Economics 101-01
Over the last 37 years, costs of college tuition, room, and board have increased by:
767%.
If there are 325 million Americans, 162 million with jobs (with 2 million of those in the active duty military), 8 million who are out of work and looking for jobs, and 155 million who do not have jobs and are not looking for work, what is the unemployment rate?
8/168 or 4.8 percent Only those who are working as civilians or looking for work count. Therefore the two million active-duty military do not count. There are 160 million in the labor force and 8 million are looking for work, so the fraction is 8/168.
Which of the following policies might create demand-pull inflation?
A decrease in interest rates
An increase in taxes will cause:
AD to decrease (move to the left).
An increase in government spending will cause:
AD to increase (move to the right).
Which of the following would qualify as an aggregate supply shock?
An unexpected decrease in oil prices
Which of the following would qualify as an aggregate demand shock?
An unexpected reduction in consumer confidence
GDO is computed as
C+I+G+X-M C~ consumption I~ investment G~ government spending on goods and services X~ exports M~ imports
the CPI for 2018 is
CPI in 2018= (Price of the market basket in 2018 / the price of the market basket in the base year of 1998) x 100%
Fiscal Policy is controlled by:
Congress and the President.
The income approach to GDP equals:
Employee Compensation + Profit + Net Property Income + Indirect Business Taxes + Depreciation - Income Earned Abroad.
The percentage of a balance that a borrower must pay a lender is called the:
Interest Rate
In 2019, General Motors announced the closure of its Lordstown, Ohio assembly plant. Those laid off as a result would likely be classified as
Structurally Unemployed If people lose their jobs because of a change in the economy that makes their particular skill obsolete (either because the industry ceases to exist or because it moves to another country), they are referred to as structurally unemployed.
Which of the following would be described as the administrative lag?
The time required to agree upon a policy remedy for a recession.
Which of the following will increase macroeconomic equilibrium real gross domestic product?
a decrease in taxes
A depression is different from a recession in that:
a depression is much worse.
price index
a device that centers the price of the market basket around 100
Cost-of-living adjustment (COLA)
a device that compensates people for the fact that changes in inflation change the spending power of their income
chain-based index
a price index based on an annually adjusted market basket
An example of discretionary fiscal policy would be:
a tax cut adopted to stimulate consumption.
From 2007 to 2013, total federal, state, and local appropriations to public institutions of higher education:
decreased $71 billion.
The optimal resource use for a limited natural resource very much depends on the:
discount rate you apply to the use to future limited natural resources.
The interest rate effect, the real balance effect, and the foreign purchases effect suggest that the aggregate demand curve is:
downward sloping.
Gross domestic product (GDP) is counted using two methods: one which counts all the ways people _____ money and another which counts all the ways people _____ money.
earn, spend The computation of the GDP is done in two distinct ways. One way is to count all those things for which people pay money. This is called the expenditures approach. The expenditures approach adds up all of the following: consumption, investment, government spending on goods and services, and net exports (net exports = exports - imports). The other approach, which counts all those ways in which people earn money, is called the income approach.
Gross Domestic Product is counted using two methods: one which counts all the ways people ________ money and another which counts all the ways people ________ money.
earn; spend
When domestic prices rise,
exports fall.
The interest-adjusted value of past payments is:
future value
Market Basket
goods that average people buy and the quantities they buy them in
Fiscal policy is purposeful movements in ________ designed to direct an economy.
government spending and taxes
to compute inflation you
inflation during 2018 = [(CPI January 1, 2019 - CPI January 1, 2018) / CPI January 1, 2018] x 100%
The Consumer Price Index (CPI) is a heavily criticized measure of inflation because:
it consistently overstates the increase in the cost-of-living.
In the United States, the average government subsidy for a college education at a private institution is approximately ________ for every $1 spent by the student.
less than $0.65
Crude oil would be considered a:
limited natural resource.
price of the market basket in the base year
national average of the total cost of the market basket
Pollution is an example of a:
negative externality
Which of these goods will not be counted in GDP?
the Ford manufactured in Mexico and sold in Mexico
Gross Domestic Product (GDP)
the dollar value of all of the goods and services produced for final sale in the US in a year
An example of nondiscretionary fiscal policy would be:
the existence of the progressive federal income tax.
