ECON 131 Macroeconomics Midterm

15. Refer to Table 5-1. If D2 and S1 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are __________ and __________, respectively. A. $8; 15 B. $10; 17 C. $12; 9 D. $12; 10

A. $8; $15

13. In 2010, Americans had about _____ outstanding in credit card debts not paid on time. A. $900 billion B. $90 billion C. $900 million D. $90 million

A. $900 billion

During the last two centuries, the average rate of growth of GDP per capita in the leading industrialized countries has averaged about _________ per year. A. 2% B. 12% C. 22% D. 32%

A. 2%

1. During the Great Depression of the 1930s, the unemployment rate reached more than _________ of the labor force. A. 25% B. 45% C. 65% D. 85%

A. 25%

8. Freelife, New Hampshire has a labor force of 78,567 persons and employment of 74,382. The unemployment rate for the city is: A. 5.3%. B. 5.6%. C. 6.0%. D. 7.1%

A. 5.3%

21. On the supply side of the GDP, Structures account for around ________ of U.S. GDP. A. 7% B. 17% C. 37% 14 D. 57%

A. 7%

18. In the early 2000s, the illiteracy rate for girls between the ages of 15 and 24 was __________ and the illiteracy rate for males in this age group was ______________. A. 78%; 75% B. 80%; 83% C. 67%; 70% D. 72%; 69%

A. 78%; 75%

7. To compare the GDP of two different countries with different currencies, it is necessary to use _________________________. A. an exchange rate B. foreign currency C. currency rates D. per capita GDP

A. An exchange rate

7. ______________________ argues that the productivity of workers will increase if they are paid more, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate. A. Efficiency wage theory B. Equilibrium wage theory C. Employee wage theory D. Employer wage theory

A. Efficiency wage theory

2. Consumption is the purchase of goods and services by: A. households. B. government. C. business firms. D. foreign buyers.

A. Households

4. ___________ 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

A. Inventories

1. Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be. A. normative statement B. budget constraint C. trade-off D. opportunity cost

A. Normative statements

8. Which of the following is the name used to describe the price index that consists of intermediate goods and finished goods? A. Producer Price Index B. Consumer Price Index C. Employment Cost Index D. Processing Price Index

A. Producer Price Index

13. Investment (I) includes: A. the amount spent on new factories and machinery. B. the amount spent on stocks and bonds. C. the amount spent on consumer goods that last more than one year. D. the amount spent on purchases of art.

A. The amount spent on new factories and machinery

5. Macroeconomic topics do not usually include: A. the profit maximizing decisions of an individual manufacturer. B. the rate of inflation. C. the rate of unemployment. D. economic growth.

A. The profit maximizing decisions of an individual manufacturer

10. The general pattern that consumption of the first few units of any good tends to bring a higher level of _______ to a person than consumption of later units is a common pattern. A. utility B. marginal benefit C. opportunity cost D. sunk costs

A. Utility

17. The choice on a production possibilities set that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display ___________. A. allocative efficiency B. the production possibilities frontier C. trade-offs D. scarcity

A. allocative efficiency

12. In the 1970s and 1980s, labor unions commonly negotiated wage contracts that had ___________________ which guaranteed that their wages would keep up with inflation. A. cost of living adjustments B. inflation protection plans C. inflation ceiling guarantees D. wage protection clauses

A. cost of living adjustments

12. 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.

A. cyclically unemployed

7. The situation where the buying power of money in terms of goods and services increases is called: A. deflation. B. inflation. C. stationary pricing. D. hyperinflation.

A. deflation

19. The extent of _______________________ will depend on how easy it is for workers to learn about alternative jobs, which may reflect the ease of communications about job prospects in the economy. A. frictional unemployment B. cyclical unemployment C. seasonal unemployment D. cyclical employment

A. frictional unemployment

2. A welder who quits his job and moves from Pittsburgh to Madison to try to get a better welding job is said to be: A. frictionally unemployed. B. underemployed. C. cyclically unemployed. D. structurally unemployed.

