Economics Midterm Study Guide
inflation rate equation
(price index year 2 - price index year 1) / price index year 1 * 100
Tax Multiplier Equation
-MPC/MPS
Spending Multiplier
1/MPS
consumption function formula
C = A + MPC x YD
Deflation vs. disinflation
Deflation: negative inflation rate Disinflation:inflation rate is less than base year
Shortage Upward Pressure Downward Pressure
Downward Pressure
AD is more than SRAS Inflation Recession
Inflation
GDP deflator formula
Nominal GDP/Real GDP x 100
SRAS is more than AD Inflation Recession
Recession
Surplus Upward Pressure Downward Pressure
Upward Pressure
A change in the aggregate price level will lead to: a. a movement along the nation's aggregate demand curve. b. a shift of a nation's aggregate demand curve.
a
A change in the price of a substitute for a particular good/service affects the _____________ of that good or service. a. demand b. quantity demanded
a
A commodity which can be made available to everyone even at a zero cost is considered ________. a. a free good b. a natural resource c. a subsidized good d. a scarce or economic good e. impossible based on the definition of Economics
a
A movie ticket costs $12.00 and there are two movies you want to watch. You spend the $12 to see movie A instead of movie B. The (implicit/indirect) opportunity cost of watching movie A is _______________. a. not watching movie B b. not watching movie B and the $12 spent to buy the ticket c. $12.00
a
A movie ticket costs $12.00 and there are two movies you want to watch. You spend the $12 to see movie A instead of movie B. The direct cost of watching movie A is _______________. a. $12.00 b. not watching movie B c. not watching movie B and the $12 spent to buy the ticket
a
A price ceiling above the market equilibrium price will: a. have no effect b. create a surplus c. create a shortage
a
As the price of movie tickets increases, you find yourself watching more movies at home through streaming (Netflix) or rentals (Redbox) as your quantity demanded for movie tickets decreases. This is an example of the _____________ at work. a. substitution effect b. income effect c. law of diminishing returns
a
Ceteris paribus (holding everything else constant) we see here that as the price per square foot of housing decreases from $150 to $100, the quantity demanded of square footage of housing will: a. increase b. remain the same c. decrease
a
Choices must be made because people have _________. a. unlimited wants but limited resources b. to contend with the wants of other people c. to pay taxes and therefore don't get to spend every dollar they earn d. limited wants and unlimited resources
a
Economic growth is usually presented in: a. percentage change b. absolute dollars
a
Expectations about future shortages or higher future prices: a. increase the demand for a good or service b. increase the quantity demanded of a good or service
a
Goods that are produced in a particular period but NOT sold in that period: a. end up in inventories and are included in investment. b. go into inventories and are called consumption. c. are not counted in GDP because they were not sold. d. are classified as intermediate goods. e. are finally included in depreciation when they are sold.
a
Household ___________ is the value of a household's assets minus its liabilities. a. wealth b. income
a
If consumption spending increases from $358 to $367 billion when disposable income increases from $412 to $427 billion, it can be concluded that the marginal propensity to consume is: a. 0.6 b. 0.9 c. 0.4 d. none of these e. 0.8. f. 1.67
a
If government spending increases by $20 billion, but the government increases taxes by $20 billion, and the marginal propensity to consume is 0.8, which of the following could/would happen? a. aggregate demand could increase by as much as $20 billion none of these b. aggregate demand could increase by as much as $4 billion dollars c. aggregate demand could decrease by as much as $25 billion d. nothing, since the increase in government spending equals the increase in taxes e. aggregate demand could increase by as much as $16 billion
a
If the U.S. dollar gets "stronger" or appreciates compared to some foreign currency: a. U.S. exports to that country will decrease, net exports will decrease and aggregate demand will decrease b. U.S. exports to that country will increase, net exports will increase and aggregate demand will increase
a
If the level of income of foreigners increases (while domestic incomes remain the same): a. exports will increase and net exports will increase b. imports will increase and net will decrease c. imports will decrease and net exports will increase d. exports will decrease and net exports will decrease
a
If the price of ice cream remained constant while the temperature rose to record highs: a. the demand for ice cream would increase b. the quantity demanded of ice cream would increase c. both of these are true
a
If we were looking at the market for tickets to an animal based theme park and a documentary exposed the cruelty with which the animals were captured and the horrible conditions in which the animals lived, we would expect: a. the demand for tickets to this theme park to decrease and shift to the left b. the demand for tickets to this theme park to increase and shift to the right c. the quantity demanded of tickets to this animal based theme park to increase and there to be a downward movement along the demand curve d. the quantity demanded of tickets to this animal based theme park to decrease and there to be an upward movement along the demand curve
a
In order to create the appropriate policy: a. both positive and normative analysis should be used. b. only positive analysis should be used. c. only normative analysis should be used.
a
In the short-run, as the price level in the economy increases: a. profits for firms also increase due to "fixed" or sticky production costs. b. profits for firms decrease due to flexible production costs. c. profits for firms decrease due to "fixed" or sticky production costs. d. profits for firms decrease due to "fixed" or sticky production costs. e. profits for firms remain largely unchanged due to flexible production costs.
a
Increasing opportunity costs occur because resources: a. tend to be better suited at making one of the goods rather than both b.are perfectly suited to producing both goods
a
Minimum wage is an example of a _______________. a. price floor b. price ceiling
a
Normative analysis: a. is subjective and based on a person's values or personal judgments b. can be proven or disproven
a
Period of the business cycle signaling the end of a contraction or recession and when growth resumes. a. Trough b. Boom c. Peak d. Bust e. Recovery f. Trend g. Expansion
a
Peru can produce 20 tons of sugar or 20 tons of wheat. Brazil can produce 30 tons of sugar or 20 tons of wheat. Which country has the absolute advantage in the production of sugar? a. Brazil b. neither c. Peru
a
Peru can produce 20 tons of sugar or 20 tons of wheat. Brazil can produce 30 tons of sugar or 20 tons of wheat. Which country has the absolute advantage in the production of wheat? a. neither b. Brazil c. Peru
a
Positive analysis: a. can be proven or disproven b. is subjective and based on a person's values or personal judgments
a
Price ceilings are meant to help ___________ of a good or service. a. buyers or consumers b. producers or suppliers
a
Price ceilings cause: a. shortages b. surpluses
a
Price floors cause: a. surpluses b. shortages
a
Products X Y are complements (like gas and cars). When the price of X decreases, the: a. demand for Y increases b. quantity demanded of Y decreases c. quantity demanded of Y increases d. demand for Y decreases
a
Products X Y are substitutes (like apartments and houses). When the price of X decreases, the: a. demand for Y decreases b. quantity demanded of Y increases c. demand for Y increases d. quantity demanded of Y decreases
a
RELATED TO THIS QUESTION (You are thinking about taking a vacation in Italy. While watching the news, you see that the unions that represent all airline employees have negotiated for higher wages that will cause all airline ticket prices to increase starting in six months. You realize that this will cause the:) When the increase in these airline ticket prices takes effect, we will see ________________ since people will be traveling less. a. the demand for hotel rooms decrease b. the quantity demanded of hotel rooms decrease
a
Real GDP is often abbreviated as: a. Y b. PY
a
Surpluses result in: a. decreasing market prices b. increasing market prices
a
The CPI for 2021 equals 120. The CPI for 2022 equals 132. What is the rate of inflation over this period? a. 10% b. 12% c. none of these d. 6%
a
The Demand curve is: a. a collection of all possible price and quantity demanded combinations b. actually a solid line
a
The business cycle model shows: a. the fluctuations of business revenues and profits over the course of a year. b. what happens when certain governmental policies take effect. c. the long-run fluctuations in real GDP during some time period.
