Macro exam study
Suppose U.S. Exports are $1.42 trillion, and imports are $2.13 trillion. Capital Inflow is $1.44 trillion. What is Capital Outflow, in trillions of dollars?
.73
The accompanying graph represents the market for bread in the small closed economy of Paleodieta. Paleodieta opens up to trade, and finds that the world price of bread is $2 per pound. How many billions of pounds of bread will be produced by Paleodieta?
1
José is an illegal immigrant from Guatemala. Emma is a well-paid web designer who hires José to do some remodeling on her house. She offers José $5,000, but she would have been willing to pay him $5,500 (because that's how much she values the remodeling). José accepts, but he would have been willing to do the work for $4,000 (because that is how much he would earn doing work on a different house). What are the net gains to José and Emma that they get as a result of trading? You don't need to type a dollar sign with your answer; just enter a number.
1,500
Suppose CPI in 2015 was 230, and CPI in 1990 was 115. The price of an economics textbook in 1990 was $50. The price of the newest version of that textbook in 2015 was $200. If the price of the textbook from 1990 had just kept up with inflation, what would its price in 2015 be?
100
If GDP is $15 trillion, Consumption is $9 trillion, Government Spending is $2 trillion, Investment is $3 trillion, and Exports are $3 trillion, then imports must be $____ trillion.
2
If the Federal Reserve requires that banks hold 5% of deposits in reserve, and then the Fed injects $100 into the banking system, by how much does money supply rise in total? You may assume that banks lend out every dollar they are legally allowed to lend.
2,000
You have the following facts: CPI in 2016 was 240. CPI in 2060 is 2400. The price of gasoline in 2016 is $2.00 per gallon. The price of gasoline in 2060 is $15 per gallon. How many dollars would you need in 2060 to buy what $2.00 would buy in 2016?
20
If Nominal GDP in 2015 was $150, and Real GDP in 2015 was $75, then GDP Deflator in 2015 was
200
In each of the following situations, how much do the actions taken contribute to U.S. GDP? Remember, some things aren't counted! You may assume that all the goods were produced in the U.S. Type in each answer as a number, without commas or dollar signs. For example, "10000" will be accepted by Blackboard, but "$10,000" will not. Bubba Bob pays a mechanic $200 to install a new carburetor in his 1984 Chevrolet Camaro. Of this, $100 is parts, and $100 is labor. Contribution to GDP: Bubba Bob buys a new carburetor for his 1984 Camaro for $100, and then installs it himself. Contribution to GDP: Bubba Bob buys a used carburetor from a salvage yard for $10, and pays a mechanic $100 to install it. Contribution to GDP: Bubba Bob sells his 1984 Chevrolet Camaro to his friend, Leroy Bubba Cletus, for $800, and buys a 1990 Chevrolet Beretta for $1,200. Contribution to GDP: Bubba Bob sells his 1984 Chevrolet Camaro for $800, changes his name to Clarence Julien Delacroix, and buys a new Cadillac CTS-V for $80,000. Contribution to GDP:
200 100 100 0 80,000
Rooster works on a farm. Peacock works as a model. Owl works night shift security. Pigeon is actively looking for work. Seagull is living an empty, sad life, scrounging for scraps by the sea, with no job, and no plans to get one. Budgie isn't old enough to work yet. What is the unemployment rate in this economy? You may assume that this is the entire population of this country. Type in your answer as a whole number, rounded to two decimal places. Do not type the % symbol.
25
After the ceiling is in place, how many bushels of corn are bought and sold?
3
After graduating from college and getting a great paying job thanks to your degree in Advanced Hyperbolic Topology, you and your significant other decide to buy a house. You shop around to several different mortgage lenders, and eventually settle on one that offers an interest rate of 4.5% per year. You go to their office to fill out the mortgage paperwork, and overhear some of the employees talking in a back room. They mention that their company is expecting inflation this year to be 1.5%. What real interest rate does this mortgage lender expect to earn?
