Econ Final 2020 (Part 1)
82. In determining real GDP, economists adjust the nominal GDP by using the: A. national productivity index. B. wholesale (producers') price index. C. GDP price index. D. consumer price index.
C
81. Assume that in 2002 the nominal GDP was $350 billion and in 2003 it was $375 billion. On the basis of this information we: A. cannot make a meaningful comparison of the economy's performance in 2002 relative to 2003. B. can conclude that the economy was achieving real economic growth. C. can conclude that real GDP was higher in 2002 than in 2003. D. can conclude that real GDP was lower in 2002 than in 2003.
A
83. Which of the following activities is excluded from GDP, causing GDP to understate a nation's well-being? A. the services of used-car dealers B. the child-care services provided by stay-at-home parents C. the construction of new houses D. government expenditures on military equipment
B
9. Macroeconomics can best be described as the: A. analysis of how a consumer tries to spend income. B. study of the large aggregates of the economy or the economy as a whole. C. analysis of how firms attempt to maximize their profits. D. study of how supply and demand determine prices in individual markets.
B
10. A positive statement is one which is: A. derived by induction. B. derived by deduction. C. subjective and is based on a value judgment. D. objective and is based on facts.
D
Assume an economy that makes only one product and that year 3 is the base year. Output and price data for a five-year period are as follows. Answer the question on the basis of these data. 79. Refer to the above data. If year 3 is chosen as the base year, the price index for year 1 is: A. 140. B. 40. C. 167. D. 60.
D
32. Anything that is generally acceptable in trading for goods and services is a: A. Medium of exchange B. Measure of value C. Store of value D. Token money
A
41. The law of demand states that, other things equal: A. price and quantity demanded are inversely related. B. the larger the number of buyers in a market, the lower will be product price. C. price and quantity demanded are directly related. D. consumers will buy more of a product at high prices than at low prices.
A
42. The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is ____. A. direct, inverse B. inverse, direct C. inverse, inverse D. direct, direct
A
49. Refer to the above diagram. A government-set price ceiling is best illustrated by: A. price A. B. quantity E.' C. price C. D. price B.
A
64. Refer to the above data. PI is: A. $314. B. $346. C. $408. D. $437.
A
67. Refer to the above data. Consumption of fixed capital is: A. $5. B. $10. C. $20. D. $30.
A
69. Refer to the above data. From this information we can conclude that the net foreign factor income is: A. negative $5 billion. B. zero. C. positive $5 billion. D. positive $15 billion.
A
7. Macroeconomics approaches the study of economics from the viewpoint of: A. the entire economy. B. governmental units. C. the operation of specific product and resource markets. D. individual firms.
A
84. A large underground economy results in an: A. understated GDP. B. overstated GDP. C. understated GDP price index. D. overstated GDP price index.
A
27. A basic characteristic of a command system is that: A. Wages paid to labor are higher B. Government owns most economic resources C. Free markets are never permitted in a command economy D. Government planners play a limited role in deciding what goods will be produced
B
11. Ben says that "An increase in the tax on beer will raise its price." Holly argues that "Taxes should be increased on beer because college students drink too much." We can conclude that: A. Ben's statement is normative, but Holly's is positive .B. Holly's statement is normative, but Ben's is positive. C. Both statements are normative. D. Both statements are positive.
B
15. The negative slope of the production possibilities curve is a graphical way of indicating that: A. any economy "can have its cake and eat it too." B. to produce more of one product we must do with less of another. C. the principle of increasing opportunity costs applies to only parts of the economy. D. consumers buy more when prices are low than when prices are high.
B
16. The construction of a production possibilities curve assumes: A. the quantities of all resources are unlimited. B. technology is fixed. C. some resources are unemployed. D. there is no inflation in the economy.
B
17. Refer to the above diagram for athletic shoes. The optimal output of shoes is: A. Q1. B. Q2. C. Q3. D. greater than Q3.
B
3. Purposeful behavior means that: A. people are selfish in their decision-making. B. people weigh costs and benefits to make decisions. C. people are immune from emotions affecting their decisions. D. decision-makers do not make mistakes when weighing costs and benefits.
