marco notes

The table shows the cost of a fixed basket of goods that a typical urban consumer would buy in the economy of Kindleberger. The base period for the consumer price index (CPI) is the year 2000. What is the CPI for 2011?

87.38

Tom is saving for his dream car by putting his summer earnings into a fixed-rate savings account. If inflation unexpectedly increases, then so too will Tom's summer earnings.

A. False

What is the single MOST important factor influencing economic growth for an economy?

A. Increased productivity

Q38 If an economy is operating below full employment, what is likely to happen in the long run

A. Input prices and wages fell; SRAS shifts to the right

Jen received news that she is getting a 5% raise. However, the Bureau of Labor Statistics just reported that prices are rising by 7%. Based on the given information, which of these statements is TRUE?

A. Jen's purchasing power will decline by 2%

Q37 If Tony spends $25,000 when his income is $50,000, what is his average propensity to consume?

0.5

Q20 A small nation has 1400 citizens: 800 are employed, 200 are unemployed, 200 are retired, and 200 are kids in school. The unemployment rate is

20%

Q34 Suppose economists observe that an increase in government purchases of $40 billion raises aggregate expenditures by $120 billion. These economists would estimate that the marginal propensity to save is

A. 0.33

Q36 When disposable income, the income after tax, increases from $1,000 to $1,200, what is the value of the marginal propensity to consume? What is the value of the marginal propensity to save?

A. 0.5; 0,5

Q35 Suppose economists observe that an increase in government purchases of $40 billion raises aggregate expenditures by $120 billion. These economists would estimate that the marginal propensity to consume is

A. 0.67

Which of the following would shift the short-run aggregate supply curve to the right?

A. A rise in productivity

Q41 Which of the following factors can shift the long-run aggregate supply curve?

A. All of the above

Demand-pull inflation is caused by

A. An increase in aggregate demand to equilibrium point beyond full employment

The largest component of GDP by the income approach is ______ and by the expenditure approach is _____

A. Compensation of employees; consumer spending

Q23 In the year 2011, this economy is undergoing:

A. Deflation

Q31 What is the catch-up effect concerning developed and developing countries?

A. Developing countries may grow faster than developed countries because they lack the most basic tools and capital investment leads to higher productivity growth.

Q25 After graduating from college, you work for 25 hours per week at Aldi while actively looking for a permanent job. You are classified as

A. Employed and Underemployed

A change in business inventory is NOT treated as an investment

A. False

Q6 The economy is likely to be heading into a recession when the National Activity Index equals -0.55.

A. False

Q16 Johnny is 17 and works in his uncle's grocery store 10 hours a week after school. His uncle pays him no money but provides him free food and accommodation. However, Johnny earns a spot on the high school basketball team and no longer works in his uncle's store. How is Johnny categorized in the unemployment figures?

A. Johnny is not part of the labor force

Q26 Economic growth will NOT lead to

A. More equitable distribution of income

Q11 Since his last job, Tim looks at the help-wanted ads but has not applied to any in the past four weeks. Tim is

A. Not in the labor force

The high point and the low point of a business cycle are called

A. Peak; trough

Q5 Total spending in an economy is the sum of

A. Personal consumption plus gross private investment plus government spending plus net export

Long-run growth is demonstrated on the graph a movement from point _____ to point

A. Point A to point B

Q29 Short-run growth is demonstrated on the graph a movement from point _____ to point _____

A. Point C to point A

If an economy has a very high but declining unemployment rate, and a barely positive growth rate, which phase of the business cycle does this best describe?

A. Recovery

Q21 Which will NOT cause inflation

A. Slow growth in the quantity of money

Long-run growth is MOST likely to be achieved by promoting

A. Technological advancement

4 Which is true if a nation is currently at its natural rate of unemployment?

A. The rate of cyclical unemployment is 0%

Q8 At one time, Southlake was known for its poor air quality. Locals said that a man wearing a white shirt when he walked into the city would have a black shirt when he left. Since that time, the city has greatly reduced its air and water pollution. As a result of cleaner air and water

A. The standard of living of the citizens of Southlake has increased, even though the improvement in the environment was not reflected in its GDP

If a country's annual growth rate is 5%, then it takes 14 years to double its GDP

A. True

Q13 If nominal GDP is $12 trillion for a given year and the GDP deflator for that year is 100, then real GDP is $12 trillion

A. True

Q17 Hyperinflation is usually caused by the government printing extra money to finance its huge budget deficits.

A. True

Q2 Suppose the yield on a 1-year Treasury bill is 3% and the 10-year Treasury note yields 2.74%. This yield curve suggests the economy is headed for a recession.

A. True

Q7 Gross private domestic investment includes investments in residential and business structures.

A. True

Q44 Which of the following will NOT occur when the aggregate price falls?

A. Value of money assets falls

Q40 Cost-push inflation is caused by

A. a decrease in short-run aggregate supply to an equilibrium point below full employment

The interest rate effect

A. is the change in consumer and investment spending due to changes in interest rates resulting from changes in the aggregate price level

Q9 Northface is a popular U.S. brand. However, most of its clothing is made in China. In which category would the value of North face's clothing appear?

B. In U.S. GNP

Unexpected inflation benefits ________ hurts_______________

Borrowers; lenders

If the price level is 100 in year 1, 120 in year2, and 135 in year 3. In year 3, this economy is undergoing:

Disinflation

Q33 Which of the following is NOT an effective tool used by a government to promote economic growth?

Trade barriers to protect domestic industries

In the U.S., part-time workers are counted as employed.

true