Macroecon Test 1 (Quiz Q's)

Which of the following might lead to an increase in the equilibrium price of jelly and a decrease in the equilibrium quantity of jelly sold?

An increase in the price of grapes, an input into jelly.

Which of the following trade policies would benefit producers, hurt consumers, and increase the amount of trade?

Starting to allow trade when the world price is greater than the domestic price.

Angus the sheep farmer sells wool to Barnaby the knitter for $20. Barnaby makes two sweaters, each of which has a market price of $40. Collette buys one of them, while the other remains on the shelf of Barnaby's store to be sold later. What is the GDP here?

$80

Which of the following does NOT add to US GDP?

The federal government sends a Social Security check to your grandmother.

Because consumers can sometimes substitute cheaper goods for those that have risen in price,

the CPI overstates inflation.

The circular flow diagram illustrates that, in markets for the factors of production,

households are sellers, and firms are buyers.

When two individuals produce efficiently and then make a mutually beneficial trade based on a comparative advantage,

they both obtain consumption outside their production outside their production possibilities frontier.

If the price of a hot dog is $2 and the price of a hamburger is $4, then 30 hot dogs contribute as much as to GDP as ___ hamburgers.

15

An economic model is:

A simplified representation of some aspect of the economy.

When the government imposes a binding price floor, it causes:

A surplus of the good to develop.

The largest component in the basket of goods and services used to compute the CPI is:

Housing.

A point inside the production possibilities frontier is:

Both efficient and feasible.

Suppose that in the US, producing an aircraft takes 10,000 hours of labor and producing a shirt takes 2 hours of labor. In China, producing an aircraft takes 40,000 hours of labor and producing a shirt takes 4 hours of labor. What will these nations trade?

China will export shirts, the US will export aircraft.

Which is the largest component of the GDP?

Consumption.

In a market with a binding price ceiling, an increase in the ceiling will ___ the quantity supplied, ___ the quantity demanded, and reduce the ___.

Increase ; Decrease ; Shortage

An American buys a pair of shoes manufactured in Italy. How do the US national income accounts treat the transaction?

Net exports fall, while GDP is unchanged.

If the economy goes into a recession and incomes fall, what happens in the market for interior goods?

Prices and quantities both rise.

If all quantities produced rise by 10% and all prices fall by 10%, which of the following occurs?

Real GDP rises by 10%, while nominal GDP is unchanged.

The discovery of a large new reserve of crude oil will shift the ___ curve for gasoline, leading to a ___ equilibrium price.

Supply ; Lower

An increase in ___ will cause a movement along a given demand curve, which is called a change in ___.

Supply ; Quantity demanded

When a good is taxed, the burden of the tax falls mainly on consumers if:

Supply is elastic, demand is inelastic.

The consumer price index measures approximately the same economic phenomenon as:

The GDP deflator.

Movie tickets and DVD's are substitutes. If the price of DVD's increases, what happened in the market for movie tickets?

The demand curve shifts to the right.

A change in which of the following will NOT shift the demand curve for hamburgers?

The price of hamburgers.