Econ Macro exam 2

To find the quantity demand in a chart what do you do?

Add across the price.

After the United States introduces a tariff in the market for widgets, the price of widgets in the United States will: A. decrease. B. increase. C. remain the same. D. change in an indeterminate manner.

B.

Which of the following could be responsible for an increase in the price of wheat? A. an increase in the supply of wheat B. an increase in the demand for wheat C. a decrease in the demand for wheat D. a simultaneous increase in supply and decrease in demand for wheat

B.

Buyers who were originally willing to buy 800 units of a good at $4 per unit are now willing to buy 1200 units at $4 per unit. That change would be described as: A. an increase in demand. B. a decrease in demand. C. an increase in quantity demanded. D. a decrease in quantity demanded.

A.

A person who works 25 hours per week: A.is considered to be employed. B. is considered to be a discouraged worker. C. is characterized by both being employed and being part of the labor force. D. is considered to be unemployed. E. is considered to part of the labor force.

C.

Assuming that Chinese food and Thai food are substitutes, if P. F. Chang's Chinese Restaurant reduces its prices: A. the sales of the nearby Bahn Thai restaurant will increase. B. demand for meals at P. F. Chang's will increase. C. the demand for meals at the Bahn Thai restaurant will decrease. D. the quantity of food demanded from P. F. Chang's will decrease.

C.

Minimum wage laws have little or no effect in this segment. A. Low-skilled Labor B. Teenagers C. Skilled workers D. Unemployed workers

C.

What is the most likely effect of deregulation on the supply curve? A. Supply curve will shift to the left B. Quantity supplied will reduce C. Supply curve will shift to the right D. Supply curve will not be effected

C.

Which of the following is most likely to be an inferior good? A. Porsches. B. Lobster. C. Used clothing. D. An Ivy League education.

C.

The supply of newspapers will decline if: A. newsprint becomes more expensive. B. the printers' union agrees to lower wages. C. newspaper prices are reduced. D. magazine prices fall.

A.

The unemployment rate is the number of people classified as unemployed as a percentage of: a) the labor force. b) the population over the age of sixteen. c) the number of people over the age of sixteen who are employed. d) the entire population.

A.

The unemployment rate may underestimate the true extent of unemployment if: A. many part-time employees would like to work full-time, but are unable to get the additional work. B. employees increase the number of hours they work overtime. C. there are a large number of people working in the underground economy. D. any of the above occur.

A.

When there is an excess quantity supplied of a product at the current price, then: A. the price will tend to fall. B. the price will tend to rise. C. the price must be below the equilibrium price. D. consumers will reduce demand and sales will rise.

A.

Which of the following is not held constant when moving along a product's demand curve? A. The price of the product itself. B. The expected price of the product in the near future. C. Income. D. Prices of complementary goods. E. Prices of substitutes.

A.

When the demand and supply of grapes both increase at the same time, we can safely predict that the: a) price of grapes will rise. b) quantity of grapes bought and sold will rise. c) quantity of grapes bought and sold will fall. d) price of grapes will fall.

B.

When there is an excess quantity demanded of a product at the current price, then: A. the price will tend to fall. B. the price will tend to rise. C. the price must be above the equilibrium price. D. producers will reduce output and sales will fall.

B.

Which of the following is one reason why trade makes all parties better off? A. Because it always expands the amount of domestic production of each good and service, and more is preferred to less. B. Because it permits all parties to acquire some items better suited to their tastes. C. Because it makes people appreciate what they have, and they are happier. D. Because it encourages consumption rather than saving.

B.

Which of the following is the correct way to describe equilibrium in a market? A. At equilibrium, demand equals supply. B. At equilibrium, quantity demanded equals quantity supplied. C. At equilibrium, the market forces keep trying to push prices upward or downward. D. At the equilibrium price, there are shortages and surpluses

B.