3%
Suppose that the nation of Kerblopistan has a money supply of $1,000, a Velocity of 2, and a Real GDP of $40. What is the price level?
50
The accompanying graph represents the market for whole wheat flour in the small closed economy of Cornucopia. Cornucopia opens up to trade, and finds that the world price is $16 per pound. How many billions of pounds of flour will be exported by Cornucopia?
6
Suppose the country of Notmuchistan produces the following goods each week: 5 bananas, each worth $1 3 pineapples, each worth $2 20 sharp pointed sticks, each worth $3 What is Notmuchistan's weekly Nominal GDP?
71
Below is the demand schedule for chicken feet, a dim sum delicacy served at some Chinese restaurants. Although some people find the texture strange, others have developed a taste for it in the past 10 years. How many millions of pounds more of chicken feet were demanded in 2011, at 50 cents per pound, than in 2001? (Don't enter a bunch of zeroes for the millions; your answer should be simple, like 6.2, or 8.1.)
9.3
A country opens to trade. If the world price of a good exceeds the domestic price, the result will be... exports. imports. both imports and exports. neither imports nor exports.
A
Amazon is holding a buy-one-get-one-free special on MP3 albums. What happens to the quantity of MP3 albums demanded? Quantity demanded rises. Quantity demanded stays the same. Quantity demanded falls. Quantity demanded rises, then falls.
A
Congressman Jerk McStupidface suggests a new tax on airline tickets bought at the last minute. Thinking about people who buy airline tickets at the last minute, airlines who sell them, and the way that affects pricing currently, you can conclude that the burden of this tax is likely to fall more heavily on... last-minute buyers of airline tickets. passengers who buy airline tickets far in advance. to whomever the tax is legally assigned. airlines
A
Consider the supply curve for basketballs. Other things held constant, if the price of basketballs goes up from $7.99 to $14.99, what can we expect from suppliers of basketballs as a result? There will be an increase in quantity supplied. That's the Law of Supply. There will be an increase in supply. The quantity supplied will not change. There will be a decrease in quantity supplied.
A
Due to increases in hay prices, an input for raising cattle, the price of a gallon of 2% milk increases from $2.98 to $3.25. What happens to quantity of milk demanded? Quantity demanded falls. Correct. Quantity demanded rises, then falls. Quantity demanded stays the same. Quantity demanded rises.
A
If Iceland's governor chooses to set a price ceiling of 40 Rigsdaler for an oil lamp, what will occur? Nothing will change. The equilibrium price of an oil lamp will change. There will be a shortage of oil lamps. There will be a surplus of oil lamps.
A
If the economy of the nation of Fingle-Fargle is growing at 6% per year, its money supply grows at 10% per year, and its velocity growth is stable, then Fingle-Fargle's inflation rate is... 4% 6% 16% 60%
A
If the government imposes a price ceiling in this market at a price of $5.00, the result would be a shortage of 20 units. shortage of 10 units. surplus of 20 units. surplus of 10 units.
A
In the neighborhood of Sesame Street, cookies are in particularly high demand. The demand is, in fact, so great that prices for cookies are skyrocketing, and average citizens can no longer obtain this staple food. The government is considering a price control to keep cookies affordable for its citizens. Which kind of price control is the government considering? price ceiling excise tax ad valorem tax price floor
A
Noah values his car at $10,000, and Emily values it at $14,000. If Emily buys it from Noah for $11,000, which of the following is true? Noah gains $1,000 of value, and Emily gains $3,000 of value. Noah gains $11,000 of value, and Emily loses $11,000 of value. Noah gains $10,000 of value, and Emily loses $14,000 of value. Noah and Emily both gain $11,000 of value.
A
Other things constant, as the price of a resource increases, the quantity of the resource demanded falls. the quantity of the resource supplied falls. the price of the product the resource helps to produce falls. there is less of an incentive for users of the resource to find substitute resources.
A
Pollution is emitted from a power plant in Kentucky, and drifts on the wind into Canada, where it causes acid rain to fall, damaging buildings and forests. This is an example of... a negative externality. a positive externality. a public good. lack of competition.
