final exam prep

Celine buys a new MP3 player for $90. She receives consumer surplus of $15 on her purchase if her willingness to pay is $15. b. $105. c. $90. d. $75.

$105.

A painter pays $500 for paint he uses to repaint a house. He then presents a bill for $1200 that covers his time and expenses to the homeowner. How much do these transactions add to GDP? $700 b. $1200 c. $500 d. $1700

$1200

A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute $150 to GDP. b. $400 to GDP. c. between $250 and $400 to GDP, depending on the profit earned by the bicycle company when it sold the bicycle. d. $250 to GDP.

$250 to GDP.

In the economy of Talikastan in 2015, consumption was $3000, exports were $1200, GDP was $8000, government purchases were $1200, and imports were $600. What was Talikastan's investment in 2015? $3200 b. $5600 c. $4400 d. $2000

$3200

Bill created a new software program he is willing to sell for $200. He sells his first copy and enjoys a producer surplus of $150. What is the price paid for the software? $200. b. $50. c. $350. d. $150.

$350.

real exchange rate

(nominal exchange rate x domestic price)/foreign price

when a trading partner goes into a recession it shifts

, it buys fewer goods from the United States. U.S. net exports decline at every price level, shifting the aggregate-demand curve for the U.S. economy to the left

If the nominal interest rate is 4 percent and the real interest rate is 7 percent, then the inflation rate is 3 percent. b. -3 percent. c. 11 percent. d. 0.75 percent.

-3 percent.

Variables that influence net capital outflow

-Real interest rates paid on foreign assets -Real interest rates paid on domestic assets -Perceived economic and political risks of holding assets abroad -Government policies that affect foreign ownership of domestic assets

Senator Noitall says that in order to help poor countries develop, the United States should: i) Encourage poor countries to allow U.S. and other foreign firms to build and operate businesses in their country; ii) Reduce or eliminate subsidies to U.S. producers when poor countries have a comparative advantage producing goods the U.S. subsidizes; iii) Work to promote political stability in poor countries; and iv) Reduce poor countries reliance on market forces in their economies. Which of these policies would help growth? i, ii, iv b. ii, iii, iv c. i, iii, iv d. i, ii, iii

. i, ii, iii

Given the following information, what are the values of M1 and M2? Small time deposits $1,800 billion Demand deposits and other checkable deposits $1,000 billion Savings deposits $1,400 billion Money market mutual funds $1,000 billion Traveler's checks $50 billion Large time deposits $600 billion Currency $300 billion Miscellaneous categories in M2 $50 billion a. M1 = $1,300 billion, M2 = $5,600 billion. b. M1 = $3,150 billion, M2 = $6,200 billion. c. M1 = $1,400 billion, M2 = $6,200 billion. d. M1 = $1,350 billion, M2 = $5,600 billion.

. M1 = $1,350 billion, M2 = $5,600 billion.

The GDP deflator reflects the current level of prices relative to the level of prices in the base year. b. current level of real output relative to the level of real output in the base year. c. level of real output in the base year relative to the current level of real output. d. level of prices in the base year relative to the current level of prices.

. current level of prices relative to the level of prices in the base year.

One year a country has positive net exports. The next year it still has positive but larger net exports a. its trade deficit fell. b. its trade surplus rose. c. its trade surplus fell. d. its trade deficit rose

. its trade surplus rose.

If a tax is levied on the sellers of a product then there will be a(n) a. downward shift in the supply curve b.upward shift of the supply curve c.decrease in quantity supplied d. increase in quantity supplied

.upward shift of the supply curve

From 2009 to 2010, the CPI for education increased from 279.3 to 281.8. What was the inflation rate for education between 2009 and 2010? . 90% b. 2.5% c. 9.0% d. 0.9%

0.9%

What did the Russian central bank do to stabilize the exchange rates?

