MacroEconomics Study Guide M1

A) shift the supply curve of oil to the left

An expected increase in the market price of oil in the coming year is likely to ________ in the current year. A) shift the supply curve of oil to the left B) cause no changes in the demand and supply curves of oil C) shift the supply curve of oil to the right D) shift the demand curve for oil to the left

D) a rightward shift of a demand curve

An increase in the demand for a good is represented by ________. A) a rightward movement along a demand curve B) a leftward shift of a demand curve C) a leftward movement along a demand curve D) a rightward shift of a demand curve

B) It doesn't. The final value is the same.

How does the expenditures measure of GDP differ from the production measure? A) It depends on the amount of inventories held at the beginning and end of the year. B) It doesn't. The final value is the same. C) It is lower, because only purchased items are counted. D) It is higher due to the higher cost of a final good than of the inputs.

B) Dividing a nation's aggregate income by the number of people in the country

How is income per capita calculated? A) Dividing GDP by the number of households B) Dividing a nation's aggregate income by the number of people in the country C) Averaging the individual incomes of all working people D) None of the above

C) $300, $400, and $700

If Dell buys a computer from a foreign producer for $500 and sells it to Best Buy for $800, who then sells it to a consumer for $1,200, what is Dell's value added, Best Buy's value added, and the computer's contribution to GDP? A) $300, $700, and $1,000 B) $300, $400, and $1,200 C) $300, $400, and $700 D) $800, $1,200, and $400

C) decreases the net benefit by $3

If Project A has a cost of $5 and provides a benefit of $10, and Project B has a cost of $2 and provides a benefit of $4, then switching from Project A to Project B ________. A) increases the net benefit by $3 B) increases the net benefit by $6 C) decreases the net benefit by $3 D) decreases the net benefit by $6

C) An individual can optimize by choosing Project X.

If Project X has a cost of $6 and provides a benefit of $10 and Project Y has a cost of $25 and provides a benefit of $27, which of the following statements is true? A) An individual can optimize by choosing Project Y. B) Switching from Project Y to Project X decreases net benefit by $2. C) An individual can optimize by choosing Project X. D) Switching from Project X to Project Y increases net benefit by $2.

D) An individual can optimize by choosing Project X.

If Project X has a cost of $6 and provides a benefit of $10 and Project Y has a cost of $25 and provides a benefit of $27, which of the following statements is true? A) Switching from Project Y to Project X decreases net benefit by $2. B) Switching from Project X to Project Y increases net benefit by $2. C) An individual can optimize by choosing Project Y. D) An individual can optimize by choosing Project X.

C) the productivity of the domestic

If a foreign company operating in a country changes work rules, resulting in a more flexible allocation of resources in the various sectors of the domestic economy, ________. A) the GDP of the economy is likely to decrease B) the productivity of the domestic workers is likely to decrease C) the productivity of the domestic workers is likely to increase D) the Human Development Index of the country is likely to decrease

D) net benefit of Project A; net benefit of Project B

If the ________ minus the ________ is positive, Project A is chosen over Project B. A) net benefit of Project B; net benefit of Project A B) total benefit of Project B; total benefit of Project A C) cost of Project A; cost of Project B D) net benefit of Project A; net benefit of Project B

D) Equilibrium quantity will fall, but the change in equilibrium price is uncertain.

If the demand for gem-quality diamonds decreases AND the supply of gem-quality diamonds decreases, what can be said about equilibrium price and quantity in this market? A) Equilibrium price and quantity will both rise. B) Equilibrium quantity will rise, but the change in equilibrium price is uncertain. C) Equilibrium price and quantity will both fall. D) Equilibrium quantity will fall, but the change in equilibrium price is uncertain.

C) Equilibrium quantity will fall, but the change in equilibrium price is uncertain.

If the demand for gem-quality diamonds decreases AND the supply of gem-quality diamonds decreases, what can be said about equilibrium price and quantity in this market? A) Equilibrium price and quantity will both rise. B) Equilibrium quantity will rise, but the change in equilibrium price is uncertain. C) Equilibrium quantity will fall, but the change in equilibrium price is uncertain. D) Equilibrium price and quantity will both fall.

A) 10 per hour; 10 hours

If the opportunity cost of time is ________ and an individual spends ________ commuting every month, the opportunity cost of her commute is $100 every month. A) 10 per hour; 10 hours B) $12 per hour; 5 hours C) $8 per hour; 20 hours D) $5 per hour; 10 hours

D) income per capita will decrease

If the population of a country increases, GDP remaining constant, then its ________. A) gross national product will increase B) income per capita will remain unchanged C) trade deficit will decrease D) income per capita will decrease

C) income per capita will decrease

If the population of a country increases, GDP remaining constant, then its ________. A) trade deficit will decrease B) gross national product will increase C) income per capita will decrease D) income per capita will remain unchanged

D) $15

If the total cost incurred by a firm in hiring ten workers is $45 and the total cost incurred when the eleventh worker is hired is $60, the marginal cost of hiring the eleventh worker is ________. A) $20 B) $105 C) $1.33 D) $15

C) France if all other goods also cost the same in Spain and France but the GDP per capita is higher in France

In France and Spain, a Big Mac costs 1 euro. Yet the standard of living is higher in ________. A) Spain if a Big Mac is only a small part of people's consumption and Spain's GDP per capita is higher B) Spain if all other goods are cheaper in Spain than in France C) France if all other goods also cost the same in Spain and France but the GDP per capita is higher in France D) France if its exchange rate is higher

C) $340

Maria has to choose between driving and taking a train to destination A. Traveling by train will cost her $400 and will take 4 hours. Driving to destination A takes 6 hours, and the required amount of gasoline costs $250. Her opportunity cost of time is $15 per hour. Refer to the scenario above. If Maria borrows her parents' car and pays for only the gasoline, what is her total cost of driving to destination A? A) $250 B) $90 C) $340 D) $300

C) $340

Maria has to choose between driving and taking a train to destination A. Traveling by train will cost her $400 and will take 4 hours. Driving to destination A takes 6 hours, and the required amount of gasoline costs $250. Her opportunity cost of time is $15 per hour. Refer to the scenario above. If Maria borrows her parents' car and pays for only the gasoline, what is her total cost of driving to destination A? A) $300 B) $90 C) $340 D) $250

