Econ 2105 Final

a) an upward-sloping supply curve.

Rising marginal costs imply a) an upward-sloping supply curve. b) a downward-sloping demand curve. c) rising fixed costs. d) falling variable costs.

150

Suppose a labor market is described by the demand equation, Qd = 1200 - 20w, and the supply equation, Qs = 10w - 300, where Qd is the quantity demanded of labor (in Million), Qs is the quantity supplied of labor (in Million), and w is the wage (in dollars). If the government imposes a minimum wage of $55, the number of workers unemployed is _________ million. (Round to the nearest whole million.)

200

Suppose a labor market is described by the demand equation, Qd = 1200 - 20w, and the supply equation, Qs = 10w - 300, where Qd is the quantity demanded of labor (in Million), Qs is the quantity supplied of labor (in Million), and w is the wage (in dollars). The equilibrium number of employed workers in this market is ________ million. (Round to the nearest integer.)

50

Suppose a labor market is described by the demand equation, Qd = 1200 - 20w, and the supply equation, Qs = 10w - 300, where Qd is the quantity demanded of labor (in Million), Qs is the quantity supplied of labor (in Million), and w is the wage (in dollars). The equilibrium wage in this market is $_______. (Round to the nearest integer.)

c) fall; rise or fall

Suppose the New York City housing market is in equilibrium. A recession causes local household incomes to decline. At the same time, construction of a series of new apartment buildings has just been completed. Given these two changes, and assuming that apartment housing is a normal good, we can predict that the price of apartments will _________, and the quantity of apartments bought and sold will __________. a) rise or fall; fall b) rise or fall; rise c) fall; rise or fall d) rise; fall or rise

c) A; −$100 million

Suppose there are only two countries, country A and country B. Country A imports $200 million worth of goods and services from country B. Country B imports $100 million worth of goods and services from country A. Net exports for country _____ equal _____. a) A; $200 million b) B; −$100 million c) A; −$100 million d) B; $200 million

a) GDP rises by $38,000.

You purchase a new car (produced this year) for $38,000. After six months, you sell the car for $31,500. How much does GDP rise because of these two transactions? a) GDP rises by $38,000. b) GDP rises by $69,500. c) GDP rises by $31,500. d) GDP rises by $6,500.

b) The demand for the luxury good will shift to the left today

.What would you expect to happen to the demand for a luxury good today, if the government announces it will stop taxing that luxury good next year? a) The demand for the luxury good will shift to the right today. b) The demand for the luxury good will shift to the left today. c) Consumers will stop their consumption of the luxury good altogether. d) There will be no impact on the demand for the luxury good.

b) 4.7%

50 hamburgers, 10 textbooks, eight T-shirts, and 100 bottles of water. Suppose that in 2015, each hamburger was $3.50, each textbook was $89.99, each T-shirt was $14, and each bottle of water was $1.50. In 2016, each hamburger was $3.60, each textbook was $95, each T-shirt was $13, and each bottle of water was $1.65. What was the approximate inflation rate in 2016? a) 4.4% b) 4.7% c) 4% d) -4.7%

b) $1,337

50 hamburgers, 10 textbooks, eight T-shirts, and 100 bottles of water. Suppose that in 2015, each hamburger was $3.50, each textbook was $89.99, each T-shirt was $14, and each bottle of water was $1.50. In 2016, each hamburger was $3.60, each textbook was $95, each T-shirt was $13, and each bottle of water was $1.65. What was the approximate value of the basket in 2015? a) $100 b) $1,337 c) $1,400 d) $5,737

Graph A

A campus bookstore sells both new and used books and rents them as well. In a particular semester, the percentage of students who opt for used books and rentals increases, and the percentage of students who opt for new books decreases. Which graph shows the new equilibrium that would result in the market for used books?

a) point Q to point P.

A decrease in the price of an item will cause the movement from a) point Q to point P. b) point N to point M. c) point P to point W. d) point T to point P.

c) multiply the individual supply of one of the suppliers by ten.

A market consists of ten similar suppliers that are making the same supply decisions. To find the market supply of these ten suppliers, you: a) find the average quantity produced by the ten suppliers. b)term-24 take the individual supply of one supplier. c) multiply the individual supply of one of the suppliers by ten. d) take one-tenth of the individual supply of each supplier and add it up.

d) a good for which higher income causes an increase in demand.

