macro practice questions
______ is an example of ______.
a volcano; land
measuring expenditure GDP
GDP = C + I + G + (X-M)
When the economy goes into recession, the output gap is _______.
negative
A discouraged worker ______.
has stopped looking for a job because of repeated failure to find one
Structural unemployment is _______. An example of structural unemployment is _______.
he unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs; coal miners who are unemployed because new technology has made other types of energy cheaper and more accessibleThe price level is the _____.
What is the law of demand and how do we illustrate it? The law of demand states that other things remaining the same, the _______ the price of a good, the _______.
higher; smaller is the quantity demanded
The quantity of labor demanded is the number of labor hours _______ during a given period. The quantity of labor supplied is the number of labor hours _______ during a given period.
hired by all the firms in the economy; that all the households in the economy plan to work
The following events occur one at a time: (i) The price of crude oil rises. (ii) The price of a car rises. (iii) All speed limits on highways are abolished. (iv) Robots cut car production costs. Explain the effect of each of these events on the market for gasoline. The demand for gasoline _______. The supply of gasoline ______. The quantity of gasoline demanded _______. The quantity of gasoline supplied _______.
-decreases when the price of a car rises -decreases when the price of crude oil rises -decreases when the price of crude oil rises -increases when the speed limits are abolished
You plan to travel in Europe this summer. If you do, you won't be able to take your usual summer job that pays $9,000 for the summer, and you won't be able to live at home for free. The cost of transportation is $2,000, visas cost $100, and living expenses are $1,100. What is the opportunity cost of your plan to travel in Europe?
12,000 (9,000+ 2,00+ 1,100- 100= 12,000)
Indicate whether each of the following news items is a positive or a normative statement. 1. Upper A ban on smoking will lower the Medicare budget 2. The United States should spend more on the environment and less on space exploration 3.We need more police on inner dash city streets. 4.Cable subscribers are decreasing. Statement 1 is a ______ statement, and statement 2 is a ______ statement. Statement 3 is a ______ statement, and statement 4 is a ______ statement.
1. positive 2. normative 3. normative 4. postitive
Aaron plays basketball two nights a week and his current grade in economics is 65 percent. He decides to play basketball for three nights each week and his economics grade falls to 55 percent. The marginal cost to Aaron of playing basketball one more night each week is _______.
10 percentage points
If real GDP per person doubles in 20 years, then the annual growth rate of real GDP per person is ______ percent a year.
3.5
Hyperinflation is an inflation rate of _____ or higher that grinds the economy to a halt and causes a society to collapse
50 percent a month
Which of the following is an example of an incentive?
All conference volunteers would be offered free lunch on all three days.
Aqua Springs makes the following four statements about bottled spring water. Which statement best describes the firm's quantity supplied in the bottled water market?
At a price of $1 gallon, we plan to sell 2,000 gallons per day.
Jeb makes the following four statements about peanuts. Which statement best describes his quantity demanded in the peanut market?
At a price of $1 per pack, I plan to buy 2 packs of peanuts per week.
Which of the following is an example of investment?
Continental buying Airbus planes
Which of the following is an example of a final good or service?
Dan bought a Toyota Camry
Who in the following statements is a discouraged worker?
Dan is available to work but has not looked for a job in the past eight weeks because of repeated applications but no single offer.
______ is an example of ______.
an economics professor; labor
The alternative index, which might be least biased is the _______.
chained CPI because it uses current and previous period quantities
Choose the correct statement.
Each peak unemployment rate in the recessions of 1982, 1990-1991, and 2001 was lower than the previous one.
Choose the correct statement.
Entrepreneurs make business decisions
Choose the correct statement.
Entrepreneurship is the human resource that organizes labor, land, and capital
Which one of the following news headlines definitely concerns the social interest?
Food must be labeled with nutrition information
Complete the following sentence: ______ earns ______.
