macec

From 2006 to 2018, the average annual growth rate of total factor productivity in the United States was _____%.

0.4

The portion of a firm's profit paid to the owner of one share of its stock would accurately be characterized as:

a dividend.

Chained dollars is:

a method of calculating changes in real GDP, using an early base year and a late base year.

Infrastructure includes:

a public transportation system.

Gains from trade exist for: individuals only. states only. countries only. Correct Answer all of the above.

all

Menu costs refer to the increased cost of:

changing listed prices.

Suppose Texas decides to produce only two goods, salsa and cowboy hats. If Texas is producing on its production possibility frontier, as salsa production increases, the production of cowboy hats will:

decrease at some rate.

Fiscal policy involves changes in:

government spending.

Real GDP is the same as _____ GDP.

inflation-adjusted

The concept that the whole is greater than the sum of its parts best characterizes:

macroeconomics.

Individuals gain from trade because:

specialization in production

Long-run growth is a(n):

sustained upward trend in total output per person, which generates higher incomes and higher living standards.

Among developed countries, which factor is considered the MOST important driver of productivity growth?

technological progress

Which item would NOT be included in GDP?

the dollar value of a repair job done by your cousin on her own car

A long period of economic recovery does NOT imply:

we no longer experience business cycles.

For an economist, the cost of a good is:

what you gave up to get it.

Marginal analysis is the study how of individuals decide:

whether to do a bit more of an activity or a bit less of it.

Deflation

encourages people to hold cash rather than invest.

Opportunity cost is:

the value of the best alternative forgone in making a choice between alternatives..

In an open economy:

there is trade in goods, services, and/or assets with other countries.

Long-run growth is a sustained upward trend in:

total output per person over several decades.

In many countries, economists adopt the rule that a recession is a period of at least _____ during which aggregate output falls.

two consecutive quarters

An issue of importance to macroeconomists is:

understanding how living standards change over time.

For a student who owns his or her own apartment near the university campus and so does not need to live in a dorm, the cost of going to university is:

tuition, the cost of school supplies, and forgone income.

Specialization in production was the starting point for Adam Smith in:

The Wealth of Nations .

Which statement is TRUE?

The level of saving is important for long-run growth.

Which statement is one of the five principles for understanding how individual choices interact?

Markets move toward equilibrium.

______ are used to reduce the severity of recessions.

Monetary and fiscal policy

Sometimes, the government varies its spending, depending on the needs of the country. Which economic principle does this statement BEST represent?

Government policies can change spending.

From 1980 to 2018, the annual average growth rate of real GDP per capita in _____ was 3.7%.

Ireland

How the actions of individuals and firms interact to produce a particular economy-wide level of performance is the focus of:

macroeconomics

The promotion of employment and growth in the economy as a whole is a focus of:

macroeconomics.

Suppose South Korea has a real GDP per capita of $28,000, while Norway has a real GDP per capita of $56,000. If real GDP per capita in South Korea grows at a 7% annual rate, and real GDP per capita in Norway grows at a 3.5% annual rate, how long will it take for real GDP per capita in the two nations to converge?

20 years

The rule of 70 indicates that a 6% annual increase in the level of real GDP would lead to output doubling in approximately _____ years.

24

If the nominal interest rate is 4%, and the inflation rate is 1%, then the real interest rate is _____%.

3

In general, when consumers wish to purchase more goods and services than are readily available, the economy tends to see inflation. Which economic principle does this statement BEST represent?

Overall spending sometimes gets out of line with the economy's productive capacity.

(Figure: The effect of a minimum wage) Suppose the labor market is in equilibruim at E when the government imposes a minimum wage of Wf. Assuming all workers without jobs are seeking work structual unemployment would equal

Qs-Qd

(Figure: Circular Flow model) There is a decrease in exports holding everything else constant which outcome is likely to occur

a decrease in nominal GDP

(Figure: The Business Cycle) The movement from point B to point C is called a(n):

expansion

In the circular-flow diagram, resources such as capital and labor are bought and sold in:

factor markets.

When the Dairy Farmers of America (an agricultural coop) restricts the supply of milk to increase the profits of dairy farmers, the milk market:

fails because there is no longer an efficient allocation of resources.

When an economy is expanding, unemployment tends to _____ , and overall prices tend to _____ .

fall; rise

All points inside the production possibility frontier represent:

inefficient production points that are attainable without added opportunity costs.

