Macro Final exam - Study tests 1&2
Consumers eat salsa with taco chips. The price of salsa rises. How does the increase in the price of salsa affect the demand for taco chips? A) It decreases the demand for taco chips. B) It has no effect on the demand for taco chips. C) It will decrease the demand for taco chips ONLY IF taco chips are a normal good. D) It increases the demand for taco chips. E) It could increase, decrease, or have no effect on the demand for taco chips, but more information is needed to determine the impact
A
Gabriel operates a ranch in Idaho where he raises cattle and grows potatoes. The figure above illustrates his production possibilities frontier. What is Gabriel's opportunity cost of raising another 100 cows? A) 1.25 tons of potatoes B) 100 cows C) 5.0 tons of potatoes D) 3.0 tons of potatoes E) 1.0 ton of potatoes
A
Microeconomics includes the study of A) the choices that individuals and businesses make. B) how a nation promotes economic growth. C) the effect on the national economy of the choices that individuals make. D) how countries decide to fund their budget deficits. E) the overall amount of production within the economy.
A
The income paid for the use of land is called A) rent. B) land capital. C) profit. D) wages. E) interest.
A
The largest share of total production in the United States is A) consumption goods and services. B) imported goods and services. C) government goods and services. D) capital goods. E) exported goods and services.
A
What would be an example of capital good? A) Antonio, the manager of the local Taco Hut, purchases a new deep fryer. B) Jeanette buys a new dress. C) The local driver's license office purchases a new digital camera and printer. D) Apple sells computers to Japan. E) Rhianna gets a haircut.
A
which of the following is a positive statement? A)Online shopping increased by 50 percent this Chistmas season. B)There should be a computer in every elementary school. C)Too many people are unemployed. D)We need to spend less on luxury items , and more on necessities for the less fortunate .E)Our country must increase military spending.
A
Consider the following people: ∙ Chris quits his job as an automobile mechanic to pursue his college education full-time. ∙ Arrelo is temporarily laid off from her technical support job because of a strike by production workers. ∙ Schurita graduated from college in May and is currently looking for a job. ∙ Bo quit his job on September 1 and then, after looking for a new job, will begin his new job on October 1. ∙ Terri retired from his job on May 1. ∙ Vicki works part-time at Bainen Press to help pay her college tuition. 9) Vicki would be classified as A) a part-time worker for noneconomic reasons. B) not in the labor force because she is a full-time student. C) unemployed. D) a part-time work for economic reasons. E) a discouraged worker.
A E2
Full employment occurs when the A) unemployment rate equals the natural unemployment rate. B) natural unemployment rate equals the frictional unemployment rate. C) structural unemployment rate equals zero. D) structural unemployment rate equals the frictional unemployment rate. E) cyclical unemployment rate equals the natural unemployment rate.
A E2
The CPI is calculated by the Bureau of Labor Statistics on a frequency of every A) month. B) decade, along with the Census. C) quarter. D) year. E) week.
A E2
The labor force consists of A) the number of people in the working-age population who are employed or unemployed. B) all people in the population aged 16 and over who are not in jail, a hospital, or an institution or in the U.S. Armed Forces. C) the number of people who are employed. D) the number of people who are employed minus the number of the people who are unemployed. E) the number of people who unemployed and who are actively seeking work
A E2
The presence of new goods that are of higher quality than the old goods leads the BLS to A) try to separate price differences from improvements in quality. B) actually understate the cost of living when calculating the CPI. C) update the market basket every time a new good is available. D) immediately update the reference base period used in calculating the CPI. E) do nothing because at least some people still buy the old goods.
A E2
The value of used goods ________ counted as part of GDP ________. A) are not; because they were counted during the period when they were counted as new goods B) may be; as long as their value has risen C) are not; because most fall in value and would cause a decrease in the value of GDP D) are; as long as they are classified as consumption goods E) are; as long as they are classified as investment goods.
A E2
When comparing the annual inflation rate in the United States based on the CPI with the annual inflation rate based on the PCEPI, the data show that the two inflation rates A) move up and down in similar but not identical ways. B) both fluctuate, but the fluctuations have little relationship to each other. C) move in opposite directions. D) steadily increased over the 16 year period after 2000. E) remained constant over the 16 year period after 2000
A E2
Which of the following purchases would be included in GDP for the year 2018? A) A new car sold in 2018 B) General Motors stock sold in 2018 C) The estimated value of illegal drug transactions in 2018 D) A used 2017 car that is resold in 2018
A E2
If the price of a DVD falls, i. the demand curve for DVDs will shift rightward. ii. the demand curve for DVDs will not shift. iii. there will be a movement along the demand curve for DVDs. A) i only B) ii and iii C) iii only D) ii only E) i and iii
B
In one hour John can produce 20 loaves of bread or 8 cakes. In one hour Phyllis can produce 30 loaves of bread or 15 cakes. Which of the following statements is true? A) Phyllis has a comparative advantage in producing both cakes and bread. B) Phyllis has an absolute advantage in both goods. C) John has a comparative advantage in producing cakes. D) John has an absolute advantage in both goods. E) Phyllis has a comparative advantage in producing bread.