The central reason why there are gains from international trade is because A. trading allows otherwise unemployed people to have jobs. B. the rate of interest is not the same in all countries. C. resources are not equally distributed to all nations. D. those nations with absolute advantages in producing many goods can produce all of those goods at lower opportunity costs than other countries.

C.

There is an increase in demand for personal computers at the same time their input costs fall. We would expect that: A. price will fall, but the effect on quantity sold is uncertain. B. the quantity sold will decline, but the effect on price is uncertain. C. the quantity sold will increase, but the effect on price is uncertain. D. price will rise, but the effect on quantity sold is uncertain

C.

Whenever there is a shortage at a particular price, the quantity sold at that price will equal: A. the quantity demanded at that price. B. the quantity supplied minus the quantity demanded. C. the quantity supplied at that price. D. (quantity demanded plus quantity supplied)/2.

C.

Which of the following scenarios would prompt producers to supply less now than they otherwise would have? a) Producers expecting a lower price in the future b) Producers expecting prices to be volatile c) Producers expecting a higher price in the future d) Producers expecting prices to remain unchanged

C.

An increase in costs associated with additional security measures taken by the airlines is most likely to lead to: A. a decrease in equilibrium price and a decrease in equilibrium quantity. B. a decrease in equilibrium price and an increase in equilibrium quantity. C. an increase in equilibrium price and a decrease in equilibrium quantity. D. an increase in equilibrium price and no change equilibrium quantity. E. a decrease in equilibrium price and no change equilibrium quantity.

C.

As a result of the decline in the real estate markets, many sellers and builders were very eager to sell their homes. As a result of this greater willingness to sell, we would expect to see: A. an increase in equilibrium price and an increase in equilibrium quantity. B. an increase in equilibrium price and a decrease in equilibrium quantity. C. a decrease in equilibrium price and an increase in equilibrium quantity. D. a decrease in equilibrium price and a decrease in equilibrium quantity. E. no change in equilibrium price and an increase in equilibrium quantity.

C.

How will a decrease in price tend to affect supply? A. Supply will increase. B. Supply will decrease. C. Supply will not change. D. It is uncertain.

C.

If new manufacturers enter the computer industry, then (ceteris paribus): A. some established manufacturers must exit the industry. B. the equilibrium price of computers must rise. C. the supply curve shifts to the right. D. the supply curve shifts to the left.

C.

If the price of ice cream increases substantially (ceteris paribus), the equilibrium quantity of hot fudge sauce, a complement, is likely to: A. increase, and the equilibrium price is likely to decrease. B. increase, and the equilibrium price is likely to increase. C. decrease, and the equilibrium price is likely to decrease. D. decrease, and the equilibrium price is likely to increase. E. decrease, while the impact on equilibrium price is uncertain.

C.

A shortage exists in the market for corn at the prevailing price. The shortage will be eliminated by a price: A. increase, increasing the supply and decreasing the demand. B.decrease, increasing the supply and decreasing the demand. C. decrease, increasing the quantity supplied and decreasing the quantity demanded. D. increase, increasing the quantity supplied and decreasing the quantity demanded. E. increase, increasing the supply and decreasing the quantity demanded.

D.

All of the following factors will affect the supply of shoes except one. Which will not affect the supply of shoes? A. higher wages for shoe factory workers B. higher prices for leather C. a technological improvement that reduces waste of leather and other raw materials in shoe production D. an increase in consumer income

D.

Ceteris paribus, the fear among travelers created by the 9-11 attacks would have what impact on the market for air travel? A. an increase in equilibrium price and an increase in equilibrium quantity. B. an increase in equilibrium price and a decrease in equilibrium quantity. C. a decrease in equilibrium price and an increase in equilibrium quantity. D. a decrease in equilibrium price and a decrease in equilibrium quantity. E. not change in equilibrium price and a decrease in equilibrium quantity.

D.

The change in the total gain to a nation from international trade is the: A. producer surplus. B. consumer surplus. C. excess of producer surplus over consumer surplus. D. sum of consumer and producer surpluses.

