Econ 002 Macroeconomics Ch1-3/4
If Nominal GDP is $12,000 billion and the GDP deflator is 80, then Real GDP is ________.
$15,000 billion
The country of Wakanda in 2017 had a GDP of $500 billion, with a total of 1.75 million workers, each of which averages 1600 work hours a year. What is the value of the output per worker per hour of work?
$179
The country of Russia had a Gross Domestic Product of about $4 trillion in 2016 and a population of 142 million people, the GDP per capita would be ________.
$28,000
Danielle is planning a cruise to Mexico and has a budget for new clothes of $300. The average price for a pair of shoes is $50 while the average price for a suit is $100. Danielle already has 4 pairs of shoes purchased for her cruise, what is the opportunity cost of buying two more pairs of shoes?
1 dress
Suppose the European Union has a real GDP of 12.2 trillion Euros, and their GDP deflator is 125. What is the European Union's nominal GDP?
15.25 trillion Euros
Suppose the European Union has a Nominal GDP of 20 trillion Euros, and their GDP deflator is 125. What is the European Union's Real GDP?
16 trillion Euros
Given X = 52+27-((3/15)*100), X is ________.
59
Which of the following promotes economic growth?
Political stability and property rights protection.
If demand increases and supply remains constant, what happens to the market equilibrium?
Quantity and price both rise.
According to the order of operations in solving equations, which step should come first?
Simplify inside parentheses and brackets.
What can be assumed if a model can accurately predict outcomes?
The assumptions of the model are generally accurate.
Which topic below best applies to microeconomics?
The price that a farmer asks for her watermelons.
Cocoa nibs from Nigeria last year was supplied at $9 per 10 pounds. This year the demand has increased and that same supply of Nigerian cocoa nibs is priced at $12 per 10 pounds. What will most likely happen to supply of Nigerian cocoa nibs this year?
There will be an increase in quantity supplied.
A positive statement is
can be shown to be correct or incorrect.
Assuming there are only two types of outputs in a country: consumer goods and nuclear missiles. All else being constant, as the nation produces more missiles,
every additional missile will reduce consumer goods production by more and more.
A nation achieves economic growth when its:
production possibilities frontier shifts outward.
Scarcity is imposed on individual households in the form of income and
the prices of the goods that a person may purchase.
A severe freeze has damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of
the supply curve.
Normative statements are based upon
value judgments.
You are charged with setting the price for your company's lawn mower product that has been on the market for a year and is lagging in sales. After researching and discovering the needed data you create a supply and demand curve. Here is what you have discovered.and ends at (240,250). There is a blue downward sloping line that starts at (70,250) and ends at (240,150).) What sales price should you select to meet the equilibrium price for the lawn mower?
$190
Assume the economy of country C produces hotdogs and buns in the following quantities and prices in 2016 and 2017. Assume also that 2016 is the base year and the real GDP will be calculated using 2016 prices. What is the real GDP 2017? Hot DogsBunsQuantityPriceQuantityPriceYear 2016 (base year)6 million$24 million$1Year 20178 million$36 million$2
$22 million.
If Nominal GDP is $16,000 billion and the GDP deflator is 50, then Real GDP is ________.
$32,000 billion
You own an auto dealership that has recently received many five star customer reviews at online review sites stating you sell quality cars and are very trustworthy. The diagram represents your demand curve before the online reviews. You find that the positive online reviews increase the demand by 20 cars at any given price. What two points will the new demand curve probably pass through?
($20,000, 120) and ($15,000, 220)
shows that in 1970, people 19 and under made up 77.2 million or 37.6% of the population; people between ages 20 and 64 made up 107.7 million or 52.5% of the population; and people 65 or older made up 20.1 million or 9.8% of the population. Image (b) shows that in 2000, people 19 and under made up 78.4 million or 28.5% of the population; people between ages 20 and 64 made up 162.2 million or 58.9% of the population; and people 65 or older made up 34.8 million or 12.6% of the population. Image (c) projects that in 2030, people 19 and under will make up 92.6 million or 26.4% of the population; people between ages 20 and 64 made up 188.2 million or 53.6% of the population; and people 65 or older made up 70.3 million or 20% of the population.) According to this pie chart, which age group population has been continually shrinking since 1970?