B
Milk can be used to produce cheese or butter. If the price of a pound of butter rises, what happens to the supply of cheese? A) The supply of cheese increases. B) The supply of cheese decreases. C) The supply of cheese stays the same and there is no change in the quantity supplied of cheese. D) The supply of cheese stays the same and there is a decrease in the quantity supplied of cheese. E) The supply of cheese could increase, decrease, or stay the same depending on what happens to the supply of butter.
B
Scarcity results from the fact that A) not all goals are desirable. B) people's wants exceed the resources available to satisfy them. C) the population keeps growing. D) we cannot answer the major economic questions. E) choices made in self-interest are not always in the social interest.
B
The circular flow diagram shows A) how nominal GDP is distinct from real GDP. B) the flow of expenditure and income between different sectors of the economy. C) how prices of factors of production are determined. D) the effects of inflation in a simple economy
B
The law of demand implies that, other things remaining the same, A) as the demand for cheeseburgers increases, the price of a cheeseburger falls. B) as the price of a cheeseburger rises, the quantity of cheeseburgers demanded decreases. C) as more people demand cheeseburgers, the quantity demanded increases. D) as the price of a cheeseburger rises, the quantity of cheeseburgers demanded increases. E) as income increases, the quantity of cheeseburgers demanded increases
B
The question "Should we produce LCD televisions or computer monitors?" is an example of a ________ question. A) where B) what C) why D) for whom E) how
B
The table above shows the situation in the gasoline market in Tulsa, Oklahoma. If the price of a gallon of gasoline is $3.62, then A) there is a surplus of gasoline in Tulsa. B) there is a shortage of gasoline in Tulsa. C) the gasoline market in Tulsa is in equilibrium. D) without more information we cannot determine if there is a surplus, a shortage, or an equilibrium in the gasoline market in Tulsa. E) there is neither a surplus nor a shortage, but the market is NOT in equilibrium.
B
What would be an example of a consumption good? A) Rhianna gets a haircut. B) Jake buys an iPhone. C) The local driver's license office purchases a new digital camera and printer. D) Antonio, the manager of the local Taco Hut, purchases a new deep fryer. E) Donald Trump purchases furniture for his office.
B
When free trade between two countries occurs, the result is that: A) both countries lose because the increase in demand for each country's output causes prices to rise. B) both countries could gain because producers can specialize in production. C) both countries gain because each country produces all goods that its consumers demand. D) one country gains because it can consume more than before and the other country loses.
B
Which of the following correctly describes how the "global pie is baked"? A) Asia accounts for about 40 percent of the global pie. B) Advanced economies account for about 50 percent of the value of the world's production. C) Emerging economies account for about 25 percent of the global pie. D) The United States' share of economic pie is increasing while China's share is decreasing. E) The increase in manufacturing has taken place in mainly the advanced economies.
B
GDP is best defined as the ________ in a given time period. A) market value of ALL the goods and services produced within a country B) market value of the final goods and services produced within a country C) market value of the final goods and services consumed by a nation's citizens D) number of goods and services produced within a country E) number of final goods and services produced within a country
B E2
If in Switzerland in January, 2009 the CPI was 187.4 and in January, 2010 it was 191.1, then the inflation rate in 2010 was A) -1.9 percent. B) 1.9 percent. C) 3.7 percent. D) unknown without the base period index number. E) unknown without the real prices.
B E2
If the Federal government expands its support of education and retraining of workers who have been unemployed for a relatively long length of time, which type of unemployment would the education and retraining most likely be targeted? A) government B) structural C) discouraged D) frictional E) cyclical
B E2
If the bank returns $1,060 on the $1,000 deposited for a year during which inflation was 4 percent, the real interest rate is A) 6 percent. B) 2 percent. C) 10 percent. D) 16 percent. E) -2 percent
B E2
People who are in the process of changing jobs voluntarily are included in which of the following types of unemployment? A) Cyclical unemployment B) Frictional unemployment C) Structrual unemployment D) None of the above
B E2
The GDP price index can be interpreted as A) (nominal GDP - real GDP) ÷ 100. B) (nominal GDP ÷ real GDP) × 100. C) (real GDP - nominal GDP) ÷ 100. D) (real GDP ÷ nominal GDP) × 100. E) (nominal GDP + real GDP) ÷ 100.
