Econ 103 final

"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is: A. $0 B. $4 C. $40 D. $44

$44

Stealth bank holds deposits of $600 million. It holds reserves of $30 million and government bonds worth $80 million. The current market value of the bank's loans is $400 million. What is the value of the bank's total liabilities? A. $600 million B. $110 million C. $200 million D. $90 million

$600 million

In 2010, a small country imported goods worth $500 billion and exported goods worth $443 billion. It exported services worth $248 billion and imported services worth $330 billion. Payments on investments made abroad (by Americans) totaled $199 billion, while returns paid to foreigners on money they invested in the U.S. totaled $125 billion. Unilateral transfers from the country to other nations amounted to $94 billion. What was the country's merchandise trade deficit for 2010? A. $70 billion B. $154 billion C. $57 billion D. $65 billion

$70 billion

Stealth bank has deposits of $700 million. It holds reserves of $20 million and has purchased government bonds worth $350 million. The banks loans, if sold at current market value, would be worth $600 million. What is the total value of Stealth bank's assets? A. $1.3 billion B. $1.7 billion C. $970 million D. $470 million

$970 million

Suppose that out of the original 100 of government spending, 33 will be recycled back into purchases of domestically produced goods and services in the second round and 10.89 is spent in the third round. Following this multiplier effect, what will the value of the total aggregate expenditures be after the fourth round in the cycle is completed? A. 141.70 B. 147.48 C. 147.62 D. 144.41

147.48

An analyst needs to adjust the nominal GDP for the years 2000 and 2010 into real terms to conclude his comparison analysis. The nominal GDP in 2000 was $672 billion and $1,690 billion for 2010; the real interest rate was 6.79% in 2000 and 3.71% in 2010; the 2000 deflator was 24 and 51 in 2010. What is the real gain? A. 18.34% B. 38.58% C. 151.48% D. 70.61%

18.34%

If the price index moves from 107 to 110, the rate of inflation is: A. 3% B. 30% C. 28% D. 2.8%

2.8%

The people in an economy have $10 million in money. There is only one bank that all the people deposit their money in and it holds 5% of the deposits as reserves. What is the money multiplier in this economy? A. 5 B. 1 C. 20 D. 10

20

The following table shows the aggregate supply and demand data for a country. If input prices decrease and AS shifts to the right by 3,000 units at each price level. What will the new equilibrium price equal? A. 600 B. 800 C. 300 D. 400

300

If these are the only four buyers in the market, then the market quantity demanded at a price of $1 is A. 4 units B. 7.75 units C. 14 units D. 31 units

31 units

Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3 pizzas per month when the price is $15. What is the price elasticity of Bobo's demand curve? A. 0.235 B. 2.00 C. 4.25 D. 6.33

4.25

The following table shows the aggregate supply and demand data for a country. What is the equilibrium price level? A. 200 B. 400 C. 500 D. 800

400

The economy is in a recession and the government wants to increase output. If the multiplier equals 3 and the government increases spending by 250, how much will output increase by? A. 50 B. 100 C. 200 D. 750

750

When an economy's output increases and the price level decreases, the _________ curve has shifted to the ____________. A. AS; left B. AD; left C. AD; right D. AS; right

AS; right

If aggregate supply is vertical, then which of the following statements must be true? A. Aggregate demand does not affect the quantity of output. B. Aggregate demand does not cause inflationary changes in price level. C. Inflation will accompany any rise in output. D. Inflation creates greater social benefits.

Aggregate demand does not affect the quantity of output.

Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect: A. Andy's demand for pizza to increase. B. Andy's demand for pizza to decrease. C. Andy's quantity of pizza demanded to decrease. D. Andy's demand for beer to increase.

Andy's demand for beer to increase

In the circular flow diagram model: A. households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses. B. businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households. C. households receive revenue for selling goods and services to businesses, and use that revenue to buy inputs from businesses. D. Both (a) and (b) are correct.

Both (a) and (b) are correct

On April 1, 2009, in the middle of a recession, the government of the province of Ontario, Canada increased the provincial minimum wage from $8.75 to $9.50. What will the likely effect of this policy be? A. Both the leftward shift in the labor demand curve and the higher minimum wage will lead to an increase in the unemployment rate. B. Low income workers will be better able to survive the recession at the new, higher wage rate. C. More people will be hired at the higher wage rate offsetting the effects of the recession. D. The higher wage will increase the supply of labor offsetting the effects of the recession.

