Macro Midterm
A demand curve ____
tells us the maximum that someone is willing to pay for an additional unit of a good or service
When an event occurs that changes the demand for coffee makers, ____ if demand increases an ____ if demand decreases
the demand curve shifts rightward; the demand curve shifts leftward
The expected price of a smartphone next year falls. as a result, ___
the demand for smartphones today decreases
Cyclical Unemployment
the higher than normal unemployment at a business cycle trough and the lower than normal unemployment at a business cycle peak EX: a restaurant worker who loses her job because of a downturn economy
GDP is
the market value of all the final goods and services produced within a country in a given time period
In 2017, flow A was $720 billion, C was $154 billion, B was $377 billion, and E was $37 billion Calculate investment
$152 billion
aggregate income in an economy in 2017 is $250 billion. Saving is $25 billion and imports are $30 billion Aggregate expenditure in the economy in 2017 is ___
$350 billion
Real GDP in 2016 in terms of reference base-year prices is___
$43
During a year, a firm's depreciation is $1,800 and gross investment is $9,000. The firm's net investment is ___
$7,200
CPI+
(cost of CPI basket at current-period prices / cost of CPI basket at base-period price) x 100
The money price of a pack of frozen burritos is $0.40 and the money price of a tube of toothpaste is $1.00 -The opportunity cost of a tube of toothpaste is ___ -The relative price of a tube of toothpaste is an opportunity cost because ___
-2.50 packs of frozen burritos, which is the relative price of a tube of tooth paste -The relative price tells us how many packs of frozen burritos we must give up to get a tube of toothpaste
Choose the correct statements about competitive markets
1. All competitive markets are physical places where buyers and sellers meet 2. A competitive market is a market for services but not for goods 3. A single seller in a competitive market cannot influence the price 4. competitive markets exist for goods, services, money, factors of production, and inputs
What is the effect of the following events on the demand for Xbox One games demanded, other things remaining the same Events: A. programmers who write code for XBox One games become more costly to hire B. A new game console comes onto the market, which is a clsoe substitute for Xbox One C. The number of people writing and producing XBox one games increases D. The price of an XBox one falls
1. Event A decreases the quantity demanded of Xbox One games 2. Event B decreases the demand for Xbox One Games 3. Event C increases the quantity demanded of Xbox One games 4. Event D increases the demand for Xbox One games
If the price of a denim jacket fall from $80 to $20, while all other influences on buying plans are unchanged, the quantity of denim jackets demanded change from ___ to ___.
4 mil, 16 mil
Last year, which was the base year, the family spent $8 on juice and $12 on cloth. In the base eyar, juice was $2 a bottle nad cloth was $4 a length. This year, juice is $3 a bottle and cloth is $6 a length The CPI basket is ___ bottle of juice and ___ lengths of cloth The CPI in the current year is ___ The inflation rate in the current year is ___ percent
4,3 150 50.0
Hyperinflation is an inflation rate of ___ or higher that grinds the economy to a halt and causes a society to collapse
50 Percent a month
Nominal GDP in 2016 is ___ Nominal GDP in 2017 is ___
6800 4550
Suppose the price of french fries is $1.50 a serving. Consider how the market reaches its equilibrium price. There is ___ and the price of french fries will ___.
A shortage of french fries; rise to the equilibrium price
French Fries and bakes potatoes are _____
A. Complemetns but not complements in production B. Substitutes or substitues in production C. Complements or compleements in production D. Substitutes but not substitutes in production
Bottled water and health club memberships are _____
A. Substitutes in production B. Complements C. Substitutes D. Complements in production
General Motors cut ites fourth-quarter production schedule by 10 percent because Ford Motor, Chrysler, and Toyota sales declines in August. 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 the quantity supplied C. Demand; a decrease in supply D. supply; no change in demand
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
All of the following are consequences of scarcity faced by people in the United States except deciding _____
A. whether to use the money you've saved to pay your tuition or to buy a new car B. How to study for both an economics exam and a chemistry exam that take place on the same day C. Whether a tomato is a fruit of a vegetable D. Whether to go skiing during spring break or to catch up on your course work
Table Data: (in Billions) Government expenditure: 25 Aggregate income: 106 Consumption expenditure: 70 Investment: 21 Exports of goods and services: 30
Aggregate expenditure is $106 Imports of goods and services is $40
An Apple iPod sells in the United States for $299 A Japanese firm, Toshiba, makes the hard disk and display screen, which cost $93 Other components produced in South Korea cost $25 Other components produced in the United States cost $21 The iPod is assembled in China at a cost of $5 The costs and profits of retailers, advertisers, and transportation firms in the US are $75
Apple's profit on an iPod is $80 The United States has exports of $21 imports of $144 and consumption expenditure of $299 Japan has exports of $93 South Korea has exports of $25 China has imports of $139 and exports of $144 an iPod makes a contribution of $299 to world GDP
Low-fat milk and cream are
Complements in production for a dairy and substitutes for consumers
If the price of a game console increases, the demand for games will___
Decrease, and the demand curve for games will move leftward
