Economics Midterm 2017

In figure 4.6 at equilibrium, consumer surplus is area: G. A. E+F+G. A+B+C.

A+B+C

In figure 4.6 if the price is P1, the deadweight loss due to under production is area: C+F E+G. F+G. A+C

C+F

Unemployment generally _________ during recessions and _________ during expansions. rises; falls. falls; rises. rises; rises. falls; falls.

Rises; falls

Refer to Table 7.1. The labor force equals: 18,000 people. 17,000 people. 14,000 people. 21,000 people

17,000 people

Refer to Figure 3.15. A decrease in supply is represented by the movement from: S2 to S1. S2 to S3. Point B to Point A along supply curve S2. Point B to Point C along supply curve S2.

S2 to S1

"Disembedded" economy in Polanyi's writings refers to: self-sufficicent economy self-reliant economy self-protected economy self-regulating economy

Self-regulating market

Refer to Figure 3.15. An increase in the wage rate of gardenburger makers will cause a movement from Point B on supply curve S2 to: Point C on supply curve S2. supply curve S1. supply curve S3. Point A on supply curve S2.

Supply curve S1

Refer to Figure 3.15. A decrease in the price of mushrooms (an input for gardenburgers) will cause movement from Point B on supply curve S2 to: supply curve S3. supply curve S1. Point C on supply curve S2. Point A on supply curve S2.

Supply curve S3

A decrease in demand for cameras would likely be caused by: an increase in the price of cameras. an increase in the price of a substitute good. a decrease in the price of cameras. an increase in the price of a complementary good.

an increase in the price of complementary goods

The concept of opportunity cost is based on the principle of: profit. scarcity. consumption. need.

scarcity

Which of the following is a CORRECT statement? The government issues both bonds and shares. Companies issue shares but don't issue bonds. Shareholders earn dividends but bondholders don't. Bondholders earn dividends but shareholders don't.

shareholders earn dividends but bondholders don't

Aggregate behavior is: the behavior of each household and firm. the behavior of all households and firms together. the behavior of each individual. none of the above.

the behavior of all households and firms together.

If no foreign companies produce in a country, but many of the country's companies produce abroad, then: the country's GDP will tend to be equal to its domestic income. the country's GNP will tend to exceed its GDP. the country's GNP and GDP will tend to be equal. the country's GDP will tend to exceed its GNP.

the country's GNP will tend to exceed its GDP.

In which basic market would DVDs be traded? the goods and services market the money market the factor market the labor market

the goods and services market

Refer to Figure 3.8. Assume there are only 2 people in the market for baseball caos: Alex and Ryan. Along the market demand curve for baseball caps, at the price of _______, quantity demanded would be __________. $8; 12 $8; 13 $10; 7 $10; 11

$10; $11

Refer to Table 6.5. Assume that this economy produces only two goods Good X and Good Y. The value for this economy's nominal GDP in year 1 is: $200. $160. $140. $18

$140

Refer to Table 6.5. Assume that this economy produces only two goods Good X and Good Y. If years 1 is the base year, the value for this economy's real GDP in year 2 is: $168. $214. $202. $179

$168

Refer to Table 6.1. The value for net exports in billions of dollars is: exports - imports 150. 250. 800. 650.

150

Refer to Table 7.1. The unemployment rate is: 25.0%. 14.3%. 16.7%. 17.6%

17.6%

Refer to Table 6.1. Personal consumption expenditures in billions of dollars are: add all goods 2,000. 1,300. 1,000. 1,500.

2,000

Refer to Table 6.1. The value of gross domestic product in billions of dollars is: private consumption + gross investment + government spending + government investment + (exports - imports) 3,125. 3,750. 3,000. 3,075

3,075

In figure 4.6 at equilibrium, producer surplus is : E+F+G. A+B+C. G. A

E+F+G

The ________ can change the quantity of money in the economy. Office of the Comptroller of the Currency Treasury Department Congress Federal Reserve

Federal Reserve

According to Polanyi, productive activity in pre-capitalist societies were driven by: production for exchange householding (or production for own use) production for profit none of the above.

Householding (or production for own use)

The price of mozzarella cheese, which is used in making pizzas, increases. In the market for pizza you would expect that: the supply of pizza would increase and the price of pizza would decrease. the demand for pizza would decrease and the price of pizza would fall. the supply of pizza would decrease and the price of pizza would increase. the demand for pizza would increase and the price of pizza would increase.

