Econ Final

(4)Price go up because of change in supply (2)Price go down because of change in demand (1)Price go up because of change in demand (3)Price go down because of change in supply

1.Demand goes up 2.Demand goes down 3.Supply goes up 4.Supply goes down

Once every __________, the Census Bureau does a comprehensive survey of housing and residential finance.

10 years

If the unemployment rate is 8 percent, then this means:

8 percent of the labor force is unemployed

Who wrote: "The Wealth of the Nations"?

Adam Smith

What does a budget constraint show?

Various combinations of goods or services an individual can purchase with their income.

What is the definition of a shortage

When quantity demanded is greater than quantity supplied

Any given demand or supply curve is based on the ceteris paribus assumption that ___________________.

all else is held equal

Which of the following are most likely classified by economists as consumer durable goods?

automobiles, furniture

From a neoclassical viewpoint, government should focus less on:

cyclical unemployment.

The neoclassical view holds that long-term expansion of potential GDP due to _______________________ will determine ____________________.

economic growth; the size of the economy

A welder who quits his job and moves from Pittsburgh to Madison to try to get a better welding job is said to be:

frictionally unemployed.

Final goods or services used to compute GDP refer to:

goods and services purchased by the ultimate users

Improvements in the productivity of labor will tend to:

increase wages

Which of the following is most likely to contribute to economic growth as measured by GDP per capita?

increased capital formation

A payment is said to be ________________ if it is automatically adjusted for inflation.

indexed

The percentage change in the price level from one-time period to the next, whether the price level is measured in terms of money is the _____________.

inflation rate

__________ implies that pressure for price increases reaches across _______________markets, not just one.

inflation; most

In the neoclassical model, the AS curve shifts to the right over time as_______________________ and potential GDP expands.

productivity increases

To achieve a high standard of living, a nation should:

promote economic growth.

One factors that complicate the calculation of the inflation rate is:

quality bias sometimes called new product bias

Which of the following will have the greatest influence on the slope of the demand curve in a single market model?

substitute goods

Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is:

the benefit to his grades from studying for an hour

As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good.

the production possibilities frontier

When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________.

the quantity demanded of financial capital at any given interest rate will shift to the right.

A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of:

the supply curve.

Which of the following is included in GDP calculations?

the university tuition paid to enroll in a course

If Keynes' law applies during economic contractions and Say's law applies during economic expansion, how will the three goals of macroeconomics be affected?

trade-offs and connections may differ in the short run and the long run

In November 2010 the labor force in Siouxtown, was 14,800. There were 14,483 persons employed. The local unemployment rate:

2.10%

If the number of employed persons in a country equals 24 million, the number of unemployed persons equals 8 million, and the number of persons over age 16 in the population equals 40 million, the unemployment rate equals:

25%

Craigburg has a working age population of 20 million. Of those, 11 million are employed and 1 million are unemployed. The unemployment rate is ________ and the participation rate is __________.

8.3%; 60%.

What is a chart that shows all possible combinations a country can produce of two different goods. It shows the trade off of producing more of one good over another one.

A Productions Possibility Frontier

When an economy's output increases and the price level decreases, the _________ curve has shifted to the ____________.

AS; right

Why is there scarcity?

Because our unlimited wants exceed our limited resources

If a window gets broken and somebody says, 'do not fret, this creates wealth because it creates a job for the glass maker'. What is that an example of:

Broken Window Fallacy

What items could cause equilibrium quantity to go up

Demand goes up Demand goes down Supply goes up Supply goes down

______________________ argues that the productivity of workers will increase if they are paid more, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate.

Efficiency wage theory

When we want to measure wage inflation in the labor market, we use the:

Employment Cost Index

In the circular flow model looking at just firms and households. Do physical goods and money flow in the same direction?

False

Is the product market(goods market) and the factor market(AKA resource market) the same thing?

False

_______________________ happens when the economy is producing at its potential and unemployment is at the natural rate of unemployment.

Full employment GDP

A nation's prosperity is sometimes measured in terms of ___________.

GDP per capita

What name is given to the index based on the prices of exported or imported merchandise?

International Price Index

Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happen to the unemployment rate?

It would fall.

In an AD/AS model, the point where the economy has excess capacity is called the:

Keynesian zone of the AS curve

A surplus happens when

Market price is above market equilibrium

Most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.

Market-oriented economy

_________ is output per hour in the business sector.

Productivity

From a neoclassical view, which of the following is a true statement?

The economy cannot sustain production above its potential GDP in the long run.

Aggregate demand curves slope downwards for each of the following reasons EXCEPT

The substitution effect: As the price level falls, people buy more of the cheaper goods and less of other goods.

