Final from exams
Refer to the above data. Gross domestic product is: a. $1,049 billion b. $1,079 billion c. $1,090 billion d. $1,101 billion
$1,079 billion
Refer to the above diagram. The highest price that buyers will be willing and able to pay for 100 units of this product is: a.$30 b. $60 c. $40 d. $20
$60
Refer to the above diagram. If this is a competitive market, price and quantity will move toward: a. $60 and 100 respectively b. $60 and 200 respectively c. $40 and 150 respectively d. $20 and 150 respectively e. none of the above
$60 and 100 respectively
Refer to the above data. Assume that before specialization and trade Landia was producing combination C and Scandia was producing combination B. If these two nations now specialize completely based on with comparative advantage, the total gains from specialization and trade would be: a. 8 fish and 2 chips b. 10 fish and 4 chips c. 0 fish and 8 chips d. 4 fish and 6 chips
0 fish and 8 chips
The consumer price index was 177.1 in 2001 and 179.9 in 2002. Therefore, the rate of inflation in 2002 was about: a. 6.7 percent b. 3.4 percent c. 1.6 percent d. 4.1 percent
1.6 percent
Refer to the above data. The equilibrium price level will be: a. 150 b. 200 c. 250 c. 300
200
Refer to the above data. If Landia and Scandia fully specialize based on comparative advantage, their aggregate output will be: a. 48 chips and 8 fish b. 40 chips and 16 fish c. 36 chips and 10 fish d. 42 chips and 12 fish
40 chips and 16 fish
Suppose nominal GDP in 2006 was $100 billion and in 2007 it was $260 billion. The general price index in 2006 was 100 and in 2007 it was 80. Between 2006 and 2007 the real GDP rose by approximately: a. 160 percent b. 44 percent c. 37 percent d. 12 percent
44 percent
The countries comprising NAFTA are: a. Canada, United States, and Puerto RIco b. United States, Mexico, and Chile c. United States, United Kingdom, and France d. Canada, Mexico, and the United States
Canada, Mexico, and the United States
Refer to the above diagram. This economy will experience unemployment if it produces at point: a. A b. B c. C d. D
D
Refer to the above diagram. If the initial aggregate demand curve from AD1 to AD0 , the equilibrium price level and level of real domestic output will be: a. F and C, respectively b. G and B, respectively c. F and A, respectively d. E and B, respectively
F and C, respectively
Real GDP refers to: a. the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income b. GDP data that embody changes in the price level, but not changes in physical output c. GDP data that reflect changes in both physical output and the price level d. GDP data that have been adjusted for changes in the price level
GDP data that have been adjusted for changes in the price level
In terms of absolute volume of imports and exports, the world's leading trading nation is: a. France b. Japan c. United States d. South Korea
United States
A price index is: a. a comparison of the price of a market basket from a fixed point of reference b. a comparison of real GDP in one period relative to another c. the cost of a market basket of goods and services in a base period divided by the cost of the same market basket in another period d. a ratio of real GDP to nominal GDP
a comparison of the price of a market basket from a fixed point of reference
Cyclical unemployment results from: a. a deficiency of spending on goods and services b. the decreasing relative importance of goods and the increasing relative importance of services in the U.S. economy c. the everyday dynamics of a free labor market d. technological change
a deficiency of spending on goods and services
The phase of the business cycle in which real GDP declines is called: a. the peak b. an expansion c. a recession d. the trough
a recession
Economists use the term "demand" to refer to: a. a particular price-quantity combination on a stable demand curve b. the total amount spent on a particular commodity over a stipulated time period. c. an upsloping line on a graph which relates to consumer purchases and product price d. a schedule of various combinations of market prices and amounts demanded
a schedule of various combinations of market prices and amounts demanded
Refer to the above diagram. A price 0f $60 in this market will result in: a. equilibrium b. a shortage of 50 units c. a surplus of 50 units d. a surplus of 100 units e. a shortage of 100 units
a surplus of 100 units
Refer to the above diagram. A price of $20 in this market will result in: a. equilibrium b. a shortage of 50 units c. a surplus of 50 units d. a surplus of 100 units e. a shortage of 100 units
a surplus of 50 units
Other things equal, if the national incomes of the major trading partners of the United States were to rise, the U.S. a. aggregate demand curve would shift to the right b. aggregate supply curve would shift to the left c. aggregate supply curve would shift to the right d. aggregate demand curve would shift to the left
aggregate demand curve would shift to the right
Investment spending in the United States tends to be unstable because: a. expected profits are highly variable b. capital goods are durable c. innovation occurs at an irregular pace d. all of these contribute to the instability
all of these contribute to the instability
If consumers are willing to pay a higher price than previously for each level of output, we can say that there has occurred: a. a decrease in demand b. an increase in demand c. in decrease in supply d. an increase in supply.
