Macro Econ Test 1

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Over the past 100 years, the average growth rate of U.S. real GDP per person is ___ percent. Over the past 100 years, growth was most rapid during the ______ and slowest during the ______. A. 1960s; Great Depression B. 1990s; 1970s C. 2000s; 1920s D. 1960s; 1980s

2 A

A demand curve _______. A. is a willingness-and-ability-to-pay curve B. shows us that the highest price that someone is willing to pay for an additional unit of a good or service rises as the quantity increases C. is a marginal cost curve D. tells us how much someone wants to buy comma but not necessarily how much they can afford to buy

A government budget deficit ______ the real interest rate because ______. A. raises; the demand for loanable funds increases B. lowers; the demand for loanable funds decreases C. lowers; the supply of loanable funds increases D. raises; the supply of loanable funds decreases

A government budget deficit _______ the real interest rate, increases ______. A. raises; private saving, and decreases investment B. lowers; investment, and decreases private saving C. raises; investment, and decreases private saving D. lowers; private saving, and decreases investment

A government budget surplus _______ the real interest rate, decreases ______. A. lowers; private saving, and increases investment B. raises; investment, and increases private saving C. raises; private saving, and increases investment D. lowers; investment, and increases private saving

A government budget surplus occurs, which _______ loanable funds. A. increases the supply of B. decreases the demand for C. increases the demand for D. decreases the supply of

A macroeconomic equilibrium in which real GDP exceeds potential GDP is _____ equilibrium. And one in which real GDP is less than potential GDP is _____ equilibrium. A. an above full-employment; a below full-employment B. a below full-employment; an inflationary C. an above full-employment; a recessionary D. a below full-employment; an above full-employment

A smartphone and a text message are ______. A text message and an email are ______. A. complements; substitutes B. substitutes; substitutes C. substitutes; complements D. complements; complements

According to classical growth theory, the growth of real GDP per person stops when _______. A. a population explosion eventually occurs and real GDP per person returns to the subsistence level B. the opportunity cost of women in the labor force increases C. the population growth rate slows, and with no change in labor productivity, the growth rate of real GDP stops D. capital experiences diminishing marginal returns

An economy is at full employment when ______. A. the unemployment rate equals the natural unemployment rate B. there is no structural unemployment C. there is no frictional unemployment D. the unemployment rate is less than the natural unemployment rate

An increase in expected future income _______. An increase in the expected future inflation rate _______. A. increases aggregate demand today; increases aggregate demand today B. decreases aggregate demand today but increases aggregate demand in the future; decreases aggregate demand today but increases aggregate demand in the future C. increases aggregate demand today; has no influence on aggregate demand today or in the future D. increases aggregate demand in the future but has no influence on aggregate demand today; increases aggregate demand in the future but has no influence on aggregate demand today

An increase in the price of leather jackets, a complement in production of beef, will ______ the equilibrium price of beef and ______ the equilibrium quantity of beef. A. decrease; increase B. decrease; decrease C. increase; increase D. increase; decrease

An unemployed person ______. A. wants work, has made specific efforts to find a job within the previous four weeks, or is waiting to be called back to a job from which he or she has been laid off, or is waiting to start a new job within 30 days B. may be a person who is employed at a job that does not use the skills they have accumulated at college or on previous jobs C. is not in the labor force D. can hold a part-time job and be searching for a full-time job

As the average income in China continues to increase, explain how the following will change: a. The demand for beef b. The demand for rice As the average income in China continues to increase, we would expect the demand for beef to _______ and the demand for rice to _______. A. increase if beef is a normal good; decrease if rice is an inferior good B. decrease if beef is a normal good; increase if rice is an inferior good C. not change; not change because people need to eat regardless of their income D. increase; increase because the demand for any good increases when income increases

Choose the correct statement about growth in labor productivity. A. Potential GDP per hour of labor increases. B. Potential GDP remains unchanged. C. The demand for labor increases, the production function does not change, but a movement occurs along the production function. D. The real wage rate falls and the equilibrium quantity of labor increases

Choose the correct statement. A. A government budget deficit competes with investment for funds. B. The sum of private saving and investment is called national saving. C. The greater U.S. net exports, the greater is U.S. investment. D. All of U.S. investment is financed by U.S. national saving.

Choose the correct statement. A. If there is a shortage of labor, the real wage rate rises to eliminate the shortage. B. The demand for labor is the relationship between the quantity of labor demanded and the money wage rate. C. The real wage rate is the money wage rate multiplied by the price level. D. The real wage rate is the number of dollars that an hour of labor earns

Choose the correct statement. A. The quantity of real GDP supplied equals potential GDP at the price level at which the real wage rate is at its full-employment equilibrium level. B. In the short run, a rise in the price level brings no change in the quantity of real GDP supplied. C. Along the SAS curve, the real wage rate and the price level change by the same percentage. D. The SAS curve shifts rightward when the price level falls.

Choose the correct statement. A. The relationship between the quantity of real GDP supplied and the price level is different in the long run than in the short run. B. At any given time, the quantity of capital and the state of technology are fixed because they depend on decisions made in the past, and the quantity of labor is fixed because it depends on the population. C. Aggregate supply and the quantity of real GDP supplied are two ways of expressing the same concept. D. Aggregate supply is the relationship between the quantity of real GDP supplied and potential GDP.

Examples of physical capital are ______. Examples of financial capital are ______. A. ovens used by Pizza Hut and lawn mowers used by Larry's Mowing; bonds issued by Wal-Mart and stocks issued by Boeing B. bonds issued by Wal-Mart and stocks issued by Boeing; the $20 in your pocket C. $20 in the ATM; bonds issued by Wal-Mart and stocks issued by Boeing D. inventories of steel and glass at Boeing; the $20 in your pocket

Firms make investment decisions by _______. A. comparing the expected profit with the real interest rate and making the investment if the project has a positive net present value B. approaching financial institutions to determine if they are willing to lend the necessary funds C. comparing the expected profit with the nominal interest rate and making the investment if the project has a positive net present value D. comparing the expected profit in an expansion with the expected profit in a recession, and making the investment if the difference in expected profit over the business cycle is relatively stable

First Call, Inc., a smartphone company, plans to build a factory—one that costs $10 million if the real interest rate is 4 percent a year; a larger factory that costs $12 million if the real interest rate is 3 percent a year; or a smaller one that costs $8 million if the real interest rate is 5 percent a year. First Call expects its profit to double next year. Explain how this increase in expected profit influence First Call's demand for loanable funds. This increase in expected profit _______ the demand for loanable funds and brings _______ the demand for loanable funds curve. A. increases; a rightward shift of B. increases; both a movement along and a rightward shift of C. decreases; a leftward shift of D. increases; a movement along

Frictional unemployment is _______. An example of frictional unemployment is _______. A. the unemployment that arises from normal labor turnover long dash —from people entering and leaving the labor force and from the ongoing creation and destruction of jobs; new college graduates looking for work B. the higher than normal unemployment at a business cycle trough and the lower the normal unemployment at a business cycle peak; a ski instructor who loses his job during the summer C. the unemployment that arises from normal labor turnover long dash —from people entering and leaving the labor force and from the ongoing creation and destruction of jobs; an autoworker who loses his job because the automaker moved production to Mexico D. the unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs; coal miners who are unemployed because new technology has made other types of energy cheaper and more accessible

GDP equals aggregate income and also equals aggregate expenditure because _______. A. firms pay out as incomes (aggregate income) everything they receive from the sale of their output (aggregate expenditure) B. the Department of Commerce has defined GDP in such a way that it can be calculated by either summing total income or by summing total expenditures C. aggregate income measures profit as net profit and aggregate expenditure measures investment as net investment D. labor produces final goods and all purchases in the economy are purchases of final goods

