ECO101 Macroeconomics Unit 2

The Czech Republic has a GDP of 2,000 billion koruny. The exchange rate is 20 koruny per U.S. dollar. The Czech population is 20 million. Calculate the per capita GDP of the Czech Republic in U.S. dollars.

$5000

The demand measure of GDP accounting adds together:

consumption, investment, government purchases, and trade balance.

A business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle are:

expansion, peak, recession, trough

The longer the time period considered, the more the elasticity of supply tends to:

increase

In 1980 Denmark had a GDP of $70 billion (measured in U.S. dollars) and a population of 5.1 million. In 2000, Denmark had a GDP of $160 billion (measured in U.S. dollars) s and a population of 5.3 million. By what percentage did Denmark's GDP per capita rise between 1980 and 2000?

120%

Billy Bob's Barber Shop knows that a 5 percent increase in the price of their haircuts results in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of demand facing Billy Bob's Barber Shop?

3.0

The demand for a product is unit elastic. At a price of $20, 10 units of a product are sold. If the price is increased to $40, then one would expect sales to equal:

5 units.

Consumption in the United States is about ____________ of GDP, and it moves relatively little over time.

68%

Which of the following is included in the calculated Gross Domestic Product?

A local ice cream store sells $17,000 worth of cones and sundaes on July 1.

Which of the following is true? A depression is a recession that is mild and relatively brief. B. The expansions and contractions of real world business cycles last varying lengths of time and often differ in magnitude. C. The timing of business fluctuations is regular and therefore easily predictable. D. During the contractionary phase of the business cycle, the rate of unemployment is generally quite low.

B. The expansions and contractions of real world business cycles last varying lengths of time and often differ in magnitude.

On April 1, 2009, in the middle of a recession, the government of the province of Ontario, Canada increased the provincial minimum wage from $8.75 to $9.50. What will the likely effect of this policy be?

Both the leftward shift in the labor demand curve and the higher minimum wage will lead to an increase in the unemployment rate.

___________ is about two-thirds of the demand side of GDP, but it moves relatively little over time.

Consumption

A price cut will increase the total revenue a firm receives if the demand for its product is:

Elastic

In contrast to goods and services markets, _____________ are rare in labor markets, because rules that prevent people from earning income are not politically popular.

Price Ceilings

A 10 percent increase in the price of soda leads to a 20 percent increase in the quantity of iced tea demanded. It appears that:

cross-price elasticity of demand for iced tea is +2.

Demand is said to be ___________ when the quantity demanded is very responsive to changes in price.

elastic

If the supply curve for housing is perfectly inelastic, then a reduction in demand will cause the equilibrium price to:

fall and the equilibrium quantity to stay the same.

For most high-income countries of the world, GDP _________________ over time.

has risen gradually

On the demand side of GDP, consumption by _____________ is the largest component of GDP, accounting for about two-thirds of the GDP in any year.

households

Consumption is the purchase of goods and services by:

households.

The price elasticity of demand for tickets to local baseball games is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise:

increasing the price of game tickets because demand is inelastic.

Since Baltimore passed the first _______________ in 1994, several dozen cities enacted similar laws in the late 1990s and into the 2000s.

living wage law

A 10 percent increase in income leads to a 15% decrease in the quantity of macaroni and cheese demanded but no change in the price of macaroni and cheese. From this information, we can assume:

macaroni is an inferior good and price elasticity of supply is infinite.

The value of what businesses provide to other businesses is captured in the final products at the end of the __________ chain.

production

The difference between nominal GDP and real GDP is:

real GDP adjusts for inflation

The price elasticity of demand measures the:

responsiveness of quantity demanded to a change in price.

As the _____________ complement for high-skill labor becomes cheaper, the demand curve for high-skill labor will shift to the right.

technology

Whenever there is a shortage at a particular price, the quantity sold at that price will equal:

the quantity supplied at that price.

If cola and iced tea are good substitutes for consumers, then it is likely that:

their cross price elasticities are greater than zero.

Many economists believe that the trend toward greater wage inequality across the U.S. economy was primarily caused by _____________.

New Technologies