Macroeconomics Midterm

(7) Find image in notes table (table 6.6): Assume that this economy produces only two goods Good X and Good Y. The value for this economyʹs nominal GDP in year 3 is A) $32. B) $24. C) $39. D) $20. E) $28

c

(3) Find image in notes table (figure 3.2): If the price is $10, A) every willing buyer can find a willing seller, but not every willing seller can find a willing buyer. B) there is pressure on the price to fall. C) there is a shortage of 400 units. D) there is a surplus of 300 units. E) None of the above is correct.

e

economics could be best described as the study of _______.

choices

It is important for a good economic model to predict cause and effect so that it can: -be used to change the direction of causality. -fit the real world perfectly. -be used to predict all future events. -explain events that have occurred and help anticipate future events.

explain events that have occurred and help anticipate future events.

Economists use the idea of rational choice to A) describe how average people do not properly use economic ideas. B) explain how people use available resources to make the best choice. C) explain how people may make mistakes by not using available information. D) describe how people do not always do what is best.

explain how people use available resources to make the best choice.

a good theory is one that -describes the real world as closely as possible -explains or predicts what it is designed to explain or predict -incorporates as many facts as possible -has assumptions that mirror reality -all of the above are equally important

explains or predicts what it is designed to explain or predict

An economic model: A) exactly explains what happens in the real economy. B) does not make clear assumptions. C) approximates all facets of what happens in the real economy. D) cuts away unnecessary details to clearly demonstrate the principles at work

cuts away unnecessary details to clearly demonstrate the principles at work

Disagreeing about a positive statement means: -having insufficient information. -not having enough facts -disputing a fact. -having a different opinion.

disputing a fact.

(3) Find image in notes table (figure 3-2): At a price of $25, there is __________________ in this market, which should cause ________________. A) a shortage of 100 units ; the price of the good to rise B) a surplus of 100 units ; the price of the good to fall C) a surplus of 300 units ; the price of the good to rise D) equilibrium ; the price to not change in the future E) a surplus of 300 units ; the price of the good to fall

e

Whether or not we measure the economy's expenditure or its income: -national production > national expenditure > national income. -national production < national expenditure < national income. -national production = national expenditure = national income.

national production = national expenditure = national income.

The first question economists use to break down problems is "What are the wants and constraints of those involved?" — is based on the existence of ________

scarcity

The study of economics arises due to A) money. B) greed. C) scarcity. D) resources.

scarcity.

Jada has just lost her job in a web startup that was affected by a downturn in the economy. -Structural unemployment. -Cyclical unemployment. -Frictional unemployment.

Cyclical unemployment.

Rohit had a job working on Wall Street but lost his job during the financial crisis. -Structural unemployment. -Cyclical unemployment. -Frictional unemployment.

Cyclical unemployment.

Last year, you estimated you would earn $5 million in sales revenues from developing a new product. So far, you have spent $3 million developing the product, but it is not yet complete. Meanwhile, this year you have new sales projections that show expected revenues from the new product will actually be only $4 million. How much should you be willing to spend to complete the product development? -$0 -Up to $1 million -Whatever it takes -Up to $4 million

Up to $4 million

If a decrease in income leads to an increase in the demand for macaroni, then macaroni is A) an inferior good. B) a neutral good. C) a necessity. D) a normal good.

a

If the Consumer Price Index increases from month to month we know that A) the average price level of consumer goods and services is increasing. B) total spending on consumer goods and services is inccreasing. C) total production of consumer goods and services is increasing. D) All of the above

a

ʺLate registration will result in an additional $30 fee.ʺ This is an example of: A) a negative incentive. B) marginal analysis. C) group responsibility. D) a positive incentive.

a negative incentive

A model refers to: A) a perfect replica of reality. B) a simplified description, or representation, of reality. C) facts, measurements, or statistics that describe the world.

a simplified description, or representation, of reality.

Consider the following statements: a. Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area. b. Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. c. Firms produce more of a particular DVD when its selling price rises Which of the above statements demonstrates that economic agents respond to incentives? A) a only. B) b only. C) c only. D) a and b. E) a, b, and c.

a, b, and c.

frictional unemplyment:

unemployment caused by a worker changing his or her location, job, or career

A demand curve slopes downward because: -people want to buy more at higher prices. -when people buy more, sellers lower the price. -when prices are lower, people think the good is inferior. -people are only willing to buy more at lower prices.

people are only willing to buy more at lower prices.

If GDP is currently $15 trillion and is growing at a rate of 3.5% per year, how long will it take GDP to reach $30 trillion? A) about 10 years B) about 20 years C) about 7 years D) about 14 years

b

positive or normative: "an increase in the minimum wage causes higher fast food prices"

positive

positive or normative: fifteen percent of Americans do not have health insurance

positive

positive or normative: some employers offer healthcare benefits

positive

positive or normative: the number of doctors in the U.S. has risen by 10% over the past 5 years

positive

When graphing the demand curve, _________ on the x-axis (the horizontal axis) and quantity ______ on the y-axis (the vertical axis).

quantity; price

If the Consumer Price Index was 104 in 2020, it means that on average consumer prices ______ by _______ percent between the base year and 2020.

rose; 4

Suppose a gold miner finds a gold nugget and sells the nugget to a mining company for $500. The mining company melts down the gold, purifies it, and sells it to a jewelry maker for $1,000. The jewelry maker fashions the gold into a necklace that it sells to a department store for $1,500. Finally, the department store sells the necklace to a customer for $2,000. As a result of these transactions, GDP increases by: __________

$2,000

Which of the following goods or services in a market basket in 2013 would likely present challenges in constructing a market basket in 2033? -Oranges -A mobile phone -A sofa -Internet service -Tickets to a basketball game

-A mobile phone -Internet service

Which of the following contribute to the natural rate of unemployment? -Seasonal unemployment -Frictional unemployment -Structural unemployment -Real-wage unemployment -Cyclical unemployment

-Frictional unemployment -Structural unemployment -Real-wage unemployment

What are two main challenges that the BLS faces when calculating the CPI? -What area of the country to include. -How to measure changes in the market basket over time. -Which goods should be contained in the basket. -What price level to select for the base year.

-How to measure changes in the market basket over time. -Which goods should be contained in the basket.

From the list below, select the characteristics that describe a good economic model. -Fits the real world perfectly. -Predicts things that are usually true. -Makes approximately accurate assumptions. -Predicts that A causes B. -Includes every detail of a given situation.

-Predicts things that are usually true. -Makes approximately accurate assumptions. -Predicts that A causes B.

dentify a few examples of incentives that someone might encounter in his or her daily life. -Tax breaks for 401(k) retirement -Going grocery shopping -Meeting friends -Parking fines for illegal parking -Receiving five cents for recycling glass bottles

-Tax breaks for 401(k) retirement -Parking fines for illegal parking -Receiving five cents for recycling glass bottles

Purchasing power parity (PPP): -almost never holds completely. -represents the universality of exchange rate systems. -is as commonly accepted as the law of demand. -is a reason why all economies have left the gold standard.

-almost never holds completely.

In order to be considered unemployed, a person must be: -willing and able to work -under 16 or over 65. -not working. -actively seeking work.

-willing and able to work -not working. -actively seeking work.

1. Which of the following could cause an increase in the demand for peanut butter? -An increase in the price of jelly -A decrease in the price of peanut butter -An increase in the expected future price of peanut butter -An increase in the number of buyers in the market -An increase in consumer incomes (if peanut butter is a normal good) 2. Which of the following could cause a decrease in the demand for jelly? -An increase in the price of peanut butter (if peanut butter and jelly are complements) -A news report that jelly is hazardous -A decrease in income, if jelly is an inferior good -A decrease in the expected future price of peanut butter -An increase in the price of jelly

1. -An increase in the expected future price of peanut butter -An increase in the number of buyers in the market -An increase in consumer incomes (if peanut butter is a normal good) 2. -An increase in the price of peanut butter (if peanut butter and jelly are complements) -A news report that jelly is hazardous

Consider the market for pizza. 1. Which of the following would cause a decrease in market equilibrium price and quantity? -A decrease in the price of cheese, an input to pizza -An increase in the price of hamburgers, a substitute for pizza -A decrease in the number of pizza buyers -A decrease in the number of pizzeriasAn improvement in pizza-making technology 2. Which of the following would cause the equilibrium price to fall while the equilibrium quantity rises? -An improvement in pizza-making technology -An increase in the price of hamburgers, a substitute for pizza -A decrease in the number of pizza buyers -An increase in the price of cheese, an input to pizzaA decrease in the number of pizzerias

1. A decrease in the number of pizza buyers Correct 2. An improvement in pizza-making technology

1. Which of the following could cause a decrease in the supply of jelly? -An increase in the price of sugar, an input to jelly production -An increase in the price of peanut butter An increase in the price of jelly -A decrease in the expected future price of jelly A decrease in income, if jelly is an inferior good 2. Which of the following could cause an increase in the supply of peanut butter? -An increase in the price of jelly -A decrease in the price of peanut butter -An increase in the number of firms in the market -A decrease in the expected future price of peanut butter -An improvement in technology

1. An increase in the price of sugar, an input to jelly production 2. -An increase in the number of firms in the market -A decrease in the expected future price of peanut butter -An improvement in technology

Consider the market for corn. Indicate whether each of the following events will cause a shift in the demand curve or a movement along the curve. If it will cause a shift, specify the direction. 1. A drought hits corn-growing regions, cutting the supply of corn. -Movement along the demand curve -Rightward shift of demand -Leftward shift of demand 2. The government announces a new subsidy for biofuels made from corn. -Rightward shift of demand -Movement along the demand curve -Leftward shift of demand 3. A global recession reduces the incomes of consumers in poor countries, who rely on corn as a staple food (assuming corn is a normal good). -Movement along the demand curve -Leftward shift of demand -Rightward shift of demand 4. A new hybrid variety of corn seed causes a 15 percent increase in the yield of corn per acre. -Movement along the demand curve -Rightward shift of demand -Leftward shift of demand 5. An advertising campaign by the beef producers' association highlights the health benefits of corn-fed beef. -Leftward shift of demand -Movement along the demand curve -Rightward shift of demand

1. Movement along the demand curve 2. Rightward shift of demand 3. Leftward shift of demand 4. Movement along the demand curve Correct 5. Rightward shift of demand Correct

The U.S. counts people as being unemployed only if they meet three specific criteria:

1. They didn't work at all in the prior week. 2. They were available to work if they had been offered a job. 3. They were making efforts to look for a job.

1. When policy-makers discuss policies that encourage long-run growth in per capita real GDP, they often mention policies aimed at reducing the growth rate in the population. If effective, these policies could improve long-run growth because a smaller population increases: -nominal GDP for a given level of real GDP. -per capita real GDP for a given level of nominal GDP. -real GDP for any given level of real GDP. -per capita real GDP for a given level of real GDP. 2. However, these policies can: -increase technological innovation and result in unemployment. -reduce nominal GDP at the same time and may be coercive. -decrease technological innovation and result in unemployment. -increase nominal GDP at the same time and may be coercive.

1. per capita real GDP for a given level of real GDP. 2. reduce nominal GDP at the same time and may be coercive.

1. Because of the prevalence of the gray-market economy in many developing counties, GDP for these counties is often _______ Look at each of the following examples and decide whether it would be normally included in GDP calculations for the United States, and what category it would fall under. a. An undocumented worker is paid cash for working on a construction project. Included? _______ Category: ______ b. A body shop pours some old paint into a storm drain. Included? _______ Category: ______ c. A busy couple hires a maid service to help with housework. Included? _______ Category: ______ d. You start a repair shop in your garage fixing machines for a local business. Included? _______ Category: ______ e. Your neighbor pays you $10 to shovel snow from his driveway. Included? _______ Category: ______ f. The town manager hires your painting business to repaint the town hall. Included? _______ Category: ______ g. A college student does housekeeping for his grandmother in exchange for room and board. Included? _______ Category: ______

1. underestimated a. no; underground economy b. no; environmental externality c. yes; consumption d. yes; investment e. no; underground economy f. yes; government purchase g. no; home production

suppose labor's share of output is 70% and capital's share of output is 30%. The country finds that its output grew at a rate of 3.4% during the past year, its labor force grew by 2%, and its capital grew by 3%. In this case, labor contributed ___________ to the growth of output, capital contributed _________ to the growth of output, and the implied rate of growth in technology was _______

1.4% 0.9% 1.1%

Suppose the CPI in a given year is 207. The year before, the CPI was 199. The inflation rate between these two years is: _______

4.0%

Which of the following defines the investment trade-off? -A reduction in investment expenditure designed to boost current consumption. -An increase in investment expenditure designed to boost future consumption. -A reduction in current consumption to pay for investment capital. An increase in consumption designed to increase investment.

A reduction in current consumption to pay for investment capital.

A recent study found that people who watch less TV have greater levels of happiness. Which is the following is a correct interpretation? A) Watching TV causes people to be less happy. B) People who are happier to begin with, tend to watch less TV. C) There is no causal relationship between TV viewing and happiness. D) Any of the above may be true - we canʹt know without more information.

Any of the above may be true - we canʹt know without more information.

(7) Find image in notes table (7-6): Suppose that a very simple economy produces three goods: cameras, legal services, and books. Suppose the quantities produced and their corresponding prices for 2008 and 2009 are shown in the table above. What is real GDP in 2008, using 2009 as the base year? A) $10,275 B) $11,200 C) $10,482 D) $9,750 E) None of the above

B

Consider our class discussion in answering this question. As an economy moves from ʺgood timesʺ to a recession, it is likely that measured production falls and unmeasured production ___________. Thus, actual production ___________________ measured production. A) falls ; falls more than B) rises ; falls less than C) falls ; falls by the same amount as D) rises ; falls by the same amount as E) does not change ; falls more than

B

In measuring GDP, which of the following is included? A) the value of used goods when they are sold B) the value of goods and services purchased by the government C) the value of preparing meals at home D) the value of stocks and bonds bought and sold

B

The environmental damage that often occurs when goods and services are produced is __________ in the GDP statistics. This implies that GDP ___________ the value of production (relative to the actual value of production). A) included ; correctly records B) not included ; overstates C) not included ; understates D) included ; overstates

B

Which of the following is part of U.S. GDP? A) Production of new cars in Brazil by an American-owned company which employs American workers. B) Production of new cars in the U.S. by a Brazilian-owned company which employs Brazilian workers. C) Production of new cars in Brazil by an American-owned company which employs Brazilian workers. D) Production of new cars in Brazil by a Brazilian-owned company which employs American workers. E) More than one of the above

B

Which of the following is an example of irrational behavior? A) Borrowing the maximum possible amount of money available from student loans, so that you can get the maximum enjoyment out of your college years. B) Turning down a job as an executive (which pays a salary of $80,000) for a job as a white-water rafting guide (which pays a salary of $18,000). C) Choosing to get an MBA despite the fact that your marginal benefit of more schooling is less than your marginal cost. D) All of the above

Choosing to get an MBA despite the fact that your marginal benefit of more schooling is less than your marginal cost.

Which of the following is a normative economic statement? A) The state of Floridaʹs unemployment rate dropped when several large companies relocated to the Miami area. B) Falling global demand for pesticides has led to decreases in the price of pesticides. C) Climate change is the most important problem that we face. D) With falling mortgage rates and falling unemployment rates, the number of new homes being built has increased. E) All of the above

Climate change is the most important problem that we face.

To determine how much should be paid to employees for cost-of-living adjustments, the better measure of inflation is the: -Consumer Price Index, because employees spend their wages on goods and services. -Producer Price Index, because it is measured quarterly. -Consumer Price Index, because it is measured monthly. -Producer Price Index, because employees spend their wages on goods and services.

Consumer Price Index, because employees spend their wages on goods and services.

Economics promotes which of the following as the way to make the best decision? A) Continue an enjoyable activity until it is no longer enjoyable. B) Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost. C) Continue an enjoyable activity until you cannot afford to pursue it. D) Continue an enjoyable activity as long as you do not have to pay for it.

Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost.

A recent study (this is true) found that people that watch Fox News are less informed about current events than people that donʹt watch any news at all. Which is the following is a correct interpretation? A) Watching Fox News reduces peopleʹs knowledge about current events. B) There is no causal relationship between watching Fox News and understanding current events. C) Either of the above may be true - we canʹt know without more information.

Either of the above may be true - we canʹt know without more information.

Which actor in the simplified circular flow model buys or rents land, labor, and capital? A) Markets for factors of production B) Government C) Firms D) Households

Firms

Which actor in the simplified circular flow model is on the supply side of the goods market? A) Government B) Firms C) Markets for factors of production D) Households

Firms

Which of the following statements is TRUE in a simple circular flow model? A) Firms are neither buyers nor sellers in the product market. B) Firms are buyers in the factors of production market. C) Households are neither buyers nor sellers in the factors of production market. D) Households are sellers in the product market.

Firms are buyers in the factors of production market.

Adam has just arrived in a new city and is looking for work. -Cyclical unemployment. -Structural unemployment. -Frictional unemployment.

Frictional unemployment.

Maria has started looking for work after taking time off to have a baby. -Frictional unemployment. -Cyclical unemployment. -Structural unemployment.

Frictional unemployment.

Which of the following is not a characteristic of a perfectly competitive market? -Participants are price takers. -A standardized product -No transactions costs -Government regulation to ensure fairness -Full information

Government regulation to ensure fairness

Which of the following is the best measure of a country's increase in economic prosperity? -Growth in real -GDPGrowth in nominal GDP -Growth in real GDP per capita -Growth in nominal GDP per capita

Growth in real GDP per capita

Which question is an illustration of a macroeconomic question? A) How will the governmentʹs budget deficit be affected by recent tax cuts? B) Is a consumer boycott an effective means of reducing a productʹs price? C) Is a Comcast (a specific company) unresponsive to the demands of its customers? D) Are oil companies ripping off consumers by charging exorbitantly high prices for gasoline?

How will the governmentʹs budget deficit be affected by recent tax cuts?

Which of the following is an example of a positive (as opposed to normative) statement? A) Individuals with a bachelorʹs degree earn higher average incomes than those with only a high school diploma. B) The state government should allocate more funds toward education. C) The consumption of marijuana is unacceptable and should never be legally allowed in a society. D) Teachers should be paid higher salaries.

Individuals with a bachelorʹs degree earn higher average incomes than those with only a high school diploma

If a country's labor and capital grow at the same rate, is this likely to have the same impact on the growth rate of output? -Yes. If labor and capital are growing at the same rate, the impact on the growth rate of output is the same. -No. Growth in labor always has a bigger impact than growth in capital. -No. Growth in capital always has a bigger impact than growth in labor. -It depends on whether the capital share of output is larger than the labor share of output.

It depends on whether the capital share of output is larger than the labor share of output.

