Macro Final

Consider the table, which shows the annual salary for several workers. Worker Salary Chuck $31040 Ade $23920 Gwen $61070 Sophie $15000 Tony $517610 1. Calculate the median wage. 2. Comparison of the minimum wage and the median wage can be used to estimate the extent to which unemployment results from minimum wage laws. All else equal, which scenario would result in the most unemployment? A. A country where the minimum wage is set at 60% of the median wage. B. A country where the minimum wage is set at 10% of the median wage. C. A country where the minimum wage is set at 1% of the median wage. D. A country where the minimum wage is set at 95% of the median wage.

1. 31040 2. D. A country where the minimum wage is set at 95% of the median wage.

According to the quantity theory of money, the major cause of inflation in the long run is an increase in: A. the standard of living. B. the velocity of money. C. the growth rate of the money supply. D. the growth rate of real GDP.

C. the growth rate of the money supply

These figures illustrate the production possibilities available to Kate and Sarah with eight hours of labor in their bakery. Answer the questions according to these figures. 1. Kate has an absolute advantage in: A. both goods. B. cake. C. bread. D. neither good. 2. Sarah has an absolute advantage in: A. bread. B. both goods. C. neither good. D. cake.

1. D. Neither Good 2. B. Both Goods

Kayla is a speculator in the market for a rare French goat cheese known as Crottin de Chavignol. She entered into a futures contract with farmers from the small town of Chavignol, where the cheese is produced. The futures contract specifies that after 4545 months, Kayla will purchase 45004500 kilograms (kg) of Crottin de Chavignol at $210210/kg. When the specified number of months has passed, the price of Crottin de Chavignol is $260260/kg. 1. What is Kayla's profit per kilogram? Please denote losses with a negative sign. 2. Which of the statements is NOT true about futures contracts? A. Many futures contracts are settled in cash that do not require actual delivery of the commodity. B. The futures markets are used as a prime tool for speculators. C. Few people have the space or resources to purchase commodity futures. D. Futures markets can help to reduce investor risk.

1. $50 2. C. Few people have the space or resources to purchase commodity futures.

Shirts Pants Year Price Quantity Price Quantity 2013 $7.50 750 $12.50 4000 2014 $12.00 600 $18.50 3500 The table contains prices and output for a two good economy. Nominal and real GDP in 2013 are both $55,625. Use the information in the table to answer the questions. 1. What is nominal GDP in 2014? 2. What is real GDP in 2014? Use 2013 as the base year. 3. Real output from 2013 to 2014 has A. stayed the same. B. increased. C. decreased. D. experienced inflation.

1. $71950 2. $48250 3. C. decreased

Use the table to answer the questions. Define productivity as GDP per worker, and please enter all answers as numerical values rounded to 3 decimal places, and not as percentages (e.g., 0.103 instead of 10.3%). GDP Population Workers Year 1 1099 195 119 Year 2 1247 279 231 1. What is the GDP growth rate? 2. What is GDP per capita growth rate? 3. What is the productivity growth rate?

1. 0.135 2. -0.207 3. -0.415

Market Basket '70 $ '75 # '75 $ '76 # '76 $ Dozen Eggs $0.40 21 $0.06 27 $0.80 Calculator $20.00 14 $10.50 17 $15.50 Microwave $110.00 3 $160.00 9 $190.00 1. What is the GDP deflator for 1975? 2. What is the GDP deflator for 1976? 3. What was the inflation rate from 1975 to 1976? Enter a negative number if there was deflation.

1. 103.4 2. 148.8 3. 43.9

Suppose total output is 10, total input is 5, and the cost of input is $10.00 each. 1. What is the productivity measure? 2. What is the per‑unit production cost? 3. What is the main source of increased productivity? A. offshoring of labor to increase firm profits B. improved production technology C. wartime production needs D. enforcing barriers to firm entry in key markets E. demand increases during a recession

1. 2 2. $5 3. B. improved production technology

After a financial crisis hits the country of Arcadia, 33 million people become unemployed. If 2525 million individuals are lucky enough to keep their jobs, what is the unemployment rate? Please specify your answer to two decimal places.

10.71%

"Italy includes cocaine, prostitution and black market alcohol in GDP figures" (The Independent, October 30, 2014). 1. How would you expect the inclusion of these previously excluded underground activities to impact the value of Italy's GDP? A. Increase the value of GDP. B. Decrease the value of GDP. C. The inclusion of these items will not change the value of GDP. 2. Select ALL of the statements that correspond to a deficiency in real GDP per capita as an accurate reflection of the well-being of a nation. A. It does not put importance on physical health. B. It does not value production that is not intended for sale. C. It does not take into account the cost of the intermediate goods that go into production. D. It does not consider the quality of the environment.

1. A 2. A, B, and D

Classify the items as to whether or not they would be included in calculating the GDP for Canada. If a country is not specified, assume the action is done in Canada. 1. A college student buys used textbooks. This transaction _____ included in Canada's GDP. 2. Mrs. Baird's Bakery buys flour. This transaction _____ included in Canada's GDP. 3. Canadian Tire sells products in Canada. This transaction _____ included in Canada's GDP. 4. GM assembles and sells cars in Mexico. This transaction _____ included in Canada's GDP. 5. The Canadian government issues Old Age Security payments to individuals. These transactions _____ included in Canada's GDP.