A
Saccharin and aspartame are both low-calorie substitutes for sugar. If saccharin is found to cause cancer, the price of aspartame will increase. the price of sugar will decrease. the price of saccharin will increase. the demand curves for aspartame and sugar will shift leftward. aspartame and sugar will be complements.
A
South Korea's population is 50 million people, and its Real GDP is $1,410,000,000,000 ($1.41 trillion). Spain's population is 47 million people, and its Real GDP is $1,380,000,000,000 ($1.38 trillion). Which of the following is correct? Spain's Real Per Capita GDP is $29,362, which is higher than South Korea's Real Per Capita GDP of $28,200. Spain's Real Per Capita GDP has grown faster when adjusted for inflation. If South Korea had the population of Spain, its Real Per Capita GDP would be $27,600. None of the above.
A
Structural unemployment is a result of difficulties in matching qualified workers with available jobs. inaccurate or costly information about job opportunities. slow or negative economic growth, as during a recession. not enough workers to fill available jobs.
A
Suppose CPI in 2015 was 230, and CPI in 1990 was 115. The price of an economics textbook in 1990 was $50. The price of the newest version of that textbook in 2015 was $200. In the previous question, you determined what the price of the textbook from 1990 would be in 2015 if it had just kept up with inflation. The textbook price has actually risen faster than inflation. The textbook price has actually risen as fast as the overall price level. There is not enough information to determine what happened to the real textbook price. The textbook price has actually risen slower than inflation.
A
Suppose demand decreases and (at the same time) supply decreases. Which of the following will happen? Equilibrium price will rise, fall, or stay the same while equilibrium quantity will decrease. Equilibrium price will rise, fall, or stay the same while equilibrium quantity will increase Equilibrium quantity will rise, fall, or stay the same and equilibrium price will increase. Equilibrium quantity will rise, fall, or stay the same while equilibrium price will decrease. The change in equilibrium price and quantity cannot be determined.
A
Suppose the economy is in a long run equilibrium as depicted below. Money supply growth is 8% per year, and velocity growth is 0% per year. Consumers and business owners then hear some bad news--there is a big war breaking out in the Middle East, or a natural disaster, or a new financial crisis. This shocking news causes the rate of velocity growth to fall from 0% to -8% (money supply growth is unchanged). Which of the following is the best way to describe the resulting short run equilibrium? You might want to draw this yourself. recession stagflation boom technological progress
A
Suppose the government proposes a $100 per phone tax on smartphones, arguing that the producers of smartphones can easily afford to pay it. An economist would respond that... consumers will end up paying some of the tax, because the burden of a tax is not determined by the legal assignment of the tax. taxes are used to fund important public services. there is never a good argument in favor of taxes. because smartphone demand is completely elastic, producers will likely bear all the burden of the tax.
A
Suppose the price of a bunch of bananas in 1990 was $2, and today the same bunch would cost $5. CPI in 1990 was 130. CPI today is 240. You conclude that... If the price of bananas had kept up with inflation, they would cost only $3.69, so bananas have become more expensive in real terms. If the price of bananas had kept up with inflation, they would cost only $1.08, so bananas have become more expensive in real terms. If the price of bananas had kept up with inflation, they would cost $9.23, so bananas have become less expensive in real terms. If the price of bananas had kept up with inflation, the would cost $2.70, so bananas have become less expensive in real terms.
A
Suppose the rate of technology progress rises, resulting in faster long run economic growth. Which of the following is correct? The inflation rate falls, and the economic growth rate rises. The inflation rate rises, and the economic growth rate falls. The inflation rate falls, and the economic growth falls. The inflation rate rises, and the economic growth rate rises.
