ECON FINAL
Climate change has increased the frequency and destructive power of hurricanes. This has led to widespread strain on construction material and the need for basic raw materials. Which of the following best describe the above scenario? A change in the number of sellers A change in technology A change in consumer demands A change in input costs A change in the number of buyers A relationship between complements The difference between inferior and normal goods A relationship between substitutes
A change in input costs
is a way to compare and equalize the prices of internationally traded goods across countries. An international parity rate The foreign exchange rate A floating exchange rate Purchasing power parity None of the answer choices
A floating exchange rate
A new government initiative led to the investment in public transportation. This initiative has been opposed by car manufacturers which have intensively lobbied against it. Which of the following best describe the above scenario? A change in the number of sellers A change in input costs A relationship between complements A change in the number of buyers A relationship between substitutes A change in technology A change in consumer demands The difference between inferior and normal goods
A relationship between substitutes***
Changing cultural values has led to many young Americans to delay starting families and instead begin adopting dogs. Which of the following best describe the above scenario? A change in the number of sellers The difference between inferior and normal goods A relationship between substitutes A change in technology A change in input costs A change in the number of buyers A change in consumer demands A relationship between complements
A relationship between substitutes***
Which of the following is the percentage of annual US government spending allocated to foreign aid? 1% 17% 10% 21%
1%
Country Alpha and Country Beta initially have the same real GDP per capita. Country Alpha experiences no economic growth, while Country Beta grows at a sustained rate of 5 percent. In 14 years, Country Alpha's GDP will be approximately _________ that of Country Beta.
1/2
Kasey has 8 hours to work each day. It takes him 2 hours to carve a wooden toy and 1 hour for him to build a guitar. What is his opportunity cost for 1 guitar. 2 hours 2 wooden toys 1/2 a wooden toys 1 hour
1/2 a wooden toys
During the deep recessions of the early 1980s and of 2007-2009, unemployment reached roughly __________. 40% 30% 20% 10%
10%
Employed 1000 Unemployed 80 Out of Labor Force 500 Military and Institutionalized 100 What is the size of the labor force in Storria?
1080
Employed 500 Unemployed 300 Out of Labor Force 200 Military and Institutionalized 100 What is the population of Stamfordia?
1100
Employed 1000 Unemployed 80 Out of Labor Force 500 Military and Institutionalized 100 What is the population of Storria?
1680
Women composed __________ of the paid workforce in 1900 and 50% of the paid workforce in 2010. 60% 2% 33% 18%
18%
In 2010, $1.00 U.S. bought 8.24 Chinese yuan and in 2012 it bought 6.64 Chinese yuan. How many U.S. dollars could 1 Chinese yuan purchase in 2010 and 2012? 2010: .15 U.S. dollars; 2012: .11 U.S. dollars 2010: 1.2 U.S. dollars; 2012: 1.5 U.S. dollars 2010: .12 U.S. dollars; 2012: .15 U.S. dollars None of the answer choices 2010: .82 U.S. dollars; 2012: .66 U.S. dollars
2010: .12 U.S. dollars; 2012: .15 U.S. dollars
In 2010, 100 Japanese yen purchased .88 U.S. dollars and in 2013, it purchased .93 U.S. dollars. How much was 1 U.S. dollar worth in Japanese yen, in 2010 and 2013? None of the answer choices 2010: 100 yen, 2013: 114 yen 2010: 112.4 yen, 2013: 105.3 yen 2010: 113.6 yen, 2013: 107.5 yen 2010: 88 yen, 2013: 93 yen
2010: 113.6 yen, 2013: 107.5 yen
Employed 500 Unemployed 300 Out of Labor Force 200 Military and Institutionalized 100 What is the unemployment rate?
37.5
The U.S. unemployment rate moves up and down as the economy moves in and out of recessions. But over time, the unemployment rate seems to return to a range of ____________. 4%-6% 8%-10% 6%-8% 2%-4%
4%-6%
Consumption in the United States is about ____________ of GDP, and it moves relatively little over time.
68%
Employed 1000 Unemployed 80 Out of Labor Force 500 Military and Institutionalized 100 What is the unemployment rate in Storria?
7.4
Employed 500 Unemployed 300 Out of Labor Force 200 Military and Institutionalized 100 What is the size of the labor force in Stamfordia?
800
A new recent scientific discovery that gluten free products helped reduce blood pressure and increase overall health. Which of the following best describe the above scenario? A relationship between complements A change in consumer demands A change in the number of sellers The difference between inferior and normal goods A change in input costs A relationship between substitutes A change in technology A change in the number of buyers
A change in consumer demands***
Suppose there is an increase in consumer taxes. Which of the following shifts would we see in the AS-AD diagram?
AD left
Suppose there is an increase in consumer confidence and hence they begin spending more. Which of the following shifts would we see in the AS-AD diagram?
AD right
Suppose there is an increase in government spending. Which of the following shifts would we see in the AS-AD diagram?
AD right
When an economy's output increases and the price level decreases, the _________ curve has shifted to the ____________.
AS, right
A stronger euro is less favorable for: American tourists traveling in France. German tourists traveling abroad. Canadian firms selling in Germany. Canadian investors with money investments in Germany.
American tourists traveling in France.
In macroeconomics, the connection from inputs to outputs for the entire economy is called _______________.