1. is not 2. is not 3. is 4. is not 5. are not

The overall population for Region A is 9999 million people. The labor force contains 48 million people, 32 million people are employed, and 1616 million are unemployed. What is the unemployment rate? Round your answer to two decimals.

33.33%

Assume that the production function for a country is given by √Y=K and annual investment is given by the function 𝐼=𝛾×𝑌 where γ=0.300γ=0.300, and that the yearly depreciation rate is 5.005.00%. Suppose that this year, the output in the country is 1, and a neighbor country's output is 50% higher. Calculate the time it would take for the country's output to catch up with its neighbor's output. Assume the neighbor country's economy is neither growing nor shrinking.

5

Find the velocity of money when 𝑀=$622, 𝑃=107, and 𝑌R=$33. M is the money supply, v is the velocity of money, P is the price level, and YR is the real gross domestic product (GDP). Round your answer to 2 decimal places.

5.68

The steady-state capital stock is the capital stock where: A. investment equals depreciation. B. depreciation equals zero. C. investment is less than depreciation. D. investment exceeds depreciation.

A. investment equals depreciation

Select the components or inputs associated with the production function where gross domestic product (GDP) is the output. Production function inputs include A. physical capital B. technological knowledge C. capital deepening D. aggregate supply E. aggregate demand.

A and B

What are the unexploited gains from trade at the free market equilibrium? A. $0 B. $1,500 C. $500 D. $1,000

A. $0

Consider the GDP deflator and real GDP, given in thousands of dollars, for the country of Economica. Year Real GDP GDP deflator 1 $10587 111 2 $50524 118 3 $20987 100 The base year, or base period, is year 3. For the given years, calculate the nominal GDP. Round your answers to the nearest dollar. A. What is the nominal GDP for year 1? B. What is the nominal GDP for year 2? C. What is the nominal GDP for year 3?

A. $11752 B. $59618 C. $20987

Table: Equilibrium Quantity Price Quantity Demanded Quantity Supplied $10 100 400 8 150 350 6 200 300 4 250 250 2 300 200 Based on the table, the equilibrium quantity is: A. 250. B. 10. C. 100 and 400. D. 275.5.

A. 250

Jose sells his economics textbook from last semester, which he could sell back to the bookstore for $40, to Adolfo for $150. Adolfo had planned to pay $240 for the textbook at the bookstore. Which of the following statements is TRUE? A. Both Jose and Adolfo are made better off by the trade. B. Adolfo is made better off by the trade, but Jose is made worse off by the trade. C. Jose and Adolfo must have the same preferences for the textbook. D. This trade did not create value because Adolfo is buying the textbook for more than Jose could get from the bookstore.

A. Both Jose and Adolfo are made better off by the trade.

Please classify the given groups of people as either employed, unemployed, or not in the labor force. A. Retirees who neither have a job nor are looking for a job B. People who do not have a job but actively looked in the last four weeks C. People temporarily away from their jobs due to illness D. Full-time students E. People in active military service F. Full-time home-makers G. People temporarily away from their jobs due to vacation H. People in prison I. Those who worked during the previous week J. Mental patients confined in institutions K. People who actively looked for a job during the last 12 months, but not the last four weeks

A. Not in the labor force B. Unemployed C. Employed D. Not in the labor force E. Not in the labor force F. Not in the labor force G. Employed H. Not in the labor force I. Employed J. Not in the labor force K. Not in the labor force

The market value of which of the examples would be considered double counting in the calculation of GDP? A. Wheels used to produce a skateboard that will be sold new B. A new skateboard bought for a niece C. A ticket to the X Games bought from a person on the street corner D. The commission paid to the seller of a previously owned collector's skateboard

A. Not included in GDP because of double counting B. Included in GDP C. Not included in GDP because of double counting D. Included in GDP

Monetizing the debt occurs when a government: A. pays off its debts by printing money. B. raises taxes to pay off the debt. C. issues more debt to finance its budget deficit. D. decreases the money supply to pay off the debts.

A. pays off its debts by printing money

A discouraged worker is a(n): A. person who has given up looking for work but would still like a job if one is available. B. worker who is being discouraged by his or her employer when asking for a promotion. C. unemployed person who has temporary part-time employment. D. person working for fewer hours than he or she prefers.

A. person who has given up looking for work but would still like a job if one is available.

The equilibrium price is: A. stable because at this price the quantity demanded equals the quantity supplied. B. stable because at this price all buyers are willing and able to pay. C. unstable because at this price the quantity demanded is less than the quantity supplied. D. unstable because at this price the quantity demanded exceeds the quantity supplied.

A. stable because at this price the quantity demanded equals the quantity supplied

When the price of a good decreases: A. the quantity demanded increases. B. supply increases. C. demand increases. D. the quantity supplied increases.

A. the quantity demanded increases

Please match each scenario with the term it best identifies. (Early employment bonus, job retraining, job-search assistance, work test) A. The government implements a new policy where people receiving unemployment benefits must provide proof that they are searching for work. Otherwise, they will lose their benefits in 11 month. B. The government decides to give all unemployed workers a free account on a federal job bank, allowing workers to find jobs easier than ever before and hopefully expediting re-employment. C. Chelsea recently lost her job as an accountant. However, thanks to her stellar resume, she is able to quickly find a new job after two weeks. Much to her pleasure, she receives a tax credit because she was able to quickly find a new job. D. Simon is a junior chef at a three-star Michelin-renowned restaurant, Sur La Table. He loses his job and applies for, and is accepted into, a state funded program that allows unemployed individuals to take medical technician courses at their local community colleges for free.

