Macro Final

Suppose that apples and pomegranates are substitutes in consumption. The _______ pomegranates will increase when the apple prices rise A)quantity demanded B)quantity supplied C)supply of D)demand of

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Private savings equal A) disposable income minus consumption B)taxes minus government spending on goods and services C)the total amount of savings accounts plus stocks plus bonds owned by households D)income plus investment

A) disposable income minus consumption

In soccer, when one coach decides to send in a substitute, the other manager to send in a different player. Once both managers decide that no more player substitutions will benefit their team, the situation has reached: A) equilibrium B) the market C) equity D) efficiency

A) equilibrium

Accoerding to estimates of the aggregate production function, each increase of 1% leads to an increase in labor productivity by ___% A).33 B)3.3 C)33 D)1

A).33

In a closed economy, investment spending, I, must equal A)GDP-C-G B)GDP-C C)GDP-C-G-X D)GDP-(CxG)

A)GDP-C-G

The aggregate price level is A)a measure of the overall level of prices in an economy B)the average of stock prices on the New York stock exchange C)a hypothetical set of consumer purchases of goods and services D) a measurement of intermediate goods and services

A)a measure of the overall level of prices in an economy

diminshing returns to physical capital imply that, with human capital/worker and technology held fixed, each successive increase in physical capital leads to ___real gdp/capita A)a smaller increase in B)larger increase in C)a decrease in D)negative

A)a smaller increase in

which policy promotes economic growth A)building infrastructure and providing public goods B)implementing a monetary policy that causes prices, on avg, to fall C)implementing a fiscal policy that increases inflation D)increasing interest rates on student loans

A)building infrastructure and providing public goods

if there is an increase in the government budget deficit, the ___ loanable funds will ___, interest rates will ___, and the amount of borrowing will ___. A)demand for, increase, increase, increase B)demand for, decrease, decrease, decrease C)supply of, increase, decrease, increase D)supply of, decrease, increase, decrease

A)demand for, increase, increase, increase

the demand for loanable funds curve is ___ sloping because ___respond to lower interest rates by ___ their quantity demanded of loanable funds A)downward, borrowers, increasing B)downwards, savers, increasing C)upward, investors, decreasing D)upward, savers, decreasing

A)downward, borrowers, increasing

An economy is said to have a comparative advantage if it A)has the lowest OC of producing a particular good compared with other economies B)can produce fewer of all goods than another economy C)can produce more of all goods than another economy with the same amount of resources D)has the highest OC of producing a particular good compared with other economies

A)has the lowest OC of producing a particular good compared with other economies

one difference between a closed economy and an open economy is that: A)in the latter, foreign savings complement domestic savings in financing investment spending B)in the latter, the government is more open to the idea of financing investment spending than in the former C)in the former, foreign savings complement domestic savings in financing investment spending D)in the former, foreign savings finance more investment spending than in the latter

A)in the latter, foreign savings complement domestic savings in financing investment spending

A simplified representation of a real situation that is used to better understand real life situations is called a A)model B)assumption C)PPF D)trade-off

A)model

if technology advances: A)more output can be obtained from same inputs B)more inputs are needed to produce the same output C)less output can be obtained from the same inputs D)less output can be produced with even more inputs

A)more output can be obtained from same inputs

in a closed economy, all investment must come from A)national savings B)money creation C)debt issuance D)foreign borrowing

A)national savings

in an open economy, total investment equals A)national savings minus net exports B)private savings plus national savings plus capital inflows C)private savings plus capital inflows D)national savings minus private savings minus capital inflows

A)national savings minus net exports

Economists say that long-run economic growth is almost entirely due to: A)rising productivity B)population growth C)democratic governance D)balanced budgets

A)rising productivity

the government can increase national savings by A)taxing more than it spends B)spending more than it taxes C)increasing inflation D)increasing the deficit

A)taxing more than it spends

Opportunity cost is A)the value of the best alternative forgone in making a choice between alternatives B) the amount you pay to take advantage of a lucrative opportunity C)the benefit derived from a product D)the payment not made for a product

A)the value of the best alternative forgone in making a choice between alternatives

Which item would not be part of GDP A)used car sales B)cable TV service purchased for a home C)new residential construction D)a new truck purchased by a building contractor

A)used car sales

The demand for a good will increase if: A)the prices of inputs needed to produces the good decrease B)there is a decrease in the price of the good C)the price of a complementary good increases D)there is an increase in the number of consumers in the market

B)there is a decrease in the price of the good

which of the following would shift the aggregate production function upwards? A)an increase in the price of oil B)an improvement in technology C)a decrease in the supply of labor D)a decline in the birth rate

