Econ 1202 Quiz Questions

Consider an economy that produces only DVDs and DVD players. Last year, 10 DVDs were sold at $20 each and 5 DVD players were sold at $100 each, while this year 15 DVDs were sold at $10 each and 10 DVD players were sold at $50 each. Nominal GDP this year is: $650. $700. $500. $100

$650

Suppose that, in year 1, an economy produces 100 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year, the economy produces 110 golf balls that sell for $3.25 each and 80 pizzas that sell for $9 each. Using year 1 as the base year, real GDP in year 2 is: $970. $1,077.50. $900. $1,000.

$970.

If a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its unemployment rate is: 67.5%. 10%. 7.5%. 4%.

10%.

Suppose that nominal GDP is $1,000 in 2009 and $1,500 in 2010. If the overall price level increased by _____% between 2009 and 2010, we could say that real GDP _____. more than 50; increased 50; stayed constant 50; increased less than 50; decreased

50; stayed constant

The calculation of GDP does NOT include the value of: Bridgestone tires purchased by Ford Motor Co. Goodyear tires purchased by the United States Secret Service. Michelin tires purchased by Canadian car collectors. Firestone tires sold at your local garage.

Bridgestone tires purchased by Ford Motor Co.

The labor force is considered to be: everyone who is employed plus everyone who is unemployed. the population of the nation. everyone who is employed. those not frictionally unemployed plus all others who are employed.

everyone who is employed plus everyone who is unemployed.

Gasoline, a derivative of oil, is a large part of transportation costs for many producers. If the price of oil increases at the same time that incomes fall for many consumers, one would expect the equilibrium price of many normal goods to _____, while their equilibrium quantities would _____. fall, rise, or stay the same; decrease decrease; fall, rise, or stay the same fall; fall fall; rise

fall, rise, or stay the same; decrease

The table below shows CPI for 2015, 2016 and 2017 in an economy. 2015 2016 2017 104 109 112 Based on the table, the price levels in the economy ____________ from 2016 to 2017. This economic condition is known as ______________. Increased by 2.8%, disinflation Increased by 7.7%, inflation Decreased by 7.7%, deflation Increased by 4.8%, inflation Increased by 2.8%, deflation

Increased by 2.8%, disinflation

f the number employed is 145 million, the working-age population is 230 million, and the number unemployed is 20 million, the labor force participation rate is 70%, then the unemployment rate is 8.7% 30% 12.1% 13.7% It can not be determined because we do not know what the labor participation rate for the working age population is.

12.1%

Assume that the consumer price index for 2009 was 72.6 and for 2010 was 82.4. What was the inflation rate between the two years? 0.88% 9.8% 11.9% 13.5%

13.5%

Adam Smith strongly believed that businessmen and women acted in the best interests of society and the public. True False.

False

In the Wall Street Journal (last January) it was reported that the unemployment rate increased from 3.7% to 3.9% from November 2018 to December 2018 in the United States. This unambiguously must have shown that the U.S. economy "slowed down" last December and the number of employed Americans has fallen. False True

False

Smithian Growth refers to economic growth driven by technological change and innovation. False True

False

The substitution bias in calculating the inflation rate through the consumer price index has the effect of underestimating the (actual) rate of inflation True False

False

Peter Pundit, an economics reporter in the United States, states that the European Union (EU) is increasing its productivity very rapidly in all industries. He claims that this productivity advance is so rapid that output from the EU in these industries will soon exceed that of the United States and, as a result, the United States will no longer benefit from trade with the EU. Do you think Peter Pundit is correct or not? If not, what do you think is the source of his mistake? Peter Pundit is correct. The United States will lose any comparative advantage it may have. Peter Pundit is not correct. He confuses absolute and comparative advantage. Peter Pundit is correct. The United States will lose any absolute advantage it may have. Peter Pundit is not correct. The United States will still have an absolute advantage in producing some products.

Peter Pundit is not correct. He confuses absolute and comparative advantage.

The cornerstone of economic progress articulated by Adam Smith was Pursuit of social interest towards social welfare. Pursuit of self interest, Division of labor/Specialization and Freedom to/of Trade (markets) Pursuit of social interest, technological change and Freedom to/of Trade (markets) Development and growth of large companies such as Google, Walmart and the like.

Pursuit of self interest, Division of labor/Specialization and Freedom to/of Trade (markets)

Which factor would NOT result in an increase in the supply of a good? an increase in input prices an increase in the number of suppliers a beneficial technological change a decrease in input prices

an increase in input prices

Because of international trade, a country may: consume outside its production possibility frontier. find its production possibility frontier shifting outward. consume inside its production possibility frontier. avoid opportunity costs.

consume outside its production possibility frontier.

Gross domestic product is defined as: consumer spending + government transfers + investment spending + exports - imports. disposable income + taxes + investment spending + exports + imports. consumer spending + government purchases of goods and services + investment spending + exports - imports. consumer spending + government purchases of goods and services + financial spending + exports - imports.

consumer spending + government purchases of goods and services + investment spending + exports - imports.

GDP is the total dollar value of all: final goods and services produced in the economy in a given period. wages paid to producing workers in a given period. intermediate goods and services produced in the economy in a given period. government production in a given period.

final goods and services produced in the economy in a given period.