A. work test B. Job-search assistance C. Early employment bonus D. Job retraining

1. What is inflation? A. a decrease in the overall price level B. an increase in the amount of money in circulation C. an increase in the overall price level D. an increase in the overall level of economic activity 2. Which of the examples provides the best evidence that inflation has occurred? A. A person whose salary has remained the same is able to purchase more goods and services. B. A person whose salary has decreased is able to purchase fewer goods and services. C. A person whose salary has increased is able to purchase fewer goods and services. D. A person whose salary has increased is able to purchase more goods and services. E. A person whose salary has decreased is able to purchase more goods and services.

C. an increase in the overall price level C. a person whose salary has increased is able to purchase fewer goods and services

The quantity demanded of a good or service is the amount that: A. consumers would like to buy but might not be able to afford. B. consumers need to consume during a given time period. C. consumers are willing and able to buy at a given price. D. firms are willing to sell during a given time period at a given price.

C. consumers are willing and able to buy at a given price

Which of these production functions exhibits diminishing returns? A B C D

D

Use the PPFs shown for the United States and India. With specialization and trade, the United States would produce _____, and India would produce _____. A. 0 pounds of rice and 40 shirts; 20 pounds of rice and 0 shirts B. 30 pounds of rice and 16 shirts; 11.4 pounds of rice and 15 shirts C. 50 pounds of rice and 40 shirts; 20 pounds of rice and 35 shirts D. 50 pounds of rice and 0 shirts; 0 pounds of rice and 35 shirts

D. 50 pounds of rice and 0 shirts; 0 pounds of rice and 35 shirts

The hypothetical data in the table below displays the percentage that unemployment benefits replace take-home pay for workers in different countries. Country First Year Second Year After Five Years Belgium 75% 70% 61% Finland 70% 60% 55% Italy 54% 50% 22% Australia 40% 25% 10% Which country would you expect to have the lowest long-term unemployment rate? A. Italy B. Belgium C. Finland D. Australia

D. Australia

A car produced by the American company GM in a plant located in Canada would be included in: A. both U.S. GDP and U.S. GNP. B. U.S. GDP, but not U.S. GNP. C. neither U.S. GDP nor U.S. GNP. D. U.S. GNP, but not U.S. GDP.

D. US GNP, but not US GDP

A decrease in demand refers to: A. a rightward shift of the demand curve. B. a downward movement along the demand curve. C. an upward movement along the demand curve. D. a leftward shift of the demand curve.

D. a leftward shift of the demand curve

In the Solow model production function, Y = F(A, K, eL), A stands for: A. attitude. B. aggregate demand. C. assets. D. ideas.

D. ideas

The most volatile spending component of GDP in the United States is: A. net exports. B. government purchases. C. consumption. D. investment.

D. investment

Absolute advantage derives from which of the following? A. the most suitable climate B. the best educated labor force C. the least expensive labor force D. the lowest cost of production

D. the lowest cost of production

Absolute advantage can be determined by comparing different producers' A. comparative advantage. B. input requirements per unit of output. C. geographical location. D. input payments, such as wage. E. opportunity costs.

B. input requirements per unit of output

1. The people described spent their money during different time periods. Label each of their scenarios as to whether they bought their goods during a time of inflation, deflation, or price stability. A. Peter is a compulsive gamer. He decides to buy World of Warcraft, all of its expansions, Starcraft 2, a PS3, a Wii, and an Xbox 360, since prices in general have been rising at an alarming rate. B. Melissa decides to start her own personal library by amassing a private collection of books and magazines about world religions, cooking, comics, and economics. As she reads an issue of The Economist, she discovers that overall price levels have changed only 0.01% in the past two years, and decides it does not matter whether she starts the project now or later. C. Linda postpones her wedding even though most food prices and most service prices were dropping this year, which would help keep the cost of the wedding down. 2. Out of these individuals, whose money gained the most value during their time period? A. Peter's money gained the most value. B. Melissa's money gained the most value. C. Linda's money gained the most value. D. All three had equal gains.

1. A. Inflation B. Price stability C. Deflation 2. C. Linda's money gained the most value

1. Consumer surplus is equal to the difference between A. the maximum price a buyer is willing to pay and the market price. B. the minimum price a buyer is willing to pay and the market price. C. the minimum price a seller is willing to accept and the market price. D. the maximum price a seller is willing to accept and the market price. 2. Consumer surplus is shown graphically as the area A. above the supply curve and below the market price. B. under the demand curve and above the market price. C. under the demand curve and below the market price. D. above the supply curve and above the market price.

