Macro Econ Test 1

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Over the past 100​ years, the average growth rate of U.S. real GDP per person is ___ percent. Over the past 100​ years, growth was most rapid during the​ ______ and slowest during the​ ______. A. ​1960s; Great Depression B. ​1990s; 1970s C. ​2000s; 1920s D. ​1960s; 1980s

2 A

A demand curve​ _______. A. is a willingness-and-ability-to-pay curve B. shows us that the highest price that someone is willing to pay for an additional unit of a good or service rises as the quantity increases C. is a marginal cost curve D. tells us how much someone wants to buy comma but not necessarily how much they can afford to buy

A

A government budget deficit​ ______ the real interest rate because​ ______. A. ​raises; the demand for loanable funds increases B. ​lowers; the demand for loanable funds decreases C. ​lowers; the supply of loanable funds increases D. ​raises; the supply of loanable funds decreases

A

A government budget deficit​ _______ the real interest​ rate, increases​ ______. A. ​raises; private​ saving, and decreases investment B. ​lowers; ​investment, and decreases private saving C. ​raises; ​investment, and decreases private saving D. ​lowers; private​ saving, and decreases investment

A

A government budget surplus​ _______ the real interest​ rate, decreases​ ______. A. ​lowers; private​ saving, and increases investment B. ​raises; ​investment, and increases private saving C. ​raises; private​ saving, and increases investment D. ​lowers; ​investment, and increases private saving

A

A government budget surplus​ occurs, which​ _______ loanable funds. A. increases the supply of B. decreases the demand for C. increases the demand for D. decreases the supply of

A

A macroeconomic equilibrium in which real GDP exceeds potential GDP is​ _____ equilibrium. And one in which real GDP is less than potential GDP is​ _____ equilibrium. A. an above full​-employment​; a below full​-employment B. a below full​-employment​; an inflationary C. an above full​-employment​; a recessionary D. a below full​-employment​; an above full​-employment

A

A smartphone and a text message are​ ______. A text message and an email are​ ______. A. ​complements; substitutes B. ​substitutes; substitutes C. ​substitutes; complements D. ​complements; complements

A

According to classical growth​ theory, the growth of real GDP per person stops when​ _______. A. a population explosion eventually occurs and real GDP per person returns to the subsistence level B. the opportunity cost of women in the labor force increases C. the population growth rate​ slows, and with no change in labor​ productivity, the growth rate of real GDP stops D. capital experiences diminishing marginal returns

A

An economy is at full employment when​ ______. A. the unemployment rate equals the natural unemployment rate B. there is no structural unemployment C. there is no frictional unemployment D. the unemployment rate is less than the natural unemployment rate

A

An increase in expected future income​ _______. An increase in the expected future inflation rate​ _______. A. increases aggregate demand​ today; increases aggregate demand today B. decreases aggregate demand today but increases aggregate demand in the​ future; decreases aggregate demand today but increases aggregate demand in the future C. increases aggregate demand​ today; has no influence on aggregate demand today or in the future D. increases aggregate demand in the future but has no influence on aggregate demand​ today; increases aggregate demand in the future but has no influence on aggregate demand today

A

An increase in the price of leather jackets​, a complement in production of beef​, will​ ______ the equilibrium price of beef and​ ______ the equilibrium quantity of beef. A. decrease​; increase B. decrease​; decrease C. increase​; increase D. increase​; decrease

A

An unemployed person​ ______. A. wants​ work, has made specific efforts to find a job within the previous four​ weeks, or is waiting to be called back to a job from which he or she has been laid​ off, or is waiting to start a new job within 30 days B. may be a person who is employed at a job that does not use the skills they have accumulated at college or on previous jobs C. is not in the labor force D. can hold a​ part-time job and be searching for a​ full-time job

A

As the average income in China continues to​ increase, explain how the following will​ change: a. The demand for beef b. The demand for rice As the average income in China continues to​ increase, we would expect the demand for beef to​ _______ and the demand for rice to​ _______. A. increase if beef is a normal​ good; decrease if rice is an inferior good B. decrease if beef is a normal​ good; increase if rice is an inferior good C. not​ change; not change because people need to eat regardless of their income D. ​increase; increase because the demand for any good increases when income increases

A

Choose the correct statement about growth in labor productivity. A. Potential GDP per hour of labor increases. B. Potential GDP remains unchanged. C. The demand for labor​ increases, the production function does not​ change, but a movement occurs along the production function. D. The real wage rate falls and the equilibrium quantity of labor increases

A

Choose the correct statement. A. A government budget deficit competes with investment for funds. B. The sum of private saving and investment is called national saving. C. The greater U.S. net​ exports, the greater is U.S. investment. D. All of U.S. investment is financed by U.S. national saving.

A

Choose the correct statement. A. If there is a shortage of​ labor, the real wage rate rises to eliminate the shortage. B. The demand for labor is the relationship between the quantity of labor demanded and the money wage rate. C. The real wage rate is the money wage rate multiplied by the price level. D. The real wage rate is the number of dollars that an hour of labor earns

A

Choose the correct statement. A. The quantity of real GDP supplied equals potential GDP at the price level at which the real wage rate is at its​ full-employment equilibrium level. B. In the short​ run, a rise in the price level brings no change in the quantity of real GDP supplied. C. Along the SAS​ curve, the real wage rate and the price level change by the same percentage. D. The SAS curve shifts rightward when the price level falls.

A

Choose the correct statement. A. The relationship between the quantity of real GDP supplied and the price level is different in the long run than in the short run. B. At any given​ time, the quantity of capital and the state of technology are fixed because they depend on decisions made in the​ past, and the quantity of labor is fixed because it depends on the population. C. Aggregate supply and the quantity of real GDP supplied are two ways of expressing the same concept. D. Aggregate supply is the relationship between the quantity of real GDP supplied and potential GDP.

A

Examples of physical capital are​ ______. Examples of financial capital are​ ______. A. ovens used by Pizza Hut and lawn mowers used by​ Larry's Mowing; bonds issued by​ Wal-Mart and stocks issued by Boeing B. bonds issued by​ Wal-Mart and stocks issued by​ Boeing; the​ $20 in your pocket C. ​$20 in the​ ATM; bonds issued by​ Wal-Mart and stocks issued by Boeing D. inventories of steel and glass at​ Boeing; the​ $20 in your pocket

A

Firms make investment decisions by​ _______. A. comparing the expected profit with the real interest rate and making the investment if the project has a positive net present value B. approaching financial institutions to determine if they are willing to lend the necessary funds C. comparing the expected profit with the nominal interest rate and making the investment if the project has a positive net present value D. comparing the expected profit in an expansion with the expected profit in a​ recession, and making the investment if the difference in expected profit over the business cycle is relatively stable

A

First​ Call, Inc., a smartphone​ company, plans to build a factory—one that costs ​$10 million if the real interest rate is 4 percent a​ year; a larger factory that costs ​$12 million if the real interest rate is 3 percent a​ year; or a smaller one that costs ​$8 million if the real interest rate is 5 percent a year. First Call expects its profit to double next year. Explain how this increase in expected profit influence First​ Call's demand for loanable funds. This increase in expected profit​ _______ the demand for loanable funds and brings​ _______ the demand for loanable funds curve. A. increases​; a rightward shift of B. increases​; both a movement along and a rightward shift of C. decreases​; a leftward shift of D. increases​; a movement along

A

Frictional unemployment is​ _______. An example of frictional unemployment is​ _______. A. the unemployment that arises from normal labor turnover long dash —from people entering and leaving the labor force and from the ongoing creation and destruction of​ jobs; new college graduates looking for work B. the higher than normal unemployment at a business cycle trough and the lower the normal unemployment at a business cycle​ peak; a ski instructor who loses his job during the summer C. the unemployment that arises from normal labor turnover long dash —from people entering and leaving the labor force and from the ongoing creation and destruction of​ jobs; an autoworker who loses his job because the automaker moved production to Mexico D. the unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of​ jobs; coal miners who are unemployed because new technology has made other types of energy cheaper and more accessible

A

GDP equals aggregate income and also equals aggregate expenditure because​ _______. A. firms pay out as incomes​ (aggregate income) everything they receive from the sale of their output​ (aggregate expenditure) B. the Department of Commerce has defined GDP in such a way that it can be calculated by either summing total income or by summing total expenditures C. aggregate income measures profit as net profit and aggregate expenditure measures investment as net investment D. labor produces final goods and all purchases in the economy are purchases of final goods