The supply of pizza would decrease and the price of pizza would increase.

Promissory notes by the federal government when it borrows money are known as: Treasury stocks. none of the above Treasury shares. Treasury bonds.

Treasury bonds

Classifying discouraged workers as unemployed would: increase the unemployment rate. decrease the unemployment rate. not change the unemployment rate. have an indeterminate impact on the unemployment rate.

increase the unemployment rate

If personal saving is -$10 billion and disposable personal income is $370 billion, then personal consumption spending: is $360 billion. is $390 billion. is $380 billion. cannot be determined from this information.

is $380 billion

Interest paid by households and by the government is: counted in national income, but not in GDP. not counted in GDP because it is not assumed to flow from the production of goods and services. not counted in GDP but is counted in GNP because it is paid by U.S. citizens to people living in the United States. included in both GDP and GNP because it represents an expenditure by one group and a receipt of income by another group.

not counted in GDP because it is assumed to flow from the production of goods and services.

the term business cycle refers to: short-term ups and downs in the level of economic activity. long-term trends in the level of economic activity. short-term ups and downs in the price level. long-term trends in the price level.

short-term ups and downs in the level of economic activity

Which of the following is NOT a topic studied in Macroeconomics? gross domestic product the inflation rate the unemployment rate the price of Dell computers

the price of Dell computers

In 2012, GDP was exactly equal to final sales. This implies that: there was no change in inventories that year. there was accumulation of inventories that year. there was a decline in inventories that year. GDP did not grow that year compared to the year before.

there was no change in inventories that year

If national income is $600 billion, person income is $400 billion, personal taxes are $120 billion, then disposable income equals : $480 billion. $280 billion. $80 billion. $320 billion

$280 billion

Refer to Table 3.1. This market will be in equilibrium if the price per pizza is: $15. $12. $6. $9.

$9

If Mr. Garrison is paid an interest rate of 4% on his savings, but the inflation rate is 7%, the real interest rate Mr. Garrison earns is: 28%. -3%. 4%. -7%.

-3%

If 20 million workers are unemployed and 180 million workers are employed, then the unemployment rate is: 80%. 18%. 11.1%. 10%.

10%

Division of labor results in: productivity of workers fragmentation of work alienation from work all of the above

All of the above: productivity of workers, fragmentation of work, and alienation from work

Which of the following statements is FALSE? Short-term ups and downs in the economy are known as business cycles. During a recession, output and employment are falling. The rate of change in economic activity is used to assess whether an economy is expanding or contracting. Business cycles are always symmetric—the length of an expansion is the same as the length of a contraction.

Business cycles are always symmetric - the length of an expansion is the same as the length of a contraction

According to Figure 2.4, a decrease in unemployment may be represented by the movement from: C to D. B to D. B to A. A to C.

C to D

Which of the following would be more plausible statement about human nature in capitalism? Capitalism promotes and nurtures selfish behavior. Capitalism promotes and nurtures altruistic behavior Capitalism promotes and nurtures egalitarian behavior Capitalism promotes and nurtures compassionate behavior

Capitalism promotes and nurtures selfish behavior.

Refer to Figure 3.7. Assume the market is initially at Point B and that pizza is a normal good. A decrease in income would cause the market to move from Point B on demand curve D2 to: demand curve D3. Point A on demand curve D2. Point C on demand curve D2. demand curve D1.

Demand curve D1

Refer to Figure 3.7. If pizza and hamburgers are substitutes, an increase in the price of hamburgers will cause a movement from Point B on demand curve D2 to: Point A on demand curve D2. Point C on demand curve D2. demand curve D1. demand curve D3.

Demand curve D3

Refer to Figure 3.7. If pizza and beer are complementary goods, a decrease in the price of beer will cause a movement from Point B on demand curve D2 to: demand curve D3. demand curve D1. Point A on demand curve D2. Point C on demand curve D2.

Demand curve D3.

Refer to figure 2.3. the law of _____________ opportunity cost us best depicted by the production of possibilities frontier in panel A.: increasing constant decreasing zero

Increasing

Which of the following would be the most plausible statement about the role of the state in capitalism? It guarantees political freedom. It lets market rule by itself. It both promotes laissez-faire and intervenes markets in reality. None of the above.

