Macro Exam 1
Consider the information below on the labor market in a given country. If the government wanted to implement a minimum wage, which of the following potential minimum wage would be binding and affect the market?
$7
Assume that in the year 2010, the US Nominal GDP was $15 trillion, while the GDP deflator was 200. Calculate the US Real GDP for 2010.
$7.5 trillion
To calculate the price elasticity of demand using the midpoint method, you would use the following approach:
% change in quantity / % change in price
To calculate the price elasticity of supply using the midpoint method, you would use the following approach:
% change in quantity / % change in price
If income elasticity of demand for a good is positive, we say that good is a normal good. You can use the following approach to calculate the income elasticity of demand for a good:
% change in quantity demanded / % change in income
The wage elasticity of labor supply can be calculated using the following approach:
% change in quantity of labor supplied / % change in wage
Alex has a budget of $100 a month for movie tickets and restaurant meals. A movie ticket will cost $10 and a restaurant meal costs $20. Which of the following combinations is part of Alex's budget constraint?
2 movie tickets and 4 restaurant meals
Irfan has the budget constraint described in the graph below. If Irfan purchases 1 hour of tutoring per month and decides to increase his purchases to 2 hours per month, what is the opportunity cost of the 2nd tutoring hour?
2 restaurant meals
Based on the information in the table below, calculate the unemployment rate:
4.76%
Which of the following statements is TRUE?
A budget constraint shows the limits on an individual's consumption, while a production possibility frontier shows the limits on an economy's production.
Which of the following examples represents the relationship between division of labor and production?
A nurse takes patients' vital signs while the doctor focuses on diagnosis so that more patients can receive care
A company discovers a new technology that allows it to substantially reduce its cost of production. The demand for the product is inelastic. Consumers will in general experience:
A price decrease
In general, supply and demand are often inelastic in the short run, so that shifts in either demand or supply can cause:
A relatively greater change in prices
Consider a market with an equilibrium price of $10. If the government imposes a price ceiling of $8, other things equal, the result will be as follow:
A shortage will occur because the price ceiling is below the equilibrium price.
Martha spends 5 hours of free time exercising and playing music per day. The table below represents the level of utility she receives from the various combinations of exercise and music activities. For instance, if she only plays music, her total utility from exercise will be 0, and the utility from music will be 50. If she exercises for 1 hour, she will receive a level of utility of 25. Utility is measured in 'utils'; those numbers are arbitrary and designed to quantify the benefits received from various actions. Marginal analysis will help Martha in her decision making regarding how to spend her free time because ...
All answers are correct. (She can compare the gains in utility from exercising to the loss in utility from music to find the optimum combination., She will be able to find the combination of music and exercise which gives her the most total utility, She will realize which activity is more important to her.)
Consider the market for air travel. If airport fees rise and cause the price of plane tickets to rise,
All of the answers are correct. (It will cause consumers to travel less by plane and more by car., It will cause airlines to lower the number of flights they offer., It will cause buyers and sellers in the market to adjust their behavior.)
Based on a country's aggregate production function,
An increase in human capital and physical capital would also increase the aggregate production function.
According to the circular flow diagram, households...
Are sellers in the labor market and buyers in the goods and services market.
Identify the suppliers in financial market amongst the examples below
Ari deposits $1000 in his savings account at Local Bank
Consider a poor country confronting the rising price of eggs, an important food source for the population. The government considers imposing a price ceiling to keep the price of eggs at an affordable level for the population. The price ceiling would cause the following...
At the new price, fewer egg producers would supply the market and there would be fewer eggs available on the market.
Which of the following equation represents GDP measured by the components of demand
Consumption + Government Spending + Trade Balance + Investment = GDP
Based on the GDP information in the table below for 2 countries:
Countries A and B have improved their standard of living in 2021 but A has higher standards of living than B.
Which of the following countries would be more likely to experience strong economic growth, other things equal?
Country ABC has an extensive set of business laws and property rights laws which promote trust in economic activity.
Workers at a car-manufacturing plant in Detroit, Michigan are laid off because of a recession in the economy. The workers' resulting unemployment can be described as:
Cyclica
Which of the following statements best describe how economists calculate GDP?
