Macro final
If the government reduces the subsidy to universities, we can expect A. a decrease in the supply of higher education. B. an increase in the supply of higher education. C. higher education to not be affected since they can simply raise tuition. D. universities to cut the amount of money spent on the football program.
A. a decrease in the supply of higher education.
If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as a medium of exchange. a store of value. a unit of account. an economic investment.
A. a medium of exchange
When economists refer to scarcity, they are referring to A. a situation where what we want of something exceeds what we have of that thing. B. a situation where what we have of something exceeds what we want of that thing. C. any situation where an item is limited in amount. D. the want-satisfying properties of a good or service.
A. a situation where what we want of something exceeds what we have of that thing.
Rapid asset price increases A. are sometimes referred to as financial bubbles. B. are sometimes called financial busts. C. are always expected and predictable. D. are usually isolated events that will not affect the general economy.
A. are sometimes referred to as financial bubbles.
The immediate-short-run aggregate supply curve represents circumstances where A. both input and output prices are fixed. B. both input and output prices are flexible. C. input prices are fixed, but output prices are flexible. D. input prices are flexible, but output prices are fixed.
A. both input and output prices are fixed
The diagram illustrates the pattern of business cycles. wage movements over time. price level movements. economic growth patterns.
A. business cycles
College classes and textbooks are A. complementary goods. B. substitute goods. C. independent goods. D. inferior goods.
A. complementary goods
Which of the following is a labor resource? A. a computer programmer B. a computer C. silicon (sand) used to make computer chips D. software used by a firm
A. computer programmer
Economic growth is best defined as an increase in A. either real GDP or real GDP per capita. B. nominal GDP. C. total consumption expenditures. D. wealth in the economy.
A. either real GDP or real GDP per capita
Net exports are A. exports minus imports. B. imports minus exports. C. exports plus imports. D. always some positive amount.
A. exports minus imports
Which of the following does an individual's budget line not reveal? A. how much of each good the individual wants B. what combinations of the two goods an individual can attain C. the opportunity cost of one good in terms of the other D. that a person faces scarcity in terms of what their limited income can purchase
A. how much of each good the individual wants
If there is an unexpectedly good selling environment and sales exceed production, A. inventories will be unexpectedly falling. B. inventories will be unexpectedly rising. C. inventories will not be changing in response to the increase in sales. D. firms will decrease production.
A. inventories will be unexpectedly falling
National income accountants define consumer nondurable goods as products that have an expected life of less than 3 years. 3 years or more. less than 1 year. None of the answers are correct.
A. less than 3 years
Anything that is generally acceptable in trading for goods and services is a A. medium of exchange. B. capital good. C. store of value. D. resource.
A. medium of exchange
Refer to the diagram. An effective government-set price ceiling is best illustrated by A. price A. B. quantity E. C. price C. D. price B.
A. price A
Specialization in production is important primarily because it A. results in greater total output. B. allows society to avoid the coincidence-of-wants problem. C. allows society to trade by barter. D. allows society to have fewer capital goods.
A. results in greater total output
Assume a nation's current production possibilities are represented by the curve AB in the accompanying diagram. Economic growth would best be indicated by a A. shift in the curve from AB to CD. B. shift in the curve from AB to EF. C. movement from point 1 to point 2. D. movement from point 3 to point 4.
A. shift in the curve from AB to CD
Opportunity costs exist because A. the decision to engage in one activity means forgoing some other activity. B. wants are scarce relative to resources. C. households and businesses make rational decisions. D. most decisions do not involve sacrifices or trade-offs.
A. the decision to engage in one activity means forgoing some other activity.
Which of the following will NOT be included in U.S. GDP? A. the value of avocados grown in Mexico and shipped to your local grocery store B. the value of paper towels made at the P&G plant in Missouri C. the value of a Boeing 787 Dreamliner made in South Carolina D. the value of a checkup with your doctor
A. the value of avocados grown in Mexico and shipped to your local grocery store
Which of the following will be included in U.S. GDP? A. the value of the cars produced at a Japanese-owned Toyota factory in Ohio B. the value of the trucks produced at an American-owned Ford factory in Canada C. the value of a pair of Hotter shoes made in the United Kingdom D. the value of the BMWs produced at the BMW factory in Mexico
A. the value of the cars produced at a Japanese-owned Toyota factory in Ohio
On the basis of the information, and assuming trade occurs between the three states, we can expect A. Washington to exchange apples with Texas and receive money in return. B. Washington to exchange apples with Michigan and receive money in return. C. Texas to exchange lettuce with Michigan and receive autos in return. D. Texas to trade lettuce directly for Washington apples.
A. washington to exchange apples with texas and receive money in return
Before the Industrial Revolution, living standards in the world A. were relatively stagnant for long periods of time. B. were already rising significantly for many decades. C. are not known, for lack of reliable records from that period. D. were declining because of rapid increases in population.
