Unit 3 Test MACRO

The country of MiddleTerra has 200 people, 100 of them are working, and the real GDP is $5,000. What is the per capita income in MiddleTerra?

$25 per capita

If Canada is using all its resources to their fullest extent, it can produce either 10 million iPads or 5 million HDTVs. If Mexico is using all its resources to their fullest extent, it can produce either 6 million iPads or 6 million HDTVs. Thus:

Canada has a comparative advantage in producing iPads.

_____ is a reduction in the rate of inflation.

Disinflation

An expansion is a period during which the economy's output declines.

False

Use the following data to calculate GDP: consumption = $2,000; gross investment = $600; government purchases = $500; net exports = -$40; transfer payments = $340.

GDP = $3,060

Which of the following may be an explanation for the shift in aggregate demand from line A to line B?

Interest rates fall and boost investments.

Which of the following statements regarding Gross Domestic Product is not true?

It is a stock variable.

Stagflation is a situation with high unemployment rates, high inflation rates, and little or no growth in the economy.

True

When calculating the GDP (gross domestic product) of the United States, the value of the cars produced by the Toyota plant in Ohio are included.

True

Which one of the following would NOT lead to higher prices?

an increase in the supply of food

If the cost of a typical market basket in 2019 is 400 and the cost of a typical market basket in 2020 is 390, then during this period the economy is undergoing:

deflation

The ultimate objective of macroeconomics is to :

develop and test theories about how the overall economy works

Arlina got a 5% raise while the rate of inflation was 6%. Arlina's standard of living:

fell by 1%

The effects of a quota are similar to that of a tariff in that consumers pay _____ prices and imports _____ as a result of the quota.

higher; fall

The difference between human capital and physical capital is that:

human capital is not physical; an example of human capital is education

A rising aggregate price level _____ an economy's interest rates and therefore _____ output demanded.

increases; reduces

Which of the following is true regarding Gross Domestic Product?

it can be measured either from total spending or total expenditure.

If the pound sterling appreciates against the U.S. dollar, England buys _____ U.S. goods, causing the U.S. aggregate demand curve to shift to the _____.

more; right

Which of the following would be included in GDP?

payment of the monthly telephone bill by Mr. Laconic

A country has an absolute advantage in the production of a good if it can:

produce more of the good than another country.

One of the main purposes of a tariff is to:

raise the price of an import above the world price.

If oil prices decline, the short-run aggregate supply curve shifts _____ and output supplied will _____.

right; increase

Increased consumer confidence will shift the aggregate demand curve to the _____ and _____ output demanded.

right; increase

Which of the following is not the proper subject matter for macroeconomics?

the price of corn

An increase in real GDP generally translates into a higher standard of living for most of a country's residents.

true