macec

Assume that the consumer price index is 124.0 for 2018 and 130.7 for 2019. What was the inflation rate between these two years?

5.40%

Recessions are periods when ___ _ .

both output and employment fall

Expenditure on domestically produced final goods and services is:

equal to GDP.

(Figure: The Business Cycle) The movement from point B to point C is called a(n):

expansion

Suppose that, in year 1, an economy produces 200 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year, the economy produces 210 golf balls that sell for $3.50 each and 80 pizzas that sell for $9 each. The value of nominal GDP in years 1 and 2, respectively, is:

$1,200 and $1,455.

( Table: Per Capita GDP) Use Table: Per Capita GDP. The growth rate of nominal GDP from 2016 to 2019 was _____ %. ​ YearNominal GDPPrice LevelPopulation2016$3,00010052019$8,00020010 ​ 37.5 60 62.5 Correct Answer 166.7 ​

166.7

(Table: Production of Zucchini and Eggplant in Nutley Township) Use Table: Production of Zucchini and Eggplant in Nutley Township. This table shows the production possibility frontier for Nutley Township. Suppose Nutley Township initially produces combination C and moves to combination D . What is the opportunity cost of this move? Table: Production of Zucchini and Eggplant in Nutley TownshipCombinationZucchiniEggplantA075B570C1060D1545E2025F250 Correct Answer 15 bushels of eggplant 5 bushels of zucchini 15 bushels of zucchini 45 bushels of eggplant

15 bushels of eggplant

(Table: Production Possibilities Schedule I) Use Table: Production Possibilities Schedule I. If the economy produces 4 planes per period, it also can produce, at most, _____ trains per period. Table: Production Possibilities Schedule IAlternativesABCDEFPlanes Produced012345Trains Produced30282418100 30 28 Correct Answer 10 18

10

(Scenario: The United States and Germany) Use Scenario: The United States and Germany. If Germany produces 300 tons of aluminum, how many tons of barley can it produce? Scenario: The United States and GermanyTwo countries, the United States and Germany, produce two goods, barley (B) and aluminum (A). Each has a linear production possibility frontier in both goods. If the United States spends all of its available resources to produce barley, it can produce 500 tons of aluminum. If it uses all of its resources to produce aluminum, it can produce 250 tons of aluminum and no barley. If Germany spends all of its available resources producing barley, it can produce 400 tons of barley, and if it spends all of its resources on the production of aluminum, it can produce 400 tons of aluminum. Correct Answer 100 200 300 400

100

An issue of importance to macroeconomists is:

understanding how living standards change over time.

(Table: GDP for Genovia) According to the information presented in the Table, GDP is: ​ Year 2019 (in billions of dollars)Consumption spending$130Rental income$20Interest$70Profit$40Investment spending$30Wages$58Government purchases$36Imports$14Exports$6 ​ $94 billion. Correct Answer $188 billion. $168 billion. $139 billion. ​

188 billion

Gertrude has a linear production possibility frontier when she produces sunflowers and garbanzo beans. If she uses all of her resources, she can produce 400 bushels of sunflowers or 800 bushels of garbanzo beans. Gertrude is NOT producing efficiently if she produces _____ bushels of sunflowers and _____ bushels of garbanzo beans.

200; 200

The most painful effect of a recession is:

unemployment

(Figure: Apple cider and Soybeans) Use Figure: Apple cider and Soybeans. The opportunity cost of moving from producing ONLY soybeans to producing at point D is _____ tons of soybeans. ​ Correct Answer 3 6 9 15 ​

3

(Table: Production Possibilities Schedule II) Use Table: Production Possibilities Schedule II. If an economy is producing at alternative B , the opportunity cost of producing at C is _____ cell phones per period. Table: Production Possibilities Schedule IIAlternativesABCDEComputers01234Cell phones20181480 0 1 Correct Answer 4 18