Both the leftward shift in the labor demand curve and the higher minimum wage will lead to an increase in the unemployment rate.

Nancy's union has negotiated a three-year wage contract that provides for a 2.4% increase indexed to inflation. The rates of inflation are forecast to be 1.62%, 1.93% and 2.21% respectively. How will Nancy's wage increase be expressed in the new contract? A. COLA plus 1.6% B. COLA plus 1.9% C. COLA plus 2.4% D. COLA plus 2.2%

COLA plus 2.4%

A nation's prosperity is sometimes measured in terms of ___________. A. GNP B. GDP C. GDP per capita D. economic output

GDP per capita

An economy's rate of productivity growth is closely linked to the growth rate of its ______________, although the two aren't identical A. GNP B. output C. GDP per capita D. technology

GDP per capita

Referring to the diagram above, which of the following is a true statement? A. Short-run increased output will lower output costs, but demand for higher profits will increase prices. B. Higher cost levels will result because government will increase taxes as output rises. C. Higher cost levels of increased output will force an increase in price for the product. D. Short-run lower output costs will result because government will decrease taxes as output rises.

Higher cost levels of increased output will force an increase in price for the product.

Which of the following best describes the relationship between economic growth and literacy? A. As the economy grows, literacy declines because it becomes less and less useful in a developed economy. B. Increased literacy initially stimulates economic growth by raising labor productivity, but as the economy grows and the opportunity cost of education rises, literacy declines. C. Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education. D. There is no correlation between economic growth and literacy.

Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education.

Refer to Figure 4-1. The movement from __________ to __________ is consistent with a successful advertising campaign that claims wool keeps you warm. A. Point A; Point B B. Point A; Point F C. Point A; Point D D. Point A; Point H

Point A; Point F

Refer to Figure 4-1. The movement from __________ to __________ is consistent with a decrease in the price of cotton (a substitute). A. Point A; Point H B. Point A; Point D C. Point A; Point F D. Point A; Point B

Point A; Point H

_________ is output per hour in the business sector. A. Net exports B. Productivity C. Investment D. GDP per capita

Productivity

From a neoclassical view, which of the following is a true statement? A. Lower wages will cause an economy-wide increase in the price of a key input. B. Because wages are flexible, they are unaffected by high rates of unemployment. C. A surge in aggregate demand ends up as a rise in output, but does not increase price levels. D. The economy cannot sustain production above its potential GDP in the long run.

The economy cannot sustain production above its potential GDP in the long run.

Which of the following is true? A. A depression is a recession that is mild and relatively brief. B. The expansions and contractions of real world business cycles last varying lengths of time and often differ in magnitude. C. The timing of business fluctuations is regular and therefore easily predictable. D. During the contractionary phase of the business cycle, the rate of unemployment is generally quite low.

The expansions and contractions of real world business cycles last varying lengths of time and often differ in magnitude

Aggregate demand curves slope downwards for each of the following reasons EXCEPT A. The wealth effect: As the price level falls, the buying power of people's savings increases and induces them to spend more. B. The substitution effect: As the price level falls, people buy more of the cheaper goods and less of other goods. C. The interest rate effect: As prices for outputs rise, it costs more to make the same purchases, driving up the demand for money, raising interest rates and reducing investment spending. D. The foreign price effect: As the price level falls, U.S. become more attractive to foreigners and domestic residents, increasing net export spending.

The substitution effect: As the price level falls, people buy more of the cheaper goods and less of other goods.

Steel mill wage costs increase by 18 percent over a year. What is the likely economic effect on the market for steel? A. There is an increase in the cost of producing steel, which shifts the supply curve of steel to the right, thereby increasing the price of steel. B. There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel. C. There is a decrease in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel. D. The increase in wage costs will shift the demand curve for steel to the left, increasing the cost of steel.

There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel

Which of the following involves a financial outflow from the U.S. economy? A. South Korean investors buy firms in the U.S B. Chinese investors buy real estate across the U.S. C. returns paid on U.S. investments in France D. U.S. firms buying logging rights to China's forests

U.S. firms buying logging rights to China's forests

Which of these is most likely a topic of discussion in macroeconomics? A. an increase in the price of a hamburger B. a decrease in the production of DVD players by a consumer electronics company C. an increase in the wage rate paid to automobile workers D. a decrease in the unemployment rate

a decrease in the unemployment rate

A price ceiling is A. often imposed on markets in which "cutthroat competition" would prevail without a price ceiling. B. a legal maximum on the price at which a good can be sold. C.often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling. D.All of the above are correct.

a legal maximum on the price at which a good can be sold.

