Econ 2301 Macro
A demand schedule shows
various quantities of a good or service demanded at various prices.
Which of the following would cause an increase in the demand for chicken?
An increase in the price of hamburger, a substitute for chicken.
Which of the following is a true statement about self-interest as used in the study of economics?
Any action can be based on self-interest if the person has some reason for the action.
Which of the following best represents the law of demand?
As the price of a good decreases, the quantity demanded of that good increases.
Refer to the table at right. Country A has a per capita real GDP of $1,000 and B has a per capita real GDP of $10,000. A is growing at a rate of 5 percent a year and B at a rate of 4 percent a year. After 50 years, how much larger is per capita real GDP in B than A? How much is this in real dollars?
B is a little over 6 timesB larger, or almost $60,000 larger on a real per capita basis.
The flow of gross domestic product during a given interval must always be equivalent to the flow of gross domestic income within that same period because
Both (a) and (b) are correct.
The indices that are based on a fixed market basket of goods and services are
CPI and PPI.
Using the above table, a unit tax of $2 is imposed on the product. How much of the tax is paid by the producer?
$1
According to the market data for good X in the above table, a stable equilibrium price is established a
$4
Refer to the above table. The production of this good has been through the first 3 stages of production. What is the total value added in Stage 1 through 3?
.43
The statistical measure of the weighted average of prices of goods purchased by a typical individual is called the
Consumer Price Index.
Which of the following is TRUE about the effects of an excise tax if consumers are totally unresponsive to price changes?
Consumers pay all of the excise tax.
What did Malthus say about population growth?
The population would grow faster than food supplies, which would be a recipe for disaster.
The inflation rate has been 7 percent for 10 years, and the nominal interest rate has been 6 percent during this same time period. Suddenly, the public anticipates that the inflation rate will be 6 percent this coming year. The real rate of interest for the coming year is
0%
The minimum wage laws seek to
assure a minimum standard of payment for work.as
Assume you borrow funds to buy a new car at 3 percent interest and you think that the economyminuswide rate of inflation over the life of the loan will be 2 percent. If you are correct in your assumption, your real rate of interest on the car loan will be
1 percent.
Suppose that the price of cornflakes is $6.75 per box and the price of oatmeal is $4.50 per box. Both boxes contain the same number of ounces of cereal. The relative price of cornflakes in terms of oatmeal is
1.50
Voluntary exchange
makes both parties to a trade better off.
The price index for any designated base year must always equal
100
Refer to the above table. You are given information on Collin's consumption for 2008 and 2018. Using 2008 as the base year, compute the price index for 2018. The index equals
141.667.
Suppose that the price of a bag of coffee is $15 and the price of a Upper T minus shirt is $9. What is the relative price of a bag of coffee? What is the relative price of a t shirt?
15/9 = 1.667 9/15 = .6
The world's population is growing at a rate of about
2 people per second
According to the above table, net domestic product (NDP) is
2265
Using the above table, the National Income (NI) for the country is
318
Using the above table, the labor force is
380,000.
Currently economists estimate that the natural rate of unemployment in the United States is about
5 percent.
Based on the above figure, which diagram depicts the effect on the demand for Cheerios when the price of Apple Jacks cereal has increased?
A
Which of the following statements is TRUE of static tax analysis?
A government receives higher tax revenues by raising the tax rate.
Which of the following is not a key feature shared by nations that attain higher levels of economic development?
A large presence of military personnel to ensure that the government's views are supported
Which of the following is an example of a negative externality?
A large wind turbine in a house's backyard ruins the view of other homeowners.
Which one of the following is an example of a normative statement?
A vacation in Colorado is better than a vacation in Hawaii
Consider the figure 4B-2. If the price is $20, find the area that represents producer surplus.
A+B+C
If nominal GDP increases, it is possible that
A. output has increased. B. both prices and output have increased. C. prices have increased. D. any of the above might have happened.
Which of the following is a normative statement?
An economy with high unemployment can be worse off than an economy with high inflation.
Which of the following is consistent with the law of supply?
An increase in the market price of MP 3 players causes an increase in the production of MP 3 players.
Which of the following statements is NOT true about inflation?
During an inflationary period, the prices of all goods will increase.