Howard Schultz, the head of Starbucks; profit
Which of the following statements describes a change in the quantity supplied and which describes a change in supply? I Farms are selling less chicken because the price of turkey has increased. II Farms are selling less chicken because the price of chicken has fallen. III Farms are selling more chicken because the price of chicken has risen. IV Farms are selling more chicken because the cost of chicken feed has fallen.
I and IV are changes in supply and II and III are changes in the quantity supplied.
Which of the following statements about the market for chicken describes a change in the quantity demanded and which describes a change in demand? I People are buying less chicken because the price of beef has fallen. II People are buying less chicken because the price of chicken has increased. III People are buying more chicken because the price of chicken has fallen. IV The cost of chicken feed has increased.
I is a change in demand and II and III are changes in the quantity demanded.
Which of the following statements is about a normal good, which is about an inferior good, which is about both, and which is about neither? I With incomes falling in the recession, people are buying more chicken. II People are buying more beef now that incomes have increased. III People are buying more chicken because the price of chicken has fallen. IV With higher incomes, people are switching from chicken to beef.
I is inferior, II is normal, III is neither, and IV is both
Which of the following illustrates a tradeoff?
I will study for my exam instead of going to a movie tonight
Which of the following statements by Aqua Springs demonstrates that the firm's selling plans obey the law of supply?
If the price of bottled water falls and all the other influences on our selling plans remain the same, we will cut back on production and lay off some workers
Which of the following illustrates scarcity?
Megan wants to buy a CD that costs $25 but has only $10 to spend.
Explain the influences on the pace of labor productivity growth. Choose the correct statement.
Most technologies are embodied in physical capital.
Which of the following news headlines does not deal with scarcity?
Netflix stock soars to a new high
Which of the following statements illustrates structural unemployment?
Outsourcing resulted in many job losses in the mid 2000s.
The core inflation rate is the annual percentage change in the _____ price index _____ the prices of food and energy.
PCE; excluding
Which of the following examples describes microeconomics?
People prefer buying iPhones over Nokia phones.
Which of the following is an example of consumption expenditure?
Rachel buying a TV
Which of the following statements illustrates frictional unemployment?
Robin is quitting his current job to find another that has better prospects.
Which of the following is an example of an intermediate good or service?
Samsung buys compressors for manufacturing refrigerators.
Which of the following is an example of government expenditure on goods and services?
The White House buying internet services.
Why would a corn farmer grow soybeans?
Soybeans and corn can be grown with the same resources, so they are substitutes in production.
Which of the following examples describes macroeconomics?
The U.S. unemployment rate has increased by 0.4 percent.
Which of the following statements by Tom demonstrates that his buying plans obey the law of demand?
The only thing that's changed is the price of textbooks: they've become more expensive and now I'm not buying as many. Your answer is correct.
Pam, Pru, and Pat are deciding how they will celebrate the New Year. Pam prefers to go on a cruise, is happy to go to Hawaii, but does not want to go skiing. Pru prefers to go skiing, is happy to go to Hawaii, but does not want to go on a cruise. Pat prefers to go to Hawaii or to take a cruise, but does not want to go skiing. Their decision is to go to Hawaii. What is the opportunity cost of the trip to Hawaii for each of them?
The opportunity cost for Pam and Pat is a cruise and for Pru it is skiing.
Choose the correct statement.
The opportunity cost of something is the highest-valued alternative that must be given up to get it.
Dairies make low-fat milk from full-cream milk. In the process of making low-fat milk, the dairies produce cream, which is made into ice cream. In the market for low-fat milk, which of the following events illustrates the law of supply?
The price of low-fat milk rises.
Which of the following is the opportunity cost of attending a ball game?
The things you would have bought with what you spent on the ticket and bus fare getting to the game plus the things you would alternatively have done with your time.
Which of the following news headlines does not illustrate the potential for conflict between self-interest and the social interest?
Toyota offers retirement incentive to 2,00 U.S. employees
The broader measure of unemployment that includes discouraged workers is _______.
U-4
The inflation rate is calculated as _________.
