Macroeconomics Midterm
Dependencies between your own choices reflect the fact that: a. society has limited resources. b. resources can be spread across time. c. you have limited resources. d. resources are spread across varying markets.
c. you have limited resources
Consider the data in the table. The price of gasoline is $3.99 per gallon at the gas station. If Rexhall Fuel Supplies is a rational seller, how many gallons of gasoline should this seller be willing to sell? a. 20 million gallons per week b. 14 million gallons per week c. 30 million gallons per week d. 42 million gallons per week
a. 20 million gallons per week
Refer to the following table that shows monthly data for Japan. What was the unemployment rate in January 2014? a. 3.7% b. 3% c. 2.8% d. 3.3%
a. 3.7%
Consider the data shown in the table. Assume that the economy produces only textbooks. What is the growth rate of real GDP between the two years using last year as the base year? a. 5% b. 15% c. 10% d. 2.5%
a. 5%
Which of the following lists only the factors that would cause a decrease in the supply of an item? a. A rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in-production. b. A decrease in the number of sellers in the market; a fall in the price of a complement-in-production; an increase in productivity. c. A fall in input prices; an increase in productivity; a fall in the price of a substitute-in-production. d. A rise in the price of a substitute-in-production; a rise in the price of a complement-in-production; an expectation that the price of the item will rise in the future.
a. A rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in-production.
Consider the following graphs, which are discussed in the textbook. Focus on the graph that looks at the relationship between GDP per person and infant deaths per 1,000 live births. What can explain this relationship? a. As real GDP per person rises, maternal and fetal health increase due to better health care, education, sanitation, and nutrition. b. Infant mortality declines only when GDP per person is above $25,000 per year. c. As life expectancy increases, GDP per person increases at the same rate. d. As real GDP per person rises, infant mortality rises.
a. As real GDP per person rises, maternal and fetal health increase due to better health care, education, sanitation, and nutrition.
The cost-benefit principle states that _____ are the incentives that shape decisions. a. Cost and Benefits b. Incomes c. Opportunity Costs d. Framing Effects
a. Cost and Benefits
Which of the following would be considered in a cost-benefit analysis to decide if a person should cycle to work or ride the subway? (i) The air pollution that the cyclist has to breathe. (ii) The cost of subway tickets. (iii) The time it takes to cycle to work versus the time it takes to ride the subway to work. (iv) The cost per gallon of gasoline. a. (i), (ii), and (iv) b. (i), (ii) and (iii) c. (i), (ii), (iii) and (iv) d. (i), (iii) and (iv)
b. (i), (ii) and (iii)
Based on the following statistics, how much are net exports? a. $2.357 trillion b. -$0.575 trillion c. $20.67 trillion d. $0.575 trillion
b. -$0.575 trillion
The table contains the monthly demand for soda cans for four students. If these four students make up the entire market, what is the total monthly market demand for soda at $1.50 per can? a. 125 cans b. 148 cans c. 99 cans d. 45 cans
b. 148 cans
What is the difference between microeconomics and macroeconomics? a. Microeconomics is the study of the economy as a whole, whereas macroeconomics is the study of individual decisions in specific markets. b. Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of the economy as a whole. c. Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of government policies. d. Microeconomics focuses only on the forces of individual demand and individual supply, whereas macroeconomics focuses only on policy making for the economy.
b. Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of the economy as a whole.
You eat M&Ms every day. When you go to the store to buy some, you find that M&Ms are more expensive than they were last month. Which of the following could explain why M&Ms are more expensive? a. Consumers are now purchasing fewer M&Ms compared to other types of chocolates. b. The supply of cacao beans, used to produce chocolate, has fallen around the world. c. A new study finds that the benefits of eating chocolate are not as great as previously thought. d. A new robot has been installed at the Mars chocolate company that reduces the time needed to produce M&Ms by half.
b. The supply of cacao beans, used to produce chocolate, has fallen around the world.
When there is a shortage of highly skilled workers in a particular region, the: a. demand for skills education decreases. b. demand for skills education increases. c. supply of jobs for highly skilled workers increases. d. demand for highly skilled workers increases.
b. demand for skills education increases.
You are considering whether you should go out to dinner at a restaurant with your friend. The meal is expected to cost you $50, you typically leave a 20% tip, and a round-trip Uber ride will cost you $15. You value the restaurant meal at $30 and the time spent with your friend at $50. You should ____ to dinner with your friend because the benefit of doing so is _____ than the cost. a. not go; less b. go; greater c. go; less d. not go; greater
b. go; greater
The principle that your best choice depends on your other choices, the choices others make, developments in other markets, and expectations about the future is known as the _____ principle. a. cost-benefit b. interdependence c. marginal d. opportunity cost
b. interdependence
A market consists of ten similar suppliers that are making the same supply decisions. To find the market supply of these ten suppliers, you: a. find the average quantity produced by the ten suppliers. b. multiply the individual supply of one of the suppliers by ten. c. take one-tenth of the individual supply of each supplier and add it up. d. take the individual supply of one supplier.
b. multiply the individual supply of one of the suppliers by ten.
When you calculate marginal costs, they should include: a. the market price of the product. b. only variable costs. c. both the variable and fixed costs. d. only fixed costs.
b. only variable costs.
An underemployed person is one who is: a. employed in the underground economy. b. working but whose skills are not fully utilized. c. cyclically unemployed. d. retired or outside of the labor force.
b. working but whose skills are not fully utilized.
