Macro Final Exam Study material.

deposits of its customers.

A bank's largest liability is its

the money supply should grow at a constant rate.

A monetary growth rule means that

restrict the Fed's ability to make loans except to commercial banks.

A provision of the Dodd-Frank Act of 2010 revised the Federal Reserve Act to

makes domestic consumers worse off.

A quota

there were no states

According to the Centers for Disease Control and Prevention, ________ in 2013 in which less than 20 percent of the population was considered obese.

a movement up along the money demand curve.

An increase in the interest rate causes

1/2 of a ton of pineapples

Figure 2-8 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. Refer to Figure 2-8. What is the opportunity cost of producing 1 ton of coconuts in Guatemala?

constant

If opportunity costs are ________, the production possibilities frontier would be graphed as a negatively sloped straight line.

$25

Lionel's Lawn Care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, and he charges $25 for this service. For a total price of $40, Lionel will also trim shrubs, a service that adds an additional $10 to the total cost of the standard package. What is Lionel's marginal benefit if he sells the standard package?

at the lowest cost

Productive efficiency is achieved when firms produce goods and services

Y to Z

Refer to Figure 2-4. A movement from ________ is the result of advancements in plastic production technology.

lumber.

Refer to Table 2-5. Estonia has a comparative advantage in the production of

one and a half lawns mowed

Table 2-4 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. What is Jack's opportunity cost of cultivating a garden?

2016

A car that is produced in 2016 is not sold until 2017. According to the definition of GDP, in which year's GDP should it be counted?

increase; increase

A decrease in the price level results in a(n) ________ in household consumption spending and a(n) ________ in investment spending.

shares of stock.

All of the following are considered intellectual property except

the ability to produce a good or service at a lower opportunity cost than any other producer.

Comparative advantage means

there is a decline in the price level.

Deflation occurs when

Hungary has the comparative advantage in beer.

For each pound of salami that Hungary produces, it gives up the opportunity to make 10 bottles of beer. Slovakia can produce 1 pound of salami for every 8 bottles of beer it produces. Which of the following is true about the comparative advantage between the two countries?

Switzerland has the comparative advantage in watches.

For each watch that Switzerland produces, it gives up the opportunity to make 50 pounds of chocolate. Germany can produce 1 watch for every 100 pounds of chocolate it produces. Which of the following is true about the comparative advantage between the two countries?

The demand curve for traditional camera film shifts to the left.

How does the increasing use of digital cameras affect the market for traditional camera film?

the supply curve for apples has shifted to the left.

If in the market for apples the supply has decreased, then

shows the relationship between the price of umbrellas and the quantity of umbrellas supplied.

The supply curve for umbrellas

a $5,000 per-car fee imposed on all sports utility vehicles imported into the United States

Which of the following is the best example of a tariff?

increase consumption and investment.

A decrease in the real interest rate will

most likely increase consumer's purchases of durable goods.

A decrease in the real interest rate will

factor market.

A worker is hired in a

commercial banks

Although the Federal Reserve had traditionally made discount loans only to ________, in response to the financial crisis in 2008 the Fed made primary dealers eligible for discount loans as well.

respond to economic incentives.

Economists assume that rational people

less than six months.

Except for recessions, the duration of unemployment for the typical person lasts

Z to Y (point on the 3rd line to a point on the 2nd line)

Figure 2-4 shows various points on three different production possibilities frontiers for a nation. Refer to Figure 2-4. A movement from ________ is the result of additional government restrictions on the pollution that results from plastic production.

a only

Figure 2-4 shows various points on three different production possibilities frontiers for a nation. Refer to Figure 2-4. Consider the following events: a. an increase in the unemployment rate b. general technological advancement c. an increase in consumer wealth Which of the events listed above could cause a movement from Z to V?

Fiona figures that the additional benefit of having her own office (as opposed to sharing) is at least $625.

Fiona shares an office with her ex-husband. Her share of the rent and utilities is $625 per month. She is considering moving to a home office which she will not have to share with anyone. The home office will not cost her anything as far as extra rent or utilities. Recently, you ran into Fiona at the gym and she tells you that she has moved into her home office. Fiona is as rational as any other person. As an economics major, you rightly conclude that

sell goods in the product market.

Firms

the accumulated skills and training workers have.

Human capital refers to

as long as the marginal benefit it receives is just equal to or greater than $200.

If the marginal cost of producing a television is constant at $200, then a firm should produce this item

George has an absolute advantage in both tasks.

Refer to Table 2-4. Which of the following statements is true?

4 board feet of lumber

Table 2-5 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. Refer to Table 2-5. What is Finland's opportunity cost of producing one cell phone?