A
The U.S. sugar industry is protected from foreign competition by quotas, which limit the quantity of sugar that may be imported. As a result, Americans pay more for all goods containing sugar. This has also encouraged the growth of the high fructose corn syrup industry. Which of the following most likely explains why this quota exists? the special interest effect market failure tax revenue lobbying by economists
A
The market is not in equilibrium after the price ceiling is imposed. Rather, there is a _______ of ______ million bushels. shortage, 4 surplus, 7 surplus, 4 shortage, 7
A
The price of Coca-Cola stays at 5 cents per bottle all year. What happens to the quantity of Coca-Cola bottles demanded? Quantity demanded stays the same. Quantity demanded rises, then falls. Quantity demanded falls. Quantity demanded rises.
A
Which of the following are leakages from the circular flow of income? Savings, taxes, and imports Investment, government purchases, and exports Investment, taxes and bonds Imports, wages and taxes
A
Which of the following does not contribute to GDP? You lose $50 playing cards with friends. You pay a doctor $200 to treat an arm that you broke in an accident. You pay $300 for this month's rent on your apartment. Your economics textbook is revised, and you buy the new edition.
A
Which of the following is correct? Changes in money supply growth can change inflation in the long run, but cannot change the economic growth rate. Changes in money supply growth can change both inflation and economic growth in the long run. Changes in velocity growth can change inflation in the long run, but cannot change the economic growth rate. Changes in velocity growth can change both inflation and economic growth in the long run.
A
Your car is in the shop (or maybe you don't own one), and you need to go to the store. You consider paying $30 for an Uber driver to take you, but a friend offers to take you for free instead, and you take her up on her offer. The effect of this on GDP is... zero, because the free ride is nonmarket production. zero, because the free ride is an improvement in product quality. $30. zero, because GDP does not capture the additional leisure and the improvement of job quality.
A
A country opens to trade, but imposes a tariff on imports. If the world price of a good is greater than the domestic price, the result will be: the government collects tariff revenue. the government collects no tariff revenue. foreign producers benefit. none of the above.
B
A country opens to trade. If the world price of a good is less than the domestic price, the result will be... exports. imports. both imports and exports. neither exports nor imports.
B
Below is the demand schedule for chicken feet, a dim sum delicacy served at some Chinese restaurants. Although some people find the texture strange, others have developed a taste for it in the past 10 years. Based on the demand schedule, you conclude: There was movement along the demand curve to the left. The demand curve shifted to the right. Correct. There was movement along the demand curve to the right. The demand curve shifted to the left.
B
Consider the demand curve for blue jeans. The price of blue jeans goes down. Ceteris paribus, which of the following will occur? The quantity of blue jeans demanded falls. The quantity of blue jeans demanded rises. The demand for blue jeans falls. The demand for blue jeans rises.
B
Consider the light from a lighthouse. Lighthouses shine light over bodies of water, so that ships do not run aground on reefs, shoals, sandbars, other dangers at sea. A ship that can see the light does not reduce the ability of other ships to see the light, and a crew that hasn't paid the lighthouse operator can't be excluded from seeing the light—anyone near the lighthouse can see the light. One could therefore argue that a lighthouse is an example of a... a negative externality. a public good. economic efficiency. tragedy of the commons.
B
Josephine teaches economics, and makes about $110,000 per year doing so. If she couldn't teach economics, she would be doing economic consulting for a major bank for $150,000 per year. If she couldn't work as an economic consultant, she would go back to school and study history. If she couldn't do that, she would stay at home and take care of the kids (her husband currently does this, but could go back to work if she couldn't find a job she liked). Which of the following is Josephine's opportunity cost of teaching economics? $110,000 Doing economic consulting. Going back to school and studying history. Staying home and taking care of the kids.
B
Printerstan decides to pay for a budget shortfall by printing money. The most likely outcome of this is... a larger budget deficit. higher inflation. lower inflation. a decrease in the price of ink.
B
Suppose a price floor of $7.00 is imposed. As a result, buyers' total expenditure on the good decreases by $20.00. the supply curve will shift to the left so as to now pass through the point (Q = 40, P = $7.00). the quantity of the good demanded decreases by 20 units. the price of the good continues to serve as the rationing mechanism.
