Econ Final

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High income countries are classified as having a GDP per capita that is greater than a. $17,964 b. $21,556 c. $14,970 d. $12,475

$12,475

GDP in the United States in 2012 was about __________.

$16.2 trillion

The diagram above refers to a private closed economy. In this instance, the equilibrium GDP is:

$180 billion.

Alex wants to measure the nominal 1998 GDP of $993 billion in 2008 dollars. From the data he gathered, he knows the deflator for 1998 is 30 and for 2008, it is 74, and that real interest in those years was 6.23% and 3.21% respectively. If he avoids making a misleading calculation, what will the value be?

$2,449 billion

"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is

$44

In 2010, Americans had about _____________ outstanding in credit card debts not paid on time.

$900 billion

7. When discussing economic growth, it is often useful to focus on ____________, to avoid studying changes in the size of GDP that represent only having more people in the economy, and focus on those increases in GDP which represent an actual rise in the standard of living on a per person basis. . economic growth B. GDP per capita C. living standards D. consumption and expenditures

The change in inventories, a component of aggregate supply, comprises roughly __________ of GDP.

0.5%

In Sub-Saharan Africa, the population is 910 million, and the average GDP per capita is: a. $5,399. b. $7,308. c. $1,415. d. $2,733.

1,415

Country Alpha and Country Beta initially have the same real GDP per capita. Country Alpha experiences no economic growth, while Country Beta grows at a sustained rate of 5 percent. In 14 years, Country Alpha's GDP will be approximately _________ that of Country Beta. A. one-fourth B. double C. one-half D. triple

1/2

During the deep recessions of the early 1980s and of 2007-2009, unemployment reached roughly __________.

10%

If GDP is 3600 and the money supply is 300, what is the velocity?

In the United States, a typical credit card interest rate ranges from ______________ per year.

12% to 18%

The high-income economies of the world contain approximately __________ of the world's population and produce and consume ___________ of the World's GDP. a. 12%; over 60% b. 14%; over 70% c. 14%; over 50% d. 12%; over 80%

12%; over 60%

The unemployment rate in a town in which 65,400 persons are employed and 11,000 are unemployed equals:

14.4%.

When Anders took out his first two-year membership with Maxima Gym in 2004, the fee was $540.00. He renewed his membership three times; in 2006 for $580.00, in 2008, for $600.00, and again in 2010, for $630.00. What is the overall rate of inflation for Anders' gym membership?

16.66%

Women composed __________ of the paid workforce in 1900 and 50% of the paid workforce in 2010.

18%

An analyst needs to adjust the nominal GDP for the years 2000 and 2010 into real terms to conclude his comparison analysis. The nominal GDP in 2000 was $672 billion and $1,690 billion for 2010; the real interest rate was 6.79% in 2000 and 3.71% in 2010; the 2000 deflator was 24 and 51 in 2010. What is the real gain?

18.34%

The United States has approximately ___________ credit card holders.

180 million

During the last two centuries, the average rate of growth of GDP per capita in the leading industrialized countries has averaged about _________ per year.

During the last two centuries, the average rate of growth of GDP per capita in the leading industrialized countries has averaged about _________ per year. A. 22% B. 2% C. 32% D. 12%

During the last two centuries, the average rate of growth of GDP per capita in the leading industrialized countries has averaged about _________ per year. A. 22% B. 32% C. 12% D. 2%

Of the world's population of 6.7 billion people, _________ are scraping by on incomes that average less than $2 per day.

2.6 billion

If the price index moves from 107 to 110, the rate of inflation is:

2.8%

During the Great Depression of the 1930s, the unemployment rate reached more than _________ of the labor force.

25%

If nominal GDP is 2700 and the money supply is 900, what is velocity?

Billy Bob's Barber Shop knows that a 5 percent increase in the price of their haircuts results in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of demand facing Billy Bob's Barber Shop?

3.0

A country will roughly double its GDP in twenty years if its annual growth rate is:

3.5 percent

A country will roughly double its GDP in twenty years if its annual growth rate is:

3.5%

Assuming a country's economy maintains an 8% rate of growth, young adults starting at age 20 would see the average standard of living in their country more than double by the time they had reached age __________.

In certain African countries like Niger, Tanzania, Nigeria, and Sudan, for example, GDP per capita at the start of the 2000s was still less than $___________.

300

In certain African countries like Niger, Tanzania, Nigeria, and Sudan, for example, GDP per capita at the start of the 2000s was still less than $___________. A. 300 B. 30 C. 3000 D. 30,000

300

If GDP is 2400 and the money supply is 600, then what is the velocity?

If nominal GDP is 1800 and the money supply is 450, then what is velocity?

In 1990, the GDP of Canada was $680 billion as measured in Canadian dollars, and the exchange rate was that $1 Canadian was worth 85 U.S. cents. In 2000, the GDP of Canada was $1000 billion as measured in Canadian dollars, and the exchange rate was that $1 Canadian was worth 69 U.S. cents. By what percentage did the GDP of Canada increase from 1990 to 2000 in Canadian dollars?

47%

Refer back to the introduction of this set. Of the world's population of 6.7 billion people, _________ are scraping by on incomes that average less than $2 per day. A. 260 million B. 5 billion C. 2.6 billion D. 6.2 billion Submit

5 billion

Freelife, New Hampshire has a labor force of 78,567 persons and employment of 74,382. The unemployment rate for the city is:

5.3%.

If GDP is 1800 and the money supply is 300, then what is the velocity?

Each month the Census Bureau carries out the Current Population Survey (CPS) (which has been carried out every month since 1940). A total of __________ households are contacted every month.

60,000

Refer to table 2-1. A student has only a few hours to prepare for two different exams tomorrow morning. The above table shows alternative possible exam outcomes with three alternative uses of the student's time. The opportunity cost of scoring an 84 on the history exam rather than a 76 is

7 points on the economics exam

On the supply side of the GDP, Structures account for around __________ of U.S. GDP.

In Bangladesh during the early 2000s, the illiteracy rate for girls between the ages of 15 and 24 was __________ and the illiteracy rate for males in this age group was ______________.

78%; 75%

In the early 2000s, the illiteracy rate for girls between the ages of 15 and 24 was __________ and the illiteracy rate for males in this age group was ______________.

78%; 75%

If the unemployment rate is 8 percent, then this means:

8 percent of the labor force is unemployed.

Craigburg has a working age population of 20 million. Of those, 11 million are employed and 1 million are unemployed. The unemployment rate is ________ and the participation rate is __________.

8.3%; 60%.

If a technological leader's economy produces per capita growth rates of about 2% per year, multiplying per capita GDP by a factor of five would take about a. 30 years. b. 70 years. c. 80 years. d. 50 years.

80 years

The basket of goods in the Consumer Price Index consists of about _________ products; that is, several hundred specific products in over __________ broad-item categories.

80,000; 200

North American and the European Union have about _________% of the world's population and their combined economic statistics show that they produce and consume about _________% of the world's GDP. a. 16, 16 b. 9, 70 c. 80, 70 d. 70, 16

9,70

If the unemployment rate is 6 percent and the number of persons unemployed is 6 million, then the number of people employed is equal to:

94 million.

10. Investment (I) includes: A. the amount spent on new factories and machinery.-- B. the amount spent on stocks and bonds. C. the amount spent on consumer goods that last more than one year. D. the amount spent on purchases of art.

10. Refer to the graph above. A government creating economic policy in these circumstances should be most concerned about: A. unemployment but not inflation. B. inflation but not unemployment. C. inflation and unemployment. D. neither inflation nor unemployment.

15. The graph above refers to a significant increase in individual income taxes, taking them to their highest level in 50 years. Which of the following is likely to result? A. unemployment is likely to rise B. natural rate of unemployment is likely to fall C. lower inflationary pressures D. short run increase in economic growth

19. The following table shows the aggregate supply and demand data for a country. If input prices decrease and AS shifts to the right by 3,000 units at each price level. What will the new price equal? A. 600 B. 800 C. 300 D. 400

4. Consumption is the purchase of goods and services by: A. households.-- B. government. C. business firms. D. foreign buyers.

4. In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers A. market-oriented economy B. macroeconomy C. microeconomy D. command economy

41. Referring to the diagram above, complete the following sentence: Any increase in aggregate demand in the short-run will lead to: A. an increase in output (Q1 to Q2), but it will also lead to prices increasing. B. an increase in output (Q1 to Q2), but it will also lead to a recession. C. a 45 degree supply curve, which will lead to increasing unemployment. D. a 45 degree supply curve, which will lead to recession.

6. Assuming a country's economy maintains an 8% rate of growth, young adults starting at age 20 would see the average standard of living in their country more than double by the time they had reached age __________. A. 30-- B. 40 C. 50 D. 60

Aggregate supply (AS) denotes the relationship between the __________________ that firms choose to produce and sell and the _________________, holding the price of inputs fixed. A. total quantity; price level for output B. type of goods; input price of raw materials C. price of goods; number of employees D. total inputs; types of goods

As the aggregate price level in an economy rises, ____________________. A. interest rates increase B. consumer demand increases C. exports decrease D. investment increases

Despite many negative feelings, a number of governments have decided that reducing barriers to trade is at least potentially beneficial to their economy. Which of the following is an example of countries reducing barriers through free trade? A. NAFTA B. NATO C. G20 D. GTO

From a neoclassical view, which of the following is less important? A. fighting unemployment B. encouraging long-term growth C. fighting inflation D. level of potential GDP

Growth policies that mainly focus on both finding appropriate technology and on getting connected through communications and transport infrastructure are generally associated with: A. technologically disconnected nations. B. nations that are technology leaders. C. neoclassical economic theory D. Keynesian economic theory

High income countries are classified as having a GDP per capita that is greater than A. $12,475 B. $14,970 C. $17,964 D. $21,556

If aggregate supply is vertical, then which of the following statements must be true? A. Aggregate demand does not affect the quantity of output. B. Aggregate demand does not cause inflationary changes in price level. C. Inflation will accompany any rise in output. D. Inflation creates greater social benefits.

In 2010, many high-income countries will be focused on the short-term economic horizon due to aggressive and often controversial steps governments took to jump-start these economies out of severe recession. Considering the economic challenges that result from these policies, which of the following actions would be most advisable? A. extricate themselves from the recession and the policies adopted in fighting that recession B. to continue to temporarily disregard the foundations for future long-term growth C. find niches that they are well-suited to fill in the global networks of economic production D. build upon or copy technologies and industries developed by other technology leaders

In an AD/AS model, the point where the economy has excess capacity is called the: A. Keynesian zone of the AS curve B. intermediate zone of the AS curve C. neoclassical zone of the AS curve D. crossing point of the potential GDP line

In an AD/ASAD/AS diagram, __________________________ could explain a rise in cyclical unemployment? A. a shift to the left in either AS or AD B. a shift in AS to the left C. a shift in AS to the right D. a shift in AD to the left

In the global economy, some nations are open to international trade, while others use tariffs and import quotas to limit the impact of trade. Which of the following is a reasonable conclusion that you can draw from this statement? A. differences in economic institutions exist among nations B. no nation intentionally aims for an unsustainable trade imbalance C. nations have similar priorities and similar economic situations D. economic growth is built on a foundation of trade improvements

In the long-run neoclassical view, when wages and prices are flexible, ________________________ determine the size of real GDP. A. potential GDP and aggregate supply B. potential GDP and aggregate demand C. levels of output and aggregate supply D. levels of wages and aggregate demand

In the neoclassic model, economic growth over time shifts potential GDP and the ______________ gradually to the right. A. vertical AS curve B. vertical AD curve C. vertical Phillips curve D. 45 degree AD curve

Many _____________ countries have a legacy of government economic controls. A. converging B. technologically disconnected C. Sub-Saharan D. high-income

Suppose that a rise in business confidence has led to more investment in the economy and higher levels of output. In the short-run Keynesian analysis, the rise in aggregate demand will: A. lower unemployment. B. cause government to lower taxes. C. cause government to increase spending. D. exports will drop.

The ____________________ in an AD/AS diagram is most relevant to Say's Law. A. steep portion of the AS curve B. AS curve C. AD curve D. flat portion of the AS curve

The neoclassical view holds that long-term expansion of potential GDP due to _______________________ will determine ____________________. A. economic growth; the size of the economy B. government spending; aggregate demand C. government spending; aggregate supply D. economic adjustments; cyclical unemployment

Unemployment rates in the nations of Europe have typically been ____________ than in the United States. A. higher B. lower C. the same D. better

Using a neoclassical model, what will the level of cyclical unemployment be when an economy is producing at potential GDP? A. zero B. never 0% C. 1% - 3% D. 3% - 5%

What do growth in standard of living, low unemployment, low inflation, and a sustainable balance of trade all share in common? A. main universal goals of macroeconomic policy B. lack of diversity in undeveloped countries in the World C. microeconomic policy goals of developed countries D. microeconomic policy goals of undeveloped countries

When GDP per capita is used as a rough measure to compare the economic regions of the World, Latin America and the Caribbean are better off than _________________, but worse off than ___________________. A. Sub-Saharan Africa; South Asia, Eastern Europe and Central Asia B. Eastern Europe and Central Asia; East Asia and the Pacific C. East Asia and the Pacific; the Middle East and North Africa D. South Asia; Eastern Europe and Central Asia

When a shift in ________________ occurs, rational expectations hold that its impact on output and employment will only be temporary. A. aggregate demand B. aggregate supply C. wage levels D. price levels

When prices of outputs in an economy become sufficiently high causing production to exceed potential GDP, the resulting: A. hyper-intense production will be unsustainable in the long run. B. higher wages will encourage workers to produce more at high prices. C. lower prices will lead to a lower quantity of demand. D. downward slope in aggregate supply curve will be short run.

Which of the following government policies would be supported by neoclassical macroeconomic assumptions? A. focus on long-term growth and on controlling inflation B. focus on short-term recession and controlling inflation C. focus on combating depression and cyclical unemployment D. focus on real GDP and cyclical unemployment

Which of the following is most strongly supported by the Keynesian perspective of macroeconomics? A. inflation is a price that might have to be paid to achieve lower unemployment B. inflation offers no offsetting gains in terms of higher unemployment C. more emphasis on economic growth and how labor markets work D. shifts in unemployment primary determine changes in the price level

Why do smaller economies around the world typically face more volatile inflation? A. they can be unsettled by international movements of capital and goods B. they address inflation concerns without restricting trade and thus lose benefits C. businesses are distracted from focusing on real productivity gains D. the fundamentals of growth are the same in every country

_________________ results when an economy experiences high unemployment and high inflation at the same time. A. Stagflation B. Deflation C. Reflation D. Recession

__________________________ address the problem of economic growth by continually striving for a more educated workforce that can create, invest in and apply new technologies. A. Technological leaders B. Technologically disconnected nations C. Converging economies D. Command economies

trade surplus

A __________________ often results in an outflow of financial capital leaving the domestic economy and being invested in the global economy?

budget deficit

A ______________________ is created each time the federal government spends more than it collects in taxes in a given year.

higher interest rate

A ____________________________ is one economic mechanism by which government borrowing can crowd out private investment.

proportional tax

A ________________________________ is calculated as a flat percentage of income earned, regardless of level of income.

sustained pattern of large budget deficits

A ___________________________________ can lead to disruptive economic patterns and heavy strains on a country's banking and financial system.

out of the labor force

A college student who is enrolled in school full time and not seeking employment is considered:

especially large and sustained government borrowing

increase

A decrease in the government's budget surplus will cause the interest rate to:

cyclically unemployed.

A forestry worker who is out of work because of the temporarily low demand for wood products associated with a recession is defined as:

12.60%

A government annually collects $230 billion in tax revenue and allocates $29 billion to its universal healthcare spending. What percentage of this government's budget is spent on healthcare?

the exchange rate and the trade deficit to decrease

the exchange rate and the trade deficit to increase.

28.57%

A government collects $700 billion annually in tax revenue. Each year it allocates $70 billion to the justice system and $130 billion for its own administrative costs. What percentage of annual tax revenue is allocated to these two categories of government spending?

implement fiscal policy establishing tax incentives

A government will likely ____________________________ to encourage investment in technology R&D by private firms.

Which of the following is included in the calculated Gross Domestic Product?

A local ice cream store sells $17,000 worth of cones and sundaes on July 1.

moderate increase in a trade deficit and a moderate appreciation of the exchange rate

A moderate increase in a budget deficit that leads to a _____________________ is not necessarily a cause for concern

lower economic growth

A prolonged period of budget deficits may lead to ___________________.

give private investment an opportunity to expand.

A reduction in government borrowing can:

1. During the last two centuries, the average rate of growth of GDP per capita in the leading industrialized countries has averaged about _________ per year. A. 2% B. 12% C. 22% D. 32%

10. Marginal thinking is best demonstrated by: A. choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time. B. deciding to never purchase a coat made with animal skins or furs C. acquiring the information relevant to a choice before making that choice D. measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake

12. The general pattern that consumption of the first few units of any good tends to bring a higher level of _______ to a person than consumption of later units is a common pattern. A. utility B. marginal benefit C. opportunity cost D. sunk costs

18. The model that economists use for illustrating the process of individual choice in a situation of scarcity is the budget constraint, sometimes also called the _______________, a diagram which shows what choices are possible. A. opportunity set B. consumption choice C. time value of money D. risk premium

18. Which of the following statements is true? A. GDP includes spending on recreation and travel, but it does not cover leisure time. B. GDP does not include production that is exchanged in the market, but it does cover production that is not exchanged in the market. C. GDP does not include newly produced goods and services, but counts the buying and selling of previously existing assets D. GDP includes production that is not exchanged in the market

20. The choice on a production possibilities set that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display _____________________. A. allocative efficiency B. the production possibilities frontier C. trade-offs D. scarcity

5. ___________ is a small category that refers to the goods produced by one business that have yet to be sold to consumers, and are either still sitting in warehouses and on store shelves. A. Inventories-- B. Services C. Structures D. Durable goods

7. The ___________ is the only price where quantity demanded is equal to quantity supplied. A. equilibrium price B. horizontal axis intercept C. vertical axis intercept D. market price

7. Which of the following is not counted as a part of GDP? A. the purchase of 100 shares of AT&T stock by your grandfather.-- B. the purchase of a snow plough by the city of Minneapolis. C. the unsold additions to inventory at an appliances store D. the purchase of a loaf of bread by a consumer

Refer to Table 5-1. If D2 and S1 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are __________ and __________, respectively.