It both promotes laissez-faire and intervenes markets in reality.

Profits earned in the United States by foreign-owned companies are included in: neither the U.S. GDP nor GNP. both the U.S. GDP and GNP. the U.S. GDP but not GNP. the U.S. GNP but not GDP.

The U.S. GDP but not GNP

The Greek origin of modern word economics, oikonomia means: the business of household management the science of household management the study of household management the art of household management

The art of householding management

According to Heilbroner and Thurow, the market system was the cause of: unrest, insecurity, and individual suffering as well as progress, opportunity, and fulfillment. progress, opportunity, and fulfillment. unrest, insecurity, and indivudal suffering. none of the above.

unrest, insecurity, and individual suffering as well as progress, opportunity, and fulfillment

Refer to Figure 2.5. The economy is currently at Point A. The opportunity cost of moving from Point A to Point B is the: 90 LCD televisions that must be forgone to produce 20 additional plasma televisions. 30 LCD televisions that must be forgone to produce 20 additional plasma televisions. 120 LCD televisions that must be forgone to produce 40 additional plasma televisions. 30 LCD televisions that must be forgone to produce 60 additional plasma televisions.

30 LCD televisions that must be forgone to produce 20 additional plasma televisions.

Refer to Table 6.1. The value for gross private domestic investment in billions of dollars is: non-residential investment + residential investment - change in business inventories 425. 450. 300. 375.

425

Refer to Table 6.1. The value of government spending in billions of dollars is: federal purchase of goods + state and local purchases of goods 300. 100. 200. 500.

500

The government wants to encourage consumer spending through cutting income taxes. This is an example of: a monetary policy. an incomes policy. a fiscal policy. a supply-side policy.

A fiscal policy

If the equilibrium price of gasoline is $4 per gallon and the government will not allow oil companies to charge more than $3 per gallon, which of the following will happen? Supply must eventually increase so that the market will come into equilibrium at a price of $3.00. The market will be in equilibrium at a price of $3.00. A nonprice rationing system such as ration coupons must be used to ration the available supply of gasoline. Demand must eventually decrease so that the market will come into equilibrium at a price of $3.00.

A non price rationing system such as rationing coupons must be used to ration the available supply of gasoline.

An example of a transfer payment is: an interest payment on a General Motors' bond. the added value of stock from the time it was bought to the time it was sold. a Social Security retirement benefit. the salary paid to a member of the armed forces.

A social security retirement benefit

Polanyi calls land, labor and money as fictitious commodities because: they had never been considered as commodities like the ones sold and bought in a market place before (capitalism). they had never been considered as factors of production before (capitalism). they had never been relied on as the main soruce of livelihood before (capitalism). all of the above.

All of the above: they had never been considered as commodities like the ones sold and brought in a market place before(capitalism), they had never been considered as factors of production before(capitalism), they had never been relied on as the main source of livelihood before (capitalism).

Which of the following would be considered a reason for studying history of ideas and economic history according to Rima (CP-1)? Understanding disagreement among economists Inability to provide agreed-upon theoretical explanations and policy recommendations by economists Gaining a better understanding of material world around us All of the above

All of the above: understanding disagreement among economists, inability to provide agreed-upon theoretical explanations and policy recommendations by economists, gaining better understanding of material world around us

Heilbroner and Thurow argue that the three distinguishing aspects of pre-capitalist societies were: presence of the institution of private property; lack of a market system; turbulance in social life presence of the institution of private property; lack of a market system; stability of economic life lack of the institution of private property; the lack of a market system; turbulence in social life lack of the institution of private property; lack of a market system; stability of economic life

Lack of institution of private property, lack of a market system, and stability of economic life

Refer to table 2.1. Which of the following statements is TRUE? Table 2.1 Krystal Mark Writing Poems 8 12 TV Commercials 2 4 Krystal has a comparative advantage in writing TV commercials, and Mark has a comparative advantage in writing poems. Krystal has a comparative advantage in both writing TV commercials and writing poems. Mark has a comparative advantage in both writing TV commercials and writing poems. Mark has a comparative advantage in writing TV commercials, and Krystal has a comparative advantage in writing poems.

Mark has a comparative advantage in writing TV commercials, and Krystal has a comparative advantage in writing poems.

