upon Econ midterm

When economists measure economic growth, they often use:

real gdp

A transfer payment is a payment for:

which no services were rendered by the government.

3 way to calculate gdp

1 adding up total value of all final good and services produced 2 add ing up spending on all domestically produced good and service 3 total factor income earned by household from firm in Econ

A friend comes up to you and offers you a free ticket to a professional baseball game that night. You decide to attend the game. The game takes five hours and costs you $15 for transportation. If you had not attended the game, you would have worked at your part-time job for $8 an hour. What is the cost to you of attending the game?

55

The switching between recessions and expansions is known as the: macroeconomy. business cycle. long-run economic growth. unemployment rate.

bus cycle

In Kessy's old kitchen, he could bake 10 cookies or mix 15 glasses of lemonade in one day. Now Kessy has a larger oven and refrigerator. How does this affect his production possibility frontier?

shifts it out bc new eq

Unemployment that is due to the time workers spend in job search is _____ unemployment.

rictional

real calculation

same quantity on the different prices

business cycle peak

the point at which the economy turns from expansion to recession

Which factor is NOT included in investment spending in the national income accounts? the purchase of machinery and other productive physical capital new residential construction spending on inventories the purchase of stocks and bonds by a business

the purchase of stocks and bonds by a business

aggregate spending

the sum of consumer spending, investment spending, government purchases of goods and services, and exports minus imports, is the total spending on domestically produced final goods and services in the economy

long run growth

the sustained upward trend in the economy's output over time

Which statement is a positive economic statement?

there has been an increase in the rate of inflation.

If equilibrium exists:

there will be no remaining opportunities for individuals to make themselves better off.

he economic way of thinking entails:

thinking at the margin

he class will usually look at interest rate(s) paid by the U.S. Government when it borrows money

tresury rate The "pieces of paper" that reflect the terms of the borrowings are typically called "bonds."

If demand decreases and supply increases, the direction of change in the equilibrium quantity is unpredictable unless the relative magnitudes of the demand and supply changes are known. t or f

true

Suppose there is an excess supply of chemical engineers in India. Over time, the salaries for chemical engineers will fall in India.

true

The unemployment rate is the ratio of all of the people:

unemployed to those in the labor force.

During a recession: there is no relation between unemployment and the growth rate of real GDP. unemployment increases and the growth rate of real GDP decreases. unemployment decreases and the growth rate of real GDP increases. unemployment and the growth rate of real GDP both decrease.

unemployment increases and the growth rate of real GDP decreases.

real

use cost as last year but on quantity of this year

If every individual were required to be self-sufficient:

overall fall

unemployment rate

40/140

Inflation can be measured by the:

ercentage change in the consumer price index.

Index formula

% demo in target group/% demo in base population X 100

Gross Domestic Product or "GDP

(price of goods times the number of goods produced)

_____ illustrates a positive relationship between price and quantity. A production possibility frontier A demand curve Equilibrium A supply curve

A supply curve

Sometimes the government varies its spending, depending on the needs of the country. Which economic principle does this statement BEST represent?

Government policies can change spending.

Sometimes the government varies its spending, depending on the needs of the country. Which economic principle does this statement BEST represent? The true cost of something is its opportunity cost. Government policies can change spending. When markets don't achieve efficiency, government intervention can improve society's welfare. Resources should be used efficiently to achieve society's goal

Government policies can change spending.

. A decrease in the price of a good will result in:

an increase in the quantity demanded.

GDP deflator

Nominal GDP/Real GDP x 100

Florida schools offered cash bonuses to students who scored high on the state's standardized exams. The cash bonuses are motivated by which economic principle?

People usually respond to incentives, exploiting opportunities to make themselves better off.

Peter Pundit, an economics reporter in the United States, states that the European Union (EU) is increasing its productivity very rapidly in all industries. He claims that this productivity advance is so rapid that output from the EU in these industries will soon exceed that of the United States and, as a result, the United States will no longer benefit from trade with the EU

Peter Pundit is not correct. He confuses absolute and comparative advantage.

Which principle underlies the interaction of individual choices?

