Final Exam Practice Questions

(Table: Per Capita GDP) Use Table: Per Capita GDP. If 2016 is the base year, real GDP in 2019 was:

$4000

(Table: Investment Projects) Use Table: Investment Projects. If the market interest rate is 9.5%, the amount of planned investment spending is:

$5,500

(Table: Investment Spending, Private Spending, and Capital Inflows) Use Table: Investment Spending, Private Spending, and Capital Inflows. What is the budget balance as a percentage of GDP in Northlandia?

10%

In 2019, 10 million people did not have a job but were actively looking for employment, and 85 million people had either a full-time or a part-time job. The unemployment rate in 2019 was _____%.

10.5

(Figure: The Demand and Supply of Quinoa) Use Figure: The Demand and Supply of Quinoa. What is the equilibrium quantity of quinoa in each period?

6,000 bushels

If the price level at the end of year 1 is 150, and the price level at the end of year 2 is 160, the inflation rate in year 2 is _____%.

6.7

(Table: Price and Output Data) Use Table: Price and Output Data. Between years 2 and 3, nominal GDP increased by: ​

67%.

A contraction in the business cycle is:

a recession.

In a situation in which there are technological improvements, we generally see:

a shift in the production possibility frontier outward.

(Table: Competitive Market for Hats) Use Table: Competitive Market for Hats. If the supply curve for Hats is linear, it can be expressed as:

Qs = 4P.

If an economy is efficient:

all opportunities to make people better off without making other people worse off have been exploited.

A shift of resources from one industry to another can be shown on the production possibility frontier as:

a movement along the production possibility frontier.

Crowding out refers to:

a negative effect on private investment spending of government deficit spending.

One factor that raises the natural rate of unemployment is:

a population boom that increases the number of young workers joining the labor force.

Consider the market for online video streaming services (Netflix, Apple TV, Amazon Prime, HULU, to name a few). Which of the following would cause the equilibrium price of online streaming services to rise?

an increase in demand combined with a decrease in supply

After Hurricane Katrina, there was extensive damage to much of the infrastructure of the southern United States. How would Katrina have affected the production possibility frontier?

an inward shift

Macroeconomists:

analyze aggregate data on real GDP, the price level, and unemployment.

If real GDP grows at an average rate of 3% per year, it will double in _____ years.

approximately 23

Workers today are more productive than they were in the past because they:

are better educated and so have more human capital.

(Table: The Market for Salt and Vinegar Chips) Use Table: The Market for Salt and Vinegar Chips. There is a surplus of 70 bags of salt and vinegar chips per month if the price is _____ per bag.

$0.70

(Table: Investment Projects) Use Table: Investment Projects. If the market interest rate is 11.5%, the quantity of loanable funds demanded is:

$4,000.

(Table: National Income Accounts) Use Table: National Income Accounts. The value of private savings is:

$4.2 Trillion

You decide whether to eat one more slice of cheesecake based on how hungry you feel. Which economic principle does this statement BEST represent?

"How much" is a decision at the margin.

If the labor force totals 100 million workers, and 90 million are working, then the unemployment rate is _____%.

10

Of the following firms, _____ is the best example of a company that offers an efficiency wage.

Costco

$(Table: Price and Output Data) Use Table: Price and Output Data. The value of year 2's output in real dollars is:

$15

(Figure: The Labor Market) Use Figure: The Labor Market. The equilibrium wage rate is:

$15.

GDP is $12 trillion in a closed economy. Consumption is $8 trillion, and government spending is $2 trillion. Taxes are $0.5 trillion, and government transfers are $0. How much is private savings?

$3.5 trillion

(Table: Price and Output Data) Use Table: Price and Output Data. The value of year 4's output in real dollars is:​

$30.

In 2019, consumer spending was $14,000, government purchases of goods and services were $3,700, and investment spending was $3,700. If GDP in 2019 was $21,000, exports were _____, and imports were _____.

$300; $700

Suppose that Mr. Green Jeans sells $5,000 of wheat to Big Ben Bakery. Big Ben uses the wheat to make flour and then hamburger buns, which it sells to Hamburger Heaven for $11,000. Hamburger Heaven also buys $20,000 of beef from a rancher. Hamburger Heaven uses the beef and buns to make 10,000 hamburgers, which are sold for $5 each. How much do these transactions add to GDP?

