Econ Final Exam
The proprietors' income component of the income approach to calculating GDP must be adjusted by an allowance to account for depreciating equipment
The value of cars that the Ford Motor Company produces in a German Plant
The national income and product account are released quarterly
To ensure that accurate economic information is really available
Which circumstance would increase the supply of pork sausage?
The equilibrium price is indeterminate, but the equilibrium quantity falls
Suppose the market of iPhones, the following 2 changes take place:(1) the cost of making iPhones fall and (2) the price of smart-phone data plans fall. What happens to the equilibrium and the equilibrium quantity?
The equilibrium price is indeterminate, but the equilibrium quantity rises
The weekly Job Report is used as a way
To estimate trends in layoff and hiring
The component common to markets is the
Transaction
The existence of discouraged workers ten to cause the official unemployment ate to
Understate the actual rate
Wages that are higher than equilibrium can lead to
Unemployment
Are Cancer treats to ease lung cancer caused by smoking cigarettes include the GDP accounts
Yes
Are changes in inventories included in calculation of gross domestic investment
Yes
Can hamburger purchased by a hungry restaurant patron could be included in GDP calculations?
Yes
Is depreciation included in the GDP
Yes
The National Bureau of Economic Research
is a nonprofit research organization that dates business cycles in he United States
the unemployment rate is defined as the ____ divided by the ____
Number unemployed; number in the labor force
Full employment
Occurs if cyclical unemployment is 0
Unemployed does not include
* Those who are doing tempary work * Those who are unpaid family wrkers * Those who do not have a job and are not activly seeking employment
What are the basic economic questions that each society must answer?
1. What goods and services are to be produced? 2. how are the goods and services produced? 3. Who will receive the goods and services?
The nation of Workovia has a population of 15 million, of whom, 10 million are in the labor force and 9 million are working. Workovia has a population of 15 million, of whom, 10 million are in the labor force and 9 million are working. What is the unemployment rate?
10%
There are 15 million people living in Marketstan, of whom 9 million are working and 1 million are actively looking for work. What is Marketstan's unemployment rate?
10%
Consumer price index of 115 means that the prices rose by what from the base year?
15%
We are most likely to see a recession if interest rates on long-term bonds are ___ and interest rates on short-term bonds are
2%; 4%
Bacon purchased a grocery store is an example of a?
A final good
Sales of luxury consumer products for cats and dogs, such as pet spas and hotels, have experienced _____ over the past decade
A large increase
The price of apples that recently fallen in the market place. From this information, we can safely predict that
A surplus of apples must have existed
In 2013, the group with the highest unemployment rate in the United States was:
African Americans
Capital includes what?
All manufactured products that are used to produce other goods
Which of the following is the true within the circular flow of economic activity?
Business firm are sellers of products and buyers of production factors
In 2012, the group with the lowest unemployment rate in the United State with the lowest unemployment rate in the US was
College graduates
Price of gasoline is included in which index
Consumer price index
The income approach to calculation GDP includes compensation of employees plus:
Corporate profits and rental income
The mortgage crisis caused a lot of consumers to stop spending money. The decrease in spending led to a decrease in production. Which type of unemployment resulted.
Cyclical
Which scenario is the MOST likely effect of a decrease in the price of tablet computers on the market for laptop computers (a substitute)?
Decreased equilibrium price and deceased equilibrium quantity
Net exports equal
Exports minus imports
In the national income and product accounts, "disposable personal income" and "personal income" are synonymous. T/F
False
Markets gravitate towards equilibrium levels only when government intervenes. T/F
False
The Bureau of Labor Standards collects a random sample of different goods and services every month in order to achieve statistical uniformity. T/F
False
The consumer price index measures private goods as well as public goods. T/F
False
The law of demand refers to the positive relationship between price and quantity demand. T/F
False
Full employment, or the natural rate of unemployment, is determined by
Institutional factors such as the presence or absence of employment agencies and their effectiveness
The main idea of a circular flow diagram.