There are gains from trade

Trade Expands the Productive Capacity of a Nation (the "Economic Pie")

Trade creates valuable incentives 2. Trade gets the production ("what is produced") to those that value the production most (the "who gets the production") with important footnote 3. Trade reduces the cost of production

To be officially unemployed, a person must: be working fewer than 20 hours per week. be working fewer than 30 hours per week. be under 55 years old. not have a job and must have looked for work in the past four weeks.

as 4 week

The effect of a natural disaster can be shown by a(n) _____ the production possibility frontier.

inward shift

Inflation

a general increase in prices and fall in the purchasing value of money.

aggregate price level

a measure of the overall level of prices in the economy

Which method of encouraging recycling is likely to be MOST effective given that people usually exploit opportunities to make themselves better off

a tax er garbage can generated

What do we study in Macroeconomics?

a. output of (real) goods and services b. general level of prices c. unemployment (rate) d. Structure of interest rates e. distribution of wealth and income (often in microeconomics)

natural rate of unemployment

actual-cyclical

Real GDP per capita is: a perfect measure of a country's standard of living. used only by the United Nations to compare nations based on measures of welfare. the only way to measure living standards among different countries. an incomplete measure of a country's standard of living.

an incomplete measure of a country's standard of living.

fiscal policy

change in government spending and tax to effect overall spend

Real GDP is nominal GDP adjusted for

changes in prices

Good X and good Y are related goods. Holding everything else constant, if the price of good X decreases and the demand for good Y increases, good X and good Y are probably:

complements

If people demand more of product A when the price of B falls, then A and B are: inferior goods. substitutes. complements. not related.

complements

If people demand more of product A when the price of B falls, then A and B are: inferior goods. substitutes. complements. not related.

complements.

Gross domestic product is defined as:

consumer spending + government purchases of goods and services + investment spending + exports - imports.

The natural level of unemployment contains no_____ unemployment.

cyclica

The deviations from the natural rate of unemployment in the actual rate of unemployment rate

cyclical.

GPA per capita

decided by pop

Internet employment agencies have simplified the job search for the applicants. They have also led to a(n) _____ unemployment.

decrease in frictional

market basket

is a hypothetical set of consumer purchases of goods and services

surplus

is above

If demand is downward sloping, a decrease in supply with no change in demand will lead to a(n) _____ in equilibrium quantity and a(n) _____ in equilibrium price. increase; decrease decrease; increase increase; increase decrease; decrease

decrease; increase

The annual percentage change in the aggregate price level is negative when there is: disinflation. deflation. inflation. spiraling inflation.

deflation.

If an economy is producing at a point on its production possibilities frontier, it is:

efficient in production but not necessarily in allocation.

Goods that are produced in a particular period but NOT sold in that period: are classified as intermediate goods. are finally included in depreciation when they are sold. go into inventory and are called consumption. end up in inventory and are included in investment.

end up in inventory and are included in investment

The natural rate of unemployment is: equal to the sum of frictional and structural unemployment. the rate during recessions. cyclical unemployment less frictional unemployment. equal to the sum of frictional and cyclical unemployment.

equal to the sum of frictional and structural unemployment

If real GDP rises while nominal GDP falls, then prices on average have: risen. fallen. decreased and then been offset by an equal increase. stayed the same.

fallen.

When people in Brazil engage in trade with people in Germany, all citizens in both nations are necessarily made better off. False True

false

The effect of an increase in productive inputs such as labor and capital can be shown by a(n)

outward shift of the production possibility frontier.

Which principle underlies the interaction of individual choices? "How Much" is a decision at the margin. People usually respond to incentives, exploiting opportunities to make themselves better off. Choices are necessary because resources are scarce. There are gains from trade.

here are gains from trade.

When labor unions successfully bargain for wage rates that are _____ the equilibrium wage rate, they may cause _____.

higher than; an increase in structural unemployment

Which method of encouraging recycling is likely to be MOST effective given that people usually exploit opportunities to make themselves better off? ppealing to consumers to be a good citizen imposing a tax per unit of garbage generated advertising different ways of recycling publicizing the advantages of recycling

imposing a tax per unit of garbage generated

Keynesian economics

inadequate spending, stopped by intervention

In most cases, economic efficiency is achieved through:

incentives built into a market economy.