Which of the following statements concerning ʺequityʺ over ʺefficiencyʺ is true? A) Efficiency refers to how equally our economic rewards are distributed. B) Itʹs usually the case that actions which increase equity cause increases in efficiency C) Itʹs usually the case that actions which increase equity cause decreases in efficiency D) Equity refers to making our economic rewards as large as possible. E) More than one of the above is correct

Itʹs usually the case that actions which increase equity cause decreases in efficiency

(1) Find image in notes (figure 2-11): Which arrow represents the following: you receive your paycheck from Target (your employer)? A) J B) M C) G D) K

J

(1) Find image in notes (figure 2-11): Which arrow in the diagram depicts the following transaction: Starbucks pays its shareholders dividends based on the profits of the company. A) M B) K C) J D) G

J

(1) Find image in notes (figure 2-11): Suppose that you get a haircut after todayʹs exams. The haircut is shown by arrow ____ while you paying for the haircut is shown by arrow ____. A) J ; G B) J ; M C) G ; K D) K ; G E) M ; J

K ; G

(1) Find image in notes (figure 2-11): Which two arrows in the diagram depict the following transaction: Stanley purchases the novel, ʺNight of Sorrowsʺ for his summer reading pleasure. A) K and G B) K and M C) J and M D) J and G

K and G

(1) Find image in notes (figure 2-11): Which of the following is the best example of an activity depicted by Arrow M in the Circular Flow Diagram above? A) Downward Dog (a local bar) pays a bartender who works there. B) LaTroy uses his entrepreneurial ability to start a new software company. C) American Dream Pizza delivers a pizza to you. D) Josie pays the housekeeper that cleaned her house. E) You pay for the pizza that American Dream Pizza delivers to you.

LaTroy uses his entrepreneurial ability to start a new software company.

(1) Find image in notes (figure 2-11): Suppose that you work weekends at the local coffee shop. You going to work is shown by arrow ____ while you getting paid for your work is shown by arrow ____. A) J ; G B) J ; M C) M ; J D) K ; G E) G ; K

M ; J

Suppose the federal government expands unemployment insurance such that people who qualify receive 90% of their salary for 2 years, assuming they continue to fulfill the requirements of the benefits. Which of the following occurs? -Natural rate of unemployment increases. -Frictional unemployment does not change. -Cyclical unemployment increases. -Cyclical unemployment decreases.

Natural rate of unemployment increases.

(1) Find image in notes (figure 2-11): Which is greater -- the dollar value of spending by households in the product market or the dollar value of incomes earned by households in the factor market? A) the dollar value of incomes earned by households in the factor market B) the dollar value of spending by households in the product market C) Neither is greater - they are equal in size.

Neither is greater - they are equal in size.

Which of the following is a positive (as opposed to a ʺnormativeʺ) question? A) Policymakers should act now to increase the minimum wage. B) Without the minimum wage, firms will unfairly exploit workers by paying low wages. C) Raising the minimum wage results in higher teenage unemployment. D) The minimum wage isnʹt a good policy. E) More than one of the above is correct

Raising the minimum wage results in higher teenage unemployment.

Which of the following is a positive economic statement? A) The government should mandate the production of electric automobiles. B) It is wrong for people to buy SUVs. C) SUVs result in more emissions of CO2 per mile driven than do compact cars. D) The government ought to subsidize the purchase of compact cars. E) More than one of the above

SUVs result in more emissions of CO2 per mile driven than do compact cars.

Which of the following statements is true about scarcity? A) Scarcity refers to the situation in which unlimited wants exceed limited resources. B) Scarcity is not a problem for the wealthy. C) Scarcity is only a problem when a country has too large a population. D) Scarcity arises when there is a wide disparity in income distribution.

Scarcity refers to the situation in which unlimited wants exceed limited resources.

Which of the following is an example of a normative (as opposed to ʺpositiveʺ) question? A) How will an increase in the price of gasoline affect the price of taxi trips? B) What fraction of an income-tax cut will be spent on consumer goods? C) How will an increase in the minimum wage affect the unemployment rate of teenaged workers? D) Should the government provide free prescription drugs to senior citizens? E) More than one of the above is correct

Should the government provide free prescription drugs to senior citizens?

Which of the following is the best example of a macroeconomic question? A) Should we have a constitutional amendment requiring the government to implement a national consumption tax to replace the current income tax? B) Why does a pharmaceutical manufacturer try to lower its production costs? C) Should the government put a tax on alcohol in an attempt to assist in the funding of support groups like Alcoholics Anonymous? D) Why did a leading computer manufacturer establish call centers in India?

Should we have a constitutional amendment requiring the government to implement a national consumption tax to replace the current income tax?

Juan left high school without graduating and can't find any jobs he is qualified for. -Structural unemployment. -Frictional unemployment. -Cyclical unemployment.

Structural unemployment.

Max wants to work as an air steward, but because the airline industry is heavily unionized there are very few jobs available. -Frictional unemployment. -Cyclical unemployment. -Structural unemployment.

Structural unemployment.

Which of the following is considered a macroeconomic topic? A) Jay-Z decides to sell his Brooklyn Nets minority ownership. B) iTunes raises the price of all its music. C) The labor force participation rate in the U.S. fell by 1 percent in 2010. D) iTunes raises the price of its pop artistsʹ music only.

The labor force participation rate in the U.S. fell by 1 percent in 2010.

You have paid all expenses to travel to your favorite beach for a vacation. You made these payments early in order to receive a discount and all payments are nonrefundable. Unfortunately, a hurricane is likely to crash into the coast during your vacation dates. What should not be considered as you make a decision to take your trip or not? A) The money that has already been spent on the trip B) The best alternative use of your time if you do not take the trip C) The satisfaction you are likely to receive at the beach during a hurricane

The money that has already been spent on the trip

Which of the following is an example of a final good which is directly counted as part of GDP? A) The purchase of wheat from a wheat farmer by a bakery (the wheat will be used to make bread). B) The purchase of tires by Ford from Goodyear (the tires are put on new trucks in the Ford factory). C) The purchase of a new fire truck by the city of Corvallis. D) The purchase of raw beef from a rancher by a barbeque restaurant (the restaurant will cook the beef and sell it to customers). E) All of the above are correct.

The purchase of a new fire truck by the city of Corvallis.

Which of the following correctly describes the relationship between economic efficiency and economic equity? A) There is often a trade-off between the two goals. B) They are both automatically achieved in a free market economy. C) There is usually no conflict between the two goals. D) Increased efficiency usually goes hand in hand with increased equity.

There is often a trade-off

Which of the following statements is false? A) Trade-offs do not apply when the consumers purchase a product for which there is excess supply, such as a stock clearance sale. B) Every individual, no matter how rich or poor, is faced with making trade-offs. C) Anytime you have to decide which action to take, you are facing an economic trade-off. D) Economics is a social science that studies the trade-offs we are forced to make because of scarcity.

Trade-offs do not apply when the consumers purchase a product for which there is excess supply, such as a stock clearance sale.

Which of the following is a positive statement? -it is unfair that everyone is not paid the same wage. -The government should do more to assist workers. -Unemployment benefits usually expire after 26 weeks. -The distribution of income in the U.S. should be equal.

Unemployment benefits usually expire after 26 weeks.

Which of the following is a macroeconomics question? A) What determines the unemployment rate? B) How is the production quantity of digital cameras determined? C) What factors determine the price of iPhones? D) What determines the wages and benefits of flight attendants?

What determines the unemployment rate?

The idea of efficiency is used to address which of the following questions? A) What are the trade-offs? B) Why isnʹt everyone already doing it? C) How will others respond? D) What are the wants and constraints of those involved?

Why isnʹt everyone already doing it?

Which of the following is a positive (as opposed to a ʺnormativeʺ) question? A) Should the minimum wage be set at one-half the average manufacturing wage to guarantee individuals a decent standard of living? B) Wouldnʹt it be more equitable if the minimum wage increased automatically with the cost of living? C) Will the level of teenage unemployment increase if the minimum wage is increased? D) Wouldnʹt it be better to try to increase peopleʹs wages through job-training programs rather than by requiring employers to pay minimum wages? E) More than one of the above is correct

Will the level of teenage unemployment increase if the minimum wage is increased?

(10) Find image in notes (Figure 11-2): Assuming no technological change, if the United States increases capital per hour worked by $40,000 every year between 2010 and 2014, we would expect to see A) the US will move to flatter (less steep) portions of the per-worker production function over time. B) real GDP per hour worked will be lower in 2014 than it was in 2010. C) real GDP per hour worked will increase by the same increment each year between 2010 and 2014. D) the per-worker production function will shift up every year there is increase in capital per hour worked.

a

(10) Find image in notes (figure 10-2): Which of the following combinations of points illustrates changes in the Soviet Unionʹs economy from 1950-1980? A) A to B to C B) B to D C) B to E D) E to B

a

(3) Find image in notes table (figure 3-2): If the price is $10, then the quantity demanded is ______, the quantity supplied is _______, and the quantity actually produced and consumed is _______. A) 800 ; 200 ; 200 B) 200 ; 600 ; 800 C) 200 ; 800 ; 600 D) 600 ; 600 ; 600 E) 800 ; 200 ; 600

a

(3) Find image in notes table (figure 3-2): If the price is $25, A) every willing buyer can find a willing seller, but not every willing seller can find a willing buyer. B) there is no pressure on the price to rise or fall. C) there is a shortage of 300 units. D) there is a surplus of 100 units. E) More than one of the above is correct.

a

(3) Find image in notes table (figure 3-2): If the price is _____, then every willing seller can find a willing buyer, but not every willing buyer can find a willing seller. A) $25 ; $10 B) $10 ; $20 C) $25 ; $20 D) $10 ; $25

a

(3) Find image in notes table (figure 3-2): Suppose that the price is initially at $15 and it rises over time to $20. As the price increases, which of the following occurs? A) the quantity supplied increases B) demand for the good decreases C) supply of the good increases D) the quantity demanded increases E) More than one of the above is correct

a

(3) Find image in notes table (figure 3.13): Refer to Figure 3.13. If supply shifts from S1 to S2 which of the following is TRUE? A) there is a decrease in the quantity demanded of cheeseburgers B) the equilibrium price and equilibrium quantity of cheeseburgers both increase C) there is an increase in the supply of cheeseburgers D) there is a decrease in demand for cheeseburgers E) More than one of the above

a

(3) Find image in notes table (figure 3.14): Refer to Figure 3.14. An increase in quantity supplied is represented by the movement from A) Point B to Point A along supply curve S2. B) S2 to S3. C) S2 to S1. D) Point B to Point C along supply curve S2

a

(3) Find image in notes table (figure 3.2): If the current market price is $25, the market will achieve equilibrium by A) a price decrease, decreasing the quantity supplied and increasing the quantity demanded. B) a price increase, increasing the supply and decreasing the demand. C) a price increase, increasing the quantity supplied and decreasing the quantity demanded. D) a price decrease, decreasing the supply and increasing the demand.

a

(3) Find image in notes table (figure G): The figure above represents the market for canvas tote bags. Assume that the market price is $35. Which of the following statement is true? A) There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25. B) There will be a surplus that will cause the price to decrease; demand will then increase and supply will decrease until the price equals $25. C) There is a surplus that will cause the price to decrease; quantity supplied will then increase and quantity demanded will decrease until the price equals $25. D) There is a surplus that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25.

a

(3) Find image in notes table (figure H): Assume that the graphs in this figure represent the demand and supply curves for cheese. Which panel best describes what happens in the cheese market when there is a decrease in the price of yogurt (a production substitute for cheese)? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

a

(3) Find image in notes table (figure H): Assume that the graphs in this figure represent the demand and supply curves for chicken sandwiches. What panel shows an increase in the quantity demanded of chicken sandwiches? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

a

(3) Find image in notes table (figure H): Assume that the graphs in this figure represent the demand and supply curves for chicken sandwiches. What panel shows the effects of a decrease of prices of inputs needed to produce chicken sandwiches? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

a

(3) Find image in notes table (figure H): Assume that the graphs in this figure represent the demand and supply curves for chicken sandwiches. What panel shows an increase in the quantity demanded of chicken sandwiches? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

a

(3) Find image in notes table (table 4.1): Refer to Table 4.1. If the price per pizza is $10, the price will: A) decrease because there is an excess supply in the market. B) increase because there is an excess supply in the market. C) increase because there is an excess demand in the market. D) remain constant because the market is in equilibrium. E) decrease because there is an excess demand in the market.

a

(7) Find image in notes (scenario 7-1): The value added of CANOES-R-US for each canoe equals A) $500. B) $400. C) $1,200. D) $800. E) $900

a

(7) Find image in notes (scenario 7-1): Which of the following in classified as ʺInvestmentʺ in U.S. GDP accounts? A) Ford purchases new machines (which were produced in the US) for its Oregon factory. B) Ford buys tires (which were produced in the US) to put on the vehicles that it is producing and selling C) You purchase a new Ford vehicle (produced in the US) from a Ford dealer. D) You buy stock in the Ford Motor Company. E) All of the above are correct

a

(7) Find image in notes (table 7-10): Using 2010 as the base year, the growth rate of the real GDP between 2009 and 2010 is approximately (choose the closest answer) A) -8.8% B) -3.6% C) 3.6% D) -9.6% E) 9.6%

a

(7) Find image in notes table (2010-2011 data): Bananaland produces only bananas and sunscreen and the quantities and prices for 2010 and 2011 are given in the table above. The base year is 2011. The growth rate of Real GDP from 2010 to 2011 is approximately equal to (choose the closest answer): A) +58% B) +88% C) +10% D) -88% E) +110%

a

(7) Find image in notes table (2010-2011 data): The table above gives the production and prices for a small nation (Bananaland) that produces only bananas and sunscreen. The base year is 2011. Even without doing any calculations, we know that real GDP is higher in 2011 than in 2010 because the total quantity of each output (bananas and sunscreen) is higher in 2011 than in 2010. A) True B) False

a

(7) Find image in notes table (7-6): Suppose that a very simple economy produces three goods: cameras, legal services, and books. Suppose the quantities produced and their corresponding prices for 2008 and 2009 are shown in the table above. What is nominal GDP in 2008? A) $9,750 B) $11,200 C) $10,482 D) $10,275 E) None of the above

a

(7) Find image in notes table (table 7.5): Suppose that a very simple economy produces three goods: cameras, legal services, and books. Suppose the quantities produced and their corresponding prices for 2008 and 2009 are shown in the table above. What is real GDP in 2008, using 2009 as the base year? A) $5,200 B) $4,200 C) $2,600 D) $4,000 E) None of the above

a

(8) Find image in notes (CPI Table 3): The table above has information about the CPI and nominal wage rate for the country of Syldavia for the years 2000-2002. The reference base year is 2000. In which year was the real wage rate the highest? A) 2000 B) 2001 C) 2002 D) The real wage is the same in 2001 and 2002. It is higher in these years than in 2000.

a

(8) Find image in notes (CPI table 2): The table above has information about the CPI and nominal wage rate for the country of Syldavia for the years 2000-2002. The reference base year is 2000. In which year was the real wage rate the highest? A) 2000 B) 2001 C) 2002

a

(8) Find image in notes (Data Table 1): The data in the table above shows the consumption by families in a small (poor) economy. The families consume only salt and bread. The base reference period is 2000. The cost of the CPI basket in 2000 is A) $40.50. B) $1.50. C) $2.50. D) $12.00

a

(8) Find image in notes (price-level adjustments): According to the information given in the table shown, if someone makes $40,000 in the U.S., what would his salary need to be in Mexico to maintain the same standard of living? A) $26,400 B) $13,600 C) $40,000 D) $60,606

a

(8) Find image in notes (price-level adjustments): According to the information in the table shown, if someone were to make $35,000, she would be able to buy the most goods and services if she lived in: A) Mexico. B) Australia. C) the United States. D) China.

a

(8) Find image in notes (table 8-3): Assume the market basket for the consumer price index has three products Cokes, hamburgers, and CDs with the following values in 2000 and 2006 for price and quantity: The Consumer Price Index for 2006 equals (approximately) A) 121. B) 118. C) 93. D) 100. E) 108.

a

(9) Find image in notes (table 2): The table above shows data reported by the Office for National Statistics for the United Kingdom in September 2000. In September 2000, the unemployment rate is approximately A) 5.5 percent. B) 4.7 percent. C) 3.7 percent. D) 3.5 percent.

a

A firm produces $9 million worth of computers and sells $8 million worth of computers. Which of the following is true? A) GDP will increase by $9 million. B) GDP will increase by $8 million and investment will increase by $1 million. C) GDP will increase by $8 million. D) Inventory investment will decrease by $1 million

a

A small economy increased its capital per hour worked (K/L) from $40,000 to $50,000. As a result, real GDP per worker (Y/L) grew from $20,000 to $25,000. If the economy wants to further increase its real GDP per worker (Y/L) to $30,000, by how much must it increase its capital per hour worked (K/L) (assuming that there is no change in technology)? A) by more than $10,000. B) by $10,000. C) by less than $10,000.

a

Ameer just quit his job as a shoe salesman and is looking for work as an accountant, which is what his college degree is in. Ameer would be considered: A) frictionally unemployed. B) cyclically unemployed. C) structurally unemployed D) Ameer is not in the labor force.

a

An example of human capital would be: A) a training session on Excel. B) an office chair. C) Excel software. D) All of these are examples of human capital.

a

Between 2007 and 2008, if an economyʹs exports rise by $8 billion and its imports fall by $8 billion, by how much will GDP change between the two years, all else equal? A) The change in net exports will increase GDP by $16 billion. B) The change in net exports will decrease GDP by $8 billion. C) The increase in exports is offset by the decrease in imports, so there is no change in net exports and no effect on GDP. D) The change in net exports will increase GDP by $8 billion

a

Between 2007 and 2008, the CPI of a small nation rose from 182 to 185. If household incomes rose by 3% during that period of time, which of the following is true? A) The purchasing power of household income rose between 2007 and 2008. B) The purchasing power of household income remained constant between 2007 and 2008. C) The purchasing power of household income fell between 2007 and 2008. D) The CPI cannot be used to determine how the purchasing power of household income changes over time.

a

Carlʹs Computers produces computers and sells them to Samʹs Installation service for $1000. Samʹs Installation service sells the computers to consumers for $1200 each. Which of the following statements is TRUE? A) Samʹs Installation service has a value added of $200 per computer. B) Carlʹs Computers has no value added because it does not sell directly to consumers. C) Samʹs Installation service has a value added of $2200 per computer. D) The total contribution to GDP by the two firms is $2200. E) More than one of the above is correct

a

Discouraged workers are classified by the BLS as A) out of the labor force. B) unemployed. C) part of the labor force. D) employed. E) More than one of the above is correct

a

During the winter, about 20% of the local lettuce crop was destroyed by flooding. At the same time that part of the lettuce crop was destroyed, the demand for lettuce increased. Taken together, these two situations would have caused: A) the equilibrium price of lettuce to increase. The equilibrium quantity of lettuce could have increased, decreased, or remained the same. B) both the equilibrium price and quantity of lettuce to decrease. C) the equilibrium price to increase and the equilibrium quantity of lettuce to decrease. D) the equilibrium price of lettuce to either increase, decrease, or remain the same and the equilibrium quantity of lettuce to decrease.