B
52. The agency responsible for compiling the National Income Product Accounts for the U.S. economy is the: A. Council of Economic Advisers B. Bureau of Economic Analysis C. National Bureau of Economic Research D. Bureau of Labor Statistics
B
56. The value added of a firm is the market value of: A. a firm's output plus the value of the inputs bought from others. B. a firm's output less the value of the inputs bought from others. C. the firm's output. D. the firm's inputs bought from others.
B
61. Refer to the above data. GDP is: A. $390. B. $417. C. $422. D. $492.
B
70. Consumption of fixed capital (depreciation) can be determined by: A. adding taxes on production and imports to NDP. B. subtracting NDP from GDP. C. subtracting net investment from GDP. D. adding net investment to gross investment.
B
74. Refer to the above data. Nominal GDP in year 3 is: A. $100. B. $450. C. $225. D. $150.
B
78. Suppose nominal GDP in 2009 was $100 billion and in 2010 it was $260 billion. The general price index in 2009 was 100 and in 2010 it was 180. Between 2009 and 2010 the real GDP rose by approximately: A. 160 percent. B. 44 percent. C. 37 percent. D. 80 percent.
B
13. The process of producing and accumulating capital goods is called: A. money capital. B. depreciation. C. investment. D. consumption.
C
14. A production possibilities curve shows: A. that resources are unlimited. B. that people prefer one of the goods more than the other. C. the maximum amounts of two goods that can be produced, assuming the full use of available resources. D. combinations of capital and labor necessary to produce specific levels of output.
C
21. (Last Word) A caller to a radio talk show states that protesters against globalization are a collection of "anarchist punks, naïve college students, and trade union radicals." This is an example of: A. the fallacy of composition. B. the economic perspective. C. loaded terminology. D. marginal analysis.
C
40. A market: A. reflects upsloping demand and downsloping supply curves. B. entails the exchange of goods, but not services. C. is an institution that brings together buyers and sellers. D. always requires face-to-face contact between buyer and seller.
C
44. Refer to the above data. Equilibrium price will be: A. $4. B. $3. C. $2. D. $1.
C
5. Which one of the following expressions best states the idea of opportunity cost? A. "A penny saved is a penny earned." B. "He who hesitates is lost." C. "There is no such thing as a free lunch." D. "All that glitters is not gold."
C
65. Refer to the above data. DI is: A. $284. B. $329. C. $274. D. $402.
C
66. The gross domestic product for the above economy is: A. $100. B. $95. C. $110. D. $107.
C
68. Refer to the above data. Disposable income is: A. $83. B. $73. C. $75. D. $77.
C
77. Suppose a nation's 2010 nominal GDP was $972 billion and the general price index was 90. To make the 2010 GDP comparable with the base year GDP, the 2010 GDP must be: A. deflated to $678 billion. B. deflated to $896 billion. C. inflated to $1080 billion. D. deflated to $1080 billion.
C
19. (Last Word) The fallacy of composition is essentially the error of: A. omitting relevant variables in constructing a model. B. reasoning from the general to the particular. C. confusing cause and effect in economic relationships. D. generalizing from the particular to the general.
D
20. (Last Word) The post hoc, ergo propter hoc fallacy suggests that: A. positive statements are always followed by normative judgments. B. positive statements can never be proven true or false. C. if one acts on one's expectations, those expectations will always be fulfilled. D. cause and effect can be determined merely by observing the sequence of events.
D
29. An economic system in which money is not used is a: A. Planned economy B. Market economy C. Mixed economy D. Barter economy
D
31. Which of the following statements is correct? A. The operation of a market system eventually results in an equal distribution of income B. Producers are "kings" in a market economy because they determine what is produced C. The market system is efficient at allocating resources, but not at distributing products D. Freedom of choice and enterprise are essential elements of the market system
D
36. Issues of the distribution of goods and services and of incomes in a market system are the primary topics of which fundamental question? A. What is to be produced? B. How is the output to be produced? C. How can the system accommodate change? D. Who is to receive the output?
D
39. A major problem with state ownership of resources is that it does not: A. Allow for the full use of central economic planning B. Let state enterprises buy resources used to make products C. Let state enterprises sell products produced with those resources D. Give incentives for individuals to make the best use of those resources
D
45. Refer to the above diagram. A price of $60 in this market will result in: A. equilibrium. B. a shortage of 50 units. C. a surplus of 50 units. D. a surplus of 100 units.