An aggregate production function
_____________________ are a form of tax and spending rules that can affect aggregate demand in the economy without any additional change in legislation. Discretionary fiscal policies Standardized employment budgets Budget expenditures Automatic stabilizers
Automatic stabilizers
are a form of financial instrument through which corporations and governments borrow money from financial investors and promise to repay with interest. Time deposits Bonds Certificates of deposit Money market funds
Bonds
A stronger British pound is beneficial for: U.S. exchange students studying in Britain with a U.S. scholarship. British investors who have invested money in Australia. exchange students with a British scholarship studying in Canada. British firms selling goods and services in Canada
British firms selling goods and services in Canada
The _____________ is an example of a large-scale common currency. US Dollar None of the above French Franc Chinese yuan British pound
British pound
When society has a higher level of capital per person, it is called ______________.
Capital deepening
Which of the following is NOT a quality of physical capital?
Capital goods and intermediate goods are the same
Which of the following institutions determines the quantity of money in the economy as its most important task? U.S. Department of the Treasury Federal Open Market Committee Central Bank Federal Reserve Board of Governors
Central Bank
Which of the following goods is most closely a substitute for Pepsi cola? pizza water Coca cola popcorn nachos
Coca cola
Which of the following is when a nation adopts another country or group of countries' currency Common Currency Pegged Rates None of the answer choices Floating Exchange Rates
Common Currency
The demand measure of GDP accounting adds together:
Consumption, investment, government purchases and trade balance
When the economy of a country is operating close to its full capacity:
Cyclical unemployment is near zero
According to the AS-AD model, which of the following is true about output when there is an decrease in the LRASand no other change?
Decrease in long run, no change in short run
According to the AS-AD model, which of the following is true about price level when there is an increase in the LRAS and no other change?
Decrease in long run, no change in short run
According to the AS-AD model, which of the following is true about output when there is an decrease in the SRASand no other change?
Decrease in short run, no change in long run
The normal goods cookies and cheesecakes are substitutes. Suppose the price of cookies increase. What happens to the market of cheesecake? Demand increases Supply decreases Demand decreases Supply increases
Demand increases
In the country of Speagland, there is very high inflation. Suzie is an amazing chef who makes the best cookies you've ever had. She has decided to open up a new cookie shop to sell her cookies. She'll need to order equipment and meet with suppliers to negotiate contracts for supplies. Unintended redistributions of purchasing power Blurred price signals Difficulties in long-term planning. None of the above
Difficulties in long-term planning.
argues that the productivity of workers will increase if they are paid more, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate. Equilibrium wage theory Employer wage theory Employee wage theory Efficiency wage theory
Efficiency wage theory
When we want to measure wage inflation in the labor market, we use the: Employment Price Index Consumer Price Index Employment Cost Index Product Price Index
Employment Cost Index
Which of the following statements is incorrect? -The typical employment insurance compensation is roughly one third of one's latest salary for up to 26 weeks. -Employment insurance compensation encourages longer job searches, which may lead to a better match between jobs and employees. -Employment insurance compensation increases the opportunity cost of being unemployed. -Demand and supply curves for labor are constantly shifting.
Employment insurance compensation increases the opportunity cost of being unemployed
Increased investment alone will guarantee economic growth.
False
In order to avoid double counting, statisticians just count the __________________.
Final goods and services
An economics professor is discussing a measure of inflation over time based on a basket of goods comprised of all the components of GDP. Which measure is it? Consumer Price Index Consumer GDP GDP Price Index GDP Deflator
GDP Deflator
When discussing economic growth, it is often useful to focus on ____________, to avoid studying changes in the size of GDP that represent only having more people in the economy, and focus on those increases in GDP which represent an actual rise in the standard of living on a per person basis.
GDP per capita
Which of the government policies below is most unlikely to encourage per capita economic growth?
High taxes
Which of the factors of production include the skills and education embodied in the workforce of the economy?
Human capital
According to the AS-AD model, which of the following is true about price level when there is an increase in the AD and no other change?
Increase both
According to the AS-AD model, which of the following is true about output when there is an increase in the LRASand no other change?
Increase in long run, no change in short run
According to the AS-AD model, which of the following is true about price level when there is an decrease in the LRAS and no other change?
Increase in long run, no change in short run
According to the AS-AD model, which of the following is true about output when there is an increase in the LRASand no other change?
Increase in short run, no change in long run
According to the AS-AD model, which of the following is true about price level when there is an decrease in the SRAS and no other change?
Increase in short run, no change in long run
According to the AS-AD model, which of the following is true about unemployment when there is an decrease in the SRAS and no other change?
Increase short, no change long
Which of the following is most likely to contribute to economic growth as measured by GDP per capita?
Increased capital formation
Which of the following is when theb capital that flows across national boundaries as either portfolio investment or direct investment Pegged currency International capital flows Tobin taxes Merged currency None of the answer choices
International capital flows
If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn, then Iowa should import corn from Oklahoma. Oklahoma should produce just enough corn to satisfy its own residents' demands. Iowa has an absolute advantage in the production of corn. Iowa has a comparative advantage in the production of corn.
Iowa has a comparative advantage in the production of corn.
A nation can achieve higher economic growth if:
It devotes more resources to research and development
Why is productivity growth considered to be the most important factor in the AD/ASAD/AS model?