B E2
Which of the following people is frictionally unemployed? A) Amanda, a sales associate at J.C. Penney who quit her job to attend school full time B) Eugene, a pharmaceutical drug salesman who was laid off when his company lost a large contract with an HMO C) Tran, a building construction supervisor who was fired because of a downturn in the building industry that is the result of a general downturn in the economy D) Cara, an executive who lost her job because her company could not compete with foreign competition and whose skills are not wanted by other companies E) Samantha, who worked part-time in J.C. Penney to help with the Christmas rush but was laid off in January
B E2
A country produces only cans of soup and ink pens. If the country produces on its bowed outward PPF and increases the production of cans of soup, the opportunity cost of additional A) cans of soup is decreasing. B) ink pens is increasing. C) cans of soup is increasing. D) cans of soup remains unchanged. E) More information is needed to determine what happens to the opportunity cost.
C
An increase in the number of pineapple growers results in A) no change in the supply of pineapples and a movement along the supply curve of pineapples. B) an increase in the quantity of pineapples supplied and no shift in the supply curve of pineapples. C) an increase in the supply of pineapples and a rightward shift in the supply curve of pineapples. D) an increase in the supply of pineapples and a leftward shift in the supply curve of pineapples. E) None of the above answers is correct.
C
In the circular flow model, rent, wages, interest, and profit paid flow from ________ through ________ to ________. A) households; factor markets; firms B) firms; goods markets; firms C) firms; factor markets; households D) firms; goods markets; households E) households; goods markets; firms as payment for goods
C
In the table above, Jack's comparative advantage is producing ________ and Jill's comparative advantage is producing ________. A) clothing; clothing B) clothing and food; nothing C) clothing; food D) food; clothing E) nothing; clothing and food
C
Which of the following statements is true about a competitive market? A competitive market A) has a handful of sellers but always has many buyers. B) has one seller competing to sell his or her product. C) has so many buyers and sellers that no one can influence the price. D) includes markets for goods and services but not for inputs. E) must have a physical location.
C
Which of the following transactions takes place in factor markets? A) Sam enters the winning bid on a grand piano at a local auction. B) Jake purchases 1,000 shares of stock in the Wal-Mart Corporation through his online trading account. C) Henry receives a commission from his employer for selling a new automobile. D) Justin receives $30 in exchange for mowing his neighbor's lawn. E) Lucille receives a $500 check from the U.S. Social Security Administration
C
Whilemoving along a production possibilities frontier, the amount of labor ________, the amount of capital ________, and the level of technology ________. A) is fixed; is fixed; varies B) varies; varies; varies C) is fixed; is fixed; is fixed D) varies; is fixed; varies E) varies; is fixed; is fixed
C
Within the circular flow model, economists define households as A) individuals or groups within the same legally defined family. B) married or engaged couples. C) individuals or groups living together. D) families with at least 2 children. E) families living in their own houses.
C
____________is the human resource that organizes labor, land, and capital. A) A gift of nature B) Human skill C) Entrepreneurship D) Profit E) Human capital
C
An unpaid worker in a family business is classified as A) employed no matter how many hours the person worked in the previous week. B) not in the labor force. C) employed if the person worked at least 15 hours in the previous week. D) unemployed only if the person worked no hours in the previous week. E) unemployed no matter how many hours the person worked in the previous week.
C E2
Discouraged workers A) are not included in the calculation of the unemployment rate, the labor force, or the working-age population. B) are counted as one -half of a worker in the unemployment statistics. C) would increase unemployment rate if they were added to the number of unemployed workers. D) are counted as unemployed workers when the unemployment rate is calculated. E) would decrease the unemployment rate if they were added to the number of unemployed workers.
C E2
In a circular flow diagram, i. the value of production = income. ii. the value of production = expenditure. iii. expenditure = income. A) i and iii are true statements. B) Only iii is a true statement. C) i, ii and iii are true statements. D) Only i is a true statement. E) i and ii are true statements.
C E2
The expenditure approach to measuring GDP is done by using data on only A) consumption expenditure. B) consumption expenditure, investment, and government expenditures. C) consumption expenditure, investment, government expenditure on goods and services, and net exports of goods and services. D) wages, rent, interest, and profit. E) consumption expenditure and investment.