an increase in demand
Tariffs and quotas: a. benefit producers of protected products, but harm domestic consumers b. benefits both producers of protected products and domestic consumers c. benefit neither producers of protected products nor domestic consumers d. benefit domestic consumers at the expense of producers of protected products
benefit producers of protected products, but harm domestic consumers
Inflation affects: a. both the level and the distribution of income b. neither the level nor the distribution of income c. the distribution, but not the level, of income d. the level, but not the distribution, of income
both the level and the distribution of income
Recurring upswings and downswings in an economy's real GDP over time are called: a. recessions b. business cycles c. output yo-yos d. total product oscillations
business cycles
The investment demand curve will shift to the right as a result of: a. the availability of excess production capacity b. an increase in business taxes c. businesses becoming more optimistic about future business conditions d. an increase in the real interest rate
businesses becoming more optimistic about future business conditions
Which of the following concepts provide the basic rationale for international trade? a. increasing opportunity costs b. consumer sovereignty c. comparative advantage d. the law of supply
comparative advantage
The term "mixed economy" refers to an economy: a. comprised of both the product and resource markets b. which engages both domestic and international trade c. comprised of both extensive private markets and government involvement in the economy d. which functions primarily on the basis of custom and tradition.
comprised of both extensive private markets and government involvement in the economy
A shift to the right in the demand curve for product A can be most reasonably explained by saying that: a. consumer incomes have declined and they now want to buy less of A at each possible price b. the price of A has increased and, as a result, consumers want to purchase less of it c. consumer preferences have changed in favor of A so that thy now want to buy more at each possible price. d. the price of A has declined and, as a result, consumers want to purchase more of it
consumer preferences have changed in favor of A so that thy now want to buy more at each possible price.
The stabilization function of government involves government's efforts to: a. alter the output of specific goods when external costs or benefits are present b. reduce the after-tax incomes of the rich and increase the after-tax incomes of the poor c. deal with the problems of substantial unemployment and rapid inflation d. provide the socially desired output of public goods
deal with the problems of substantial unemployment and rapid inflation
In the following question(s) you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S)of, X, (2) the equilibrium price (P) of X and (3) the equilibrium quantity (Q) of X A decrease in the number of consumers of product X will: a. decrease S, decrease P, and decrease Q b. increase D, increase P, and increase Q c. decrease D, decrease P, and decrease Q d. decrease D, decrease P, and increase Q
decrease D, decrease P, and decrease Q
If X is a normal good, a rise in money income will shift the: a. supply curve for X to the left b. supply curve for X to the right c. demand curve for X to the left d. demand curve for X to the right
demand curve for X to the right
Government may lessen income inequality by: a. providing transfer payments to the poor b. directly modifying market prices as, for example, by establishing a legal minimum wage. c. using the tax system to tax the wealthy relatively more heavily than the poor d. doing all of these
doing all of these
Government's economic role is complicated by the fact that: a. public goods entail no opportunity costs b. the public sector cannot base decisions on marginal costs and marginal benefits c. economic decisions are made in a political context d. the marginal utility of public goods rises rather than falls
economic decisions are made in a political context
Economic growth is best defined as an increase in: a. either real GDP or real GDP per capita b. nominal GDP c. total consumption expenditures d. wealth in the economy
either real GDP or real GDP per capita
Other things equal, a decrease in the real interest rate will: a. expand investment and shift the AD curve to the left b. expand investment and shift the AD curve to the right c. reduce investment and shift the AD curve to the left d. reduce investment and shift the AD curve to the right
expand investment and shift the AD curve to the right
The simple circular flow model shows that: a. households are on the demand side of both product and resource markets b. businesses are on the supply side of both product and resource markets c. households are on the supply side of the resource market and on the demand side of the product market d. businesses are on the demand side of the product marker and on the supply side of the resource market
households are on the supply side of the resource market and on the demand side of the product market
A market is in equilibrium: a. provided there is no surplus of the product b. at all prices above that shown by the intersection of the supply and demand curves c. if the amount producers want to sell is equal to the amount consumers want to buy d. whenever the demand curve is downsloping and the supply curve is upsloping
if the amount producers want to sell is equal to the amount consumers want to buy
In recent years the United States has: a. exported more goods and services than it has imported b. imported more goods and services than it has exported c. realized an approximate balance in its imports and exports d. experienced a falling absolute dollar amount of imports and rising absolute dollar amounts of exports
