TEST Final Macro
Kayla faces risks and she pays a fee to abc company; in return, acb company agrees to accept some or all of kayla's risks. ABC company is
an INSURANCE company
According to Arthur Laffer, the graph that represents the amount of tax revenue (measured on the vertical axis) as a function of the size of the tax (measured on the horizontal axis) looks like
an UPSIDE-DOWN U
Which of the following would shift the demand curve for gasoline to the right
and INCREASE in CONSUMER INCOME, assuming gasoline is a normal good
Stocks and bonds
and checking accounts are all stores of value but ONLY CHECKING ACCOUNTS commonly function as mediums of exchange
Refer to figure 6-18. Buyers pay how much of the tax per unit
$1
Buskin's Corporation has issued 2 million shares of stock. Its earnings were 10 million, of which it retained 6 million. What was the dividend per share
$2
Refer to Figure 8-2. The amount of deadweight loss as a result of the tax is
$2.50
Suppose x=1 Then the slope of the market demand curve is
-1/3
Refer to figure 5-5. Using the midpoint method, between prices 12 and 18, price elasticity of demand is
0.33
Suppose some country had an adult population of about 25 million, a labor force participation rate of 60 percent and an unemployment rate of 6 percent. How many people were employed
0.9 Million
the amount of deadweight loss as a result of the tax is
105
If Bintu must work 2 hours to make each cup, then her production possibilities frontier is based on how many hours of work
16 hours
The reserve requirement is 10%. Lucy deposits $200 into a bank. By how much do excess reserves change?
180
If the consumer price index was 88 in 2009, 95 in 2010, and 100 in 2011, then the base year must be
2011
For good X, the supply curve is the typical upward sloping straight ling, and the demand curve is the typical downward sloping line. A tax of $15 per unit is imposed on good X. The tax reduces the equilibrium quantity in the market by 300 units. The deadweight loss from the tax is
2250
Refer to figure 5-5. At a price of $12 per unit, sellers total revenue equals
288
Figure 9-13. Consumer surplus after trade is
3600
Refer to figure 8-6. Without a tax, consumer surplus in this marker is
3600
Janelle earned a salary of 40000 in 1996 and 65000 in 2006. The consumer price index was 160 in 1996 and 266 in 2006. Janelles 2006 salary in 1996 dollars is
39097.74
A farmer sells 50 000 of apples to individuals who take them home to eat and 75 000 of apples to a company that uses them all to produce cider. How much of the farmer's sales will be included as apples in GDP
50 000
Eloise deposits 250 into an account and one year later has 272.50. What interest rate was paid on Eloise's deposit
9 percent
If the nominal interest rate is 7 percent and the real interest rate is -2.5 percent then the inflation rate is
9.5
Adam is looking for a job in marketing. He has had some offers and his prospects are promising but he's not yet accepted a job. Amanda lost her job working for Mercury Bicycles because many customers decided they prefer bicycles manufactured by ultimate bicycles instead. Who is FRICTIONALLY unemployed?
ADAM AND AMANDA
Refer to figure 7-8. Which area represents the increase in producer surplus when the price rises from p1 to p2
AHGB
By comparing the world price of horseradish to Cropland's domestic price of horseradish, we can determine whether cropland
ALL OF THE ABOVE
GDP is equal to
ALL OF THE ABOVE
Which of the following are residents of rich countries likely to have in greater quantities, or better quality, than residents of poor countries
ALL OF THE ABOVE
GDP does NOT reflect
ALL OF THE ABOVE ARE CORRECT
Technological knowledge refers to
ALL OF THE ABOVE ARE TECHNOLOGICAL KNOWLEDGE
If the government allowed a free market for transplant organs such as kidneys to exist, critics argue that such a market would
BENEFIT RICH people but not POOR people
In the 1990's, Fed Chairperson Alan Greenspan questioned whether the stock market
BOOM at that time reflected IRRATIONAL EXUBERANCE
Penny is a piano teacher and Dan is a tile layer. If penny teaches Dan's daughter to play the piano in exchange for Dan tiling her kitchen floor,
BOTH penny and dan are made better off by trade
If the Federal funds rate were above the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by
BUYING bonds. this buying would INCREASE the money supply
Refer to figure 2-6. Unemployment could cause this economy to produce at which points
C G F
In the national income accounts, depreciation is called
CONSUMPTION of fixed capital
Which arrow represents the flow of income payments
D
During the recent financial crisis velocity decreased. This means that the rate at which money changed hands
DECREASED. Other things the same, a DECREASE in velocity DECREASES the price level