a

Home Depot sells new and used doors to contractors who build new homes. Home Depot also sells new and used doors to homeowners. Which of the following would be directly counted in GDP? A) the sale of a new door to homeowner B) the sale of a used door to a homeowner C) the sale of a used door to TapKon construction for installation into a new home D) the sale of a new door to TapKon construction for installation into a new home E) All of the above are directly counted in GDP

a

If the demand for jelly increases at the same time that the price of grapes (used to make jelly) rises A) the equilibrium price of jelly rises and the equilibrium quantity of jelly might rise or fall. B) the equilibrium price of jelly falls and the equilibrium quantity of jelly might rise or fall. C) the equilibrium price of jelly might rise or fall, and the equilibrium quantity of jelly falls. D) the equilibrium price of jelly might rise or fall, and the equilibrium quantity of jelly rises.

a

If the number of unemployed workers is 30 million, the number in the working-age population is 500 million, and the unemployment rate is 10%, what is the labor force participation rate? A) 60% B) 94% C) 67% D) 84% E) 80%

a

If the working age population in an economy increases, while the size of the labor force remains unchanged, ________. A) the labor force participation rate will fall B) the labor force participation rate will remain unaffected C) the natural rate of unemployment will increase D) the labor force participation rate will increase

a

In a given year the nominal growth rate is 7% with inflation and population growth rates of 2% and 1.2% respectively, then real growth rate of GDP per capita is: A) 3.8%. B) 5.0%. C) 7.0%. D) 5.8%.

a

In a recession, the number of ʺdiscouraged workersʺ is likely to _______________. Thus, the actual unemployment situation is likely ________________ the official unemployment numbers tell us during the recession. A) increase ; worse than B) decrease ; worse than C) increase ; better than D) decrease ; better than

a

In most years, consumers demand more gasoline during summer months. Thus, during the summer months, the price of gasoline is typically higher than during other times of the year, and people use more gasoline at these higher prices. Does this outcome represent a violation of the law of demand? A) No it is not a violation of the law of demand. The ʺceteris paribusʺ portion of the law of demand doesnʹt hold in this example. B) No it is not a violation of the law of demand. The law of demand maintains that, ceteris paribus, people will demand more of a good at higher prices which is exactly what happens in this example. C) Yes it is a violation of the law of demand. Gasoline is different than most goods. People tend to use more of it at higher prices.

a

In most years, consumers demand more gasoline during summer months. Thus, during the summer months, the price of gasoline is typically higher than during other times of the year, and people use more gasoline at these higher prices. Does this outcome represent a violation of the law of demand? A) No it is not a violation of the law of demand. The ʺceteris paribusʺ portion of the law of demand doesnʹt hold in this example. B) Yes it is a violation of the law of demand. Gasoline is different than most goods. People tend to use more of it at higher prices. C) No it is not a violation of the law of demand. The law of demand maintains that, ceteris paribus, people will demand more of a good at higher prices which is exactly what happens in this example

a

In recent years the cost of producing wines in the U.S. has increased largely due to rising rents for vineyards. At the same time, more and more Americans prefer wine over beer. Which of the following best explains the effect of these events in the wine market? A) The supply curve has shifted to the left and the demand curve has shifted to the right. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity. B) Both the supply and demand curves have shifted to the right. As a result, there has been an increase in both the equilibrium price and the equilibrium quantity. C) Both the supply and demand curves have shifted to the right. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity. D) The supply curve has shifted to the left and the demand curve has shifted to the right. As a result there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price.

a

New growth theory states that increases in ________ capital will result in ________ at the ________ level. A) knowledge; increasing returns; economy B) knowledge; decreasing returns; economy C) knowledge; increasing returns; firm D) physical; increasing returns; firm E) More than one of the above is correct

a

Other things equal, physical capital accumulation comes from _______________ spending, which is funded by ______________. A) investment ; savings B) discretionary; consumption C) investment ; consumption D) consumption ; investment

a

Policies that make it more difficult to fire an employee are likely to: A) lead to greater unemployment. B) have no impact on unemployment. C) affect frictionally unemployed workers more than other unemployed workers. D) lead to less unemployment

a

Production by Honda, a Japanese firm, in the United States is included in ____ GDP and production by Nike Corporation, a U.S. firm, in Vietnam is included in ____ GDP. A) U.S.; Vietnamese B) Japanese; Vietnamese C) Japanese; U.S. D) U.S.; U.S.

a

Rosina Gonzales quit her job in Pennsylvania and moved to California to be close to her family. She is currently looking for work, so she would be considered A) frictionally unemployed. B) cyclically unemployed. C) a discouraged worker. D) seasonally unemployed.

a

Select the phrase that correctly completes the following statement. ʺAn increase in input prices caused a decrease in the supply of baseballs. As a result ________.ʺ A) the price of baseballs increased and the quantity demanded of baseballs decreased B) the price of baseballs increased. The higher price caused the supply of baseballs to increase C) the price of baseballs increased and the demand for baseballs decreased D) the equilibrium quantity of baseballs increased

a

Suppose favorable weather resulted in a bumper crop of oranges in Florida. In the market for oranges A) the supply curve shifted to the right resulting in a decrease in the equilibrium price. B) the supply curve shifted to the right resulting in an increase in the equilibrium price. C) the demand curve shifted to the left resulting in a decrease in the equilibrium price. D) the demand curve shifted to the right resulting in an increase in the equilibrium price.

a

Suppose that GDP is $17 trillion, but you believe that the actual value of production in the economy is $15. Which of the following facts supports your belief? A) GDP does not account for environmental damage B) GDP does not count household production C) GDP does not count intermediate goods D) GDP does not count transfer payments

a

Suppose that in 1996, 12 million cars were purchased at $15,000 each, while in 1997, 14 million cars were purchased at $18,000 each. What might have caused this change? A) The price of airplane tickets (a substitute for cars) rose B) Automobile manufacturing technology increased C) Automobile manufacturing technology decreased D) The price of airplane tickets (a substitute for cars) fell

a

Suppose that in October the price of a cup of cafe latte was $2.50 and 400 lattes were consumed. In November the price of a latte was $2.00 and 300 lattes were consumed. What might have caused this change? A) The price of tea (a substitute for cafe lattes) fell. B) The price of coffee beans (an input of production of cafe lattes) rose. C) The price of tea (a substitute for cafe lattes) rose. D) The price of coffee beans (an input of production of cafe lattes) fell.

a

Suppose that the demand for tatoo ink increases at the same time that there is a technological advance in the production of tatoo ink. It is impossible for the A) equilbrium quantity of tatoo ink to fall. B) equilbrium price of tatoo ink to fall. C) equilbrium quantity of tatoo ink to rise. D) equilbrium price of tatoo ink to rise

a

Suppose that the market for bottled water is initially in equilibrium. If the demand for bottled water decreases, but the price of bottled water stays at the initial equilibrium price, then A) There will be a surplus of bottled water. B) The bottled water market will be in equilibrium. C) There will be a shortage of bottled water.

a

Suppose that when the price of hamburgers increases, the Ruiz family increases their purchases of hot dogs. To the Ruiz family, A) hamburgers and hot dogs are substitutes. B) hamburgers and hot dogs are inferior goods. C) hamburgers and hot dogs are complements. D) hamburgers and hot dogs are normal goods.

a

The CPI in 1980 was 82, and the CPI in 2006 was 202. If you earned a salary of $30,000 in 1980, what would be a salary with equivalent purchasing power in 2006? A) $73,902 B) $32,180 C) $49,268 D) $43,360

a

The CPI in 1980 was 82, and the CPI in 2010 was 220. If you earned a salary of $100,000 in 2010, what would be a salary with equivalent purchasing power in 1980? (choose the closest answer) A) $37,273 B) $268,293 C) $82,000 D) $26,829

a

The convergence theory is based on the idea of: A) decreasing marginal returns. B) decreasing income per capita. C) increasing opportunity costs. D) increasing rates of income per capita

a

The cost of raising beef cattle has fallen at the same time as consumer preference for beef has fallen (i.e. decrease in beef demand). In the market for beef, these events result in the equilibrium price ________ and the equilibrium quantity ________. A) decreasing ; increasing, decreasing, or not changing B) increasing, decreasing, or not changing; increasing C) increasing, decreasing, or not changing; decreasing D) increasing; increasing, decreasing, or not changing

a

The cost of raising beef cattle has risen at the same time as consumer preference for beef has declined (i.e. decrease in beef demand). In the market for beef, these events result in the equilibrium price ________ and the equilibrium quantity ________. A) increasing, decreasing, or not changing; decreasing B) increasing; increasing, decreasing, or not changing C) decreasing ; increasing, decreasing, or not changing D) increasing, decreasing, or not changing; increasing

a

The demand for refrigerators falls when the economy enters a downturn. If a refrigerator manufacturer lays off workers during an economic downturn, this would be an example of: A) cyclical unemployment. B) structural unemployment. C) frictional unemployment. D) natural unemployment

a

The labor demand curve: A) is provided by firms who want to hire workers at each given wage. B) shows number of workers who are willing and able to work at higher wages. C) shows that the number of people who want to work increases as the wage increases. D) is made up of workers who want to work for firms at each given wage.

a

The law of demand defines a A) negative relationship between price and quantity demanded. B) negative relationship between income and quantity demanded. C) positive relationship between income and quantity demanded. D) positive relationship between price and quantity demanded.

a

The law of demand implies, holding everything else constant, that as the price of yogurt A) increases, the quantity of yogurt demanded will decrease. B) increases, the demand for yogurt will increase. C) decreases, the quantity of yogurt demanded will decrease. D) decreases, the demand for yogurt will increase.

a

The period of time from 1,000 B.C. to 1700 A.D. was a period of A) no sustained economic growth. B) slow and steady economic growth. C) moderate economic growth. D) rapid and sustained economic growth

a

The poorer a country is the: A) more difficult it is to pay for things that will bring it out of poverty. B) more they can invest in all the components of productivity at once. C) less they have to give up for the basic things that will bring them out of poverty. D) easier it is to pay for things that will bring it out of poverty.

a

The president of a poor country has announced that he will implement the following measures which he claims are designed to increase growth: 1. Reduce corruption in the legal system. 2. Reduce reliance on market forces because they allocate goods and services in an unfair manner. 3. Restrict investment in domestic industries by foreigners because they take some of the profits out of the country. 4. Discourage trade with neighboring countries in order to protect domestic industries. 5. Increase the fraction of GDP devoted to consumption by reducing the fraction devoted to investment. How many of these measures will likely have a positive effect on long-run growth? A) 1 B) 2 C) 3 D) 4 E) 5

a

Under which of the following cases will Nominal GDP definately increase? A) prices rise and Real GDP does not change B) prices do not change and Real GDP falls C) prices rise and Real GDP falls D) prices fall and Real GDP falls E) More than one of the above

a

Using the growth accounting equation, if the growth rate of out is 5%, the growth of labor is 3% and the growth of capital is 2% then if α=0.75 then growth of technology can be estimated to be: A) 2.75%. B) 4.25%. C) 4.00%. D) 3.00%.

a

Using the growth accounting equation, if the growth rate of technology is 3%, the growth of labor is 2% and the growth of capital is 1% then if α = 0.25 then growth of output can be estimated to be: A) 4.75%. B) 4.00%. C) 6.00%. D) 4.25%.

a

We would expect that policies to protect workers would: A) lead to greater unemployment. B) have no impact on unemployment. C) lead to less unemployment. D) affect those seasonally unemployed more profoundly than other unemployed workers.

a

What happens in the U.S. GDP accounts when you purchase an $800 Italian -made suit? A) Consumption rises by $800, Net Exports fall by $800, and US GDP doesnʹt change. B) Consumption doesnʹt change, Net Exports fall by $800, and US GDP falls by $800. C) Consumption rises by $800, Net Exports rise by $800, and US GDP rises by $800. D) Consumption doesnʹt change, Net Exports do not change, and US GDP doesnʹt change

a

What is the difference between an ʺincrease in supplyʺ and an ʺincrease in quantity suppliedʺ? A) An ʺincrease in supplyʺ means the supply curve has shifted to the right while an ʺincrease in quantity suppliedʺ refers to a movement along a given supply curve in response to an increase in price. B) An ʺincrease in supplyʺ means the supply curve has shifted to the left while an ʺincrease in quantity suppliedʺ refers to a movement along a given supply curve in response to an increase in price. C) There is no difference between the two terms; they both refer to a shift of the supply curve. D) There is no difference between the two terms; they both refer to a movement along a given supply curve

a

When growth goes down, unemployment tends to go: A) up shortly after, and vice versa. B) down at the same time, and vice versa. C) up at the same time, but remains sticky on the way down and lags behind. D) down shortly after, and vice versa.

a

When thereʹs a change in anything that affects the demand for a good, other than a change in the price, graphically we must: A) shift the entire demand curve B) slide along the given demand curve

a

Which approach to calculating GDP best highlights the relative importance of different factors of production? A) The income approach B) The value-added approach C) The expenditure approach D) Any of these measurements would work equally well for that comparison.

a

Which approach to calculating GDP would be best to compare consumer activity versus government purchases? A) The expenditure approach B) The value-added approach C) The income approach D) Any of these measurements will allow that comparison equally well.

a

Which of the following best describes the relationship between the price level and the inflation rate? A) The inflation rate is the percentage change in the price level from one period to the next. B) Low price levels imply low inflation rates. C) High price levels imply high inflation rates. D) All of the above are correct.

a

Which of the following correctly describes how price adjustments eliminate a shortage? A) As the price rises, the quantity demanded decreases while the quantity supplied increases. B) As the price falls, the quantity demanded increases while the quantity supplied decreases. C) As the price falls, the quantity demanded decreases while the quantity supplied increases. D) As the price rises, the quantity demanded increases while the quantity supplied decreases

a

Which of the following describes the accuracy of the Consumer Price Index? A) Changes in the CPI overstate the true rate of inflation. B) Changes in the CPI accurately reflect the true rate of inflation. C) Changes in the CPI are unrelated to the true rate of inflation. D) Changes in the CPI understate the true rate of inflation.

a

Which of the following has a tendency to raise the unemployment rate? A) increasing the minimum wage in an economy B) reducing labor unions membership in an economy C) offering wages at the equilibrium wage rate D) reducing unemployment insurance in an economy E) More than one of the above is correct.

a

Which of the following implies that GDP overstates the actual value of production? A) GDP does not count environmental damage B) GDP does not count transfer payments C) GDP does not count intermediate goods D) GDP does not count household production E) More than one of the above

a

Which of the following implies that GDP understates the actual value of production? A) GDP does not count household production B) GDP does not count transfer payments C) GDP does not count intermediate goods D) GDP does not count environmental damage E) More than one of the above implies that GDP understates the actual value of production

a

Which of the following is counted in GDP? A) a payment for medical service B) the sale of a used car C) the value of home cooking D) the purchase of Microsoft stock

a

Which of the following is held constant along a given demand curve? A) the incomes of buyers B) the price of the good C) Both of the above D) None of the above

a

Which of the following should be included in U.S. GDP? A) Tennis shoes manufactured by an Italian firm in the U.S. and sold in France. B) A Social Security payment to a U.S. citizen living in New York. C) Tennis shoes manufactured in Indonesia by a U.S. firm and sold in the U.S. D) A Social Security payment to a U.S. citizen living in Mexico

a

Which of the following statements correctly differentiates between unemployed workers and discouraged workers? A) Unemployed workers are counted in the labor force, but discouraged workers are excluded from the labor force. B) Unemployed workers do not have a paid job, while discouraged workers have a paid job. C) The unemployment benefits received by unemployed workers are not capped, while the unemployment benefits received by discouraged workers are capped at a maximum. D) Unemployed workers refer to the skilled workers who have been laid off, while discouraged workers refer to the unskilled workers who have lost their jobs.

a

Which of the following statements is true? A) An increase in demand causes a change in equilibrium price; the change in price does not cause a further shifts in demand or supply. B) If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater. C) A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand. D) If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease. E) All of the above are true

a

Which of the following would cause a decrease in the supply of milk? A) An increase the price of a product that producers sell instead of milk. B) An increase in the price of cookies (assuming that milk and cookies are complements). C) A decrease in the price of milk D) An increase in the number of firms that produce milk. E) More than one of the above would decrease the supply of milk

a

Which of the following would not be included in the GDP category called ʺinvestment expendituresʺ? A) a purchase of shares of preferred stock B) the cars held in inventory on a local Ford dealerʹs lot C) spending on new houses D) a purchase of a copy machine by Kinkos

a

George owns a house on a 10-acre lot filled with peach trees. Each year he hires a few workers to pick the peaches, then he sells them to Patty's Pies for $5,000. Patty uses the peaches to make pies that she sells for $8,000 to local restaurants. The local restaurants sell the pies (by the slice) to consumers for a total of $10,000. a. As a result of these transactions, GDP increases by: b. The value added by George is: c. The value added by Patty is: d. The value added by the local restaurants is:

a. $10,000 b. $5,000 c. $3,000 d. $2,000

Given the following information about each economy, either calculate the missing variable or determine that it cannot be calculated: a. Suppose C = $20.1 billion, I = $3.5 billion, G = $5.2 billion, and NX = $-1 billion. Total income is ___________ . b. Suppose total income is $1.7 trillion, G = $1 trillion, and C = $1.2 trillion. I is ___________ . c. Suppose total expenditure is $578 billion, C = $449 billion, I = $105 billion, and G = $79 billion. NX is: ____________. Exports < imports .

a. $27.8 billion b. indeterminate c. $ -55 billion

a. If the current exchange rate is 1 euro to 1.5 U.S dollars, according to the theory of purchasing power parity, a haircut that costs 15 dollars in Dallas should cost __________ euros in Paris. A wheel of French cheese that costs 20 euros in Paris should cost _________ dollars in Dallas. b. In reality, the price of the haircut in Paris probably _________ because a haircut is a ________. c. The wheel of French cheese would probably cost _______ in Dallas because of __________

a. 10; 30 b. is different; is a non-traceable good c. more; of transportation costs

Suppose the median household earned $9,243 in 1976 and $52,765 in 2016. During that time, also suppose the CPI rose from 48.2 to 214.68. a.The total growth rate in nominal median household income from 1976 to 2016 was: 470.9%. b. The total growth rate in real median household income from 1976 to 2016 was: 28.2%

a. 470.9% b. 28.2%

Consider the following events: a. A fruitworm infestation ruins a large number of apple orchards in the state of Washington. This event would cause a ______ the supply curve in the market for apples. b. Demand for apples goes down, causing the price to fall. This event would cause a _________ the supply curve. c. Considering the events described above, which of the following statements is true? -A change in price will mean a movement along an existing supply curve. -A change in price will cause a shift of the supply curve. -A change in income will cause a movement along the supply curve. -A change in something other than price will mean a movement along an existing supply curve.

a. shift of b. movement along c. A change in price will mean a movement along an existing supply curve.