$50, 000

Holding the human capital per worker and technology unchanged, the estimated aggregate production function in Jamaica is Y / L = 50 × K / L, where Y = real output, L = number of workers, and K = quantity of physical capital. If real GDP per worker equals $3,200, physical capital per worker equals:

$64

Suppose that there is no trade and no government. GDP is $25 trillion, and consumption spending is $18 trillion. What is the level of private saving?

$7 trillion

(Figure: Savannah's Production Possibilities) Use Figure: Savannah's Production Possibilities. The opportunity cost for Savannah in moving from point B on the curve to point A is:

10 pineapples

(Figure: Comparative Advantage) Use Figure: Comparative Advantage. The opportunity cost of producing 1 box of cheese for Canada is _____ box(es) of apples

1

In the Republic of Sildavia, a market basket of goods and services cost $130 in 2017, $140 in 2018, and $160 in 2019. Based on this information, and assuming 2017 is the base year, the price index in 2019 was:

123.07

(Table: Population Data for Roanoke County) Use Table: Population Data for Roanoke County. How many people are in the labor force?

128,000

The consumer price index in 1979 was 72.6. In 1980, it was 82.4. What was the rate of inflation from 1979 to 1980?

13.5%

(Figure: Apple Cider and Soybeans) Use Figure: Apple Cider and Soybeans. The opportunity cost of moving from producing ONLY soybeans to producing ONLY apple cider is _____ tons of soybeans.

15

If a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its labor force is:

150 million.

Which annual rate of inflation is hyperinflation?

2,000%

(Table: Kenya's Economy in 2010) Use Table: Kenya's Economy in 2010. During 2010, assuming there are no changes in the price level, aggregate output per capita in Kenya grew at a rate of:

2.6%

In the United States, consumer spending accounts for approximately _____ of GDP.

2/3

A group of 10 people includes 3 retirees, 2 part-time workers, 2 discouraged workers, 1 unemployed worker, and 2 full-time workers. The unemployment rate is _____%.

20

If a country has a working-age population of 200 million, 120 million people with jobs, and 30 million people unemployed and seeking employment, then its unemployment rate is:

20%

You read in the newspaper that the consumer price index for 2019 is 120. You conclude that a typical market basket in 2019 would have cost _____ more than the same market basket purchased in _____.

20%; the base year

Gertrude has a linear production possibility frontier when she produces sunflowers and garbanzo beans. If she uses all of her resources, she can produce 400 bushels of sunflowers or 800 bushels of garbanzo beans. Gertrude is NOT producing efficiently if she produces _____ bushels of sunflowers and _____ bushels of garbanzo beans.

200; 200

Suppose that, in year 1, an economy produces 200 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year, the economy produces 210 golf balls that sell for $3.50 each and 80 pizzas that sell for $9 each. The growth rate of nominal GDP is ____%.

21.25

(Table: Labor Force Distribution) Use Table: Labor Force Distribution. The total population is _____ million.

232

If the nominal interest rate is 4%, and the inflation rate is 1%, then the real interest rate is _____%.

3

(Table: Per Capita GDP) Use Table: Per Capita GDP. The growth rate of per capita nominal GDP was:

33%.

Suppose that a panel of economists predicts that a nation's real GDP per capita will have an average annual growth rate of 2%. According to the rule of 70, how many years will it take for this nation's real GDP per capita to double?

35

A group of 10 people includes 3 retirees, 2 part-time workers, 2 discouraged workers, 1 unemployed worker, and 2 full-time workers. The labor force participation rate is _____%.

50

If the marginal propensity to consume is 0.9, and investment spending increases by $50 billion, the change in real GDP will be $_____ billion.

500

The Republic of Livonia has an adult population of 100 million; 60% of Livonia's population is employed, and 10% of the people are unemployed. The labor force participation rate in Livonia is _____%.

70

(Figure: Savannah's Production Possibilities) Use Figure: Savannah's Production Possibilities. Which point or points represent(s) a feasible combination of bananas and pineapples?

A, B, and C

In one day, Keshia can bake 10 muffins or mix 15 glasses of passion fruit juice. His friend Alicia can bake 10 muffins or mix 10 glasses of passionfruit juice. His other friend, Ewan, can bake 10 muffins or mix 20 glasses of passionfruit juice. Who has the LOWEST opportunity cost in muffin production?

Alicia

(Figure: Technological Progress and Productivity Growth) Use Figure: Technological Progress and Productivity Growth. Which change in real GDP is MOST likely to have resulted from an increase in the quality (as well as quantity) of government spending on education?