A

How do households make saving​ decisions? The​ _______, the greater is the amount that a household decides to save. A. greater a​ household's disposable income and the smaller a​ household's expected future income B. smaller the default risk and the greater a​ household's wealth C. smaller a​ household's expected future income and the greater a​ household's wealth D. higher the expected profit and the greater a​ household's disposable income

A

If the price level and the money wage rate rise by the same​ percentage, the quantity of real GDP supplied​ ______ and there is a movement up along the​ ______ aggregate supply curve. A. does not​ change; long-run B. ​decreases; long-run C. does not​ change; short-run D. ​increases; short-run

A

In 2018​ Brazil's real GDP is growing at 1.7 percent a year and its population is growing at 0.7 percent a year. If these growth rates​ continue, in what year will​ Brazil's real GDP per person be twice what it is in​ 2018? If these growth rates​ continue, Brazil's real GDP per person will be twice what it is in 2018 in​ _______. A. 2088 B. 2047 C. 2059 D. 2118

A

In new growth theory​ ______. A. discoveries result from choices B. the pace of technological change influences the economic growth rate but economic growth does not influence the pace of technological change C. discoveries are a private capital good D. the forces of competition destroy incentives to make new discoveries

A

In the​ long-run macroeconomic​ equilibrium, ______. A. potential GDP and aggregate demand determine the price​ level, and the money wage rate adjusts so that the SAS curve intersects the LAS curve at the​ long-run equilibrium price level B. real GDP is always increasing C. the AD and SAS curves determine the price level and technology advances so that the LAS curve intersects the AD curve at the equilibrium price level D. potential GDP and​ short-run aggregate supply determine the price level

A

Inflation results from​ ______. A. a persistent increase in aggregate demand at a faster pace than that of the increase in​ long-run aggregate supply B. an increase in​ long-run aggregate supply that exceeds the increase in aggregate demand C. aggregate demand and​ long-run aggregate supply increasing at the same pace D. an increase in​ long-run aggregate supply that exceeds the increase in​ short-run aggregate supply

A

I​ = ______. A. S​ + ​(T−G​) ​+ ​(M−X​) B. S−​(T​ + G​)−​(M​ + X​) C. S−​(T−G​) minus −​(M−X​) D. S​ + ​(T​ + G​) ​+ ​(X−M​)

A

Mitsubishi Heavy Industries makes the wings of the new Boeing 787 Dreamliner in Japan. Toyota assembles cars for the U.S. market in Kentucky. Explain where these activities appear in​ Japan's National Income and Product Accounts. A. When the wings are sent to the United​ States, their value appears as Japanese exports in calculating​ Japan's GDP. B. The production of cars by Toyota in Kentucky is included in​ Japan's GDP because Toyota is a Japanese firm. C. The production of the wings by Mitsubishi Heavy Industries is included in world GDP but not in​ Japan's GDP because the wings will be shipped to the United States. D. If any parts for the cars come from​ Japan, the parts are Japanese imports

A

Potential GDP​ ______ and potential GDP per hour of labor​ ______. A. ​increases; decreases B. ​increases; increases C. ​decreases; decreases D. ​increases; increases

A

Ramen noodles and rice rice are substitutes substitutes. If the price of ramen noodles ramen noodles decreases decreases​, the demand for rice rice will​ _______. A. decrease decrease​, and the demand curve for rice rice will shift leftward leftward B. increase or​ decrease, but the demand for ramen noodles ramen noodles will not change C. increase increase​, and the demand curve for rice rice will shift rightward rightward D. not​ change, but there will be a movement along the demand curve for rice rice

A

Real GDP per person grows when​ ______. A. real GDP grows at a faster rate than the population grows B. immigration laws are restrictive C. real GDP and the population grow at an equal rate D. the population grows at a faster rate than real GDP grows

A

Retraining programs seek to avoid​ _______ unemployment because​ _______. A. ​structural; the programs aim to give workers the skills needed for the available jobs B. ​cyclical; by giving workers the skills needed for the available​ jobs, recessions can be avoided C. ​frictional; by giving workers the skills needed for the available​ jobs, people entering the labor force will immediately find employment D. all types​ of; the natural unemployment rate will fall

A

Starting from a​ full-employment equilibrium, an increase in aggregate demand​ ______, and creates​ ______ gap. A. increases real GDP above potential​ GDP; an inflationary B. increases real GDP above​ potential; a recessionary C. decreases real GDP below potential​ GDP; an inflationary D. decreases real GDP below potential​ GDP; a recessionary

A

Structural unemployment is​ _______. An example of structural unemployment is​ _______. A. the unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of​ jobs; coal miners who are unemployed because new technology has made other types of energy cheaper and more accessible B. the higher than normal unemployment at a business cycle trough and the lower the normal unemployment at a business cycle​ peak; a ski instructor who loses his job during the summer C. the unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of​ jobs; older workers who leave the labor force rather than learn new skills D. the unemployment that arises from normal labor turnover long dash —from people entering and leaving the labor force and from the ongoing creation and destruction of​ jobs; an autoworker who loses his job because the automaker moved production to Mexico

A

The CPI is a​ _______. A. measure of the average of the prices paid by urban consumers for a fixed basket of consumer goods and services B. list of the items that an average urban household buys and the percentage weight of total expenditure given to each item C. measure of inflation D. measure of the price level of all goods and services that are counted as part of GDP

A

The SAS curve and the LAS curve A. intersect at potential GDP. B. are parallel at potential GDP. C. are perpendicular to one another at potential GDP. D. None of the above answers is correct.

A

The aggregate production function is the relationship that tells us​ ______, when all other influences on production remain the same. A. how real GDP changes as the quantity of labor changes B. how the real wage rate changes as the quantity of labor changes C. how potential GDP changes as the labor market moves from surplus or shortage to equilibrium D. how real GDP changes as the quantity of leisure changes

A

The demand for loanable funds increases and the supply of loanable funds increases. As a​ result, the equilibrium real interest rate​ ______ and the equilibrium quantity of loanable funds​ ______. A. ​rises, falls, or remains the​ same; increases B. ​falls; increases C. ​rises; increases,​ decreases, or remains the same D. ​falls; decreases

A

The demand for loanable funds is determined by​ ______. The demand for loanable funds changes when​ ______ changes. A. the real interest rate and expected​ profit; expected profit B. disposable income and expected future​ income; expected future income C. the real interest rate and expected​ profit; the real interest rate D. disposable income and expected future​ income; disposable income

A

The loanable funds market is​ ______. A. the aggregate of all the individual financial markets B. the same as the loan market C. the aggregate of the bond and stock markets D. the market set up by banks to provide loans to households and businesses

A

The price of a music dash streaming subscription rises What is the effect on the price and quantity of​ smartphones? The equilibrium quantity of smartphones​ _______ and the equilibrium price​ _______. A. decreases​; falls B. increases​; rises C. decreases​; rises D. increases​; falls

A

The reference base period for the CPI is​ 1982-1984. In June ​2017, the CPI was 245.0. Complete the sentence. This CPI in June 2017 tells us that the​ ______ of the prices paid by urban consumers for a fixed basket of consumer goods and services was​ ______ . A. ​average; 145.0 percent higher in June June 2017 than the average of​ 1982-1984 B. inflation​ rate; 145.0 percent per year C. inflation​ rate; 245.0 percent per year D. ​average; 245.0 percent higher in June 2017 than the average of​ 1982-1984

A

The three main types of markets for financial capital are​ _______. A. loan​ markets, bond​ markets, and stock markets B. loan​ markets, bond​ markets, and commercial banks C. investment​ banks, commercial​ banks, and insurance companies D. bond​ markets, stock​ markets, and commercial banks

A

The unemployment rate is never​ zero, even at full employment because​ _______. A. there are always new workers entering the labor market to search for​ work, workers leaving one job to search for another​ job, and workers who have been laid off and are searching for another job B. people make lifestyle choices such as early​ retirements, gap​ years, and movements from​ high-stress to​ low-stress jobs C. cyclical unemployment is always present in the economy D. there are always people without jobs because of family responsibilities such as caring for children or elderly parents

A

The​ crowding-out effect is the tendency for a government budget deficit to​ ______ the real interest rate and decrease​ ______. A. ​raise; investment B. ​raise; investment by the full amount of the government budget deficit C. ​lower; saving D. ​lower; saving by the full amount of the government budget surplus

