Macro

Which of the following statements about the simple circular flow model of a market economy is correct? (A) Households are on the demand side of the product market and the supply side of the resource market. (B)Business firms are on the supply side of both the product market and the resource market. (C)Households receive income in the form of wages, and business firms receive income in the form of investment. (D)Exports and investment expenditures are examples of leakage from the circular flow, whereas imports and savings are injections. (E) Circular flow models are used primarily to explain why money is necessary in any economic system.

(A) Households are on the demand side of the product market and the supply side of the resource market.

Which of the following will most likely decrease the unemployment rate? (A) Workers become discouraged and drop out of the labor force. (B)Workers lose jobs when their skills become obsolete. (C) Workers switch from full-time to part-time jobs. (D) Workers are not allowed to work from home. (E) Workers continue to work after reaching the retirement age.

(A) Workers become discouraged and drop out of the labor force.

The unemployment rate measures the percentage of (A) people in the labor force who do not have jobs (B) people in the labor force who have a part-time job but are looking for a full-time job (C) people who do not have jobs and have given up looking for work (D) people in the adult population who do not have jobs (E) people in the adult population who have temporary jobs

(A) people in the labor force who do not have jobs

Which of the following changes would cause an economy's aggregate demand curve to shift to the right? (A) An increase in spending on imports (B) An increase in autonomous consumption spending (C) An increase in interest rates (D) A decrease in the money supply (E) A decrease in the overall price level in the economy

(B) An increase in autonomous consumption spending

The table shows the maximum quantity of cars or motorcycles that can be produced by two countries, X and Y, using equal amounts of resources. Based on the data in the table, which of the following is true? (A)Country X has a comparative advantage in producing cars. (B) Country Y has a comparative advantage in producing cars. (C)Country X has an absolute advantage in producing cars. (D)Country X has an absolute advantage in producing motorcycles. (E)Country Y has a comparative advantage in producing motorcycles.

(B) Country Y has a comparative advantage in producing cars.

Which of the following transactions would be counted as investment spending in the calculation of a nation's gross domestic product? (A) Robert buys 100 shares of stock in an energy company. (B) Ming purchases a new delivery truck for her bakery business. (C)Latasha pays a mechanic to repair her personal car. (D)Sam earns interest on Canadian government bonds. (E) Taylor receives unemployment benefits when he loses his job.

(B) Ming purchases a new delivery truck for her bakery business.

The fundamental economic problem is (A) rising interest rates (B) The scarcity of resources (C) unemployment and inflation (D) the tax burden on households (E) the unequal distribution of income

(B) the scarcity of resources

Country A can produce either 2 tons of cocoa or 4 cars with 10 units of labor. Country B can produce either 5 tons of cocoa or 25 cars with 10 units of labor. Based on this information, which of the following is true? (A) Country A has an absolute advantage in the production of cocoa, while Country B has a comparative advantage in the production of cocoa. (B)Country A has a comparative advantage in the production of cocoa, while Country B has a comparative advantage in the production of cars. (C) Country A has an absolute advantage in the production of cocoa, while Country B has a comparative advantage in the production of cars. (D) Country A has a comparative disadvantage in the production of both goods. (E) Neither country has a comparative advantage in the production of either good.

(B)Country A has a comparative advantage in the production of cocoa, while Country B has a comparative advantage in the production of cars.

Based on the provided graph of the market for clinkers, which of the following statements is true if the current price in the market for clinkers is $20? (A) There is a shortage of 2 clinkers. (B)There is a surplus of 2 clinkers. (C)The market is in equilibrium. (D)The demand for clinkers will decrease. (E) The supply of clinkers will increase.

(B)There is a surplus of 2 clinkers.

Nominal gross domestic product is best defined as (A) the market value of all goods and services consumed in a nation in a given year (B)the market value of final goods and services produced in a nation in a given year (C)the base-year value of total goods and services produced in a nation in a given year (D)the base-year value of final goods and services produced in a nation in a given year (E)the market value of all goods and services produced and consumed in a nation in a given year

(B)the market value of final goods and services produced in a nation in a given year

Which of the following is true if the economy is producing at the full-employment level of output? (A)The unemployment rate is zero. (B)No person is receiving unemployment compensation from the government. (C) There is frictional unemployment. (D) The government's budget is balanced. (E)The balance of trade is in equilibrium.

(C) There is frictional unemployment.

The table below indicates the number of labor hours required in Countries X and Y to produce one unit of food or one unit of clothing. Given this information, which of the following statements is correct? (A) X has a comparative advantage in the production of both food and clothing. (B) Y has a comparative advantage in the production of both food and clothing. (C) X has a comparative advantage in food production, whereas Y has a comparative advantage in clothing production. (D)Y has a comparative advantage in food production, whereas X has a comparative advantage in clothing production. (E) Neither country has a comparative advantage in the production of either good.