1. increase domestic interest rates from 9% to 20% 2. capital controls (forcing russian gas exports to be bought in rubles) 3. Buy Rubles- increase demand via foreign reserves

AllenUnpaid stay at home dad. Has not looked for a job in several years.BenCollege president.AllisonPart-time welder. Actively looking for full time work.BrittanySelf-employed full-time wedding singer.CathyFull-time physician's assistant.CalvinRetired finance professor. Last applied for work 10 weeks ago.DianeLaid-off fork-lift operator expecting to be recalled.DavidWorks for a bicycle store. Age 70.EvelynManager of health food store.EliMuseum guard. Was not at work last week due to illness.FloraHas never been employed. Looked for a job last week.FrankFired from job as an investment banker. Last looked for work three weeks ago. How many in the sample are in the labor force? 11 b. 10 c. 9 d. 8

10

Metropolis National Bank is currently holding 2% of its deposits as excess reserves. Metropolis National Bank Assets Reserves $60,000 Loans $440,000 Liabilities Deposits$500,000 Metropolis National Bank is currently holding 2% of deposits as excess reserves. What is the reserve requirement? 12 percent b. 6 percent c. 8 percent d. 10 percent

10 percent

How far will the Russian economy expected to fall?

12%

A painter pays $500 for paint he uses to repaint a house. He then presents a bill for $1200 that covers his time and expenses to the homeowner. How much do these transactions add to GDP? $1700 b. $500 c. $700 d. $1200

1200

An MP3 player in Singapore costs 200 Singaporean dollars. In the U.S. it costs 100 US dollars. What is the nominal exchange rate if purchasing-power parity holds? 2.0 b. 1.0 c. .50 d. None of the above is correct.

2.0

What is the current state of unemployment? 1% 3.6% 4.8% 7.1%

3.6%

Last year real GDP per person in the imaginary nation of Olympus was 4,250. The year before it was 4,100. By about what percentage did Olympian real GDP per person grow during the period? 6 percent b. 1.6 percent c. 2.5 percent d. 3.7 percent

3.7 percent

A bank has $500,000 in deposits and $475,000 in loans. It has loaned out all it can. It has a reserve ratio of 25 percent. b. 2.5 percent. c. 9.5 percent. d. 5 percent.

5 percent.

The wealth effect

A decrease in the price level raises the real value of money and makes consumers wealthier, thereby encouraging them to spend more. The increase in consumer spending means a larger quantity of goods and services demanded.

an increase in the price level first

A higher price level raises money demand. Higher money demand leads to a higher interest rate. A higher interest rate reduces the quantity of goods and services demanded.

The interest rate effect

A lower price level reduces the interest rate, encourages greater spending on investment goods, and thereby increases the quantity of goods and services demanded.

Scarcity

A situation in which unlimited wants exceed the limited resources available to fulfill those wants

Which of the following statements is correct? a. Buyers always want to pay more and sellers always want to be paid more. b. Buyers always want to pay more and sellers always want to be paid less. c. Buyers always want to pay less and sellers always want to be paid less. d. Buyers always want to pay less and sellers always want to be paid more

Buyers always want to pay less and sellers always want to be paid more.

Feds tools for affecting monetary policy

Changes in monetary policy aimed at expanding aggregate demand can be described either as increasing the money supply or as lowering the interest rate.

Which economy has the highest growth rate of real GDP? The United States China Great Britain Texas

China

Suppose the number of buyers in a market decreases and a technological advancement occurs also. What would we expect to happen in the market? a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. None of the above is correct.

Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.

The 19th century economist, Karl Marx, author of the communist manifesto was in favor of complete equality. True. The core of communism is equality B. True. Marx wanted a revolution to redistribute wealth from the rich to the poor. C. False. Marx understood some people work harder than others. D. False. Communism never achieved equality.

False. Marx understood some people work harder than others

U.S. GDP and U.S. GNP are related as follows: GNP = GDP - Income earned by foreigners in the U.S. + Income earned by U.S. citizens abroad. b. GNP = GDP + Value of exported goods - Value of imported goods. c. GNP = GDP - Value of exported goods + Value of imported goods. d. GNP = GDP + Income earned by foreigners in the U.S. - Income earned by U.S. citizens abroad.

