Econ finallll

U2 producing a soccer ball costs jake 5$. He sells it to Darby for $35. Darby values the soccer ball at $50. For this transaction, the total surplus in the market is $40

false

U3 If the nominal interest rate is 5 percent and the inflation rate is 2 percent, then the real interest rate is 7 percent

false

U3 The natural rate of unemployment is closely associated with the short-run ups and downs of economic activity

false

U3 the governments purchase of goods but not its purchase of services are included in GDP

false

U2 A life-saving medicine without any close substitutes will tend to have: A) A small elasticity of demand B)A large elasticity of demand C) A small elasticity of supply D) A large elasticity of supply

A) A small elasticity of demand

U2 Jen values her time at $60 an hour. she spends 2 hours giving Colleen a massage. Colleen was willing to pay as much as $300 for the massage, but they negotiate a price of $200 A) consumer surplus is $20 larger than producer surplus B) consumer surplus is $40 larger than producer surplus C) producer surplus is $20 larger than consumer surplus D) producer surplus is $40 larger than consumer surplus

A) consumer surplus is $20 larger than producer surplus

U3 Which of the following are human capital and physical capital, respectively A) for an accounting firm: the accountants' knowledge of tax laws and computer software B) for a grocery store: grocery carts and shelving C) for a school: chalkboard and desks D) for a library: the building and the reference librarians' knowledge of the internet

A) for an accounting firm: the accountants' knowledge of tax laws and computer software

U3 Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP makes use of A) market prices B) statistical estimates of the value of goods and services to consumers C) prices based on the assumption that producers make no profits D) the maximum amount consumers would be willing to pay

A) market prices

U3 you pay for cheese and bread from the deli with currency. Which function of money does this best illustrate? A) medium of exchange B) unit of account C) store of value D) liquidity

A) medium of exchange

U2 If a nation that does not allow international trade in steel has a domestic price of steel lower than the world price, then... A) the nation has a comparative advantage in producing steel and would become a steel exporter if it opened up to trade B)the nation has a comparative advantage in producing steel and would become a steel importer if it opened up trade C)the nation does not have a comparative advantage in producing steel and would become a steel exporter if it opened up trade D)the nation does not have a comparative advantage in producing steel and would become a steel importer if it opened up trade

A) the nation have a comparative advantage in producing steel and would become a steel exporter if it opened up trade

U1 when deciding whether or not to undertake an activity, economists compare.... A) the total cost of the activity against the total benefit received B) the total benefit of the activity against the total cost of the production C) the additional cost of the activity against the additional benefit received D) the average cost of the activity versus the total benefit received

A) the total cost of the activity against the total benefit received

U3 in measuring the stock of money in the U.S., the M1 includes A) travelers checks B) savings deposits C) credit cards D) none of the above

A) travelers checks

U2 at the equilibrium price of a good, the good will be purchased by those buyers who A) value the good more than price B) value the good less than price C) have the money to buy the good D) consider the good a necessity

A) value the good more than price

U2 which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease revenue? A) .8 B) 1 C)1.8 D)2.4

A).8

U3 If the reserve ratio is 5 percent, then $500 of additional reserves can create up to A) $10,500 of new money B) $10,000 of new money C) $9,500 of new money D) $2,500 of new money

B) $10,000 of new money

U1 which of these activities will most likely result in an external benefit? A) a college student buys a deck of cards to play solitaire in her dorm room B) an elderly women plants a flower garden on the vacant lot next to her house C) an executive purchases a book to read on a business trip D) a ten year old uses his allowance to buy new Nike shoes

B) an elderly women plants a flower garden on the vacant lost next to her house

U1 When the government redistributes income from the wealthy to the poor... A) efficiency is improved, but equality is not B) equality is improved, but efficiency is not C) both efficiency and equality are improved D)neither efficiency nor equality are improved

B) equality is improved, but efficiency is not

U1 As trade becomes more widespread, specialization ______, which in turn ______ productivity. A) decrease, decrease B) increase, increase C) decrease, increase D) increase, decrease

B) increases, increases

U1 productivity is defined as... A) amount of goods and services produced from each unit of labor input B) number of workers required to produce a given amount of goods and services C) amount of labor that can be saved by replacing workers with machines D)actual amount of effort workers put into an hour of working time

B) number of workers requires to produce a given amount of goods and services

U3 when studying changes in the economy over time, economists want a measure of the total quantity of goods and services the economy is producing that is not affected by changes in the prices of those goods and services. In other words, economists want to study A) nominal GDP B) real GDP C) the GDP deflator D) GNP

