Econ Final

When a freshman Kayla Smith decides on a major she will pursue at Auburn University, a________ issue is being addressed

microeconomic

The "new product bias" in the consumer price index refers to the idea that

new products' prices often decrease after their initial introduction, and the CPI is adjusted infrequently and overestimates the cost to consumers

The increase in quality bias in the consumer price index refers to the idea that price increases in the CPI reflect pure inflation, but ________ quality increases. This causes the CPI to ________ the

not; overstate

Consider the data above (in billions of dollars) for an economy. As calculated by the spending approach, NGDP (in billions of dollars) for this economy equals (2)

$1,400

Consider the data above (in billions of dollars) for an economy. As calculated by the spending approach, NGDP (in billions of dollars) for this economy equals

$1,600

if real GDP per capita in Ukraine is 8,000, what will real GDP per capita in Ukraine be after 10 years if real GDP per capita grows at an annual rate of 3.2%

$10, 962

Given the equations for C, I, G, and NX below, what is the equilibrium level of GDP? C= 4,000 + 0.5Y I= 1,500 G=2,250 NX=-150

$15,200

Suppose when L=50 and K=100, output Y=$1,000. How much will Ynew be if this company doubles both inputs of production , i.e., Lnew=100 and Knew=200?

$2,000

What is the equilibrium level of real GDP, Y, in this economy?

$2,000

What is the equilibrium level of real GDP, Y, in this economy? (2) (mpc =.8)

$2,500

Suppose that government spending increases, shifting up the aggregate expenditure line. GDP increases from GDP1 to GDP2, and this amount is $400 billion. If the mpc is0.5, then what is the distance between N and L or by how much did government spending change?

$200 billion

Suppose that government spending increases, shifting up the aggregate expenditure line. GDP increases from GDP1 to GDP2, and this amount is $800 billion. If the mpc is 0.75, then what is the distance between N and L or by how much did government spending change?

$200 billion

Given the consumption schedule in the table above, the marginal propensity to consume, mpc, is

0.75

Suppose investment, I, decrease by $200 (from Iold=$550 to Inew=$350).What will the new equilibrium real GDP, Ynew, be? (Hint: the easiest way to answer this question is to use the multiplier).

$5,000

Suppose that a simple economy produces only four goods and services: shoes,DVDs, sugar, and coke. Assume that all sugar is used in the coke production. Using the information in the above table, nominal GDP for this simple economy equals

$5,400

Looking at the table above, real average hourly earnings in 2016 were

$5.29

Looking at the table above, real average hourly earnings in 2017 were

$5.63

CANOES-R-US makes canoes. It buys the shell of the canoe from CANOES UNLMTD for $300 and uses its labor and intermediate goods to make the canoe. It sells the finished canoe to a retail canoe store for $800. The retail canoe store then sells the canoe to a consumer for $1,200. The value added by CANOES UNLMTD for each canoe equals

$500

Suppose when L=50 and K=100, output Y=$1,000. How much will Ynew be if this company cuts both inputs of production in half, i.e., Lnew=25 and Knew=50?

$500

Suppose investment, I, decrease by $200 (from Iold=$750 to Inew=$550).What will the new equilibrium real GDP, Ynew, be? (Hint: the easiest way to answer this question is to use the multiplier).17)A)$7,000.

$6,000

What is the equilibrium level of real GDP, Yold?

$6,000

What is real GDP in 2022, using 2021 as the base year?

$6,360

Suppose that a simple economy produces only four goods and services: shoes,DVDs, sugar, and coke. Assume one half of the sugar is used in the coke production while the other half of the sugar is purchased by households. Using the information in the above table, nominal GDP for this simple economy equals

$6,400

Looking at the table above, real average hourly earnings in 2018 were

$6.45

The CPI in 1990 was 131, and the CPI in 2010 was 218. If your mom earned a salary of $40,000 in 1990, what would be her salary measured in 2010 dollars

$66,565

Suppose investment, I, increase by $200 (from Iold=$550 to Inew=$750).What will the new equilibrium real GDP, Ynew, be? (Hint: the easiest way to answer this question is to use the multiplier).

$7,000

What is the equilibrium level of real GDP, Yold?

$7,000

What is nominal GDP in 2022?

$7,035

If the consumption function is defined as C= 7,250 + 0.8Y, what is the value of the autonomous consumption expenditure?