Assume that the cost of aluminum used by soft-drink companies increases. Indicate which of the following statements describing the resulting effects in the market for soft drinks distributed in aluminum cans are true (T) or false (F). The demand for soft drinks decreases The quantity of soft drinks demanded decreases. The supply of soft drinks decreases. The quantity of soft drinks supplied decreases.
F T T F
As nations become richer, average family size increases.
False
Economic models relate to the way people think rather than to the way people act.
False
In general, the less organized the market, the lower the transaction costs.
False
Market failure refers to a situation where a market economy collapses.
False
The most common provider of public goods is the private sector.
False
An economic system in which relative prices change to reflect changes in supply and demand for different commodities is known as a
market.ma
Labor is a key input at fast-food restaurants. Suppose that the government boosts the minimum wage above the equilibrium wage of fast-food workers. Which of the following best describes the response of the quantity of labor employed at restaurants?
Fewer workers will be employed since the wage increase will induce managers to seek to substitute other inputs for the now relatively more expensive labor.
Which of the following statements is correct?
GDP excludes nonmarket production and is not a measure of aGD nation's overall welfare.
Which of the following is a main limitation of GDP?
GDP is not a good measure of a nation's overall welfare.
Which of the following would NOT be included in a nation's Gross Domestic Product (GDP)?
In a poker game a student wins $500 that he does not report as income.
Which of the following is NOT an example of a transfer payment?
Interest payments on government bonds
Which of the following is always true of rational behavior?
It always entails pursuing one's own best interest.
Which of the following is NOT a voluntary exchange?
Jose loses his smartphone on the way home.Jo
Which of the following will increase labor productivity?
Labor has more physical capital to work with.
Until 2008, the people of the fictitious nation of Dor relied mainly on private car companies to determine how many automobiles to produce. After 2008, the people of Dor have been relying on the Dor government to determine how many automobiles to produce. This represents a shift in the economic system of Dor from
Market System to Central Planning.Ma
Gross domestic product is
NDP plus depreciation.
Which of the following equations is correct?
NDP = C + I + G + X minus depreciation B. GDP minus depreciation = NDP C. GDP = C + netI + G + X + depreciation D. All of the above equations are correct.
Which of the following transactions would not be included in GDP?
Nancy mows her own lawn
Subsidizing medical services through Medicare
Only A and B are true.
Refer to the above figure. Which of the following statements is true?
Panel A shows a change in quantity demanded and Panel B shows a change in demand.Pa
Labor productivity can best be calculated as
Real GDP / number of workers
Paul Romer's theory of economic growth differs from traditional theories in that
Romer argues an investment-knowledge cycle allows a one-time increase in investment to permanently increase a country's growth rate, while traditional theory argued such an investment would have only a short-term effect.
Refer to the figure. Suppose that the supply curve shifts from SA to SB while the demand curve remains at DA. Which of the following is true?
Supply has increased.Su
What is the economic effect of price floors?
Surpluses.
Which of the following is a normative statement?
Tax cuts ought to be enacted for the good of the economy.
Refer to the figure at right. A unit tax of $2 has been placed on the good. Which of the following statements is true about the vertical distance between Upper S 1 and Upper S 2?
The distance is $2.
What if the increase in demand were larger than the increase in supply?
The equilibrium price and quantity increase.
Which one of the following statements is true?
The market clearing price of a good reflects its relative scarcity.
How would the market for coffee be affected if the government charged an excise tax of $1.00 on each unit of coffee sold?
The supply curve would shift up vertically by $1.00.
Suppose that an early frost damages the Florida orange crop. As a result, the price of California oranges increases. Ceteris paribus, which one of the following statements best explains this situation?
The supply of Florida oranges decreased, causing their price to increase, and thus causing the demand for California oranges to increase.
Which of the following statements about taxation is TRUE?
There is a tax rate at which tax revenues are maximized.
A nation's capital goods wear out over time, so a portion of its capital goods become unusable every year. Last year, its residents decided to produce no capital goods. It has experienced no growth in its population or in the amounts of other productive resources during the past year. In addition, the nation's technology and resource productivity have remained unchanged during the past year
The nation's economic growth rate for the current year will be negative
Which of the following statements is TRUE?
Transfer payments are money payments made by the government for which no goods or services are currently received.
In general, the more securely private property rights are assigned, the more capital accumulation there will be.
True
National income is income earned by all U.S. factors of production.
True
The difference between real GDP and nominal GDP for the same year reflects the amount of inflation that occurred during that year.