When evaluating a business decision, an economist will often resort to the use of present value because:
the investment occurs in one time period and the profits in another.
Microeconomics
the part of the discipline of economics that deals with individual markets and firms
Macroeconomics
the part of the discipline of economics that deals with the economy as a whole
Inflation
the percentage change in the consumer price index
Consumer Price Index (CPI)
the price index based on what average customers buy in a given year
If faculty choose to stay with an old edition of a book, this is predicted to cause:
used textbook prices to rise (for the older edition).
Base Year
year to which all other prices are compared
In a market for money,
borrowers are the consumers and lenders are the suppliers.
Nobel laureate economist Ronald Coase suggests that pollution problems could be solved if:
community property was owned by self-interested parties.
Applying the concept of "clean enough" to clean water, an economist means the:
state of cleanliness where the marginal cost of cleaning equals the marginal benefit of cleaning.
The concept of "clean enough", to an economist, means the:
state of cleanliness where the marginal cost of cleaning equals the marginal benefit of cleaning.
The act of weighing the long-run use of limited natural resources is called:
stewardship
If a college textbook costs $80 (for a new book) at a college bookstore, it probably cost the bookstore:
$60.
Suppose the CPI was 120 last year. This year it is 144. Instructions: Enter your answers rounded to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. a. This year's inflation rate is __ percent. Now suppose the CPI was 120 last year, and this year it is 114. b. This year's inflation rate is __ percent.
a. 20 If the CPI was 120 last year and 144 this year, the inflation rate is 20.00 percent (= ((144 - 120)/120) × 100). b. -5 If the CPI was 120 last year and 114 this year, the inflation rate is approximately - 5.00 percent (= ((114 - 120)/120) × 100). The inflation rate is the percentage change in the CPI over a period of time.
Label each of the following scenarios as either frictional unemployment, structural unemployment, or cyclical unemployment. a. Tim just graduated and is looking for a job: b. A recession causes a local factory to lay off 30 workers: c. Thousands of bus and truck drivers permanently lose their jobs when driverless, computer-driven vehicles make human drivers redundant: d. Hundreds of New York legal jobs permanently disappear when a lot of legal work gets outsourced to lawyers in India: e. Hundreds of ski lift operators are out of work in March:
a. Frictional unemployment Tim just graduated and is looking for a job is an example of frictional unemployment because Tim is merely transitioning from school to work. He is not unemployed because of a recession (cyclical unemployment) or because he lacks the skills desired by employers (structural unemployment). b. Cyclical unemployment A recession causes a local factory to lay off 30 workers is an example of cyclical unemployment because the downturn in the business cycle has led to these 30 workers losing their jobs. c. Structural unemployment Thousands of bus and truck drivers permanently lose their jobs when driverless, computer-driven vehicles make human drivers redundant is an example of structural unemployment because the drivers are losing their jobs as the result of a technological innovation that has destroyed the demand for human driving skills. d. Structural unemployment Hundreds of New York legal jobs permanently disappear when a lot of legal work gets outsourced to lawyers in India is an example of structural unemployment because the demand for legal skills has permanently dropped in New York due to competition from India. e. Seasonal unemployment Unemployed ski lift operators are seasonally unemployed. Seasonal unemployment is a state that exists when people lose their jobs predictably every year at the same time.
Payment of a share of prospective royalties to the author before publication is called the:
advance
Short-run expansionary Fiscal Policy would result in:
aggregate demand moving to the right. ????
Congress and the President have control of the tax system and government spending. As a result, their policies will directly impact:
aggregate demand.
A decrease in productivity will shift:
aggregate supply to the left.
The majority of economists believe that the Consumer Price Index:
overstates the increase in the cost of living.
The difference between nominal and real interest rates is that:
real interest rates are what you get after having adjusted nominal rates for inflation.
The period of growth from a trough that brings Real GDP back to its previous peak is called a:
recovery
If the price of gasoline has increased from $2 per gallon to $4 per gallon at the same time that the overall price index increased from 200 to 400, then you know that the inflation-adjusted price of gasoline has:
remained constant.????