It shifts the AS curve in the long term
Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happen to the unemployment rate? It would not change. It would change, but the effect cannot be predicted. It would increase. It would fall.
It would fall
will often cause monetary policy to be considered counterproductive because it makes it hard for the central bank to know when the policy will take effect? Reserve requirements Altering the discount rate Quantitative easing Long and variable time lags
Long and variable time lags
Carly, a journalist, hires a contractor for $100 a day to build a deck in her backyard beause she cannot build it herself. Unit of Account Medium of Exchange Store of Value Standard of Deferred Payment
Medium of Exchange
_________ is calculated by taking _________ and then subtracting the value of how much physical capital is worn out, or reduced in value because of aging, over the course of a year.
NNP, GNP
_______________________ are economists who generally emphasize the importance of aggregate supply in determining the size of the macroeconomy over the _____________.
Neoclassic economists, long run
In an AD/AS diagram, an increase in structural unemployment will:
No effect
Are markets always in equilibrium? No, but if there is no outside interference, they tend to move toward equilibrium. Yes, because very few things tend to alter supply and demand Yes, they are always at the equilibrium point, or very close to it. None of the answer choices No, they never "settle down" into a stable price and quantity.
No, but if there is no outside interference, they tend to move toward equilibrium.
By the definition of GDP, is the following good included in GDP in 2014? In 2013, you buy a brand new guitar for $1,000
No, different time period
By the definition of GDP, is the following good included in GDP in 2014? This year, you build yourself a computer worth $3,000.
No, no market value
By the definition of GDP, is the following good included in GDP in 2014? You make yourself a large cup of coffee (20 ounces) at home using official Starbucks beans.
No, no market value
Central Bank policy requires Northern Bank to hold 10% of its deposits as reserves. Northern Bank policy prevents it from holding excess reserves. If the central bank purchases $30 million in bonds from Northern Bank what will be the result? Northern's net worth changes by $30 million the money supply in the economy decreases Northern's bond assets increase by $30 million Northern's loan assets increase by $30 million
Northern's loan assets increase by $30 million
Which of the factors of production include machines and production facilities?
Physical capital
The term "full employment GDP" is synonymous with which of the following?
Potential GDP
Suppose there is an economic boom and families have more income. What happens to the market for an inferior good like McDonalds? Price increases, Quantity Increases Price decreases, Quantity Decreases Price increases, Quantity Decreases Price decreases, Quantity Increases
Price decreases, Quantity Decreases
Deregulation has made it much easier for restaurants to open up. What happens to the market for the average restaurant meal? Price decreases, Quantity Increases Price increases, Quantity Decreases Price increases, Quantity Increases Price decreases, Quantity Decreases
Price decreases, Quantity Increases
Immigration from Vietnam has led to more Vietnamese restaurants to open up. What happens to the market of Vietnamese food? Price decreases, Quantity Increases Price decreases, Quantity Decreases Price increases, Quantity Increases Price increases, Quantity Decreases
Price decreases, Quantity Increases
Consider the market for social media software. New government regulatory rules requires tech firms to hire more lawyers and accountants to stay in compliance. What hapepns to the market of social media software? Price increases, Quantity Increases Price decreases, Quantity Increases Price increases, Quantity Decreases Price decreases, Quantity Decreases
Price increases, Quantity Decreases
Suppose a drought makes it harder for farmers to grow corn this year. What happens to the market of corn? Price decreases, Quantity Decreases Price decreases, Quantity Increases Price increases, Quantity Increases Price increases, Quantity Decreases
Price increases, Quantity Decreases
A celebrity endorsed a new brand of soda pop called Popstar and young people everyone began buying it. What happens to the market of Popstar? Price increases, Quantity Decreases Price decreases, Quantity Decreases Price increases, Quantity Increases Price decreases, Quantity Increases
Price increases, Quantity Increases
Consider the market for used and new cars. Suppose the price of used cars increases, what happens to the market of new cars? Price increases, Quantity Decreases Price decreases, Quantity Increases Price increases, Quantity Increases Price decreases, Quantity Decreases
Price increases, Quantity Increases
Consider the market of pork and beef, two substitutes. Pork is an inferior good while beef is a normal good. Suppose the price of beef increases, what happens to the market of pork? Price increases, Quantity Decreases Price increases, Quantity Increases Price decreases, Quantity Decreases Price decreases, Quantity Increases
Price increases, Quantity Increases
Consider the markets for online education, an inferior good, and in-person education, a normal good. They are substitutes. Suppose the price of in-person education increases. What happens to the market for online education? Price increases, Quantity Increases Price decreases, Quantity Increases Price increases, Quantity Decreases Price decreases, Quantity Decreases
Price increases, Quantity Increases
Suppose because of demographic changes, there is a larger population of older Americans. What happens to the market of dentures, a normal good? Price increases, Quantity Increases Price decreases, Quantity Decreases Price decreases, Quantity Increases Price increases, Quantity Decreases
Price increases, Quantity Increases
A new minimum wage law is implemented for all workers in coal mines. What happens to the price of coal? Price decreases, Quantity Decreases Price increases, Quantity Decreases Price decreases, Quantity Increases Price increases, Quantity Increases
Price increases, Quantity decreases***
Consider the market for ketchup and mustard, two complements. Suppose the price of ketchup increases. What happens in the mustard market? Price increases, Quantity Decreases Price increases, Quantity Increases Price decreases, Quantity Decreases Price decreases, Quantity Increases
Price increases, Quantity increases***
Suppose the price of hot dogs, a substitute for hamburgers, decreases. At the same time, global warming has made it harder and more expensive to raise cattle. What happens to the market for hamburgers? (Select all that are true) Price increases Price decreases Price is ambiguous Quantity increases Quantity decreases Quantity is ambiguous
Price is ambiguous, quantity decreases***
Over the long run, ____________ per hour is the most important determinant of the average wage level in any economy.