19 and under
Consider the Production Possibility Frontier for country X producing 2 groups of goods, MP3 players and watches. The opportunity cost of moving from the combination of MP3 players and watches B to C is
2 watches.
Assume the economy of country C produces hotdogs and buns in the following quantities and prices in 2016 and 2017. Assume also that 2016 is the base year and the real GDP will be calculated using 2016 prices. What is the real yearly growth (between 2016 and 2017)? Hot DogsBunsQuantityPriceQuantityPriceYear 2016 (base year)6 million$24 million$1Year 20178 million$36 million$2
37.5%
With a Real GDP of $100 billion in 2016 and of $140 billion in 2017, the real growth would be ________.
40%
The conditions of demand and supply are given in the table below. What is the equilibrium quantity? PriceQdQs$1.609,0005,000$2.008,5005,500$2.408,0006,400$2.807,5007,500$3.207,0009,000$3.606,50011,000$4.006,00015,000
7,500
A new tool manufacturer opened a plant in town three months ago and hired 3000 new employees. People now have extra cash to spend and are out spending in the town. What is an example of how this extra money may shift the demand curve for goods and services in the town?
A local restaurant has a 40% increase in the number of dinners.
What is the Gross Domestic Product (GDP) designed to measure?
A nation's total production of final goods and services.
How would the equation x=0 and y=5 be represented in a XY graph, and what does it say about the relationship between X and Y?
A single point y=5 on the Y-axis has a horizontal line to the right from that point. This graph indicates that y is not dependent upon x.
The supply curve will shift to the right if which of the following occurs?
An improvement in technology
Which of the following would cause the supply curve to shift to the right?
An improvement in technology
Which of the following is unlikely to result in economic growth?
An increase in consumption and decline in savings.
According to the law of demand, assuming other factors are held constant
As the price of milk decreases, the quantity of milk demanded will increase.
Silicon is used for the manufacturing of semiconductor chips. At the end of last year a large new source of silicon has been discovered this year and the price of silicon has decreased by 15%. Semiconductor chips are used in devices, cell phones, gaming systems, and this year many new devices are now using chips. If you were drawing a supply and demand graph to illustrate the changes to the semiconductor market since last year, what would you say has happened to the supply and demand curves and the equilibrium price and quantity this year?
Both the demand and supply of semiconductor chips will increase shifting the curves to the right with equilibrium quantity increasing but it is impossible to pinpoint the equilibrium price change
Charlie searched for a model and discovered one on which to base his theory. For his model he used the circular flow diagram, applied math functions to predict economic actions, and identified the economic aspects and associations used in the model. All of his actions are in line, but what has Charlie forgotten to do with his model?
Charlie forgot to explain assumptions he used to simplify the model.
Every day, 500 airplanes in San Francisco incur an additional 30 minutes of airport delays when flying into or out of the airport. In Chicago, the delays amount to 15 minutes for 1,400 airplanes. If the price of time is $20/hour in San Francisco and $15/hour in Chicago, which airport incurs the largest opportunity cost?
Chicago
Identify the positive statement among the following statements
College tuition is higher for out-of-state students than it is for in-state students.
Assume that you are an economist looking at economic indicators for both the United States as well as several European countries. What do these economic indicators enable you to do?
Compare how well the U.S. economy is doing relative to the European countries.
Jerusha lives in a country with a large amount of protection under the law for conducting business or bringing her ideas to the market with patten production. Because of the economic conditions what will Jerusha most likely do with her rainwater collecting invention?
Develop her invention and bring it to market with ease and minimal cost.