True
Suppose that the government has raised by $10 a per-carat tax rate it imposes on diamonds in an effort to influence production of this particular good by each of the firms that produce it and purchases by individual consumers. Would we apply microeconomic or macroeconomic analysis to analyze this policy action?
We would apply microeconomic analysis because this policy action would affect decision making undertaken by individuals (or households) and by firms.
What if the increase in demand were smaller than the increase in supply?
What if the increase in demand were smaller than the increase in supply?
Can real standards of living go up without any positive economic growth?
Yes, if individuals are, on average, enjoying more leisure by working fewer hours but producing as much as they did before.
One of your classmates, Sally, is a hardworking student, serious about her classes, and conscientious about her grades. Sally is also involved, however, in volunteer activities and an extracurricular sport. Is Sally displaying rational ... behavior?
Yes, she is using her time allocated among school, studying, sports and volunteer work in a manner she deems best.
If the current price of a good is less than the equilibrium price, there will be
a a shortage of the good and its price will increase.
Which of the following is a possible outcome of setting a legal maximum rental rate below the market clearing rental rate?
a black market in rental housing
Which one of the following would benefit financially from unanticipated inflation?
a borrower whose loan has a fixed nominal interest rate
Which of the following will cause the demand curve to shift?
a change in consumer income
Which of the following would likely cause an increase in the supply of single-serve coffee makers?
a decrease in the cost of manufacturinga single-serve coffee makers
If other factors remain unchanged, technological progress in producing good A definitely will lead to
a decrease in the market clearing price of good A and an increase in the equilibrium quantity of good A.a
The study of how a particular firm might choose to maximize its profits would fall into what type of analysis?
microeconomics
A demand curve is derived from
a demand schedule
Suppose that jeans that were fashionable in the 1990s become unfashionable today. If other factors were held constant, then there would be in the market of jeans
a leftward shift in the demand curve.
Graphically, the presence of an external cost that is ignored by producers can be shown as
a market supply curve to the right of the market supply curve for which the producers have to pay for the external cost.
One reason why economists often use models in their analysis is that
a model helps us toa understand, explain, and predict economic phenomena in the real world.
To be counted in the labor force,
a person has to be at least 16 or older, have a job, or if unemployed has to be actively seeking employment.
When the government sets a maximum price that can be charged for a good or service, it creates
a price ceiling.
The "principle of rival consumption" applies to which of the following?
a private good
A reduction in a country's saving rate will tend to cause which of the following in the long run?
a reduction in economic growth
All other factors held constant, a reduction in price tends to cause which of the following?
a reduction in quantity supplied and an increase in quantity demanded.
Seasonal unemployment is
a result of the seasonal pattern of work in specific industries.
Profits represent
a reward to entrepreneurs.
Any improvement in overall production technology that permits more output to be produced with the same level of inputs causes
a rightward shift of the supply curve so that more is offered at each price.a
The funding of public education is
a subsidy program
Entrepreneurship functions better when
a system of private property rights permits entrepreneurs to capture the rewards from their entrepreneurial activities.
Economists assume that when there is a change in demand and/or supply, that prices reach a new equilibrium
after an adjustment period that varies.
The development of modern rich nations can be characterized by three stages:
agriculturalag stage, followed by manufacturing stage, and lastly the tertiary stage.
The economic way of thinking will help you
all of the above
The questions that an economic system attempts to solve include
all of the above
Which of the following is true of unemployment?
all of the above
Pollution produced by a factory is being dumped into a local river. The community uses local funds to clean the river. This is an example of
an external cost as thea community, not the factory, is paying for the clean up.
Static tax analysis assumes that
an increase in a tax rate will leave the tax base unchanged.
Firms that produce 90 percent of all phone cameras have shut down their facilities for maintenance. In the phone camera market this will lead to
an increase in price and a decrease in quantity.an
Which of the following will cause a rightward shift of the demand curve?
an increase in the expected future price of the good
Consider the following statement based on a positive economic analysis that assumes that all other things remain constant: A reduction in income tax rates will result in more people working. Which of the following (initially assumed constant) could occur and thus offset the stated outcome
an increase in the outsourcing of jobs
Which of the following is an example of investment in computing Gross Domestic Product (GDP)?
an increase of inventory stock in a retail storean
An expected increase in the future price of automobiles will lead to
an outward shift in demand for automobiles today.