A) $720

Maria has to choose between driving and taking a train to destination A. Traveling by train will cost her $400 and will take 4 hours. Driving to destination A takes 6 hours, and the required amount of gasoline costs $250. Her opportunity cost of time is $15 per hour. Refer to the scenario above. If Maria's opportunity cost of time increases to $80 per hour, the cost of taking the train is ________. A) $720 B) $800 C) $970 D) $320

A) $720

Maria has to choose between driving and taking a train to destination A. Traveling by train will cost her $400 and will take 4 hours. Driving to destination A takes 6 hours, and the required amount of gasoline costs $250. Her opportunity cost of time is $15 per hour. Refer to the scenario above. If Maria's opportunity cost of time increases to $80 per hour, the cost of taking the train is ________. A) $720 B) $970 C) $800 D) $320

D) drive, as it will save her $120

Maria has to choose between driving and taking a train to destination A. Traveling by train will cost her $400 and will take 4 hours. Driving to destination A takes 6 hours, and the required amount of gasoline costs $250. Her opportunity cost of time is $15 per hour. Refer to the scenario above. Maria should choose to ________. A) drive, as it will give her a real saving of $150 B) travel by train, as it will save her $30 in travel time C) travel by train, because it is quicker D) drive, as it will save her $120

C) drive, as it will save her $120

Maria has to choose between driving and taking a train to destination A. Traveling by train will cost her $400 and will take 4 hours. Driving to destination A takes 6 hours, and the required amount of gasoline costs $250. Her opportunity cost of time is $15 per hour. Refer to the scenario above. Maria should choose to ________. A) travel by train, as it will save her $30 in travel time B) travel by train, because it is quicker C) drive, as it will save her $120 D) drive, as it will give her a real saving of $150

D) $460

Maria has to choose between driving and taking a train to destination A. Traveling by train will cost her $400 and will take 4 hours. Driving to destination A takes 6 hours, and the required amount of gasoline costs $250. Her opportunity cost of time is $15 per hour. Refer to the scenario above. What is the total cost involved if Maria chooses to travel by train? A) $60 B) $420 C) $400 D) $460

B) decrease in quantity demanded

Suppose Apple raises the cost of downloading a song from iTunes from $0.99 per song to $1.49 per song. This price increase will cause a(n) ________. A) increase in quantity demanded B) decrease in quantity demanded C) decrease in demand D) increase in demand

A) $15

Suppose that instead of Greg not mowing his lawn, he pays a lawn care business $20.00. He had to buy $5 in gas and took 1 hour of his time when he did it himself. By how much would GDP change? A) $15 B) $0 C) $20 D) Not enough information provided

D) your opportunity cost of waiting at the site (and pushing and shoving) is at least $1,020

Suppose that, when you arrive at the sale site for $50 Apple laptops (described in the text) at 1:45 A.M., you find more than 2,000 people already waiting for the site to open. You turn around and go home to get some sleep. Later you buy an Apple laptop, the same model as the $50 one, for $1,070. This indicates that ________. A) your opportunity cost of waiting at the site (and pushing and shoving) is at most $1,020 B) more than fifty people in the crowd were physically stronger than you C) you are willing to pay at most $1,070 for the laptop D) your opportunity cost of waiting at the site (and pushing and shoving) is at least $1,020

C) The cement market is perfectly competitive.

Suppose the market for cement is such that the output of all sellers is identical in composition and quality. While there are a large number of buyers and sellers, everyone conducts transactions at a common market price. Which of the following statements is true about the structure of the cement market? A) All transactions in the cement market are likely to be involuntary. B) The cement market is government regulated. C) The cement market is perfectly competitive. D) All participants in the cement market are price-makers.

A) nominal GDP to real GDP

The GDP deflator is 100 times the ratio of ________. A) nominal GDP to real GDP C) real GDP to nominal GDP B) GDP to GNP D) GNP to GDP

b) Substitution

2) Which of the following is NOT a key principle of economics? a) Equilibrium b) Substitution c) Empiricism d) Optimization

C) increase in the U.S. GDP

A French tourist spent $1,200 in the United States this year. This transaction led to a(n) ________. A) decrease in the U.S. GDP B) increase in the GDP of France C) increase in the U.S. GDP D) decrease in France's trade deficit

C) trade deficit

A ________ occurs when a country's imports exceed its exports. A) fiscal deficit B) trade surplus C) trade deficit D) budget surplus

D) $1,000,000

A bundle of goods that costs $1 in the United States is worth 5 units in Country A's currency. If Country A's GDP in its own currency is 5,000,000 units, Country A's GDP in PPP-adjusted dollars will be ________. A) $2,500,000 B) $50,000,000 C) $3,000,000 D) $1,000,000

A) represented by a movement along a demand curve

A change in the quantity demanded of a good is ________. A) represented by a movement along a demand curve B) represented by a shift of a demand curve C) the outcome of a change in consumer income D) the outcome of a change in tastes and preferences

a) 2 magazines and 4 DVDs

A consumer has $50 to spend. He has to decide between buying two goods: magazines priced at $5 each and DVDs priced at $10 each. Which of the following combinations of the two goods will entirely exhaust his budget constraint? a) 2 magazines and 4 DVDs b) 2 magazines and 2 DVDs c) 3 magazines and 4 DVDs d) 6 magazines and 1 DVD

D) 3.1 percent

A country's Consumer Price Index was 129 for Year 1 and 133 for Year 2. The inflation rate of the country between the two years was approximately ________. A) 4 percent B) 6 percent C) 2.2 percent D) 3.1 percent

C) increase the supply

A fall in the price of flour, used in making cakes, is likely to ________ of cakes. A) decrease the quantity supplied B) increase the quantity supplied C) increase the supply D) decrease the supply

B) increase the supply

A fall in the price of flour, used in making cakes, is likely to ________ of cakes. A) decrease the supply B) increase the supply C) increase the quantity supplied D) decrease the quantity supplied

B) college graduates will earn about 107 percent more than high school graduates

A model is based on an assumption that an additional year of education increases a student's future wage by 20 percent. Refer to the scenario above. The hypothesis of the model is that ________. A) college graduates will earn about 80 percent more than high school graduates B) college graduates will earn about 107 percent more than high school graduates C) college graduates will earn about 275 percent more than high school graduates D) college graduates will earn about 200 percent more than high school graduates

C) The prediction is an approximate relationship and may not hold for everyone.

