Macro exam 1 review
when prices are rising, real gdp tend to be ___ than nominal gdp for the same year
lower
a person will decide to take the day off work if the
marginal cost is less than the marginal benefit
natural rate of unemployment
frictional + structural unemployment
suppose that anticipated inflation is 4% for the coming year, with loan contracts set at 7% with the expectation of 3% inflation. if the actual inflation rate at the end of the year is 2%
creditors gain at the expense of debtors
Jill has an escalator clause in her labor contract that gives her a raise equal to the change in the consumer price index (CPI). Last year she earned $40,000 and the CPI was 100. If the CPI this year is 110, her new salary is:
$44,000
say someone gave you a used phone valued at $500 as a gift. unfortunately, you were hoping for a model that sells for $800. the opportunity cost to you keeping the phone is
$500
say parents gave you a used car valued at $8000 as a gift for your bday. Unfortunately, you were hoping for a sportier model that sells for $12,000. The opportunity cost to you of keeping the car that your parents gave you is
$8000
suppose in 2020, the cost of purchasing a basket of goods was $80. that same basket cost $90 in 2021. if 2021 is the base year, the consumer price index for 2021 is
100 (base period and current period are the same in this case)
suppose a market basket of goods costs $10,000 in 2009, the base period, and that same basket of goods now cost 11,200. what is the consumer price index for the current period
112.0
Heather has one employee in her sweater shop who can sew six sweaters a day. When she hires a second person, the two employees can make ten sweaters together. Thinking at the margin, the extra benefit received from hiring a second worker is _____ sweaters.
4
in the market for widgets, more sellers exit the market at same time consumer preferences are changing, such that people like widgets a lot less than before. if the rate at which sellers are exiting the market is slower than the rate that consumer preferences are changing, we can expect
a decrease in the equilibrium price and quantity of widgets
if the supply of a good increases while the demand for the good decreases, the equilibrium price will
decrease
if both supply and demand for a good decrease simultaneously, but the decrease in demand is greater than the decrease in supply, then the equilibrium price _____ and equilibrium output___
falls; falls
a decrease in the price of bagels will ___ the market price and ____ the market quantity of cream cheese, a complement of bagels
increase; increase
which scenario is the most likely effect of a decrease in price of a milk on the market for cereal
increased equilibrium price of cereal and an increased equilibrium quantity of cereal
which factor of production is the least likely to increase output per worker?
labor
In the market for cable television, fewer people are subscribing to cable while the cost of providing cable television has increased. if the magnitude of the corresponding demand and supply shifts are the same for both events, we can expect
no change in equilibrium price but a decrease in the equilibrium quantity of cable television
if both the supply of and the demand for a good decrease simultaneously, and if demand shrinks relatively less than supply, then price will
rise and quantity will fall
Disinflation
a reduction in the rate of inflation
the price of apples has recently fallen in the marketplace. from this info, we can infer that
a surplus of apples must have existed at the previous price
Deflation
a sustained drop in the price level
what impact will a rising price level have on real gdp
changes in the price level do not impact real gdp
what would be the effect on the equilibrium price and equilibrium quantity of new housing if mortgage interest rates rise and the costs of building a house rise simultaneously
equilibrium price cannot be predicted, but the equilibrium quantity will fall
if both the supply and demand for a good increase simultaneously
equilibrium quantity increases and the effect on equilibrium prices is indeterminate
a person will decide not to attend a concert if the marginal cost of attending the concert
exceeds the marginal benefit
When the supply of surfboards increases and the demand for surfboards falls simultaneously, the price of surfboards will:
fall
martin purchases 500 shares of stock in abc company at a price of $10 per share. he pays his stock broker a commission of $50 for helping with the transaction. how much does gdp change as a result of martins commission payment
gdp rises by $50
investment in structures, equipment, software, and net inventory is known as
gross private domestic investments
activity example of a non market transaction
growing your own food in a vegetable garden
which group benefits from an unanticipated rise in the inflation rate - senior citizens living on fixed income - workers on contracts without escalator clause - creditors or lenders homeowners with fixed rate mortgages
homeowners with fixed rate mortgages
when the supply of coffee decreases and the demand for coffee increases simultaneously, the price of coffee will
rise
if both the supply of and the demand for a good decrease simultaneously, but the decrease in supply is greater than the decrease in demand, then the equilibrium price will ____ and the equilibrium output ____
rise, fall
which transaction would not be included in the gdp calculation of a country
supplemental income paid by the government to a person with a disability - unemployment insurance paid by for the government to a person that recently lost her job
over the past 10 years, laptop computer prices have decreased while their quantity has increased. this indicates that
supply increased more than demand
you can buy an electronic game for $25 at the campus store or for $15 at a nearby shopping mall. you can buy a computer for $1000 at the campus store or $990 at the nearby mall. should your "where to buy" decision be the same or different in the two cases?