1. A. the maximum price a buyer is willing to pay and the market price 2. B. under the demand curve and above the market price

Vincent and Jean are two cooks who work in a village. Each of them can either bake cakes or make pizzas. Every ingredient is readily available to them, and the only scarce resource is the cooks' time. Vincent can bake 10 cakes or make 5 pizzas in an hour. Jean can bake 12 cakes or make 8 pizzas in an hour. Please answer the four questions. 1. Which cook has the absolute advantage in baking cakes? A. Neither B. Jean C. Vincent 2. Which cook has the absolute advantage in making pizzas? A. Neither B. Jean C. Vincent 3. Which cook has the comparative advantage in baking cakes? A. Neither B. Jean C. Vincent 4. Which cook has the comparative advantage in making pizzas? A. Neither B. Vincent C. Jean

1. B. Jean 2. B. Jean 3. C. Vincent 4. C. Jean

Assume Spain and Mali can both produce grain and dates, and that the only limited resource is the farming labor force, meaning that land, water, and all other resources are plentiful in both countries. Each farmer in Spain can produce 10 t of grain or 5 t of dates in a season. Each farmer in Mali can also produce 10 t of grain or 25 t of dates. Please answer the four questions. 1. Which country has the absolute advantage in producing dates? A. Neither B. Mali C. Spain 2. Which country has the absolute advantage in producing grain? A. Mali B. Spain C. Neither 3. Which country has the comparative advantage in producing dates? A. Spain B. Neither C. Mali 4. Which country has the comparative advantage in producing grain? A. Mali B. Spain C. Neither

1. B. Mali 2. C. Neither 3. C. Mali 4. B. Spain

The figures illustrate the production possibilities available to Kate and Sarah with eight hours of labor in their bakery. Answer the questions according to these figures. 1. Kate has a comparative advantage in: A. neither good. B. both goods. C. cake. D. bread. 2. Sarah has a comparative advantage in: A. bread. B. neither good. C. both goods. D. cake.

1. C. Cake 2. A. Bread

Year Nominal GDP GDP deflator 2030 $1600 94 2035 $2055 100 2075 $2180 124 2088 $4500 145 1. What happened to the general price level between 2030 and 2035? A. Prices remained stable. B. Deflation occurred. C. Inflation occurred. 2. What is real GDP in 2075? Use 2035 as the base year, and round your answer to two decimal places.

1. C. Inflation occurred 2. 1758.06

Suppose the production function and investment curves shift from Y1, up to Y2 and from Investment 1, up to Investment 2. 1. The shift is most likely due to: A. a decrease in population. B. a decrease in technology. C. an advancement in technology. D. a decrease in ideas per person. 2. More of which three factors could increase the speed of technology growth in the future? The factors are: A. capital, labor, ideas B. population, land, water C. land, capital, depreciation D. population, incentives, ideas.

1. C. an advancement in technology 2. D. population, incentives, ideas

1. Producer surplus is the difference between A. the market price and the minimum price a buyer is willing to pay. B. the maximum price a seller is willing to accept and the market price. C. the maximum price a buyer is willing to pay and the market price. D. the market price and the minimum price a seller is willing to accept. 2. Producer surplus is shown graphically as the area A. under the demand curve and below the market price. B. above the supply curve and above the market price. C. above the supply curve and below the market price. D. under the demand curve and above the market price.

1. D. the market price and the minimum price a seller is willing to accept 2. C. above the supply curve and below the market price

The figure shows the supply and demand for online music. Suppose that an economic downturn decreases household wealth and erodes consumer confidence. 1. Move the supply and/or demand curves to reflect the primary effect this would have on the market for online music. You can assume that online music is a normal good. 2. Equilibrium price: A. increases. B. decreases. C. remains constant. D. change is ambigous. 3. Equilibrium quantity: A. increases. B. decreases. C. remains constant. D. change is ambiguous.

1. Demand shifts left; supple stays 2. B. decreases 3. B. decreases

Stone and brick are substitutes in home construction. Consider the market for bricks depicted in the graph. Suppose the price of stone increases due to new regulations for the stone quarrying industry. 1. Illustrate the impact this will have on the market for bricks. 2. Equilibrium price: A. remains constant. B. may increase or decrease, but it is impossible to know for sure. C. decreases. D. increases. 3. Equilibrium quantity: A. may increase or decrease, but it is impossible to know for sure. B. decreases. C. increases. D. remains constant.

1. Demand shifts right; supply stays 2. D. increases 3. C. increases

Consider the information about the economy of Pakistan. Note that the currency of Pakistan is the rupee. The government purchases: 2.502.50 trillions of rupees. Individuals consume: 10.5010.50 trillions of rupees. Individuals save: 4.914.91 trillions of rupees. Businesses invest: 1.701.70 trillions of rupees. Foreigners spend: 0.520.52 trillions of rupees to purchase Pakistani firms. Pakistan imports: 2.032.03 trillions of rupees. Pakistan exports: 1.341.34 trillions of rupees. Calculate Pakistan's GDP. Assume that the values are all current and no conversions need to be made. Give your answer in terms of trillions of rupees, and round to two decimals.

14.01 trillions of rupees

Suppose the civilian noninstitutionalized working-age population is 35.9 million in in a hypothetical economy. Of these, 4.9 million are working part-time and 14.53 million are working full-time. Assume the Bureau of Labor Statistics (BLS) definitions are used for calculating unemployment data. Among those not working, the most recent job-search activity for 2.90 million happened less than two weeks ago, while 1.72 million most recently looked for work between two and four weeks ago. An additional 0.86 million most recently looked for work five weeks ago, and the remaining 10.99 million who do not have jobs have not looked for work in the past six weeks. Round your answers to two decimal places. A. What is the size of the total labor force? B. How many people are unemployed? C. What is the labor force participation rate? D. What is the unemployment rate?