If the price of a wallet falls from $40 to $20, while all other influence on selling plans are unchanged, the quantity of wallets supplied _____
Decreases from 8 million to 4 million
The price of a music-streaming subscription rises The equilibrium quantity of smartphones ___ and the equilibrium price ___
Decreases; Falls
A fall in the price of a smartphone ____ the quantity supplied and ____ supply
Decreases; does not change
Three Indian firms are producing components for Boing fighter jets F15 and F18 and for the Chinook heavy-life helicopter in Bangalore, Hyderabad, and other places in India The sale of Boeing's fighter jets and heavy-life helicopters is recorded as ___, and the Boeing's outsourcing of components to India is recorded as ___
Government expenditure in U.S. GDP; imports in U.S. GDP
The law of demand states that other things remaining the same, the ____ the price of a good, the _____
Higher; smaller is the quantity demanded
The market for eggs is a competitive market ____
If many people buy and many firms sell eggs, so no single buyer or seller can influence the price
During 2017, B was $9,658 billion, C was $2,147 billion, D was $2,656 billion, and E was -$723 billion
In the figure, consumption expenditure is represented by the blow labeled B, investment is represented by the flow labeled D, government expenditure is represented by the flow labeled C and net exports are represented by the flow labeled E. during 2017 aggregate income was $13738 billion GDP was $13738
An increase in the price of rubber matting, a substitute in production of rubber balls, will ___ the equilibrium price of rubber balls and ___ the equilibrium quantity of rubber balls
Increase; decrease
The price of a music-streaming subscription falls. What is the effect on the price and quantity of smartphones? The equilibrium quantity of smartphones ____ and the equilibrium price _____
Increases; Rises
Item 1. Cheese bought by Domino's Item 2. The purchase of a new security system for Congress Item 3. Your purchase of a new iPhone Item 4. New computers bought by PepsiCo
Item 1 is an intermediate good and item 2 is a final good which is government expenditure Item 3 is a final good that is consumption expenditure and item 4 is a final good that is investment
If the price of a taco falls, a _____ demand curve occurs. If any factor that influences buying plans other than the price changes, then a ____ the demand curve occurs
Movement down along; shift of
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 ___
Price level price level; falling; negative
When a shortage arises, the price _____ to its equilibrium, which _____
Rises; decreases the quantity demanded and increases the quantity supplied
Diet coke and regular coke are
Substitutes for consumers and substitutes in production for producers
At the initial equilibrium there is a ___ of hot chocolate The price of a cup ___ and the quantity of cups demanded ___ as the market moves to its new equilibrium The new equilibrium price is ___ a cup and the new equilibrium quantity is ___ cups a day
Surplus Falls; increases $1.70; 450
The price at which the quantity demanded equals the quantity supplied is the equilibrium price because ___
The plans of producers and consumers are coordinated and there is no influence on the price to change
The demand for gym memberships does not change when a change in _____ occurs
The price of a gym membership
Suppose the current price of a concert ticket is $40 and 4 million concert tickets a year are bought. What do you predict will happen to the price of a concert ticket?
The shortage of concert tickets forces the price up
Paula graduate from college and her income increases by $30,000 a year. Nothing else changes. Paula decreases the quantity of pasta and pizza that she buys and increases the quantity of winter vacations that she buys. For Paula, ___
Winter vacations are normal goods
Calculate the unemployment rate, the labor force participation rate, and the employment-to-population ratio Labor force = 153,124,000 Employment = 146,047,000 working-age population = 231,867,000
The unemployment rate is 4.6 Percent the labor force participation rate is 66 percent the employment-to-population ratio is 64 percent
Frictional unemployment
The unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs EX: coal miners who are unemployed because new technology has made other types of energy cheaper and more accessible
___ is an example of U.S. consumption expenditure
Your purchase of coffee from Starbucks
How do we calculate the inflation rate?
[(CPI this year - CPI last year) / CPI last year] x 100
A final good is ___. an example of a final good is ___
an item that is bought by its final user during a specified time period; bread sold to a consumer
An intermediate good is ___. an example of an intermediate good is ___
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
The reference base period for the CPI is 1982-1984. In January 2017, the CPI was 242.8 This CPI in January 2017 tells us that the ___ of the prices paid by urban consumers for a fixed basket of consumer goods and services was ____
average; 142.8 percent higher in January than average of 1982-1984
Gross domestic product and gross investment are measured ___ Net domestic product and net investment are measured ___
before the depreciation of capital; after the depreciation of capital
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
cannot predict
The four price indexes that are alternatives to the CPI are ___
chained CPI, personal consumption expenditure deflator, GDP deflator, and core PCE
The income approach to measuring GDP sums together ___, which equals net domestic income at factor cost
compensation of employees, net interest, rental income, corporate profits, and proprietors' income
bottle water and health club memberships are
complements
If as the price of beef decreases, the quantity of leather that firms plan to sell decreases, then beef and leather are ____
complements in production
Pizza and sausage are ______. Wheat and corn are ______.