Is that every dollar spend in an economy becomes a dollar of income to someone else.
A market demand curve
Is the horizontal summation of individual demands
The father of modern demand-and-supply analysis is
Karl Marx
When quantity demand in a market equals quantity supplied, then the:
Market is in equilibrium
Wealthier countries tend to value environmental quality
More than developing countries
Who lets economists judge our nation's economic performance, compare U.S income and the output to that of other nations, and track the economy's condition over the course of the business cycle.
National income and product accounts
Over the past few decades, net exports in the United States have been a ______ percentage of GDP
Negative
In the National Activity Index
Negative values mean that economy is growing more slowly that its long-term trend
The national income and product accounts ignore
Non market transactions, investments in human capital, and use of people's leisure time
Full employment
Occurs if cycle unemployment is 0
What items are included in gross private domestic investment?
Residential housing New equipment purchased by businesses Increases in business inventories
If the supply curve shifts leftward and the demand curve also shifts leftward, and if demand shrinks relatively less than supply the price will?
Rise then quickly fall
If the price the US Post Office charges to deliver Express Mail rises, the demand facing FedEx will rise because its respective services are ____ goods
Substitute
Then quantity supplied exceeds quantity demand, a ____ occurs and prices are pushed ____ toward equilibrium.
Surplus; down
If the consumer price index (CPI) says that inflation equation 10% last year, then the chained CPI for urban consumers is likely to say
That inflation equaled 9.7% last year
What is not a problem in measuring the consumer price index CPI
The CPI includes new products in its baskets
In a planned economy, most of the productive resources are owned by?
The Government
Suppose that id the United States produced only oil, it could produce 25 million barrels; and if it produced only microchips it could produce 20 million chips. Suppose that if Mexico produced only oil, it could produce 16 million barrels; and if it produced only chips, it could produce 8 million chips. Is there comparative advantage or absolute and who has he advantage?
The US has absolute advantage in producing both goods
The GDP deflator is measure of
The average change in prices for all foods and services
______ is a measure of the change in average prices paid by urban consumers for a typical market basket for goods and services.
The consumer price index
The law of supply states that
as the price of a good increases, quantity supplied increases
When the economy is operation as full employment
cyclical unemployment is 0
If television sellers expect the prices of television to fall in the future, we are likely to see:
demand for television increase
The law of supply states that as prices ____, the quantity
fall; supplied rises
The US gross domestic product is equal to the total market value of all
final foods and services produced by resources in the United States
frictional unemployment vs unemployment
frictional unemployment is generally short-term where as unemployment is often long term
A criticism of GDP per capita is that it
might not fully reflect the standard of living of a typical citizen
If the television sellers expect the price of televisions to fall in the future, we are likely to see the price?
of the televisions fall and quantity of the televisions rise
List some market transaction?
payment made to disaster victim
When production technology improves, supply increases and the equilibrium?
quantity rises and the equilibrium price falls
Janet is receiving at 5% pay raise. If the rate of inflation is 2%, then Janet's purchasing power is.
rising
Income payments to the rest of the world are
subtracted from the GDP
According to the law of supply, producers will supply more of their products when
the price rises
A change in the price of a good will cause a change in what?
the quantity supplied
Adam Smith suggested that?
Almost as if an inadvisable hand guides the market to equilibrium
The proprietors' income component of the income approach to calculating GDP must be adjusted by.
An allowance to account for depreciating equipment
The Weekly Jobs Report contains.
An estimate of the number of persons filing for unemployment benefits for the first time
Business cycles
Are always the same duration
Compensation of employees in the income approach to calculation GDP includes many benefits, such
As employers' contributions to unemployment compensation
At the peak of the business cycle, the economy is typically operating
At its capacity
Long-term storage and surpluses are almost always the result of automatic market adjustments. T/F
Flase
When an economy has reached a zero unemployment rate, it said to have reached full employment. T/F
Flase
When the Bureau of Labor Statistics calculates the consumer price index, it assumes that
Consumers do not substitute cheaper goods for foods when prices have risen
What did Simon Kuznets do?