Which of the following scenarios depicts a seller who is following the Rational Rule for Sellers? a. Mindy sets up a lemonade stand and calculates the cost of an additional cup of lemonade at 50 cents, and sells it for 25 cents. b. An auto-rickshaw driver in New Delhi, India, calculates a trip to have a marginal cost of 350 rupees and accepts a ride request for 315 rupees. c. American Airlines determines the marginal cost of an extra passenger to be $75 and sells a discount seat for $250. d. Andy's Diner finds that the marginal cost of a fish and chips meal is $7 and lists the item for sale at $6.50.
c. American Airlines determines the marginal cost of an extra passenger to be $75 and sells a discount seat for $250.
A bakery hires a baker who can make 15 cakes per day. The bakery then decides to hire a second baker who will use the kitchen at the same time as the first baker. The bakery finds that the second baker can produce only an additional nine cakes per day. What concept does this scenario illustrate? a. The opportunity cost principle b. The marginal principle c. Diminishing marginal product d. The cost-benefit principle
c. Diminishing marginal product
The accompanying table provides data for five different oatmeal cookie sellers. Out of the sellers listed, who all are following the law of supply? a. Ren only b. Len, Ken, Ren, and Ben c. Len, Ren, and Jen d. Ken and Ben
c. Len, Ren, and Jen
Which principle tells you that the true cost of something is the next best alternative you have to give up to get it? a. The interdependence principle. b. The marginal principle c. The opportunity cost principle. d. The cost-benefit principle.
c. The opportunity cost principle
Joshua Murphy is planning on studying late into the night for his economics exam. How many cups of coffee should he buy tonight? Joshua should keep buying coffee throughout the evening until the marginal: a. benefit of purchasing one more coffee is less than the marginal cost. b. cost of purchasing one more coffee is positive. c. benefit of purchasing one more coffee equals the marginal cost. d. benefit of purchasing one more coffee is positive.
c. benefit of purchasing one more coffee equals the marginal cost.
As a result of technological innovation, automated water pumps are being installed on the farms of Kenyan tomato farmers. As a result of the increased use of automated water pumps, the equilibrium price of tomatoes will: a. rise, due to a fall in supply. b. rise, due to a rise in demand. c. fall, due to a rise in supply. d. fall, due to a fall in demand.
c. fall, due to a rise in supply.
Which of the following is a scaled number? a. the sum of all incomes earned in the economy b. the country's national debt c. government budget deficit as a percentage of GDP d. total tax revenues in the economy
c. government budget deficit as a percentage of GDP
Dell and Apple are competitors in the computer market. Which graph illustrates the effect of a rise in the price of Dell computers on the demand for Apple computers? a. Graph A b. Graph C c. Graph D d. Graph B
c. graph D
When you get hired for a well-paying job, you will most likely view older used cars as a. complementary goods. b. substitute goods. c. inferior goods. d. normal goods.
c. inferior goods
The equilibrium unemployment rate is also known as the _____ unemployment rate. a. cyclical b. frictional c. long-run d. structural
c. long-run
Consider the data shown in the table. Assume that the economy produces only frozen fish. What is the real GDP for last year using this year as the base year? a. $180,000 b. $191,625 c. $194,250 d. $185,000
d. $185,000
Below is U.S. economic data for 2018. What was total spending? a. $21.86 trillion b. $23.73 trillion c. $21.22 trillion d. $20.58 trillion
d. $20.58 trillion
Use the table to answer the question. What is the equilibrium price in this market? a. $7 b. $3 c. $11 d. $9
d. $9
During the Great Recession, the United States Congress increased the length of time that unemployment benefits could be received from 52 weeks to 99 weeks. This change caused: a. an increase in the number of employed people in the economy. b. a decrease in unemployment. c. an increase in the labor force participation rate. d. an increase in the costs for the government.
d. an increase in the costs for the government.
The key to using the cost-benefit principle is to think about _____ aspects of a decision. a. Only Nonfinancial b. Neither financial nor nonfinancial c. Only financial d. both financial and nonfinancial
d. both financial and nonfinancial
In a voluntary economic transaction between a buyer and a seller, _____ can earn economic surplus from the transaction. a. only the buyer b. neither the buyer nor the seller c. only the seller d. both the buyer and the seller
d. both the buyer and the seller
An equilibrium price is: a. the price that occurs when there is a surplus. b. the price that prevails when there is a shortage. c. the price that prevails when quantity supplied is less than quantity demanded. d. determined by the intersection of the demand and supply curves.
d. determined by the intersection of the demand and supply curves.
According to the marginal principle, keep increasing quantity until the marginal benefit of an additional item is _____ the marginal cost of an additional item. a. greater than or less than b. greater than c. less than d. equal to
d. equal to
Diminishing marginal benefit: a. is when buying an additional item yields a larger marginal benefit than the previous item. b. is not important in determining a consumer's purchase decision. c. is when consumers do not follow the rational rule. d. is when buying an additional item yields a smaller marginal benefit than the previous item.
d. is when buying an additional items yields a smaller marginal benefit than the pervious item.
A rational buyer will: a. not consider costs versus benefits when purchasing a product. b. buy a product until the marginal benefit of consuming the product is less than the price of the product. c. buy the product only when the marginal benefit of consuming the product is twice as much as the price of the product. d. keep buying a product until marginal benefit equals price.
d. keep buying a product until marginal benefit equals price.
