Macroeconomics final exam
An absolute advantage in cooking, cleaning, and car repair
"My brother is better at cooking, better at cleaning, and better at fixing the car than I am." Relative to me, my brother has...
Economics is what?
A social science
A higher saving rate increases investment spending
Saving is important for economic growth because why?
Spill over to others, including foreign residents
The benefits from research and development activities do what?
Buyers and sellers synchronize their decisions through the price system
What does the rationing function of prices mean?
Funds received by a college student for working in the college dining hall
Which of the following transactions is included in GDP?
A computer tablet
Which of the following would most likely be defined as a final good?
A leftward shift in the demand for tennis rackets
A significant increase in the price of tennis balls would most likely lead to what?
They make decisions based on their own self interest
According to economic theory, how do people make decisions?
Are classified as unemployed
According to the bureau of labor statistics, if you voluntarily leave your job to search for another job then you are what?
Producers provide less of a good when the price decreases
According to the law of supply...
China
According to the world bank and the international monetary fund, which of the following countries has shown the greatest rate of economic growth in the past two decades?
Production
Activities designed to convert resources into goods and services is known as what?
The market clearing price
Adding the quantities demanded by all consumers at every price will yield what?
A shift in the demand curve to the right
An increase in demand is shown graphically by what?
A price ceiling that will likely lead to a shortage of shirts on the market
Assume that the market clearing price for a shirt is $20, but that the government sets maximum price that can be charged for the shirt at $15. This is an example of what?
How individuals, businesses, and governments make choices
Because resources are scarce to relative wants, the study of economics concerns what?
Fixed investment
Capital purchases by businesses of newly produced durables is known as what?
3.5-4%
Currently, economists estimate that the natural rate of unemployment in the United States is about what?
Cyclical unemployment
Do United States experienced a deep recession between 2007 and 2009. Which type of unemployment would most likely increase during that period of recession?
Always equals 100
For the CPI the value of the index in the base year is what?
An outward shift of the production possibilities curve
Graphically, economic growth is represented as what?
The demand for gasoline decrease, and the effect of the decrease in demand on the gasoline price was greater than the price effect of the decrease in supply.
In 2010, a British petroleum oil rig exploded in the golf of Mexico. The explosion resulted in a major oil spill and a decrease in the supply of oil. At the same time, the average price of gasoline decreased. Which of the following best explains the decrease in the price of gasoline?
160
In 2015, the price for a market basket of consumer goods is $1600. In the base year, the cost of the identical market basket was $1000. Price index in this case is what?
buyers and sellers of goods and services
In an economy that relies primarily on the market system, the what, how and for whom questions that all economies must make are primarily determined by what?
The quantities in the market basket stay the same while prices differ
In computing a price index...
The supply curve for USA produced refrigerators to shift left
In response to USA trade tariffs the price of steel used to produce USA manufactured refrigerators will cause what?
A decrease in demand with no change in supply
In which of the following situations will both market clearing price and the equilibrium quantity decrease?
Increased
Since 1950, it can be observed that the female participation rate in our labor force has what?
Higher in country A
Suppose country a and country b each have the same real gross domestic product, equal to 440 billion. Country a has 100 million people and country B has 175 million people. in this situation, per capita real GDP is what?
The demand of peanut butter will rise
Suppose that a new study finds the eating more peanut butter will improve a persons health. As a result...
Intermediate good
Suppose you buy a new Tesla sedan. The battery that comes with the car is what?
Human capital
The accumulated training and education that you have is what?
Limited resources and unlimited wants
The basic economic problem is a situation of what?
Has a negative slope
The law of demand implies that the demand curve has what?
An inverse relationship between price and quantity demanded
The law of demand shows that there is what?
The mix of current resources that utilizes all available inputs using current technology
The production possibilities curve represents the maximum feasible production combinations resulting from what?
7%
The real rate of interest equals 5% and the expected rate of inflation equals 2% therefore the nominal rate of interest equals what?
Computed by taking the nominal value and dividing by the appropriate price index
The real value of an economic variable is what?
Columbia has a comparative advantage in producing coffee relative to the United States
The reason that most coffee that is consumed in the United States comes from Columbia is that...
An increase in price will lead to an increase in quantity supplied
The relationship between quantity supplied and the price of output is such that...
The products final price
The sum of the value added at all stages of production for a product is what?
Other things being equal
The term Ceteris paribus is an economic assumption that means what?
The growth in per capita real GDP
The variable used to measure economic growth is what?
The opportunity cost of changing oil is higher for Tiger Woods than for the garage mechanic
Tiger Woods, a professional golfer, hires a garage mechanic to change the motor oil of his car even though he can do the work himself. Which of the following best explains why Tiger Woods does not change the oil himself?
Be at least 16, out of work, and actively seeking employment
To be counted as unemployed in the United States a person has to be what?
Understanding the number of people out of work, because discouraged workers are excluded in the statistics
Unemployment statistics are often criticized for what?