A. $8; 15

In 2010, Americans had about _____________ outstanding in credit card debts not paid on time.

A. $900 billion

On April 1, 2009, in the middle of a recession, the government of the province of Ontario, Canada increased the provincial minimum wage from $8.75 to $9.50. What will the likely effect of this policy be?

A. Both the leftward shift in the labor demand curve and the higher minimum wage will lead to an increase in the unemployment rate.

Refer to Figure 5-1. The movement from __________ to __________ is consistent with a decrease in the price of cotton (a substitute).

A. Point A; Point H

11. Which of the government policies below is most unlikely to encourage per capita economic growth?

A. high taxes on companies that spend a lot on capital formation--- B. the use of tax revenues for investment and capital formation C. special subsidies for capital-intensive forms of production D. promotion of education and training programs for workers

Since Baltimore passed the first _______________ in 1994, several dozen cities enacted similar laws in the late 1990s and into the 2000s.

A. living wage law

1. Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be A. normative statement B. budget constraint C. trade-off D. opportunity cost

A. normative statement

10. Country Alpha and Country Beta initially have the same real GDP per capita. Country Alpha experiences no economic growth, while Country Beta grows at a sustained rate of 5 percent. In 14 years, Country Alpha's GDP will be approximately _________ that of Country Beta.

A. one-fourth B. one-half-- C. double D. triple

The "law of supply" functions in labor markets; that is, a higher __________ for labor leads to a higher quantity of labor supplied.

A. price

As the _____________ complement for high-skill labor becomes cheaper, the demand curve for high-skill labor will shift to the right.

A. technology

2. As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good A. the production possibilities frontier B. allocative efficiency C. scarcity D. utility

A. the production possibilities frontier

In what way is each and every one of the economies of the more than 200 countries of the world similar? a. each focuses on a neoclassical perspective b. all use the same macroeconomic policies c. all have their own distinctive characteristics d. each focuses on a Keynesian perspective

All have their own distinctive characteristics

Refer to Figure 2-2. When the economy moves from Point A to Point B in the diagram above

All of the above occur

productivity and economic growth

An additional investment in human capital, especially for the low-income nations of the world, will likely directly increase which of the following?

crowd out private investment in physical capital

An increase in government borrowing can:

Which of the following statements most likely lies within the realm of microeconomics?

An increase in labor costs will increase the additional cost of producing another bus.

decrease

An increase in the government's budget surplus will cause the interest rate to:

20. Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect:

Andy's demand for beer to increase.

Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect:

Andy's demand for beer to increase.

$540 billion

At the beginning of 2009, a government had a total debt of $540 billion dollars. It ended 2009 with a $6 billion dollar budget surplus. In 2010, its budget surplus reached $8 billion dollars. What is the total debt of the government equal to at the end of 2010?

12. The graph above reflects a significant increase in world oil prices. What will the impact on aggregate supply most likely lead to? A. an increase in economic growth B. an increase in input prices C. a decrease in the natural unemployment rate D. less inflationary pressures

13. If imports exceed exports, as in recent years, then __________ exists. A. a trade surplus B. a trade deficit-- C. a trade imbalance D. trade disequilibrium

13. The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options. A. marginal utility B. sunk costs C. marginal analysis D. budget constraints

16. Which of the following would most likely shift the production possibilities curve inward? A. an increase in the number of hours factories are in use B. a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time C. an increase in the production of capital goods D. technological progress

17. The following table shows the aggregate supply and demand data for a country. What is the equilibrium price level? A. 200 B. 400 C. 500 D. 800

19. Economists refer to this pattern, the ___________________________________, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines. A. law of trade-offs B. law of diminishing marginal utility C. production possibilities frontier D. law of increasing marginal utility

2. Any given demand or supply curve is based on the ceteris paribus assumption that ___________________. A. everything is variable. B. all else is held equal C. no one knows which variables will change and which will remain constant. D. what is true for the individual is not necessarily true for the whole.

2. _____________________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s. . A GDP per capita B. The Industrial Revolution C. The living standard D. Investment and inventions

3. To achieve a high standard of living, a nation should: A. increase the tax deduction for child dependents. B. promote economic growth. C. use less capital and more labor in the production process. D. increase welfare payments to the poor.

4. In economics, the demand for a good refers to the amount of the good that people: A. would like to have if the good were free. B. will buy at various prices. C. need to achieve a minimum standard of living. D. will buy at alternative income levels

4. In the long run, the most important source of increase in a nation's standard of living is a: A. zero rate of population growth B. high rate of economic growth. C. high rate of consumption. D. high rate of labor force growth

42. Referring to the diagram above, which of the following is a true statement? A. The increase in supply (Q1 to Q2) may come about because of increased money supply. B. The increase in output (Q1 to Q2) may come about because of lower levels of taxation. C. The increase in supply (Q1 to Q2) may result from decreased government spending. D. The increase in output (Q1 to Q2) may result from increased levels of taxation.

8. After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is A. no change; only the supply curve for beef is likely to be affected. B. a shift of the demand curve for beef to the left. C. a movement down along the demand curve for beef to the right. D. a shift of the demand curve for beef to the right.

8. _________ are now the largest single component of the supply side of GDP, representing over half of GDP. A. Durable goods B. Services-- C. Nondurable goods D. Structures

9. Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good. A. utility B. marginal analysis C. the budget constraint D. consumption

A typical neoclassical aggregate supply (AS) curve ______________ and a typical neoclassical Phillips curve __________________. A. slopes upward; slopes downward B. is vertical; is vertical C. is vertical; slopes downward D. slopes upward; is vertical

Aggregate demand curves slope downwards for each of the following reasons EXCEPT A. The wealth effect: As the price level falls, the buying power of people's savings increases and induces them to spend more. B. The substitution effect: As the price level falls, people buy more of the cheaper goods and less of other goods. C. The interest rate effect: As prices for outputs rise, it costs more to make the same purchases, driving up the demand for money, raising interest rates and reducing investment spending. D. The foreign price effect: As the price level falls, U.S. become more attractive to foreigners and domestic residents, increasing net export spending.

Along with the general growth-oriented agenda, some central Asian nations need an improved infrastructure of _________________, along with research into ___________ focused on their particular economic realities. A. market-oriented institutions; economic and legal stability B. communication and transportation; technology C. foreign aid; foreign investment D. health and medical research; foreign aid

Factors like health, education, human rights, crime, personal safety, and cleanliness of environment all: A. fail to capture the standard of living in a precise manner. B. have a large impact on the standard of living of a country. C. have a slight impact on the standard of living of a country. D. fail to capture diversities that make up the global economy.

If Keynes' law applies during economic contractions and Say's law applies during economic expansion, how will the three goals of macroeconomics be affected? A. determinates of total supply for the economy will be traded-off B. trade-offs and connections may differ in the short run and the long run C. the economy will face genuine limits to how much can be produced D. institutional and market structures will connect factors of production

If a technological leader's economy produces per capita growth rates of about 2% per year, multiplying per capita GDP by a factor of five would take about: A. 50 years. B. 80 years. C. 30 years. D. 70 years.

In _____________________________, firms and workers often build upon or copy technologies and industries developed by the technology leaders. A. Eastern Europe's disconnected economy B. China and India's converging economies C. the Middle East's low-income economies D. South Africa's developing economy

In an AD/AS diagram, an increase in structural unemployment will: A. shift AS to the right. B. have no effect on AS or AD. C. shift AS to the left. D. shift AD to the left.

In any economy functioning at potential GDP, there are occasions when the short-term aggregate supply curve unexpectedly shifts, causing inflationary pressures. Which of the following is considered to be a common cause of this type of shift? A. overoptimistic lending by banks B. sudden rise in input prices C. a surge of export sales D. a wave of government spending

In order to shift the vertical supply curve to the left, which of the following would have to occur? A. increase in productivity B. breakdown of key market institutions C. expansion of potential GDP D. flexible wage and price adjustments

In the neoclassical model, the AS curve shifts to the right over time as_______________________ and potential GDP expands. A. the macroeconomy adjusts back to real GDP B. productivity increases C. the level of real output drops D. aggregate demand increases

It is sometimes necessary for a _________________ economy to live with a degree of uncertainty over _______________ that would be politically unacceptable in the high-income economies. A. developing; unemployment B. converging; inflation C. disconnected; fundamentals of growth D. converging; trade imbalances

Many high-income nations are approaching a situation in which: A. they will intentionally aim for a low standard of living. B. the elderly will soon form a much larger share of the population. C. the demands of the elderly will cause an unsustainable trade imbalance. D. they will intentionally aim for high rates of unemployment and inflation.

Most contracts, wage levels, and interest rates are either indexed to inflation, or involve using the currency of another country to sidestep the problem of inflation in some converging economies. Following these policies caused A. the net flow of foreign investment in and out of the economy reached zero B. solid levels of economic growth for sustained periods of time with 10-30% inflation C. a moderate but substantial current account trade imbalance to control inflation D. indexed inflation policy trade-offs that led to substantial restrictions on trade

Over the long run, a surge in aggregate demand from a neoclassical perspective will most likely result in: A. a rise in level of output. B. an increase in price level. C. downward pressure on the price level. D. pressure for a lower level of inflation.

The Keynesian view of economics assumes that: A. the Keynesian Phillips curve is vertical. B. wages are sticky. C. the economy must focus is on long-term growth. D. economic output is primarily determined by aggregate supply.

The U.S. trade deficit can disappear without raising legitimate concerns over disruption to the economy if: A. the U.S. immediately ceases trade with all foreign countries. B. domestic savings rates increases and foreign investment gradually decreases. C. all tariffs are doubled and import quotas are reduced by half. D. foreign investors sell their U.S. dollar investments and stop investing in the U.S. economy.

The ____________ describes a situation where sufficient credit is available, but the economy experiences a reduction in consumption and investment. A. inflation rate effect B. interest rate effect C. wealth effect D. price effect

The __________________ in an AD/AS diagram is most relevant to Keynes's Law. A. AS curve B. flat portion of the AS curve C. AD curve D. steep portion of the AS curve

The high-income economies of the world contain approximately __________ of the world's population and produce and consume ___________ of the World's GDP. A. 14%; over 50% B. 12%; over 60% C. 14%; over 70% D. 12%; over 80%

The maximum quantity that an economy can produce, given its existing levels of labor, physical capital, technology, and institutions, is called: A. real GDP. B. potential GDP. C. aggregate supply. D. aggregate demand.

The neoclassical perspective on macroeconomics emphasizes that in the long run, the economy seems to rebound back to its _____________ and its ____________________. A. long term growth; cyclical unemployment B. potential GDP; natural rate of unemployment C. natural level of output; cyclical unemployment rate D. real GDP; natural rate of unemployment

The theory of _____________________ holds that people will use all information available to them to form the most accurate possible expectations about the future. A. adaptive expectations B. rational expectations C. Keynesian economics D. Neoclassical economics

When other factors such as health and illiteracy rates are added to global comparisons of GDP and population, which of the following is likely to be revealed? A. rough comparisons between regions as data are not available B. very wide differences in the standard of living C. 2% of the world's GDP comes from agriculture in low-income countries D. the similarity in the low degree of urbanization

When the economy of a country is operating close to its full capacity: A. the unemployment rate is greater than the natural rate of unemployment. B. cyclical unemployment is close to zero. C. unemployment is close to zero. D. the unemployment rate is less than the natural rate of unemployment.

Which of the following is a valid criticism of the rational expectations theory? A. prices do not wait on events B. the assumption seems too strong C. people form the most accurate possible expectations D. adjustment of wages and prices might be quite rapid

Which of the following must be present in order for the aggregate supply curve to form an upward slope? A. the lure of higher profits to induce continued production B. fixed cost of inputs combined with rising prices for outputs C. rise in aggregate quantity of supplied goods and services D. constant price level for intermediate goods and services

Which of the following will have the greatest influence on the slope of the demand curve in a single market model? A. wealth effects B. substitute goods C. full employment D. higher wages

While governments will play a different role across countries, all the ________________ economies have found that increasing ____________________ for firms and workers has been a critical ingredient in the recipe for faster growth. A. technologically disconnected; focus on raising human capital B. converging; market-oriented incentives C. technologically disconnected; focus on increasing technology D. high-income; retained revenue and wages

With regard to the major issues involving trade imbalances, which of the following explains why smaller countries around the world should take some steps to limit flows of international capital? A. to counter cyclical unemployment B. to reduce susceptibility to economic whiplash C. to maintain the natural rate of unemployment D. to achieve real productivity gains

________________________ are the result of improvements in human capital, physical capital, and technology interacting in a _____________________. A. High income economies; command economy B. Productivity improvements; market-driven economy C. Global economies; remarkably similar manner D. Sustainable balances of trade; global economy

Refer to Table 5-1. If D2 and S2 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are __________ and __________, respectively.

B. $10; 12

Refer to Table 5-1. If D1 and S1 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are __________ and __________, respectively.

B. $4; 16

Are markets always in equilibrium?

B. No, but if there is no outside interference, they tend to move toward equilibrium.

Refer to Figure 5-1. The movement from __________ to __________ is consistent with a successful advertising campaign that claims wool keeps you warm.

B. Point A; Point F

Steel mill wage costs increase by 18 percent over a year. What is the likely economic effect on the market for steel?

B. There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel.

How do apple growers react to the news of medical research findings that suggest that eating apples leads to greater health benefits than were previously known?

B. They increase the quantity of apples supplied.

The supply curve of textbooks (which are produced using paper made from trees) will shift to the left in response to:

B. a sharp increase in the demand for and construction of wood-frame homes.

Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine:

B. both the equilibrium price and quantity will rise

Many economists believe that the trend toward greater wage inequality across the U.S. economy was primarily caused by _____________.

B. new technologies

Many states do have ____________, which impose an upper limit on the interest rate that lenders can charge.

B. usury laws

difficulty managing public investment so it's done in a cost effective way

Because of the difference between the discipline imposed by market competition and the discipline imposed by political decisions, which of the following is most likely?

Why is there scarcity

Because our unlimited wants exceed our limited resources

In the circular flow diagram model:

Both (a) and (b) are correct.

Both the leftward shift in the labor demand curve and the higher minimum wage will lead to an increase in the unemployment rate.

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the ______, sometimes also called the opportunity set, a diagram which shows what choices are possible

Budget constraint

The slope of the _____ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good

Budget constraint

Which of the following best characterizes the circular flow of income?

Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.

in accumulated government debt

By June, 2010, the U.S. government owed $13.6 trillion dollars ________________ that, over time, has remained unpaid.

1. The downward slope of the demand curve again illustrates the pattern that as _____________ rises, _________________ decreases. A. quantity demanded, price B. quantity supplied, quantity demanded C. price, quantity demanded D. price, quantity supplied

11. Middle-income countries, which include much of Latin America, Eastern Europe, and some countries in East Asia, have per capita GDP in the range of ___________. A. $60 to $120 B. $600 to $1200 C. $6,000 to $12,000 D. $60,000 to $120,000

12. When __________________, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right. A. prices rise B. equilibrium is achieved C. costs of production fall D. there is a population increase

13. The graph above refers to a significant increase in individual income taxes, taking them to their highest level in 50 years. Which of the following is likely to result? A. cyclical unemployment will decrease B. inflationary pressures will be greater C. the economy will experience lower economic growth D. input prices will rise in the short run

14. The law of ____________________________ explains why people and societies rarely make all-or-nothing choices .A. consumption B. marginal analysis C. diminishing marginal utility D. utility

15. As a person receives more of a good, the _______________ from each additional unit of the good declines. A. utility B. sunk costs C. marginal utility D. budget constraint

16. The following table shows the aggregate supply and demand data for a country. What is the equilibrium output? A. 8,000 B. 4,000 C. 7,000 D. 9,000

17. In deciding how many hours to work, Beulah will make a choice that maximizes her _______; that is, she will choose according to her preferences for leisure time and income. A. budget constraint B. opportunity set C. utility D. production possibilities frontier

19. The difference between nominal GDP and real GDP is: A. nominal GDP measures actual productivity B. nominal GDP adjusts for inflation C. real GDP adjusts for inflation D. real GDP excludes imports and exports

19. _____________ - a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines A. Skill B. Specialization C. Economies of scale D. Division of labor

20. The nominal value of any economic statistic refers to the number that is actually announced at that time, while the ________________ refers to the statistic after it has been adjusted for inflation. A. empirical value B. adjusted value C. real value D. net value

3. Economists refer to the relationship that a higher price leads to a lower quantity demanded as the _____________. A. income gap B. market equilibrium C. law of demand D. price model

43. Referring to the diagram above, which of the following is a true statement? A. Short-run increased output will lower output costs, but demand for higher profits will increase prices. B. Higher cost levels will result because government will increase taxes as output rises. C. Higher cost levels of increased output will force an increase in price for the product. D. Short-run lower output costs will result because government will decrease taxes as output rises.