A normal good is: a) a good which is only purchased by high-income consumers. b) a good for which higher income causes a decrease in demand. c) a good which is normally purchased by many consumers. d) a good for which higher income causes an increase in demand.

b) boosts real GDP but not necessarily real GDP per person.

A rise in population in a country: a) leads to an increase in the level of technology in an economy. b) boosts real GDP but not necessarily real GDP per person. c) leads to a downward shift of the aggregate production function. d) always raises the standard of living in a country.

b) The cost of building the factory, purchasing the robotic assembly lines and industrial freezers.

Amul Food Factory in India makes ice cream and produces processed and condensed milk. In the factory, the firm's employees use raw milk and sugar. The firm runs on electricity and purchases raw milk every day. Large robotic assembly lines fill and package the ice cream containers. Large industrial freezers store the ice cream. Based on this scenario, can you identify the fixed costs for Amul Food Factory? a) The cost of the raw milk purchased from the farmers. b) The cost of building the factory, purchasing the robotic assembly lines and industrial freezers. c) The cost of the employees hired and the number of packages purchased. d) The cost of purchasing electricity, raw milk, and sugar.

c) when the quantity supplied equals the quantity demanded.

An equilibrium in a market occurs: a) at the halfway point on the price axis. b) when suppliers have sold all the goods and services that they have produced. c) when the quantity supplied equals the quantity demanded. d) at the halfway point on a demand curve.

a) a graph with quantities of a product that a seller is willing to supply at different price points.

An individual supply curve is a) a graph with quantities of a product that a seller is willing to supply at different price points. b) a graph that plots how much a seller produces at different points in time. c) a graph that plots the quantities of an item that a buyer plans to buy at different prices. d) the quantity a seller is willing to supply at one particular price.

b) working but whose skills are not fully utilized.

An underemployed person is one who is: a) employed in the underground economy. b) working but whose skills are not fully utilized. c) retired or outside of the labor force. d) cyclically unemployed.

b) skills she may gain from her final year of economics courses.

Carolyn Bates is a junior in college studying economics. She has created a new software application that applies the four principles of economic decision making to any potential decision that a user faces. She is considering leaving school after this academic year to pursue further development of her app. Carolyn should ignore all of the following costs when calculating the opportunity costs of leaving college EXCEPT the a) 90 credit hours she has already completed for her degree. b) skills she may gain from her final year of economics courses. c) time she will spend working on the app instead of studying. d) tuition costs she has already paid to her college.

e) Four

Charles McCoy is a manager at a Chipotle restaurant, and he has to decide how many workers to hire. One worker can make 20 burritos that sell for $7 on average in one hour. A second worker can make another 16 burritos in one hour. The marginal product of each additional worker decreases by four burritos, with each additional hire. The cost of ingredients is $2 per burrito no matter what the total quantity produced is. Given that workers are paid $21 per hour and have eight-hour shifts, how many employees should Charles hire for each hour? a) Three b) Six c) Seven d) Five e) Four

i, ii, and iii

Consider the graph of the labor market shown here. A wage rate of $25 could be an example of:(i) an efficiency wage.(ii) a minimum wage.(iii) a wage rate negotiated by a labor union.(iv) hysteresis.

b) 2.6%

In 1945, the United States recorded real GDP growth of -1% and nominal GDP growth of 1.6%. What was the inflation rate in 1945? a) -0.6% b) 2.6% c)-2.6% d) 0.6%

b) They are not counted.

Dale is a stay-at-home-parent whose typical day consists of getting the kids ready for school, doing the laundry, cooking three meals, and cleaning the house. How are Dale's home activities counted in GDP? a) They are counted by subtracting Dale's opportunity cost in terms of lost income. b) They are not counted. c) They are counted by assigning a value that is equivalent to what it would have taken to pay a housekeeper to perform the same tasks. d) They are counted at market value.

