Economics Midterms
If Mr. Garrison is paid an interest rate of 4% on his savings, but the inflation rate is 7%, the real interest rate Mr. Garrison earns is 4%. -3%. 28%. -7%.
-3%
If 20 million workers are unemployed and 180 million workers are employed, then the unemployment rate is 18%. 11.1%. 80%. 10%.
10%
If national income is $600 billion, personal income is $400 billion, personal taxes are $120 billion, then disposable income equals $480 billion. $280 billion. $320 billion. $80 billion.
280 billion
If personal saving is -$10 billion and disposable personal income is $370 billion, then personal consumption spending is $380 billion. is $390 billion. is $360 billion. cannot be determined from this information.
380 billion
Which of the following is an example of a final good or service? lumber purchased by a construction company to used in building houses wheat a bakery purchases to make bread a computer purchased by Federal Express to track shipments coffee beans Starbucks purchases to make coffee
a computer purchased by Federal Express to track shipments
The government wants to encourage consumer spending through cutting income taxes. This is an example of a monetary policy. a supply-side policy. a fiscal policy. an incomes policy.
a fiscal policy
In a business cycle, a peak represents the end of ________ and a trough represents the end of ________. a recession; an expansion a trough; a peak a depression; an expansion an expansion; a recession
an expansion; a recession
If in a year there is a positive inventory investment, then final sales are less than GDP. are zero. equal GDP. exceed GDP.
are less than GDP
Unemployment means that there are some people who will not work at the going wage rate. there is excess demand in the labor market. people are not willing to work at the going wage rate. at the going wage rate, there are people who want to work but cannot find work.
at the going wage rate, there are people who want to work but cannot find work
What should be subtracted from GDP to calculate national income? depreciation personal income taxes net factor payments to the rest of the world indirect taxes
depreciation
In which basic market would DVDs be traded? the money market the goods and services market the factor market the labor market
goods and services market
The demanders in the goods-and-services market are households, the government, business firms, and the rest of the world. the government and business firms. households and business firms. households, the government, and the rest of the world.
households, the government, business firms, and the rest of the world.
Classifying discouraged workers as unemployed would decrease the unemployment rate. not change the unemployment rate. increase the unemployment rate. have an indeterminate impact on the unemployment rate.
increase the unemployment rate.
Profits earned in the United States by foreign-owned companies are included in the U.S. GNP but not GDP. the U.S. GDP but not GNP. both the U.S. GDP and GNP. neither the U.S. GDP nor GNP.
the U.S. GDP but not GNP.
In 2012, GDP was exactly equal to final sales. This implies that there was accumulation of inventories that year. there was no change in inventories that year. there was a decline in inventories that year. GDP did not grow that year compared to the year before.
there was no change in inventories that year
Promissory notes issued by the federal government when it borrows money are known as none of the above Treasury shares. Treasury bonds. Treasury stocks
treasury bonds
The ________ can change the quantity of money in the economy. Treasury Department Office of the Comptroller of the Currency Congress Federal Reserve
Federal Reserve
Which of the following is a CORRECT statement? Companies issue shares but don't issue bonds. Bondholders earn dividends but shareholders don't. The government issues both bonds and shares. Shareholders earn dividends but bondholders don't.
Shareholders earn dividends but bondholders don't.
An example of a transfer payment is the salary paid to a member of the armed forces. a Social Security retirement benefit. an interest payment on a General Motors' bond. the added value of stock from the time it was bought to the time it was sold.
Social Security retirement benefit
Which of the following statements is FALSE? The rate of change in economic activity is used to assess whether an economy is expanding or contracting. Business cycles are always symmetric—the length of an expansion is the same as the length of a contraction. Short-term ups and downs in the economy are known as business cycles. During a recession, output and employment are falling.
Business cycles are always symmetric—the length of an expansion is the same as the length of a contraction.
Interest paid by households and by the government is counted in national income, but not in GDP. not counted in GDP but is counted in GNP because it is paid by U.S. citizens to people living in the United States. included in both GDP and GNP because it represents an expenditure by one group and a receipt of income by another group. not counted in GDP because it is not assumed to flow from the production of goods and services.
not counted in GDP because it is not assumed to flow from the production of goods and services.
In which of the following conditions is the inflation rate likely to fall and the unemployment rate likely to rise? boom hyperinflation stagflation recession
recession
Which of the following is subtracted from national income to get to personal income? personal Taxes retained earnings depreciation personal interest income
retained earnings
Unemployment generally ________ during recessions and ________ during expansions. rises; rises. falls; falls. rises; falls. falls; rises.
rises;falls
the term business cycle refers to the short-term ups and downs in the level of economic activity. long-term trends in the price level. short-term ups and downs in the price level. long-term trends in the level of economic activity.
short term ups and downs in the level of economic activity
The change in capital stock in a period is equal to the amount of the capital at the beginning of the period plus gross investment. the ratio of the amount of the capital at the beginning of the period to the amount of depreciation. the amount of the capital at the beginning of the period minus net investment. the amount of the capital stock at the beginning of the period plus gross investment minus depreciation.
the amount of the capital stock at the beginning of the period plus gross investment minus depreciation.
Aggregate behavior is the behavior of each individual. the behavior of all households and firms together. the behavior of each household and firm. none of the above
the behavior of all households and firms together
If no foreign companies produce in a country, but many of the country's companies produce abroad, then the country's GNP and GDP will tend to be equal. the country's GNP will tend to exceed its GDP. the country's GDP will tend to be equal to its domestic income. the country's GDP will tend to exceed its GNP.
the country's GNP will tend to exceed its GDP.
Which of the following is an example of an intermediate good? the dough you buy to fix yourself a pizza for dinner the pizza sauce you purchase to make pizzas to sell for a fund-raiser for an organization you belong to the chocolate you buy to make yourself some cookies lumber you buy to build a house for your dog
the pizza sauce you purchase to make pizzas to sell for a fund-raiser for an organization you belong to
Which of the following is NOT a topic studied in Macroeconomics? the unemployment rate the price of Dell computers gross domestic product the inflation rate
the price of Dell computers
Which of the following would NOT be counted in 2013's GDP? the 2013 salary of a used motorcycle salesperson the value of a refrigerator manufactured in 2013 but not sold in 2013 the value of a 2008 boat you purchase from a boat dealer in 2013 the commissions earned by a real estate agent in selling condominiums built prior to 2013
the value of a 2008 boat you purchase from a boat dealer in 2013