(C) X has a comparative advantage in food production, whereas Y has a comparative advantage in clothing production.

Aggregate demand may be measured by adding (A) consumption, investment, savings, and imports (B) savings, government spending, and business inventories (C) consumption, investment, government spending, and net exports (D) domestic private expenditures and government spending (E) domestic expenditures and imports

(C) consumption, investment, government spending, and net exports

Which of the following would cause the official unemployment rate to understate the problem of unemployment? (A) Workers receiving unemployment compensation (B)Cyclically unemployed workers (C)Discouraged workers (D)Recent college graduates looking for work (E) Retirees

(C)Discouraged workers

What is the fundamental problem that economics attempts to address? (A) Determining the appropriate level of government spending in an economy (B)How to maintain full employment output (C)How to fulfill unlimited wants with limited resources (D) What policies will stimulate the most economic growth (E)Whether or not to restrict international trade to achieve more favorable terms of trade

(C)How to fulfill unlimited wants with limited resources

If the marginal propensity to consume is 0.8, an increase of $20,000 in government spending will change the real gross domestic product by a maximum of (A)$16,000 (B) $20,000 (C) $80,000 (D) $100,000 (E) $120,000

(D) $100,000

The value of which of the following is counted in the United States gross domestic product? (A) Clean air (B)Child care a father provides for his child (C)An automobile produced in Sweden by a United States firm (D)A car produced in the United States and sold in Europe (E) Medical services not provided due to preventative health care

(D)A car produced in the United States and sold in Europe

Which of the following individuals is classified as unemployed? (A) A fifteen-year-old high school student who is looking for a babysitting job (B)A laid-off computer programmer who has given up looking for a new job (C)A parent who works in an after-school day care center for 15 hours a week (D)A recent college graduate who is looking for her first job (E)A mayor who lost an election and retired

(D)A recent college graduate who is looking for her first job

Suppose two countries are each capable of individually producing two given commodities. Instead, each specializes by producing the commodity for which it has a comparative advantage and then trades with the other country.Which of the following is most likely to result? (A)The two countries will become more independent of each other. (B)Unemployment will increase in one country and decrease in the other. (C)There will be more efficient production in one country but less efficient production in the other. (D)Both countries will become better off. (E) Both countries will be producing their commodity inefficiently.

(D)Both countries will become better off.

If France has a comparative advantage in the production of grapes, and Italy has an absolute advantage in the production of olives, which of the following statements must be true? (A) France and Italy will not benefit from trading with each other. (B) France can produce more olives than Italy can. (C)France can produce more grapes than Italy can. (D)France has a lower opportunity cost in producing grapes than Italy does. (E) France has a higher opportunity cost in producing grapes than Italy does.

(D)France has a lower opportunity cost in producing grapes than Italy does.

In the competitive market represented by the graph provided, which of the following is true at a price of $20 ? (A)There is a surplus of 60 units. (B)There is a surplus of 35 units. (C) There is a shortage of 60 units. (D)There is a shortage of 35 units. (E) The quantity sold equals 60 units.

(D)There is a shortage of 35 units.

If the number of people that are employed is 140 million, the number of people that are unemployed is 20 million, and the civilian, non institutional population aged 16 and over is 200 million, then the labor force participation rate is (A) 10.0% (B) 12.5% (C) 60.0% (D) 70.0% (E) 80.0%

(E) 80.0%

Which of the following will most likely result from a decrease in government spending? (A) An increase in output (B) An increase in the price level (C) An increase in employment (D) A decrease in aggregate supply (E) A decrease in aggregate demand

(E) A decrease in aggregate demand

Which of the following statements exemplifies the concept of structural unemployment? (A) New entrants into the labor force have trouble finding jobs. (B) Workers leave their current jobs to find better jobs. (C) Workers are laid off because aggregate demand has declined. (D) Workers are fired because consumers have reduced their total expenditures. (E) Workers are fired because their skills are no longer in demand.

(E) Workers are fired because their skills are no longer in demand.

According to the law of supply, which of the following is true as the price of a good or service decreases? (A) Producers are willing and able to sell more so they increase their sales. (B) Producers are willing and able to sell less because their production costs increase. C) Producers are willing and able to sell less because their profits decrease. (D) Consumers are willing and able to buy more because they will switch from more expensive goods. (E) Consumers are willing and able to buy more because they will be able to afford a greater quantity.

C) Producers are willing and able to sell less because their profits decrease.