A. 24.05 B. 4.62 C. 66.99 D. 19.21

Suppose that Paulie and Vinny each can produce ice cream or t-shirts. The table shows the quantity of each good that Paulie and Vinny each can produce in 1 hour, respectively, if they devote all of their time and effort into making the good. Round all answers to two decimal places. Ice Cream (cups) T-shirts (quantity) Paulie 5 16 Vince 9 15 A. What is Paulie's opportunity cost of producing a cup of ice cream? B. What is Vinny's opportunity cost of producing one t-shirt? C. Paulie has comparative advantage in __________ and Vinny has comparative advantage in __________.

A. 3.2 B. 0.6 C. t-shirts; ice cream

The table shows employment statistics for a fictional country. Use the information to answer the questions. Round your percentages to two decimal places. Category Number of People Employed 5905 Unemployed 452 Not in the labor force 581 A. What is the total labor force? B. What is the labor force participation rate? C. What is the unemployment rate? Suppose 266 of the 452 unemployed people have been unemployed for so long that they stop looking for work. D. What is the new labor force? E. What is the new labor force participation rate? F. What is the new employment rate?

A. 6357 B. 91.63 C. 7.11 D. 6091 E. 87.79 F. 3.05

Suppose that Paulie and Vince each can produce ice cream or t-shirts. The table shows the quantity of each good that Paulie and Vince each can produce in one hour, respectively, if they devote all of their time and effort to making the good. Ice Cream (cups) T-shirts (quantity) Paulie 2 18 Vince 6 11 A. What is Paulie's opportunity cost of producing one cup of ice cream (round to two decimal places)? B.What is Vince's opportunity cost of producing one t-shirt (round to two decimal places)?

A. 9 T-shirts B. 0.55 cups of ice cream

Christine and Paul are deciding how to split their time between writing music and lyrics for their new album. Their PPFs for 72 h of work are shown. Christine and Paul have to write music for 8 songs and lyrics for 12 songs (4 songs already have music). When they are done, they can go to a private island and relax from all their hard work. It is possible that they will use more than 72 h. (Christine can write music for 8 songs and lyrics for 9 in 72h. Paul can write music for 6 songs and lyrics for 4 in 72h.) A. Once they start writing lyrics and music, assuming their hired help packs for them and their plane is waiting outside their door, in how many hours can they board the plane to their relaxing island getaway? B. Christine will write music for _____ songs. C. Paul will write music for _____ songs. D. Christine will write lyrics for _____ songs. E. Paul will write lyrics for _____ songs.

A. 96 B. 0 C. 8 D. 12 E. 0

1. Recessions typically hurt: A. no one; they help people B. firms and individuals. C. individuals D. Firms 2. The most common indicator in the labor market is: A. recessions. B. GDP. C. inflation. D. unemployment rate. 3. Since 1900, what has been the long-term pattern of growth in the United States? A. a decrease in real GDP (gross domestic product) per capita B. relatively constant real GDP (gross domestic product) per capita C. an increase in real GDP (gross domestic product) per capita

A. B. firms and individuals B. D. unemployment rate C. C. an increase in real GDP per capita

A. Move the supply and/or demand curve to illustrate how an across-the-board cut in the price of all apps on the Apple App Store affects the market for iPhones. B. Move the supply and/or demand curve to illustrate how a decrease in the price of Samsung's current Galaxy smartphone impacts the market for iPhones.

A. Demand shifts right; supply stays B. Demand shifts left; supply stays

Classify the statements as true or false. A. The process of specialization and trade has positive net benefits and is, therefore, beneficial to everyone. B. A nation will not have a comparative advantage in a product if it does not also have an absolute advantage in the production of that good. C. It can be mutually beneficial for two nations to specialize in goods for which they have a comparative advantage and then trade with one another. D. Countries specialize in the production of goods for which they have a comparative advantage. E. Absolute advantage is the source of the potential gains from specialization and trade.

A. False B. False C. True D. True E. False

Some of the statements describe how the gross domestic product (GDP) can be related to and indicative of economic well‑being and some of the statements pertain to how GDP does not capture economic well‑being. Consider the production approach of measuring GDP when placing each statement in the category with the label that best describes the statement. Each category will contain two statements and each statement is used only once. A. People have more goods and services such as clothing, entertainment, transportation, etc. B. People with more leisure time are more relaxed and can come up with creative ideas that could help grow the economy. C. People have healthier food, healthcare, and education. D. People are more likely to volunteer and provide services because they tend to be more civic-minded.

A. GDP related to economic wellbeing B. GDP not related to economic wellbeing C. GDP related to economic wellbeing D. GDP not related to economic wellbeing

Firms in the country of Merka, which experiences varying levels of unemployment over time, face a very competitive labor market. Classify the given events according to how each would affect Merka's unemployment rate. A. Increase in the minimum wage B. Decreased unemployment benefits C. Increase in the unions' influence D. Introduction of employment-at-will doctrine

A. Increase in the unemployment rate B. Decrease in the unemployment rate C. Increase in the unemployment rate D. Decrease in the unemployment rate

The main reason specialization can raise productivity is that: A. knowledge in human brains is limited. B. it is always good to know less than more. C. some persons have more knowledge than others. D. it is impossible to learn anything well.

A. Knowledge in human brains is limited.

Indicate whether each scenario involves a shift in the supply curve or movement along the supply curve. A. Americans sell their gold and silver jewelry as a result of rising prices. B. A national consumer products company produces less of its premium quality soap as a result of lower soap prices. C. Amplitude decides to join the smartphone market. D. After discovering that flash-steaming tuna before using mechanical processes to extract meat removes more tuna flesh, more cans of tuna arrive on the shelves at all major grocers.

