AP MACRO FINAL

When aggregate demand declines, the price level may remain constant, at least for a time, becuase

firms individually fear that their price cut may set off a price war.

Changes in government spending and tax revenues for the purpose of achieving a full-employment and noninflationary level of domestic output is called:

fiscal policy.

An example of a final good in national income accounts would be new:

flowers purchased by homeowner Lenny Davis.

According to the theory of comparative advantage, a good should be produced where

its opportunity costs are least.

To be considered scarce, an economic resource must be

limited and desirable, but not free.

Which of the following is true of an import quota? It

limits quantity of imports allowed into a country.

An increase in the capital stock will most likely cause the

long-run aggregate supply curve to shift rightward.

A bank "creates" money when it:

makes a loan.

When money is used as a standard of value, a person is

making price comparisons among products.

Given a fixed Phillips Curve with stable and predictable inflation and unemployment rate tradeoffs, it appears that:

manipulating aggregate demand through fiscal and monetary policies has the effect of causing a movement along the curve.

A person states that: "A large public debt will bankrupt the United States government." An economist is likely to respond:

no, because the government can refinance the public debt by selling new bonds.

The real interest rate is simply stated as the

nominal interest rate minus the expected inflation rate.

During a recession the business cycle is contracting

occurs when the unemployment rate is growing.

When on decision is made, the next best alternative not selected is called

opportunity cost.

The opportunity cost of building a new high school is

other goods and services, which must now be sacrificed to build the new high school

The unemployment rate measures the percentage of

people in the labor force who do not have jobs

The short-run aggregate supply curve will shift to the right when

prices of inputs decrease.

When inflation is running high, proper monetary policy would be to:

raise the reserve requirement.

A recession is defined by which of the following:

real domestic output falls

The long-run growth rate of an economy will be increased by an increase in all of the following EXCEPT

real interest rate

Which of the following is a macroeconomic statement?

the gross profits of all American businesses were $181 billion last year

An example of a public transfer payment is a(n):

veteran's benefit payment.

Other things being equal, if the real interest rate falls and business taxes rise

we will be uncertain as to the resulting change in investment.

Suppose the autonomous consumption is $400 and the marginal propensity to consume is 0.8. If disposable income increase by $1,200, consumption spending will increase by

$960

What is the present value of $110 paid one year from now if the interest rate is 10%?

100

If the Consumer price index rises from 300 to 333 in a particular year, the rate of inflation in that year is:

11%

If the legal reserve requirement is 25%, the value of the simple deposit expansion multiplier is

4.

If a $200 billion increase in consumption spending creates $200 billion of new income in the first round of the multiplier process and $160 billion in the second round, the multiplier and the marginal propensity to consume will be, respectively,

5.00 and 0.80

Tight money policy will increase economic activity in our economy.

False

When banks practice fractional reserve banking, most of the money deposited in a bank stays in the bank's vaults.

False

Assume that the marginal propensity to consume is 0.90. As a result of an increase in the tax rates, the government collects an additional $20 million. What will be the impact on gross domestic product (GDP)?

GDP will decrease by a maximum of $180 million

Which of the following would be included in the calculation of gross domestic product?

Government purchase of a new submarine

A country's government runs a budget deficit when which of the following occurs in a given year?

Government spending exceeds tax revenue.

Which of the following is the best measure of the production (output) of an economy?

Gross Domestic Product

Bernie is an entrepreneur. Which of the following would most likely apply to him?

He earns profits for starting up businesses

Which of the following is most likely to increase the velocity of money?

Higher frequency of paychecks

Which of the following problems do all economic systems face?

How to allocate scarce resources among unlimited wants & How to decide what to produce, how to produce, and for whom to produce

Which of the following is a positive statement?

I enjoy summer evenings when it cools off.

Which of the following will occur if inflation in the United States begins to rise while prices in other countries remain relatively stable? In the United States,

real interest rates decrease.

The phrase 'There Is No Such Thing As a Free Lunch' refers to the belief that

Nothing is without cost

Which of the following is true if real GDP in Year 1 is $5,000 and in Year 2 is $5,200?

Output has increased by 4 percent.

An import tariff will have what effect on price and quantity in the domestic market for the good?

Price - increase Quantity - decrease

Which does not contribute to the production of the domestic output of an economy?

a full-time student

A rightward shift of the Phillips Curve suggests that:

a higher rate of unemployment is associated with each inflation rate.

Net exports is a negative number when:

a nation's imports of goods and services are greater than its exports.