a
The business cycles an economy experiences are represented graphically by: a. the "wavy" line b. the smooth upward sloping trend line
a
To say that an economy went through an expansion means: a. the economy's actual growth exceeded its long-run trend. b. that the economy developed new trade relationships with other countries. c. its national debt grew.
a
Wages paid to households for supplying labor would be referred to as __________. a. income b. wealth
a
We can see by looking at the graph that for each individual price, there are/is ___________ associated with that price: a. only one quantity b. multiple quantities
a
When a change in aggregate demand is greater than an initial change in government spending, __________ has occurred. a. a multiplier effect b. a domino c. a disproportional effect
a
When domestic consumers buy foreign made goods, we must subtract the spending spent on foreign goods and this would count as: a. a negative towards the economy's aggregate demand. b. a positive towards the economy's aggregate demand.
a
When examining the market for a normal good, as income increases: a. demand for the normal good will increase b. demand for the normal good will decrease
a
When the costs of complying with governmental regulation increases, we can expect: a. supply to decrease b. supply to increase c. quantity supplied to decrease d. nothing to change e. quantity supplied to increase
a
When the entire demand curve shifts, this is the result of a change in: a. something other than the price of the good/service being examined b. a change in the price of the good/service being examined
a
When the percentage change in prices is less than zero, this is referred to as: a. deflation b. disinflation c. inflation
a
When the price is less than the equilibrium price, there is a: a. shortage b. surplus
a
When the price is less than the equilibrium price: a. the quantity demanded is greater than quantity supplied b. the quantity demanded is less than quantity supplied c. the quantity demanded equals quantity supplied
a
When the price of the good or service being examined changes, we see: a. a movement along the demand curve b. a shift of the demand curve
a
When we use the word investment in economics, it means: a. the value of all goods produced during a period for use in the production of other goods and services b. investing in the stock market c. investing in your 401-K retirement fund
a
Which fiscal policy tool has an indirect effect on aggregate demand? a. changes in taxes b. changes in the required reserve ratio c. changes in the discount rate d. changes in government spending e. buying/selling government bonds
a
Which of the following would cause a leftward shift of the supply curve for pizzas? a. a significant number of pizzerias closing for business b. an increase in the price of pizzas c. the development of a machine that can roll, toss and shape the dough into its pizza shape d. a decrease in the price of pizzas
a
Which of the following would cause business investment to decrease and therefore cause aggregate demand to decrease and shift leftward? a. an increase in real interest rates b. an increase in the expectations of firms c. an increase in the aggregate price level d. a decrease in the aggregate price level
a
Which of the following would cause business investment to increase and therefore cause aggregate demand to increase and shift rightward? a. an increase in the expectations of firms b. a decrease in the aggregate price level c. an increase in real interest rates d. an increase in the aggregate price level
a
Which of the following would cause household consumption to increase and therefore cause aggregate demand to increase and shift rightward? a. a lower level of household indebtedness b. an increase in the aggregate price level c. a decrease in consumer confidence d. an increase in real interest rates e. a decrease in household wealth f. a decrease in the aggregate price level g. a decrease in household incomes
a
Without acquiring more resources, in order to have more of one thing or output: a. you must sacrifice some of the other b. you must wait until more of it becomes available c. the monetary cost of the other thing or output MUST decrease
a
You normally go to the movie theater twice a month. Then the price of movie tickets doubled and you realize that you can only afford to go once a month now. This is an example of the _____________ at work. a. income effect b. law of diminishing returns c. substitution effect
a
Your local mall is an example of ________ market. a. both the resource and the product market b. the product c. the resource d. neither the resource or the product
a
_________ are set above the market equilibrium price. a. Price floors b. Price ceilings
a
_________ are set below the market equilibrium price. a. Price ceilings b. Price floors
a
___________ illustrates the particular combinations of two goods/services that an economy can have given the scarce resources available. a. A production possibilities curve b. Scarcity c. Opportunity Cost
a
Expansionary fiscal policy can be achieved by: a. increasing government spending b. cutting taxes c. lowering the required reserve ratio d. raising the required reserve ratio e. lowering the discount rate f. buying government bonds g. raising the discount rate h. selling government bonds i. decreasing government spending j. raising taxes
a, b
In order to be considered part of the demand for a good or service, you must: a. be able to pay for it b. be willing to pay for it c. need it
a, b
Which of the following is an example of an intermediate good? a. cheese purchased by Pizza Hut b. AA batteries packaged with a toy c. frozen yogurt sold by Menchies d. an iPhone case purchased by Cindy to protect her phone e. a toy robot purchased as a gift for a child
a, b
(Check ALL that apply) ___________ are hurt by excessive, unexpected inflation. a. Banks and other money lenders b. Consumers on fixed incomes c. Borrowers d. Savers e. Pandas
a, b, d
Inflation is caused by: a. increases in the overall demand for goods and services. b. increases in the supply of money. c. orange marmalade d. decreases in the overall supply of goods and services. e. decreases in the supply of money.