B to C

The consumer price index is calculated by the ____.

Bureau of Labor Statistics

(Figure: Shifts in Demand and Supply II) Use Figure: Shifts in Demand and Supply II. The graph shows how supply and demand might shift in response to specific events. Suppose a heat wave destroys one-quarter on the nation's potato crop. Which panel BEST illustrates how this event will affect the market for french fries?

C

(Figure: Shifts in Demand and Supply) Use Figure: Shifts in Demand and Supply. The figure shows how supply and demand might shift in response to specific events. Suppose the Surgeon General relaunches the "apple-a-day" program in elementary schools. Which panel BEST illustrates how this development will affect the market for apples?

C

(Figure: Supply of Bananas) Use Figure: Supply of Bananas. A rise in the prices of inputs (e.g., labor, fertilizer, and fuel) used to produce and transport bananas could be represented in the figure as a movement from:

C to A

(Figure: Technological Progress and Productivity Growth) Use Figure: Technological Progress and Productivity Growth. Which change in real GDP is MOST likely to have resulted from a gradual deterioration in property rights because of excessive government intervention?

C to B

(Figure: Four Markets for Apple TV Rentals) Use Figure: Four Markets for Apple TV Rentals. Assume that D1 or S1 is the original curve and that D2 or S2 is the new curve. Which graph shows what would occur if the cost of buying content for Apple TV distributors (i.e., the price that Apple pays for online content to sell to consumers) decreased?

D

Which equation is correct?

GDP = C + I + G + X - IM

Which equation breaks GDP down into the four sources of aggregate spending?

GDP = C + I + G + X - IM.

Which question is MOST appropriate to the study of MACROECONOMICS?

How does the aggregate price level affect overall consumer spending?

Which statement is positive? Which statement is normative? I. Government spending on defense was $500 billion in 2019. II. The federal government should spend more on defense to protect us from our enemies.

I is positive; II is normative.

In the market for fresh coffee, a normal good, which of the following will shift the demand curve to the right?

Incomes rise.

The emergence of new technologies and the expansion of resource availability concern which economic principle?

Increases in the economy's potential lead to economic growth over time.

Marius and Jennifer are going to sell cupcakes and muffins at their third annual fundraiser bake sale. In one day, Marius can make 40 cupcakes or 20 muffins, and Jennifer can make 15 cupcakes or 15 muffins. Based on this information, _____ has the comparative advantage in cupcakes, and _____ has the comparative advantage in muffins.

Marius; Jennifer

Suppose Oliver and Felix each have a different skill set in producing two goods, cloth and corn. Each can produce both goods simultaneously. In general, Oliver is better at producing cloth, and Felix is better at producing corn. Which principle of economics applies best to this scenario?

Oliver and Felix can both be made better off through specialization and trade

Assuming that iPhones are normal goods, which factor will NOT increase the demand for iPhones?

Samsung going out of business

Which of the following statements is normative?

Scientists should not make normative statements.

Which statement regarding the consumer price index is FALSE?

The CPI changes only in the base year, every five to seven years.

If two countries each specialize in the goods to which they are most suited and then trade, which of the following will occur?

The average well-being of people in both countries will increase.

Which statement is normative?

The best way to encourage growth in the economy is through education.

When the Chicago city manager receives complaints that the municipal courts are not fully accessible to individuals with disabilities, she responds that the $1 million improvement needed to address the problem will not happen because "that money could be spent building lavatory space for people with disabilities." Which economic principle does this statement BEST represent?

The true cost of something is its opportunity cost.

You decide to join the football team, but this means you can't join the basketball team, as the practices for the two teams occur at the same time. Which economic principle does this statement BEST represent?

The true cost of something is its opportunity cost.

Which of the following is NOT a key element of the supply and demand model?

The way in which disequilibrium of supply and demand causes the supply curve or demand curve to shift to restore equilibrium.

Owen and David are brothers. They have to cut the grass and clean the swimming pool before they can go to the high school basketball game. Owen cuts the grass, and David cleans the pool, and they make it to the basketball game on time. Which economic concept does this statement BEST represent?

There are gains from trade.

Sabrina and Hayley are roommates. Sabrina hates to clean the bathroom. Hayley will agree to clean the bathroom only if Sabrina vacuums the living room. Which economic concept does this statement BEST represent?

There are gains from trade.

