the capital stock in the country depreciates. (iv) the depreciation rate increases.

(i) only

Consider the data shown in the table. Assume that the economy produces only barrels of oil. What is the real GDP for this year using last year as the base year?

4,980,000

Which of the following would lead to a slowdown in economic growth?

a reduction in the birth rate coupled with an increase in the retirement rate of a population

If a bakery buys a second oven, hires a second baker, buys double the number of ingredients, doubles the size of the bakery, and then produces double the number of cakes, then the bakery is experiencing:

constant returns to scale.

Which of the following is an example of transfer payments? - government loans - unemployment benefits - military salaries - interest earned on savings in banks

unemployment benefits