5. The value of what is produced per worker, or per hour worked, is called ____________. A. economic growth B. human capital C. productivity D. GDP per capita

5. When economists talk about supply, they are referring to a relationship between price received for each unit sold and the _________________. A. demand schedule B. market price C. quantity supplied D. demand curve

6. Which of the following is included in the calculated Gross Domestic Product? A. Farmer Freddie sells his second tractor to his son. B. Suzanne buys a love seat and chair for $85 at the yard sale on the corner. C. A local ice cream store sells $17,000 worth of cones and sundaes on July 1.-- D. Mr. Farkle buys a used lawn mower from his neighbor, Mr. Sparkle.

9. GDP in the United States in 2012 was about __________. A. $162 billion B. $1.62 trillion C. $16.2 trillion-- D. $162 trillion

A trade balance can be quickly defined as the gap between _____________, which are also included in the current account balance along with _______________________. A. supply and demand; investment income and unilateral transfers B. supply and demand; stocks and bonds C. exports and imports; investment income and unilateral transfers D. exports and imports; stocks and bonds

A vertical AS curve means that the level of aggregate supply (or potential GDP) will determine the real GDP of the economy, regardless of the level of: A. cyclical unemployment. B. real unemployment. C. aggregate demand. D. inflationary pressures.

After reports of the subprime mortgage crisis began to appear in the media, which of the following most likely caused housing prices to fall? A. neoclassical theory B. cyclical expectations C. rational expectations D. Keynesian theory

Aggregate supply curves are ________________________ for low levels of output, and ____________________________ for high levels of output. A. relatively flat; remain flat B. relatively steep; remain steep C. relatively flat; relatively steep D. relatively steep; relatively flat

Because China and the East Asian tigers are _________________________, their economies have all experienced rapid economic growth rates. A. rely on using technology developed by technological leaders B. overly reliant on a legacy of government economic controls C. the highest savers in the world, often saving one-third or more of GDP D. technologically disconnected, they encourage their firms to participate in world markets

Changes in the price level of the different components of aggregate demand are reflected in the AD/AS AD/AS macroeconomic model by a ________________________. A. flatter top portion of AD curve B. longer distance to equilibrium point C. downward sloping AD curve D. shorter distance to equilibrium point

Consumption in the United States is about ____________ of GDP, and it moves relatively little over time. A. 10% B. 33% C. 68% D. 90%

Countries have strong differences in economic institutions: the U.S. is extremely _________________, Cuba has a ________________ and Canada is a mixture of both. A. high-income; low-income B. technological; shortage of technology C. market-oriented; command economy D. regulated; lack of regulation

Due to inflationary pressures, the national income of households has been spread across a higher overall price base for goods and services. How will this affect be shown in an AD/ASAD/AS model? A. nearly vertical AS slope at the far right B. nearly horizontal AD curve at the far left C. a downward sloping AD curve D. a downward sloping AS curve

From a neoclassical perspective, which of the following would most likely be viewed as an element that underpins long-run productivity growth in the economy? A. flexible price levels B. flexible market forces C. investments in human capital D. higher unemployment

If a neoclassical model shows increasing wages in the economy over the long run, what else will likely occur? A. change in government policy to decrease in aggregate demand B. substantial short-term off-setting decrease in output C. inflationary increase in price level D. short-run decrease in cyclical unemployment

If aggregate supply is vertical, then aggregate demand does not affect: A. either wages or prices. B. the causes of inflationary changes in price level. C. the quantity of output. D. inflationary pressures that accompanies any rise in output.

In Sub-Saharan Africa, the population is 910 million, and the average GDP per capita is: A. $5,399. B. $2,733. C. $1,415. D. $7,308.

In macroeconomics, _____________________ denotes the relationship between the total quantity of goods and services and the price level for output. A. macroeconomic equilibrium B. aggregate supply (AS) C. aggregate demand (AD) D. potential GDP

In the U.S., international trade raises many _______________ that are the same as issues raised by ________________________ in the domestic economy. A. monetary policy issues; real productivity gains B. fiscal policy issues; trade-offs that control inflation C. public policy issues; competitive market forces D. public policy issues; workers' demands for long-term benefits

In the neoclassical version of the AD/AS model, which of the following should you use to represent the AS curve? A. the AS curve shifting as productivity increases B. an upward sloping curve with a vertical top C. a vertical line drawn at the level of potential GDP D. the AS curve shifting as potential GDP expands

In the neoclassical view, changes in ____________________ can only have a short-run impact on output and on unemployment. A. wage levels B. aggregate supply C. aggregate demand D. tax levels

In the neoclassical view, the economy has a ___________________________ to move back to potential GDP. A. rational tendency B. tendency to be unable C. self-correcting tendency D. immediate tendency

In what way is each and every one of the economies of the more than 200 countries of the world similar? A. all use the same macroeconomic policies B. each focuses on a Keynesian perspective C. all have their own distinctive characteristics D. each focuses on a neoclassical perspective

Melanie decided to save 20% of her annual earnings for 10 years so she would have a down payment for a house. After 5 years, what change in the economy would cause an increase in the purchasing power of the funds she has managed to save? A. recession B. depression C. deflation D. stagflation

Of all the arguments for placing limitations on trade, which of the following would most likely be characterized as being the most controversial among economists? A. bank/financial sector regulation argument B. floating currency argument C. the infant industry argument D. quantitative easing argument

Policies that provide governments with economic controls should be evaluated on their __________________________________, not on the basis of the promises of their supporters or the theories of economists. A. ability to be dismantled quickly over time B. acceptance by market-oriented economists C. actual effects, which can be positive or negative D. ability to act as a critical ingredient for faster growth

Potential GDP in the U.S. will be unaffected by ____________________. A. technology B. the amount of capital available C. the unemployment rate D. government institutions

The _________________ means that a higher price level leads to lower real wealth. A. employment effect B. interest rate effect C. wealth effect D. foreign price effect

The ___________________ argument tends to view inflation as a cost that offers no offsetting gains in terms of lower unemployment? A. market forces B. Keynesian C. neoclassical D. flexible wage and price

The shape of the ______________ involves a tradeoff between unemployment and inflation. A. aggregate demand curve B. aggregate supply curve C. Phillips curve D. Keynesian demand curve

What name was given to South Korea, Thailand, Malaysia, Indonesia, Singapore, Hong Kong and Taiwan because of their economic success? A. Asian tigers B. West Asian tigers C. East Asian tigers D. Tigers

What term is used to describe the maximum quantity that an economy can produce, in the context of its existing inputs, market and legal institutions? A. GDP deflator B. AS curve C. potential GDP D. aggregate supply

When per capita GDP is used as a rough measure to compare the economic regions of the World, the richest region is _________________ and the poorest region is ________________. A. East Asia and the Pacific; South Asia B. the United States, Western Europe and Japan; South Asia C. the United States, Western Europe and Japan; Sub-Saharan Africa D. East Asia and the Pacific; Sub-Saharan Africa

Whether the economy is in a recession is illustrated in the AD/AS model by how close the _____________________ is to the potential GDP line. A. AS curve B. AD curve C. equilibrium D. AS and AD curve

Which of the following represents a Keynesian point of view of macroeconomics? A. focus on long-term growth in the economy B. aggregate supply is the primary determinate of economic output C. creating increases in aggregate demand to reduce unemployment D. vertical aggregate supply

Why do neoclassical economists tend to put relatively more emphasis on long-term growth than on fighting recession? A. price and wage stickiness is reasonable in the short run B. government focuses more on recession and cyclical unemployment C. standard of living is ultimately determined by long-term growth D. upward trend of potential GDP determines the rate of inflation

________________ economists place an emphasis on __________ run economic performance. A. Phillips; short B. Keynesian; long C. Neoclassical; long D. Says; short

_______________________ are economists who generally emphasize the importance of aggregate supply in determining the size of the macroeconomy over the _____________. A. Keynesian economists; long run B. Keynesian economists; short run C. Neoclassical economists; long run D. Neoclassical economists; short run

_______________________ happens when the economy is producing at its potential and unemployment is at the natural rate of unemployment. A. The foreign price effect B. Stagflation C. Full employment GDP D. The interest rate effect

___________________________ in high-income countries is caused by the economy being in a recession. A. A cyclical standard of living B. The natural rate of unemployment C. Cyclical unemployment D. A natural literacy rate

Refer to figure 2-1. An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in the movement from

C to F

In the United States, a typical credit card interest rate ranges from ______________ per year.

C. 12% to !8%

The imposition of a price ceiling on a market often results in:

C. a shortage

Which of the following will not result in a leftward shift of the market demand curve for labor?

C. an increase in the wage rate

The labor ____________ curve(s) will shift _______________ if there is an increase in productivity or an increase in the demand for the final product.

C. demand; right

Refer to Table 5-1. Suppose that D2 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D2 to D1, then:

C. equilibrium quantity decreases from 15 to 13.

Improvements in the productivity of labor will tend to:

C. increase wages

If the demand for software engineers __________ slower than does supply, then wages of software engineers will __________.

C. increases; fall

In contrast to goods and services markets, _____________ are rare in labor markets, because rules that prevent people from earning income are not politically popular.

C. price ceilings

A straightforward example of a _______________, often used for simplicity, is the interest rate.

C. rate of return

A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will:

C. shift to the right, decreasing the price of the drug

As the __________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left.

C. technology

When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________.

C. the quantity demanded of financial capital at any given interest rate will shift to the right.

Whenever there is a shortage at a particular price, the quantity sold at that price will equal:

C. the quantity supplied at that price

If labor demand is downward sloping and labor supply is upward sloping, then when labor demand rises faster than labor supply, it is expected that real wages __________.

C. will increase

Nancy's union has negotiated a three-year wage contract that provides for a 2.4% increase indexed to inflation. The rates of inflation are forecast to be 1.62%, 1.93% and 2.21% respectively. How will Nancy's wage increase be expressed in the new contract?

COLA plus 2.4%

Which of the following institutions determines the quantity of money in the economy as its most important task?

Central Bank

The ___________________ is the institution designed to control the quantity of money in the economy and also to oversee the:

Central Bank; safety and stability of the banking system.

Several types of economic events can cause a shift in labor demand, so that a higher or lower quantity of labor is hired at every salary or wage. List three of these events.

Changes in education and training, changes in technology, changes in government regulations. Changes in the number of workers, changes in required education, changes in government policies.

In _____________________________, firms and workers often build upon or copy technologies and industries developed by the technology leaders. a. the Middle East's low-income economies b. South Africa's developing economy c. China and India's converging economies d. Eastern Europe's disconnected economy

China and India's converging economies

Marginal thinking is best demonstrated by

Choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time

___________ is about two-thirds of the demand side of GDP, but it moves relatively little over time.

Consumption

The GDP deflator is a price index that includes the following components of GDP:

Consumption, Investment, Government plus Exports minus Imports

8.3% ; 60%

Craigburg has a working age population of 20 million. Of those, 11 million are employed and 1 million are unemployed. The unemployment rate is _____ and the participation rate is _______.

In which of the following countries will the national government have the greatest influence with respect to the nation's economy?

Cuba

In countries like _____________ the command economy predominates.

Cuba and North Korea

is lower than its historical high point.

Currently, the US government accumulated debt to GDP ratio:

___________________________ in high-income countries is caused by the economy being in a recession. a. A natural literacy rate b. The natural rate of unemployment c. A cyclical standard of living d. Cyclical unemployment

Cyclical unemployment

1. GDP is A. the sum of all currency and coins in circulation. B. the value of all final goods and services produced by a government. C. the value of all final good and services produced anywhere in the world by a nation's firms. D. the value of all final goods and services produced domestically.

11. Referring to the above diagram, which of the following is a true statement? A. Macroeconomic policy will be needed to address rising inflation. B. There is sufficient aggregate demand to cause inflationary pressures. C. The equilibrium in the economy is at a level of output above full employment. D. There is insufficient aggregate demand to reach full employment.

11. Which of the following is most likely a topic of discussion in macroeconomics A. an increase in the price of a hamburger B. a decrease in the production of DVD players by a consumer electronics company C. an increase in the wage rate paid to automobile workers D. a decrease in the unemployment rate

12. A business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle are (in order): A. trough, expansion, recession, peak B. contraction, recession, expansion, boom C. expansion, trough, recession, peak D. expansion, peak, recession, trough--

14. In 1980 Denmark had a GDP of $70 billion (measured in U.S. dollars) and a population of 5.1 million. In 2000, Denmark had a GDP of $160 billion (measured in U.S. dollars) s and a population of 5.3 million. By what percentage did Denmark's GDP per capita rise between 1980 and 2000? A. 45.4% B. 219% C. 128% D. 120%---

14. The graph above refers to a significant increase in oil prices. Which of the following is likely to result? A. long run economic gains B. short run economic gains C. natural rate of unemployment remains constant D. a rise in inflation from 2.0% to 3.0%

16. _______________, which can be approximated by the growth of gross domestic product, ultimately determines the prevailing standard of living in a country. A. Trade balance B. Inflation C. Education D. Economic growth

17. The change in inventories, a component of aggregate supply, comprises roughly __________ of GDP. A. 20% B. 10% C. 1% D. 0.5%

18. The following table shows the initial aggregate supply and demand data for a country. If input prices rise and AS shifts to the left by 2,000 units at each price level, what output level will equal the new equilibrium price? A. 6000 B. 2000 C. 8000 D. 7000

6. When quantity demanded decreases in response to a change in price: A. the demand curve shifts to the right. B. the demand curve shifts to the left. C. there is a movement down along the demand curve. D. there is a movement up along the demand curve.

8. "If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is A. $0 B. $4 C. $40 D. $44

8. Investment in human capital: A. is of minor importance to economic growth. B. can be acquired through on-the-job training. C. is an important source of economic growth. D. is characterized by both b) and c).

A foreign aid donor has provided technology to help farmers in an undeveloped country to be more productive. If that country's government reacts to political pressure by urban food consumers by imposing price ceilings on farm products, A. foreign investors will be more likely to provide funds for profitable activities. B. it will create a reasonably stable market-oriented macroeconomic climate. C. it will prove technologically disconnected countries need a full economic growth agenda. D. the farmers receiving the technology will still be unable to make a living.

A typical Keynesian aggregate supply (AS) curve _______________ and a typical Keynesian Phillips curve _____________. A. is vertical; is vertical B. slopes downward; slopes downward C. slopes upward; slopes upward D. slopes upward; slopes downward

A vertical aggregate supply curve, where the quantity of output is consistent with many different price levels, also implies: A. an upward sloping Phillips curve. B. a downward sloping aggregate demand curve. C. a vertical aggregate demand curve. D. a vertical Phillips curve

As the aggregate price level in an economy decreases, A. investment decreases. B. consumer demand decreases. C. interest rates decrease. D. imports decrease.

At a macroeconomic level, the theory of rational expectations points out that if the ______________________ is vertical over time, then people should rationally expect this pattern. A. GDP B. Phillips curve C. aggregate demand curve D. aggregate supply curve

By about 2050, the ___________ populations in _____________ are expected to boom. A. elderly; high income countries B. youth; high income countries C. youth; low income countries D. elderly; low-income countries

By measuring and comparing per capita GDP data, economists can determine the extent that per capita GDP differs between the nations of the World. While this is useful information, which of the following is a valid criticism of comparing per capita GDP for this purpose? A. national economies within the global economy are diverse B. most comparisons between regions are admittedly rough C. fails to capture diversity across the regions D. fails to capture the precise standard of living

Developing the means to increase human capital, and using existing technology to connect to the global economy are generally associated with growth policies of: A. all nations. B. technologically disconnected nations. C. nations that are technology leaders. D. converging nations.

Economic production has fallen to less than full potential due to inadequate incentives for firms to produce. The duration of this economic condition will likely be: A. indefinite B. unknown C. long-term D. short-term

From a neoclassical view, which of the following is a true statement? A. Lower wages will cause an economy-wide increase in the price of a key input. B. Because wages are flexible, they are unaffected by high rates of unemployment. C. A surge in aggregate demand ends up as a rise in output, but does not increase price levels. D. The economy cannot sustain production above its potential GDP in the long run.

From a neoclassical viewpoint, government should focus less on: A. long-term growth. B. controlling inflation. C. aggregate supply. D. cyclical unemployment.

If an economy experiences a decrease in aggregate demand due to a decline in consumer confidence and output falls below potential GDP, which of the following is likely to occur? A. more consumption and less saving B. adjustment back to potential GDP C. increase in price inflation D. a rise in unemployment

If an economy has a high level of trade in goods and services relative to GDP and its exports and imports are balanced, what value will the net flow of foreign investment be? A. unchanged B. lower C. higher D. zero

If the neoclassical argument that the economy always moves back to potential GDP is accepted, then which of the following will be more important? A. encouraging higher wages B. fighting unemployment C. fighting recession D. encouraging long-term growth

If the price level of what firms produce is rising across an economy, but the costs of production are constant, then: A. the maximum potential GDP will be exceeded. B. increase in quantity produced won't be large. C. a majority of industries will start running into limits. D. higher profits will induce expanded production.

In a number of middle to low-income economies around the world, governments may run an expansionary policy of huge and sustained budget deficits. This policy A. uses the central bank as a mechanism for making loans to politically favored firms. B. will begin a cycle of heavy reliance on economic growthfrom a few exported products. C. counters inflation without regard to the shift to the left in aggregate demand. D. will shift aggregate demand to the right, so that output is beyond the potential GDP level.