An economy is said to have a comparative advantage in the production of one good if it: has the highest opportunity cost of producing a particular good. can produce fewer of all goods than another economy. can produce more of all goods than another economy. has the lowest opportunity cost of producing a particular good.

has the lowest opportunity cost of producing a particular good.

Manny is attending college and majoring in chemistry. By doing so, Manny is improving his: labor. capital. human capital. land.

human capital.

A new wonder diet that results in a dramatic weight loss sweeps through the United States. The key to the diet is to eat large amounts of red meat (beef) but no poultry or carbohydrate-rich foods. As millions of Americans switch to the new diet, we can expect a(n) _____ in the _____ beef, leading to a shift to the _____ in the _____ curve for beef and _____ beef prices. decrease; demand for; left; demand; higher increase; demand for; right; demand; higher decrease; supply of; left; supply; higher increase; demand for; right; demand; lower

increase; demand for; right; demand; higher

The Bryce Harper RV Manufacturing Co., which produces motor homes or coaches (or "RV"s), in upper New York State produced 10 motor homes (or "RV"s) in 2017 at an average sales price of $100,000 each. Unfortunately, for Bryce and his company he only sold 9 (in 2017) of the 10 RVs that were produced in 2017. As a result of Bryce Harper RV Manufacturing Co.'s 2017 production, GDP in the U.S. in 2017: Increased by $1,000,000 since the unsold RV is treated as imputed consumption similar to residential homes increased by $900,000 but not the full $1,000,000 because the company was only able to sell 9 RVs in 2017 increased by $1,000,000 since the unsold RV is treated as business inventory investment for GDP calculations increased by $900,000, with GDP rising in the subsequent year when the 10th RV is actually sold

increased by $1,000,000 since the unsold RV is treated as business inventory investment for GDP calculations

Increases in a nation's standard of living are largely driven by decreases in federal government spending increases in labor productivity higher interest rates lower rates of inflation

increases in labor productivity

Adam Smith, in his "An Inquiry into the Nature and Causes of the Wealth of Nations," argued that the the principal reason or cause that drives a nation's economic growth is: increases in labor productivity caused by the division of labor and specialization government investments in infrastructure such as ports and schools that increase labor productivity increases in the number of unproductive laborers relative to productive laborers since they demand more goods and services which increases overall demand increases in labor productivity caused by technological progress

increases in labor productivity caused by the division of labor and specialization

According to official statistics, discouraged workers are: included in the employment statistics. treated just like the underemployed. not included in the labor force. included in the labor force.

not included in the labor force.

Suppose that people expect the price of Bluetooth speakers to rise next year. As a result of this expectation, people will MOST likely: purchase fewer Bluetooth speakers this year. observe higher prices for Bluetooth speakers this year. decide to wait and purchase the Bluetooth speakers next year. purchase the same amount of Bluetooth speakers since this expectation will have no effect on consumers this year.

observe higher prices for Bluetooth speakers this year.

As long as people have different _____, everyone has a comparative advantage in something. benefits utility direct costs opportunity costs

opportunity costs

The total value of all final goods and services produced in a given year, calculated using the prices of a selected base year, is: consumption spending. net exports. nominal GDP. real GDP.

real GDP.

The concept of comparative advantage is based on: absolute labor productivity. relative labor costs. relative opportunity costs. dollar prices of labor.

relative opportunity costs.

During a recession, one will often observe: rising employment rates. zero unemployment rates. rising aggregate output. rising unemployment rates and falling aggregate output.

rising unemployment rates and falling aggregate output.

If suppliers expect prices for their product to rise next year, then one would expect a: shift to the right in the supply curve for the product this year. shift to the left in the supply curve for the product this year. shift in the demand curve for the product this year. decrease in the quantity demanded this year.

shift to the left in the supply curve for the product this year.

As part of its monetary policy, the Federal Reserve controls the prime rate (of interest) the federal government's expenditures on goods and services the (unified) overall corporate bond rate (of interest) the (targeted) federal funds rate (of interest)

the (targeted) federal funds rate (of interest)

The article entitled "How Aging Japan Defied Demographics and Revived its Economy" best reflects: the impact of Japan's decreased female labor force participation rate on Japan's production possibility curve and gross domestic product how, despite the aging of Japan's population, the total employment for those from the age of 25-54 has increased rapidly in Japan and is expected to increase through 2050. the impact of Japan's increased female labor force participation rate on Japan's production possibility curve and gross domestic product the impact of Japan's decreased labor force participation rate for those over 65 years old on Japan's economy

the impact of Japan's increased female labor force participation rate on Japan's production possibility curve and gross domestic product

Which item would NOT be included in this year's (2018) GDP? the purchase of a new hybrid truck the hiring of a new schoolteacher the production of a television show the purchase of your neighbor's house (assuming that no broker was used), which was built in 1994

the purchase of your neighbor's house (assuming that no broker was used), which was built in 1994

Real GDP is: the projected future value of GDP. the value of the production of all final goods and services adjusted for price changes. the value of the production of all final goods and services measured in current prices. calculated by adding up only the real number of all items sold in the United States, regardless of their prices.

the value of the production of all final goods and services adjusted for price changes.