a, b, d
Which of the following are the categories of resources as defined by economists? (Check ALL that apply) a. capital b. entrepreneurial ability c. oil d. land e. money f. labor g. government
a, b, d, f
(Check ALL that apply) Which of the following are phases of the business cycle? a. expansion b. trough c. inflation d. time e. contraction f. peak g. unemployment h. real GDP
a, b, e, f
(Check ALL that apply) When Supply decreases, but there is no change in Demand: a. Equilibrium Price will increase b. Equilibrium Quantity will increase c. Equilibrium Quantity will decrease d. Equilibrium Price will decrease
a, c
Expansionary Fiscal policy will tend to do what things? a. increase aggregate demand b. shift aggregate demand to the left c. shift aggregate demand to the right d. decrease aggregate demand
a, c
Which of the following is a macroeconomic objective? a. price level stability b. income equality c. low unemployment d. economic growth e. high profits for firms f. equal access to healthcare
a, c, d
GDP does not include: a. non-market or illegal activities b. goods produced within a nation's borders c. intermediate goods d. financial transactions e. final goods f. used goods
a, c, d, f
According to the video, examples of transfer payments include: a. Welfare to households b. Wages paid to firefighters and police officers c. Research grants given to universities d. Subsidies to businesses
a, d
When Demand decreases and there is no change in Supply: a. Equilibrium Quantity will decrease b. Equilibrium Quantity will increase c. Equilibrium Price will increase d. Equilibrium Price will decrease
a, d
Macroeconomic policy emphasized the use of two key government tools a. Monetary Policy b. Anti-trust Policy c. Judicial Policy d. Environmental Policy e. Fiscal Policy
a, e
(Check ALL that apply) Which of the following contributes to increases in productivity? a. the discovery of new resources b. increases in government transfers on programs such social security c. increases in consumer confidence d. increases in the population e. decreases in unemployment f. new processes g. advancements in technology h. changes in the real interest rate
a, f, g
(Loop back to 16:20) Given the consumption function of C = $16,000 + (0.5 x Yd), if individual household current disposable income is $20,000, individual household consumer spending will equal: a. $20,000 b. $26,000 c. $36,000 d. $16,000 e. $6,000 f. none of these
b
A change in any one of these four types of expenditures will lead to: a. a movement along the nation's aggregate demand curve. b. a shift of a nation's aggregate demand curve.
b
A change in the price of a good/service affects the _____________ of that good or service. a. demand b. quantity demanded
b
A country's exports minus its imports during a period are _______. a. gross exports b. net exports c. none of these d. direct foreign investment e. gross imports f. net imports
b
A recession in the economy affects household incomes. As a result, people take fewer vacations. This is an example of the demand for vacations shifting to the left due to a change in: a. tastes/preferences/information/season b. income for a normal good c. the price of hotel/airline/cruise tickets d. expectations e. the price of a complementary good f. the number of consumers g. the price of a substitute good h. income for an inferior good
b
According to the Law of Demand, as price increases, quantity demanded ___________. a. increases b. decreases
b
According to the wealth effect, as the price level increases, the purchasing power of households will ___________ and the quantity demanded of all goods and services in the economy will _____________. a. increase; decrease b. decrease; decrease c. decrease; increase d. increase; increase
b
Aggregate demand will increase by a multiple of a particular tax __________. a. increase b. decrease
b
An individual firm enters its "long-run" period when every last production cost: a. becomes fixed as agreed upon in a contract. b. has been renegotiated or becomes flexible as contracts expire.
b
As a hurricane approaches, we would expect to see: a. the quantity demanded of batteries, bottled water and gasoline to decrease b. the demand for batteries, bottled water and gasoline to increase c. the quantity demanded of batteries, bottled water and gasoline to increase d. the demand for batteries, bottled water and gasoline to decrease
b
As the marginal propensity to consume decreases, we see the spending multiplier: a. increase b. decrease c. remain the same
b
Business cycle fluctuations that are graphed __________ the trend line reflect more economic stability. a. farther from b. closer to
b
Businesses/firms: a. sell goods and services to households in the factor/resource market. b. sell goods and services to households in the product market. c. buy goods and services from households in the factor/resource market. d. buy goods and services from households in the product market.
b
Combinations or points inside the economy's production possibilities curve are: a. efficient b. inefficient c. currently impossible
b
Country A can produce either 2 tons of cocoa or 4 cars with 10 units of labor. Country B can produce either 5 tons of cocoa or 25 cars with 10 units of labor. Based on this information, which of the following is true? a. Neither country has a comparative advantage in the production of either good. b. Country A has a comparative advantage in the production of cocoa, while country B has a comparative advantage in the production of cars. c. Country A has an absolute advantage in the production of cocoa, while country B has a comparative advantage in the production of cars. d. Country A has an absolute advantage in the production of cocoa, while country B has a comparative advantage in the production of cocoa. e. Country A has a comparative disadvantage in the production of both goods.
b
Financial "investments" are: a. included in the calculation of GDP because they typically increase the wealth of those people that make those "investments" which they can they use to purchase goods and services. b. not included in the calculation of GDP because nothing is produced.
b
GDP does not include: a. services b. intermediate goods c. final goods
b
Households make payments in the __________ market while firms/businesses make payments in the _________ market. a. resource; product b. product; resource
b
If a market basket costs $10 in year 1 and then costs $16 in year 2, what was the rate of inflation over that year? a. 62.5% b. 60% c. 1.6% d. 6% e. None of these
b
If consumers expected the price of a good or service to decrease in the near future, we would expect to see: a. quantity demanded of that good or service to decrease today as consumers wait for prices to go down b. demand for that good or service to decrease today as consumers wait for prices to go down
b
If nominal GDP equals $5,000 and real GDP equals $4,000, then the GDP Deflator equals: a. 800 b. 125 c. 300 d. 0.8 e. 1.25
b
If riding a public bus is an inferior good (as compared to owning a car), as income decreases: a. demand for bus tickets/passes decreases b. demand for bus tickets/passes increases c. quantity demanded of bus tickets/passes increases d. quantity demanded of bus tickets/passes decreases
b
If the C.P.I. in 2021 is 100 and the C.P.I. in 2022 is 107, we can conclude that: a. prices decreased by 7% over that over. b. prices increased by 7% over that year. c. prices decreased by 107% over that over. d. prices increased by 107% over that year.