Productivity
The value of what is produced per worker, or per hour worked, is called ____________.
Productivity
To achieve a high standard of living, a nation should:
Promote economic growth
Economists typically measure economic growth by tracking:
Real GDP per capita
Suppose there is a unexpected increase in world oil prices. Which of the following shifts would we see in the AS-AD diagram?
SRAS left
Sam is a woodworker. In 15 minutes, he can make 1 chair. On the other hand, in 45 minutes he can make 1 table. Stephanie is also a woodworker but an apprentice. She can make a chair, but in 30 minutes and a table in 2 hours. Which of the following is true? Stephanie has an absolute advantage in making chairs. Stephanie has an absolute advantage in making tables. Sam has an absolute advantage in making chairs. Sam has an absolute advantage in making tables.
Sam both
Which of the following is NOT part of M1 Money Supply? Savings Deposits Coins and Currency Travelers' Checks Checkable Deposits
Savings Deposits
If Shawn can produce donuts at a lower opportunity cost than Sue, then Shawn should not produce donuts. Sue has a comparative advantage in the production of donuts. Shawn has a comparative advantage in the production of donuts. Shawn is capable of producing more donuts than Sue in a given amount of time.
Shawn has a comparative advantage in the production of donuts.
Which of the following is an exchange rate policy in which the government usually allows the market to set the exchange rate, but in some cases, especially if the exchange rate seems to be moving rapidly in one direction, the central bank will intervene. Soft peg Hard peg Currency Block None of the answer choices
Soft peg
Which of the following goods is most closely a substitute for the gaming system, Microsoft xBox? Apple MacBook Apple iPhone Sony Playstation Microsoft Surface Book Google's Fitbit
Sony Playstation
_________________ results when an economy experiences high unemployment and high inflation at the same time.
Stagflation
Betty gets $200 from her grandparents for her birthday. She takes the money andkeeps it in her sock drawer for safekeeping. Unit of Account Store of Value Standard of Deferred Payment Medium of Exchange
Store of Value
Since the late 1950s, economists have performed "growth accounting" studies in the United States. These have determined that ________________ is typically the most important contributor to U.S. economic growth.
Technology
Aggregate supply (AS) denotes the relationship between the __________________ that firms choose to produce and sell and the _________________, holding the price of inputs fixed.
Total quantity, price level for output
If the U.S. dollar weakens, which of the following parties will benefit? Australian firms selling in the U.S. countries exporting to the U.S. Japanese investors who have money in the U.S. U.S firms selling in Europe
U.S firms selling in Europe
Potential GDP in the U.S. will be unaffected by ____________________.
Unemployment rate
Fred looks in his wallet and see he has $20 in cash. He thinks about it and decides to buy an ice cream cone for $10. Unit of Account Store of Value Medium of Exchange Standard of Deferred Payment
Unit of Account
Say's Law argues that a given ____________________ must create an equivalent ________________________ somewhere else in the economy.
Value of supply, value of demand
By the definition of GDP, is the following good included in GDP in 2014? The used car you bought for $12,000 is taken to a repair shop to get modified for an extra $3000.
Yes
If the government for the state of Washington collects $65.8 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be: an increase in payroll tax. a budget surplus. an increase in excise tax. a budget deficit.
a budget deficit.
Which of the following will not result in a leftward shift of the market demand curve for labor? a decrease in labor productivity a decrease in the firm's product price None of the answer choices an increase in the wage rate a decrease in demand for the firm's product
a decrease in the firm's product price
Which of the following changes in the financial market will lead to a decline in interest rates: a rise in demand a fall in demand a rise in supply a fall in supply
a fall in demand, a fall in supply
Which of the following changes in the financial market will lead to an increase in thequantity of loans made and received: a rise in demand a fall in demand a rise in supply a fall in supply
a rise in demand, a rise in supply
The supply curve of textbooks (which are produced using paper made from trees) will shift to the left in response to: None of the answer choices a sharp increase in the demand for and construction of wood-frame homes an end to government regulations that limit timber harvesting in national forests. a decline in college tuition. an increase in the supply of lumberjacks
a sharp increase in the demand for and construction of wood-frame homes
What distinguishes the real value of a statistic from the nominal value of a statistic? real interest rate adjusting for inflation timing of announcement adjusting for GDP deflator
adjusting for inflation
During a recession, if a government uses an expansionary fiscal policy to increase GDP, the: aggregate supply curve will shift to the right. aggregate supply curve will shift to the left. aggregate demand curve will shift to the left. aggregate demand curve will shift to the right.
aggregate demand curve will shift to the right.