B)an improvement in technology

GDP is 12 trillion in a closed economy. consumption is 8 trillion, and government spending is 2 trillion. taxes are .5 trillion. what is the budget balance A)surplus of 1.5 trillion B)deficit of 1.5 trillion C)surplus of .5 trillion D)deficit of .5 trillion

B)deficit of 1.5 trillion

Value added in national income accounts refers to the A)value added by labor to the production process B)difference between the price and the value of inputs purchased C)difference in profits at various stages of production D)value of all inputs used by the final producer

B)difference between the price and the value of inputs purchased

a business will want to borrow to undertake an investment project when the rate of return on that project is ____ A)lower than the interest B)higher than the interest C)higher than the exchange D)equal due to inflation

B)higher than the interest

The production possibility frontier illustrates that: A)an economy's productive capacity increases at a fixed proportion relative to population B)in a two good economy at maximum capacity, more of one good can be produced only if less of the other good is produced C) economic production possibilities are only limited by wants D)the economy will move to fill employment

B)in a two good economy at maximum capacity, more of one good can be produced only if less of the other good is produced

economists use ___ as a model to explain how savers and borrowers come together to determine the equilibrium interest rate A)money market B)market for loanable funds C)aggregate supply and demand D)financial system

B)market for loanable funds

if a country has a trade surplus, we can conclude that it also has A)budget surplus B)net capital outflows C)net capital inflow D)budget deficit

B)net capital outflows

a key statistic used to measure economic growth is A)the size of the governments budget B)real gdp/capita C)life expectancy D) the dow jones stock index

B)real gdp/capita

Suppose the government sets a price floor that is below equilibrium price of a good. The price floor will: A)a result in a surplus of goods B)result in a shortage of goods C)have no immediate effect on the price of a good D)increase the quantity supplied of the good

B)result in a shortage of goods

the savings-investment spending identity in a closed economy says that: A)each person in the economy must invest as much as they save B)savings and investment spending are always equal for the economy as a whole C)savings must equal government investment for the economy as a whole D)each person in the economy must save as much as he or she invests

B)savings and investment spending are always equal for the economy as a whole

the budget balance equals A)taxes plus government spending B)taxes minus government spending C)consumption plus investment D)imports minus exports

B)taxes minus government spending

If resources are scarce: A)their supply is unlimited B)they are insufficient to provide enough goods and services to satisfy all human material wants and needs C)there are not enough of them for firms to produce enough goods and services D) they are probably overvalued by consumers

B)they are insufficient to provide enough goods and services to satisfy all human material wants and needs

When the minimum wage increases, which outcome is most likely A)skilled workers will outnumber unskilled workers B)unemployment among unskilled workers increases C)fewer workers will be willing to work D)employment among skilled workers will decease

B)unemployment among unskilled workers increases

The circular flow diagram illustrates A)the minimum wage state by state B)fluctuations in exchange rates C)the key concepts in the national accounts D)changes in worker productivity

C)the key concepts in the national accounts

GDP/capita measures the value of all final goods and services produced within a country divided by A)the number of households B)the number of firms C)the population D)the number of government agencies

C)the population

We have to make choices because A)with good planning, trade-offs can be avoided B)the resources we would like to use in production are infinite C)the resources available to use are scarce D)we have unlimited income and must decide what to purchase

C)the resources available to use are scarce

An economic expansion in the United States is typically associated with: A)falling inflation rate B)increase in the poverty rate C) increase in output D)decrease in corporate profits

C) increase in output

Which question is the most appropriate to the study of macroeconomics A) how much will SOny charge for the new game system, to be introduced later this year? B) what determines whether Cola opens a new office in Beijing? C)How does aggregate price level affect overall consumer spending? D)How will the level of interest rates affect Delta's decision to buy a new airplane?

C)How does aggregate price level affect overall consumer spending?

One role of government policy, suggested by macroeconomic analysis, is to: A)manage short run economic fluctuations B)insure business against all damages caused by economic fluctuations C)act as an invisible hand, ensuring that goods and services are efficiently allocated to their best uses across the economy D)prevent interference in the workings of free market

C)act as an invisible hand, ensuring that goods and services are efficiently allocated to their best uses across the economy

If the demand for electric cars falls when the price of electricity rises, then electric cars and electricity are both A)both expensive B)rival in consumption C)complements D)substitutes

C)complements

Taken collectively, people in nations that engage in international trade are likely to A)lower their standards of living B)be made worse off C)consume more than they could consume In the absence of trade D)lose from lower opportunity cost of production

C)consume more than they could consume In the absence of trade

the government saves when it A)has a balanced budget B)has a budget deficit C)has a budget surplus D)borrows by selling bonds

C)has a budget surplus

A binding price ceiling is usually designed to A)keep prices above equilibrium B)increase the quantity of the good C)keep prices below the equilibrium D)prevent excess supply