A. frictionally unemployed

3. The percentage change in the price level from one time period to the next, whether the price level is measured in terms of money or as a price index, will be the _____________. A. inflation rate B. price index rate C. consumer price index D. producer price Index

A. inflation rate

3. 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.

A. it devotes more resources to research and development

4. Since Baltimore passed the first _______________ in 1994, several dozen cities enacted similar laws in the late 1990s and into the 2000s. A. living wage law B. price ceiling C. price floor D. minimum wage

A. living wage law

16. 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.

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

18. A university student who is enrolled in school fulltime and not seeking employment is considered: A. out of the labor force. B. unemployable, and not counted in official statistics. C. employed in leisure. D. underemployed.

A. out of the labor force.

3. If a nation's labor force receives a significant influx of young workers: A. the natural rate of unemployment is likely to increase. B. the natural rate of unemployment is likely to decrease. C. the natural rate of unemployment is unlikely to change D. frictional unemployment will likely decrease to zero.

A. the natural rate of unemployment is likely to increase

4. The most significant real economic cost of high unemployment is: A. the potential goods and services that might have been produced but weren't. B. the money cost of retraining persons to obtain new jobs. C. the lost tax revenue that might have been paid by persons if they had worked. D. the money cost of unemployment insurance payments to the unemployed.

A. the potential goods and services that might have been produced but weren't

2. As depicted in _________________, it is necessary to give up some of one good to gain more of the other good. A. the production possibilities frontier B. allocative efficiency C. scarcity D. utility

A. the production possibilities frontier

15. Insofar as government public policy is concerned, the best way to battle unemployment would be __________________. A. to minimize recessions B. to maximize unemployment payments C. to maximize unemployment insurance duration D. to minimize labor unions

A. to minimize recessions

14. Refer to Table 5-1. If D2 and S2 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are __________ and __________, respectively. A. $12; 12 B. $10; 12 C. $8; 15 D. $6; 18

B. $10; $12

7. Referring to Table 2-1: A student has only a few hours to prepare for two different exams this afternoon. The above table shows alternative possible exam scores with three alternative uses of the student's time. The opportunity cost of scoring a 94 on the economics exam rather than a 77 is: A. 8 points on the history exam. B. 15 points on the history exam. C. 14 points on the history exam. D. 17 points on the history exam.

B. 15 points on the history exam

5. Women composed __________ of the paid workforce in 1900 and 50% of the paid workforce in 2010. A. 2% B. 18% C. 33% D. 60%

B. 18%

17. In certain African countries like Niger, Tanzania, Nigeria, and Sudan, for example, GDP per capita at the start of the 2000s was still less than $___________. A. 30 B. 300 C. 3000 D. 30,000

B. 300

3. Which of the following best denotes the reason for the existence of substantial black markets? A. a market-oriented economy B. a command economy C. government laws and rules D. the microeconomy

B. A command economy

11.Which of the following best characterizes the circular flow of income? A. Businesses buy resources from the government, and households buy goods and services from businesses. B. Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses. C. The government purchases resources from businesses and households and then sells goods and services to businesses and households. D. Households buy factors of production from businesses, and businesses buy goods and services from households.

B. Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.

6. Which of the following is not included in GDP? A. the payments for a chiropractor's services B. cash income paid to a day laborer that is not reported to the tax authorities C. the replacement of brake pads on your six-year-old vehicle D. the fees for legal services rendered by your lawyer

B. Cash income paid to a day laborer that is not reported to the tax authorities

8. ___________ is about two-thirds of the demand side of GDP, but it moves relatively little over time. A. Government 12 B. Consumption C. Investment D. Services

B. Consumption

1. In which of the following countries will the national government have the greatest influence with respect to the nation's economy? A. China B. Cuba C. Canada D. Chile