$7,250

If real GDP per capita in Ukraine is $8,000, what will real GDP per capita in Ukraine be after 5years if real GDP per capita grows at an annual rate of 3.2%?

$9,365

Suppose that investment spending increases by $9 million, shifting up the aggregate expenditure line and GDP increases from GDP1 to GDP2. If the mpc is 0.9, then what is the change in GDP?

$90 million

If the consumption function is defined as C= 7,250 + 0.8Y, what is the value of the marginal propensity to consume, mpc?

0.8

What is the marginal propensity to consume, mpc, in this economy?

0.8

Suppose that investment spending increases by $1 million, shifting up the aggregate expenditure line and GDP increases from GDP1 to GDP2. If the mpc is 0.9, then what is the change in GDP?

10 million

Based on the information above, what is the level of public saving, Spub, inthe economy?

- $1 trillion

Using the mpc that you calculated in question#2 above, calculate by how much disposable income,Yd, should have changed to cause a $75-decrease in consumption, C? (3)

-$150

Using the mpc that you calculated in question#2 (.75) above, calculate by how much disposable income,Yd, should have changed to cause a $150-decrease in consumption, C?

-$200

Using the mpc that you calculated in question#2 (0.6) above, calculate by how much disposable income,Yd, should have changed to cause a $150-decrease in consumption, C?

-$250

The figure above represents the market for coffee/spice grinders. What is the slope of the demand for coffee/spice grinders?

-2.5

If the consumption function is defined as C= 7,250 + 0.8Y, what is the value of the marginal propensity to save, mps?

0.2

Given the consumption schedule in the table above, the marginal propensity to consume, mpc, is (3)

0.5

What is the slope of the supply of ice cream cones?

0.50

Given the consumption schedule in the table above, the marginal propensity to consume, mpc, is

0.6

Imagine that you borrow $1,000 for one year and at the end of the year you repay the $1,000 plus $170 of interest. If the inflation rate was 7%, what was the real interest rate you paid?

10%

Suppose that investment spending increases by $10 million, shifting up the aggregate expenditure line and GDP increases from GDP1 to GDP2. If the mpc is 0.9, then what is the change in GDP?

100 million

Consider the above data on nominal GDP and real GDP (values are in billions of dollars). The GDP deflator for 2011 equals

103.3

Consider the above data on nominal GDP and real GDP (values are in billions of dollars). The GDP deflator for 2012 equals

106.2

Consider the above data on nominal GDP and real GDP (values are in billions of dollars). The GDP deflator for 2013 equals

108.5

Consider a simple economy that produces only three products: burritos, flashlights, and golf balls. Given the quantities in the market basket and assuming that 2017 is the base year, calculate the CPI in 2018 (round your answer to one decimal):

142.6

Consider a simple economy that produces only three products: burritos, flashlights, and golf balls. Given the quantities in the market basket and assuming that 2017 is the base year, calculate the CPI in 2018 (round your answer to one decimal):

145.3

Consider the labor market statistics for three different years. How much was the unemployment rate, UR, in year 1?

15%

Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2010 and 2011

15.4%

According to the "Rule of 70," it will take 4 years for real GDP per capita to double when the growth rate of real GDP per capita is

17.5%

If in a small economy both real GDP and capital grow by 9%, labor input increases by 6%, what is the rate of technological progress in this economy?

2%

if labor productivity increased by 4% and the capital to labor ratio increased by 6%, how much was technological progress in this economy?

2%

If the CPI in 2016 was 241 and the CPI was 157, what was the average inflation rate over this 20 year period?

2.2%

The figure above represents the market for coffee/spice grinders. What is the slope of the supply of coffee/spice grinders:

2.5

What is the unemployment rate in this economy?

25%

Consider the labor market statistics for three different years. What was the number of employed, E, in year 2?

252 million

According to the "Rule of 70," it will take 2.5 years for real GDP per capita to double when the growth rate of real GDP per capita is

28%

Ivan runs a custom jewelry shop in Sparkle City. He is debating whether he should extend his hours of operation. Ivan figures that his sales revenue will depend on the number of hours the jewelry shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $65 per hour. Using marginal analysis, determine how many hours should Ivan extend his hours of operations?

3 hours

based on the information above what is the level of private saving, Spriv, in the economy is Y = 12 trillion I = 2 trillion G = 2 trillion TR = 2 trillion T = 3 trillion

3 trillion

Imagine that you borrow $1,000 for one year and at the end of the year you repay the $1,000 plus$100 of interest. If the inflation rate was 7%, what was the real interest rate you paid?