Marcus puts a greater proportion of his portfolio into government bonds. Marcus's action
DECREASES both risk and the AVERAGE rate of return
A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes
DECREASES, and the consumer surplus in the market for red wine DECREASES
If marijuana were legalized, it is likely that there would be an increase in the supply of marijuana. Advocates of marijuana legalization argue that this would significantly reduce the amount of revenue going to the criminal organizations that currently supply marijuana. The advocates believe that the
DEMAND for marijuana is INELASTIC
The classical dichotomy regers to the idea that the supply of money
DETERMINES NOMINAL variables, but not REAL variables
Which of the following statements is correct
Differences in natural resources CAN explain some of the differences in standards of living around the world
Refer to figure 5-7. For prices above $8, demand is price
ELASTIC, and total revenue will fall as price rises
Which of the following is NOT correct
Economists' opposition to trade restrictions is still based largely on the principle of absolute advantage
Erin is required to pay a tax of $40 when she hires someone to clean her house for a week. Which one is correct
Erin will now clean her own house
Discounting refers directly to
Finding the PRESENT value of a FUTURE sum of money
Refer to figure 5-14 Along which of these segments of the supply curve is supply least elastic
GH
The x coordinate of an ordered pair specifies the
HORIZONTAL location of the point
Refer to figure 8-19. If the economy is at point A on the curve than a small increase in the tax rate will
INCREASE the deadweight loss of the tax and INCREASE tax revenue
Equilibrium quantity must increase when demand
INCREASES and supply does NOT change, when demand does NOT change and supply INCREASES, and when BOTH deman and supply INCREASE
In the long run, a higher saving rate
INCREASES the level of productivity
Which of the following statement is correct
If the prices of all goods and services changed proportionately over time, then the consumer price index would reflect no substitution bias
The shape of the curve is consistent with which of the following statements about the economy to which the curve applies
In the long run, a higher saving rate leads to a higher level of INCOME
If the United States decides to trade with Mexico, we know that
Mexico and the United States can both benefit
Refer to table 3-8. Huang has an absolute advantage in the production of
NEITHER good and a comparative advantage in the production of PARASOLS
Which of the following restrictions implies that investment exceeds private saving for a closed economy
NO restriction is necessary; investment and private saving are equal for all closed economies
Which of the following restrictions implies that private saving and investment are equal for a closed economy
NO restriction is necessary; private saving and investment are equal for all closed economies
According to the classical dichotomy, which of the following increases when the money supply increases
NONE OF THE ABOVE INCREASES
In a competitive market, the price of a product
NONE OF THE ABOVE IS CORRECT
If a tax is levied on the buyers of a product, then the supply curve will
NOT SHIFT
Economists believe that production possibilities frontiers
OFTEN have a BOWED shape
Refer to Figure 8-3. The amount of tax revenue received by the government is equal to the area
P3ACP1
Which of the four panels illustrates an increase in quantity supplied
PANEL A
Prices rise when the quantity of money rises rapidly is an example of a
POSITIVE economic statement
A supply schedule is a table that shows the relationship between
PRICE and QUANTITY supplied
which of these statements does not apply to market economies
Prices ENSURE that anyone who wants a product can get it
Suppose the government imposes a 20 cent tax on the sellers of iced tea. Which of the following is NOT correct. The tax would
RAISE the equilibrium price by 20 cents
Suppose OPEC succeeds in raising world oil prices by 300 percent. This price increase causes inventors to look at alternative sources of fuel for internal combustion engines. A hydrogen-powered engine is developed which is cheaper to operate than gasoline engines. Which problems in the construction of the CPI does this situation represent
SUBSTITUTION bias and INTRODUCTION of new goods
If the quantity supplied responds only slightly to changes in price, then
SUPPLY is said to be INELASTIC
Refer to table 3-10. Juanita has an absolute advantage in
TESTING cellular phones and a comparative advantage in TESTING cellular phones
What quantity is measured along the horizontal axis
THE QUANTITY OF MONEY
The BLS reports the U-6 measure of labor underutilized. Which of the following is how it computes U-6?