D.

When unemployment rises above the natural rate it reflects the existence of ____ unemployment. A. frictional B. structural C. seasonal D. cyclical

D.

Which of the following groups of people would be included in the official unemployment rate? a) all of the above b) part-time workers c) discouraged workers d) workers temporarily laid off from jobs to which they expect to return

D.

The unemployment rate may overestimate the true extent of unemployment if: A. many part-time employees would like to work full-time, but are unable to get the additional work. B. many people become discouraged and cease looking for work. C. people falsely claim that they are actively seeking work in order to receive unemployment benefits. D. many people who claim to be unemployed actually work in the underground economy. E. either c. or d. occurs.

E.

Cyclical unemployment arises when: the agriculture sector completes the cycle of planting, cultivating, and harvesting the nation's food supply. the business cycle enters an expansionary phase. labor unions strike for higher wages. business activity in the macroeconomy declines.

business activity in the macroeconomy declines.

Economists use the term "business cycle" to refer to: qualitative changes in products resulting from improved technology. periods of increase or decrease in the rate of inflation. fluctuations in economic activity, measured by GDP or unemployment. the growth of small businesses into major corporations.

fluctuations in economic activity, measured by GDP or unemployment.

Say that initially the nominal interest rate is 6% and prices are stable, but the inflation rate the following year rises to 3%. If the real rate of interest is to remain unchanged, the nominal interest rate in the second year must: rise by 3 percentage points. remain unchanged. fall by 3 percentage points. rise by 6 percentage points. rise by 9 percentage points.

rise by 3 percentage points.

A new U.S. tariff on Mexican avocados would be likely to: A. raise the price of avocados to U.S. consumers. B. increase U.S. consumption of domestically produced avocados. C. increase total U.S. consumption of avocados. D. do both a. and b.

D.

Assume a price floor is imposed at the current equilibrium price in the market for lettuce. If the demand for lettuce then increases: a) a surplus of lettuce will be created. b) a shortage of lettuce will be created. c) the quantity of lettuce traded remains the same. d) the quantity of lettuce supplied will increase.

D.

The real interest rate equals: the inflation rate minus the nominal interest rate. the nominal interest rate minus the inflation rate. the nominal interest rate plus the inflation rate. none of the answers

the nominal interest rate minus the inflation rate.

A major macroeconomic goal of nearly every society is: a) maintaining high levels of employment. b) all of the answers. c) achieving high rates of economic growth. d) none of the answers. e) maintaining stability of prices.

B.

Frictional unemployment occurs when: A. there is friction between an employer and employee. B. a worker decides to quit to seek a different job. C. a large corporation transfers a worker to another city. D. college students go back to school at the end of the summer.

B.

If both the supply and demand curves shift to the left, then we can conclude that there will be a(n): A. increase in the equilibrium quantity sold. B. decrease in the equilibrium quantity sold. C. increase in the equilibrium price. D. decrease in the equilibrium price. E. a change in quantity that is indeterminate.

B.

The quantity of a good bought and sold in a market will be below the equilibrium quantity if: A. the market price is above the equilibrium price B. the market price is either above or below the equilibrium price C. the market price is below the equilibrium price D. demand or supply is increasing.

B.

An upward-sloping supply curve shows that: A. buyers are willing to pay more for particularly scarce products. B. suppliers expand production as the product price falls. C. suppliers are willing to increase production of their goods if they receive higher prices for them. D. buyers are willing to buy more as the product price falls. E. buyers are not affected either directly or indirectly by the sellers' costs of production.

C.

Comparative advantage occurs when a person or a country can produce a good or service at a lower ____ than others. a) fixed cost b) variable cost c) opportunity cost d) total cost

C.

A demand curve shows the relationship between price and quantity demanded, "other things remaining constant (ceteris paribus)." The other things that remain constant include all of the following except the: A. price of the product. B. price of complementary products. C. price of substitute products. D. number of consumers in the demographic group purchasing the product. E. preferences of consumers.