____ vasts may be espcially important in the tax system when inflaction distorts the measures of income on which taxes are collected

inflation fallacy

Between 1980 and 2020, which of the following grew fastest?

medical care prices

One type of macroeconomic policy is _____ .

monetary policy

If real GDP falls when nominal GDP increases, then ____ .

nominal GDP increases by less than prices

The instrument by which a household makes a loan to a firm and the firm pays interest to the household is known as:

a bond.

(Figure: An Expanded Circular-Flow Diagram) Figure: An Expanded Circular-Flow Diagram. The flow of funds into and out of households is:

$1,020.

Figure: The Business Cycle) Point B on this graph shows a(n): peak. Correct Answer trough. expansion. recession. ​

Trough

Which statement is true?

Very talented individuals, who can do most things better than most people, would benefit from specializing in one thing.

For which decision would marginal analysis be MOST relevant?

What is the right amount of hours to study for my exam?

Which statement is CORRECT?

When the economy is in recession and jobs are hard to find, inflation tends to fall.

Inventories are counted as investment because they:

are a source of future sales.

In India, the standard of living in 1980 was _____ than in 1947.

not much higher

As long as people have different _____, everyone has a comparative advantage in something.

opportunity costs

( Table: Per Capita GDP) Use Table: Per Capita GDP. The growth rate of nominal GDP from 2016 to 2019 was _____ %. ​ YearNominal GDPPrice LevelPopulation2016$3,00010052019$8,00020010 ​ 37.5 60 62.5 Correct Answer 166.7 ​

166.7

Which of the following questions would NOT involve marginal analysis:

Should I attend the Lakers game?

Recessions are periods when ___ _ .

both output and employment fall

In the circular-flow diagram, firms:

buy resources.

Statements that make value judgments are:

normative

The most painful effect of a recession is:

unemployment

If the state of New York allocates additional spending on after-school programs for at-risk youths, then the opportunity cost of these expenditures is:

the value of alternative expenditures forgone in making this allocation.

(Figure: Cell Phones and Automobiles) Use Figure: Cell Phones and Automobiles. If the economy is operating at point Y , and its relevant production possibility frontier is given by given by PPF 1 : ​ Correct Answer the economy is at full employment and is efficient. the economy is less than fully employed. the economy is not efficient. economic growth is not possible in the future. ​

Correct Answer the economy is at full employment and is efficient.

If workers' nominal wages have risen by 30% over 10 years and prices have increased by 30% in that same period, then we can safely conclude that the goods and services workers can buy have:

not changed in quantity or quality.

Recessions are periods in which:

output and employment are falling in many indestries

An economy that has the ________ opportunity cost of producing a particular good is said to have ________.

lowest; a comparative advantage in the production of that good

Sabrina has gone out to lunch three times this week. She has some extra money, so she decides to go out to lunch a fourth time. Which economic principle does this statement BEST represent?

"How much" is a decision at the margin.

Suppose that, in year 1, an economy produces 200 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year, the economy produces 210 golf balls that sell for $3.50 each and 80 pizzas that sell for $9 each. The value of nominal GDP in years 1 and 2, respectively, is:

$1,200 and $1,455.

Assume that in the base year, 2019, a country's nominal GDP is $10,000 billion. The country has had 5% inflation each year since 2014. Real GDP in 2019 is:

$10,000 billion.

If, during 2010, the Republic of Sildavia recorded investment spending of $3 billion, government purchases of $3 billion, consumer spending of $7 billion, imports of $5 billion, government transfers of $1 billion, and exports of $3 billion, Sildavia's GDP in 2010 was:

$11 billion.

Consider an economy that produces only smartphones and laptops. Last year, 10 smartphones were sold at $800 each, and 5 laptops were sold at $1,000 each, while this year, 15 smartphones were sold at $900 each, and 10 laptops were sold at $1,100 each. Real GDP this year, using last year as a base year, is:

$22,000.

( Table: Pizza Economy III) Use Table: Pizza Economy III. Considering 2018 as the base year, real GDP between 2018 and 2019 grew at a rate of: 2018 Units of Output2018 Price per Unit2019 Units of Output2019 Price per UnitGino's Pizza4,000$104,000$8Bee's Spaghetti3,000$91,000$6Claudia's Cookies2,000$61,000$1Andre's Salad5,000$72,000$4 53.19%. 39.47%. Correct Answer -39.47%. -58.67%.