Determine whether each of the following counts as consumption, investment, government purchases, net exports, or none of these, under the expenditure approach to calculating GDP. a. The construction of a courthouse: -Net exports -Investment -None of these -Consumption -Government purchases b. A taxi ride: -Government purchases -None of these -Net exports -Investment -Consumption c. The purchase of a new taxi car by a taxi company: -Investment -Net exports -Consumption -Government purchases -None of these d. A student buying a textbook: -Net exports -Government purchases -Consumption -None of these -Investment e. The trading of municipal bonds (a type of financial investment offered by city or state governments): -Consumption -Net exports -Investment -Government purchases -None of these f. A company's purchase of foreign minerals: -None of these -Consumption -Government purchases -Net exports -Investment

a. Government purchases b. Consumption c. Investment d. Consumption e. None of these f. Net exports

Rick Alexander is a master builder who spent three decades running a successful home-restoration business in Connecticut. When his elderly parents fell ill in 2008, he gave up his business and moved to Florida to look after them. He thought it would be easy to find work—after all, he had a certified trade and more than 30 years' experience. He looked first for jobs as a supervisor at construction sites, but didn't find anything. Lowering his sights, he next looked for work at wholesalers and lumberyards, and then he applied for any job at hardware stores. Still he experienced a constant stream of rejections. He tried to start his own business, but couldn't generate enough sales to make it profitable. Tired and frustrated, Rick Alexander gave up looking for work. For each of the following situations, is Rick Alexander counted as employed, unemployed, or not in the labor force by the Bureau of Labor Statistics? a. Alexander is self-employed in his old job as a carpenter. b. Alexander moves to Florida and begins looking for work. c. Alexander feels discouraged looking for work and stops applying for jobs. d. Alexander starts looking for work again. e. Alexander starts work at a new job.

a. employed b.unemployed c. not in the labor force d. unemployed e. employed

Determine which category each of the following economic activities falls under: consumption, investment, government purchases, net exports, or not included in GDP. a. The mayor of Chicago authorizes the construction of a new stadium using public funds: __________ b. A student pays rent on her apartment: c. Parents pay college tuition for their son: d. Someone buys a new Hyundai car produced in South Korea: e. Someone buys a used Hyundai car: f. Someone buys a new General Motors car produced in the United States: _____________ g. A family buys a house in a newly constructed housing development: h. The U.S. Army pays its soldiers I. A Brazilian driver buys a Ford car produced in the United States: j. The Department of Motor Vehicles buys a new machine for printing drivers' licenses: k. An apple picked in Washington in October is bought at a grocery store in Mississippi in December: l. Hewlett-Packard produces a computer and sends it to a warehouse in another state for sale next year

a. government purchases b. consumption c. consumption d. net exports e. not included in GDP f. consumption g. investment h. government purchases I. net exports j. government purchases k. consumption l. investment

Determine whether each of the following statements is positive or normative. a. People who pay their bills on time are less likely than others to get into debt: b. Hard work is a virtue: c. Everyone should pay his or her bills on time: d. China has a bigger population than any other country in the world: e. China's one-child policy (which limits families to one child each) helped to spur the country's rapid economic growth: Positive Correct. f. Lower taxes are good for the country: .

a. positive b. normative c. normative d. positive e. positive f. normative

For each of the pairs below, determine whether they are positively correlated, negatively correlated, or uncorrelated. a. Time spent studying and test scores: b. Vaccination and illness: c. Soft drink preference and music preference: d. Income and education:

a. positively correlated b. negatively correlated c. uncorrelated d. positively correlated

Indicate whether the following goods have likely required hedonic quality adjustment over time if they were included in the Consumer Price Index (CPI). a. Laptop computers: b. Cell phones: c. Salt: d. Televisions: e. Housing: f. Tennis rackets:

a. yes b. yes c. no d. yes e. no f. yes

Economists sometimes describe the economy as having a "circular flow." In the most basic form of the circular flow model, companies hire workers and pay them wages. Workers then use these wages to buy goods and services from companies. The circular flow model explains the equivalence of the expenditure and income methods of valuing an economy because: -companies hire workers and workers buy goods and services from companies. -all firm revenues are turned into wages (expenditure method), and all wages are spent on the firms' products (income method). -companies buy goods and services from other companies and workers buy goods and services from companies. -all firm revenues are turned into wages (income method), and all wages are spent on the firms' products (expenditure method).

all firm revenues are turned into wages (income method), and all wages are spent on the firms' products (expenditure method).

A rational choice is one that: A) does not involve self-interested behavior. B) involves the use of strategic decision making in an effort to reach a goal. C) is usually optimized when decision makers are poorly informed about alternatives. D) allows individuals to reach their goals.

allows individuals to reach their goals.

ted quits his $60,000/year job to be a stay at home dad. What is the opportunity cost of his decision? -depends on the going rate for a stay at home dad -the value he attributes to the joy of parenting -at least $60,000 -0 since he will no longer be earning a salary

at least $60,000

f the GDP deflator for the year that just ended is less than 100, it means that compared to the base year, _______________

average prices have decreased

(3) Find image in notes table (Graph 3): A shift from A to B in the graph shown might be caused by: A) an increase in the goodʹs price. B) a decrease in the price of a complement. C) an increase in the price of a complement. D) a decrease in the price of a substitute. E) More than one of the above is correct

b

(3) Find image in notes table (figure 3-2): Suppose that you observe this market and see that store shelves are persistently empty of this product, and that many consumers come to the stores for this product, but there is none available. Which of the following is most likely the actual market price of the good? A) $20 B) $15 C) $25

b

(3) Find image in notes table (figure 3.15): Refer to Figure 3.15. A decrease in the price of mushrooms (an input for gardenburgers) will cause a movement from Point B on supply curve S2 to A) Point C on supply curve S2. B) supply curve S3. C) Point A on supply curve S2. D) supply curve S1.

b

(3) Find image in notes table (figure 4.2): Assume that the pizza market is initially in equilibrium at Point B. If pizza and beer are consumption complements, a decrease in the price of beer will cause a movement from Point B on demand curve D2 to _______________________ in the pizza market. A) demand curve D1. B) demand curve D3. C) Point A on demand curve D2. D) Point C on demand curve D2

b

(3) Find image in notes table (figure 4.4): Figure 4.4 illustrates the demand for guitars. If buyers expect the price of guitars to decrease in the near future, this would most likely bring about (in the current time frame) a movement from: A) point B to point C. B) D1 to D0. C) point B to point A. D) D1 to D2.

b

(3) Find image in notes table (figure H): Assume that the graphs in this figure represent the demand and supply curves for cheese. Which panel best describes what happens in the cheese market when there is an increase in demand for yogurt (a production substitute for cheese)? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

b

(3) Find image in notes table (figure H): Assume that the graphs in this figure represent the demand and supply curves for chicken sandwiches. What panel shows the effects of an increase of prices of inputs needed to produce chicken sandwiches? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

b

(3) Find image in notes table (figure H): Assume that the graphs in this figure represent the demand and supply curves for chicken sandwiches. What panel shows a decrease in supply of chicken sandwiches? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

b

(3) Find image in notes table (figure H): Assume that the graphs in this figure represent the demand and supply curves for chicken sandwiches. What panel shows a decrease in the quantity demanded of chicken sandwiches? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

b

(7) Find image in notes (scenario 7-1): Bananaland produces only bananas and sunscreen and the quantities and prices for 2001 and 2002 are given in the table above. The base year is 2001. Nominal GDP in 2002 is equal to A) $625. B) $800. C) $640. D) $500. E) None of the above

b

(7) Find image in notes (scenario 7-1): Bananaland produces only bananas and sunscreen and the quantities and prices for 2001 and 2002 are given in the table above. The base year is 2001. Real GDP in 2002 is equal to A) $800. B) $625. C) $640. D) $500. E) None of the above

b

(7) Find image in notes (table 7-10): Real GDP for Nelsonville in 2009 (using 2010 as the base year) equals A) $5,500. B) $6,250. C) $5,100. D) $5,700. E) None of the above

b

(7) Find image in notes table (7-6): Suppose that a very simple economy produces three goods: cameras, legal services, and books. Suppose the quantities produced and their corresponding prices for 2008 and 2009 are shown in the table above. What is the growth rate of the GDP deflator from 2008 to 2009, using 2009 as the base year? (Choose the answer closest to the correct value.) A) 1.3% B) 14.9% C) 13% D) 13.4% E) 0.13%

b

(7) Find image in notes table (table 6.5): Refer to Table 6.5. Assume that this economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economyʹs inflation rate between year 1 and year 2 is A) -6.1%. B) 6.5%. C) 6.1% D) -5.5%. E) 79%.

b

(7) Find image in notes table (table 6.5): Refer to Table 6.5. Assume that this economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economyʹs real GDP in year 2 is A) $202. B) $168. C) $214. D) $106.5 E) $179.

b

(7) Find image in notes table (table 6.6): Assume that this economy produces only two goods Good X and Good Y. If year 2 is the base year, the value for this economyʹs inflation rate between year 2 and year 3 is A) -8.6%. B) 21.9% C) 4%. D) -4%. E) 39.3%

b

(7) Find image in notes table (table 7.5): Suppose that a very simple economy produces three goods: cameras, legal services, and books. Suppose the quantities produced and their corresponding prices for 2008 and 2009 are shown in the table above. What is nominal GDP in 2008? A) $260 B) $4,000 C) $5,200 D) $2,600 E) None of the above

b

(8) Find image in notes (CPI Table 1): The table above has information about the CPI and nominal wage rate for the country of Syldavia for the years 2000-2002. Which of the following statements is TRUE? A) Real wages did not change between 2000 and 2001 B) The nominal wage had more purchasing power in 2001 than it had in 2000 C) The price level rose from 2000 to 2001 D) The price level did not change from 2000 to 2001 E) More than one of the above is correct

b

(8) Find image in notes (CPI Table 4): The table above has information about the CPI and nominal wage rate for the country of Syldavia for the years 2000-2002. The reference base year is 2000. In which year was the real wage rate the highest? A) 2000 B) 2001 C) 2002

b

(8) Find image in notes (CPI table 2): The table above has information about the CPI and nominal wage rate for the country of Syldavia for the years 2000-2002. Which of the following statements is TRUE? A) The highest price level was in 2002 B) The inflation rate was negative (ʺdeflationʺ) during 2002. C) The price level rose continuously from 2000 to 2001 to 2002 D) The price level rose from 2001 to 2002 E) More than one of the above is correct

b

(8) Find image in notes (Data Table 1): The data in the table above shows the consumption by families in a small (poor) economy. The families consume only salt and bread. The base reference period is 2000. The CPI in 2001 is A) 100. B) 106.2. C) 124. D) 94.2.

b

(8) Find image in notes (Data Table 1): The data in the table above shows the consumption by families in a small (poor) economy. The families consume only salt and bread. The base reference period is 2000. The inflation rate between 2000 and 2001 is A) 52.5 percent. B) 6.2 percent. C) 5.25 percent. D) 106.2 percent.

b

(8) Find image in notes (table 6.10): If 2000 is the base year, the CPI in 2001 is: A) 151.9 B) 113.9 C) 115.9% D) 117.4 E) 115.9

b

(8) Find image in notes (table 8-3): Assume the market basket for the consumer price index has three products -- Cokes, hamburgers, and CDs -- with the following values in 2000 and 2006 for price and quantity: The Consumer Price Index for 2006 equals (approximately) A) 118 B) 121. C) 75. D) 93. E) 108.

b

) If the demand for letters written by Abraham Lincoln is higher than the demand for letters written by John Wilkes Booth, what would have to be true for the market equilibrium prices for these letters to be equal? A) If the demand for Lincoln letters is greater than the demand for Booth letters, the market equilibrium price for Lincoln letters will always be greater than the market equilibrium price for Booth letters. B) The supply of Booth letters would have to be less than the supply of Lincoln letters. C) The supply of Lincoln letters would have to be less than the supply of Booth letters. D) The supply of Lincoln letters and the supply of Booth letters would have to be equal.

b

A Minnesota farmer buys a new tractor made in Iowa by a German company. As a result A) U.S. investment and German GDP increase, but U.S. GDP is unaffected. B) U.S. investment and GDP increase, but German GDP is unaffected. C) U.S. investment, U.S. GDP, and German GDP are unaffected, because tractors are intermediate goods. D) U.S. investment, U.S. GDP, and German GDP all increase

b

A firm produces $10 million worth of soccer balls in 2016. It sells $8 million of these balls in 2016, and the other $2 million of balls in 2017. How is this accounted for in the 2016 GDP statistics? A) 2016 Consumption increases by $10 million, and thus GDP increases by $10 million B) 2016 Consumption increases by $8 million, Investment increases by $2 million, and thus GDP increases by $10 million C) 2016 Consumption increases by $8 million, and thus GDP increases by $8 million D) 2016 Consumption increases by $10 million, Net Exports decrease by $2 million, and thus GDP increases by $8 million

b

A new technology is discovered that results in all new cars producing 50 percent less pollution. The technology costs nothing to produce. As a result of the technology, there is a reduction in the number of visits people make to the doctor to complain of breathing difficulties. Which of the following is true? A) GDP will increase to reflect the improvement in the health of the population, and the likely increase in the cost of the car. B) GDP will decrease as a result of fewer doctor services being provided. C) GDP will increase to reflect the improvement in the health of the population. D) GDP is not affected.

b

An example of U.S. foreign direct investment would be a: A) factory in Japan owned by a Canadian citizen. B) factory in Canada owned by a U.S. citizen. C) factory in New Mexico owned by a Japanese citizen. D) All of these are examples of foreign direct investment

b

An increase in the minimum wage causes the quantity supplied of labor to _______, the quantity demanded of labor ______, and thus causes a ______________ of labor. A) decrease ; increase ; shortage B) increase ; decrease ; surplus C) increase ; decrease ; shortage D) decrease ; increase ; surplus

b

An insect that is resistant to currently used pesticides has infested the cotton crop, and this yearʹs crop is only half of what was produced last year. You accurately predict that this A) will shift the supply curve of cotton to the left, the equilibrium price of cotton will increase, and the demand for cotton will fall. B) will shift the supply curve of cotton to the left, the equilibrium price of cotton will increase, and the quantity demanded of cotton will decrease. C) will shift the supply curve of cotton to the right, the equilibrium price of cotton will increase, and the demand for cotton will fall. D) will shift the supply curve of cotton to the right, the equilibrium price of cotton will increase, and the quantity demanded of cotton will decrease

b

At the end of the year, Ford realizes it has overproduced Fiestas, because 2,500 of them are left unsold. How is this accounted for in that yearʹs GDP? The cars are: A) considered durable goods, and their value will increase consumption. B) considered inventory and their value will increase investment. C) not counted until they are sold in next yearʹs GDP. D) considered a bad thing and reduce the value of investment

b

Between 2007 and 2008, the CPI of a small nation rose from 180 to 185, and household incomes rose by 3% during that period of time. The cost of living in this economy increased by _____ (choose the closest answer), and the purchasing power of household income ______ between 2007 and 2008. A) 5% ; rose B) 2.8% ; rose C) 1.02% ; didnʹt change D) 1.02% ; fell E) 5% ; fell

b

Caroline is an artist. She purchases canvas, paints, brushes, and accessories for $75. She sells one of her original paintings to an art gallery for $1,500, which, in turn, sells it to an art lover for $4,500. How much income is generated by the art gallery? A) $1,425 B) $3,000 C) $6000 D) $4,500 E) $1,500

b

Consider the market for tacos. If a new report warns that taco consumption is an unhealthy behavior at the same time that the price of beef (input to taco production) rises, the price of tacos will ____________ and the quantity of tacos will ____________. A) fall ; rise, fall, or not change B) rise, fall, or not change ; fall C) rise ; rise, fall, or not change D) rise, fall, or not change ; rise E) None of the above

b

Consider the market for tacos. There is a decrease in taco demand at the same time that there is a decrease in taco supply. As these shifts occur, we observe that the equilibrium price of tacos rises and the equilibrium quantity of tacos falls. We can thus deduce that A) the supply and demand shifts were of equal size B) the supply shift was larger in size than the demand shift C) the demand shift was larger in size than the supply shif

b

Consider two countries alike in every other way, but one country is rich and full of capital and the other is poor and has very little capital. If the savings rate in each country is 5%, then we should expect ___________________. A) both countries to grow at the same rate B) both countries to grow, but the rich country to grow more slowly than the poor country C) the poor country to get richer and the rich country to get poorer D) the rich country to get richer and the poor country to get poorer

b

Discouraged workers are classified by the BLS as A) unemployed. B) out of the labor force. C) part of the labor force. D) employed. E) More than one of the above is correct

b

During 2002 the supply of petroleum increased while at the same time the demand for petroleum increased. If the magnitude of the increase in demand was greater than the magnitude of the increase in supply, which of the following occurred? A) The equilibrium price of petroleum decreased and the equilibrium quantity increased. B) The equilibrium price of petroleum increased and the equilibrium quantity increased. C) The equilibrium price of petroleum decreased and the equilibrium quantity did not change. D) The equilibrium price of petroleum decreased and the equilibrium quantity decreased. E) The equilibrium price of petroleum increased and the equilibrium quantity decreased

b

During the 1990s positive technological change in the production of chicken caused an increase in supply of chicken. What should this change have done to the equilibrium price and quantity of chicken? A) increase the equilibrium price and increase the equilibrium quantity B) decrease the equilibrium price and increase the equilibrium quantity C) increase the equilibrium price and decrease the equilibrium quantity D) decrease the equilibrium price and decrease the equilibrium quantity

b

Farmers can plant either corn or soybeans in their fields. Which of the following would cause the supply of soybeans to decrease? A) A decrease in the price of corn. B) An increase in the price of corn. C) A decrease in the price of soybeans. D) An increase in the price of soybeans

b

Gross domestic product in the economy is measured by the A) total number of goods and services produced in the economy. B) dollar value of all final goods and services produced in the economy. C) total number of services produced in the economy

b

Gross domestic product in the economy is measured by the A) total number of services produced in the economy. B) dollar value of all final goods and services produced in the economy. C) total number of goods produced in the economy. D) total number of goods and services produced in the economy

b

If a country has a CPI of 105.0 in 2000 and a CPI of 102.0 in 2001, this set of CPIs suggests that A) there was an error when calculating the CPI in 2001. B) the average prices of goods and services decreased between 2000 and 2001. C) the average quantity of goods and services decreased between 2000 and 2001. D) the average prices of goods and services increased between 2000 and 2001.

