Macroeconomic Final Review (2/3)
Deflation occurs when A) there is a decline in the price level. B) there is a one-time increase in the price level. C) there is a sustained increase in the price level. D) there is a decrease in the expected rate of inflation.
A
Depreciation is A) the value of worn-out equipment, machinery, and buildings. B) the value of the decrease in business inventory stocks. C) the decline in the value of the stock market, net of dividends. D) the value of the addition to the capital stock.
A
Economic growth is best defined as an increase in either real GDP or real GDP per capita. nominal GDP. wealth in the economy. total consumption expenditures.
A
Economists believe the most persuasive argument for protectionism is to protect infant industries. But the argument has a drawback. What is this drawback? A) Protection lessens the need for firms to become productive enough to compete with foreign firms; this often results in infant industries never "growing up." B) Governments are usually too impatient and do not allow protection to remain in place long enough to allow industries to be competitive in international markets. C) Governments always make the level of protection for infant industries too high. D) Governments usually use tariffs, rather than quotas, to protect infant industries in order to collect tariff revenue. (Quotas do not result in government revenue).
A
GDP is the monetary value of all the final goods and services produced within the borders of a nation in a particular year. monetary value of all economic resources used in producing a year's output. national income minus all nonincome charges against output. monetary value of all the goods and services, final and intermediate, produced in a specific year.
A
Gross national product (GNP) of the United States is the market value of all final goods and services A) produced by citizens of the United States anywhere in the world. B) consumed by citizens of the United States anywhere in the world. C) produced within the United States. D) consumed within the United States.
A
Knowledge capital is nonrival in the sense that A) two people can use the same knowledge to develop and produce a product. B) firms can benefit from the research and development of rival firms without paying for that benefit. C) firms do not compete to be the first to develop new technologies. D) no single company can be excluded from the benefits of new technologies.
A
Macroeconomics, as opposed to microeconomics, includes the study of what determines the A) average price levels of goods and services in the economy. B) quantity of Dell employees. C) price charged for laptop computers by Dell. D) wages paid to employees by Dell.
A
Part-time workers who want full-time work are counted as fully employed, and therefore the official unemployment rate may understate the level of unemployment. unemployed, and therefore the official unemployment rate may overstate the level of unemployment. fully employed, and therefore the official unemployment rate may overstate the level of unemployment unemployed, and therefore the offical unemployment rate may understate the level of unemployment.
A
Refer to Figure 22-1. Using the per-worker production function in the figure above, the largest changes in an economy's standard of living would be achieved by a movement from A) B to C to D. B) C to B to A. C) D to C to B. D) A to B to C.
A
Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as A) not in the labor force. B) employed. C) not in the working-age population. D) unemployed.
A
The Bureau of Labor Statistics would categorize a person as ________ if they were temporarily away from their job because they were ill. A) employed B) unemployed C) out of the labor force D) a discouraged worker
A
The GDP deflator is a measure of the A) average level of prices of final goods and services in the economy. B) average level of prices of intermediate goods and services in the economy. C) total production of the economy adjusted for inflation. D) total production of the economy unadjusted for inflation.
A
The GDP deflator is equal to A) nominal GDP divided by real GDP, multiplied by 100. B) nominal GDP divided by real GDP. C) real GDP divided by nominal GDP. D) real GDP divided by nominal GDP, multiplied by 100.
A
The best measure of the income households actually have available to spend is A) disposable personal income. B) net national income. C) national income. D) personal income.
A
The economic effects of a recession are likely to have the smallest impact on the sales of which of the following businesses? A) a fast-food restaurant B) an automobile manufacturer C) a home builder D) a furniture store
A
The period between a business cycle peak and a business cycle trough is called A) recession. B) expansion. C) recalculation. D) diffusion.
A
The rapid growth of the Chinese economy should A) benefit U.S. consumers as they have access to less-expensive consumer goods. B) make it more difficult for citizens of the United States to find jobs. C) not affect the mix of jobs available to citizens of the United States. D) benefit U.S. consumers as they have access to less-expensive consumer goods and make it more difficult for citizens of the United States to find jobs
A
The short-term unemployment arising from the process of matching workers with jobs is called A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) seasonal unemployment.