complements: substitutes
Smartphone and a text message are ____. A text message and an email are _____
complements; substitutes
The expenditure approach to measuring GDP sums together ___, and the largest component is ___
consumption expenditure, investment, government expenditure on goods and services, and net exports; consumption expenditure
Donuts and chocolate chip cookies are substitutes. If the price of a donut decreases, the demand for chocolate chip cookies will ____
decrease, and the demand curve for chocolate chip cookies will shift leftward
An increase in the price of a gym membership _____
decreases the quantity of gym memberships demanded and results in a movement up along the demand curve for a gym membership
government funded retraining ___ the natural unemployment rate because ___
decreases; natural unemployment includes structural unemployment
GDP equals aggregate income and also equals aggregate expenditure because ___
firms pay out as incomes (aggregate income) everything they receive from the sale of their output (aggregate expenditure)
When the unemployment rate is less than the natural unemployment rate, real GDP is ___ than potential GDP and the output gap is ___
greater; positive
a person is not in the labor force is they are ___
in the working-age population but neither employed or unemployed
A decrease in the price of lawn fertilizer, a complement in production of nylon, will ___ the equilibrium price of nylon and ___ the equilibrium quantity of nylon
increase; decrease
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 ____
increased
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 ___
increased; decreased
As the market moves toward the equilibrium price, the quantity demanded ____ and the quantity supplied ____
increases; decreases
A demand curve ___
is a marginal benefit curve
A demand curve that illustrates the law of demand ____
is downward sloping
The firms that printed your textbook bought the paper from XYZ Paper Mills This purchase of paper ___ part of GDP because the paper is ___ good THe value of the paper is counted in GDP as ____
is not; an intermediate part of the value of the textbook
the natural unemployment rate ___
is the unemployment rate when there is no cyclical unemployment
the bias in the CPI is a problem because
it distorts wage agreements linked to the CPI
The CPI is a
measure of the average of the prices paid by urban consumers for a fixed basket of consumer goods and services
unemployment arises when___
people leave their jobs and spend time searching for another job that better suits their abilities
When the economy goes into recession, the output gap is ___
negative
the main sources of bias in the CPI are ___
new goods bias, quality change bias, commodity substitution bias, outlet substitution bias
If all the newly hired people had been unemployed, the labor force participation rate would have ___ and the unemployment rate would have ___
not changed; decreased
The chained CPI ___
overcomes the sources of bias in the CPI by incorporating substitutions an using current and previous period quantities
Some unemployment is unavoidable because ______.
people are making transitions through the stages of life and businesses are making transitions
Net domestic income at factor cost ___ indirect taxes less subsidies ___ depreciationg ives GDP (income approach)
plus; plus
domestic product is ___ national product is ___
production within a country the value of goods and services produced anywhere in the world by the residents of a nation
The output gap is the gap between ___
real GDP and potential GDP
When the CPI ___
rises slowly, the inflation rate is negative
When the increase in demand is less than the decrease in supply, the equilibrium price ____ and the equilibrium quantity ____
rises; decreases
When the increase in demand is greater than the decrease in supply, the equilibrium price ____ and the equilibrium quantity _____
rises; increases
When the increase in demand equals the decrease in supply, the equilibrium price ____ and the equilibrium quantity ____
rises; remains unchanged
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 ____
rose; fell
What is the main type of unemployment that retraining programs seek to avoid?
structural; the programs aim to give workers the skills needed for the available jobs
French fries and baked potatoes are
substitutes or substitutes in production
Pasta and pizza are ______. A video game and a laptop are ______.
substitutes; complements
Coal and oil are ____. A skateboard and roller blades are ____
substitutes; substitutes
Real GDP is calculated by ___
summing together the value of the year's production using the prices of the reference base year
Suppose that the price is $10 a bottle. Describe the situation in the shampoo market and explain how the price adjusts. If the price is $10 a bottle, there is a ____ of shampoo, so the price of a bottle of shampoo ____.
surplus; falls
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? ______. The relative price of a Wii game in terms of textbooks is ____ textbooks
the number of Wii games you must give up to get the textbook; .5
An economy is at full employment when ______.
the unemployment rate equals the natural unemployment rate
Nominal GDP is ___. Real GDP is___.
the value of the final goods and services produced in a given year valued at the prices of that year; the value of final goods and services produced in a given year when valued at the prices of a reference base year
The unemployment rate is never zero, even at full employment because ___
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
An unemployed person ___
wants work, has made specific efforts to find a job within the previous four weeks, or is waiting to be called back to ajob from which he or she has been laid off, or is waiting to start a new job within 30 days
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
when the wings are sent to the United States, their value appears as Japanese exports in calculating Japan's GDP