imported more goods and services than it has exported
A trade deficit occurs for a nation when it: a. exports more than it imports b. imports more than it exports c. receives more foreign currency than it sends out in domestic currency d. loans out U.S. dollars to foreign buyers of domestically produced goods
imports more than it exports
The GDP price index: a. includes fewer goods and services than the consumer price index b. is identical to the consumer price index c. is another term for the producer price index d. includes all goods comprising the nation's domestic output
includes all goods comprising the nation's domestic output
In the following question(s) you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S)of, X, (2) the equilibrium price (P) of X and (3) the equilibrium quantity (Q) of X An Increase in the tastes and preferences for X will: a. increase S, decrease P, and increase Q b. decrease S, decrease P, and decrease Q c. increase D, increase P, and increase Q d. decrease D, decrease P, and decrease Q
increase D, increase P, and increase Q
In an effort to avoid recession, the government implements a tax rebate program, effectively cutting taxes for households. We would expect this to: a. affect neither aggregate supply nor aggregate demand b. increase aggregate demand c. reduce aggregate demand d. reduce aggregate supply
increase aggregate demand
Refer to the above diagram. A shift of the aggregate demand curve from AD1 to AD0 might be caused by a(n): a. decrease in aggregate supply b. decrease in the amount of output supplied c. increase in investment spending d. decrease in net export spending.
increase in investment spending
Depreciation of the dollar will: a. increase the prices of U.S. imports, but decrease the prices of U.S. exports b. decrease the prices of U.S. imports, but increase the prices of U.S. exports c. increase the prices of both the U.S. imports and exports d. decrease the prices of both U.S. imports and exports
increase the prices of U.S. imports, but decrease the prices of U.S. exports
The production possibilities curve: a. shows all those levels of production which are consistent with a stable price level b. indicates that any combination of goods lying outside the curve is economically inefficient c. is a frontier between all combinations of two goods which can be produced and those combinations which cannot be produced d. shows all those combinations of two goods which are most preferred by society
is a frontier between all combinations of two goods which can be produced and those combinations which cannot be produced
A market: a. reflect upsloping demand and downsloping supply curves b. entails the exchange of goods, but not services c. is an institution which brings together buyers and sellers. d. always entails face-to-face contact between buyer and seller.
is an institution which brings together buyers and sellers.
The World Trade Organization (WTO): a. sets tariffs to balance international trade among nations b. is the successor to GATT c. is better known as the European Union d. sets exchange rates to balance international trade among nations
is the successor to GATT
Refer to the above diagram. Other things equal, this economy will achieve the most rapid rate of growth if: a. the ratio of capital to consumer goods is minimized b. it chooses point C c. it chooses point B d. it chooses point A
it chooses point A
The use of money contributes to economic efficiency because: a. governmental direction of the production and distribution of output can be avoided by using money b. "roundabout production" could not occur without the availability of money c. it is necessary for the creation of capital goods d. it promotes specialization by overcoming the problems with barter
it promotes specialization by overcoming the problems with barter
According to the concept of comparative advantage, a good should be produced in that nation where: a. its domestic opportunity cost is greatest b. money is used as a medium of exchange c. its domestic opportunity cost is least d. the terms of trade are maximized
its domestic opportunity cost is least
Import quotas are: a. maximum limits on the quantity or total value of specific products imported to a nation b. excise taxes or duties placed on imported products c. licensing requirements, unreasonable quality standards, and the like designed to impede imports d. government payments to domestic producers to reduce the world prices of exported goods
maximum limits on the quantity or total value of specific products imported to a nation
GDP is the: a. national income minus all non-income charges against output b. monetary value of all final goods and services produced within the borders of a nation in a particular year c. monetary value of all economic resources used in producing a year's output d. monetary value of all final goods and services, final and intermediate, produced in a specific year
monetary value of all final goods and services produced within the borders of a nation in a particular year
Other things equal, a decrease in the real interest will: a. shift the investment demand curve to the right b. shift the investment demand curve to the left c. move the economy upward along its existing investment demand curve d. move the economy downward along its existing investment demand curve
move the economy downward along its existing investment demand curve
Demand-pull inflation: a. occurs when the prices of resources rise, pushing up cost and the price level b. occurs when the total spending exceeds the economy's ability to provide output at the existing price level c. occurs only when the economy has reached its absolute production capacity d. is also called cost-push inflation
occurs when the total spending exceeds the economy's ability to provide output at the existing price level