GNP = GDP - Income earned by foreigners in the U.S. + Income earned by U.S. citizens abroad

Which statement is a normative economic statement? If we raise the minimum wage, then we cause more unemployment. If the government increases spending, then the economy will grow. If we increase government debt, then we will distort our sense of responsibility. If we increase the supply of labor, the wages will fall.

If we increase government debt, then we will distort our sense of responsibility.

aggregate demand has three important lessons:

In the short run, shifts in aggregate demand cause fluctuations in the economy's output of goods and services. In the long run, shifts in aggregate demand affect the overall price level but do not affect output. Because policymakers influence aggregate demand, they can potentially mitigate the severity of economic fluctuations.

Are wages keeping up with inflation in 2022? Wages always keep up with inflation Inflation is rising faster than wages. Only wages for the bottom 20% of the income distribution are rising faster than inflation. Only wages for the top 20% are rising faster than inflation.

Only wages for the bottom 20% of the income distribution are rising faster than inflation.

Foriegn exchange market what is supply and demand?

Supply(NCO) vertical demand (for net exports) downward sloping

Which economy has the highest GDP per capita? The United States India China Great Britain

The United States

which of the following should be counted as part of the cost of going to college? The cost of dorm room travel to college cost of books the cost of food the amount of money i can make after college the amount of money i can earn instead of going to college tuition

The cost of dorm room travel to college cost of books tuition the amount of money i can earn instead of going to college

Which of the following describes hyperinflation? The monthly inflation rate is greater than 50 percent. The annual inflation rate is greater than 50 percent. The double-digit inflation experienced in United States during the 1970's. Anything above the Fed's target of 2% annual inflation.

The monthly inflation rate is greater than 50 percent

According to economic research, does minimum wage cause large unemployment? Yeah, a whole ton. The negative employment effect is minimal Minimum Wage increase employment It is impossible to study the question with data.

The negative employment effect is minimal

Why did China become one of the poorest nations in the world by 1947 a Their large population always diminished their ability to grow b The trade protection policies of the 1500's prevented adoption of greater technology c The communist regime of Mao hampered economic growth d. The Europeans, at the time of the world exploration were the richest regime on earth d

The trade protection policies of the 1500's prevented adoption of greater technology

What do economists believe about the employment effects of minimum wage? Basic supply and demand tell us that minimum wage always causes unemployment. The labor market is perfectly competitive, and therefore minimum wage will do more harm than good. There is an ongoing debate among economists whether the costs of minimum wage are larger than the benefits. The data show that minimum wage never causes unemployment.

There is an ongoing debate among economists whether the costs of minimum wage are larger than the benefits.

US exchange rate goes up this shifts

This appreciation of the dollar makes U.S. goods more expensive relative to foreign goods, depressing net exports and shifting the aggregate-demand curve to the left.

increase in the money supply shifts

This decrease in the interest rate makes borrowing less costly, stimulating investment spending and thereby shifting the aggregate-demand curve to the right.

Which of the following is correct? a. US exports as a percentage of GDP have about tripled since 1950, the US currently has a trade deficit b. US exports as a percentage of GDP have about tripled since 1950. The US currently has a trade surplus c. US exports as a percentage of GDP have doubled since 1950. The US currently has a trade deficit d. US exports as a percentage of GDP have about doubled since 1950. The US currently has a trade surplus

US exports as a percentage of GDP have about tripled since 1950, the US currently has a trade deficit

The exchange rate effect

When a fall in the U.S. price level causes U.S. interest rates to fall, the real value of the dollar declines in foreign exchange markets. This depreciation stimulates U.S. net exports and thereby increases the quantity of goods and services demanded.

What does an increase in the money supply do

When the Fed increases the money supply, it lowers the interest rate and increases the quantity of goods and services demanded for any given price level, shifting the aggregate-demand curve to the right.

