Macroeconomics - Test 1

If exports for a country are $2 billion and imports are $3 billion, what are the net exports?

-$1 billion

How are interest rates set, according to the classical model?

by supply and demand

According to classical economists, the competitive interaction of markets kept the economy operating near __________.

full employment

GDP is a measure of an economy's total _________.

output

Roger worked in a coal mine until it went out of business because fewer people were using coal to heat their homes. Now he is unable to find a new job because he is not qualified for any of the jobs that are available. This is an example of:

structural unemployment

____ deals with how well resources are used and allocated.

Efficiency

What does a consumer price index of 130 mean?

Prices have increased by 30% from the base year to the current year.

_____ deals with decision making by individuals, business firms, industries, and governments.

Microeconomics

Which of the following is an example of a durable good?

a refrigerator

If we classify people by income level, which group or groups must deal with scarcity?

all income groups, even the very rich, must deal with scarcity

If a set basket of goods costs $6,000 in the current year and $5,000 in the base year, what is the consumer price index?

120

Julie can bake 12 dozen cookies in an 8-hour day. What is her labor productivity?

144/8 = 18

Which of the following topics would be studied in macroeconomics?

how recessions occur

A person buying a house will likely have it inspected. Which of the following key ideas of economics can explain these results?

information is important

Which of the following is included in a country's infrastructure?

interstate highways

What is the greatest limitation of the classical model?

its focus on the long run

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

opportunity cost

Labor productivity is the ratio of __________ to the __________ devoted to the production of that output.

output of goods; labor hours

Studies of the retail industry have shown that salespeople who are paid on commission tend to sell more dollars worth of merchandise than those who are paid a straight salary. Which of the following key ideas of economics can explain these results?

people follow incentives

Hyperinflation is typically caused by excessive government spending that is financed by:

printing money

Recently in the news, economists have been saying that business investments have begun to decline. In which phase of the business cycle does this occur?

recession

June is a highly skilled surgeon who was forced to take a job as a lifeguard at a local pool because she was unable to find a job in the medical field during a recession. June is considered to be:

underemployed

Which of the following is calculated in the national income?

wages

If personal income is $2 billion and taxes paid on that income are $500 million, what is disposable personal income?

$1.5 billion

Suppose a friend invites you to attend the opening day game for your favorite baseball team. You will have to miss a day of work in order to go. Since you work part-time, for a wage somewhat better than minimum wage, you will not earn $40 that day. The ticket to the game cost your friend $10, your friend treats to you another $10 worth of food and beverage. What is the opportunity cost of this choice?

$40

Suppose you decide to miss a day of work in order to attend the opening day game for your favorite baseball team. Since you work part-time, for a wage somewhat better than minimum wage, you will not earn $40 that day. The ticket to the game cost you $10, and you can expect to spend another $10 on food and beverage. What is the opportunity cost of this choice?

$60

What is the formula for calculating CPI?

(cost in current period/cost in base period) x 100

What is the effect of a high capital-to-labor ratio?

Higher productivity since each worker has more tools at their disposal.

Jim has been out of work for over a year and has given up trying to get a new job until the economy gets better. Jim is considered to be:

a discouraged worker

Net domestic product is equal to GDP minus _______.

Depreciation

Scarcity exists because:

Human desires are greater than what can be produced with the limited resources available at zero cost

Which of the following is not a source of growth?

Increases in nominal money supply

Inflation, unemployment, national output of goods and services, and economic growth are all issues studied in:

Macroeconomics

Which of the following is included in the PPI?

commodity price indexes

In 2007 the inflation level was -.9%. This is an example of:

deflation

In 2005 the inflation level was 5.6% and in 2006 the inflation level was 4.9%. This is an example of:

disinflation

The general movement of the economy from good times to bad and back again is called:

the business cycle

Which of the following would be protected by a patent?

the invention of a machine

Which of the following is an example of a fixed investment?

the purchase of a manufacturing plant

Which of the following would be protected by a copyright?

the writing of a book