A

Toyota and Honda build additional plants in the United States. This event​ _______. A. increases the quantity of real GDP demanded B. increases aggregate demand C. decreases aggregate demand D. decreases the quantity of real GDP demanded

A

When labor productivity​ increases, there is​ _____ the production function and​ _____ in potential GDP. A. an upward shift​ of; an increase B. a movement up​ along; an increase C. a movement up​ along; no change D. an upward shift​ of; no change

A

When potential GDP​ increases, ______. A. ​long-run aggregate supply and​ short-run aggregate supply increase. The LAS and the SAS curve shift rightward B. ​long-run aggregate supply and​ short-run aggregate supply increase. A movement upward occurs along the LAS curve and along the SAS curve C. ​long-run aggregate supply increases but​ short-run aggregate supply does not change. The LAS curve shifts rightward and a movement occurs along the SAS curve D. we​ don't know what the effect is on​ long-run aggregate supply or​ short-run aggregate supply

A

When the price level rises but the money wage rate and other factor prices remain the​ same, there is a movement along​ ______. The quantity of real GDP supplied​ ______. A. the SAS​ curve; increases B. the LAS curve​; decreases C. the SAS​ curve; decreases D. the LAS curve and the SAS curve​; decreases

A

Think about the demand for three game​ consoles: XBox​ One, PlayStation​ 4, and Wii U. What is the effect of the following events on the demand for Xbox One games and the quantity of Xbox One games​ demanded, other things remaining the​ same? The events are A. Programmers who write code for XBox One games become more costly to hire. B. The expected future price of an XBox One game falls. C. The price of an Xbox One falls. D. The prices of a PlayStation4 and a Wii U fall. Event A ​ ______ the​ ______ XBox One games. A. decreases​; quantity demanded of B. decreases​; demand for C. increases​; quantity demanded of D. increases​; demand for Event B​ ______ the​ ______ XBox One games. A. increases​; quantity demanded of B. decreases​; demand for C. decreases​; quantity demanded of D. increases​; demand for Event C​ ______ the​ ______ XBox One games. A. increases​; quantity demanded of B. decreases​; quantity demanded of C. decreases​; demand for D. increases​; demand for Event D​ ______ the​ ______ XBox One games. A. decreases​; demand for B. increases​; demand for C. increases​; quantity demanded of D. decreases​; quantity demanded of

A B D A

Explain why a relative price is an opportunity cost. The money price of a box of ramen noodles a box of ramen noodles is ​$ 0.80 0.80 and the money price of a tube of toothpaste a tube of toothpaste is ​$ 4.00 4.00. The opportunity cost of a tube of toothpaste a tube of toothpaste is​ _______. A. 5.00 5.00 boxes of ramen noodles boxes of ramen noodles​, which is the relative price of a tube of toothpaste a tube of toothpaste B. 0.20 0.20 tubes of toothpaste tubes of toothpaste C. ​$ 0.80 0.80​, the money price of a box of ramen noodles a box of ramen noodles D. ​$ 4.00 4.00​, the price of a tube of toothpaste a tube of toothpaste The relative price of a tube of toothpaste a tube of toothpaste is an opportunity cost because​ ______. A. the relative price tells us how many tubes of toothpaste tubes of toothpaste we must give up to get a box of ramen noodles a box of ramen noodles B. it is constant C. the relative price tells us how many boxes of ramen noodles boxes of ramen noodles we must give up to get a tube of toothpaste a tube of toothpaste D. it is expressed as a money price

A C

The firm that printed your textbook bought the paper from XYZ Paper Mills. Was this purchase of paper part of​ GDP? If​ not, how does the value of the paper get counted in​ GDP? This purchase of paper​ ______ part of GDP because the paper is​ ______ good. A. is​ not; an intermediate B. is​ not; a final C. ​is; an intermediate D. ​is; a final The value of the paper is counted in GDP as​ ______. A. investment B. an intermediate good C. part of the value of the textbook D. an import because most paper is imported into the United States

A C

Aggregate demand​ _______ when an increase in interest rates occurs. Aggregate demand​ _______ when an increase in expected inflation occurs. A. ​increases; decreases B. ​increases; increases C. ​decreases; increases D. ​decreases; decreases

C

A movement along the aggregate demand curve occurs if​ _______. A. the price​ level, the exchange rate or foreign income​ change, and the​ full-employment quantity of labor remains the same B. the price level changes and all other factors remain unchanged C. expectations about future inflation or future income​ change, and the money wage rate remains the same D. government expenditure or the interest rate​ change, and the price level remains the same

B

A person is not in the labor force if they are​ ______. A. over 65 years of age B. in the​ working-age population but neither employed nor unemployed C. between the ages of 16 and 19 D. unemployed

B

According to classical growth​ theory, when real GDP per person​ ______, the population grows. A. falls below the subsistence level B. rises above the subsistence level C. equals the subsistence level D. grows because of technological change

B

According to new growth​ theory, the growth of real GDP per person​ _______. A. stops if old firms die and continues if new firms are born B. persists indefinitely C. stops when technology stops advancing D. decreases when workers take more leisure and increases when the average workweek increases

B

According to the​ Ricardo-Barro effect, when a government budget deficit occurs​ today, ______. A. saving​ decreases, the supply of loanable funds​ decreases, and the real interest rate rises B. saving​ increases, the supply of loanable funds​ increases, and the real interest rate does not change C. the private demand for loanable funds decreases by more than the government budget​ deficit, the DLF curve shifts​ leftward, and the real interest falls D. the private demand for loanable funds​ decreases, the DLF curve shifts​ leftward, and the real interest does not change

B

Chinese Premier Wen Jiabao has warned Japan that its companies operating in China should raise the pay for their workers. Explain how a rise in wages in China will influence the quantity of real GDP supplied and aggregate supply in China. A rise in wages in China​ _______ . A. decreases​ China's long-run aggregate supply with no change in​ short-run aggregate supply B. decreases​ China's short-run aggregate supply and the quantity of real GDP supplied does not change C. decreases​ China's short-run aggregate supply and​ long-run aggregate​ supply, and increases the quantity of real GDP supplied if the price level rises D. does not change​ China's aggregate supply or the quantity of real GDP supplied

B

Choose the correct statement. A. The largest contribution to labor productivity growth comes from human capital. B. Most technologies are embodied in physical capital. C. Growth in average hours per work increase labor productivity. D. The fundamental source of labor productivity growth is physical capital.

B

Choose the correct statement. A. An increase in the quantity of labor and a corresponding decrease in leisure hours shifts the production function upward. B. Labor hours are not all equally productive. C. An increase in the quantity of labor and a corresponding decrease in leisure hours will have no effect on real GDP. D. The aggregate production function is the relationship that tells us how real GDP changes as the real wage rate​ changes, when all other influences on production remain the same.

B

Choose the correct statement. A. The higher the price​ level, the greater is the quantity of real GDP demanded. B. The quantity of real GDP demanded is the sum of the real consumption​ expenditure, investment, government​ expenditure, and exports minus imports. C. The quantity of real GDP demanded depends on the quantity of real GDP supplied. D. The aggregate demand curve slopes downward because of the wealth effect and the money wage rate.

B

Choose the correct statement. A. The nominal interest rate is the opportunity cost of loanable funds. B. The real interest rate is the nominal interest rate adjusted to remove the effects of inflation on the buying power of money. C. The real interest rate is the number of dollars that a borrower pays and a lender receives in interest in a year expressed as a percentage of the number of dollars borrowed and lent. D. The nominal interest rate is approximately equal to the real interest rate minus the inflation rate.

B

Choose the correct statement. A. The quantity of labor demanded in the economy during a given period depends on the quantity of labor supplied. B. Each additional hour of labor increases real GDP by successively smaller amounts. C. The nominal wage influences the quantity of labor supplied because what matters to households is not the number of dollars they earn but what they can buy with those dollars. D. If there is a shortage of​ labor, the real wage rate falls to eliminate the shortage.

B

Choose the correct statements about competitive markets. 1. . A competitive market has many buyers. 2. A competitive market is a market for services but not for goods. 3. All competitive markets are physical places where buyers and sellers meet. 4. A single seller in a competitive market cannot influence the price. Upper A single seller in a competitive market cannot influence the price. A single seller in a competitive market cannot influence the price. A. Statements 1 and 2 are correct. B. Statements 1 and 4 are correct. C. Statements 2 and 3 are correct. D. Statements 3 and 4 are correct.