Which period had the highest level of government debt to GDP ratio? Revolutionary War Civil War World War I FDR's New Deal World War II Reagan's Tax Cuts The Financial Crisis None of the Above

World War II

Is a free concert a scarce good? No, because there is no cost. Yes, because there are so few of them. No, we don't have to give up anything. Yes, because we have to give up what we would have done with our time.

Yes, because we have to give up what we would have done with our time.

In 2021, are wages of young workers keeping up with the pace of inflation? No, inflation is rising faster than wages for all workers. No, inflation is rising faster for young people, but wages of the baby boomer generation are rising the fasted. Yes. Wages for middle aged workers are rising the fastest. Yes. Wages are rising for young workers faster than all other generations.

Yes. Wages are rising for young workers faster than all other generations.

A perpetuity is a. a financial intermediary that has existed throughout recorded history. b. an instrument of equity finance. c. a stock that pays dividends forever. d. a bond that pays interest forever.

a bond that pays interest forever.

When a net capital outflow is negative

a country is experiencing a capital inflow (money is flowing in)

industrial machinery is an example of a. technological knowledge. b. a production function. c. a factor of production that in the past was an output from the production process. d. an item which always has the property called constant returns to scale.

a factor of production that in the past was an output from the production process.

The gains from trade are a evident in the real world, but impossible to capture in economic models. b. evident in economic models, but seldom observed in the real world. c. based on the principle of absolute advantage. d. a result of more efficient resource allocation than would be observed in the absence of trade.

a result of more efficient resource allocation than would be observed in the absence of trade.

The CPI is a measure of the overall cost of the goods and services bought by a typical firm. b. the government. c. a typical consumer. d. All of the above are correct.

a typical consumer.

A bond buyer is a a. saver. Bond buyers may sell their bonds prior to maturity. b. borrower. Bond buyers must hold their bonds until maturity. c. borrower. Bond buyers may sell their bonds prior to maturity. d. saver. Bond buyers must hold their bonds until maturity.

a. saver. Bond buyers may sell their bonds prior to maturity.

Which of the following helps to explain why the inflation fallacy is a fallacy? a. Nominal incomes tend to rise at the same time that the price level is rising. b. Increases in the price level can be created by increases in money demand. c. Inflation only changes nominal variables. d. As the price level rises, the value of a dollar falls.

a. Nominal incomes tend to rise at the same time that the price level is rising.

When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy a. rises. b. stays the same. c. may fall, rise, or stay the same. d. falls.

a. rises

A basic principle of economics is that a country's standard of living depends on its ability to thrive economically without having to interact with other countries. b. abundance of natural resources. c. ability to produce goods and services. d. quantity of physical capital.

ability to produce goods and servic

a cut in taxes shifts

aggregate demand right because it encourages people to save more

Appreciation (or "strengthening")

an increase in the value of a currency as measured by the amount of foreign currency it can buy

If the demand for a product decreases, then we would expect equilibrium price and equilibrium quantity to both increase. b. to increase and equilibrium quantity to decrease. c. and equilibrium quantity to both decrease. d. to decrease and equilibrium quantity to increase.

and equilibrium quantity to both decrease.

sticky wages

are nominal wages that are slow to fall even in the face of high unemployment and slow to rise even in the face of labor shortages

"Suppose you won a free ticket to see an Eric Clapton concert tonight. You can't resell it. Bob Dylan is performing on the same night and his concert is the only other activity you are considering. A Dylan ticket costs $40 and on any given day you would be willing to pay as much as $50 to see him perform. (In other words, if Dylan tickets sold for more than $50, you would pass on the opportunity to see him even if you had nothing else to do.) There is no other cost of seeing either performer. What is your opportunity cost of attending the Clapton concert?" A. 0 b 10 c 40 d 50

b 10

A price ceiling is binding when it is set above the equilibrium price, causing a shortage. b. above the equilibrium price, causing a surplus. c. below the equilibrium price, causing a shortage. d. below the equilibrium price, causing a surplus.

below the equilibrium price, causing a shortage.