The average rate of all prices is declining
What happens during deflation?
An automatic increase in wages that takes into account increases in price level
What is a COLA?
The transformation of an invention into something useful
What is an innovation?
Decision making by individual businesses and consumers
What is macro economics the study of?
A result of the seasonal pattern of work in specific industries
What is seasonal unemployment?
A statistical measure of a weighted average prices of a specific set of goods and services purchased by consumers in urban areas
What is the consumer price index?
C + I+G+X
What is the proper formula for computing the GDP using the expenditure approach?
Command and control
What is the type of economic system that relies on one central authority to make economic decisions?
Structural unemployment
What is unemployment that results from a mismatch of workers abilities and skills with current requirements of employers?
The current price of a good is above its market clearing price
What situation gives rise to a surplus?
Theory A predicts real world events better than does theory B
What would lead an economist to conclude that theory a is superior to theory B?
Shift outward in the future
When an economy sacrifice production of consumption goods to produce more capital goods this year, we would expect that the production possibilities curve to...
They expect to earn rewards from successful research and development
When are firms more likely to devote resources to research and development?
A system of private property rights permits entrepreneurs to capture the rewards from their entrepreneurial activities
When does entrepreneurship function better?
Real GDP per capita
When economic growth is compared between countries, the best Measure to use is what?
The great depression
When was the highest measured rate of unemployment in the United States?
People get discouraged and quit looking for work
When will the unemployment rate decrease?
The GDP deflator
Which is the broadest price index reported in the United States?
Full-time students who are not working or looking for work
Which of the following groups would not be considered as part of the civilian labor force?
Reduction in illiteracy, reduction in poverty, and improved health
Which of the following is a benefit of economic growth?
Technological advances in production
Which of the following is a non-price determinant of supply?
The price of eggs increases, the quantity demanded of bacon will fall
Which of the following is a positive economic statement?
Public school teachers are not paid enough
Which of the following is an example of a normative statement?
Quantity supplied is equal to quantity demand
Which of the following occurs when the market is in equilibrium?
Consumption expenditures
Which of the following spending components makes up the largest percentage of gross domestic product?
A shortage occurs when the quantity demanded is greater than the quantity supplied at a price below the market clearing price
Which of the following statements is correct?
People or businesses who are reaping borrowed funds that have a fixed rate of interest
Who does unanticipated inflation benefit?
Because exports account for those goods that were produced in the economy but that were not devoted to domestic consumption, Used for domestic investment, or provided as government goods
Why are exports added to, rather than subtracted from, the expenditure components to arrive at GDP using the expenditure method?
Because limited resources mean all the goods we want cannot be obtained
Why is it that all of our wants cannot be satisfied?
Provides a positive incentive because it rewards people for recycling
A five dollar per month discount on the garbage collection for customers that recycle glass, plastic, cans, paper and cardboard
In the labor force his unemployment was involuntarily terminated
A job loser is an individual who what?
Free markets and government control
A mixed economic system is best described as an economy with a mix of what?
Increased
If your income rises at 5% and inflation has risen at 2% then the purchasing power of your income has what?
The dollar value of final goods and services produced in the United States
Gross domestic product is a measure of what?
To take vacations that require driving more miles
Hi gasoline prices give people all of the following incentives except what?
By supply and demand
How are the signals in markets determined?
Summing the amount supplied by individual producers at various prices
How is market supply obtained?
one dollar
How much of each dollar spent by consumer ultimately becomes income to someone else?
Is not included in gross domestic product
If Jack refinished his basement himself, the value of his work
He is not part of the labor force
If Tim works at home taking care of the household...
It can increase the production of both goods by putting unemployed resources to work
If a country is currently producing inside its production possibilities curve...
Be a straight line
If all resources were perfectly adaptable for alternative uses, the production possibilities curve would do what?
The effect on the market clearance price is indeterminate, and the equilibrium quantity definitely rises
If supply and demand both simultaneously increased then what happens?
Decrease, assuming apples and pears are substitutes
If the price of apples goes down then the demand for pears will what?
Specialization and gains from comparative advantage
International trade between two nations increases the standard of living of both nations due to...
Real output per labor hour
Labor productivity measures what?
Performance of the economy as a whole
Macro economics is concerned with studying what?
Structurally unemployed
Mrs.. Garcia lost her job at a textile mill due to competition from cheaper imported goods. She would be classified as what?
And approach to measuring any economies aggregate performance
National income accounting is what?
Land and natural resources
Natural gas found in Virginia's middle Peninsula and Northern neck counties is an example of what?
Forgoing the nap
On an afternoon that a class meets, you could alternatively study for an exam that will take place in another class the next morning, go to a movie with a friend, or, most desirable to you at present, take a nap. The opportunity cost of attending the afternoon class is what?
The next highest valued alternative when a choice is made
Opportunity cost is best defined as what?
Choices
Opportunity costs arise from what?