Macroeconomics Final Exam Review

What is an example of an inferior good?

a city bus

When the supply curve shifts out (to the right) and demand curve shifts in (to the left) the equilibrium price will:

decrease

What are some categories of personal consumption expenditures?

durable, non-durable goods and services

One important reason economists track business investment is that:

it is a leading indicator of the business cycle

T or F: The U.S. median household income in 2013 was about $65,000.

False

A sheep ranch produces $30 worth of wool. A suit manufacturer produces $60 worth of suits. A retail outlet sells a suit to a customer for $180. The change in GDP would be:

$180

The demand for gas is rising, what could cause this?

Consumers expect prices to rise in the near future.

T or F: China's GDP per capita would have been higher if not for the deterioration in its environment.

False

T or F: henry sells brownies to his classmates at college for cash. his income from this product is probably NOT part of the informal economy.

False it could be considered part of an informal economy.

If there is an increase in the price of tomatoes it should cause the supply of ketchup to shift to the right

False it would shift to the left because there isn't tomatoes to make ketchup.

If the price of gas increases from $4 to $4.50, ceeteris paribus what happens...

People will buy less gas

When you construct a demand curve what has to be true?

To construct a demand curve the price of all other goods must be held constant.

T or F: Gross private domestic investment is a key factor behind economic growth in the U.S.

True

Tor F: A disadvantaage of using per capita GDP to measure the standard of living in a country is that it does not accuractely reflect the differences in wealth between rich citizens and poor citizens in the same country.

True

Tor F: Business cycles are alternating increases and decreases in macroeconomics activity

True

If a consumer buys a set of headphones at the same time as she buys an MP3 player, these 2 products are most likely what kind of goods?

complementary goods

In the simple circular flow model:

income is equal to spending

Bus tickets are often considered _____ goods because _____.

inferior goods because as income rises, demand for bus tickets.

What component is the smallest part of U.S. GDP?

net exports

If an increase in income leads to an increase in demand for opera tickets, then operas are what type of good?

normal good

What is the reason that the law of demand exist?

people substitue cheaper products for more expensive products.

if other factors are held constant whe the price of an ipad rises then the....

quantity demanded for ipads fall

When production technology improves, supply increases and the equilibrium

quantity rises and the equilibrium price falls.

What is the reason a supply curve is upward sloping?

reason supply curve is upward sloping because it is producing more units that makes it more expensive to produce each individual unit.

According to the law of supply producers will supply more of their products when...

the price rises

What is also included in personal consumption expenditures?

the purchase of a new TV by a household