Economic growth can be portrayed as a : a. outward shift of the production possibilities curve b. inward shift of the production possibilities curve c. movement from a point on to a point inside the production possibilities curve d. movement from one point to another point on a fixed production possibilities curve
outward shift of the production possibilities curve
The aggregate supply curve (short-run) is upsloping because: a. wages and other resource prices match changes in the price level b. the price level is flexible upward but inflexible downward c. per-unit production costs rise as the economy moves toward and beyond its full-employment real output d. wages and other resources prices are flexible upward but inflexible downward
per-unit production costs rise as the economy moves toward and beyond its full-employment real output
The unemployment rate is the: a. ratio of unemployed to employed workers b. number of employed workers minus the number of workers who are not in the labor force c. percentage of the labor force that is unemployed d. percentage of the total population that is unemployed
percentage of the labor force that is unemployed
Specialization in production is economically beneficial primarily because it: a. allows everyone to have a job which they like b. permits the production of a larger output with fixed amounts of resources c. facilitates trade by bartering d. guarantees full employment
permits the production of a larger output with fixed amounts of resources
The Law of demand states that: a. price and quantity demanded are inversely related b. the larger the number of buyers in a market, the lower will be product price c. price and quantity demanded are directly related d. consumers will buy more of a product at high prices than at low prices.
price and quantity demanded are inversely related
Inflation means that: a. all price are rising, but at different rates b. all prices are rising and at the same rate c.prices in the aggregate are rising, although some particular prices may be falling d. real income are rising
prices in the aggregate are rising, although some particular prices may be falling
The law of supply indicates that: a. producers will offer more of a product at high prices than they will at low prices b. the products supply curve is downsloping c. the consumers will purchase less of a good at high prices than they will at low prices d. producers will offer more of a product at low prices than they will at high prices.
producers will offer more of a product at high prices than they will at low prices
In the above diagram, a shift from AS3 to AS2 might be caused by an increase in: a. business taxes and government regulation b. the prices of imported resources c. the prices of domestic resources d. productivity
productivity
A nation's production possibilities curve is "bowed out" from the origin because: a. resources are not equally efficient in producing every good b. the originator of the idea drew it this way and modern economists follow this convention c. resources are scarce d. wants are virtually unlimites
resources are not equally efficient in producing every good
refer to the above graphs. An increase in an economy's labor productivity would: a. move the economy away from point A and toward point B b. move the economy away from point B and toward point A c. shift curve AB to CD d. shift curve CD to AB
shift curve AB to CD
An improvement in production technology will: a. increase the equilibrium price b. shift the supply curve to the left c. shift the supply curve to the right d. shift the demand curve to the left
shift the supply curve to the right
If the price of product L increases, the demand curve for close-substitute product J will: a. shift downward toward the horizontal axis b. shift to the left c. shift to the right d. remain unchanged
shift to the left
The terms of trade: a. show the ratio at which nations will exchange two goods b. show how the gains from trade can be equally shared c. show how the value of one nation's currency in terms of another nation's currency d. compare the volume of a nation's exports and imports
show the ratio at which nations will exchange two goods
The aggregate demand curve: a. is upsloping because a higher price level is necessary to make production profitable as production costs rise b. is downsloping because production costs decline as real output increases. c. shows the amount of expenditures required to induce the production of each possible level of real output d. shows the amount of real output that will be purchased at each possible price level
shows the amount of real output that will be purchased at each possible price level
The aggregate supply curve: a. is explained by the interest rate, real-balances, and foreign purchases effects b. gets steeper as the economy moves from the top curve to the bottom of the curve c. shows the various amounts of real output that businesses will produce at each price level d. is downsloping because real purchasing power increases as the price level falls
shows the various amounts of real output that businesses will produce at each price level
Unemployment involving a mismatch of the skills of unemployed workers and the skills required for available jobs is called: a. frictional unemployment b. structural unemployment c. cyclical unemployment d. compositional unemployment
structural unemployment
The concept of opportunity cost: a. is irrelevant in socialistic economies because of central planning b. suggests that the use of resources in any particular line of production means that alternative outputs must be forgone c. is irrelevant if the production possibilities curve is shifting to the right d. suggests that insatiable want to be fulfilled
suggests that the use of resources in any particular line of production means that alternative outputs must be forgone