[(CPI this year − CPI last year)÷ CPI last year] ×100
Consider the influences on selling plans, and whether the influence changes supply.
a change in the price of rubber balls changes the quantity supplied of rubber balls
The source of the growth slowdown was _______.
a combination of a slowdown in the growth of work hours and a slowdown in the growth of labor productivity
A business cycle is _______.
a periodic but irregular up-and-down movement of total production and other measures of economic activity
According to classical growth theory, the growth of real GDP per person stops when _______.
a population explosion eventually occurs and real GDP per person returns to the subsistence level
GDP is calculated by _________.
adding indirect taxes less subsidies and depreciation to total income
A final good is _______. An example of a final good is _______.
an item that is bought by its final user during a specified time period; bread sold to a consumer
An intermediate good is _________. An example of an intermediate good is _______.
an item that is produced by one firm, bought by another firm, and used as a component of a final good or service; wheat sold to a baker to make bread
The growth rate is the _____ of a variable - the change in the level expressed as a percentage of the initial level.
annual percentage change
The natural unemployment rate is the unemployment rate when the economy is _____.
at full employment
Labor market equilibrium occurs _______.
at the real wage rate at which the quantity of labor demanded equals the quantity of labor supplied
The figure shows the production possibilities frontier for a firm that produces pet food. Complete the following sentences. Point A is ______ and point B is ______.
attainable; unatainablt
The price level is the _____.
average change in prices
The Consumer Price Index is a measure of the _____ of the prices paid by _____ consumers for a fixed market basket of consumption goods and services.
average; urban
Cyclical unemployment is the fluctuating unemployment over the business cycle that increases during _____ and decreases during _____.
a recession; an expansion
What are the alternative measures of the price level and how do they address the problem of the bias in the CPI? The four price indexes that are alternatives to the CPI are ______.
chained CPI, personal consumption expenditure deflator, GDP deflator, and core PCE
Gross domestic product and gross investment are measured ______. Net domestic product and net investment are measured ______.
before the depreciation of capital; after the depreciation of capital
Rational choice is a choice that uses the available resources to _____ of the person making the choice.
best achieve the objective
The law of demand applies to food because when the price of food rises, there is ______.
both a substitution effect and an income effect
The total amount spent _____ is called gross investment.
both buying new capital and replacing depreciated capital
The production possibilities frontier is the boundary between the combinations of goods and services that _____, given the available factors of production and the state of technology.
can be produced and the combinations that cannot be produced
Production efficiency is a situation in which the economy is getting all that it can from its resources and _____ produce more of one good or service without producing _____ of something else.
cannot; less
The natural unemployment rate _______.
changes as frictions and structural change occur in the economy
Operators of private dog parks in your city decide to eliminate their fees and allow dog owners to exercise their dogs in the parks at no charge.in the parks at no charge. This statement means that the incentive to exercise dogs at the dog park ______. The operators decision is a _______ decision.
changes; microeconomics
The income approach to measuring GDP sums together ______, which equals net domestic income at factor cost.
compensation of employees, net interest, rental income, corporate profits, and proprietors' income
A substitute is a good that is _____ another good, and a complement is a good that is _____ another good.
consumed in place of; consumed together with
The expenditure approach to measuring GDP sums together ______, and the largest component is ______.
consumption expenditure, investment, government expenditure on goods and services, and net exports; consumption expenditure
Growth rates are calculated in a similar manner for all variables. Real GDP growth rate = [(Real GDP in ______ year− Real GDP in ______ year)divided by ÷ Real GDP in ______ year ] × 100.
current; previous; previous
In June 2015, the U.S. unemployment rate was 5.2 percent. In June 2017, the unemployment rate was 4.4 percent. Predict what happened to unemployment between June 2015 and June 2017, if the labor force was constant. If the labor force remained constant between June 2015 and June 2017, then the number unemployed _______.
decreased
Dairies make low-fat milk from full-cream milk, and in the process they produce cream, which is made into ice cream. Explain the effect of the following events on the supply of low-fat milk. If the wage rate of dairy workers rises, the supply of low-fat milk _______.