A model is based on an assumption that an additional year of education increases a student's future wage by 20 percent. Refer to the scenario above. Which of the following statements is true about the model's prediction? A) The prediction can be applied to estimate the returns only for a limited number of years of additional education. B) The prediction cannot be verified empirically. C) The prediction is an approximate relationship and may not hold for everyone. D) The prediction is precise, exact, and accurate for the entire population.

d) college graduates will earn about 107 percent more than high school graduates

A model is based on an assumption that an additional year of education increases a student's future wage by 20 percent. Refer to the scenario above. The hypothesis of the model is that ________. a) college graduates will earn about 80 percent more than high school graduates b) college graduates will earn about 200 percent more than high school graduates c) college graduates will earn about 275 percent more than high school graduates d) college graduates will earn about 107 percent more than high school graduates

A) The prediction is an approximate relationship and may not hold for everyone.

A model is based on an assumption that an additional year of education increases a student's future wage by 20 percent. Refer to the scenario above. Which of the following statements is true about the model's prediction? A) The prediction is an approximate relationship and may not hold for everyone. B) The prediction cannot be verified empirically. C) The prediction can be applied to estimate the returns only for a limited number of years of additional education. D) The prediction is precise, exact, and accurate for the entire population.

D) $100

A student has two options: she can either surf the web or work part-time. Working part-time pays her $20 per hour. What is the student's opportunity cost of surfing the web for 5 hours? A) $20 B) $50 C) $4 D) $100

C) $100

A student has two options: she can either surf the web or work part-time. Working part-time pays her $20 per hour. What is the student's opportunity cost of surfing the web for 5 hours? A) $4 B) $50 C) $100 D) $20

C) has the lowest total cost

Among a set of alternatives with the same benefits, an individual is said to optimize if she chooses an alternative that ________. A) has the lowest opportunity cost B) has the highest total cost C) has the lowest total cost D) has the highest indirect cost

A) has the lowest total cost

Among a set of alternatives with the same benefits, an individual is said to optimize if she chooses an alternative that ________. A) has the lowest total cost B) has the highest indirect cost C) has the lowest opportunity cost D) has the highest total cost

D) shift to the right

Assume that a worker in a technology firm can produce 3 circuit boards in an hour. Due to subsequent innovation, she is now able to produce 6 circuit boards per hour. Other things remaining the same, the firm's supply curve is likely to ________. A) become steeper B) remain unchanged C) shift to the left D) shift to the right

B) At a price of $1 per table, there is a surplus in the market.

At a price of $1 per table, the quantity supplied of tables is 100 units, whereas the quantity demanded is 70 units. Given this information, which of the following statements is true? A) At a price of $1 per table, there is a shortage in the market. B) At a price of $1 per table, there is a surplus in the market. C) The equilibrium price is $1 per table. D) The market clearing price is $1 per table.

D) willingness to pay exceeds the willingness to accept for the ninety-ninth unit

Consider a market where the demand curve is downward sloping and the supply curve is upward sloping (so they are neither vertical nor horizontal). If the consumers' willingness to pay for the hundredth unit is $9.00 and the seller's willingness to accept for the hundredth unit $9.00, then the ________. A) willingness to accept exceeds the willingness to pay for the ninety-ninth unit B) equilibrium quantity is more than 100 units C) equilibrium quantity is less than 100 units D) willingness to pay exceeds the willingness to accept for the ninety-ninth unit

C) inputs are

Double counting occurs when ________ included in the calculation of the GDP. A) household production is B) depreciation is C) inputs are D) unsold inventories are

D) having more wants than the amount of available resources

In economics, scarcity refers to the situation of ________. A) sellers setting the prices of their products too high for people to be able to afford them B) making the best use of limited information C) the government rationing available goods and services D) having more wants than the amount of available resources

a) making the best use of limited information

In economics, scarcity refers to the situation of ________. a) making the best use of limited information b) having more wants than the amount of available resources c) sellers setting the prices of their products too high for people to be able to afford them d) the government rationing available goods and services

D) The concept of diminishing marginal benefit

Jenny likes chocolates. One day, a friend offers her a chocolate bar and she is extremely happy on receiving it. As the day progresses, many other people also buy her chocolate. As she gets more and more chocolates, her excitement on receiving each bar is seen to gradually lessen. Which economic principle is reflected in this example? A) Aggregation of demand behavior B) The Law of Increasing Willingness to Pay C) The Law of Equi-Marginal Utility D) The concept of diminishing marginal benefit

B) The concept of diminishing marginal benefit

Jenny likes chocolates. One day, a friend offers her a chocolate bar and she is extremely happy on receiving it. As the day progresses, many other people also buy her chocolate. As she gets more and more chocolates, her excitement on receiving each bar is seen to gradually lessen. Which economic principle is reflected in this example? A) The Law of Increasing Willingness to Pay B) The concept of diminishing marginal benefit C) The Law of Equi-Marginal Utility D) Aggregation of demand behavior

d) $35 per hour

John has to choose between two jobs: one that offers him $50 per hour and one that offers him $35 per hour. The opportunity cost of choosing the job that offers him $50 per hour is ________. a) $15 per hour b) $1.5 per hour c) $85 per hour d) $35 per hour

A) Demand will increase.

Las Vegas, Nevada, is a popular vacation destination for residents of Hawaii. If the Hawaiian economy experiences strong economic growth and, as a result, household incomes increase on average by 10 percent, what will likely happen to the demand for airplane tickets from Hawaii to Las Vegas? A) Demand will increase. B) No shift in demand will occur; quantity demanded will increase. C) Demand will decrease. D) No shift in demand will occur; quantity demanded will decrease.

C) Demand will increase.

Las Vegas, Nevada, is a popular vacation destination for residents of Hawaii. If the Hawaiian economy experiences strong economic growth and, as a result, household incomes increase on average by 10 percent, what will likely happen to the demand for airplane tickets from Hawaii to Las Vegas? A) No shift in demand will occur; quantity demanded will decrease. B) No shift in demand will occur; quantity demanded will increase. C) Demand will increase. D) Demand will decrease.

B) Demand will increase.

Las Vegas, Nevada, is a popular vacation destination for residents of Hawaii. If the Hawaiian economy experiences strong economic growth and, as a result, household incomes increase on average by 10 percent, what will likely happen to the demand for airplane tickets from Hawaii to Las Vegas? A) No shift in demand will occur; quantity demanded will increase. B) Demand will increase. C) Demand will decrease. D) No shift in demand will occur; quantity demanded will decrease.