The supply curve of textbooks (which are produced using paper made from trees) will shift to the left in response to: A. a decline in college tuition. B. a sharp increase in the demand for and construction of wood-frame homes. C. an increase in the supply of lumberjacks. D. an end to government regulations that limit timber harvesting in national forests.

a sharp increase in the demand for and construction of wood-frame homes

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is: A. no change; only the supply curve for beef is likely to be affected. B. a shift of the demand curve for beef to the left. C. a movement down along the demand curve for beef to the right. D. a shift of the demand curve for beef to the right.

a shift of the demand curve for beef to the left

Only one of the following statements about trade surplus and capital flow is correct. Which one is it? A. a trade surplus means that there is a net inflow of capital B. a trade surplus means that there is a net outflow of capital C. a trade surplus exists if there is a net inflow of capital excluding foreign borrowing and lending D. a trade surplus exists if there is a net outflow of capital excluding foreign borrowing and lending

a trade surplus means that there is a net outflow of capital

A vertical aggregate supply curve, where the quantity of output is consistent with many different price levels, also implies: A. an upward sloping Phillips curve. B. a downward sloping aggregate demand curve. C. a vertical aggregate demand curve. D. a vertical Phillips curve.

a vertical Phillips curve.

Banks typically come under financial stress because of: A. the money multiplier effect. B. a widespread decline in the value of their assets. C. diversification of loan assets. D. risks associated with extraordinary economic gains.

a widespread decline in the value of their assets.

The _________________ argument points out that if an employer reacts to poor business conditions by reducing pay for all workers, then the best workers, with the best employment alternatives at other firms, are the most likely to leave and the least-attractive workers, with fewer employment alternatives, are more likely to stay. A. efficiency wage theory B. adverse selection of wage cuts C. equilibrium wage theory D. employer wage theory

adverse selection of wage cuts

Any given demand or supply curve is based on the ceteris paribus assumption that ___________________. A. everything is variable. B. all else is held equal C. no one knows which variables will change and which will remain constant. D. what is true for the individual is not necessarily true for the whole.

all else is held equal

Which of the following results in a rightward shift of the market demand curve for labor for a given firm? A. a decrease in labor productivity B. a decrease in the firm's product price C. an increase in the wage rate D. an increase in demand for the firm's product

an increase in demand for the firm's product

According to the Keynesian framework, ________________ in __________________ may cause inflation, but not a recession. A. decrease; interest rates B. an increase; domestic investment C. a decrease; a major trading partner's economy D. a decrease; a major trading partner's export prices

an increase; domestic investment

If the central bank increases the amount of reserves banks are required to hold to 20%, then: A. the money multiplier will increase and the supply of money in the economy will decrease. B. both the money multiplier and the supply of money in the economy will increase. C. the money multiplier will decrease and the supply of money in the economy will increase. D. both the money multiplier and supply of money in the economy will decrease.

both the money multiplier and supply of money in the economy will decrease.

Ignoring signs (positive, negative), the slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good. A. Opportunity cost B. productive efficiency C. budget constraint D. production possibilities frontier

budget constraint

Demand is said to be price elastic if A. the price of the good responds substantially to changes in demand B.demand shifts substantially when income or the expected future price of the good changes C. buyers do not respond much to changes in the price of the good D. buyers respond substantially to changes in the price of the good

buyers respond substantially to changes in the price of the good

The process of banks making loans in financial capital markets is intimately tied to the: A. redistribution of wealth. B. financial stress levels of banks. C. creation of money. D. home construction industry.

creation of money.

