micro final

Which of the following is true of disposable income?

It equals consumption expenditures plus saving

Which of the following best describes aggregate expenditure?

a. C + I + G + (X − M)

Which of the following is not true of a change in the price level?

a. It will shift the aggregate demand curve.

If incomes in the United States increase, other things equal, then U.S. _____.

a. imports increase and exports remain constant

An increase in the marginal propensity to consume (MPC) will, other things constant, _____.

a. increase the value of the multiplier

Less of an economy's resources will be channeled into building new factories and equipment when:

a. interest rates are high.

The aggregate demand curve of an economy:

a. is downward sloping

Which of the following factors of production is likely to be most productive?

a. A certified doctor working in a well-equipped hospital

Long-term growth in production can be explained by:

a. an improvement in the quality of resources available.

Capital deepening refers to:

a. an increase in the amount of capital per worker.

The movement from point A to point B in the figure below illustrates the effect of: (output per worker)

a. an increase in the capital stock relative to the workforce.

The rules of the game refer to:

a. any factor that facilitates production and exchange, such as tax laws and property rights.

Productivity measures:

a. how efficiently resources are turned into goods and services.

Given the MPC is positive and less than one, an increase in disposable income will _____.

a. increase both consumption and saving

Applied research:

a. is designed to answer particular questions

The most important determinant of a household's consumption spending is:

a. its disposable income

If a household's income rises from $46,000 to $46,700 and its consumption spending rises from $35,800 to $36,400, then its:

a. marginal propensity to consume is 0.86.

The fraction of an increase in income that is saved is referred to as the _____.

a. marginal propensity to save

. In contrast to government research and development, private sector R&D has:

a. more impact on productivity since most government R&D focuses narrowly on military applications.

A breakthrough in technology is most likely to:

a. reduce the labor needed to produce a given amount of output.

The per capita output of an economy is likely to increase if:

a. the number of workers in the economy grows faster than its population.

The marginal propensity to consume is:

a. the relationship between a change in consumption and a change in income.

A decrease in the price level will _____.

a.shift the consumption function upward

Expectations that the price level will increase in the future will:

a.shift the current consumption function upward.

Which of the following is not an example of a government purchase?

b. Chinese toys to be sold in stores

The aggregate output demanded for a given price level occurs at the point where:

b. aggregate expenditure equals real GDP.

A household that expects a decrease in disposable income in the future will _____.

b. decrease its current consumption spending

An increase in real disposable income will:

b. decrease the value of net exports of a country.

The figure given below shows the income-expenditure model. At point C, _____.(aggregate expenditure)

b. producers experience an unexpected loss of inventory

Net taxes are:

b. taxes minus transfer payments.

The aggregate demand curve of an economy illustrates the relationship between:

b. the price level and real gross domestic product (GDP).

The amount of U.S. exports to the rest of the world is primarily determined by _____.

b. the real disposable income in other nations

If the marginal propensity to consume is equal to 0.70 and income rises by $20 billion in an economy, then consumption spending will increase by:

b. $14 billion.

The table given below shows the disposable income and consumption of a household. In the table below, the level of saving at a disposable income of $1,200 is:

b. $240

The gross domestic product of Solvasa, a small island country, is $68 billion. The adult population of the country is 8.70 million and 11.3 million citizens are below 18 years of age. The output per capita of Solvasa is approximately equal to _____.

b. $3,400

Joe runs a pizzeria at a busy place in a city. Around 125 customers visit every day and they each buy 3 pizzas on average. Joe has employed 20 workers to make pizzas. The productivity of one worker per day in the pizzeria is equal to _____.

b. 18.75 pizzas per worker

In an iron and steel plant with 4 blast furnaces, 40 laborers produce 160 tons of pig iron every day. The labor productivity in the firm is equal to _____.

b. 4 tons per worker

The figure below shows three different per-worker production functions: PF1, PF2, and PF3. If PF1 is the initial per-worker production function, which of the following reflects the impact of an increase in the level of technology?

b. An upward shift from PF1 to PF2

Which of the following is a reason behind the low standards of living in developing countries?

b. Low levels of human and physical capital per worker

Which of the following is an advantage of clustering?

b. New entrants can have lower cost of gathering regional information about trends in the market

Which of the following best describes the impact of technological change on labor?

b. Technology causes unemployment in the short run and higher incomes in the long run.

_____ is an important determinant of its standard of living in the long run.

b. The productivity of a nation's resources

The table given below shows the disposable income and consumption of a household. In the table below, saving:

b. decreases as disposable income decreases.

The impact of computers on U.S. productivity growth:

b. has been dramatic, contributing to significant growth during the early years of the 21st century.

The output per capita of a country is equal to _____.

b. its GDP divided by its population

. The production possibilities curve for capital and consumer goods is concave to the origin because:

b. resources are not perfectly adaptable to the production of both goods

Clustering:

b. takes place when new firms enter regions already thick with other firms in the same or similar industries.