B) decrease in the equilibrium price and the equilibrium quantity

Other things remaining same, a leftward shift in the demand curve will lead to a(n) ________. A) increase in the equilibrium price and the equilibrium quantity B) decrease in the equilibrium price and the equilibrium quantity C) decrease in the equilibrium price and an increase in the equilibrium quantity D) increase in the equilibrium price and a decrease in the equilibrium quantity

B) increase in the equilibrium price and a decrease in the equilibrium quantity

Other things remaining the same, a leftward shift in the supply curve will lead to a(n) ________. A) decrease in the equilibrium price and an increase in the equilibrium quantity B) increase in the equilibrium price and a decrease in the equilibrium quantity C) increase in the equilibrium price and the equilibrium quantity D) decrease in the equilibrium price and the equilibrium quantity

B) productivity in this country has decreased

Over the course of 10 years, a country's population doubles. During this time, its GDP increases from $10 trillion to $12 trillion. Pete, who lives in this country and buys the same goods and services every year, finds that he is still paying the same price for them. This implies that ________. A) the country's workforce has more than doubled B) productivity in this country has decreased C) purchasing power parity in this country has decreased D) Both A and B

A) 4

Scenario: Ryan wants to rent an apartment. The following table shows the monthly rent of five apartments and the number of hours per month it takes to commute to work from each apartment. Ryan's opportunity cost of time is $15 per hour. Refer to the scenario above. The total cost per month is the highest if Apartment ________ is rented. A) 4 B) 2 C) 3 D) 5

C) $2,150

Scenario: Ryan wants to rent an apartment. The following table shows the monthly rent of five apartments and the number of hours per month it takes to commute to work from each apartment. Ryan's opportunity cost of time is $15 per hour. Refer to the scenario above. What is the total cost incurred per month if Ryan rents Apartment 3? A) $2,050 B) $2,270 C) $2,150 D) $2,000

B) Increase of 4 bottles

Scenario: A market researcher asks three consumers, A, B, and C, about their willingness to pay for different quantities of a 20-ounce bottle of Lemon-Lime Gatorade. She collects the following information. Refer to the scenario above. What is the change in the quantity demanded in the market if the price of Gatorade falls from $4 per 20-ounce bottle to $3 per 20-ounce bottle? A) Increase of 1 bottle B) Increase of 4 bottles C) Increase of 2 bottles D) No increase

B) $100

Scenario: A firm wants to set up a factory. It has four different options. The rent of the factory in each of the four different locations and the time taken to transport the product from each location to the market is shown in the table below. The opportunity cost of time is $10 per hour. Refer to the scenario above. If the firm chooses factory Far over Close, what is its marginal opportunity cost of transporting products to the market? A) $150 B) $100 C) $50 D) −$200

A) $200

Scenario: A firm wants to set up a factory. It has four different options. The rent of the factory in each of the four different locations and the time taken to transport the product from each location to the market is shown in the table below. The opportunity cost of time is $10 per hour. Refer to the scenario above. What is the marginal rent cost if the firm chooses factory Very Close over factory Close? A) $200 B) $100 C) −$100 D) −$200

A) Far

Scenario: A firm wants to set up a factory. It has four different options. The rent of the factory in each of the four different locations and the time taken to transport the product from each location to the market is shown in the table below. The opportunity cost of time is $10 per hour. Refer to the scenario above. Which is the optimum location for the firm to set up its factory? A) Far B) Very Close C) Very Far D) Close

B) 5

Scenario: Ryan wants to rent an apartment. The following table shows the monthly rent of five apartments and the number of hours per month it takes to commute to work from each apartment. Ryan's opportunity cost of time is $15 per hour. Refer to the scenario above. If the opportunity cost of time increases to $60 per hour, renting which apartment will minimize Ryan's total cost every month? A) 2 B) 5 C) 4 D) 3

C) 5

Scenario: Ryan wants to rent an apartment. The following table shows the monthly rent of five apartments and the number of hours per month it takes to commute to work from each apartment. Ryan's opportunity cost of time is $15 per hour. Refer to the scenario above. If the opportunity cost of time increases to $60 per hour, renting which apartment will minimize Ryan's total cost every month? A) 4 B) 2 C) 5 D) 3

C) $2,150

Scenario: Ryan wants to rent an apartment. The following table shows the monthly rent of five apartments and the number of hours per month it takes to commute to work from each apartment. Ryan's opportunity cost of time is $15 per hour. Refer to the scenario above. What is the total cost incurred per month if Ryan rents Apartment 3? A) $2,270 B) $2,050 C) $2,150 D) $2,000

A) She will rent the hotel room for 3 days if the benefit of staying for the third day exceeds the cost of staying for the third day.

Scenario: Sarah has to choose between renting a hotel room for 2 days and renting a hotel room for 3 days. Refer to the scenario above. If Sarah is optimizing using marginal analysis, then which of the following statements is true? A) She will rent the hotel room for 3 days if the benefit of staying for the third day exceeds the cost of staying for the third day. B) She will rent the hotel room for 3 days if the net benefit of staying for 3 days exceeds the net benefit of staying for 2 days. C) She will rent the hotel room for 3 days if the cost of staying for the first 2 days is less than the cost of staying for the third day. D) She will rent the hotel room for 3 days if the benefit of staying for the third day exceeds the benefits of staying for the first 2 days.

B) She will rent the hotel room for 3 days if the net benefit of staying for 3 days exceeds the net benefit of staying for 2 days.

Scenario: Sarah has to choose between renting a hotel room for 2 days and renting a hotel room for 3 days. Refer to the scenario above. Which of the following is true if Sarah is optimizing using total value? A) She will rent the hotel room for 3 days if the net benefit of staying for the third day is negative. B) She will rent the hotel room for 3 days if the net benefit of staying for 3 days exceeds the net benefit of staying for 2 days. C) She will rent the hotel room for 3 days if the total benefit of staying for 3 days exceeds the total benefits of staying for 2 days. D) She will rent the hotel room for 3 days if the cost of staying for 2 days exceeds the cost of staying for 3 days.

B) She will rent the hotel room for 3 days if the benefit of staying for the third day exceeds the cost of staying for the third day.

