Econ Final
At an annual growth rate of 2%, approximately how long does it take for real GDP per capita to increase from $30,000 to $60,000 in a country?
(60,000 - 30,000) ------------------- x100 30,000
If v = 4%, P = 3%, and YR = 2%, then M must equal:
1%
If the adult population of a country is 200 million, 100 million are employed, and 10 million are unemployed, this country's labor force is:
110 million.
What makes a bigger contribution to GDP, 12 million cars sold at $28,000 each or 20 million computers sold at $1,000 each?
12 million cars
A real return of 10% per year means that a $10,000 investment will grow to $20,000 in:
20 years.
Suppose a nation's CPI is 150 in Year 1 and 180 in Year 2. What is the rate of inflation?
20%
If a zero-coupon bond with a face value of $1,000 costs $800, then the rate of return if held to maturity would be:
20%.
The average rate of inflation in the United States over the past 10 years has been around 2.4%. If this trend continues, prices in the United States will double in about _____ years.
29
If the growth rate of the money supply in an economy is 5%, the growth rate of output is 2%, and the velocity of money is constant, what will the inflation rate in this economy be?
3%
The average annual rate of growth of real GDP in the United States has fluctuated around ____ for the last 60 years.
3.2%
If the down payment for a $250,000 home is $50,000 and the mortgage is $200,000, the leverage ratio is:
4
According to the rule of 70, a country with an annual growth rate of 10% will double its GDP per capita in:
7 years.
The AD-AS model consists of the:
AD, SRAS, and LRAS curves.
Which index measures price increases that typical American consumers face when shopping?
CPI
What does "crowding out" mean
Government borrowing causes private investment and consumption to decrease.
Popular U.S. stock indexes include: I. FDIC II. Dow Jones Industrial Average III. NASDAQ
II and III only
What will happen to the supply of workers 18 to 21 years after a baby boom?
It will increase because of the influx of new adults into the labor market.
Which of the following individuals can be counted as unemployed?
Jean, who left her job to search for a higher-paying position
Joe runs a landscape company and uses one of his home's bedrooms as a home office. This office could be used to earn rental income from college students. If average rental income in Joe's neighborhood were to rise:
Joe's opportunity cost of using a bedroom as a home office would increase
Which of the following identities represents the quantity theory of money?
Mv = PYR
Which of the following best describes the principle of comparative advantage?
Someone has the ability to produce the same good for the lowest opportunity cost.
Which of the following government outlays is a transfer payment that would NOT be included in GDP?
The Social Security program sends a monthly payment to a senior citizen.
What does the law of supply state?
There is a positive relationship between price and quantity supplied.
Which of the following represents the national spending approach to splitting GDP?
Y = C + I + G + NX
Which of the following factors causes a decrease in supply?
a decrease in the price of the product
Unanticipated high inflation always means:
a loss in purchasing power for lenders.
Which of the following individuals can be counted as unemployed?
a man who was laid off from an auto manufacturing plant in Detroit
A shortage results when:
a price ceiling is imposed.
A real price is:
a price that has been corrected for inflation.
An increase in spending growth causes:
a rightward shift of the AD curve.
An increase in supply refers to:
a rightward shift of the supply curve.
The first major event of the Great Depression was:
a stock market crash.
Southwest Airlines was able to enter the national market in 1978 as a result of:
airline deregulation.
For most of recorded human history, long-run economic growth was:
almost nonexistent.
Inflation is:
an increase in the average level of prices.
Which of the following would cause the aggregate demand curve to shift to the right?
an increase in the growth rate of the money supply
A mutual fund is:
an investment fund that pools money from many investors and invests that money in the stocks of many firms.
Inflation refers to an increase in the:
average level of prices.
In the 1800s, the federal government paid railroad companies for each mile of track built. This payment scheme created incentives for railroad companies to lay track:
between points A and B using the most indirect route.
Using a graph of the AD and long-run aggregate supply curves, the Internet revolution of the 1990s caused:
both real growth and inflation to increase.
The efficient markets hypothesis implies that an investor:
cannot systematically outperform the market as a whole over time.
Economists believe people make decisions by:
comparing marginal costs with marginal benefits.
Suppose that the equilibrium price in the market is $10. If the current market price is $7.50:
competition among buyers will increase the current price.
Unemployment correlated with the business cycle is called:
cyclical unemployment.
A leverage ratio is the ratio of:
debt to equity.
Both unions and minimum wages:
decrease the quantity of labor demanded and increase unemployment.
Imagine that millions of refugees move out of country A and into country X. This would cause the demand for housing in country A to _____ and the demand for housing in country X to _____.
decrease; increase
Higher GDP growth is generally associated with:
decreases in the unemployment rate.
If the inflation rate falls from 4% in 2005 to 2% in 2006, then:
disinflation has occurred.
An unemployed person is one who:
does not have a job but is actively looking for one.
The labor force consists of:
employed workers and adults who do not have jobs but who are looking for work.
If market demand decreases:
equilibrium price and quantity will both decrease.
If market supply increases:
equilibrium price and quantity will both increase.
An inferior good is one that:
experiences decreased demand when income increases.
Gross domestic product is the market value of all:
final goods and services produced within a country in a year.