b

If the number of unemployed workers is 19 million, the number in the working-age population is 500 million, and the unemployment rate is 4%, what is the labor force participation rate? A) 4.75% B) 95% C) 7.8% D) 78% E) 96.2%

b

In 1970, the CPI was 39 and in 2000 it was 172. A local phone call cost $0.10 in 1970. What is the price of this phone call in 2000 dollars? (round to the nearest penny) A) $1.42 B) $0.44 C) $1.72 D) $0.39 E) $0.22

b

In general, economists believe that the measured unemployment rate _________________ the actual amount of joblessness in the economy. A) overstates B) understates C) correctly measures

b

Inflation is measured by examining the percent change in the ________ from one year to the next A) price of gas B) CPI C) nominal GDP D) GDP growth

b

Just as indexing allows us to compare the cost of living across different periods of time, the ________ is used to allow us to compare the cost of living across different locations. A) consumer purchasing index B) purchasing power index C) retail power parity D) producer price index

b

Lettuce is an inferior good. During the winter, about 20% of the lettuce crop was destroyed by flooding. At the same time that part of the lettuce crop was destroyed, consumer income also decreased. Taken together, these two situations would have caused: A) the equilibrium price to increase and the equilibrium quantity of lettuce to decrease. B) the equilibrium price of lettuce to increase. The equilibrium quantity of lettuce could have increased, decreased, or remained the same. C) the equilibrium price of lettuce to either increase, decrease, or remain the same and the equilibrium quantity of lettuce to decrease. D) both the equilibrium price and quantity of lettuce to decrease.

b

Marla is an architect who is designing a home for Chuck. Chuck is paying Marla $150 per hour to design his new home. When Chuck and Marla get married, Marla continues to work on designing the home, but she no longer charges Chuck for her work. As a result, GDP ________ because ________. A) doesnʹt change ; Marlaʹs work is counted either way B) falls ; Marlaʹs architectural design services are no longer bought by Chuck once theyʹre married C) rises ; Marlaʹs work is counted after they marry, but is not counted before they get married. D) rises ; Marla becomes more productive once sheʹs married E) falls ; Marlaʹs work becomes less valuable once sheʹs married

b

Members of the military are currently not included in the employment, labor force, and working-age population statistics. What impact would including members of the military in these statistics have on the unemployment rate and the labor force participation rate? A) Including the military would reduce both the unemployment rate and the labor force participation rate. B) Including members of the military would reduce the unemployment rate and increase the labor force participation rate. C) Including the military would increase both the unemployment rate and the labor force participation rate. D) Including members of the military would increase the unemployment rate and reduce the labor force participation rate.

b

One would speak of a movement along a supply curve for a good, rather than a change in supply, if A) the cost of producing the good changes. B) the price of the good changes C) Both of the above are correct

b

Patents and copyrights are meant to address the _____________ nature of knowledge capital. A) private good B) nonexcludable C) rival D) nonrival

b

Petroleum and solar power are substitutes (in consumption). Petroleum and automobiles are complements (in consumption). When the price of petroleum decreases, the demand for solar power will __________ and the demand for automobiles will ___________. A) decrease ; decrease B) decrease ; increase C) increase ; decrease D) not change ; not change E) increase ; increase

b

Productivity is generally measured as: A) output per year. B) output per worker. C) real output over time. D) nominal output over time

b

Relative to the socially optimal levels, in a free market system individuals are likely to pursue _____________ education, and companies are likely to pursue _______________ research and development. A) too much ; too little B) too little ; too little C) too much ; too much D) too little ; too much E) the right amount of ; the right amount of

b

Suppose that good weather increases the supply of avocados. Avocados are an input in the production of guacamole, and guacamole is in turn a consumption substitute for salsa. The equilibrium price of salsa will __________ and the equilibrium quantity of salsa will ________. A) not change; not change B) fall; fall C) rise; fall D) rise; rise E) fall; rise

b

Suppose that in 2009, 12 million cars were purchased at $15,000 each, while in 2010, 14 million cars were purchased at $12,000 each. What most likely caused this change? A) The demand for automobiles decreased B) The supply of automobiles increased C) The supply of automobiles decreased D) The demand for automobiles increased

b

Suppose that the CPI measures the inflation rate as 4%. Which of the following is most likely to be the actual rate of inflation in the economy? A) 4% B) 3% C) 5%

b

Suppose that the demand for tatoo ink decreases at the same time that there is a technological advance in the production of tatoo ink. It is impossible for the A) equilbrium quantity of tatoo ink to fall. B) equilbrium price of tatoo ink to rise. C) equilbrium quantity of tatoo ink to rise. D) equilbrium price of tatoo ink to fall.

b

Suppose that the price of imported oil rises dramatically. Ceteris paribus, the inflation rate measured by the CPI will be _______ the inflation rate measured by the GDP deflator. A) less than B) greater than C) equal to

b

Suppose that you own a house that was built in 1950. You bought the house in the 2002 for $200,000. It is estimated that you could sell the house today (in 2012) for $300,000. It is also estimated that if the house were a rental property, the monthly rent amount would be $2000. How is the value of this house accounted for in this yearʹs (2012) GDP statistics? A) The estimated home value of $300,000 is included in this yearʹs GDP calculations. B) The ʺimputed rentʺ of $2000 per month is included in this yearʹs GDP calculations. C) Since the house has appreciated at approximately $10,000 per year over the past 10 years, a value of $10,000 is included in this yearʹs GDP calculations. D) There is no value associated with this house in this yearʹs GDP calculations

b

Suppose that ʺsafe carsʺ and ʺdangerous carsʺ are substitutes in consumption. If there is a technological advance in the production of ʺsafe carsʺ then the equilibrium price of ʺsafe carsʺ will __________ and the equilibrium quantity of ʺsafe carsʺ will ______________. Additionally, the equilibrium quantity of ʺdangerous carsʺ will ______________. A) rise ; decrease ; increase B) fall ; increase ; decrease C) fall ; increase ; increase D) rise ; increase ; increase E) None of the above

b

The CPI is used as a cost of living index to adjust the incomes of government workers. Given what we know about the biases in the CPI, incomes that are adjusted using the CPI will typically A) increase by the actual change in the cost of living. B) increase by more than the actual change in the cost of living C) increase by less than the actual change in the cost of living.

b

The advice to ʺkeep searching, there are plenty of jobs around here for which you are qualified,ʺ would be most appropriate for which of the following types of unemployment? A) cyclical unemployment B) frictional unemployment C) seasonal unemployment D) structural unemployment

b

The labor supply curve: A) has a negative slope. B) shows that, all things being equal, more workers will want to work when wages are higher and less will want to work when wages are lower. C) shows the relationship between the total quantity of labor supplied by all firms in the economy and the wage rate. D) All of these are true.

b

The president of a poor country has announced that he will implement the following measures which he claims are designed to increase growth: 1. Reduce corruption in the legal system. 2. Reduce reliance on market forces because they allocate goods and services in an unfair manner. 3. Restrict investment in domestic industries by foreigners because they take some of the profits out of the country. 4. Encourage trade with neighboring countries. 5. Increase the fraction of GDP devoted to consumption by reducing the fraction devoted to investment How many of these measures will likely have a positive effect on long-run growth? A) 1 B) 2 C) 3 D) 4 E) 5

b

The purchase of a factory by a corporation in a foreign country is called A) globally-directed investment. B) foreign direct investment. C) foreign capital depreciation. D) foreign portfolio investment.

b

The trade-offs in the effect of unemployment insurance are: A) it reduces incentive to accept a job, but reduces the number of job offers typically made. B) it prolongs the job search, but reduces the number of job searches a person has to make. C) it is free money and makes people lazy, but without it people would starve. D) it shortens the job search, but lengthens the number of times a person will switch careers.

b

Total changes in GDP over time are: A) bigger than the annual growth rate due to population growth. B) bigger than the annual growth rate due to compounding. C) smaller than the annual growth rate due to backsliding. D) smaller than the annual growth rate due to compounding

b

Upon getting a big promotion, Sally decides to buy a house in the neighborhood she grew up in as a child. In fact, the house she buys used to belong to a neighbor of hers, and so sheʹs certain itʹs in good shape and well worth the $200,000 she pays for it. The only thing Sally needs to do is replace all the gutters for $1,000, which she happily does. How will GDP be affected by Sallyʹs recent purchases? A) Investment will increase by $201,000. B) GDP will increase by $1000. C) Consumption will increase by $210,000. D) Consumption will increase by $1,000, and investment will increase by $200,000.

b

Wages that are above the wage that workers would be willing to accept, where the premium is paid to increase worker productivity, are referred to as: A) wage floors. B) efficiency wages. C) wage ceilings. D) productivity wages.

b

We donʹt typically see wages ________ in response to an economic downturn because ________. A) rise; they are ʺsticky,ʺ and are slow to respond to shifts in the economy B) fall; they are ʺstickyʺ and are slow to respond to shifts in the economy C) rise; they cannot rise above the equilibrium in any circumstance D) fall; they cannot fall below where they were previously set due to inflation

b

When the economy is in good shape, many people pay others to produce things for them. For example, people dine out, hire housekeepers, and the like. When the economy is in bad shape, people are less likely to engage in these activities. For example, they are more likely to prepare their own food and are less likely to dine out. As an economy moves from ʺgood timesʺ to a recession, it is likely that measured production falls and unmeasured production ___________. Thus, actual production ___________________ measured production. A) does not change ; falls more than B) rises ; falls less than C) falls ; falls by the same amount as D) rises ; falls by the same amount as E) falls ; falls more than

b

Which of the following causes the unemployment rate to overstate the true extent of joblessness? A) Discouraged workers are counted as unemployed. B) A drug dealer reports herself as unemployed. C) People who donʹt want to work and donʹt try to find a job are not considered part of the labor force. D) Discouraged workers are not counted as unemployed. E) More than one of the above

b

Which of the following correctly describes the relationship between the price level and the inflation rate? A) High price levels imply that the inflation rate is rising. B) Positive rates of inflation imply that the price level is rising. C) Low price levels imply low inflation rates. D) High price levels imply high inflation rates

b

Which of the following could cause nominal GDP to decrease, but real GDP to increase? A) The price level rises and the quantity of final goods and services produced rises. B) The price level falls and the quantity of final goods and services produced rises. C) The price level rises and the quantity of final goods and services produced falls. D) The price level falls and the quantity of final goods and services produced falls. E) More than one of the above is correct

b

Which of the following could cause nominal GDP to rise, but real GDP to decrease? A) The price level falls and the quantity of final goods and services produced rises. B) The price level rises and the quantity of final goods and services produced falls. C) The price level falls and the quantity of final goods and services produced falls. D) The price level rises and the quantity of final goods and services produced rises. E) More than one of the above

b

Which of the following is a good or service that is directly counted in GDP? A) a used tire you buy for your personal car B) a new tire you buy for your personal car C) used tires bought by a used car dealer to put on a car on his lot D) tires Ford buys to put on a car E) More than one of the above

b

Which of the following is an example of a worker experiencing structural unemployment? A) A college student who graduated last month and began looking for work. B) An assembly line worker who loses his job because of automation. C) A Freightliner employee that got laid off because of the recession of 2001. D) A worker quits his job because he does not get along with his boss. E) A worker that changes jobs to move closer her family

b

Which of the following is an intermediate good? A) Tomatoes grown in your garden that you use to make salsa. B) Tomatoes sold in the grocery store that you use to make salsa. C) Tomatoes sold to a factory and used in the production of spaghetti sauce. D) Tomatoes you buy at a local farmerʹs stand that you use to make salsa

b

Which of the following is included when measuring Gross Domestic Product (GDP)? A) The value of purchases of used goods B) Rent payments made to apartment landlords C) The value of leisure time D) The value of services provided by homemakers

b

Which of the following is most likely to produce sustained levels of economic growth in the long run? A) increases in physical capital B) technological changes

b

Which of the following is not the result of wage stickiness in an economic downturn? A) Cyclical unemployment. B) A shortage of labor. C) Actual wages are temporarily above the market-clearing level. D) A surplus of labor.

b

Which of the following shifts the supply curve rightward? A) an increase in the number of potential buyers B) a decrease in the price of an input used to produce the good C) a decrease in the price of the good D) an increase in the price of the good E) More than one of the above is correct

b

Which of the following would not be included in the GDP category called ʺinvestment expendituresʺ? A) the construction of a new factory by Intel (a computer processor chip manufacturer) B) a purchase of shares of stock in Microsoft C) a purchase of a copy machine by Kinkos (a company that makes copies for consumers) D) spending on new houses

b

Which of the following would shift the demand curve of a good to the right? A) an increase in income if the good is inferior B) an increase in the expected future price of the good C) a decrease in the price of the good D) an increase in the price of a complement E) More than one of the above is correct

b

Why are both education and knowledge capital likely to be under -provided (relative to the socially optimal level) in a market economy? A) Firms and individuals consider both their private benefits of acquiring education and knowledge capital and the benefits that other firms and individuals will experience from this acquisition. B) Firms and individuals only consider their private benefits of acquiring education and knowledge capital and do not consider the benefits that other firms and individuals will experience from this acquisition. C) Firms and individuals only consider their private costs of acquiring education and knowledge capital and do not consider the costs that other firms and individuals will experience from this acquisition. D) None of the above - Actually education and knowledge capital are likely to be provided at their socially optimal levels by a market economy.

b

In the circular flow model, households: -buy goods and services and supply factors of production. -buy goods and services and buy factors of production. -sell goods and services and buy factors of production. -supply goods and services and supply factors of production.

buy goods and services and supply factors of production.

(10) Find image in notes (figure 10-2): Suppose that an economy begins at point B. If the number of factories and machinery grows, then (other things equal) the economy will move to A) A B) B C) C D) D E) E

c

(10) Find image in notes (figure 10-2): Suppose that an economy begins at point B. If this economy gains capital, then (other things equal) the economy will move to A) A B) B C) C D) D E) E

c

(10) Find image in notes (figure 10-2): The movement from E to B to D in the figure above illustrates A) an increase in capital per worker. B) a decrease in capital per worker. C) an improvement in technology. D) diminishing returns to capital. E) diminishing returns to labor

c

(10) Find image in notes (figure 10-2): Which of the following shows the simultaneous effect of technological growth and an increase in the capital stock (all else equal)? A) E to A B) A to B C) A to D D) E to B E) More than one of the above is correct.

c

(3) Find image in notes table (figure 3.13): Refer to Figure 3.13. If supply shifts from S1 to S2 which of the following is TRUE? A) the equilibrium price and equilibrium quantity of cheeseburgers both increase B) there is an increase in the supply of cheeseburgers C) there is a decrease in the quantity demanded of cheeseburgers D) there is a decrease in demand for cheeseburgers E) More than one of the above

c

(3) Find image in notes table (figure 3.2): If the price is $25, then the quantity demanded is ______, the quantity supplied is _______, and the quantity actually consumed is _______. A) 500 ; 800 ; 600 B) 600 ; 800 ; 200 C) 500 ; 800 ; 500 D) 800 ; 600 ; 600 E) 600 ; 800 ; 600

c

(3) Find image in notes table (figure 3.3): A technological advancement in the production of this good would be represented by a movement from A) A to B. B) B to A. C) S1 to S2. D) S2 to S1

c

(3) Find image in notes table (figure 4.2): Assume that the pizza market is initially in equilibrium at Point B. If pizza and hamburgers are consumption substitutes, a decrease in the price of hamburgers will cause a movement from Point B on demand curve D2 to: A) Point C on demand curve D2. B) Point A on demand curve D2. C) demand curve D1. D) demand curve D3.

c

(3) Find image in notes table (figure 4.3): Figure 4.3 illustrates the demand for tacos. Assume that tacos and beer are consumption complements. An increase in the price of beer would bring about a movement from A) point a to point b. B) point c to point b. C) D1 to D0. D) D1 to D2.

c

(3) Find image in notes table (figure H): Assume that the graphs in this figure represent the demand and supply curves for almonds. Which panel best describes what happens in this market when there is a new well-publicized health report proclaiming the health benefits of almond consumption? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

c

(3) Find image in notes table (figure H): Assume that the graphs in this figure represent the demand and supply curves for chicken sandwiches. What panel shows an increase in demand for chicken sandwiches? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

c

(7) Find image in notes (scenario 7-1): Bananaland produces only bananas and sunscreen and the quantities and prices for 2001 and 2002 are given in the table above. The base year is 2001. The growth rate of GDP Deflator from 2001 to 2002 is approximately equal to (choose the closest answer): A) 114% B) 60% C) 28% D) 128% E) 14%

c

(7) Find image in notes (scenario 7-1): What happens in the U.S. GDP accounts when you purchase an $800 Italian -made suit? A) Consumption doesnʹt change, Net Exports fall by $800, and US GDP falls by $800. B) Consumption rises by $800, Net Exports rise by $800, and US GDP rises by $800. C) Consumption rises by $800, Net Exports fall by $800, and US GDP doesnʹt change. D) Consumption doesnʹt change, Net Exports do not change, and US GDP doesnʹt change

c

(7) Find image in notes (table 7-10): Nominal GDP for Nelsonville in 2010 equals A) $5,100. B) $5,500. C) $5,700. D) $6,250. E) None of the above

c

(7) Find image in notes table (2010-2011 data): Bananaland produces only bananas and sunscreen and the quantities and prices for 2010 and 2011 are given in the table above. Nominal GDP in 2011 is equal to A) $190. B) $800. C) $300. D) $80. E) None of the above

c

(7) Find image in notes table (table 6.5): Refer to Table 6.5. Assume that this economy produces only two goods Good X and Good Y. The value for this economyʹs nominal GDP in year 1 A) is $160. B) is $200. C) is $140. D) is $180

c

(7) Find image in notes table (table 6.6): Assume that this economy produces only two goods Good X and Good Y. If year 2 is the base year, the value for this economyʹs real GDP in year 3 is A) $20. B) $39. C) $32. D) $28 E) $24.

c

(7) Find image in notes table (table 7.5): Suppose that a very simple economy produces three goods: cameras, legal services, and books. Suppose the quantities produced and their corresponding prices for 2008 and 2009 are shown in the table above. What is the growth rate of the GDP deflator from 2008 to 2009, using 2009 as the base year? (Choose the answer closest to the correct value.) A) 27.3% B) 30.7% C) 30% D) 25% E) 23%

c

(8) Find image in notes (CPI Table 3): The table above has information about the CPI and nominal wage rate for the country of Syldavia for the years 2000-2002. Which of the following statements is TRUE? A) Real wages did not change between 2001 and 2002 B) The nominal wage had more purchasing power in 2001 than it had in 2002 C) The price level rose from 2000 to 2001 D) The price level rose from 2001 to 2002 E) More than one of the above is correct

c

(8) Find image in notes (Data Table 1): The data in the table above shows the consumption by families in a small (poor) economy. The families consume only salt and bread. The base reference period is 2000. The CPI in 2000 is A) 124. B) 106.2. C) 100. D) 94.2.