b
If the U.S. dollar gets "weaker" or depreciates compared to some foreign currency: a. U.S. exports to that country will decrease, net exports will decrease and aggregate demand will decrease b. U.S. exports to that country will increase, net exports will increase and aggregate demand will increase
b
If the initial price results in a shortage, prices will: a. decrease until the price reaches the lowest price sellers are willing to accept b. increase until the price reaches equilibrium c. increase until the price reaches the highest price sellers demand d. decrease until the price reaches equilibrium
b
If the value of the marginal propensity to consume is 0.6 and real GDP falls by $25, this was caused by a decrease in initial spending of (hint: if the usual process is to multiply the initial change in spending by the spending multiplier to get $25, what do you think you have to do to find that initial change when you already know the change in real GDP?): a. $20 b. $10 c. $15 d. $30 e. $25 f. $16.67 g. none of these
b
If there is a surplus and no government involvement, the price will: a. not change, since a surplus is the best situation for the market b. decrease until it reaches equilibrium c. increase until it reaches equilibrium
b
If there were a change in investment spending (which is to say consumption by firms) of $10 million and the marginal propensity to save is 0.25, the real GDP (Y) would increase by: a. none of these b. $40 million c. $2.5 million d. $13.3 million e. $10 million f. $20 million g. $25 million
b
In a typical production possibilities curve we may face __________ opportunity cost as we produce more of a particular good. a. a constant b. an increasing c. a decreasing
b
In the market for hamburgers, if human fingers are found in multiple burger restaurants, then we can expect: a. 1. Demand to increase 2. Supply to not change 3. the Equilibrium price to increase 4. the Equilibrium quantity to increase b. 1. Demand to decrease 2. Supply to not change 3. the Equilibrium price to decrease 4. the Equilibrium quantity to decrease c. The cook to now be called "Four Fingers Freddy" and have more space in his glove. d. neither curve to shift as a shortage as created e. neither curve to shift as a surplus in created to increase f. 1. Demand to not change 2. Supply to increase 3. the Equilibrium price to decrease 4. the Equilibrium quantity to increase g. 1. Demand to not change 2. Supply to decrease 3. the Equilibrium price to increase 4. the Equilibrium quantity to decrease
b
Inferior goods a. increase when consumer income rises d. decrease when consumer income rises
b
Inflation would be studied in a. Microeconomics b. Macroeconomics
b
Italy can produce 50 units of peanut butter or 50 units of jelly. France can produce 30 units of peanut butter or 60 units of jelly. Which of the following is an acceptable Terms of Trade to both Italy and France? a. 1 unit of peanut butter exchanges for 2 units of jelly b. 1 unit of peanut butter exchanges for 1 ½ units of jelly c. 1 unit of peanut butter exchanges for 3 units of jelly d. 1 unit of peanut butter exchanges for 1 unit of jelly e. 1 unit of peanut butter exchanges for ½ a unit of jelly
b
Nominal GDP is often abbreviated as: a. Y b. PY
b
Nominal GDP is: a. the inflation adjusted GDP. b. the current dollar GDP. c. the future dollar GDP. d. the constant dollar GDP. e. the real GDP minus depreciation of physical capital.
b
Parts or products that go into producing other finished economic goods are known as: a. transferable goods b. intermediate goods c. composite goods
b
Peru can produce 20 tons of sugar or 20 tons of wheat. Brazil can produce 30 tons of sugar or 20 tons of wheat. Which country has the comparative advantage in wheat production? a. neither b. Peru c. Brazil
b
Peru can produce 20 tons of sugar or 20 tons of wheat. Brazil can produce 30 tons of sugar or 20 tons of wheat. In Peru the opportunity cost of producing 1 ton of wheat is: a. 1 ton of wheat b. 1 ton of sugar c. 20 tons of wheat d. ⅔ of a ton of wheat e. 20 tons of sugar f. 1 ½ tons of sugar g. 30 tons of sugar h. (a bowl of Cinnamon Toast Crunch)
b
Price floors are meant to help the ___________ of a good. a. buyers b. producers or suppliers
b
Rent Control is an example of a _____________. a. price floor b. price ceiling
b
Shortages result in: a. decreasing market prices b. increasing market prices
b
Suppose that the consumption function is C = $300 + (0.6 x Yd) where Yd is disposable income. If disposable income equals $1,200, then saving equals: a. $240 b. $1020 c. $1,500 d. -$300 e. $180 f. none of these
b
The _________ approach is calculated by adding the aggregate spending of consumers, firms, government, and foreign consumers in the domestic economy. a. income b. expenditure
b
The _________ approach is concentrated in the factor market. a. expenditures b. income
b
The amount of vehicles produced by all U.S. automobile manufacturers would be studied in: a. Macroeconomics b. Microeconomics
b
The rational choice depends on: a. the monetary cost of the choice being made b. the individual decision maker c. the legal consequences of the choice being made d. all of these
b
The value of assets such as real estate, government bonds and stocks owned by households would be referred to as _____________. a. income b. wealth
b
Unemployment across the entire economy would be studied in: a. Microeconomics b. Macroeconomics
b
When examining the market for an inferior good, as income decreases: a. demand for the inferior good will decrease b. demand for the inferior good will increase
b
When foreigners purchase some of a nation's goods and services, this counts as: a. a negative towards the economy's aggregate demand. b. a positive towards the economy's aggregate demand.
b
When quantity supplied is greater than quantity demanded, there is a: a. shortage b. surplus
b
When something other than the price of the good or service being examined changes, we see: a. a movement along the demand curve b. a shift of the demand curve
b
When the price is greater than the equilibrium price, there is a: a. shortage b. surplus
b
When workers expected continued inflation: a. workers will demand increases in their nominal wages which will shift the SRAS curve rightward. b. workers will demand increases in their nominal wages which will shift the SRAS curve leftward. c. firms will demand that workers accept lower nominal wages which the SRAS curve leftward.
b
Which of the following will cause a rightward shift of the supply curve? a. the loss of some technology b. an increase the number of sellers c. an increase in the price of a resource / input used in production d. a decrease in today's price of the good or service e. an increase in today's price of the good or service f. an increase in the price of a production substitute g. expectations by suppliers that future prices of the good they produce will be higher
b
Which of the following will shift the demand curve for hamburgers to the left? a. an increase in the price of hamburgers b. an increase in the price of hamburger buns c. a decrease in the price of french fries
b
Which of the following would cause a decrease in the demand for taxi cab rides in New York city? a. The price of taxi cab rides increased by 25% b. Half the population of New York city moved away to another state
b
Which of the following would cause a leftward shift of the nation's aggregate demand curve? a. a decrease in the aggregate price level b. a decrease in household consumption c. an increase in household consumption d. an increase in the aggregate price level
b
Which of the following would cause the demand of chocolate bars to decrease? a .the price of chocolate bars increases b. people now preferring to consume candy like Airheads or Twizzlers instead of chocolate bars
b
Which of the following would shift the demand for hamburgers to the right? a. both of these b. an increase in the price of pizza and hot dogs c. a decrease in the price of hamburgers
b
You are thinking about taking a vacation in Italy. While watching the news, you see that the unions that represent all airline employees have negotiated for higher wages that will cause all airline ticket prices to increase starting in six months. You realize that this will cause the: a. quantity demanded of airline tickets to increase today b. demand for airline tickets to increase today
b
You have $2,000 in a savings account that pays you 3.5% interest per year. By the end of the year, the purchasing power of those $2,000: a. has certainly increased. b. cannot be determined without knowing the rate of inflation over that same year. c. has certainly decreased.
