Macro ECON Final

If a country's GDP is $200 million and its total population is 10,000, but only 8,000 of these people work, the country's per capita income is $25,000. $20,000. $11,111. $100,000.

$20,000

(Table) According to the table, the number of people in the labor force is

140

Suppose an economist breaks the unemployment rate into the following components: frictional (2%), structural (1%), and cyclical (4%). Based on these estimates, the natural rate of unemployment is

3%

Which of these is NOT an example of market failure? A) air is polluted by a manufacturing firm. B) Water is polluted by a paper company located by a river. C) Consumers must buy water from one local water utility. D) Competition leads firms to provide products at the lowest possible price.

D) Competition leads firms to provide products at the lowest possible price.

Which statement is a key idea in economic thinking? A) The value of a good can be objectively measured and is the same for everyone. B) Scarcity exists for the poor but not for the rich. C) All of these are key ideas in economic thinking. D) Incentives matter.

D) Incentives matter.

Which statement is NOT correct? Discouraged workers are not classified as unemployed. Discouraged workers have stopped actively seeking work. Discouraged workers are considered underemployed. Discouraged workers are considered part of the leisure class and not part of the labor force.

Discouraged workers are considered underemployed.

The government can always successfully intervene in the case of market failure. False True

False

_____ unemployment is the result of changes in the business cycle. Structural Cyclical Frictional Seasonal

cyclical

Nonprice factors that affect demand include income, prices of related goods, the number of buyers, and expectations about future prices, income, and product availability.

true

The idea that resources are specialized is the reason for increasing opportunity costs. True False

true

The recessionary gap is the increase in aggregate spending needed to bring a depressed economy back to full employment.

true

To convert a nominal value to a real value in dollar terms, the base year index must be set at 100.

true

Which circumstance will cause a movement down along a demand curve? an increase in the price of a complementary good an increase in the price of a substitute good a decrease in the product price an increase in the product price

A decrease in the product price.

Figure: Determining Production Possibilities 2) Which point in the graph is consistent with a recession? d c a b

A

Joan is trying to gather information on the membership at her Zen Center. She estimates that it will cost around $1,000 to gather the information but expects the information to lead to increased membership revenue of $1,100. Based on this information, Joan should... A) gather the information since the net gain will be $100. B) not gather the information since it will cost money and the Zen Center is a not-for-profit organization. C) not gather the information since she will only gain $100. D) gather the information regardless of the cost.

A) Gather the information since the net gain will be $100.

Which statement is TRUE? A) Low productivity and low pay go together. B) The most productive countries are those with the lowest per capita incomes. C) Low productivity and high pay go together. D) High productivity and low pay go together.

A) Low productivity and low pay go together.

Which statement about markets is TRUE? A) They bring buyers and sellers together. B) They always operate efficiently. C) Profits are never an effective discipline in the market. D) Markets need to always be controlled by the government.

A) They bring buyers and sellers together.

There would be no economic problems in a world where all resources are A) unlimited. B) scarce. C) owned by the government. D) privately owned.

A) Unlimited

In a pure market economy, the government's primary role does NOT include... A) reallocating resources across the economy. B) enforcing contracts between private parties. C) providing public goods, such as national defense. D) protecting property rights.

A) reallocating resources across the economy.

Figure: Biscuits and Cookies PPFs) Greg and Melissa face the production possibilities frontiers shown for biscuits and cookies. When Greg completely specializes in producing the good he has a comparative advantage in, he produces... A) 100 biscuits and 200 cookies. B) 0 biscuits and 200 cookies. C) 100 biscuits and 0 cookies. D) 50 biscuits and 100 cookies.

B) 0 Biscuits and 200 cookies

Which statement about incentives is TRUE? A) Incentives can be manipulated with precision. B) Each person is motivated by different incentives. C) Each person is motivated by the same incentive. D) Price is the only relevant economic incentive.

B) Each person is motivated by different incentives.

When each member of a farm co-op specializes in one task, this will generally lead to... A)some members becoming better off while some become worse off. B)gains to all members as long as trade is possible. C)a worse outcome than if every member learns how to do every task as best as they can. D)the same outcome as without specialization because it has a neutral impact on productivity.

B) Gains to all members as long as trade is possible.

When specialization is used... A) opportunity costs tend to be constant. B) there are greater gains in overall well-being. C) there is more emphasis on self-reliance. D) Society is more productive, while individuals are less productive.

B) There are greater gains in overall well-being.

____ people are forced to make tradeoffs. A)Only wealthy B)Only poor C)All D) Only middle-class

C) All

Which example represents incentives for decisions? A)tax deductions for individual retirement accounts B)investment tax credits for businesses C)All of these are incentives. D)tax deductions for education saving accounts

C) All of these are incentives.

Which statement is NOT considered a key principle of economics? A) Information is important to producers and consumers. B) Scarcity exists for everyone. C) Irrational behavior requires thinking at the margin. D) People face economic incentives on a regular basis.