As real interest rates fall, firms desire to a. buy more new equipment and buildings. This response helps explain why the supply of loanable funds is upward sloping. b. buy more new equipment and buildings. This response helps explain why the demand for loanable funds is downward sloping. c. buy less new equipment and buildings. This response helps explain why the supply of loanable funds is upward sloping. d. buy less new equipment and buildings. This response helps explain why the demand for loanable funds is downward sloping.

buy more new equipment and buildings. This response helps explain why the demand for loanable funds is downward sloping.

What would happen in the market for loanable funds if the government were to increase the tax on interest income a. The supply of loanable funds would shift right b The demand for loanable funds would shift right c The supply of loanable funds would shift left d The demand for loanable funds would shift left

c The supply of loanable funds would shift left

Aggregate Demand shifts

c+I+G+NX

When did the United States experience the highest levels of inflation a In the gilded age of the late 1880's b in the great depression of the 1930's c. In the oil shocks of the 1970's d. During the great moderation from 1982-2008 e. During the Great Recession from 2008-2010

c. In the oil shocks of the 1970's

The CPI for all goods and services excluding food and energy is called a. a hedonic price index b. the CPI basis c. the core CPI d. The producer price index

c. the core CPI

Specialization and trade are closely linked to a. gains to some traders that exactly offset losses to other traders. b. shrinkage of the economic pie. c. absolute advantage. d. comparative advantage.

comparative advantage

The most obvious benefit of specialization and trade is that they allow us to? Answers: a. work more hours per week than we otherwise would be able to work. b. consume more goods by forcing people in other countries to consume fewer goods.c. spend more money on goods that are beneficial to society, and less money on goods that are harmful to society.d. consume more goods than we otherwise would be able to consume.

consume more goods than we otherwise would be able to consume.

Job search a. creates structural unemployment, while firms paying wages above equilibrium to improve worker health creates frictional unemployment. b. creates frictional unemployment, while firms paying wages above equilibrium to improve worker health creates structural unemployment. c. and firms paying wages above equilibrium to improve worker health both create structural unemployment. d. and firms paying wages above equilibrium to improve worker health both create frictional unemployment.

creates frictional unemployment, while firms paying wages above equilibrium to improve worker health creates structural unemployment.

A market includes a. buyers only. b. the place where transactions occur but not the people involved. c. sellers only. d. both buyers and sellers.

d. both buyers and sellers.

A decrease in the money supply might indicate that the Fed had a. purchased bonds to decrease banks reserves. b. sold bonds to increase banks reserves. c. purchased bonds to increase banks reserves. d. sold bonds to decrease banks reserves.

d. sold bonds to decrease banks reserves.

If the government is currently in a budget deficit, then a. It does not necessarily have a debt b. its debt is increasing c. government expenditures are greater than taxes d. All of the above are correct

d. All of the above are correct

appreciations of the dollar increases or decreases NX

decreases

Deflation in the short run a. increases incomes and enhances the ability of debtors to pay off their debts. b. increases incomes and reduces the ability of debtors to pay off their debts. c. decreases incomes and enhances the ability of debtors to pay off their debts. d. decreases incomes and reduces the ability of debtors to pay off their debts.

decreases incomes and reduces the ability of debtors to pay off their debts.

how does a government deficit affect the market for loanable funds

decreases saving shifts supply of loanable funds to the left

how does an import quota affect the 3 graph system

demand for dollars shifts right, increasing real exchange rate but net exports stay the same while imports fall

The unemployment rate is computed as the number of unemployed . divided by the labor force, all times 100. b. divided by the adult population, all times 100. c. times the labor-force participation rate, all times 100. d. divided by the number of employed, all times 100.

divided by the labor force, all times 100.