The market for hot dogs has been recently affected by a decrease in input prices. Following this change, how does the new equilibrium compare to the old?
Equilibrium price decreases and quantity increases.
Consider the graph of the production possibility frontier for country X. What is a combination of MP3 players and watches that would be inefficient production for country X?
F
In this time series graph, the unemployment rate fluctuates from around 4% to 10%. Given this information, 1987 had an unemployment rate of around 6%. Look at the year 2015 and compare whether it was easier or harder to find employment with 1986 and why?
Finding work was equally as effortful in 2015 as it was in 1986 because both of those years had economic conditions where unemployment was around 6%.
Identify which of the following microeconomic topics can have an impact on macroeconomic topics?
How do people decide how much to save for the future, or whether they should borrow to spend beyond their current means?
Which of the following statements reflects marginal decision-making?
If we double the order to a dozen cookies, we will pay only 15 percent more.
Which of the following statements reflects marginal decision-making?
If we double the order to a dozen doughnuts, we will pay only 20 percent more
The operations vice president is adjusting the production quantities for the upcoming month of March for the coal company. Last month the price of a ton of coal was $45, and in February it increased to $64 per ton. According to the law of supply, what would be a rational response of the VP of operations in adjusting his coal output with the change in the market price?
Increase output and hire more workers.
Two common ways to discourage tobacco use are taxes on tobacco and information campaigns on the hazards of tobacco use. Which one causes a shift in the demand curve for smoking?
Information campaign on hazards of tobacco.
Which of the following statements is normative?
Installing solar panels is better for society.
The current competitive economy has caused the Doggie Dog Food company to brainstorm in their latest meeting on how to become more productive and efficient. Larry the VP of operations suggests that they deepen the company's capital. Which of the follow steps should the Doggie Dog Food company take to deepen its capital?
Invest in additional training for their dog food scientist and nutritionist updating with the latest dog food and health knowledge.
Which is a true statement about marginal cost?
It is the difference (or change) in cost of a different choice.
In this time series graph, the unemployment rate fluctuates from around 4% to 10%. Given this information, if 2017 had an unemployment rate of around 4-5%, was 2017 a year where it was easier or harder to find employment than 1986 and why?
It was more difficult to find work in 1986 because the unemployment rate was close to 6% and thus an economy worse off than the economy of 2017.
Janice has calculated the GDP for 2018 by using the total final goods times the 2018 prices of total goods. If Janice wishes to create a real value GDP value for 2018, what must she do?
Janice must adjust the total value 2018 GDP for inflation.
If you lived in a country where literacy was high and 90% of the children completed their education with a high percentage going on to a higher education, what would probably be the results for the country?
More technological breakthroughs would happen in this country.
Lian is a production analyst at the cardboard box manufacturer Flexpac. Last year, because of an increase in online shopping, shipping companies have increased the use of boxes for shipping. Management has charged Lian with generating a supply curve graph to illustrate the rise in price and supply of their boxes. These are the figures Lian discovered and put in a table. If you were assisting Lian, what steps would you tell her to take next? Price ($)Quantity Supplied$100100$125150$150200$175250$200280$225310$250350
Plot these points on a graph sloping up to the right with price on the y-axis and quantity supplied on the x-axis.
The regional soda company in Michigan, Faygo, has recently run viral advertisements online and has increased their prices and number of supplied sodas to regional grocery stores. The graph of Faygo's supply schedule is shown below. and ends at (170,1200).) Which supply schedule is correct for creating Faygo's soda supply curve graph?
Price ($)Quantity Supplied$40050$60070$70090$800110$900130$1,100150$1,200170
When creating a graph for your economics course, which axis is most commonly used to represent quantity (q)?
Quantity is most commonly represented on the x-axis.
Which of the following best defines real GDP?
Real GDP is defined as the total dollar value of final goods and services produced within a country in one year after adjustment for inflation.
Which of the following statements is normative?
Retired professionals should work less and get out more.