B
Suppose that the city of Halifax decrees that all restaurants located within a 15 mile radius of the University of Halifax must charge at least $10 a meal so that college students can become more refined in their dining. What is a likely result of this price floor? (Note that the last problem asked you which was not likely; this one asks which one is likely.) Some restaurants like Le Cordon Bleu will create rustic chicken and imported cheese paninis at $10 a sandwich to satisfy the refined demands of college students instead of its old $5 ham and cheese specials. There will be a surplus of food at many of the restaurants as quantity supplied exceeds quantity demanded at a price of $10 per meal. The price floor will make restaurants more efficient by limiting their menu to just the demands of students, which results in less food waste. Fewer meals will be sold than if Halifax had established a price ceiling.
B
Suppose that the rate of spending growth in an economy, % Δ M + % Δ V , is 5%. Which of the following Dynamic Aggregate Demand curves corresponds to this rate of spending growth?
B
The loanable funds market is in equilibrium. Due to a change in tax law, many workers increase the amount of their income that they devote to retirement savings (and consume less). What happens? The demand for loanable funds shifts to the right, and interest rates rise. The supply of loanable funds shifts to the right, and interest rates fall. The demand for loanable funds shifts to the left, and interest rates fall. The supply of loanable funds shifts left, and interest rates fall
B
The opportunity cost of going to college is the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses. the value of the best opportunity a student gives up to attend college. zero for students who are fortunate enough to have all of their college expenses paid by someone else. zero, since a college education will allow a student to earn a larger income after graduation.
B
The reporter on one broadcast network says 2011 GDP increased to an all-time high. Commenting on the same figure, a second reporter says GDP in 2011 was less than in 2010. Which of the following explanations is consistent with the statements of both reporters? The first reporter was referring to real GDP, and the second was referring to nominal GDP. The first reporter was referring to nominal GDP, and the second was referring to real GDP. The first reporter was referring to GDP as measured by the expenditure approach, and the second was referring to GDP as measured by the income cost approach. The first reporter was referring to GDP as measured by the income cost approach, and the second was referring to GDP as measured by the expenditure approach.
B
There is a week-long special at Safeway, where pork shoulder is on sale at $1.99 per pound, down from $3.99 per pound. What happens to the quantity of pork shoulder demanded? Quantity demanded stays the same. Quantity demanded rises. Correct. Quantity demanded rises, then falls. Quantity demanded falls.
B
This tax has been legally placed on... both consumers and producers producers consumers government
B
Which of the following causes SRAS to shift? When prices become sticky. When inflation expectations adjust. When the Fed increases the rate of economic growth. When government spending rises.
B
Which of the following is not correct? CPI overstates inflation because it does not account for improvements in the quality of goods. Real GDP overestimates our material well-being because it does not account for inflation. The unemployment rate understates the true labor market conditions for workers because it does not account for underemployed workers. GDP alone is not a good measure of our material well-being because it does not account for population (which is why we use GDP per capita instead).
B
Which of the following are examples positive economic statements? The unemployment rate is too high. The unemployment rate is 4%. If the price of gasoline rises above $3.00, that is too high. A decrease in the price of gasoline will cause the quantity supplied to fall, ceteris paribus.
B AND D
Which of the following are examples of people responding to incentives according to their rational self-interest? (There may be more than one correct answer.) Mike is offered $50 to wash a car. In response, he climbs a flagpole, then jumps off while singing "O Canada". Aidan, tired of being made fun of because his parents gave him a fashionable name that very quickly became dated, has his name legally changed. He pays $40 in legal fees. Correct Anna has been playing a lot of League of Legends in her spare time, and has become so good at it that she has been offered $70,000 a year to play for a professional team. She takes the job, dropping out of college. The price of pomegranates goes from $5 per pound to $100 per pound due to a blight that kills many pomegranate trees. Publix, a popular grocery store chain, responds to this price change by tripling their purchases of pomegranates.