A decrease in demand and a decrease in supply will lead to
an unambiguous decrease in quantity, but the effect on price is indeterminate.
Normative economics is
analysis involving value judgments about economic policies; or a statement of "what ought to be."
The text points out that rent controls, in some cases, have
benefited millionaires.
Refer to the figure at right. A price ceiling has been set at Upper P 1, and a black market has opened. The equilibrium black market quantity will be
between be Upper Q 1 and Upper Q 2
Many economists suggest that our nation's legal system is an example of a public good. Which of the key properties of a public good does the legal system satisfy?
both a & b ? idk
The terms of exchange are determined
by supply and demand.
A good economic model
captures the essential relationships of the problem under consideration
A change in the ceteris paribus conditions for supply will lead to a
change in supply.
The term "business fluctuations" refers to
changes in overall business activity, as evidenced by changes in national income, employment, and the price level.
Dynamic tax analysis assumes
changes in the tax rates will change the tax base.
An effluent fee is a
charge to a polluter that gives the right to discharge pollution into the air.
Which of the following is most likely NOT a final good or service?
coffee beans in a coffee shop
When the price of tablet devices decreased in the 2010s, there was an increase in the demand for computing apps because tablet devices and computing apps are
complementary goods
A leftward shift in the supply curve for a good may be caused by any of the following except
consumer expectation of a future increase in income
If there is a shortage in a free market, then
consumers will offer to pay a higher price for the good, and the price will rise toward the equilibrium level.
The biggest component of GDP using the expenditure approach is ____________ and the biggest component of GDP using the income approach is _____________.
consumer expenditures; wages
Suppose that Lee quits a job with the AAA Corporation in order to look for more rewarding employment. Lee would be
counted as frictionally unemployed.
Microeconomics focuses on
decisions made by individual households and firms
Firms providing wireless (an alternative to cable) Internet access services reduce their prices. This will cause a(n)
decrease in demand
There is a decrease in the incomes earned by consumers of cable-based Internet access services. This will cause a(n)
decrease in demand
You receive a five percent raise in your salary. The inflation rate is six percent. The purchasing power of your salary has
decreased by one percent.
Suppose that today, consumers expect the price of bottled water to double in the future. Then today the bottled water's
demand curve will shift to the right
All of the following are benefits of economic growth except
urban congestion
The value of Gross Domestic Product (GDP), when estimated by the income approach, is the sum of
depreciation, business income adjustments less indirect business taxes, U.S. net income earned abroad and income earned domestically by factors of production.
An extremely severe recession is known as a
depression.
All of the following are economic functions of the government EXCEPT
determining the wage rate for most jobs.
There is normally a __________ relationship between price and quantity of a good supplied, other things held constant. ________________ curve normally shows a direct relationship between price and quantity supplied. ________________ curve is obtained by horizontally adding individual supply curves in the market.
direct / supply / market supply
Individuals receive income and pay taxes over the course of a year. The difference between the income they receive and the taxes they pay is referred to as
disposable personal income
Which of the following is subject to double taxation?
dividends and retained earnings
National income is income ________ the factors of production
earned bye
Which of the following terms describes the situation in which all resources are able to move to to highest-valued uses via voluntary exchange?
economic efficiency
Population growth generally
encourages technological progress that increases economic growth.
A free rider is someone who
enjoys the trees I have planted and does not compensate me for them.
If the demand and supply curves increase (shift outward) by identical proportions then
equilibrium price stays the same and quantity rises
Another name for a shortage is
excess quantity demanded.
If the number of firms in an industry decreases, the supply curve will shift to the right.
false
A true public good must be provided by the government. Which of the following goods provided by the government is a true public good?
flood control
Regarding open economies, economists tend to find evidence that
free trade encourages a more rapid spread of technology, and hence increases economic growth.
Heroin, cigarettes, gambling, and cocaine are examples of
government - inhibited goods
The fact that every dollar that the government spends or transfers must ultimately be provided by the taxes and user charges it collects plus government borrowing is known as the
government budget constraint.
Which of the following will NOT lead to increased capital investment within a country?
government ownership of all properties within the country
A supply curve
has a direct or positive relationship between price and quantity supplied.ha
A government-inhibited good is one that
has been deemed socially undesirable via the political process.