A progressive tax is such that: a. tax rates are higher the greater one's income b. the same tax rate applies to all income receivers, so that the rich pay absolutely more taxes than the poor c. entrepreneurial income is exempt from taxation d. the revenues it yields are spent on transfer payments
tax rates are higher the greater one's income
Which of the following best describes the "invisible hand" concept? a. the desires of resource suppliers and producers to further their own self-interest will automatically further the public interest b. the nonsubstitutability of resources creates a conflict between private and public interests and the need for government intervention c. Mixed capitalism is the best system for overcoming the scarce resources-unlimited wants problem d. businesses are on the demand side of the product market and on the supply side of the resource market
the desires of resource suppliers and producers to further their own self-interest will automatically further the public interest
If the exchange rate changes from $1 = 2 euros to $1 = 3 euros: a. the dollar has appreciated in value b. the dollar has depreciated in value c. the dollar has neither appreciated nor depreciated, but the euro has appreciated in value d. U.S. exports to Europe will increase
the dollar has appreciated in value
The income and substitution effects account for: a. the upward sloping supply curve b. the downward sloping demand curve c. movements along a given supply curve d. the "other things equal" assumption
the downward sloping demand curve
If depreciation exceeds gross investment: a. the economy's stock of capital may be either growing or shrinking b. the economy's stock of capital is shrinking c. the economy's stock of capital is growing d. net investment is zero
the economy's stock of capital is shrinking
Historically, real GDP has increased less rapidly than nominal GDP because: a. price indices have not reflected improvements in product quality b. the general price level has increased c. technological process has resulted in more efficient production d. the general price level has declined
the general price level has increased
The most important determinant of consumer spending is: a. the level of household borrowing b. consumer expectations c. the stock of wealth d. the level of income
the level of income
The primary benefits of international trade include: a. the more efficient use of world resources and higher living standards b. greater stability of domestic output, employment, and the price level. c. diminished dependence on foreign supplies of goods and materials d. greater economic security for our domestic producers
the more efficient use of world resources and higher living standards
In comparing GDP data over a period of years, a difference between nominal and real GDP may arise because: a. of changes in trade deficits and surpluses b. the length of the workweek has declined historically c. the price level may change over time d. depreciation may be greater or smaller than gross investment
the price level may change over time
If there is a shortage of product X: a. fewer resources will be allocated to the production of this good b. the price of the product will rise c. the price of the product will decline d. the supply curve will shift to the left and the demand curve to the right, eliminating the shortage
the price of the product will rise
In 1933 net private domestic investment was a minus $6.0 billion. This means that: a. gross private domestic investment exceeds depreciation by $6.0 billion b. the economy was expanding in that year c. the production of 1933's GDP used up more capital goods than were produced in that year d. the economy produced no capital goods at all in 1933
the production of 1933's GDP used up more capital goods than were produced in that year
In a market economy the distribution of income would be determined primarily by: a. consumer needs and preferences b. the quantities and prices of the resources which households supply c. government regulations which provide a minimum income for all d. a social consensus as to what disrtibution of income is most equitable
the quantities and prices of the resources which households supply
The investment demand curve portrays an inverse (negative) relationship between: a. investment and real GDP b. the real interest rate and investment c. the nominal interest rate and investment d. the price level and investment
the real interest rate and investment
The fundamental problem of economics is: a. to establish a democratic political framework for the provision of social goods and services c. the scarcity of productive resources relative to material wants. d. to achieve a more equitable distribution of money income in order to mitigate poverty
the scarcity of productive resources relative to material wants.
Nominal GDP is: a. the sum of all monetary transactions that occur in the economy in a year b. the sum of all monetary transactions involving final goods and services that occur in the economy in a year c. the amount of production that occurs when the economy is operating at gull employment d. money GDP adjusted for inflation
the sum of all monetary transactions involving final goods and services that occur in the economy in a year
Refer to the above diagram. A shift of the consumption schedule from C1 to C2 might be caused by a: a. recession b. wealth effect of an increase in stock market prices c. increases in income tax rates d. increase in saving.
wealth effect of an increase in stock market prices
The real-balances, interest-rate, and foreign purchases effects all help explain: a. why the aggregate demand curve is downsloping b. why the the aggregate supply curve is upsloping c. shifts in the aggregate demand curve d. shifts in the aggregate supply curve
why the aggregate demand curve is downsloping