There are many buyers and sellers.

Which of the following describes a characteristic of a perfectly competitive market?

the firm has an incentive to increase supply now and decrease supply in the future.

Which of the following statements is true?

downward sloping; vertical

A "long-run exploitable Phillips curve" refers to a Phillips curve that in the long run is ________ rather than ________.

$3.20

A Big Mac costs $4.79 in the United States and 9.6 zlotys in Poland. If the exchange rate is 3 zlotys per dollar, what is the dollar cost of a Big Mac in Poland?

a yearly interest payment and a principal payment.

A bond is a financial security that represents a promise to repay

current price

A bond's coupon payment divided by the bond's ________ is equal to the bond's current yield.

standard of deferred payment

A car dealer sells you a car today in exchange for money in the future. This illustrates which function of money?

All of these are correct. (decreases reserves. decreases deposits. decreases excess reserves.)

A cash withdrawal from the banking system

an induced; an autonomous

A change in consumption spending caused by income changes is ________ change in spending, and a change in government spending that occurs to improve roads and bridges is ________ change in spending.

rose 60% from the cost of the market basket in the base year.

A consumer price index of 160 in 1996 with a base year of 1982-1984 would mean that the cost of the market basket

increase; increase

A decrease in the tax rate will ________ the disposable income of households and ________ the size of the multiplier effect.

not in the labor force.

A full-time student who is not working is categorized as

taking on more partners

A partnership can raise funds for expansion in which of the following ways?

increase; increase

A policy that offers parents a tax reduction based on how much they are saving for their children's college education should ________ the equilibrium level of loanable funds and ________ the rate of long-term growth.

bowed outward

A production possibilities frontier with a ________ shape indicates increasing opportunity costs as more and more of one good is produced.

the country's total production will fall.

According to the production possibilities model, if more resources are allocated to the production of physical and human capital, then all of the following are likely to happen except

interest rates.

All of the following are considered among the four most important determinants in explaining exchange rate fluctuations in the long run except

primary dealers

Although the Federal Reserve had traditionally made discount loans only to commercial banks, in response to the financial crisis in 2008 the Fed made ________ eligible for discount loans as well.

an open economy.

An economy that has interactions in trade or finance with other economies is referred to as

lead to a current account deficit.

An increase in U.S. federal government budget deficits that raises U.S. interest rates relative to the rest of the world should

The price level will rise, and the level of GDP will be unaffected.

An increase in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?

All of these are correct.

An increase in frictional unemployment will a.) shift the long-run Phillip curve to the right. b.) increase the natural rate of unemployment. c.) shift the short-run Phillips curve to the right. d.) All of these are correct. e.) None of these is correct.

increase; decrease

An increase in taxes will ________ consumption spending, and a decrease in transfer payments will ________ consumption spending.

increase the demand for dollars on the foreign exchange market.

An increase in the demand for American-made goods will

an increase in the equilibrium quantity of peanuts; the equilibrium price may increase or decrease.

An increase in the demand for peanuts due to changes in consumer tastes, accompanied by an increase in the supply of peanuts as a result of favorable growing conditions, will result in

when there is an increase in supply and an increase in demand for the product.

An increase in the equilibrium quantity of a product will result

supply; right; fall

An increase in the government budget surplus will shift the ________ curve for loanable funds to the ________ and the equilibrium real interest rate will ________.

decrease the interest rate.

An increase in the money supply will

decrease; decrease

An increase in the price level results in a(n) ________ in household consumption spending and a(n) ________ in investment spending.

move the economy up along a stationary short-run aggregate supply curve.

An increase in the price level will

falling; falling

An increase in the purchasing power of money would not, on average, result in an increase in the purchasing power of people's income because a ________ price level would likely mean ________ wages and salaries.

reduces consumption spending

An increase in the real interest rate does which of the following?

400; 420

An inflation rate of 5% between 2015 and 2016 would be implied by a change in the GDP deflator from ________ in 2015 to ________ in 2016.

an increase in the labor force.

An outward shift of a nation's production possibilities frontier can occur due to

the equilibrium price of DVD players will increase; the equilibrium quantity will decrease.

Assume that both the demand curve and the supply curve for DVD players shift to the left but the supply curve shifts more than the demand curve. As a result,

25 pedicures

Carmelita can perform either a combination of 35 manicures and 70 pedicures or a combination of 50 manicures and 45 pedicures. If she now performs 35 manicures and 70 pedicures, what is the opportunity cost of performing an additional 15 manicures?