3%

Ivan runs a custom jewelry shop in Sparkle City. He is debating whether he should extend his hours of operation. Ivan figures that his sales revenue will depend on the number of hours the jewelry shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $45 per hour Using marginal analysis, determine how many hours should Ivan extend his hours of operations?

4 hours

according to the rule of 70, it will take 17.5 years for real GDP per capita to double when the growth rate of real GDP per capita is

4%

Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2007 and 2008

40%

Consider the labor market statistics for three different years. What was the working age population, WAP, in year 3?

400 million

Using the CPI as a measure of inflation, calculate the inflation rate between 2017 and 2018 (round your answer to one decimal).

42.6%

Using the CPI as a measure of inflation, calculate the inflation rate between 2017 and 2018 (round your answer to one decimal).

45.3%

Ivan runs a custom jewelry shop in Sparkle City. He is debating whether he should extend his hours of operation. Ivan figures that his sales revenue will depend on the number of hours the jewelry shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $25 per hour Using marginal analysis, determine how many hours should Ivan extend his hours of operations?

5 hours

Suppose in Q4 of 2021, real GDP was $19,806 billion, while in Q4 of 2020 real GDP was $18,768 billion. What was the percentage change in real GDP between 2020 and 2021

5.5%

If a small economy and capital grow by 9% technological progress is 2%, by how much labor must have increased in the economy?

6%

GDP in a country grew from $10 billion to $14 billion over the span of 5 years. the average growth rate of GDP was

7%

Imagine that you borrow $1,000 for one year and at the end of the year you repay the $1,000 plus $100 of interest. If the inflation rate was 3%, what was the real interest rate you paid?

7%

What is the employment rate in this economy?

75%

What is the labor force participation rate in this economy?

80%

If in a small economy real GDP grows by 9%, labor input increases by 6%, the rate of technological progress is 2%, by how much capital grows in this economy?

9%

If labor productivity increased by 4% and technological progress was 1%, by how much must have the capital-to-labor ratio increased?

9%

if labor productivity increased by 4% and technological progress by 1%, by how much must have the capital to labor ration increased?

9%

Suppose the economy is at point A. If the economy experiences an increase in the price of crude oil, where will the new long-run equilibrium be (after the self-adjustment is completed)?

A

Suppose the economy is at point C. If government spending on public schools decreases, where will the new long-run equilibrium be (after the self-adjustment is completed)?

A

Suppose the economy is at point C. If the Fed raises the interest rate, where will the new long-run equilibrium be (after the self-adjustment is completed)?

A

Which of the points in the above graph are possible long-run equilibria?

A and C

According to the theory of "global convergence" , poorer countries should beat a point like ________, where growth in GDP is relatively ________, while richer countries should be at a point like ________, where growth in GDP is relatively ________.

A; high; B; low.

Ceteris paribus, a decrease in income taxes would be represented by a movement from

AD1 to AD2

Ceteris paribus, an increase in corporate taxes would be represented by a movement from

AD2 to AD1

Ceteris paribus, an increase in income taxes would be represented by a movement from

AD2 to AD1

Suppose the economy is at point A. If the economy experiences an increase in the price of crude oil, where will the new short-run equilibrium be (immediately after this increase in the price of crude oil)?

B

Suppose the economy is at point C. If government spending on public schools decreases, where will the new short-run equilibrium be (immediately following this decrease in government spending)?

B

according to the theory of global convergence, richer countries should be at a point like ----, where growth in GDP is relatively ----, while poorer countries should be at a point like ----, where growth in GDP is relatively ----

B; low; A; high

Suppose the economy is at point A. If the Fed lowers the interest rate, where will the new long-run equilibrium be (after the self-adjustment is completed)?

C

Suppose the economy is at point C. If the economy experiences a decrease in the price of crude oil, where will the new long-run equilibrium be (after the self-adjustment is completed)?

C

Which of the following price indices comes closest to measuring the cost of living in the typical household?

CPI

Suppose the economy is at point A. If government spending on public schools increases, where will the new short-run equilibrium be (immediately following this increase in government spending)?

D

Suppose the economy is at point A. If the Fed lowers the interest rate, where will the new short-run equilibrium be (immediately following this decrease in interest rates)?

D

Which of the following is a positive economic statement? (3)

Due to a decrease in state funding, university tuition has risen

Which of the following is a normative economic statement?

