Macro / ECON 1202 Quiz No.1

A guitar is produced in California using $100 in raw materials and sells for $300 in a guitar shop. Each guitar that is produced contributes _____ to U.S. GDP.

$300

The following figure shows the supply and demand for strawberries. Suppose sellers try to sell strawberries for $4 a pound. Will a shortage or surplus occur and at what amount?

A surplus of 20,000 pounds.

The article entitled "African Economic Growth, The Twilight of the Resource Curse" best reflects that long term and sustained economic growth occurs through a nation's specializing in primary commodity exports along the lines of comparative advantage (through the net export sector as opposed to the other components of GDP)

False

If a strong economic recovery boosts average incomes, what would happen to the equilibrium price and quantity for a normal good and an inferior good?

The equilibrium price and quantity for a normal good will increase and it will decrease for an inferior good.

If a city government were to impose a price ceiling to bring down rental prices of apartments in the downtown area:

an illegal rental market would likely emerge.

Which factor would change demand from D0 to D1?

an increase in the price of a substitute good

As described in the article entitled "Millennial Home Buyers Send a Chill Through Rental Markets," late 2017 residential apartment rents were

falling as Millennials' incomes were rising, Millennials were forming new households and purchasing homes while the supply of apartments increased.

For which of the following situations would the yield curve most likely predict that a recession will occur? short-term interest rate = 0%; long-term interest rate = 5% short-term interest rate = 3%; long-term interest rate = 3% short-term interest rate = 4%; long-term interest rate = 3% short-term interest rate = 2%; long-term interest rate = 4%

short-term interest rate = 4%; long-term interest rate = 3%

A binding price ceiling usually results in a:

shortage and a misallocation of resources.

A business cycle is:

the periodic fluctuation of economic activity.