How do households make saving decisions? The _______, the greater is the amount that a household decides to save. A. greater a household's disposable income and the smaller a household's expected future income B. smaller the default risk and the greater a household's wealth C. smaller a household's expected future income and the greater a household's wealth D. higher the expected profit and the greater a household's disposable income

If the price level and the money wage rate rise by the same percentage, the quantity of real GDP supplied ______ and there is a movement up along the ______ aggregate supply curve. A. does not change; long-run B. decreases; long-run C. does not change; short-run D. increases; short-run

In 2018 Brazil's real GDP is growing at 1.7 percent a year and its population is growing at 0.7 percent a year. If these growth rates continue, in what year will Brazil's real GDP per person be twice what it is in 2018? If these growth rates continue, Brazil's real GDP per person will be twice what it is in 2018 in _______. A. 2088 B. 2047 C. 2059 D. 2118

In new growth theory ______. A. discoveries result from choices B. the pace of technological change influences the economic growth rate but economic growth does not influence the pace of technological change C. discoveries are a private capital good D. the forces of competition destroy incentives to make new discoveries

In the long-run macroeconomic equilibrium, ______. A. potential GDP and aggregate demand determine the price level, and the money wage rate adjusts so that the SAS curve intersects the LAS curve at the long-run equilibrium price level B. real GDP is always increasing C. the AD and SAS curves determine the price level and technology advances so that the LAS curve intersects the AD curve at the equilibrium price level D. potential GDP and short-run aggregate supply determine the price level

Inflation results from ______. A. a persistent increase in aggregate demand at a faster pace than that of the increase in long-run aggregate supply B. an increase in long-run aggregate supply that exceeds the increase in aggregate demand C. aggregate demand and long-run aggregate supply increasing at the same pace D. an increase in long-run aggregate supply that exceeds the increase in short-run aggregate supply

I = ______. A. S + (T−G) + (M−X) B. S−(T + G)−(M + X) C. S−(T−G) minus −(M−X) D. S + (T + G) + (X−M)

Mitsubishi Heavy Industries makes the wings of the new Boeing 787 Dreamliner in Japan. Toyota assembles cars for the U.S. market in Kentucky. Explain where these activities appear in Japan's National Income and Product Accounts. A. When the wings are sent to the United States, their value appears as Japanese exports in calculating Japan's GDP. B. The production of cars by Toyota in Kentucky is included in Japan's GDP because Toyota is a Japanese firm. C. The production of the wings by Mitsubishi Heavy Industries is included in world GDP but not in Japan's GDP because the wings will be shipped to the United States. D. If any parts for the cars come from Japan, the parts are Japanese imports

Potential GDP ______ and potential GDP per hour of labor ______. A. increases; decreases B. increases; increases C. decreases; decreases D. increases; increases

Ramen noodles and rice rice are substitutes substitutes. If the price of ramen noodles ramen noodles decreases decreases, the demand for rice rice will _______. A. decrease decrease, and the demand curve for rice rice will shift leftward leftward B. increase or decrease, but the demand for ramen noodles ramen noodles will not change C. increase increase, and the demand curve for rice rice will shift rightward rightward D. not change, but there will be a movement along the demand curve for rice rice

Real GDP per person grows when ______. A. real GDP grows at a faster rate than the population grows B. immigration laws are restrictive C. real GDP and the population grow at an equal rate D. the population grows at a faster rate than real GDP grows

Retraining programs seek to avoid _______ unemployment because _______. A. structural; the programs aim to give workers the skills needed for the available jobs B. cyclical; by giving workers the skills needed for the available jobs, recessions can be avoided C. frictional; by giving workers the skills needed for the available jobs, people entering the labor force will immediately find employment D. all types of; the natural unemployment rate will fall

Starting from a full-employment equilibrium, an increase in aggregate demand ______, and creates ______ gap. A. increases real GDP above potential GDP; an inflationary B. increases real GDP above potential; a recessionary C. decreases real GDP below potential GDP; an inflationary D. decreases real GDP below potential GDP; a recessionary

Structural unemployment is _______. An example of structural unemployment is _______. A. the unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs; coal miners who are unemployed because new technology has made other types of energy cheaper and more accessible B. the higher than normal unemployment at a business cycle trough and the lower the normal unemployment at a business cycle peak; a ski instructor who loses his job during the summer C. the unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs; older workers who leave the labor force rather than learn new skills D. the unemployment that arises from normal labor turnover long dash —from people entering and leaving the labor force and from the ongoing creation and destruction of jobs; an autoworker who loses his job because the automaker moved production to Mexico

The CPI is a _______. A. measure of the average of the prices paid by urban consumers for a fixed basket of consumer goods and services B. list of the items that an average urban household buys and the percentage weight of total expenditure given to each item C. measure of inflation D. measure of the price level of all goods and services that are counted as part of GDP

The SAS curve and the LAS curve A. intersect at potential GDP. B. are parallel at potential GDP. C. are perpendicular to one another at potential GDP. D. None of the above answers is correct.

The aggregate production function is the relationship that tells us ______, when all other influences on production remain the same. A. how real GDP changes as the quantity of labor changes B. how the real wage rate changes as the quantity of labor changes C. how potential GDP changes as the labor market moves from surplus or shortage to equilibrium D. how real GDP changes as the quantity of leisure changes

The demand for loanable funds increases and the supply of loanable funds increases. As a result, the equilibrium real interest rate ______ and the equilibrium quantity of loanable funds ______. A. rises, falls, or remains the same; increases B. falls; increases C. rises; increases, decreases, or remains the same D. falls; decreases

The demand for loanable funds is determined by ______. The demand for loanable funds changes when ______ changes. A. the real interest rate and expected profit; expected profit B. disposable income and expected future income; expected future income C. the real interest rate and expected profit; the real interest rate D. disposable income and expected future income; disposable income

The loanable funds market is ______. A. the aggregate of all the individual financial markets B. the same as the loan market C. the aggregate of the bond and stock markets D. the market set up by banks to provide loans to households and businesses

The price of a music dash streaming subscription rises What is the effect on the price and quantity of smartphones? The equilibrium quantity of smartphones _______ and the equilibrium price _______. A. decreases; falls B. increases; rises C. decreases; rises D. increases; falls

The reference base period for the CPI is 1982-1984. In June 2017, the CPI was 245.0. Complete the sentence. This CPI in June 2017 tells us that the ______ of the prices paid by urban consumers for a fixed basket of consumer goods and services was ______ . A. average; 145.0 percent higher in June June 2017 than the average of 1982-1984 B. inflation rate; 145.0 percent per year C. inflation rate; 245.0 percent per year D. average; 245.0 percent higher in June 2017 than the average of 1982-1984

The three main types of markets for financial capital are _______. A. loan markets, bond markets, and stock markets B. loan markets, bond markets, and commercial banks C. investment banks, commercial banks, and insurance companies D. bond markets, stock markets, and commercial banks

The unemployment rate is never zero, even at full employment because _______. A. there are always new workers entering the labor market to search for work, workers leaving one job to search for another job, and workers who have been laid off and are searching for another job B. people make lifestyle choices such as early retirements, gap years, and movements from high-stress to low-stress jobs C. cyclical unemployment is always present in the economy D. there are always people without jobs because of family responsibilities such as caring for children or elderly parents

The crowding-out effect is the tendency for a government budget deficit to ______ the real interest rate and decrease ______. A. raise; investment B. raise; investment by the full amount of the government budget deficit C. lower; saving D. lower; saving by the full amount of the government budget surplus

Toyota and Honda build additional plants in the United States. This event _______. A. increases the quantity of real GDP demanded B. increases aggregate demand C. decreases aggregate demand D. decreases the quantity of real GDP demanded