c) a smaller increase in

Diminishing returns to physical capital imply that, with human capital per worker and technology held fixed, each successive increase in physical capital leads to _____ real GDP per worker (or productivity). a) a larger increase in b) a decrease in c) a smaller increase in d) negative

a) (A) decreases; (B) increases

Fill in the blanks below using the following choices: (A) If the congestion effect of using a highway increases, then the demand for that highway __________. (B) If the network effect of using a social media platform increases, the demand for advertising by businesses on that platform ________. a) (A) decreases; (B) increases b) (A) increases; (B) increases c) (A) increases; (B) decreases d) (A) decreases; (B) decreases

c) hysteresis

Following a significant recessionary period in which there were periodic wage freezes, workers negotiate higher wages. However, the higher wages lead to a decrease in the number of new workers getting hired, so unemployment persists in the region. The scenario described here is an example of: a) efficiency wages. b) frictional unemployment. c) hysteresis d) a government mandated minimum wage.

d) Graph D

Fossil has started an aggressive advertising campaign for its wallets. Which graph shows how the demand in the market might change if the advertising campaign is successful? a) Graph A b) Graph B c) Graph C d) Graph D e) None of these answers is correct.

90

Gary Parker is willing to pay $740 for a new iPad. Apple (the producer of iPads) is selling a new iPad for $650. It costs Apple $370 to produce this iPad. How much economic surplus does Gary receive if he purchases this iPad? $__________.

520

Gary Parker is willing to pay $800 for a new iPad. Apple (the producer of iPads) is selling a new iPad for $680. It costs Apple $280 to produce this iPad. How much total economic surplus is generated if Gary purchases this iPad? $__________.

b) final goods and services

Gross domestic product is the value of all _____ produced in an economy over a given period. a) goods and services b) final goods and services c) intermediate goods and services d) consumer goods and services

a) workers can produce more with fixed amounts of physical and human capital.

If technology advances: a) workers can produce more with fixed amounts of physical and human capital. b) GDP per capita declines. c) human capital becomes less useful. d) physical capital becomes less productive.

54,307.71

In 1989, a four-year college degree would set you back $26,902. The consumer price index was 124.44 in January 1989. If the current consumer price index is 251.21, the cost of the four-year degree in current dollars is $ ___________ [round to the nearest cent - i.e., hundredth of a dollar].

d) 61.53%

In 2018, there were 111.01 million people aged 16 years and older in Japan. There were also 68.3 million people in the labor force. What was the labor force participation rate? a) 38.47% b) 68.3% c) 50% d) 61.53%

b) scarcity

In California, there has been a drought, and rural communities are fighting with urban areas over water. Which economic concept does this statement BEST represent? a) incentives b) scarcity c) specialization d) equilibrium

a, b, d

In order to be considered unemployed, the person must be [check all that apply]: a) available to work. b) over the age of 16. c) skilled. d) actively searching for work.

c) a decrease in demand.

In the graph, the movement from point W to point P represents: a) an increase in quantity demanded. b) an increase in demand. c) a decrease in demand. d) a decrease in quantity demanded.

d) households sell resources.

In the market for inputs: a) firms buy goods and services. b) firms sell goods and services. c) households sell goods and services. d) households sell resources.

1235

In the table, GDP is equal to _________ billion.

does not occur; only Ivan receives

Ivan has inherited his grandmother's 1963 Chevrolet Corvette, which he values at $60,000. Samantha is interested in buying such a car and is willing to pay up to $55,000. Ivan hears Samantha is looking for this particular car and offers to sell it to her for $70,000. A voluntary economic exchange _____ between Ivan and Samantha because _____ positive economic surplus from the transaction.

2

Kevin Williamson goes to a local coffee shop and orders a medium-sized latte. His willingness to pay for that latte is $6.5. The price of the latte is $4.5. The cost to the coffee shop to produce the latte is $2.5. How much economic surplus does Kevin gain when he purchases the latte? $_________.

c) tendency to focus on nominal values instead of inflation-adjusted values.

Money illusion is the: a) increase in the amount of money that it takes to purchase goods and services when prices rise. b) inability to understand that prices always rise. c) tendency to focus on nominal values instead of inflation-adjusted values. d) illusion that one's earnings this year are higher than they were last year.

3800

Nerida Kyle is thinking of buying a car to avoid taking Lyft to work. She is using the cost-benefit principle to evaluate this decision and is calculating the costs and benefits to owning the car over the next year. She's gathered the following information to help her make her decision: The car costs $15,000 to purchase, but she can resell it after a year of use for $13,500. She thinks gas will cost her about $1,200 for the year. The annual insurance premium for her car is $800. Maintenance and repairs will cost about $300 for the year. Using Lyft to get to work would cost her $4,000 for the year. The cost of the car for the year is:

180,000

Nominal GDP for last year is $ ________ .