B

Complete the sentence. The market for frozen burritos is a competitive market​ _______. A. only if the market where frozen burritos are sold is a world market B. if many people buy and many firms sell frozen burritos​, so no single buyer or seller can influence the price C. if few people buy frozen burritos comma so sellers can hold out for a high price D. only if the buyers and sellers of frozen burritos are spread around the world and never meet

B

Cyclical unemployment is​ _______. An example of cyclical unemployment is​ _______. A. a combination of structural unemployment and frictional​ unemployment; coal miners who are unemployed because new technology has made other types of energy cheaper and more accessible B. the higher than normal unemployment at a business cycle trough and the lower the normal unemployment at a business cycle​ peak; a restaurant worker who loses her job because of a downturn in the economy C. the higher than normal unemployment at a business cycle trough and the lower the normal unemployment at a business cycle​ peak; a ski instructor who loses his job during the summer D. the unemployment that arises at full​ employment; an artist who paints but has no success selling her paintings

B

Domestic product is​ _______. National product is​ _______. A. production excluding​ imports; production including imports B. production within a​ country; the value of goods and services produced anywhere in the world by the residents of a nation C. production including​ imports; production excluding imports D. the value of goods and services produced anywhere in the world by the residents of a​ nation; production within a country

B

During a​ year, a​ firm's depreciation is ​$400 and gross investment is ​$2,000. What is the​ firm's net investment​? The​ firm's net investment is​ ______. A. ​$3,600 B. ​$1,600 C. ​$400 D. ​$2,000

B

Examples of monetary policy that decrease aggregate demand include​ ______. A. an increase in transfer payments and an increase in interest rates B. a decrease in the quantity of money and an increase in interest rates C. a decrease in taxes and a decrease in interest rates D. an increase in taxes and a decrease in the quantity of money

B

Explain why the real interest rate is the opportunity cost of loanable funds. The real interest rate is the opportunity cost of loanable funds because​ ______. A. although the nominal interest rate is the interest rate forgone when a lender does not lend the​ funds, the borrower pays the real interest rate on borrowed funds B. the real interest paid on borrowed funds is the opportunity cost of borrowing and the real interest rate forgone is the opportunity cost of not saving or not lending those funds C. the real interest is the number of dollars that the borrower gives up when she takes a loan D. when a consumer takes a​ loan, the interest rate quoted by the bank is the real interest rate

B

Government funded retraining​ _______the natural unemployment rate because​ _______. A. ​decreases; cyclical unemployment will fall B. ​decreases; natural unemployment includes structural unemployment C. does not​ change; the natural unemployment rate is constant D. ​increases; more unemployed people will enter the labor force

B

Gross investment is​ ______. Net investment is​ ______. A. net investment minus​ depreciation; gross investment plus depreciation B. the total amount spent on new​ capital; the change in the value of capital C. depreciation minus net​ investment; depreciation minus gross investment D. the change in the value of​ capital; the total amount spent on new capital

B

Hyperinflation is an inflation rate of​ _____ or higher that grinds the economy to a halt and causes a society to collapse. A. 20 percent a year B. 50 percent a month C. 20 percent a month D. 50 percent a year

B

If the price level rises and the money wage rate remains​ constant, the quantity of real GDP supplied​ ______ and there is a movement up along the​ ______ aggregate supply curve. A. does not​ change; long-run B. ​increases; short-run C. does not​ change; short-run D. ​increases; long-run

B

In January​ 2013, Tim's​ Gyms, Inc. owned machines valued at​ $1 million. During the​ year, the market value of the equipment fell by 30 percent. During​ 2013, Tim spent​ $200,000 on new machines. During​ 2013, Tim's gross investment totalled A. ​$300,000. B. ​$200,000 C. ​$1 million. D. ​$900,000.

B

Labor market equilibrium occurs​ _______. A. when there is zero unemployment B. at the real wage rate at which the quantity of labor demanded equals the quantity of labor supplied C. at the nominal wage rate at which the quantity of labor demanded equals the quantity of labor supplied D. when the demand for labor is maximized

B

Low-fat milk and cream are​ _______. A. substitutes in production for a dairy and complements for consumers B. complements in production for a dairy and substititues for consumers C. complements for consumers but not complements for a dairy farmer D. substitutes for consumers and substitutes for a dairy farmer

B

Once the preconditions for growth are in​ place, the influences on the pace of labour productivity growth are​ _______. A. physical capital​ growth, population​ growth, and human capital growth B. physical capital​ growth, human capital​ growth, and technological advances C. human capital​ growth, population​ growth, and low inflation D. low​ inflation, low​ unemployment, and investment in physical capital

B

Paychecks in Kansas are​ growing, according to the U.S. Department of Labor. Jacqueline​ Midkiff, with the​ department's office in Kansas​ City, says the average overall increase across the board through the​ Midwest, is 1.9 percent over this time last​ year, while inflation grew at 1.4 percent for the same time period. ​Source: Kansas Public Radio​, August​ 1, 2012 Explain how​ "the average overall increase across the​ board" wage increase will influence aggregate supply. The​ "average overall increase across the​ board" wage increase​ _______. A. decreases​ long-run aggregate supply because potential GDP decreases B. decreases​ short-run aggregate supply because it increases​ firms' costs C. increases​ long-run aggregate supply because potential GDP increases D. increases​ short-run aggregate supply because workers are willing to work more hours

B

Since​ 1980, the gap between the United States and​ _______. A. Russia​ narrowed, the gap between the United States and Mexico​ widened, and the gap between the United States and Nigeria remained relatively constant B. Russia and between the United States and Nigeria​ narrowed, the gap between the United States and Mexico​ widened, and the gap between the United States and the Europe Big 4 remained relatively constant C. Mexico​ narrowed, the gap between the United States and Russia​ widened, and the gap between the United States and the Europe Big 4 remained relatively constant D. Canada​ narrowed, the gap between the United States and Mexico​ widened, and the gap between the United States and Nigeria remained relatively constant

B

Taking a smartphone to the gym when you work out becomes less popular. What is the result of this​ event? As a​ result, _______. A. the quantity of smartphones demanded increases B. the demand for smartphones decreases C. the quantity of smartphones demanded decreases D. the demand for smartphones increases

B

The bias in the CPI is a problem because​ ______ . A. it causes too much commodity substitution B. it distorts wage agreements linked to the CPI C. it discourages people from looking hard enough for a bargain D. it causes too little commodity substitution

B

The chained CPI​ ______. A. does not overcome the source of bias in the CPI B. overcomes the sources of bias in the CPI by incorporating substitutions and using current and previous period quantities C. overcomes the sources of bias in the CPI by eliminating measures of the goods and services with the most volatile prices D. overcomes the sources of bias in the CPI by giving extra weight to the measures of the goods and services with the most volatile prices

B

The demand for labor is the relationship between the quantity of labor demanded and the​ ______. The supply of labor is the relationship between the quantity of labor supplied and the​ ______. A. real interest​ rate; real interest rate B. real wage​ rate; real wage rate C. nominal interest​ rate; nominal interest rate D. money wage​ rate; money wage rate

B

The demand for loanable funds increases and the supply of loanable funds decreases. As a​ result, the equilibrium real interest rate​ ______ and the equilibrium quantity of loanable funds​ ______. A. ​rises, falls, or remains the​ same; increases,​ decreases, or remains the same B. ​rises; increases,​ decreases, or remains the same C. ​falls; decreases D. ​rises, falls, or remains the​ same; increases

B

The growth rate of real GDP per person​ _______. A. is calculated by dividing the growth rate of real GDP by the growth rate of the population B. tells us about changes in the standard of living and the growth rate of real GDP tells us how rapidly the total economy is expanding C. tells us how rapidly the total economy is expanding and the growth rate of real GDP tells us about changes in the standard of living D. is calculated by multiplying the growth rate of real GDP by the growth rate of the population

B

The inflation rate is the percentage change in the​ _____ from one year to the next. Deflation is a situation in which the​ _____ is​ _____ and the inflation rate is​ _____. A. interest​ rate; interest​ rate; rising; positive B. price​ level; price​ level; falling; negative C. price​ level; input​ cost; rising; positive D. interest​ rate; interest​ rate; falling; negative

B

The key proposition of new growth theory that makes growth persist is that​ ______ is not subject to diminishing returns. A. labor B. knowledge capital C. production D. physical capital

B

The law of demand states that other things remaining the​ same, the​ _______ the price of a​ good, the​ _______. A. ​lower; greater is demand B. ​higher; smaller is the quantity demanded C. ​lower; smaller is the quantity demanded D. ​higher; greater is the quantity demanded

