Macroeconomics Final

If the bank returns $1,060 on the $1,000 deposited for a year during which inflation is 4%, the real interest rate is

2%

500lbs of apples and 1200lbs of bananas, 300lbs of apples and 1300lbs of bananas, opportunity cost of bananas

2lbs of apples

Equilibrium quantity and equilibrium price for a stapler is

70,000 and $6

Adding wages, interest, rent, and profits yield

GDP

Market value of the final goods and services produced in a given year within a country

GDP measures

Demand is the relationship between quantity demanded and the price of a good when all the other influences on buying plans remain the same

True regarding demand

Excludes the value of underground production and leisure time

U.S real GDP

Measuring total production by valuing items at their market value allows up to

add together the value of different goods that have different prices

oil refiners can refine a barrel of petroleum so that it yields either more home heating oil or more diesel fuel. If the price of diesel fuel falls, there is

an increase in supply of home heating oil

Macaroni and cheese is an inferior good, then a decrease in income results in

an increase in the demand for mac and cheese

A market defined as

any arrangement that brings buyers and sellers together

What determines the position of the supply curve of high skilled workers relative to that of low skilled workers

cost of acquiring the skill

How are final goods and services valued when measuring nominal GDP

current market prices

Created by recession

cyclical unemployment

Real GDP fluctuates around its trend

during business cycle

All of the available factors of production are being efficiently employed, the

economy is producing at a point on its PPF

NOT directly included in Canadian GDP

gasoline purchased by a tour bus operator

Circular flow model, two types of markets

goods and factor

For CPI to provide an accurate measure of the prices paid by urban consumers, it is necessary

have a market basket that is consistent and corresponds to what households actually purchase

Market demand curve for mangos is

horizontal sum of the individual demand curves of all buyers

Puerto Rico's PPF will shift outward further than Hawaii's PPF

if PR produces more hotels than Hawaii

The law of supply, other things remain the same

if the price of a good increases, the quantity supplied increases

Which factor of production does human capital enhance

labor

As a factor of production, oil reserves are counted as

land

If real GDP exceeds potential GDP, then the unemployment rate _____ the natural unemployment rate

less than

2012, real GDP is larger than nominal, GDP price index in 2012 is

less than 100

Household income earned from the markets for factors of production and with no government redistribution is

market income

CPI decreases from one year to the next, inflation rate is

negative

If the price of the goods and services contained in the CPI market basket increases from the base period to the next year, we know that

next year's cpi will be above 100

Whatever is paid out and cannot be reduced or reversed

opportunity cost

A _____ tax is one that taxes income at an average rate that decreases

regressive

increase in the demand for a good or service

rise in the price of a substitute good or service

Demand for oranges increase while the supply decreases. The equilibrium price of oranges _____ , and the equilibrium quantity _____

rises; perhaps changes but we can't say if it increases, decreases, or stays the same

Automobile workers union successfully negotiates a wage increase for its members, how does the wage hike affect the supply of automobiles

supply decrease

A price of $35 per dozen roses results in (figure)

surplus

Best definition of economic growth

sustained expansion of production possibilities

Because firms pay out everything they receive as income to the factors of production

total expenditure equals total income

Business cycle has two turning points

trough and peak

Nominal GDP is GDP

using current market prices

When Ford decides to increase production of hybrid cars, answers _____

what

Baskin Congressional Advisory Commission reported that the CPI overestimated inflation by

1.1% a year

analyze the aggregate effects on the national economy

BEST describes macroecon

Should we collect tolls on turnpikes using human toll collectors or mechanized toll machines?

Best example of "how?" question

Producing an amount of GDP equals to potential GDP is most consistent with the economy processing

Beyond the ppf

New goods bias, commodity substitution bias

Bias in the CPI

Compare the records of the CPI and the PCEPI tends to exceed CPI when

CPI tends to exceed the PCEPI

_____ the owners of the factors of production, while _____ what amounts of those factors is there

Households are and firms determine

An example of consumption good

Jake buys an iphone

Cumulative percentage of income graphed against cumulative percentage of households nominal gdp

Lorenz curve for income

kmart, home-depot, and delta

Macroeconomic topic

largest single component of U.S. federal government expenditures is spent on

Medicare and medicaid

Describe how the world ought to be, depend on people's values and cannot be tested

Normative statement

Unemployment rate is below the natural unemployment rate

Peak of business cycle

Circular flow model shows that goods and services flow from

businesses to households

Represents real flow (circular flow model)

capital

One person's opportunity cost of producing a good is lower than another person's opportunity cost of producing the same good

comparative advantage

Which of the following shifts the demand curve for movies leftward

decrease in the price of netflix, a substitute for movies

Number of buyers of SUV, decrease sharply. So the

demand curve for SUVs shifts leftward

Price of green tea increases and the price of wasabi dip increases, what would be the effect on demand for sushi at lunch

demand for sushi would decrease

Nominal is measured in current dollars and real is measured in dollars of a given year

difference between nominal and real

Everything else same, government expenditure increases by $400 billion and imports increase by $700 billion, then GDP

does not change

Percentage of workers who work part time for non economic reasons

does not fluctuate much at all with the business cycle

Real interest rate is negative if the inflation rate

exceeds the nominal interest rate

Because of the circular flow of expenditure and income in the economy, total _____ equals total _____ equals total _____

expenditure; income value; value of production

Price for flour, used to produce bagels, increase. Equilibrium price of cream cheese _____ and the equilibrium quantity of cream cheese _____

falls and decreases

New replacement muffler installed by midas mufflers

final good or service

Which type of unemployment is a permanent and healthy phenomenon in a dynamic economy

frictional

3 main ways that government is the U.S. redistribute income

income taxes, income maintenance program, and subsidized services

"increase in the tax on gasoline increase the price of gasoline"

positive statement

Changes in which of the following factors do NOT shift the demand curve

price of the good

Currently redistribute income in the U.S.

progressive income tax, social security

To find the cost of the CPI market basket in the base period prices we have to multiply the

quantities in the cpi market basket by the base period prices

Production possibilities model, vertical axis measures _____ and the horizontal axis measures _____

quantity of a good or service; the quantity of the good or service

Measure of standard of living

real GDP and population