Suppose Country A and Country B each have the same real Gross Domestic Product (GDP), equal to $440 billion. Country A has 100 million people and Country B has 175 million people. In this situation, per capita real Gross Domestic Product (GDP) is
higher in Country A.
Holding supply constant, an increase in demand leads to
higher prices and higher quantity supplied. hi
Compared with the market clearing price of a health care service covered by Medicare, the Medicare program pays a __________ price to health care providers and charges a __________ price to consumers.
higher, lower
Widespread measles vaccinations provided a significant external benefit because
hose who failed to obtain vaccinations remained unexposed to measles as a result of others getting vaccinated. IDK - a guess?
When one uses the expenditure approach to calculate Gross Domestic Product (GDP), which of the following would be included?
household purchases of legal servicesho B. government spending at the state level C. inventory investment all of the above
In economics, "demand" refers to
how much of a good people will buy at any price during a given time period.
Economics is the study of
how people allocate their limited resources to satisfy their unlimited wants
Real standards of living can increase
if the country is producing the same amount they traditionally have and are enjoying more leisure time.if
Consumers' tastes shift away from using wireless Internet access in favor of cable-based Internet access services.
increase in demand
Which of the following contributes to economic growth?
increase in labor productivity
Firms providing cable-based Internet access services reduce their prices. This will cause a(n)
increase in quantity demanded
The definition of economic growth is the annual percentage
increase in the per capita real GDP.in
The largest share of federal government tax receipts is derived from
individual income taxes.
When studying individuals' economic behavior, economists assume that
individuals act as if they were rational.in
Microeconomics is the part of economic analysis that studies decision making undertaken by ________. Macroeconomics is the part of economic analysis that studies the behavior of ________.
individuals and firms; the economy as a whole
An important assumption in the theory of public choice is that
individuals will act within the political process to maximize their individual well-being.
A patent is a government protection that gives
inventors exclusive rights to their product for a time
The rate of inflation and the purchasing power of money are
inversely related.
Any use of today's resources to expand tomorrow's production or consumption is a(n)
investment
A theory or a model
is a simplified, abstract view of reality.
Self-interest
is consistent with many goals that people pursue, including betterment of others.
All of the following result from price floors in agriculture EXCEPT
lower prices to consumers for agricultural products that have price floors.lo
The study of an individual's choice about what type of computer to buy is a subject of
microeconomics.
Secular stagnation refers to
negligible economic growth over a lengthy period.
What economic growth theory examines the factors that determine why technology, research, and innovation are undertaken and how they interact?
new growth theory
Public goods are unlikely to be provided by the private sector because
no one can be excluded from the consumption of the good.
The labor-force participation rate shows the percentage of
non-institutionalized working-age people who are actually working or seeking employment.
When one converts nominal GDP to real GDP, one takes into account which of the following?
none of the above
Everyone should enjoy open access to healthcare.
normative
Increasing the earnings of minimum wage employees is desirable, and raising the minimum wage is the best way to accomplish this.
normative
___________ economics involves people's values and typically uses the word should.
normative
Labor productivity increases when
output remains constant while the labor force decreases.
When there is an external cost, the unregulated market
overproduces the good or service.
The rationality assumption states that
people do not intentionally make decisions that would leave them worse off.
Ceteris paribus, as the price of a good or service increases,
people will buy less of it.
Economic growth can be defined as a percentage increase in
per capita real GDP
A higher minimum wage will reduce employment opportunities for minimum wage workers.
positive
Heathcare subsidies will increase the consumption of health care.
positive
___________ economics is value-free and relates to statements that can be refuted, such as "If A, then B.
positive
When demand decreases and the (upward sloping) supply curve remains in the same position,
price falls and equilibrium quantity falls.
Government intervention in agriculture usually involves
price supports in order to keep farm incomes high.
According to the law of supply
producers provide less of a good when the price decreases.pr
The growth rate of per capita real Gross Domestic Product (GDP) is a reasonable measure of
productive activity.
Retained earnings are
profits not given out to stockholders.
Assume a family that earns $20,000 pays $1,500 in income taxes, while a family that earns $40,000 pays $3,200 in income taxes. In this situation, the income tax system is
progressive.
The federal income tax code of the United States is
progressive.
A current concern about Social Security is that
promised benefit payouts are growing more rapidly than likely sources of revenues, indicating a future inability to keep the system operating.