When plotting a demand curve a. quantity demanded is on the vertical axis. b. quantity supplied is on the vertical axis. c. price is on the horizontal axis. d. price is on the vertical axis.
d. price is on the vertical axis.
Which of the following is an example of transfer payments? a. military salaries b. interest earned on savings in banks c. government loans d. unemployment benefits
d. unemployment benefits
An equilibrium in a market occurs: a. when suppliers have sold all the goods and services that they have produced. b. at the halfway point on the price axis. c. at the halfway point on a demand curve. d. when the quantity supplied equals the quantity demanded.
d. when the quantity supplied equals the quantity demanded.
Which of the following is an example of a durable good? a. fresh flowers from the florist b. a soft drink c. your haircut d. your new car
d. your new car
In 1971, the cost of a four-year college degree from a public university was about $1,410. The consumer price index was 40.48 in January 1971. If the current consumer price index is 251.1, what is the approximate cost of the four-year degree in current dollars? a. $8,746 b. $1,410 c. $227 d. $9,422
a. $8,746
In order to be considered unemployed, a person must: (i) be part of the working-age population. (ii) be actively looking for work. (iii) not have been self-employed. (iv) must be noninstitutionalized. a. (i), (ii), and (iv) b. (iii) and (iv) c. (ii) and (iv) d. (i) and (ii)
a. (i), (ii), and (iv)
The table shows consumer price index data for the United Kingdom. Based on this information, what is the rate of inflation in 2016? a. 1% b. 2.29% c. 1.43% d. 2.32%
a. 1%
Consider the following basket of goods: 50 bottles of milk, 100 avocadoes, 50 apples, and eight pineapples. Suppose that last year, each bottle of milk was $2.50, each avocado was $1.50, each apple was $0.75, and each pineapple was $4. This year, each bottle of milk is $2.50, each avocado is $1.80, each apple is $0.80, and each pineapple is $4.30. What is the inflation rate between last year and this year? a. 10.13% b. -10% c. -9.09% d. 8.99%
a. 10.13%
The table shows statistics for three Canadian cities at several different points in time. What was the number of unemployed people (in thousands) in Toronto in January 2019? a. 234.2 b. 250.9 c. 3,639.5 d. 3,405.3
a. 234.2
The table shows statistics for three Canadian cities at several different points in time. What was the unemployment rate in Montreal in January 2019? a. 6.2% b. 8.8% c. 93.8% d. 5.4%
a. 6.2%
Which of the following will fall when the economy is expanding? a. Applications for unemployment benefits b. Nonfarm payrolls c. Business confidence d. Consumer confidence
a. Applications for unemployment benefits
Which of the following shows the medium of exchange function of money? a. Daniela goes to the store and purchases roses with U.S. dollars. b. Mena saves his money in a certificate of deposit at the bank. c. Wilma wants to sell her old car, and she values it at $2,400. d. Darius goes window shopping.
a. Daniela goes to the store and purchases roses with U.S. dollars.
(Figure: Market for Luxury SUVs) Which of the following graphs shows what will happen to the supply curve for luxury SUVs, if economists predict an increase in demand for these vehicles? a. Graph D b. Graph A c. Graph C d. Graph B
a. Graph D
What is quantity supplied? a. It is the amount of an item that a seller is willing to sell at a particular price. b. It is a graph that plots how much a seller produces at different points in time. c. It is a graph that plots the quantities of an item that a seller plans to sell at different prices. d. It is the amount of an item that a buyer is willing to buy at a particular price.
a. It is the amount of an item that a seller is willing to sell at a particular price.
Which of the following scenarios illustrates the law of demand? 1. Kathleen eats more steak when the price is low, and less when the price is high. 2. Francis does not care about the price of coffee at the coffee shop - he must buy two cappuccinos every day, regardless of the price. 3. John likes to drink spring water. At $2 he buys four bottles of water, and at $1.50 he still buys four bottles of water. 4. A research company finds that the more expensive a particular brand of a designer handbag, the more that consumers are willing to purchase the brand.
a. Kathleen eats more steak when the price is low, and less when the price is high.
Refer to the data dashboard shown. Which indicator is a cross-check on GDP? a. Real GDI b. Employment cost index c. Stock prices: S&P 500 d. Business confidence
a. Real GDI
Which economic indicator tells you about the future expected profits of businesses? a. S&P 500 b. Consumer price index c. Nonfarm payrolls d. Initial unemployment claims
a. S&P 500
An individual demand curve is a graph: a. that plots the quantity of an item that someone plans to buy, at each price. b. that plots the quantity of an item that someone plans to buy, at one single price point. c. that plots the quantity of an item that a seller plans to sell, at each price. d. that plots the market price of a product at different points in time.
a. That plots the quantity of an item that someone plans to buy, at each price.
Which of the following is NOT a factor that can shift supply? a. The market price of a product. b. The price of a substitute-in-production. c. The expected future price of a product. d. The price of a complement-in-production.
a. The market price of a product.
There are four suppliers in the packed meals market. The quantity of packed meals that each one is willing to supply per week at various prices is provided in the accompanying table. What is the change in the market supply for packed meals when the price rises from $6.25 per meal to $6.50 per meal? a. The quantity supplied in the market rises by 152,000. b. The quantity supplied in the market falls by 165,000. c. The quantity supplied in the market falls by 132,000. d. The quantity supplied in the market rises by 132,000.
a. The quantity supplied in the market rises by 152,000.
