Econ final

​Suppose you own a savings bond that will pay you $100 in 7 years. If the annual interest rate is 2%, what is the present value of the savings bond?

$87.06

Allied Business Consultants employs five researchers that each work 8 hour days. In one day the researchers prepared 10 reports for its 2 largest clients. What was Allied Business Consultants' productivity?

1/4 report per hour

A barber shop produces 192 haircuts a day. Each barber in the shop works 8 hours per day and produces the same number of haircuts per hour. If the shop's productivity is 2 haircuts per hour of labor, then how many barbers does the shop employ?

12

Suppose that in a closed economy GDP is equal to 20,000, consumption equal to 15,000, government purchases equal 4,000 and taxes equal 3,000. What are private saving, public saving, and national saving?

2,000, -1,000, and 1,000, respectively.

If in a closed economy Y = $11 trillion, which of the following combinations would be consistent with national saving of $3 trillion?

C = $7 trillion, G = $1 trillion

Refer to Figure 26-2. Which of the following events would shift the demand curve from D1 to D2?

Firms become optimistic about the future and, as a result, they plan to increase their purchases of new equipment and construction of new factories.

Fran buys 1,000 shares of stock issued by Miller Brewing. In turn, Miller uses the funds to buy new machinery for one of its breweries.

Fran is saving; Miller is investing.

Consider the expressions T - G and Y - T - C. Which of the following statements is correct?

The first of these is public saving; the second one is private saving.

Refer to Figure 26-4. Which of the following events could explain a shift of the demand-for-loanable-funds curve from to ?

The tax code is reformed to encourage greater investment.

For an economy that engages in international trade, GDP is divided into four components. Which of the following items is not one of those components?

national saving.

A pharmaceutical company unexpectedly announces that it just developed an important new drug. This news should

raise the price of the corporation's stock; if it does not the stock is undervalued.

A company that produces wallpaper is considering buying some new equipment that it expects will increase future profits. If the interest rate falls, then the present value of these future earnings

rises. The company is more likely to buy the equipment.

By holding insurance a person

shares risk and so reduces the burden of risk.

After adjusting for inflation, over time the prices of most natural resources have been

steady or falling, meaning that our ability to conserve them is growing more rapidly than their supplies are dwindling.

Economists differ in their views of the role of the government in promoting economic growth. A controversial idea is that government should

target and subsidize specific industries important for technological progress.

In 1870, the richest country in the world was

the United Kingdom.

The field of finance primarily studies

the implications of time and risk for allocating resources over time

An asset market is said to experience a speculative bubble when

the price of the asset rises above what appears to be its fundamental value.

A low price-earnings ratio indicates that either the stock is

undervalued or people are relatively pessimistic about the corporation's prospects.

In order to promote growth in living standards, policymakers must

​All of the above

​A tech company loses a high-profile patent-infringement case against its top competitor. Which of the following is true?

​Demand for the company's stock decreases, while the price of a share falls.

David recently received an inheritance, and he is planning to invest the inheritance in one of four stock portfolios. Which of these portfolios would you expect to have the highest risk?​

​​A portfolio with an average annual rate of return of 14%.

Alexis and Tara both mine salt. Alexis mines 300 pounds in 20 hours. Tara mines 400 pounds in 40 hours. Which of the following is correct?

Alexis's productivity is greater than Tara's. This difference could be explained by Alexis having more physical capital than Tara.

Refer to Figure 26-1. Which of the following events would shift the supply curve from S1 to S2?

In response to tax reform, households are encouraged to save more than they previously saved.

Among the following countries, which one has the highest growth rate of real GDP per person over about the last 100 years?

Mexico

Inflation costs are minimized under which inflation rate?

a. 5 percent

Refer to Figure 34-7. If the economy is at point b, a policy to restore full employment would be

a. an increase in the money supply.

"Money is a veil" best describes the

a. classical view.

If inflation is higher than what was expected,

a. creditors receive a lower real interest rate than they had anticipated.

Credit cards

a. defer payments.

Abby buys health insurance because she knows that she has health risks that wouldn't be obvious to an insurance company. Brad buys home owners insurance and then is less careful to make sure he's put out his cigarettes. The example with Abby

a. illustrates adverse selection; the example with Brad illustrates moral hazard.

A decrease in the price level

a. increases the quantity of goods and services demanded.

Assume the MPC is 0.72. The multiplier is

b. 3.57.

A bank has $500,000 in deposits and $475,000 in loans. It has loaned out all it can. It has a reserve ratio of

b. 5 percent.

A bank has a 20 percent reserve requirement, $8,000 in loans, and has loaned out all it can given the reserve requirement.

b. It has $10,000 in deposits.

An open-market purchase

b. increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public.

A situation in which the Fed's target interest rate has fallen as far as it can fall is sometimes described as a

b. liquidity trap.

An automobile manufacturer unexpectedly announces that it has hired a new chief executive officer. It is widely believed that the presence of this individual will raise the profitability of the corporation. At the same time interest rates unexpectedly rise. Which of the above would tend to make the price of the stock rise?

b. the announcement but not the rise in interest rates

​Which of the following events shifts the aggregate-demand curve leftward?

b. ​A decrease in government expenditures, but not a change in the price level.

Demand deposits are included in

c. M1 and M2.

According to the classical model, which of the following would double if the quantity of money doubled?

c. both prices and nominal income

An increase in government purchases is likely to

c. crowd out investment spending by business firms.

Assuming the Fisher Effect holds, and given U.S. tax laws, an increase in inflation

c. does not change the real interest rate but reduces the after-tax real rate of interest.

Aggregate demand shifts right if at a given price level

c. taxes fall and shifts right if the money supply increases.

Based on past experience, if a country is experiencing hyperinflation, then which of the following would be a reasonable guess?

d. All of the above are correct.

Refer to Figure 33-4. A decrease in taxes would move the economy from C to

d. B in the short run and A in the long run.

A company that produces baseball gloves is considering buying some new equipment that it expects will increase future profits. If the interest rate rises, then the present value of these future profits

d. falls. The company is less likely to buy the equipment.

During the last tax year you lent money at a nominal rate of 6 percent. Actual inflation was 1 percent, but people had been expecting 1.5 percent . This difference between actual and expected inflation

d. transferred wealth from the borrower to you and caused your after-tax real interest rate to be 0.5 percentage points higher than what you had expected.

Country A experienced a growth rate of real GDP per person of 2.5 percent per year throughout the 1900's. In view of other countries' experiences during this time country A's growth was

exceptionally high.

Country A experienced a growth rate of real GDP per person of 0.5 percent per year throughout the 1900's. In view of other countries' experiences, country A's growth was

exceptionally low