When labor productivity increases, there is _____ the production function and _____ in potential GDP. A. an upward shift of; an increase B. a movement up along; an increase C. a movement up along; no change D. an upward shift of; no change

When potential GDP increases, ______. A. long-run aggregate supply and short-run aggregate supply increase. The LAS and the SAS curve shift rightward B. long-run aggregate supply and short-run aggregate supply increase. A movement upward occurs along the LAS curve and along the SAS curve C. long-run aggregate supply increases but short-run aggregate supply does not change. The LAS curve shifts rightward and a movement occurs along the SAS curve D. we don't know what the effect is on long-run aggregate supply or short-run aggregate supply

When the price level rises but the money wage rate and other factor prices remain the same, there is a movement along ______. The quantity of real GDP supplied ______. A. the SAS curve; increases B. the LAS curve; decreases C. the SAS curve; decreases D. the LAS curve and the SAS curve; decreases

Think about the demand for three game consoles: XBox One, PlayStation 4, and Wii U. What is the effect of the following events on the demand for Xbox One games and the quantity of Xbox One games demanded, other things remaining the same? The events are A. Programmers who write code for XBox One games become more costly to hire. B. The expected future price of an XBox One game falls. C. The price of an Xbox One falls. D. The prices of a PlayStation4 and a Wii U fall. Event A ______ the ______ XBox One games. A. decreases; quantity demanded of B. decreases; demand for C. increases; quantity demanded of D. increases; demand for Event B ______ the ______ XBox One games. A. increases; quantity demanded of B. decreases; demand for C. decreases; quantity demanded of D. increases; demand for Event C ______ the ______ XBox One games. A. increases; quantity demanded of B. decreases; quantity demanded of C. decreases; demand for D. increases; demand for Event D ______ the ______ XBox One games. A. decreases; demand for B. increases; demand for C. increases; quantity demanded of D. decreases; quantity demanded of

A B D A

Explain why a relative price is an opportunity cost. The money price of a box of ramen noodles a box of ramen noodles is $ 0.80 0.80 and the money price of a tube of toothpaste a tube of toothpaste is $ 4.00 4.00. The opportunity cost of a tube of toothpaste a tube of toothpaste is _______. A. 5.00 5.00 boxes of ramen noodles boxes of ramen noodles, which is the relative price of a tube of toothpaste a tube of toothpaste B. 0.20 0.20 tubes of toothpaste tubes of toothpaste C. $ 0.80 0.80, the money price of a box of ramen noodles a box of ramen noodles D. $ 4.00 4.00, the price of a tube of toothpaste a tube of toothpaste The relative price of a tube of toothpaste a tube of toothpaste is an opportunity cost because ______. A. the relative price tells us how many tubes of toothpaste tubes of toothpaste we must give up to get a box of ramen noodles a box of ramen noodles B. it is constant C. the relative price tells us how many boxes of ramen noodles boxes of ramen noodles we must give up to get a tube of toothpaste a tube of toothpaste D. it is expressed as a money price

A C

The firm that printed your textbook bought the paper from XYZ Paper Mills. Was this purchase of paper part of GDP? If not, how does the value of the paper get counted in GDP? This purchase of paper ______ part of GDP because the paper is ______ good. A. is not; an intermediate B. is not; a final C. is; an intermediate D. is; a final The value of the paper is counted in GDP as ______. A. investment B. an intermediate good C. part of the value of the textbook D. an import because most paper is imported into the United States

A C

Aggregate demand _______ when an increase in interest rates occurs. Aggregate demand _______ when an increase in expected inflation occurs. A. increases; decreases B. increases; increases C. decreases; increases D. decreases; decreases

A movement along the aggregate demand curve occurs if _______. A. the price level, the exchange rate or foreign income change, and the full-employment quantity of labor remains the same B. the price level changes and all other factors remain unchanged C. expectations about future inflation or future income change, and the money wage rate remains the same D. government expenditure or the interest rate change, and the price level remains the same

A person is not in the labor force if they are ______. A. over 65 years of age B. in the working-age population but neither employed nor unemployed C. between the ages of 16 and 19 D. unemployed

According to classical growth theory, when real GDP per person ______, the population grows. A. falls below the subsistence level B. rises above the subsistence level C. equals the subsistence level D. grows because of technological change

According to new growth theory, the growth of real GDP per person _______. A. stops if old firms die and continues if new firms are born B. persists indefinitely C. stops when technology stops advancing D. decreases when workers take more leisure and increases when the average workweek increases

According to the Ricardo-Barro effect, when a government budget deficit occurs today, ______. A. saving decreases, the supply of loanable funds decreases, and the real interest rate rises B. saving increases, the supply of loanable funds increases, and the real interest rate does not change C. the private demand for loanable funds decreases by more than the government budget deficit, the DLF curve shifts leftward, and the real interest falls D. the private demand for loanable funds decreases, the DLF curve shifts leftward, and the real interest does not change

Chinese Premier Wen Jiabao has warned Japan that its companies operating in China should raise the pay for their workers. Explain how a rise in wages in China will influence the quantity of real GDP supplied and aggregate supply in China. A rise in wages in China _______ . A. decreases China's long-run aggregate supply with no change in short-run aggregate supply B. decreases China's short-run aggregate supply and the quantity of real GDP supplied does not change C. decreases China's short-run aggregate supply and long-run aggregate supply, and increases the quantity of real GDP supplied if the price level rises D. does not change China's aggregate supply or the quantity of real GDP supplied

Choose the correct statement. A. The largest contribution to labor productivity growth comes from human capital. B. Most technologies are embodied in physical capital. C. Growth in average hours per work increase labor productivity. D. The fundamental source of labor productivity growth is physical capital.

Choose the correct statement. A. An increase in the quantity of labor and a corresponding decrease in leisure hours shifts the production function upward. B. Labor hours are not all equally productive. C. An increase in the quantity of labor and a corresponding decrease in leisure hours will have no effect on real GDP. D. The aggregate production function is the relationship that tells us how real GDP changes as the real wage rate changes, when all other influences on production remain the same.

Choose the correct statement. A. The higher the price level, the greater is the quantity of real GDP demanded. B. The quantity of real GDP demanded is the sum of the real consumption expenditure, investment, government expenditure, and exports minus imports. C. The quantity of real GDP demanded depends on the quantity of real GDP supplied. D. The aggregate demand curve slopes downward because of the wealth effect and the money wage rate.

Choose the correct statement. A. The nominal interest rate is the opportunity cost of loanable funds. B. The real interest rate is the nominal interest rate adjusted to remove the effects of inflation on the buying power of money. C. The real interest rate is the number of dollars that a borrower pays and a lender receives in interest in a year expressed as a percentage of the number of dollars borrowed and lent. D. The nominal interest rate is approximately equal to the real interest rate minus the inflation rate.

Choose the correct statement. A. The quantity of labor demanded in the economy during a given period depends on the quantity of labor supplied. B. Each additional hour of labor increases real GDP by successively smaller amounts. C. The nominal wage influences the quantity of labor supplied because what matters to households is not the number of dollars they earn but what they can buy with those dollars. D. If there is a shortage of labor, the real wage rate falls to eliminate the shortage.

Choose the correct statements about competitive markets. 1. . A competitive market has many buyers. 2. A competitive market is a market for services but not for goods. 3. All competitive markets are physical places where buyers and sellers meet. 4. A single seller in a competitive market cannot influence the price. Upper A single seller in a competitive market cannot influence the price. A single seller in a competitive market cannot influence the price. A. Statements 1 and 2 are correct. B. Statements 1 and 4 are correct. C. Statements 2 and 3 are correct. D. Statements 3 and 4 are correct.