The study of collective decision making, or the process through which voters, politicians and other interested parties influence nonmarket choices is known as
public choice theory
If a price floor is set below the current market clearing price, then
quantity demanded will remain equal to quantity supplied at the current market clearing price.
An economy's rate of economic growth equals
rate of growth of capital plus rate of growth of labor plus rate of growth in the productivity of capital and labor.
When GDP is corrected to reflect constant dollars, this price-corrected GDP is called
real GDP
Measurement of economic values after adjustments have been made for changes in the average of prices between years in known as
real values
In order to increase the supply of a good, producers must
reduce their per-unit costs of producing the good.
In its most ideal form, a price system allows
resources to move from lower-valued uses to higherminusvalued uses through voluntary exchange.
Higher saving rates mean higher future growth rates because
saving contributes to more investment, which yields a larger capital stock.
For economic growth to take place, a country must save. But, for saving to actually generate economic growth,
saving must be channeled into investment.sa
An increase in growth rates will cause the production possibilities curve to
shift outward.
In a price system, changes in prices
signal to consumers that some goods are relatively more or less scarce.
Unemployment is a ________ concept, measuring the ________.
stock; number of people at a point in time who are not working but who are looking for work.
Fred recently lost his job as a teller at the bank. The bank explained that they were replacing Frank and others with ATM machines. Fred falls into a category of unemployment known as
structural unemployment.
If a decrease in the price of good A causes a decrease in demand for good B, the two goods are
substitutes.su
If the production of a product results in significant external costs, an appropriate government policy might be to
tax producers and thus shift the supply curve to the left.
One way of addressing the associated market failure that generates both private costs and external costs is for this activity to be
taxed
A change in which of the following will result in a shift of the supply curve?
technology and productivity cost of inputs used to produce the product taxes and subsidies All of the above.
New growth theory argues that
technology cannot be looked at as an outside factor without an explanation of what drives it.
New entrants to the labor force usually account for around ________ percent of the unemployed.
ten
Ad valorem taxation means
that the tax rate is a percentage of the price paid for a product.
Thomas Robert Malthus believed
that the world's population would eventually outstrip food supplies.
An economist seeking to predict the effect that an increase in a state's sales tax rate will have on consumers? Purchases of goods and services presumes that people are limited in their ability to process information about how the tax-rate increase will influence the after-tax prices those consumers will pay. In examining the above decision-making process, the approach that the economist is following relies on
the assumption of bounded rationality
To evaluate the impact of an increase in the range of choices that an individual confronts when deciding among devices for accessing the internet, an economic researcher makes the assumption that the individual is unable to take into account every new internet-access option available to her. In examining the above decision-making process, the approach that the economist is following can best be described as the one that relies on
the assumption of bounded rationality.th
An economic model is developed from a set of assumptions about consumer behavior and predicts that people will buy less of a good the higher the price of the good. Empirical testing of this model would involve
the collection of data to evaluate the usefulness of the model
A demand curve is a graphical representation of
the demand schedule
A microeconomist would study all of the following issues EXCEPT
the effect of a change in income taxes on the nation's rate of unemployment.
Suppose there is a simultaneous increase in demand and increase in supply. Given this information, we know with certainty that
the equilibrium quantity will increase.th
The computation of GDP by adding up the dollar value at current market prices of all final goods and services is
the expenditure approach.
The marginal tax rate shows
the extra tax due on an extra dollar of income.
Rational, self-interested government officials seeking more funding for mass transit through higher taxes should consider
the fact that raising taxes is generally unpopular and may result in a potential loss in a future election.
According to the theory of public choice, the employees of General Electric and employees of the U.S. Post Office should act differently because
the incentives facing them are different
Some people claim that the "economic way of thinking" does not apply to issues such as health care. All of the following choices clearly demonstrate how economics applies to this issue, except when
the individual decides against health care as it may make him better off.
Structural unemployment results when
the introduction of a product substitute leads to a large decline in the market demand for a product so that workers specializing in the production of that product find themselves out of work.
In a progressive income tax system,
the marginal tax rate exceeds the average tax rate.
If a tax system is progressive, then
the marginal tax rate is greater than the average tax rate as income rises.
