Macroeconomics-exam question review

If a market is not an equilibrium:

The price will change and in response market participants will slide along the exisiting supply and demand curve until the market reaches equilibrium

All else equal, a decrease in the number of businesses selling pizza will cause:

an increase in the equilibrium price of pizza

Gross Domestic Product is a measure of the total value of all:

final goods and services produced in an economy over a period of time

Willingness to pay is:

highest value that a consumer believes a good or service is worth

When economists use the word "additional," they generally mean:

marginal

If the price ceiling is set above the equilibrium price:

no impact is felt in the market

If an increase in income leads to an increase in the demand for opera tickets, then opera concerts are a(n):

normal good

If the demand for iPhones rises as incomes increase, then the iPhone is a(n):

normal good

Assume that a person just lost his job and decided to take a month-long break to travel to Eurpe before looking for a new one. Just as he returns home from his trip, he interviewd by the Department of Labor about his employment status. How would he be classified? a)unemployed b)not in the labor force c)discourged d)employed

not in the labor force

A firm will most likely decrease the price of its output if the:

quantity suplied of the goods exceeds the quantity demanded

Deadweight loss: a)reduces consumer surplus and not producer surplus b)reduces producer surplus and not consumer surplus c)reduces consumer surplus and producer surplus d)reduces neither consumer surplus nor producer surplus

reduces consumer surplus and producer surplus

Which of these is NOT a type of unemployment? a)frictional b)cyclical c)structural d)regional

regional

If sellers expect the price of their product to rise in the future they are likely to:

restrict their supply in the near term

Other things equal, the effect decrease in income on a normal good is to:

shift the demand curve to the left, reducing both equilbrium price and output

Other things equal, an improvement in production technology:

shifts the supply curve to the right, reducing the equilibrium price and increasing the equilibrium output

The broadest measure of inflation is:

the GDP deflator

A business cycle is

the pattern of short-run upward and downwrd movements in total output

Intermediate goods are excluded from GDP because

their inclusion would involve double counting

The derivation of a production possibilities frontier assumes that:

there is a fixed quantity of resources and technology available

If the price index is 150, how much did a $15 pizza (today) cost in the base year?

$10.00

Suppose that a customer's willingness to pay for a product is $79, and the seller's willingness to sell is $64. If the negotiated price is $68, how much is the consumer surplus?

$11

Suppose the market basket of goods costs $10,000 in 2009, the base period, and that same basket og goods cost $13,400. What has been the percentage change in the cost of goods between the base period and the current period?

+13.4%

Suppose the market basket of goods and services cost $3500 in 1996 but today costs $4250. Using 1996 as the base year, the consumer price index for today is:

121.40

If the CPI this year is 230 and was 200 last year, the annual inflation rate between the two years is____________.

15 percent

What is the difference betwwen a change in quantity supplied and a change in supply?

A change in the market price affects the quantity supplied, but not the supply

Nominal GDP is

GDP values at prices of that year

___________combine land, labor, and capital to produce goods and services and assume the risks associated with running businesses.

Entrepreneurs

Suppose that in Japan one worker can produce either four cars or five tons of grain per year. What is the opportunity cost of producing one car in Japan?

1.25 tons of grain

Assume that the total labor force is 150 individuals with 15 unemployed. The unemployment rate is________. Now assume that 50 people drop out of the labor force and that 15 remain unemployed. The new unemployment rate is_________.

10 percent, 15 percent

If the cost of a typical market basket is 400 in 2018, 450 in 2019, and 550 in 2020, then during this period, the economy is undergoing:

Inflation

Jason purchased a new printer for $150 although he was willing to pay $175. The minimum price acceptable by the seller, Jasmine, was $145. a)a consumer surplus of $25 exists, and producer surplus is $5 b)a consumer surplus of $325 exists, and producer surplus is $295 c)A consumer surplus of $175 exists, and producer surplus is $145 d)A consumer surplus of $150 exists, and producer surplus is $150

a consumer surplus of $25 exists, and producer surplus is $5

Which of the following will cause a movement down along a demand curve? a)an increase in the price of a substitute good b)a decrease in the product price c)an increase in the product price d)an increase in the price of a complementary good

a decrease in the product price

A price ceiling usually results in:

a shortage and a misallocation of resources

When quantity demanded exceed quantity supplied:

a shortage occurs and prices bid up toward equilibrium

Microeconomics is concerned with issues such as: a)which job to take b)inflation c)unemployment d)interest rates

a)which job to take

If Nike, an American corporation, produces sneakers in Thailand this would

add to Thailand's GDP but not to U.S. GDP

The production of too many Matchbox cars and not enough Barbie dolls is an example of: a)labor inefficiency b)productive inefficiency c)technical inefficiency d)allocative inefficiency

allocative inefficiency

When an economy is producing the mix of goods and services most desired by society, the economy is considered to be:

allocatively efficient

Suppose Mike has three hours of time to spend and he sets the following activities in order of priority: 1)seeing a movie 2)attend a ball game 3)study economics Assume that each activity takes three hours. What is Mike's opportunity cost of seeing a movie?

attending a ball game

Which of the following will cause an increase in the quantity demanded for iPhones? a)an increase in preferences for iPhones b)a decrease in the price of iPhones c)an increase in the price of iPhones d)an increase in the number of buyers in the iPhone market

b)a decrease in the price of iPhones

When society produces the mix of goods and services that are most desired and produces them at the lowest cost possible: a)inefficiency occurs b)production and allocative efficiency are achieved c)production efficiency is achieved d)allocative efficiency is achieved

b)production and allocative efficiency are achieved

To gain from trade, a country should: a)trade only with its political allies b)specialize in the commodity in which it has a comparative advantage c)always specialize in the commodity in which it has an absolute advantage d)always try to get a favorable tariff.

b)specialize in the commodity in which it has a comparative advantage

If you were not studying economics, you could be doing one of the following: sleeping in (which you value at $5.00), playing cards with your friends (which you value at $10.00), or working (you would have earned an extra $8.00). The opportunity cost of studying economics is therefore: a)$5.00 b)$8.00 c)$10.00 d)$23,00

c)$10.00

If a country has few resources: a)trade will never occur b)trade will not increase the GDP c)it will still have a comparative advantage in something d)specialization would be useless

c)it will still have a comparative advantage in something

Unemployment caused by the fluctuation of the business cycle is called____________ unemployment.

cyclical

Which of the following situations involves an external cost? a) Winston doesnt understand his economics text, which was not written by Professor Stone,and he feels he has wasted his money. b)Johnston thinks that the price of gasoline is too high c)Pablo can't decide whether to go to Hong Kong for lunch or Paris for brunch, and he doesnt think it is fair he can't do both d)Alma lives next to a freeway and the noise wakes her up every morning, against her wished, at six o'clock

d

All of the following will decrease the supply of commercial air travel except: a) a decrease in the number of companies that offer commerical air travel b)an increase in the wages of airline pilots c)an increase in jet fuel prices d)a technology change that makes aircrafts more fuel efficient

d)a technology change that makes aircrafts more fuel efficient

Which of the following is not a determinant of demand? a)tatstes and preferences b)prices of related goods c)income d)history of the product

d)history of the product

Suppose the working age population in Timy Town is 200 people. If 25 of these are NOT in the labor force, the__________ equals______. a)unemployment rate; 25/200*100 b)unemployment rate; 25/175*100 c)labor force; 25/200*100 d)labor force;175

d)labor force;175

The income approach to measuting GDP

determies the cost of production, then adjusts it to equal the market value of production

When the increase in prices goes from 9% to 8%, this is referred to as:

disinflation

The law of supply states

if prices fall, pproducers will offer fewer products to the market

The study of economics:

is about peoples decisions regarding their use of scarce resources

Full employment means

only frictional and structural unemployment exists

The producer surplus from a good is equal to the

price of the good minus its opporutnity cost of production

If the CPI is 118, this means that

prices are 18 percent higher than in the reference base period

Total surplus is calculated as:

producer surplus plus consumer surplus

Flu vaccination shots provide external benefits. Thus: a)too few flu vaccination shots are given b)the private market provides the socially desirable output of shots c)too many flu vaccinations shots are given d)the private market collapses

too few flu vaccination shots are given

There are two sellers in the DVD market, Wen and Ahmed. If the market price were $5 per DVD, Wen would br willing to sell 10 DVDs and Ahmed would wat to sell 15 DVDs. If the markey price were to rise to $7 then:

we can confidently say that market quantity supplied is at least 25 DVDs.

How large is deadweight loss in equilibrum?

zero