Complete the sentence. The market for frozen burritos is a competitive market _______. A. only if the market where frozen burritos are sold is a world market B. if many people buy and many firms sell frozen burritos, so no single buyer or seller can influence the price C. if few people buy frozen burritos comma so sellers can hold out for a high price D. only if the buyers and sellers of frozen burritos are spread around the world and never meet

Cyclical unemployment is _______. An example of cyclical unemployment is _______. A. a combination of structural unemployment and frictional unemployment; coal miners who are unemployed because new technology has made other types of energy cheaper and more accessible B. the higher than normal unemployment at a business cycle trough and the lower the normal unemployment at a business cycle peak; a restaurant worker who loses her job because of a downturn in the economy C. the higher than normal unemployment at a business cycle trough and the lower the normal unemployment at a business cycle peak; a ski instructor who loses his job during the summer D. the unemployment that arises at full employment; an artist who paints but has no success selling her paintings

Domestic product is _______. National product is _______. A. production excluding imports; production including imports B. production within a country; the value of goods and services produced anywhere in the world by the residents of a nation C. production including imports; production excluding imports D. the value of goods and services produced anywhere in the world by the residents of a nation; production within a country

During a year, a firm's depreciation is $400 and gross investment is $2,000. What is the firm's net investment? The firm's net investment is ______. A. $3,600 B. $1,600 C. $400 D. $2,000

Examples of monetary policy that decrease aggregate demand include ______. A. an increase in transfer payments and an increase in interest rates B. a decrease in the quantity of money and an increase in interest rates C. a decrease in taxes and a decrease in interest rates D. an increase in taxes and a decrease in the quantity of money

Explain why the real interest rate is the opportunity cost of loanable funds. The real interest rate is the opportunity cost of loanable funds because ______. A. although the nominal interest rate is the interest rate forgone when a lender does not lend the funds, the borrower pays the real interest rate on borrowed funds B. the real interest paid on borrowed funds is the opportunity cost of borrowing and the real interest rate forgone is the opportunity cost of not saving or not lending those funds C. the real interest is the number of dollars that the borrower gives up when she takes a loan D. when a consumer takes a loan, the interest rate quoted by the bank is the real interest rate

Government funded retraining _______the natural unemployment rate because _______. A. decreases; cyclical unemployment will fall B. decreases; natural unemployment includes structural unemployment C. does not change; the natural unemployment rate is constant D. increases; more unemployed people will enter the labor force

Gross investment is ______. Net investment is ______. A. net investment minus depreciation; gross investment plus depreciation B. the total amount spent on new capital; the change in the value of capital C. depreciation minus net investment; depreciation minus gross investment D. the change in the value of capital; the total amount spent on new capital

Hyperinflation is an inflation rate of _____ or higher that grinds the economy to a halt and causes a society to collapse. A. 20 percent a year B. 50 percent a month C. 20 percent a month D. 50 percent a year

If the price level rises and the money wage rate remains constant, the quantity of real GDP supplied ______ and there is a movement up along the ______ aggregate supply curve. A. does not change; long-run B. increases; short-run C. does not change; short-run D. increases; long-run

In January 2013, Tim's Gyms, Inc. owned machines valued at $1 million. During the year, the market value of the equipment fell by 30 percent. During 2013, Tim spent $200,000 on new machines. During 2013, Tim's gross investment totalled A. $300,000. B. $200,000 C. $1 million. D. $900,000.

Labor market equilibrium occurs _______. A. when there is zero unemployment B. at the real wage rate at which the quantity of labor demanded equals the quantity of labor supplied C. at the nominal wage rate at which the quantity of labor demanded equals the quantity of labor supplied D. when the demand for labor is maximized

Low-fat milk and cream are _______. A. substitutes in production for a dairy and complements for consumers B. complements in production for a dairy and substititues for consumers C. complements for consumers but not complements for a dairy farmer D. substitutes for consumers and substitutes for a dairy farmer

Once the preconditions for growth are in place, the influences on the pace of labour productivity growth are _______. A. physical capital growth, population growth, and human capital growth B. physical capital growth, human capital growth, and technological advances C. human capital growth, population growth, and low inflation D. low inflation, low unemployment, and investment in physical capital

Paychecks in Kansas are growing, according to the U.S. Department of Labor. Jacqueline Midkiff, with the department's office in Kansas City, says the average overall increase across the board through the Midwest, is 1.9 percent over this time last year, while inflation grew at 1.4 percent for the same time period. Source: Kansas Public Radio, August 1, 2012 Explain how "the average overall increase across the board" wage increase will influence aggregate supply. The "average overall increase across the board" wage increase _______. A. decreases long-run aggregate supply because potential GDP decreases B. decreases short-run aggregate supply because it increases firms' costs C. increases long-run aggregate supply because potential GDP increases D. increases short-run aggregate supply because workers are willing to work more hours

Since 1980, the gap between the United States and _______. A. Russia narrowed, the gap between the United States and Mexico widened, and the gap between the United States and Nigeria remained relatively constant B. Russia and between the United States and Nigeria narrowed, the gap between the United States and Mexico widened, and the gap between the United States and the Europe Big 4 remained relatively constant C. Mexico narrowed, the gap between the United States and Russia widened, and the gap between the United States and the Europe Big 4 remained relatively constant D. Canada narrowed, the gap between the United States and Mexico widened, and the gap between the United States and Nigeria remained relatively constant

Taking a smartphone to the gym when you work out becomes less popular. What is the result of this event? As a result, _______. A. the quantity of smartphones demanded increases B. the demand for smartphones decreases C. the quantity of smartphones demanded decreases D. the demand for smartphones increases

The bias in the CPI is a problem because ______ . A. it causes too much commodity substitution B. it distorts wage agreements linked to the CPI C. it discourages people from looking hard enough for a bargain D. it causes too little commodity substitution

The chained CPI ______. A. does not overcome the source of bias in the CPI B. overcomes the sources of bias in the CPI by incorporating substitutions and using current and previous period quantities C. overcomes the sources of bias in the CPI by eliminating measures of the goods and services with the most volatile prices D. overcomes the sources of bias in the CPI by giving extra weight to the measures of the goods and services with the most volatile prices

The demand for labor is the relationship between the quantity of labor demanded and the ______. The supply of labor is the relationship between the quantity of labor supplied and the ______. A. real interest rate; real interest rate B. real wage rate; real wage rate C. nominal interest rate; nominal interest rate D. money wage rate; money wage rate

The demand for loanable funds increases and the supply of loanable funds decreases. As a result, the equilibrium real interest rate ______ and the equilibrium quantity of loanable funds ______. A. rises, falls, or remains the same; increases, decreases, or remains the same B. rises; increases, decreases, or remains the same C. falls; decreases D. rises, falls, or remains the same; increases

The growth rate of real GDP per person _______. A. is calculated by dividing the growth rate of real GDP by the growth rate of the population B. tells us about changes in the standard of living and the growth rate of real GDP tells us how rapidly the total economy is expanding C. tells us how rapidly the total economy is expanding and the growth rate of real GDP tells us about changes in the standard of living D. is calculated by multiplying the growth rate of real GDP by the growth rate of the population

The inflation rate is the percentage change in the _____ from one year to the next. Deflation is a situation in which the _____ is _____ and the inflation rate is _____. A. interest rate; interest rate; rising; positive B. price level; price level; falling; negative C. price level; input cost; rising; positive D. interest rate; interest rate; falling; negative

The key proposition of new growth theory that makes growth persist is that ______ is not subject to diminishing returns. A. labor B. knowledge capital C. production D. physical capital