B) real GDP

U2 total surplus is equal to A) value to buyers - profit to sellers B) value to buyers - cost to sellers C) consumer surplus x producer surplus D) (consumer surplus + producer surplus) x equilibrium quantity

B) value to buyers - cost to sellers

U2 which of the following statements is not valid when the market supply curve is vertical? A) market quantity supplied doesn't change when the price changes B) supply is perfectly inelastic C) an increase in market demand will increase the equilibrium quantity D) an increase in the market demand will increase the equilibrium price

C) an increase in market demand will increase the equilibrium quantity

U2 suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by A) less than .50 B) .50 C) between .5 and 1 D) 1

C) between .5 and 1

U3 other things the same, If a country raises its saving rate, then in the long run A) both the level and growth rate of real GDP are unchanged B) the level of real GDP is higher but the growth rate of real GDP is unchanged C) both the level and growth rate of real GDP are higher D)none of the above are correct

C) both the level and growth rate of real GDP are higher

U1 when determining what a country should specialize in producing, economists chiefly consider A) absolute advantage B) the skill set of production C) comparative advantage D) the dispersion of knowledge

C) comparative advantage

U1 market failure is caused by: A) low consumer demand B) equilibrium prices C) externalities and market power D) high prices and foreign competition

C) externalities and market power

U3 other things equal, relatively poor countries tend to grow A) slower than relatively rich countries; this is called the poverty trap B) slower than relatively rich countries; this is called the fall-behind effect C) faster than relatively rich countries; this is called the catch-up effect D) faster than relatively rich countries; this is called the constant-returns-to-scale effect

C) faster than relatively rich countries; this is called the catch-up effect

U1 in a market economy, who makes the decisions that guide most economic activity? A) firms only B) households only C) firms and households D) government

C) firms and households

U3 suppose the demand for hard-wood flooring increases, while the demand for wall-to-wall carpeting decreases. Based on this change in consumer tastes, the demand for hard-wood-flooring factory workers in North Carolina increases, while the demand for carpet factory workers in Georgia decreases. This is an example of A) frictional unemployment created by efficiency wages B)structural unemployment created by efficiency wages C) frictional unemployment created by sectoral shifts D) structural unemployment created by sectoral shifts

C) frictional unemployment created by sectoral shifts

U3 Productivity is defined as the quantity of A) labor required to produce a nations GDP B) labor required to produce one unit of goods and services C) goods and services produced from each unit of labor input D) goods and services produced per unit of time

C) goods and services produced from each unit of labor input

U2 which of the following movements would illustrate the effect in the market for wedding cakes resulting from a decrease in the number of pastry chefs? A) point A to point B B) point C to point B C) point C to point D D) point A to point D *Picture*

C) point C to point D

U2 When a nation opens itself up to trade in a good and becomes an exporter, A)producer surplus decreases, but consumer surplus and total surplus would both increase B) producer surplus decreases, consumer surplus increases, and so the impact on total surplus is ambiguous C) producer surplus and total surplus increase, but consumer surplus decreases D) producer surplus, consumer surplus, and total surplus all increase

C) producer surplus and total surplus increase, but consumer surplus decreases

U1 A professor spends 10 hours per day giving lectures and writing papers. For the professor, a graph that shows his various possible mixes of output (lectures given per day and papers written per day) is called... A) line of tastes B) trade-off curve C) production possibilities frontier D) consumption possibilities frontier

C) production possibilities frontier

U3 on a banks T-account, which are part of the banks assets? A) both deposits made by its customers and reserves B) deposits made by its customers but not reserves C) reserves but not deposits made by its customers D) neither deposits made by its customers nor reserves

C) reserves but not deposits made by its customers

U2 consider the US market for chocolate, a market in which the government has imposed a price ceiling. Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling? A) a government study that shows that consuming chocolate increases the incidence of cancer B) a large increase in the size of the cocoa bean crop; cocoa beans are used to produce chocolate C) south america cocoa bean producers refuse to ship to chocolate producers in the US D) a sharp drop in consumer income; chocolate is a normal good

C) south america cocoa bean producers refuse to ship to chocolate producers in the US

U3 which of the following items is included in GDP? A) the sale of stocks and bonds B) the sale of used goods C) the sale of services such as those performed by a doctor D) all of the above are included in GDP

C) the sale of services such as those performed by a doctor

U3 in an economy that relies upon barter, A) trade does not require a double coincidence of wants B) scarce resources are allocated just as easily as they are in economies that do not rely upon barter C) there is no item in the economy that is widely accepted in exchange for goods and services D) all of the above are correct