B and C
A new hormone will increase the amount of milk each cow produces. If this hormone is adopted by many dairies, what will be the effect on the milk market? An increase in supply, higher equilibrium price, and lower equilibrium quantity. A decrease in supply, lower equilibrium price, and lower equilibrium quantity. An increase in supply, lower equilibrium price, and higher equilibrium quantity. An increase in supply, higher equilibrium price, and higher equilibrium quantity. A decrease in supply, lower equilibrium price, and higher equilibrium quantity.
C
A sharp increase in the price of wood causes increases in the prices of dressers and desks. What happens to the quantity of dressers and desks demanded? Quantity demanded rises, then falls. Quantity demanded rises. Quantity demanded falls. Correct. Quantity demanded stays the same.
C
During the recession phase of a business cycle, which of the following usually occurs? Inflation falls, unemployment falls, economic growth rises Inflation rises, unemployment falls, economic growth rises Inflation falls, unemployment rises, economic growth falls Inflation rises, unemployment rises, economic growth falls
C
From 2002 to 2014 France's Real GDP grew at an annual rate of 0.8%. At this economic growth rate, France's GDP will double in... 8.75 years. 560 years. 87.5 years. 8 years.
C
Given the demand and supply conditions shown in Figure 4-4, what will happen as the result of imposing a price ceiling of a? Demand for the product will decline. Supply will increase. There will be a shortage of the product. Over time, the quality of the product offered by suppliers will increase.
C
How will an increase in the price of coffee affect the market for cocoa, a substitute good? The supply of cocoa will increase, leading to a reduction in the price of cocoa. The supply of cocoa will decrease, leading to an increase in the price of cocoa. The demand for cocoa will increase, leading to an increase in the price of cocoa. The demand for cocoa will decrease, leading to a reduction in the price of cocoa.
C
If Iceland's governor chooses to set a price ceiling of 15 Rigsdaler for an oil lamp, what will occur? There will be a surplus of oil lamps. The equilibrium price of an oil lamp will change. There will be a shortage of oil lamps. Nothing will change.
C
If the Federal Reserve wants to increase money supply, which of the following would achieve this goal? Increasing the Discount Rate Increasing the Reserve Requirement Buying Treasury Bills from banks Increase interest paid on reserves
C
If the inflation rate is stable and predictable at 15% per year, which of the following is correct? Many resources are wasted as people hire financial advisers to help them shield their assets from inflation. Relative prices of goods and services will shift unpredictably. Menu costs and shoeleather costs will result in wasted resources. The Federal Reserve will automatically increase the rate of money supply growth.
C
Suppose demand decreases and (at the same time) supply increases. Which of the following will happen? Equilibrium price will rise, fall, or stay the same while equilibrium quantity will decrease. Equilibrium price will rise, fall, or stay the same while equilibrium quantity will increase. Equilibrium quantity will rise, fall, or stay the same and equilibrium price will increase. Equilibrium quantity will rise, fall, or stay the same while equilibrium price will decrease. The change in equilibrium price and quantity cannot be determined.
C
Suppose that the city of Lethbridge decrees that all restaurants located within a 15 mile radius of the University of Lethbridge can charge no more than $1 a meal so that college students can eat out economically. Which of the following is NOT a likely result of this price ceiling? The portion sizes and quality at the finest dining establishments at Lethbridge will decrease significantly. Some restaurants will choose to secretly sell meals at $5 each to consumers who are willing to pay this higher price. There will be food surpluses at many of the restaurants as quantity supplied exceeds quantity demanded at a price of $1 per meal. People will waste time standing outside long lines to camp for food.
C
Suppose the Fed sells $100 million of U.S. securities to the public. If the reserve requirement is 20 percent, the currency holdings of the public are unchanged, and banks have zero excess reserves both before and after the transaction, the total impact on the money supply will be a $100 million decrease. $500 million increase. $500 million decrease. $100 million increase.
C
The key explanation for the prevalence of waterway pollution is the inclusion in production of all costs involving use of the waterway. that there are private costs but no costs to society. that waterways are often an open access, commonly owned resource. that waterways are subject to the market's normal control procedures.