Scenario: Sarah has to choose between renting a hotel room for 2 days and renting a hotel room for 3 days. Refer to the scenario above. If Sarah is optimizing using marginal analysis, then which of the following statements is true? A) She will rent the hotel room for 3 days if the cost of staying for the first 2 days is less than the cost of staying for the third day. B) She will rent the hotel room for 3 days if the benefit of staying for the third day exceeds the cost of staying for the third day. C) She will rent the hotel room for 3 days if the net benefit of staying for 3 days exceeds the net benefit of staying for 2 days. D) She will rent the hotel room for 3 days if the benefit of staying for the third day exceeds the benefits of staying for the first 2 days.

B) She will rent the hotel room for 3 days if the net benefit of staying for 3 days exceeds the net benefit of staying for 2 days.

Scenario: Sarah has to choose between renting a hotel room for 2 days and renting a hotel room for 3 days. Refer to the scenario above. Which of the following is true if Sarah is optimizing using total value? A) She will rent the hotel room for 3 days if the total benefit of staying for 3 days exceeds the total benefits of staying for 2 days. B) She will rent the hotel room for 3 days if the net benefit of staying for 3 days exceeds the net benefit of staying for 2 days. C) She will rent the hotel room for 3 days if the cost of staying for 2 days exceeds the cost of staying for 3 days. D) She will rent the hotel room for 3 days if the net benefit of staying for the third day is negative.

C) The country's GDP will increase by $12,000.

Scenario: Sarah takes care of her son instead of sending him to a day care that charges $12,000 annually. Refer to the scenario above. Which of the following will happen if she puts him into a day care? A) The country's GDP will decrease by $12,000. B) The country's trade deficit will increase by $12,000. C) The country's GDP will increase by $12,000. D) The country's GDP will remain unchanged.

A) GDP would increase.

Scenario: Tree Country has a population of 18,000 people, of whom two-thirds are part of the workforce. The country's only asset is wood, where K = 18,000. The country only produces wooden furniture. In the figure below, Y stands for GDP, and H equals efficiency units of labor. Refer to the scenario above. Assume Tree Country's economy has constant returns to scale. If its population doubles and all other inputs remain the same, how would GDP change? A) GDP would increase. B) GDP would decrease by exactly 50 percent. C) GDP would increase by exactly 50 percent. D) GDP would stay the same.

C) Sweetland's labor force produces less efficiently

Scenario: Two neighboring countries, Sweetland and Sourland, are identical in terms of size, population (800,000), education of workforce, and value of natural resources owned. Refer to the scenario above. Workers in Sweetland are highly unionized. Among other factors, this makes it more difficult for firms in Sweetland to hire and fire workers than it is for firms in Sourland. It is likely that ________. A) Sweetland's productivity is higher B) Sweetland's aggregate production function lies above Sourland's aggregate production function C) Sweetland's labor force produces less efficiently D) Sweetland's output is more dependent on total efficiency units of labor

B) the quantity demanded of a commodity varies inversely with the price of the commodity, all other things remaining constant

The Law of Demand states that ________. A) the demand for a commodity always equals the supply of the commodity B) the quantity demanded of a commodity varies inversely with the price of the commodity, all other things remaining constant C) the quantity demanded of a commodity is the same for all consumers in a perfectly competitive market D) the demand for a commodity is directly related to consumers' income, all other things remaining constant

A) the quantity demanded of a commodity varies inversely with the price of the commodity, all other things remaining constant

The Law of Demand states that ________. A) the quantity demanded of a commodity varies inversely with the price of the commodity, all other things remaining constant B) the demand for a commodity is directly related to consumers' income, all other things remaining constant C) the demand for a commodity always equals the supply of the commodity D) the quantity demanded of a commodity is the same for all consumers in a perfectly competitive market

D) increasing; physical capital stock

The aggregate production function shows a(n) ________ relationship between ________ and output. A) decreasing; physical capital stock B) decreasing; labor C) constant; labor D) increasing; physical capital stock

C) greater than or equal to the price

The buyers of a good will want to purchase it as long as their willingness to pay for the good is ________. A) equal to zero B) greater than zero C) greater than or equal to the price D) less than the price

B) expenditure must equal; income

The circular flow diagram implies that if accounting is done correctly, the market value of ________ the market value of ________. A) production must exceed; expenditure B) expenditure must equal; income C) expenditure must exceed; income D) income must exceed; production

B) $7,115

The country described in the table below produces and consumes only three goods: energy drinks, pizza, and t-shirts. The quantity produced and price of each good in 2016 and 2017 are provided. Refer to the above table. Assuming that 2016 is the base year, what is real GDP for 2017? A) $6,785 B) $7,115 C) $7,950 D) $7,400

C) $7,115

The country described in the table below produces and consumes only three goods: energy drinks, pizza, and t-shirts. The quantity produced and price of each good in 2016 and 2017 are provided. Refer to the above table. Assuming that 2016 is the base year, what is real GDP for 2017? A) $6,785 B) $7,400 C) $7,115 D) $7,950

D) $7,115

The country described in the table below produces and consumes only three goods: energy drinks, pizza, and t-shirts. The quantity produced and price of each good in 2016 and 2017 are provided. Refer to the above table. Assuming that 2016 is the base year, what is real GDP for 2017? A) $7,950 B) $6,785 C) $7,400 D) $7,115

D) 111

The country described in the table below produces and consumes only three goods: energy drinks, pizza, and t-shirts. The quantity produced and price of each good in 2016 and 2017 are provided. Refer to the above table. Assuming that 2016 is the base year, what was the GDP deflator in 2017? A) 109.5 B) 115 C) 102.3 D) 111

B) $7,900

The country described in the table below produces and consumes only three goods: energy drinks, pizza, and t-shirts. The quantity produced and price of each good in 2016 and 2017 are provided. Refer to the above table. What is nominal GDP for 2017? A) $7,700 B) $7,900 C) $6,900 D) $7,400

A) Income per worker would likely increase more for workers in South Korea.

The following table compares some attributes of workers in South Korea, Spain, and the United States. Refer to the table above. If workers in Spain and South Korea had access to the level of technology available in the United States, what might we expect with respect to income per worker? A) Income per worker would likely increase more for workers in South Korea. B) No change, because these countries already have access to the U.S. level of technology. C) Income per worker in Spain would reach the level of the United States. D) Income per worker would only increase for workers in South Korea.

