Macro 1001 Final Exam Review - HW #3,4 and Quiz 2
Based on the information in the table, what is the unemployment rate? Population 16 and older 1,000,000 Participation Rate 80% Employed Workers 720,000
10.0 percent
Suppose we observe an increase in both the equilibrium price and quantity of bread. This is best explained by:
a decrease in the price of butter, a complement to bread.
Suppose that the equilibrium price of T-shirts increases and the equilibrium quantity of T-shirts decreases. This is best explained by:
a decrease in the supply of T-shirts.
Suppose you observe a decrease in the equilibrium price and quantity of corn. Of the options listed below, this is best explained by:
a fall in consumer income assuming corn is a normal good.
If 2009 is the base year, then the real GDP in 2009 is ________ the nominal GDP in 2009.
equal to
The quantity that sellers wish to sell tends to ______ as price increases, and so the supply curve is ______ sloping.
increase; upward
The value of unpaid work by a homemaker ______ included in GDP and the value of housekeeping services sold in a market ______ included in GDP.
is not; is
If the demand for steak increases as income increases, then steak is a(n):
normal good.
The standard of living in an economy is best measured by:
output per person.
If the supply curve and the demand curve both shift to the left, then the new equilibrium:
quantity will be lower, but the direction of the price change is uncertain.
Macroeconomic issues include all of the following EXCEPT:
regulation of natural monopolies.
Producers of TVs will be able to lower the wage rate that they pay to their workers. You predict that the supply curve of TVs shifts
rightward, and the price falls.
In a free market, if the price of a good is above the equilibrium price, then;
sellers, dissatisfied with growing inventories, will lower their prices.
When a market is not in equilibrium:
the economic motives of sellers and buyers will move the market to its equilibrium.
When the supply curve shifts to the left and there is no change in demand:
the equilibrium price will rise.
Which of the following would be included in GDP?
the gasoline sold at a gas station
You can spend $10 for lunch and you would like to purchase two cheeseburgers. When you get to the restaurant, you find out the price for cheeseburger has increased from $5 to $6, so you decide to purchase just one cheeseburger. This is best described as:
the income effect of a price change.
As coffee becomes more expensive, Joe starts drinking tea instead of coffee. This is called:
the substitution effect of a price change.
Flour is a basic ingredient in all bread making. If the price of flour increases:
the supply for bread decreases.
GDP is:
the total market value of all final goods and services produced within a country in a given year.
GDP is a measure of an economy's:
total output.
Assume an economy produces only hamburgers and hot dogs and the base year is 2016. Quantities Produced Prices 2016 2017 2016 2017 Hamburgers 2,000 3,000 2 3.00 Hot dogs 3,000 4,000 1 1.50 Given the data in the table above, what is the value of real GDP in 2017?
$10,000
Assume an economy produces only hamburgers and hot dogs and the base year is 2016. Quantities Produced Prices 2016 2017 2016 2017 Hamburgers 2,000 3,000 2 3.00 Hot dogs 3,000 4,000 1 1.50 Given the data in the table above, what is the value of nominal GDP in 2017?
$15,000
If an automobile manufacturer pays $200 for a car windshield, $400 for four car tires, $100 for a car radio, and sells cars made with these parts for $20,000, then each car the automobile manufacturer sells contributes how much to GDP?
$20,000
Suppose that the total production of an economy consists of 4 oranges and 10 candy bars, each orange sells for $0.25, and each candy bar sells for $0.50. What is the market value of production in this economy?
$6.00
In a country with 200 million people aged 16 years and older, 120 million are in the labor force, and 114 million are employed, what is the participation rate?
60 percent
Based on the information in the table, how big is the labor force? Population 16 and older 1,000,000 Participation Rate 80% Employed Workers 720,000
800,000
Given the following data for the economy, compute the value of GDP. Government purchases of goods and services10 Consumption Expenditures70 Exports5 Imports12 Change in inventories-7 Construction of new homes and apartments15 Sales of existing homes and apartments22 Government payments to retirees17 Business fixed investment9
90
Which of the following factors will lead to a decrease in the current supply of a good?
A belief that the price of a good or service will go up in the future
Which of the following would increase the net export component of U.S. GDP?
A bottle of California wine is purchased in London
Which of the following is an example of an intermediate good?
A new speaker system sold to an automaker for installation in a car
Classify each of the following individuals as employed, unemployed, or not in the labor force: a. A factory worker laid off indefinitely during a recession who looking for work in the service industry is considered unemployed Correct. b. A computer technician on vacation is considered employed Correct. c. A 14 year old grape picker during the grape harvest is considered not in the labor force Correct. d. A banker who quits his job to (unsuccessfully) seek fame and fortune as an actor is considered unemployed Correct. e. A stay at home dad is considered not in the labor force Correct. f. A recent college graduate looking for her first job is considered unemployed Correct. g. An auto mechanic without a job who has given up looking for work is considered not in the labor force Correct.