4

(Table: Production of Zucchini and Eggplant in Nutley Township) Use Table: Production of Zucchini and Eggplant in Nutley Township. The table shows the production possibility frontier for Nutley Township. Suppose Nutley Township produces combination F . What is the opportunity cost of a move to combination E ? Table: Production of Zucchini and Eggplant in Nutley TownshipCombinationZucchiniEggplantA075B570C1060D1545E2025F250 Correct Answer 5 bushels of zucchini 20 bushels of zucchini 25 bushels of eggplant 0 bushels of eggplant

5 bushels of zucchini

(Figure: Savannah's Production Possibilities) Use Figure: Savannah's Production Possibilities. The opportunity cost for Savannah in moving from point A on the curve to point B is: ​ 10 bananas. 10 pineapples. Correct Answer 5 bananas. 5 pineapples. ​

Correct Answer 5 bananas.

(Table: Matcha Tea and Coho Salmon Production Possibilities II) Use Table: Matcha Tea and Coho Salmon Production Possibilities II. This table shows the maximum amounts of matcha tea and Coho salmon, both measured in pounds, that Colombia and Washington can produce if each produces just one good. Colombia has an absolute advantage in the production of: Table: Matcha Tea and Coho SalmonMatcha TeaCoho SalmonColombia4020Washington1010 matcha tea only. Coho salmon only. Correct Answer both matcha tea and Coho salmon. neither matcha tea nor Coho salmon.

Correct Answer both matcha tea and Coho salmon.

(Figure: Cell Phones and Automobiles) Use Figure: Cell Phones and Automobiles. If the economy is operating at point Y , and its relevant production possibility frontier is given by given by PPF 1 : ​ Correct Answer the economy is at full employment and is efficient. the economy is less than fully employed. the economy is not efficient. economic growth is not possible in the future. ​

Correct Answer the economy is at full employment and is efficient.

Statements that make value judgments are:

normative

Sometimes, the government varies its spending, depending on the needs of the country. Which economic principle does this statement BEST represent?

Government policies can change spending.

Which question is MOST appropriate to the study of MACROECONOMICS?

How does the aggregate price level affect overall consumer spending?

If workers' nominal wages have risen by 30% over 10 years and prices have increased by 30% in that same period, then we can safely conclude that the goods and services workers can buy have:

not changed in quantity or quality.

If they spend all night writing poems, Leticia can write 10 poems, and Isabella can write 5. If they spend all night making necklaces, Leticia can make 6, and Isabella can make 4. We know that _____ has a comparative advantage in _____.

Leticia; poems

______ are used to reduce the severity of recessions.

Monetary and fiscal policy

Which of the following questions would NOT involve marginal analysis:

Should I attend the Lakers game?

Which statement about the U.S. economy is FALSE?

Since World War II, aggregate output has grown more slowly than the population.

Which statement is TRUE?

The level of saving is important for long-run growth.

Suppose Pennsylvania produces only steel and barley, with fixed amounts of land, labor, and capital resources. Which scenario BEST sets the stage for economic growth?

The percentage of Pennsylvania residents with a university degree rises from 15% to 23%.

When the Chicago city manager receives complaints that the municipal courts are not fully accessible to individuals with disabilities, she responds that the $1 million improvement needed to address the problem will not happen because "that money could be spent building lavatory space for people with disabilities." Which economic principle does this statement BEST represent?

The true cost of something is its opportunity cost.

Figure: The Business Cycle) Point B on this graph shows a(n): peak. Correct Answer trough. expansion. recession. ​

Trough

Two neighbors, Virginia and Susan, are separated by a white fence. Each neighbor has a garden that grows potatoes and lima beans. To gain from trade, _____ can trade _____ to _____ for _____ if _____ is the more efficient grower of lima beans.

Virginia; lima beans; Susan; potatoes; Virginia

Suppose a new law requires that all children be vaccinated against the chicken pox (in addition to their standard vaccinations against polio, measles, mumps, etc.). Further, if you cannot afford to pay for the vaccination, it will be provided free of charge at county hospitals. Which economic principle does this statement BEST represent?

When markets don't achieve efficiency, government intervention can improve society's welfare.