Steel mill wage costs increase by 18 percent over a year. What is the likely economic effect on the market for steel?

There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel.

Choose the correct statement concerning natural disasters.

They create jobs, but destroy wealth

Increased investment alone will guarantee economic growth.

This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology.

Demand for a good goes up. Because of this the price of the good rise.

True

If measuring opportunity cost on a budget constraint line. Can the opportunity cost be less than one? Can it be one-half a good?

True

Is the budget constraint a visual of the opportunity cost between two goods?

True

If an economy experiences a decrease in aggregate demand due to a decline in consumer confidence and output falls below potential GDP, which of the following is likely to occur?

a rise in unemployment

If imports exceed exports, as in recent years, then __________ exists.

a trade deficit

In the neoclassical version of the AD/AS model, which of the following should you use to represent the AS curve?

a vertical line drawn at the level of potential GDP

What distinguishes the real value of a statistic from the nominal value of a statistic?

adjusting for inflation

To compare the GDP of two different countries with different currencies, it is necessary to use _________________________.

an exchange rate

Which of the following results in a rightward shift of the market demand curve for labor?

an increase in demand for the firm's product

Which of the following will not result in a rightward shift of the market supply curve for labor?

an increase in labor productivity

Over the long run, a surge in aggregate demand from a neoclassical perspective will most likely result in:

an increase in price level.

Which of the following factors contribute to economic growth?

an increase in the proportion of the population that is college educated

Which of the following will not result in a leftward shift of the market demand curve for labor?

an increase in the wage rate

The rise in unemployment that occurs because of a recession is known as cyclical unemployment, because it is closely tied to the ______________.

business cycle

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of:

buyers and sellers

The nature of demand indicates that as the price of a good increases:

buyers desire to purchase less of it

Investment in human capital:

can be acquired through on-the-job training. is an important source of economic growth.

Which of the following is not included in GDP?

cash income paid to a day laborer that is not reported to the tax authorities

Economic models like the _____________________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories.

circular flow diagram

The demand measure of GDP accounting adds together:

consumption, investment, government purchases, and trade balance.

With regard to the economy, the term negative inflation is synonymous with which of the following?

deflation

Which of the following must be present in order for the aggregate supply curve to form an upward slope?

demand

Which of the following government policies would be supported by neoclassical macroeconomic assumptions?

focus on long-term growth and on controlling inflation

Which of the following best describes a fiscal policy tool?

government spending

A nation can achieve higher economic growth if:

it devotes more resources to research and development.

Why is productivity growth considered to be the most important factor in the AD/ASAD/AS model?

it shifts the AS curve in the long-term

In the ____________, households work and receive payment from firms.

labor market

Economists refer to the relationship that a higher price leads to a lower quantity demanded as the _____________.

law of demand

When nations desire a healthy macroeconomy, they typically focus on three goals, one of these being:

low inflation

If labor demand is downward sloping and labor supply is upward sloping, then when labor demand rises faster than labor supply, it is expected that real wages __________.

may increase, decrease or stay the same depending on the relative slopes.

While one occasionally sees references to inflation over short time periods, the term typically implies a(n)_____________ in prices.

ongoing rise

George looked for work for six months but could not find a job to his liking. He now spends his time at the beach. For purposes of employment he is considered:

out of the labor force

A university student who is enrolled in school fulltime and not seeking employment is considered:

out of the labor force.

The effect of substitution bias is that the rise in the price of a fixed basket of goods over time tends to ___________________ the rise in a consumer's true cost of living, because it doesn't take into account that the person can substitute between goods according to changes in their relative prices.

overstate

What term is used to describe the maximum quantity that an economy can produce, in the context of its existing inputs, market and legal institutions?

potential GDP

The neoclassical perspective on macroeconomics emphasizes that in the long run, the economy seems to rebound back to its _____________ and its ____________________.

potential GDP; natural rate of unemployment

The law of supply functions in labor markets; that is, a higher __________ for labor leads to a higher quantity of labor supplied.

price

The value of what is produced per worker, or per hour worked, is called ____________.

productivity

The difference between nominal GDP and real GDP is:

real GDP adjusts for inflation

In an AD/AS model:

real GDP is shown on the horizontal axis

Economists typically measure economic growth by tracking:

real GDP per capita.

A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will:

shift to the right, decreasing the price of the drug

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ___________________

shortage or excess demand

As the __________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left.

technology

Scarcity exists because of:

unlimited wants and limited resources.

The Keynesian view of economics assumes that:

wages are sticky