econ 200 exam 1 ahmed practice questions

A particularly strong expansion is called a(n)

Boom

When two people agree to a price in a negotiation we can assume that,

Both parties will benefit

Efficiency is an important social goal because

movements toward economic efficiency make the total economic pie larger.

average labor productivity equals

output employed per year

In recent years the Bureau of Labor Statistics has released special unemployment rates that include estimates of the number of discouraged and part-time workers that indicate the,

problem of discouraged workers and part-time workers is fairly significant

The government purchases component of GDP includes

purchases of final goods and services

if the unemployment rate increases from 4 percent to 10 percent then the economy is mostly likely in a(n),

recession

A demand curve is ______ sloping because ______.

downward; fewer people are willing to buy an item at higher prices

The situation described in the book as "smart for one

dumb for all" occurs when, individuals act rationally, but there are still unexploited opportunities for society as a whole

Each person who is 16 years or older is considered to be in one of the following categories

employed, unemployed, or out of the labor force

In the circular flow diagram the two main participants are __________ and they exchange ______, households and firms;

goods, services and resource

One can be classified as unemployed

if and only if, that person, does not have a job, but has been actively looking for one in the past four weeks

The CPI for any period measures the cost

in that period of a basket of goods and services relative to the cost of the same basket of goods and serves in the base year

The supply curve illustrates that firms

increase the quantity supplied of a good when its price rises.

Efficiency occurs if the

socially optimal quantity of goods and services is being produced

Circular flow chart shows

the flow of goods, services, resources and financial exchanges

Trade imbalance is

the quantity of a country's exports differs significantly from the quantity of imports

The Bureau of Labor Statistics calculates

the unemployment rate across race, gender, age and other parameters

If two goods are complements and the price of one good increases

then demand for the other good will, Decrease

If demand increases and supply decreases

then equilibrium, price will rise, but we cannot say for certain what will happen to quantity

If both the supply and demand decrease

then equilibrium, quantity will fall, but we cannot say for certain what will happen to price

If the demand for a good decreases as income decreases

then the good is:, Normal good

If the demand for hot dogs rises when income falls

then this suggests that hot dogs are, Inferior good

If the demand for bread increases when the price of potatoes increases

then this suggests that potatoes and bread are, Substitutes

If the price of golf clubs falls

then we would expect the demand for golf balls to, Increase

If the price of a good falls

then, Quantity demanded will rise

The sum of the value added by all firms equals total

value of final goods and services

Excess demand occurs

when price is below the equilibrium price.

If televisions are a normal good then when income falls, the demand for televisions will:,

Fall

The country of Northland produced $1000 billion of output in one year. The population of Northland was 50 million, of whom 30 million were employed. What was average labor productivity in Northland?,

$33,333

Suppose that the total production of an economy consists of 10 oranges and 5 candy bars each orange sells for $0.20, and each candy bar sells for $1. What is the market value of production in this economy?,

$7

If the corn was grown and the jar of popcorn produced in the year 2018 but the jar was sold at Friendly Groceries in the year 2019, what is the contribution of these transactions to GDP in the year 2019?

, $1.50

Using 2019 as the base year by how much does a "cost of protein" index increase between 2019 and 2020,

, 13.4 %

Compared to 1929 total output in the U.S. in 2019 was approximately ____ times large

, 16 times

If tax revenues equal 25 percent of total output and government expenditures equal 20 percent of total output then there is a,

, Government budget surplus

If business inventories at the beginning of the year equal $20 billion and equal $30 at the end of the year then all else equal, GDP will

, Increase by 10 billion

Suppose that the total expenditures for a typical household in 2018 equaled $3000 per month, while the cost of purchasing exactly the same items in 2020 was $3,500. If 2020 is the base year, the CPI for 2018 equals,

0.86

Data for an economy shows that the unemployment rate is 10 percent the participation rate 80 percent, and 200 million people 16 years or older are not in the labor force. How many people are in the working-age population in this economy?,

1 billion

The consumer price index for Planet Econ consists of only two items: books and hamburgers. In 2018 the base year, the typical consumer purchased 10 books for $20 each and 200 hamburgers for $1 each. In 2020, the typical consumer purchased 12 books for $23 each and 300 hamburgers for $1.15 each. The consumer price index for 2020 on Planet Econ equals,

1.15

What is the current value of the CPI with a basket of fish and chips costing $500 in the base year and $600 in the current year

1.2

Consider an economy with 500 people. If 350 are employed and 50 people are unemployed what is the unemployment rate,

12.5%

In 2019 the United States imported approximately ____ percent of all goods and services produced in the country

15

An economy produces 1000,000 computers valued at $2,000 each. Households purchase 200,000 computers, of which 100,000 are imported. Businesses purchase 300,000 domestically produced computers, the government purchases 300,000 domestically produced computers, and 100,000 domestically produced computers are sold abroad. At the end of the year, the computer manufacturers hold the unsold computers in inventory. What is the value of GDP,

2 billion

What is the percentage change in the CPI with a basket of fish and chips costing $500 in the base year and $600 in the current year

20% increase

Consider an economy with 500 people. If 350 people are employed and 50 are unemployed what is the size of the labor force,

400

In a small town of 100 people there are 10 children under 16, 10 retired people, 60 people with full-time jobs, 3 people with part-time jobs, 3 full-time students over 16, and 4 full-time homemakers. The remaining people did not have jobs but wanted them. How many people are in the labor force of this town?,

73

Demand is typically plotted with

A demand curve

Who is considered employed among the following people

Alex, who works part-time at a fast food restaurant.