According to Aristotle, human economy stems from: unlimited needs and wants of humans scarcity of resources acquisative and maximizing behavior of humans none of the above.

None of the above: unlimited needs and wants of humans, scarcity of resources, acquisitive maximizing behavior of humans

Refer to Figure 3.15. An increase in quantity supplied is represented by a movement from: S2 to S3. Point B to Point A along supply curve S2. Point B to Point C along supply curve S2. S2 to S1.

Point B to Point A along supply curve S2

Refer to Figure 4.2. The market is initially in equilibrium at point A and supply shifts from S1 to S2. Which of the following statements is TRUE? Price will still serve as a rationing device causing quantity supplied to rise from 8 to 11 soft pretzels. The market cannot move to a new equilibrium until there is also a change in supply. Price will still serve as a rationing device causing quantity demanded to fall from 11 to 8 soft pretzels. There is no need for price to serve as a rationing device in this case because the new equilibrium quantity is higher than the original equilibrium quantity.

Price will still serve as a rationing device causing quantity demanded to fall from 11 to 8 soft pretzels.

Polanyi observed that embedded economies were built on status whereas disembedded economies rested on contractus. Which of the following would best represent status and contractus? slave vs. wage-laborer slave vs. peasant slave vs. slave owner peasant vs. landlord

Slave vs. Wage Laborer

Which of the following is not one of the factors per se that transforms wageless labor, unrentable land, and private treasures into factors of production according to Heilbroner and Thurow? Technological changes Transformation ancestral estates into potential capital The great price inflation due to influx of gold The enclosure movement

Technological changes

Which of the following would be considered one of the characteristics of social sciences (including economics) according to Rima? The discovery of a new theory offering solution to a puzzle results in discarding the older theory with the dominant paradigm. The discovery of a new theory offering solution to a puzzle is considered a progress and modifies the older theory. The discovery of a new theory offering solution to a puzzle does not necessarily discard the older theory. None of the above

The discovery of new theory offering solution to a puzzle does not necessarily discard the older theory.

Which of the following will NOT cause a shift in the demand curve for compact discs? a change in wealth a change in income a change in the price of downloadable online music a change in the price of compact discs

a change in the price of compact discs.

Which of the following is an example of a final good or service? wheat a bakery purchases to make bread a computer purchased by Federal Express to track shipments coffee beans Starbucks purchases to make coffee lumber purchased by a construction company to used in building houses

a computer purchased by Federal Express to track shipments

Which of the following will definitely occur when there is a simultaneous decrease in demand and a decrease in supply? a decrease in equilibrium quantity an increase in equilibrium quantity a decrease in equilibrium price an increase in equilibrium price

a decrease in equilibrium quantity

in a business cycle, a peak represents the end of _________ and a trough represents the end of _________. a trough; a peak a recession; an expansion a depression; an expansion an expansion; a recession

an expansion; a recession

If in a year there is a positive inventory investment, then final sales: exceed GDP. equal GDP. are zero. are less than GDP

are less than GDP

Unemployment means that: at the going wage rate, there are people who want to work but cannot find work. there are some people who will not work at the going wage rate. there is excess demand in the labor market. people are not willing to work at the going wage rate.

at the going wage rate, there are people who want to work but cannot find work

Refer to Table 3.1. If the price per pizza is $12, the price will: remain constant because the market is in equilibrium. decrease because there is an excess supply in the market. increase because there is an excess demand in the market. decrease because there is an excess demand in the market.

decrease because there is an excess supply in the market

Refer to Table 3.1. If the price per pizza is $6, there is an excess : supply of 700 pizzas. supply of 1,000 pizzas. demand of 300 pizzas. demand of 600 pizzas.

demand of 300 pizzas

What should be subtracted from GDP to calculate national income? personal income taxes indirect taxes net factor payments to the rest of the world depreciation

depreciation

In the short run, it is necessary to non-price ration a good whenever _________ exists. excess supply a surplus market equilibrium excess demand

excess demand

Refer to Table 3.1. If the price per pizza is $15, there is a(n): market equilibrium. excess supply of 600 units. excess demand of 400 units. excess demand of 900 units.

excess supply of 600 units

The demanders in the good and services market are: households and business firms. households, the government, business firms, and the rest of the world. the government and business firms. households, the government, and the rest of the world

households, the government, business firms, and the rest of the world.