A. Movement B. Movement C. Shift D. Shift

Inflation: A. is an increase in the price of a good or service. B. is an increase in the average price level. C. occurs when any good or service increases in price. D. cannot occur when prices are decreasing.

B. is an increase in the average price level

If we hold ideas, education, and labor constant in the Solow model, then output (GDP) is a function of: A. labor only. B. physical capital only. C. human capital only. D. technological knowledge only.

B. physical capital only

Classify each scenario according to whether it is an example of an active employment at-will doctrine. A. A tenured organic chemistry professor who cannot be fired despite being a horrible teacher. B. Cathy quits her job as a babysitter despite having only been hired three weeks ago, because she feels watching over eight toddlers at once will cause her to lose too much sleep. C. Katherine, a waitress, gets fired from her job after spilling a hot bowl of French onion soup on a customer's shoe. D. Alex has a clause in his worker's contract stating that if he gets fired during a recession, he gets a severance package of half his salary paid for up to six months. E. Brian, who works for an educational software company, quits. He is not allowed to work for a competing software company for six months due to a clause in his contract. F. Wei-Cheng gets fired from his company for no reason other than that he is the only Asian worker.

A. Not an example of employment-at-will B. Example of employment-at-will C. Example of employment-at-will D. Not an example of employment-at-will E. Not an example of employment-at-will F. Not an example of employment-at-will

Indicate whether each of the following items is an input in the aggregate production function for GDP. A. Contributions to Social Security B. Bonds issued by an automaker C. Profits of a large investment company D. A significant amount of oil discovered in Texas E. A recent graduate with an engineering degree F. Unskilled migrant worker from Latin America G. A decrease in property taxes H. An upgrade of computers for Mikey's Motors

A. Not an input B. Not an input C. Not an input D. Is an input E. Is an input F. Is an input G. Not an input H. Is an input

Classify the given goods according to whether or not they would be included in calculating the GDP for the United States. If a country is not specified, assume the action is performed in the United States. A. GM's assembly and sale of cars in Mexico B. resale of used textbooks to college students C. sale of wheat to Mrs. Baird's Bakery D. Honda's assembly and sale of cars in the U.S. E. Ocean Spray purchases plastic to make bottles F. Old Navy purchases mannequins to display clothes

A. Not included B. Not included C. Not included D. Included E. Not included F. Included

For each example, determine how the market for the good in bolded text will respond to the described change. A. Due to increases in hay prices, an input for raising cattle, the price of a gallon of 2% MILK increases from $2.98 to $3.25. B. A company offers a coupon for $6 off the price of LASER TAG. C. A sharp increase in the price of wood causes increases in prices for DRESSERS AND DESKS. D. At a week‑long special at the grocery store, PORK SHOULDER is on sale at $1.99/lb, down from $3.99/lb. E. A website offers a buy‑one‑get‑one‑free special for DIGITAL MUSIC ALBUMS.

A. Quantity demanded decreases B. Quantity demanded increases C. Quantity demanded decreases D. Quantity demanded increases E. Quantity demanded increases

Determine if each of the statements regarding business cycles and how they can impact an economy is true or false. A. The four phases of business cycles are peaks, troughs, expansions, and recessions. B. Business cycles can be described as fluctuations from the economy's long‑term growth trend. C. Business cycles last for approximately nine months. D. When a business cycle reaches the trough, the economy is usually operating at its capacity. E. The peak of a business cycle is followed by a downturn or recession. F. Business cycles are common in emerging economies but not in developed economies.

A. True B. True C. False D. False E. True F. False

The table shows information on the conditions of demand and supply for designer purses, where the quantity of designer purses is measured in thousands. For each price, select the correct category (equilibrium, excess demand or shortage, excess supply or surplus) Price Quantity demanded Quantity Supplied $300 490 420 $500 450 450 $700 400 520 $900 320 650 A. $300 B. $500 C. $700 D. $900

A. excess demand or shortage B. equilibrium C. excess supply or surplus D. excess supply or surplus

Gross domestic product is the market value of all: A. finished goods and services produced within a country in a year. B. goods and services produced within a country in a year. C. goods and services sold within a country in a year. D. finished goods and services produced by a country's permanent residents, wherever located, in a year.

A. finished goods and services produced within a country in a year

Classify each example as either relating to human capital, physical capital, or technology. A. An increase in adult literacy affects _____. B. An increase in the number of company cars impacts _____. C. An increase in the number of college graduates impacts _____. D. New distribution techniques affect _____. E. An increase in the number of company computers affects_____. F. More people graduating from culinary school affects _____. G. A new cancer treatment affects _____. H. A doctor's knowledge about a new cancer treatment affects _____.