decreases because the cost of producing low-fat milk increases
An increase in the price of a hot dog _______.
decreases the quantity of hot dogs demanded and results in a movement up along the demand curve for a hot dog
An increase in the population ______ the real wage rate and ______ the equilibrium quantity of labor.
decreases; increases
An economic model ______. An example of a model is ______.
describes some aspect of the economic world and includes only those features needed for the purpose a roadmap
Real GDP per person is real GDP
divided by the population
If the price of low-fat milk rises, the supply of low-fat milk _______.
does not change because the relationship between price and quantity supplied does not change
This PPF ______ illustrate scarcity because ______.
does; the firm cannot produce points outside the frontier and as the firm moves along the PPF, it cannot produce more dog biscuits without producing less cat food
A person is in the labor force if that person is _______.
either employed or unemployed
Which of the following pairs does not match? a. land; rent b. capital; interest c. entrepreneurship; rent d. labor; wages
entrepreneurship; rent
The phases of the business cycle are _______. The turning points of the business cycle are _______.
expansion and recession; peak and trough
Economic growth is the _______.
expansion of production possibilities
Net exports of goods and services is the value of _____ of goods and services _____ the value of _____ of goods and services.
exports; minus; imports
"As more people buy bicycles, the demand for bicycle helmets will increase and the price of a helmet will decrease. The fall in the price of a bicycle helmet will decrease the supply of bicycle helmets." This statement is ______ because ______.
false; an increase in demand for bicycle helmets does not decrease the price of a bicycle helmet and a decrease in the price of a bicycle helmet does not decrease the supply of bicycle helmets
In 2016, the price of corn fell and some corn farmers will switch from growing corn in 2017 to growing soybeans. Does this fact illustrate the law of demand or the law of supply? As the price of corn fell in 2016, _________.
farmers planned to decrease the quantity of corn supplied in 2017. This fact illustrates the law of supply.
Real GDP is the value of ______. Potential GDP is ______.
final goods and services produced in a given year when valued at the prices of a reference base year; the maximum level of real GDP that can be produced while avoiding shortages of labor, capital, land, and entrepreneurial ability that would bring rising inflation
Gross domestic product (GDP) is the market value of all the _____ goods and services produced _____ a country in a given time period.
final; within
GDP equals aggregate income and also equals aggregate expenditure because _______.
firms pay out as incomes (aggregate income) everything they receive from the sale of their output (aggregate expenditure)
Describe the trends and fluctuations in the U.S. employment-to-population ratio and the labor force participation rate from 1980 to 2017. The employment-to-population ratio _______
followed an upward trend before 2000 and then followed a downward trend
"Health dash care professionals and drug companies say Medicaid drug rebates should be available to everyone in need" involves a_______ question.
for whom
For each news item below, indicate whether it involves a what, how, or for whom question. "Oscar stars' swag dash bags may be taxable" involves a ______ question. "Microsoft announces new operating system" involves a ______ question.
for whom; what
The benefit of something is the _____. Benefit is determined by preferences - by what a person _____ and the intensity of those feelings.
gain or pleasure it brings; likes and dislikes
A tradeoff is _______.
giving up one thing to get somethings else
The aggregate production function is the relationship that tells us ______, when all other influences on production remain the same.
how real GDP changes as the quantity of labor changes
A person is not in the labor force if they are _____
in the working-age population but neither employed nor unemployed
As the average income in China continues to increase, explain how the following will change: a. The demand for beef b. The demand for rice As the average income in China continues to increase, we would expect the demand for beef to _______ and the demand for rice to _______.
increase if beef is a normal good; decrease if rice is an inferior good
In June 2015, the U.S. unemployment rate was 5.2 percent. In June 2017, the unemployment rate was 4.4 percent. Predict what happened to the labor force between June 2015 and June 2017 if unemployment was constant. If unemployment remained constant between June 2015 and June 2017, then the labor force ______.
increased
The equilibrium quantity of golf clubs _______.