Inflation can be calculated in terms of how the overall cost of ___________________ changes over time. all goods all services the basket of goods all goods and services
all goods and services
Trade between countries can best be understood by examining the countries' absolute advantages. must benefit both countries equally; otherwise, trade is not mutually beneficial. limits a country's ability to produce goods and services on its own. allows each country to consume at a point outside its production possibilities frontier.
allows each country to consume at a point outside its production possibilities frontier.
One of the following groups is not participating in the foreign exchange markets. Which one? All of them are participating Boston business firms trading goods and services with firms in France an Iowa travel firm that arranges vacation tours for local seniors to Hawaii international investors buying bonds issued by a German car manufacturing firm international investors buying part-ownership of a mining operation in Afghanistan
an Iowa travel firm that arranges vacation tours for local seniors to Hawaii
Which of the following will NOT result in a rightward shift of the market supply curve for labor? an increase in labor productivity an increase in immigration an increase in the working-age population None of the answer choices a decrease in non-wage income
an decrease in non wage income
The federal government levies _____________________________ on people who pass assets ____________________________, either after death or during life. a regressive tax; to non-family members an excise tax; to their children an estate and gift tax; to the next generation a progressive tax; to non-family members
an estate and gift tax; to the next generation
The government can use _____________ in the form of ____________________ to increase the level of aggregate demand in the economy. an expansionary fiscal policy; an increase in corporate taxes a contractionary fiscal policy; an increase in taxes an expansionary fiscal policy; an increase in government spending a contractionary fiscal policy; a reduction in taxes
an expansionary fiscal policy; an increase in government spending
Which of the following results in a rightward shift of the market demand curve for labor? an increase in demand for the firm's product None of the answer choices a decrease in labor productivity an increase in the wage rate a decrease in the firm's product price
an increase in demand for the firm's product
If Canada's economy moves into an expansion while its economy is producing more than potential GDP, then: government spending and tax revenue will increase because of automatic stabilizers. automatic stabilizers will decrease government spending and increase tax revenue. automatic stabilizers will increase government spending and decrease tax revenue. government spending and tax revenue will decrease because of automatic stabilizers.
automatic stabilizers will decrease government spending and increase tax revenue.
Which of the following goods is most closely a complement for eggs for breakfast? wheat soda bacon cinnnamon
bacon
Which of the following goods is most closely a substitute for wheat? barley tofu pork lamb fish
barley
What is the name given to the macroeconomic equation MV = PQ basic quantity equation of output basic quantity equation of money basic velocity of price equation basic velocity of money equation
basic quantity equation of money
The Central Bank has raised its reserve requirements from 10% to 12%. If Southern Bank finds that it is not holding enough in reserves to meet the higher requirements, then it will likely: reduce the quantity of money and loans on the balance sheet buy bonds to increase the size of its reserve assets keep track of whether money is flowing in or out of the bank borrow for the short term from the central bank
borrow for the short term from the central bank
Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine: both the equilibrium price and quantity will rise. the equilibrium price will rise and the equilibrium quantity will decrease. the equilibrium price will fall and the equilibrium quantity will fall. the equilibrium price will rise, while the change to equilibrium quantity is indeterminate. None of the answer chocies
both the equilibrium price and quantity will rise.
If the central bank increases the amount of reserves banks are required to hold to 20%, then: both the money multiplier and the supply of money in the economy will increase. the money multiplier will decrease and the supply of money in the economy will increase. the money multiplier will increase and the supply of money in the economy will decrease both the money multiplier and supply of money in the economy will decrease.
both the money multiplier and supply of money in the economy will decrease.
Cyclical unemployment arises when: -the business cycle enters an expansionary phase. -business activity in the macroeconomy declines. labor unions strike for higher wages. the agriculture sector completes the cycle of planting, cultivating, and harvesting the nation's food supply.
business activity in the macroeconomy declines
A central bank that wants to increase the quantity of money in the economy will buy bonds in open market operations raise the discount rate sell bonds in open market operations reverse quantitative easing
buy bonds in open market operations
By the definition of GDP, is the following good included in GDP in 2020? You buy a used car built in Canada that was made in 2018 for $12,000.
c,d
In 2010, Microsoft will pay corporate income tax to the federal government based on the company's __________________. optional tax rate corporate profits proportional tax rate excise profits
corporate profits
The process of banks making loans in financial capital markets is intimately tied to the: financial stress levels of banks. creation of money. home construction industry. redistribution of wealth.
creation of money
The type of unemployment that occurs because of a recession is called: cyclical unemployment. the natural rate of unemployment. frictional unemployment. seasonal unemployment.
cyclical unemployment
By the definition of GDP, is the following good included in GDP in 2014? You decide to go on a nice vacation in 2014 in Montreal, Quebec, Canada and spend $100 on a hotelroom each evening.
d
Another term used to describe negative inflation is: GDP deflator counter inflation deflation hyperinflation
deflation
Eggs and milk are complements and normal goods. Suppose the price of eggs increase. What happens to the market of milk Supply increases Demand decreases Demand increases Supply decreases
demand decreases
Suppose the normal goods Netflix and chili are complements. Suppose the price of Netflix increases. What happens to the market of chili? Supply increases Demand decreases Demand increases Supply decreases
demand decreases
Suppose the normal goods of movie tickets and watching Netflix are substitutes. Suppose the price of Netflix decrease. What happens to the market of movies? Demand increases Demand decreases Supply increases Supply decreases
demand decreases
The inferior good Gordito Crunch and the normal good Chipotle Steak Burrito are substitutes. Suppose your income increase. What happens to the market of the Gordito Crunch? Supply increases Demand decreases Supply decreases Demand increases
demand decreases
Suppose the normal goods Fish and chips are complements. Suppose your income increases. What happens to the market of fish? Supply decreases Supply increases Demand increases Demand decreases
demand increases
What term is used to describe the interest rate charged by the central bank when it makes loans to commercial banks? Fed rate discount rate open market rate reserve requirement
discount rate
When the government passes a new law that explicitly changes overall tax or spending levels, it is enacting: discretionary fiscal policy. progressive fiscal policy. regressive fiscal policy. fiscal policy.
discretionary fiscal policy.