A. human capital B. physical capital C. human capital D. technology E. physical capital F. human capital G. technology H. human capital

Each of the scenarios occurred this year, but it fails to fit one of the criteria for the definition of Canada's GDP. Please classify the scenarios under the criteria it fails to meet. A. Dr. A. Just trades acne treatments with Kit E. Katz for dog-sitting services. This transaction violates the __________ criterion. B. Don E. Brook buys only vintage shirts because he wants a new look. This transaction violates the __________ criterion. C. Easton West buys Roots sweatshirts. Roots is headquartered in Toronto, Ontario but produces in Vietnam. This transaction violates the __________ criterion. D. Joy Rider makes guacamole from limes that her neighbor, Bea Kind, gave to Joy, from her tree. This transaction violates the __________ criterion. E. Yum n' Yummy restaurant buys onions, egg plant, and tomatoes for use in the famous Yum n' Yummy omelet. This transaction violates the __________ criterion. F. Trudy Ages buys her dream car that was made in the 1970's. This transaction violates the __________ criterion.

A. market value B. produced within a certain time frame C. produced within a country's boundaries criterion D. market value E. final good or service F. produced within a certain time frame

Ned owns a small electronics repair business. He can either repair iPhones or Samsung phones. If he only repairs iPhones he can repair 16 phones in a day. If he only repairs Samsung phones, he can repair 12 in a day. What is the opportunity cost of iPhone repairs production (in terms of Samsung repairs/iPhone repairs)? A. 16 B. 3/4 C. 1/2 D. 12 E. 2 F. 4/3

B. 3/4

What is a real price? A. A real price refers to the actual price you pay for a good. B. A real price refers to a price that has been adjusted to account for inflation. C. A real price refers to the retail price, not the sales price. D. All of the above describe real prices.

B. A real price refers to a price that has been adjusted to account for inflation.

The ratio of the nominal value of economic output to the real value of economic output multiplied by 100 is the: A. producer price index. B. GDP deflator. C. exchange rate. D. consumer price index.

B. GDP deflator

Employment laws can vary significantly by country. For instance, in the United States, many jobs are governed by the principle of employment at-will. Employment at-will is rarer in certain countries in Europe, such as Portugal. Regulation and collective bargaining impact labor markets to a larger extent in Europe than in the United States. How do European labor markets compare to the labor market in the United States as a result of these varying labor laws? A. The hiring and firing costs are lower in Europe than the United States. B. The labor market in Europe is less flexible than in the United States. C. During a period of increased demand, European firms are more likely to hire more workers. D. Europe has a lower rate of long-term unemployment than the United States.

B. The labor market in Europe is less flexible than in the United States.

Consider a supply curve that shifts up and to the left. According to the figure, the: A. technology for producing output has improved. B. costs of producing output have increased. C. costs of producing output have decreased. D. price of the product has decreased.

B. costs of producing output have increased

Suppose that a baby boom occurs between the years 2025-2030, similar to the baby boom following World War II. What do you expect to happen to the labor force participation rate in the year 2090-2100, holding all else constant? The labor force participation rate will: A. increase as the baby boomers will continue to work while in the influx of young workers will drive up the participation rate. B. decrease since the baby boomers will opt for more leisure. C. not change since every retiree will have a new worker replace them. D. increase since the baby boomers will opt for more leisure.

B. decrease since the baby boomers will opt for more leisure

A gardener can produce either beans or corn in her garden. The gardener's opportunity cost of a bushel of beans multiplied by her opportunity cost of a bushel of corn is: A. equal to three. B. equal to one. C. equal to two. D. equal to infinity. E. greater than one but smaller than three. F. unknown, because there is not enough information.

B. equal to one

The natural rate of unemployment equals A. cyclical unemployment plus structural unemployment. B. frictional unemployment plus structural unemployment. C. frictional unemployment plus underemployed workers. D. structural unemployment minus cyclical unemployment. E. frictional unemployment plus cyclical unemployment.

B. frictional unemployment plus structural unemployment

The natural unemployment rate is the rate of _____ unemployment plus the rate of _____ unemployment. A. cyclical; structural B. structural; frictional C. cyclical; frictional D. frictional and structural; cyclical

B. structural; frictional

Consider the table below. Assuming the law of demand holds, the cell labeled "?" could be which of the following quantities? Price of a movie Quantity Demanded $15 167 $17 ? A. 183 B. 175 C. 155 D. 169 E. 167

C. 155

A bank lends money for a year at an interest rate of 7%, and the inflation rate for that year turns out to be 5%. What is the bank's real rate of return for that year? A. 6.0% B. 12.0% C. 2.0% D. 3.5%

C. 2.0%

A farmer produces both beans and corn on her farm. If she must give up 16 bushels of corn to be able to get 6 bushels of beans, then her opportunity cost of 11 bushel of beans is A. 0.38 bushels of corn. B. 16.00 bushels of corn. C. 2.67 bushels of corn. D. 2.99 bushels of corn.

C. 2.67 bushels of corn

Which term best describes the situation that, relative to England, France can produce beef at a lower cost of production (i.e., can produce beef using fewer inputs)? A. appreciating currency B. comparative advantage C. absolute advantage D. compound interest E. black market F. budget constraint

C. Absolute advantage

The table shows the units of output a worker can produce per month in Germany and Korea for two different goods: televisions and personal computers. Use this table to answer the question. TVs per month Computers per month German worker 40 10 Korean worker 16 8 Which of the statements is true? A. Korea has a comparative advantage in the production of televisions, while Germany has a comparative advantage in the production of personal computers. B. Korea has a comparative advantage in the production of both goods. C. Germany has a comparative advantage in the production of televisions, while Korea has a comparative advantage in the production of personal computers. D. Germany has a comparative advantage in the production of both goods.

C. Germany has a comparative advantage in the production of televisions, while Korea has a comparative advantage in the production of personal computers.