A college graduate using the summer following graduation to search for a job would best be classified as:

a part of frictional unemployment

United States exports, foreign travel in the United States, and foreign capital inflow into the United States give rise to:

a supply of foreign currencies to the United States.

Macroeconomics approaches the study of economics from the viewpoint of:

the entire economy

The chair of the Federal Reserve is Paul Volker.

False

Suppose that all banks keep only the minimum reserves required by law and that there are no currencies drains. The legal reserve requirement is 10 percent. If Maggie deposits the $100 bill she received as a graduation gift from her grandmother into her checking account, the maximum increase in the total money supply will be

$900

Suppose that the Federal Reserve buys $400 billion worth of government securities from the public. If the required reserve ratio is 20 percent, the maximum increase in the money supply is

$2,000 billion

In the Keynesian aggregate-expenditure model, if the MPC is 0.75 and gross investment increases by $6 billion, equilibrium GDP will increase by

$24 billion.

If a $500 billion increase in investment spending increases income by $500 billion in the first round of the multiplier process and by $450 in the second round, income will eventually increase by:

$5,000 billion.

Assume the marginal propensity to consume out of disposable income is 0.8 and that the government taxes all income at a constant rate of 30%. If gross income increases by $100, consumption will initially increase by

$56

You plan to stay in a hotel for one week on your senior trip to Cancun, Mexico. The total cost is 7000 pesos. With an exchange rate of 11 pesos per dollar, what is the cost of your hotel in U.S. dollars?

$636.36

How much money will $100,000 in actual reserves create if the reserve requirement is 10%?

$900,000

Which of the following will not change the demand for oranges?

A change in the price of oranges

Which of the following combinations of policies is designed to decrease inflation?

A decrease in government spending and an open-market sale of government securties

Which of the following will not cause the demand curve for athletic shoes to shift?

A decrease in the price of athletic shoes

Which of the following would cause the aggregate demand curve to shift to the right?

A new law that requires the government to cover the full cost of medicine for the elderly.

Which of the following people would be considered unemployed?

A person who stayed at home to raise his children and now starts looking for a job

Which of the following would best portray long-run economic growth?

A rightward shift of the long-run aggregate supply curve

Which of the following best describes aggregate supply?

A schedule indicating the level of real output that will be produced at each possible price level

Of the following, which is the best example of structural unemployment?

A steel worker who is replaced by a robot

GDP is the market value of:

All final goods and services produced in an economy in a given year

A commercial bank holds $500,000 in demand deposit liabilities and $120,000 in reserves. If the required reserve ratio is 20%, which of the following is the maximum amount by which this single commercial bank and the maximum amount by which the banking system can increase loans?

Amount created by single bank- $20,000 Amount created by banking system- $100,000

Which of the following will lead to an increase in the demand for loanable funds in the United States?

An increase in U.S. government borrowing

Which of the following would cause an outward or rightward shift in the production possibilities curve?

An increase in capital equipment

Which of the following is true if the production possibilities curve is a curved line concave to origin?

As more of one good is produced, increasing amounts of the other good must be given up

Corporate profits increase; as a result, government collects more corporate income taxes

Automatic and Contractionary

During periods of inflation, wages continue to rise, resulting in an increase in income taxes paid to both national and state levels of government.

Automatic and Contractionary

Incomes rise; as a result, people pay a larger fraction of their income in taxes.

Automatic and Contractionary

Because of a recession, the number of people qualifying for food stamps increases.

Automatic and Expansionary

Suppose two countries are each capable of individually producing two given commodities. Instead, each specializes by producing the commodity for which it has a comparative advantage and then trades with the other country. Which of the following is most likely to result?

Both countries will become better off

In the circular flow diagram, which of the following is true in the product market?

Business firms sell goods and services to households.

If the real interest rate in Country X increases relative to the real interest rate in Country Y and there are no trade barriers between the two countries, then for country X which of the following will be true of its capital flow, the value of its currency, and its exports?

Capital Flow- Inflow Currency- Appreciation Exports- decrease

With an increase in the investment demand in the United States, the real interest rate rises. In this situation, the most likely change in the capital stock in the United States and in the international value of the dollar would be which of the following?

Capital Stock in the US- increase International value of the US dollar- increase

Automatic stabilizers can do which of the following?

Cause tax revenue to decrease when gross domestic product (GDP) decreases and to increase when GDP increases

A change in which of the following will cause the aggregate demand curve to shift?