Economists at the Bureau of Economic Analysis pull together data on sales, imports, exports, government purchase and investments from various government sources every 3 months.
Miriam is actively searching for a new job after she voluntarily quit her job. Miriam is now considered:
Frictionally unemployed
In 2010, the country of Utopia experienced the highest contraction of their economy at 10% in the previous 20 years before a new expansion phase. In 2010, the economy of Utopia...
Had reached a trough.
Which of the following elements demonstrate the degree of globalization?
High levels of trade and exchange between countries.
The circular flow diagram describes...
How firms and households carry out economic activities through the market for input or factors of production and the market for goods and services.
The graph below represents the Production Possibility Frontier for the country of OZ for 2 groups of goods or services: Infrastructure (like bridges and roads) and technology and research.
If the country of OZ is currently producing 10 infrastructure projects and wants to produce 5 more, the opportunity cost would be 2 research and technology projects.
Which of the following statements best represents the law of demand?
If the price of sports shoes increases, Bella will purchase fewer pairs per year.
If demand is ___, then a given % rise in price will cause a smaller % fall in quantity demanded so that total revenue (Price × Quantity) rises.
Inelastic
An economy will achieve productive efficiency when it ___ and will achieve productive efficiency when it ___.
Is maximizing production and could not increase production of both goods at the same time; is producing the combination of goods and services that most benefit the people in the economy.
If discouraged workers are included in the determination of the unemployment rate, what effect will it have on the computed rate?
It will raise it because there are always discouraged workers.
Advances in information technology and the development of programs like TurboTax, which guides people through their tax filing, have...
Lowered the demand for tax preparers
Someone criticizes the government for increasing interest rates but approving the increase in government spending. They are criticizing the government's ____policy and praising the government ___ policy.
Monetary, Fiscal
How do economists define unemployed workers?
Not currently working but actively searching for work
If interest rates increase in financial markets, then...
Omar is likely to deposit more money in his savings account and the quantity supplied increases.
Based on the information in the table below, calculate the labor force participation rate, and the percentage or workers out of the labor force:
Participation rate: 75.9%; Out of the labor force: 24.1%
A horizontal demand curve or supply curve would be called:
Perfectly elastic
In the country of Azard, businesses use new smart cell phones to speed up many tasks such as sales recording, inventory checks, purchase orders etc. Which components of growth are recorded here?
Physical capital and technology
Which of the following describes a supply curve?
Price Quantity $1 50 $2 100 $3 150 $4 200 $5 250 $6 300 $7 350 $8 400 $9 450
In market economies, most decisions are made by ___, while in command economies, most economic decisions are made by ___.
Private citizens and firms; the government
The government of the country Excel provides a large number of grants for scientists to research new technologies and other processes. This action would
Promote economic growth through technological advances.
Which statement best describes the difference between Nominal and Real GDP?
Real GDP is Nominal GDP which has been adjusted to remove the distorting effects of inflation.
Achieving economic growth over a long period of time and raising standard of living, can be done through
Small consistent yearly growth over a long period of time
A market is most efficient when
Social or economic surplus is maximized
Employees at a toy-manufacturing factory are let go because robots have been installed to replace humans. What type of unemployment faces the laid-off workers?
Structural
An auto company decided to relocate its offices from Huntsville, Alabama to Orlando, Florida. The human resources manager of the auto company refuses to relocate to Orlando due to family obligations. While she is searching for a new job, the manager will be considered:
Structurally unemployed
How a tax burden is divided between consumers and producers is called tax incidence. Consumers bear most of the tax burden when:
Supply is more elastic than demand.
Economic growth accounting studies show that
Technology is the most important component of economic growth
If the state of Texas has a lower opportunity cost for producing beef compared to Alaska, then...
Texas has a comparative advantage in beef, and Alaska should purchase beef from Texas.
If the demand for airline traveling increases,
The demand for flight attendants and pilots will increase and shift right.
Productivity is measured as
The dollar value of a worker's hour of work.
Identify the scenario which corresponds to the graph of a given market below:
The graph represents a decrease in demand and a decrease in equilibrium price and quantity.
