macro ch 3, 7 homework

A small economy starts the year with $1 million in capital. During the course of the year, gross investment is $150,000 and depreciation is $50,000. How big is the economy's stock of capital at the end of the year?

$1,100,000

Assume that a grower of flower bulbs sells its annual output of bulbs to an Internet retailer for $70,000. The retailer, in turn, brings in $160,000 from selling the bulbs directly to final customers. What amount would these two transactions add to personal consumption expenditures and thus to GDP during the year?

$160,000

Suppose that this year a small country has a GDP of $100 billion. Also assume that Ig = $30 billion, C = $60 billion, and Xn = - $10 billion. How big is G?

$20 billion

A demand curve A. indicated the quantity demanded at each price in a series of prices B. shows the relationship between income and spending C. shows the relationship between price and quantity supplied D. graph as an upsloping line

A

A shift to the right in the demand curve for product A can be most reasonably explained by saying that A. consumer preferences have changed in favor of A so that they now want to buy more at each possible price B. consumer incomes have decline, and consumers now want to buy less of A at each possible price C. the price of A has increased and, as a result, consumers want to purchase less of it D. the price of A has declined and, as a result, consumers want to purchase more of it

A

If the supply of a product decreases and the demand for that product simultaneously increases then equilibrium. A. price must rise, but equilibrium quantity may rise, fall or remand unchanged B. price must rise and equilibrium quantity must fall C. price and equilibrium quantity must both increase D. price and equilibrium quantity must both decline

A

The equilibrium price and quantity in a market usually produce allocative efficiency because A. marginal benefit and marginal cost are equal at that point B. the excess of goods produced at equilibrium guarantees that all will have enough C. equilibrium ensures an equitable distribution of output D. all consumers who want the good are satisfied

A

allocative efficiency refers to A. the production of the product mix most wanted by society B. the use of the least-cost method of production C. production at some point inside of the production possibilities curve D. the full employment of all available resources

A

an increase in the price of a product will reduce the amount of it purchased because A. consumers will substitute other products for the one who price has risen B. the higher price means that real incomes have risen C. the higher price will signal to consumers that the good is of low quality D. consumers substitute relatively high priced for relatively low price products

A

gross domestic product (GDP) measures and reports output A. in dollar amounts and percentage growth B. as an index number C. in percentage terms D. in quantities of physical units

A

if there is a shortage of product X, and the price is free to change, A. the price of the product will rise B. the price of the product will decline C. fewer resources will be allocated to the production of this good D. the supply curve will shift to the left and the demand curve to the right, eliminating the shortage

A

price floors and ceilings prices both A. interfere with the rationing function of prices B. cause the supply and demand curves to shift until equilibrium is established C. causes surpluses D. cause shortages

A

the value of U.S. import is A. subtracted from exports when calculating GDP because imports do not constitute production in the United States B. added to exports when calculating GDP because imports reflect spending by Americans C. subtracted from exports when calculating GDP because imports do not constitute spending by Americans D. added when calculating GDP because imports do not constitute production in the United States

A

which of the following would not shift the demand curve for beef? A. a reduction in the price of cattle feed B. a change in the incomes of beef consumers C. an effective advertising campaign by pork producers D. a widely publicized study that indicates beef consumption increases one's cholesterol

A

Because successive units of a good produce less and less additional satisfaction, the price must fall to encourage a buyer to purchase more units of the good. This statement is most consistent with which explanation for the law of demand? A. the substitution effect B. diminishing marginal utility C. income effect D. rationing function of prices

B

Tom Atoe grows fruits and vegetables for home consumption. This activity is A. excluded from GDP in order to avoid double counting B. productive but is excluded from GDP because no market transaction occurs C. excluded from GDP because an intermediate good is involved D. included in GDP because it reflects production

B

if depreciation exceeds gross investment A. net investment is zero B. the economy's stock of capital is shrinking C. the economy's stock of capital is growing D. the economy's stock of capital may be either growing or shrinking

B

in calculating GDP, governmental transfer payments, such as social security or unemployment compensation, are A. counted as investment spending B. not counted C. counted as government spending D. counted as consumption spending

B

net exports are A. imports less exports B. exports less imports C. that portion of consumption and investment goods sent to other countries D. exports plus imports

B

other things equal, if the price of a key resource used to produce product X falls, the A. supply curve of product X will not shift B. supply curve of product X will shift to the right C. demand curve of product X will shift to the right D. supply curve of product X will shift to the left

B

with a downsloping demand curve and an upsloping supply curve for a product, placing an excise tax on this product will A. increase equilibrium price and quantity B. increase equilibrium price and decrease equilibrium quantity C. decrease equilibrium price and increase equilibrium quantity D. decrease equilibrium price and quantity

B

A nation's gross domestic product (GDP) A. can be found by summing C + In + S + Xn B. is the dollar value of all final output produced by its citizens, regardless of where they are living C. is the dollar value of all final output produced within the borders of the nation during a specific period of time D. is always some amount less than C + Ig + G + Xn

C

Real GDP measures A. base year output at current prices B. base year output at current exchange rates C. current output at base year prices D. current output at current prices

C

Which of the following would most likely increase the demand for gasoline? A. the expectations by consumers that gasoline prices will be lower in the future B. a decrease in the price of public transportation C. the expectation by consumers that gasoline prices will be higher in the future D. a widespread shift in car ownership from SUVs to hybrid sedans

C

assume that the demand curve for product C is downsloping. If the price of C falls from $2.00 to $1.75 A. the demand for C will increase B. the demand for C will decrease C. a larger quantity of C will be demanded D. a smaller quantity of C will be demanded

C

in constructing a demand curve for product X, A. consumer preferences are allowed to vary B. the supply curve of product X is assumed constant C. the prices of other goods are assumed constant D. money incomes are allowed to vary

C

Because of unseasonably cold weather, the supply of oranges has substantially decreased. This statement indicates the A. demand for oranges will necessarily rise B. price of oranges will fall C. equilibrium quantity of oranges will rise D. amount of oranges that will be available at various prices has declined

D

Which of the following is a consequence of rent controls established to keep housing affordable for the poor? A. less rental housing is available, as prospective landlords find it unprofitable to rent at restricted prices B. the quality of rental housing declines as landlords lack the funds and incentive to maintain properties C. apartment building are town down in favor of office buildings, shopping malls, and other buildings where rents are not controlled D. all of these are consequences of rent controls

D

in moving along a supply curve, which of the following is not held constant? A. expectations about the future price of the product B. the number of firms producing this good C. techniques used in producing this product D. the price of the product itself

D

other things equal, if the price of a key resource used to produce product X falls, the A. supply curve of product X will not shift B. demand curve of product X will shift to the right C. supply curve of product X will shift to the left D. supply curve of product X will shift to the right

D

there will be a surplus of a product when A. the supply curve is downward sloping and the demand curve is upward sloping B. the demand and supply curves fall to intersect C. price if below the equilibrium level D. consumers want to buy less than producers offer for sale

D