Sarah lives in Montana and works remotely with a company in Portland. She lives in Montana because of the fresh air, clean water and wide open spaces to go hiking on her time after work. Is Sarah's environmental quality reflected in factoring the Gross Domestic Product and why or why not?
Sarah's environmental quality is left out of GDP because GDP focuses on productivity rather than Sarah's well being or standard of living.
and ends at 600,0) Which of the following data sets depicts the correct version of the above quantity Demand graph representing the number and price of watches. The x-axis shows quantity and the y-axis shows price.
Table 2Prices ($)Quantity Demanded$30010$25050$200100$150200$100300$50400$25500$5600
Bob is measuring the GDP in 2018 by using the quantity of each final good and service produced in 2018, multiplied by the price at which the goods and services were sold in 2018. What type of calculation is Bob creating?
The GDP using nominal values.
Information campaigns about tobacco hazards and taxes on tobacco are two ways to discourage its use. Which one causes a movement along the demand curve?
The Information campaign on hazards of tobacco.
How would the equation where x=3 and y=4 be represented in a XY graph, and what does it say about the relationship between X and Y?
The beginning point y=4 on the Y axis has a horizontal line straight to the right, X-axis has a vertical line straight up from x=3. With the two points on the graph, there is an intersection point where the x and y will cross each other.
It is said that the rational consumer will act according to his or her self-interest, and that self-interest can include a concern for one's family and friends, but not often society as a whole. Which of the following illustrates this type of decision?
The boat rental was worth the additional fish caught, regardless of how little fish we left behind.
The distinction between real GDP and nominal GDP is important to determine which of the following?
The change in real output produced.
How would you interpret a graph of a nation when its production possibilities frontier shifts outward?
The country is achieving economic growth.
Imagine that a high school junior sold her old car at the end of the summer and now has the funds from the sale in her bank. She decides to purchase a much needed new automobile instead of saving that money to pay for her senior trip coming up next year. From an economist's perspective, which of the following statements about this decision is likely to be true?
The decision is rational in the sense that it reflects the junior's preference for a new automobile over a senior trip.
The price of printers at the big box technology stores increases as a new type of print technology is rolled out to consumers. Which of the following scenarios for a complementary printer good would likely take place?
The demand for printer ink decreases as less people are buying printers.
Identify the normative statement(s) among the following statement(s).
The federal government spends too much.
Of the following examples, which one has little or no effect on labor productivity?
The frequency of business cycles.
A company starts a technology organization dedicated to training high school students in the use of the latest program languages. How can the company justify creating and funding such an organization since it is not about its primary products?
The money spent will boost the company's image and create potential employees with needed skills.
Alejandra is calculating the nondurable goods value for 2017. She is calculating the value by using the quantity of each final nondurable good produced in 2017, multiplied by the price at which the nondurable goods were sold in 2017. What type of calculation is Alejandra creating?
The nondurable goods nominal values.
How does a production possibilities model differ from a budget constraint model?
The production possibilities model demonstrates diminishing returns.
Which of the following is counted as part of GDP?
The purchase of a snow plough by the city of Minneapolis.
Which of the following is left out of being counted as part of GDP?
The purchase of your next door neighbor's house.
Robert is tasked with analyzing the market supply and demand for potatoes. Right now, he plotted the supply and demand curves for potatoes which you see in the graph. The current potato price is $70/ton. If the demand is at 200 million tons, what is the market situation for potatoes? How much must prices change before the market is in equilibrium?
There is a potato shortage. The price must increase by $40/ton to reach equilibrium.
Becky is tasked with analyzing the market supply and demand for potatoes. Right now, she plotted the supply and demand curves for potatoes which you see in the graph. The current potato price is $150/ton. If the demand is at 120 million tons, what is the market situation for potatoes? How much must prices change before the market is in equilibrium?
There is a potato surplus. The price must drop by $40/ton to reach equilibrium.
