MACROECON MIDTERM

Production levels beneath the PPF are

attainable but inefficient

Inflation is a

general rise in prices.

Which of the following groups benefits from an unanticipated rise in the inflation rate?

homeowners with fixed-rate mortgages

The field of economics that deals with the allocation of scarce resources for national economies is known as

macroeconomics

If the demand for iPhones rises as incomes increase, then the iPhone is a

normal good

When production technology improves, supply increases and the equilibrium

quantity rises and the equilibrium price falls

Which phase of the business cycle occurs immediately before a trough?

recession

The law of supply states that as prices ____, the quantity _____.

rise; supplied decreases.

If the number of tomato growers in the market increases, the supply curve for tomatoes will

shift to the right

GDP can be found either by adding up all of the __________ or all of the __________ in the economy.

spending; income

If a product becomes obsolete and the workers who produced that product will need additional training to find new jobs, then they are experiencing

structural unemployment.

A benefit of using GDP per capita instead of GDP is that it

takes into account the size of the population when measuring the value of the goods and services a country produces.

San Jacintonistan has a current GDP of $10 trillion and a GDP growth rate of 7%. The United States of Lonestaria has a current GDP of $2.5 trillion and a growth rate of 14%. Using the rule of 70, how many years will it take for the United States of Lonestaria's economy to catch up to the San Jacintonistan economy?

20

According to the table, when using the expenditure approach, GDP is:

$1,770 billion.

If personal consumption is $100, investment is $25, government purchases total $25, imports equal $20, and exports equal $10, then GDP equals:

$140.

Suppose a loaf of bread goes through the following stages of production, with the values noted at the end of each stage:

$2.65

The price of a front row 50 yard line tickett to a Houston Texans football game on StubHub is about $600. Parking is $25. If you attend the game you will need to spend $25 on food and drinks.If you choose to instead pick up a shift at work you can earn $50. What is the economic cost of attending the game?

$700

An economy has a population of 226,500. Of them, 12,500 are unemployed and actively seeking work, and 35,000 have given up looking for a job. Also, 28,000 people work part-time, and 151,000 people work full-time. This economy's unemployment rate is _______.

6.5%

Last year the consumer price index (CPI) was 115 and this year's CPI is 125. The rate of inflation is:

8.7%.

Suppose the market basket of goods and services cost $3,500 in 1996 but today costs $4,250. Using 1996 as the base year, the consumer price index for today is

121.4.

If nominal GDP in 2014 is $20,000 billion while real GDP is $16,000 billion, then the GDP deflator in 2014 is

125

Suppose the Bureau of Labor Statistics collects the data presented in the following table: Year - Cost of Basket 2010 - $200 2011 - $230 2012 - $250 If 2010 is the base year, then the consumer price index for 2012 is:

125

Which of the following will NOT cause the supply curve for kayaks to shift to the left?

A decrease in the price of kayaks.

The event that stimulated the U.S. government's commitment to tracking the economy's health through a national income accounting system was the

Great Depression

If the Surgeon General announced that wearing baseball caps will eliminate dandruff, then

Equilibrium price of baseball caps will increase.

_____ unemployment includes workers who voluntarily quit their jobs to search for better positions.

Frictional

A ________ occurs when price is above market equilibrium.

Surplus

_____ is an index of the change in the average prices for all goods and services in GDP, the broadest measure of inflation.

The GDP deflator

_____ is a measure of the change in average prices paid by urban consumers for a typical market basket of goods and services.

The consumer price index

If bagels and doughnuts are substitute goods, then which of the following is likely to occur if the price of bagels is reduced?

The demand curve for doughnuts will shift left.

There are 15 million people living in Marketstan, of whom 9 million are working and 1 million are actively looking for work. What is Marketstan's unemployment rate?

10%

_____ is an overall decline in prices throughout the economy.

Deflation

EpiPens are a vital, life saving medical resource for those suffering from extreme allergies. The company that produces EpiPens is a virtual monopolist with no close competitors. They have used this market power to increase the price of an EpiPen from $50 in 2007 to over $600 now. This is an obvious example of which type of market failure?

Lack of competition

___________ are where buyers and sellers come together to exchange goods and services

Markets

After a long recession with high levels of unemployment the economy finally begins to grow again as the unemployment rate begins to return to the natural rate (5%). This is an example of short run economic growth and does not represent an expansion of capabilities.

True

Which of the following could create long run growth in the United States?

US businesses take advantage of low interest rates and invest in new capital by building new factories and buying new equipment. The United States wins a legal battle to attain legal rights to the north Atlantic ocean, expanding territory and giving access to oil, mineral and fishery resources previously owned by European nations. Advancements in computing technology make businesses more efficient in all product sectors. All of the above

If a nation exhibits increasing opportunity cost the PPF will be

a curved line

When an economy is producing the mix of goods and service MOST desired by society, that economy is considered to be

allocatively efficient

What is an example of a final good?

bacon purchased at a grocery store

In economics, capital refers to

buildings, equipment and other manufactured items used in the production of goods and services.

Alternating periods of macroeconomic expansion and contraction are known as:

business cycles.

If a pizza parlor uses an oven in its production process, the oven is an example of which factor of production?

capital

In using the income approach to GDP, the largest category is

compensation of employees.

The largest component of GDP is

consumption expenditure.

Workers who want to work but have been frustrated by the inability to find work and have stopped searching are known as

discouraged workers.

Lexie works Monday to Friday from 4 P.M. to 6 P.M. in the after-school program at a local elementary school. She began looking for a full-time job last week and has already scheduled three job interviews. According to the Bureau of Labor Statistics, Lexie is

employed.

GDP includes outputs produced _____ but it does not include outputs produced _____.

inside the United States by foreign citizens; outside the United States by U.S. citizens

Jordan Meadows lost his job as an airline pilot and has not been able to find another job as a pilot. Since he is old enough to be eligible for his pension, he decides to retire and devote himself to caring for his elderly parents, According to the Bureau of Labor Statistics, Jordan is

not in the labor force.

The unemployment rate is defined as the ________ divided by the ________.

number unemployed; number in the labor force

The highest valued alternative that is foregone when you choose an action is called its

opportunity cost

Most economists believe that the consumer price index ______ the rate of inflation.

overstates

The high point of a business cycle is called the

peak

Using the expenditure approach, GDP =

personal consumption + gross investment + government consumption + net exports of goods and services

According to the law of demand, people buy more of a good when

prices go down

The ________ shows the productively efficient combinations of two goods that are possible for a society to produce

production possibilities frontier

Which of the following items is NOT included in gross private domestic investment?

purchases of common stock