In an AD/AS model: A. the GDP deflator always slopes upwards. B. the potential GDP always slopes downwards. C. the CPI is shown on the vertical axis. D. real GDP is shown on the horizontal axis.

In low and middle-income countries, workers who are not connected to a labor market are often unable to: A. collect old-age payments. B. receive social benefits. C. be "officially" employed. D. specialize very much.

Referring to a Keynesian Phillips curve, a reduction in inflation is likely to cause: A. at least a slight increase in aggregate demand. B. a vertical Phillips curve because aggregate supply remains fixed. C. unemployment to remain constant in the long run. D. at least a slight increase in unemployment.

Say's Law argues that a given ____________________ must create an equivalent ________________________ somewhere else in the economy. A. potential GDP; value of supply B. total quantity of goods; price level for output C. natural rate of unemployment; full employment GDP D. value of supply; value of demand

Suppose that productivity growth in an economy over a two-year period has fallen to less than 2% per year, causing a severe recession. From the neoclassical view, which of the following will be more important in these circumstances? A. an increase in the annual unemployment rate B. supply and demand in the labor market C. the problem of cyclical unemployment D. the growth rate of long-term productivity

The _____________ holds that a rise in price level will make domestic goods relatively more expensive, ____________ exports and _______________ imports. A. interest rate effect; encouraging; discouraging B. employment effect; discouraging; encouraging C. wealth effect; encouraging; discouraging D. foreign price effect; discouraging; encouraging

The main public policies of technological leading countries are _______________ focused on investment, including investment in human capital, in technology, and in physical plant and equipment. A. market-orientated policies B. monetary policies C. economic policies D. fiscal policies

The term "full employment GDP" is synonymous with which of the following? A. aggregate GDP B. Keynesian zone C. macroeconomic equilibrium D. potential GDP

What do Africa, southern Mexico, and tropical areas of Central America and Brazil all share in common? A. high per capita GDPs B. rapid growth rates C. command economies D. technological exclusion

When an economy's output increases and the price level decreases, the _________ curve has shifted to the ____________. A. AS; left B. AD; left C. AD; right D. AS; right

Which of the following is a building block of neoclassical economics? A. the size of the economy is determined by real GDP B. sticky wages and prices C. aggregate demand model D. wages and prices will adjust in a flexible manner

Which of the following is a distinguishing characteristic of the neoclassical view? A. increasing price levels will increase the unemployment rate B. wages and real GDP are sticky over time C. wages are maintained at original equilibrium D. flexibility of wages and prices over time

Which of the following most likely contributed to the early economic development for the Netherlands? A. higher proportion of youth and young adults B. only about 2% of GDP comes from agriculture C. 30-40% of the population lives in urban areas D. geographically located in Europe with coastlines

Which of the following will have the greatest influence on shifting the aggregate supply curves of high-income countries to the right? A. a market-driven economy B. investment in human capital C. risk of exchange rate fluctuations D. growth-oriented public policy

Why is productivity growth considered to be the most important factor in the AD/AS AD/AS model? A. it shifts the AD curve in the long-term B. it shifts the AD curve in the short-term C. it shifts the AS curve in the short-term D. it shifts the AS curve in the long-term

The United States has approximately ___________ credit card holders.

D. 180 million

Refer to Table 5-1. Suppose that D1 and S2 are the demand and supply schedules for Product A. If the government imposes a price ceiling of $4, then:

D. a 10 unit shortage will result

Which of the following results in a rightward shift of the market demand curve for labor?

D. an increase in demand for the firm's product

Which of the following will not result in a rightward shift of the market supply curve for labor?

D. an increase in labor productivity

Refer to Table 5-1. Suppose that D1 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D1 to D2, then:

D. equilibrium price increases from $6 to $8

Other things being equal, a __________ supply of workers tends to __________ real wages.

D. larger; decrease

Whenever there is a surplus at a particular price, the quantity sold at that price will equal:

D. the quantity demanded at that price

The law of _____ explains why people and societies rarely make all-or-nothing choices

Diminishing marginal utility

The U.S. trade deficit can disappear without raising legitimate concerns over disruption to the economy if: Select one: a. the U.S. immediately ceases trade with all foreign countries. b. all tariffs are doubled and import quotas are reduced by half. c. foreign investors sell their U.S. dollar investments and stop investing in the U.S. economy. d. domestic savings rates increases and foreign investment gradually decreases.

Domestic savings rates increases and foreign investment gradually decreases.

Which of the following statements most likely lies within the realm of macroeconomics?

Due to an economic recession, manufacturing firms began implementing layoffs of their workforces.

25%

During the Great Depression of the 1930s, the unemployment rate reached more than_____ of the labor force.

10%

During the deep recessions of the early 1980s and of 2007-2009, unemployment reached roughly ______.

60,000

Each year the Census Bureau carries out the Current Population Survey (CPS) (which has been carried out every month since 1940). A total of ____ households are contacted every month.

What name was given to South Korea, Thailand, Malaysia, Indonesia, Singapore, Hong Kong and Taiwan because of their economic success? a. Tigers b. Asian tigers c. West Asian tigers d. East Asian tigers

East Asian tigers

_______________, which can be approximated by the growth of gross domestic product, ultimately determines the prevailing standard of living in a country.

Economic growth

When we want to measure wage inflation in the labor market, we use the:

Employment Cost Index

Which of the following statements is incorrect?

Employment insurance compensation increases the opportunity cost of being unemployed.

Ethiopia has a GDP of $8 billion (measured in U.S. dollars) and a population of 55 million. Costa Rica has a GDP of $9 billion (measured in U.S. dollars) and a population of 4 million. Calculate per capita GDP for each country.

Ethiopia = $145.00 Costa Rica = $2250.00

Unemployment that is due to normal turnover in the labor market

Frictional unemployment is:

a worker decides to quit one job to seek a different job

Frictional unemployment occurs when

government borrowing

From a macroeconomic point of view, which of the following is a source of demand for financial capital?

Explain why U.S. minimum wage laws have historically had only a small impact on employment.

From text: Let's suppose that the minimum wage set lies just slightly below the equilibrium wage level. Wages could fluctuate according to market forces above this price floor, but they would not be allowed to move beneath the floor. In this situation, the price floor minimum wage is said to be nonbinding—that is, the price floor isn't determining the market outcome. Even if the minimum wage moves just a little higher, it will still have no effect on the quantity of employment in the economy, as long as it remains below the equilibrium wage. Even if the minimum wage is increased by enough so that it rises slightly above the equilibrium wage and becomes binding, only a small excess supply gap between the quantity demanded and quantity supplied of low-skill labor.

An economics professor is discussing a measure of inflation over time based on a basket of goods comprised of all the components of GDP. Which measure is it?

GDP Deflator

Which of the following statements is true?

GDP includes spending on recreation and travel, but it does not cover leisure time.

An economy's rate of productivity growth is closely linked to the growth rate of its ______________, although the two aren't identical.

GDP per capita

When discussing economic growth, it is often useful to focus on ____________, to avoid studying changes in the size of GDP that represent only having more people in the economy, and focus on those increases in GDP which represent an actual rise in the standard of living on a per person basis.

GDP per capita

Some prominent members of the slow-economic growth country club include a high-income country like _________.

Germany

Unemployed

Gomer loses his job as a road construction worker and cannot find another position with equivalent pay and benefits. As a result, he is still checking the want ads and reporting to the unemployment office on a weekly basis. He is considered to be:

If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that:

Goods X and Y are complement goods.

Unemployment rates in the nations of Europe have typically been ____________ than in the United States. a. the same b. better c. higher d. lower

Higher

a corresponding change in private saving

If David Ricardo's theory holds completely true, then any change in budget deficits or budget surpluses would be completely offset by which of the following?

increase

If a country's GDP decreases, but its debt increases during that year, then the country's debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes.

increase or decrease

If a country's GDP increases, but its debt decreases during that year, then the country's debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes.

public physical capital; lower government spending

If a government decides to finance an investment in ________________ with higher taxes or ____________________ in other areas, it need not worry that it is crowding out private investment.

private savings decrease while everything else holds constant

If a government experiences an increase in its budget surplus, which of the following possible outcomes will likely result?

expansionary

If a government reduces taxes in order to increase the level of aggregate demand, what type of fiscal policy is being used?

a contractionary monetary policy.

the natural rate of unemployment is likely to increase

If a nation's labor force receives a significant influx of young workers:

proportional.

If government tax policy requires Bill to pay $20,000 in taxes on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is:

progressive.

If government tax policy requires Jane to pay $25,000 in taxes on annual income of $200,000 and Mary to pay $10,000 in tax on annual income of $100,000, then the tax policy is:

income tax is a progressive tax

If individual income tax accounts for more total revenue than the payroll tax in the U.S., why would over half the households in the country pay more in payroll taxes than in income taxes?

an inflationary increase in the price level

the central bank might react with an expansionary monetary policy

If the U.S. government's budget deficits are increasing aggregate demand, and the economy is producing at a level that is substantially less than potential GDP, then:

the standardized employment budget

If the economy is producing less than its potential GDP, _____________________ will show a larger deficit than the actual budget.

a budget deficit.

If the government for the state of Washington collects $65.8 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be:

decrease

If the government initiates an expansionary monetary policy at the same time that its budget deficit decreases, then the interest rate will ______________________.

higher interest rates; largely offset by the lower interest rates

25%

If the number of employed persons in a country equals 24 million, the number of unemployed persons equals 8 million, and the number of persons over age 16 in the population equals 40 million, the unemployment rate equals:

S + (M - X) = I + (G - T)

If the quantity of financial capital supplied is equal to the quantity of financial capital demanded then, the national savings and investment identity is written as:

94 million

If the unemployment rate is 6 percent and the number of persons unemployed is 6 million, then the number of people employed is equal to:

8 percent of the labor force is unemployed

If the unemployment rate is 8 percent, than this means:

corporate profits

In 2010, Microsoft will pay corporate income tax to the federal government based on the company's __________________.

investment in physical capital; fiscal policy

the education system

In most developed countries, the government plays a large role in society's investment in human capital through _________________________.

much less than one-to-one

In the U.S. economy, the offsetting effects of private saving compared to government borrowing are typically noted as being represented by which of the following ratios?

the trade deficit

In the national savings and investment identity framework, an inflow of savings from abroad is, by definition, equal to:

Which of the following is correct?

Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital.

Which of the following is correct? A. A decrease in the productivity of labour leads to economic growth. B. An increase in the quantity of labor always leads to economic growth. C. Third World countries are rich in human capital. D. Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital.

Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital.

Which of the following best describes the relationship between economic growth and literacy? A. Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education. B. There is no correlation between economic growth and literacy. C. As the economy grows, literacy declines because it becomes less and less useful in a developed economy. D. Increased literacy initially stimulates economic growth by raising labor productivity, but as the economy grows and the opportunity cost of education rises, literacy declines.

Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education

Which of the following best describes the relationship between economic growth and literacy?

Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education.

The ____________________ is based on the prices of merchandise that are exported or imported.

International Price Index

What name is given to the index based on the prices of exported or imported merchandise?

International Price Index

___________ is a small category that refers to the goods produced by one business that have yet to be sold to consumers, and are either still sitting in warehouses and on store shelves.

Inventories

The opportunity cost of an action

Is a subjective valuation that can be determined only by the individual who chooses the action

Refer to figure 2-2. At Point A in the production possibilities graph shown above, the economy

Is not using its resources efficiently

Scarcity implies that

It is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available

Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happen to the unemployment rate?

It would fall.

Is not part of the labor force

Karen chooses to go to university fulltime rather to work. Karen:

Economists refer to this pattern, the ______, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines

Law of diminishing marginal utility

____________________________ will often cause monetary policy to be considered counterproductive because it makes it hard for the central bank to know when the policy will take effect?

Long and variable time lags

Which of the following did not result in economic growth?

Many citizens emigrating from Zimbabwe when a politically repressive regime took office.

Most choices involve ______, which involves comparing the benefits and costs of choosing a little more or a little less of a good

Marginal analysis

Markets tend toward equilibrium and, as a result, will tend to eliminate shortages and surpluses. Why?

Markets tend toward equilibrium because when a shortage exists, consumers who are unhappy about not being able to purchase the products or services they want will tend to bid the prices higher, moving the market toward equilibrium. If a surplus exists, suppliers are unhappy about not being able to sell the quantity of goods or services they wish, and will tend to lower prices in order to persuade consumers to purchase more goods and services.

The marginal benefit of a slice of pizza is the

Maximum amount that a consumer is willing to pay for the slice

NAFTA

_________ is calculated by taking _________ and then subtracting the value of how much physical capital is worn out, or reduced in value because of aging, over the course of a year.

NNP; GNP

Are markets always in equilibrium?

No, but if there is no outside interference, they tend to move toward equilibrium.

Central Bank policy requires Northern Bank to hold 10% of its deposits as reserves. Northern Bank policy prevents it from holding excess reserves. If the central bank purchases $30 million in bonds from Northern Bank what will be the result?

Northern's loan assets increase by $30 million

In many cases, it is reasonable to refer to the _______ as the price

Opportunity cost

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the budget constraint, sometimes also called the _____, a diagram which shows what choices are possible

Opportunity set

Philosophers draw a distinction between ______, which describes the world as it is, and normative statements, which describe how the world should be

Positive statements

19. ______________ are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling.

Price floors

______________ are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling.

Price floors

Which of the following is the name used to describe the price index that consists of intermediate goods and finished goods?

Producer Price Index

_________ is output per hour in the business sector.

Productivity

________________________ are the result of improvements in human capital, physical capital, and technology interacting in a _____________________. a. Global economies; remarkably similar manner b. High income economies; command economy c. Sustainable balances of trade; global economy d. Productivity improvements; market-driven economy

Productivity improvements; market-driven economy

changes in private savings offset any changes in the government deficit

Ricardian equivalence means that:

_________ are now the largest single component of the supply side of GDP, representing over half of GDP.

Services

As the text suggests, the demand and supply model predicts that the new computer and communications technologies will raise the pay of high-skill labor but reduce the pay of low-skill labor. Explain how this works using the four-step process.

Step 1: What did the market look like before the change? In this case there are two markets: low-skill labor and high-skill labor. In each market, the original demand curve for labor is D0, the original supply curve for labor is S0, and the original equilibrium is E0, where the equilibrium wage is w0 and the equilibrium quantity is q0. Step 2: Does the new technology affect the supply of labor or the demand for labor? The new technology affects demand for labor. Step 3: How will the new technology alter demand for the two types of labor? As the technology substitute for low-skill labor becomes cheaper, demand for low-skill labor will shift to the left, as shown by the shift from D0 to D1 in the market for low-skill labor. As the technology complement for high-skill labor becomes cheaper, demand for high-skill labor will shift to the right, as shown by the shift from D0 to D1 in the market for high-skilled labor. Step 4: Compare the new equilibrium to the original equilibrium. The new equilibrium for low-skill labor at E1 has a lower wage and quantity than the original equilibrium E0 in the market for low-skill labor. The new equilibrium for high-skilled labor at E1 has a higher wage and quantity than the original equilibrium.

When GDP per capita is used as a rough measure to compare the economic regions of the World, Latin America and the Caribbean are better off than _________________, but worse off than ___________________. a. Eastern Europe and Central Asia; East Asia and the Pacific b. East Asia and the Pacific; the Middle East and North Africa c. South Asia; Eastern Europe and Central Asia d. Sub-Saharan Africa; South Asia, Eastern Europe and Central Asia

Sub-Saharan Africa; South Asia, Eastern Europe and Central Asia

The lesson of ____ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options

Sunk costs

It would fall

Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happen to the unemployment rate?

It would fall.

Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happen to the unemployment rate?

What do Africa, southern Mexico, and tropical areas of Central America and Brazil all share in common? a. command economies b. technological exclusion c. high per capita GDPs d. rapid growth rates

Technological exclusion

Growth policies that mainly focus on both finding appropriate technology and on getting connected through communications and transport infrastructure are generally associated with: a. Keynesian economic theory b. nations that are technology leaders. c. neoclassical economic theory d. technologically disconnected nations.

Technologically disconnected nations.

Which of the following institutions oversees the safety and stability of the U.S. banking system?

The Federal Reserve

_____________________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s.

The Industrial Revolution

_____________________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s. A. The living standard B. The Industrial Revolution C. Investment and inventions D. GDP per capita Submit

The Industrial Revolution

4%-6%

The U.S. Unemployment rate moves up and down as the economy moves in and out of recessions. But over time, the unemployment rate seems to return to a range of ___________.

private savings from U.S. households and firms; inflows of foreign financial investment

The U.S. economy has two main sources for financial capital; _______________________ and ____________________________.

When per capita GDP is used as a rough measure to compare the economic regions of the World, the richest region is _________________ and the poorest region is ________________. a. East Asia and the Pacific; Sub-Saharan Africa b. East Asia and the Pacific; South Asia c. the United States, Western Europe and Japan; Sub-Saharan Africa d. the United States, Western Europe and Japan; South Asia

The United States, Western Europe and Japan; Sub-Saharan Africa

Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is

The benefit to his grades from studying for an hour

The opportunity cost of attending university is likely to include all except which of the following

The cost of haircuts received during the school term

is higher than it has ever been.

The current level of US government accumulated debt, when measured in nominal dollars:

Equilibrium wage

The definition of market equilibrium states that at the _____, the quantity of labor demanded by employers will equal the quantity supplied.

equilibrium wage

The definition of market equilibrium states that at the ______ the quantity of labor demanded by employers will equal the quantity supplied.