B

The main sources of bias in the CPI are​ ______. A. designer name bias and generic product bias B. new goods​ bias, quality change​ bias, commodity substitution​ bias, and outlet substitution bias C. ​anti-fur bias, vegetarian​ bias, and lifestyle bias D. big box store​ bias, corner store​ bias, mall​ bias, and brand name bias

B

The quantity of labor demanded is the number of labor hours​ _______ during a given period. The quantity of labor supplied is the number of labor hours​ _______ during a given period. A. that produce the desired quantity of real​ GDP; that firms hire to produce the desired quantity of real GDP B. hired by all the firms in the​ economy; that all the households in the economy plan to work C. that all the households in the economy are willing to​ work; that all the firms in the economy are willing to hire D. that firms are willing to hire at a minimum wage​ rate; that all the households in the economy are willing to work at a minimum wage rate

B

The real interest rate​ ______, household saving​ ______, A. ​rises; ​increases, and investment decreases B. ​falls; ​decreases, and investment increases C. ​falls; ​increases, and investment decreases D. ​rises; ​decreases, and investment increases

B

Think of examples of goods whose relative price has risen or fallen by a large amount. In​ 2007, the price of a gallon of gas was​ $2.59. In​ 2017, the price of a gallon of gas was​ $2.32 In​ 2007, the price of a dozen eggs was​ $1.63. In​ 2017, the price of a dozen eggs was​ $1.40. Between 2007 and​ 2017, the relative price of a gallon of gas with respect to a dozen eggs​ _______ and the relative price of a dozen eggs with respect to a gallon of gas​ _______. A. ​fell; fell B. ​rose; fell C. ​fell; rose D. ​rose; rose

B

When a shortage or a surplus arises in the loanable funds market​ _______. A. the nominal interest rate is pulled to the new equilibrium level B. the real interest rate is pulled to the new equilibrium level C. the supply of loanable funds changes to return the economy to its original real interest rate D. the demand for loanable funds changes to return the economy to its original real interest rate

B

When an event occurs that changes the demand for coffee makers​, ​_______ if demand increases and​ ______ if demand decreases A. a movement up along the demand curve​ occurs; a movement down along the demand curve occurs B. the demand curve shifts​ rightward; the demand curve shifts leftward C. a movement down along the demand curve​ occurs; a movement up along the demand curve occurs D. the demand curve shifts​ leftward; the demand curve shifts rightward

B

When the increase in demand is greater than the decrease in​ supply, the equilibrium price​ _____ and the equilibrium quantity​ _____. A. ​falls; increases; B. ​rises; increases; C. ​falls; decreases; D. ​rises; decreases

B

The money price of a textbook is​ $90 and the money price of the Wii game Super Mario Galaxy is​ $45. What is the opportunity cost of a textbook in terms of the Wii​ game? What is the relative price of the Wii game in terms of​ textbooks? The opportunity cost of a textbook in terms of Wii games is​ ______. A. ​$45 B. the number of Wii games you must give up to get the textbook C. ​$90 D. the numbers of hours you must work to be able to afford to buy the textbook The relative price of a Wii game in terms of textbooks is ____ textbooks.

B 5

An increase in expected future profits​ _______. A. has no influence on aggregate demand today or in the future B. decreases aggregate demand today but increases aggregate demand in the future C. increases aggregate demand today D. increases aggregate demand in the future but has no influence on aggregate demand today

C

The following events have occurred at times in the history of the United​ States: 1. A deep recession hits the world economy 2. The world oil price rises sharply 3. U.S. businesses expect future profits to fall Explain the effect of each of the following events on aggregate supply and aggregate demand in the United States. Event 1​ ______. Event 2​ ______. A. increases​ short-run aggregate​ supply; decreases​ short-run aggregate supply B. decreases aggregate​ demand; decreases​ short-run aggregate supply C. decreases aggregate​ demand; increases​ short-run aggregate supply D. decreases aggregate demand and​ short-run aggregate​ supply; increases​ short-run aggregate supply and decreases​ long-run aggregate supply Event 3​ ______. A. decreases aggregate demand B. increases​ short-run aggregate supply C. increases aggregate demand D. decreases aggregate demand and​ short-run aggregate supply

B A

Mexico trades with the United States. Explain the effect of each of the following events on the quantity of real GDP demanded and aggregate demand in Mexico. When the U.S. economy goes into a recession​, ​______. A. ​Mexico's price level falls and quantity of real GDP demanded​ increases, but​ Mexico's aggregate demand is unchanged B. ​Mexico's exports to the United States decrease​, ​Mexico's aggregate demand decreases​, and​ Mexico's AD curve shifts leftward C. ​Mexico's price level falls and quantity of real GDP demanded​ decreases, but​ Mexico's aggregate demand is unchanged D. ​Mexico's imports from the United States decrease and​ Mexico's aggregate demand increases When Mexico decreases the quantity of​ money, Mexico's aggregate demand​ ______. A. decreases and its AD curve shifts leftward B. is​ unchanged, but the quantity of real GDP demanded increases and there is a movement down along the AD curve C. increases and its AD curve shifts rightward D. is​ unchanged, but the quantity of real GDP demanded decreases and there is a movement up along the AD curve When the price level in Mexico falls​, ​_______. A. ​Mexico's aggregate demand decrease B. ​Mexico's aggregate demand increases C. the quantity of real GDP demanded in Mexico decreases D. the quantity of real GDP demanded in Mexico increases

B A D

What is the output​ gap? How does it change when the economy goes into​ recession? The output gap is the gap between​ _______. A. real GDP and nominal GDP B. real GDP and potential GDP C. the actual unemployment rate and the natural unemployment rate D. nominal GDP and potential GDP When the economy goes into​ recession, the output gap is​ _______. A. zero B. greater than the natural unemployment rate C. positive D. negative

B D

Why does demand not change when the price of a good changes with no change in the other influences on buying​ plans? Consider the demand for gym memberships. The demand for gym memberships does not change when a change in​ _______ occurs. A. the expected future price of a gym membership B. the price of a gym membership C. the population D. the price of bottled water is a complement of gym membership An increase in the price of a gym membership ​_______. A. decreases the demand for gym memberships and shifts the demand curve for a gym membership leftward B. increases the quantity of gym memberships demanded and results in a movement down along the demand curve for a gym membership C. increases the demand for gym memberships and shifts the demand curve for a gym membership rightward D. decreases the quantity of gym memberships demanded and results in a movement up along the demand curve for

B D

A demand curve that illustrates the law of demand​ ______. A. is vertical is vertical B. shows that the quantity demanded remains the same when the price rises shows that the quantity demanded remains the same when the price rises C. shows that the quantity demanded increases as the price falls shows that the quantity demanded increases as the price falls D. is horizontal is horizontal

C

A government budget surplus​ _______ loanable funds. A. decreases the demand for B. decreases the supply of C. increases the supply of D. increases the demand for

C

According to neoclassical growth​ theory, the fundamental cause of economic growth is​ ______. A. the choices that people make in the pursuit of profit B. the emergence of​ markets, property​ rights, and monetary exchange C. technological​ change, which induces saving and investment that make capital per hour of labor grow D. population growth'

C

According to neoclassical growth​ theory, the growth of real GDP per person stops when​ _______. A. labor experiences diminishing marginal returns B. a population explosion eventually occurs and real GDP per person returns to the subsistence level C. technology stops advancing D. knowledge capital experiences diminishing marginal returns

C

An increase in labor productivity​ ______ the real wage rate and​ ______ the equilibrium quantity of labor. A. ​decreases; decreases; B. ​increases; decreases; C. ​increases; increases; D. ​decreases; increases;

C

An increase in the population​ ______ potential GDP and​ ______ potential GDP per hour of labor. A. ​decreases; increases B. ​decreases; decreases C. ​increases; decreases D. ​increases; increases

C

An increase in the price level when the money wage rate remains unchanged increases​ ______. A. factor prices by the same percentage as the increase in the price level B. potential GDP C. the quantity of real GDP supplied D. aggregate supply

C

An intermediate good is ​ _________. An example of an intermediate good is​ _______. A. an item that is produced by one​ firm, bought by another​ firm, and used as a component of a final good or​ service; a used car B. a good that is used for only part of the​ year; snow tires C. an item that is produced by one​ firm, bought by another​ firm, and used as a component of a final good or​ service; wheat sold to a baker to make bread D. an item that is used for a given period of time and then must be​ replaced; winter boots

C

Autoworkers agree to a lower money wage rate. This event​ _______. A. increases aggregate demand B. decreases aggregate demand C. increases the quantity of real GDP demanded D. decreases the quantity of real GDP demanded

C

CPI​ = ______. A. ​[(Cost of CPI basket at​ current-period prices minus −Cost of CPI basket at​ base-period ​prices) divided by ÷Cost of CPI basket at​ current-period ​prices] times ×100 B. ​[(Cost of CPI basket at​ base-period prices minus −Cost of CPI basket at​ current-period ​prices) divided by ÷Cost of CPI basket at​ current-period ​prices] times ×100 C. ​(Cost of CPI basket at​ current-period prices divided by ÷Cost of CPI basket at​ base-period ​prices) times ×100 D. ​(Cost of CPI basket at​ base-period prices divided by ÷Cost of CPI basket at​ current-period ​prices) times ×100

C

Choose the correct statement. A. Fannie Mae is a commercial bank. B. The Federal Reserve is the U.S. central bank that also acts as a commercial bank. C. Commercial banks are financial institutions that accept​ deposits, provide payment​ services, and make loans to firms and households. D. Freddie Mac is a commercial bank.

