Macro Exam 1

Which of the following is TRUE within the circular flow of economic activity? a. households are buyers of products and sellers of production factors b. Business firms are buyers and sellers of production factors c. households are sellers of products and buyers of production factors d. Business firms are buyers of products and sellers of production factors

a. households are buyers of products and sellers of production factors

which of the following items would be included in the GDP accounts? a. personal time spent learning how to use accounting software b. personally rotating the tires on your neighbor's car c. caring for your aged grandmother at home d. $50 consultation on the phone with a psychic adviser

a. personal time spent learning how to use accounting software

Which of the following is NOT an investment in human capital? a. researching automated production techniques b. putting more money into the education system c. starting a job-training program d. launching employee physical fitness campaign

a. researching automated production techniques

a business cycle is a. a period of fluctuation of economic activity b. the engine of economic growth c. a period lasting about 50 years d. identical to the consumption life cycle

a. the periodic fluctuation of economic activity

All of the following are considered human capital, EXCEPT: a. working in a factory b. obtaining a college education c. receiving training for another area in a current job d. completing a professional development course

a. working in a factory

Which organization determines the beginning and end dates of a recession? a. the Council of Economic Advisers b. the national bureau of Economic Research c. the US treasury department d. the federal reserve board of governors

b the national bureau of Economic Research

Which shaped curve reflects the reality that most goods are better suited for specific sorts of production a. straight line PPF b. concave PPF c. downward-sloping PPF d. convex PPF

b. Concave PPF

The US gross domestic product is equal to the total market value of all a. intermediate goods and services produced by resources in the United States b. final goods and services produced by resources in the United States c. final goods and services produced by US citizens in the United States d. Intermediate goods and services produced by US citizens in the United States

b. final goods and services produced by resources in the United States

in economics the payment to capital is called a. factor payment b. interest c. capitalization d. profit

b. interest

The National Activity Index: a. is a weighted average of 85 indicators of national economic activity b. is a weighted average of estimates of economic activity by the NBER and the BEA c. is produced by NBER d. is a measure of unemployment and participation in the labor force

b. is a weighted average of estimates of economic activity by the NBER and the BEA

Capital: a. refers to commercial bank lending policies b. is any manufactured product that is used to produce other products c. is a field of corn d. is the only element that is needed to turn resources to products

b. is any manufactured product that is used to produce other products

One important reason economists track business investment is that: a. it helps them decide which stocks to purchase b. it is a leading indicator of the business cycle c. business investment is an excellent proxy for government investment d. it shows them where the economy has been

b. it is a leading indicator of the business cycle

Which of the following is included in gross private domestic investment? a. highway construction by a government contractor b. the purchase of a new TV by a household c. purchases of common stock by investors d. an increase in business inventories

b. purchase of a new TV by a household

Which component of GDP includes college tuition? a. durable goods b. nondurable goods c. services d. private domestic investment

b. services

to gain from trade, a country should a. always try to get a favorable tariff b. specialize in the commodity in which it has a comparative advantage c. always specialize in the commodity in which it has an absolute advantage d. trade only with its political allies

b. specialize in the commodity in which it has a comparative advantage

the key benefit of countries engaging in trade based on comparative advantage is that a. both countries will be able to consume more than with no trade b. it allows countries to produce efficiently inside their individual PPFs c. it allows both countries to maximize their opportunity cost d. None of these is a key benefit

both countries will be able to produce more with no trade

In Economics, capital refers to a. funds used by business to acquire goods and services b. the process of raising money in the stock market c. actual manufactured products used in the production process d. anything that adds to human capital

c. actual manufactured products used in the production process

The diagram that illustrates how households and businesses interact throughtout product and resource markets is called the: a. product-resource diagram b. economic agents graph c. circular flow diagram d. economic interactivity diagram

c. circular flow diagram

Which of the following is NOT a problem in using GDP to measure standard of living? a. failure to include environmental impacts b. failure to include the value of non-market work c. failure to include exports and imports d. failure to include the value of investment in human capital

c. failure to include exports and imports

Points that are unattainable for an economy are shown as points a. inside the PPF b. on the PPF c. outside the PPF d. of unemployment

c. outside the PPF

the graphical tool we could use to represent the combinations of tow goods that are possibly with a given society at full employment is: a. efficiency curve b. allocation curve c. production possibilities frontier d. cost graph

c. production possibilities frontier

which of the following items is NOT included in gross private domestic investment a. residential housing b. new equipment purchased by businesses c. purchases of common stock d. increases in business inventories

c. purchases of common stock

We are least likely to be heading into a recession when the National Activity Index equals: a. -.33 b .55 c -.98 d .81

d. .81

Which of the following is NOT a criticism of the dating of business cycles by he NBER? a. Economists use different methodologies to measure business cycles b. NBER dates peaks and troughs only after the fact c. the NBER deliberations are not public d. the NBER is sometimes manipulated by the federal government

d. The NBER is sometimes manipulated by the federal government

Which is NOT a criticism of the National Bureau of Economic Research's recession dating? a. Dates are announced long after the economy turned b. deliberations are not made public c. Its use of revised data introduces errors in dating d. There is no single consistent methodology used in dating

d. There is no single consistent methodology used in dating

The national NBER determines that a recession is over: a. after one year of economic growth b. when the economy is in a trough c. when the unemployment rate declines below 5% d. does not update or revise data

d. does not update or revise data

Which of the following activities is an example of a nonmarket transaction? a. hiring a maid to clean your home b. employing a lawn service worker to trim your bushes c. hiring a nanny to take car of your kids d. growing your own vegetable garden

d. growing your own vegetable garden

Economists believe that changes in investment spending are important for forecasting the business cycle because a. increases in investment spending raise tax revenues, which allows government to spend more b. investment closely reflects consumer sentiment c. changes in investment show where the economy has been d. investment is a key determinant of economic growth

d. investment is a key determinant of economic growth

Which of the following events has significantly influenced the development of macroeconomic ideas? a. WWII b. the development of the modern corporation c. the Industrial Revolution d. the great depression

d. the great depression

"The economic wealth of this country was built primarily by some individuals profiting from a transaction." This statement indicates the author: a. fails to understand the fallacy of composition b. fails to understand that all voluntary trades benefit both parties involved c. fails to understand the significance of the PPF d. uses sound economic thinking. The statement is essentially correct

fails to understand that all voluntary trades benefit both parties involved

If the government of Spain decides to spend less on the military and more on health care, the foregone spending on military items represent the: a. cost factor of the extra health care b. production efficiency of the extra health care c. opportunity cost of the extra health care d. allocative cost of the extra health care

opportunity cost of the extra health care

GDP=

personal consumption expenditures+gross private domestic investment + government expenditures + (exports-imports)

one of the major limits to trade is a. transaction costs b. comparative advantage c. opportunity cost d. absolute advantage

transaction costs