194,250

Nominal GDP for this year is $ ________ .

b) the demand for paintbrushes to decrease.

Paint and paintbrushes are complements. If the price of paint rises, we can expect: a) the quantity demanded of paint to increase. b) the demand for paintbrushes to decrease. c) the demand for paintbrushes to increase. d) the quantity demanded of paintbrushes to remain unchanged.

b) supply of peanut oil will increase.

Peanut butter and peanut oil are complements-in-production. When the price of peanut butter rises, the a) supply of peanut oil will fall. b) supply of peanut oil will increase. c) quantity supplied of peanut butter will remain unchanged. d) quantity supplied of peanut butter will fall.

b) 3%

Refer to the following table that shows monthly data for Japan. What was the unemployment rate in December 2016? a) 3.7% b) 3% c) 2.8% d) 3.3%

d) shift the supply curve for canola oil rightward.

Researchers have found a new strain of canola (a grain used to produce canola oil) that is resistant to pesticides and drought while yielding more canola oil. Holding all else constant, this research will: a) decrease the quantity supplied of canola oil. b) increase the quantity supplied of canola oil. c) shift the supply curve for canola oil leftward. d) shift the supply curve for canola oil rightward.

d) the salaries of qualified architects to fall.

Suppose there is a surplus of qualified architects in the United States. Over time, we would expect: a) the demand for qualified architects to fall. b) the salaries of qualified architects to rise. c) the supply of qualified architects to fall. d) the salaries of qualified architects to fall.

Graph B

Technological advancement can be shown by which of these production functions?

a) research and development.

Technological progress is advanced through: a) research and development. b) infrastructure. c) government regulation. d) consumption.

b) there is deflation.

The CPI changes from 100 to 90. This means that: a) the base year index has been changed to 90. b) there is deflation. c) 90% of all prices have fallen. d) consumers now purchased 10% fewer goods due to inflation.

d) price of all goods and services produced domestically.

The GDP deflator is an index that tracks the: a) price that businesses pay over time for the inputs used in the production process. b) average price that consumers pay over time for a representative basket of goods and services. c) hest prices consumers pay over time for imported goods and services. d) price of all goods and services produced domestically.

b, c, d

The aggregate production function Y = f(L, H, K) shows that economic growth can occur if [select ALL that apply]: a) labor produterm-68ctivity falls. b) human capital increases. c) physical capital increases. d) labor productivity increases. e) the depreciation rate increases. f) the capital stock in the country depreciates.

d) investment equals depreciation.

The capital stock in an economy stops growing when: a) depreciation reaches zero. b) capital accumulation begins. c) savings increases in the economy. d) investment equals depreciation.

d) costs and benefits

The cost-benefit principle states that _____ are the incentives that shape decisions. a) framing effects b) opportunity costs c) incomes d) costs and benefits

a, b, d

The demand curve... [Select all that apply.] a) is a curve that shows the maximum willingness to pay for a product. b) is a curve that shows the marginal benefit gained from a product. c) is a curve that shows the production cost of a product. d) is a curve that shows the relationship between the price of a product and a consumer's willingness to buy at each price.

8

The growth rate of Nominal GDP is ________ percent [round to the nearest percent].

5

The growth rate of Real GDP is ________ percent [round to the nearest percent].

3

The growth rate of the price level (aka inflation) is ________ percent [round to the nearest percent].

a) the positive relationship between price and quantity supplied.

The law of supply refers to a) the positive relationship between price and quantity supplied. b) the positive relationship between price and quantity demanded. c) the inverse relationship between price and quantity supplied. d) the inverse relationship between price and quantity demanded.

c) the additional benefit from buying one more unit of that item.

The marginal benefit of consuming an item is a) the difference between what the consumer is willing to pay and the actual market price of the item. b) the additional number of consumers who buy a unit of an item. c) the additional benefit from buying one more unit of that item. d) the total benefit from buying several units of the item.

c) capital accumulation alone cannot lead to sustainable economic growth.