increases
If the price of cream rises, the supply of low-fat milk _______.
increases because cream and low-fat milk are complements in production
Potential GDP ______ and potential GDP per hour of labor ______.
increases; decreases
An increase in labor productivity ______ the real wage rate and ______ the equilibrium quantity of labor.
increases; increases
The price of a music dash streaming subscription falls. What is the effect on the price and quantity of smartphones? The equilibrium quantity of smartphones _______ and the equilibrium price _______.
increases; rises
What does the demand curve tell us about the price that consumers are willing to pay? A demand curve _______.
is a marginal benefit curve
economics ________ .
is a subject that studies how we cope with scarcity.
A supply curve that illustrates the law of supply _______.
is upward sloping
The substitution effect influences food purchases because when the price of a certain food rises, other things remaining the same, ______. Consumers ______.
its relative price rises; purchase more of a different food that is less expensive
The key proposition of new growth theory that makes growth persist is that ______ is not subject to diminishing returns.
knowledge capital
A movie star is an example of the factor of production_______.
labor
Upper A dog trainer is an example of the factor of production_______.
labor
The unemployment rate is the percentage of the people in the _____ who are unemployed.
labor force
Which of the following pairs does not match?
labor; interest
factors of production are grouped into four categories, which are _______.
land, labor, capital, and entrepreneurship
Real GDP is calculated by _______.
summing together the value of the year's production using the prices of the reference base year
The quantity supplied of a good or service is ______.
measured as an amount per unit of time
Think about the following news items. Which items involve a microeconomic issue and which involve a macroeconomic issue? A.Pay to rise for millions as 19 states increase minimum wage B.7 ways streaming music will change in 2017 C.More Americans are satisfied with their standard of living than eight years ago D. Manufacturing production in the U.S. rises for sixth straight month Statement A involves a ______ issue. Statement B involves a ______ issue. Statement C involves a ______ issue. Statement D involves a ______ issue.
micro; micro macro; macro
An increase in the demand for golf clubs and an increase in the supply of golf clubs occur together. What is the effect on the price and quantity of golf clubs? An increaseAn increase in the demand for golf clubs together with an increase in the supply of golf clubs ______ create a surplus or a shortage of golf clubs at the original price. The equilibrium price of golf clubs ______.
might; might fall, rise, or not change
Economics is used as a policy tool when economists _______.
model different economic proposals proposed by government
To disentangle cause and effect, economists use economic models and use _______ to test the predictions of those models.
natural experiments, statistical investigations, and perform economic experiments
When the unemployment rate is greater than the natural unemployment rate, the output gap is _______. When the unemployment rate is less than the natural unemployment rate, the output gap is _______.
negative; positive
The key idea of classical growth theory that leads to the dismal outcome is that ______.
no matter how much technological change occurs, real GDP per person is always pushed back toward the subsistence level
The labor force is the number of people employed plus the _____.
number unemployed
A rational choice is _______.
one that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice
The chained CPI _______.
overcomes the sources of bias in the CPI by incorporating substitutions and using current and previous period quantities
The equilibrium price is the best deal available for both buyers and sellers because buyers ______ and sellers ______.
pay the highest price they are willing to pay; receive the lowest price at which they are willing to sell
Some unemployment is unavoidable because ______.
people are making transitions through the stages of life and businesses are making transitions
Unemployment arises when ______.
people leave their jobs and spend time searching for another job that better suits their abilities
The working-age population is the total number of _____ aged _____ years and over who are not in jail, hospital, or some other form of institutional care or in the U.S. Armed Forces.
people; 16
According to new growth theory, the growth of real GDP per person _______.
persists indefinitely
Once the preconditions for growth are in place, the influences on the pace of labour productivity growth are _______.
physical capital growth, human capital growth, and technological advances
The output gap is real GDP minus _____ expressed as a percentage of _____.
potential GDP; potential GDP
The inflation rate is the percentage change in the _____ from one year to the next. Deflation is a situation in which the _____ is _____ and the inflation rate is _____.