Which of the following is NOT a capital good?

Batteries purchased by a car manufacturer to install in new cars

Why are rotisserie chickens less expensive than fresh chickens?

Because rotisserie chickens help solve the problem of unpredictable excess supplies of fresh chickens

If a country's economic decisions are made by an individual or small number of individuals then it has a,

Centralized economy

A movement along a demand curve from one price-quantity combination to another is called a

Change in quantity demanded

The CPI is the

Consumer price index

An increase in market price will lead to

Decrease in quantity demanded

Suppose the cost of the materials used to produce shoes falls. This is likely to lead the equilibrium price of shoes to ________ and the equilibrium quantity of shoes to _______.

Decrease, increase

If average labor productivity decreases while population and the number of employed workers remain constant then total output,

Decreases

Suppose that the total production of an economy consists of 10 oranges and 5 candy bars each orange sells for $0.20, and each candy bar sells for $1. Which expression of the output of this economy is most consistent with the concept of GDP?,

Economy produces $7 worth of food

Inflation is the increase in

General level of prices

According to the circular flow diagram households buy _______ from firms and firms buy ________ from households,

Goods and services; resources

If government inflation figures overstate the true increase in the cost of living which of the following would NOT be true,

Goods produced this year will tend to be of lower quality than the corresponding models from last year

Which of the following helps explain why official government inflation figures often overstate the true increase in the cost of living

Government statisticians have difficulty taking adequate account of product quality improvements

The field of macroeconomics developed when economists looked for causes of

Great depression

All of the following are examples of positive statements except

High rates of economic growth are undesirable because of the destruction caused to the environment

In the circular flow diagram the expenditure method measures the total amount of,

Household spending

Goods and services provided by state and local governments are

Included in GDP at cost

Over the entire period since 1950 average labor productivity in the United States has _______ although between 1973 and 1995 the rate of change ________,

Increased, slowed

As income rises the demand for normal goods _______, and the demand for inferior goods ____,

Increases, decreases

rate at which prices in general are increasing is called the

Inflation rate

Which of the following is true regarding the measurement of total output

It can be measured from either total expenditure or total income

How is the cost of living for a household measured?

It is the amount spent on a typical basket of goods and services. It is the amount spent on a typical basket of goods and services.

The cost of living and the CPI are measured by the governmental agency called the Bureau of

Labor statistics

Most economists who have studied it believe that the Great Depression was caused by

Poor economic policy making

Analysis that aims at determining only the economic consequences of a particular policy is called _____ analysis

Positive

Demand curves are typically plotted with____

Price on vertical axis and quantity on horizontal

The total income of capital and labor must equal the value of total

Production

In the circular flow diagram the sum of all final goods and services produced by firms in a given period of time is measured by the,

Production method

An example of fiscal policy is

Reduction of tax income rates

Which of the following is not true of a demand curve?

Reflects sellers reservation prices

A government is running a budget deficit if

Revenue is less than spending

An increase in demand is represented by

Right shift

If the expected future price of a good rises then current demand will,

Rise

If the demand for candy increases then the equilibrium price of candy will _______, and the equilibrium quantity of candy will _______.,

Rise, rise

If equilibrium price of soap rises and the equilibrium quantity of soap falls, then this suggests that the,

Supply of soap decreased

Which of the following is a nominal quantity

The current price of a barrel of oil

If the current demand curve for cars shifts to the left then one possible explanation is that,

The expected future price of cars decreased

A seller's reservation price is generally equal to

The sellers marginal cost

In Econland exports equal 25 percent of total output while imports equal 20 percent of total output. Econland has a,

Trade surplus

The unemployment rate equals the number of people

Unemployed / labor force

If the consumer price index increased from 1.52 to 1.65 then it must be the case that ______ relative to prices in the base year,

Weighted average price

A demand curve shows the quantity of a good that buyers_____

Wish to buy at every price.

Example of structural policy

a decision by a developing country to reduce government control of the economy and to become more market-oriented

If your local grocery store announces that it will have a 50 percent off sale on ice cream next week then this will lead to,

a decrease in the demand for ice cream this week.

Two goods are complements if

an increase in the price of one good leads to a decrease in demand for the other.

If a technological innovation reduces the cost of producing cars

and at the same time, an increase in income leads the demand for cars to rise, then the equilibrium, quantity of cars will rise, but we cannot say for certain what will happen to price

The labor force consists of people who

are employed and people who are unemployed

The buyer's reservation price for a particular good or service is the

largest price the buyer would be willing to pay for it

A market equilibrium

leaves no unexploited opportunities for individuals

The duration of an unemployment spell is a measure of the

length of time a spell of unemployment lasts.

An outcome is socially optimal if it

maximizes total economic surplus.

A market equilibrium

might not maximize total economic surplus