D
51. (Consider This) Ticket scalping refers to: A. the surplus of tickets that occurs when price is set below equilibrium. B. the shortage of tickets that occurs when price is set above equilibrium. C. pricing tickets so high that an athletic or artistic event will not be sold out. D. reselling a ticket at a price above its original purchase price.
D
57. The concept of net domestic investment refers to: A. the amount of machinery and equipment used up in producing the GDP in a specific year. B. the difference between the market value and book value of outstanding capital stock. C. gross domestic investment less net exports. D. total investment less the amount of investment goods used up in producing the year's output.
D
76. If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index for that year is: A. 100. B. 200. C. 240. D. 300.
D
80. The economy above has experienced a: A. declining nominal GDP. B. rising price level. C. declining real GDP. D. rising real GDP.
D
85. Environmental pollution is accounted for in: A. GDP. B. PI. C. DI. D. none of these.
D
1. According to economists, economic self-interest: A. is a reality that underlies economic behavior. B. has the same meaning as selfishness. C. is more characteristic of men than of women. D. is usually self-defeating.
A
18. (Last Word) The "after this, therefore because of this" fallacy states that: A. because event A precedes event B, A is necessarily the cause of B. B. the very attempt to accomplish a certain objective may create conditions that prohibit the achievement of that goal. C. events may drastically alter plans; one's intentions and actual accomplishments may differ considerably. D. generalizations that are accurate at the level of microeconomics may be inaccurate at the level of macroeconomics.
A
24. Refer to the above diagram. If society is currently producing 9 units of bicycles and 4 units of computers and it now decides to increase computer output to 6, the cost: A. will be 4 units of bicycles. B. will be 2 units of bicycles. C. will be zero because unemployed resources are available. D. of doing so cannot be determined from the information given.
A
28. Laissez-faire capitalism is characterized by: A. Very limited government role in the economy B. Active government intervention in the economy C. Individuals and firms abiding by a government economic plan D. A very fair distribution of income and wealth
A
33. Consumer sovereignty and "dollar votes" guide the market system in dealing with which fundamental question? A. What will be produced? B. How is the output to be produced? C. How can the system accommodate change? D. Who is to receive the output?
A
4. In deciding whether to study for an economics quiz or go to a movie, one is confronted by the idea(s) of: A. scarcity and opportunity costs. B. money and real capital. C. complementary economic goals. D. full production.
A
53. The system that measures the economy's overall performance is formally known as: A. National income accounting B. Business cycle measurement C. GDP assessment D. Final output and income statistics
A
54. A nation's gross domestic product (GDP): A. is the dollar value of all final output produced within the borders of the nation. B. is the dollar value of all final output produced by its citizens, regardless of where they are living. C. can be found by summing C + In + S + Xn. D. is always some amount less than C + Ig + G + Xn.
A
55. If intermediate goods and services were included in GDP: A. the GDP would be overstated. B. the GDP would then have to be deflated for changes in the price level. C. nominal GDP would exceed real GDP. D. the GDP would be understated.
A
58. The smallest component of aggregate spending in the United States is: A. net exports. B. government purchases. C. investment. D. consumption.
A
59. In calculating GDP, governmental transfer payments, such as social security or unemployment compensation, are: A. not counted. B. counted as investment spending. C. counted as government spending. D. counted as consumption spending.
A
12. The economizing problem is one of deciding how to make the best use of: A. virtually unlimited resources to satisfy virtually unlimited wants. B. limited resources to satisfy virtually unlimited wants. C. unlimited resources to satisfy limited wants. D. limited resources to satisfy limited wants.
B
2. Economics may best be defined as the: A. interaction between macro and micro considerations. B. social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity. C. empirical testing of value judgments through the use of logic. D. use of policy to refute facts and hypotheses.
B
22. In recent years the economy of Japan has grown, despite the fact that the population of Japan has declined. Which of the following would best explain Japan's economic growth despite having a smaller population? A. Immigration of new workers into Japan. B. Advancements in technology that make labor more productive. C. Reduced employment of capital because fewer workers are available to use it. D. Greater consumption of goods imported from other countries.