price level; price level; falling; negative
A substitute in production is a good that is _____ another good, and a complement in production is a good that is _____ another good.
produced in place of; produced together with
Domestic product is _______. National product is _______.
production within a country; the value of goods and services produced anywhere in the world by the residents of a nation
PPP is _______.
purchasing power parity
A demand curve shows the relation between the _____ and _____, when all other influences on buying plans remain the same.
quantity demanded of a good; its price
A supply curve shows the relationship between the ______ and _____ when all other influences on selling plans remain the same.
quantity supplied of a good; its price
The output gap is the gap between _______.
real GDP and potential GDP
To measure the standard of living, we use _____ .
real GDP per person
Neoclassical growth theory is the proposition that _____ grows because technological change induces saving and investment that make _____ grow.
real GDP per person; capital per hour of labor
Classical growth theory is the view that the growth of _____ is temporary and that when it rises above the subsistence level, a population explosion _____.
real GDP per person; eventually brings it back to the subsistence level
New growth theory holds that _____ grows because of the choices people make in the pursuit of profit and that growth will _____.
real GDP per person; persist indefinitely
The demand for labor is the relationship between the quantity of labor demanded and the ______. The supply of labor is the relationship between the quantity of labor supplied and the ______.
real wage rate; real wage rate
When the CPI _______.
rises slowly, the inflation rate is low
The labor-force participation rate _______.
shows a steep downward decrease in 2008 and 2009
A demand curve that illustrates the law of demand ______.
shows that the quantity demanded decreases at the price rises
Economics is the _____ the choices that individuals, businesses, governments, and entire societies make as they _____, and the influences on those choices, and the arrangements that coordinate them.
social science that studies; cope with scarcity
Zach is an engineering student who is considering taking an extra course in SpanishSpanish. An incentive that might encourage him to take the SpanishSpanish course is _______.
softer grading in Spanish
Which of the following statements are positive? 1. Most iPods are purchased by teenagers 2. The greatest number of accidents are caused by drunk drivers 3. Drunk drivers should have their licenses suspended for the remainder of their lives 4. Greece is the best place to vacation
statements 1 and 2 are positive
Choose the correct statements. a. There is no relationship between the opportunity cost of producing an additional good measured on the x-axis and the opportunity cost of producing an additional good measured on the y-axis. b. Opportunity cost of a good cannot be accurately measured along a PPF because the PPF shows only two goods. c. Opportunity cost is a ratio. d. The opportunity cost of producing more x, illustrated as a movement between two points on the PPF is equal to the inverse of the opportunity cost of producing more y, illustrated as a movement between the same two points in the nbsp opposite direction.
statements c and d are correct
Choose the statement that is incorrect.
t is never a rational choice to decide to enter the labor force immediately following high school.
According to neoclassical growth theory, the fundamental cause of economic growth is ______.
technological change, which induces saving and investment that make capital per hour of labor grow
According to neoclassical growth theory, the growth of real GDP per person stops when _______.
technology stops advancing
The growth rate of real GDP per person _______.
tells us about changes in the standard of living and the growth rate of real GDP tells us how rapidly the total economy is expanding
A supply curve _______.
tells us the lowest price at which someone is willing to sell
Exports of goods and services are items that firms in _____ produce and sell to _____.
the United States; any other country
The factors that might make the natural unemployment rate change include _______.
the age distribution of the population, the scale of structural change, the real wage rate, and unemployment benefits
Define the quantity demanded of a good or service. The quantity demanded of a good or service is ______.
the amount that consumers plan to buy during a given time period at a particular price
The growth rate of real GDP contributes to an improved standard of living because _______.
the average person enjoys more consumption goods and services and more resources are devoted to health care, research, and environmental protection
What problems arise from the CPI bias? Choose the correct statement.
the bias in the CPI increases government outlays
Economists do jobs that require _______.
the collection and analysis of data, the ability to predict future trends, and study to determine ways of using resources more efficiently
Economic growth is _______.