C
The market for exchanging Dollars for Euros is in equilibrium. Nokia (a European company) invents a new smartphone which, amazingly, everyone around the world (including people in the U.S.) wants to buy. Which of the following will occur? The euro depreciates relative to the dollar. The dollar appreciates relative to the euro. The dollar depreciates relative to the euro. The dollar and the euro both depreciate.
C
The market for home mortgages is in equilibrium. As a result of new regulations, it becomes more difficult and costly for banks to lend money to home buyers. Which of the following will occur? Interest rates will rise and the equilibrium quantity of loans will rise. Interest rates will fall and the equilibrium quantity of loans will fall. Interest rates will rise and the equilibrium quantity of loans will fall. Interest rates will fall and the equilibrium quantity of loans will rise.
C
The market for theme parks tickets is in equilibrium, and then two things happen. First, summer arrives, freeing many families to go on vacation. Second, twenty new theme parks open in the U.S. Which of the following occurs in the market for theme park tickets? Price rises, quantity is indeterminate. Price falls, quantity is indeterminate. Price is indeterminate, quantity rises. Price rises, quantity rises.
C
The oil crisis of the 1970s resulted in an increase in inflation rates and a lower rate of economic growth. This combination is known as... stagnation. disinflationfatuation. stagflation. "bad".
C
When economists speak of changes in GDP measured in constant dollars, they mean that money GDP is constant. the price level is constant. a price index has been used to adjust money GDP for the effects of inflation. the growth rate of money GDP has been adjusted for changes in population.
C
Which of the following is not a government policy that would increase a country's unemployment rate? more generous social welfare programs unemployment benefits that last longer before requiring recipients to return to work openness to imports of foreign goods and services government policies that make it difficult to fire or lay off workers
C
Which one of the following transactions would be included in GDP? Ava pays $50 for a used picture frame at a neighborhood garage sale. Ethan donates $500 to his town's junior college scholarship fund. Emily pays $500 to fix the front end of her car damaged in a recent accident. Mia pays $5,000 to purchase 100 shares of Microsoft stock.
C
Back in the days before it was easy to lock down computers so that users couldn't screw them up, computers in computer labs tended to quickly be infected with viruses,spyware, and unnecessary programs. The failure of users to take care of these computers is an example of... a positive externality. a public good. lack of competition. the tragedy of the commons.
D
Frictional unemployment would be eliminated if the economy were more stable. would be eliminated if the minimum wage were raised. is the result of workers' skills not matching the jobs available. is present even when labor markets are working well.
D
Groupon (remember Groupon? Does anyone still use that?) has a coupon for $6 off the price of laser tag. What happens to the quantity of laser tag demanded? Quantity demanded stays the same. Quantity demanded rises, then falls. Quantity demanded falls. Quantity demanded rises.
D
How will an increase in lumber prices influence the home construction market? The demand for newly constructed homes will increase. The demand for newly constructed homes will decrease. The supply of newly constructed homes will increase. The supply of newly constructed homes will decrease.
D
I have limited spare time, and I like to spend a lot of it reading books and listening to podcasts (particularly history podcasts). Sadly, I cannot do both at the same time. The graph below represents the number of books and podcast episodes that I could consume. The line is like a Production Possibility Frontier, though it would be more accurate to call it a Consumption Possibility Frontier. Which of the following statements are correct? You may assume that I don't want to let any of my "media consumption time" go to waste--that is, I will always want to consume as much as I can. I could listen to 12 podcasts and read 1 book each week. I would be as happy as possible if I read 1 book and listened to 2 podcast episodes each week. If I were to be assigned an extra class (which means a lot of extra work for me), I would now be able to consume 9 podcasts and 2 books each week. I could listen to 7 podcasts and read 1 book each week.
D
If the government imposed a price ceiling of a, which of the following would be true? The quantity of rental housing demanded would be t. The quantity of rental housing supplied would be r. There would be a shortage of rental housing. All of the above are true.