If improvements in technology have reduced the cost of producing personal computers, you accurately predict that in the market for personal computers, there will be a(n): decrease in the supply of personal computers, an increase in the price, and a decrease in the demand. increase in the quantity supplied of personal computers, a reduction in the price, and an increase in the quantity demanded. increase in the supply of personal computers, a reduction in the price, and an increase in the demand. increase in the supply of personal computers, a decrease in the price, and an increase in the quantity demanded.

increase in the supply of personal computers, a decrease in the price, and an increase in the quantity demanded.

Refer to Figure 3.18. The current price of a bag of pretzels is $1.10. You accurately predict that in this market: price tends to remain constant, and quantity supplied increases. price and quantity demanded increase, and quantity supplied decreases. price and quantity supplied decrease, and quantity demanded increases. price, quantity demanded, and quantity supplied decrease.

price and quantity supplied decrease, and quantity demanded increases.

In which of the following conditions is the inflation rate likely to fall and the unemployment rate likely to rise? recession hyperinflation stagflation boom

recession

Capital, as economists use the term,: is the money the firm spends to hire resources. is money the firm raises from selling stock. refers to the process by which resources are transformed into useful forms. refers to things that have already been produced that are in turn used to produce other goods and services.

refers to the things that have already been produced that are in turn used to produce other goods and services

Which of the following is subtracted from national income to get personal income? depreciation personal interest income personal Taxes retained earnings

retained earnings

During the Iraq War, many of Iraq's oil refineries were destroyed. This would best be represented by: shift of Iraq's production possibility frontier toward the origin. movement down Iraq's production possibility frontier. movement off Iraq's production possibility frontier to some point inside the frontier. movement up Iraq's production possibility frontier.

shift of Iraq's production possibility frontier toward the origin.

As an individual consumes more of a product within a given period of time, it is likely that each additional unit consumed will yield: the same amount of satisfaction. successively more satisfaction. successively less satisfaction. less satisfaction for a while and then start to add more satisfaction.

successively les satisfaction

The change in capital stock in a period is equal to: the ratio of the amount of the capital at the beginning of the period to the amount of depreciation. the amount of the capital at the beginning of the period plus gross investment. the amount of the capital at the beginning of the period minus net investment. the amount of the capital stock at the beginning of the period plus gross investment minus depreciation.

the amount of the capital stock at the beginning of the period plus gross investment minus depreciation.

According to Polanyi, capitalist economies differ from pre-capitalist economies mainly because of: the embedded nature of economy in relation to society the embedded nature of the state in economic affairs the disembedded nature of economy in relation to society the disembedded nature of the state in economic affairs

the disembedded nature of economy in relation to society

Which of the following is an example of an intermediate good? the pizza sauce you purchase to make pizzas to sell for a fund-raiser for an organization you belong to the chocolate you buy to make yourself some cookies the dough you buy to fix yourself a pizza for dinner lumber you buy to build a house for your dog

the pizza sauce you purchase to make pizzas to sell for a fund-raiser for an organization you belong to

In terms of the production possibility frontier, an an increase in productivity attributable to new technology would best be shown by: a movement from a point inside the frontier to a point on it. a movement toward the origin. the production possibility frontier shifting outward, away from the origin. a movement along the frontier.

the production possibility frontier shifting outward, away from the origin.

An example of an investment is: all of the above. the purchase of an Exxon Mobil bond. the purchase of a share of Google stock. the purchase of a Hewlett Packard laser printer for use by a business.

the purchase of a Hewlett Packard laser printer for use by the business.

When hurricane Andrew passed through Louisiana in the summer of 1992, approximately a quarter of the sugar cane crop was destroyed. Ceteris Paribus,: the demand for sugar decreased, and the price of sugar decreased. the demand for sugar increased, and the price of sugar increased. the supply of sugar decreased, and the price of sugar decreased. the supply of sugar decreased, and the price of sugar increased.

the supply of sugar decreased, and the price of sugar increased.

Which of the following would NOT be counted in 2013s GDP? the value of a refrigerator manufactured in 2013 but not sold in 2013 the value of a 2008 boat you purchase from a boat dealer in 2013 the commissions earned by a real estate agent in selling condominiums built prior to 2013 the 2013 salary of a used motorcycle salesperson

the value of a 2008 boat you purchase from a boat dealer in 2013.