the expansion of production possibilities
Cyclical unemployment is _______. An example of cyclical unemployment is _______.
the higher than normal unemployment at a business cycle trough and the lower the normal unemployment at a business cycle peak; a restaurant worker who loses her job because of a downturn in the economy
Gross domestic product is ______.
the market value of all the final goods and services produced within a country in a given time period
The four main ways in which the CPI is an upward-biased measure of the price level are through _______.
the new goods bias, the quality change bias, the commodity substitution bias, and the outlet substitution bias
Why is the price at which the quantity demanded equals the quantity supplied the equilibrium price? The price at which the quantity demanded equals the quantity supplied is the equilibrium price because _______.
the plans of producers and consumers are coordinated and there is no influence on the price to change
Why does demand not change when the price of a good changes with no change in the other influences on buying plans? Consider the demand for hot dogs. The demand for hot dogs does not change when a change in _______ occurs.
the price of a hot dog
The income effect influences food purchases because when the price of a certain food rises, other things remaining the same, ______. Consumers ______.
the price rises relative to income; cannot afford to buy all the things they previously bought, so they normally buy less of the food that has experienced the price rise
The equilibrium price is the price at which _____ and the equilibrium quantity is the _____.
the quantity demanded equals the quantity supplied; the quantity bought and sold at the equilibrium price
Demand is _____ , when all other influences on buying plans remain the same.
the relationship between the quantity demanded of a good and the price of the good
Supply is _____, when all other influences on buying plans remain the same.
the relationship between the quantity supplied of a good and the price of the good
Real GDP might be an unreliable indicator of the standard of living because ______.
the standard of living depends on many factors, some of which are not part of real GDP
The two broad sources of potential GDP growth are growth of ______ and growth of ______.
the supply of labor; labor productivity
The natural unemployment rate is _______.
the unemployment rate when the economy is at full employment
Frictional unemployment is _______. An example of frictional unemployment is _______.
the unemployment that arises from normal labor turnoverlong dash—from people entering and leaving the labor force and from the ongoing creation and destruction of jobs; new college graduates looking for work
The amount by which _____ is called net investment.
the value of capital
Nominal GDP is ______. Real GDP is ______.
the value of the final goods and services produced in a given year valued at the prices of that year; the value of final goods and services produced in a given year when valued at the prices of a reference base year
The unemployment rate is never zero, even at full employment because ______.
there are always new workers entering the labor market to search for work, workers leaving one job to search for another job, and workers who have been laid off and are searching for another job
Potential GDP is determined by ______.
the full-employment quantity of labor
Alternative price indexes can avoid the bias by _______
using current and previous period quantities
An unemployed person ______.
wants work, has made specific efforts to find a job within the previous four weeks, or is waiting to be called back to a job from which he or she has been laid off, or is waiting to start a new job within 30 days
The graph shows a production possibilities frontier. Complete the following sentence. Production efficiency is achieved at points A, B, and C because to increase the production of x as we move from A to B to C, _______ .
we are giving up the minimum amount of y possible to increase the production of x
When we use PPP we can make valid international comparisons of real GDP because ______.
we calculate the value of goods and services produced in two countries using the same prices
The what, how, and for whom questions in economics are questions about ______.
what goods and services do we produce, how do we use the factors of production to produce these goods, and who consumes the goods and services that are produced
For each news item below, indicate whether it involves a what, how, or for whom question. "Cancer scientists hail break through treatment" involves a ______ question. "Stores use computers to keep their inventory records" involves a ______ question.
what; how
Choose the correct statement.
when the relative prices change and people substitute to the lower priced good, the CPI ignores the substitution and the CPI overstates inflation
All of the following are consequences of scarcity faced by people in the United States except deciding _______.
whether a tomato is a fruit or a vegetable
The sources of economic growth are _______.
work hours growth and labor productivity growth
The range of economists' pay is _______ and the median level of pay is _______.