C) 18 bottles

The following table shows the demand schedules of three consumers of wine. Assume that these three buyers constitute the entire market. Refer to the table above. If the market price of wine is $4 per bottle, and the market demand for wine is 65 bottles, Sandra's demand for wine is ________. A) 47 bottles B) 111 bottles C) 18 bottles D) 40 bottles

D) 7 bottles

The following table shows the demand schedules of three consumers of wine. Assume that these three buyers constitute the entire market. Refer to the table above. If the market price of wine is $8 per bottle, and the market demand for wine is 19 bottles, David's consumption of wine is ________. A) 4 bottles B) 9 bottles C) 12 bottles D) 7 bottles

D) 7 bottles

The following table shows the demand schedules of three consumers of wine. Assume that these three buyers constitute the entire market. Refer to the table above. If the market price of wine is $8 per bottle, and the market demand for wine is 19 bottles, David's consumption of wine is ________. A) 9 bottles B) 12 bottles C) 4 bottles D) 7 bottles

A) $4

The following table shows the market demand schedule and supply schedule for notebooks. Refer to the table above. What is the equilibrium price of notebooks? A) $4 B) $2 C) $6 D) $7

D) 16 units

The following table shows the market demand schedule and supply schedule for notebooks. Refer to the table above. What is the shortage in the market when the price of a notebook is $1? A) 10 units B) 0 units C) 14 units D) 16 units

C) 24 units

The following table shows the market demand schedule and supply schedule for notebooks. Refer to the table above. What is the surplus in the market when the price of a notebook is $9? A) 20 units B) 16 units C) 24 units D) 26 units

A) 18

The following table shows the supply schedule of bread for three sellers in the economy. Assume that these three sellers constitute the entire market. Refer to the table above. If the market supply of bread at a price of $3 per loaf is 45 loaves, Seller 3's supply is ________ loaves. A) 18 B) 20 C) 24 D) 15

C) $7

The following figure shows the demand and supply curves for USB flash drives at different price levels. D is the demand curve, and S 1 is the initial supply curve. Refer to the figure above. If the supply curve for flash drives shifts from S 1 to S 2 , with no change in the demand curve, the new competitive equilibrium price is ________. A) $4 B) $5 C) $7 D) $3

A) 40 units

The following figure shows the demand and supply curves for USB flash drives at different price levels. D is the demand curve, and S 1 is the initial supply curve. Refer to the figure above. When the demand curve for flash drives is D and the supply curve of flash drives is S 1 , what is the shortage in the market if the price is $4? A) 40 units B) 0 units C) 10 units D) 20 units

B) 0 units

The following figure shows the demand and supply curves for USB flash drives at different price levels. D is the demand curve, and S 1 is the initial supply curve. Refer to the figure above. When the supply curve of flash drives is S 2 and the demand curve of flash drives is D, what is the surplus in the market when the price is $7? A) 40 units B) 0 units C) 20 units D) 10 units

A) A

The following figure shows the total output that an economy can produce using varying amounts of capital. Refer to the figure above. The increase in output due to the same one-unit increase in capital is the greatest at point ________. A) A B) B C) C D) D

B) The purchase of a cow by a restaurant to turn into steaks

Which of the following would not be included in the calculation of GDP? A) The purchase of a new car by a family B) The purchase of a cow by a restaurant to turn into steaks C) The purchase of a steak by a customer at a restaurant D) The purchase of ice cream by a student at a store

D) all of the above

The gasoline market in the United States is often said to be highly competitive. It is not perfectly competitive, but it has features and results that are similar to those of a perfectly competitive market, such as ________. A) an individual buyer cannot influence the market price of gasoline by himself B) an individual gas station cannot influence the market price by itself C) gas stations located near each other tend to charge the same or very similar prices D) all of the above

D) all of the above

The gasoline market in the United States is often said to be highly competitive. It is not perfectly competitive, but it has features and results that are similar to those of a perfectly competitive market, such as ________. A) an individual gas station cannot influence the market price by itself B) gas stations located near each other tend to charge the same or very similar prices C) an individual buyer cannot influence the market price of gasoline by himself D) all of the above

B) shortage of 140 skins

The numbers in the table below characterize the market for raccoon skins in Minnesota during the 2010—2011 trapping season. The demand schedule that prevailed in November and December of 2010 is denoted by "Original Quantity Demanded," and the demand schedule that prevailed from late January onward is denoted by "Quantity Demanded-Late January." Refer to the table above. Given the original demand, at a price of $18 per raccoon skin, there is a ________. A) surplus of 140 skins B) shortage of 140 skins C) surplus of 280 skins D) shortage of 280 skins

C) surplus of 160 skins

The numbers in the table below characterize the market for raccoon skins in Minnesota during the 2010—2011 trapping season. The demand schedule that prevailed in November and December of 2010 is denoted by "Original Quantity Demanded," and the demand schedule that prevailed from late January onward is denoted by "Quantity Demanded-Late January." Refer to the table above. Given the original demand, at a price of $22 per raccoon skin, there is a ________. A) surplus of 340 skins B) shortage of 160 skins C) surplus of 160 skins D) shortage of 340 skins

D) $20; 300

The numbers in the table below characterize the market for raccoon skins in Minnesota during the 2010—2011 trapping season. The demand schedule that prevailed in November and December of 2010 is denoted by "Original Quantity Demanded," and the demand schedule that prevailed from late January onward is denoted by "Quantity Demanded-Late January." Refer to the table above. The original equilibrium price is ________ per skin and the original equilibrium quantity is ________ skins. A) $14; 180 B) $16; 500 C) $22; 360 D) $20; 300

D) Decrease in supply

The table below provides data on opium sales and farmgate prices of opium in Afghanistan from 1994 to 2008. Refer to the table above. From 2000 to 2001, opium sales fell by 95 percent and opium prices increased by 975 percent. If you are told that demand curve for opium in Afghanistan remained constant from 2000 to 2001, what was the likely change in opium supply? A) Decrease in only quantity supplied B) Increase in only quantity supplied C) Increase in supply D) Decrease in supply

D) Decrease in supply

The table below provides data on opium sales and farmgate prices of opium in Afghanistan from 1994 to 2008. Refer to the table above. From 2000 to 2001, opium sales fell by 95 percent and opium prices increased by 975 percent. If you are told that demand curve for opium in Afghanistan remained constant from 2000 to 2001, what was the likely change in opium supply? A) Increase in supply B) Increase in only quantity supplied C) Decrease in only quantity supplied D) Decrease in supply