Business activity in the macroeconomy declines

The development of a nationwide computerized job bank listing of all job opening would mostly likely to reduce:

The demand and supply model can explain the existing levels of prices, wages, and rates of return. Demand and supply can also be used to explain how economic events will cause changes in prices, wages, and rates of return. There are only four possibilities: what are they?

The economic event may cause the demand curve to shift right or to shift left; or it may cause the supply curve to shift right or to shift left.

Which of the following is true?

The expansions and contractions of real world business cycles last varying lengths of time and often differ in magnitude.

A foreign aid donor has provided technology to help farmers in an undeveloped country to be more productive. If that country's government reacts to political pressure by urban food consumers by imposing price ceilings on farm products, a. foreign investors will be more likely to provide funds for profitable activities. b. the farmers receiving the technology will still be unable to make a living. c. it will prove technologically disconnected countries need a full economic growth agenda. d. it will create a reasonably stable market-oriented macroeconomic climate.

The farmers receiving the technology will still be unable to make a living.

an expansionary fiscal policy; an increase in government spending

The government can use _____________ in the form of ____________________ to increase the level of aggregate demand in the economy.

Because China and the East Asian tigers are _________________________, their economies have all experienced rapid economic growth rates. a. the highest savers in the world, often saving one-third or more of GDP b. rely on using technology developed by technological leaders c. technologically disconnected, they encourage their firms to participate in world markets d. overly reliant on a legacy of government economic controls

The highest savers in the world, often saving one-third or more of GDP

All adults who are working or actively seeking work

The labor force consists of:

As depicted in ______, it is necessary to give up some of one good to gain more of the other good

The production possibilities frontier

Business cycle

The rise in unemployment that occurs because of a recession is known as cyclical unemployment, because it is closely tied to the _____.

18. Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

The statement is correct

Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

The statement is correct.

shorter than

The time lag for monetary policy is typically ________________ the time lag for fiscal policy.

cyclical unemployment

The type of unemployment that occurs because of a recession is called:

14.4%

The unemployment rate in a town in which 65,400 persons are employed and 11,000 are unemployed equals

Either many people who claim to be unemployed actually work in the underground economy or people falsely claim that they are actively seeking work in order to receive unemployment benefits.

The unemployment rate may overestimate the true extent of unemployment if:

unemployed workers as a percentage of the labor force.

The unemployment rate measures:

Steel mill wage costs increase by 18 percent over a year. What is the likely economic effect on the market for steel?

There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel.

Why do smaller economies around the world typically face more volatile inflation? a. they can be unsettled by international movements of capital and goods b. they address inflation concerns without restricting trade and thus lose benefits c. businesses are distracted from focusing on real productivity gains d. the fundamentals of growth are the same in every country

They can be unsettled by international movements of capital and goods

How do apple growers react to the news of medical research findings that suggest that eating apples leads to greater health benefits than were previously known?

They increase the quantity of apples supplied.

Increased investment alone will guarantee economic growth.

This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology.

Increased investment alone will guarantee economic growth. A. This is a true statement, because growth occurs only with savings. B. This is a true statement, because money is the only resource needed for growth. C. This is a false statement, because an economy must rely on capital injections from abroad. D. This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology.

This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology.

Explain the nature of individual and business decisions which drive the demand and supply of financial capital. Specifically, what kinds of factors will shift demand and supply of financial capital?

Those who supply financial capital face two broad decisions: how much to save, and how to divide up their savings among different forms of financial investments. In thinking about how much to save, people must decide what they will need in the future to address expected or unexpected events. If Investment A becomes more risky, or the return diminishes, then savers will shift their funds to Investment B—and the supply curve of financial capital for Investment A will shift back to the left while the supply curve of capital for Investment B shifts to the right. Those who demand financial capital want the money now and are willing to repay in the future. For example, individuals might borrow money to purchase a long-term possession such as a condominium, a house or a car. A business might seek financial investment so that it has the funds to build a factory or invest in a research and development project that won't pay off for five years, ten years or even more

10%

Through good economic years and bad, many European economies had unemployment rates hovering near _____________ since the 1970s.

Scarcity exists because of

Unlimited wants and limited resources

In deciding how many hours to work, Beulah will make a choice that maximizes her _____; that is, she will choose according to her preferences for leisure time and income

Utility

The general pattern that consumption of the first few units of any good tends to bring a higher level of _____ to a person than consumption of later units is a common pattern

Utility

They are all subject to government excise taxes.

What do goods like gasoline, tobacco, and alcohol typically share in common?

the discipline of the market

When a business firm makes an investment in physical capital, what is that investment subject to?

S + (M - X) + (T - G) = I

When a government records a budget surplus, the national savings and investment identity is written as:

S = I + (G - T) + (X - M)

When a government records a trade surplus, the national savings and investment identity is written as:

(a.) savings will increase if investment remains constant. (b.) investment will increase if savings remain constant. (d.) savings will decrease, no matter what happens to investment.

When government policy moves from a budget deficit to a budget surplus and the trade deficit remains constant

investment will decrease if savings also remains constant.

When government policy moves from a budget surplus to a budget deficit and the trade deficit remains constant:

central bank prints more money

When governments are borrowers in financial capital markets, which of the following is least likely to be a possible source of the funds from a macroeconomic point of view?

unemployment and inflation increase.

When increasing oil prices cause aggregate supply to shift to the left, then:

use contractionary fiscal policy to shift aggregate demand to the left.

When inflation begins to climb to unacceptable levels in the economy, the government should:

discretionary fiscal policy.

When the government passes a new law that explicitly changes overall tax or spending levels, it is enacting:

an increase in the government budget surplus or a decrease in its budget deficit

When the interest rate in an economy decreases, it is most likely as a result of:

a decrease in the government's budget surplus or an increase in its budget deficit

When the interest rate in an economy increases, it is likely the result of either:

regressive

When the share of individual income tax collected by the government from people with higher incomes is smaller than the share of tax collected from people with lower incomes, then the tax is ____________________.

increasing exchange rates

Which of the following is least likely to be the result of economic disruptive patterns caused by a prolonged period of government budget deficits?

R&D aimed at producing new weapon

Which of the following is least likely to benefit the civilian economy?

exports increase while imports and all other variables are held constant

Which of the following is not a consequence of an increase in the government's budget deficit?

18%

Women composed ______ of the paid workforce in 1900 and 50% of the paid workforce in 2010.

If an economy has a high level of trade in goods and services relative to GDP and its exports and imports are balanced, what value will the net flow of foreign investment be? a. higher b. zero c. unchanged d. lower

Zero

Efficiency wage theory

______________ argues that the productivity of workers will increase if they are paid more, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions.

Automatic stabilizers

_____________________ are a form of tax and spending rules that can affect aggregate demand in the economy without any additional change in legislation.

Trade balance

_______________________________ can set the stage for international financial investors first to send their funds to a country and cause an appreciation of its exchange rate and then to pull their funds out and cause a depreciation of the exchange rate and a financial crisis as well.

16. The circular flow diagram of economic activity is a model of the A. flow of goods, services, and payments between households and firms. B. influence of government on business behaviour. C. role of unions and government in the economy. D. interaction among taxes, prices, and profits

20. In Bangladesh during the early 2000s, the illiteracy rate for girls between the ages of 15 and 24 was __________ and the illiteracy rate for males in this age group was ______________. A. 78%; 75% B. 80%; 83% C. 67%; 70% D. 72%; 69%

A change in price of a good or service typically causes ___________________________ for that specific good or service.

a change along the supply curve

Which of the following best denotes the reason for the existence of substantial black markets?

a command economy

When a Central Bank takes action to decrease the money supply and increase the interest rate, it is following:

a contractionary monetary policy.

what is most likely a topic of discussion in macroeconomics?

a decrease in employment rate

Which of the following would most likely shift the production possibilities curve inward?

a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time

Which of the following events would cause interest rates to increase?

a higher discount rate

If the economy is in recession with high unemployment and output below potential GDP, then __________________ would cause the economy to return to its potential GDP?

a loose monetary policy

The supply curve of textbooks (which are produced using paper made from trees) will shift to the left in response to:

a sharp increase in the demand for and construction of wood-frame homes.

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is:

a shift of the demand curve for beef to the left.

The imposition of a price ceiling on a market often results in:

a shortage

Which of the following lies primarily within the realm of macroeconomics?

a study of how tax cuts stimulate aggregate production

what lies primarily within the realm of macroeconomics?

a study of how tax cuts stimulate aggregate production

Frictional unemployment occurs when:

a worker decides to quit one job to seek a different job.

Which of the following is least likely to benefit the civilian economy? Select one: a. R&D aimed at producing new weapons b. tax policy promoting civilian R&D spending c. direct private sector R&D spending d. R&D carried out in government laboratories

a. R&D aimed at producing new weapons

a. Trade balance

An increase in government borrowing can: Select one: a. crowd out private investment in physical capital. b. cause a substantial decrease in interest rates. c. increase the incentive to invest in technology. d. allow private investment to expand.

a. crowd out private investment in physical capital.

If the government initiates an expansionary monetary policy at the same time that its budget deficit decreases, then the interest rate will ______________________. Select one: a. decrease b. remain unchanged c. increase d. either increase or decrease

a. decrease

A moderate increase in a budget deficit that leads to a _____________________ is not necessarily a cause for concern. Select one: a. moderate increase in a trade deficit and a moderate appreciation of the exchange rate b. combination of less foreign capital and banks that are bankrupt c. a series of large budget deficits d. shift in aggregate demand so far to the right that it causes high inflation

a. moderate increase in a trade deficit and a moderate appreciation of the exchange rate

Suppose you are analyzing data for an economy in which Ricardian neutrality holds true. If the budget surplus increases by 100, then: Select one: a. private savings will decrease by 100. b. investment will increase by 100. c. investment will decrease by 100. d. private savings will increase by 100.

a. private savings will decrease by 100.

When a business firm makes an investment in physical capital, what is that investment subject to? Select one: a. the discipline of the market b. political orientated incentives c. economic output and productivity d. state and local government incentives

a. the discipline of the market

A government began 2013 with a budget surplus and a trade deficit. Due to the onset of recession, the government changed its policy and is now running a budget deficit. If all other factors hold constant, this change in policy will cause: Select one: a. the exchange rate and the trade deficit to increase. b. the exchange rate to increase and the trade deficit to decrease. c. the exchange rate and the trade deficit to decrease. d. the exchange rate to decrease and the trade deficit to increase.

a. the exchange rate and the trade deficit to increase.

A government annually collects $230 billion in tax revenue and allocates $70 billion to military spending. What percentage of this government's budget is spent on its military? a/30.43% b/27.50% c/41.90% d/36.63%

a/30.43%

In certain African countries like Niger, Tanzania, Nigeria, and Sudan, for example, GDP per capita at the start of the 2000s was still less than $___________. a/300 b/3000 c/30 d/30,000

a/300

_________ is output per hour in the business sector. a/Productivity b/GDP per capita c/Net exports d/Investment

a/Productivity

What do goods like gasoline, tobacco, and alcohol typically share in common? a/They are all subject to government excise taxes. b/They are all subject to government fiscal taxes. c/A progressive tax is imposed on each of them. d/A regressive tax is imposed on each of them.

a/They are all subject to government excise taxes.

If the government for the state of Washington collects $65.8 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be: a/a budget deficit. b/an increase in excise tax. c/an increase in payroll tax. d/a budget surplus.

a/a budget deficit.

During a recession, if a government uses an expansionary fiscal policy to increase GDP, the: a/aggregate demand curve will shift to the right. b/aggregate supply curve will shift to the left. c/aggregate demand curve will shift to the left. d/aggregate supply curve will shift to the right.

a/aggregate demand curve will shift to the right.

A consensus estimate based on a number of studies suggests that if there is an increase in budget deficits (or a fall in budget surplus) by 1% of GDP, it will most likely cause which of the following? a/an increase of 0.5-1.0% in the long-term interest rate b/long and variable time lags in enacting the fiscal policy c/smaller impact due to temporary fiscal policy d/output above the potential GDP output level

a/an increase of 0.5-1.0% in the long-term interest rate

If Canada's economy moves into an expansion while its economy is producing more than potential GDP, then: a/automatic stabilizers will decrease government spending and increase tax revenue. b/government spending and tax revenue will decrease because of automatic stabilizers. c/government spending and tax revenue will increase because of automatic stabilizers. d/automatic stabilizers will increase government spending and decrease tax revenue.

a/automatic stabilizers will decrease government spending and increase tax revenue.

If Canada's economy moves into an expansion while its economy is producing more than potential GDP, then: a/automatic stabilizers will decrease government spending and increase tax revenue. b/government spending and tax revenue will increase because of automatic stabilizers. c/automatic stabilizers will increase government spending and decrease tax revenue. d/government spending and tax revenue will decrease because of automatic stabilizers.

a/automatic stabilizers will decrease government spending and increase tax revenue.

Country Able and Country Baker initially have the same real GDP per capita. Country Able experiences no economic growth, while Country Baker grows at a sustained rate of 7 percent. In 12 years, Country Baker's GDP will be approximately ___________ that of Country Able. a/double b/triple c/one-fourth d/one-half

a/double

Which of the following terms is used to describe the set of policies that relate to government spending, taxation, and borrowing? a/fiscal policies b/monetary policies c/financial policies d/economic policies

a/fiscal policies

If individual income tax accounts for more total revenue than the payroll tax in the U.S., why would over half the households in the country pay more in payroll taxes than in income taxes? a/income tax is a progressive tax b/payroll tax is a regressive tax c/payroll tax is a progressive tax d/income tax is a proportional tax

a/income tax is a progressive tax

If a country's GDP decreases, but its debt increases during that year, then the country's debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes. a/increase b/increase or decrease c/decrease because GDP decreased d/decrease

a/increase

Which of the following is most likely to contribute to economic growth as measured by GDP per capita? a/increased capital formation b/rapid population growth c/an increase in marginal tax rates d/the imposition of tariffs and quotas on imported goods

a/increased capital formation

If government tax policy requires Bill to pay $20,000 in taxes on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is: a/proportional. b/progressive. c/regressive. d/optional.

a/proportional.

The time lag for monetary policy is typically ________________ the time lag for fiscal policy. a/shorter than b/the same as c/longer than d/about the same as

a/shorter than

If the economy is producing less than its potential GDP, _____________________ will show a larger deficit than the actual budget. a/the standardized employment budget b/discretionary fiscal policy c/the automatic stabilizers d/expansionary fiscal policy

a/the standardized employment budget

When increasing oil prices cause aggregate supply to shift to the left, then: a/unemployment and inflation increase. b/You Answered unemployment decreases and inflation increases. c/unemployment increases and inflation decreases. d/unemployment and inflation decrease.

a/unemployment and inflation increase.

Policies that provide governments with economic controls should be evaluated on their __________________________________, not on the basis of the promises of their supporters or the theories of economists. a. acceptance by market-oriented economists b. ability to act as a critical ingredient for faster growth c. actual effects, which can be positive or negative d. ability to be dismantled quickly over time

actual effects, which can be positive or negative

What distinguishes the real value of a statistic from the nominal value of a statistic?

adjusting for inflation

The _________________ argument points out that if an employer reacts to poor business conditions by reducing pay for all workers, then the best workers, with the best employment alternatives at other firms, are the most likely to leave and the least-attractive workers, with fewer employment alternatives, are more likely to stay.

adverse selection of wage cuts

The labor force

all adults who are working or actively seeking work.

The labor force consists of:

all adults who are working or actively seeking work.

Any given demand or supply curve is based on the ceteris paribus assumption that ___________________.

all else is held equal

The term "ceteris paribus" means that:

all variables except those specified are constant.

Which of the following is considered to be a relatively weak tool of monetary policy?

altering the discount rate

In macroeconomics, the connection from inputs to outputs for the entire economy is called _______________.

an aggregate production function

In macroeconomics, the connection from inputs to outputs for the entire economy is called _______________. A. an aggregate production function B. physical capital C. human capital D. a production function

an aggregate production function

In macroeconomics, the connection from inputs to outputs for the entire economy is called _______________. A. human capital B. a production function C. physical capital D. an aggregate production function

an aggregate production function

To compare the GDP of two different countries with different currencies, it is necessary to use _________________________.

an exchange rate

Which of the following results in a rightward shift of the market demand curve for labor?

an increase in demand for the firm's product

Which of the following will not result in a rightward shift of the market supply curve for labor?

an increase in labor productivity

Which of the following factors contribute to economic growth?

an increase in the proportion of the population that is college educated

Which of the following will result in an upward left movement along the market demand curve for labor and cause a reduction in quantity demanded for labor?

an increase in the wage rate

Which of the following are most likely classified by economists as consumer durable goods?

automobiles, furniture

13. In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction o fA. all consumers. B. buyers and sellers. C. producers and input suppliers. D. producers and government planning committees

14. Which of the following best describes the relationship between economic growth and literacy? A. As the economy grows, literacy declines because it becomes less and less useful in a developed economy. B. Increased literacy initially stimulates economic growth by raising labor productivity, but as the economy grows and the opportunity cost of education rises, literacy declines. C. Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people

17. Which of the following best characterizes the circular flow of incomeA. Businesses buy resources from the government, and households buy goods and services from businesses. B. Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses. C. The government purchases resources from businesses and households and then sells goods and services to businesses and households. D. Households buy factors of production from businesses, and businesses buy goods and services from households.