B. Cuba

9. Country Able and Country Baker initially have the same real GDP per capita. Country Able experiences no economic growth, while Country Baker grows at a sustained rate of 7 percent. In 12 years, Country Baker's GDP will be approximately ___________ that of Country Able. A. triple B. double C. one-half D. one-fourth

B. Double

13. Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected __________ doesn't change. A. market B. economy C. production D. firm

B. Economy

9. Which of the following statements is incorrect? A. Employment insurance compensation encourages longer job searches, which may lead to a better match between jobs and employees. B. Employment insurance compensation increases the opportunity cost of being unemployed. C. The typical employment insurance compensation is roughly one third of one's latest salary for up to 26 weeks. D. Demand and supply curves for labor are constantly shifting.

B. Employment insurance compensation increases the opportunity cost of being unemployed

5. When discussing economic growth, it is often useful to focus on ____________, to avoid studying changes in the size of GDP that represent only having more people in the economy, and focus on those increases in GDP which represent an actual rise in the standard of living on a per person basis. A. economic growth B. GDP per capita C. living standards D. consumption and expenditures

B. GDP per capita

16. Some prominent members of the slow-economic growth country club include a highincome country like _________. A. Somalia B. Germany C. Bolivia D. Nigeria

B. Germany

4. The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending. A. business B. government C. household D. capital market

B. Government

10. In the long run, the most important source of increase in a nation's standard of living is a: A. zero rate of population growth. B. high rate of economic growth. C. high rate of consumption. D. high rate of labor force growth.

B. High economic growth

. In the long run, the most important source of increase in a nation's standard of living is A. zero rate of population growth B. high rate of economic growth. C. high rate of consumption. D. high rate of labor force growth.

B. High rate of economic growth

7. Which of the following is most likely to contribute to economic growth as measured by GDP per capita? A. the imposition of tariffs and quotas on imported goods B. increased capital formation C. rapid population growth D. an increase in marginal tax rates

B. Increased capital formation

1. While one occasionally sees references to inflation over short time periods, the term typically implies a(n)_____________ in prices. A. ongoing decrease B. ongoing rise C. short term rise D. short term decrease

B. Ongoing rise

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

B. Productivity

15. Which of the following is true? A. A depression is a recession that is mild and relatively brief. 13 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.

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

2. In a discussion of economics, which of the following would exert the most influence on an individual firm's decision to hire workers? A. wage levels B. the macroeconomy C. the firm's income D. household income

B. The macroeconomy

8. Which of the following lies primarily within the realm of macroeconomics? A. a study of the demand for gasoline B. a study of how tax cuts stimulate aggregate production C. an analysis of supply and demand conditions in the electricity market D. a study of the impact of "mad cow" disease on the price of beef worldwide

B. a study of how tax cuts stimulate aggregate production

11. Frictional unemployment occurs when: A. there is friction between an employer and employee. B. a worker decides to quit one job to seek a different job. C. a large corporation transfers a worker to another city. D. college students go back to school at the end of the summer.

B. a worker decides to quit one job to seek a different job

13. 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

B. adverse selection of wage cuts

11. The model that economists use for illustrating the process of individual choice in a situation of scarcity is the _________________, sometimes also called the opportunity set, a diagram which shows what choices are possible. A. consumption set B. budget constraint C. original budget D. income cap

B. budget constraint

15. Some recent economic research has suggested that African countries' economic growth may have been limited by __________________. A. population B. geography and climate C. government interventionism D. technological challenges

B. geography and climate

16. For most high-income countries of the world, GDP _________________ over time. A. has proven to be stable B. has risen gradually C. has declined slightly D. has sharply risen

B. has risen gradually over time.

14. A payment is said to be ______________ if it is automatically adjusted for inflation. A. cross referenced B. indexed C. matched D. maintained

B. indexed

5. Scarcity implies that: A. consumers would be willing to purchase the same quantity of a good at a higher price. B. it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available. C. at the current market price, consumers are willing to purchase more of a good than suppliers are willing to produce. D. consumers are too poor to afford the goods and services available.