C E2
Which of the following is a final good or service? A) the fertilizer purchased by Royal Lawn and Landscape B) the computers purchased by Office Depot for sale to its customers C) a new replacement muffler installed by Midas Mufflers D) the CPUs purchased by Dell to be used in their computers E) the grilled chicken purchased by Taco Bell for use in their burritos
C E2
A sticky price can be the result of A) any sort of shortage of a good, service, or factor of production. B) a minimum wage set below the equilibrium wage rate. C) any sort of surplus of a good, service, or factor of production. D) firms and labor unions entering into a long-term contract. E) a price cap.
D
As we move along the production possibilities frontier, A) less of both goods can be produced. B) a tradeoff is not possible because nations need all goods. C) more of both goods can be produced. D) the production of one good increases as the production of the other good decreases. E) the possibilities of tradeoffs diminish
D
Opportunity cost is best defined as A) how much money is paid for something. B) the total of all other alternatives that are forgone in making a choice. C) how much money and time it takes to consume something. D) the value of the highest-valued alternative that is forgone in making a choice. E) the sunk cost of any decision.
D
Suppose the equilibrium quantity of movie tickets is 1,000. If the demand curve shifts ________, the equilibrium quantity of movie tickets will ________. A) rightward; not change B) leftward; increase C) leftward; not change D) rightward; increase E) rightward; decrease
D
The concept of human capital describes A) human population, that is, the quantity of labor. B) the number of machines (capital) that have been produced by people (humans). C) the number of machines per employed worker. D) human skills, that is, the quality of labor. E) the number of workers per operating machine
D
When economists use the term "correlation," they are referring to A) positive economics. B) economic policy. C) normative economics. D) how two variables move together in a predictable way. E) cause and effect relationships between variables.
D
1994 - 90 1996 - 95.5 1998-2000 - 100 2002 - 104 The table above gives the CPI for a nation. Based on the table, we can determine that the reference base period is A) 1996. B) 2002. C) 1994. D) 1998-2000. E) More information about when the Consumer Expenditure Survey was undertaken is needed to answer the question.
D E2
A recession runs from the A) trough of a business cycle to its expansion. B) peak of the business cycle to a recovery. C) trough of a business cycle to its peak. D) peak of the business cycle to its trough. E) expansion of a business cycle to its peak.
D E2
Consider the following people: ∙ Chris quits his job as an automobile mechanic to pursue his college education full-time. ∙ Arrelo is temporarily laid off from her technical support job because of a strike by production workers. ∙ Schurita graduated from college in May and is currently looking for a job. ∙ Bo quit his job on September 1 and then, after looking for a new job, will begin his new job on October 1. ∙ Terri retired from his job on May 1. ∙ Vicki works part-time at Bainen Press to help pay her college tuition. Bo's actions would A) raise the September unemployment rate and the October unemployment rate. B) raise the September unemployment rate and not change the October unemployment rate. C) classify him as out of the labor force in September. D) raise the September unemployment rate and lower the October unemployment rate. E) have no impact on the September unemployment rate or the October unemployment rate
D E2
In 2012, the nominal wage rate for unionized carpenters was $37.50 and the CPI was 204. Calculate the real wage rate for this group of workers. A) $47.09 B) $37.50 C) $5.44 D) $18.38 E) $1.84
D E2
Population 280 Working-age population 210 Labor force 150 Employed 135 Unemployed 15 Based on the above table, the unemployment rate is A) 11.1 percent B) 8.6 percent. C) 5.4 percent. D) 10 percent. E) 7.1 percent.
D E2
Rosina Gonzales quit her job in Pennsylvania and moved to California to be close to her family. She is currently looking for work, so she would be considered A) a discouraged worker. B) avoidably unemployed. C) not in the labor force because she moved more than 150 miles. D) frictionally unemployed. E) cyclically unemployed.
D E2
Suppose a person's nominal income increases by 8% while the price level in the economy increases by 10%. In this case, the person's real income: A) increased by 2% B) decreased by 18% C) increased by 18% D) decreased by 2%
D E2
When an American college student in Davis, California spends $200 on a pair of Louis Vuitton jeans (a famous French brand), U.S. consumption ________, U.S. net exports ________, and U.S. GDP ________. A) does not change; does not change; does not change B) does not change; decreases by $200; decreases by $200 C) does not change; increases by $200; increases by $200 D) increases by $200; decreases by $200; does not change E) increases by $200; does not change; increases by $200
D E2
A statement that "All children should receive free health care" is an example of what kind of statement? A) a fair statement B) a statement on the margin C) a natural experiment statement D) a positive statement E) a normative statement
E
Both the demand for and supply of cars changes in France. You observe that the quantity of cars does not change but the price rises. Thus, which of the following occurred? A) Demand increased by a larger magnitude than supply decreased. B) Demand and supply decreased by an equal amount. C) Demand decreased and supply increased by an equal amount. D) Demand and supply increased by an equal amount. E) Demand increased and supply decreased by an equal amount.