A 10 percent decrease in the price of potato chips leads to a 30 percent increase in the quantity of soda demanded. It appears that: A. elasticity of demand for potato chips is 3. B. cross-price elasticity of demand for soda is -3. C. elasticity of demand for potato chips is 3. D. elasticity of demand for soda 3.

cross-price elasticity of demand for soda is -3

A forestry worker who is out of work because of the temporarily low demand for wood products associated with a recession is defined as: A. cyclically unemployed. B. underemployed. C. frictionally unemployed. D. naturally unemployed.

cyclically unemployed

______________ are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling. A. Rent controls B. Price ceilings C. Price floors D. Subsidies

price floors

Refer to Figure 3-2. A change from Point A to Point B represents a(n): A. increase in demand. B. decrease in demand. C. decrease in quantity demanded. D. increase in quantity demanded.

decrease in quantity demanded

Equilibrium price must decrease when demand A. increases and supply does not change, when demand does not change and supply decreases, and when demand decreases and supply increases simultaneously B. increases and supply does not change, when demand does not change and supply decreases, and when demand increases and supply decreases simultaneously C. increases and supply does not change, when demand does not change and supply decreases, and when demand increases and supply decreases simultaneously D. decreases and supply does not change, when demand does not change and supply increases, and when demand increases and supply decreases simultaneously

decreases and supply does not change, when demand does not change and supply increases, and when demand increases and supply decreases simultaneously

A country finds itself in the following situation: the government budget surplus is 2% of its GDP; private savings is 30% of GDP; and physical investment is 33% of GDP. Based on the national saving and investment identity, if the government budget surplus falls to zero, what will happen to this country's current account balance? A. surplus of 1% drops to 1% deficit of GDP B. surplus of 2% increases to 4% surplus of GDP C. deficit of 1% increases to 2% surplus of GDP D. deficit increases from 1% to 3% of GDP

deficit increases from 1% to 3% of GDP

Melanie decided to save 20% of her annual earnings for 10 years so she would have a down payment for a house. After 5 years, what change in the economy would cause an increase in the purchasing power of the funds she has managed to save? A. recession B. depression C. deflation D. stagflation

deflation

If Bill performs plumbing upgrades for Alice in exchange for her incorporating his business, then their _________________________ will be satisfied. A. balance of trade B. double coincidence of wants C. convenience of exchange D. division of labor

double coincidence of wants

The leader of a federal political party made the following campaign promise: "My administration will increase national defense without requiring sacrifices elsewhere in the economy." The promise can be kept if A. the economy moves along the production possibilities in the direction of a greater quantity of defense. B. the economy moves from a point inside the production possibilities curve toward a point on the production possibilities curve. C. the production possibilities frontier shifts outward due to an improvement in technology. D. either b) or c) occurs, but not as a result of a).

either b) or c) occurs, but not as a result of a)

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ___________________ A. excess supply B. excess demand C. ceteris paribus D. a price ceiling

excess demand

If the supply curve for housing is perfectly inelastic, then a reduction in demand will cause the equilibrium price to: A. rise and the equilibrium quantity to fall. B. rise and the equilibrium quantity to stay the same. C. fall and the equilibrium quantity to fall. D. fall and the equilibrium quantity to stay the same.

fall and the equilibrium quantity to stay the same.

In order to avoid double counting, statisticians just count the __________________. A. final inventories B. final goods and services C. intermediate goods and services D. durable goods and nondurable goods

final goods and services

The _____________ holds that a rise in price level will make domestic goods relatively more expensive, ____________ exports and _______________ imports. A. interest rate effect; encouraging; discouraging B. employment effect; discouraging; encouraging C. wealth effect; encouraging; discouraging D. foreign price effect; discouraging; encouraging

foreign price effect; discouraging; encouraging

The development of a nationwide computerized job bank listing of all job openings would be most likely to reduce: A. natural unemployment. B. frictional unemployment. C. seasonal unemployment. D. cyclical unemployment.

frictional unemployment

Which of the government policies below is most unlikely to encourage per capita economic growth? A. high taxes on companies that spend a lot on capital formation B. the use of tax revenues for investment and capital formation C. special subsidies for capital-intensive forms of production D. promotion of education and training programs for workers

high taxes on companies that spend a lot on capital formation

Which of the following would reduce the supply of microcomputers? A. a technological improvement that lowers the cost of producing the computers B. higher wage rates for the workers that assemble the computers C. a reduction in the price of computer chips used to produce the computers D. a reduction in the price of computers.

higher wage rates for the workers that assemble the computers

A perfectly elastic supply curve is: A. upward sloping to the right. B. downward sloping to the left. C. horizontal. D. vertical.

horizontal

In the early 1990's extremely high inflation rates of 2500% were common in Russia. During that time, we can say that as a result of those inflation rates, Russia was experiencing ___________________. A. perpetual inflation B. ultra inflation C. hypo inflation D. hyperinflation

hyperinflation

The price elasticity of demand for tickets to local baseball games is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise: A. increasing the price of game tickets because demand is inelastic. B. not changing the price of game tickets because demand is unit elastic. C. increasing the price of game tickets because demand is elastic. D. decreasing the price of game tickets because demand is elastic.

increasing the price of game tickets because demand is inelastic.