C) there is no item in the economy that is widely accepted in exchange for goods and services

U2 If something happens to alter the quantity demanded at any given price, then A) the demand curve becomes steeper B)the demand curve becomes flatter C)the demand curve shifts D)we move along the demand curve

C)the demand curve shifts

U2 assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus would be A) $2500 B) $900 C) $800 D) $1600

D) $1600

U3 unemployment insurance A) reduces the hardship of unemployment, but it also increases the amount of employment B) reduces the incentive for the unemployed to find and take new jobs C) causes workers to be less likely to seek guarantees of job security when they negotiate with employers over the terms of employment D) all of the above is correct

D) all of the above

U2 consider the following market at the price of *insert picture* A) $8, there is a surplus of 6 units B)$5, there is neither a shortage nor a surplus C)$2, there is a shortage of 6 units D) all of the above are correct

D) all of the above are correct

U3 the CPI differs from the GDP deflator in that A) the CPI is an inflation index, while the GDP deflator is a price index B) substitution bias is not a problem with the CPI, but it is a problem with the GDP deflator C) increases in the prices of foreign produced goods that are sold to U.S. consumers show up in the GDP deflator but not in the CPI D) increases in the prices domestically produced goods that are sold to the U.S. government show up in the GDP deflator but not in the CPI

D) increases in the prices domestically produced goods that are sold to the U.S. government show up in the GDP deflator but not in the CPI

U2 Which of the following events would cause a movement upward and to the left along the demand curve for olives? A) the number of people who purchase the olives decreases B) consumer income decreases, and olives are a normal good C) the price of pickles decreases, and pickles are a substitute for olives D) the price of olives rise

D) the price of olives rise

U2 T/F if a nation that imports a good imposes a tariff, it will increase the quantity imported from abroad

False

U2 T/F when an increase in the price of one good lowers the demand for another good, the two goods are called complements

True

U2 consumer surplus measures the benefit to buyers of participating in a market

True

U1 positive statements are... A) prescriptive B) claims about how the world should be C) claims about how the world is D) made by economists speaking as policy advisers

c) claims about how the world is

U1 T/F If Wrex can produce more math problems per hour and more book reports per hour than Maxine can, then Wrex cannot gain from trading math problems and book reports with Maxine

false

U1 T/F Suppose that in one hour Dewey can produce either 10 bushels of corn or 20 yards of cloth. Dewey's opportunity cost of producing one bushel of corn is 1/2 yard a cloth.

false

U1 T/F To produce 100 bushels of wheat, Farmer A requires fewer inputs than does Farmer B. We can conclude that Farmer A has an absolute advantage over Farmer B in producing wheat.

false

U1 T/F if one producer has the absolute advantage in the production of all goods, then that same producer will have the comparative advantage in the production of all goods as well

false

U1 T/F in the long run, society faces a trade off between inflation and unemployment

false

U1 T/F points inside the production possibilities frontier represent efficient levels of production

false

U1 T/F when a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other is constant

false

U2 a decrease in the price of creamer will increase the equilibrium price and decrease the equilibrium quantity in the market for coffee

false

U2 a price ceiling set above the equilibrium price causes a surplus in the market.

false

U1 T/F in the circular flow diagram, factors of production include land, labor, and capital

true

U1 T/F the cost of an action is measured in terms of foregone opportunities

true

U1 T/F using income tax revenue to fund the welfare system illustrates the conflict between efficiency and equality

true

U2 goods with close substitutes tend to have more elastic demands than goods do without close substitutes

true

U2 if the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers

true

U2 suppose that when the price rises by 10% for a particular good, the quantity demanded of that good falls by 20%. The price elasticity of demand for this good is equal to 2.0

true

U2 the price of coffee rose sharply last month, while the quantity sold remained the same. this is due to the fact that demand increased, but supply was perfectly inelastic

true

U3 GDP includes the value of paper clips but does not also count the value of the metal used to make them

true

U3 If the fed decreases reserve requirements, the money supply will increase

true

U3 If your company opens and operates a branch in a foreign country, your company engages in foreign direct investment

true

U3 Increases in both human capital per worker and physical capital per worker increase productivity

true

U3 Sandra routinely uses currency to purchase her groceries. She is using money as a medium of exchange

true

U3 changes in the GDP deflator reflect only changes in the prices of goods and services

true

U3 inflation can be measured using either the GDP deflator or the consumer price index

true