A

All of the following would shift a product's demand curve except a(n): a) increase in the price of the product. b) change in consumer preferences. c) decrease in consumer income. d) increase in the price of a substitute.

A

If the price of tennis rackets were to increase, we would expect: A. the demand for tennis balls to increase. B. the demand for tennis balls to decrease. C. the supply of tennis balls to increase, leading to a movement along the demand curve for tennis balls. D. the supply of tennis balls to decrease.

B

A tariff on a particular good does which of the following? A. It increases the net-of-tariff price received by foreign producers. B . It increases the price of the good to domestic consumers. C. It redistributes income away from domestic producers toward domestic consumers. D. none of the above.

B.

CNN announces that bad weather in Central America has greatly reduced the number of cocoa bean plants, and, as a result, it is expected that the price of chocolate will rise in the near future. As a result: A. the current market demand for chocolate will decrease. B. the current market demand for chocolate will increase. C. the current quantity demanded for chocolate will decrease. D. there is no change in the current market for chocolate, but there will be after the current crop of cocoa bean plants is processed into chocolate.

B.

Each point on the supply curve shows the: A. amount that people want to buy at that price. B. quantity supplied at that price. C. productive capacity of an individual producer. D. the amount producers want to sell to buyers of different income levels.

B.

If one nation can produce greater quantities of a good than another nation, it has a(n) A. comparative advantage in producing that good. B. absolute advantage in producing that good. C. absolute advantage, but a comparative disadvantage in producing that good. D. comparative advantage, but an absolute disadvantage in producing that good.

B.

Japan and China can both produce guns and rice. The country with the lowest opportunity cost of guns (in terms of rice) will A. import guns. B. have a comparative advantage in guns. C. have an absolute advantage in guns. D. have a comparative advantage in rice.

B.

Are markets always in equilibrium? A. Yes, they are always at the equilibrium point, or very close to it. B. Yes, because very few things tend to alter supply and demand. C. No, but if there is no outside interference, they tend to move toward equilibrium. D. No, they never 'settle down' into a stable price and quantity.

C.

If supply for computer games decreases due to higher prices for labor, but demand for computer games increases, then the equilibrium price change A. is indeterminate and the equilibrium quantity rises. B. is indeterminate and the equilibrium quantity falls. C. falls and the equilibrium quantity also falls. D. rises and the change in equilibrium quantity is indeterminate.

D.

Inflation exists whenever: A. the price of a good increases. B. the price of a good decreases. C. the economy experiences a contraction. D. the overall price level is rising. E. the overall price level is falling.

D.

Introducing a tariff on vitamin E would: A. reduce imports of vitamin E. B increase U.S. consumption of domestically produced vitamin E. C. decrease total U.S. consumption of vitamin E. D. all of the above.

D.

A simultaneous increase in demand and decrease in supply would lead to: A. increase in the equilibrium price and a decrease in the quantity sold. B. increase in both the equilibrium price and the quantity sold. C. decrease in both the equilibrium price and the quantity sold. D. uncertain effect on the equilibrium price but an increase in the equilibrium quantity. E. uncertain effect on the equilibrium quantity but an increase in the equilibrium price.

E.

If there are discouraged workers: A. they are included in the official count of the unemployed. B. both officially unemployed and part of the labor force. C. they are considered part of the labor force. D. the unemployment rate will tend to overstate the true level of unemployment. E. the unemployment rate will tend to understate the true level of unemployment.

E.

In the expansion phase of the business cycle output is rising. investment is rising. consumer and business confidence is high. all of the answers are true. unemployment is falling.

all of the answers are true.