Consumer wealth

If GDP is declining, the economy is most likely in which phase of the business cycle?

Contractionary

The M1 definition of money includes which of the following?

Currency in circulation and demand deposits

Which of the following changes will occur to the demand for US dollars and the international value of the dollar in the short run if investors in the US and abroad increase their purchases of US government bonds?

Demand for dollar- Increase International Value of Dollar- Increase

Assume the economy has a low unemployment rate and a high rate of inflation. Which of the following sets of monetary and fiscal policies would be consistent and designed to reduce the rate of inflation?

Discount rate- Increase Government spending- Decrease Open Market Operations- Sell Bonds

Which of the following monetary and fiscal policy combinations would definitely cause a decrease in aggregate demand in the short run?

Discount rate- Increase Government spending- Decrease Open Market Operations- Sell Bonds

The government raises Social Security taxes

Discretionary and Contractionary

The government raises medicare taxes to afford the Affordable Care Act.

Discretionary and Contractionary

The government launches a major expansion of infrastructure (roads, bridges, etc) spending.

Discretionary and Expansionary

Assume a contractionary monetary policy causes real interest rates in the United States to increase relative to Japan. In the short run, the value of the U.S. dollar, the value of the Japanese yen, and the U.S. balance of trade will most likely change in which of the following ways?

Dollar - appreciate Yen - depreciate US Balance of Trade - Move toward deficit

If a contractionary monetary policy raises interest rates in the US, what will happen to the value of the US dollar, the value of the Japanese Yen, and the US balance of trade?

Dollar- appreciate Yen- depreciate Balance of Trade- toward deficit

The main benefit of free trade between two countries is that

Each country can consume beyond its constraints of resources and productivity

Which of the following indicates that the macroeconomy is achieving its economic goals?

Economic growth

The current account and the financial account must do which of the following?

Equal zero when added together

If the production technology of a good improves and at the same time the number of consumers willing and able to buy the good in the market increases, which of the following will definitely occur?

Equilibrium quantity will increase

Recession raises the amount of unemployment compensation paid to unemployed workers.

Expansionary and Automatic

Most of the money in our economy is in the form of currency.

False

A President of the United States promises to simultaneously produce more defense goods without any decreases in the production of other goods. Under which of the following conditions could such a promise be valid?

If the U.S. were producing inside its production possibilities curve.

What does a balance of trade deficit imply?

Imports of goods and services exceed exports of goods and services.

Which of the following explains why inflation can increase?

Increase in aggregate demand & Decrease in aggregate supply & Increase in rate of money supply growth

Which of the following combinations of changes in government spending and taxes is necessarily expansionary?

Increase in government spending, decrease in taxes

When the unemployment rate is 10% and the CPI is rising at 2%, the federal government cuts taxes and increases government spending. If the Federal Reserve buys bonds on the open market, interest rates, investment, real gross domestic product (GDP) and the price level are most likely to change in which of the following ways?

Interest Rate - Decrease Investment - Increase Real GDP - Increase Price Level - Increase

With a constant money supply, if the demand for money decreases, the equilibrium interest rate and quantity of demand will change in which of the following ways?

Interest Rate- Decrease Quantity of Money- No Change

If the Federal Reserve raises reserve requirements, which of the following is most likely to occur?

Interest rates would increase

A peak in the business cycle

Is a temporary maximum point

A normative statement is one that:

Is based on the law of averages

Which of the following are true statements about the federal funds rate?

It is the interest rate that banks charge each other for short-term loans. & It is influenced by open market operations.

If a country has a current account deficit, which of the following must be true?

It must show a surplus in its capital account.

Suppose the Federal Reserve buys $400,000 worth of securities from the securities dealers on the open market. If the reserve requirement is 20% and the banks hold no excess reserves, what will happen to the total money supply?

It will expand by $2,000,000.

Which of the following is true if a nation does NOT have an absolute advantage in producing any good or service?

It will have a comparative advantage in the production of the good or service in which it has a lower opportunity cost

If the Federal Reserve raises the discount rate, which of the following would most likely occur?

Money supply will decrease.

In a flexible system of exchange rates, an open market sale of bonds by the Federal Reserve will most likely change the money supply, the interest rate and the value of the US dollar in which of the following ways?

Money supply- decrease Interest rates- increases Value of the dollar- increase

Which of the following are considered a nonproductive transaction?

