ECON Exam 1
Which of the following market changes would lead to a shift of the supply curve from Old supply to New supply?
A rise in the price of a product that is a complement-in-production. ( shifted forward to higher quantity lower price)
Which of the following scenarios shows evidence of inflation?
You go to the soda machine and realize that a bottle of Fanta now costs 15 cents more.
The law of diminishing returns states that:
when one input is held constant, while other inputs are increased, eventually output will increase by smaller and smaller amounts.
Rapid growth in poorer countries leads to:
a reduction in inequality between poorer countries and richer countries.
If the standard of living rises in a country, we know that:
real GDP per person has increased.
In Canada, the Ontario government provides a tax credit to firms that spend on scientific research and experimental development. This tax credit will:
shift these firms' production functions upward through innovation and creative ideas.
In 2014, the action movie John Wick made about $14.5 million in its opening weekend. In 2017, John Wick: Chapter 2 made about $30.5 million in its opening weekend. The consumer price index in 2014 was 236.7. If the consumer price index in 2017 was 245.1, how much did the first John Wick movie make in 2017 dollars?
$15 million
In 1979, when the consumer price index was 72.58, men earned a median income of $11,779 per year. If the consumer price index in 2015 was 236.99, how much was $11,779 in 2015 dollars?
$38,461
In 1971, when the consumer price index was 40.48, men earned a median income of $6,903 per year. If the consumer price index in 2012 was 229.6, how much was $6,903 in 2012 dollars?
$39,153.4
What is Belgium's real GDP if its nominal GDP is $532 billion (in current US$) and the GDP deflator is 119.9?
$443.7 billion
The table below shows data for Central African Republic (CAR). What was this country's real GDP per person in 2010?
$487.95
Which of the following is a source of comparative advantage?
abundant inputs
You have four friends. Which of your friends can be described as "frictionally unemployed"?
Davis, who wants to work as an automation engineer but finds that he is required to get additional certification to qualify for available automation engineer jobs
Economic growth in a country leads to:(i) an increase in life expectancy.(ii) an increase in real GDP in the economy.(iii) a decrease in real income per person.(iv) an increase in average mortality rates
(i) and (ii)
The aggregate production function Y = f(L, H, K) shows that economic growth can occur if:(i) human capital increases.(ii) labor productivity falls.(iii) the capital stock in the country depreciates.(iv) the depreciation rate increases.
(i) only
Which of the following explains why the price of a product might rise from one year to the next?(i) an increase in quality(ii) industry pricing trends(iii) increased costs of production(iv) an increase in demand for the product
(i), (ii), (iii), and (iv)
In order to be considered unemployed, the person must be:(i) over the age of 16.(ii) actively searching for work.(iii) available to work.(iv) skilled.
(i), (ii), and (iii)
Which people are not counted as part of the official measure of the labor force in the United States?(i) individuals under the age of 16(ii) retirees(iii) institutionalized people(iv) those who are not working but getting job training
(i), (ii), and (iii)
Consider the following basket of goods: 10 loaves of bread, 300 oranges, four pairs of jeans, and two pairs of shoes. Suppose that in 2017, each loaf of bread was $2.99, each orange was $1, each pair of jeans was $47, and each pair of shoes was $95. In 2018, each loaf of bread was $2.99, each orange was $0.75, each pair of jeans was $49.50, and each pair of shoes was $99.99. What was the inflation rate in 2018?
-7.8%
You open a savings account that pays 1.67% interest a year. What is your real rate of return if the actual inflation rate is 1.67%?
0%
Refer to the following table that shows monthly data for Japan. What was the unemployment rate in December 2017?
2.7%
In December of 2018, West Virginia reported a civilian labor force of 784,574 people. The number of employed people was 744,178. What was the unemployment rate?
5.1%
In 1989, a four-year college degree would set you back $26,902. The consumer price index was 123.94 in January 1989. If the current consumer price index is 251.1, what is the cost of the four-year degree in current dollars?
54,502.92
Refer to the following table that shows monthly data for Japan. What was the total number of people (in millions) in the labor force in March 2017?
66.7 million
In a 2011 to 2012 labor force survey, the working age population in Uganda was 15,764,000. The labor force was 12,623,000. What was the labor force participation rate in Uganda?
80.01
Which of the following is an example of hyperinflation?
An economy experiences inflation of more than 7,500% in one year.
Which of the following market changes would lead to a shift of the supply curve from Old supply to New supply?
An increase in the price of an input used in production ( shift backwards, price up quantity down)
Which of the following market changes would lead to a shift of the supply curve from Old supply to New supply?
Fewer sellers in the market. ( shift backwards, price up quantity down)
Which of the following correctly shows the steps needed to calculate the inflation rate?
Find out what people typically buy, collect the prices from the stores where people shop, tally up the cost of the basket of goods and services, and calculate the inflation rate.
West Virginia experiences an economic boom. We would expect:
cyclical unemployment to fall.
You have four friends. Which of your friends can be described as "cyclically unemployed"?
