TEST Final Macro

Kayla faces risks and she pays a fee to abc company; in return, acb company agrees to accept some or all of kayla's risks. ABC company is

an INSURANCE company

According to Arthur Laffer, the graph that represents the amount of tax revenue (measured on the vertical axis) as a function of the size of the tax (measured on the horizontal axis) looks like

an UPSIDE-DOWN U

Which of the following would shift the demand curve for gasoline to the right

and INCREASE in CONSUMER INCOME, assuming gasoline is a normal good

Stocks and bonds

and checking accounts are all stores of value but ONLY CHECKING ACCOUNTS commonly function as mediums of exchange

Refer to figure 6-18. Buyers pay how much of the tax per unit

$1

Buskin's Corporation has issued 2 million shares of stock. Its earnings were 10 million, of which it retained 6 million. What was the dividend per share

$2

Refer to Figure 8-2. The amount of deadweight loss as a result of the tax is

$2.50

Suppose x=1 Then the slope of the market demand curve is

-1/3

Refer to figure 5-5. Using the midpoint method, between prices 12 and 18, price elasticity of demand is

0.33

Suppose some country had an adult population of about 25 million, a labor force participation rate of 60 percent and an unemployment rate of 6 percent. How many people were employed

0.9 Million

the amount of deadweight loss as a result of the tax is

105

If Bintu must work 2 hours to make each cup, then her production possibilities frontier is based on how many hours of work

16 hours

The reserve requirement is 10%. Lucy deposits $200 into a bank. By how much do excess reserves change?

180

If the consumer price index was 88 in 2009, 95 in 2010, and 100 in 2011, then the base year must be

2011

For good X, the supply curve is the typical upward sloping straight ling, and the demand curve is the typical downward sloping line. A tax of $15 per unit is imposed on good X. The tax reduces the equilibrium quantity in the market by 300 units. The deadweight loss from the tax is

2250

Refer to figure 5-5. At a price of $12 per unit, sellers total revenue equals

288

Figure 9-13. Consumer surplus after trade is

3600

Refer to figure 8-6. Without a tax, consumer surplus in this marker is

3600

Janelle earned a salary of 40000 in 1996 and 65000 in 2006. The consumer price index was 160 in 1996 and 266 in 2006. Janelles 2006 salary in 1996 dollars is

39097.74

A farmer sells 50 000 of apples to individuals who take them home to eat and 75 000 of apples to a company that uses them all to produce cider. How much of the farmer's sales will be included as apples in GDP

50 000

Eloise deposits 250 into an account and one year later has 272.50. What interest rate was paid on Eloise's deposit

9 percent

If the nominal interest rate is 7 percent and the real interest rate is -2.5 percent then the inflation rate is

9.5

Adam is looking for a job in marketing. He has had some offers and his prospects are promising but he's not yet accepted a job. Amanda lost her job working for Mercury Bicycles because many customers decided they prefer bicycles manufactured by ultimate bicycles instead. Who is FRICTIONALLY unemployed?

ADAM AND AMANDA

Refer to figure 7-8. Which area represents the increase in producer surplus when the price rises from p1 to p2

AHGB

By comparing the world price of horseradish to Cropland's domestic price of horseradish, we can determine whether cropland

ALL OF THE ABOVE

GDP is equal to

ALL OF THE ABOVE

Which of the following are residents of rich countries likely to have in greater quantities, or better quality, than residents of poor countries

ALL OF THE ABOVE

GDP does NOT reflect

ALL OF THE ABOVE ARE CORRECT

Technological knowledge refers to

ALL OF THE ABOVE ARE TECHNOLOGICAL KNOWLEDGE

If the government allowed a free market for transplant organs such as kidneys to exist, critics argue that such a market would

BENEFIT RICH people but not POOR people

In the 1990's, Fed Chairperson Alan Greenspan questioned whether the stock market

BOOM at that time reflected IRRATIONAL EXUBERANCE

Penny is a piano teacher and Dan is a tile layer. If penny teaches Dan's daughter to play the piano in exchange for Dan tiling her kitchen floor,

BOTH penny and dan are made better off by trade

If the Federal funds rate were above the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by

BUYING bonds. this buying would INCREASE the money supply

Refer to figure 2-6. Unemployment could cause this economy to produce at which points