B
23. Refer to the above diagram. Points A, B, C, D, and E show: A. that the opportunity cost of bicycles increases, while that of computers is constant. B. combinations of bicycles and computers that society can produce by using its resources efficiently. C. that the opportunity cost of computers increases, while that of bicycles is constant. D. that society's demand for computers is greater than its demand for bicycles.
B
25. Refer to the above diagram. The combination of computers and bicycles shown by point G is: A. attainable, but too costly. B. unattainable, given currently available resources and technology. C. attainable, but involves unemployment. D. irrelevant because it is inconsistent with consumer preferences.
B
34. The term consumer sovereignty means that: A. Government is responsible for protecting consumers' interests B. What is produced is ultimately determined by what consumers buy C. There are no limits on what consumers may buy in a market system D. Producers have a strong influence over what consumers buy
B
35. Economic efficiency is the primary guide in answering which of the fundamental questions in a market economy? A. What will be produced? B. How is the output to be produced?' C. How can the system accommodate change? D. Who is to receive the output?
B
38. The idea that the desires of resource suppliers and firms to further their own self-interest will automatically further the public interest is known as: A. Consumer sovereignty B. The invisible hand C. Derived demand D. Profit maximization
B
43. The upward slope of the supply curve reflects the: A. principle of specialization in production. B. law of supply. C. fact that price and quantity supplied are inversely related. D. law of diminishing marginal utility.
B
46. Other things equal, an excise tax on a product will: A. increase its supply. B. increase its price. C. increase the quantity sold. D. increase its demand.
B
47. Refer to the above diagram, which shows demand and supply conditions in the competitive market for product X. Given D0, if the supply curve moved from S0 to S1, then: A. supply has increased and equilibrium quantity has decreased. B. supply has decreased and equilibrium quantity has decreased. C. there has been an increase in the quantity supplied. D. supply has increased and price has risen to 0G.
B
71. The total amount of income earned by U.S. resource suppliers in a year, plus taxes on production and imports, is measured by: A. gross domestic product. B. national income. C. personal income. D. disposable income.
B
72. Nominal GDP is: A. the sum of all monetary transactions that occur in the economy in a year. B. the sum of all monetary transactions involving final goods and services that occur in the economy in a year. C. the amount of production that occurs when the economy is operating at full employment. D. money GDP adjusted for inflation.
B
8. Which of the following is associated with macroeconomics? A. an examination of the incomes of Harvard Business School graduates B. an empirical investigation of the general price level and unemployment rates since 1990 C. a study of the trend of pecan prices since the Second World War D. a case study of pricing and production in the textbook industry
B
26. The market system is an economic system that: A. Produces more consumer goods than capital goods B. Produces more capital goods than consumer goods C. Gives private individuals the right to own resources used in production D. Emphasizes the government's power to control markets and direct economic activity
C
30. Which statement is correct? A. In a market system, buyers and sellers must be in face-to-face contact with each other B. Prices affect the distribution of goods in a market system but not the allocation of resources C. In a market system, prices serve to ration goods and services to consumers D. The operation of a market system has little, if any, effect on the distribution of income in the economy
C
37. The development of the Internet and e-mail to replace regular mail would be an example of: A. Roundabout production B. Derived demand C. Creative destruction D. Specialization
C
50. Refer to the above diagram. A government-set price floor is best illustrated by: A. price A. B. quantity E. C. price C. D. price B.
C
6. A well-tested economic theory is often called: A. an hypothesis. B. a prototype. C. a principle. D. an anomaly.
C
60. The largest component of total expenditures in the United States is: A. net exports. B. government purchases. C. consumption. D. gross investment.
C
62. Refer to the above data. NDP is: A. $370. B. $402. C. $392. D. $467.
C
48. Which of the above diagrams illustrate(s) the effect of an increase in automobile worker wages on the market for automobiles? A. A only. B. B only. C. C only. D. D only.
D
63. Refer to the above data. NI is: A. $362. B. $372. C. $447. D. $402.
D
73. Real GDP refers to: A. the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income. B. GDP data that embody changes in the price level, but not changes in physical output. C. GDP data that reflect changes in both physical output and the price level. D. GDP data that have been adjusted for changes in the price level.
D
75. Refer to the above data. Real GDP in year 3 is: A. $100. B. $450. C. $225. D. $150.
D