A) Decrease in demand

The table below provides data on opium sales and farmgate prices of opium in Afghanistan from 1994 to 2008. Refer to the table above. From 2007 to 2008, opium sales fell by roughly 6.1 percent and opium prices fell by 18.6 percent. If you are told that the supply curve of opium remained constant from 2007 to 2008, what was the likely change in opium demand? A) Decrease in demand B) Increase in demand C) Decrease in only quantity demanded D) Increase in only quantity demanded

C) Decrease in demand

The table below provides data on opium sales and farmgate prices of opium in Afghanistan from 1994 to 2008. Refer to the table above. From 2007 to 2008, opium sales fell by roughly 6.1 percent and opium prices fell by 18.6 percent. If you are told that the supply curve of opium remained constant from 2007 to 2008, what was the likely change in opium demand? A) Increase in only quantity demanded B) Decrease in only quantity demanded C) Decrease in demand D) Increase in demand

B) $352,000

The table below shows the values of various economic variables of a country during a particular year. Refer to the table above. The GDP of the country is ________. A) $402,000 B) $352,000 C) $452,000 D) $554,000

B) $352,000

The table below shows the values of various economic variables of a country during a particular year. Refer to the table above. The GDP of the country is ________. A) $452,000 B) $352,000 C) $554,000 D) $402,000

C) $4,000

The table below shows the values of various economic variables of a country during a particular year. Refer to the table above. The trade balance of the country during that particular year was ________. A) −$104,000 B) −$6,000 C) $4,000 D) $50,000

D) $4,000

The table below shows the values of various economic variables of a country during a particular year. Refer to the table above. The trade balance of the country during that particular year was ________. A) −$6,000 B) −$104,000 C) $50,000 D) $4,000

D) $378,000

The table below shows the values of various economic variables of a country during a particular year. Refer to the table above. What will be the value of the GDP of the country if the country runs a trade surplus of $30,000 next year, everything else remaining unchanged? A) $372,000 B) $524,000 C) $407,000 D) $378,000

C) $1,000,000

The total value of inputs used in the production of 100,000 units of a good manufactured in a country is $150,000. Assume that the country produces only this good and each unit of the good sells for $10. What is the GDP of the country? A) $250,000 B) $150,000 C) $1,000,000 D) $1,150,000

A) The country ran a trade surplus of $35,000 during that year.

The value of a country's exports during a particular year was $120,000 and the value of its imports was $85,000. Which of the following is true? A) The country ran a trade surplus of $35,000 during that year. B) The country ran a budget surplus of $205,000 during that year. C) The country ran a fiscal deficit of $205,000 during that year. D) The country ran a trade deficit of $35,000 during that year.

A) The country ran a trade surplus of $35,000 during that year.

The value of a country's exports during a particular year was $120,000 and the value of its imports was $85,000. Which of the following is true? A) The country ran a trade surplus of $35,000 during that year. B) The country ran a fiscal deficit of $205,000 during that year. C) The country ran a trade deficit of $35,000 during that year. D) The country ran a budget surplus of $205,000 during that year.

C) Y = C + I + G + X - M

What is the correct national income accounting identity in an open economy? A) Y = C + I + G - X + M B) Y = C + I + G C) Y = C + I + G + X - M D) Y = C + I + G + X + M

A) net benefits of Project A; net benefits of Project B

When optimizing using total value, if the ________ exceed the ________, Project A is chosen over Project B. A) net benefits of Project A; net benefits of Project B B) marginal costs of Project A; marginal costs of Project B C) total benefits of Project B; total benefits of Project A D) marginal benefits of Project B; marginal benefits of Project A

D) A situation where no economic agent would benefit by changing his or her behavior

Which of the following best describes equilibrium? A) A situation where the government intervenes to allocate resources B) A situation where economic agents do not optimize as they do not have perfect information C) A situation where only one individual or firm makes an optimal decision D) A situation where no economic agent would benefit by changing his or her behavior

D) The market for soybeans in the United States

Which of the following examples best approximates a competitive market? A) The market for F-35 fighter planes B) The market for Tesla electric cars C) The market for Jackson Pollock paintings D) The market for soybeans in the United States

B) The market for soybeans in the United States

Which of the following examples best approximates a competitive market? A) The market for Jackson Pollock paintings B) The market for soybeans in the United States C) The market for F-35 fighter planes D) The market for Tesla electric cars

B) The market for soybeans in the United States

Which of the following examples best approximates a competitive market? A) The market for Tesla electric cars B) The market for soybeans in the United States C) The market for F-35 fighter planes D) The market for Jackson Pollock paintings

D) With each additional pen Jill buys, her willingness to pay for another pen decreases.

Which of the following examples best describes the concept of diminishing marginal benefit? A) If a seller of notebooks in a perfectly competitive market charges above the market price, his profit decreases. 23) B) If the weather gets cold, the demand for ice cream will fall. C) Each additional unit of ice cream that John consumes gives him more and more satisfaction. D) With each additional pen Jill buys, her willingness to pay for another pen decreases.

A) A change in the market price of the good

Which of the following factors will NOT cause a shift in the demand for a good? A) A change in the market price of the good B) A change in the number of consumers C) A change in tastes and preferences D) A change in consumer incomes

D) Improved transportation technology

Which of the following is a reason for the rise in U.S. trade over the past 80 years? A) Improved bureaucracy B) Rising government expenditure C) Falling consumption expenditure D) Improved transportation technology

A) A research on the effect of air pollution on lung disorders by observing the health conditions of people who stay close to industrial areas and those who stay away from industries

Which of the following is an example of a natural experiment? A) A research on the effect of air pollution on lung disorders by observing the health conditions of people who stay close to industrial areas and those who stay away from industries B) A study on the benefits of regular exercise by paying for the membership fees at fitness clubs for one-half of the participants C) A laboratory research on the effectiveness of solar power as an alternative source of fuel D) A research on the effectiveness of a new medicine among some voluntary participants

B) A rise in the price of gasoline

Which of the following is likely to cause the demand curve for cars to shift to the left? A) An increase in the cost of production, leading to an increase in the price of cars B) A rise in the price of gasoline C) An increase in the economy's national income D) A rise in the price of cars

B) An increase in the number of years of training that each worker receives

Which of the following is likely to increase the productivity of workers in an economy? A) An increase in the price level B) An increase in the number of years of training that each worker receives C) The discovery of an oil field D) An increase in the labor force participation rate in the economy

B) An increase in the number of years of training that each worker receives

Which of the following is likely to increase the productivity of workers in an economy? A) The discovery of an oil field B) An increase in the number of years of training that each worker receives C) An increase in the price level D) An increase in the labor force participation rate in the economy

B) An increase in the enrollment rates in high schools

Which of the following is likely to shift the market demand curve for school textbooks to the right? A) A fall in the total income of all consumers B) An increase in the enrollment rates in high schools C) A fall in the price of school textbooks D) An increase in school tuition fees

D) A firm producing compact fluorescent light bulbs installs new machinery. Their per-day production of light bulbs increases.