B. it is impossible to completely fufill the unlimited human desire for goods and services with the limited resources available.

16. Economists refer to this pattern, the ___, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines. A. law of trade-offs B. law of diminishing marginal utility C. production possibilities frontier D. law of increasing marginal utility

B. law of diminishing marginal utility

9. Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good. A. utility B. marginal analysis C. the budget constraint D. consumption

B. marginal analysis

8. Many economists believe that the trend toward greater wage inequality across the U.S. economy was primarily caused by _____________. A. the recession B. new technologies C. the rise of global markets D. inflation

B. new technologies

5. The Producer Price Index is based on prices paid for supplies and inputs by: A. consumers B. producers of goods and services C. government D. the small business sector

B. producers of goods and services

11. Which of the following is included in GDP? A. revenue from the sale of a three-year old car B. the fees charged for a stock broker's services C. the receipts from a sale of land D. the value of lawn care service provided by a sixteen-year-old as part of his weekly chores

B. the fees charged for a stock broker's services

9. 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.

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

11. How do apple growers react to the news of medical research findings that suggest that eating apples leads to greater health benefits than were previously known? A. They increase the supply of apples. B. They increase the quantity of apples supplied. C. They decrease the supply of apples. D. They decrease the quantity of apples supplied.

B. they increase the quantity of apples supplied

6. In November 2010 the labor force in Siouxtown, 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%

B. was 2.1%

14. Middle-income countries, which include much of Latin America, Eastern Europe, and some countries in East Asia, have per capita GDP in the range of ___________. A. $60 to $120 B. $600 to $1200 C. $6,000 to $12,000 D. $60,000 to $120,000

C. $6,000 to $12,000

20. Once every __________, the Census Bureau does a comprehensive survey of housing and residential finance. A. month B. 5 years C. 10 years D. 20 years

C. 10 years

10. Through good economic years and bad, many European economies had unemployment rates hovering near _________ since the 1970s. A. 1% B. 5% C. 10% D. 20%

C. 10%

5. In the United States, a typical credit card interest rate ranges from ________ per year. A. .2% to .8% B. 2% to 8% C. 12% to 18% D. 22% to 28%

C. 12% to 18%

12. GDP in the United States in 2012 was about __________. A. $162 billion B. $1.62 trillion C. $16.2 trillion D. $162 trillion

C. 16.2 trillion

9. Durable goods and non-durable goods comprise approximately ________ of the supply side of the GDP. A. 1% B. 20% C. 45% D. 80%

C. 45%

6. Of the world's population of 6.7 billion people, _________ are scraping by on incomes that average less than $2 per day. A. 260 million B. 2.6 billion C. 5 billion D. 6.2 billion

C. 5 billion

14. Each month the Census Bureau carries out the Current Population Survey (CPS) (which has been carried out every month since 1940). A total of __________ households are contacted every month. A. 600 B. 6000 C. 60,000 D. 600,000

C. 60,000

4. The basket of goods in the Consumer Price Index consists of about _________ products; that is, several hundred specific products in over __________ broad-item categories. A. 200; 800 B. 80,000; 400 C. 80,000; 200 D. 800; 200

C. 80,000; 200

5. Which of the following is included in the calculated Gross Domestic Product? A. Farmer Freddie sells his second tractor to his son. B. Suzanne buys a love seat and chair for $85 at the yard sale on the corner. C. A local ice cream store sells $17,000 worth of cones and sundaes on July 1. D. Mr. Farkle buys a used lawn mower from his neighbor, Mr. Sparkle.

C. A local ice cream store sells $17,000 worth of cones and sundaes on July 1.

4. Why is there scarcity? A. Because the opportunity set determines this. B. Because theory dictates it. C. Because our unlimited wants exceed our limited resources D. Because human wants are limited.