A
The unemployment rate equals the number of unemployed divided by the ________, all times 100. A) labor force B) total population C) working-age population D) number of employed
A
Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study? A) Real GDP grows by 2.3% in the second quarter. B) Airlines raise ticket prices in response to rising fuel costs. C) Avocado prices rise due to a late frost in California. D) The United Auto Workers sign a contract raising wages and benefits 7% over the next 3 years.
A
Which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given working-age population? A) labor force participation rate B) the ratio of minimum wage to inflation C) unemployment rate D) discouraged-worker ratio
A
A numerical limit imposed by a government on the quantity of a good that can be imported into the country is called a A) barricade. B) quota. C) tariff. D) quantity floor.
B
An agreement negotiated by two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is called A) a non-tariff trade barrier. B) a voluntary export restraint. C) an import quota. D) an export quota.
B
As it relates to corporations, the principal-agent problem is that the federal government (the agent) taxes both corporate profits and the dividends paid to stockholders (the principals). the goals of the corporate managers (the agents) may not match the goals of the corporate owners (the principals). it is costly for corporate owners (the principals) to obtain a corporate charter from government (the agent). the goals of the corporate managers (the principals) may not match the goals of the corporate owners (the agents).
B
Dumping refers to A) exporting products that do not meet domestic safety standards. B) selling a product for a price below its cost of production. C) selling inferior products to unsuspecting consumers. D) illegally avoiding tariffs by selling products on the black market.
B
If competitive industry Z is making substantial economic profit, output will fall in all industries except industry Z. expand in industry Z, as more resources will move into that industry. expand in industry Z, but no new firms will enter the market. fall in industry Z and firms will likely leave the market.
B
If the prices of all goods and services rose, but the quantity produced remained unchanged, what would happen to nominal and real GDP? Nominal and real GDP would both rise. Nominal GDP would rise, but real GDP would be unchanged. Real GDP would rise, but nominal GDP would be unchanged. Nominal and real GDP would both be unchanged.
B
In the circular flow model, the value of total production for an economy ________ the value of total expenditures on final goods and services. A) is greater than B) equals C) is less than D) may be greater than or less than
B
One difference between stocks and bonds is that A) stocks are usually issued in electronic form, while bonds are usually issued in paper form. B) stocks do not involve a promise to repay a purchaser of the stock, while bonds represent a promise to repay the purchase price of the bond. C) stocks represent ownership in companies, while bonds represent ownership in banks. D) stocks are financial securities, while bonds are labor market securities.
B
Protectionism A) is the use of cheap labor to protect firms from paying high wages. B) is the use of trade barriers to protect domestic firms from foreign competition. C) refers to reductions in tariffs and other barriers that protect consumers from paying high prices. D) refers to the use of copyright and trademark laws to protect inventors and artists from losing the rights to their creative efforts.
B
Real GDP is GDP in a given year A) valued in the prices of that year. B) valued in the prices of the base year. C) adjusted only for anticipated inflation. D) adjusted only for unanticipated inflation.
B
Refer to Table 22-1. Based on the table above, which country has a higher standard of living and why? A) Sweden has a higher standard of living because their GDP is higher. B) Ireland has a higher standard of living because their GDP per capita is higher. C) Sweden has a higher standard of living because their GDP per capita is higher. D) Ireland has a higher standard of living because growth in GDP is greater in Ireland than in Sweden.
B
The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector A) sell their goods and services to citizens in other countries. B) do not pay taxes to the government. C) produce goods and services no one wants. D) employ illegal immigrants from other countries.
B
The natural rate of unemployment is higher than the full-employment rate of unemployment. that rate of unemployment occurring when the economy is at its potential output. found by dividing total unemployment by the size of the labor force lower than the full-employment rate of unemployment.
B
The percent increase in the CPI from one year to the next is a measure of the A) GDP deflator. B) inflation rate. C) real interest rate. D) unemployment rate.