-39.47%.

From 2006 to 2018 the average annual growth rate of the total factor productivity in the United States was

0.4%

Assume an economy has grown by 4% per year over the past 30 years. During the same period, the labor force has grown by 1% per year and the quantity of physical capital has grown by 5% per year. Each 1% increase in physical capital per worker is estimated to increase productivity by 0.4%. Assume that human capital has not changed during the past 30 years. How much has technological progress contributed to productivity growth?

1.4%

(Table: Comparative Advantage I) Use Table: Comparative Advantage I. The opportunity cost of producing 1 box of computers for Japan is _____ box(es) of tuna. Table: Comparative Advantage IJapan and Norway produce only two goods, tuna and computers, and this table shows the maximum amount that each nation can produce of the two goods.JapanNorwayTuna100,000 boxes50,000 boxesComputers10,00010,000 Correct Answer 10 0.2 5 0.1

10

(Table: Production Possibilities Schedule I) Use Table: Production Possibilities Schedule I. If the economy produces 4 planes per period, it also can produce, at most, _____ trains per period. Table: Production Possibilities Schedule IAlternativesABCDEFPlanes Produced012345Trains Produced30282418100 30 28 Correct Answer 10 18

10

(Scenario: The United States and Germany) Use Scenario: The United States and Germany. If Germany produces 300 tons of aluminum, how many tons of barley can it produce? Scenario: The United States and GermanyTwo countries, the United States and Germany, produce two goods, barley (B) and aluminum (A). Each has a linear production possibility frontier in both goods. If the United States spends all of its available resources to produce barley, it can produce 500 tons of aluminum. If it uses all of its resources to produce aluminum, it can produce 250 tons of aluminum and no barley. If Germany spends all of its available resources producing barley, it can produce 400 tons of barley, and if it spends all of its resources on the production of aluminum, it can produce 400 tons of aluminum. Correct Answer 100 200 300 400

100

If the cost of the market basket in the base year is $5,000, and the cost of the market basket in the current year is $5,100, the price index for the current year is ___ .

102

If the cost of a market basket is $200 in year 1 and $230 in year 2, the price index for year 2 using year 1 as the base is:

115

According to the information in Table: Calculating GDP, what is GDP?Table: Calculating GDPRent$2,400Consumption Spending$7,900Social Security benefit$6,100Investment spending$2,100Wages and salaries$6,500Exports$800Interest$1,900Government purchases of goods and services$2,600Profits$1,400Imports$1,200Purchase of stocks$6,300Unemployment compensation$3,950Payroll taxes$2,965Sales taxes$1,300 ​ $47,475 Correct Answer $12,200 $21,485 $34,085 ​

12,200

(Table: Production of Zucchini and Eggplant in Nutley Township) Use Table: Production of Zucchini and Eggplant in Nutley Township. This table shows the production possibility frontier for Nutley Township. Suppose Nutley Township initially produces combination C and moves to combination D . What is the opportunity cost of this move? Table: Production of Zucchini and Eggplant in Nutley TownshipCombinationZucchiniEggplantA075B570C1060D1545E2025F250 Correct Answer 15 bushels of eggplant 5 bushels of zucchini 15 bushels of zucchini 45 bushels of eggplant

15 bushels of eggplant

(Table: GDP for Genovia) According to the information presented in the Table, GDP is: ​ Year 2019 (in billions of dollars)Consumption spending$130Rental income$20Interest$70Profit$40Investment spending$30Wages$58Government purchases$36Imports$14Exports$6 ​ $94 billion. Correct Answer $188 billion. $168 billion. $139 billion. ​

188 billion

in febuary 2020, roughly ____% of unemployed individuals had been unemployed fro 27 weeks or more

19.2

In the United States, from _____, real GDP per capita rose faster than real median income.

1980 to 2018

(Table: Price Levels) What was the rate of inflation from 2012 to 2013? Table: Price Levels2011221.32012227.72013232.22014234.8 6.4% 4.5% 2.9% Correct Answer 2.0%

2%

Suppose that real GDP per capita, growing at a constant rate, doubles over 35 years. What must the annual growth rate of real GDP per capita be for this to occur?