The moral of the story of the Solow growth model is that: a) technological advance cannot sustain continuous economic growth. b) human capital growth does not lead to economic growth. c) capital accumulation alone cannot lead to sustainable economic growth. d) capital accumulation is the key to sustained economic growth.

a) next best alternative you have to give up to get it.

The opportunity cost principle states that the true cost of something is the a) next best alternative you have to give up to get it. b) economic surplus you receive from getting it. c) least desired alternative you have to give up to get it. d) economic surplus you give up to get it.

14

The president of the World Bank is on his way to a meeting with the president of Colombia. He bumps into you in the hallway and wants to know how long it will take for Colombian per capita GDP to double. All he knows is that the average annual growth rate has been about 5 percent. You quickly tell him that, assuming Colombian per capita GDP keeps growing at the same pace into the future, it will take about ________ years because you understand the Rule of 70.

d) marginal; equals; marginal

The rational rule suggests you should continue with an activity until your _____ benefit _____ your _____ cost. a) total; exceeds; total b) marginal; is less than; marginal c) total; equals; total d) marginal; equals; marginal

3.04

The table shows consumer price index data for the United States. Based on this information, the rate of inflation between 1991 and 1992 was _____ % [round to the nearest hundredth of a percent].

b) learn to use a printing press.

To acquire human capital, a person would: a) sell books produced using a printing press. b) learn to use a printing press. c) purchase a printing press rather than a very large television. d) save to buy a printing press.

b) C + I + G + (X - M).

Total spending in the economy is calculated as: a) Y - C - I. b) C + I + G + (X - M). c) C + I + G + (M - X). d) Y - I - G - NX.

d) longer unemployment durations.

Unemployment insurance can lead to: a) a reduction in the government budget deficit. b) an increase in the number of retirees. c) fewer unemployment benefit claims. d) longer unemployment durations.

400

Using 2021 as the base year, Real GDP in 2021 was: $_________.

450

Using 2021 as the base year, Real GDP in 2022 was: $_________.

12.5

Using 2021 as the base year, the growth rate of Real GDP from 2021 to 2022 was [round to the nearest tenth of a percent]: _________%.

470

Using 2022 as the base year, Real GDP in 2021 was: $_________.

c) vary with the quantity of output produced.

Variable costs are the costs that a) stay fixed with the quantity of output produced. b) are independent of the amount of output produced. c) vary with the quantity of output produced. d) are incurred to build factories and assembly plants.

d) $504.75

What was CAR's real GDP per person in 2011? a) $487.95 b) $336.93 c) $471.63 d) $504.75

a) $528.13

What was CAR's real GDP per person in 2012? a) $528.13 b) $487.95 c) $471.63 d) $504.75

d) only variable costs.

When you calculate marginal costs, they should include: a) the market price of the product. b) only fixed costs. c) both the variable and fixed costs. d) only variable costs.

Graph B

Which graph shows the effect on the supply curve for new housing in Dubai, if economists predict a decrease in demand for new housing?

Graph B

Which graph shows what will happen to the supply of roses if the price of roses falls?

a) South Korea

Which of the following countries enjoyed significant catch-up economic growth in the second half of the twentieth century? a) South Korea b) Argentina c) United States d) Spain

d) the law of diminishing returns

Which of the following explains the shape of the aggregate production function? a) the development of human capital b) the profit maximization rule c) the impact of technological change d) the law of diminishing returns

d

Which of the following is (are) included in investment? [Select ALL that apply.] a) the purchase of $32,000 worth of stock b) the purchase of $45,000 worth of bonds c) the construction of a highway by the federal government d) the purchase of an aircraft by a domestic airline e) military spending f) social security payments

b) Consumers buy more iPhones because prices have fallen.

Which statement BEST illustrates the law of demand? a) An increase in food prices encourages more individuals to buy more food as a result of scarcity. b) Consumers buy more iPhones because prices have fallen. c) Tesla produces more cars as prices increase. d) Fewer people visit Disneyland because incomes have fallen.

d) Marty, who cannot find a job, though he is willing to accept less than the existing wage

You have four friends. Which of your friends can be described as "structurally unemployed"? a) Dolly, a recent graduate who is looking for the job that best suits her qualifications b) Kirstie, who was fired for being inefficient at her job c) Kevin, who does not like the company he works for d) Marty, who cannot find a job, though he is willing to accept less than the existing wage

c) $1,400

50 hamburgers, 10 textbooks, eight T-shirts, and 100 bottles of water. Suppose that in 2015, each hamburger was $3.50, each textbook was $89.99, each T-shirt was $14, and each bottle of water was $1.50. In 2016, each hamburger was $3.60, each textbook was $95, each T-shirt was $13, and each bottle of water was $1.65. What was the value of the basket in 2016? a) $5,737 b) $100 c) $1,400 d) $1,337

d) a left shift in the IS curve.