20. Economic models like the _____________________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories A. financial capital market B. circular flow diagram C. financial investment market D. Specialization Model

3. Because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea, and Canada to take full advantage of specialization? A. division of labour B. international trade C. economies of scale D. command economy

3. The demand measure of GDP accounting adds together A. wages and salaries, rent, interest, and profit. B. consumption, investment, government purchases, and trade balance. C. consumption, government purchases, wages and salaries, and trade balance. D. consumption, interest, government purchases, and trade balance

Specialization A. leads to greater self-sufficiency. B. can lead to an increase in overall production.--- C. allows workers to develop skills by working on a large number of tasks D. is always the result of an inefficient use of resources

If a government's budget deficits are increasing aggregate demand when the economy is already producing near potential GDP, causing a threat of an inflationary increase in price levels, then the central bank may react with: Select one: a. a loose monetary policy. b. a contractionary monetary policy. c. an expansionary monetary policy. d. a discretionary monetary policy.

b. a contractionary monetary policy.

If David Ricardo's theory holds completely true, then any change in budget deficits or budget surpluses would be completely offset by which of the following? Select one: a. a change in currency exchange rates b. a corresponding change in private saving c. a dependence on inflows of capital d. a sustained pattern of trade imbalances

b. a corresponding change in private saving

Because of the difference between the discipline imposed by market competition and the discipline imposed by political decisions, which of the following is most likely? Select one: a. tax budgets increase without a corresponding drop in private investment b. difficulty managing public investment so it's done in a cost effective way c. reduced government borrowing to avoid crowding out private investment d. government budgets will exactly shadow the rate of private investment

b. difficulty managing public investment so it's done in a cost effective way

If the government initiates an expansionary monetary policy at the same time that its budget deficit increases, then the interest rate will __________________. Select one: a. remain unchanged b. either increase or decrease c. decrease d. increase

b. either increase or decrease

If the government's budget deficit increases while the economy is producing substantially less then potential GDP and expansionary monetary policy is implemented, then any ________________ from government borrowing would be _____________________________ from that monetary policy. Select one: a. lower interest rates; largely offset by the higher interest rates b. higher interest rates; largely offset by the lower interest rates c. inflationary increase in price level; crowding out private investment d. increase in interest rates; reduced by private sector investment

b. higher interest rates; largely offset by the lower interest rates

A government will likely ____________________________ to encourage investment in technology R&D by private firms? Select one: a. spend more on R&D in government laboratories b. implement fiscal policy establishing tax incentives c. reduce R&D grants to nonprofit organizations d. reduce R&D grants to universities

b. implement fiscal policy establishing tax incentives

Which of the following is least likely to be the result of economic disruptive patterns caused by a prolonged period of government budget deficits? Select one: a. substantial inflows of foreign financial capital b. increasing exchange rates c. strains on a country's financial system d. high inflation

b. increasing exchange rates

In a market-oriented economy, private firms will undertake most of the _____________________________, and ________________ should seek to avoid a long series of large budget deficits that might crowd out such investment. Select one: a. economic growth activities; monetary policy b. investment in physical capital; fiscal policy c. investment in human capital; monetary policy d. economic growth activities; fiscal policy

b. investment in physical capital; fiscal policy

When government policy moves from a budget surplus to a budget deficit and the trade deficit remains constant: Select one: a. savings will decrease if investment remains constant. b. investment will decrease if savings also remains constant. c. investment will increase if savings also remains constant. d. savings will decrease no matter what happens to investment.

b. investment will decrease if savings also remains constant.

A prolonged period of budget deficits may lead to ___________________. Select one: a. lower inflation b. lower economic growth c. outflows of financial capital abroad d. increasing exchange rates

b. lower economic growth

In the U.S. economy, the offsetting effects of private saving compared to government borrowing are typically noted as being represented by which of the following ratios? Select one: a. slightly more than two-to-one b. much less than one-to-one c. slightly less than one-to-one d. much more than two-to-one

b. much less than one-to-one

The U.S. economy has two main sources for financial capital; _______________________ and ____________________________. Select one: a. private sector investment; government borrowing b. private savings from U.S. households and firms; inflows of foreign financial investment. c. private savings from U.S. households and firms; government borrowing d. private sector investment; inflows of foreign financial investment from abroad

b. private savings from U.S. households and firms; inflows of foreign financial investment.

A government annually allocates $5 billion of its total tax revenue to weather related disaster relief, $21 billion to healthcare and $11 billion to education. If the government's quarterly tax revenue is $33 billion, what percentage of its budget is allocated annually to healthcare? a/25.00% b/15.90% c/63.63% d/17.50%

b/15.90%

During the last two centuries, the average rate of growth of GDP per capita in the leading industrialized countries has averaged about _________ per year. a/32% b/2% c/12% d/22%

b/2%

A nation's prosperity is sometimes measured in terms of ___________. a/GNP b/GDP per capita c/economic output d/GDP

b/GDP per capita

Some prominent members of the slow-economic growth country club include a high-income country like _________. a/Somalia b/Germany c/Bolivia d/Nigeria

b/Germany

Which of the following did not result in economic growth? Increased government funding of post-secondary education. a/The invention of a threshing machine for harvesting grains. b/Many citizens emigrating from Zimbabwe when a politically repressive regime took office. c/Installing a network of irrigation ditches and pumping stations in d/order to grow fruits and vegetables in parts of southern California.

b/Many citizens emigrating from Zimbabwe when a politically repressive regime took office.

_____________________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s. a/Investment and inventions b/The Industrial Revolution c/GDP per capita d/The living standard

b/The Industrial Revolution

If an economy moves into a recession, causing that country to produce less than potential GDP, then: a/tax revenue and government spending will be lower because of automatic stabilizers. b/automatic stabilizers will cause tax revenue to decrease and government spending to increase. c/tax revenue and government spending will be higher because of automatic stabilizers. d/automatic stabilizers will cause tax revenue to increase and government spending to decrease.

b/automatic stabilizers will cause tax revenue to decrease and government spending to increase.

Assume that laws have been passed that require the federal government to run a balanced budget. During a recession, the government will want to implement _____________________, but may be unable to do so because such a policy would ____________________________. a/contractionary fiscal policy; lead to a budget surplus b/expansionary fiscal policy; lead to a budget deficit c/contractionary fiscal policy; lead to a budget deficit d/discretionary fiscal policy; lead to a budget surplus

b/expansionary fiscal policy; lead to a budget deficit

Some recent economic research has suggested that African countries' economic growth may have been limited by __________________ . a/population b/geography and climate c/technological challenges d/government interventionism

b/geography and climate

Over the long run, ____________ per hour is the most important determinant of the average wage level in any economy. a/demand b/productivity c/supply d/dollars

b/productivity

A __________________________ policy will cause a greater share of income to be collected from those with high incomes than from those with lower incomes. a/excise tax b/progressive tax c/proportional tax d/regressive tax

b/progressive tax

If government tax policy requires Jane to pay $25,000 in taxes on annual income of $200,000 and Mary to pay $10,000 in tax on annual income of $100,000, then the tax policy is: a/optional. b/progressive. c/proportional. d/regressive.

b/progressive.

Which of the following factors contribute to economic growth? a/a decline in the stock of physical capital b/the discovery of new oil reserves c/decrease in the productivity of labor d/a decrease in the quantity of labor due to emigration

b/the discovery of new oil reserves

When increasing oil prices cause aggregate supply to shift to the left, then: a/unemployment decreases and inflation increases. b/unemployment and inflation increase. c/unemployment increases and inflation decreases. d/unemployment and inflation decrease.

b/unemployment and inflation increase.

What is the name given to the macroeconomic equation MV = PQ?

basic quantity equation of money

The Central Bank has raised its reserve requirements from 10% to 12%. If Southern Bank finds that it is not holding enough in reserves to meet the higher requirements, then it will likely:

borrow for the short term from the central bank.

Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine:

both the equilibrium price and quantity will rise.

Macroeconomics primarily examines:

broad issues such as national output, employment and inflation.

macroeconomics primarily examines

broad issues such as national output, employment, and inflation

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the _________________, sometimes also called the opportunity set, a diagram which shows what choices are possible.

budget constraint

The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good.

budget constraint

Cyclical unemployment arises when:

business activity in the macroeconomy declines.

The rise in unemployment that occurs because of a recession is known as cyclical unemployment, because it is closely tied to the ______________.

business cycle

what best characterizes the circular flow of income?

businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses

A central bank that wants to increase the quantity of money in the economy will:

buy bonds in open market operations.

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of

buyers and sellers

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of:

buyers and sellers

The nature of demand indicates that as the price of a good increases:

buyers desire to purchase less of it.

Atlantic Bank is required to hold 10% of deposits as reserves. If the central bank increases the discount rate, how would Atlantic Bank respond?

by increasing its reserves

How are the specific interest rates for the lending and borrowing markets determined?

by the forces of supply and demand

10. The basic difference between macroeconomics and microeconomics is A. microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade. B. microeconomics concentrates on the behaviour of individual consumers while macroeconomics focuses on the behaviour of firms. C. microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.---- D. microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment

11. The marginal benefit of a slice of pizza is the: A. total amount that a consumer is willing to pay for a whole pizza, divided by the number of slices B. difference between the value of the slice to the consumer and the price of the slice. C. maximum amount that a consumer is willing to pay for the slice. D. price of the slice of pizza

12. Over the long run, ____________ per hour is the most important determinant of the average wage level in any economy. A. demand B. dollars C. productivity D. supply

14. Which of the following statements most likely lies within the realm of macroeconomics A. An increase in the price of automobiles will lead to a decrease in the quantity of automobiles demanded. B. Due to process innovations in computer chip manufacturing, the market supply of computers increased. C. Due to an economic recession, manufacturing firms began implementing layoffs of their workforces.--- D. Anticipating that the benefits would outweigh costs involved, an undergraduate student purchases the course textbook.

15. A country will roughly double its GDP in twenty years if its annual growth rate is: A. 12 percent. B. 7.5 percent. C. 3.5 percent. D. 2.5 percent.

15. The basic difference between macroeconomics and microeconomics is that A. microeconomics looks at the forest (aggregate markets) while macroeconomics looks at the trees (individual markets). B. macroeconomics is concerned with groups of individuals while microeconomics is concerned with single countries. C. microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets).--- D. macroeconomics is concerned with generalization while microeconomics is concerned with specialization

18. A nation's prosperity is sometimes measured in terms of ___________. A. GNP B. GDP C. GDP per capita D. economic output

19. An economy's rate of productivity growth is closely linked to the growth rate of its ______________, although the two aren't identical.A. GNP B. output C. GDP per capita D. technology

5. Which of the following is generally accepted as a valid criticism of the production of useful goods and services A. government involvement B. the black market C. environmental pollution-- D. economic freedom

6. Why is there scarcity A. Because the opportunity set determines this. B. Because theory dictates it. C. Because our unlimited wants exceed our limited resources D. Because human wants are limited

7. Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is A. nothing, because he enjoys playing basketball more than studying. B. the increase in skill he obtains from playing basketball for that hour. C. the benefit to his grades from studying for an hour D. nothing, because he had a free pass into the sports complex to play basketball

7. If macroeconomics looks at the economy as a whole, it focuses on which of the following? A. households B. business firms C. unemployed people D. the division of labor

8. In the ______________, households receive goods and services and pay firms for them A. labor market B. financial capital market C. goods and services market-- D. savings market

9. When nations desire a healthy macroeconomy, they typically focus on three goals, one of these being: A. labor market B. financial capital market C. goods and services market D. savings market

When a government records a budget surplus, the national savings and investment identity is written as: Select one: a. S = I + (G - T) + (X - M) b. S + (T - G) = 1 + (X - M) c. S + (M - X) + (T - G) = I d. S - (G - T) = I - (X - M)

c. S + (M - X) + (T - G) = I

When the interest rate in an economy decreases, it is most likely as a result of: Select one: a. a decrease in the government budget surplus or an increase in its budget deficit. b. an increase in the government budget surplus or its budget deficit. c. an increase in the government budget surplus or a decrease in its budget deficit. d. a decrease in the government budget surplus or its budget deficit.

c. an increase in the government budget surplus or a decrease in its budget deficit.

A country's economic data indicates that there has been a substantial reduction in the financial capital available to private sector firms. Which of the following most likely had the greatest influence on this economy? Select one: a. reduction in influx of funds for foreign financial investors b. especially large and sustained household saving c. especially large and sustained government borrowing d. increased borrowing by private firms

c. especially large and sustained government borrowing

A reduction in government borrowing can: Select one: a. crowd out private investment in human capital. b. increase the interest rate. c. give private investment an opportunity to expand. d. decrease the incentive to invest.

c. give private investment an opportunity to expand.

When government policy moves from a budget deficit to a budget surplus and the trade deficit remains constant: Select one: a. savings will increase if investment remains constant. b. savings will decrease, no matter what happens to investment. c. investment will increase if savings remain constant. d. investment will decrease if savings remain constant.

c. investment will increase if savings remain constant.

If a government experiences an increase in its budget surplus, which of the following possible outcomes will likely result? Select one: a. exports decrease while imports and all other variables are held constant b. investment falls while everything else holds constant c. private savings decrease while everything else holds constant d. imports increase while exports and all other variables are held constant

c. private savings decrease while everything else holds constant

In most developed countries, the government plays a large role in society's investment in human capital through _________________________. Select one: a. direct spending b. tax incentives c. the education system d. private sector R&D

c. the education system

In the national savings and investment identity framework, an inflow of savings from abroad is, by definition, equal to: Select one: a. the trade surplus. b. domestic household savings. c. the trade deficit. d. private sector investment.

c. the trade deficit.

A __________________ often results in an outflow of financial capital leaving the domestic economy and being invested in the global economy? Select one: a. trade deficit b. twin surplus c. trade surplus d. fiscal deficit

c. trade surplus

Of the world's population of 6.7 billion people, _________ are scraping by on incomes that average less than $2 per day. a/5 billion b/6.2 billion c/2.6 billion d/260 million

c/2.6 billion

A country will roughly double its GDP in twenty years if its annual growth rate is: a/12 percent. b/2.5 percent. c/3.5 percent. d/7.5 percent.

c/3.5 percent.

In the early 2000s, the illiteracy rate for girls between the ages of 15 and 24 was __________ and the illiteracy rate for males in this age group was ______________. a/67%; 70% b/72%; 69% c/78%; 75% d/80%; 83%

c/78%; 75%

Which of the following did not result in economic growth? a/Installing a network of irrigation ditches and pumping stations in order to grow fruits and vegetables in parts of southern California. b/Increased government funding of post-secondary education. c/Many citizens emigrating from Zimbabwe when a politically repressive regime took office. d/The invention of a threshing machine for harvesting grains.

c/Many citizens emigrating from Zimbabwe when a politically repressive regime took office.

The federal government levies _____________________________ on people who pass assets ____________________________, either after death or during life. a/an excise tax; to their children b/a progressive tax; to non-family members c/an estate and gift tax; to the next generation d/a regressive tax; to non-family members

c/an estate and gift tax; to the next generation

The government can use _____________ in the form of ____________________ to increase the level of aggregate demand in the economy. a/a contractionary fiscal policy; an increase in taxes b/an expansionary fiscal policy; an increase in corporate taxes c/an expansionary fiscal policy; an increase in government spending d/a contractionary fiscal policy; a reduction in taxes

c/an expansionary fiscal policy; an increase in government spending

Which of the following factors contribute to economic growth? a/an increase in the average wage rate paid to workers b/an increase in the standard of living c/an increase in the proportion of the population that is college educated d/a decrease in the productivity of labor

c/an increase in the proportion of the population that is college educated

A ______________________ is created each time the federal government spends more than it collects in taxes in a given year. a/regressive tax b/budget surplus c/budget deficit corporate tax

c/budget deficit

When society has a higher level of capital per person, it is called ______________. a/technological gains b/physical capital c/capital deepening d/human capital

c/capital deepening

A typical ____________________________ fiscal policy allows government to decrease the level of aggregate demand, through increases in taxes. a/expansionary b/discretionary c/contractionary d/standardized

c/contractionary

A typical ____________________________ fiscal policy allows government to decrease the level of aggregate demand, through increases in taxes. a/standardized b/discretionary c/contractionary d/expansionary

c/contractionary

When the government passes a new law that explicitly changes overall tax or spending levels, it is enacting: a/fiscal policy. b/regressive fiscal policy. c/discretionary fiscal policy. d/progressive fiscal policy.

c/discretionary fiscal policy.

Which of the following terms is used to describe the set of policies that relate to government spending, taxation, and borrowing? a/economic policies b/financial policies c/fiscal policies d/monetary policies

c/fiscal policies

In the long run, the most important source of increase in a nation's standard of living is a: a/zero rate of population growth b/high rate of labor force growth. c/high rate of economic growth. d/high rate of consumption.

c/high rate of economic growth

By June, 2010, the U.S. government owed $13.6 trillion dollars ________________ that, over time, has remained unpaid. a/from decreases in income tax b/from decreases in corporate tax c/in accumulated government debt d/from decreases in excise tax

c/in accumulated government debt

The current level of US government accumulated debt, when measured in nominal dollars: a/is lower than it has ever been. b/has reached higher levels in the past. c/is higher than it has ever been. d/has remained steady for the past decade.

c/is higher than it has ever been.

A nation can achieve higher economic growth if: a/the productivity of labor declines b/more resources are allocated to consumption goods. c/it devotes more resources to research and development. d/taxes are imposed on investment in capital.

c/it devotes more resources to research and development.