Mr. Gentile gives his niece $50 for her birthday & Mrs. Patullo cooks for her family & Mrs. Arianas is a waitress in the "underground" or blackmarket economy

If a nation's currency appreciates, in the short run its net exports and aggregate demand are most likely to change in which of the following ways?

Net exports - decrease Aggregate demand - decrease

Which of the following purchases is included in the calculation of gross domestic product?

New harvesting equipment for the farm

Assume the aggregate supply curve is upward sloping and the economy is in a recession. If the government increases both taxes and government spending by $25 billion, the price level and real GDP will most likely change in which of the following ways?

Price Level- Increase Real GDP- Increase

True statements about expansionary monetary policy in the long run include which of the following?

Price level increases to match the increase in the money supply. & The nominal interest rate equals the real interest rate plus the expected inflation rate. & The real output level has not permanently increased.

Which of the following is a regulation that sets the amount of an item that can be imported?

Quota

An increase in personal income taxes will most likely result in which of the following changes in real GDP and the price level in the short run?

Real GDP- Decrease Price Level- Decrease

An increase in labor productivity would most likely cause real gross domestic product and the price level to change in which of the following ways?

Real GDP- Increase Price Level- Decrease

In the short run, in which of the following ways is an expansionary monetary policy most likely to cause the real interest rate and the value of the domestic currency to change?

Real interest rate - decrease Value of currency - decrease

If expansionary fiscal policies in the United States lead to increased budget deficits, what will happen to real interest rates in the United States and the value of the dollar?

Real interest rate - increase Value of currency - increase

If fiscal policy is used to correct a recessionary gap, which of the following would most likely occur in the absence of crowding out in the short run?

Real output increase, unemployment decrease

Which phase of the business cycle would be most closely associated with an economic contraction?

Recession

If the primary goal is to reduce inflation, which of the following fiscal policy actions would be appropriate during a period of a rapidly increasing consumer price index?

Reduce government expenditures for defense and space research. & Increase personal income tax rates.

Which of the following monetary and fiscal policy combinations would definitely cause an increase in aggregate demand?

Reserve Requirement- Decrease Taxes- Decrease Government spending- Increase

Reserves, the money supply and interest rates are most likely to change in which of the following ways when the Federal Reserve sells bonds?

Reserves - decrease Money Supply- decrease Interest Rates - increase

A severe, sustained increase in oil prices would most likely cause short-run and long-run aggregate supply curves and the production possibilities curve to change in which of the following ways?

SRAS Curve- Decrease LRAS Curve- Decrease PPC- Shift inward

A rapid increase in successful research and development projects for the nation will most likely result in which of the following changes in the short-run and the long-run aggregate supply curves and the production possibilities curve?

SRAS Curve- Increase LRAS Curve- Increase PPC- Shift outward

A country's financial account include which of the following?

Sales of assets to other countries

Which of the following is a leakage from the circular flow of economic activity?

Saving

What will happen to the supply of loanable fund and the equilibrium interest rate if the Federal Reserve buys government securities?

Supply - Increase Interest rate - Decrease

The money market is definitely in equilibrium in which of the following cases?

When the quantity of money demanded equals the quantity of money supplied.

"Sales of durable goods last month were surprisingly high. Recent price increases have pushed the CPI to more than a 7% increase for the past year. On average, the producer price index has gained 1% each month during the last year. Wage rates have increased throughout the economy, but productivity gains are minimal. The unemployment rate, however, is steady at 6%." Which of the following changes in the tax rate, government spending and the federal funds rate are most appropriate given the state of the economy?

Tax Rate - Increase Government Spending - Decrease Federal Funds Rate - Increase

Which of the following fiscal policy actions would be most effective in combating a recession?

Taxes- $25 billion decrease Government Spending- $25 billion increase

"Because of unseasonably cold weather, the supply of oranges has substantially decreased.". This statement indicates that:

The amount of oranges that will be available at various prices has declined

Which of the following would be counted as investment when calculating gross domestic product?

The construction of a new house

Assume that Country A exports one bushel of wheat in exchange for 2.5 bushels of corn from Country B. If the terms of trade are beneficial to both countries, which of the following must be true?

The cost of producing a bushel of wheat in Country B is greater than 2.5 bushels of corn

A country's current account includes which of the following?

The country's trade balance

If real interest rates in the United States are increasing faster than real interest rates in other countries, which of the following is most likely to occur?

The demand for dollars will increase, and the value of the dollar will increase.

If higher United States interest rates cause foreign demand for the dollar to increase, which of the following will occur to the international value of the dollar and to United States exports?