In the absence of a minimum wage, efficiency wages, or labor unions, a decline in the demand for labor will likely result in _____ if wages are flexible.

a lower level of employment but likely no change in the unemployment rate

Which of the following is an advantage to a foreign country of investment by U.S. firms?

U.S. companies often bring new technology to the foreign countries in which they invest, raising their productivity.

When a factory closes, why is that bad news for local restaurants?

Unemployed factory workers have lower incomes and are less likely to dine out.

Which statement about unemployment is FALSE?

Unemployment typically falls during recessions.

A downward shift of the consumption function can be caused by:

a decrease in wealth.

When a country utilizes more physical capital per worker over time, there will be:

a lower but always positive growth rate of productivity.

The purpose of simplifying assumptions in economic models is to:

abstract from complicating phenomena that may obscure the systematic economic relationships under study.

Economists use real GDP per capita to measure economic growth:

because it provides an inflation-adjusted measure of a country's production of goods and services, controlled for population.

The production possibility frontier will shift outward because of:

better technology that improves worker productivity.

When Brazil engages in trade with Germany

both Germany and Brazil will be better off.

Recessions are periods when ___ _.

both output and employment fall

(Figure: Production Possibility Frontier for Trains and Planes) Use Figure: Production Possibility Frontier for Trains and Planes. This production possibility frontier is:

bowed out because of increasing opportunity costs.

(Figure: Circular-Flow Model) Use Figure: Circular-Flow Model. How does the government finance its purchases of goods and services?

by taxes

(Figure: Production Possibility Frontier for Trains and Planes) Use Figure: Production Possibility Frontier for Trains and Planes. The combination of trains and planes at point H:

cannot be attained, given the level of technology and the resources available.

If France gives up three high speed trains for each ton of cheese it produces, while Canada gives up seven high speed trains for each ton of cheese it produces, then France has a comparative advantage in _____ production and should specialize in _____.

cheese; cheese

An economy is said to have a(n) _____ in the production of a good if it can produce that good _____.

comparative advantage; at a lower opportunity cost than another economy

_____ spending is the LARGEST component of U.S. GDP, at approximately 68% of aggregate spending.

consumer

The national income and product accounts keep track of:

consumer spending.

A trade-off involves weighing

costs and benefits

Menu costs of inflation are the:

costs associated with businesses changing prices.

The price index in the current year is the cost of the market basket in the ____ year divided by the cost of the market basket in the ____ year times ____.

current; base; 100

Suppose Texas decides to produce only two goods, salsa and cowboy hats. If Texas is producing on its production possibility frontier, as salsa production increases, the production of cowboy hats will:

decrease at some rate.

(Figure: Consumption Functions) Use Figure: Consumption Functions. An economy's consumption function would shift from curve C to curve C" when there is a(n):

decrease in wealth.

Consider the supply curve for wool sweaters. An increase in the price of wool will:

decrease the supply of wool sweaters

If tortilla chips are an inferior good, when incomes rise, the equilibrium price will _____, and the equilibrium quantity will _____.

decrease; decrease

As the average age of the labor force increased from the end of the 1970s to the end of the 1990s, the natural rate of unemployment:

decreased.

Other things equal, investment spending _____ when _____.

decreases; firms expect sales to fall

Deflation is a:

decreasing aggregate price level.

The market price of cruise ship vacations has increased recently. Some economists suggest that the price increased because of an increase in the number of retirees. In other words, they believe that:

demand increased

Suppose the economy of New Caledonia is producing at a point on its production possibility frontier. If this is the case, it is:

efficient in production but not necessarily in allocation.

A recession does NOT imply:

employment growth.

A person who spends time looking for work is:

engaged in job search.

Natural unemployment is:

equal to the sum of frictional unemployment and structural unemployment.

The natural rate of unemployment:

equals the actual rate of unemployment when cyclical unemployment equals zero.

In soccer, when one coach decides to send in a substitute, the other manager often adjusts her lineup in response to that change. This sometimes causes the first manager to send in a different player. Once both managers decide that no more player substitutions will benefit their team, the situation has reached:

equilibrium

When labor unions successfully bargain for wage rates that _____ the equilibrium wage rate, they may cause _____.

exceed; structural unemployment

The official unemployment rate reported by the government may tend to understate the amount of unemployment because it:

excludes discouraged workers

Which influence will shift the supply curve?

expectations of a future decline in prices

A decrease in consumer spending is likely to be caused by:

expectations of an increase in personal income taxes.

