ECON - MIDTERM REVIEW

EpiPens are a vital, life saving medical resource for those suffering from extreme allergies. The company that produces EpiPens is a virtual monopolist with no close competitors. They have used this market power to increase the price of an EpiPen from $50 in 2007 to over $600 now. This is an obvious example of which type of market failure? 1.Public good 2.lack of competition 3. Externalities 4.imperfect information

2.lack of competition

San Jacintonistan has a current GDP of $10 trillion and a GDP growth rate of 7%. The United States of Lonestaria has a current GDP of $2.5 trillion and a growth rate of 14%. Using the rule of 70, how many years will it take for the United States of Lonestaria's economy to catch up to the San Jacintonistan economy?

20

Which of the following will NOT cause the supply curve for kayaks to shift to the left? 1. A decrease in the number of sellers of kayaks. 2.An increase in the cost of materials used to produce kayaks. 3. An increase in the taxes on kayaks. 4. A decrease in the price of kayaks.

4. A decrease in the price of kayaks.

Which of the following could create long run growth in the United States? 1.US businesses take advantage of low interest rates and invest in new capital by building new factories and buying new equipment. 2.The United States wins a legal battle to attain legal rights to the north Atlantic ocean, expanding territory and giving access to oil, mineral and fishery resources previously owned by European nations. 3.Advancements in computing technology make businesses more efficient in all product sectors. 4.All of the above

4.All of the above

If the Surgeon General announced that wearing baseball caps will eliminate dandruff, then ___________.

Equilibrium price of baseball caps will increase.

_____ unemployment includes workers who voluntarily quit their jobs to search for better positions.

Frictional

The event that stimulated the U.S. government's commitment to tracking the economy's health through a national income accounting system was the:

Great Depression.

_____ is an index of the change in the average prices for all goods and services in GDP, the broadest measure of inflation.

The GDP deflator

_____ is a measure of the change in average prices paid by urban consumers for a typical market basket of goods and services.

The consumer price index

If bagels and doughnuts are substitute goods, then which of the following is likely to occur if the price of bagels is reduced?

The demand curve for doughnuts will shift left.

After a long recession with high levels of unemployment the economy finally begins to grow again as the unemployment rate begins to return to the natural rate (5%). This is an example of short run economic growth and does not represent an expansion of capabilities. True or False

True

If a nation exhibits increasing opportunity cost the PPF will be ___________.

a curved line

When an economy is producing the mix of goods and service MOST desired by society, that economy is considered to be __________.

allocatively efficient

Production levels beneath the PDF are _____________.

attainable but inefficient

Which of the following items is NOT included in gross private domestic investment? a) new equipment purchased by businesses b)purchases of common stock c) increases in business inventories d) residential housing

b)purchases of common stock

What is an example of a final good?

bacon purchased at a grocery store

Alternating periods of macroeconomic expansion and contraction are known as:

business cycles.

In using the income approach to GDP, the largest category is:

compensation of employees.

The largest component of GDP is:

consumption expenditure.

Workers who want to work but have been frustrated by the inability to find work and have stopped searching are known as:

discouraged workers.

Lexie works Monday to Friday from 4 P.M. to 6 P.M. in the after-school program at a local elementary school. She began looking for a full-time job last week and has already scheduled three job interviews. According to the Bureau of Labor Statistics, Lexie is:

employed.

Inflation is a:

general rise in prices.

Which of the following groups benefits from an unanticipated rise in the inflation rate?

homeowners with fixed-rate mortgages

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

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

The field of economics that deals with the allocation of scarce resources for national economies is known as _______________

macroeconomics

___________ are where buyers and sellers come together to exchange goods and services.

markets

If the demand for iPhones rises as incomes increase, then the iPhone is a(n) ___________.

normal good

Jordan Meadows lost his job as an airline pilot and has not been able to find another job as a pilot. Since he is old enough to be eligible for his pension, he decides to retire and devote himself to caring for his elderly parents, According to the Bureau of Labor Statistics, Jordan is:

not in the labor force.

The unemployment rate is defined as the ________ divided by the ________.

number unemployed; number in the labor force

The highest valued alternative that is foregone when you choose an action is called its ___________.

opportunity cost

Most economists believe that the consumer price index ______ the rate of inflation.

overstates

The high point of a business cycle is called the:

peak.

According to the law of demand, people buy more of a good when __________.

prices go down

The ________ shows the productively efficient combinations of two goods that are possible for a society to produce.

production possibilities frontier

When production technology improves, supply increases and the equilibrium __________.

quantity rises and the equilibrium price falls

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

recession

The law of supply states that as prices ____, the quantity _____.

rise;supplied decreases.

If the number of tomato growers in the market increases, the supply curve for tomatoes will __________.

shift to the right

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

spending; income

If a product becomes obsolete and the workers who produced that product will need additional training to find new jobs, then they are experiencing:

structural unemployment.

A ________ occurs when price is above market equilibrium

surplus

A benefit of using GDP per capita instead of GDP is that it:

takes into account the size of the population when measuring the value of the goods and services a country produces.

If personal consumption is $100, investment is $25, government purchases total $25, imports equal $20, and exports equal $10, then GDP equals:

$140.

The price of a front row 50 yard line ticket to a Houston Texans football game on StubHub is about $600. Parking is $25. If you attend the game you will need to spend $25 on food and drinks.If you choose to instead pick up a shift at work you can earn $50. What is the economic cost of attending the game?

$700

There are 15 million people living in Marketstan, of whom 9 million are working and 1 million are actively looking for work. What is Marketstan's unemployment rate?

10%

Suppose the market basket of goods and services cost $3,500 in 1996 but today costs $4,250. Using 1996 as the base year, the consumer price index for today is:

121.4.

If nominal GDP in 2014 is $20,000 billion while real GDP is $16,000 billion, then the GDP deflator in 2014 is:

125.

An economy has a population of 226,500. Of them, 12,500 are unemployed and actively seeking work, and 35,000 have given up looking for a job. Also, 28,000 people work part-time, and 151,000 people work full-time. This economy's unemployment rate is _______. (Round the percentage to one decimal place; for example, 0.0436 is 4.4%.)

6.5%

In economics, capital refers to ____________.

Buildings, equipment and other manufactured items used in the production of goods and services.

If a pizza parlor uses an oven in its production process, the oven is an example of which factor of production?

Capital

_____ is an overall decline in prices throughout the economy.

Deflation