Refer to the graph to answer the question. In the graph, the movement from point W to point P represents: a. a decrease in demand. b.an increase in demand. c. an increase in quantity demanded. d. an increase in quantity demanded.
a. a decrease in demand
A normal good is: a. a good for which higher income causes an increase in demand. b. a good which is only purchased by high-income consumers. c. a good which is normally purchased by many consumers. d. a good for which higher income causes a decrease in demand.
a. a good for which higher income causes an increase in demand.
A seller at a farmer's market wants $10 for a bag of 10 apples. You think his price is too high, so you counter with an offer of $6 for the bag. The seller then offers you a much smaller bag of five apples for $6. You bargain again, and the seller lets you buy the 10 apples for $8. This scenario is an example of: a. a market in action. b. a centrally planned market. c. perfect competition. d. a shortage.
a. a market in action.
Quantity demanded is on the horizontal axis when you plot a demand curve and shows the: a. amount of a good that a person is willing to buy at each price. b. amount of a good that a person actually buys at the market price. c. amount of a good that a seller is willing to sell at a particular price. d. amount where opportunity cost is equal to the marginal benefit.
a. amount of a good that a person is willing to buy at each price
Graphically, shortages will always occur: a. at prices below the equilibrium price. b. at the equilibrium price. c. at prices above the equilibrium price. d. when the quantity supplied exceeds the quantity demanded.
a. at prices below the equilibrium price.
Kathleen Alvarado is binge-watching her favorite show on Netflix. She is attempting to decide how many more episodes to watch. Kathleen should continue watching episodes as long as the marginal: a. benefit of watching another episode exceeds the marginal cost. b. benefit of watching another episode is positive. c. benefit of watching another episode is less than the marginal cost. d. cost of watching another episode is positive.
a. benefit of watching another episode exceeds the marginal costs.
The higher the minimum wage, as compared to the equilibrium wage, the: a. higher the structural unemployment rate. b. higher the cyclical unemployment rate. c. lower the natural rate of unemployment. d. lower the structural unemployment rate.
a. higher the structural unemployment rate.
The interdependence principle: a. implies that buyers decisions are affected by many factors other than the price of an item. b. refers to the marginal benefit of consuming additional units of an item. c. implies that consumers depend on each other to make purchase decisions in the market. d. is the same as the cost-benefit principle.
a. implies that buyers decisions are affected by many factors other than the price of an item.
Nerida Kyle could either commute to work via Uber or purchase a new car. The average cost of her one-way Uber trip is $15. Nerida works five days a week for 50 weeks a year. Based solely on avoiding the cost of an Uber, Nerida should purchase a car if the cost of the car is _____ than _____ per week. a. less; $150 b. greater; $75 c. less; $75 d. greater; $150
a. less; $150
Menu costs are the: a. marginal costs of adjusting prices. b. costs of producing restaurant meals. c. total costs of producing goods and services. d. variety of costs that cause producers to change their prices.
a. marginal costs of adjusting prices.
If you see that inflation between last year and this year is 3%, this means that: a. on average, prices went up across the economy by 3%. b. the prices of each and every good and service went up by 3%. c. the consumer price index rose by 3% more than the producer price index. d. economic growth is also 3%.
a. on average, prices went up across the economy by 3%.
Refer to the diagram of the circular flow of income. Based on the diagram, the arrow going FROM box 2 to box 1 must be: a. output bought by households. b. spending by households. c. inputs used by businesses. d. earnings by businesses.
a. output bought by households.
The GDP deflator is an index that tracks the: a. price of all goods and services produced domestically. b. average price that consumers pay over time for a representative basket of goods and services. c. highest prices consumers pay over time for imported goods and services. d. price that businesses pay over time for the inputs used in the production process.
a. price of all goods and services produced domestically.
A shortage occurs when: a. quantity demanded exceeds quantity supplied. b. there is excess production. c. when there is insufficient demand. d. quantity supplied exceeds quantity demanded.
a. quantity demanded exceeds quantity supplied.
According to Okun's rule of thumb, for every 1% fall in the actual output below potential output, the unemployment rate: a. rises by 0.5%. b. falls by 1%. c. rises by 1%. d. falls by 0.5%.
a. rises by 0.5%.
An example of a leading indicator is: a. the stock market. b. unemployment. c. nonfarm payrolls. d. unemployment insurance claims.
a. the stock market.
A downward-sloping demand curve implies: a. there is an inverse relationship between price and quantity demanded. b. there is a positive relationship between price and quantity demanded. c. there is no relationship between price and quantity demanded. d. buyers are willing to buy less when prices are lower.
a. there is an inverse relationship between price and quantity demanded.
Variable costs are the costs that a. vary with the quantity of output produced. b. stay fixed with the quantity of output produced. c. are incurred to build factories and assembly plants. d. are independent of the amount of output produced.
a. vary with the quantity of output produced.