Which of the following groups are typically harmed by unexpected inflation? both borrowers and pensioners on fixed incomes pensioners on fixed incomes lenders both lenders and pensioners on fixed incomes borrowers

both lenders and pensioners on fixed incomes

The index of leading economic indicators: virtually always predicts downturns in the economy with a lead time of six months. provide accurate information on the duration of downturns in the economy. can result in a self-fulfilling prophecy if business firms respond to leading economic indicator predictions. provide accurate information on the depth of downturns in the economy.

can result in a self-fulfilling prophecy if business firms respond to leading economic indicator predictions.

If the demand for milk is downward sloping, then an increase in the price of milk will result in a(n): a. increase in the demand for milk. b. decrease in the demand for milk. c. increase in the quantity of milk demanded. d. decrease in the quantity of milk demanded. e. decrease in the supply of milk.

d

Billy loses his job as a road construction worker and cannot find another position with equivalent pay and benefits. As a result, he is still checking the want ads and reporting to the unemployment office on a weekly basis. He is considered to be: out of the labor force. lazy. part of the underground economy. underemployed. unemployed.

unemployed

Underemployment occurs when: a firm hires fewer than the required number of workers, to save costs. a worker who wants part-time work is working part-time. a worker is over qualified and possesses more skills than what his job demands. a firm hires workers who do not possess the required skills that the job demands.

a worker is over qualified and possesses more skills than what his job demands.

If we observe both an increase in the price of flour and in the number of units sold, this could be explained by: A.an increase in the demand for flour. B. a decrease in the demand for flour. C. a decrease in the supply of flour. D. an increase in the supply of flour.

A.

Kathryn chooses to go to college full-time rather than to work. Kathryn: A. is not part of the labor force. B. is part of the labor force and what economists call a discouraged worker. C. may be characterized by being both a discouraged worker and part of the labor force. D. is part of the labor force, but not actively seeking work. E. is considered employed.

A.

Real gross domestic product is the total value of all: a) final goods and services adjusted for inflation. b) goods and services adjusted for inflation. c) intermediate goods and services without adjustment for inflation. d) final goods and services without adjustment for inflation. e) goods and services without an adjustment for inflation.

A.

The difference between a change in quantity demanded and a change in demand is that a change in: A. quantity demanded is caused by a change in a good's own current price, while a change in demand is caused by a change in some other variable, such as income, tastes, or expectations. B. demand is caused by a change in a good's own current price, while a change in quantity demanded is caused by a change in some other variable, such as income, tastes, or expectations. C. quantity demanded is a change in the amount people actually buy, while a change in demand is a change in the amount they want to buy. D. A change in demand and a change in quantity demanded are the same thing.

A.

Given a fixed nominal interest rate on a loan, unanticipated deflation: A. decreases the burden of paying off the loan. B. increases the burden of paying off the loan. C. does not alter the burden of paying off the loan. D. has an indeterminate effect on the burden of paying off the loan.

B.

Medical authorities announced in the late 1980s that an acne medicine named Retin-A also had previously unknown wrinkle-reducing properties. An economist would expect to find that, after this announcement, the price of Retin-A ____ and the quantity sold ____. A. rose; fell B. rose; rose C. fell; fell D. fell; rose

B.

Protectionist legislation is often passed because: A. employers in the affected industry lobby more effectively than the workers in that industry. B. both employers and workers in the affected industry lobby for protectionist policies. C. trade restrictions often benefit domestic consumers in the long run, though they must pay more in the short run. D. it helps to keep domestic prices at a relatively lower level.

B.

Structural unemployment includes: A. unemployment caused by workers who leave positions to seek better jobs. B. unemployment caused by automation that displaces workers from their jobs. C. unemployment caused by a decline in the economy's total production. D. unemployment caused by the geographical and occupational mobility of the labor force. E. all of the above.

B.

The law of demand asserts that: a) people want to buy more of goods that are priced very high because of their prestige. b) when people want a good badly enough they will find a way to pay for it. c) output prices are more important than input prices. d) the quantity of a good that people will buy is inversely related to the product's price.

d