2%

Gertrude has a linear production possibility frontier when she produces sunflowers and garbanzo beans. If she uses all of her resources, she can produce 400 bushels of sunflowers or 800 bushels of garbanzo beans. Gertrude is NOT producing efficiently if she produces _____ bushels of sunflowers and _____ bushels of garbanzo beans.

200; 200

(Figure: Apple cider and Soybeans) Use Figure: Apple cider and Soybeans. The opportunity cost of moving from producing ONLY soybeans to producing at point D is _____ tons of soybeans. ​ Correct Answer 3 6 9 15 ​

3

In 2019, consumer spending was $14,000, government purchases of goods and services were $3,700, and net exports were -$500. If GDP in 2019 was $21,000, investment spending was _____ .

3,700

( Table: Price and Output Data) Use Table: Price and Output Data. Between years 2 and 3, the amount of change in nominal GDP due to inflation was: ​ YearOutputPrice per Unit12$223$43 = base period4$546$657$9 ​ 100%. Correct Answer 34%. 22%. 5%. ​

34%

In February 2020, roughly _____% of unemployed individuals had been unemployed for less than 5 weeks.

35.1

(Table: Production Possibilities Schedule II) Use Table: Production Possibilities Schedule II. If an economy is producing at alternative B , the opportunity cost of producing at C is _____ cell phones per period. Table: Production Possibilities Schedule IIAlternativesABCDEComputers01234Cell phones20181480 0 1 Correct Answer 4 18

4

Assume an economy has grown by 4% per year over the past 30 years... 1%... 5%.... 1%..... 0.4%.... 30.... How fast has physical capital per worker grown

4%

(Table: Labor Force Distribution) Use Table: Labor Force Distribution. The unemployment rate is _____%. Table: Labor Force DistributionEmployed adults155 millionLabor force162 millionUnemployed adults7 millionAdults not in the labor force30 millionNon-adults (under 16) population40 million Correct Answer 4.3 3 30 3.65

4.3

( Table: Per Capita GDP) Use Table: Per Capita GDP. If 2016 is the base year, real GDP in 2019 was: ​ YearNominal GDPPrice LevelPopulation2016$3,00010052019$8,00020010 ​ $400. $3,000. Correct Answer $4,000. $80,000. ​

4000

( Table: Lemonade and Cookies) Use Table: Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. If 2019 is the base year, real GDP in 2018 was: 2018 Output2018 Prices2019 Output2019 PricesLemonade200 glasses$1 per glass220 glasses$1 per glassCookies100 cookies$2 per cookie100 cookies$2.25 per cookie $400. $420. Correct Answer $425. $445.

425

( Table: Peanut Butter and Jelly Prices) Use Table: Peanut Butter and Jelly Prices. Suppose a market basket consists of 20 jars of peanut butter and 10 jars of jelly. What is the value of the market basket in 2018? Price in 2017Price in 2018Price in 2019Peanut butter$1.00$1.10$1.20Jelly$2.00$2.25$2.50 $3.35 $40 $42 Correct Answer $44.50

44.50

(Table: Production of Zucchini and Eggplant in Nutley Township) Use Table: Production of Zucchini and Eggplant in Nutley Township. The table shows the production possibility frontier for Nutley Township. Suppose Nutley Township produces combination F . What is the opportunity cost of a move to combination E ? Table: Production of Zucchini and Eggplant in Nutley TownshipCombinationZucchiniEggplantA075B570C1060D1545E2025F250 Correct Answer 5 bushels of zucchini 20 bushels of zucchini 25 bushels of eggplant 0 bushels of eggplant

5 bushels of zucchini

Assume that the consumer price index is 124.0 for 2018 and 130.7 for 2019. What was the inflation rate between these two years?

5.40%

(Figure: Circular-Flow Model) Use Figure: Circular-Flow Model. What is the value of GDP in this economy? $100 $400 Correct Answer $500 $600 ​

500

(Table: Peanut Butter and Jelly Economy) Use Table: Peanut Butter and Jelly Economy. In 2019, nominal GDP was _____ and real GDP was _____ . ​ Product2018 Output2018 Prices (base year)Product2019 Output2019 PricesPeanut butter200 units$1 per unitPeanut butter250$1.10 per unitJelly100 units$2 per unitJelly100$2.50 per unit ​ $450; $400 Correct Answer $525; $450 $525; $400 $450; $575 ​

525 450

(Table: Price Index) Use Table: Price Index. What is the inflation rate between 2018 and 2019? YearPrice Index2016100201710420101032011110 Correct Answer 6.8% 4.6% 7.9% 6.1%

6.8%

(Table: Population Data for Estill County) If marginally attached workers are included, the number of persons in the labor force in Estill County is: Table: Population Data for Estill CountyDemographic GroupNumber of ResidentsEmployed5,000Unemployed and looking for work1,000Not working due to disability200Not working due to retirement700Unemployed and not looking for work due to discouragement over job prospects500Under the age of 162,000Total Population9,400 7,400. Correct Answer 6,500. 6,000. 5,500.