What is Uganda's real GDP if its nominal GDP is $27.5 billion (in current US$), and the GDP deflator is 163.4? a. $27.5 billion b. $16.8 billion c. $44.9 billion d. $12.4 billion
b. $16.8 billion
Refer to the following table. What was the approximate output gap in 1998? a. 3% b. -1.2% c. -5.5% d. 1.2%
b. -1.2%
Suppose a labor market is described by the demand equation, Qd = 60 - 2w, and the supply equation, Qs = -10 + w, where Qd is the quantity demanded of labor, Qs is the quantity supplied of labor, and w is the wage (in dollars). If the government institutes a minimum wage of $25, how many workers will be willing to work in this market? a. 10,000,000 b. 15,000,000 c. 5,000,000 d. 20,000,000
b. 15,000,000
The table shows statistics for three Canadian cities at several different points in time. What was the number of unemployed people (in thousands) in Montreal in January 2009? a. 171.4 b. 181.6 c. 2,059.7 d. 1,878.1
b. 181.6
Take a look at Spice King Burgers' supply curve for burgers. How many burgers will they supply at a market price of $1.50 per burger? 400 units 200 units 500 units 300 units
b. 200 units
In May 2019, Texas reported a civilian labor force of 14,012,711. The number of employed people was 13,516,387. What was the unemployment rate? a. 4.9% b. 3.5% c. 5.3% d. 96.5%
b. 3.5%
Which of the following correctly shows the steps needed to calculate the inflation rate? a. Tally up the cost of the basket of goods and services, subtract the value of goods and services that are no longer counted in the basket, and then calculate the inflation rate. b. Find out what people typically buy, collect the prices from the stores where people shop, tally up the cost of the basket of goods and services, and calculate the inflation rate. c. Find the total value of the basket of goods and services, assess quality changes from one period to the next, and measure the inflation rate. d. Collect prices from the stores where people shop, assess the substitution that people make from low inflation to high inflation products, and calculate the difference in the prices that people pay.
b. Find out what people typically buy, collect the prices from the stores where people shop, tally up the cost of the basket of goods and services, and calculate the inflation rate.
If an economy has a positive output gap of 1.5%, this means: a. GDP is 1.5% below potential GDP. b. GDP is 1.5% above potential GDP. c. unemployment is 1.5% above the natural rate of unemployment. d. inflation is 1.5% above the long-run rate of inflation.
b. GDP is 1.5% above potential GDP.
You purchase a new car (produced this year) for $38,000. After six months, you sell the car for $31,500. How much does GDP rise because of these two transactions? a. GDP rises by $69,500. b. GDP rises by $38,000. c. GDP rises by $6,500. d. GDP rises by $31,500.
b. GDP rises by $38,000.
Which of the following correctly describes the business cycle? a. It is the constant rise in GDP over time. b. It is the fluctuations of GDP around the potential output. c. It refers to excess unemployment during recessionary periods. d. It refers to ups and downs in business revenue during expansions and recessions.
b. It is the fluctuations of GDP around the potential output.
How is the economic surplus generated by a decision calculated? a. It is the total benefits plus total costs arising from the decision. b. It is the total benefits minus total costs arising from the decision. c. It is the sum of costs arising from the decision. d. It is the sum of benefits arising from the decision.
b. It is the total benefits minus total costs arising from the decision.
The city of Vaughan in Ontario, Canada, opened a new subway line that extended the existing subway system between the greater Toronto area and the city of Vaughan. The route previously only had bus service. Which of the following graphs depicts the effect you would expect to see on the demand for bus rides on this route after the introduction of the subway? (look back at practice quiz) a. Graph D b. Graph A c. Graph B d. Graph C
b. graph A
The Rational Rule for Sellers says that a seller should sell one more unit of an item if the price is: a. greater than or equal to the marginal benefit. b. greater than or equal to the marginal cost. c. less than the marginal cost. d. less than the marginal benefit.
b. greater than or equal to the marginal cost.
When there is a shortage of highly skilled workers in a particular region: a. the incomes of highly skilled workers fall. b. highly skilled workers can negotiate higher salaries. c. unemployment rises among highly skilled workers. d. there is a corresponding surplus of low-skilled workers in the region.
b. highly skilled workers can negotiate higher salaries.
Jonathan Mendez is deciding whether to study for his economics exam at a café down the street or go to a concert a few cities over. The time spent commuting to the concert is ____ in his opportunity cost calculations and represents a _____ cost. a. not included; financial b. included; nonfinancial c. not included; sunk d. included; financial
b. included; nonfinancial
The __________ suggests, decisions about quantities are best made incrementally. a. opportunity cost principle b. marginal principle c. interdependence principle d. cost-benefit principle
b. marginal principle
The real interest rate is the: a. percentage of the nominal interest that is inflation. b. nominal interest rate minus the rate of inflation. c. nominal interest rate plus the rate of inflation. d. economic growth rate adjusted for the effects of inflation.
b. nominal interest rate minus the rate of inflation.