B
The real interest rate equals the nominal interest rate ________ the inflation rate. A) plus B) minus C) times D) divided by
B
The stated interest rate on a loan is the A) real interest rate. B) nominal interest rate. C) actual inflation rate. D) expected inflation rate.
B
To calculate GDP using the value-added method, one would add up A) the market value of final goods and services produced during a particular period. B) the value added by each firm involved in the production of final goods and services. C) only the value added by the underground economy. D) the market value of intermediate goods and services produced during a particular period.
B
To reduce the bias in the consumer price index, the Bureau of Labor Statistics A) incorporates substitutions by consumers when prices of specific products rise rapidly. B) updates the market basket every two years, rather than every 10 years. C) incorporates substitutions by consumers when prices of specific products fall rapidly. D) updates the market basket every 10 years, rather than every two years.
B
Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) seasonal unemployment.
B
Which of the following is the best example of a voluntary export restraint? A) a subsidy granted by the U.S. government to domestic cell phone manufacturers so they can compete more effectively with foreign cell phone manufacturers B) a limit set by the Korean government on the number of cell phones that the United States can import from Korea C) a limit imposed by the U.S. government on the number of cell phones that the United States can import from Korea D) a $50 per-cell phone fee imposed on all cell phones imported into the United States
B
Absolute advantage is A) the ability to produce a good or service at a higher opportunity cost than one's competitors. B) the ability to produce more of a good or service than competitors that have fewer resources. C) the ability to produce more of a good or service than competitors when using the same amount of resources. D) the ability to produce higher quality goods compared to one's competitors.
C
An advantage of the household survey over the establishment survey of the labor market is that the household survey A) omits persons employed at newly opened firms. B) includes the number of discouraged workers. C) includes the number of self-employed persons. D) is based on actual payrolls, rather than on unverified answers.
C
CANOES-R-US makes canoes. It buys the shell of the canoe from another local firm for $300 and uses its labor and intermediate goods to make the canoe. It sells the finished canoe to a retail canoe store for $800. The retail canoe store then sells the canoe to a consumer for $1,200.Refer to Scenario 19-1. The value added of CANOES-R-US for each canoe equals A) $1,200. B) $800. C) $500. D) $400.
C
Human capital refers to which of the following? A) manufactured goods that are used to produce other goods and services B) the quantity of goods and services that can be produced by one worker or by one hour of work C) the accumulated knowledge and skills workers acquire from education and training or from their life experiences D) physical equipment that is made by human laborers, not machines
C
If real GDP per capita measured in 2009 dollars was $6,000 in 1950 and $48,000 in 2018, we would say that in 2018, the average American could buy ________ times as many goods and services as the average American in 1950. A) 1/8 B) 4 C) 8 D) 12
C
It is difficult to determine if foreign companies are selling their products for prices below their costs of production because A) domestic taxes increase the firms' costs but it is difficult to determine the incidence of these taxes. B) costs are calculated in the firms' local currencies. C) the true costs of production are difficult to calculate. D) the firms have no legal obligation to reveal this information.
C
Macroeconomics seeks to understand A) public choices, private choices, and consumer maximization. B) product demand, product cost, and profit maximization. C) economic growth, business cycles, and inflation. D) industry sales, marketing strategies, and corporate growth.
C
Refer to Figure 21-5. "Crowding out" of firm investment as a result of a budget deficit is illustrated by the movement from ________ in the graph above. A) B to C B) C to A C) A to B D) B to A
C
Refer to Figure 21-6. The loanable funds market is in equilibrium, as shown in the figure above. An increase in the supply of loanable funds could result in which of the following combinations of the real interest rate and quantity of loanable funds at a new equilibrium? A) The real interest rate is 5 percent, and the quantity of loanable funds is $150 million. B) The real interest rate is 5 percent, and the quantity of loanable funds is $90 million. C) The real interest rate is 3 percent, and the quantity of loanable funds is $150 million. D) The real interest rate is 3 percent, and the quantity of loanable funds is $90 million.