The law of demand states that other things remaining the same, the _______ the price of a good, the _______. A. lower; greater is demand B. higher; smaller is the quantity demanded C. lower; smaller is the quantity demanded D. higher; greater is the quantity demanded

The main sources of bias in the CPI are ______. A. designer name bias and generic product bias B. new goods bias, quality change bias, commodity substitution bias, and outlet substitution bias C. anti-fur bias, vegetarian bias, and lifestyle bias D. big box store bias, corner store bias, mall bias, and brand name bias

The quantity of labor demanded is the number of labor hours _______ during a given period. The quantity of labor supplied is the number of labor hours _______ during a given period. A. that produce the desired quantity of real GDP; that firms hire to produce the desired quantity of real GDP B. hired by all the firms in the economy; that all the households in the economy plan to work C. that all the households in the economy are willing to work; that all the firms in the economy are willing to hire D. that firms are willing to hire at a minimum wage rate; that all the households in the economy are willing to work at a minimum wage rate

The real interest rate ______, household saving ______, A. rises; increases, and investment decreases B. falls; decreases, and investment increases C. falls; increases, and investment decreases D. rises; decreases, and investment increases

Think of examples of goods whose relative price has risen or fallen by a large amount. In 2007, the price of a gallon of gas was $2.59. In 2017, the price of a gallon of gas was $2.32 In 2007, the price of a dozen eggs was $1.63. In 2017, the price of a dozen eggs was $1.40. Between 2007 and 2017, the relative price of a gallon of gas with respect to a dozen eggs _______ and the relative price of a dozen eggs with respect to a gallon of gas _______. A. fell; fell B. rose; fell C. fell; rose D. rose; rose

When a shortage or a surplus arises in the loanable funds market _______. A. the nominal interest rate is pulled to the new equilibrium level B. the real interest rate is pulled to the new equilibrium level C. the supply of loanable funds changes to return the economy to its original real interest rate D. the demand for loanable funds changes to return the economy to its original real interest rate

When an event occurs that changes the demand for coffee makers, _______ if demand increases and ______ if demand decreases A. a movement up along the demand curve occurs; a movement down along the demand curve occurs B. the demand curve shifts rightward; the demand curve shifts leftward C. a movement down along the demand curve occurs; a movement up along the demand curve occurs D. the demand curve shifts leftward; the demand curve shifts rightward

When the increase in demand is greater than the decrease in supply, the equilibrium price _____ and the equilibrium quantity _____. A. falls; increases; B. rises; increases; C. falls; decreases; D. rises; decreases

The money price of a textbook is $90 and the money price of the Wii game Super Mario Galaxy is $45. What is the opportunity cost of a textbook in terms of the Wii game? What is the relative price of the Wii game in terms of textbooks? The opportunity cost of a textbook in terms of Wii games is ______. A. $45 B. the number of Wii games you must give up to get the textbook C. $90 D. the numbers of hours you must work to be able to afford to buy the textbook The relative price of a Wii game in terms of textbooks is ____ textbooks.

B 5

An increase in expected future profits _______. A. has no influence on aggregate demand today or in the future B. decreases aggregate demand today but increases aggregate demand in the future C. increases aggregate demand today D. increases aggregate demand in the future but has no influence on aggregate demand today

The following events have occurred at times in the history of the United States: 1. A deep recession hits the world economy 2. The world oil price rises sharply 3. U.S. businesses expect future profits to fall Explain the effect of each of the following events on aggregate supply and aggregate demand in the United States. Event 1 ______. Event 2 ______. A. increases short-run aggregate supply; decreases short-run aggregate supply B. decreases aggregate demand; decreases short-run aggregate supply C. decreases aggregate demand; increases short-run aggregate supply D. decreases aggregate demand and short-run aggregate supply; increases short-run aggregate supply and decreases long-run aggregate supply Event 3 ______. A. decreases aggregate demand B. increases short-run aggregate supply C. increases aggregate demand D. decreases aggregate demand and short-run aggregate supply

B A

Mexico trades with the United States. Explain the effect of each of the following events on the quantity of real GDP demanded and aggregate demand in Mexico. When the U.S. economy goes into a recession, ______. A. Mexico's price level falls and quantity of real GDP demanded increases, but Mexico's aggregate demand is unchanged B. Mexico's exports to the United States decrease, Mexico's aggregate demand decreases, and Mexico's AD curve shifts leftward C. Mexico's price level falls and quantity of real GDP demanded decreases, but Mexico's aggregate demand is unchanged D. Mexico's imports from the United States decrease and Mexico's aggregate demand increases When Mexico decreases the quantity of money, Mexico's aggregate demand ______. A. decreases and its AD curve shifts leftward B. is unchanged, but the quantity of real GDP demanded increases and there is a movement down along the AD curve C. increases and its AD curve shifts rightward D. is unchanged, but the quantity of real GDP demanded decreases and there is a movement up along the AD curve When the price level in Mexico falls, _______. A. Mexico's aggregate demand decrease B. Mexico's aggregate demand increases C. the quantity of real GDP demanded in Mexico decreases D. the quantity of real GDP demanded in Mexico increases

B A D

What is the output gap? How does it change when the economy goes into recession? The output gap is the gap between _______. A. real GDP and nominal GDP B. real GDP and potential GDP C. the actual unemployment rate and the natural unemployment rate D. nominal GDP and potential GDP When the economy goes into recession, the output gap is _______. A. zero B. greater than the natural unemployment rate C. positive D. negative

B D

Why does demand not change when the price of a good changes with no change in the other influences on buying plans? Consider the demand for gym memberships. The demand for gym memberships does not change when a change in _______ occurs. A. the expected future price of a gym membership B. the price of a gym membership C. the population D. the price of bottled water is a complement of gym membership An increase in the price of a gym membership _______. A. decreases the demand for gym memberships and shifts the demand curve for a gym membership leftward B. increases the quantity of gym memberships demanded and results in a movement down along the demand curve for a gym membership C. increases the demand for gym memberships and shifts the demand curve for a gym membership rightward D. decreases the quantity of gym memberships demanded and results in a movement up along the demand curve for

B D

A demand curve that illustrates the law of demand ______. A. is vertical is vertical B. shows that the quantity demanded remains the same when the price rises shows that the quantity demanded remains the same when the price rises C. shows that the quantity demanded increases as the price falls shows that the quantity demanded increases as the price falls D. is horizontal is horizontal

A government budget surplus _______ loanable funds. A. decreases the demand for B. decreases the supply of C. increases the supply of D. increases the demand for

According to neoclassical growth theory, the fundamental cause of economic growth is ______. A. the choices that people make in the pursuit of profit B. the emergence of markets, property rights, and monetary exchange C. technological change, which induces saving and investment that make capital per hour of labor grow D. population growth'

According to neoclassical growth theory, the growth of real GDP per person stops when _______. A. labor experiences diminishing marginal returns B. a population explosion eventually occurs and real GDP per person returns to the subsistence level C. technology stops advancing D. knowledge capital experiences diminishing marginal returns

An increase in labor productivity ______ the real wage rate and ______ the equilibrium quantity of labor. A. decreases; decreases; B. increases; decreases; C. increases; increases; D. decreases; increases;

An increase in the population ______ potential GDP and ______ potential GDP per hour of labor. A. decreases; increases B. decreases; decreases C. increases; decreases D. increases; increases

An increase in the price level when the money wage rate remains unchanged increases ______. A. factor prices by the same percentage as the increase in the price level B. potential GDP C. the quantity of real GDP supplied D. aggregate supply