the same because the marginal costs and marginal benefits are the same in each case
in the market for ev, more vehicle manufacturers are releasing electric models at same time that ev's are becoming more popular with consumers. we can expect an
unknown change in the equilibrium price but an increase in the equilibrium quantity of evs
inferior good
when consumers get richer, demand contracts. when consumer get poorer, demand expands
substitutes
when price of good x rises, demand for good y expands. when price of good x falls, demand for good y contracts
suppose that a store sells candy bars for $0.89 for one and $1.50 for two. the marginal cost of the second candy bar is
$0.61
if personal consumption is $200, investment is $50, government purchases total $60, imports equal $30 and exports equal $50, then gdp equals
$330
Company DEF produces gizmos. One particular batch cost $50,000 to produce. Because market conditions were bad at the time of sale, they were sold at a loss for $40,000. The value of the gizmos included in the GDP is:
$40,000
which policy increase productivity - increasing infrastructure spending - lowering household income taxes - increasing regulations on business - raising tariffs
-increasing infrastructure spending
karls keychain company produces keychains that sell in its stores for $1 each. on january 1, 2015, the company had inventory of 10,000 keychains. during 20015, the company sold 900,000 keychains. at the end of the business year on december 31, 2015, the company's inventory of keychains was 6,000. how much did karls output contribute to gdp in 2015
$896,000
which of these is an example of gross private domestic investment? - household purchase of shares of google stock - sale of an existing home - highway construction by a government contractor - a change in business inventories
- a change in business inventories
which of these would not lead to higher prices - an increase in the supply of food an increase in the supply of money - higher gas prices - strong consumer demand
- an increase in the supply of food
hanna is not at work because she broke her leg, but she will return once it heals. shes - temporarily unemployed, - unemployed - in the labor force - part time employed
- in the labor force
karl's keychain company produces keychains that sell in its stores for $1 each. On january 1, 2015, the company had inventory of 10,000 keychains. During 2015, the company produced 900,000 keychains. at the end of the business year on december 31, 2015, the company's inventory of keychains was 8,000. what was the value of karls inventory investment in 2015?
-$2000
an economy has a population of 226,500 people, of whom 12,500 are unemployed and actively seeking work, and 35,000 have given up looking for a job. also, 28,000 people work part time, and 151,000 people work full time. the economy's unemployment rate is ___
6.5%
Hyperinflation
A very rapid rise in the price level; an extremely high rate of inflation.
structurally unemployed
Unemployment that occurs as a result of basic changes in the economy causing some skills to be unnecessary. When this occurs, retraining of workers may be necessary. a store closes, workers lose their jobs. normal part of functioning economy
in the market for widgets, more sellers enter market at same time consumer preferences are changing, such that people like widgets a lot more than before. if the rate at which sellers are entering the market is FASTER than the rate that consumer preferences are changing, we can expect
a decrease in equilibrium price and an increase in equilibrium quantity
in the market for ev, more manufacturers releasing electric models at same time consumer preferences are changing towards ev's. if manufacturers are releasing new electric models at a faster rate than consumer preferences are changing toward ev's, we can expect
a decrease in equilibrium price and an increase in the equilibrium quantity of ev's
The supply of coffee has increased as much as the demand for coffee has increased. as a result, we can predict
a decrease in equilibrium price, but equilibrium quantity increases
in the market for coffee, more sellers enter the market at the same time that consumer preferences are changing, such that people like coffee a lot more than before. if the rate at which sellers are entering the market is faster than the rate that consumer preferences are changing, we can expect
a decrease in the equilibrium price and an increase in the equilibrium quantity of coffee
in the market for electric vehicles, more vehicle manufacturers are releasing electric models at the same time that consumer preferences are changing toward ev's. if manufacturers are releasing new electric models at a faster rate than consumer preferences are changing toward ev's, we can expect
a decrease in the equilibrium price and an increase in the equilibrium quantity of ev's
normal good
a good where when consumers get richer, demand expands, and when consumers are poorer, demand contracts
which of these would be included in gdp calculations
a hamburger purchased by a hungry restaurant patron
which one of these would be included in gdp calculations
a laptop computer purchased by a consumer
if the supply of a good increases while the demand for that good decreases, the equilibrium quantity will
be indeterminate because we don't know which shifted more
the opportunity cost of undertaking an activity is defined as the ___ activity
benefit forgone by not undertaking the next best
which of these is an example of economic investment - putting funds in a certificate of deposit - purchasing a share of google stock - trading a bond certificate - building a new sales force training facility
building a new sales force training facility
An airline finds that its morning flights are half-empty, but the mid-afternoon flights are full. Which would be the MOST plausible statement for an economist to make?