E
Deb and Pete have volunteered to help their favorite charity mail out fundraiser information. The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes. What is Deb's opportunity cost of assembling 1 packet? A) 160 envelopes B) 1/4 of an envelope C) 40 envelopes D) 4 packets E) 4 envelopes
E
In order to determine whether to major in economics, a rational individual compares the ________ of the decision. A) opportunity cost and the sunk cost B) self-interest and social-interest C) normative benefits and positive costs D) positive benefits and normative costs E) marginal benefit and marginal cost
E
Self interest A) cannot be used to determine how goods are produced. B) reflects choices that are best for society as a whole. C) occurs only when wants exceed available resources. D) has nothing to do with determining what goods are produced. E) reflects choices that are best for the individual who makes them.
E
Suppose India and France have the same PPF, shown in the figure above. Based on their current production points, India's most likely future PPF is ________, and France's most likely future PPF is ________. A) PPF2;PPF2 B) PPF0;PPF0 C) PPF1;PPF2 D) PPF1;PPF1 E) PPF2;PPF1
E
Suppose that, instead of taking this test, you could either have worked and earned income or partied and had a pleasurable time. Your opportunity cost of taking the test is the A) test because you are taking it. B) forgone working and partying. C) forgone work. D) forgone party. E) forgone working or partying, depending on which was your next best choice
E
The above figure shows the production possibility frontier for a country. Suppose the country is producing at pointD. What would be the opportunity cost to move to pointC? A) 15 thousand bottles of wine B) 6 thousand bottles of wine C) 12 tons of rice D) Nothing, it is a free lunch. E) This movement is not possible without economic growth.
E
When all of the available factors of production are being efficiently employed, the A) opportunity cost of changing production is infinite. B) PPF disappears. C) economy is producing at a point beyond itsPPF. D) economy is producing at a point within itsPPF. E) economy is producing at a point on itsPPF.
E
) The Consumer Price Index (CPI) measures the changes of the A) prices paid by consumers and businesses for a fixed market basket of goods and services. B) prices paid by all businesses for a fixed market basket of production resources. C) lowest prices paid by consumers for a fixed market basket of consumer goods and services. D) quantities of a fixed market basket of goods produced by businesses. E) prices paid by consumers for a fixed market basket of consumer goods and services.
E E2
An economic recession produces A) an increase in natural unemployment. B) a decrease in cyclical unemployment. C) a decrease in natural unemployment. D) an increase in structural unemployment. E) an increase in cyclical unemployment.
E E2
Investment is defined as the purchase of A) new capital goods but not additions to inventories. B) additions to inventories only. C) financial assets and inventories only. D) any financial asset only. E) new capital goods and additions to inventories.
E E2
Last year in a nation to the south, net domestic product at factor cost equaled $3,300 billion. Indirect taxes minus subsidies equaled $200 billion, depreciation equaled $800 billion, the statistical discrepancy equaled zero, and net operating surplus equaled $150 billion. The country's GDP was A) $3,500 billion. B) $4,450 billion. C) $2,300 billion. D) $4,150 billion. E) $4,300 billion
E E2
Leisure time A) is included in GDP and has become an increasingly large part of GDP. B) is less valuable to us than the wage we earn for working. C) has steadily decreased over the years. D) is not an economic good. E) is not valued as part of GDP.
E E2
Nominal GDP is GDP A) minus depreciation. B) that ignores depreciation. C) after adjusting for any price changes. D) during a recession. E) computed with current market values.
E E2
The bias in the CPI distorts private contracts because A) the CPI cannot properly account for what goods and services a typical urban consumer buys. B) a worker that links her salary to the CPI is likely to be worse off than a worker that doesn't link her salary to the CPI. C) a lender that links the interest payments on the loan to the CPI is likely to be worse off than a lender that does not link the interest payments on the loan to the CPI. D) a future increase in a payment that is linked to the CPI is likely to be less than the true increase in the price level. E) a future payment that is linked to the CPI is likely to be raised above the true increase in the price level.
E E2
The more money an average household spends on one specific type of good or service per month, the A) costlier it will be to conduct the Consumer Expenditure Survey. B) smaller the relative importance of that item in the CPI market basket. C) more frequently its price is checked when calculating the CPI. D) less significant an increase in the price of that good or service will be for the household. E) larger the relative importance of that item in the CPI market basket.
E E2
