Econ 211 final exam minus last 3 chapters. (Dr. Mann)

The expenditure category that accounts for the largest share of GDP is:

personal consumption expenditures.

Dave brags to his dad that his $45,000 starting salary as a computer programmer is much higher than his dad's $28,000 starting salary some years ago. If the consumer price index the year Dave begins work is 180.5 while the consumer price index the year his dad started work was 110.8, Dave is:

A. incorrect; adjusting for quantity changes, his salary is less than his dad's salary. B. correct; adjusting for price changes, his salary is more than his dad's salary. * C. incorrect; adjusting for price changes, his salary is less than his dad's salary. D. correct; adjusting for quantity changes, his salary is more than his dad's salary.

In economics, capital refers to:

actual manufactured buildings and equipment used in the production process.

Marginal analysis would put an emphasis on: Correct!

additional costs and benefits.

The real GDP that firms will produce at varying price levels is

aggregate supply

A good is a normal good if:

the demand curve shifts outward if income increases.

Expansionary fiscal policy is typically used to:

combat a recession due to deficient demand.

Inflation is a:

general rise in prices.

Ceteris paribus, a decrease in the number of businesses selling pizza will cause a(n):

increase in the equilibrium price of pizza.

As income increases, consumption _________.

increases at a slower rate

The field of economics that is concerned about the broader issues in the economy, such as inflation, unemployment, and national output of goods and services is called:

macroeconomics

Which of the following statements is true?

Economic growth leads to increased consumption of goods and services.

Which interest rate is the rate at which banks charge each other for overnight loans?

Federal Funds Rate

Chris places $1,000 from his savings account into his checking account at the same bank. Which is true?

M2 is unchanged, but M1 increases by $1,000

_____ costs include the time and money that could have been spent on another highly valued activity.

Opportunity

_____ government spending, _____ transfer payments, and _____ taxes are all examples of expansionary fiscal policy.

Raising; increasing; reducing

Scarcity refers to the fact that:

a person must make choices given the resource limitations he or she faces.

If one country has a(n) _____ advantage in the production of one item, it can always produce more of the same item than another nation, given the same resources.

absolute

The 12 Federal Reserve banks and their branches do all of the following EXCEPT:

accept deposits from U.S. citizens.

The key to being counted as unemployed by the Bureau of Labor Statistics is to be:

actively seeking work.

Which event will cause an increase in the supply of yogurt?

an increase in the number of sellers in the yogurt market

If a consumer buys a set of headphones at the same time as she buys an MP3 player, these two products are MOST likely _____ goods.

complementary

Suppose that the price of a good is $650 and equilibrium price is $625. Compared to market equilibrium:

consumer surplus is decreased and deadweight loss is increased.

The mortgage crisis caused a lot of consumers to stop spending money. The decrease in spending led to a decrease in production. Which type of unemployment resulted?

cyclical

All of the following are true for inflation EXCEPT:

debtors are hurt during inflationary times because the amount they pay creditors back increases.

A decrease in the incomes of the other countries will cause a(n) _______ in the ________ US-made products.

decrease; aggregate demand for

In a simple circular flow diagram, total spending on goods and services in the product market:

equals the total income earned in the resource market.

If both the supply and the demand curves shift to the right:

equilibrium quantity increases and the effect on equilibrium price is indeterminate.

Producer surplus is defined as the:

gap between the supply curve and the market price.

Gasoline is produced from crude oil. Ceteris paribus, if the supply of crude oil falls, the equilibrium price of gasoline will _____ and the equilibrium quantity will _____.

increase; decrease

Corporate bonds generally have a _____ return on investment than do stocks because bonds are _____.

lower; less risky

Physical capital includes

manufactured products that are used to produce other goods and services.

Institutions that bring buyers and sellers together so they can interact and transact with each other are called:

markets.

The reason business investment is sensitive to interest rates is that:

most funds used for investment are borrowed, so firms incur an interest charge.

A legal maximum price that can be charged for a product or service is known as a(n):

price ceiling.

Suppose that a customer's willingness to pay for a product is $1,480, and the seller's willingness to sell is $1,210. If the negotiated price is $1,479:

producer surplus is greater than consumer surplus.

The _____ is the sum of past _____.

public debt; budget deficits

Other factors held constant, as the price of an iPad rises, the:

quantity demanded for iPads falls.

Economic growth is most accurately measured using

real GDP per capita

A shift to the ______ of the ______ curve will cause the price level and employment to increase.

right; aggregate demand

Which action will NOT shift a production possibilities frontier curve outward?

shifting preferences of consumers to cheaper products

A price ceiling usually results in a:

shortage and a misallocation of resources.

Suppose the government implements a policy increasing the rewards earned by savers. In this case, the _____ loanable funds shifts _____.

supply of; right

If a government collects $5,400 in tax revenue and spends $5,000, it has:

surplus of $400

Markets tend to produce:

too little of a good exhibiting external benefits.

Mandatory spending comprises nearly _____ of the federal budget.

two thirds

Servings as a _____ is a function of money that gives us a yardstick by which we can measure and compare the values of a wide variety of goods and services.

unit of account

A bank has a reserve requirement of 15%. The bank currently has $1,000 in bank vaults, $4,000 in deposits at the Federal Reserve, and $25,000 in deposits. The bank has how many excess reserves?