An intermediate good is _________. An example of an intermediate good is _______. A. an item that is produced by one firm, bought by another firm, and used as a component of a final good or service; a used car B. a good that is used for only part of the year; snow tires C. an item that is produced by one firm, bought by another firm, and used as a component of a final good or service; wheat sold to a baker to make bread D. an item that is used for a given period of time and then must be replaced; winter boots

Autoworkers agree to a lower money wage rate. This event _______. A. increases aggregate demand B. decreases aggregate demand C. increases the quantity of real GDP demanded D. decreases the quantity of real GDP demanded

CPI = ______. A. [(Cost of CPI basket at current-period prices minus −Cost of CPI basket at base-period prices) divided by ÷Cost of CPI basket at current-period prices] times ×100 B. [(Cost of CPI basket at base-period prices minus −Cost of CPI basket at current-period prices) divided by ÷Cost of CPI basket at current-period prices] times ×100 C. (Cost of CPI basket at current-period prices divided by ÷Cost of CPI basket at base-period prices) times ×100 D. (Cost of CPI basket at base-period prices divided by ÷Cost of CPI basket at current-period prices) times ×100

Choose the correct statement. A. Fannie Mae is a commercial bank. B. The Federal Reserve is the U.S. central bank that also acts as a commercial bank. C. Commercial banks are financial institutions that accept deposits, provide payment services, and make loans to firms and households. D. Freddie Mac is a commercial bank.

Choose the correct statement. A. The growth rate of potential GDP and the trend growth rate of real GDP have risen since 2000. B. The return to full employment in an expansion phase of the business cycle is economic growth. C. The annual growth rate of real GDP fluctuates widely over the business cycle. D. The annual growth rate of real GDP provides information about changes in the trend growth rate

Economic growth is measured by A. changes in the employment rate. B. changes in nominal GDP. C. changes in real GDP. D. All of the above are used to measure economic growth.

Economic growth is _______. A. the annual percentage change in labor productivity B. the return to full employment in an expansion phase of the business cycle C. the expansion of production possibilities D. the annual percentage change in the quantity of money

General Motors cut its fourth-quarter production schedule by 10 percent because Ford Motor, Chrysler, and Toyota sales declined in August. Source: The New York Times, September 5, 2007 Explain whether this news clip illustrates a change in the supply of cars or a change in the quantity supplied of cars. This news clip illustrates a decrease in ______ and ______ in the market for cars. A. supply; a decrease in the quantity demanded B. demand; a decrease in supply C. demand; a decrease in the quantity supplied D. supply; no change in demand

Gross domestic product and gross investment are measured ______. Net domestic product and net investment are measured ______. A. after the depreciation of capital; before the depreciation of capital B. excluding exports; including exports C. before the depreciation of capital; after the depreciation of capital D. excluding net exports; including net exports

If demand and supply change in the same direction, we _____ the direction of change of the equilibrium quantity and we _____ the direction of change of the equilibrium price A. cannot predict; can predict B. can predict; can predict C. can predict; cannot predict D. cannot predict; cannot predict

If real GDP per person doubles in 20 years, then the annual growth rate of real GDP per person is ______ percent a year. A. 28.5 B. 14.0 C. 3.5 D. 14.3

In the long run, the money wage rate ______, short-run aggregate supply ______, and the economy returns to a full-employment equilibrium. A. falls; increases B. falls; decreases C. rises; decreases D. rises; increases

In 1890, the United States surpassed China to become the world's largest economy because ______. A. the U.S. population exceeded China's population B. the United States was a strong, united country following the Civil War and Reconstruction C. the benefits of the Industrial Revolution were greater in the United States than in China D. the U.S. population growth rate was much lower than China's population growth rate

Nominal GDP is ______. Real GDP is ______. A. another name for real another name for real GDP; calculated as the quantity produced in the base year multiplied by the prices that prevailed in the given year B. the value of final goods and services produced in a given year when valued at the prices of a reference base year; the value of the final goods and services produced in a given year valued at the prices of that year C. a more precise name for GDP; the value of final goods and services produced in a given year when valued at the prices of a reference base year D. the value of the final goods and services produced in a given year valued at the prices of that year; a more precise name for GDP

______ is an example of U.S. consumption expenditure. A. The purchase of a new computer system by JFK Airport's air traffic control B. A week's stay in a New York hotel by a family from Denmark C. Your purchase of a tire for your car D. The payment of unemployment benefits paid to households

Paula graduates from college and her her income increases by $30,000 a year. Nothing else changes. Paula decreases the quantity of ramen noodles and french fries that she buys and increases the quantity of winter vacations that she buys. For Paula, _______. A. ramen noodles and winter vacations are inferior goods B. ramen noodles and french fries are normal goods C. winter vacations are normal goods D. winter vacations and french fries have become substitutes

Physical capital is ______. Financial capital is ______. A. inventories of raw materials and semi-finished goods; the tools, instruments, machines, buildings, and other items that have been produced in the past and that are used today to produce goods and services B. money in the bank or in the ATM; the stocks that can be purchased on the stock market and the bonds that can be purchased on the bond market C. the tools, instruments, machines, buildings, and other items that have been produced in the past and that are used today to produce goods and services; the funds that firms use to buy physical capital D. the stocks that can be purchased on the stock market and the bonds that can be purchased on the bond market; money in the bank

Potential GDP is determined by ______. A. labor productivity B. the demand for labor C. the full-employment quantity of labor D. the supply of labor

Starting from a full-employment equilibrium, a decrease in short-run aggregate supply ______ the price level and ______ potential GDP. A. decreases; decreases real GDP below B. decreases; increases real GDP above C. increases; decreases real GDP below D. increases; increases real GDP above

The Fed cuts the quantity of money and all other things remain the same. Explain the effect of the cut in the quantity of money on aggregate demand in the short run. In the short run, aggregate demand _______. A. increases because long-run aggregate supply increases B. increases because interest rates fall and it is it easier to get a loan to buy homes and large consumer goods C. decreases because interest rates rise and it is it more difficult to get a loan to buy homes and large consumer goods D. decreases because long-run aggregate supply decreases

The Rule of 70 states that the number of years it takes for the level of any variable to ______ is approximately ______. A. increase by a factor of 70; 1/70 multiplied by the annual percentage growth rate of the variable B. double; 70 multiplied by the annual percentage growth rate of the variable C. double; 70 divided by the annual percentage growth rate of the variable D. increase by a factor of 70; 70 divided by the annual percentage growth rate of the variable

The U.S. price level rises. This event _______. A. increases aggregate demand B. increases the quantity of real GDP demanded C. decreases the quantity of real GDP demanded D. decreases aggregate demand

The aggregate demand curve slopes downward because _______. A. as the price level falls, expected future profits increase B. of the wealth effect and the price level effect C. of the wealth effect and the substitution effect D. as the price level falls, expected future income increases

The fundamental source of labor productivity growth is ______. A. government B. money C. human capital D. physical capital

The two broad sources of potential GDP growth are growth of ______ and growth of ______. A. government; the private sector B. corporations; private firms C. the supply of labor; labor productivity D. exports; imports

Three Indian firms are producing components for Boeing fighter jets F15 and F18 and for the Chinook heavy-lift helicopter in Bangalore, Hyderabad, and other places in India. The sale of Boeing's fighter jets and heavy-lift helicopters is recorded as _______, and the Boeing's outsourcing of components to India is recorded as _______. A. imports in U.S. GDP; imports in U.S. GDP B. exports in India's GDP; exports in India's GDP C. government expenditure in U.S. GDP; imports in U.S. GDP D. government expenditure in U.S. GDP; government expenditure in U.S. GDP

We are interested in long−term growth primarily because it brings A. lower price levels. B. higher price levels. C. higher standards of living. D. trade wars with our trading partners.