The table shows consumer price index data for the United States. Based on this information, what is the rate of inflation in 2006? a. 1.64% b. 3.81% c. 3.22% d. 2.87%
c. 3.22%
(Figure: Shift in Supply 1) Use the figure to answer the question. Which of the following events would lead to a shift of the supply curve from Old supply to New supply? a. a decrease in the size of the market b. technological advance in production techniques c. a natural disaster that causes a shutdown of production d. increased taxation of raw materials used by producers
b. technological advance in production techniques
In 1995, when the consumer price index was 152.38, women earned a median income of $12,130 per year. If the consumer price index in 2015 was 236.99, how much was $12,130 in 2015 dollars? a. $7,799 b. $12,130 c. $18,865 d. $16,259
c. $18,865
Consider the data shown in the table. Assume that the economy produces only barrels of oil. What is the real GDP for this year using last year as the base year? a. $5,229,000 b. $4,800,000 c. $4,980,000 d. $5,104,500
c. $4,980,000
Based on the following statistics, how much is consumption? a. $11.62 trillion b. -$0.38 trillion c. $6.49 trillion d. $5.13 trillion
c. $6.49 trillion
Refer to the diagram of the circular flow of income. The key lessons from this diagram are that: (i) all flows of resources are matched by flows of money. (ii) the market value of total output must be equal to total spending. (iii) total spending must equal total income. (iv) all inputs are provided by businesses. a. (i), (ii), (iii), and (iv) b. (ii) and (iii) c. (i), (ii), and (iii) d. (i) and (iv)
c. (i), (ii), and (iii)
Which of the following five scenarios illustrate markets in action? (i) You rent a book at the university bookstore. (ii) You bargain at a street stall. (iii) You mow your own lawn.(iv) You get a manicure at a nail salon. (v) You grow your own vegetables and consume them yourself. a. (i), (ii), and (iii) b. (i), (iii), and (v) c. (i), (ii), and (iv) d. (iii) and (v)
c. (i), (ii), and (iv)
Which of the following are correct about fixed costs? (i) They do not change with the level of production in the short run. (ii) They include variable costs. (iii) They are present even when the firm is producing zero units. (iv) They are irrelevant to marginal cost. a. (i), (ii), and (iii) b. (ii) and (iv) c. (i), (iii), and (iv) d. (i), (ii), (iii), and (iv)
c. (i), (iii), and (iv)
Which of the following is (are) included in investment? (i) military spending (ii) the purchase of an aircraft by a domestic airline (iii) the purchase of $45,000 worth of bonds (iv) the purchase of $32,000 worth of stock (v) social security payments (vi) the construction of a highway by the federal government a. (ii), (iii), and (iv) b. (i) and (vi) c. (ii) only d. (i), (ii), (v), and (vi)
c. (ii) only
You purchase a certificate of deposit and expect an inflation rate of 1.25% over the next year. Your nominal rate of interest is 2.1%. What is your expected real rate of return? a. 1.25% b. -0.85% c. 0.85% d. -2.1%
c. 0.85%
In 2017, the total population of Africa was estimated to be about 1,250,000,000 people. This number, in billions, is: a. 125. b. 1,250. c. 1.25. d. 12.5.
c. 1.25.
Refer to the following table. What was the approximate output gap in 1999? a. 3% b. 1.2% c. 1.9% d. -3.6%
c. 1.9%
The table shows statistics for three Canadian cities at several different points in time. What was the number of people (in thousands) in Montreal's labor force in January 2005? a. 1,831.7 b. 171.4 c. 2,003.1 d. 2,888.8
c. 2,003.1
In May 2019, there were approximately 68,980,000 people in Japan's labor force. About 1,650,000 people were unemployed. What was the unemployment rate? a. 6.1% b. 5.0% c. 2.4% d. 1.8%
c. 2.4%
Refer to the data dashboard shown. Which indicator tells you how fast wages and benefits are rising? a. Business confidence b. Stock prices: S&P 500 c. Employment cost index d. Inflation
c. Employment cost index
Which of the following will probably rise when the economy is in a recession? a. Real GDP growth b. Employment c. Initial unemployment claims d. Real retail sales
c. Initial unemployment claims
Dale is a stay-at-home-parent whose typical day consists of getting the kids ready for school, doing the laundry, cooking three meals, and cleaning the house. How are Dale's home activities counted in GDP? a. They are counted by assigning a value that is equivalent to what it would have taken to pay a housekeeper to perform the same tasks. b. They are counted by subtracting Dale's opportunity cost in terms of lost income. c. They are not counted. d. They are counted at market value.
c. They are not counted.
Suppose that you have a pumpkin stall at a farmer's market, and the Halloween season arrives. You know that your customers will want to buy many pumpkins to decorate their houses and make pumpkin pies. Which of the following is a likely result of this scenario? a. You will take fewer pumpkins to the market to sell. b. You will be able to sell only the highest-quality pumpkins. c. You can charge a higher price per pumpkin. d. You will wind up with many unsold pumpkins.
c. You can charge a higher price per pumpkin.
In the graph, the movement from point J to point K must have been caused by: a. a rise in the price of the item. b. a decrease in the total supply of the item. c. a fall in the price of the item. d. an increase in the total supply of the item.
c. a fall in the price of the item.
Henry Ford's $5 per day wage is an example of: a. a government regulated wage. b. a minimum wage law. c. an efficiency wage. d. an equilibrium wage.
c. an efficiency wage.
Refer to the graph to answer the question. In the graph, the movement from point M to point Q represents: a. an increase in demand. b. a decrease in quantity demanded. c. an increase in quantity demanded. d. a decrease in demand.
c. an increase in quantity demanded.
Hyperinflation is: a. a period of high money growth in an economy. b. very high rates of economic growth. c. extremely high rates of inflation. d. inflation that occurs when the economy is in a recession.
c. extremely high rates of inflation.
Consider these four graphs of the labor market, showing four different minimum wage levels. Which graph(s) shows a wage level where there is no unemployment? a. graphs A and C b. graph D c. graph B d. graphs A and D
c. graph B
Which of the following lists the functions of money? a. store of value, store of interest, and buffer against inflation b. carrier of exchange, unit of account, and measure of inflation c. medium of exchange, store of value, and unit of account d. medium of exchange, measure of inflation, and benchmark of quality
c. medium of exchange, store of value, and unit of account
If you see that the consumer price index this year is lower than the consumer price index last year, this means that: a. the consumer price index is lower than the producer price index. b. economic growth also decreased. c. on average, prices went down across the economy. d. the prices of each and every good and service went down.
c. on average, prices went down across the economy.