b
_________ economists believe that the economy is NOT self-regulating (or self-adjusting). a. Rational Expectation b. Keynesian c. Monetarist d. Classical
b
____________ focuses on choices made by individuals, households or individual firms. a. Macroeconomics b. Microeconomics
b
____________ focuses on economic measures such as gross domestic product (GDP) that summarize data across many different markets. a. Microeconomics b. Macroeconomics
b
______________ is a simplified version of reality that allows us to observe, understand and make predictions about economic behavior. a. An economic law b. An economic model c. An economic conclusion
b
The private sector model of the circular flow includes: a. the government b. firms/businesses c. households d. foreign economies
b, c
Two tools of fiscal policy that can be used to increase aggregate demand are: a. selling government bonds b. increasing government spending c. cutting taxes d. increasing the money supply e. increasing bank loans
b, c
Examples of resources include (choose ALL that apply): a. money b. plants c. people d. machines e. fuel and energy f. animals
b, c, d, e, f
(Check ALL that apply) ___________ are actually helped by excessive, unexpected inflation. a. Consumers on fixed incomes b. Borrowers c. Savers d. Firms (when the price level rises faster than resources prices) e. Banks and other money lenders
b, d
(Check ALL that apply) When Demand decreases, but there is no change in Supply: a. Equilibrium Quantity will increase b. Equilibrium Price will decrease c. Equilibrium Price will increase d. Equilibrium Quantity will decrease
b, d
(Check ALL that apply) When Demand increases, but there is no change in Supply: a. Equilibrium Quantity will decrease b. Equilibrium Quantity will increase c. Equilibrium Price will decrease d. Equilibrium Price will increase
b, d
Contractionary Fiscal policy will tend to do what things? a. increase aggregate demand b. decrease aggregate demand c. shift aggregate demand to the right d. shift aggregate demand to the left
b, d
GDP is used to: a. determine how much the government should tax households and businesses b. determine the size of the economy at a certain time c. establish trade quotas to restrict imports d. determine the growth of the economy over time
b, d
In which of the following ways can comparing GDP year - to - year be helpful to economists and policymakers? a. It helps policymakers calculate the unemployment rate. b. It can help measure the effectiveness of government policy. c. It can help determine that exact amount of annual government spending. d. It can help identify rates of economic growth or contraction. e. It can help identify where we are on the business cycle.
b, d, e
Which of the following are subcomponents of the Investment component of GDP? a. transfer payments b. business expenditures c. government subsidies d. new residential construction e. changes in business inventories f. net exports
b, d, e
(Check ALL 3 that apply) When Real GDP is declining (or has a negative slope): a. business profits and investments are rising b. households/consumers are decreasing spending c. households/consumers are increasing spending d. business profits and investments are declining e. unemployment is decreasing as companies begin hiring f. unemployment is increasing as people are getting laid off
b, d, f
(Check ALL 3 that apply) When Real GDP is increasing (or has a positive slope): a. households/consumers are decreasing spending b. unemployment is decreasing as companies begin hiring c. unemployment is increasing as people are getting laid off d. households/consumers are increasing spending e. business profits and investments are declining f. business profits and investments are rising
b, d, f
If the demand for product X increases at the same time there is an increase in the supply of product X, we can expect: (Check BOTH that apply) a. no change in the Equilibrium price b. the change in Equilibrium price to be indeterminate c. Equilibrium price to increase d. Equilibrium price to decrease e. Equilibrium quantity to increase f. the change in Equilibrium quantity to be indeterminate g. Equilibrium quantity to decrease h. no change in the Equilibrium quantity
b, e
Which of the following are reasons for the inverse relationship between price and quantity demanded? (check ALL that apply) a. tastes preferences effect b. substitution effect c. comparative advantage d. expectation effect e. increasing opportunity costs f. scarcity g. income effect h. law of diminishing marginal utility
b, g, h
A medical study finds that consuming product X will improve people's health. This causes a significant increase in the demand for product X. At the same time, there is a slight decrease in the price of a key resource used to make product X. Supply increases slightly. Given this information we can expect (Check BOTH that apply): a. no change in the Equilibrium price b. Equilibrium price to increase c. the change in Equilibrium quantity to be indeterminate d. the change in Equilibrium price to be indeterminate e. Equilibrium quantity to decrease f. Equilibrium price to decrease g. no change in the Equilibrium quantity h. Equilibrium quantity to increase
b, h
A government that achieves it macroeconomic goal(s) will: a. achieve more technological advances b. have happier citizens c. reduce the fluctuations in its business cycles d. be able to collect higher tax revenues
c
A movie ticket costs $12.00 and there are two movies you want to watch. You spend the $12 to see movie A instead of movie B. The FULL COST of watching movie A is _______________. a. $12.00 b. not watching movie B c. not watching movie B and the $12 spent to buy the ticket
c
A nation's real GDP will: a.remain flat over the course of many years b. decline steadily as population increases c. generally increase over time
c
A particular vending machine has both your favorite potato chips and your favorite candy bar. This vending machine also sells bagged popcorn, Combos, Skittles and Pop-tarts, All of which you hate. You decide to buy the candy bar. The opportunity cost of buying the candy bar is/are: a. the bag of Combos b. the bagged popcorn c. the potato chips d. all of these e. the bag of Skittles f. the Pop-tarts g. the $1 you spent to buy the candy bar
c
An economy has an MPC of 0.8. If the federal government decreases its expenditures on goods and services by $10 billion and decreases taxes on personal incomes by $10 billion, which of the following will occur in the short-run? a. Aggregate demand will increase by up to $10 billion b. The federal budget deficit will increase by $10 billion c. Aggregate demand will decrease by up to $10 billion d. Aggregate demand will not change e. The federal budget deficit will decrease by $10 billion
c
As more and more cases of police brutality are reported in the news, the government is considering purchasing body cameras that police officers would be required to wear. This is an example of the demand for body cameras shifting to the right due to a change in: a. the price of a complementary good b. the price of a substitute good c. tastes/preferences/information/season d. expectations e. income for an inferior good f. income for a normal good
c
As price increases: a. supply decreases b. supply increases c. quantity supplied increases d. quantity supplied decreases
c
As the marginal propensity to save decreases, we see the spending multiplier: a. decrease b. remain the same c. increase
c
Assume that the U.S. can produce 100 cars or 200 units of corn and Mexico can produce 50 cars or 300 units of corn. Which of the following, if any, would be an acceptable Terms of Trade between the U.S. and Mexico? a. 1/10 of a car for 1 unit of corn b. neither of these are an acceptable Terms of Trade between the U.S. and Mexico c. 1 car for 3 units of corn d. 1 car for 1 unit of corn e. 1 car for 10 units of corn
c
Combinations or points beyond/outside the economy's production possibilities curve are: a. inefficient b. efficient c. currently impossible
c
Combinations or points on the economy's production possibilities curve are: a. currently impossible b. inefficient c. efficient
c
Deflation (i.e. a negative change in the economy's price level) redistributes wealth: a. from the lender to the government. b. from the borrower to the government. c. from the borrower to the lender. d. from the lender to the borrower.
c
Fiscal policy is based on the premise that: a. politicians advised by trained economists know what's best for households. b. actions guided by an "invisible hand" are not sophisticated enough for an economy as large as the United States'. c. when people don't spend enough, the government should spend.