According to the growth accounting studies, if you lived in a country where illiteracy was high and 40% of the children left school early and did not complete their education what would probably the results for that country?
There would be both a human and economic loss.
This year the cost of iron used in manufacturing cars has increased by 15%. With the costs for manufacturing cars now up, what effect will this have on the car market?
This will decrease the quantity demanded.
Juan has a monthly budget of $100 to spend on entertainment. A concert ticket costs $20 while a movie ticket costs $10. This month Juan has attended one concert and 5 movies so far. If Juan decides to only go to movies for the rest of the month. How many movie tickets can he afford to purchase and stay within his budget?
Three tickets.
Which is a true statement about marginal benefit?
To an individual, one good may have a larger marginal benefit than than another.
China had special economic zones originally in places such as Hong Kong and Shenzhen set up back in the 1980s. Why would the Chinese government support these areas with different rules like no tax on trade or different economic laws?
To facilitate a healthy economic environment and grow international trade.
Julie's entertainment budget for the next six months is $150 per month. She enjoys watching the latest movies and loves the ballet. A movie ticket costs $15 while a ballet ticket costs $35. This month Julie already attended one ballet show and three movies. If Julie decides she would rather see ballet shows for the remainder of this month, how many ballet shows can she attend and stay within her budget?
Two ballet shows.
The United States will have a trade deficit in which of the following scenarios?
U.S. imports are greater than U.S. exports
The country of Wakanda has an economy that will double in 10 years. According to what you've learned about compound growth, what type of economy does Wakanda have?
Wakanda has a thriving and rapidly growing economy growing over 7% per year.
Last year Hawaii did not received many rain storms and with eight months of little rain there was low demand for umbrellas. This year however, there have been three months of big rain storms and only a few weeks of sunny weather. If you were to draw a graph depicting the changing market for umbrellas from last year to this, how would the new equilibrium price and quantity demanded compare to last year's market?
With supply of umbrellas being constant, equilibrium price and quantity demanded increase for umbrellas compared to last year.
Two countries are trying to decide which product should have an increased production. Both Canada and Costa Rica produce coffee and corn, but it is easier for Canada to raise corn than grow coffee. Costa Rica easily grows coffee, but has a more difficult time growing corn. In comparison with Costa Rica, Canada has
a comparative advantage with corn.
The relationship between the circumference of a student's head and their test scores can best be represented on a graph by
a line with zero slope (no relationship between size of student head and test scores).
An equation where X=5 could be represented on a graph where Y is on the vertical axis and X is on the horizontal axis as
a single point (X=5) and a vertical line upwards from that point.
The town of Franklin has an economy composed entirely of two equally sized specialized tire manufacturers. Both company X and company Z produce race car tires and airplane tires. Company X is better at producing race car tires than Company Z which is better at producing airplane tires. In order to maximize output, Company X should
abandon the production of airplane tires to fully specialize in the production of race car tires and then trade with Company Z for airplane tires.
The town of Chester has an economy composed entirely of two equally sized food companies. Both company Q and company R produce peanut butter and jam. Company Q is better at producing jam than Company R which is better at producing peanut butter. In order to maximize output, Company R should
abandon the production of jam to fully specialize in the production of peanut butter and then trade with Company Q for jam.
Economic indicators can help give us
an understanding of the state of the economy.
A combination of clothing and cell phones that would meet the allocative efficiency would be:
any combination on the production possibilities frontier that brings the highest level of satisfaction to the people in the economy.
In order to satisfy as many wants as possible, it is necessary to achieve productive efficiency
because otherwise resources are idle.
According to this graph, which age group will experience the greatest decline in population growth between 2000 and 2030?
between 20-64
According to this graph, which age group will make up most of the population in the United States in 2030?
between 20-64
Which of the following is the alternating periods of expansion and contraction in real GDP?
business cycles
Self-interest can include more than a concern for oneself. To the extent that the happiness of others contributes significantly to the our own happiness, actions taken in our own self-interest may have benefits for
close friends and family.