D
Public choice theory indicates that the behavior of people in government differs from the behavior of people in the private sector because they are motivated by the public interest rather than their own personal self-interest. differs from the behavior of people in the private sector because public sector decision roles do not allow people to pursue their own self-interests. is the same as people in the private sector only if decisions are made by majority vote. is best understood by applying the same principles we use to predict the behavior of people in the private sector.
D
Suppose the market for milk is in equilibrium. A price floor is imposed below the equilibrium price. What will happen? a shortage of milk. a surplus of milk. a new equilibrium. None of the above.
D
Suppose the market for wheat is in equilibrium. A price ceiling imposed above the equilibrium wheat price will result in... a shortage of wheat. a surplus of wheat. a new equilibrium. None of the above.
D
The point of Steven Landsburg's "Iowa Car Crop" parable is... Car production should be moved from Detroit to Iowa. Cars produced in Iowa are inefficient because they destroy jobs in Detroit. Tariffs on foreign imports protect jobs in both Detroit and Iowa. A tax on imports from Japan is also a tax on farmers in Iowa that export to Japan.
D
The problem with unanticipated inflation is... Central banks do not know how to get it under control. It is too easy for Wall Street bankers to use surprise inflation to make money at everyone else's expense. unanticipated inflation makes prices go up. Unanticipated inflation makes it hard to plan for the future, which makes people reluctant to undertake risky long-term investments.
D
This tax has been legally placed on... both consumers and producers producers government consumers
D
Which of the following is a deficiency of the regular (or traditional) consumer price index (CPI) as a measure of the cost of living? The CPI fails to make any adjustment for changes in the price of housing. The CPI only measures changes in the prices of food, clothing, and energy. The CPI fails to maintain the quantities of the typical bundle of goods purchased by consumers constant over a lengthy time frame. The CPI does not adjust regularly for the fact that consumers will shift their spending away from goods that become more expensive.
D
Which of the following would contribute toward this year's GDP? You volunteer at a soup kitchen serving food to low income families and the homeless. You spend an hour pulling weeds out of your lawn, which makes it look much better and promotes healthier grass growth. You buy some crank for $20 from Big Tony, who hangs out on the corner north of the bus station. Yeah, crank. You know—speed, crystal, ice, tweak. Methamphetamine. You dig? None of the above contribute toward this year's GDP.
D
Why do political instability and insecure property rights retard economic growth? Fear that private property will be confiscated substantially reduces the incentive to invest and create wealth. When property rights are insecure, foreign investors will be reluctant to invest in the country. Savings will tend to flow out of a country if individuals fear their property is insecure. All of the above are correct.
D
Suppose the graph below represents the labor market for low-wage workers. A minimum wage of $14 per hour is being considered. If imposed, the minimum wage will result in a __________ of _________ workers.
SURPLUS, 4 MILLION
Match each good with either "final good" or "intermediate good". Cowhide, purchased by a tanner, to be made into a belt for retail sale intermediate good A new guitar sold by a music store to a child learning to play final good A ton of steel that will be used to make several new cars intermediate good A new car sold to a nice old lady who only drives it to church on Sundays final good Flour used by a pizza restaurant to make a pizza intermediate good Cement purchased by a homeowner to repair a sidewalk final good Cement purchased by a contractor to build a sidewalk for a new house intermediate good A pizza oven used by a restaurant to make pizza
i,f,i,f,i,f,i,f
After the collapse of the Soviet Union, some housing complexes, which had been operated by the government, were handed over to the families that lived in them. This sounds like it would benefit these families, but there was a problem: The families were considered to all jointly own the entire building. This means that no family could sell their unit without permission from all the other owners. The other owners wouldn't consent to letting a family sell without asking for something in return, which made sales unprofitable. As a result, people were stuck with their apartments, and the apartments were stuck with their people--the apartments couldn't be sold, torn down, or changed. There were simply too many people with the right to say "no". This is a market failure known as...
the Tragedy of the Anticommons