c
GDP is expressed in: a. real terms b. the goods and services not produced c. monetary value
c
If ACME widget manufacturers expects the price of the widgets they sell to decrease in the near future, we can expect: a. the quantity supplied of ACME widgets to decrease or a down and leftward movement along the supply curve for ACME widgets b. the supply of ACME widgets to decrease or shift to the left c. the supply of ACME widgets to increase or shift to the right d. the quantity supplied of ACME widgets to increase or an up and rightward movement along the supply curve for ACME widgets
c
If Real GDP has been declining for four consecutive months, this would mean the economy is experiencing: a. a recession b. a depression c. a contraction
c
If consumption spending increases from $358 to $367 billion when disposable income increases from $412 to $427 billion, it can be concluded that the spending multiplier is: a. none of these b. 10 c. 2.5 d. 1.67 e. 4.3
c
If government spending changes by $2 billion but aggregate demand changes by $6 billion, the multiplier must be ________. a. $6 billion b. $4 billion c. 3 d. 4 e. 6
c
If household savings increase by $40 billion when household income increases by $133 billion, then the marginal propensity to save equals _________. a. 2.3 b. 0.43 c. 0.3
c
If the full-employment level of GDP equals $600 billion but actual or real GDP equals $424 billion, the change in government spending needed to close the output gap is _________ when the MPC is 0.75. a. none of these b. $565.33 billion c. $44 billion d. $132 billion e. $234.67 billion f. $318 billion g. $176 billion h. $424 billion
c
Improvements in worker productivity: a. create a movement up along the SRAS curve. b. create a movement down along the SRAS curve. c. create a rightward shift of the SRAS curve. d. crease a leftward shift of the SRAS curve.
c
In examining the quantity demanded of a good or service, we hold everything constant except: a. the weather b. the price of complementary products c. the price of that good or service d. the price of substitutes e. income f. tastes and preferences
c
Inflation redistributes wealth: a. from the borrower to the government. b. from the borrower to the lender. c. from the lender to the borrower. d. from the lender to the government.
c
Period of the business cycle when output falls over time and unemployment increases. a. Recovery b. Trend c. Contraction d. Boom e. Bust f. Trough g. Expansion h. Recession i. Peak
c
Period of the business cycle when real GDP is growing at a rate that is faster than the long-run economic growth rate. a. Recession b. Trough c. Boom d. Contraction e. Bust f. Trend g. Recovery h. Peak
c
Peru can produce 20 tons of sugar or 20 tons of wheat. Brazil can produce 30 tons of sugar or 20 tons of wheat. Which country has the comparative advantage in sugar production? a. neither b. Peru c. Brazil
c
Products X Y are substitutes (like apartments and houses). When the price of X increases, the: a. quantity demanded of Y increases b. demand for Y decreases c. demand for Y increases d. quantity demanded of Y decreases
c
Scarcity exists when there is not enough of something to satisfy everyone's wants at: a. any price b. the maximum price c. a zero price
c
Some economists question the effectiveness of government intervention in the economy because: a. politicians are not trained economists b. the office of the president can potentially change every four years c. the economy moves in cycles d. it was government intervention that lead to the Great Depression
c
The Law of Supply shows us that price and quantity supplied have: a. an indirect or negative relationship b. no relationship c. a direct or positive relationship
c
The Price Index of the Base year will always be: a. more than 100 b. less than 100 c. 100
c
The business cycle rises above the trend line when: a. costs of production fall and therefore profits rise b. the stock market rises c. real GDP expands faster than the growth trend d. when unemployment increases rapidly
c
The most accurate way to measure the growth or contraction of an economy's aggregate output is by looking at: a. shifts of the Production Possibilities Frontier b. nominal GDP c. real GDP d. a marginal cost / marginal benefit analysis e. fluctuations in the exchange rate f. the Consumer Price Index
c
The real interest equals: a. nominal interest rate + inflation b. nominal interest rate ÷ inflation c. nominal interest rate - inflation
c
Which of the following are things that are studied in a macroeconomics course? a. investments b. finance c. the behavior and choices of people d. the stock market
c
Which of the following would be considered a capital resource? a. the money need to start the pizzeria business b. the dough used to make a pizza at a pizzeria c. the pizza oven used to cook/heat a pizza d. the pizza maker working at a pizzeria
c
Which of the following would cause household consumption to decrease and therefore cause aggregate demand to decrease and shift leftward? a. an increase in the aggregate price level b. a lower level of household indebtedness c. a decrease in consumer confidence d. an increase in household incomes e. a decrease in the aggregate price level f. a decrease in real interest rates g. an increase in household wealth
c
You love having popcorn when you go to the movie theater. A small popcorn costs $4.00 so buying two would cost $8.00 and you would not enjoy the second bag as much as the first. Instead, you spend $7.00 to buy the large popcorn. This is an example of the _____________ at work. a. income effect b. substitution effect c. law of diminishing returns
c
You pay $15,000 for a used car at a dealership. The dealer's commission or fee is $1,200. The total contribution of this transaction towards the calculation of this year's GDP is _______. a. $16,200 b. $15,000 c. $1,200
c
If the price of a good or service decreases (gets cheaper), the DEMAND for that good or service will: a. decrease b. increase c. not change
c (demand doesn't change the QUANTITY DEMANDED does)
(Check ALL that apply) An increase in corporate taxes will: a. increase the quantity supplied b. decrease the quantity supplied c. decrease supply d. shift the supply curve to the left e. cause a movement down and to the left along the supply curve f. shift the supply curve to the right g. increase supply h. cause a movement up and to the right along the supply curve
c, d
(Check ALL that apply) When Supply increases, but there is no change in Demand: a. Equilibrium Price will increase b. Equilibrium Quantity will decrease c. Equilibrium Price will decrease d. Equilibrium Quantity will increase
c, d
From an economist's perspective. which of the following is/are NOT considered to be investment? (Check ALL that apply) a. the building of an apartment complex b. construction of a new factory c. government construction of new highways and bridges d. purchase of shares of company stock e. additions to inventories at a steel plant
c, d
Which of the following will cause an increase short-run aggregate supply? (Check ALL that apply) a. A depreciated or "weaker" currency when purchasing foreign made raw materials. b. An increase in energy costs (such as the price of crude oil). c. A decrease in energy costs (such as the price of crude oil). d. An appreciated or "stronger" currency when purchasing foreign made raw materials. e. An increase in workers' nominal wages f. A decrease in workers' nominal wages.