George owns a custom pottery business where he makes all types of mugs and drinkware. Which of the following products would dramatically affect his profit margins if the price were to decrease for that product?
coffee mugs
Making an economically rational decision requires
considering the prospective benefits and costs to oneself.
Hannah has a small business making clothing alterations. Which of the following products would dramatically affect her profit margins if the price were to decrease for that product?
dresses
Tangi Tumolo carves and creates beautiful furniture on the island of Kiribati. Each month he takes the furniture to the capital city of South Tawara and sells what he can for the best prices he can. He also takes orders from people each month to build certain furniture indicating what is currently in demand. Each month the prices and products very a bit depending on the demand in the market. Tangi enjoys the ebb and flow of the changing market as it keeps his business interesting and current with demand. Kiribati's government takes a 'hands off' approach with the economy and the market is thriving on its own. Tangi Tumolo lives in what type of economy?
free Market
Which of the following is included in the computation of GDP in a particular year?
government expenditure on public schools
When calculating GDP as the sum total of all spending, which of the following should be included?
government purchases of labor, goods, and services
If Stan's Shoemaker Shop practices the division of labor and employees concentrate on one step of the shoe-making process, this will likely result in
greater production output.
Khloe is the owner of a wellness center in Los Angeles. Her business has been growing over three years and she is now considering expanding her business by adding a healthy cafe in her center. Khloe is analyzing the estimated costs, projected potential revenue and costs and benefits of a cafe. Khloe is behaving rationally because
her decision will be based on her self interest.
In the long run, important sources of an increase in a nation's economic growth include(s):
high rate of labor force growth.
Which of the following will cause the supply curve to shift to the left?
higher product taxes
In calculating GDP, which component of spending must be subtracted from total spending to account for the fact that not all private or public spending by U.S. households is directed to U.S. businesses?
import
In calculating GDP, which component of spending must be subtracted from total spending?
import
If a data line on a graph has a slope of zero it means that there
is a constant relationship between x and y.
If a graph data line indicates that there is a zero slope, this means there
is a constant relationship between x and y.
Investment in human capital
is an important source of labor productivity.
Sustained economic growth
is key because over a long period of time small yearly growth rate compound
Sustained economic growth
is key because over a long period of time small yearly growth rate compound.
According to growth accounting studies, investing in research and education
is the best way to achieve greater technological progress.
A profit-maximizing decision must be made about whether to keep a bed & breakfast operating. Until the place sells, the mortgage of $3000/month must be paid, since it is a sunk cost. If the restaurant operates, costs rise by $4000 per month, but revenue will be only $6000 per month. Until the building can be sold,
it is best to ignore sunk costs and keep the bed & breakfast operating.
An economy is considered to be in an expansion if:
it is moving from the trough to the peak of the business cycle.
What are the factors of production?
land, economic capital, labor, entrepreneurship
Economists refer to the relationship that a higher price leads to a lower quantity demanded as the
law of demand.
Congress must vote whether to increase the government budget so as not to shut down the government this year. The vote passed and the budget ceiling has been increased to keep the government running. This is an example of what type of policy?
macroeconomic fiscal policy
To make an economically rational decision, marginal cost should be compared to
marginal benefit.
A company is trying to accurately predict how many more units of a product will be purchased by their customers if the product is discounted by 15%. What tool will assist the company to most accurately run this assessment?
mathematical equations
A manufacturer is trying to accurately predict how many more units of a product will be purchased by their business customers if a product is discounted by 5%. What tool will assist the manufacturer to most accurately predict the purchase behavior?
mathematical equations
If an economist is trying to predict the outcome from particular causes and effects, what is the best tool(s) for her to use in order to test out her economic model?
mathematical functions
The country of Armenia has an economy that includes people buying and selling freely, a government setting some price restrictions such as a minimum wage equivalent to $5 hour and regulates certain industries (pharmaceutical, mining, and farming). Armenia's economy is likely a ________ economy.
mixed market
Macroeconomic policies that focus on banking and interest rates or controlling the money supply are called
monetary policies.