6500

If the population of the United States is 260 million, the labor force is 130 million, and 120 million workers are employed, the rate of unemployment is _____%.

7.7

(Table: Production Possibilities Schedule II) Use Table: Production Possibilities Schedule II. If the economy is producing at point D, the opportunity cost of producing at E is _____ cell phones per period. Table: Production Possibilities Schedule IIAlternativesABCDEComputers01234Cell phones20181480 1 6 Correct Answer 8 14

8

If real GDP in country A is $500 billion in one year and $540 billion in the following year, then the growth rate for this country from one year to the next is:

8%.

( Table: Price and Output Data) Use Table: Price and Output Data. The price index for year 2 is: ​ YearOutputPrice per Unit12$223$43 = base period4$546$657$9 ​ 4. 12. 60. Correct Answer 80. ​

80

(Table: Population Data for Estill County) What is the labor force participation rate? Table: Population Data for Estill CountyDemographic GroupNumber of ResidentsEmployed5,000Unemployed and looking for work1,000Not working due to disability200Not working due to retirement700Unemployed and not looking for work due to discouragement over job prospects500Under the age of 162,000Total Population9,400 64% Correct Answer 81% 17% 79%

81

(Figure: Savannah's Production Possibilities) Use Figure: Savannah's Production Possibilities. The opportunity cost for Savannah in moving from point A on the curve to point B is: ​ 10 bananas. 10 pineapples. Correct Answer 5 bananas. 5 pineapples. ​

Correct Answer 5 bananas.

(Table: Matcha Tea and Coho Salmon Production Possibilities II) Use Table: Matcha Tea and Coho Salmon Production Possibilities II. This table shows the maximum amounts of matcha tea and Coho salmon, both measured in pounds, that Colombia and Washington can produce if each produces just one good. Colombia has an absolute advantage in the production of: Table: Matcha Tea and Coho SalmonMatcha TeaCoho SalmonColombia4020Washington1010 matcha tea only. Coho salmon only. Correct Answer both matcha tea and Coho salmon. neither matcha tea nor Coho salmon.

Correct Answer both matcha tea and Coho salmon.

(Figure: Dreamliners and Small Jets) Use Figure: Dreamliners and Small Jets. The combination of dreamliners and small jets at point H: ​ ​ can be attained but would cost too much. Correct Answer cannot be attained, given the level of technology and the factors of production available. has no meaning, since it does not relate to the preferences of consumers. is attainable but would increase unemployment. ​

Correct Answer cannot be attained, given the level of technology and the factors of production available.

(Figure: Cell Phones and Automobiles) Use Figure: Cell Phones and Automobiles. Assume the economy's current production possibility frontier is given by PPF 1 . Point Z : ​ ​ Correct Answer is unattainable, all other things unchanged. is attainable if the economy can reach full employment. is attainable if the quantity and/or quality of factors decreases. will be attained when the economy becomes efficient and moves to curve 2. ​

Correct Answer is unattainable, all other things unchanged.​

(Table: Comparative Advantage I) Use Table: Comparative Advantage I. Japan has an absolute advantage in producing: Table: Comparative Advantage IJapan and Norway produce only two goods, tuna and computers, and this table shows the maximum amount that each nation can produce of the two goods.JapanNorwayTuna100,000 boxes50,000 boxesComputers10,00010,000 computers only. Correct Answer tuna only. both computers and tuna. neither computers nor tuna.

Correct Answer tuna only.

Which question is MOST appropriate to the study of MACROECONOMICS?

How does the aggregate price level affect overall consumer spending?

Which question is MOST appropriate to the study of MICROECONOMICS?

How much will Sony charge for the new game system, to be introduced later this year?

Which statement demonstrates one of the three principles of economy-wide interactions?