What is the expenditure approach to measuring GDP? The expenditure approach to measuring GDP sums together ______, and the largest component is ______. A. compensation of employees, net interest, rental income, proprietors' income, and corporate profits; compensation of employees B. consumption expenditure, investment, government expenditure on goods and services, and net exports; government expenditure on goods and services C. consumption expenditure, investment, government expenditure on goods and services, and net exports; consumption expenditure D. net domestic income at factor cost, indirect taxes less subsidies, and depreciation; net domestic income at factor cost

When the increase in demand is less than the decrease in supply, the equilibrium price _____ and the equilibrium quantity _____. A. falls; decreases B. rises; increases C. rises; decreases D. falls; increases

When the real interest rate rises, the ______ because the ______ is the opportunity cost of loanable funds. A. quantity of loanable funds demanded increases; inflation rate B. demand for loanable funds increases; real interest rate C. quantity of loanable funds demanded decreases; real interest rate D. demand for loanable funds decreases; inflation rate

When the unemployment rate is less than the natural unemployment rate, real GDP is ______ than potential GDP and the output gap is ______. A. greater; negative B. smaller; negative C. greater; positive D. smaller; positive

With a rise in the money wage rate, ______. A. potential GDP decreases in the long run because the size of the labor force decreases B. firms have an incentive to use more capital-intensive methods in production, which will increase potential GDP in the long run C. the quantity that firms are willing to supply at each price level decreases D. firms have an incentive to produce more because they can charge a higher price

How do we calculate the inflation rate and what is its relationship with the CPI? The inflation rate is calculated as _________. A. [(CPI this year minus −CPI last year) divided by ÷CPI this year] times ×100 B. [(CPI this year minus −CPI in the base year) divided by ÷CPI in the base year] times ×100 C. [(CPI this year minus −CPI last year) divided by ÷CPI last year] times ×100 D. [(CPI in the base year minus −CPI last year) divided by ÷CPI this year] times ×100 When the CPI _______. A. rises slowly, the inflation rate is low B. falls, the inflation rate is positive and low C. is constant, the inflation rate is negative D. rises slowly, the inflation rate is negative

C A

Complete the following sentences. Bottled water and health club memberships are _______. A. substitutes B. substitutes in production C. complements D. complements in production French fries and baked potatoes are _______. A. substitutes but not substitutes in production B. complements or complements in production C. substitutes or substitutes in production D. complements but not complements in production

C C

Hiring in recent months has hit a pace last seen during the late 1990s and the labor force participation rate has started to rise but it remains significantly below its pre-recession level of 2007. If all the newly hired people had been unemployed, the labor force participation rate would have _______ and the unemployment rate would have _______. A. not changed; not changed B. increased; decreased C. not changed; decreased D. decreased; not changed If all the newly hired people had previously given up on their job search, the labor force participation rate would have _______ and the unemployment rate would have _______. A. increased; not changed B. decreased; increased C. increased; decreased D. not changed; not changed

C C

The G-20 aims to take stock of the economic recovery. One achievement in Pittsburgh could be a deal to require that financial institutions hold more capital. Source: USA Today, September 24, 2009 What are the financial institutions that the G-20 might require to hold more capital? What exactly is the "capital" referred to in the news clip? How might the requirement to hold more capital make financial institutions safer? The financial institutions that the G-20 might require to hold more capital are ______. The "capital" referred to in the news clip is ______. A. banks and insurance companies; physical capital B. government-sponsored mortgage lenders and pension funds; the institutions' own funds C. banks and insurance companies; the institutions' own funds D. government-sponsored mortgage lenders and pension funds; physical capital The requirement to hold more capital can make financial institutions safer because by holding more capital, a financial institution ______. A. becomes larger B. can charge a higher price for its bonds C. decreases its risk of insolvency D. increases the value of its stock

C C

A final good is _______. An example of a final good is _______. A. an item that is bought by its final user or an item that is a component of a final good; tires B. an item that is bought by its final user during a specified time period; the ice cream that an ice cream parlor buys to make milkshakes C. the last item of a given type that a consumer will buy; a house that is purchased by a retired couple D. an item that is bought by its final user during a specified time period; bread sold to a consumer

A government budget deficit _______ loanable funds. A. decreases the demand for B. increases the supply of C. decreases the supply of D. increases the demand for

A rise in the money wage rate with no change in potential GDP creates ______. A. a leftward shift of the LAS curve and no change in the SAS curve B. a movement along the SAS curve C. a leftward shift of the LAS curve and a leftward shift of the SAS curve D. a leftward shift of the SAS curve and no change in the LAS curve

A rise in the money wage rate ______. A. increases short-run aggregate supply because a rise in the money wage rate increases costs, so firms are willing to supply more only at a higher price level B. decreases potential GDP because the full-employment quantity of labor decreases C. does not change short-run aggregate supply because along the SAS curve relative prices remain constant D. does not change the LAS curve because along the LAS curve a rise in the money wage rate is accompanied by an equal percentage change in the price level

Aggregate income in an economy in 2017 is $200 billion. Saving is $25 billion and imports are $30 billion. What is aggregate expenditure in the economy in 2017? Aggregate expenditure in the economy in 2017 is ______. A. $170 billion B. $225 billion C. $145 billion D. $200 billion

All of the following are consequences of scarcity faced by people in the United States except deciding _______. A. whether to take a part dash time job or to take an extra course this term whether to take a part-time job or to take an extra course this term B. whether to go skiing during spring break or to catch up on your course work whether to go skiing during spring break or to catch up on your course work C. whether to play the piano or to study for the next hour nbsp whether to play the piano or to study for the next hour D. whether or not Pluto should be classified a planet whether or not Pluto should be classified a planet

An increase in current income taxes ______ the supply of loanable funds today because it ______. A. has no effect on; doesn't change expected future disposable income B. increases; increases expected future disposable income C. increases; decreases disposable income, which encourages greater saving D. decreases; decreases disposable income, which decreases saving

An increase in labor productivity _______ potential GDP and ______ potential GDP per hour of labor. A. decreases; decreases B. increases; decreases C. decreases; increases D. increases; increases

An increase in the population ______ the real wage rate and ______ the equilibrium quantity of labor. A. increases; increases B. decreases; decreases C. increases; increases D. decreases; increases

As we move up along the long-run aggregate supply curve, ______. A. the prices of goods and services remain constant B. the money wage rate remains constant C. the prices of goods and services increase and the money wage rate decreases D. the real wage rate remains constant

As we move up along the short-run aggregate supply curve, ______. A. potential GDP increases B. the real wage rate, the prices of other resources, and potential GDP remain constant C. the money wage rate and the prices of other resources change by the same percentage D. the money wage rate, the prices of other resources, and potential GDP remain constant

Autoworkers agree to a lower money wage rate. This event ______ short-run aggregate supply and ______ long-run aggregate supply. A. does not change; does not change B. decreases decreases; does not change C. increases; increases D. increases increases; does not change

China was the world's largest economy until 1890 because ______. A. the Industrial Revolution gave the greatest growth to the countries with the largest populations B. it was the country with the largest land mass C. it was a large exporter of goods and services D. people in all countries had approximately the same subsistence level of income and China had the largest population

Choose the correct statement about an increase in the population. A. Potential GDP decreases. B. The real wage rate rises. C. The production function shifts upward. D. Potential GDP per hour of labor decreases.

Choose the correct statement about the LAS curve. A. The LAS curve shifts rightward when the money wage rate falls. B. Along the LAS curve the money wage rate is constant and the real wage rate rises as the price level rises. C. The LAS shifts rightward when the SAS curve shifts rightward and shifts leftward when the SAS curve shifts leftward. D. The LAS curve is vertical because potential GDP is independent of the price level.