Chained dollars is:

a method of calculating changes in real GDP, using an early base year and a late base year.

Given that people usually exploit opportunities to make themselves better off, which of the following policies is MOST likely to reduce road congestion in Los Angeles (the worst traffic city in America)?

a toll road that requires each car to pay a congestion fee to enter the city center

If the value of a nation's imports exceeds the value of its exports, it has:

a trade deficit.

Gains from trade exist for: individuals only. states only. countries only. Correct Answer all of the above.

all

If an economy produces the desired mix of goods from its available resources, this mix of goods is:

allocatively efficient.

One normally expects that unemployment decreases, while aggregate output and aggregate incomes increase during:

an expansion.

(Figure: Circular-Flow Model) Use Figure: Circular-Flow Model. If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it), and there is an increase in consumer spending, holding everything else constant, which outcome is likely to occur? ​ Correct Answer an increase in GDP a decrease in GDP an increase in the unemployment rate a decrease in the inflation rate ​

an increase in GDP

(Figure: Computers and Speedboats II) Use Figure: Computers and Speedboats II. The downward slope of the production possibility frontier implies that resources: ​ must be used efficiently. Correct Answer are scarce. should not be wasted. should be allocated so that approximately equal amounts of both goods are produced. ​

are scarce.

Trade takes the form of _____ when people directly exchange goods and services they _____ for goods and services they _____.

barter; have; want

An economy's gross domestic product consists of:

consumption, investment spending, government purchases of goods and services, and net exports.

A trade-off involves weighing

costs and benefits.

Suppose Texas decides to produce only two goods, salsa and cowboy hats. If Texas is producing on its production possibility frontier, as salsa production increases, the production of cowboy hats will:

decrease at some rate.

If workers' nominal wages have risen by 30% over 10 years, and prices have increased by 40% in the same period, then we can safely conclude that the goods and services workers can buy have:

decreased in quantity.

The central mission of modern macroeconomics is to prevent:

deep recessions, like the Great Depression.

The process observed when an economy's production possibility frontier shifts outward is:

economic growth.

Suppose the economy of New Caledonia is producing at a point on its production possibility frontier. If this is the case, it is:

efficient in production but not necessarily in allocation.

Deflation

encourages people to hold cash rather than invest.

The circular-flow diagram is important because it shows that the flow of money going into each market or sector of the economy is _____ the flow of money coming out of that sector.

equal to

In the simplest circular-flow model, households supply _____ and demand _____.

factors of production; goods and services

A change in the level of government spending is an example of _____ policy.

fiscal

Altering government spending and/or taxes in an effort to affect overall spending is a use of:

fiscal policy.

Flows into financial markets are equal to the sum of:

foreign lending and purchases of stock plus private saving.

Fiscal policy involves changes in:

government spending.

Long-run economic growth is best measured by:

growth in the production of goods and services.

When an economy is between the peak and the trough of a business cycle, it is:

in a contraction.

When choosing among alternative models, economists generally prefer models that

include assumptions that most closely resemble reality.

Which resource does NOT pertain to the production of avocados?

income obtained from the sale of avocados

If the value of homes in Seattle increases, and as a result, the people of Seattle spend more, incomes in Seattle will:

increase

The paradox of thrift implies that:

increased saving by individuals increases their chances of becoming unemployed.

All points inside the production possibility frontier represent:

inefficient production points that are attainable without added opportunity costs.

Real GDP is the same as _____ GDP.

inflation-adjusted

The opportunity cost of producing a good:

is what you give up to produce the good.

An economy that has the ________ opportunity cost of producing a particular good is said to have ________.

lowest; a comparative advantage in the production of that good

How the actions of individuals and firms interact to produce a particular economy-wide level of performance is the focus of:

macroeconomics

The promotion of employment and growth in the economy as a whole is a focus of:

macroeconomics.

An increase in the value of nominal GDP over time:

may be due to an increase in prices, in the production of goods and services, or both.

Between 1980 and 2020, which of the following grew fastest?

medical care prices

Inflation affects people adversely because with inflation:

money loses value over time.

