Econ 204 exam 1

Gross domestic product is a measure of:

an economy's total output.

Two countries will benefit from trade if:

each country has a lower opportunity cost of producing the traded good

When Main Street Bank buys new automatic teller machines, the quantity of _____ in the economy increases.

physical capital

Which of the following would promote long-run economic growth?

technological advancement

The capital-to-labor ratio measures:

the amount of economic capital per worker.

In the simple circular flow model:

income is equal to spending.

Which of the following is true in the case of the simple circular flow model with no savings?

Total spending equals total income

During a typical economic recovery:

unemployment decreases.

If a car is produced in Detroit in 2013 but not sold until 2014, it should be included in _____ GDP, and its value should be counted in _____.

2013's; inventory changes

Which of the following is true within the circular flow of economic activity?

Households are buyers of products and sellers of production factors. Business firms are sellers of products and buyers of production factors.

Jason produces more jeans than Jasmine. Why would Jason and Jasmine want Jasmine to produce the jeans although they both know that he can produce more than she can at a faster rate?

Jasmine has a lower opportunity cost of producing the jean than Jason.

_____ unemployment is caused by changes in consumer demands or technology

Structural

Which of the following will NOT be included in the GDP?

a cruise on a ship registered in Norway

If the cost of a typical market basket in 2019 is 400 and the cost of a typical market basket in 2020 is 390, then during this period the economy is undergoing

deflation

An increase in physical capital per worker will:

lead to more output per worker.

Which phase of the business cycle occurs immediately before a trough?

recession

Which of the following items would be considered a durable good?

refrigerator

The "business cycle" refers to:

short-run fluctuations in macroeconomic activity

The theory of comparative advantage says that countries...

should export those goods they can produce at a lower opportunity cost than another country

Cyclical unemployment occurs when:

the economy slows down and workers are laid off.

________ advantage exists when one country can produce more of a good than another country.

Absolute

Suppose an economy has historically grown at a rate of 2.25%. The economy is growing at a rate of 3%, and the unemployment rate is low by historical standards. The economy is expected to continue to grow in the near future, but monetary authorities are concerned that inflation may increase. This economy is probably in the _____ stage of the business cycle.

expansion

The key to computing comparative advantage is:

measurement of opportunity cost.

.Which of the following would be an example of a situation associated with short-run economic growth?

A country reports that employment rises by 200,000 workers, reducing the unemployment rate.

._____ unemployment is the result of changes in the business cycle

Cyclical

Most trade is based on specialization according to

comparative advantage.

The mortgage crisis caused a lot of consumers to stop spending money. The decrease in spending led to a decrease in production. Which type of unemployment resulted?

cyclical

Comparative advantage exists when one country can produce:

a good at a lower opportunity cost than can another count

Which one of the following would be included in GDP calculations

a hamburger purchased by a hungry restaurant patron

GDP includes output produced _____ but it does not include output produced _____.

inside the United States by foreign citizens; outside the United States by U.S. citizens

If technology is held constant, an increase in capital concurrent with a decrease in labor input causes output to:

rise, fall, or stay the same.

A production function:

shows the output that is produced using different combinations of inputs combined with existing technology.

GDP can be found either by adding up all of the _____ or all of the _____ in the economy.

spending; income

Since the invention of automatic teller machines, many bank tellers have lost their jobs. This is an example of _____ unemployment.

structural