$200

Cassie's Quilts alters, reconstructs, and restores heirloom quilts. Cassie has just spent $800 purchasing, cleaning, and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task. Alternatively, she can sell the quilt "as is" now for $900. What is the marginal cost of completing the task?

a and b.

Consider the following statements: a. Consumers rent more kayaks from a vendor that rents kayaks at a lower price than other rival kayak vendors along Waikiki beach. b. Department stores take steps to increase security since they believe it is more costly to allow shoplifting than to install expensive security monitoring equipment. c. Farmers produce more cotton when its selling price falls. Which of the above statements demonstrates that economic agents respond to incentives?

the value of worn-out equipment, machinery, and buildings.

Depreciation is

workers who have stopped looking for work because they believe there are no jobs for them.

Discouraged workers are

raise the level of investment.

Enforcing property rights in an economy will

producing more of one good means less of another good can be produced.

Every society faces economic trade-offs. This means

increase a firm's stock price, which causes firms to issue more stock shares, and thus increases funds for investment.

Falling interest rates can

Y to X

Figure 2-4 shows various points on three different production possibilities frontiers for a nation. Refer to Figure 2-4. A movement from ________ could occur because of additional government restrictions toward allowing immigrant labor.

2/3 of a ton of pineapples

Figure 2-8 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. Refer to Figure 2-8. What is the opportunity cost of producing 1 ton of coconuts in Costa Rica?

Greenland

Figure 2-9 shows the production possibilities frontiers for Greenland and Iceland. Each country produces two goods, snow cones and popsicles. Which country has a comparative advantage in the production of popsicles?

spend earnings from resource sales on goods and services in the product market.

In the circular flow model, households

$25

Ivan runs a custom jewelry shop in Sparkle City. He is debating whether he should extend his hours of operation. Ivan figures that his sales revenue will depend on the number of additional hours the jewelry shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $25 per hour. Refer to Table 1-3. What is Ivan's marginal cost if he decides to stay open for six hours instead of five hours?

2 hours

Julius runs a small tailor shop in the city of Bloomfield. He is debating whether he should extend his hours of operation. Julius figures that his sales revenue will depend on the number of additional hours the tailor shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $18 per hour. Refer to Table 1-2. Using marginal analysis, how many hours should Julius extend his shop's hours of operations?

$18

Julius runs a small tailor shop in the city of Bloomfield. He is debating whether he should extend his hours of operation. Julius figures that his sales revenue will depend on the number of additional hours the tailor shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $18 per hour. Refer to Table 1-2. What is Julius's marginal cost if he decides to stay open for three hours instead of two hours?

additional cost

Marginal cost is the ________ associated with a particular increase in an activity.

Point C (the point outside of the PPF line)

Refer to Figure 2-1. ________ is (are) unattainable with current resources.

factory markets.

Refer to Figure 2-10. In the circular flow diagram, market K represents

Graph A

Refer to Figure 2-3. Carlos Vanya grows tomatoes and strawberries on his land. His land is equally suited for growing either fruit. Which of the graphs in Figure 2-3 represents his production possibilities frontier?

Graph A (the only straight line)

Refer to Figure 2-3. Carlos Vanya grows tomatoes and strawberries on his land. His land is equally suited for growing either fruit. Which of the graphs in Figure 2-3 represents his production possibilities frontier?

b only

Refer to Figure 2-4. Consider the following movements: a. from point V to point W b. from point W to point Y c. from point Y to point Z Which of the movements listed above represents advancements in technology with respect to both plastic production and food production?

3 million tons of steel

Refer to Figure 2-5. If the economy is currently producing at point X, what is the opportunity cost of moving to point W?

0 forks

Refer to Figure 2-6. If the economy is currently producing at point D, what is the opportunity cost of moving to point B?

along Dina's production possibilities frontier.

Refer to Table 2-1. Assume Dina's Diner only produces sliders and hot wings. A combination of 40 sliders and 50 hot wings would appear

outside Nadia's production possibilities frontier.

Refer to Table 2-2. Assume Nadia's Neckware only produces ascots and bowties. A combination of 24 ascots and 12 bowties would appear

Its profit would be $500 lower.

Suppose a cigar manufacturer currently sells 1,500 cigars per week and makes a profit of $3,000 per week. The plant foreman observes, "Although the last 500 cigars we produced and sold increased our revenue by $7,500 and our costs by $7,000, we are only making an overall profit of $3,000 per week so I think we need to cut back on production. Had the firm not produced and sold the last 500 cigars, would its profit be higher or lower, and if so by how much?

0.25 cell phones

Table 2-5 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. Refer to Table 2-5. What is Finland's opportunity cost of producing one board foot of lumber?