Macro Cumulative Exam
If a market is not at equilibrium
The price will change and in response market participants will slide along the existing supply and demand curve until the market reaches equilibrium.
Electricity is essential in the production of aluminum. If electricity prices increase
The supply curve for aluminum shifts upward.
Wheat is the main input in the production of flour. If the price of wheat increases, all else equal, we would expect.
The supply of flour to decrease
All of these can improve a country's labor productivity EXCEPT:
The use of less capital and more labor
Intermediate goods are excluded from GDP because
Their inclusion would involve double counting
The derivation of a production possibilities frontier assumes that
There is a fixed quantity of resources and technology available.
The ______ rate is the rate at which banks charge each other for overnight loans, while the _____ rate is the rate at which regional Federal Reserve Banks charge depository institutions for short-term loans.
federal funs; discount
The producer surplus from a good is equal to the
maximum amount a consumer is willing to pay for the good minus the price that actually must be paid.
When money is used to purchase goods or services, money is functioning as a:
medium of exchange
If you were not studying economics, you could be doing one of the following: sleeping in (which you value at $5.00), playing cards with your friends (which you value at $10.00), or working (you would have earned an extra $8.00). The opportunity cost of studying economics is therefore
$10.00
Suppose that a customer's willingness to pay for a product is $79, and the seller's willingness to sell is $64. If the negotiated price is $68, how much is consumer surplus.
$11
If. you have $100,000 in a 401(k) growing 10% per year on average, how much will this be worth in 35 years when you retire?
$3,200,000
Assume that the reserve requirement is 20%. A bank has $20 billion in demand deposits. How much money does the bank have to keep in reserves?
$4 billion
If. the reserve requirement is 25%, a new deposit of $1,000 leads to. a potential increase in the money supply of
$4,000
If the reserve requirement is 10% and a bank initially receives $30,000 in deposits, what is the potential amount of deposits that can be created
300,000
Which of the following is the best liquid
A Picasso painting
Suppose the market basket of goods cost $10,000 in 2009, the base period, and that same basket of goods now cost $11,430. What has been the percentage change in the cost of goods between the base period and the current period?
+13.4%
If the CPI this year is 230 and was 200 last year, the annual inflation rate between the two years is
15 percent
Jason purchased a new printer for $150 although he was willing to pay $175. The minimum price acceptable by the seller, Jasmine, was $145
A consumer surplus of $25 exists, and producer surplus is $5
Which of the following will cause an increase in the quantity demanded for iphones
A decrease in the price of iphones
Which of the following will not cause an increase in demand
A decrease in the products price
All else equal, a decrease in the number of businesses selling pizza will cause:
An increase in the equilibrium price of pizza.
Normative GDP is
GDP valued at prices of that year
Open market operations involve. the purchase and sale of
Government securities
_____ combine land, labor, and capital to produce goods and services and assume the risks associated with running businesses
Entrepreneurs
Which of the following statement is correct?
Federal Reserve is considered to be an independent in central bank.
Gross Domestic Product is a measure of the total value of all
Final goods and services produced in an economy over a period of time
Which of the following is not a determinant of demand?
History of the product
Which is an example of a normative question
How should a society achieve full employment
Increasing opportunity costs occur along the PPF because
Not all resources are equally well suited to produce all goods
Which item is a basic goal of the Federal Reserve System?
Full employment
A higher reserve requirement
Further limits deposit creation
Which of the following is correct?
The Federal Reserve has 12 regional banks. The Board of Governors has 7 members, each serving 14 year terms.
The broadest measure of inflation is
The GDP deflator
A business cycle is
The pattern of short run upward and downward movement in total output.
Why does a small difference in the economic growth rate lead to big differences over time?
The power of compounding
If the price index is 150, how much did a $15 pizza (today) cost in the base year?
$10.00
Which of the following situations involves an external cost?
Alma lives next to a freeway and the noise wakes her up every morning, against her wishes, at six o'clock.
The fundamental reason why supply curve slope upward is
Increasing costs
If the cost of a typical market basket is$400 in 2018, $450 in 2019, and $550 in 2020, then during this period the economy is undergoing
Inflation
If a country has few resources
It will still have a comparative advantage in something
Willingness to pay is
the highest value that a consumer believes a good or service is worth
The money multiplier is
1/reserve requirement
If an economy is growing at 10%, how long will it take for $1,000 to turn into $4,000
14 years
The theory of comparative advantage says
Countries should export those goods they can produce at a lower opportunity cost than another country.