A local hardware store benefits when a new automobile plant moves to town and hires workers because the:

new jobs at the plant will increase local incomes, some of which will be spent at the hardware store.

Jacob is an economist working at the Federal Reserve Bank of New York. While having lunch with his mother, she asks him to tell her what efficiency means. As a proud son, Jacob tells his mother that economists define an efficient use of resources as a situation in which:

one person can be made better off but only by making another person worse off.

As long as people have different _____, everyone has a comparative advantage in something.

opportunity costs

Recessions are periods in which:

output and employment are falling in many indestries

An increase in the nation's _____ is generally accepted as a long-run indicator of a rising standard of living.

output per person

Households supply _____ to _____.

private savings; financial markets

Inflation

raises the cost of making purchases.

In Douglas County, Washington, apple production is limited by the number of acres available for agricultural production. Which economic concept does this statement BEST represent?

scarcity

Individuals gain from trade because:

specialization in production

In contrast to the conclusion of microeconomic analysis that competitive markets (assuming no market imperfections and perfect information) will lead to full employment, many economists argue, based on macroeconomic analysis, that:

the economy can suffer from prolonged unemployment as a result of an overall deficiency of demand.

You have $5 to spend on a vending machine snack. A pack of gum will cost you $2.50, and a chocolate bar will also cost you $2.50. If you choose to buy the pack of gum, the opportunity cost of the gum is:

the enjoyment you would have received from the chocolate bar.

Scarlet is a manager at the local Apple store. In determining whether to buy a few additional iPhones, Scarlet chooses at the margin when she compares

the extra revenue from selling a few additional iPhones to the extra cost of buying those iPhones.

When markets don't achieve efficiency:

the government may intervene to improve society's welfare.

Which price measure is likely to reflect the most rapid price changes?

the producer price index

The production possibility frontier is bowed out because:

the resources that are available are not equally suited for all types of production.

If the state of New York allocates additional spending on after-school programs for at-risk youths, then the opportunity cost of these expenditures is:

the value of alternative expenditures forgone in making this allocation.

For an economist, the cost of a good is:

what you gave up to get it.

Marginal analysis is the study how of individuals decide:

whether to do a bit more of an activity or a bit less of it.

(Table: Comparative Advantage I) Use Table: Comparative Advantage I. Japan has an absolute advantage in producing: Table: Comparative Advantage IJapan and Norway produce only two goods, tuna and computers, and this table shows the maximum amount that each nation can produce of the two goods.JapanNorwayTuna100,000 boxes50,000 boxesComputers10,00010,000 computers only. Correct Answer tuna only. both computers and tuna. neither computers nor tuna.

Correct Answer tuna only.

In the circular-flow diagram, firms:

buy resources.

A resource is anything that:

can be used to produce of goods and services.

Opportunity cost is:

the value of the best alternative forgone in making a choice between alternatives..

Everyone benefits from road signs that provide directions for motorists, yet the marginal benefit to any one individual usually falls short of the marginal cost. This is an example of:

the unsuitability of some goods to an efficient allocation by markets.

A central and fundamental theme in economics is that:

there are not enough resources available to satisfy all the ways a society wants to use them.

If a market is in disequilibrium:

there will be opportunities for people to make themselves better off.

Long-run growth is a sustained upward trend in:

total output per person over several decades.

For a student who owns his or her own apartment near the university campus and so does not need to live in a dorm, the cost of going to university is:

tuition, the cost of school supplies, and forgone income.

A new Subway location has offered a prize—a free meal (valued at $5) each week for a year—to its first 100 customers on opening day. Isabella camped out for 48 hours before the opening to be one of the first 100 customers and successfully obtained the prize. The cost to Isabella of obtaining the "free meal a week for a year" prize was:

whatever else she would have done with the 48 hours.

King Taco charges the same price for everything on its menu: $5 will buy a taco, a burrito, or nachos. You buy the burrito and think that if you had not purchased the burrito, you would have purchased the taco. The opportunity cost of the burrito is:

your forgone enjoyment of the taco.