$1,250

A lawyer can argue a case in court for one hour and make $300. She could alternatively use that hour of time to type a legal brief in her office. What is the opportunity cost of her typing the legal brief?

$300, since that is the amount she could have made by arguing a case in court

Which of these would be considered a public good?

A. .a private office building B. national defense * C. a toll bridge D. a football stadium

Holding other expenditures constant, if imports fall by $20 billion and exports fall by $10 billion, then GDP:

A. falls by $10 billion. B. rises by $30 billion. C.rises by $10 billion. * D. falls by $30 billion.

If the nominal GDP is $13 trillion for a given year and the GDP deflator for that year is 115, then the real GDP is: Correct!

A.$11.3 trillion. * B.$14.95 trillion. C. $12.0 trillion. B. $13.0 trillion.

In the Keynesian Macroeconomic Equilibrium:

AE=Y and S=I

If a product becomes obsolete and the workers who produced that product will need additional training to find new jobs, then they are experiencing:

structural unemployment.

According to the law of demand, people buy more of a good when:

the price falls.

Normative questions involve societal beliefs on what should or should not be done.

true

Economists refer to the payment to labor as:

wages

The _______ effect is a reason for the negative slope of the aggregate demand curve.

wealth

If the marginal propensity to consume is 0.75, by how much will $500 of government spending increase GDP?

$2000

If an economy's GDP will double in 40 years, then its growth rate must be about

1.75

Suppose an economist breaks the unemployment rate into the following components: frictional (2%), structural (1%), and cyclical (4%). Based on these estimates, the natural rate of unemployment is:

3%

If the growth rate in an economy is 2%, then its GDP will double in about

35

According to the textbook, what brought the US out of the great Depression?

an increase in spending on World War II

If investment decreases from $500 billion to $400 billion and the marginal propensity to consume is 0.75, then equilibrium income will

fall by $400 billion.

If the Fed reduces the supply of money in the market, bond prices will ______ and interest rates will ________.

fall; rise

Which is a source of positive productivity growth?

increasing the quality of labor

The largest source of federal government revenues is:

individual income taxes.

Which of the following is the most liquid?

money in a checking account

Which of the following is a tool of monetary policy?

open market operations

Production efficiency occurs when goods are:

produced with the lowest possible resource cost.

Production levels to the right of the production possibilities frontier are:

unattainable.

If disposable income is $4,500 and saving is $1,400, how much is consumption?

$3100

The following table represents the balance sheet for a bank. What is the bank's reserve ratio? Assets Liabilities Vault Cash $5,000 Deposits $80,000 Fed Deposits 15,000 Loans 60,000

.25

The money multiplier is 3. What is the reserve requirement?

1/3

The Federal Reserve System includes ______ regional banks.

12

If the marginal propensity to consume is 0.6, then the multiplier is

2.5

Suppose that 5 cooks work 10 hours each to produce 1,000 hamburgers. What is the productivity of these cooks?

20 hamburgers per hour

Last year, the consumer price index (CPI) was 115 while the consumer price index for this year is 125. The rate of inflation is:

8%. 9.2%. 10.8%. 8.7%. *

Jordan Meadows lost his job as an airline pilot and has not been able to find another job as a pilot. Since he is old enough to be eligible for his pension, he decides to retire and devote himself to caring for his elderly parents. According to the Bureau of Labor Statistics, Jordan is:

A.a discouraged worker. B. not in the labor force. C. employed. D. unemployed.

What impact will a rising price level have on real GDP?

Changes in the price level do not impact real GDP.

Which of the following may be an explanation for the shift in aggregate demand to the left

Consumer confidence declines and consumption spending falls.

inflation occurs when aggregate demand expands so much that equilibrium output exceeds full employment output and the price level rises.

Demand-pull

If the reserve requirement is 40%, a new deposit of $400 leads to a potential increase in the money supply of

$1,000

If you were not studying economics, you could be doing one of the following: sleeping in (which you value at $5), playing cards with your friends (which you value at $10), or working (you would have earned an extra $8). The opportunity cost of studying economics is therefore:

$10.

If a person borrows $5,000 at 8% interest and never makes any payment, how much will the loan balance be after two years?

$5,832

Suppose that a bond has a face value (par value) of $1,000 and a coupon rate of 10%. If the bond sells at a price of $2,000 what is the yield?

5%

An economy has a population of 226,500, of whom 12,500 are unemployed and actively seeking work, and 35,000 have given up looking for a job. Also, 28,000 people work part-time, and 151,000 people work full-time. This economy's unemployment rate is _____.

6.5%

Suppose a market basket of goods costs $10,000 in 2009, the base period, and that same basket of goods now costs $11,200. What is the consumer price index for the current period?

89.3 112.0 * 132.0 120.0

_______ is the largest component of total spending

consumption

Successful barter in a primitive economy necessitates:

a double coincidence of wants.

The U.S. gross domestic product is equal to the total market value of all:

final goods and services produced by resources in the United States.

In the Keynesian model, the price level is _______; in the aggregate demand and supply model, the price level is _______.

fixed; flexible

A change from a technically or productively inefficient mix to an efficient mix of output would BEST be represented with a production possibilities frontier (PPF) as a:

movement from inside the PPF onto the PPF.

According to the law of supply, producers will supply more of their products when:

the price rises.

When markets are efficient:

the sum of consumer and producer surplus is maximized.