Macro Midterm I

Quota

Establish limitation on the quality of a certain imported good

Embargo

A complete bend on trade (Either country or product)

In building an economic model, variables that will be explained by the model are referred to as _______ variables. A. exogenous B. endogenous C. fluctuating D. demonstrative

Endogenous

What is the difference between positive and normative analysis? Provide an example statement for each type of analysis?​

Positive analysis is data dependent and testable; it attempts to explain what is or is not in the world. Normative analysis is opinion dependent and not testable; it attempts to explain what should or should not be in the world. Eg:

Tariffs

A tax place on imported product

Which of the following is an example of automatic fiscal policy? A) The progressive tax bracket systems, if you make more money you pay higher taxes. B) The Jobs Creation Act passed in 2018 C) A temporary change in government spending submitted by the president in his annual federal budget recommendation D) Changing the money supply by the federal reserve.

A) The progressive tax bracket systems, if you make more money you pay higher taxes.

Since 2004, the Fed has focused on a core price index that excludes food and energy prices to measure inflation because A) food and energy are necessities, so consumers have no choice but to purchase these. B) food and energy prices tend to remain stable in the short run, so are not relevant to the calculation of inflation. C) including food and energy prices tends to overstate the true inflation rate by 0.5% to 1%. D) food and energy prices tend to fluctuate up and down for reasons that may not be related to the general causes of inflation.

D) food and energy prices tend to fluctuate up and down for reasons that may not be related to the general causes of inflation.

The consumer price index is A) an average of the prices of the goods and services purchased by the typical family. B) the cost of a market basket of goods and services typically consumed in a base year. C) the cost of a market basket of goods and services typically consumed in the current year. D) an average of the prices of new final goods and services produced in the economy over a period of time.

A) an average of the prices of the goods and services purchased by the typical family.

Gross national product (GNP) of the United States is the value of all final goods and services A) produced anywhere in the world by residents of the United States. B) produced in the United States by residents of any nation. C) produced and consumed within the United States. D) produced anywhere in the world, but consumed by residents of the United States.

A) produced anywhere in the world by residents of the United States.

In a circular-flow diagram, the total value of ________ equals the total value of ________. A) spending on goods and services; income B) GDP; GNP C) capital; labor D) exports; imports

A) spending on goods and services; income

A(n) ________ is a tax on an imported good. A) tariff B) import quota C) voluntary export restraint D) export quota

A) tariff

Automatically

Any policy that does not require special act of Congress to be an active [Eg: Unemployment benefit]

Discretionary

Any policy that require action by Congress in order to be an active [ Eg: Yearly budget]

The ability of one person or nation to produce a good at a lower opportunity cost than another is called a(n) A) market advantage. B) comparative advantage. C) absolute advantage. D) specialization advantage.

B) comparative advantage.

An import quota A) limits the amount of a good that can be imported, thus decreasing prices. B) limits the amount of a good that can be imported, thus increasing prices. C) increases the amount of a good imported, thus decreasing prices. D) increases the amount of a good imported, thus increasing prices.

B) limits the amount of a good that can be imported, thus increasing prices.

Which of the following statements about economic analysis is true? A. Unlike positive analysis, normative economic analysis can be tested B. There is much more disagreement among economists over normative economic analysis than over positive economic analysis C. Normative economic analysis is concerned with "what is," whereas positive economic analysis is concerned with "what ought to be" D. Economics is primarily about normative analysis, which measures the costs and benefits of different courses of action

B. There is much more disagreement among economists over normative economic analysis than over positive economic analysis

All of the following are part of an economic model except A. data B. opinions C. assumptions D. hypotheses

B. opinions

Which of the following is true about the consumer price index? A) It is updated continuously to account for the introduction of new goods. B) It accounts for people switching away from goods whose prices have risen. C) It assumes that consumers purchase the same quantity of each product in the market basket each month. D) It accurately reflects quality changes in goods and services over time.

C) It assumes that consumers purchase the same quantity of each product in the market basket each month.

Which of the following is a positive economic statement? A) Income tax rates for the rich should be increased. B) The Federal Reserve should not increase interest rates until the unemployment rate falls below 7%. C) Rising global demand for gasoline has led to an increase in the price of oil. D) The government should increase spending on infrastructure to lower the unemployment rate.

C) Rising global demand for gasoline has led to an increase in the price of oil.

Which of the following could cause nominal GDP to increase and real GDP to decrease? A) The price level falls and the quantity of final goods and services produced falls. B) The price level falls and the quantity of final goods and services produced rises. C) The price level rises and the quantity of final goods and services produced falls. D) The price level rises and the quantity of final goods and services produced rises.

C) The price level rises and the quantity of final goods and services produced falls.

All of the following new construction projects are examples of fixed investment spending except A) a dental office. B) a manufacturing factory. C) a public library. D) a shopping center.

C) a public library.

The ability of one person or nation to produce more of a good than another is called a(n) A) market advantage. B) comparative advantage. C) absolute advantage. D) specialization advantage.

C) absolute advantage.

Factors of production are usually divided into all of the following categories except A) labor. B) capital. C) interest. D) natural resources.

C) interest.

Feudalism can primarily be thought of as an economic system centered by: A) market forces B) supply and demand C) land D) economic forces

C) land

Which of the following is a characteristic of pure capitalism? A) government granted monopolies B) public ownership of land C) government ownership of capital D) laissez faire economics

D) laissez faire economics

The purchase by the Canadian government of a fighter jet produced in the United States is included in U.S. A) consumption spending. B) investment spending. C) government purchases. D) net exports.

D) net exports.

Which of the following goods is directly counted in GDP? A) the ground beef that Taco Bell purchases for use in its burritos B) the tortillas that Taco Bell purchases for its burritos C) the paper wrap that Taco Bell purchases to wrap its burritos D) the Burrito Supreme that Sondra purchases for lunch at Taco Bell

D) the Burrito Supreme that Sondra purchases for lunch at Taco Bell

Nominal GDP is the value of goods and services A) adjusted for inflation. B) adjusted for anticipated inflation. C) using base-year prices. D) using current -year prices.

D) using current -year prices.

Which of the following is a normative economic statement? A. Income tax revenues decreased during the recession B. Despite government stimulus spending, the unemployment rate remained above 9% in 2010 C. When the price of gasoline rises, transportation costs rise. D. The government should decrease spending on foreign aid to lower the federal deficit.

D. The government should decrease spending on foreign aid to lower the federal deficit.

Why restrict trade?

Protect domestic employment Protect infant industry eg: Sugar (infant in US) Prevent foreign dependence eg: oil Political/Ideological difference

Describe two different scenarios when a product will not be included in a country's GDP. And why?

a. Resale my shoes, because it doesn't produce now which it doesn't count in GDP. b.Weed production. because there still some state still counts as an illegal substance.