All in question
For each of the following transactions, state the possible effect on U.S. GDP for this year: The purchase of a 1990 Ford Bronco. U.S. GDP does not change Correct. b. A purchase of a share of IBM stock.U.S. GDP does not change Correct. c. Steel purchased by General Motors to be used in the production of new vehicles.U.S. GDP does not change Correct. d. A dry cleaning bill.U.S. GDP increases Correct. e. The money you saved by doing your own laundry rather than using a dry cleaning service.U.S. GDP does not change Correct. f. $25 paid to a local landscaping business to mow your lawn.U.S. GDP increases Correct. g. Money used to purchase an illegal drug.U.S. GDP does not change Correct.
All in question
How would each of the following transactions affect the GDP of the United States? a. The U.S. government pays $1 billion in salaries for government workers. GDP will increase .b. The U.S. government pays $1 billion to Social Security recipients. GDP will not change Correct .c. The U.S. government pays a U.S. firm $1 billion for newly produced airplane parts. GDP will increase Correct. d. The U.S. government pays $1 billion in interest to holders of U.S. government bonds. GDP will not change Correct. e. The U.S. government pays $1 billion to Saudi Arabia for crude oil to add to U.S. government-owned oil reserves. GDP will not change Correct.
All on question slide
Which of the following events will cause an increase in the market demand for Guinness (a brand of beer)?
An increase in the price of Heineken (another brand of beer).
Which of the following is consistent with the law of demand?
An increase in the price of a soda causes a decrease in the quantity of soda demanded.
What might cause a demand curve to shift to the right?
An increase in the price of a substitute
Macroeconomists would be most likely to study which of the following?
Average annual earnings of all employed workers in the United States
The profit from American Airlines in Texas is included in the U.S. ________.
Both GDP and GNP
Which of the following activities is most likely to be counted in GDP?
Gail buys paper and crayons to donate to poor children in need of school supplies.Correct
Which of the following is an example of frictional unemployment?
Hector looked for a job for five weeks after finishing college. He turned down several jobs that didn't fit his skills, but now has a job that requires the expertise he gained in college.
Which of the following transactions would be included in the GDP of the United States?
Honda produces cars in Ohio.
Major macroeconomic questions include all of the following EXCEPT:
How do monopoly firms set prices and determine quantities to produce?
Which of the following is NOT true of a demand curve?
It reflects sellers' reservations prices.
Which of the following is NOT a characteristic of a market in equilibrium?
Neither buyers nor sellers want the price to change.
Which of the following would increase the government purchases component of U.S. GDP?
The U.S. federal government pays $3 billion in salaries to soldiers in the military.
Suppose that the technology used to manufacture laptops has improved. The likely result would be:
an increase in supply of laptops.
Equilibrium price and quantity are determined by:
both supply and demand.
To understand how the price of a good is determined in a free market, one must account for the desires of:
buyers and sellers.
In a free market, if the price of a good is below the equilibrium price, then;
buyers, hoping to ensure they acquire the good, will bid the price higher.
Refer to the accompanying figure. Suppose the solid line represents the current supply of Star Wars action figures. If retailers learn that a new Star Wars movie will be released in several months, this news is likely to cause:
current supply to shift to S(A) in anticipation of higher future prices.
As the price of flour (an input in the production of cookies) increases, firms that produce cookies will:
decrease the supply of cookies.
All else equal, a decrease in the demand for oranges will lead to a(n) ______ in equilibrium price and a(n) ______ in equilibrium quantity.
decrease; decrease
A demand curve is ______ sloping because ______.
downward; fewer people are willing to buy an item at higher prices
Consumption spending includes spending on:
durables, nondurables, and services.
A technological improvement lowers the cost of producing coffee. At the same time, consumers' preferences for coffee increase. The equilibrium price and quantity of coffee will
equilibrium price is ambiguous, equilibrium quantity will increase.
Net exports equal:
exports minus imports.
Goods and services that are consumed by the ultimate user are called ______ goods and services.
final
The most commonly used measure of an economy's output is:
gross domestic product.
The four categories of final users of GDP are:
households, firms, governments, and the foreign sector.
Goods and services provided by state and local governments are:
included in GDP at cost
If supply increases and demand decreases, the new equilibrium price will be ______ and the new equilibrium quantity will be ______.
lower; uncertain
Gross domestic product (GDP) equals the ______ of final ______ produced within a country during a given period of time.
market value; goods and services
The demand curve illustrates the fact that consumers tend to purchase:
more of a good as its price falls.
An individual worked for an airline that went out of business because the airline was unable to meet new federal safety standards. While the individual is unemployed, she will be classified as ______ unemployed.
structural
If the demand for olives falls when the price of cheese falls, then we know that cheese and olives are:
substitutes.
In the United States decisions to increase interest rates are made by _____ and decisions to increase taxes are made by ____.
the Federal Reserve; Congress
Refer to the accompanying figure. Suppose the solid line shows the demand for coffee. If coffee and tea are substitutes, and the price of tea falls, then you would expect:
the demand curve to shift to D(A).
Suppose sport utility vehicles get poor gas mileage compared to other available cars. If the price of gasoline increases, then one would expect:
the demand for sport utility vehicles to decrease.
Excess demand occurs:
when price is below the equilibrium price.