Keele, who lost her job after her company lost a lot of customers during an economic downturn
Which of the following market changes would lead to a shift of the supply curve from Old supply to New supply?
Lower costs of transportation for the producers. ( shifted forward to higher quantity lower price)
Which of the following people can be described as "structurally unemployed"?(i) Mola is trained as a textile worker but is currently unemployed. He wants to work in the textile industry, which is unionized. Wages are high, but firms in this industry cannot offer jobs at lower wages due to the union requirements. Therefore, no jobs are available.(ii) Agnes believes that she can get a better job in Alaska. Therefore, she quits her job in West Virginia and is looking for a job in Alaska.(iii) Pratt has just retired after working for 40 years in a candle-making factory.(iv) The minimum wage has just been raised, and Philomena finds that fewer jobs are available in the fast-food industry. She is unable to find a job.(v) Cary will graduate in two months, after being a full-time student for the past four years. She wants to find a job in the investment banking sector.
Mola and Philomena
The government passes a new investment tax credit initiative. Which input in the production function changes, and what is the effect on economic growth in the country?
The capital stock increases, and economic growth is positively affected.
You are studying the international market for coffee. The world production of coffee beans increases, and at the same time, consumers worldwide start favoring tea over coffee. What is the effect on the equilibrium price and the equilibrium quantity in the coffee market?
The equilibrium price falls, and the change in the equilibrium quantity is ambiguous.
What happens to the equilibrium price and quantity when demand decreases and at the same time supply increases, and the demand shift is relatively smaller than the supply shift?
The equilibrium price falls, and the equilibrium quantity rises.
What will happen in the market for clothing when a major department store shifts its production of clothing to a low-labor-cost country?
The lower cost of production will lead to an increase in supply and a fall in the price of clothing.
(Figure: Imports and Exports) During the 2008 to 2009 financial crisis, exports as a share of GDP fell in the United States. Which of the following could explain this phenomenon?
The percentage decrease in exports was greater than the percentage decrease in GDP.
If there is a technological advance in the production of the Amazon Echo smart speaker, you would expect to see _____ overtime.
a fall in its equilibrium price
At Trader Joe's, the price of chocolate chip cookies falls. As a result, you would expect to see
a rise in the quantity demanded of chocolate chip cookies.
Southeast Asian countries experience high temperatures and high humidity during the monsoon seasons. This makes working conditions difficult. Because air conditioners are expensive and consume a lot of electricity, an alternative air cooler called an Eco-cooler was invented. This device does not use electricity, is made from readily available soda bottles, and works by funneling air into a room. This scenario is an example of:
a technological innovation that can increase labor productivity and thus increase economic growth.
Which of the following is LEAST likely to be traded internationally?
an afternoon bowling
You run a factory that makes leather shoes. You opt to pay your workers twice the going wage in order to reduce tardiness and shirking and to increase workers' morale and effort. This scenario is an example of:
an efficiency wage.
A firm that prepares and mails customer notices on behalf of banks has recently shifted from manually addressing letters to using a computer program that automatically inserts customer addresses and prepares letters. Thus, the production time for each letter has decreased from four minutes to just 30 seconds. This scenario is an example of:
an improvement in technology leading to a rise in productivity.
During the Great Recession, the United States Congress increased the length of time that unemployment benefits could be received from 52 weeks to 99 weeks. This change caused:
an increase in the costs for the government.
David is looking for a full-time job in the insurance industry. He is able to find only a 10-hour per week job as a fill-in insurance agent. Davis can be described as:
an involuntary part-time worker.
The moral of the story of the Solow growth model is that:
capital accumulation alone cannot lead to sustainable economic growth.
If a bakery buys a second oven, hires a second baker, buys double the number of ingredients, doubles the size of the bakery, and then produces double the number of cakes, then the bakery is experiencing:
constant returns to scale.
The CPI changes from 100 to 125. This means that:
overall prices are now 25% higher than they used to be.
The real interest rate is the:
interest rate in terms of changes in purchasing power.
The capital stock in an economy stops growing when:
investment equals depreciation.
Unemployment insurance can lead to:
longer unemployment durations.
The United States has a comparative disadvantage in _____-skilled labor. This explains why the U.S. is a net _____ of high-skilled services.
low; exporter
Menu costs are the:
marginal costs of adjusting prices.
If you see that inflation between last year and this year is 3%, this means that:
on average, prices went up across the economy by 3%.
The CPI changes from 100 to 200. This means that:
overall prices have doubled.
In 2017, Kenya banned the use of disposable plastic shopping bags due to concern over plastics pollution. Which graph depicts what happened in the country's market for reusable cloth bags?
shift up the supply curve
A government can promote the development of human capital by:
subsidizing secondary school education.
Money illusion is the:
tendency to focus on nominal values instead of inflation-adjusted values.
The catch-up effect would be largest in an economy where:
the initial level of capital is low.
Cedar point amusement park reduces its entry fees. As a result of this price fall,
the quantity demanded will be higher.
A constant returns to scale production function is one where increasing all inputs by a certain proportion leads to output rising by:
the same proportion.