C

Choose the correct statement. A. The growth rate of potential GDP and the trend growth rate of real GDP have risen since 2000. B. The return to full employment in an expansion phase of the business cycle is economic growth. C. The annual growth rate of real GDP fluctuates widely over the business cycle. D. The annual growth rate of real GDP provides information about changes in the trend growth rate

C

Economic growth is measured by A. changes in the employment rate. B. changes in nominal GDP. C. changes in real GDP. D. All of the above are used to measure economic growth.

C

Economic growth is​ _______. A. the annual percentage change in labor productivity B. the return to full employment in an expansion phase of the business cycle C. the expansion of production possibilities D. the annual percentage change in the quantity of money

C

General Motors cut its​ fourth-quarter production schedule by 10 percent because Ford​ Motor, Chrysler, and Toyota sales declined in August. ​Source: The New York Times​, September​ 5, 2007 Explain whether this news clip illustrates a change in the supply of cars or a change in the quantity supplied of cars. This news clip illustrates a decrease in​ ______ and​ ______ in the market for cars. A. ​supply; a decrease in the quantity demanded B. ​demand; a decrease in supply C. ​demand; a decrease in the quantity supplied D. ​supply; no change in demand

C

Gross domestic product and gross investment are measured​ ______. Net domestic product and net investment are measured​ ______. A. after the depreciation of​ capital; before the depreciation of capital B. excluding​ exports; including exports C. before the depreciation of​ capital; after the depreciation of capital D. excluding net​ exports; including net exports

C

If demand and supply change in the same​ direction, we​ _____ the direction of change of the equilibrium quantity and we​ _____ the direction of change of the equilibrium price A. cannot​ predict; can predict B. can​ predict; can predict C. can​ predict; cannot predict D. cannot​ predict; cannot predict

C

If real GDP per person doubles in 20​ years, then the annual growth rate of real GDP per person is​ ______ percent a year. A. 28.5 B. 14.0 C. 3.5 D. 14.3

C

In the long​ run, the money wage rate​ ______, short-run aggregate supply​ ______, and the economy returns to a​ full-employment equilibrium. A. ​falls; increases B. ​falls; decreases C. ​rises; decreases D. ​rises; increases

C

In​ 1890, the United States surpassed China to become the​ world's largest economy because​ ______. A. the U.S. population exceeded​ China's population B. the United States was a​ strong, united country following the Civil War and Reconstruction C. the benefits of the Industrial Revolution were greater in the United States than in China D. the U.S. population growth rate was much lower than​ China's population growth rate

C

Nominal GDP is​ ______. Real GDP is​ ______. A. another name for real another name for real GDP​; calculated as the quantity produced in the base year multiplied by the prices that prevailed in the given year B. the value of final goods and services produced in a given year when valued at the prices of a reference base​ year; the value of the final goods and services produced in a given year valued at the prices of that year C. a more precise name for GDP​; the value of final goods and services produced in a given year when valued at the prices of a reference base year D. the value of the final goods and services produced in a given year valued at the prices of that​ year; a more precise name for GDP

C

______ is an example of U.S. consumption expenditure. A. The purchase of a new computer system by JFK Airport's air traffic control B. A week's stay in a New York hotel by a family from Denmark C. Your purchase of a tire for your car D. The payment of unemployment benefits paid to households

C

Paula graduates from college and her her income increases by ​$30,000 a year. Nothing else changes. Paula decreases the quantity of ramen noodles and french fries that she buys and increases the quantity of winter vacations that she buys. For Paula​, ​_______. A. ramen noodles and winter vacations are inferior goods B. ramen noodles and french fries are normal goods C. winter vacations are normal goods D. winter vacations and french fries have become substitutes

C

Physical capital is​ ______. Financial capital is​ ______. A. inventories of raw materials and​ semi-finished goods; the​ tools, instruments,​ machines, buildings, and other items that have been produced in the past and that are used today to produce goods and services B. money in the bank or in the​ ATM; the stocks that can be purchased on the stock market and the bonds that can be purchased on the bond market C. the​ tools, instruments,​ machines, buildings, and other items that have been produced in the past and that are used today to produce goods and​ services; the funds that firms use to buy physical capital D. the stocks that can be purchased on the stock market and the bonds that can be purchased on the bond​ market; money in the bank

C

Potential GDP is determined by​ ______. A. labor productivity B. the demand for labor C. the​ full-employment quantity of labor D. the supply of labor

C

Starting from a​ full-employment equilibrium, a decrease in​ short-run aggregate supply​ ______ the price level and​ ______ potential GDP. A. ​decreases; decreases real GDP below B. ​decreases; increases real GDP above C. ​increases; decreases real GDP below D. ​increases; increases real GDP above

C

The Fed cuts the quantity of money and all other things remain the same. Explain the effect of the cut in the quantity of money on aggregate demand in the short run. In the short​ run, aggregate demand​ _______. A. increases because​ long-run aggregate supply increases B. increases because interest rates fall and it is it easier to get a loan to buy homes and large consumer goods C. decreases because interest rates rise and it is it more difficult to get a loan to buy homes and large consumer goods D. decreases because​ long-run aggregate supply decreases

C

The Rule of 70 states that the number of years it takes for the level of any variable to​ ______ is approximately​ ______. A. increase by a factor of​ 70; 1/70 multiplied by the annual percentage growth rate of the variable B. ​double; 70 multiplied by the annual percentage growth rate of the variable C. ​double; 70 divided by the annual percentage growth rate of the variable D. increase by a factor of​ 70; 70 divided by the annual percentage growth rate of the variable

C

The U.S. price level rises. This event​ _______. A. increases aggregate demand B. increases the quantity of real GDP demanded C. decreases the quantity of real GDP demanded D. decreases aggregate demand

C

The aggregate demand curve slopes downward because​ _______. A. as the price level​ falls, expected future profits increase B. of the wealth effect and the price level effect C. of the wealth effect and the substitution effect D. as the price level​ falls, expected future income increases

C

The fundamental source of labor productivity growth is​ ______. A. government B. money C. human capital D. physical capital

C

The two broad sources of potential GDP growth are growth of​ ______ and growth of​ ______. A. ​government; the private sector B. ​corporations; private firms C. the supply of​ labor; labor productivity D. ​exports; imports

C

Three Indian firms are producing components for Boeing fighter jets F15 and F18 and for the Chinook​ heavy-lift helicopter in​ Bangalore, Hyderabad, and other places in India. The sale of​ Boeing's fighter jets and​ heavy-lift helicopters is recorded as​ _______, and the​ Boeing's outsourcing of components to India is recorded as​ _______. A. imports in U.S.​ GDP; imports in U.S. GDP B. exports in​ India's GDP; exports in​ India's GDP C. government expenditure in U.S.​ GDP; imports in U.S. GDP D. government expenditure in U.S.​ GDP; government expenditure in U.S. GDP

C

We are interested in long−term growth primarily because it brings A. lower price levels. B. higher price levels. C. higher standards of living. D. trade wars with our trading partners.