When Net Capital Outflow is positive, it means:

domestic residents are spending more on foreign assets than foreigners are spending on domestic assets. (money is flowing out)

things that decrease bugget deficit

economic boom (90s)

If total spending rises from one year to the next, then employment or productivity must be rising. b. the economy must be producing a larger output of goods and services. c. goods and services must be selling at higher prices. d. either the economy must be producing a larger output of goods and services, or goods and services must be selling at higher prices, or both.

either the economy must be producing a larger output of goods and services, or goods and services must be selling at higher prices, or both.

Net exports equal imports minus exports. b. exports minus imports. c. exports plus imports. d. GDP minus imports.

exports minus imports.

Which statement is a normative economic statement? If we raise the minimum wage, then we cause more unemployment. If the government increases spending, then the economy will grow. If we increase government debt, then we will distort our sense of responsibility. If we increase the supply of labor, the wages will fall.

f we increase government debt, then we will distort our sense of responsibility.

The law of demand states that, other things equal, when the price of a good a. rises, the quantity demanded of the good rises. b. rises, the demand for the good falls. c. falls, the quantity demanded of the good rises. d. falls, the demand for the good rises.

falls, the quantity demanded of the good rises.

how does capital flight affect the 3 graph system

first increases net capital outflows which shifts supply of loanable funds right and net capital outflow right

Greg, a U.S. citizen, opens an ice cream store in Bermuda. His expenditures are U.S. foreign portfolio investment that decrease U.S. net capital outflow. b. foreign direct investment that increase U.S. net capital outflow. c. foreign portfolio investment that increase U.S. net capital outflow. d. foreign direct investment that decrease U.S. net capital outflow.

foreign direct investment that increase U.S. net capital outflow.

Gasoline is considered a final good if it is sold by a gasoline station to a bus company that operates a bus route between San Francisco and Los Angeles. b. pipeline operator to a gasoline station in San Francisco. c. gasoline station to a motorist in Los Angeles. d. All of the above are correct.

gasoline station to a motorist in Los Angeles.

For two individuals who engage in the same two productive activities, it is impossible for one of the two individuals to a. be more productive per unit of time in both activities. b. have a comparative advantage in both activities. c. gain from trade with each other. d. have an absolute advantage in both activities.

have a comparative advantage in both activities.

Disposable personal income is the income that households have left after paying taxes to the government. b. households have left after paying taxes and and receiving transfers to the government. c. businesses have left after paying taxes payments to the government. d. households have left are receiving non-tax payments from the government.

households have left after paying taxes and and receiving transfers to the government.

In the CPI, goods and services are weighted according to how much consumers buy of each good or service. b. the extent to which each good or service is regarded by the government as a necessity. c. how long a market has existed for each good or service. d. the number of firms that produce and sell each good or service.

how much consumers buy of each good or service.

increase in unemployment insurance shifts

if Congress made unemployment insurance substantially more generous, unemployed workers might search less hard for new jobs, increasing the natural rate of unemployment and reducing the economy's production of goods and services. As a result, the short run and long-run aggregate-supply curve would shift to the left.

Since 1950, the U.S. economy has engaged in an increasing amount of international trade for the following reasons:

improved transportation such as larger cargo ships, advances in telecommunications that allow for better overseas communication, technologically advanced goods are more valuable per pound and easier to transport, and many governments look more favorably on trade as evidenced by their support of the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT).

For an economy as a whole, income must equal expenditure. b. wages must equal profit. c. consumption must equal saving. d. consumption must equal income.

income must equal expenditure.

For a given real interest rate, a decrease in the inflation rate would increase the after-tax real interest rate and so decrease saving. b. decrease the after-tax real interest rate and so decrease saving. c. increase the after-tax real interest rate and so increase saving. d. decrease the after-tax real interest rate and so increase saving.

increase the after-tax real interest rate and so increase saving.