c

(8) Find image in notes (table 8-3): Assume the market basket for the consumer price index has three products -- Cokes, hamburgers, and CDs -- with the following values in 2000 and 2006 for price and quantity: The Consumer Price Index for 2000 equals (approximately) A) 93. B) 118. C) 100. D) 108. E) 121

c

(8) Find image in notes (table 8-8): Looking at the table above, real average hourly earnings in 2005 (expressed in ʺbase year dollarsʺ) were A) $11.37 B) $10.24 C) $5.63 D) $3.67

c

(9) Find image in notes (table 1): In the table above, the size of the labor force is A) 80 million. B) 46 million. C) 42 million. D) 40 million

c

(9) Find image in notes (table 3): Using the above table, the labor force participation rate is approximately A) 63% B) 53% C) 70% D) 75% E) 66%

c

(9) Find image in notes (table 3): Using the above table, the unemployment rate is approximately A) 10% B) 2.5% C) 4.8% D) 3.0% E) 3.3%

c

(9) Find image in notes (table 6.2): Refer to Table 6.2. The total number of people unemployed is approximately A) 6.47 million B) 7.58 million C) 6.83 million D) 4.67 million. E) 9.54 million

c

A engineering firm spends money on research and development in order to develop a new production technique. This is : A) included in GDP as consumption spending B) not included in GDP because it is an intermediate good. C) included in GDP as investment spending. D) included in GDP as government spending

c

A engineering firm spends money on research and development in order to develop a new production technique. This is : A) included in GDP as government spending. B) not included in GDP because it is an intermediate good. C) included in GDP as investment spending. D) included in GDP as consumption spending

c

A firm produces $9 million worth of computers in 2010. It sells $8 million worth of these computers in 2010, and the other $1 million of computers in 2011. Which of the following is true? A) 2010 GDP will increase by $8 million. B) 2010 GDP will increase by $1 million. C) 2010 GDP will increase by $9 million

c

A perfectly competitive market is one in which: A) fully informed, price-making buyers and seller easily trade a standardized good or service. B) uninformed, price-making buyers and seller easily trade a standardized good or service. C) fully informed, price-taking buyers and sellers easily trade a standardized good or service. D) uninformed, price-taking buyers and sellers easily trade a standardized good or service.

c

A supply curve A) is the relationship between the supply of a good and the cost of producing the good. B) is a table that shows the relationship between the price of a product and the profits earned by sellers. C) is a curve that shows the relationship between the price of a product and the quantity of the product supplied. D) is a curve that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange with one another

c

A(n) ________ is represented by a rightward shift of the demand curve while a(n) ________ is represented by a movement along a given demand curve. A) increase in quantity demanded; increase in demand B) increase in demand; decrease in demand C) increase in demand; increase in quantity demanded D) decrease in demand; decrease in quantity demanded

c

According to the rule of 70, a country will double its real GDP per capita in 35 years if it grows at an average of ________ per year. A) 5.0% B) 7.0% C) 2.0% D) 3.5%

c

After getting a raise at work, Alexis now regularly buys steak instead of hamburger. Based on this behavior, we can assume: A) steak and hamburger are complementary goods for Alexis. B) steak is an inferior good, and hamburger is a normal good for Alexis. C) steak is a normal good, and hamburger is an inferior good for Alexis. D) steak and hamburger are normal goods for Alexis

c

An economic slow-down would cause the labor: A) supply curve to shift left. B) supply curve to shift right. C) demand curve to shift left. D) demand curve to shift right

c

Apple has been producing the new iPhone throughout 2013, but doesnʹt plan to sell it until March 2014. How are these iPhones, which are sitting in a warehouse somewhere in the U.S., affecting GDP? A) They are considered inventory until they sell, so investment will increase when they are sold in 2014. B) They are not counted in GDP at all since they were not sold. C) They will increase GDP only in the year they are produced, 2013. D) They are inventory and will decrease investment in 2013.

c

Consider the market for flavored mineral water. If the price of soda (a consumption substitute for flavored mineral water) increases, which one of the following is likely to be the outcome? A) the equilibrium quantity of flavored mineral water will fall B) the price of flavored mineral water will fall C) the demand for flavored mineral water will increase (shift right) D) the demand for soda will decrease (shift left) E) More than one of the above are correct

c

Core inflation is measured because the prices of: A) durable goods fluctuate more frequently than the prices of nondurable goods; therefore, removing them from the basket prevents potential distortion. B) retail consumption items fluctuate frequently and can distort actual changes in the cost of living. C) food and energy costs fluctuate frequently and can distort actual changes in the cost of living. D) nondurable goods fluctuate more frequently than the prices of durable goods; therefore, removing them from the basket prevents potential distortion

c

GDP per capita: A) tells us about how the output is allocated in an economy. B) tells us about what you can buy with a given amount of money in that country. C) is an average income per person in an economy. D) All of these statements are true

c

Ham and eggs are complements. If the price of ham rises, the demand for eggs will A) decrease and the demand curve for ham will shift rightward. B) not change but there will be a movement along the demand curve for eggs. C) decrease and the demand curve for eggs will shift leftward. D) increase or decrease but the demand curve for ham will not change

c

If a US company employs Brazilian workers to produce furniture in a Canadian factory, the value of the furniture is ____________ . A) Brazilʹs GDP B) USʹ GDP C) Canadaʹs GDP

c

If property rights are not enforced in a country, A) the market system will still work smoothly. B) that countryʹs growth rate will not be affected. C) entrepreneurs are unlikely to risk their own funds investing in such an economy. D) that country will grow more rapidly because of the reduction of law suits

c

If real GDP in 2010 is higher than nominal GDP of 2010, and the base year is 2009, then A) nominal GDP in 2010 equals nominal GDP in 2009. B) prices in 2010 are higher than prices in 2009. C) prices in 2010 are lower than prices in 2009. D) real GDP in 2010 is larger than real GDP in 2009. E) More than one of the above

c

If real GDP per capita for Econotopia grew from $20 trillion to $40 trillion between 2000 and 2014, then which of the following was the approximate annual growth rate? A) 10% B) 20% C) 5% D) 14%

c

If real GDP per capita for Schruteland grew from $5 trillion to $10 trillion between 1980 and 2015, then which of the following was the approximate annual growth rate? A) 4% B) 6% C) 2% D) 35%

c

If the GDP deflator is 210, this value means that prices have increased A) 210 percent in the last year. B) 210 percent since the base year. C) 110 percent since the base year. D) 10 percent in the last year.

c

If there is frictional unemployment, then the number of available jobs is __________ the number of available workers. A) less than B) equal to C) Both of the above are possible

c

In a given year the nominal GDP growth rate is 10% with an inflation rate of 6% and population growth rate of 1%. Thus, the real growth rate of GDP per capita is: A) 5%. B) 17%. C) 3%. D) 7%

c

Knowledge capital is nonrival in the sense that A) firms can benefit from the research and development of rival firms without paying for that benefit. B) no single company can be excluded from the benefits of new technologies. C) two people can use the same knowledge to develop and produce a product. D) firms do not compete to be the first to develop new technologies.

c

Now that Social Security payments are indexed, the: A) payments are not adjusted enough, so retirees can buy less with their payments over time. B) real value is adjusted to maintain a constant nominal value. C) nominal value is adjusted to maintain a constant real value. D) payments are adjusted so retirees can buy more with their payments over time.

c

One would speak of a movement along a supply curve for a good, rather than a change in supply, if A) the cost of producing the good changes. B) the number of firms providing the good changes. C) the price of the good changes. D) there is a technological breakthrough in the production of the good. E) More than one of the above is correct

c

Suppose that a coffee distributor sells coffee beans to other firms, who later brew coffee for customers. In addition, the coffee distributor also sells specialty coffee drinks directly to customers. Denote the direct sales of coffee to customers as I and the sales of coffee to other firms as II. Which of the following would be directly counted as part of gross domestic product? A) Both I and II B) Neither I nor II C) I but not II D) II but not I

c

Suppose that the market for pineapples (a normal good) is initially in equilibrium. If the incomes of potential buyers rise, but the price of pineapples stays at the initial equilibrium price, then A) The pineapple market will be in equilibrium. B) There will be a surplus of pineapples. C) There will be a shortage of pineapples

c

Suppose that you suspect that the number of ʺdiscouraged workersʺ has increased over the last year. Which of the following pieces of information would be support your suspicion? A) the unemployment rate has risen over the last year B) the number of unemployed people has risen over the last year C) the labor force participation rate has fallen over the last year D) the number of employed people has risen over the last year

c

The Industrial Revolution A) produced goods exclusively using human or animal power. B) had no impact on standards of living in the world. C) marked the beginning of significant economic growth in the world.

c

The law of demand states that, other things remaining the same, the higher the price of a good, the A) larger is the quantity demanded of the good. B) larger is the demand for the good. C) smaller is the quantity demanded of the good. D) smaller is the demand for the good.

c

The phrase ʺdemand has increasedʺ means that A) there has been a downward movement along a demand curve. B) there has been an upward movement along a demand curve. C) a demand curve has shifted to the right. D) a demand curve has shifted to the left

c

The president of a poor country has announced that he will implement the following measures which he claims are designed to increase growth: 1. Reduce corruption in the legal system. 2. Reduce reliance on market forces because they allocate goods and services in an unfair manner. 3. Increase government support for vaccinations of children. 4. Encourage trade with neighboring countries. 5. Increase the fraction of GDP devoted to consumption by reducing the fraction devoted to investment. How many of these measures will likely have a positive effect on long-run growth? A) 1 B) 2 C) 3 D) 4 E) 5

c

Transfer payments are excluded from government purchases in GDP accounting because A) they are already included as part of investment. B) they are difficult to measure. C) nothing is being produced in return for the payment. D) they are a reward to individuals who have been productive their entire lives

c

Which of the following could cause nominal GDP to increase, but real GDP to decrease? A) The price level falls and the quantity of final goods and services produced rises. B) The price level falls and the quantity of final goods and services produced falls. C) The price level rises and the quantity of final goods and services produced falls. D) The price level rises and the quantity of final goods and services produced rises. E) More than one of the above is correct

c

Which of the following explains why frictional unemployment exists in an economy? A) It arises because unemployment benefits encourage workers not to look for jobs. B) It arises because most of the workers donʹt work very hard in their jobs, thus producing friction between employers and employees. C) It arises because it takes time for an unemployed worker to find a firm with a well -matched job vacancy. D) It arises because job search is completely a supply side phenomenon in the labor market, and firms make no attempts to advertise for the vacancies they have.

c

Which of the following implies that Real GDP understates the actual value of production? A) Real GDP does not consider price changes B) Real GDP does not count environmental damage C) Real GDP does not count the underground economy D) Real GDP does not count intermediate goods E) More than one of the above

c

Which of the following is an example of a worker experiencing cyclical unemployment? A) A worker quits his job because he does not get along with his boss. B) A lifeguard who was hired during the summer season is laid off after summer is over. C) A Freightliner employee that got laid off because of the recession of 2001. D) An assembly line worker who loses his job because of automation. E) A worker that changes jobs to move closer her family

c

Which of the following is part of Investment (I) in the GDP statistics? A) Purchases of stocks and bonds B) A decline in consumer debt C) Purchases of new machinery by a business D) Purchases of rare artwork

c

Which of the following statements concerning ʺknowledge capitalʺ is FALSE? A) Knowledge capital is likely to be under-provided by the market system. B) Knowledge capital is non-excludable (in the absence of government policy). C) When one firm uses a piece of knowledge capital, then there is less knowledge capital available for other firms. D) Knowledge capital can be described as ʺideasʺ which are useful in the production of goods and services. E) All of the above are FALSE

c

Which of the following statements concerning ʺknowledge capitalʺ is FALSE? A) Many firms can simultaneously use a piece of knowledge capital. B) Knowledge capital is non-excludable (in the absence of government policy). C) Knowledge capital is likely to be optimally-provided by the market system. D) Knowledge capital can be described as ʺideasʺ which are useful in the production of goods and services. E) All of the above are FALSE

c

Which of the following transactions would be included in GDP? A) Mary buys a used book for $5 at a garage sale. B) Olivia receives a tax refund of $500. C) Peter buys a newly constructed house. D) Nick buys $5,000 worth of stock in Microsoft. E) All of the above

c

Which of the following would cause decreases in both the equilibrium price and quantity of white bread? A) An increase in the price of rye bread, a consumption substitute for white bread. B) A decrease in the price of flour, an input to white bread production. C) An increase in the price of butter, a consumption complement for white bread. D) An increase in the price of flour, an input to white bread production.

c

When we say rational people make decisions at the margin, we are saying that people: -compare the additional costs and additional benefits of the current choice and past choices. -compare the total costs and additional benefits of only the current choice. -compare the additional costs and additional benefits of only the current choice. -compare the additional costs and additional benefits of only the past choices.

compare the additional costs and additional benefits of only the current choice.

You have an 8:30 class this morning but you are feeling extremely tired. You decide whether to get some extra sleep or go to class by: -resolving to go to bed earlier each night. -realizing that without more sleep you won't feel your best. -comparing the benefit of feeling rested to the cost of missing your class. -making a resolution to never schedule anything before 10 am.

comparing the benefit of feeling rested to the cost of missing your class.

f a decrease in the price of laptops causes the demand for tablets to increase, laptops and tablets are _________

complements

Answer the following questions. a. A relatively small but steady economic growth rate can create a large change in economic prosperity in a fairly short period of time. This is a phenomenon known as ______ b. Using the rule of 70, suppose a person lived to be 70 years old in a country with an average annual growth rate in real GDP per capita of 2 percent. The average income during this person's lifetime would increase by approximately: _______ times.

compounding; 4

In economics, we assume that people are ʺrationalʺ. That is, economists believe that people A) only undertake actions if it is in their long-run interest to do so. B) will not engage in activities such as smoking or gambling unless they are irrational. C) consider, from their personal perspective, the expected benefits and costs of actions and try to maximize their net benefits. D) try to earn as much money as possible. E) All of the above are correct

consider, from their personal perspective, the expected benefits and costs of actions and try to maximize their net benefits.

(10) Find image in notes (Figure 11-3): Which of the following would cause an economy to move from a point like A in the figure above to a point like B? A) a technological regression B) a decrease in capital per hour worked C) an improvement in technology D) an increase in capital per hour worked

d

(10) Find image in notes (figure 10-2): Suppose that an economy begins at point B. If managers of business firms discover new managerial techniques that make their production facilities more efficient, the economy will likely move to point A) A B) B C) C D) D E) E

d

(10) Find image in notes (figure 10-2): Which movement best shows the diminishing marginal returns to capital? A) D to B B) B to D C) B to E D) B to C

d

(10) Find image in notes (figure 10-3): According to the idea of ʺconvergenceʺ (i.e. ʺthe catch-up hypothesisʺ ), poorer countries are more likely to be at a point like ________, where growth in GDP is relatively ________, while richer countries are more likely to be at a point like ________, where growth in GDP is relatively ________. A) B; low; A; high B) B; high; A; low C) A; low; B; high D) A; high; B; low

d

(3) Find image in notes table (figure 3-2): If the price is _____, then every willing seller can find a willing buyer, but not every willing buyer can find a willing seller. A) $10 ; $25 B) $10 ; $20 C) $25 ; $20 D) $25 ; $10

d

(3) Find image in notes table (figure 3-2): At a price of $25, how many units will be sold? A) 800 B) 600 C) 400 D) 500

d

(3) Find image in notes table (figure 3.12): Refer to Figure 3.12. The market is initially in equilibrium at Point A. If demand shifts from D1 to D2 and the price of burritos remains constant at $3.00, there will be A) an excess supply of 50 million pounds of burritos. B) an excess supply of 150 million pounds of burritos. C) an excess demand of 100 million pounds of burritos. D) an excess demand of 150 million pounds of burritos.

d

(3) Find image in notes table (figure 3.7): Refer to Figure 3.7. An increase in quantity demanded is represented by movement A) from D2 to D1. B) from D2 to D3. C) along D2 from Point B to point A. D) along D2 from Point B to point C

d

(3) Find image in notes table (figure 4.3): Figure 4.3 illustrates the demand for tacos. Assume tacos are an inferior good. A decrease in income would bring about a movement from A) point a to point b. B) point c to point b. C) D1 to D0. D) D1 to D2

d

(3) Find image in notes table (figure H): Assume that the graphs in this figure represent the demand and supply curves for computer memory. What panel describes the current effect when buyers expect a decrease in computer memory prices in the future? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

d

(8) Find image in notes (Data Table 1): The data in the table above shows the consumption by families in a small (poor) economy. The families consume only salt and bread. The base reference period is 2000. The cost of the CPI basket in 2001 is A) $40.50. B) $3.10. C) $4.10. D) $43.00.

d

(8) Find image in notes (Data Table 2): The data in the table above shows the consumption by typical families in a small economy. The families consume only salt and bread. The base reference period is 2017. The CPI in 2018 is approximately A) 100. B) 74. C) 43. D) 134. E) 109.

d

(9) Find image in notes (table 6.4): Refer to Table 6.4. The labor-force participation rate is approximately A) 97.9% B) 79.7% C) 66.6% D) 83.5% E) 3.7% 4

d

A change in which variable will change (shift) the market demand for a product? A) the number of firms in the market B) the price of the product C) the quantity supplied of the product D) expected future prices E) More than one of the above is correct

d

A demand curve shows the relationship between A) the quantity that consumers are willing and able to buy and the quantity that sellers are willing and able to offer. B) the price of a product and the income demanded to buy it. C) the amount of a product sellers are willing to sell at a particular price and the amount consumers are willing to buy at that price. D) the price of a product and the quantity of the product demanded.

d

A small economy increased its capital per hour worked (K/L) from $10,000 to $20,000. As a result, real GDP per worker (Y/L) grew from $2000 to $2500. If the economy increases its capital per worker (K/L) even further to $30,000, then which of the following is most likely to be the new real GDP per worker (Y/L) (assuming that there is no change in technology)? A) $3000 B) $2200 C) $3500 D) $2800

d

If there is a change in the ability of a firm to produce a given level of output with a given level of inputs, we say there is A) diminishing returns. B) a movement along a given per-worker production function. C) human capital investment. D) technological change

d

A small economy increased its capital per hour worked (K/L) from $40,000 to $50,000. As a result, real GDP per worker (Y/L) grew from $20,000 to $25,000. If the economy increases its capital per hour worked from $50,000 to $60,000, but there is no change in technology, by how much more and in what direction will output per worker change? A) Output per worker will fall by more than $5,000. B) Output per worker will increase by more than $5,000. C) Output per worker will increase by exactly $5,000. D) Output per worker will increase by less than $5,000.

d

According to New Growth theory, relative to the socially optimal levels, firms will ______________ in knowledge capital because the benefits of this capital _______________ A) overinvest ; spillover to other firms B) overinvest ; are entirely captured to by the firm itself C) underinvest ; are entirely captured by the firm itself D) underinvest ; spillover to other firms

d

An example of physical capital is: A) a factory. B) a pen. C) a computer. D) All of the items are examples of physical capital.