Fashion designers should be allowed to copyright designs to promote innovation

Which of the following is a microeconomics question?

How does Fiat decide on the price of the 500 Pop model?

Which of the following is a positive economic statement? (2)

If the price of gasoline rises, a smaller quantity of it will be bought

If aggregate expenditure, AE, is higher than GDP, Y, how will the economy reach macroeconomic equilibrium?

Inventories will decline, and GDP and employment will rise

If aggregate expenditure, AE, is equal to GDP, Y, how will the economy reach macroeconomic equilibrium?

Inventories will remain unchanged, and GDP and employment will not change since the economy is already in the macroeconomic equilibrium

If aggregate expenditure, AE, is less than GDP, Y, how will the economy reach macroeconomic equilibrium?

Inventories will rise, and GDP and employment will decline.

According to the figure above, at what point is AE>Y?

J

Which of the following transactions would take place in the "underground economy"?

John makes chain-link belts and necklaces and sells them at a local flea market for cash to avoid paying taxes.

According to the figure above, at what point is AE=Y?

K

According to the figure above, at what point is AE<Y?

L

f the U.S. dollar appreciates against the Japanese yen from 100 yen/$ to 105 yen/$, what will be the effect on net exports for the United States?

Net exports will decrease as U.S. exports decrease

If the U.S. dollar depreciates against the Japanese yen from 105 yen/$ to 100 yen/$, what will be the effect on net exports for the United States?

Net exports will rise as U.S. exports increase.

The following equations represent the demand and supply for kumquats: QD= 60 - 3P QS=-20 + 5P What is the equilibrium price (P*) and quantity (Q*) of kumquats?

P*= $10; Q*= 30

The following equations describe the demand and supply for Pauline's Pickled Pomegranates: P= 60 - 2QD P= 15 +QS What are the equilibrium price (P*) and quantity (Q*) for Pauline's Pickled Pomegranates?

P*=$30 and Q* =15

Using the slope that you calculated in question #7 above, write down the equation for the supply of ice cream cones.

P=2+0.5*Qs

Using the slope of the supply of coffee/spice grinders that you calculate in question #7, write down the equation for the supply of coffee/spice grinders.

P=2.5*Qs

Using the slope of the demand for coffee/spice grinders that you calculated in question #7, write down the equation for the demand for coffee/spice grinders.

P=20-2.5*Qd

Suppose you want to open a coffee shop in your home town. You consider taking out a small business loan from a local bank. Which of the scenarios below would you prefer as a borrower? (3)

Scenario I: Nominal interest rate is 10%, inflation is 5%. Scenario II: Nominal interest rate is 15%, inflation is 12%. Scenario III: Nominal interest rate is 7%, inflation is 3%. Scenario IV: Nominal interest rate is 9%, real interest rate is 6%.

Suppose you want to open a coffee shop in your home town. You consider taking out a small business loan from a local bank. Which of the scenarios below would you prefer as a borrower? (2)

Scenario I: Nominal interest rate is 10%, inflation is 8%. Scenario II: Nominal interest rate is 15%, inflation is 12%. Scenario III: Nominal interest rate is 7%, inflation is 3%. Scenario IV: Nominal interest rate is 9%, real interest rate is 6%.

Suppose you want to open a coffee shop in your home town. You consider taking out a small business loan from a local bank. Which of the scenarios below would you prefer as a borrower?

Scenario I: Nominal interest rate is 10%, inflation is 8%. Scenario II: Nominal interest rate is 15%, inflation is 12%. Scenario III: Nominal interest rate is 7%, inflation is 6%. Scenario IV: Nominal interest rate is 9%, real interest rate is 6%.

Cassie's Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent $800 purchasing, cleaning and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $400 in material and time in order to complete the task. Alternatively, she can sell the quilt "as is" now for $900. What should she do?

She should purchase the period fabric, complete the task and then sell the quilt for $1,500

Cassie's Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent $800purchasing, cleaning and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $700 in material and time in order to complete the task. Alternatively, she can sell the quilt "as is" now for $900. What should she do?

She should sell the quilt now for $900

Which of the following is consistent with the graph depicted above? (demand curve shifting right)

Technological change increases the profitability of new investment

Which of the following is a positive economic statement?

The minimum wage law causes unemployment

Which of the following is a normative economic statement?

Tobacco products should be banned in all public spaces

Which of the following is a macroeconomics question?

What determines the unemployment rate?