A new wonder diet that results in a dramatic weight loss sweeps through the United States. The key to the diet is to eat large amounts of red meat (beef) but no poultry or carbohydrate-rich foods. As millions of Americans switch to the new diet, we can expect a(n) _____ in the _____ beef, leading to a shift to the _____ in the _____ curve for beef and _____ beef prices.

increase; demand for; right; demand; higher

pro and con of inflation and deflation

inflation-discourage ppl from holding onto cash bs it losing value so ppl spend it but lose end up spend all and become a barter

self regulating

invisible hand do work

Inflation: is a movement of the economy toward economic growth. is an increase in the overall level of prices. can be thought of as an increase in a nation's standard of living. is a sustained fall in the overall level of prices.

is an increase in the overall level of prices.

aggregate output

is the total quantity of final goods and services produced within an economy

Real GDP

is the total value of all final goods and services produced in the economy during a given year, calculated using the prices of a selected base year

Nominal GDP

is the value of all final goods and services produced in the economy during a given year, calculated using the prices current in the year in which the output is produced

Marginal analysis:

is used primarily when deciding how much of an activity should be done.

Increases in a nation's standard of living are largely driven by

labor productivity

If the state government allocates additional spending on education programs, the opportunity cost is:

measured in terms of the best alternative uses for that money

price index

measures the cost of purchasing a given market basket in a given year. The index value is normalized so that it is equal to 100 in the selected base year

Consumer Price Index (CPI)

measures the cost of the market basket of a typical urban American family

Which resource is NOT one that pertains to the production of rice? labor fertile land capital equipment money

money

An economy is efficient if it is:

not possible to produce more of one good without producing less of another good.

Payments to Social Security recipients are indexed to the rate of inflation, as measured by the consumer price index. This means that, when the rate of inflation increases, the _____ Social Security recipients _____. market basket for; increases market basket for; decreases payments to; increase payments to; decrease

payments to; increase

Deflation

price level falling so ppl hold on to cash bc it gains value so want to save rather then spend

The producer price index is often regarded as a warning sign of inflation because: commodity producers can sell whatever they want at higher prices. producers are likely to have monopoly control over prices. consumers have to pay the prices charged. prices of inputs will ultimately be reflected in prices of final products.

prices of inputs will ultimately be reflected in prices of final products.

An example of investment spending is the: purchase of stock shares by a mutual fund. amount of funds raised by the government in the financial markets. purchase of government bonds by a private household. An example of investment spending is the:

purchase of a freezer by an ice-cream parlor.

When economists measure economic growth, they often use: the unemployment rate. real GDP. the inflation rate. nominal GDP.

real GDP.

The total value of all final goods and services produced in a given year, calculated using the prices of a selected base year, is:

real gdp

hanges in the overall prices of goods and services are NOT reflected in the measure.

real gdp

Gains from trade arise because of

specialization in production

Frictional and structural unemployment are a part of the natural rate of unemployment. False True

t

Fiscal policy attempts to affect the level of overall spending by making changes in:

tax and spend

Fiscal policy attempts to affect the level of overall spending by making changes in: the money supply. the interest rate. taxes and spending. banking regulations.

taxes and spending.

The article entitled "Strong Economy Drove Wages Higher in August as Hiring Heats Up" best reflects that over the recent past (quarters)

the United States' production possibility curve (and its productive capacity) has expanded or increased

keynesian economics promotes ideas that: the free market system will always prevail. the private sector is perfectly capable of regulating itself. the government can help a depressed economy via fiscal and monetary policies. government intervention can be destabilizing.

the government can help a depressed economy via fiscal and monetary policies.

Because people usually exploit opportunities to make themselves better off, if the price of gasoline rises and stays high for an extended period, we expect people to: increase the number of miles they drive. ride their bicycles less. buy larger and less fuel-efficient cars. use more public transportation.

use more public transportation.

monetary policy

uses change in the quantity to alter interest and affect overall spending used by fed

Long-run growth is the: downturn phase of business cycles. sustained downward trend in the employment rate over several decades. sustained upward trend in aggregate output per person over several decades. expansion phase of business cycles. Score: 1 of 1

ustained upward trend in aggregate output per person over several decades

comparative advantage

what ur looking for on bottom

. Margo spends $30,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is

whatever she would have purchased with the $30,000 plus whatever she would have earned had she not been in college.