TOTAL unemployed + marginally attached workers + PART TIME employed for economic reasons/ LABOR FORCE + marginally attached workers
Refer to figure 9-8. When the country for which the figure is drawn allows the international trade in cars
TOTal surplus increases by the area D
Which of the following scenarios is NOT consistent with the Laffer curve
The tax rate is VERY HIGH and tax revenue is VERY HIGH
Which of the following transaction adds to US GDP for 2010
When Tim and Tina were both single, they lived in separate apartments and each paid 750 in rent. Tim and Tina got married in 2010 and they bought a previously unoccupied house that, according to reliable estimates, could be rented for 1550 per month
Refer to Figure 4-19. All else equal, a decrease in the price of the gran fed turkeys would cause a move from
Y to X
If sellers do not adjust their quantity supplied at all in response to a change in price, the price elasticity of supply is
ZERO, and the supply curve is VERTICAL
When the relative price of a good decreases, consumers respond by buying
a LARGER quantity of that good and a SMALLER quantity of SUBSTITUTES for that good
Refer to figure 26-3. Which of the following movements shows the effects of a new law that makes more people than before eligible for Individual retirement accounts
a movement from point C to point F
**According to the quantity equation, the price level would change less than proportionately with a rise in the money supply if there were also
either a RISE in output or a FALL in the rate at which money changes hands
An assistant manager at a restaurant gets a $100 a month raise. He figures that with his new monthly salary he cannot buy as many goods and services as he could buy last year
his real salary has FALLEN and his nominal salary has RISEN
Economists differ in their views of the role of the government in promoting economic growth. A controversial idea is that government should
lend support to the invisible hand by maintaining property rights and political stability
An increase in which of the following would shift the supply curve for gasoline to the right
number of producers of gasoline
Pierre says that he will spend exactly 75 cents a day on candy bars, regardless of the price of candy bars. Pierre's demand for candy bars is
perfectly INELASTIC
Which of the following movements would illustrate the effect in the market for chocolate chip cookies of a decrease in the price of flour
point A to point B
When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of a particular good
producer surplus INCREASES and total surplus INCREASES in the market for that good
A relatively flat demand curve indicates that
quantity demanded will adjust SIGNIFICANTLY to a price change
**The inflation rate you are likely to hear on the nightly news is calculated from
the CPI
Suppose that Congress were to institute an investment tax credit. What would happen in the market for loanable funds
the DEMAND for loanable funds would shift RIGHT
The future value of a deposit in a savings account will be smaller
the LOWER the INTEREST rate is
Which of the following is NOT a determinant of the price elasticity of demand for a good
the STEEPNESS or FLATNESS of the supply curve for the good
You have driven 500 miles on a vacation and then you notice that you are only 25 miles from an attraction you hadnt known about, but would really like to see. In computing the opportunity cost of visiting this attraction you had not planned to visit, you should include
the cost of driving the next 25 miles, but NOT the cost of driving the first 500
When shopping you notice that a pair of jeans costs $20 and that a tee shirt costs $10. You compute the price of jeans relative to tee shirts.
the dollar price of jeans is a NOMINAL variable; the RELATIVE price of jeans is real variable
A production possibilities frontier shifts outward when
the economy experiences economic growth
Assuming diminishing returns
the increase in output growth from an increase in the saving rate FALLS over time and that other things the same POOR countries should grow FASTER than RICH ones
Suppose the market demand curve for a good passes through the point (quantity demanded =100, prices =25). If there are five buyers in the marker, then
the marginal buyer's willingness to pay for the 100th unit of the good is $25
If the minimum wage exceeds the equilibrium wage, then
the quantity SUPPLIED of labor will exceed the quantity demanded
Suppose a typical worker in India can produce 32 units of product in an 8 hr day, while a typical worker in Bangladesh can produce 30 units of product in a 10 hour day. we can conclude that
the standard of living will likely be higher in india than in bangladesh
the prices of stock traded on exchanges are determined by
the supply of, and the demand for, the stock
Congressman Dearmark justified spending 3 million on a new entertainment complex in his district because it will create 450 new jobs for his residents. As student of economics you know that
this is a case of the BROKEN WINDOW FALLACY