Economic capital is productive, so it does NOT include
money.
If trade between nations is prohibited,
nations will be unable to specialize in what they are good at and therefore end up consuming less.
If Kendrick decides to watch t.v. instead of go to the gym, the ________ is a missed workout.
opportunity cost
The point at which an economy transitions from an expansion to a recession is called a/an ________.
peak
Once a model of reality is constructed around certain assumptions, it can be tested to determine its value in
predicting outcomes.
If Mikael decides to go out with his friends instead of study for his biology test, what is the opportunity cost?
preparation for his biology test
Considering the graph for microchips, if prices increase from $150 to $200, suppliers will want to
produce almost 70 more microchips.
The production possibilities model illustrates an inverse relationship between two goods or services because
production of different types will compete for limited resources.
The distinguishing feature of economic capital (as opposed to financial capital, like money) is that it is
productive.
Contractual laws, by establishing recourse (protection) for parties involved,
promotes economic transactions and growth.
A demand curve shows the graphical relationship between price and
quantity demanded.
Capital deepening generally
results in greater economic growth.
Which component of spending has steadily gained over the past fifty years?
services
In order to satisfy as many wants as possible, it is necessary to achieve allocative efficiency,
since otherwise output may go to where it is less valued.
Society gains advantages through trade because of its ability to
specialize resources to the uses where opportunity cost is minimized.
The advantages that society gains through trade lie in the ability to
specialize resources to the uses where opportunity cost is minimized.
An Uber driver faces costs for driving that include sunk costs like insurance that contribute to the average cost per mile of $.50. Yet when a rider offers to pay less than that for a ride, the driver agrees because
sunk costs like auto insurance (in this case) do not increase as driving increases.
When there is an excess supply of goods
suppliers lower prices, which encourages consumers to demand more.
The relationship between the price in a market and the amount that producers collectively make available for sale, is referred to as
supply.
Economic growth has been
sustained and rapid since the 1800's.
Modern economic growth finds its roots in
technological progress and industrialization.
Marginal benefit is
the additional benefit that one more unit of something will provide.
The ________ shows the interaction between household and firms in the goods and services market as well as in the labor market. This simplifies a complex economy, enabling economists to better observe and understand behavior.
the circular flow diagram
The ________ simplifies the economy into two groups, firms and households, and allows us to make predictions about economic behavior.
the circular flow diagram
When choosing a college major in a rational way, Minty should consider
the cost of the degree and the benefit each degree would bring
When choosing a college major in a rational way, Minty should consider
the cost of the degree and the benefit each degree would bring.
Carla just started her new job working at the Department of Commerce. In order to see whether Carla "knows her stuff," her boss asks her to put together a presentation on the current state of the economy. What is one of the economic indicators Carla could look at?
the inflation rate
The construction estimator told the storage unit owner that building another section of storage units will likely add 100 more storage space renters to the bottom line. The rational storage business owner considered the rental prices of an additional 100 units, but he would decide to add more units if and only if
the marginal benefit is greater than the marginal cost of additional units.
The musician was known for multiple encore performances, but had limited stamina and a rational mind. Even she would eventually call it a night when, by her judgement
the marginal cost is greater than the marginal benefit of an additional encore.
A keynote speaker was known for his many speaking engagements, but now he has limited time and a rational mind. Even he would eventually start to turn down speaking engagement when, by his judgement
the marginal cost is greater than the marginal benefit of an speaking engagement.
If you are focusing on the value of output per hour worked you are considering
the most important determinant of the average wage level in the economy.
A budget constraint model differs from production possibilities model in that, typically
the production possibilities model demonstrates diminishing returns.
Because of ________ if a city government decides to spend money on beautifying its downtown and attracting tourism to its city when no money has been devoted to those efforts before, then gains in tourism may be significant.
the production possibility frontier
If a data line on a graph slopes upward as it goes to the right, it is depicting that
the relationship between the variables on the axes is direct.