Capital deepening refers to
The increase in quantity and quality of capital per worker
Martha spends 5 hours of free time exercising and playing music per day. The table below represents the level of utility she receives from the various combinations of exercise and music activities. For instance, if she only plays music, her total utility from exercise will be 0, and the utility from music will be 50. If she exercises for 1 hour, she will receive a level of utility of 25. Utility is measured in 'utils'; those numbers are arbitrary and designed to quantify the benefits received from various actions. The utility patterns in the table illustrate the law of marginal diminishing utility because ...
The increase in utility for each additional hour Martha exercises falls
The graph below represents the Production Possibility Frontier for the country of Sandia for 2 groups of goods or services: Infrastructure (like bridges and roads) and technology and research. The Production Possibility Frontier of Sandia illustrates the law of diminishing returns because...
The opportunity cost of producing additional infrastructure projects is higher when Oz is already producing 3 than when it is producing 2 infrastructure projects.
Which of the following events would increase the demand for cruise vacations?
The popularity of cruises rises after a successful marketing campaign.
Which of the following statements describes microeconomics?
The price of beef increased by 15% last month due to a cyber attack on a major beef processing firm.
During the COVID 19 pandemic, the demand for personal protective equipment increased. What adjustments would the market make as a result that would benefit the economy?
The price of personal protective equipment would rise, signaling to producers that more production was needed.
Assume that as the economy booms, the demand for business and consumer loans rises significantly, while the supply of funds and loans remains constant. As a result, the market interest rate for business and consumer loans rises to 20% per year. The government implements a ceiling on interest rates of 15% a year and as a result...
The quantity demanded of business and consumer loans rises, while the quantity supplied falls and a shortage occurs
The supply of new houses in Houston is best described as
The quantity of new houses that builders are willing and able to build at various prices in a given period of time.
Consider the market for cheese. If the price of milk increases, what will be the consequences?
The supply of cheese would fall.
Assume that the US debt is increasing rapidly at a time when the US economy is struggling. If investor confidence in the ability of the US to repay the debt falls, then...
The supply of funds in the US financial markets would fall and interest rates would rise.
Modern economics growth was made possible by
The technological advances of the industrial revolution in the 1800's
Gross Domestic Product represents...
The value of the total production in a country
Scarcity is a problem because...
There are not enough resources to produce all the goods and services people want to purchase.
A perfectly inelastic demand curve or supply curve means...
There is no change in quantity demanded or supplied in response to a change in price
If you work part-time when you would like to work full time, or have a full-time job that doesn't utilize all your skills and talents, then you are counted as:
Underemployed
When most workers are classified as not being in the labor force, when in reality they are actively searching for work, then the unemployment rate will be
Understated
Select the statement below which highlights the role of real GDP: "The growth in real GDP has been much lower than expected over the last few years and...
Unemployment has been rising as a result creating hardship for many in the country.
The market equilibrium for milk in your city can best be described as follows:
When the demand and supply of milk intersect, at a price where the quantity demanded and supplied of milk are the same
Which of the following changes would increase labor productivity?
Workers in country X go through extensive technical training in most manufacturing sectors.
The GDP deflator is...
a price index used to remove the distorting effect of inflation from Nominal GDP.
A good economic theory ....
captures the essence of the economic concepts and facilitates their understanding.
Suppose that D1 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D1 to D 2, then
equilibrium price increases from $6 to $8
A normative statement reflects opinions or beliefs, while a positive statement...
is based on facts
Assume the real GDP of Brazil in 2020 was R 6 billion (Real). If the exchange rate was 1 Real = $0.25, calculate the real GDP of Brazil in US dollars in 2020.
$1.5 billion
Which of the following graphs represents an increase in supply in a given market?
$10 59 58 57 $6 $5 $4 $3 $2 $1 §- 0 • 100, $9 90, $8 0 80, $7 70, $6 60, $5 50, $4 40, $3 O 30, $2 20, $1 0150, $9 • 140, $8 • 130, $7 • 120, $6 • 110, $5 • 100, $4 • 90, $3 • 80, $2 • 70, $1 20 40 60 80 Quantity 100 120 140 160
Based on the following data, GDP would equal ___ while Net National Product equals ___
$110 billion; $114 billion