Suppose that the supply curve remains unchanged. If the demand curve shifts to the right,
the market clearing price definitely will increase.th
The price of a firstminusclass stamp in 1957 was 3 cents, and it is 47 cents in 2016. From this we know that
the money price of th firstminusclass stamps increased from 1957 to 2016, but we can't tell if the relative price of firstminusclass stamps increased or decreased without more information.
Costs of unemployment include
the output lost due to the fact that the economy is not running at full employment.
A capital gain is defined as
the positive difference between the sale price and the purchase price of an asset.
The term "creative destruction" refers to
the process by which new jobs are created and old ones destroyed.
After a government implements a voucher program, granting funds that families can spend at schools of their choice, numerous students in public schools switch to private schools. Parents' and students' valuations of the services provided at both private and public schools adjust to equality with the true market price of educational services. As a result of this voucher program,
the public schools will lose
Which of the following transactions would NOT contribute to the GDP?
the purchase of 100 shares of Google stock
Which of the following transactions would be included in the calculation of Gross Domestic Product (GDP)?
the purchase of legal services
An economic study of the number of online searches that individuals conduct before selecting a particular item to purchase online presumes that people are interested only in their own satisfaction, pursue their ultimate objectives, and consider every relevant option. In examining the above decision-making process, the approach that the economist is following can best be described as the one that relies on
the rationality th assumption.
Economics is most precisely defined as
the study of how people make choices.
A municipality taxing hotel guests to obtain funding for a new sports stadium should consider all of the following, except
the winning potential of the sports team using the stadium
The total amount that the U.S. government spends to support a covered type of health care service under the Medicare system equals
the per-unit subsidy provided to producers of that service times the quantity of the service demanded by consumers at a below-equilibrium out-of-pocket price of the service.
Nonprice rationing devices are required
to allocate goods when there is a price ceiling.
Which of the expressions below best describes the aim of economic theory?
to predict the choices people will maketo
The ultimate purpose of economics is
to study how individuals make choices
The simple circular flow of income shows that the total income in an economy equals
total expenditures
Net exports is equal to
total exports minus total imports.to
The simple circular flow model shows that
total income received by households must be equal to the dollar value of all goods and services produced.to
Profits are part of the
total income.to
Gross domestic product (GDP) is the
total market value of all final goods and services produced during a year by factors of production located within a nation's borders.
Money payments made by governments to individuals for which no services or goods are concurrently rendered are known as
transfer payments
The rationality assumption of economics is the assumption that people do not intentionally make decisions that would leave them worse off.
true
When a good causes positive external benefits to accrue to third parties, an unfettered market will
under-allocate resources to the good causing the benefit.
If the U.S. economy enters a recession, the
unemployment rate tends to increase.
The appropriate formula for computing Gross Domestic Product using the income approach (excluding depreciation and indirect income taxes) is
wages + rent + interest + profits + indirect business taxes + depreciation.
The usefulness of a model is determined by
whether it helps to explain or predict real world phenomena.
A rational LOADING..., self-interested student decides whether to purchase a textbook required for a particular class based on all of the following, except
whether the textbook has an attractive dust jacket.
A government is considering two alternative plans for providing subsidy to private schools. Under the first plan it offers to let a number of students at a public school transfer to a private school under two conditions: It will transmit to the private school the same per-pupil subsidy it currently provides the public school, and the private school will be required to admit the students at a below market tuition rate. Under the second plan, the government will simply provide the students with grants to cover the current market tuition rate at the private school. ( Hint: Does it matter if schools receive payments directly from the government or from the consumers?) The outcomes of the two plans
will be different; under the first plan where a private school directly receives the subsidy, it will provide a quantity of educational services in excess of the market equilibrium quantity.
An unexpected import restriction imposed on mangoes by the USDA
will increase the price of mangoes in the United States.
In the figure at right, what are the equilibrium price and quantity?
$30 and 100 units
If nominal Gross Domestic Product (GDP) in 2018 was $3,000 billion, and the price level index was 330 (2000 = 100), then real Gross Domestic Product (GDP) in terms of the price level in 2018 was about
$909 billion.
If demand increases while supply remains unchanged, the equilibrium price of the product will ________ and the equilibrium quantity will ________.
increase; increase
Suppose the price of crude oil used to produce gasoline rises significantly. At the same time, consumers purchase hybrid cars in great numbers. In the market for gasoline, demand shifts to the ________ and supply shifts to the ________.
left, left