A nation can achieve higher economic growth if: a/the productivity of labor declines b/taxes are imposed on investment in capital. c/it devotes more resources to research and development. d/more resources are allocated to consumption goods.

c/it devotes more resources to research and development.

c/one-half

To achieve a high standard of living, a nation should a/increase welfare payments to the poor. b/increase the tax deduction for child dependents. c/promote economic growth. d/use less capital and more labor in the production process.

c/promote economic growth.

A ________________________________ is calculated as a flat percentage of income earned, regardless of level of income. a/regressive tax b/progressive tax c/proportional tax d/estate and gift tax

c/proportional tax

If government tax policy requires Bill to pay $20,000 in taxes on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is: a/regressive. b/optional. c/proportional. d/progressive.

c/proportional.

Specialization:

can lead to an increase in overall production.

When society has a higher level of capital per person, it is called ______________.

capital deepening

When society has a higher level of capital per person, it is called ______________. A. capital deepening B. human capital C. physical capital D. technological gains

capital deepening

When society has a higher level of capital per person, it is called ______________. A. human capital B. technological gains C. physical capital D. capital deepening

capital deepening

Which of the following is not included in GDP?

cash income paid to a day laborer that is not reported to the tax authorities

Economic models like the _____________________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories.

circular flow diagram

Along with the general growth-oriented agenda, some central Asian nations need an improved infrastructure of _________________, along with research into ___________ focused on their particular economic realities. a. market-oriented institutions; economic and legal stability b. health and medical research; foreign aid c. communication and transportation; technology d. foreign aid; foreign investment

communication and transportation; technology

When demand is inelastic:

consumers are not very responsive to changes in price.

Many _____________ countries have a legacy of government economic controls. a. converging b. high-income c. Sub-Saharan d. technologically disconnected

converging

Developing the means to increase human capital, and using existing technology to connect to the global economy are generally associated with growth policies of: a. technologically disconnected nations. b. all nations. c. converging nations. d. nations that are technology leaders.

converging nations.

It is sometimes necessary for a _________________ economy to live with a degree of uncertainty over _______________ that would be politically unacceptable in the high-income economies. a. converging; trade imbalances b. disconnected; fundamentals of growth c. developing; unemployment d. converging; inflation

converging; inflation

While governments will play a different role across countries, all the ________________ economies have found that increasing ____________________ for firms and workers has been a critical ingredient in the recipe for faster growth. a. technologically disconnected; focus on raising human capital b. high-income; retained revenue and wages c. technologically disconnected; focus on increasing technology d. converging; market-oriented incentives

converging; market-oriented incentives

In the 1970s and 1980s, labor unions commonly negotiated wage contracts that had _______________________ which guaranteed that their wages would keep up with inflation.

cost of living adjustments

When __________________, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right.

costs of production fall

The central bank uses a ____________________ monetary policy to offset business related economic contractions and expansions?

countercyclical

If the original level of aggregate demand is AD0, then an expansionary monetary policy that shifts aggregate demand to AD1 will only:

create an inflationary increase in price level.

The type of unemployment that occurs because of a recession is called:

cyclical unemployment.

A forestry worker who is out of work because of the temporarily low demand for wood products associated with a recession is defined as:

cyclically unemployed.

13. Increased investment alone will guarantee economic growth. A. This is a true statement, because growth occurs only with savings. B. This is a true statement, because money is the only resource needed for growth. C. This is a false statement, because an economy must rely on capital injections from abroad. D. This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology.

16. Which of the following factors contribute to economic growth? A. an increase in the average wage rate paid to workers B. an increase in the standard of living C. a decrease in the productivity of labor D. an increase in the proportion of the population that is college educated

17. Some prominent members of the slow-economic growth country club include a high-income country like _________.A. an increase in the average wage rate paid to workers B. an increase in the standard of living C. a decrease in the productivity of labor D. an increase in the proportion of the population that is college educated

18. In the circular flow diagram modelA. households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses. B. businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households. C. households receive revenue for selling goods and services to businesses, and use that revenue to buy inputs from businesses. D. Both (a) and (b) are correct.

If the quantity of financial capital supplied is equal to the quantity of financial capital demanded then, the national savings and investment identity is written as: Select one: a. (M - X) - S = (G + T) - I b. S = (X - M) - (G - T) c. S + (G - T) = I - (X - M) d. S + (M - X) = I + (G - T)

d. S + (M - X) = I + (G - T)

When a government records a trade surplus, the national savings and investment identity is written as: Select one: a. S + (G - T) = I - (X - M) b. S - (G - T) = I - (X - M) c. S = (G - T) + (X - M) - I d. S = I + (G - T) + (X - M)

d. S = I + (G - T) + (X - M)

When the interest rate in an economy increases, it is likely the result of either: Select one: a. an increase in the government budget surplus or its budget deficit. b. a decrease in the government budget surplus or its budget deficit. c. an increase in the government budget surplus or a decrease in its budget deficit. d. a decrease in the government's budget surplus or an increase in its budget deficit.

d. a decrease in the government's budget surplus or an increase in its budget deficit.

If the U.S. economy is producing at a level that is substantially less than potential GDP and the government's budget deficits are increasing aggregate demand, then ____________________________ is not much of a danger. Select one: a. a tight monetary policy b. international financial investment c. the central bank's contractionary monetary policy d. an inflationary increase in the price level

d. an inflationary increase in the price level

When governments are borrowers in financial capital markets, which of the following is least likely to be a possible source of the funds from a macroeconomic point of view? Select one: a. decrease in borrowing by private firms b. increase in household savings c. foreign financial investors d. central bank prints more money

d. central bank prints more money

Which of the following is not a consequence of an increase in the government's budget deficit? Select one: a. private savings increases while holding everything else constant b. investment falls while holding everything else constant c. imports increase while exports and all other variables are held constant d. exports increase while imports and all other variables are held constant

d. exports increase while imports and all other variables are held constant

From a macroeconomic point of view, which of the following is a source of demand for financial capital? Select one: a. domestic household private savings b. foreign financial investment c. savings by households and firms d. government borrowing

d. government borrowing

Suppose you are analyzing data for an economy in which Ricardian neutrality holds true. If the budget deficit increases by 50, then: Select one: a. private savings will decrease by 50 b. investment will increase by 50 c. investment will decrease by 50 d. private savings will increase by 50

d. private savings will increase by 50

If a government decides to finance an investment in ________________ with higher taxes or ____________________ in other areas, it need not worry that it is crowding out private investment. Select one: a. hydroelectric dams and windmills; government R&D b. water supply and sewers; by raising capital spending c. roads and bridges; increased borrowing d. public physical capital; lower government spending

d. public physical capital; lower government spending

If the U.S. government's budget deficits are increasing aggregate demand, and the economy is producing at a level that is substantially less than potential GDP, then: Select one: a. an inflationary increase in the price level is a real danger. b. government borrowing is likely to crowd out private investment. c. higher interest rates will crowd out private investment. d. the central bank might react with an expansionary monetary policy.

d. the central bank might react with an expansionary monetary policy.

A government began 2013 with a budget deficit and a trade deficit. During the year, the government changed its policy and is now running a budget surplus. If all other factors hold constant, this change in policy will cause: Select one: a. the exchange rate and the trade deficit to increase. b. the exchange rate to increase and the trade deficit to decrease. c. the exchange rate to decrease and the trade deficit to increase. d. the exchange rate and the trade deficit to decrease.

d. the exchange rate and the trade deficit to decrease.

d. the trade deficit.

Which of the following is the percentage of annual US government spending allocated to foreign aid? a/21% b/17% c/10% d/1%

d/1%

d/30

A government collects $70 billion quarterly in tax revenue. Each year it allocates $15 billion to the justice system and $29 billion for the administrative costs. What percentage of its total annual tax revenue is left for allocation to the remaining categories of government spending? a/15.71% b/62.85% c/37.15% d/84.29%

d/84.29%

Some prominent members of the slow-economic growth country club include a high-income country like _________. a/Somalia b/Nigeria c/Bolivia d/Germany

d/Germany

Which of the following is correct? a/An increase in the quantity of labor always leads to economic growth. b/Third World countries are rich in human capital. c/A decrease in the productivity of labour leads to economic growth. d/Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital.

d/Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital.

Which of the following best describes the relationship between economic growth and literacy? a/Increased literacy initially stimulates economic growth by raising labor productivity, but as the economy grows and the opportunity cost of education rises, literacy declines. b/As the economy grows, literacy declines because it becomes less and less useful in a developed economy. c/There is no correlation between economic growth and literacy. d/Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education.

d/Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education.

A ______________________ means that government spending and taxes are equal. a/discretionary fiscal policy b/fiscal budget c/contractionary fiscal policy d/balanced budget

d/balanced budget

Which of the government policies below is most unlikely to encourage per capita economic growth? a/special subsidies for capital-intensive forms of production b/the use of tax revenues for investment and capital formation c/promotion of education and training programs for workers d/high taxes on companies that spend a lot on capital formation

d/high taxes on companies that spend a lot on capital formation

By June, 2010, the U.S. government owed $13.6 trillion dollars ________________ that, over time, has remained unpaid. a/from decreases in corporate tax b/from decreases in excise tax c/from decreases in income tax d/in accumulated government debt

d/in accumulated government debt

If a country's GDP increases, but its debt decreases during that year, then the country's debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes. a/decrease because its debt decreased b/increase because GDP increased c/decrease d/increase or decrease

d/increase or decrease

A ________________________________ is calculated as a flat percentage of income earned, regardless of level of income. a/progressive tax b/estate and gift tax c/regressive tax d/proportional tax

d/proportional tax

Economists typically measure economic growth by tracking: a/averaged GDP growth b/the unemployment rate. c/the employment rate. d/real GDP per capita.

d/real GDP per capita.

Which of the following is unlikely to affect the rate of economic growth? a/the quality of available resources b/the quantity of available resources c/technological change d/the level of government spending

d/the level of government spending

When inflation begins to climb to unacceptable levels in the economy, the government should: a/use contractionary fiscal policy to shift aggregate demand to the left. b/use expansionary fiscal policy to shift aggregate demand to the left. c/use expansionary fiscal policy to shift aggregate demand to the right. d/use contractionary fiscal policy to shift aggregate demand to the right.

d/use contractionary fiscal policy to shift aggregate demand to the right.

Another term used to describe negative inflation is:

deflation

With regard to the economy, the term negative inflation is synonymous with which of the following?

deflation

The situation where the buying power of money in terms of goods and services increases is called:

deflation.

The labor ____________ curve(s) will shift _______________ if there is an increase in productivity or an increase in the demand for the final product.

demand; right

What term is used to describe the interest rate charged by the central bank when it makes loans to commercial banks?

discount rate

In the first chapter of The Wealth of Nations, Smith introduces the idea of the ____, which means the way in which the work required to produce a good of service is divided into a number of tasks that are performed by different workers.

division of labor

In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers.

division of labor

double

_______- a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines

economies of scale

_____________ - a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines.

economies of scale

Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected ___ doesn't change.

economy

Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected __________ doesn't change.

economy

The unemployment rate may overestimate the true extent of unemployment if:

either B) or C) occurs.

A price cut will increase the total revenue a firm receives if the demand for its product is:

elastic

Demand is said to be ___________ when the quantity demanded is very responsive to changes in price.

elastic

Supply is said to be ____________ when the quantity supplied is very responsive to changes in price.

elastic

When economists are sketching examples of a demand or supply curve that is close to horizontal, they refer to that demand or supply curve as ____________.

elastic

Youth smoking seems to be more __________ than adult smoking—that is, the quantity of youth smoking will fall by a greater percentage than the quantity of adult smoking in response to a given percentage increase in price.

elastic

__________ is the change in what is on the horizontal axis (quantity) divided by the change in what is on the vertical axis (price).

elasticity

By about 2050, the ___________ populations in _____________ are expected to boom. a. elderly; high income countries b. elderly; low-income countries c. youth; high income countries d. youth; low income countries

elderly; low-income countries

Which of the following is generally accepted as a valid criticism of the production of useful goods and services?

environmental pollution

If the supply curve for a product is horizontal, then the elasticity of supply is:

equal to infinity

If the supply curve for a product is vertical, then the elasticity of supply is:

equal to zero

The ___________ is the only price where quantity demanded is equal to quantity supplied.

equilibrium price

The ____________ is the quantity where quantity demanded and quantity supplied are equal at a certain price.

equilibrium quantity

The definition of market equilibrium states that at the _______________, the quantity of labor demanded by employers will equal the quantity supplied.

equilibrium wage

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ___________________

excess demand

A business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle are:

expansion, peak, recession, trough

Regardless of the outcome in the long run, ______________________ always has the effect of stimulating the economy in the short run.

expansionary monetary policy

If the supply curve for housing is perfectly inelastic, then a reduction in demand will cause the equilibrium price to:

fall and the equilibrium quantity to stay the same

When the Federal Reserve announces that it is implementing a new interest rate policy, the ____________________ will be affected?

federal funds rate

If you were to survey central bankers from around the world and ask them what they believe the primary task of monetary policy should be, what would the most popular answer likely be?

fighting inflation

In order to avoid double counting, statisticians just count the __________________.

final goods and services

The main public policies of technological leading countries are _______________ focused on investment, including investment in human capital, in technology, and in physical plant and equipment. a. economic policies b. monetary policies c. market-orientated policies d. fiscal policies

fiscal policies

The circular flow diagram of economic activity is a model of the:

flow of goods, services, and payments between households and firms.

If a Central Bank decides it needs to decrease both the aggregate demand and the money supply, then it will:

follow tight monetary policy.

When a Central Bank makes a decision that will cause an increase in both the money supply and aggregate demand, it is:

following a loose monetary policy.

When the Central Bank acts in a way that causes the money supply to increase while aggregate demand remains unchanged, it is:

following an expansionary monetary policy.

The development of a nationwide computerized job bank listing of all job openings would be most likely to reduce:

frictional unemployment.

A welder who quits his job and moves from Pittsburgh to Madison to try to get a better welding job is said to be:

frictionally unemployed.

A nation's prosperity is sometimes measured in terms of ___________.

gdp per capita

An economy's rate of productivity growth is closely linked to the growth rate of its ______________, although the two aren't identical.

gdp per capita

Which of the following most likely contributed to the early economic development for the Netherlands? a. only about 2% of GDP comes from agriculture b. higher proportion of youth and young adults c. geographically located in Europe with coastlines

geographically located in Europe with coastlines

Some recent economic research has suggested that African countries' economic growth may have been limited by __________________ .

geography and climate

Some prominent members of the slow-economic growth country club include a high-income country like _________. A. Germany B. Somalia C. Bolivia D. Nigeria Submit

germany

In the _____, households receive goods and services and pay firms for them

goods and services market

In the ______________, households receive goods and services and pay firms for them.

goods and services market

Final goods or services used to compute GDP refer to:

goods and services purchased by the ultimate users.

The effects of inflation are seen in:

goods, services, wages and income levels

2. In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made.

government

In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made.

government

The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending.

government

in a command economy, the ____ either makes most economic decisions itself or at least strongly influences how the decisions are made

government

the two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves ____ spending.

government

Which of the following best describes a fiscal policy tool?

government spending

what best describes a fiscal policy tool?

government spending

Which of the following will have the greatest influence on shifting the aggregate supply curves of high-income countries to the right? a. investment in human capital b. risk of exchange rate fluctuations c. growth-oriented public policy d. a market-driven economy

growth-oriented public policy

For most high-income countries of the world, GDP _________________ over time.

has risen gradually

Factors like health, education, human rights, crime, personal safety, and cleanliness of environment all: a. have a slight impact on the standard of living of a country. b. fail to capture the standard of living in a precise manner. c. fail to capture diversities that make up the global economy. d. have a large impact on the standard of living of a country.

have a large impact on the standard of living of a country.

In the long run, the most important source of increase in a nation's standard of living is a: A. high rate of economic growth. B. high rate of labor force growth. C. zero rate of population growth. D. high rate of consumption.

high rate of economic growth

In the long run, the most important source of increase in a nation's standard of living is a:

high rate of economic growth.

Which of the government policies below is most unlikely to encourage per capita economic growth?

high taxes on companies that spend a lot on capital formation

Which of the government policies below is most unlikely to encourage per capita economic growth? A. high taxes on companies that spend a lot on capital formation B. promotion of education and training programs for workers C. special subsidies for capital-intensive forms of production D. the use of tax revenues for investment and capital formation

high taxes on companies that spend a lot on capital formation

17. Which of the following would reduce the supply of microcomputers?

higher wage rates for the workers that assemble the computers

Which of the following would reduce the supply of microcomputers?

higher wage rates for the workers that assemble the computers

A perfectly elastic supply curve is:

horizontal

Consumption is the purchase of goods and services by:

households

On the demand side of GDP, consumption by _____________ is the largest component of GDP, accounting for about two-thirds of the GDP in any year.

households

in the circular flow diagram model

households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses. Businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households

In the early 1990's extremely high inflation rates of 2500% were common in Russia. During that time, we can say that as a result of those inflation rates, Russia was experiencing ___________________.

hyperinflation

Gross Domestic Product equals $1.2 trillion. If consumption equals $690 billion, investment equals $200 billion, and government spending equals $260 billion, then:

imports exceed exports by $50 billion.

Inflation implies that the level of all prices _____________________.

increase

The longer the time period considered, the more the elasticity of supply tends to:

increase

Central bank policy requires all banks to hold 10% of deposits as reserves. Pacific Bank policy prevents it from holding excess reserves. Suppose banks cannot trade any of the bonds they already have. If the central bank decides to lower the reserve requirement to 9%, which of the following will result?

increase of $1 million in Pacific's loan assets

If the demand curve is perfectly elastic, then an increase in supply will:

increase the quantity exchanged but result in no change in the price.