C

What is the expenditure approach to measuring​ GDP? The expenditure approach to measuring GDP sums together​ ______, and the largest component is​ ______. A. compensation of​ employees, net​ interest, rental​ income, proprietors'​ income, and corporate​ profits; compensation of employees B. consumption​ expenditure, investment, government expenditure on goods and​ services, and net​ exports; government expenditure on goods and services C. consumption​ expenditure, investment, government expenditure on goods and​ services, and net​ exports; consumption expenditure D. net domestic income at factor​ cost, indirect taxes less​ subsidies, and​ depreciation; net domestic income at factor cost

C

When the increase in demand is less than the decrease in​ supply, the equilibrium price​ _____ and the equilibrium quantity​ _____. A. ​falls; decreases B. ​rises; increases C. ​rises; decreases D. ​falls; increases

C

When the real interest rate rises​, the​ ______ because the​ ______ is the opportunity cost of loanable funds. A. quantity of loanable funds demanded increases​; inflation rate B. demand for loanable funds increases; real interest rate C. quantity of loanable funds demanded decreases​; real interest rate D. demand for loanable funds decreases​; inflation rate

C

When the unemployment rate is less than the natural unemployment​ rate, real GDP is​ ______ than potential GDP and the output gap is​ ______. A. ​greater; negative B. ​smaller; negative C. ​greater; positive D. ​smaller; positive

C

With a rise in the money wage​ rate, ______. A. potential GDP decreases in the long run because the size of the labor force decreases B. firms have an incentive to use more​ capital-intensive methods in​ production, which will increase potential GDP in the long run C. the quantity that firms are willing to supply at each price level decreases D. firms have an incentive to produce more because they can charge a higher price

C

How do we calculate the inflation rate and what is its relationship with the​ CPI? The inflation rate is calculated as ​ _________. A. ​[(CPI this year minus −CPI last ​year) divided by ÷CPI this ​year] times ×100 B. ​[(CPI this year minus −CPI in the base ​year) divided by ÷CPI in the base ​year] times ×100 C. ​[(CPI this year minus −CPI last ​year) divided by ÷CPI last ​year] times ×100 D. ​[(CPI in the base year minus −CPI last ​year) divided by ÷CPI this ​year] times ×100 When the CPI​ _______. A. rises​ slowly, the inflation rate is low B. ​falls, the inflation rate is positive and low C. is​ constant, the inflation rate is negative D. rises​ slowly, the inflation rate is negative

C A

Complete the following sentences. Bottled water and health club memberships are​ _______. A. substitutes B. substitutes in production C. complements D. complements in production French fries and baked potatoes are​ _______. A. substitutes but not substitutes in production B. complements or complements in production C. substitutes or substitutes in production D. complements but not complements in production

C C

Hiring in recent months has hit a pace last seen during the late 1990s and the labor force participation rate has started to rise but it remains significantly below its​ pre-recession level of 2007. If all the newly hired people had been​ unemployed, the labor force participation rate would have​ _______ and the unemployment rate would have​ _______. A. not​ changed; not changed B. ​increased; decreased C. not​ changed; decreased D. ​decreased; not changed If all the newly hired people had previously given up on their job​ search, the labor force participation rate would have​ _______ and the unemployment rate would have​ _______. A. ​increased; not changed B. ​decreased; increased C. ​increased; decreased D. not​ changed; not changed

C C

The​ G-20 aims to take stock of the economic recovery. One achievement in Pittsburgh could be a deal to require that financial institutions hold more capital. ​Source: USA Today​, September​ 24, 2009 What are the financial institutions that the​ G-20 might require to hold more​ capital? What exactly is the​ "capital" referred to in the news​ clip? How might the requirement to hold more capital make financial institutions​ safer? The financial institutions that the​ G-20 might require to hold more capital are​ ______. The​ "capital" referred to in the news clip is​ ______. A. banks and insurance​ companies; physical capital B. ​government-sponsored mortgage lenders and pension​ funds; the​ institutions' own funds C. banks and insurance​ companies; the​ institutions' own funds D. ​government-sponsored mortgage lenders and pension​ funds; physical capital The requirement to hold more capital can make financial institutions safer because by holding more​ capital, a financial institution​ ______. A. becomes larger B. can charge a higher price for its bonds C. decreases its risk of insolvency D. increases the value of its stock

C C

A final good is​ _______. An example of a final good is​ _______. A. an item that is bought by its final user or an item that is a component of a final​ good; tires B. an item that is bought by its final user during a specified time​ period; the ice cream that an ice cream parlor buys to make milkshakes C. the last item of a given type that a consumer will​ buy; a house that is purchased by a retired couple D. an item that is bought by its final user during a specified time​ period; bread sold to a consumer

D

A government budget deficit​ _______ loanable funds. A. decreases the demand for B. increases the supply of C. decreases the supply of D. increases the demand for

D

A rise in the money wage rate with no change in potential GDP creates​ ______. A. a leftward shift of the LAS curve and no change in the SAS curve B. a movement along the SAS curve C. a leftward shift of the LAS curve and a leftward shift of the SAS curve D. a leftward shift of the SAS curve and no change in the LAS curve

D

A rise in the money wage rate​ ______. A. increases​ short-run aggregate supply because a rise in the money wage rate increases​ costs, so firms are willing to supply more only at a higher price level B. decreases potential GDP because the​ full-employment quantity of labor decreases C. does not change​ short-run aggregate supply because along the SAS curve relative prices remain constant D. does not change the LAS curve because along the LAS curve a rise in the money wage rate is accompanied by an equal percentage change in the price level

D

Aggregate income in an economy in 2017 is ​$200 billion. Saving is ​$25 billion and imports are ​$30 billion. What is aggregate expenditure in the economy in​ 2017? Aggregate expenditure in the economy in 2017 is​ ______. A. ​$170 billion B. ​$225 billion C. ​$145 billion D. ​$200 billion

D

All of the following are consequences of scarcity faced by people in the United States except deciding​ _______. A. whether to take a part dash time job or to take an extra course this term whether to take a part-time job or to take an extra course this term B. whether to go skiing during spring break or to catch up on your course work whether to go skiing during spring break or to catch up on your course work C. whether to play the piano or to study for the next hour nbsp whether to play the piano or to study for the next hour D. whether or not Pluto should be classified a planet whether or not Pluto should be classified a planet

D

An increase in current income taxes​ ______ the supply of loanable funds today because it​ ______. A. has no effect​ on; doesn't change expected future disposable income B. increases​; increases expected future disposable income C. increases​; decreases disposable​ income, which encourages greater saving D. decreases​; decreases disposable​ income, which decreases saving

D

An increase in labor productivity​ _______ potential GDP and​ ______ potential GDP per hour of labor. A. ​decreases; decreases B. ​increases; decreases C. ​decreases; increases D. ​increases; increases

D

An increase in the population​ ______ the real wage rate and​ ______ the equilibrium quantity of labor. A. ​increases; increases B. ​decreases; decreases C. ​increases; increases D. ​decreases; increases

D

As we move up along the​ long-run aggregate supply​ curve, ______. A. the prices of goods and services remain constant B. the money wage rate remains constant C. the prices of goods and services increase and the money wage rate decreases D. the real wage rate remains constant

D

As we move up along the​ short-run aggregate supply​ curve, ______. A. potential GDP increases B. the real wage​ rate, the prices of other​ resources, and potential GDP remain constant C. the money wage rate and the prices of other resources change by the same percentage D. the money wage​ rate, the prices of other​ resources, and potential GDP remain constant

D

Autoworkers agree to a lower money wage rate. This event​ ______ short-run aggregate supply and​ ______ long-run aggregate supply. A. does not​ change; does not change B. decreases decreases​; does not change C. increases​; increases D. increases increases​; does not change

D

China was the​ world's largest economy until 1890 because​ ______. A. the Industrial Revolution gave the greatest growth to the countries with the largest populations B. it was the country with the largest land mass C. it was a large exporter of goods and services D. people in all countries had approximately the same subsistence level of income and China had the largest population

D

Choose the correct statement about an increase in the population. A. Potential GDP decreases. B. The real wage rate rises. C. The production function shifts upward. D. Potential GDP per hour of labor decreases.

D

Choose the correct statement about the LAS curve. A. The LAS curve shifts rightward when the money wage rate falls. B. Along the LAS curve the money wage rate is constant and the real wage rate rises as the price level rises. C. The LAS shifts rightward when the SAS curve shifts rightward and shifts leftward when the SAS curve shifts leftward. D. The LAS curve is vertical because potential GDP is independent of the price level.