The international value of the dollar- increases exports - decrease

You should have studied an extra hour last night if

The marginal benefit of studying an extra hour exceeds its marginal cost

Expansionary monetary policy results in which of the following in the short run?

The money supply increases.& The nominal interest rate decreases. & The real interest rate decreases.

An expansionary fiscal policy will result in an increase in the interest rate unless which of the following occurs?

The money supply is increased.

Assume that, under a system of floating (also known as flexible) exchange rates, Mexicans decide to increase their investments (savings) in the United States. As a result:

The peso will depreciate and the dollar will appreciate in value.

A change in ________ creates a movement along the aggregate demand curve, while a change in _______ shifts the aggregate demand curve.

The price level; inflation expectations

If the government increases spending without a tax increase and simultaneously no monetary policy changes are made, which of the following would most likely occur?

The rise in income may be smaller than the multiplier would predict because the higher interest rates will crowd-out private investment spending.

The statement that "the cost of reducing the rate of inflation is that people must lose their jobs" indicates that the speaker believes in a relationship that is usually depicted by which of the following?

The short-run Phillips curve

The concept of opportunity cost would no longer be relevant if

The supply of all resources were unlimited

When the actual inflation rate is greater than the anticipated inflation rate, which of the following is most likely to suffer?

Those who lend at a fixed interest rate

An increase in the price of gasoline will cause the demand curve for tires to shift in which direction?

To the left, because gasoline and tires are complements

Monetary Policy is subject to less political pressure than fiscal policy.

True

If the balance on the current account is zero, which of the following transactions will cause it to go into deficit?

U.S. tourists in Great Britain purchase pounds sterling.

If the U.S. dollar appreciates in the foreign exchange market, U.S. imports and exports are most likely to change in which of the following ways?

US imports - increase US exports - decrease

Which of the following is at its highest at the trough of a business cycle?

Unemployment

Which of the following characteristics of money could be found in bars of gold?

Uniformity and durability

Which of the following is the most fundamental issue that economics addresses?

Use of scarce resources

The US's economy is generally considered to be at "full employment" when:

about 3 to 4 percent of the labor force is unemployed

The long-run aggregate supply will shift to the right whenever

actors of production (such as labor and capital) increase.

An "inflationary gap" is the amount by which:

aggregate expenditures exceed the full-employment level of domestic output

The crucial problem of economics is

allocating scarce productive resources to satisfy wants

Producer surplus is the

amount a seller is paid less the cost of production.

Adding the market value of all final and intermediate goods and services in an economy in a given year would result in:

an amount greater than GDP for that year.

To protect high-cost domestic producers, a country imposes a tariff on an imported commodity, Y. Which of the following is most likely to occur in the short run?

an increase in domestic production of Y

A leftward shift of a product supply curve might be caused by

an increase in the prices of needed inputs

Which of the following statements is correct? Unanticipated inflation

arbitrarily "taxes" fixed-income groups

To be officially unemployed a person must:

be in the civilian labor force

An example of an intermediate good or service would be:

bricks bought by a homeowner for constructing a patio.

To counter the crowding-out effect on interest rates caused by the government's deficit spending, the Federal Reserve can

buy bonds through open market operations.

When the Federal Reserve bank uses their open-market operations, they are:

buying or selling government bonds.

If Maria Smith's disposable income increases from $600 to $650 and her level of personal consumption expenditures increases from $480 to $520, you may conclude that her marginal propensity to Correct answer:

consume is 0.8.

In the gross domestic product, the largest dollar amount is

consumer spending.

If a lump-sum income tax of $25 billion is levied and the MPS is 0.20, the:

consumption schedule will shift downward by $20 billion.

Hyperinflation is typically caused by

continuous expansion of the money supply to finance government budget deficits

To reduce inflation, the Federal Reserve could

contract the money supply in order to raise interest rates, which decreases investment

The government eliminates the deductibility of interest expense of tax purposes

contractionary and discretionary

When a Japanese company buys a U.S. software company, this transaction will be a:

credit on the financial account of the U.S. balance of payments.

The crowding-out effect works through interest rates to:

decrease the effectiveness of expansionary fiscal policy.

Suppose the economy is in long-run equilibrium. If the stock market crashes in the short run, we can expect the price level to _________, and output to _________.

decrease, decrease

Last year in the country of Union, the price level increased and real GDP decreased. Such an outcome might have occurred because short-run aggregate supply _________ and aggregate demand __________.

decreased: did not change

The government eliminates favorable tax treatment on long-term capital gains (fancy way of saying savings).

discretionary and contractionary.