If a data line on a graph slopes down as it goes to the right, it is depicting that
the relationship between the variables on the axes is inverse.
The slope of a budget constraint line is influenced by
the relative prices of the two goods competing to satisfy wants.
Amka is the head analyst for the Alaska Department of Fish and Game Service. Recently the agency has become concerned about overfishing in the waters off Alaska. Amka is estimating the demand curve for salmon as part of the agency's mitigation efforts. From past statistics she knows that when the price of a freshly caught salmon is $400, the public will demand a quantity of 1 million fish. If the price is $200 then the public will demand 5.6 million fish. Finally, if the price was $125 consumers will demand a quantity of 8 million fish. Which curve below could be the correct demand curve for Alaskan salmon given these three data points?
the silver curve
The most important determinant of the average wage level in the economy is ________.
the value of output per hour worked
In the case of an negative relationship between two variables, all else remaining constant
the value of the two variables will move in opposite directions from each other.
In the case of a positive relationship between two variables, all else remaining constant:
the values of the two variables will move in the same direction.
Scarcity is a condition that is everywhere and always, since it is based upon two assumptions that reflect permanent universal conditions. The assumptions are that more output will satisfy more wants and
the world has limited productive resources.
When quantity demanded decreases in response to a change in price
there is a movement from one point to another along the demand curve.
From the graph above, one could conclude that, all else remaining constant
there is a trade-off between X and Y.
Indi and Indrani are sisters who own a software development company. Demand has been increasing for their products and services and the sisters are contemplating whether to open up a satellite office in Austin. They estimate it would add $7 million in expenses with their profit increasing by $2.5 million each year for the next 5 years (all other things equal). Indi and Indrani decide
to open an new office because the expected marginal benefit ($12.5 million over 5 years) is greater than the estimated marginal cost ($7 million).
Last year, in calculating the GDP of the United States imports were found to be greater than U.S. export. This is known as a
trade deficit
Last year, in calculating the GDP of the United States imports were found to be greater than U.S. export. This is known as a
trade deficit.
Economists would say that the decisions we make are influenced by
trade-offs.
When decisions need to be made, economists assume a decision will be influenced by its
trade-offs.
When picking up a rental car at an airport car rental agency, some travelers stand in line waiting to sign paperwork and pick up car keys at the rental desk while other travelers can go right to their rental car by using their rental car loyalty club card. In this example, the travelers who move quickly through to the parking lot pick up their car are probably
travelers who value convenience more than those waiting in line and are willing to pay additional club fees for the option of avoiding them.
Concerning the four phases in the economic cycle above, what does point D depict?
trough
The very best models have an unusual combination of characteristics. They are both
useful and simple.
What combination of model characteristics are frequently used in the most effective models?
useful and simple.
A nation that bans trade with other nations
will be unable to specialize in what they are good at and therefore end up consuming less.
A positive statement is always
without value judgments.
Given that total spending for a certain household will always include a base amount of $1000/month, and that additional spending is equal to half of any income earned, we can predict total household spending with a model y=b+mx, where
x represents income earned.
A graph in the xy plane with a single point at 4 on the x (horizontal) axis and a vertical line upwards from that point to infinity would be represented by the equation
x=4
Given that total spending for a certain household will always include a base amount of $1000/month, and that additional spending is equal to half of any income earned, we can predict total household spending with a model y=b+mx, where
y represents total spending
The house that Jamalla inherited from her mother can rent for $2000/month, but Jeanne decides to allow her brother to stay there for only half of that. This decision carried with it a
zero monetary cost but a $1000 per month opportunity cost.
The house that Jeanne inherited from her mother can rent for $1500/month, but Jeanne decides to allow her brother to stay there for only $500 per month. This decision carried with it a
zero monetary cost but a $1000 per month opportunity cost.