C
The Congressional Budget Office reported that federal budget deficits in the United States were likely to increase during the next decade, and due to these higher deficits, "the nation's capital stock ultimately would be smaller, and productivity and income would be lower than would be the case if the debt was smaller." This higher budget deficit would be represented graphically by A) a shift in the supply curve for loanable funds to the right. B) a movement to the right along the supply curve for loanable funds. C) a shift in the supply curve for loanable funds to the left. D) a movement to the left along the supply curve for loanable funds.
C
The costs to firms of changing prices are called A) money illusion costs. B) anticipation costs. C) menu costs. D) redistribution costs.
C
The entry of women into the workforce since the 1960s resulted in a shift inward in the production possibilities curve of the United States a movement along the existing production possibilities curve of the United States a shift outward in the production possibilities curve of the United States a falling real wage for female workers in the United States
C
The purchase of a new automobile is included in A) investment expenditures. B) consumption expenditures on nondurable goods. C) consumption expenditures on durable goods. D) consumption expenditures on services.
C
The quantity of goods and services that can be produced by one worker or by one hour of work is referred to as A) real GDP. B) technology. C) labor productivity. D) human capital.
C
To calculate GDP by the expenditure method, one must add A) labor, natural resources, entrepreneurship, and capital. B) wages, rents, interest, and profits. C) consumption spending, investment spending, government purchases, and net exports. D) consumption spending, investment spending, government purchases, and exports.
C
Which of the following is an example of a public good? a bottle of soda. a sofa. a weather warning system. a television set.
C
Which of the following is an intermediate good? the purchase of jogging shoes by a professor. the purchase of a pizza by a college student. the purchase of baseball uniforms by a professional baseball team. the purchase of gasoline for a ski trip to Colorado.
C
Which of the following is not directly counted in GDP? A) consumer goods B) investment expenditures C) intermediate goods D) government purchases
C
An example of a final good would be A) the whipped cream sold to Starbucks. B) the soy milk sold to Starbucks. C) the coffee beans sold to Starbucks. D) a soy latte sold by Starbucks to a student.
D
Discouraged workers are classified by the BLS as A) unemployed. B) part-time employees. C) part of the labor force. D) not in the labor force. E) employed.
D
Nominal GDP is GDP in a given year A) adjusted for anticipated inflation. B) valued in the prices of the base year. C) adjusted for inflation. D) valued in the prices of that year.
D
Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries. This protectionism will cause the greatest harm to A) Canadian consumers. B) Canadian manufacturers. C) the Canadian government. D) manufacturers who export to Canada.
D
The producer price index measures the prices that firms A) receive for the goods and services they export. B) pay for imported natural resources that go into the production process. C) pay for labor, whether or not the labor is foreign or domestic. D) receive for the goods and services they use at all stages of production.
D
Using a broader measure of the unemployment rate where discouraged workers and part-time workers who wished to work full time were counted as unemployed, the BLS estimates the unemployment rate in April 2017 would have ________ compared to the measured unemployment rate. A) decreased by less than 1 percentage point B) barely changed C) increased by more than 7 percentage points D) almost doubled
D
Value added equals the market price of the firm's product minus A) wages and salaries. B) the price of all factors of production. C) depreciation on plant and equipment. D) the price of intermediate goods.
D
When the BEA calculates real GDP using the average of prices in the current year and the year preceding it, and this average changes from year to year, this is called calculating GDP using A) fixed-weight prices. B) fixed base-year prices. C) current-year prices. D) chained-weighted prices.
D
Which of the following explains the changes in the U.S. adult male labor force participation rate since 1948? A) More men are joining the military as compared to the past. B) More men are retiring later in life as compared to the past. C) Fewer men consider themselves discouraged workers as compared to the past. D) Younger men are remaining in school longer as compared to the past.
D
Which of the following is the best example of a quota? A) a tax placed on all sport utility vehicles sold in the domestic market B) a subsidy granted by the U.S. government to domestic sport utility vehicle manufacturers so they can compete more effectively with foreign sport utility vehicle manufacturers C) a $5,000 per-car fee imposed on all sport utility vehicles imported into the United States D) a limit imposed on the number of sport utility vehicles that the United States can import from Japan
D