Which factor would cause a DECREASE in the supply of a good?

expectations that the price of the good will rise

If the opportunity cost of manufacturing tractors is higher in the United States than in the United Kingdom, and the opportunity cost of manufacturing running shoes is lower in the United States than in the United Kingdom, then the United States will:

export running shoes to the United Kingdom and import tractors from the United Kingdom.

Goods produced domestically and sold abroad are:

exports.

Firms buy inputs in the:

factor market.

When the Dairy Farmers of America (an agricultural coop) restricts the supply of milk to increase the profits of dairy farmers, the milk market:

fails because there is no longer an efficient allocation of resources.

If real GDP is less than aggregate spending, then inventories will _____, and firms will _____.

fall; increase their future production

(Table: Production of Zucchini and Eggplant in Nutley Township) Use Table: Production of Zucchini and Eggplant in Nutley Township. The table shows the production possibility frontier for Nutley Township. Suppose Nutley Township produces 5 bushels of zucchini and 50 bushels of eggplant; this combination is:

feasible but inefficient.

Among the tools available to macroeconomic policy makers is:

fiscal policy, to influence overall spending.

Increases in total output realized when individuals specialize in particular tasks and trade are known as:

gains from trade.

(Scenario: Good A and Good B) The town of York produces two goods, good A and good B. The table presents information regarding York's production of these two goods and their prices over three years. In 2018, nominal GDP was _____ nominal GDP in _____.

greater than; 2017

A jobless recovery occurs when GDP is _____, and unemployment is _____.

growing at a below-average rate; rising

Roommates Samara and Zendaya are hosting a Christmas party and have to make snacks for their guests and ornaments for themselves. Samara and Zendaya know that to finish both tasks as quickly as possible, each should focus on just one task, but they don't know who should do what. Samara and Zendaya should determine which roommate:

has the comparative advantage in preparing snacks.

Marcia spends $25 on toys for her cat to play with. This is an example of a:

household buying goods and services in the product market.

Economies with high growth rates tend to be those that increase their:

human capital.

When the government invests resources in a nation's educational system, it is investing in:

human capital.

(Figure: Cell Phones and Automobiles) Use Figure: Cell Phones and Automobiles. The movement from PPF1 to PPF2 indicates a(n):

increase in the economy's ability to produce automobiles and cell phones.

The phrase gains from trade refers to the:

increase in total output from specialization.

The paradox of thrift implies that:

increased saving by individuals increases their chances of becoming unemployed.

(Table: Peanut Butter and Jelly Economy) Use Table: Peanut Butter and Jelly Economy. Between 2018 and 2019, nominal GDP _____ by _____%.

increased; 31.25

An increase in aggregate wealth:

increases aggregate consumption.

An efficiency wage:

is offered by an employer to encourage workers to work harder.

Government spending is NOT like investment when it:

is used to monitor environmental restrictions

Structural changes in an economy and changes in consumer tastes lead to:

job creation and job destruction

If the economy grew at 3% this year, and average prices increased _____, people would be better off this year than last year.

less than 3%

Among the determinants of a country's standard of living, over:

long periods, long-run growth is much more important than the business cycle.

If a country runs a trade surplus, its investment spending is probably:

low relative to its savings.

A busy mechanic needs to decide whether to stay at the garage and work on one more car or to go meet his wife for dinner. This is an example of:

marginal analysis.

An increase in the value of nominal GDP over time:

may be due to an increase in prices, in the production of goods and services, or both.

The student center on campus has tacos, nachos, or club sandwiches for lunch, and they all cost the same. You decide to have a club sandwich today, but if they were out of club sandwiches, you would have had nachos. Your opportunity cost of buying a club sandwich is your foregone enjoyment of the:

nachos.

When the actual rate of unemployment is equal to the natural rate of unemployment, there is _____.

no cyclical unemployment

Financial markets facilitate borrowing by simplifying negotiations between borrowers and lenders. The financial system thereby:

reduces transaction costs.

A person who is NOT working or looking for work is:

not counted in the unemployment rate

(Table: Trade-off of Hours Worked and Hours Played) Use Table: Trade-off of Hours Worked and Hours Played. An individual sleeps 8 hours per day and divides the remaining time between working and having fun (work time and play time). The table shows the combinations of work and play time that can be produced in the 16 waking hours of each day. Suppose the individual completes a training workshop that allows him to do the same amount of work in half as many hours. His opportunity cost:

of play time has increased

If the economy of Microlandia is efficient in production, then it must be the case that Microlandia is _____ its production possibility frontier.

operating on

Recessions are periods in which:

output and employment fall in many industries.