C G F

In the national income accounts, depreciation is called

CONSUMPTION of fixed capital

Which arrow represents the flow of income payments

D

During the recent financial crisis velocity decreased. This means that the rate at which money changed hands

DECREASED. Other things the same, a DECREASE in velocity DECREASES the price level

Marcus puts a greater proportion of his portfolio into government bonds. Marcus's action

DECREASES both risk and the AVERAGE rate of return

A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes

DECREASES, and the consumer surplus in the market for red wine DECREASES

If marijuana were legalized, it is likely that there would be an increase in the supply of marijuana. Advocates of marijuana legalization argue that this would significantly reduce the amount of revenue going to the criminal organizations that currently supply marijuana. The advocates believe that the

DEMAND for marijuana is INELASTIC

The classical dichotomy regers to the idea that the supply of money

DETERMINES NOMINAL variables, but not REAL variables

Which of the following statements is correct

Differences in natural resources CAN explain some of the differences in standards of living around the world

Refer to figure 5-7. For prices above $8, demand is price

ELASTIC, and total revenue will fall as price rises

Which of the following is NOT correct

Economists' opposition to trade restrictions is still based largely on the principle of absolute advantage

Erin is required to pay a tax of $40 when she hires someone to clean her house for a week. Which one is correct

Erin will now clean her own house

Discounting refers directly to

Finding the PRESENT value of a FUTURE sum of money

Refer to figure 5-14 Along which of these segments of the supply curve is supply least elastic

GH

The x coordinate of an ordered pair specifies the

HORIZONTAL location of the point

Refer to figure 8-19. If the economy is at point A on the curve than a small increase in the tax rate will

INCREASE the deadweight loss of the tax and INCREASE tax revenue

Equilibrium quantity must increase when demand

INCREASES and supply does NOT change, when demand does NOT change and supply INCREASES, and when BOTH deman and supply INCREASE

In the long run, a higher saving rate

INCREASES the level of productivity

Which of the following statement is correct

If the prices of all goods and services changed proportionately over time, then the consumer price index would reflect no substitution bias

The shape of the curve is consistent with which of the following statements about the economy to which the curve applies

In the long run, a higher saving rate leads to a higher level of INCOME

If the United States decides to trade with Mexico, we know that

Mexico and the United States can both benefit

Refer to table 3-8. Huang has an absolute advantage in the production of

NEITHER good and a comparative advantage in the production of PARASOLS

Which of the following restrictions implies that investment exceeds private saving for a closed economy

NO restriction is necessary; investment and private saving are equal for all closed economies

Which of the following restrictions implies that private saving and investment are equal for a closed economy

NO restriction is necessary; private saving and investment are equal for all closed economies

According to the classical dichotomy, which of the following increases when the money supply increases

NONE OF THE ABOVE INCREASES

In a competitive market, the price of a product

NONE OF THE ABOVE IS CORRECT

If a tax is levied on the buyers of a product, then the supply curve will

NOT SHIFT

Economists believe that production possibilities frontiers

OFTEN have a BOWED shape

Refer to Figure 8-3. The amount of tax revenue received by the government is equal to the area

P3ACP1

Which of the four panels illustrates an increase in quantity supplied

PANEL A

Prices rise when the quantity of money rises rapidly is an example of a

POSITIVE economic statement

A supply schedule is a table that shows the relationship between

PRICE and QUANTITY supplied

which of these statements does not apply to market economies

Prices ENSURE that anyone who wants a product can get it

Suppose the government imposes a 20 cent tax on the sellers of iced tea. Which of the following is NOT correct. The tax would

RAISE the equilibrium price by 20 cents

Suppose OPEC succeeds in raising world oil prices by 300 percent. This price increase causes inventors to look at alternative sources of fuel for internal combustion engines. A hydrogen-powered engine is developed which is cheaper to operate than gasoline engines. Which problems in the construction of the CPI does this situation represent

SUBSTITUTION bias and INTRODUCTION of new goods

If the quantity supplied responds only slightly to changes in price, then

SUPPLY is said to be INELASTIC

Refer to table 3-10. Juanita has an absolute advantage in

TESTING cellular phones and a comparative advantage in TESTING cellular phones

What quantity is measured along the horizontal axis

THE QUANTITY OF MONEY

The BLS reports the U-6 measure of labor underutilized. Which of the following is how it computes U-6?

