ECON EXAM 1

2005 Quantity: 80, 40 2005 Price: 5, 4 2019 Quantity: 90, 60 2019 Price: 6, 10 *guns, butter 1) Real GDP for Tyrovia for 2019 using 2005 as the base year equals... A) $1,140. B) $880. C) $690. D) $560. 2) Assuming again that 2005 is the base year, nominal GDP for Tyrovia in 2019 equals... A) $1,140. B) $880. C) $690. D) $560.

1) 5*90 = 450 4*60 = 240 C) $690 2) 6*90 = 540 10*60 = 600 A) $1140

Year Nominal GDP Real GDP 2011 $13,399 $12,976 2012 14,078 13,254 2013 14,441 13,312 Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2013 equals A) 92.2. B) 103.3. C) 106.2. D) 108.5

14,441/13,312 * 100 = D) 108.5

If the price of gasoline was $1.25 a gallon last year and it is now $2.25 a gallon, what is the percentage change in price?

2.25-1.25/1.25 = .8 * 100 D) 80%

If the price of milk was $2.50 a gallon and it is now $3.25 a gallon, what is the percentage change in price? A) 77%. B) 75% C) 30%. D) 13%.

3.25-2.5/2.5 = .3 * 100 C) 30%

The following equations represent the demand and supply for silver pendants. QD = 50 - 2P QS = -10 + 2P What is the equilibrium price (P) and quantity (Q - in thousands) of pendants? A) P = $50; Q = 10 thousand. B) P = $10; Q = 30 thousand. C) P = $15; Q = 20 thousand. D) P = $20; Q = 15 thousand.

50 - 2P = -10 + 2P 60 = 4P P = 15 ---> Q = 20 C)

In a small economy, consumption spending in 2019 is $6,000, government spending is $1,200, gross investment is $1,500, exports are $2,000, and imports are $1,000. What is gross domestic product in 2019? A) $11,700. B) $10,800. C) $9,800. D) $9,700.

6,000+1500+1200+(2000-1000) = 9700 D) 9700

DeShawn's Detailing is a service that details cars at the customers' homes or places of work. DeShawn's cost for a basic detailing package is $40, and he charges $75 for this service. For a total price of $90, DeShawn will also detail the car's engine, a service that adds an additional $20 to the total cost of the package. Should DeShawn continue to offer the engine detailing service? A) yes, he still makes a profit by selling the engine detailing service with the basic detailing package. B) yes, but only if he raises the price of the basic detailing package. C) no, his marginal benefit is less than his marginal cost. D) more information is needed for DeShawn to make this decision.

90-75 = 15 < 20 C) NO

"Household production" refers to... A) goods and services people produce for themselves. B) the manufacturing of durable household products. C) the home building sector of the economy. D) home-based craft businesses

A

An example of a final good would be... A) a soy latte sold by Starbucks to a student. B) the whipped cream sold to Starbucks. C) the coffee beans sold to Starbucks. D) the soy milk sold to Starbucks.

A

If the GDP deflator rises from 185 to 190 in one year, what is the rate of inflation? A) 2.7%. B) 5%. C) 50%. D) 270%.

190-185/185 * 100 = A)2.7%

Marla is an architect who is designing a home for Chuck. Chuck is paying Marla $150 per hour to design his new home. When Chuck and Marla get married, Marla continues to work on designing the home, but she no longer charges Chuck for her work. As a result, GDP ________ because ________. A) rises; Marla becomes more productive once she's married. B) falls; Marla's work becomes less valuable once she's married. C) falls; Marla's work takes place in the underground economy once she's married. D)falls; Marla's architectural design services are no longer bought by Chuck once they're married.

D

The purchase of a new Ford car by a German citizen is included in... A) consumption expenditures. B) investment expenditures. C) government purchases. D) net export.

D

Which of the following is a macroeconomics question? A) What factors determine the price of carrots? B) What determines the wage of auto workers? C) What determines the production of DVDs? D) What determines the inflation rate?

D

Hours Open: 1, 2, 3, 4, 5, 6 Total Revenue (dollars): 50, 75, 95, 110, 120, 125 Lydia runs a small nail salon in the town of New Hope. She is debating whether she should extend her hours of operation. Lydia figures that her sales revenue will depend on the number of hours the nail salon is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $10 per hour. A) 2 hours B) 3 hours C) 4 hours D) 5 hours E) 6 hours

D) 5 hours

Year: 2004 2005 2006 2007 2008 2009 RGDP: 5.3 5.6 5.4 5.2 5.3 5.4 What phase of the business cycle was this economy in between years 2004 and 2005? A) trough. B) recession. C) peak. D) boom.

D) boom

Using the slope that you calculated in question #10 (-0.5) write down the equation for Arnolds' demand for burritos. (y int = 3) A) P = 3 - 0.5*Qd. B) P = 4 - 0.5*Qd. C) P = 2*Qd. D) P = 5 - 2*Qd.