d

An increase in cyclical unemployment will result in A) an increase in structural unemployment. B) a decrease in frictional unemployment. C) an increase in the natural rate of unemployment. D) an increase in the unemployment rate. E) More than one of the above is correct.

d

An increase in frictional unemployment will result in A) an increase in structural unemployment. B) a decrease in the natural rate of unemployment. C) a decrease in cyclical unemployment. D) an increase in the unemployment rate. E) More than one of the above is correct

d

Assume that in 2002 the nominal GDP was $350 billion and in 2003 it was $375 billion. On the basis of this information, we: A) can conclude that the economy was achieving real economic growth. B) can conclude that real GDP was higher in 2002 than in 2003. C) can conclude that real GDP was lower in 2002 than in 2003. D) cannot make a meaningful comparison of the economyʹs performance in 2002 relative to 2003.

d

Bill has graduated with his degree in economics. Through Career Services he submitted his resume to several companies and he will visit them during the next two weeks. Bill is considered A) structurally unemployed. B) cyclically unemployed. C) not in the labor force. D) frictionally unemployed.

d

During 2008 the supply of eggs increased while at the same time the demand for eggs decreased. If the magnitude of the demand shift was greater than the magnitude of the supply shift, which of the following occurred? A) The equilibrium price of eggs increased and the equilibrium quantity decreased. B) The equilibrium price of eggs decreased and the equilibrium quantity increased. C) The equilibrium price of eggs increased and the equilibrium quantity increased. D) The equilibrium price of eggs decreased and the equilibrium quantity decreased. E) The equilibrium price of eggs increased and the equilibrium quantity did not change

d

Economists say that the economy is at ʺthe natural rate of unemploymentʺ when: A) the total unemployment rate is zero. B) the structural unemployment rate is zero. C) the frictional unemployment rate is zero. D) cyclical unemployment is zero

d

Employers choose to offer efficiency wages because: A) it will reduce turnover, saving the employer time and money to hire and train new workers. B) it has proven to make workers more productive. C) they give employees an incentive to work hard to keep their jobs. D) All of these are true

d

For a country to acquire more physical capital it: A) must pay for the investment by reducing current consumption. B) faces the investment trade-off. C) must forgo current consumption. D) All of these are true.

d

For which type(s) of unemployment is it possible that the number of available workers and the number of available jobs are equal? A) structural unemployment B) cyclical unemployment C) frictional unemployment D) both frictional and structural unemployment E) None of the above

d

How would you best describe a manufacturing employee who has been fired because he was replaced by a robot (new technology) and does not have the skills necessary to help operate the robot? A) cyclically unemployed B) job leaver C) entrant/reentrant D) structurally unemployed

d

Hurricane Katrina damaged a large portion of refining and pipeline capacity when it swept through the Gulf coast states in August 2005. As a result of this, many gasoline distributors were not able to maintain normal deliveries. If the price of gasoline stayed at the pre-hurricane price (that is, if the price of gasoline did not change despite the hurricane), then we would expect to see A) an increase in the demand for gasoline. B) a surplus of gasoline. C) the quantity demanded equal to the quantity supplied. D) a shortage of gasoline.

d

If GDP is currently $13 trillion and is growing at a rate of 7% per year, how long will it take GDP to reach $26 trillion? A) about 7 years B) about 17 years C) about 14 years D) about 10 years

d

If Italyʹs real GDP fell from $2.2 trillion one year to $1.9 trillion the next, the annual growth rate would be: A) -15.8 % B) 15.8 % C) 13.6 % D) -13.6 %

d

If buyers and sellers both expect the price of washing machines to rise within the next six months, today in the washing machine market, the demand will A) decrease, supply will increase, and the change in the equilibrium price will be ambiguous. B) increase, supply will increase, and the change in the equilibrium price will be ambiguous. C) increase, supply will decrease, and the equilibrium price will fall. D) increase, supply will decrease, and the equilibrium price will rise. E) decrease, supply will increase, and the equilibrium price will fall.

d

If the market for tires is unregulated and is presently characterized by excess supply, you can accurately predict that price will A) decrease, the quantity demanded will fall, and the quantity supplied will rise. B) increase, the quantity demanded will fall, and the quantity supplied will rise. C) increase, the quantity demanded will rise, and the quantity supplied will fall. D) decrease, the quantity demanded will rise, and the quantity supplied will fall.

d

If the number of unemployed workers is 19 million, the number in the working-age population is 500 million, and the unemployment rate is 4%, how many workers are in the labor force? A) 20 million B) 1 million C) 481 million D) 475 million E) None of the above

d

In 1996, a group of American doctors called for a limit on the number of foreign-trained physicians permitted to practice in the United States. Such a policy would result in a decrease in supply of doctor services in the United States. It is likely that the equilibrium price of doctor services would __________ and the equilibrium quantity of doctor services would ___________. A) increase ; increase B) decrease ; increase C) not change ; decrease D) increase ; decrease E) decrease ; decrease

d

In January of 2001, the population of the United States was 276.8 million, the working-age population was 210.2 million, the total number of people ʺemployedʺ and ʺunemployedʺ was 145.0 million, and the total number of unemployed people was 5.5 million. What was the unemployment rate? A) 8.1 percent B) 2.4 percent C) 10.0 percent D) 3.8 percent

d

In constructing the CPI, the BLS has to deal with ʺsubstitution biasʺ which is defined the bias in the CPI resulting from A) quality changes in existing products that cause prices to increase. B) new goods being introduced that are substitutes for older goods. C) consumersʹ substitution of discount stores for full service stores to avoid the higher prices in the full service stores. D) consumersʹ substitution away from goods that become relatively more expensive and toward goods that become relatively cheaper.

d

In practice, the three measurements of inflation, the CPI, PPI, and GDP deflator: A) all measure inflation, but focus on different parts of the economy. B) are all positively correlated. C) all closely track each other. D) All of these statements are true

d

Knowledge capital is ________ and ________. As a result, firms ________ free ride on the efforts of other firms. A) nonrival; nonexcludable; cannot B) rival; nonexcludable; cannot C) nonrival; excludable; can D) nonrival; nonexcludable; can

d

Minimum wage laws cause unemployment because the legal minimum wage is set A) too low, thus discouraging more workers. B) above the market wage, causing the quantity of labor demanded to be greater than the quantity of labor supplied. C) below the market wage, causing the quantity of labor demanded to be greater than the quantity of labor supplied. D) above the market wage, causing the quantity of labor demanded to be less than the quantity of labor supplied. E) below the market wage, causing the quantity of labor demanded to be less than the quantity of labor supplied

d

New growth theory states that increases in ________ capital will result in ________ at the ________ level. A) knowledge; increasing returns; firm B) knowledge; decreasing returns; economy C) physical; increasing returns; economy D) knowledge; increasing returns; economy E) physical; increasing returns; firm

d

Sarah is a full-time student who is not looking for work. What kind of unemployment is Sarah experiencing? A) structural B) cyclical C) frictional D) Sarah is not experiencing unemployment of any kind because she is not currently part of the labor force.

d

Suppose that 100 people that were officially classified as ʺunemployedʺ quit looking for work in order to go back to school full-time. This change will cause: A) no change in the unemployment rate and a decrease in the labor force participation rate. B) an increase in the unemployment rate and an increase in the labor force participation rate. C) a decrease in the unemployment rate and no change in the labor force participation rate. D) a decrease in the unemployment rate and a decrease in the labor force participation rate. E) an increase in the unemployment rate and a decrease in the labor force participation rate.

d

Suppose that a personʹs nominal income rises by 5 percent and the price level rises from 125 to 130. The personʹs real income will: A) fall by about 1 percent. B) rise by about 4 percent. C) remain constant. D) rise by about 1 percent.

d

Suppose that a very poor country finds itself in a situation where its citizens spend all of their time simply trying to survive by searching for food and shelter. As such, there are not resources available for education and infrastructure. This is situation is termed ____________________. A) the institutions hypothesis B) diminishing returns C) new growth theory D) a poverty trap

d

Suppose that an economy moves from a recession to an expansion. As the economy improves, the number of discouraged workers likely _________. This change in the number of discouraged workers, other things equal, causes the unemployment rate to __________. A) increases ; increase B) increases ; decrease C) decreases ; decrease D) decreases ; increase

d

Suppose that in 2009, 12 million cars were purchased at $15,000 each, while in 2010, 11 million cars were purchased at $12,000 each. What most likely caused this change? A) The supply of automobiles decreased B) The demand for automobiles increased C) The supply of automobiles increased D) The demand for automobiles decreased

d

Suppose that in 2009, 12 million cars were purchased at $15,000 each, while in 2010, 14 million cars were purchased at $18,000 each. What most likely caused this change? A) The supply of automobiles decreased B) The supply of automobiles increased C) The demand for automobiles decreased D) The demand for automobiles increased

d

Suppose that in 2011, 12 million cars were purchased at $15,000 each, while in 2012, 10 million cars were purchased at $13,000 each. What might have caused this change? A) The price of airplane tickets (a comsumption substitute for cars) rose B) Automobile manufacturing technology decreased C) Automobile manufacturing technology increased D) The price of airplane tickets (a comsumption substitute for cars) fell

d

Suppose that the demand for a product falls during the winter months, but its price rises during those months. Which of the following best describes how this could occur? A) there is also a decrease in supply during winter months and it is quite small in size B) there is also an increase in supply during winter months and it is quite large in size C) there is also an increase in supply during winter months and it is quite small in size D) there is also a decrease in supply during winter months and it is quite large in size E) None of the above - it is impossible for price to rise if demand decreases

d

Which of the following is correct? A) Adults not in the labor force = adult population - employed workers B) Adults not in the labor force = unemployed workers C) Adults not in the labor force = unemployed workers - employed workers D) Adults not in the labor force = adult population - employed workers - unemployed workers

d

Suppose that the demand for a product falls during the winter months, but its price rises during those months. Which of the following best describes how this could occur? A) there is also an increase in supply during winter months and it is quite large in size B) there is also a decrease in supply during winter months and it is quite small in size C) there is also an increase in supply during winter months and it is quite small in size D) there is also a decrease in supply during winter months and it is quite large in size E) None of the above - it is impossible for price to rise if demand decreases

d

Suppose that you observe an increase in the equilibrium price of a good. You are not able to observe what happens to the equilibrium quantity. Which of the following is the most correct conclusion? A) either supply increased or demand increased B) it must be the case that supply increased C) it must be the case that demand increased D) either supply decreased or demand increased

d

The convergence theory suggests: A) countries may have the same rate of growth but differing levels of income. B) all countries eventually will experience the same rate of growth. C) that poorer countries will grow faster than rich ones. D) All of these are true

d

The income approach to calculating GDP: A) is more accurate than using the expenditure approach. B) is simpler to calculate than the expenditure approach. C) is less accurate than using the expenditure approach. D) will generate the same answer as using the expenditure approach.

d

The natural rate of unemployment means that A) everyone who wants a job has a job, although it may not be the job they really want. B) the sum of structural and cyclical unemployment is greater than frictional unemployment. C) everyone who wants a job has a job, and they have the job they most prefer. D) only frictional, structural, and classical (real-wage) unemployment exist

d

The natural rate of unemployment means that A) everyone who wants a job has a job, and they have the job they most prefer. B) everyone who wants a job has a job, although it may not be the job they really want. C) the sum of structural and cyclical unemployment is greater than frictional unemployment. D) only frictional, structural, and classical (real-wage) unemployment exist. 47) 48)

d

The president of a poor country has announced that he will implement the following measures which he claims are designed to increase growth: 1. Reduce reliance on market forces because they allocate goods and services in an unfair manner. 2. Restrict investment in domestic industries by foreigners because they take some of the profits out of the country. 3. Discourage trade with neighboring countries in order to protect domestic industries. 4. Increase the fraction of GDP devoted to investment. How many of these measures will likely have a positive effect on long-run growth? A) 1 B) 2 C) 3 D) 4 E) 0 (None of these policies will have a positive effect on long-run growth)

d

The single most important determinant of long run economic growth is the growth rate of A) the money supply B) the average waist size of a countryʹs citizens C) the CPI D) labor productivity

d

The substitution bias in the consumer price index refers to the idea that consumers ________ the quantity of products they buy in response to price, and the CPI does not reflect this and ________ the cost of the market basket. A) do not change; over-estimates B) do not change; under-estimates C) change; under-estimates D) change; over-estimates

d

Transactions costs are: A) often cited as a reason why purchasing power parity doesnʹt hold. B) the time and energy involved with creating an exchange. C) usually higher when transactions take place internationally. D) All of these statements are true

d

What is human capital? A) buildings, equipment, and machinery owned by firms B) labor productivity C) buildings, equipment, and machinery owned by individuals rather than firms D) the accumulated knowledge and skills that workers acquire from education, training, and their life experiences

d

Which of the following correctly describes the relationship between the price level and the inflation rate? A) Low price levels imply low inflation rates. B) High price levels imply high inflation rates. C) Positive rates of inflation imply that price levels are high. D) Negative rates of inflation imply that prices are falling. E) High price levels imply that the inflation rate is rising.

d

Which of the following could cause nominal GDP to decrease, but real GDP to increase? A) The price level falls and the quantity of final goods and services produced falls. B) The price level rises and the quantity of final goods and services produced falls. C) The price level rises and the quantity of final goods and services produced rises. D) The price level falls and the quantity of final goods and services produced rises. E) More than one of the above is correct

d

Which of the following definitely results in a productʹs equilibrium price rising? A) a decrease in both demand and supply B) an increase in both demand and supply C) a decrease in demand combined with an increase in supply D) an increase in demand combined with a decrease in supply E) More than one of the above

d

Which of the following goods is directly counted in GDP (Subway is a restaurant which serves sandwiches)? A) the plastic bags that Subway purchases to wrap its sandwiches B) the bread that Subway purchases for its sandwiches C) the lettuce that Subway purchases for its sandwiches D) a 12 inch Subway sandwich purchased by a student E) More than one of the above is correct

d

Which of the following has a tendency to reduce the unemployment rate? A) firms begin offering wages above the equilibrium wage rate B) increasing the minimum wage in an economy C) a law which does not allow firms to advertise job openings on the internet D) decreasing unemployment insurance in an economy E) More than one of the above is correct.

d

Which of the following illustrates the ʺlaw of supplyʺ? A) As the cost of producing socks increases, sock producers respond by producing more socks to make up for their lower profit margin. B) As the cost of producing socks increases, sock producers respond by producing less socks. C) As the price of socks decreases, sock producers respond by producing more socks. D) As the price of socks decreases, sock producers respond by producing fewer socks.

d

Which of the following statements is correct in terms of GDP accounting? A) Net exports (NX) are imports minus exports. B) The purchase of a new home is treated as consumption spending (C). C) Transfer payments are part of GDP. D) The salaries of government workers are part of the government purchases (G). E) More than one of the above is correct

d

Which of the following statements is true? A) If both demand and supply decrease there must be a decrease in equilibrium price; equilibrium quantity may either increase or decrease. B) A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand. C) An increase in demand causes a change in equilibrium price; the change in price causes a shift of the supply curve. D) If demand increases and supply decreases then the equilibrium price will increase. E) More than one of the above is correct

d

suppose that nominal GDP in 2005 was less than real GDP in 2005. Given this information, we know with certainty that A) the price level in 2005 was greater than the price level in the base year. B) real GDP in 2005 was less than real GDP in the base year. C) real GDP in 2005 was greater than real GDP in the base year. D) the price level in 2005 was less than the price level in the base year

d

if the government eliminated unemployment benefits, then the official unemployment rate would likely ___________

decrease

If a breakthrough in battery technology enables cell phone manufacturers to construct phones with the same battery life for less money, then in the cell phone market, equilibrium price _________ and equilibrium quantity __________

decreases; increases

Suppose an economic boom causes incomes to increase. This will cause the: -demand for smart phones to increase, and both the price of smart phones and the quantity of smart phones traded would rise. -supply of smart phones to decrease; the price of smart phones would increase and the quantity of smart phones traded would fall. -demand for smart phones to decrease, and both the price of smart phones and the quantity of smart phones traded would fall. -supply of smart phones to increase; the price of smart phones would decrease and the quantity of smart phones traded would rise.

demand for smart phones to increase, and both the price of smart phones and the quantity of smart phones traded would rise.