TOTAL unemployed + marginally attached workers + PART TIME employed for economic reasons/ LABOR FORCE + marginally attached workers

Refer to figure 9-8. When the country for which the figure is drawn allows the international trade in cars

TOTal surplus increases by the area D

Which of the following scenarios is NOT consistent with the Laffer curve

The tax rate is VERY HIGH and tax revenue is VERY HIGH

Which of the following transaction adds to US GDP for 2010

When Tim and Tina were both single, they lived in separate apartments and each paid 750 in rent. Tim and Tina got married in 2010 and they bought a previously unoccupied house that, according to reliable estimates, could be rented for 1550 per month

Refer to Figure 4-19. All else equal, a decrease in the price of the gran fed turkeys would cause a move from

Y to X

If sellers do not adjust their quantity supplied at all in response to a change in price, the price elasticity of supply is

ZERO, and the supply curve is VERTICAL

When the relative price of a good decreases, consumers respond by buying

a LARGER quantity of that good and a SMALLER quantity of SUBSTITUTES for that good

Refer to figure 26-3. Which of the following movements shows the effects of a new law that makes more people than before eligible for Individual retirement accounts

a movement from point C to point F

**According to the quantity equation, the price level would change less than proportionately with a rise in the money supply if there were also

either a RISE in output or a FALL in the rate at which money changes hands

An assistant manager at a restaurant gets a $100 a month raise. He figures that with his new monthly salary he cannot buy as many goods and services as he could buy last year

his real salary has FALLEN and his nominal salary has RISEN

Economists differ in their views of the role of the government in promoting economic growth. A controversial idea is that government should

lend support to the invisible hand by maintaining property rights and political stability

An increase in which of the following would shift the supply curve for gasoline to the right

number of producers of gasoline

Pierre says that he will spend exactly 75 cents a day on candy bars, regardless of the price of candy bars. Pierre's demand for candy bars is

perfectly INELASTIC

Which of the following movements would illustrate the effect in the market for chocolate chip cookies of a decrease in the price of flour

point A to point B

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of a particular good

producer surplus INCREASES and total surplus INCREASES in the market for that good

A relatively flat demand curve indicates that

quantity demanded will adjust SIGNIFICANTLY to a price change

**The inflation rate you are likely to hear on the nightly news is calculated from

the CPI

Suppose that Congress were to institute an investment tax credit. What would happen in the market for loanable funds

the DEMAND for loanable funds would shift RIGHT

The future value of a deposit in a savings account will be smaller

the LOWER the INTEREST rate is

Which of the following is NOT a determinant of the price elasticity of demand for a good

the STEEPNESS or FLATNESS of the supply curve for the good

You have driven 500 miles on a vacation and then you notice that you are only 25 miles from an attraction you hadnt known about, but would really like to see. In computing the opportunity cost of visiting this attraction you had not planned to visit, you should include

the cost of driving the next 25 miles, but NOT the cost of driving the first 500

When shopping you notice that a pair of jeans costs $20 and that a tee shirt costs $10. You compute the price of jeans relative to tee shirts.

the dollar price of jeans is a NOMINAL variable; the RELATIVE price of jeans is real variable

A production possibilities frontier shifts outward when

the economy experiences economic growth

Assuming diminishing returns

the increase in output growth from an increase in the saving rate FALLS over time and that other things the same POOR countries should grow FASTER than RICH ones

Suppose the market demand curve for a good passes through the point (quantity demanded =100, prices =25). If there are five buyers in the marker, then

the marginal buyer's willingness to pay for the 100th unit of the good is $25

If the minimum wage exceeds the equilibrium wage, then

the quantity SUPPLIED of labor will exceed the quantity demanded

Suppose a typical worker in India can produce 32 units of product in an 8 hr day, while a typical worker in Bangladesh can produce 30 units of product in a 10 hour day. we can conclude that

the standard of living will likely be higher in india than in bangladesh

the prices of stock traded on exchanges are determined by

the supply of, and the demand for, the stock

Congressman Dearmark justified spending 3 million on a new entertainment complex in his district because it will create 450 new jobs for his residents. As student of economics you know that

this is a case of the BROKEN WINDOW FALLACY