If Bill performs plumbing upgrades for Alice in exchange for her incorporating his business, then their _________________________ will be satisfied. double coincidence of wants division of labor convenience of exchange balance of trade
double coincidence of wants
The unemployment rate may overestimate the true extent of unemployment if: many part-time employees would like to work fulltime, but are unable to get the additional work. many people who claim to be unemployed actually work in the underground economy. people falsely claim that they are actively seeking work in order to receive unemployment benefits. either B) or C) occurs
either B) or C) occurs
Whether the economy is in a recession is illustrated in the AD/AS model by how close the _____________________ is to the potential GDP line.
equilibrium
The definition of market equilibrium states that at the _______________, the quantity of labor demanded by employers will equal the quantity supplied. equilibrium wage efficiency wage sticky wage natural rate of unemployment
equilibrium wage
Portfolio investments are often made based on beliefs about how _______________ are likely to move in the near future. interest rates foreign investment tax rates bond rates and interest rates exchange rates or rates of return
exchange rates or rates of return
In modern economies, _____________________ receive money from savers and provide funds to borrowers. financial intermediaries governments credit unions banks
financial intermediaries
If a Central Bank decides it needs to decrease both the aggregate demand and the money supply, then it will follow quantitative easing policy follow expansionary monetary policy follow loose monetary policy follow tight monetary policy
follow tight monetary policy
People or firms use one currency to purchase another currency at the _______________________. None of the answer choices international currency exchange international parity market foreign currency exchange foreign exchange market
foreign exchange market
The development of a nationwide computerized job bank listing of all job openings would be most likely to reduce: seasonal unemployment. natural unemployment. frictional unemployment. cyclical unemployment.
frictional unemployment
A welder who quits his job and moves from Pittsburgh to Madison to try to get a better welding job is said to be: frictionally unemployed. underemployed. cyclically unemployed. structurally unemployed.
frictionally unemployed
Which of the following goods is most closely a complement for a car? steak ice cream tractors gasoline trucks
gasoline
By definition, imports are people who work in foreign countries. limits placed on the quantity of goods leaving a country. goods in which a country has an absolute advantage. goods produced abroad and sold domestically.
goods produced abroad and sold domestically.
By definition, exports are goods produced domestically and sold abroad. goods in which a country has an absolute advantage. limits placed on the quantity of goods brought into a country. people who work in foreign countries.
goods produced domestically and sold abroad.
The effects of inflation are seen in: services and wages only goods, services, wages and income levels wages and income levels only goods and services only
goods, services, wages and income levels
Which of the following goods is most closely a complement for peanut butter? grape jelly ice cream almond butter steak car
grape jelly
In the early 1990's extremely high inflation rates of 2500% were common in Russia. During that time, we can say that as a result of those inflation rates, Russia was experiencing ___________________. perpetual inflation ultra inflation hypo inflation hyperinflation
hyperinflation
Inflation implies that the level of all prices _____________________. decrease stay the same increase none of the above
increase
Improvements in the productivity of labor will tend to decrease wages None of the answer choices decrease the supply of labor increase wages increase the supply of labor
increase wages
If the demand for software engineers ____________ slower than does supply, then wages of software engineers will _______. increases; remain constant increases; fall decreases; fall None of the answer choices increases, rise
increases; fall
Absolute advantage is found by comparing different producers' payments to land, labor, and capital. opportunity costs. inputs per unit of output. profits per unit of output
inputs per unit of output.
Suppose a country's central bank seeks a loose monetary policy. Which of the following would occur? (Mark all that apply) interest rates increase interest rates decrease investment increases investment decreases consumption increases consumption decreases
interest rates decrease, investment increases, consumption increases
The current level of US government accumulated debt, when measured in nominal dollars: has remained steady for the past decade. has reached higher levels in the past is lower than it has ever been. is higher than it has ever been.
is higher than it has ever been.
Karen chooses to go to university fulltime rather than to work. Karen: is not part of the labor force. is considered employed. is part of the labor force, but not actively seeking work. is part of the labor force and what economists call a discouraged worker.
is not part of the labor force
If the Canadian dollar is strengthening, then: it has been unpegged from other currencies. it has appreciated in terms of other currencies. Canada has purchasing power parity. Canada has adopted a hard peg policy. None of the answer choices
it has appreciated in terms of other currencies.