If firms are unable to lower prices because of a legally mandated price floor, then:
firms will often compete by offering higher-quality goods than consumers are willing to pay for.
"Buy and hold" involves buying stocks and holding them:
for the long run.
Communal property creates a:
free rider problem.
Discouraged workers are people who:
have given up looking for work but would still like to work.
The opportunity cost of producing a particular good refers to:
how much of something else must be given up to produce one additional unit of the good.
Economists assume that people respond to:
incentives
If supply decreases and its slope remains the same, consumer surplus:
increases.
As trade becomes more widespread, specialization ______, which in turn ______ productivity
increases; increases
The aggregate demand curve shows all the combinations of _____ that are consistent with a specified rate of spending growth.
inflation and real GDP growth rates
In the long run, the quantity theory of money says that the growth rate of the money supply will be approximately equal to the:
inflation rate.
Economists call private spending on the tools, plant, and equipment used to produce future output:
investment.
Hyperinflation refers to the case in which inflation:
is extremely high.
The supply curve for savings indicates that the higher the interest rate, the:
larger the quantity saved.
The buyer of a bond is a:
lender.
The "long run" is a period of time:
long enough that prices and wages are fully flexible.
Nobel Prize-winning economist Milton Friedman says, "Inflation is always and everywhere a _____."
monetary phenomenon
When economists state that "money is neutral," they mean that the:
money supply does not affect real GDP or unemployment.
The actual unemployment rate varies around the:
natural unemployment rate.
Using the national spending approach to measuring GDP, if Tyler buys 50 shares of Apple stock, it is included in GDP as part of
nothing; it is not included as part of GDP.
The demand curve for oil slopes downward because:
oil will only be used in its higher-valued uses when the price of oil is lower.
Adam Smith's "invisible hand" refers to:
people's pursuit of the social interest
A decrease in oil prices is an example of a _____ productivity shock
positive
Which statement correctly completes the definition of a demand curve? A demand curve is a function that shows the relationship between:
price and the quantity demanded.
Which variable is NOT a demand shifter?
price of raw materials
Which variable does NOT shift the demand curve?
price of the good itself
When the government of Zimbabwe ran out of money, President Robert Mugabe:
printed more money.
In the national spending approach, consumption expenditures refer to:
private spending on all final goods and services.
The ______ shows all combinations of goods that a country can produce given its productivity and ______.
production possibilities frontier; supply of inputs
A change in which factor would shift the supply curve?
production technology
The "Solow" growth rate represents an economy's _____ growth rate.
projected
According to the quantity theory of money, an increase in the money supply causes an increase in _____ over the long run.
real GDP
If spending growth is 6% and inflation is also 6%, this means that:
real GDP did not increase.
Which of the following is the best measure of a country's standard of living?
real GDP per capita
A major hurricane hitting the East Coast of the United States is an example of a:
real shock.
Financial intermediaries:
reduce the costs of moving savings from savers to borrowers and investors.
When workers lose their jobs and become officially unemployed, the number of people in the labor force:
remains constant.
An assumption of the quantity theory of money is that the velocity of money:
remains relatively constant.
An increase in spending growth will cause the aggregate demand curve to:
shift outward.
Frictional unemployment is best defined as:
short-term unemployment caused by difficulties of matching employees to employers.
Which of the following individuals can be counted as part of the labor force?
someone who is collecting unemployment benefits
To benefit the most from trade, a person should:
specialize in an activity for which she has a comparative advantage.
Oil shocks, the shift from manufacturing to service jobs, and the use of new technologies are reasons for _____ unemployment.
structural
The shift toward more of a service economy and less of a manufacturing economy in the United States has caused an increase in:
structural unemployment.
The natural unemployment rate is the rate of _____ unemployment plus the rate of _____ unemployment.
structural; frictional
Utilizing comparative advantage can best be exemplified as:
the CEO of Microsoft programming his own computer.
All of the following are U.S. stock price indexes, EXCEPT:
the CPI.
The velocity of money is:
the average number of times a dollar is spent on final goods and services.
The production possibilities frontier shows:
the combinations of outputs and resources that a country possesses given its productivity.
As a result of an increase in the supply of savings:
the interest rate decreases, but the amount of borrowing increases.
The price of savings is:
the interest rate.
Which approach measures GDP by adding together consumption, investment, government purchases, and net exports?
the national spending approach
When there is a shortage of 1,000 units of a particular good:
the price of the good will rise.
Investment is defined as:
the purchase of new capital goods.
The argument that "inflation is always and everywhere a monetary phenomenon" is consistent with:
the quantity theory of money.
Individual savings contributes to:
the supply of loanable funds.
What is the Fisher effect?
the tendency of nominal interest rates to rise with higher expected inflation rates
The fundamental idea behind the production possibilities frontier is:
the trade-offs that exist in production.
The "quantity theory of money" describes the relationship between:
the velocity of money, money supply, real output, and prices.
Businesses will take out additional loans only if:
they have no other way to obtain funds.
Why do ratings agencies rate bonds?
to indicate the chance of a bond being repaid
Nominal wage confusion occurs when:
workers respond to their nominal wage instead of to their real wage.