C) Irrational behavior requires thinking at the margin.

_____ costs include the time and money that could have been spent on another highly valued activity. A) Social B) Total C) Opportunity D) Marginal

C) Opportunity

common definition of "economics" is that it is the study of... A)maximizing personal financial wealth. B)maximizing net personal disposable income. C)the allocation of scarce resources to satisfy competing wants. D)the factors underlying financial markets.

C) The factors underlying financial markets

All of these are classified as "near monies" rather than money for the reasons specified EXCEPT credit cards, because they do not provide a store of value. money market deposit accounts, because, while checks can be written, there are restrictions, such as limits on the number of withdrawals per month, that keep them from serving daily needs as a medium of exchange. savings deposits, because savings cannot be spent. It must be transferred into cash or checking to be spent. small-denomination time deposits, because they cannot be used as a medium of exchange and carry penalties for early liquidation.

Credit cards, because they do not provide a store of value.

Suppose that a store sells candy bars for $0.89 for one and $1.50 for two. The marginal cost of the second candy bar is A) $1.50. B) $0.89. C) $0.75. D) $0.61.

D) $0.61

Which statement does NOT involve thinking at the margin? A) Dylan's supervisor asked him to work an extra four hours this week. B) If John works another hour, he will beat the rush hour traffic. C) If Jill works on her day off, she will make an additional $300. D) Sally worked eight hours today.

D) Sally worked eight hours today?

The opportunity cost of buying a ticket to a major league baseball game and then going to the game is... A) the price of the ticket. B) all other alternative activities that could have been undertaken. C) the time spent at the game. D) the next best alternative that could have been undertaken.

D) The next best alternative tat could have been undertaken.

Hitting your snooze alarm before you get out of bed is an example of... A)efficiency. B) market equilibrium. C) equity. D) thinking at the margin.

D) Thinking at the margin

Free trade is known as a _____ game because ____. zero-sum; one trader's gain is another's loss positive-sum; one trader's gain is another's loss zero-sum; both parties to a transaction can achieve positive gains positive-sum; both parties to a transaction can achieve positive gains

Positive-sum; both parties to a transaction can achieve positive gains.

The core problem in economics is economic growth. scarcity. inflation. unemployment.

Scarcity

_____ is among the top five U.S. exports to China. Furniture, Accounting services, Soybeans, Toys

Soybeans

Which statement is TRUE about differences in savings rates across groups of people?

Younger people and lower-income people tend to save less

Which situation would MOST likely lead to an import of copper into a certain country?

a comparative advantage in the production of copper by other nations

Gross domestic product is a measure of

an economy's total output.

Which event would MOST likely lead to a decrease in interest rates and an increase in loanable funds? an increase in the amount of pretax dollars individuals can contribute into savings plans a doubling of government deficits requiring the issuance of more bonds a sharp increase in borrowing by businesses due to an expanding economy an increase in major purchases by individuals as consumer confidence increases

an increase in the amount of pretax dollars individuals can contribute into savings plans

Which of these will cause the supply of loanable funds curve to shift leftward? a drop in home prices a lowering of firms' expectations about the economy an increase in the government deficit an increase in government regulations that make plant expansion difficult

an increase in the government deficit

A decrease in the price of on-demand video-streaming services such as Netflix leads to a(n)

decrease in the demand for cable TV service.

The concept of scarcity

exists in all societies

Net exports equal

exports minus imports

Suppose a perpetuity bond with a face value of $1,000 has a coupon rate of 8%. If market interest rates rise to 12%, the price of the bond falls to $666.67. rises to $1,120. rises to $1,080. falls to $880.

falls to $666.67.

Economic models must fully reflect reality.TrueFalse

false

The choice to attend a free college lecture involves no opportunity cost. True False

false

The U.S. gross domestic product is equal to the total market value of all

final goods and services produced by resources in the United States.

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

frictional

Corporate bonds generally have a _____ return on investment than do checking deposits because bonds are _____.

higher; riskier

As income increases, consumption

increses at a slower rate

The market-clearing price

is the price at which quantity demanded equals quantity supplied.

Which of these is considered near money? silver a credit card a $100 bill money market deposit accounts

money market deposit accounts

There is a(n) _____ relationship between price and quantity demanded. very weak negative positive indeterminate

negative

GNP includes output produced _____, but it does NOT include output produced _____.

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

Suppose a perpetuity bond with a face value of $1,000 has a 10% coupon rate. If market interest rates fall to 8%, the price of the bond falls to $750. rises to $1,250. rises to $1,080. stays at $1,000.

rises to $1,250.

An increase in technology shifts the production possibilities frontier curve inward. decreases inflation. shifts the production possibilities frontier curve outward. creates unemployment.

shifts the production possibilities frontier curve outward.

Near money includes some of M2 but none of M1. only the money in M2. some of M2 and some of M1. hard assets such as land.

some of M2 but none of M1.

A _____ occurs when price is above market equilibrium.

surplus