1. Which of the choices is the best example of creative destruction? A. An antitrust suit is filed in court against a monopolist. B. The prime minister signs into law that the minimum wage will go down by 50 cents. C. In the past month, there were 20,000 layoffs but 22,000 new hires. D. A chemical plant decides to use a new process in their reactions, which after combustion results in large amounts of pink smoke being emitted to the nearby town and consequent fires in the chemical plant. 2. The typewriter industry goes bankrupt and lays off all its workers. In sharp contrast, the burgeoning electronic word processing industry hires 10,000 workers that same year. This type of unemployment resulting from the shift in industries would best be categorized under: A. structural unemployment. B. cyclical unemployment. C. frictional unemployment.

C. In the past month, there were 20000 layoffs but 22000 new hires. A. structural unemployment

Only a very small portion of people who use microwaves know how they work. This is an example of: A. opportunity cost. B. absolute advantage. C. the division of knowledge. D. a production possibility frontier.

C. The division of knowledge

In a macroeconomic context, choose the best definition for the term velocity. A. The rate at which the aggregate price level increases. B. The rate at which the Federal Reserve increases or decreases the money supply. C. The rate at which money circulates through an economy. D. The speed of capital accumulation. E. The rate at which GDP increases in a year.

C. The rate at which money circulates through an economy.

What information does the World Bank's "rigidity of employment index" provide? A. a measure of the available government assistance for workers seeking employment B. a summary of the average length of unemployment over a 5-year period C. a summary of firms' costs for hiring, firing, and adjusting employment hours D. a measure of the effects of shrinking manufacturing firms in developed nations

C. a summary of firms' costs for hiring, firing, and adjusting employment hours

Conditional convergence refers to the tendency for: A. poorer countries to grow faster than richer countries given similar steady-state capital stocks, but the poor countries will never catch up with the rich countries. B. richer countries to grow faster than poorer countries given similar steady-state capital stocks, so the poor countries never catch up with the rich countries. C. countries with similar steady-state levels of output to grow faster when they're poor than when they're rich until their per capita GDP levels converge. D. poorer countries to grow faster than richer countries, but only if they receive sufficient foreign investment.

C. countries with similar steady-state levels of output to grow faster when they're poor than when they're rich until their per capita GDP levels converge.

Increases in the minimum wage will most likely lead to: A. increases in worker education programs. B. lower wages in complement industries. C. higher unemployment. D. higher living standards for low-income workers.

C. higher unemployment

What is the term for GDP when price levels are held constant? A. aggregate GDP B. annual GDP C. real GDP D. nominal GDP

C. real GDP

Business cycles are short-term movements in: A. inflation around its long-term trend. B. the unemployment rate above and below zero. C. real GDP around its long-term trend. D. nominal GDP around its long-term trend.

C. real GDP around its long-term trend

These figures illustrate the production possibilities available to Kate and Sarah with eight hours of labor in their bakery. Answer the questions according to these figures. If Kate and Sarah both specialize in the good in which they have a comparative advantage, the A. total production of bread will be 4 loaves, and the total production of cake will be 9 units. B. total production of bread will be 16 loaves, and the total production of cake will be 17 units. C. total production of bread will be 12 loaves, and the total production of cake will be 8 units. D. total production of bread will be 8 loaves, and the total production of cake will be 8.5 units.

C. total production of bread will be 12 loaves, and the total production of cake will be 8 units

Which of the following programs could help overcome structural unemployment? A. worker retraining B. job-search assistance programs C. worker retraining, limitations to unemployment benefits, and job-search assistance D. limitations to unemployment benefits

C. worker retraining, limitation to unemployment benefits, and job-search assistance

We know that a country reaches a steady state when investment equals depreciation. This means 𝛾𝑌=𝛿𝐾γ Consider an economy with the production function √Y=A⁢K Squaring both sides and solving for 𝐾K yields 𝐾=𝑌2𝐴2 Substituting 𝐾K into the steady state equation gives 𝛾𝑌=𝛿𝑌2𝐴2 Solve this equation for 𝑌.Y. Divide both sides by 𝑌Y and put everything on the other side to solve for 𝑌.Y. Once you do this, use this equation to answer the question about the economy in the steady state. What will make a country richer in the long run? A. doubling the saving rate B. Neither will make the country richer in the long run. C. Both changes will have the same impact on the steady state GDP. D. doubling total factor productivity

D. doubling total factor productivity

What happens to the marginal product of each additional unit of capital, all else equal? Capital A. increases output at an increasing rate. B. decreases output at a diminishing rate. C. decreases output at an increasing rate. D. increases output at a diminishing rate.

D. increases output at a diminishing rate

What is the catch‑up effect concerning developed and developing countries? Developing countries: A. have greater productivity per unit of capital because they are better at developing new technologies. B. never can catch up to developed countries. C. have lower productivity per unit of capital because they are better at developing new technology. D. may grow faster than developed countries because they lack the most basic tools and capital investment leads to higher productivity growth.

D. may grow faster than developed countries because they lack the most basic tools and capital investment leads to higher productivity growth.

Gains from trade are maximized when: A. there are additional potential trades available that have not been completed. B. the market price is higher than the equilibrium price. C. the market price is less than the equilibrium price. D. the market price is equal to the equilibrium price.

D. the market price is equal to the equilibrium price