macro chap 1

Karl Marx and Friedrich Engels said

"The theory of the Communists may be summed up in the single sentence: Abolition of private property."

Capital refers to

"man"-made goods used to produce other goods or services.

The creation of the dust bowl and the migration of the "Okies" to California took place in the

1930s.

The decade that had the most stagflation was the

1970s.

During the depths of the Great Depression our official unemployment rate reached ________ percent.

25

Today just 1 out of every _____ Americans is a full-time farmer.

500

Our economy would be operating at full employment with labor unemployment rate of ___ percent and a capacity utilization rate of _____ percent.

5; 85

Which one of these people is not underemployed?

A factory worker who has been laid off and is collecting unemployment insurance benefits.

When our resources are NOT allocated efficiently, we have ________________.

A market failure

Which statement is the most accurate?

A nation's economic capacity expands when the size of the labor force expands.

The bubonic plague (Black Death) in the 1300s killed one-third of Europe's population (capital goods vs. consumer goods).

A shift in the entire curve to the left (inward)

Statement I. President Ronald Reagan said that if we cut tax rates, people would have more incentive to work, output would rise, and inflation would subside. Statement II. President Reagan said big government is not the answer to our problem, it is the problem.

Both Statement I and Statement II are true.

Statement I. President Ronald Reagan said that if we cut tax rates, people would have more incentive to work, output would rise, and inflation would subside. Statement II. President Reagan presided over the worst recession we had had since World War II.

Both statements are true.

Statement I: The demand curve slopes downward to the right. Statement II: The supply curve slopes upward to the right.

Both statements are true.

Which statement was coined by Adam Smith?

By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it.

Which economic system is usually associated with government ownership of the means of production and central planning?

Communism

In a pure capitalist economy, "what to produce" is determined by

Consumers "voting" with their dollars AND the price mechanism.

The mechanical reaper was invented by

Cyrus McCormick.

Which statement is true?

Entrepreneurial ability is abundant in the U.S.. The entrepreneur sets up a business and risks his or her own money. Land, labor and capital may be considered passive resources. All of the statements are true.

Hitler's Germany was an example of a _________ economic system

Fascist

The New Deal was the economic program of

Franklin D. Roosevelt

The Social Security Program began during the administration of

Franklin D. Roosevelt

Which presidential candidate made this pledge: "Read my lips: no new taxes"?

George H.W. Bush (1988)

Who said, "It is not the employer who pays wages; he only handles the money. It is the product that pays wages."

Henry Ford

The symbiotic relationship between mass production and mass consumption was best personified by

Henry Ford.

Who promised "two cars in every garage and a chicken in every pot?"

Herbert Hoover

Which is the most accurate statement?

In order to have full production, there must be full employment.

If the equilibrium price of corn is $3 a bushel and the government imposes a floor of $4 a bushel, the price of corn will _______________________.

Increase to $4

Which of the following is not true of equilibrium price?

It is set by the government

Which president had to cope with both rising deficits and a rising rate of inflation?

Jimmy Carter

The consumption function is associated with

John Maynard Keynes.

Which movement between two points represents an increase in economic growth?

K to L

The prototype of suburban tract development was in

Levittown, New York.

Under capitalism the role of government is best described as

Limited.

Medicaid, Medicare, and food stamps were all started under the administration of President

Lyndon Johnson

Which of these relations is correct?

MPC + MPS = 1

Which of these relations is not correct?

MPC - MPS = 1

Which of these relations is not correct?

MPS = MPC + 1

In order for the price mechanism to work, we need

Many competing firms in each industry.

Which statement is true?

None is true.

The most socialist of the following countries is

Norway.

Capital comes from _____________.

Savings

Which statement is the most accurate?

Since 1978, Chinese leaders have relaxed rigid party control of the economy and permitted more individual initiative

Sweden and Norway would best be described as _______ countries

Socialist

Which statement is false?

The Bush administration (2001-2009) was more guilty of employment discrimination in its cabinet than previous administrations.

"From each according to his ability; to each according to his needs" is from

The Communist Manifesto.

In a centrally planned economic system, who decides what and how much will be produced?

The government

The invisible hand is

The profit motive.

Which statement is false?

There has been a marked upward trend in our savings rate since the mid-1980s.

A political candidate promises voters more funding for AIDS research and child care and assures them they will not have to sacrifice any other goods or services to obtain the additional programs.

This may be possible if the economy has unemployed resources

The main effect of employment discrimination is

Underemployment.

Which of the following is NOT an institutional constraint that limits our nation's production possibilities?

Workers who are "in between" jobs

Each of the following were elements of the New Deal except _______________.

a balanced budget

If the government set a price ceiling of 25 cents for a loaf of bread, the most likely consequence would be

a shortage of bread

When the market price is lower than the equilibrium price, there is

a shortage.

The graph above shows

a supply schedule.

In the graph shown above, if market price were $6, there would be

a surplus.

When the market price is higher than the equilibrium price, there is

a surplus.