Equations for C, I, G, and NX are given below: C = 2,000 + 0.9Y I = 2,500 G = 3,000 NX = 400 Now assume that investment, I, goes down by $500, i.e. decreases from I = $2,500 to Inew= $2,000.Using the multiplier method, calculate the old level of equilibrium GDP, Yold, and the new level of equilibrium real GDP, Ynew.

Yold = $79,000; Ynew = $74,000

Equations for C, I, G, and NX are given below: C = 2,000 + 0.9Y I = 2,500 G = 3,000 NX = 400 Now assume that investment, I, goes up by $500, i.e. increases from I = $2,500 to Inew= $3,000.Using the multiplier method, calculate the old level of equilibrium GDP, Yold, and the new level of equilibrium real GDP, Ynew.

Yold = $79,000; Ynew = $84,000.

Equations for C, I, G, and NX are given below: C = 2,000 + 0.9Y I = 3,000 G = 3,000 NX = 400 Now assume that investment, I, goes down by $500, i.e. decreases from I = $3,000 to Inew= $2,500.Using the multiplier method, calculate the old level of equilibrium GDP, Yold, and the new level of equilibrium real GDP, Ynew.

Yold = $84,000; Ynew = $79,000

If the U.S. economy is currently at point N, which of the following could cause it to move to point K?

a recession in China

If the U.S. economy is currently at point N, which of the following could cause it to move to point K? (2)

an appreciation of the US dollar (dollar is more expensive in terms of other currencies)

The international trade effect states that

an increase in the price level will lower net exports

which of the following is consistent with the graph depicted (supply line shifting left)

an increase in the proportion of income after net taxes used for consumption

What phase of the business cycle was this economy in between years 2020and 2022?

boom

Which of the following represents a home (household) production and is, therefore, not included into GDP?

both (a) and (b) are correct as they both represent home production

Investment spending will increase when

business cash flow increases

Economics is the study of the ________ people make to attain their goals, given their ________ resources.

choices; scarce

If the U.S. economy is currently at point K, which of the following could cause it to move to point N? (2)

congress lowers corporate taxes

A student who lost her job as a waitress at a local restaurant because of the recession caused by the COVID-19 pandemic is

cyclically unemployed

The natural rate of unemployment is the amount of unemployment

equal to frictional plus structural unemployment

Investment spending will increase when (2)

firms become more optimistic about earning future profits

Jack just told his boss that he thinks his boss is an idiot :). It is likely that Jack will be experiencing ________ unemployment in the near future

frictional

Which of the following is a normative economic statement? (3)

global warming should be at the top of every economic agenda

The basic economic problem of scarcity

has always existed and will continue to exist

If the U.S. economy is currently at point K, which of the following could cause it to move to point N? (3)

household wealth increases

all of the following policies are ways for a country to promote long-run economic growth except ?

imposing stricter regulations to limit foreign direct investment

If the U.S. economy is currently at point K, which of the following could cause it to move to point N?

interest rate falls

Investment spending will decrease when

interest rate rises

which of the following increases labor productivity

inventions of new machinery, equipment, or software

developing countries with low saving rates and poor levels of health and education are likely to experience?

low rates of growth in real GDP per capita

How would you call year 2018?

peak

Ceteris paribus, a decrease in the aggregate price level would be represented by a movement from (opposite way graph)

point A to point B

Ceteris paribus, an increase in the aggregate price level would be represented by a movement from (opposite way graph)

point A to point B

Ceteris paribus, a decrease in the aggregate price level would be represented by a movement from

point B to point A

Ceteris paribus, an increase in the aggregate price level would be represented by a movement from

point B to point A

long run economic growth requires all of the following except

political instability

What phase of a business cycle was this economy in between 2018 and 2020?

recession

People who lost their jobs as hand-drawn animators because of the popularity of computer-generated 3D animation are examples of persons who are suffering

structural unemployment

Which of the following is consistent with the graph depicted above? (supply line shifting right)

the government runs a budget surplus

Which of the approaches to measuring GDP is the LEAST accurate and is, therefore, the LEAST used?

the income approach

Which of the approaches to measuring GDP is the easiest to use and is, therefore, MOST frequently used by economists?

the spending approach

Scarcity refers to the situation in which

unlimited wants exceed limited resources

Which of the following represents an "underground" economy and is, therefore, not included into GDP?

you hire a friend to mow your lawn and pay him in cash to avoid paying taxes