The CPI differs from the GDP deflator in that a. increases in the prices of foreign produced goods that are sold to U.S. consumers show up in the CPI but not in the GDP deflator. b. substitution bias is not a problem with the CPI, but it is a problem with the GDP deflator. c. the CPI is a price index, while the GDP deflator is an inflation index. d. increases in the prices of domestically produced goods that are sold to the U.S. government show up in the CPI but not in the GDP deflator.

increases in the prices of foreign produced goods that are sold to U.S. consumers show up in the CPI but not in the GDP deflator.

capital flight

increases interest rate

An investment tax credit

increases quanitity of investment firms demand and shifts agg demand curve to the right.

An open-market purchase decreases the number of dollars in the hands of the public and increases the number of bonds in the hands of the public. b. increases the number of dollars and the number of bonds in the hands of the public. c. decreases the number of dollars and the number of bonds in the hands of the public. d. increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public.

increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public.

When public saving falls by $2b and private saving falls by $1b in a closed economy, . investment falls by $2b. b. investment falls by $3b. c. investment falls by $1b. d. investment increases by $1b.

investment falls by $3b.

savings =

investment plus NCO

Consumer surplus . measures how much a seller values a good. b. is the number of consumers who are excluded from a market because of scarcity. c. is the amount a consumer is willing to pay minus the amount the consumer actually pays. d. is the amount of a good that a consumer can buy at a price below equilibrium price.

is the amount a consumer is willing to pay minus the amount the consumer actually pays.

If the price of a good has risen over time, it must have become less scarce. b. it has become less scarce only if the price adjusted for inflation has risen. c. it has become more scarce only if the price adjusted for inflation has risen. d. it must have become more scarce.

it has become more scarce only if the price adjusted for inflation has risen.

When a country imports appliances and exports engineering services, . its productivity decreases. b. its economic well-being decreases while that of the country that sells appliances increases. c. it is essentially transforming engineering services into appliances. d. its growth slows.

it is essentially transforming engineering services into appliances.

higher interest rate means lower investment means

lower aggregate demand

A decrease in the budget deficit may increase, decrease, or not affect investment spending if private saving doesn't change. b. makes investment spending fall. c. makes investment spending rise. d. does not affect investment spending.

makes investment spending rise.

normative economics

makes prescriptions about the way the economy should work

Consumer surplus a. is the amount a buyer pays for a good minus the amount the buyer is willing to pay for it. b. measures the benefit buyers receive from participating in a market. c. measures the benefit sellers receive from participating in a market. d. is represented on a supply-demand graph by the area below the price and above the demand curve.

measures the benefit buyers receive from participating in a market.

shift in aggregate demand

moves along Philips curve

If exports exceed imports,

net exports are positive and the country is said to have a trade surplus

If Canada's national saving exceeds its domestic investment, then Canada has negative net capital outflows and negative net exports. b. positive net capital outflows and negative net exports. c. negative net capital outflows and positive net exports. d. positive net capital outflows and positive net exports.

positive net capital outflows and positive net exports.

A legal minimum on the price at which a good can be sold is called a price ceiling. b. price subsidy. c. tax. d. price floor.

price floor

The minimum wage is an example of a price ceiling. b. price floor. c. wage subsidy. d. tax.

price floor

when aggregate demand shifts

price level decreases

when aggregate supply shufts

price level increases

Buyers and sellers who have no influence on market price are referred to as market pawns. b. price setters. c. price takers. d. monopolists.

price takers.

Patents turn new ideas into private goods, but decrease the incentive to engage in research. b. private goods, and increase the incentive to engage in research. c. public goods, but decrease the incentive to engage in research. d. public goods, and increase the incentive to engage in research.

private goods, and increase the incentive to engage in research.

an increase in the expected price level does what

reduces the quantity of goods and services supplied and shifts the short-run aggregate-supply curve to the left.

longrun aggregate supply shifts

resources more workers be more productive etcetera

short run aggregate supply

rev- costs (PY- wages)

Other things the same, an increase in taxes with no change in government purchases makes national saving fall. The supply of loanable funds shifts left. b. fall. The demand for loanable funds shifts left. c. rise. The supply of loanable funds shifts right. d. rise. The demand for loanable funds shifts right. Question 18

rise. The supply of loanable funds shifts right.