Coal and oil are ______. A skateboard and roller blades are ______. A. complements; substitutes B. substitutes; complements C. complements; complements D. substitutes; substitutes

Complete the sentence. If as the price of palm oil palm oil decreases decreases, the quantity of soap soap that firms plan to sell decreases decreases, then palm oil palm oil and soap soap are _______. A. normal goods B. inferior goods C. substitutes in production D. complements in production

Complete the sentence. An increase in labor productivity ______. A. increases the supply of labor, increases potential GDP, and decreases potential GDP per hour of labor B. increases potential GDP and decreases potential GDP per hour of labor C. decreases the real wage rate, increases potential GDP, and increases potential GDP per hour of labor D. shifts the demand for labor curve rightward and the production function upward

Diet coke and regular coke are _______. A. substitutes for consumers but not substitutes in production for producers B. complements for producers but not complements in production for producers C. complements for consumers and complements in production for producers D. substitutes for consumers and substitutes in production for producers

Economic growth results from ______. A. a rising exchange rate, which increases aggregate demand B. a falling nominal wage rate, which increases short-run aggregate supply C. the decisions of Congress to cut taxes or increase spending, which increase long-run aggregate supply D. a growing supply of labor and increasing labor productivity, which increase long-run aggregate supply

Examples of fiscal policy that increase aggregate demand include ______. A. a decrease in taxes and an increase in the quantity of money B. an increase in transfer payments and an increase in interest rates C. a decrease in taxes and a decrease in interest rates D. an increase in government expenditure, a decrease in taxes, and an increase in transfer payments

Explain the relationship between asset prices and the interest rate. A. Asset prices are constantly rising and interest rates rise and fall depending on the business cycle. B. A rising interest rate increases the value of an asset and increases its price. C. The relationship between interest rates and asset prices is a causal relationship. D. When the price of an asset rises, the interest rate falls, everything else remaining the same.

Gross domestic product is ______. A. the factor cost of all the final goods and services produced by all citizens of a country in a given time period B. the market value of all the consumption goods and services produced within a country in a given time period C. the factor cost of all the consumption goods and services produced by all citizens of a country in a given time period D. the market value of all the final goods and services produced within a country in a given time period

In October 2009, the U.S. unemployment rate was 10.0 percent. In October 2011, the unemployment rate was 8.9 percent. Predict what happened to the labor force between October 2009 and October 2011 if unemployment was constant. If unemployment remained constant between October 2009 and October 2011, then the labor force ______. A. decreased B. either increased or decreased but we can't predict for sure C. did not change D. increased

Pasta and pizza are ______. A video game and a laptop are ______. A. complements; substitutes B. complements; complements C. substitutes; substitutes D. substitutes; complements

Pizza and sausage are ______. Wheat and corn are ______. A. substitutes; complements B. substitutes; substitutes C. complements; complements D. complements; substitutes

Potential GDP increases when _______. A. the government increases its expenditures B. the price level falls C. the money wage rate decreases D. the full dash employment quantity of labor increases

Real GDP growth rate = [(Real GDP in ______ year minus −Real GDP in ______ year) divided by ÷Real GDP in ______ year ] times ×100. A. current; previous; current B. previous; current; current C. previous; current; previous D. current; previous; previous

Some unemployment is unavoidable because ______. A. often people become discouraged workers B. many people in the working-age population attend school and are unemployed C. many part-time workers would like to have full-time work D. people are making transitions through the stages of life and businesses are making transitions

The U.S. price level rises. This event ______. A. increases short-run aggregate supply B. increases long-run aggregate supply C. decreases the quantity of real GDP supplied D. increases the quantity of real GDP supplied

The aggregate demand curve shows the relationship between the quantity of real GDP demanded and ______ when everything else remains the same. A. the quantity of real GDP supplied B. expected future income, inflation, and profits C. the interest rate D. the price level

The four price indexes that are alternatives to the CPI are ______. A. chained CPI, personal consumption expenditure deflator, core GDP deflator, and CPI deflator B. CPI deflator, personal consumption expenditure deflator, core GDP deflator, and core PCE C. CPI deflator, chained personal consumption expenditure deflator, GDP deflator, and core PCE D. chained CPI, personal consumption expenditure deflator, GDP deflator, and core PCE

The long minus −run aggregate supply curve is ________ because along it, as prices rise, the money wage rate ________. A. upward sloping; falls B. vertical; falls C. upward sloping; stays constant D. vertical; rises

The natural unemployment rate _______. A. is equal to the number of people cyclically unemployed divided by the number in the labor force B. is greater than the actual rate of unemployment C. is equal to the difference between the forecasted unemployment rate and the actual unemployment rate D. is the unemployment rate when there is no cyclical unemployment

The supply of loanable funds is influenced by _______. A. a household's wealth, and the greater a household's wealth, the greater is its saving B. the real interest rate, and as the real interest rate rises, the supply of loanable funds increases C. expected profit D. expected future income, and the higher a household's expected future income, the smaller is its saving today

Toyota and Honda build additional plants in the United States. This event ______ short-run aggregate supply and ______ long-run aggregate supply. A. does not change; does not change B. does not change; increases C. increases; does not change D. increases; increases

Unemployment arises when ______. A. people leave the labor force B. students decide to take time to travel following graduation C. firms close, people lose their jobs, and they become discouraged workers D. people leave their jobs and spend time searching for another job that better suits their abilities

Upper A decrease A decrease in expected future income ______. A. decreases the supply of loanable funds today because households with smaller expected future income will save less today B. has no effect on the supply of loanable funds C. decreases the supply of loanable funds because it decreases wealth D. increases the supply of loanable funds today because households with smaller expected future income will save more today

When the increase in demand equals the decrease in supply, the equilibrium price _____ and the equilibrium quantity _____. A. rises; either increases or decreases B. falls; remains unchanged C. rises; increases D. rises; remains unchanged

When the price level, the money wage rate, and other factor prices rise by the same percentage, there is a movement along ______. Potential GDP ______. A. the LAS curve; decreases B. the LAS curve and the SAS curve; does not change and the quantity of real GDP supplied increases C. the LAS curve and the SAS curve; decreases D. the LAS curve; does not change

Long-run aggregate supply is the relationship between the quantity of real GDP supplied and the price level when the _____ changes in step with the price level to maintain full employment. A. interest rate B. quantity of money C. real wage rate D. money wage rate

An increase in the population ______ the equilibrium quantity of labor, ______ and potential GDP. A. decreases; increases B. decreases; decreases C. increases; decreases D. increases; increases An increase in the population _______ the real wage rate. A. lowers B. does not change C. raises

D A

The increase in real GDP in the first quarter primarily reflected increases in personal consumption expenditures, exports, and investment. Government spending decreased. Source: Bureau of Economic Analysis, June 29, 2017 Explain how the items in the news clip influence U.S. aggregate demand. The increase in the personal consumption expenditures ______ aggregate demand. The increase in exports ______ aggregate demand. A. increases; decreases B. decreases; decreases C. increases; has no effect on D. increases; increases The increase in investment ______ aggregate demand. The decrease in government spending _______ aggregate demand. A. increases; decreases B. decreases; increases C. has no effect on; decreases D. increases; has no effect on

D A

The income approach to measuring GDP sums together ______, which equals net domestic income at factor cost. A. compensation of employees, net interest, rental income, and proprietors' income B. consumption expenditure, investment, government expenditure on goods and services, and net exports C. compensation of employees, direct taxes, and consumption of fixed capital D. compensation of employees, net interest, rental income, corporate profits, and proprietors' income Net domestic income at factor cost _______ indirect taxes less subsidies _______ depreciation gives GDP (income approach). A. minus; minus B. minus; plus C. plus; plus D. plus; minus

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