A. were relatively stagnant for long periods of time
Lower resource prices reduce production costs and increase profits; therefore A. when resource prices fall, firms supply greater output at each product price. B. when resource prices fall, firms supply less output at each product price. C. the demand curve will shift right, decreasing profits. D. the firms will not be motivated to increase production.
A. when resource prices fall, firms supply greater output at each product price.
The largest expenditure component of GDP is A. government purchases. B. personal consumption expenditures. C. gross private domestic investment. D. net exports.
B) Personal consumption expenditures
Which of the following activities is excluded from GDP, causing GDP to understate a nation's well-being? A. the services of used-car dealers B. the child-care services provided by stay-at-home parents C. the construction of new houses D. government expenditures on military equipment
B) the child-care services provided by stay-at-home parents
The French term "laissez-faire" means A. there is no free lunch. B. let it be. C. circular flow. D. public ownership.
B. "let it be."
If 40,000 hours of work produced a total output of $600,000 in an economy, then the labor productivity is $10 per hour of work. $15 per hour of work. $24 per hour of work. $240 per hour of work.
B. $15 per hour of work
Refer to the table. Per-capita GDP was about $105 in Year 3 in Alta. $303 in Year 3 in Zorn. $200 in Year 1 in Zorn. $5 in Year 2 in Alta.
B. $302 in year 3 in Zorn
The table shows the quantity of labor (measured in hours) and the productivity of labor (measured in real GDP per hour of work) in a hypothetical economy in three different years. In Year 2, the economy's real GDP was $400,000. $420,000. $462,000. $500,000.
B. $420,000
At an annual growth rate of 7 percent, real GDP will double in about 11½ years. 10 years. 13½ years. 9 years.
B. 10 years
If the natural rate of unemployment is 3 percent and the actual unemployment rate is 8.4 percent, there is a negative GDP gap of 3.0 percent. 10.8 percent. 5.4 percent. 2.0 percent.
B. 10.8%
National income accountants define consumer durable goods as products that have an expected life of A. less than 3 years. B. 3 years or more. C. more than 1 year. D. unlimited years.
B. 3 years or more
If the rate of inflation is 12 percent per year, the price level will double in about 4.1 years. 5.8 years. 10.2 years. 12.4 years.
B. 5.8 years
Which of the following goods would most probably be an inferior good? A. French wines B. generic beer C. theater tickets D. steak
B. Generic beer
Which of the following do economists consider to be capital? A. a pair of stockings B. a construction crane C. a savings account D. a share of IBM stock
B. a construction crane
An appropriate fiscal policy for a severe recession is A. a decrease in government spending. B. a decrease in tax rates. C. appreciation of the dollar. D. an increase in interest rates.
B. a decrease in tax rates.
Microeconomics is concerned with A. the aggregate or total levels of income, employment, and output. B. a detailed examination of specific economic units that make up the economic system. C. positive economics, but not normative economics. D. establishing an overall view of the operation of the economic system.
B. a detailed examination of specific economic units that make up the economic system.
The long-run begins A. before the immediate short-run ends. B. after the short-run ends. C. after the immediate short-run ends. D. before the short-run ends.
B. after the short run ends
Which of the following is a distinguishing feature of a command system? A. private ownership of all capital B. central planning C. heavy reliance on markets D. widespread dispersion of economic power
B. central planning.
Discretionary fiscal policy will likely cause budget A. surpluses during recessions and deficits during periods of demand-pull inflation. B. deficits during recessions and surpluses during periods of demand-pull inflation. C. surpluses during both recessions and periods of demand-pull inflation. D. deficits during both recessions and periods of demand-pull inflation.
B. deficits during recessions and surpluses during periods of demand-pull inflation.
Paper money (currency) in the United States is issued by the U.S. Mint. Federal Reserve System. U.S. Treasury. national banks.
B. federal reserve system
A price ceiling means that A. there is currently a surplus of the relevant product. B. government is imposing a legal price that is typically below the equilibrium price. C. government wants to stop a deflationary spiral. D. government is imposing a legal price that is typically above the equilibrium price.
B. government is imposing a legal price that is typically below the equilibrium price.
The foreign purchases effect suggests that an increase in the U.S. price level relative to other countries will A. increase the amount of U.S. real output purchased. B. increase U.S. imports and decrease U.S. exports. C. increase both U.S. imports and U.S. exports. D. decrease both U.S. imports and U.S. exports.
B. increase U.S. imports and decrease U.S. exports.
The main function of the entrepreneur is to A. make routine pricing decisions. B. innovate. C. purchase capital. D. create market demand.
B. innovate
The four factors of production are A. land, labor, capital, and money. B. land, labor, capital, and entrepreneurial ability. C. labor, capital, technology, and entrepreneurial ability. D. labor, capital, entrepreneurial ability, and money.
B. land, labor, capital, and entrepreneurial ability
In the accompanying table for a particular country, C is consumption expenditures, Ig is gross investment expenditures, G is government expenditures, X is exports, and M is imports. All figures are in billions of dollars. If this nation's equilibrium price level is 125, its net exports will be minus $4 billion. minus $2 billion. zero. $2 billion.