c, d, f
(Check ALL that apply) Which of the following are reasons that a contraction/recession in the U.S. economy might end? a. increases in the real interest rate b. a decrease in government spending c. decreases in taxes d. increases in the money supply e. the beginnings of recessions in Europe or Asia f. increases in government spending g. nominal wages decrease
c, d, f, g
You can increase your human capital through (choose ALL that apply): a. lifting, do you even bro? b. none of these c. job training d. surgery e. education f. experience
c, e, f
Marginal Propensity to Consume (MPC) equation
change in consumption/change in disposable income
Marginal Propensity to Save (MPS) equation
change in savings/change in disposable income
A Ford vehicle is produced in November of 2018 and sold to Sawgrass Ford in December of 2018. The vehicle is later purchased by the Garcia family in January of 2019. The vehicle would be counted as: a. disinvestment in 2018 and consumption in 2019 b. consumption in 2018 and investment in 2019 c. consumption in 2018 and consumption in 2019 d. investment in 2018 and disinvestment in 2019
d
A bicycle company must purchase $80 worth of aluminum in order to manufacture one bicycle that it sells for $200. Assuming that aluminum is the only input used to manufacture the bicycle, the value added by the bicycle company is: a. $200 b. $280 c. $80 d. $120
d
A decline in the price level is called: a. disinflation b. inflation c. the inflation rate d. deflation e. a recession
d
According to how Mr. Welker explained it, what is the order of a business cycle? a. 1.trough 2.contraction 3.peak 4.expansion 5. trough b. 1. contraction 2.trough 3.peak 4.expansion 5. contraction c. 1.expansion 2. trough 3.peak 4.expansion d. 1.expansion 2.peak 3. contraction 4.trough 4.expansion
d
As a hurricane approaches, we would expect to see _______________ for batteries, bottled water and gasoline. a. a leftward shift of the entire demand curve b. a movement up and to the left along the demand curve c. a movement down and to the right along the demand curve d. a rightward shift of the entire demand curve
d
Economists state that resources have to be ________. a. privately owned b. expensive c. man-made d. productive e. natural
d
Households: a. buy goods and services from firms/businesses in the factor/resource market. b. sell resources to firms/businesses in the product market. c. buy resources from firms/businesses in the resource market. d. sell resources to firms/businesses in the resource market.
d
If the full-employment level of GDP equals $600 billion but actual or real GDP equals $680 billion, the change in government spending needed to close the output gap is _________ when the MPC is 0.9. a. a decrease of $80 billion b. a decrease of $68 billion c. a decrease of $88.89 billion d. a decrease of $8 billion e. a decrease of $72 billion
d
In the market for hamburgers, if the price of chicken sandwiches (a substitute in consumption/demand) increases, then we can expect: a. neither curve to shift as a shortage as created b. 1. Demand to decrease 2. Supply to not change 3. the Equilibrium price to decrease 4. the Equilibrium quantity to decrease c. neither curve to shift as a surplus in created d. 1. Demand to increase 2. Supply to not change 3. the Equilibrium price to increase 4. the Equilibrium quantity to increase e. 1. Demand to not change 2. Supply to decrease 3. the Equilibrium price to increase 4. the Equilibrium quantity to decrease f. 1. Demand to not change 2. Supply to increase 3. the Equilibrium price to decrease 4. the Equilibrium quantity to increase
d
Jennifer expects the inflation rate to be 3%. If Jennifer borrows money at a nominal interest rate of 5%, her real interest rate is: a. positive and greater than the nominal interest rate. b. positive and equal to the nominal interest rate. c. negative and less than the nominal interest. d. positive and less than the nominal interest rate. e. equal to zero.
d
Money spent on the purchase of a new house is: a. included in the calculation of GDP as part of personal consumption expenditures b. not included in the calculation of GDP c. included in the calculation of GDP as part of personal savings d. included in the calculation of GDP as part of investment e. included in the calculation of GDP as part of private fixed capital
d
Product X is a key resource / input used to produce product Y. If the price of X decreases, we would expect: a. the quantity supplied of Y to decrease b. the supply of X to decrease c. the supply of Y to decrease d. the supply of Y to increase e. the quantity supplied of Y to increase
d
Production possibilities curves that illustrate increasing opportunity costs are: a. bowed in from the origin b. flat, horizontal lines c. straight and downward sloping d. bowed out from the origin
d
Real GDP is: a. the future dollar GDP. b. the real GDP minus depreciation of physical capital. c. the current dollar GDP. d. the constant dollar GDP.
d
Sellers prefer: a. low prices b. high taxes c. lots of competition d. high prices
d
When wages increase: a. the supply curve shifts to the right b. the quantity supplied moves up and to the right c. the quantity supplied moves up and to the left d. the supply curve shifts to the left
d
Which of the following would cause a rightward shift of the supply curve for pizzas? a. a significant number of pizzerias closing for business b. a decrease in the price of pizzas c. an increase in the price of pizzas d. the development of a machine that can roll, toss and shape the dough into its pizza shape
d
Which would be considered an investment according to economists? (Check ALL that apply) a. the resale of stock originally issued by the Ford Motor Company b. the sale of a retail department store building from JCPenny to Target c. the purchase of newly issued shares of stock in Google d. the purchase of a newly built pizza oven (built in Texas) by Bob that also owns a Papa John's franchise e. the construction of a distribution center by Amazon
d, e
{A movie ticket costs $12.00 and there are two movies you want to watch. You spend the $12 to see movie A instead of movie B. The (implicit/indirect) opportunity cost of watching movie A is _______________.} In the previous question about the vending machine, the FULL COST of buying the candy bar is/are: a. the Pop-tarts b. the bag of Combos c. all of these d. the $1 you spent to buy the candy bar e. the potato chips f. the bagged popcorn g. the bag of Skittles
d, e
(Check ALL that apply) An improvement in technology will: a. cause a movement down and to the left along the supply curve b. decrease the quantity supplied c. decrease supply d. shift the supply curve to the right e. cause a movement up and to the right along the supply curve f. increase supply g. shift the supply curve to the left h. increase the quantity supplied
d, f
Economic models may take the form of (check ALL that apply): a. mathematical equations b. verbal statements c. tables of data d. graphs e. all the above
e
Economists do not consider money capital because it ___________. a. loses value over time b. is relatively new and was not available to ancient societies c. is different from country to country d. comes from the government and not nature e. cannot produce anything
e
In a country with a working age population of 200 million, 130 million workers are employed and 10 million are unemployed. The unemployment rate is __________. 7.7% 5% 6.3% 65% 7.1%
e
Peru can produce 20 tons of sugar or 20 tons of wheat. Brazil can produce 30 tons of sugar or 20 tons of wheat. In Brazil the opportunity cost of producing 1 ton of sugar is: a. 30 tons of sugar b. 1 ton of sugar c. 20 tons of wheat d. 1 ½ tons of sugar e. ⅔ of a ton of wheat f. 1 ton of wheat g. 20 tons of sugar