A fiscal policy contraction would lead to: a) no reaction on the IS curve. b) a movement along the IS curve. c) a right shift in the IS curve. d) a left shift in the IS curve.

d) cost-push inflation.

A negative supply shock causes: a) a surplus in consumer markets. b) demand-pull inflation. c) a decrease in unexpected inflation. d) cost-push inflation.

b) an increase in the quantity and an unpredictable change in the price

A recent news story reported that the Organization of Petroleum Exporting Countries is expected to increase the supply of oil next summer. Summer is traditionally a time of increased demand for oil because of vacation travel. What would be the combined effect of these two events on the market for gasoline? a) an increase in the quantity and the price b) an increase in the quantity and an unpredictable change in the price c) an unpredictable change in both the price and the quantity d) an unpredictable change in the price and a decrease in the quantity

c) rises by 0.5%.

According to Okun's rule of thumb, for every 1% fall in the actual output below potential output, the unemployment rate: a) rises by 1%. b) falls by 1%. c) rises by 0.5%. d) falls by 0.5%.

b) The total quantity demanded in the market falls by 14 gallons.

As a part of a market research project, you survey six random people to see how much gas per week they would buy at various prices. The data you collect is in the accompanying table. What is the change in the total demand for gasoline in your survey when the price changes from $2 per gallon to $2.50 per gallon? ​a) The total quantity demanded in the market rises by 11 gallons. b) The total quantity demanded in the market falls by 14 gallons. c) The total quantity demanded in the market falls by 13 gallons. d) The total quantity demanded in the market rises by 16 gallons.

c) hyperinflation.

In 2014, Venezuela experienced inflation of about 69%. In 2015, the inflation rate rose to around 181%, and by 2017, the inflation rate was over 4,000%. This scenario describes: a) deflation. b) money illusion. c) hyperinflation. d) economic growth.

a) ... are different because relative prices change between 2021 and 2022 (i.e., price of peanut butter relative to price of jelly).

As expected, the growth rates of Real GDP using 2021 or 2022 as the base year... a) ... are different because relative prices change between 2021 and 2022 (i.e., price of peanut butter relative to price of jelly). b) ... are the same because they both measure the change in quantity. c) ... are different because both prices (i.e., price of peanut butter and price of jelly) increase. d) ... are the same because the base year does not matter for the implied growth rate.

d) rise by 1.5%.

Based on Okun's rule of thumb, if you forecast that the output gap will decline from 0% to -3%, the unemployment rate will: a) rise by 3%. b) fall by 1.5%. c) fall by 2%. d) rise by 1.5%.

c, d, h

Before monetary and fiscal policy intervention in 2020, there was a spending shock and a supply shock which (select ALL that apply) a) shifted the MP curve down b) shifted the MP curve up c) left the MP curve unchanged d) shifted the IS curve down (left) e) shifted the IS curve up (right) f) left the IS curve unchanged g) shifted the PC down (right) h) shifted the PC up (left) i) left the PC unchanged

a) inflation falls below expected inflation.

Consider the Phillips curve shown here. In region A: a) inflation falls below expected inflation. b) inflation rises above expected inflation. c) there is excess demand. d) the output gap is positive.

b) Higher income per person allows for better health care, sanitation, and nutrition.

Consider the following graphs, which are discussed in the textbook. Focus on the graph that looks at the relationship between GDP per person and life expectancy. What can explain this relationship? a) As life expectancy increases, GDP per person increases at the same rate. b) Higher income per person allows for better health care, sanitation, and nutrition. c) Higher income per person leads to a higher mortality rate.

266

Consumption is $151 billion, government expenditure is $70.2 billion, planned investment is $65.8 billion, and net exports amount to -$21 billion. Aggregate expenditure in this economy is $ _________ billion (round to the nearest tenth of a billion).

c) excess demand.