At equilibrium, quantity demanded __________________ quantity supplied.

always equals

Economic growth can be shown by ____________________ production possibilities curve.

an outward shift of the

A demand schedule can be presented

as a table and a graph.

A decrease in demand means that quantity demanded falls

at all prices.

An increase in supply means that quantity supplied rises

at all prices.

During the 19th century, the great abundance of land compared to the availability of labor

attracted millions of immigrants. encouraged early marriage and large families. encouraged rapid technological development. all of the choices are true.

As disposable income grows

autonomous C stays the same and induced C rises.

When disposable income is zero,

autonomous consumption is equal to total consumption

Mao Tse-tung was responsible for

both the Great Leap Forward and the Cultural Revolution

The market price ____________ the equilibrium price

can be higher than, or lower than

At very low levels of disposable income,

consumption is greater than disposable income.

The largest component of GDP is

consumption.

Jeff's entertainment budget is divided between $8 movie tickets and $40 hockey tickets. The opportunity cost to Jeff of going to an extra hockey game is

five movies.

An example of a public good would be

flood control protection from the Tennessee Valley Authority (TVA).

The main reason U.S. farmers can produce more than farmers in China is that they

have more capital.

People tend to spend more money the ______ the amount of credit available and the ____ the stock of liquid assets in the hands of consumers

higher, higher

The consumption function states that as

income rises, consumption rises, but not as quickly.

Our economy is generally operating _________ the production possibilities curve

inside

If the economy is operating at a 7 percent unemployment rate we are operating

inside the production possibilities curve.

At equilibrium, if quantity supplied is 16, quantity demanded

is 16.

The consumption function

is a relationship between annual consumption and annual disposable income in an economy.

Adam Smith believed that the best way to promote the public interest was to

let people pursue their own selfish interests.

The heart of the supply side economic program was to

lower taxes.

There is a shortage of quantity demanded over quantity supplied when

market price is below equilibrium price

In the 1950s

more women were underemployed than unemployed.

When the C line is above the 45-degree line, savings are

negative.

Autonomous consumption expenditures are

not influenced by income.

If the unemployment rate is 5 percent, our economy is operating.

on the production curve

Today, people spend more than _____ of their incomes on services

one-half

The government performs each of the following economic functions except

operating the price mechanism

The government performs each of the following economic functions except

operating the price mechanism.

The existence of unemployment can be illustrated on a production possibilities curve by a(n)

point below or inside the surface of the curve.

Autonomous consumption is always

positive

At equilibrium price,

quantity demanded is always equal to quantity supplied

If market price is above equilibrium price,

quantity supplied is greater than quantity demanded.

The production possibilities curve tells us that if full employment exists and a nation wishes to increase its production of military goods, it must

reduce its output of nonmilitary goods

Human wants are

relatively unlimited

Each of these is a category of C except

residential construction.

If supply increases and demand remains unchanged, equilibrium quantity will _______ and equilibrium price will ______________.

rise, fall

The consumption function tells us that as income rises, consumption

rises more slowly than income.

At very low levels of disposable income

saving is negative

The largest component of C is

services.

Henry Ford

sold millions of cars at a small unit of profit that allowed his company to keep auto prices low and wages high

In the 1970s, the main economic problem was

stagflation.

Compared to 1955, we spend ______ of every consumer dollar on services

substantially more

As price rises, the quantity ______________ rises

supplied

The price system is based on

supply and demand.

The United States experienced a depression in which of the following decades?

the 1930

Which was a decade of high inflation and high unemployment?

the 1970s

When there is dissaving

the APC is positive and the APS is negative.

In the former Soviet Union most goods and services were produced by ____________; in the United States most goods and services are produced by _____________.

the government; private enterprise

Examples of employment discrimination would include

the legendary Negro league pitcher Satchel Paige who was not allowed to pitch in the major leagues until he was in his late 40s. the large majority of women in the 1950s and 1960s who were typists or secretaries. the attitude that typing, filing and other clerical positions were "women's work". all of the examples are true.

When quantity supplied equals quantity demanded

the market is cleared

Economist John Kenneth Galbraith has argued that most prices in our mixed economy are set by

the nation's largest corporations

According to _______________, if you suddenly won the lottery, you would spend only a small part of your winnings right away.

the permanent income hypothesis

The "Okies" were associated with each of these except

the rust belt

Entrepreneurship is

the talent to develop new products and processes and to organize production to make goods and services available.

The opportunity cost of owning a car is

the vacation to Hawaii you had to give up in order to make your car payments.

The forces of demand and supply ensure that at equilibrium

there are no shortages or surpluses.

In the graph shown above, at a price of $3.00

there is a shortage.

In the graph shown above at a price of $4.50

there is neither a shortage nor a surplus.

At equilibrium, each of these is true except

there may be a shortage or a surplus.

We would not need to economize if

there was no scarcity.

Under President Eisenhower we had _____ recessions.

three

As price declines, quantity demanded goes _______ and quantity supplied goes ________.

up, down

During World War II most of the people who got jobs in defense plants were _____ who had ______ experience building planes, tanks, and warships.

women; no

At the point where C line crosses the 45-degree line, saving is

zero.