Which of the following is most likely to be an example of causation? A) A student wins money by scratching a ticket with a particular coin. He decides to scratch all tickets with the same coin in the future. B) The crime rate is high in a country. The literacy rate is high as well. C) A soccer player scores four goals when he wears red socks. He concludes that the red socks helped him score the goals. D) A firm producing compact fluorescent light bulbs installs new machinery. Their per-day production of light bulbs increases.

D) When the market price of pens increased, sellers started supplying more pens.

Which of the following is the best example of the Law of Supply? A) When the cost of production of cotton increased, all suppliers' willingness to accept decreased. B) When the cost of production of cotton fell, the market price of cotton also fell. C) When the market price of pens increased, sellers started supplying fewer pens. D) When the market price of pens increased, sellers started supplying more pens.

D) Pens and writing pad

Which of the following pairs of goods is likely to be considered complements? A) Motorcycles and typewriters B) Laptops and electric heaters C) Nokia and Samsung cell phones D) Pens and writing pads

D) A Ford car and public transportation

Which of the following pairs of goods is likely to be considered substitutes? A) Coffee and sugar B) A Nokia cell phone and a Nokia cell phone charger C) Printers and printing ink D) A Ford car and public transportation

A) Income and consumption

Which of the following pairs of variables is likely to be positively correlated? A) Income and consumption B) Availability of health care and death rate C) Price and consumption D) Education and unemployment

A) The relationship between the amount received as unemployment benefits in China and the unemployment rate in Canada

Which of the following relationships is most likely to exhibit zero correlation? A) The relationship between the amount received as unemployment benefits in China and the unemployment rate in Canada B) The relationship between wind velocity and the rotational speed of wind turbines C) The relationship between education and income D) The relationship between income and savings

D) Both life-saving drugs and ice cream are examples of scarce goods.

Which of the following statements is true? A) Gold is not a scarce resource. B) If a scarce resource is given away for free, everyone will be able to consume it. C) Scarcity means that there is an imbalance between unlimited resources and limited wants. D) Both life-saving drugs and ice cream are examples of scarce goods.

D) Using a large data set will strengthen the force of an empirical argument.

Which of the following statements is true? A) Using fewer observations will strengthen the force of an empirical argument. B) The number of observations used does not affect the strength of an empirical argument. C) Empirical arguments can be supported without the use of data. D) Using a large data set will strengthen the force of an empirical argument.

D) Gas stations ran out of gas as the quantity of gas demanded exceeded the quantity supplied.

Which of the following was an effect of the price ceiling placed on gasoline in the United States in the 1970s? A) Car owners started buying luxury cars that were less fuel efficient as the price of gas was very low. B) Those who valued gas the most were able to buy gas under the price ceiling. C) The inventory of unsold gas increased, and gas stations incurred losses. D) Gas stations ran out of gas as the quantity of gas demanded exceeded the quantity supplied.

A) Health insurance provided to a worker by the employer

Which of the following will be included in the calculation of GDP using the income-based method of national accounting? A) Health insurance provided to a worker by the employer B) The money paid to a pharmacist for medicines C) The value added by a worker in the production of a good D) The money spent by foreigners on domestically produced food grains

D) The quantity of cameras produced will equal the quantity of cameras bought in the market.

Which of the following will hold true if the market for cameras is in equilibrium at a price of $40? A) Buyers of cameras will want to buy fewer cameras than they are purchasing at equilibrium. B) Sellers of cameras will have an incentive to charge a price higher than $40. C) If the cost of producing cameras falls below $40 per camera, all sellers will stop supplying cameras. D) The quantity of cameras produced will equal the quantity of cameras bought in the market.

C) The quantity of cameras produced will equal the quantity of cameras bought in the market.

Which of the following will hold true if the market for cameras is in equilibrium at a price of $40? A) Buyers of cameras will want to buy fewer cameras than they are purchasing at equilibrium. B) Sellers of cameras will have an incentive to charge a price higher than $40. C) The quantity of cameras produced will equal the quantity of cameras bought in the market. D) If the cost of producing cameras falls below $40 per camera, all sellers will stop supplying cameras.

d) The quantity of cameras produced will equal the quantity of cameras bought in the market.

Which of the following will hold true if the market for cameras is in equilibrium at a price of $40? a) Sellers of cameras will have an incentive to charge a price higher than $40. b) If the cost of producing cameras falls below $40 per camera, all sellers will stop supplying cameras. c) Buyers of cameras will want to buy fewer cameras than they are purchasing at equilibrium. d) The quantity of cameras produced will equal the quantity of cameras bought in the market.

B) A decrease in the expenditure incurred by the government

Which of the following will lead to a decrease in the GDP of a country? A) An increase in exports B) A decrease in the expenditure incurred by the government C) A decrease in imports D) An increase in the expenditure on investment

A) An increase in consumption expenditure

Which of the following will lead to an increase in the GDP of a country, all other variables remaining unchanged? A) An increase in consumption expenditure B) An increase in imports C) A fall in the expenditure incurred by the government D) A fall in the expenditure on investment goods

D) The purchase of a cow by a restaurant to turn into steaks

Which of the following would not be included in the calculation of GDP? A) The purchase of a new car by a family B) The purchase of ice cream by a student at a store C) The purchase of a steak by a customer at a restaurant D) The purchase of a cow by a restaurant to turn into steaks

A) A tax evader enjoying national security

Who among the following is an example of a free rider? A) A tax evader enjoying national security B) An individual who buys a ticket for a baseball game C) A consumer paying for pollution control D) A housekeeper cleaning a house

D) An increase in expenditure incurred by the government

________ will lead to an increase in the GDP of a country, all other variables remaining unchanged. A) A fall in the expenditure on investment goods B) An increase in imports C) A fall in the expenditure on consumption D) An increase in expenditure incurred by the government