Demand-pull inflation is inflation resulting from: a) a surplus. b) excess supply. c) excess demand. d) insufficient demand.

c) demand is in excess of supply at the market price.

Excess demand occurs when: a) there is a surplus in the market. b) supply is in excess of demand at the market price. c) demand is in excess of supply at the market price. d) demand and supply are equal at the market price.

a) Lower interest rates lower the cost of borrowing for firms, and so investment rises.

How do interest rates affect investment in the economy? a) Lower interest rates lower the cost of borrowing for firms, and so investment rises. b) Lower interest rates lower the after-tax profit for firms, and thus investment falls. c) Higher interest rates lower the cost of borrowing for firms, and so firms save more in banks. d) Higher interest rates increase government expenditure and thus raise investment.

c) at its highest sustainable rate of production.

If an economy has an output gap of 0%, this means the economy is: a) experiencing cyclical unemployment. b) unsustainable in the long run. c) at its highest sustainable rate of production. d) suffering from hyperinflation.

a) economy is experiencing an economic downturn.

If the frictional rate of unemployment is 1.45%, the structural rate of unemployment is 2.3%, and the total unemployment rate is 6%, then we can conclude that the: a) economy is experiencing an economic downturn. b) labor force participation rate has fallen significantly. c) economic growth rate has decreased by 2.25%. d) equilibrium rate of unemployment is 2.25%.

d) 99

If the median value of the consumer confidence index is 92, which of the following consumer confidence index values indicates a particularly strong economy? a) 90 b) 91 c) 93 d) 99

5.5

In 2021, the Federal Reserve Bank (the Fed) could have raised interest rates. Suppose the equilibrium unemployment rate (i.e., natural rate of unemployment) is 3.5% and the output gap is still -4% in 2021. Using Okun's Rule of Thumb, we would expect the actual unemployment rate to be _______ percent (round to the nearest tenth of a percent).

b, f, i

In 2022, the Federal Reserve started contractionary policy. In the IS-MP-PC framework, which curve(s) shift(s) where in response to this policy (select ALL that apply): a) shifts the MP curve down b) shifts the MP curve up c) leaves the MP curve unchanged d) shifts the IS curve down (left) e) shifts the IS curve up (right) f) leaves the IS curve unchanged g) shifts the PC down (right) h) shifts the PC up (left) i) leaves the PC unchanged

d) percentage change in the consumer price index.

Inflation can be measured by the: a) absolute change in the GDP deflator. b) percentage change in GDP. c) absolute change in the consumer price index. d) percentage change in the consumer price index.

c) follow the business cycle with a delay.

Lagging indicators are variables that: a) predict monetary policy. b) tend to predict the future state of the economy. c) follow the business cycle with a delay. d) predict fiscal policy.

2.0

Refer to the following table. The approximate output gap in 1984 was ________ % [round to the nearest tenth of a percent].

c) fall below the equilibrium unemployment rate (natural rate of unemployment).

Suppose that an economy is overheating. You would expect to see the unemployment rate: a) be equal to the equilibrium unemployment rate(natural rate of unemployment). b) be zero. c) fall below the equilibrium unemployment rate (natural rate of unemployment). d) rise above the equilibrium unemployment rate (natural rate of unemployment).

Graph A

Suppose the Chinese economy is experiencing significant excess demand. Which figure shows the effect on the Phillips curve in China?

c) -4%

Take a look at the IS-MP-PC model shown here. At equilibrium, the output gap is: a) 5% b) 3% c) -4% d) -1%

d) -1%

Take a look at the IS-MP-PC model shown here. At equilibrium, unexpected inflation is: a) 5% b) 3% c) -4% d) -1%

c) real GDP.

The broadest measure of economic activity is: a) the stock market. b) business confidence. c) real GDP. d) nonfarm payrolls.

d) C + I + G + NX.

The equation for aggregate expenditure in an open economy is: a) Y - C - I. b) C - I - G - NX. c) C + I + G. d) C + I + G + NX.

b) peak, recession, trough, and expansion.