cut the prices of early morning flights and raise the prices of afternoon flights
In the market for cable television, fewer people are subscribing to cable while the cost of providing cable television has increased. As a result, since the drop in cable subscribers has had a bigger impact of the market, we can expect a(n):
decrease in equilibrium price and quantity of cable television
the supply of coffee has increased twice as much as the demand for coffee has increased. as a result, we can predict
decrease in equilibrium price, but equilibrium quantity increases
suppose 3 years ago a nation's inflation rate was 8%, 2 years ago it was 5%, and last year it was 2%. this nation is undergoing
disinflation
everything else the same, if investment expenditures rise by the $300 billion and imports increase by $300 billion, then gdp
does not change
if both the supply of and demand for a good increase simultaneously, and if demand grows relatively less than supply, then price will
fall; quantity will rise
Jennifer did not work during college. She just obtained a bachelor's degree in marketing, and she is now looking for a marketing job in the retail industry. Jennifer is considered:
frictionally unemployed
joan gather info. estimated cost to gather infor is $1000 but info leads to increase membership revenue of $1,100. joan should
gather the info since the net gain be $100
which item would be included in the gdp accounts
paying a $50 consultation fee over the phone with a psychic adviser
in the national income accounts, which of these is not classified as gov spending
payments to social security recipients
cyclically unemployed
people lose their jobs because of a temporary downturn in the economy. when demand and services don't have competence
opportunity cost exists because
resources are limited using resources for one activity means that their use elsewhere must be given up
Suppose the Terrific Tube Company ran a very successful advertising campaign. Economic analysis would suggest that the campaign would cause the equilibrium price to ______ and the equilibrium quantity to ______
rise ; rise
if a market is not at equilibrium,
the price will change and, in response, market participants will move along the existing supply and demand curves until the market reaches equilibrium.
which of these is included in personal consumption expenditures - const of res housing - highway constr the purchase of new tv by a household -purchases of common stock by an investor
the purchase of a new tv by a household
the opportunity cost of one good is
the quantity of resources... nope, none of theses choices are correct
in 2009 a market basket of goods and services cost $100 in merryland while the same basket cost $200 in berryland. in 2010, the cost in merryland was $150 and in berryland, the cost was $225. based on the given info, which statement is true
the rate of inflation is four times as large in merryland as in berryland
if a country's population increases a a higher rate than the growth rate of its real gdp
the standard of living in the country has decreased
If the producers of cotton shirts face higher cotton prices, which scenario is likely to occur?
the supply of cotton shirts decrease, the equilibrium price of cotton shirts rises, and the equilibrium quantity falls
sujata has a stopover in iceland and can choose one of three tours; visit the thermal springs, hike glaciers, or view northern lights. if she chooses the northern lights, her opportunity cost would be
the value of visiting the thermal springs if that was her second choice after the northern lights
complements
two goods with relationship that when price of good a rises, the demand for good b contracts. when price of good a falls, demand for good b expands
The student center on campus has burritos, bagels, or burgers for lunch and they all cost the same. your opportunity cost of the burger is
your enjoyment of the bagel OR the burrito
