macro exam 1

If in a year there is a positive inventory investment, then final sales A) exceed GDP. B) are less than GDP. C) equal GDP. D) are zero.

B

A farmer buys a new tractor from John Deere to use on her cotton farm. This tractor is included in GDP as A) part of gross private domestic investment. B) a durable consumption good. C) a service. D) a nondurable consumption good.

A

Scarcity implies that people must A) be irrational. B) be selfish. C) make choices. D) not be selfish.

C

In economics, items that are man made and used to produce goods and services are known as A) wants. B) labor. C) outputs. D) capital.

D

Which of the following is an example of a final good or service? A) wheat a bakery purchases to make bread B) coffee beans Starbucks purchases to make coffee C) lumber purchased by a construction company to used in building houses D) a computer purchased by a student at DU to help her in her classes

D

Why is it that all of our wants cannot be satisfied? A) because of shortages B) because we cannot seem to decide what we really want C) because other people try to change your mind about what you want D) because limited resources mean all the goods we want cannot be obtained

D

Net investment is A) gross investment minus depreciation. B) gross investment plus depreciation. C) depreciation minus gross investment. D) GNP minus final sales.

A

Scarcity arises because A) resources are limited and are inadequate to meet all human wants. B) shortages occur in some markets. C) natural resources are abundant. D) some people do not behave in a rational manner.

A

Scarcity is caused by A) unlimited wants running up against limited economic resources. B) a company's slow production speed. C) an individual's budget that is insufficient to cover the expenses of certain goods or services. D) shortages.

A

The total market value of all final goods and services produced within a given period by factors of production located within a country is A) gross domestic product. B) gross national product. C) net national product. D) net national income.

A

When people donate money to a charity, they behave A) rationally if the act gives them satisfaction. B) irrationally because the act does not benefit anyone. C) in an unpredictable manner because the act involves no incentive. D) in a way that only makes themselves worse off.

A

Which of the following is TRUE of incentives? A) Different people are motivated by different incentives. B) Money is the only measure of incentives. C) All of the people in a particular nation are motivated by the same incentives. D) In economics, people are assumed to respond to disincentives instead of incentives.

A

Which of the following is a characteristic of economics? A) allocation of limited resources in an effort to satisfy potentially unlimited wants B) the focus on how people behave not in their own self-interest C) the way society deals with people's needs D) all of the above

A

Which of the following would NOT be counted in 2010s GDP? A) the value of a 2008 boat you purchase from a boat dealer in 2010 B) the 2010 salary of a used motorcycle salesperson C) the commissions earned by a real estate agent in selling condominiums built prior to 2010 D) the value of a refrigerator manufactured in 2010 but not sold in 2010

A

In the production of goods and services, trade-offs exist because A) not all production is efficient. B) society has only a limited amount of productive resources. C) we have abundant resources to choose from. D) human wants and needs are limited at a particular point in time.

B

Sara looks into her closet and discovers a pair of like-new shoes she no longer wears because they are out of fashion. From the economist's perspective, was Sara behaving rationally when she bought those shoes? A) No. If any of a person's decisions have poor results, that person is irrational. B) Yes, Sara didn't buy those shoes when they were out of fashion. C) No. The rationality assumption states that rational people never make mistakes. D) It's not clear because psychology, not economics, deals with the rationality assumption.

B

Which statement most accurately describes economics? A) Economics is the study of how people make money. B) Economics is the study of how people make choices to satisfy their wants. C) Economics is the study of social values a society should choose. D) Economics is the study of how to eliminate scarcity.

B

Depreciation is A) the decrease in the overall price level. B) the additional capital stock in a year. C) the amount of used up machinery in a year. D) the amount of decline in business inventories.

C

In 2010 the change in business inventories is -$70 billion and GDP is $200 billion. Final sales in 2010 A) are $130 billion. B) are $200 billion. C) are $270 billion. D) are $340 billion.

C

The opportunity cost of attending college might best be described as A) the money that must be paid in order to attend college. B) the lowest-valued alternative use of the student's time. C) the highest-valued alternative use of the student's time. D) the value that the student attaches to not working.

C

The production possibilities curve represents A) the total amount of stocks and bonds that exist in the economy. B) the trade-off between human capital and physical capital that exists. C) all possible combinations of total output that can be produced. D) society's needs.

C

Gross domestic product measures A) the total spending of everyone in the economy. B) the value of all output in the economy. C) the total income of everyone in the economy. D) all of the above

D