A factor that does NOT affect consumer spending is:

past disposable income

A country's living standard is BEST measured by:

per capita real GDP.

The unemployment rate is the:

percent of the labor force that is unemployed.

GDP is the value of consumption spending _____ investment spending _____ government purchases _____ the value of exports _____ spending on imports.

plus; plus; plus; minus

Economic models are:

potentially useful in informing economic policy.

An amount that would correspond to a particular future value if deposited today at a specific interest rate is the

present value

If baseball bats and toothpicks are substitutes in production, a producer (with her fixed set of resources) will need to reduce the production of baseball bats when she:

produces more of the other good.

The _____ illustrates the trade-offs facing an economy that produces only two goods.

production possibility frontier

When the price of lawn mowers increases, the:

quantity supplied increases.

The scale MOST often used to compare economic performance in other years is:

real GDP.

If money income remains constant while the price level doubles:

real income will fall

One of the controversies surrounding the United States' automobile markets concerns the trade-off between automobile production and clean air. Assuming clean air has value, the United States will be on its production possibility frontier if and only if:

resources used to produce clean air and automobiles are being fully used.

When an economy is contracting, unemployment tends to _____, and the overall price level tends to _____.

rise; fall

According to the Congressional Budget Office, the natural rate of unemployment:

rose until the end of the 1970s and has declined since then.

The primary purpose of financial intermediaries it to transform funds gathered from _____ into financial _____.

savers; assets

(Figure: Demand for Bananas) Use Figure: Demand for Bananas. If pears are a substitute for bananas, an increase in the price of pears could be represented as a:zs

shift from D1 to D2.

An example of an intermediate good is:

steel purchased by aircraft manufacturers.

In the loanable funds market, savers:

supply funds

The market for smoothies is in equilibrium, and the price of yoghurt (an ingredient in smoothies) rises. In the smoothies market, _____ will _____, _____ the price and _____ the quantity.

supply; decrease; increasing; decreasing

The government can increase national savings by:

taxing more than it spends.

The MOST important driver of economic growth appears to be:

technological progress.

Aaron and Betty can both produce beer and wine. Aaron has a comparative advantage in the production of beer if

the amount by which Aaron must reduce the production of wine is less than the amount by which Betty must reduce the production of wine to produce an additional unit of beer.

If the price of quinoa (an important ingredient in the production of bread) rises at the same time that the number of consumers in the market increases, then

the equilibrium price will increase, but the equilibrium quantity may decrease, increase, or stay the same.

Which of the following is NOT included in investment spending in the national income accounts?

the purchase of stocks and bonds by a business

Market failure occurs when:

the pursuit of individual self-interest makes society worse off.

It is almost certain that the equilibrium quantity will fall when:

the quantity demanded is greater than the quantity supplied.

Yoghurt is an important ingredient in the production of frozen yoghurt. If the price of yoghurt increases, then one would expect, holding all other things constant:

the supply curve for frozen yoghurt to shift leftward.

If aggregate spending is higher than real GDP:

there are unplanned decreases in inventories.

There are many freshwater lakes in the United States. However, freshwater is scarce because:

there is not enough of it to meet all needs.

(Figure: Supply, Demand, and Equilibrium) Use Figure: Supply, Demand, and Equilibrium. In the figure, at a price of $72:

there will be excess supply of the good

The provision of parking passes for people with disabilities often requires that there be more than enough parking spaces for disabled individuals. As a result, many parking spaces are vacant when they could be used by individuals without special passes. This scenario illustrates the:

trade-off between efficiency and equity.

(Figure: Computers and Speedboats II) Use Figure: Computers and Speedboats II. Point F is:

unattainable, all other things unchanged.

The Bureau of Labor Services calculates U-6. This statistic measures the:

underuse of labor, including discouraged workers, marginally attached workers, and underemployed workers.

A positive statement is a statement regarding:

what is

(Figure: Aggregate Expenditures Curve III) Use Figure: Aggregate Expenditures Curve III. Suppose that the consumption function shifts upward by $100. Equilibrium real GDP will rise by:

$400

(Table: Labor Force Data) Suppose the labor force participation rate is 70%. The labor force is equal to _____ million.

105

(Table: Price and Output Data) Use Table: Price and Output Data. Between years 2 and 3, nominal GDP increased by:

67%

One reason financial institutions become very large is to:

decrease transaction costs.