In 2020, fearing a recession, Congress passes a $4 trillion relief package for workers and businesses affected by the coronavirus pandemic.

Which is MOST likely to be a macroeconomic, and not a microeconomic, question?

Is the national unemployment rate rising or falling?

If they spend all night writing poems, Leticia can write 10 poems, and Isabella can write 5. If they spend all night making necklaces, Leticia can make 6, and Isabella can make 4. We know that _____ has a comparative advantage in _____.

Leticia; poems

Which statement about the U.S. economy is FALSE?

Since World War II, aggregate output has grown more slowly than the population.

Suppose Pennsylvania produces only steel and barley, with fixed amounts of land, labor, and capital resources. Which scenario BEST sets the stage for economic growth?

The percentage of Pennsylvania residents with a university degree rises from 15% to 23%.

When the Chicago city manager receives complaints that the municipal courts are not fully accessible to individuals with disabilities, she responds that the $1 million improvement needed to address the problem will not happen because "that money could be spent building lavatory space for people with disabilities." Which economic principle does this statement BEST represent?

The true cost of something is its opportunity cost.

Two neighbors, Virginia and Susan, are separated by a white fence. Each neighbor has a garden that grows potatoes and lima beans. To gain from trade, _____ can trade _____ to _____ for _____ if _____ is the more efficient grower of lima beans.

Virginia; lima beans; Susan; potatoes; Virginia

Suppose a new law requires that all children be vaccinated against the chicken pox (in addition to their standard vaccinations against polio, measles, mumps, etc.). Further, if you cannot afford to pay for the vaccination, it will be provided free of charge at county hospitals. Which economic principle does this statement BEST represent?

When markets don't achieve efficiency, government intervention can improve society's welfare.

The Environmental Protection Agency (EPA) regulates how much pollution a factory can emit. Which economic principle does this statement BEST represent?

When markets don't achieve efficiency, government intervention can improve society's welfare.

Given that people usually exploit opportunities to make themselves better off, which of the following policies is MOST likely to reduce road congestion in Los Angeles (the worst traffic city in America)?

a toll road that requires each car to pay a congestion fee to enter the city center

If the value of a nation's imports exceeds the value of its exports, it has:

a trade deficit.

Economists believe that resources should be used as efficiently as possible to:

achieve society's goals.

if the dollar amount of nomial GDP decreases then it is possible that

aggregate output decreases by more than prices

A price index: always includes a base year. is used to measure the cost of a market basket across different years. is normalized so that it equals 100 in the base year. Correct Answer All of the above are true.

all of the above

If an economy produces the desired mix of goods from its available resources, this mix of goods is:

allocatively efficient.

A depression occurs when:

an economic downturn becomes extremely deep and prolonged.

One normally expects that unemployment decreases, while aggregate output and aggregate incomes increase during:

an expansion.

(Figure: Circular-Flow Model) Use Figure: Circular-Flow Model. If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it), and there is an increase in consumer spending, holding everything else constant, which outcome is likely to occur?

an increase in GDP

(Figure: Circular-Flow Model) Use Figure: Circular-Flow Model. If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it), and there is an increase in consumer spending, holding everything else constant, which outcome is likely to occur? ​ Correct Answer an increase in GDP a decrease in GDP an increase in the unemployment rate a decrease in the inflation rate ​

an increase in GDP

(Figure: Circular-Flow Model) Use Figure: Circular-Flow Model. If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it), and there is an increase in investment spending, holding everything else constant, which outcome is likely to occur? a decrease in GDP Correct Answer an increase in GDP an increase in the unemployment rate a decrease in the inflation rate ​

an increase in GDP

(Figure: Circular-Flow Model) Use Figure: Circular-Flow Model. If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it), and there is an increase in government spending, holding everything else constant, which outcome is likely to occur?

an increase in nominal GDP

Goods that are sold in 2020 but produced in 2018:

are included in investment in 2018.

(Figure: Computers and Speedboats II) Use Figure: Computers and Speedboats II. The downward slope of the production possibility frontier implies that resources: ​ must be used efficiently. Correct Answer are scarce. should not be wasted. should be allocated so that approximately equal amounts of both goods are produced. ​

are scarce.