$41,226 to $124,177; $72,279
CPI =
(Cost of CPI basket at current-period prices ÷ Cost of CPI basket at base-period prices) ×100
A choice on the margin is a choice that is made by comparing all the relevant _____ systematically and _____. Marginal cost is the _____ that arises from one unit _____ in an activity. Marginal benefit is the _____ that arises from one unit _____ in an activity.
alternatives; incrementally; opportunity cost; increase; benefit; increase
A marginally attached worker is a person who does not have a job, is _____ and _____ to work, has _____ specific efforts to find a job within the previous _____ weeks, but has looked for work sometime in the recent past.
available; willing; not made; four
A smartphone and a text message are ______. A text message and an email are ______.
complements; substitutes
Pizza and sausage are ______. Wheat and corn are ______.
complements; substitutes
The most important skills needed for an economics job include _______.
critical-thinking skills and math skills
Full employment is when there is no _____ unemployment or, equivalently, when all the unemployment is _____ or _____.
cyclical; frictional; structural
Depreciation is the _____ in the value of _____ that results from its use and from obsolescence.
decrease; capital
In January 2010, the price of gasoline was $2.70 a gallon. By spring 2010, the price had increased to $3.00 a gallon. Assume that there were no changes in average income, population, or any other influence on buying plans. Explain how the rise in the price of gasoline would affect a. The demand for gasoline. b. The quantity of gasoline demanded. Given the law of demand, you would expect the rise in the price of gasoline to ______ the quantity of gasoline demanded and ______ the demand for gasoline.
decrease; not change
An increase in discouraged workers ______ the official unemployment rate and ______ the broader measure of unemployment that includes this category
decreases; does not change
The Rule of 70 is the number of years it takes for the level of any variable to double. It is approximately 70 _____ by the annual percentage _____.
divided; growth rate of the variable
When a surplus arises, the price ______ to its equilibrium, which _______.
falls; increases the quantity demanded and decreases the quantity supplied
Real GDP is the value of the _____ goods and services produced in a given year expressed in terms of the prices in _____ year. Nominal GDP is the value of the _____ goods and services produced in a given year expressed in terms of the prices of _____ year.
final; a base; final; that same
The preconditions for labor productivity growth are ______.
firms, markets, property rights, and money
The law of supply states that other things remaining the same, the _______ the price of a good, the _______.
higher; greater is the quantity supplied
Imports of goods and services are items that _____ in the United States _____ the rest of the world.
households, firms, and governments; buy from
An increase in labor productivity _______ potential GDP and ______ potential GDP per hour of labor.
increases; increases
Toyota plans to stop exporting the Lexus RX to North America from Japan, building all of the vehicles in North America. The company will invest $98.3 million to boost its production capacity. Honda Motor Co. will shift a major chunk of its manufacturing to North America and increase its production capacity by as much as 40 percent Source: The Wall Street Journal, August 8, 2012 Explain how Toyota's and Honda's plans will influence U.S. GDP and its components. Assuming that U.S. consumers buy the same number of Lexus RX models and Hondas regardless of where they are built, U.S. GDP ______ when Toyota builds the Lexus RX in the United States and Honda increases production in the United States because ______.
increases; net exports and investment increase
Costs Soar for London Olympics The regeneration of East London, the site of the 2012 Olympic Games, is set to add extra pound£1.5 billion to taxpayers' bill. Read the news clip, then answer the following question. The cost of regenerating East London ______ an opportunity cost of hosting the 2012 Olympic Games ______.
is; if the regeneration of East London would not occur unless London hosted the 2012 Olympics
Net domestic income at factor cost _______ indirect taxes less subsidies _______ depreciation gives GDP (income approach).
plus; plus
When a shortage arises, the price ______ to its equilibrium, which _______.
rises; decreases the quantity demanded and increases the quantity supplied
Pasta and pizza are ______. A video game and a laptop are ______.
substitutes; complements
Which of the following goods are likely substitutes and which are likely complements? Coal and oil are ______. A skateboard and roller blades are ______.
substitutes; substitutes
The labor force participation rate is the percentage of the _____ who are members of the labor force.
working-age population