C. Because our unlimited wants exceed our limited resources

6. Macroeconomics primarily examines: A. the behavior of individual households and firms. B. how prices are determined within individual markets. C. broad issues such as national output, employment and inflation. D. the output levels that maximize the profits of business firms

C. Broad issues such as national output, employment and inflation

3. Refer to Figure 2-1. An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in the movement from: A. A to B B. B to E C. C to F D. G to F

C. C to F

11. 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%

C. COLA plus 2.4%

7. Which of the following statements most likely lies within the realm of macroeconomics? A. An increase in the price of automobiles will lead to a decrease in the quantity of automobiles demanded. B. Due to process innovations in computer chip manufacturing, the market supply of computers increased. C. Due to an economic recession, manufacturing firms began implementing layoffs of their workforces. D. Anticipating that the benefits would outweigh costs involved, an undergraduate student purchases the course textbook

C. Due to an economic recession, manufacturing firms began implementing layoffs of their workforces

18. Ethiopia has a GDP of $8 billion (measured in U.S. dollars) and a population of 55 million. Costa Rica has a GDP of $9 billion (measured in U.S. dollars) and a population of 4 million. Calculate per capita GDP for each country. A. Ethiopia = $14.50 Costa Rica = $2250.00 B. Ethiopia = $14.50 Costa Rica = $225.00 C. Ethiopia = $145.00 Costa Rica = $2250.00 D. Ethiopia = $1450.00 Costa Rica = $22,500.00

C. Ethiopia = $145.00 Costa Rica = $2,250.00

17. On the demand side of GDP, consumption by _____________ is the largest component of GDP, accounting for about two-thirds of the GDP in any year. A. services B. businesses C. households D. government

C. Households

11. 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

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

12. ____________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s A. Technology B. Living standard C. Industrial Revolution D. Capital deepening

C. Industrial Revolution

15. In many cases, it is reasonable to refer to the ________________ as the price. A. budget constraint B. sunk cost C. opportunity cost D. budget constraint

C. Opportunity cost

3. The value of what businesses provide to other businesses is captured in the final products at the end of the __________ chain. A. service B. value C. production D. supply

C. Production

8. To achieve a high standard of living, a nation should: A. increase welfare payments to the poor. B. use less capital and more labor in the production process. C. promote economic growth. D. increase the tax deduction for child dependents.

C. Promote economic growth

2. Which of the following will not result in a rightward shift of the market supply curve for labor? A. a decrease in non-wage income B. an increase in the working-age population C. an increase in labor productivity D. an increase in immigration

C. an increase in labor productivity

9. With regard to the economy, the term negative inflation is synonymous with which of the following? A. recession B. depression C. deflation D. hyperinflation

C. deflation

6. The labor ____________ curve(s) will shift _______________ if there is an increase in productivity or an increase in the demand for the final product. A. demand; left B. supply; left C. demand; right D. supply; right

C. demand; right

16. Refer to Table 5-1. Suppose that D2 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D2 to D1, then: A. equilibrium price increases from $6 to $8. B. equilibrium quantity increases from 13 to 18 C. equilibrium quantity decreases from 15 to 13. D. equilibrium price decreases from $6 to $4.

C. equilibrium quantity decreases from 15 to 13

Final goods or services used to compute GDP refer to: A. the sum of all wages paid to laborers. B. the factors of production used to produce output. 11 C. goods and services purchased by the ultimate users. D. the value of outstanding shares of stock of manufacturing firms.

C. goods and services purchased by the ultimate users

2. Inflation implies that the level of all prices _____________________. A. decrease B. stay the same C. increase D. none of the above

C. increase

17. The unemployment rate may underestimate the true extent of unemployment if: A. many people have a part time as well as a full time job. B. there are a large number of people working in the underground economy. C. many people become discouraged and cease looking for work. D. employees increase the number of hours they work overtime.