Trade takes the form of _____ when people directly exchange goods and services they _____ for goods and services they _____.

barter; have; want

(Figure: Speedboats and Pomegranates I) Use Figure: Speedboats and Pomegranates I. The figure shows the production possibility frontiers for two countries that produce only pomegranates and speedboats. The axes of the two graphs are measured in equivalent units. The United States is operating at point M, and Belarus is operating at point N . The opportunity cost of producing an additional ton of pomegranates would be greater in: ​ United States Correct Answer Belarus. neither; the opportunity cost would be the same in both countries. There is not enough information to answer the question.

belarus

In periods of unexpected inflation:

borrowers benefit, since they repay their loans in dollars whose real value has declined.

When Brazil engages in trade with Germany,

both Germany and Brazil will be better off.

The short-run alternation between recessions and expansions is known as the _____ cycle.

business

A resource is anything that:

can be used to produce of goods and services.

An economy's gross domestic product consists of:

consumption, investment spending, government purchases of goods and services, and net exports.

An economy's gross domestic product consists of:​

consumption, investment spending, government purchases of goods and services, and net exports.

A trade-off involves weighing

costs and benefits.

In the United States, recessions are typically associated with a(n):

decrease in the percentage of Americans with health insurance.

If workers' nominal wages have risen by 30% over 10 years, and prices have increased by 40% in the same period, then we can safely conclude that the goods and services workers can buy have:

decreased in quantity.

Deflation is a:

decreasing aggregate price level.

The central mission of modern macroeconomics is to prevent:

deep recessions, like the Great Depression.

The process observed when an economy's production possibility frontier shifts outward is:

economic growth.

Suppose the economy of New Caledonia is producing at a point on its production possibility frontier. If this is the case, it is:

efficient in production but not necessarily in allocation.

The circular-flow diagram is important because it shows that the flow of money going into each market or sector of the economy is _____ the flow of money coming out of that sector.

equal to

Expenditure on domestically produced final goods and services is:

equal to GDP.

(Figure: The Business Cycle) The movement from point B to point C is called a(n): trough. Correct! expansion. depression. peak. ​

expansion

In the simplest circular-flow model, households supply _____ and demand _____.

factors of production; goods and services

A change in the level of government spending is an example of _____ policy.

fiscal

Altering government spending and/or taxes in an effort to affect overall spending is a use of:

fiscal policy.

The primary tools of economic policy at the macro level are _____ policy and _____ policy.

fiscal; monetary

Flows into financial markets are equal to the sum of:

foreign lending and purchases of stock plus private saving.

In a market basket:

goods and services are constant, and their prices may change.

Long-run economic growth is best measured by:

growth in the production of goods and services.

An economy is said to have a comparative advantage if it:

has the lowest opportunity cost of producing a particular good compared with other economies.

In 1820, Mexico had a higher real GDP per capita than did Japan. Yet now Japan is one of the richest countries in the world, and Mexico is poor. Japan's high rate of economic growth likely CANNOT be explained by:

heavy government intervention in markets.

Economies with high growth rates tend to be those that increase their:

human capital

Susan is attending university and majoring in actuarial mathematics. Susan is thereby accumulating:

human capital.

Unexpected inflation _____ lenders and _____ borrowers.

hurts; benefits

Net exports are calculated by subtracting:

imports from exports.

When an economy is between the peak and the trough of a business cycle, it is:

in a contraction.

When choosing among alternative models, economists generally prefer models that

include assumptions that most closely resemble reality.

Which resource does NOT pertain to the production of avocados?

income obtained from the sale of avocados

If the value of homes in Seattle increases, and as a result, the people of Seattle spend more, incomes in Seattle will:

increase

The paradox of thrift implies that:

increased saving by individuals increases their chances of becoming unemployed.

A rubber-necking traffic jam, caused by drivers slowing down to view an accident, is an example of:

individual behavior that has a large aggregate impact.

Consider a production possibility frontier for England. If in 2020, England's resources are not being fully utilized, England will be somewhere _____ its production possibility frontier.

inside

Which factor contributes to economic development?

investment in infrastructure

Education

is more important to economic growth than the amount of physical capital a worker has avaible.

The opportunity cost of producing a good:

is what you give up to produce the good.

When a nation's economy grows:

its efficient level of production is on a production possibility frontier that is further outward than the original.

Frictional unemployment is NOT described as _____.

large compared to unemployment that arises from a downturn in the business cycle

An increase in the value of nominal GDP over time:

may be due to an increase in prices, in the production of goods and services, or both.