Other things being equal, a _____________ supply of workers tends to _________ real wages. smaller; not change larger; decrease smaller; decrease larger; increase
larger; decrease
Which of the following government policies would be the least likely to be found in a labor market? price floors minimum wage living wage laws price ceilings
living wage laws
The unemployment rate may underestimate the true extent of unemployment if: -many part-time employees would like to work fulltime, but are unable to get the additional work -there are a large number of people working in the underground economy -employees increase the number of hours they work overtime. -people are pretending to look for work so that they can continue receiving unemployment benefits.
many part-time employees would like to work fulltime, but are unable to get the additional work
In modern economies, credit cards are a _________________ because of their wide acceptance as a method of payment for both goods and services. medium of exchange unit of exchange unit of account store of value
medium of exchange
Which of the following is omitted in a barter transaction? store of value trade medium of exchange money
money
Which of the following goods is most closely a complement for popcorn? nachos movies water kayaking
movies
Many economists believe that the trend toward greater wage inequality across the U.S. economy was primarily caused by ___________________. the rise of global markets inflation None of the answer choices new technology the recession
new technology
Which of the following is a traditional tool used by the Fed during recessions? quantitative easing open market operations coins and paper currency higher interest rates
open market operations
Reginald looked for work for six months but could not find a job to his liking. He now spends his time at the beach. For purposes of employment he is considered: out of the labor force. underemployed. employed in the underground economy. unemployed.
out of the labor force
Which of the following goods is most closely a complement for a pencil? tablet computer pens paper car
paper
The "law of supply" functions in labor markets; that is, a higher ___________ for labor leads to a higher quantity of labor supplied. demand quantity None of the answer choices supply price
price
Suppose robots and human labor are substitutes. The price of labor is its wage. Quantity is the number of hours people work. Improvements in technology has lowered the price of robots. Suppose that because of demographic shifts there is an increase in human labor population.What happens to the market for human laborf? (Select all that are true) Price increases Price decreases Price is ambiguous Quantity increases Quantity decreases Quantity is ambiguous
price decreases, quantity decreases
Consider the market for beef, a normal good, and eggs, another normal good. Beef and eggs are complements. Suppose the price of eggs decrease and there is an expansion of cattle farms. What happens to the market for beef? (Select all that are true) Price increases Price decreases Price is ambiguous Quantity increases Quantity decreases Quantity is ambiguous
price decreases, quantity increases
Consider the market for gasoline cars and electric cars, two normal goods. Suppose consumers have decided to fight global warming, they prefer electric cars. On top of that, improvements in technology lower the costs to produce electric cars.What happens to the market for electric cars? (Select all that are true) Price increases Price decreases Price is ambiguous Quantity increases Quantity decreases Quantity is ambiguous
price increases, quantity decreases***
Consider the market for soda and tea, substitutes. Suppose the price of tea increases. At the same time, the government imposes a tax to limit the sale of soda pop. What happens to the market for soda? (Select all that are true) Price increases Price decreases Price is ambiguous Quantity increases Quantity decreases Quantity is ambiguous
price is ambiguous, quantity is ambiguous
The Producer Price Index is based on prices paid for supplies and inputs by: government producers of goods and services consumers the small business sector
producers of goods and services
A __________________________ policy will cause a greater share of income to be collected from those with high incomes than from those with lower incomes. proportional tax progressive tax excise tax regressive tax
progressive tax
If government policy allows a country's currency to be determined in the exchange rate market, then that currency will be subject to: None of the answer choices a hard peg policy a floating exchange rate purchasing power parity depreciation
purchasing power parity
A straightforward example of a ____________, often used for simplicity, is the interest rate. rate of return price floor financial investment price ceiling
rate of return
The difference between nominal GDP and real GDP is: real GDP adjusts for inflation real GDP excludes imports and exports nominal GDP measures actual productivity nominal GDP adjusts for inflation
real GDP adjusts for inflation
In an AD/AS model:
real GDP on horizontal axis
South Dakota's governor reports a budget surplus in 2011, that state government likely: equalized spending and taxes in that year. increased the proportional tax level. increased the corporate income tax rate. received more in taxes than it spent in that year.
received more in taxes than it spent in that year.
Which of the following is considered to be a relatively weak tool of monetary policy? reducing the money supply altering the discount rate reserve requirements quantitative easing
reducing the money supply
When the share of individual income tax collected by the government from people with higher incomes is smaller than the share of tax collected from people with lower incomes, then the tax is ____________________. optional progressive regressive proportional
regressive
Which of the following goods is most closely a substitute for potatoes? pork rice chicken salad fish
rice
A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will: shift to the right, increasing the price of the drug. None of the answer choices shift to the left, decreasing the price of the drug. shift to the left, increasing the price of the drug. shift to the right, decreasing the price of the drug
shift to the right, decreasing the price of the drug
The time lag for monetary policy is typically ________________ the time lag for fiscal policy. the same as about the same as longer than shorter than
shorter than
One of the reasons that a rise in the price of a fixed basket of goods over time tends to overstate the rise in a consumer's true cost of living, is: attribution bias preference bias complimentary bias substitution bias
substitution bias
In 2020, a pandemic hit the United States where it became more costly to operate. What do you think happens to the market of a restaurant business? Supply decreases Demand decreases Demand increases Supply increases
supply decreases
There is an inferior good of beef jerky and the normal good of steak. Suppose the price of corn which feeds cows decreases. What happens to the market of jerky? Demand decreases Supply decreases Supply increases Demand increases
supply increases
There are two services: computer programming services and computer repair services. Suppose computer technology advances making it easier to provide computer programming services. What would happen for the market of comptuer programming? Demand decreases Supply increases Demand increases Supply decreases
supply increases***
The labor __________ curve(s) will shift ____________ if there is an increase in productivity or an increase in the demand for the final product. demand; right supply; left demand; left supply; right
supply; right
For firms engaged in international lending and borrowing, ____________________ can have an enormous effect on profits. swings in exchange rates trade-offs and risks None of the answer choices foreign portfolio investments foreign direct investment
swings in exchange rates
Which of the following goods is most closely a substitute for coffee? quinoa nachos M&Ms tea cookies
tea
As the _______________ for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left. high-skill labor complementarity None of the answer choices lower wage market technology substitute
technology substitute
If $1.00 U.S. bought $1.40 Canadian dollars in 2006 and in 2010 it bought $1.00 Canadian dollar, then; the Canadian dollar appreciated against the U.S. dollar. the U.S. dollar strengthened against the Canadian dollar. the U.S. dollar appreciated against the Canadian dollar. None of the answer choices the Canadian dollar weakened against the Canadian dollar.