If the price level doubles, the value of money
Falls by 50%
Suppose the working age population in Tiny Town is 200 people. If 25 of these people are not in the labor force, the ____ equals _____.
Labor force; 175
If a bank is subject to a reserve requirement of 15%,then it is required to:
Place 15% of its deposits in the. account with its regional. Federal Reserve Bank or the vault
The use of money as a medium of exchange helps reduce the inefficiencies inherent in
barter and the double coincidence of wants
What is the best measure of economic growth and standard of living in a country?
real GDP per capita
Over the last 10 years, laptop computer prices have moved upward while the quantity has increased. This indicates that
supply has increased more than demand.
Which of the following measures would increase the money supply?
the Fed buying government bonds
Choosing to work an extra hour of overtime is an example of:
thinking at the margin
Assume that the total labor force is 150 individuals with 15 unemployed. The unemployment rate is ___. Now assume that 50 people drop out of the labor force and that 15 remain unemployed. The new unemployment rate it
10 percent, 15 percent
Suppose the market basket of goods and services cost $3,500 in 1996 but today cost $4,250. Using 1996 as the base year, the consumer price index for today is
121.4
When quantity demanded exceeds quantity supplied
A shortage occurs and prices are bid up toward equilibrium
All of the following are functions of money except
A standard of value
All of the following will decrease the supply of commercial air travel except:
A technology change that make aircrafts more fuel efficient.
If Nike, an American corporation, produces sneakers in Thailand this would
Add to Thailand's GDP but not to U.S. GDP
Suppose Mike has three hours of time to spend and he sets the following activities in order of priority: (1) seeing a movie; (2) attending a ball game; (3) studying economics. Assume that each activity takes three hours. What is Mike's opportunity cost of seeing a movie?
Attending a ball game
Suppose that the government could stimulate spending in one of the following expenditure categories. In which of these categories would the spending increase contribute most to an expansion of production possibilities?
Capital Goods
Unemployment caused by the fluctuation of the business cycle is called ________ unemployment
Cyclical
An Open Market Sale by the Federal Reserve will
Decrease the Money Supply
The income approach to measuring GDP
Determines the cost of production, then adjusts it to equal the market value of production.
When the increase in prices goes from 9% to 8%, this referred to as:
Disinflation
If the demand for iPhones rises as income increases, then the iPhone is a
Normal Good
What would be a possible opportunity cost of you going to a doctor for a check up?
Lost income due to not being at work for those hours
A bond is a contract between a seller (the company issuing the bond) and a buyer that determines which of the following items?
Maturity date of the bond, coupon rate (interest rate) of the bond, and face value of the bond.
Which of the following statements best explains how the use of money in an economy increases economic efficiency?
Money increases economic efficiency. because it decreases transaction costs.
If a price ceiling is set above the equilibrium
No impact is felt in the market.
If an increase in income leads to an increase in the demand for opera tickets, then opera concerts are a
Normal Good
Assume that a person just lost his job and decided to take a month long break to travel to Europe before looking for a new one. Just as he returns home from his trip, he is interviewed by the Department of Labor about his employment status. How would he be classified?
Not in the labor force
Full employment means
Only frictional and structural unemployment exists
Which of the following is one of the Fed's policy goals?
Price level stability
If the CPI is 118, this means that
Prices are 18 percent higher than in reference base period.
Total surplus is calculated as
Producer surplus plus consumer surplus. <br><b> </b>
When a society produces the mix of goods and services that are most desired and produces theme at the lowest cost possible
Production and allocative efficiency are achieved
Every point on the frontier of the production possibilities frontier represents
Productive Efficiency
Deadweight loss:
Reduces consumer surplus and producer surplus.
Which of these is NOT a type of unemployment
Regional
Other things equal, an improvement in production technology:
Shifts the supply curve to the right, reducing the equilibrium price and increasing equilibrium output
The supply curve
Shows a positive relationship between price and quantity supplied.
Compared to an economy that uses a medium of exchange, in a barter economy
Transaction costs are higher
Serving as a ______ is a function that gives us a yardstick by which we can measure and compare the values of a wide variety of goods and services
Unit of account
How large is deadweight loss in equilibrium?
Zero
A price ceiling usually results in
a shortage and a misallocation of resources
An individual bank can, at most, lend out all its
excess reserves
When production technology improves, supply:
increases, the equilibrium quantity rises, and the equilibrium price falls.
Money
is anything that is accepted in exchange for other goods and services
Flu vaccination shots provide external benefits. Thus:
too flu vaccinations are given