Altering interest rates and/or the money supply in an effort to affect overall spending is a use of:

monetary policy.

Inflation affects people adversely because with inflation:

money loses value over time.

Statistics and data on unemployment are reported in the Employment Situation Report:

monthly.

A local hardware store benefits when a new automobile plant moves to town and hires workers because the:

new jobs at the plant will increase local incomes, some of which will be spent at the hardware store.

Spending on inputs is _____ of GDP, and investment spending is _____ of GDP.

not a part; part

Jacob is an economist working at the Federal Reserve Bank of New York. While having lunch with his mother, she asks him to tell her what efficiency means. As a proud son, Jacob tells his mother that economists define an efficient use of resources as a situation in which:

one person can be made better off but only by making another person worse off.

An increase in the nation's _____ is generally accepted as a long-run indicator of a rising standard of living.

output per person

When a market is in equilibrium:

people have exploited all opportunities to make themselves better off.

A country's living standard is BEST measured by:

per capita real GDP.

Economic models are:

potentially useful in informing economic policy.

Households supply _____ to _____.

private savings; financial markets

The _ ___ is also known as the wholesale price index.

producer price index

Inflation

raises the cost of making purchases.

Dividing real GDP by the population results in:

real GDP per capita.

In measuring economic growth, economists often use:

real GDP.

When the price level increases and incomes remain constant, _____.

real income decreases

In April 2020, the COVID-19 pandemic led to a(n) _____ and a large spike in _____.

recession; unemployment

One of the controversies surrounding the United States' automobile markets concerns the trade-off between automobile production and clean air. Assuming clean air has value, the United States will be on its production possibility frontier if and only if:

resources used to produce clean air and automobiles are being fully used.

When an economy is contracting, unemployment tends to _____ , and the overall price level tends to _____ .

rise; fall

All else equal, a nation that has a high rate of _____ will have a high rate of _____ and therefore a high growth rate of _____ capital.

savings; investment; physical

In Douglas County, Washington, apple production is limited by the number of acres available for agricultural production. Which economic concept does this statement BEST represent?

scarcity

Recessions tend to be _____ , and expansions tend to be _____ .

short; long

In contrast to the conclusion of microeconomic analysis that competitive markets (assuming no market imperfections and perfect information) will lead to full employment, many economists argue, based on macroeconomic analysis, that:

the economy can suffer from prolonged unemployment as a result of an overall deficiency of demand.

You have $5 to spend on a vending machine snack. A pack of gum will cost you $2.50, and a chocolate bar will also cost you $2.50. If you choose to buy the pack of gum, the opportunity cost of the gum is:

the enjoyment you would have received from the chocolate bar.

Scarlet is a manager at the local Apple store. In determining whether to buy a few additional iPhones, Scarlet chooses at the margin when she compares

the extra revenue from selling a few additional iPhones to the extra cost of buying those iPhones.

When markets don't achieve efficiency:

the government may intervene to improve society's welfare.

Keynesian economics stressed:

the importance of overallspending.

The circular-flow diagram illustrates:

the key concepts in the national accounts.

Which price measure is likely to reflect the most rapid price changes?

the producer price index

We have to make choices because:

the resources available to us are scarce.

The production possibility frontier is bowed out because:

the resources that are available are not equally suited for all types of production.

The business cycle is:

the short-run alternation between expansion and contraction.

Everyone benefits from road signs that provide directions for motorists, yet the marginal benefit to any one individual usually falls short of the marginal cost. This is an example of:

the unsuitability of some goods to an efficient allocation by markets.

A central and fundamental theme in economics is that:

there are not enough resources available to satisfy all the ways a society wants to use them.

If a market is in disequilibrium:

there will be opportunities for people to make themselves better off.

A new Subway location has offered a prize—a free meal (valued at $5) each week for a year—to its first 100 customers on opening day. Isabella camped out for 48 hours before the opening to be one of the first 100 customers and successfully obtained the prize. The cost to Isabella of obtaining the "free meal a week for a year" prize was:

whatever else she would have done with the 48 hours.

King Taco charges the same price for everything on its menu: $5 will buy a taco, a burrito, or nachos. You buy the burrito and think that if you had not purchased the burrito, you would have purchased the taco. The opportunity cost of the burrito is:

your forgone enjoyment of the taco.