D

Coal and oil are​ ______. A skateboard and roller blades are​ ______. A. ​complements; substitutes B. ​substitutes; complements C. ​complements; complements D. ​substitutes; substitutes

D

Complete the sentence. If as the price of palm oil palm oil decreases decreases​, the quantity of soap soap that firms plan to sell decreases decreases​, then palm oil palm oil and soap soap are​ _______. A. normal goods B. inferior goods C. substitutes in production D. complements in production

D

Complete the sentence. An increase in labor productivity​ ______. A. increases the supply of​ labor, increases potential​ GDP, and decreases potential GDP per hour of labor B. increases potential GDP and decreases potential GDP per hour of labor C. decreases the real wage​ rate, increases potential​ GDP, and increases potential GDP per hour of labor D. shifts the demand for labor curve rightward and the production function upward

D

Diet coke and regular coke are​ _______. A. substitutes for consumers but not substitutes in production for producers B. complements for producers but not complements in production for producers C. complements for consumers and complements in production for producers D. substitutes for consumers and substitutes in production for producers

D

Economic growth results from​ ______. A. a rising exchange rate​, which increases aggregate demand B. a falling nominal wage rate​, which increases​ short-run aggregate supply C. the decisions of Congress to cut taxes or increase spending​, which increase​ long-run aggregate supply D. a growing supply of labor and increasing labor​ productivity, which increase​ long-run aggregate supply

D

Examples of fiscal policy that increase aggregate demand include​ ______. A. a decrease in taxes and an increase in the quantity of money B. an increase in transfer payments and an increase in interest rates C. a decrease in taxes and a decrease in interest rates D. an increase in government​ expenditure, a decrease in​ taxes, and an increase in transfer payments

D

Explain the relationship between asset prices and the interest rate. A. Asset prices are constantly rising and interest rates rise and fall depending on the business cycle. B. A rising interest rate increases the value of an asset and increases its price. C. The relationship between interest rates and asset prices is a causal relationship. D. When the price of an asset​ rises, the interest rate​ falls, everything else remaining the same.

D

Gross domestic product is​ ______. A. the factor cost of all the final goods and services produced by all citizens of a country in a given time period B. the market value of all the consumption goods and services produced within a country in a given time period C. the factor cost of all the consumption goods and services produced by all citizens of a country in a given time period D. the market value of all the final goods and services produced within a country in a given time period

D

In October 2009​, the U.S. unemployment rate was 10.0 percent. In October 2011​, the unemployment rate was 8.9 percent. Predict what happened to the labor force between October 2009 and October 2011 if unemployment was constant. If unemployment remained constant between October 2009 and October 2011​, then the labor force​ ______. A. decreased B. either increased or decreased but we​ can't predict for sure C. did not change D. increased

D

Pasta and pizza are​ ______. A video game and a laptop are​ ______. A. ​complements; substitutes B. ​complements; complements C. ​substitutes; substitutes D. ​substitutes; complements

D

Pizza and sausage are​ ______. Wheat and corn are​ ______. A. ​substitutes; complements B. ​substitutes; substitutes C. ​complements; complements D. ​complements; substitutes

D

Potential GDP increases when​ _______. A. the government increases its expenditures B. the price level falls C. the money wage rate decreases D. the full dash employment quantity of labor increases

D

Real GDP growth rate​ = [(Real GDP in​ ______ year minus −Real GDP in​ ______ ​year) divided by ÷Real GDP in​ ______ year ​] times ×100. A. ​current; previous; current B. ​previous; current; current C. ​previous; current; previous D. ​current; previous; previous

D

Some unemployment is unavoidable because​ ______. A. often people become discouraged workers B. many people in the​ working-age population attend school and are unemployed C. many​ part-time workers would like to have​ full-time work D. people are making transitions through the stages of life and businesses are making transitions

D

The U.S. price level rises. This event​ ______. A. increases​ short-run aggregate supply B. increases​ long-run aggregate supply C. decreases the quantity of real GDP supplied D. increases the quantity of real GDP supplied

D

The aggregate demand curve shows the relationship between the quantity of real GDP demanded and​ ______ when everything else remains the same. A. the quantity of real GDP supplied B. expected future​ income, inflation, and profits C. the interest rate D. the price level

D

The four price indexes that are alternatives to the CPI are​ ______. A. chained​ CPI, personal consumption expenditure​ deflator, core GDP​ deflator, and CPI deflator B. CPI​ deflator, personal consumption expenditure​ deflator, core GDP​ deflator, and core PCE C. CPI​ deflator, chained personal consumption expenditure​ deflator, GDP​ deflator, and core PCE D. chained​ CPI, personal consumption expenditure​ deflator, GDP​ deflator, and core PCE

D

The long minus −run aggregate supply curve is​ ________ because along​ it, as prices​ rise, the money wage rate​ ________. A. upward​ sloping; falls B. ​vertical; falls C. upward​ sloping; stays constant D. ​vertical; rises

D

The natural unemployment rate​ _______. A. is equal to the number of people cyclically unemployed divided by the number in the labor force B. is greater than the actual rate of unemployment C. is equal to the difference between the forecasted unemployment rate and the actual unemployment rate D. is the unemployment rate when there is no cyclical unemployment

D

The supply of loanable funds is influenced by​ _______. A. a​ household's wealth, and the greater a​ household's wealth, the greater is its saving B. the real interest​ rate, and as the real interest rate​ rises, the supply of loanable funds increases C. expected profit D. expected future​ income, and the higher a​ household's expected future​ income, the smaller is its saving today

D

Toyota and Honda build additional plants in the United States. This event​ ______ short-run aggregate supply and​ ______ long-run aggregate supply. A. does not​ change; does not change B. does not​ change; increases C. ​increases; does not change D. ​increases; increases

D

Unemployment arises when​ ______. A. people leave the labor force B. students decide to take time to travel following graduation C. firms​ close, people lose their​ jobs, and they become discouraged workers D. people leave their jobs and spend time searching for another job that better suits their abilities

D

Upper A decrease A decrease in expected future income​ ______. A. decreases the supply of loanable funds today because households with smaller expected future income will save less today B. has no effect on the supply of loanable funds C. decreases the supply of loanable funds because it decreases wealth D. increases the supply of loanable funds today because households with smaller expected future income will save more today

D

When the increase in demand equals the decrease in​ supply, the equilibrium price​ _____ and the equilibrium quantity​ _____. A. ​rises; either increases or decreases B. ​falls; remains unchanged C. ​rises; increases D. ​rises; remains unchanged

D

When the price​ level, the money wage​ rate, and other factor prices rise by the same​ percentage, there is a movement along​ ______. Potential GDP​ ______. A. the LAS curve​; decreases B. the LAS curve and the SAS curve​; does not change and the quantity of real GDP supplied increases C. the LAS curve and the SAS curve​; decreases D. the LAS curve​; does not change

D

​Long-run aggregate supply is the relationship between the quantity of real GDP supplied and the price level when the ​ _____ changes in step with the price level to maintain full employment. A. interest rate B. quantity of money C. real wage rate D. money wage rate

D

An increase in the population​ ______ the equilibrium quantity of​ labor, ______ and potential GDP. A. ​decreases; increases B. ​decreases; decreases C. ​increases; decreases D. ​increases; increases An increase in the population​ _______ the real wage rate. A. lowers B. does not change C. raises

D A

The increase in real GDP in the first quarter primarily reflected increases in personal consumption​ expenditures, exports, and investment. Government spending decreased. ​Source: Bureau of Economic​ Analysis, June​ 29, 2017 Explain how the items in the news clip influence U.S. aggregate demand. The increase in the personal consumption expenditures​ ______ aggregate demand. The increase in exports​ ______ aggregate demand. A. ​increases; decreases B. ​decreases; decreases C. ​increases; has no effect on D. ​increases; increases The increase in investment​ ______ aggregate demand. The decrease in government spending​ _______ aggregate demand. A. ​increases; decreases B. ​decreases; increases C. has no effect​ on; decreases D. ​increases; has no effect on

D A

The income approach to measuring GDP sums together​ ______, which equals net domestic income at factor cost. A. compensation of​ employees, net​ interest, rental​ income, and​ proprietors' income B. consumption​ expenditure, investment, government expenditure on goods and​ services, and net exports C. compensation of​ employees, direct​ taxes, and consumption of fixed capital D. compensation of​ employees, net​ interest, rental​ income, corporate​ profits, and​ proprietors' income Net domestic income at factor cost​ _______ indirect taxes less subsidies​ _______ depreciation gives GDP​ (income approach). A. ​minus; minus B. ​minus; plus C. ​plus; plus D. ​plus; minus

D C


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