Vault cash and reserve accounts are similar in that each

earns no interest.

Kimberly voluntarily quit her job as an insurance agent to return to school full-time to earn an MBA degree. With degree in hand she is now searching for a position in management. Kimberly presently is:

frictionally unemployed

In the circular flow model, wages flow between which two sectors (markets are not considered sectors)?

from firms to households

In the circular flow model, profits flow between which two sectors (markets are not considered sectors)?

from households to the product market

The market value of all final goods and services produced in the economy in a given year is

gross domestic product.

The presence of taxes has what effect on the multiplier? They

have no effect on it.

In the resource market:

households sell resources to businesses.

Suppose a factory added $5,000 worth of output this year. Incidentally, the waste from this factory caused $1,000 worth of loss to the neighboring waterways. As a result, gross domestic product will

increase by $5,000.

With an upward-sloping shirt-run aggregate supply curve, an increase in government expenditure will most likely

increase real gross domestic product.

Which combination of fiscal policy actions would most likely be offsetting?

increase taxes and increase government spending

A decline in the real interest rate will:

increase the amount of investment spending.

An increase in U.S. real interest rates relative to the rest of the world can be expected to

increase the international value of the dollar.

Trade between individuals and between nations leads to:

increased specialization.

The crowding-out effect suggests that:

increases in government spending may raise the interest rate and thereby reduce investment.

The Phillips curve shows the relationship between

inflation and unemployment.

In the short run, combining an expansionary fiscal policy with a tight money policy is most likely to cause

interest rates to rise.

The traditional Phillips Curve shows the:

inverse relationship between the rate of inflation and the rate of unemployment

The asset demand for money and the rate of interest are:

inversely related.

If the MPS is only half as large as the MPC, the multiplier:

is 3.

The major difference between nominal and real GDP is that real GDP

is adjusted for price-level changes using a price index

If Congress and the Federal Reserve both wished to encourage growth of productive capacity in an economy already close to full employment, it would be most appropriate to

reduce interest rates by engaging in open-market operations and raise taxes on personal income.

In an aggregate demand and aggregate supply graph, an expansionary fiscal policy can be illustrated by a

rightward shift in the aggregate demand curve.

If the marginal propensity to consume is 0.9 in a private closed economy, a $20 billion decline in investment spending will decrease

saving by $2 billion.

A government economist states that: "The collection of personal income tax revenues automatically falls during a recession." This statement best describes how the progressive income tax system:

serves as an automatic stabilizer for the economy.

We would expect a decline in personal and corporate income taxes to:

shift the aggregate demand curve rightward.

If the Federal Reserve undertakes a policy to reduce interest rates, international capital flows will be affected in which of the following ways?

short run capital inflows to the US will decrease

A demand curve:

shows the relationship between price and quantity demanded at all prices & indicates the quantity demanded at each price in a series of prices & graphs as a down-sloping line

The increase in income which results from an increase in investment spending would be greater the

smaller the MPS.

If other things are held constant, an increase in the United States imports will

tend to cause the dollar to depreciate because the world supply of dollars will rise

Monetary policy in the United States is the responsibility of:

the Federal Open Market Committee.

The equilibrium price level and level of real output occur where:

the aggregate demand and supply curves intersect.

United States national debt is

the amount of money owed to holders of United States securities.

The CPI tends to overstate true changes in the cost of living for which of the following reasons?

the index does not take into account a change in quality & the CPI includes only domestically produced goods & consumers often buy at discount rather than retail

Which of the following best explains why many United States economists support free international trade?

the long run gains to consumers and some producers exceed the losses to other producers

During a serious recession we would expect output to fall the most in:

the machine tool industry used on capital equipment

Unanticipated inflation helps borrowers because:

the money they pay back has less purchasing power than the money that was borrowed

Suppose there are 10 million part-time workers and 90 million full-time workers in an economy. Five million of the part-time workers switch to full-time work. We can conclude that:

the official unemployment rate will be unchanged.

Which of the following would cause the equilibrium price of good X to increase?

the price of an essential input in the production of good X increases

In the market for artichokes, if the surgeon general announces that eating an artichoke a day dramatically reduces one's likelihood of developing cancer. Simultaneously an infestation of the artichoke weevil severely damages the crop. Which of the following will definitely occur as a result?

the price of artichokes will increase