the Canadian dollar appreciated against the U.S. dollar.
If a nation merges its currency with another nation to create a single currency, what must it give up? the ability to fight recessions and control inflations the ability to determine its own nationally-oriented monetary policy the ability to sell currency in foreign exchange markets the ability to purchase currency in foreign exchange markets
the ability to determine its own nationally-oriented monetary policy
Investment (I) includes: the amount spent on consumer goods that last more than one year. the amount spent on new factories and machinery. the amount spent on stocks and bonds. the amount spent on purchases of art.
the amount spent on new factories and machinery.
If Brent uses his credit card to purchase a new television, then the money to pay the retailer is taken from: the credit card company's M1 funds. his M2 funds. the credit card company's M2 funds. his M1 funds.
the credit card company's M1 funds.
If 112 Japanese yen purchased $1.00 U.S. in 2008 and 83 Japanese yen purchased $1.00 U.S. in 2009, then: the dollar appreciated against the yen the yen weakened against the dollar. Not enough information the dollar depreciated against the yen the yen depreciated against the dollar
the dollar depreciated against the yen
If 1000 Mexican pesos could buy $1.00 U.S. dollar in 2006 and 87 U.S. dollars in 2010, then: the dollar depreciated against the peso. None of the answer choices the peso strengthened against the peso. the peso appreciated against the dollar. the dollar strengthened against the peso.
the dollar strengthened against the peso.
Foreign direct investment is the term used to describe purchases of firms in another country that involve ______________________. taking a management responsibility using another currency the exchange rate market internationally traded goods across countries
the exchange rate market
_____________________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s.
the industrial revolution
When the central bank decides it will sell bonds using open market operations interest rates decrease the money supply increases the money supply decreases the money supply is unaffected
the money supply decreases
When the central bank lowers the reserve requirement on deposits the money supply increases and interest rates decrease the money supply and interest rates increase the money supply and interest rates decrease the money supply decreases and interest rates increase
the money supply increases and interest rates decrease
If a nation's labor force receives a significant influx of young workers: the natural rate of unemployment is unlikely to change the natural rate of unemployment is likely to increase. the natural rate of unemployment is likely to decrease. frictional unemployment will likely decrease to zero.
the natural rate of unemployment is likely to increase
The most significant real economic cost of high unemployment is: the potential goods and services that might have been produced but weren't the money cost of retraining persons to obtain new jobs. the lost tax revenue that might have been paid by persons if they had worked. the money cost of unemployment insurance payments to the unemployed.
the potential goods and services that might have been produced but weren't
Which of the following is included in GDP calculations? a crisp $50 bill received on your birthday sales revenue received from a yard sale cash income received by a self-employed landscaper that is not reported to the IRS the university tuition paid to enroll in a course
the university tuition paid to enroll in a course
Gomer loses his job as a road construction worker and cannot find another position with equivalent pay and benefits. As a result, he is still checking the want ads and reporting to the unemployment office on a weekly basis. He is considered to be: out of the labor force. unemployed. laid off. underemployed
underemployed
Many states do have ____________, which impose an upper limit on the interest rate that lenders can charge. usury laws minimum interest rate price floor laws price ceiling laws
usury laws
A depreciating U.S. dollar is ________________ because it is worth ___________ in terms of other currencies. strengthening; more None of the answer choices a problem for exporters; less weakening; less beneficial to importers; more
weakening; less
The opportunity cost of an item is -always greater than the cost of producing the item. - what you give up to get that item. - always less than the dollar value of the item. - the number of hours that one must work in order to buy one unit of the item.
what you give up to get that item.
By the definition of GDP, is the following good included in GDP in 2014? Honda builds a car in Kentucky, then sells it in the USA market for $32,000.
yes
By the definition of GDP, is the following good included in GDP in 2014? You go to Starbucks and buy large cup of coffee (20 ounces) using official Starbucks beans.
yes
By the definition of GDP, is the following good included in GDP in 2014? You go to out with your friends, fill your car's tank with $40 of gasoline, and drive around all night building memories to last a lifetime.
yes
By the definition of GDP, is the following good included in GDP in 2014? Your parents pay a clown $50 (plus $5 in sales tax) to visit your grandparents and give them joy.
yes