C)keep prices below the equilibrium

which of the following helps explain latin americas poor economic growth since 1920 A)an overspending on education B)inability of domestic firms to compete with foreign importers C)lower rates of saving and investment spending D)scarcity of natural resources

C)lower rates of saving and investment spending

The promotion of employment and growth in the economy as a whole is a focus of A)environmental policy B)trade policy C)macroeconomics D)microeconomics

C)macroeconomics

national savings equals A)private savings plus consumption spending B)the trade balance plus the budget balance C)private savings plus the budget balance D)government spending plus taxes

C)private savings plus the budget balance

national savings is the sum of private savings A)private consumption B)government tax revenue C)the budget balance D)trade surplus

C)the budget balance

which of the following outcomes would not be due to the government running budget deficits? A)the government becomes a borrower in the market for loanable funds B)the interest rate rises C)the total amount of borrowing decreases D)private investment spending is crowded out

C)the total amount of borrowing decreases

the supply of loanable funds curve is ___ sloping because ___respond to lower interest rates but ___their quantity supplied of loanable funds A)upward, savers, increasing B)upward, investors, decreasing, C)upward, savers, decreasing D)downward, investors, increasing

C)upward, savers, decreasing

A technological improvement has been developed in the production of mangos. At the same time, scientists have discovered that mangos have significant health benefits. This will result in: A)a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of mangoes B)increase in equilibrium price and quantity C)decrease in both D) increase in Equilibrium quantity and uncertain effect on the Equilibrium price

D) increase in Equilibrium quantity and uncertain effect on the Equilibrium price

France must give up the production of 75 tires to produce 25 additional dress shirts. The opportunity cost of producing 4 dress shirts is ___ties A)71 B)4 C)79 D)12

D)12

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 ______ A)120%, 2010 B)120%, base year C)20%, 2010 D)20%, base year

D)20%, base year

If the price index in year 1 is 110, and the price index in year 2 is 115, then the inflation rate is exactly ___% from year 1 to year 2 A).05 B)5 C).0454 D)4.54

D)4.54

If they spend all night writing computer programs, Laurence can write 10 programs while Carrie Anne can write 5. If they spend all night making sunglasses, Laurence can make 6 while Carrie Anne can make 4. We know that: A)Carrie Ann, both programs and sunglasses B)Carrie Annn, programs not sunglasses C)Laurence, programs but not sunglasses D)Laurence, both programs and sunglasses

D)Laurence, both programs and sunglasses

an increase in the capital stock would: A)a shift in the PPF upwards B)a movement to the left along a stationary PPF C)shift the PPF downwards D)a movement to the right along a stationary PPF

D)a movement to the right along a stationary PPF

Gains from trade exist for A)individuals only B)states only C)countries only D)all of the above

D)all of the above

Suppose the government sets a price floor of $4.85/bushel of wheat when the equilibrium price is $4.55/bushel. The price floor will A)cause a shortage of wheat B)increase supply of wheat C)have no immediate effect on the price of wheat D)cause a surplus of wheat

D)cause a surplus of wheat

the convergence hypothesis helps explain why A)highly educated people converge upon high income countries B)high income individuals marry one another C)high income countries continue to experience high economic growth D)differences in real gdp/capita of high income and lowe income countries tend to decrease over time

D)differences in real gdp/capita of high income and lowe income countries tend to decrease over time

the interest rate is 5% in the market for loanable funds. investors wish to borrow 100 million, and savers wish to save 125 million. we would expect the interest rate to ___ as there is a ___ of loanable funds A)fall, shortage B)rise, surplus C)rise, shortage D)fall, surplus

D)fall, surplus

Fiscal Policy involves changes in A)interest rates B)the quantity of money C)banking regulations D)government spending

D)government spending

economists believe that the best way to stimulate investment in physical capital is to encourage A)higher rates of investment B)more spending on infastructure C)conservation of natural resources D)higher rates of national saving

D)higher rates of national saving

The convergence hypothesis states that international differnces in real GDP/capita tend to ____ over time A)diverge B)fluctuate C)remain constant D)narrow

D)narrow

assume a closed economy in which GDP is 110 billion. if government spending is 30 billion, consumption is 70 billion, taxes are 20 billion,a nd investment spending is 10 billion A)private savings is 10 billion B)the government budget balance is a surp;us of 10 billion C)there are no net savings D)private savings is 20 billion

D)private savings is 20 billion

crowding out hampers the economy by A)decreasing government borrowing B)decreasing consumption C)increasing private borrowing D)reducing private investment spending

D)reducing private investment spending

in 1798, the economist thomas malthus predicted that: A)countries with big supply of natural resources would always enjoy economic growth B)the recently independent US would rejoin the UK out of necessity C)the french revolution would improve the economics of most european countries D)rising population growth would cause real GDP/capita to fall

D)rising population growth would cause real GDP/capita to fall