The four stages of the business cycle are: a) expansion, growth, contraction, and depression. b) peak, recession, trough, and expansion. c) consumption, investment, government expenditure, and net exports. d) full employment, potential GDP, recessionary gap, and inflationary gap.

all of them

The key lessons from this diagram are that [select ALL that apply]: a) all inputs are provided by households. b) total spending must equal total income. c) the market value of total output must be equal to total spending. d) all flows of resources are matched by flows of money.

b) two

The price of smoothies at a local smoothie shop is $3. Cheryl is willing to pay $6 for her first smoothie each day. The marginal benefit to her of each additional smoothie falls by $2. How many smoothies should Cheryl purchase? a) One b) Two c) Three d) Four

c) interdependence

The principle that your best choice depends on your other choices, the choices others make, developments in other markets, and expectations about the future is known as the _____ principle. a) marginal b) opportunity cost c) interdependence d) cost-benefit

d) nominal interest rate minus the rate of inflation.

The real interest rate is the: a) percentage of the nominal interest that is inflation. b) economic growth rate adjusted for the effects of inflation. c) nominal interest rate plus the rate of inflation. d) nominal interest rate minus the rate of inflation.

b) decreases; shoe-leather

The use of online banking _____ the _____ costs of high inflation. a) increases: shoe-leather b) decreases; shoe-leather c) increases; unit-of-account d) decreases; unit-of-account

c) current conditions typically continue in the near future.

To say that business cycles are persistent means that: a) they typically have short and sharp recessions, followed by long and gradual expansions. b) they usually last over 20 years. c) current conditions typically continue in the near future. d) growth rates in a cycle will always be higher than growth rates in the previous cycle.

525

Using 2022 as the base year, Real GDP in 2022 was: $_________.

11.7

Using 2022 as the base year, the growth rate of Real GDP from 2021 to 2022 was [round to the nearest tenth of a percent]: _________%.

182,500

Using average price, Real GDP for last year is $ ________ .

191,625

Using average price, Real GDP for this year is $ ________ .

4.63

Using your answer choices from the two preceding questions, CAR's economic growth rate between 2011 and 2012 was _______ %. (Round to the nearest hundredth of a percent.) real gdp in 2012 - $528.13 real gdp in 2011 - $504.75

b) too much supply for too few buyers

What is insufficient demand? a) too many buyers for too few goods b) too much supply for too few buyers c) slow-changing consumer preferences d) lower equilibrium quantity

c) seasonally adjusted data

What kind of data adjustment removes the effect of sales spikes due to the holiday season? a) nominal data b) real data c) seasonally adjusted data d) annual data

a and c

When actual output is less than potential output (select ALL that apply): a) the output gap becomes negative. b) the output gap becomes positive. c) there is insufficient demand. d) demand-pull inflation occurs.

d) borrowers to lenders.

When inflation is lower than expected, there is redistribution from: a) borrowers to the government. b) lenders to the government. c) lenders to borrowers. d) borrowers to lenders.

c) S&P 500

Which economic indicator tells you about the future expected profits of businesses? a) Nonfarm payrolls b) Consumer price index c) S&P 500 d) Initial unemployment claims

c) Business confidence

Which of the following indicators might be a good predictor of investment? a) Initial unemployment claims b) Nonfarm payrolls c) Business confidence d) Consumer confidence

d) Unemployment rate

Which of the following is an indicator of excess capacity? a) Consumer confidence b) Inflation c) Business confidence d) Unemployment rate

a) medium of exchange, store of value, and unit of account

Which of the following lists the functions of money? a) medium of exchange, store of value, and unit of account b) carrier of exchange, unit of account, and measure of inflation c) store of value, store of interest, and buffer against inflation d) medium of exchange, measure of inflation, and benchmark of quality

Graph C

Which of the following shows the correct effect on the IS-MP framework if there is a sharp increase in loan default rates in an economy?

c) Broad indicators better capture economy-wide effects.

Why are broad indicators better than narrow indicators? a) Narrow indicators are harder to measure than broad indicators. b) Narrow indicators present economy-wide trends. c) Broad indicators better capture economy-wide effects. d) Narrow indicators present more refined forecasts.

a) -0.25%

You open a savings account that pays 0.75% interest a year. What is your real rate of return if the inflation rate is 1%? a) -0.25% b) -0.75% c) 1% d) 1.75%

-0.35

You open a savings account that pays 0.75% interest a year. Your real rate of return if the actual inflation rate is 1.10% is ____% [round to the nearest hundredth of a percent].