Decisions should reflect the _____ costs, rather than just the _____ costs. a. opportunity; nonfinancial b. nonfinancial; financial c. opportunity; financial d. financial; marginal
c. opportunity; financial
The four stages of the business cycle are: a. consumption, investment, government expenditure, and net exports. b. full employment, potential GDP, recessionary gap, and inflationary gap. c. peak, recession, trough, and expansion. d. expansion, growth, contraction, and depression.
c. peak, recession, trough, and expansion.
The opportunity costs of attending college include the: a. cost of clothes to wear at school. b. cost of room and board. c. potential income that could be earned working. d. effort and hard work.
c. potential income that could be earned working
Graphically, the equilibrium quantity can be identified as the: a. maximum quantity that buyers are willing to buy. b. quantity corresponding to the intersection of the demand curve and the price axis. c. quantity corresponding to the intersection of the demand and supply curves. d. maximum quantity that sellers are willing to sell.
c. quantity corresponding to the intersection of the demand and supply curves.
What kind of data adjustment removes the effect of sales spikes due to the holiday season? a. real data b. nominal data c. seasonally adjusted data d. annual data
c. seasonally adjusted data
Money illusion is the: a. inability to understand that prices always rise. b. illusion that one's earnings this year are higher than they were last year. c. tendency to focus on nominal values instead of inflation-adjusted values. d. increase in the amount of money that it takes to purchase goods and services when prices rise.
c. tendency to focus on nominal values instead of inflation-adjusted values.
When plotting a supply curve a. the quantity demanded goes on the vertical axis. b. the price goes on the horizontal axis. c. the quantity supplied goes on the horizontal axis. d. the quantity supplied goes on the vertical axis.
c. the quantity supplied goes on the horizontal axis.
If a store runs a sale on a product to clear out its stock, we can conclude that: a. the demand for the product is larger than the supply of the product. b. the product must be very close to its expiration date. c. there was a surplus of the product in the store. d. there was a shortage of the product in the store.
c. there was a surplus of the product in the store.
Diana is a student studying economics and currently working on her class schedule for next semester. She decides to enroll in a course on economic data analysis because she knows that data analysis is a highly sought-after skill from employers in her career field. Weighing what may affect her in the future opportunities demonstrated dependency: a. between markets. b. between people or businesses in the same market. c. through time. d. between college courses.
c. through time
Consider the data shown in the table. Assume that the economy produces only textbooks. What is the nominal GDP for last year? a. $262,500 b. $288,750 c. $275,625 d. $250,000
d. $250,000
In 2010, Canada's GDP was approximately $1,357 billion, and its population was about 34.12 million. What was Canada's approximate GDP per person in 2010? a. $26,246 b. $46,060 c. $3,980 d. $39,770
d. $39,770
Kevin Williamson goes to a local coffee shop and orders a medium-sized latte. His willingness to pay for that latte is $6. The price of the latte is $2. The cost to the coffee shop to produce the latte is $1. How much economic surplus does Kevin gain when he purchases the latte? a. $6 b. $2 c. $1 d. $4
d. $4
The United Kingdom plans to end the use of gas-powered and diesel-powered cars by the year 2040. At the same time, car manufacturers, such as General Motors and Nissan, are increasing the number of electric car models they produce. Based on this information, which of the following statements is/are correct? (i) If the supply of new electric cars is greater than the demand for new electric cars, then the price of electric cars will fall in the future. (ii) The demand for gasoline will fall in the future. (iii) The demand for electricity will rise in the future. (iv) The demand for diesel will rise in the future. a. (ii) and (iv) b. only (i) c. (i) and (ii) d. (i), (ii), and (iii)
d. (i), (ii), and (iii)
You purchase a certificate of deposit that earns an advertised rate of 1.75% interest per year. What is your real rate of return if the actual inflation rate is 1.9%? a. 3.65% b. 0.15% c. 1.75% d. -0.15%
d. -0.15%
Refer to the following table. What was the approximate output gap in 1974? a. 3.3% b. 6.1% c. 2.1% d. -6.5%
d. -6.5%
You purchase a certificate of deposit and expect an inflation rate of 1.5% over the next year. Your nominal rate of interest is 2.25%. What is your expected real rate of return? a. 2.25% b. 3.75% c. -0.75% d. 0.75%
d. 0.75%
What is Sri Lanka's GDP deflator if its nominal GDP is $88.9 billion (in current US$) and the real GDP is $59.34 billion? a. 100 b. 66.7 c. 136.5 d. 149.8
d. 149.8
Use the table to answer the question. What is the equilibrium quantity in this market? a. 100 units b. 240 units c. 330 units d. 300 units
d. 300 units
The table shows consumer price index data for the United States. Based on this information, what is the rate of inflation in 1991? a. 2.97% b. 2.79% c. 3.04% d. 4.22%
d. 4.22%
(Figure: Market for Coffee) A coffee shop opens next to an existing coffee shop. Which of the following graphs shows the effect of this new coffee shop on the market supply curve for coffee in this area? a. Graph C b. Graph B c. Graph D d. Graph A
d. Graph A
Which of the following graphs illustrates what we expect to see in the market for printing paper if the price of printing paper rises? a. Graph D b. Graph A c. Graph B d. Graph C
d. Graph C
What is the difference between spending from a microeconomic standpoint versus spending from a macroeconomic standpoint? a. In microeconomics, spending refers to domestic spending, whereas in macroeconomics, spending refers to foreign spending. b. In microeconomics, spending refers to one individual's spending, whereas in macroeconomics, spending refers to government expenditure. c. In microeconomics, spending refers to expenditure on consumer goods only, whereas in macroeconomics, spending refers to business expenditures only. d. In microeconomics, spending refers to spending by you, or your family, or your company, whereas in macroeconomics, spending refers to the spending by all consumers, all businesses, and the government in the economy.