A lender demands an interest rate in part to compensate for any expected ___________, so that the money that is repaid in the future will have at least as much buying power as the money that was originally loaned. A. risk premium B. inflation C. compound interest D. opportunity costs

inflation

In an economy with _______________, money loses some buying power each year, but it remains money. A. inflation B. currency C. deflation D. a market orientation

inflation

To a macroeconomist, a trade deficit is synonymous with which of the following? A. outflow of financial capital B. outflow of goods and services C. inflow of financial capital D. inflow of goods and services

inflow of financial capital

Which of these best describes a monetary policy tool? A. interest rates B. taxes C. household savings D. government spending

interest rates

___________ is a small category that refers to the goods produced by one business that have yet to be sold to consumers, and are either still sitting in warehouses and on store shelves. A. Inventories B. Services C. Structures D. Durable goods

inventories

Investment in human capital: A. is of minor importance to economic growth. B. can be acquired through on-the-job training. C. is an important source of economic growth. D. is characterized by both b) and c).

is characterized by both b) and c).

If a Phillips curve shows that unemployment is high and inflation is low in the economy, then that economy: A. is producing at its potential GDP. B. is producing at a point where output is more than potential GDP. C. is producing at a point where output is less than potential GDP. D. is producing at its equilibrium point.

is producing at a point where output is less than potential GDP.

A nation can achieve higher economic growth if: A. it devotes more resources to research and development. B. the productivity of labor declines C. taxes are imposed on investment in capital. D. more resources are allocated to consumption goods.

it devotes more resources to research and development.

If a country's current account balance is zero and the financial payments flowing in and out of the country's economy are equal, then which of the following must be a true statement? A. it has an overall or net inflow of financial investment B. it is not an overall or a net investor in other countries C. it has an overall or net outflow of financial investment D. its government is not indebted to other governments

it is not an overall or a net investor in other countries

The equilibrium quantity of labor and the equilibrium wage increase when: A. labor supply shifts to the right, if wages are flexible. B. labor demand shifts to the right, if wages are flexible. C. labor demand shifts to the left, if wages are flexible. D. labor supply shifts to the left, if wages are flexible.

labor demand shifts to the right, if wages are flexible.

If a firm faces ________________________, while the prices for the output the firm produces remain unchanged, a firm's profits will increase. A. higher input costs B. lower costs of production C. equilibrium D. a shift in demand

lower costs of production

Suppose that a rise in business confidence has led to more investment in the economy and higher levels of output. In the short-run Keynesian analysis, the rise in aggregate demand will: A. lower unemployment. B. cause government to lower taxes. C. cause government to increase spending. D. exports will drop.

lower unemployment.

The unemployment rate may underestimate the true extent of unemployment if: A. many part-time employees would like to work fulltime, but are unable to get the additional work. B. employees increase the number of hours they work overtime. C. there are a large number of people working in the underground economy. D. people are pretending to look for work so that they can continue receiving unemployment benefits.

many part-time employees would like to work fulltime, but are unable to get the additional work

The effect of substitution bias is that the rise in the price of a fixed basket of goods over time tends to ___________________ the rise in a consumer's true cost of living, because it doesn't take into account that the person can substitute between goods according to changes in their relative prices. A. stabilize B. understate C. overstate D. reduce

overstate

The difference between economists speaking as scientists or policy advisers boil down to the difference between A. assumptions and theories B. true statements and false statements C. specific statements and general statements D. positive statements and normative statements

positive statements and normative statements

The theory of _____________________ holds that people will use all information available to them to form the most accurate possible expectations about the future. A. adaptive expectations B. rational expectations C. Keynesian economics D. Neoclassical economics

rational expectations

The difference between nominal GDP and real GDP is: A. nominal GDP measures actual productivity B. nominal GDP adjusts for inflation C. real GDP adjusts for inflation D. real GDP excludes imports and exports

real GDP adjusts for inflation

The __________________ is the nominal interest rate minus the rate of inflation. A. real GDP B. real interest rate C. nominally adjusted D. annualized interest rate

real interest rate

The market demand curve A. is found by vertically adding the individual demand curves B. slopes upward C. represents the sum of the places that all buyers are willing to pay for the given quality of the good D. represents the sum of the quantities demanded by all buyers at each price of the good

represents the sum of the quantities demanded by all buyers at each price of the good