43. If the economy is at equilibrium as shown in the diagram above, then a contractionary monetary policy will

increase unemployment, but have little effect on inflation.

Improvements in the productivity of labor will tend to:

increase wages

Which of the following is most likely to contribute to economic growth as measured by GDP per capita?

increased capital formation

If the demand for software engineers __________ slower than does supply, then wages of software engineers will __________.

increases; fall

The price elasticity of demand for tickets to local baseball games is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise:

increasing the price of game tickets because demand is inelastic.

A payment is said to be ________________ if it is automatically adjusted for inflation.

indexed

When a price, wage, or interest rate is adjusted automatically with inflation, it is said to be __________.

indexed

The demand schedule for a good:

indicates the quantities that will be purchased at alternative market prices.

Demand is said to be _____________ when the quantity demanded is not very responsive to changes in price.

inelastic

The evidence on the supply curve of financial capital is controversial, but at least in the short run, the elasticity of savings with respect to the interest rate appears to be __________.

inelastic

When economists are sketching examples of demand and supply, it is common to sketch a demand or supply curve that is close to vertical, and then to refer to that curve as _________.

inelastic

Taxes on goods with __________ demand curves will tend to raise more tax revenue for the government than taxes on goods with __________ demand curves.

inelastic; elastic

A demand or supply curve with ______________ would be horizontal in appearance.

infinite elasticity

A lender demands an interest rate in part to compensate for any expected ___________, so that the money that is repaid in the future will have at least as much buying power as the money that was originally loaned.

inflation

The percentage change in the price level from one time period to the next, whether the price level is measured in terms of money or as a price index, will be the _____________.

inflation rate

__________ implies that pressure for price increases reaches across _______________markets, not just one.

inflation; most

Which of the following best describes a monetary policy tool?

interest rates

When the central bank decides to increase the discount rate, the:

interest rates increase.

Because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea, and Canada to take full advantage of specialization?

international trade

The opportunity cost of an action:

is a subjective valuation that can be determined only by the individual who chooses the action.

Investment in human capital:

is characterized by both b) and c).

Investment in human capital: A. is an important source of economic growth. B. is characterized by both b) and c). C. can be acquired through on-the-job training. D. is of minor importance to economic growth.

is characterized by both b) and c).

Macroeconomics:

is concerned with the expansion and contraction of the overall economy.

Karen chooses to go to university fulltime rather than to work. Karen:

is not part of the labor force.

A nation can achieve higher economic growth if:

it devotes more resources to research and development.

A nation can achieve higher economic growth if: A. taxes are imposed on investment in capital. B. more resources are allocated to consumption goods. C. it devotes more resources to research and development. D. the productivity of labor declines

it devotes more resources to research and development.

Scarcity implies that:

it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.

When banks hold excess reserves because they don't see good lending opportunities:

it negatively affects expansionary monetary policy.

In the ____________, households work and receive payment from firms.

labor market

Other things being equal, a __________ supply of workers tends to __________ real wages.

larger; decrease

Economists refer to the relationship that a higher price leads to a lower quantity demanded as the _____________.

law of demand

Economists refer to this pattern, the ___________________________________, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines.

law of diminishing marginal utility

Since Baltimore passed the first _______________ in 1994, several dozen cities enacted similar laws in the late 1990s and into the 2000s.

living wage law

When nations desire a healthy macroeconomy, they typically focus on three goals, one of these being:

low inflation

when nations desire a healthy macro economy, they typically focus on three goals, one of these being

low inflation

If a firm faces ________________________, while the prices for the output the firm produces remain unchanged, a firm's profits will increase.

lower costs of production

What do growth in standard of living, low unemployment, low inflation, and a sustainable balance of trade all share in common? a. main universal goals of macroeconomic policy b. lack of diversity in undeveloped countries in the World c. microeconomic policy goals of undeveloped countries d. microeconomic policy goals of developed countries

main universal goals of macroeconomic policy

The unemployment rate may underestimate the true extent of unemployment if:

many people become discouraged and cease looking for work.

What is concerned with the expansion and contraction of the overall economy

marcoeconomics

Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good.

marginal analysis

Most real-world choices aren't about getting all of one thing or another, instead, most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good.

marginal analysis

As a person receives more of a good, the _______________ from each additional unit of the good declines.

marginal utility

In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.

market-oriented economy

in a ____, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.

market-oriented economy

Countries have strong differences in economic institutions: the U.S. is extremely _________________, Cuba has a ________________ and Canada is a mixture of both. a. regulated; lack of regulation b. technological; shortage of technology c. high-income; low-income d. market-oriented; command economy

market-oriented; command economy

The marginal benefit of a slice of pizza is the:

maximum amount that a consumer is willing to pay for the slice.

The basic difference between macroeconomics and microeconomics is that

micro is concerned with the trees (individual markets) while macro is concerned with the forest (aggregate markets)

The basic difference between macroeconomics and microeconomics is:

microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.

The basic difference between macroeconomics and microeconomics is that:

microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets).

In good economic times, a surge in lending exaggerates the episode of economic growth. Which of the following adaptations of monetary policy can moderate these exaggerated effects?

monitoring asset prices and leverage

The demand curve for a typical good has a(n):

negative slope because some consumers switch to other goods as the price rises.

Many economists believe that the trend toward greater wage inequality across the U.S. economy was primarily caused by _____________.

new technologies

While one occasionally sees references to inflation over short time periods, the term typically implies a(n)_____________ in prices.

ongoing rise

Which of the following is a traditional tool used by the Fed during recessions?

open market operations

Attending college is a case where the ________________ exceeds the monetary cost.

opportunity cost

In many cases, it is reasonable to refer to the ________________ as the price.

opportunity cost

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the budget constraint, sometimes also called the _______________, a diagram which shows what choices are possible.

opportunity set

A university student who is enrolled in school fulltime and not seeking employment is considered:

out of the labor force

Reginald looked for work for six months but could not find a job to his liking. He now spends his time at the beach. For purposes of employment he is considered:

out of the labor force.

The effect of substitution bias is that the rise in the price of a fixed basket of goods over time tends to ___________________ the rise in a consumer's true cost of living, because it doesn't take into account that the person can substitute between goods according to changes in their relative prices.

overstate

The elasticity of supply is defined as the ________ change in quantity supplied divided by the _______ change in price.

percentage; percentage

Philosophers draw a distinction between ___________________, which describe the world as it is, and normative statements, which describe how the world should be.

positive statements

The "law of supply" functions in labor markets; that is, a higher __________ for labor leads to a higher quantity of labor supplied.

price

The elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in __________.

price

In contrast to goods and services markets, _____________ are rare in labor markets, because rules that prevent people from earning income are not politically popular.

price ceilings

______________ are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling.

price floors

The downward slope of the demand curve again illustrates the pattern that as _____________ rises, _________________ decreases.

price, quantity demanded

the downward slope of the demand curve again illustrates the pattern that as _____________ rises, _________________ decreases.

price, quantity demanded

The Producer Price Index is based on prices paid for supplies and inputs by:

producers of goods and services

The value of what businesses provide to other businesses is captured in the final products at the end of the __________ chain.

production

Over the long run, ____________ per hour is the most important determinant of the average wage level in any economy. A. productivity B. demand C. dollars D. supply Submit

productivity

The value of what is produced per worker, or per hour worked, is called ____________.

productivity

The value of what is produced per worker, or per hour worked, is called ____________. A. GDP per capita B. productivity C. human capital D. economic growth

productivity

_________ is output per hour in the business sector. A. Investment B. GDP per capita C. Productivity D. Net exports

productivity

To achieve a high standard of living, a nation should: A. increase welfare payments to the poor. B. increase the tax deduction for child dependents. C. use less capital and more labor in the production process. D. promote economic growth.

promote economic growth

To achieve a high standard of living, a nation should: A. use less capital and more labor in the production process. B. increase welfare payments to the poor. C. promote economic growth. D. increase the tax deduction for child dependents

promote economic growth

To achieve a high standard of living, a nation should:

promote economic growth.

Which of the following is described as an innovative and nontraditional method used by the Federal Reserve to expand the quantity of money and credit during the recent U.S. recession?

quantitative easing

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and ____________, shown on the horizontal axis.

quantity

A demand curve shows the relationship between price and _________________ on a graph.

quantity demanded

_________________ refers to the total number of units that are purchased at that price.

quantity demanded

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the _________________.

quantity supplied

A central bank that desires to reduce the quantity of money in the economy can:

raise the reserve requirement.

A straightforward example of a _______________, often used for simplicity, is the interest rate.

rate of return

The difference between nominal GDP and real GDP is:

real GDP adjusts for inflation

The difference between real GDP and nominal GDP is:

real GDP adjusts for inflation

Economists typically measure economic growth by tracking:

real GDP per capita.

Economists typically measure economic growth by tracking: A. the employment rate. B. real GDP per capita. C. the unemployment rate. D. averaged GDP growth.

real gdp per capita

The __________________ is the nominal interest rate minus the rate of inflation.

real interest rate

The nominal value of any economic statistic refers to the number that is actually announced at that time, while the ________________ refers to the statistic after it has been adjusted for inflation.

real value

Which of the following is an example of one of the major categories in the overall CPI?

recreation

If the economy is at equilibrium as shown in the diagram above, then an expansionary monetary policy will:

reduce unemployment, but have little effect on inflation.

Which of the following terms is used to describe the proportion of deposits that banks are legally required to deposit with the central bank?

reserve requirements

The price elasticity of demand measures the:

responsiveness of quantity demanded to a change in price.

If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to:

rise and the equilibrium quantity to stay the same.

A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will:

shift to the right, decreasing the price of the drug

If Congress and President imposed a law that gas stations could not charge more than $1.00/gallon for gas what impact would this have on the gasoline market?

shortage

Most contracts, wage levels, and interest rates are either indexed to inflation, or involve using the currency of another country to sidestep the problem of inflation in some converging economies. Following these policies caused Select one: a. the net flow of foreign investment in and out of the economy reached zero b. solid levels of economic growth for sustained periods of time with 10-30% inflation c. a moderate but substantial current account trade imbalance to control inflation d. indexed inflation policy trade-offs that led to substantial restrictions on trade

solid levels of economic growth for sustained periods of time with 10-30% inflation

In low and middle-income countries, workers who are not connected to a labor market are often unable to: a. be "officially" employed. b. specialize very much. c. collect old-age payments. d. receive social benefits.

specialize very much.

If the supply curve for aspirin is perfectly elastic, then a reduction in demand will cause the equilibrium price to:

stay the same and the equilibrium quantity to fall.

Two factors that complicate the calculation of the inflation rate are:

substitution and quality/new product bias

One of the reasons that a rise in the price of a fixed basket of goods over time tends to overstate the rise in a consumer's true cost of living, is:

substitution bias

In any economy functioning at potential GDP, there are occasions when the short-term aggregate supply curve unexpectedly shifts, causing inflationary pressures. Which of the following is considered to be a common cause of this type of shift? a. sudden rise in input prices b. a wave of government spending c. a surge of export sales d. overoptimistic lending by banks

sudden rise in input prices

The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options.

sunk costs

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the __________________ .

supply curve to the right

As the __________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left.

technology

As the _____________ complement for high-skill labor becomes cheaper, the demand curve for high-skill labor will shift to the right.

technology

Since the late 1950s, economists have performed "growth accounting" studies in the United States. These have determined that ________________ is typically the most important contributor to U.S. economic growth.

technology

The quantitative easing policies adopted by the Federal Reserve are usually thought of as:

temporary emergency measures.

The most commonly cited measure of inflation in the United States is:

the Consumer Price Index (CPI).

Investment (I) includes:

the amount spent on new factories and machinery.

Inflation can be calculated in terms of how the overall cost of ___________________ changes over time.

the basket of goods

Many high-income nations are approaching a situation in which: a. the elderly will soon form a much larger share of the population. b. they will intentionally aim for high rates of unemployment and inflation. c. the demands of the elderly will cause an unsustainable trade imbalance. d. they will intentionally aim for a low standard of living.

the elderly will soon form a much larger share of the population.

Which of the following is included in GDP?

the fees charged for a stock broker's services

Of all the arguments for placing limitations on trade, which of the following would most likely be characterized as being the most controversial among economists? Select one: a. the infant industry argument b. quantitative easing argument c. bank/financial sector regulation argument d. floating currency argument

the infant industry argument

Which of the following is unlikely to affect the rate of economic growth?

the level of government spending

Which of the following is unlikely to affect the rate of economic growth? A. technological change B. the quality of available resources C. the level of government spending D. the quantity of available resources

the level of government spending

In a discussion of economics, which of the following would exert the most influence on an individual firm's decision to hire workers?

the macroeconomy

When the central bank decides it will sell bonds using open market operations:

the money supply decreases.

The central bank requires Southern to hold 10% of deposits as reserves. Southern Bank's policy prohibits it from holding excess reserves. If the central bank sells $25 million in bonds to Southern Bank which of the following will result?

the money supply in the economy decreases

When the central bank lowers the reserve requirement on deposits:

the money supply increases and interest rates decrease.

If a nation's labor force receives a significant influx of young workers:

the natural rate of unemployment is likely to increase.

Price elasticity of demand is defined as:

the percentage change in quantity demanded divided by the percentage change in price.

The most significant real economic cost of high unemployment is:

the potential goods and services that might have been produced but weren't.

As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good.

the production possibilities frontier

Macroeconomic topics do not usually include:

the profit maximizing decisions of an individual manufacturer.

Macro topics do not usually include:

the profit maximizing decisions of an individual manufaturer

Which of the following is not counted as a part of GDP?

the purchase of 100 shares of AT&T stock by your grandfather.

Whenever there is a surplus at a particular price, the quantity sold at that price will equal:

the quantity demanded at that price.

When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________.

the quantity demanded of financial capital at any given interest rate will shift to the right.

According to the basic quantity equation of money, if price and output fall while velocity increases, then:

the quantity of money will fall.

Whenever there is a shortage at a particular price, the quantity sold at that price will equal:

the quantity supplied at that price.

A report surfaced lately that President Obama has given the order to federal agents to "round up" farm workers that have illegally entered the U.S. and deport them. The impact of this order on the market for vegetables will be a leftward shift of:

the supply curve

A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of:

the supply curve

If new manufacturers enter the computer industry, then (ceteris paribus):

the supply curve shifts to the right.

13. A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of:

the supply curve.--

GDP is:

the value of all final goods and services produced domestically.

GDP does not directly include:

the value of intermediate goods sold during a period.

If cola and iced tea are good substitutes for consumers, then it is likely that:

their cross price elasticities are greater than zero

According to the law of supply:

there is a direct relationship between price and the quantity supplied.

When quantity demanded decreases in response to a change in price:

there is a movement up along the demand curve.

Insofar as government public policy is concerned, the best way to battle unemployment would be __________________.

to minimize recessions

With regard to the major issues involving trade imbalances, which of the following explains why smaller countries around the world should take some steps to limit flows of international capital? a. to reduce susceptibility to economic whiplash b. to achieve real productivity gains c. to maintain the natural rate of unemployment d. to counter cyclical unemployment

to reduce susceptibility to economic whiplash

A 25 percent decrease in the price of breakfast cereal leads to a 20 percent increase in the quantity of cereal demanded. As a result:

total revenue will decrease

15. The gap between exports and imports in a nation's economy is called the ___________.

trade balance

underemployed.

If macroeconomics looks at the economy as a whole, it focuses on which of the following?

unemployed people

Frictional unemployment is:

unemployment that is due to normal turnover in the labor market.

Demand is said to be __________ when the quantity demanded changes at the same proportion as the price.

unit elastic

Scarcity exists because of:

unlimited wants and limited resources.

According to the quantity theory, if constant growth in the money supply is combined with fluctuating velocity, which of the following is most likely to result?

unpredictable rises and falls in nominal GDP

But nearly all supply curves share a basic similarity: they slope _______________

up from left to right

But nearly all supply curves share a basic similarity: they slope _______________.

up from left to right

Many states do have ____________, which impose an upper limit on the interest rate that lenders can charge.

usury laws

In deciding how many hours to work, Beulah will make a choice that maximizes her _______; that is, she will choose according to her preferences for leisure time and income.

utility

The general pattern that consumption of the first few units of any good tends to bring a higher level of _______ to a person than consumption of later units is a common pattern.

utility

When other factors such as health and illiteracy rates are added to global comparisons of GDP and population, which of the following is likely to be revealed? a. rough comparisons between regions as data are not available b. 2% of the world's GDP comes from agriculture in low-income countries c. very wide differences in the standard of living d. the similarity in the low degree of urbanization

very wide differences in the standard of living

In November 2010 the labor force in Siouxtown, was 14,800. There were 14,483 persons employed. The local unemployment rate:

was 2.1%.

In economics, the demand for a good refers to the amount of the good that people:

will buy at various prices.

If labor demand is downward sloping and labor supply is upward sloping, then when labor demand rises faster than labor supply, it is expected that real wages __________.

will increase

In a number of middle to low-income economies around the world, governments may run an expansionary policy of huge and sustained budget deficits. This policy a. will shift aggregate demand to the right, so that output is beyond the potential GDP level. b. will begin a cycle of heavy reliance on economic growth from a few exported products. c. uses the central bank as a mechanism for making loans to politically favored firms. d. counters inflation without regard to the shift to the left in aggregate demand

will shift aggregate demand to the right, so that output is beyond the potential GDP level.

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