A decrease in stock prices will _____ the net wealth of households and _____ consumption.

b.reduce; decrease

Expectations that the price level will decrease in the future will _____.

b.shift the current consumption function downward

The table given below shows the values of different components of aggregate expenditure of an economy. The equilibrium level of gross domestic product (GDP) is _____.

c. $6.0 trillion

Which of the following is most likely to cause a rightward shift of the investment demand curve?

c. An improvement in business expectations

Suppose at a particular level of real gross domestic product (GDP), there are no unintended inventory adjustments. In this context, which of the following is true?

c. Real GDP equals the equilibrium level of real GDP demanded.

If the spending multiplier is greater than 1.0, a $200 billion increase in autonomous investment will cause:

c. equilibrium real GDP demanded to increase by more than $200 billion.

The aggregate expenditure line shows total planned spending at each _____.

c. income level, holding the price level constant

At the equilibrium level of real gross domestic product (GDP), unplanned inventory adjustment equals _____.

c. zero

Which of the following will not shift the consumption function?

c. A change in household disposable income

Which of the following would slow down productivity growth?

c. A decline in the quality of education

Which of the following is an example of industrial policy?

c. Government imposing a high rate of taxes on the import of goods and services

Which of the following does not contribute to an improved standard of living?

c. Higher prices for the necessities of life

If Q is total real output, K is capital in use, and L is labor employed, then _____ is the formula to calculate the productivity of labor.

c. Q/L

Which of the following is the best indicator of standard of living?

c. Real GDP per capita

Which of the following is not included in the rules of the game?

c. The stock of natural resources

. A small change in the rate of productivity growth will have:

c. a small impact on output in the short run but a large impact in the long run.

According to some economists, firms in some industries gain a performance advantage by:

c. clustering

. In order for society to have a rising standard of living, output must grow:

c. faster than the population

One of the important points of criticism of industrial policy is that:

c. government sponsored research will end up benefitting foreign countries.

Over the last century, U.S. labor productivity has:

c. grown at about 2 percent per year.

Basic research:

c. is the search for general knowledge without a specific product or procedure in mind

An economy's standard of living grows over the long run because of:

c. technological improvements.

Surgeons earn more than janitors because:

c. the accumulation of human capital leads to an improvement in productivity.

Human capital represents:

c. the education, skill, and training embodied in workers

If the marginal propensity to consume (MPC) equals 0.9, the multiplier is _____.

d. 10

Identify the correct statement.

d. Annual variations in investment are larger than annual variations in consumption.

Which of the following best describes the simple spending multiplier?

d. It shows the magnified change in equilibrium output demanded that arises from a given initial change in planned aggregate spending.

Which of the following is true of government purchases?

d. They are decided by public officials.

A firm's level of investment depends on the market interest rate:

d. because the interest rate represents the opportunity cost of investing in capital.

An increase in the price level in an economy will _____.

d. decrease the quantity of real gross domestic product (GDP) demanded

In the income-expenditure framework, if planned aggregate expenditures are greater than real gross domestic product (GDP), _____.

d. inventories will decrease

In the simple aggregate expenditure model, the slope of the aggregate expenditure line depends on:

d. the marginal propensity to consume.

The sum of the marginal propensity to consume (MPC) and the marginal propensity to save (MPS) equals:

d. 1.0.

The figure below shows three different per-worker production functions: PF1, PF2, and PF3. If PF1 is the initial per-worker production function for a farm, which of the following reflects an increase in the number of tractors per worker in the farm?

d. A movement from point C to point D

_____ is an example of an industrial cluster.

d. Silicon Valley software makers

The consumption function assumes that:

d. factors other than disposable income affect consumption, but those are held constant along the consumption function.

If a household's income falls from $20,000 to $17,000 and its consumption spending falls from $18,000 to $15,000, then its:

d. marginal propensity to save is 0.

Research and development is most likely to have an impact on the _____.

d. quality of capital goods available

The term "industrial policy" refers to:

d. the government policy that aims at enhancing the competitiveness of domestic firms.

A decrease in disposable income will:

d.cause a downward movement along the consumption function.

An increase in net wealth will:

d.increase consumption and decrease saving at each level of income.

If the marginal propensity to consume (MPC) is 4/5, the value of the simple multiplier is:

e. 5.

The figure given below shows the income-expenditure model. Which of the following best describes the situation at point B?(aggregate expenditure)

e. Producers experience an unexpected accumulation of inventory

Data on annual percentage changes in real GDP, consumption, and investment in the United States shows that fluctuations in investment _____.

e. account for most of the variability in GDP

An increase in income in other countries, other things equal, would cause U.S. _____.

e. imports to remain unchanged and exports to increase

Which of the following would increase labor productivity?

e. An increase in the education level of per unit of labor

Which of the following could cause the production possibilities frontier to shift to the right?

e. Production of more capital goods and fewer consumer goods

The slope of the consumption function shows how:

e. consumption changes as the level of income changes.

Productivity growth is important because:

e. it ultimately increases a nation's standard of living.

A point on the per-worker production function shows:

e. the average output per worker on the vertical axis for each level of capital per worker on the horizontal axis.

Which of the following will shift the consumption function upward?

e.An increase in net wealth

_____ is the reward savers earn for deferring consumption.

e.Interest

An increase in the price level will:

e.decrease consumption because the value of net wealth will decrease.