Shift of Short-Run Phillips Curve

shift w/ inflation expectation, supply stuff

reasons for upward sloping SRAS

sticky wages, sticky prices, and misperceptions about relative prices.

natural unemployment rate=

structural + frictional

supply and demand of loanable funds

supply- national saving demand- I+ NCO

Loanable funds market

supply= savings= public + private savings = national savings demand= I +NCO

things that increase budget deficit

tax cuts without cuts in gov spending (80s reagen) recession (2008)

automatic stabilizers

tax system and government spending

Two alternative measures of the overall level of prices are the inflation rate and the GDP deflator. b. the cost of living index and nominal GDP. c. the GDP deflator and the consumer price index. d. the inflation rate and the consumer price index.

the GDP deflator and the consumer price index.

Alfonso, a citizen of Italy, decides to purchase bonds issued by Ireland instead of ones issued by the United States even though the Irish bonds have a higher risk of default. An economic reason for his decision might be that he dislikes U.S. foreign policy. b. the Irish bonds pay a higher rate of interest. c. the U.S. government is more stable than the Irish government. d. None of the above provide an economic reason for buying the riskier bond.

the Irish bonds pay a higher rate of interest.

Producer surplus is the amount a seller is paid minus the cost of production. b. always a negative number for sellers in a competitive market. c. measured using the demand curve for a good. d. the opportunity cost of production minus the cost of producing goods that go unsold.

the amount a seller is paid minus the cost of production.

The velocity of money is the average number of times per year a dollar is spent. b. the money supply divided by nominal GDP. c. the rate at which the Fed puts money into the economy. d. the same thing as the long-term growth rate of the money supply.

the average number of times per year a dollar is spent.

positive economics

the branch of economic analysis that describes the way the economy actually works

The CPI is a measure of the overall cost of the stocks on the New York Stock Exchange. b. the goods and services produced in the economy. c. the goods and services purchased by a typical consumer. d. the inputs purchased by a typical producer.

the goods and services purchased by a typical consumer.

Has the lower and middle classes' incomes kept up with the top 10% over the past forty years? The incomes of the bottom 90% have fallen. The incomes of the bottom 90% have risen at a slower rate than the top 10%. The incomes of the bottom 90% have not changed. The incomes of the bottom 90% cannot be determined because of changing household composition.

the incomes of the bottom 90% have risen at a slower rate than the top 10%.

To calculate the CPI, the Bureau of labor statistics uses a. the prices of all goods and services produced domestically b. the prices of all final goods and services c. the prices of all consumer goods d. the prices of some consumer goods

the prices of some consumer goods

net capital outflow

the purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreigners (inflow-outflow)

If a country experienced deflation, then . the nominal interest rate would be greater than the real interest rate. b. the real interest rate would be greater than the nominal interest rate. c. the real interest rate would equal the nominal interest rate. d. nominal GDP would be smaller than the money supply.

the real interest rate would be greater than the nominal interest rate.

Net exports are influenced by

the tastes of consumers for domestic versus foreign goods, the relative prices of foreign and domestic goods, exchange rates, foreign and domestic incomes, international transportation costs, and government policies toward trade.

If a tax is levied on the sellers of a product, then there will be a(n) increase in quantity supplied. b. decrease in quantity supplied. c. upward shift of the supply curve. d. downward shift of the supply curve.

upward shift of the supply curve.

move along short run philips curve

when aggregate demand changes

the maximum price that a buyer will pay for a good is called efficiency. b. consumer surplus. c. willingness to pay. d. equilibrium.

willingness to pay.

Cyclical unemployment refers to a. how often a worker is likely to be employed during her lifetime. b. the relationship between the probability of unemployment and a worker's changing level of experience. c. long-term trends in unemployment. d. year-to-year fluctuations of unemployment around its natural rate.

year-to-year fluctuations of unemployment around its natural rate.