e
Peru can produce 20 tons of sugar or 20 tons of wheat. Brazil can produce 30 tons of sugar or 20 tons of wheat. In Brazil the opportunity cost of producing 1 ton of wheat is: a. 1 ton of wheat b. 20 tons of wheat c. 20 tons of sugar d. 30 tons of sugar e. 1 ½ tons of sugar f. ⅔ of a ton of wheat g. 1 ton of sugar
e
Suppose investment spending increases by $120 million, and as a result, the equilibrium income increases by $396 million. The value of the marginal propensity to save is: a. 3.3 b. 0.4 c. 0.6 d. 1.5 e. none of these f. 0.7
e
(Check BOTH that apply) Price ceilings cause ____________. a. a movement up and to the left along the demand curve b. a rightward shift of the demand curve c. the quantity demanded to decrease d. a leftward shift of the demand curve e. a movement down and to the right along the demand curve f. demand to decrease g. the quantity demanded to increase h. demand to increase
e, g
If the demand for product X increases slightly while there is a significant decrease in the supply of product X, we can expect: (Check BOTH that apply) a. no change in the Equilibrium quantity b. the change in Equilibrium quantity to be indeterminate c. Equilibrium price to decrease d. the change in Equilibrium price to be indeterminate e. Equilibrium price to increase f. Equilibrium quantity to increase g. Equilibrium quantity to decrease h. no change in the Equilibrium price
e, g
As the price movie tickets increased, sales of popcorn has decreased. This is an example of the demand for popcorn shifting to the left due to a change in: a. income for a normal good b. income for an inferior good c. tastes/preferences/information/season d. the number of consumers e. the price of popcorn f. the price of a complementary good g. the price of a substitute good h. expectations
f
In the market for hamburgers, if new grilling technology cuts production time in half, then we can expect: a. 1. Demand to decrease 2. Supply to not change 3. the Equilibrium price to decrease 4. the Equilibrium quantity to decrease b. 1. Demand to not change 2. Supply to decrease 3. the Equilibrium price to increase 4. the Equilibrium quantity to decrease c. neither curve to shift as a shortage as created d. 1. Demand to increase 2. Supply to not change 3. the Equilibrium price to increase 4. the Equilibrium quantity to increase e. neither curve to shift as a surplus in created f. 1. Demand to not change 2. Supply to increase 3. the Equilibrium price to decrease 4. the Equilibrium quantity to increase
f
In the market for hamburgers, if the price of ground beef (which is used to make hamburgers) triples, then we can expect: a. neither curve to shift as a shortage as created b. 1. Demand to not change 2. Supply to increase 3. the Equilibrium price to decrease 4. the Equilibrium quantity to increase c. neither curve to shift as a surplus in created to increase d. 1. Demand to increase 2. Supply to not change 3. the Equilibrium price to increase 4. the Equilibrium quantity to increase e. 1. Demand to decrease 2. Supply to not change 3. the Equilibrium price to decrease 4. the Equilibrium quantity to decrease f. 1. Demand to not change 2. Supply to decrease 3. the Equilibrium price to increase 4. the Equilibrium quantity to decrease
f
In the market for hamburgers, if the price of hamburgers decreases, then we can expect: a. 1. Demand to not change 2. Supply to decrease 3. the Equilibrium price to increase 4. the Equilibrium quantity to decrease b. 1. Demand to decrease 2. Supply to not change 3. the Equilibrium price to decrease 4. the Equilibrium quantity to decrease c. neither curve to shift as a surplus in created d. 1. Demand to not change 2. Supply to increase 3. the Equilibrium price to decrease 4. the Equilibrium quantity to increase e. 1. Demand to increase 2. Supply to not change 3. the Equilibrium price to increase 4. the Equilibrium quantity to increase f. neither curve to shift as a shortage as created
f
Monetary Policy is run by _________. a. the Office of Budget and Management b. the Congressional Oversight Committee c. the Treasury Department d. the Commerce Department e. the Internal Revenue Service f. the Federal Reserve
f
Period of the business cycle when a contraction ends and the economy begins to grow but lies below the trend line. a. Expansion b. Peak c. Contraction d. Recession e. Trend f. Recovery g. Trough h. Bust i. Boom
f
_________ period of the business cycle immediately following a peak. a. Trend b. Boom c. Recovery d. Expansion e. Trough f. Bust g. Recession
f
(Check BOTH that apply) Price floors cause ____________. a. a rightward shift of the supply curve b. a leftward shift of the supply curve c. the quantity supplied to decrease d. supply to decrease e. supply to increase f. the quantity supplied to increase g. a movement down and to the left along the supply curve h. a movement up and to the right along the supply curve
f, h
Economic models need to be as realistic as possible in order to help understand and make predictions about economic behavior. False True
false
Money is a resource. True False
false
Opportunity costs are always constant. True False
false
Opportunity costs must be stated in a dollar price value. True False
false
Quantity demanded is the same as demand true false
false
Deflation would most likely occur during which phase of the business cycle? a. Boom b. Expansion c. Peak d. Trough e. Recovery f. Trend g. Contraction
g
Period of the business cycle when a contraction has lasted for six months or longer. a. Contraction b. Expansion c. Bust d. Trough e. Peak f. Recovery g. Recession h. Boom i. Trend
g
Which of the following would cause household consumption to decrease and therefore cause aggregate demand to decrease and shift leftward? a. a lower level of household indebtedness b. an increase in the aggregate price level c. a decrease in the aggregate price level d. an increase in consumer confidence e. an increase in household incomes f. an increase in household wealth g. an increase in real interest rates
g
If the decrease in demand for product X is of the same magnitude/size as the decrease in supply for product X, we can expect: (Check BOTH that apply) a. the change in Equilibrium quantity to be indeterminate b. the change in Equilibrium price to be indeterminate c. Equilibrium quantity to increase d. Equilibrium price to increase e. no change in the Equilibrium quantity f. Equilibrium price to decrease g. Equilibrium quantity to decrease h. no change in the Equilibrium price
g, h
Peru can produce 20 tons of sugar or 20 tons of wheat. Brazil can produce 30 tons of sugar or 20 tons of wheat. If in the absence of trade, Brazil produces 12 tons of wheat and 12 tons of sugar while Peru produces 8 tons of wheat and 12 tons of sugar, what are the Gains from Trade after these two nations specialize? (hint: these are the two S.S.O.M.s for Brazil and Peru) a. 20 tons of wheat b. 3 tons of wheat c. 12 tons of wheat d. 24 tons of sugar e. none of these f. 4 tons of sugar g. 8 tons of wheat h. 6 tons of sugar
h
Period of the business cycle when GDP begins to decline. a. Contraction b. Trend c. Recession d. Expansion e. Boom f. Recovery g. Trough h. Bust i. Peak
i
Contractionary fiscal policy can be achieved by: a. increasing government spending b. cutting taxes c. lowering the required reserve ratio d. raising the required reserve ratio e. lowering the discount rate f. buying government bonds g. raising the discount rate h. selling government bonds i. decreasing government spending j. raising taxes
i, j
labor participation rate
labor force/ working population x 100
unemployment rate
number of unemployed/labor force x 100
Price Index Equation
price in specific year/price in base year X 100
natural rate of unemployment
structural + frictional
