Macro Final Exam #1:

Don is a builder and in his free time he has built an addition to his own house. This transaction will:

not be included in GDP because it is not produced for the marketplace.

(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

(Figure: The Demand and Supply of Quinoa) Use Figure: The Demand and Supply of Quinoa. A price of _____ will result in a _____.

$9; surplus.

Cowansville has a linear production possibility frontier in the production of cheese and yogurt. It can produce 6 packages of cheese per hour or 8 cups of yogurt per hour. Suppose it has 240 hours of labor and divides labor hours equally between the production of cheese and the production of yogurt. What is the MAXIMUM number of cups of yogurt it can produce in the time it has allocated to yogurt production?

-960.

Which statement about gross domestic product is FALSE?

-It is the total output of all final and intermediate goods and services.

If they spend all night writing computer programs, Laurence can write 10 programs, and Carrie Anne can write 5. If they spend all night making sunglasses, Laurence can make 6 pairs, and Carrie Anne can make 4. Given this information and supposing Laurence and Carrie Anne have constant opportunity costs, we know that _____ has an absolute advantage in _____.

-Laurence; both programs and sunglasses.

If they spend all night writing poems, Leticia can write 10 poems, and Isabella can write 5. If they spend all night making necklaces, Leticia can make 6, and Isabella can make 4. We know that _____ has a comparative advantage in _____.

-Leticia; poems.

Which statement is normative?

-The minimum wage is necessary to help fight poverty.

A movement along the demand curve for a good generally results from:

-a change in the price of the good.

In the simplest circular-flow model, households supply _____ and demand _____.

factors of production; goods and services.

Which statement is among the four principles that underlie individual choice?

-"How much" is a decision at the margin.

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

-16.

(Table: Per Capita GDP) Use Table: Per Capita GDP. The growth rate of real GDP from 2016 to 2019 was: ​ YearNominal GDPPrice LevelPopulation2016$3,00010052019$8,00020010

-33%.

(Table: Pizza Economy III) Use Table: Pizza Economy III. Considering 2018 as the base year, real GDP between 2018 and 2019 grew at a rate of: 2018 Units of Output2018 Price per Unit2019 Units of Output2019 Price per UnitGino's Pizza4,000$104,000$8Bee's Spaghetti3,000$91,000$6Claudia's Cookies2,000$61,000$1Andre's Salad5,000$72,000$4

-39.47%.

(Figure: Wheat and Trains) Use Figure: Wheat and Trains. Suppose the economy is operating at point C. The opportunity cost of producing the fourth train would be:

-80 tons of wheat.

In Los Angeles, LA Fitness (with over 700 locations) is offering a free one-year membership for the person who attends the most CrossFit classes in March. As a result, more people attend CrossFit classes in March. Which economic principle does this scenario BEST illustrate?

-People usually respond to incentives, exploiting opportunities to make themselves better off.

If chicken and pork are substitutes, then a fall in the price of chicken will cause:

-a decrease in the demand for pork.

The production possibility frontier will shift inward because of:

-a decrease in the labor force.

(Figure: Circular-Flow Model) Use Figure: Circular-Flow Model. If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it), and there is an increase in exports, holding everything else constant, which outcome is likely to occur?

-a decrease in the unemployment rate

Which item is NOT included in calculations of GDP?

-a monthly Social Security payment.

Which factor would NOT cause a supply curve to shift?

-an increase in the price of a good.

Economists tend to believe that to change people's behavior, you must:

-change people's incentives.

Monetary policy makers seek to affect the overall level of spending through:

-changes in the quantity of money and interest rates.

Your neighbor is planting her garden one afternoon when she stops to have a beer. She drinks one glass and is now deciding whether to have a second glass. This is an example of _____ analysis.

-marginal.

The incentives built into a market economy ensure that resources are put to good use and that opportunities to make people better off are not wasted. This means that:

-markets usually lead to efficiency.

If workers' nominal wages have risen by 30% over 10 years and prices have increased by 30% in that same period, then we can safely conclude that the goods and services workers can buy have:

-not changed in quantity or quality.

If the price of beef decreases, you can usually expect the:

-quantity of beef supplied to decrease.

If yoghurt and smoothies are substitutes in consumption, then a rise in the price of yoghurt will cause:

-the demand for smoothies to increase.

It is certain that the equilibrium quantity will fall when:

-the supply curve and the demand curve both shift to the left.

Economic models:

-vary greatly in their assumptions and simplifications.