A

Which of the following is a macroeconomics question? A) What determines the unemployment rate? B) What factors determine the price of potatoes? C) What determines the wage of airline workers? D) What determines the production of CDs?

A

Which of the following is a microeconomics question? A) What factors determine the price of carrots? B) What determines the average price level and inflation? C) What will the level of economic growth be in the entire economy? D) How much will be saved and how much will be produced in the entire economy?

A

Which of the following is likely to increase measured GDP? A) Marijuana becomes legal to grow and sell in all fifty states. B) A greater number of women decide to stay at home and provide day care for their children under age 5. C) Tax rates increase and more people attempt to underreport their income for tax purposes. D) More people decide to do their own lawn maintenance and give up using a professional service.

A

Which of the following questions or statements regarding medical school is normative? A) Medical students who enter specialized fields make a larger contribution to society than do student who enter primary care. B) What role does tuition play in a student's decision about whether to attend medical school? C) How do changes in expected future incomes affect the decisions of medical students about which specialty to choose? D) Have tuition increases had a large effect or a small effect on the number of applications to medical school?

A

Which of the following statements is true about scarcity? A)Scarcity refers to the situation in which unlimited wants exceed limited resources. B) Scarcity is only a problem when a country has too large a population. C) Scarcity arises when there is a wide disparity in income distribution. D) Scarcity is not a problem for the wealthy.

A

Which of the following transactions would take place in the "underground economy"? A) John makes chain-link belts and necklaces and sells them at a local flea market for cash to avoid paying taxes. B) Matt bought an iPad for $499 but decided to sell it on eBay instead of keeping it. C) Paul buys 15 gallons of gasoline for $3.29 a gallon, not realizing that $1.50 per gallon of that price goes to the government as tax revenue. D) Elizabeth tells her mother she's going to work but really goes to see a movie.

A

Consider the following statements: a. Car owners purchase more gasoline from a gas station that sells gasoline at a higher price than other rival gas stations in the area. b. Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. c. Firms produce more of a particular DVD when its selling price falls. Which of the above statements demonstrates that economic agents respond to incentives? A) a only. B) b only. C) c only. D) a and b. E) a, b, and c.

B

The largest component of spending in GDP is A) government spending. B) consumption spending. C) investment spending. D) net export spending.

B

The purchase of a new house is included in: A) consumption expenditures. B) investment expenditures. C) government purchases. D) net export.

B

Which of the following is a positive economic statement? A) People should not buy SUVs. B) Scarcity necessitates that people make trade-offs. C) The government should mandate electric automobiles. D) Foreign workers should not be allowed to work for lower wages than the citizens of a country.

B

Which of the following is counted in GDP? A) the value of goods and services produced in the underground economy. B) the cost of a speed boat purchased by drug smugglers. C) the value of do-it-yourself work. D) the value of leisure.

B

Product: Shoes, DVDs, Sugar, Coke Quantity: 40, 100, 2,000, 300 Price: 60, 18, 1, 4 Suppose that a simple economy produces only four goods and services: shoes, DVDs, sugar, and coke. Assume one half of the sugar is used in the production of coke and the other half of the sugar is purchased by households. Using the information in the above table, nominal GDP for this simple economy equals

B) $6,400

Product: Quantity: Price: Shoes 40 $60.00 DVDs 100 18.00 Sugar 2,000 1.00 Coke 300 4.00 Suppose that a simple economy produces only four goods and services: shoes, DVDs, sugar, and coke. Assume one half of the sugar is used in the production of coke and the other half of the sugar is purchased by households. Using the information in the above table, nominal GDP for this simple economy equals A) $7,400. B) $6,400. C) $5,800. D) $5,400.

B) 6400

Which of the following is a positive economic statement? A) The government should revamp the health care system. B) The standard of living in the United States should be higher. C) If the price of iPhones falls, a larger quantity of iPhones will be purchased. D) The U.S. government should not have bailed out U.S. auto manufacturers.

C

Which of the following transactions represents the purchase of a final good? A) Starbucks purchase coffee beans. B) Delta buys a new European-made jetliner. C) Your father buys a new John Deere riding lawn mower. D) Apple buys processors from Intel to install in their computers.

C

Year: 2004, 2005, 2006, 2007, 2008, 2009 RGDP: 5.3, 5.6, 5.4, 5.2, 5.3, 5.4 How would you call year 2005 (RGDP=5.6)? A) trough. B) recession. C) peak. D) boom.

C) peak

By definition, economics is the study of... A) supply and demand. B) how to make money in the stock market. C) how to make money in a market economy. D) the choices people make to attain their goals, given their scarce resources.

D

Who, in a mixed economy, decides what goods and services will be produced with the scarce resources available in that economy? A) the government. B) consumers. C) producers. D) consumers and producers. E) the government, consumers and producers

E - mixed (gov, producers + consumers)

Who, in a centrally planned (or command-and-control) economy, decides what goods and services will be produced with the scarce resources available in that economy? A) the government, consumers and producers. B) consumers and producers. C) consumers. D) producers. E) the government.

E) Gov