d. In microeconomics, spending refers to spending by you, or your family, or your company, whereas in macroeconomics, spending refers to the spending by all consumers, all businesses, and the government in the economy.
You have four friends. Which of your friends can be described as "cyclically unemployed"? a. Regan, who is in a nursing home b. Martha, who is a full-time stay-at-home parent c. Arthur, who quit his job to look for a better job d. Keele, who lost her job after her company lost a lot of customers during an economic downturn
d. Keele, who lost her job after her company lost a lot of customers during an economic downturn
Which of the following is a broad indicator? a. Labor demand in the agricultural industry b. Agricultural sector output c. Starbucks stock returns d. Real gross domestic income
d. Real gross domestic income
Paint and paintbrushes are complements. If the price of paint rises, we can expect: a. the quantity demanded of paintbrushes to remain unchanged. b. the demand for paintbrushes to increase. c. the quantity demanded of paint to increase. d. the demand for paintbrushes to decrease.
d. The demand for paintbrush to decrease
Which economic indicator tells you how fast wages and benefits are rising? a. Nonfarm payrolls b. Business confidence c. S&P 500 d. The employment cost index
d. The employment cost index
There are four suppliers in the packed meals market. The quantity of packed meals that each one is willing to supply per week at various prices is provided in the accompanying table. What is the change in the market supply for packed meals when the price falls from $6.25 per meal to $6.00 per meal? a. The quantity supplied in the market rises by 149,000. b. The quantity supplied in the market rises by 152,000. c. The quantity supplied in the market falls by 165,000. d. The quantity supplied in the market falls by 149,000.
d. The quantity supplied in the market falls by 149,000.
Which of the following is a narrow indicator? a. The consumer price index b. Real GDI c. Non-farm payrolls d. The stock price for JPMorgan Chase & Co.
d. The stock price for JPMorgan Chase & Co.
You're shopping online, and you place an item in your virtual cart. Two days later, you return to the virtual cart to check out and find that the item is now more expensive. Assuming that the market is competitive, what could explain the price increase? a. There is decreased demand for the item. b. New sellers are offering the same product. c. There is a surplus of the item. d. There is a shortage of the item.
d. There is a shortage of the item.
Why are supply curves typically upward-sloping? a. They slope upward due to the law of demand. b. They slope upward because sellers demand more when prices are lower. c. They slope upward because sellers prefer to sell more when prices are lower. d. They slope upward because higher prices lead individual businesses to supply a larger quantity and more businesses are willing to supply goods and services.
d. They slope upward because higher prices lead individual businesses to supply a larger quantity and more businesses are willing to supply goods and services.
A minimum wage that is above the equilibrium wage is: a. a labor union negotiated wage. b. an unemployment benefit. c. an efficiency wage. d. an example of a price floor.
d. an example of a price floor.
The Great Moderation refers to the: a. longstanding effect of the Great Recession. b. stable level of inflation in the United States. c. increase in globalization. d. decreased volatility of the U.S. economy.
d. decreased volatility of the U.S. economy.
Consider the labor market shown here. If an efficiency wage of $14 is instituted in this market, the number of workers willing to work will: a. decrease by 2,000. b. increase by 4,000. c. decrease by 4,000. d. increase by 2,000.
d. increase by 2,000.
Suppose that an economy is in a recession. You would expect to see the unemployment rate: a. be equal to the equilibrium unemployment rate. b. fall below the equilibrium unemployment rate. c. be zero. d. rise above the equilibrium unemployment rate.
d. rise above the equilibrium unemployment rate.
Based on Okun's rule of thumb, if you forecast that the output gap will decline from 0% to -3%, the unemployment rate will: a. rise by 3%. b. fall by 2%. c. fall by 1.5%. d. rise by 1.5%.
d. rise by 1.5%.
Consider the graph of the labor market shown here. If the government mandates a minimum wage of $25, there is a labor: a. surplus of 2,000 workers. b. surplus of 4,000 workers. c. shortage of 2,000 workers. d. surplus of 6,000 workers.
d. surplus of 6,000 workers.
If the frictional rate of unemployment is 1.45%, the structural rate of unemployment is 2.3%, and the total unemployment rate is 6%, then we can conclude that: a. there is 2.25% actual unemployment. b. the labor force participation rate has fallen significantly. c. the economy is experiencing an economic boom. d. the equilibrium rate of unemployment is 3.75%.
d. the equilibrium rate of unemployment is 3.75%.
An economy's potential output level is: a. the output when unemployment is zero. b. equivalent of the GDP at current market value. c. the level at which no resources are available in the economy. d. the output that is possible when all resources are fully employed.
d. the output that is possible when all resources are fully employed.