(7) Find image in notes (scenario 7-1): Bananaland produces only bananas and sunscreen and the quantities and prices for 2001 and 2002 are given in the table above. The base year is 2001. The growth rate of Real GDP from 2001 to 2002 is approximately equal to (choose the closest answer): A) -60% B) +60% C) +14% D) +6% E) +25%

e

(7) Find image in notes (table 7-10): Using 2010 as the base year, the inflation rate (using the change of the GDP deflator) between 2009 and 2010 is approximately (choose the closest answer) A) -12% B) 12% C) 9.6% D) -13.6% E) 13.6%

e

(7) Find image in notes (table 7-10): The GDP Deflator in 2009 (using 2010 as the base year) equals A) 100 B) 141 C) 108 D) 114 E) 88

e

(7) Find image in notes table (2010-2011 data): Bananaland produces only bananas and sunscreen and the quantities and prices for 2010 and 2011 are given in the table above. The base year is 2011. Between 2010 and 2011, the price level in Bananaland (choose the closest answer): A) does not change because the price of one good drops by $1 but the price of the other good rises by $1 B) increases by 15.8% C) decreases by 15.8% D) decreases by 18.8% E) increases by 18.8%

e

(7) Find image in notes table (table 6.5): Refer to Table 6.5. Assume that this economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economyʹs GDP deflator in year 2 is A) 179. B) 168 C) 100. D) 93.9. E) 106.5

e

(8) Find image in notes (CPI Table 1): The table above has information about the CPI and nominal wage rate for the country of Syldavia for the years 2000-2002. . The reference base year is 2000. The inflation rate in Syldavia from 2001 to 2002 was approximately (choose the closest answer) A) 6.5% B) 5.9% C) 5% D) 9.0% E) 9.5%

e

(8) Find image in notes (Table 9-2): Assume the market basket for the consumer price index has two products bread and milk with the above values in 2006 and 2013 for price and quantity. The Consumer Price Index for 2013 equals approximately A) 118. B) 100. C) 16. D) 85. E) 116.

e

(8) Find image in notes (table 6.10): Refer to Table 6.10. If 2000 is the base year, the inflation rate between 2000 and 2001 is approximately: A) 17.4%. B) 16.5%. C) 15.9%. D) 51.9% E) 13.9%.

e

(8) Find image in notes (table 8-6): Suppose an economy has only three goods and the typical family purchases the amounts given in the table above. If 2000 is the base year, then what is the CPI for 2008? A) 40.08 B) 180 C) 100 D) 188 E) None of the above

e

Establishing a state employment agency that speeds up the process of matching unemployed workers with unfilled jobs is an attempt to lower A) cyclical unemployment. B) unnatural unemployment. C) structural unemployment. D) cyclical unemployment. E) frictional unemployment.

e

If the number of unemployed workers is 50 million, the number in the working-age population is 500 million, and the unemployment rate is 12.5%, what is the labor force participation rate? A) 87.5% B) 90% C) 22.5% D) 67% E) 80%

e

In 1970, the CPI was 50 and in 2017 it was 240. A cup of coffee cost $0.20 in 1970. What is the approximate price of this cup of coffee expressed in 2017 dollars? A) $0.48 B) $0.04 C) $4.80 D) $1.48 E) $0.96

e

In 1980, the CPI was 85 and in 2014 it was 222. A cup of coffee cost $0.40 in 1980. What is the approximate price of this cup of coffee in 2014 dollars? A) $0.34 B) $0.15 C) $0.88 D) $8.88 E) $1.04

e

People who lost their jobs as hand-drawn animators because of the popularity of computer-generated 3D animation are examples of persons who are suffering A) frictional unemployment. B) unnatural unemployment. C) classical unemployment. D) cyclical unemployment. E) structural unemployment

e

Suppose that the prices of dairy products have risen less than prices in general over the last several years. To which problem in the construction of the CPI is this most relevant? A) outlet bias B) quality bias C) the Milk Cow Blues bias D) new product bias E) substitution bias

e

The GDP Deflator measures the ___________ of an economy. A) employment rate B) level of output C) growth rate of output D) unemployment rate E) price level

e

We talked about the importance of ʺinstitutionsʺ for long-run economic growth. Which of the following statements about institutions is TRUE? A) Institutions place constraints on behavior. B) Institutions affect incentives. C) Institutions are determined by individuals as members of society. D) Institutions have a large impact on economic growth. E) More than one of the above is correct

e

When the economy is in good shape, many people pay others to produce things for them. For example, people dine out, hire housekeepers, and the like. When the economy is in bad shape, people are less likely to engage in these activities. For example, they are more likely to prepare their own food and are less likely to dine out. As an economy moves from ʺgood timesʺ to a recession, it is likely that measured production falls and unmeasured production ___________. Thus, actual production ___________________ measured production. A) does not change ; falls more than B) falls ; falls more than C) rises ; falls by the same amount as D) falls ; falls by the same amount as E) rises ; falls less than

e

Which of the following causes the unemployment rate to overstate the true extent of joblessness? A) A drug dealer reports herself as unemployed. B) Discouraged workers are counted as unemployed. C) Discouraged workers are not counted as unemployed. D) Persons who collect unemployment benefits report themselves to be searching for a job even if they do not actually want a job. E) More than one of the above causes the unemployment rate to overstate the true extent of joblessness.

e

Macroeconomics deals with ________ while microeconomics deals with ________. A) choices that involve money; choices that does not involve money B) choices of rich people; choices of poor people C) choices important to people; choices not important to people D) economywide choices; choices of individuals

economywide choices; choices of individuals

The use of resources in the most productive way possible to produce the goods and services that have the greatest total economic value to society is called: A) innovation. B) economic quantity. C) efficiency. D) sustainability

efficiency.

Suppose that the current allocation of resources is such that the economy is not producing the goods and services that have the greatest value to society. An economist would say that this economy is not: -efficient. -marginal. -productive. -normative.

efficient.

In the simple circular flow model, the amount of money spent on goods and services is __________ the amount of incomes generated by the production. A) equal to B) greater than C) less than

equal to

The Consumer Price Index is always ______ in the base year

equal to

In France, labor laws have typically made it very difficult (or even illegal) for firms to fire workers during economic downturns. These laws would cause cyclical unemployment to: -fall, but frictional and structural unemployment will also fall because there will be fewer workers leaving their jobs. -rise, but frictional and structural unemployment will rise, because there will be fewer workers leaving their jobs. -rise, along with frictional and structural unemployment, because it is riskier to hire workers. -fall, but frictional and structural unemployment will rise because it is riskier to hire workers.

fall, but frictional and structural unemployment will rise because it is riskier to hire workers.

T/F: If the official unemployment rate decreases two or three m

false

T/F: The idea of decreasing marginal returns to factors of production contradicts the theoretical basis of convergence theory.

false

Unemployment is often called a lagging or trailing indicator because unemployment tends to rise some time after the economy begins to slow down, and unemployment begins to fall again after the economy begins to rebound. Unemployment trails GDP because: -when the economy is in a recession, firms do not want to pay unemployment insurance, and during expansions they do not want the added cost of new employees. -firms will reduce employee work hours before laying them off when the economy is in recession, and increase hours of existing workers before hiring new workers when the economy expands. -laws prevent firms from reducing employment during recessions and during expansions people are still collecting unemployment insurance. -the labor force increases during recessions and shrinks during expansions.

firms will reduce employee work hours before laying them off when the economy is in recession, and increase hours of existing workers before hiring new workers when the economy expands.

Jimmy is very excited about the costume party with a 1990s theme. He is planning to dress up as MC Hammer but is also considering going as a lifeguard from Baywatch. His opportunity cost of arriving dressed like MC Hammer is: A) the savings from not purchasing red swimming trunks. B) giving up the alternative of dressing like a lifeguard. C) the cost of parachute pants that MC Hammer would wear. D) There is no opportunity cost because he attended the party either way.

giving up the alternative of dressing like a lifeguard.

When a demand curve is graphed: -price is held constant. -all factors affecting demand (including price) are held constant. -quantity demanded is held constant. -the nonprice determinants of demand are held constant.

he nonprice determinants of demand are held constant.

All economics questions and problems arise because A) the rich take too much and donʹt leave enough for the poor. B) people donʹt work hard enough. C) political parties always disagree. D) human wants exceed resources available

human wants exceed resources available

If the growth rate in nominal income is larger than the inflation rate (as measured by the change in the CPI or the GDP deflator), the real value of income has: -decreased since real income has grown slower than the price index. -increased since nominal income has grown faster than the price index. -decreased since nominal income has grown faster than the price index. -increased since real income has grown faster than the price index.

increased since nominal income has grown faster than the price index.

The two flows, or things being exchanged, in the circular flow model are: A) inputs/outputs and money. B) inputs and outputs. C) land and labor. D) imports and exports.

inputs/outputs and money.

It may be rational for a firm to offer wages above the minimum wage because paying higher wages: -is likely to attract higher-quality workers, who will be more productive, and there will likely be less turnover. -allows employees to buy more of the firm's products. -creates an atmosphere of progress and forward thinking management. -can indicate that the firm is very profitable, attracting more sales.

is likely to attract higher-quality workers, who will be more productive, and there will likely be less turnover.

Rapid economic growth: -never actually exceeds 2% per year. -occurred mostly between 300 and 500 years ago. -is relatively new in the context of history. -has occurred periodically over the past 1000 years.

is relatively new in the context of history.

Saturday afternoon you can either attend a street festival, work and earn $100, or study for your midterm exam. Working is really not something that you want to do, but you are considering either going to street festival or studying. Ultimately, you decide to stay home and study. The opportunity cost of the time spent studying: A) is zero, because you donʹt have to spend any money to study . B) is the loss of $100 worth of wages and the benefit of going to the street festival. C) is earning a high score on your midterm. D) is the benefit that could have been received at the street festival.

is the benefit that could have been received at the street festival.

air travel from New York to LA costs $800 and takes 4 hours. A bus ticket between the cities costs $100 and takes 104 hours other things constant, the minimum value of one's time that would induce a rational individuals to fly rather than drive would be: -just over $100 per hour -just over $700 per hour -just over $7 per hour -anything greater than $0 per hour -just over $10 per hour

just over $7 per hour

In economic analysis, peopleʹs resources are A) unlimited and their wants are also unlimited. B) unlimited and their wants are limited. C) limited and their wants are also limited. D) limited and their wants are unlimited.

limited and their wants are unlimited

Scarcity reflects our inability to satisfy wants due to: A) limited resources. B) unemployed workers. C) inefficient political systems. D) unlimited resources.

limited resources.

which of the following is an example of irrational behavior (according to our definition of rationality) -Steven loses an average of $500 each week playing the lottery -Lucas estimates that he will get $600 of benefit from buying a pair of downhill skis and the price of skis is $700. He decides to buy the skis -John doesn't save for this retirement -inez smokes a pack of cigarettes a day despite knowing that it will harm her health -all of the above are examples of irrational behavior

lucas estimates that he will get $600 of benefit from buying a pair of downhill skis and the price of skis is $700. He decides to buy the skis

Think about the connection between the press and government. A free press can be important for economic growth because a free, independent press: -provides a way for the government to inform the people about policies. -enables information sharing that is critical to international trade. -makes it so government officials are less inclined to engage in behavior detrimental to the economy because their actions might be exposed. -is one of the largest sectors of every economy.

makes it so government officials are less inclined to engage in behavior detrimental to the economy because their actions might be exposed.

If Country X has a larger GDP than Country Y, in general the citizens of Country X _________ have a higher standard of living than the citizens in Country Y.

may or may not

How is it possible that Switzerland, a landlocked country with almost no natural resources, is one of the richest countries in the world while the Democratic Republic of the Congo, a huge country with vast deposits of many strategically important minerals, is one of the poorest? The case of Switzerland vs. the Democratic Republic of the Congo highlights that: -it is important to extract as much of the natural resources as possible. -natural resources do not make up for all of the advantages that the other components of productivity growth bring. -natural resources are more important than the other components of productivity growth. -once you become rich, it is easier to get even richer.

natural resources do not make up for all of the advantages that the other components of productivity growth bring.

pepe's pizza company is the owner of the building in which it is located. Pepe could rent out the building for $4000 a month is he didn't use it for his restaurant. Bethany's bakery pays for $4000 a month in rent for the building that she uses for her restaurant. Who faces the higher opportunity cost if the building they use for their restaurant? -bethany -pepe -neither -- their opportunity cost for the buildings are equal

neither -- their opportunity cost for the buildings are equal

positive or normative: "allowing public utilities to charge higher prices from electricity is wrong because public agency should not earn profits"

normative

positive or normative: "current gas prices are shamefully high"

normative

positive or normative: "the minimum wage law is a good law to have"

normative

positive or normative: President Obama'd healthcare plan was a bad idea

normative

positive or normative: everyone deserves basic healthcare

normative

Disagreeing about a normative statement means: -not agreeing with someone's opinion. -you require more information. -you doubt someone's expertise. -not accepting the facts.

not agreeing with someone's opinion.

Structural employment:

occurs due to a mismatch between the skills workers can offer and the skills in demand in the economy

Cyclical unemployment:

occurs when people become temporarily unemployed due to an economic downturn.

Causation means that: -the occurrence of one event is sufficient to imply the occurrence of another event. -there is a consistently observed relationship between two events. -one event brings about another event. -two events are not related to each other.

one event brings about another event.

You supervise a team of salespeople. Your employees already receive a company discount. A positive __________ incentive would include a reward such as a bonus, a gift certificate, or an extra discount on company merchandise to the most productive employee of the month. A negative __________ incentive would include an announcement that employees who fail to meet targets will lose their company discount.

positive; negative

A statement that makes a factual claim about how the world actually works is called a _________. A statement that makes a claim about how the world should be is called a __________.

positive; normative

Cultures around the world use food to convey social values. This is a ___________ statement. Food is the best way to understand the social values of a culture. This is a _________ statement.

positive; normative

A country is attempting to measure its growth rate in technology. This is: -possible to estimate using the growth accounting equation. -impossible because you cannot directly observe technology. -straightforward because technology is measured as the value of the new capital. -not necessary because the growth rate in technology is the same as the growth rate in output.

possible to estimate using the growth accounting equation.

Both minivan sales and birth rates are on the rise. The conclusion that minivans cause people to have children is an example of making the mistake of: A) reverse causality. B) omitted variables. C) correlation without causation. D) extrapolation.

reverse causality.

In the circular flow model, firms: -sell goods and services and buy factors of production. -buy goods and services and buy factors of production. -buy goods and services and supply factors of production. -supply goods and services and supply factors of production.

sell goods and services and buy factors of production.

Suppose the baby boomers begin to retire and this reduces the labor-force participation rate, causing a decrease in the supply of labor at any wage. The labor supply curve_________ . If wages freely adjust, then the wage will _________. If wages are sticky, then the unemployment rate will ___________

shifts to the left increse increase

Suppose an increase in the level of migration increases the supply of labor at any wage. The labor supply curve _________. If wages freely adjust, then the wage will ___________. If wages are sticky, then the unemployment rate will ___________.

shifts to the right decrease increase

Many believe that technology is very costly to create, but cheap to transfer. For example, think of the personal computer: The technology underpinning the personal computer took a generation of time and a ton of money to create. However, now that the personal computer has been created, it is easy for others to purchase and reap the benefits. The U.S. has traditionally been more apt to create new technology whereas China has traditionally been more apt to adopt technologies created elsewhere. These observations imply that growth: -convergence will be unlikely to occur between rich and poor countries. -should be faster in a country that has to engage in the creation of new technologies and slower in countries that get to deploy technologies that have already been created elsewhere. -should be slower in a country that has to engage in the creation of new technologies and faster in countries that get to deploy technologies that have already been created elsewhere. -convergence cannot occur easily because there are obstacles to technology transfers.

should be slower in a country that has to engage in the creation of new technologies and faster in countries that get to deploy technologies that have already been created elsewhere.

Suppose an economic boom drives up wages for the sales representatives who work for cell phone companies. This will cause the: -supply of cell phones to increase; the price of cell phones would decrease and the quantity of cell phones traded would rise. -supply of cell phones to decrease; the price of cell phones would increase and the quantity of cell phones traded would fall. -demand for cell phones to decrease, and both the price of cell phones and the quantity of cell phones traded would fall. -demand for cell phones to increase, and both the price of cell phones and the quantity of cell phones traded would rise.

supply of cell phones to decrease; the price of cell phones would increase and the quantity of cell phones traded would fall.

If a breakthrough in battery technology enables cell phone manufacturers to construct phones with the same battery life for less money, then in the market for cell phones: -shifts to the left. -demand shifts to the right. -demand shifts to the left. -supply shifts to the right.

supply shifts to the right.

Susan has a chance to take two weeks of unpaid leave from her job to go on a trip to Antarctica that will cost $5,000. She earns $2,000 per week. She estimates that the trip will be worth twice what she has to pay for the pleasure it will give her. Susan should: -take the trip because you only live once and that's what she prefers. -continue to collect information because she cannot make a decision now. -not take the trip because the cost of the trip is more than her benefit. -take the trip because the cost of the trip is less than her benefit.

take the trip because the cost of the trip is less than her benefit.

U.S. car dealers sell both used and new cars each year. However, only the sales of the new cars count toward GDP. The sale of used cars does not count because: -there are more used cars than new cars. -the car had been previously counted in the GDP of the year it was built. -the value of the used car depends on the value of the new car. -the value of used cars cannot be determined.

the car had been previously counted in the GDP of the year it was built.

An unemployed individual decides to spend the day fishing. The opportunity cost of fishing is equal to: A) zero, because the person doesnʹt have a job. B) the cost of bait and any other monetary expenses. C) the cost of bait, any other monetary expenses, and the value of the individualʹs wages while he was working. D) the cost of bait, any other monetary expenses, and the value of the best alternative use of the individualʹs time.

the cost of bait, any other monetary expenses, and the value of the best alternative use of the individualʹs time.

Price taking behavior for a firm means that: -the firm has no individual effect on the market price. -the firm must take the price that any consumer offers. -the firm is not legally allowed to set a price. -the price in the market is fixed and cannot change.

the firm has no individual effect on the market price.

As a recession drags on for an extended period of time: -the labor force participation rate will rise. Workers who have been cyclically unemployed for a long period of time begin to see their skills deteriorate and may move from frictionally unemployed to structurally unemployed. -the labor force participation rate will fall. Workers who have been cyclically unemployed for a long period of time begin to see their skills deteriorate and may move from cyclically unemployed to structurally unemployed. -the labor force participation rate will rise. Workers who have been cyclically unemployed for a long period of time begin to see their skills deteriorate and may move from cyclically unemployed to frictionally unemployed. -the labor force participation rate will fall. Workers who have been cyclically unemployed for a long period of time begin to see their skills deteriorate and may move from frictionally unemployed to cyclically unemployed.

the labor force participation rate will fall. Workers who have been cyclically unemployed for a long period of time begin to see their skills deteriorate and may move from cyclically unemployed to structurally unemployed.

Suppose the president of a country comes to you for advice. The country is currently at eight percent unemployment and the president wishes to reduce unemployment in the country to three percent. As an economist, you determine that the country's natural rate of unemployment is five percent. You can advise the president that the target unemployment rate should be: -three percent, because this will stimulate the economy. -the natural rate of unemployment, not below it. -the difference between the actual unemployment rate and the natural rate of unemployment. -zero, because this result in the lowest inflation rate.

the natural rate of unemployment, not below it.

A demand schedule shows: -the relationship between quantities sold and the nonprice determinants of supply. -the quantities of a good that firms will buy at given revenues. -the quantities of a good that consumers will purchase at given prices. -the quantities of a good that firms will sell at given prices.

the quantities of a good that consumers will purchase at given prices.

Samia has decided that with the two hours in between classes she can do one of 3 things. She has ranked her choices, from highest to lowest as, (1) chat with her friends, (2) study economics or (3) take a nap. The opportunity cost of chatting with her friends is A) the value of studying economics, the next best use of time. B) the combined value of studying economics and taking a nap. C) zero since she does not pay her friends to talk to her. D) the value of chatting with her friends.

the value of studying economics, the next best use of time.

Correlation means that: -there is a consistently observed relationship between two events. -the occurrence of one event is sufficient to imply the occurrence of another event. -one event brings about another event. -two events are not related to each other.

there is a consistently observed relationship between two events.

The Widgetville County Wolfpack has won 90 percent of their last 20 games played under a full moon. This means: A) that full moons cause the team to play better. B) the weather affects how they play. C) that causation can be found between the two events. D) there is a positive correlation between their play and the occurrence of a full moon.

there is a positive correlation between their play and the occurrence of a full moon.

If nominal GDP for the year that just ended was 11 percent higher than nominal GDP for the prior year, we can conclude that: -the country is experiencing robust economic growth. -we need additional information to assess the condition of the economy. -the country is experiencing serious problems with inflation. -the country is in a recession.

we need additional information to assess the condition of the economy.

Which of the following is normative statement? A) ʺThe tax burden on the poor in the US is too great.ʺ B) ʺIf tariffs on imported steel are raised, sales of US automakers will fall.ʺ C) ʺMonopolies are more innovative than other firms.ʺ D) ʺIncome tax reductions cause the budget deficit to rise.ʺ E) None of the above

ʺThe tax burden on the poor in the US is too great.ʺ