In the neoclassical view, the economy has a ___________________________ to move back to potential GDP. A. rational tendency B. tendency to be unable C. self-correcting tendency D. immediate tendency

self-correcting tendency

A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will: A. shift to the right, increasing the price of the drug. B. shift to the left, increasing the price of the drug. C. shift to the right, decreasing the price of the drug D. shift to the left, decreasing the price of the drug.

shift to the right, decreasing the price of the drug

When quantity demanded increases at every possible price, the demand curve has A. shifted to the left B. shifted to the right C. not shifted; rather, we have moved along the demand curve to a new point on the same curve D. not shifted; rather, the demand curve has become steeper.

shifted to the right

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the __________________ . A. demand curve to the right B. supply curve to the left C. supply curve to the right D. demand curve to the left

supply curve to the right

Increases in which of the following is least likely to increase the rate of economic growth? A. the quality of available resources B. the quantity of available resources C. the level of government spending D. technological change

the level of government spending

A movement along the supply curve might be caused by a change in A. production technology B. input prices C. firms' expectations about future prices D. the price of the good or service that is being supplied

the price of the good or service that is being supplied

Which of the following is not counted as a part of GDP? A. the purchase of 100 shares of AT&T stock by your grandfather. B. the purchase of a snow plough by the city of Minneapolis. C. the unsold additions to inventory at an appliances store D. the purchase of a loaf of bread by a consumer

the purchase of 100 shares of AT&T stock by your grandfather.

Whenever there is a surplus at a particular price, the quantity sold at that price will equal: A. (quantity demanded plus quantity supplied)/2. B. the quantity supplied at that price. C. the quantity supplied minus the quantity demanded. D. the quantity demanded at that price.

the quantity demanded at that price.

Assume that the level of domestic investment in a country rises, while the level of private and public saving remains unchanged. In these circumstances: A. the rise in domestic investment will mean a higher trade deficit. B. the rise in domestic investment will mean a higher trade surplus. C. government borrowing will increase sharply. D. the trade deficit will decline sharply.

the rise in domestic investment will mean a higher trade deficit.

Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market." A. The statement is correct. B. The statement would be correct if "quantity of wheat demanded" were substituted for "quantity of wheat supplied." C. The statement is incorrect because it confuses a change in quantity supplied with a change in supply. D. The statement would be correct if it read that a "decrease in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

the statement is correct

A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of: A. the supply curve. B. the demand curve, as consumers try to economize because of the shortage. C. both the supply and demand curves. D. the supply curve and a rightward shift of the demand curve, resulting in a higher equilibrium price.

the supply curve

Which of the following is included in GDP calculations? A. sales revenue received from a yard sale B. cash income received by a self-employed landscaper that is not reported to the IRS C. a crisp $50 bill received on your birthday D. the university tuition paid to enroll in a course

the university tuition paid to enroll in a course

According to the law of supply: A. there is a direct relationship between price and the quantity supplied. B. there is an inverse relationship between price and the quantity supplied. C. there is a direct relationship between price and quantity demanded. D. there is an inverse relationship between price and quantity demanded.

there is a direct relationship between price and the quantity supplied

In November 2010 the labor force in Rivertown, was 14,800. There were 14,483 persons employed. The local unemployment rate: A. was 1.2%. B. was 2.1%. C. was 5.6%. D. was 7.1%.

was 2.1%.

Under what circumstances would it most likely be considered beneficial for a government to be a large borrower of foreign investment capital? A. never as there is no economic merit in a policy of running trade deficits B. if the inflow of capital is absorbed by greater government borrowing C. when borrowing larger amounts is based on unconventional macroeconomic wisdom D. when those funds are invested in a way that sustains economic growth over time

when those funds are invested in a way that sustains economic growth over time

Using a neoclassical model, what will the level of cyclical unemployment be when an economy is producing at potential GDP? A. zero B. never 0% C. 1% - 3% D. 3% - 5%

zero