Devised the gross national product as a what of measuring a nation's economic output
Willingness to pay ____ from person to person and ____ under vary circumstances
Differs; differs
Workers who want to work buy have been frustrated by the inability to find work and have stopped searching are known as
Discouraged workers
Suppose three years ago a nation's inflation rate was 8%, two years ago is 5%, and last year was 2%. This nation is undergoing
Disinflation
The GDP deflator shows that since the mid - 1980s, the U.S economy has had
Disinflation
What is a reduction in the rate of inflation
Disinflation
Which of the following terms describes a situation in which a reduction in the rate of inflation from 4% to 3% per year?
Disinflation
In the United States, people are considered unemployed if and when they
Do not have a job but are available for work and have been actively seeking work
The supply curve slopes up and to the right because:
Due to increasing opportunity costs producers must charge more to produce additional units in order to cover their costs
A refrigerator is considered a ____ good?
Durable
The phases of the business cycle vary in
Duration and intensity
if both the supply and demand curves shift to the right?
Equilibrium quantity increases and the effect on equilibrium price is the indeterminate
During deflationary period, prices will increase at a decreasing rate. T/F
False
Gross private domestic investment, which consists of ____ and changes in private inventories, is an important determinate of _____
Fixed investments; swing in the business cycle
If sellers expect the price of their product to rise in the future, they are likely to increase their supply in the near future. T/F
Flase
If in the past, you have always painted your own house but now you hire a painting contractor to do work, what effect does it have on GDP?
GDP rises as a result of this change
The event that stimulated the US government's commitment to tracking the economy's health through a national income accounting system was the
Great Depression
The cost of inflation is ___ when unanticipated
Greater
For your purchasing power to stay the same, your wages must:
Increase at the same rate as inflation
Subsidies on domestically produced sport utility vehicles cause a(n) ____ in the supply of ____ sport utility vehicles
Increase; domestic
What scenario is MOST likely effect of a decrease in the price of flashlights on the market for batteries?
Increased equilibrium price and increased equilibrium quantity
Other things equal, if a recession gets worse, the number of discouraged workers ____, and the number of those in the labor force _____.
Increases; decreases
The twin perils of the modern macro economy are said to be
Inflation and unemployment
If actual unemployment is at its natural rate:
Inflation is very low
If the demand of iPhones rises as income increases, then the iPhone is a(n) _____ good.
Normal
The difference between the consumer price index (CPI) and the producer price index (PPI)
Only the CPI is associated with the problem of quality changes
The high point of a business cycle is called the
Peak
The reason that the law of demand exists is that?
People substitute cheaper products for more expensive products
The reason that the law of demand exists is that
People substitute cheaper products for the more expensive products
A firm will MOST likely decrease the price of its output if the
Quantity supplied of the good exceeds the quantity demand
Wheat is the main input in the production of flour. If the price of wheat increases, all else equal, we could expect what?
The supply of four to decrease
Suppose the National Activity Index of the Federal Reserve Bank of Chicago drops to -8.3 this month after being above =0.36 for the previous three months. This movement in the index indicates that:
The economy has probably moved in a recession
Cyclical unemployment occurs when
The economy slows down and workers are laid off
The national income and product accounts allow economists to track
The economy's condition over the course of the business cycle
What would be the effect on the equilibrium price and equilibrium quantity of new housing of mortgage interest rates rise and the costs of building a house rise simultaneously?
The equilibrium price cannot be predicted, but the equilibrium quantity will fall
One reason for the growth of the pet goods market had been
The increase in the number and availability of goods and services for pets
According to the law of demand, people buy more good when
The price falls
Market forces are in balance (equilibrium) when
The quantities demanded by consumers just quantities supplied by producers
Unemployment tends to be highest during ______ stage of the business cycle while there are a greater risk of high demand leading to inflation during the ____ stage of the business cycle
Trough; Peak
Tiffany, who is going on interviews, hoping to get her first job is considered?
Unemployed