C. many people become more discouraged and cease looking for work

14. As a person receives more of a good, the _______ from each additional unit of the good declines. A. utility B. sunk costs C. marginal utility D. budget constraint

C. marginal utility

10. The basic difference between macroeconomics and microeconomics is that: A. microeconomics looks at the forest (aggregate markets) while macroeconomics looks at the trees (individual markets). B. macroeconomics is concerned with groups of individuals while microeconomics is concerned with single countries. C. microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets). D. macroeconomics is concerned with generalization while microeconomics is concerned with specialization.

C. micro economics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets).

13. 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

C. overstate

3. In contrast to goods and services markets, _____________ are rare in labor markets, because rules that prevent people from earning income are not politically popular. A. minimum wages B. price floors C. price ceilings D. living wage laws

C. price ceilings

10. 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.

C. shift to the right, decreasing the price of the drug

1. As the __________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left. A. high-skill labor B. lower wage C. technology D. market

C. technology

14. Which of the following factors contribute to economic growth? A. a decrease in the quantity of labor due to emigration B. a decrease in the productivity of labor C. the discovery of new oil reserves D. a decline in the stock of physical capital

C. the discovery of new oil reserves

10. Alex wants to measure the nominal 1998 GDP of $993 billion in 2008 dollars. From the data he gathered, he knows the deflator for 1998 is 30 and for 2008, it is 74, and that real interest in those years was 6.23% and 3.21% respectively. If he avoids making a misleading calculation, what will the value be? A. $430 billion B. $835 billion C. $2,063 billion D. $2,449 billion

D. $2,449 billion

6. "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

D. $44

19. The Czech Republic has a GDP of 2,000 billion koruny. The exchange rate is 20 koruny per U.S. dollar. The Czech population is 20 million. Calculate the per capita GDP of the Czech Republic in U.S. dollars. A. $5 B. $100,000 C. $500 D. $5000

D. $5,000

22. The change in inventories, a component of aggregate supply, comprises roughly _____ of GDP. A. 20% B. 10% C. 1% D. 0.5%

D. 0.5%

7. The United States has approximately ___________ credit card holders. A. 1.8 million B. 18 million C. 80 million D. 180 million

D. 180 million

12. 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. 3 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.

D. Both (a) and (b) are correct.

13. Which of the following did not result in economic growth? A. Installing a network of irrigation ditches and pumping stations in order to grow fruits and vegetables in parts of southern California. B. The invention of a threshing machine for harvesting grains. C. Increased government funding of post-secondary education. D. Many citizens emigrating from Zimbabwe when a politically repressive regime took office.

D. Many citizens emigrating from Zimbabwe when a politically regressive regime took office

13. Refer to Figure 2-2. When the economy moves from Point A to Point B in the diagram above: A. the economy begins using its resources efficiently to produce both food and clothing. 6 B. the economy operates at its productive capacity once it reaches Point B. C. the economy increases production of both clothing and food. D. All of the above occur

D. all of the above occur

12. 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)

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

6. The ____________________ is based on the prices of merchandise that are exported or imported. A. International Product Index B. Producer Price Index C. Foreign Price Index D. International Price Index

D. international price index

8. The opportunity cost of an action: A. can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of the action. B. can be determined by adding up the bills incurred as a result of the action. C. can be objectively determined only by economists. D. is a subjective valuation that can be determined only by the individual who chooses the action.

D. is a subjective valuation that can be determined only by the individual who chooses the action.

9. Macroeconomics: A. is concerned with the expansion of a small business into a large corporation. B. is narrower in scope than microeconomics. C. analyzes mergers and acquisitions between firms. D. is concerned with the expansion and contraction of the overall economy.

D. is concerned with the expansion and contraction of the overall economy

12. 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. 10 C. the quantity supplied minus the quantity demanded. D. the quantity demanded at that price.

D. the quantity demanded at that price

10. 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

D. the university tuition paid to enroll in a course