B. minus $2 billion
Purposeful behavior means that A. people are selfish in their decision making. B. people weigh costs and benefits to make decisions. C. people are immune from emotions affecting their decisions. D. decision makers do not make mistakes when weighing costs and benefits.
B. people weigh costs and benefits to make decisions.
If an economy has 800,000 hours of work, and its labor productivity is $16 per hour, then A. real GDP must be $50,000. B. real GDP must be $12,800,000. C. real GDP must be $800,000. D. real GDP cannot be determined.
B. real GDP must be $12,800,000
Which of the following measures the changes in the prices of a "market basket" of some 300 goods and services purchased by typical urban consumers? the GDP Price Index the Consumer Price Index the Retail Trade survey the Wholesale Price Index
B. the consumer price index
The equilibrium price refers to A. only resource prices, not product prices. B. the market-clearing price. C. only product prices, not resource prices. D. none of these answers are correct.
B. the market clearing price
Competition means that A. sellers can manipulate market price by causing product scarcities. B. there are independently acting buyers and sellers in the market. C. a product can be purchased at a number of different prices. D. there is more than one seller in a market.
B. there are independently acting buyers and sellers in the market
The presence of market failures implies that A. money is not an effective tool for exchange in a market system. B. there is an active role for government, even in a market system. C. individuals and firms should strive to be self-sufficient rather than specialize. D. command systems are superior to market systems in the allocation of resources.
B. there is an active role for government, even in a market system.
The opportunity cost of constructing a new public highway is the A. money cost of hiring contractors and construction workers for the new highway. B. value of other goods and services that are sacrificed in order to construct the new highway. C. expected cost of constructing the new highway in a future year. D. value of shorter driving times and distances when the new highway is completed.
B. value of other goods and services that are sacrificed in order to construct the new highway.
Financial institutions reward savers with the following, except interest. wages. dividends. capital gains.
B. wages
Normative statements are concerned primarily with A. facts and theories. B. what ought to be. C. what is. D. rational choice involving costs and benefits.
B. what ought to be.
Using the table above, what is the equilibrium rent and quantity for this small city? A. $500 and 5,000 apartments B. $1,500 and 3,600 apartments C. $2,500 and 4,200 apartments D. $3,000 and 4,000 apartments
C. $2,500 and 4,200 apartments
Which of the following is not a typical characteristic of a market system? A. private property B. freedom of enterprise C. government ownership of most property resources D. competition in product and resource markets
C. Government ownership of most property resources.
Who are the main economic investors in a market economy? savers government businesses households
C. businesses
The study of economics is primarily concerned with A. keeping private businesses from losing money. B. demonstrating that capitalistic economies are superior to socialistic economies. C. choices that are made in seeking the best use of resources. D. determining the most equitable distribution of society's output.
C. choices that are made in seeking the best use of resources.
The number of years required for real GDP to double can be found by A. dividing the annual growth rate by 0.07. B. multiplying the annual growth rate by 70. C. dividing 70 by the annual growth rate. D. adding 14 to annual growth rate.
C. dividing 70 by the annual growth rate
Real GDP per capita is found by A. adding real GDP and the population. B subtracting the population from real GDP. C. dividing real GDP by the population. D. dividing the population by real GDP.
C. dividing real GDP by population.
The aggregate demand curve is A. vertical under conditions of full employment. B. horizontal when there is considerable unemployment in the economy. C. downward sloping because of the interest-rate, real-balances, and foreign purchases effects. D. downward-sloping because production costs decrease as real output rises.
C. downward sloping because of the interest-rate, real-balances, and foreign purchases effects.
Discretionary fiscal policy refers to A. any change in government spending or taxes that destabilizes the economy. B. the authority that the president has to change personal income tax rates. C. intentional changes in taxes and government expenditures made by Congress to stabilize the economy. D. the changes in taxes and transfers that occur as GDP changes.
C. intentional changes in taxes and government expenditures made by Congress to stabilize the economy.
Given the information, and assuming trade occurs between the three states, we can expect A. that there is no means by which Michigan can obtain lettuce while specializing in the production of autos. B. that money will not be needed to accomplish the desired exchanges. C. money to flow counter clockwise from Michigan to Texas to Washington. D. money to flow clockwise from Michigan to Washington to Texas.
C. money to flow counter clockwise from michigan to texas to washington
For economists, the word "utility" means A. versatility and flexibility. B. rationality. C. pleasure or satisfaction. D. purposefulness.
C. pleasure or satisfaction.
The amount of revenue that sellers actually receive over and above the minimum acceptable amount that they are willing to receive for selling a product is called production costs. producers' supply. producer surplus. surplus production.
C. producer surplus
The aggregate supply curve (short-run) A. slopes downward and to the right. B. graphs as a vertical line. C. slopes upward and to the right. D. graphs as a horizontal line.
C. slopes upward and to the right.
Which of the following would be determined in the product market? A. the price of 100 acres of commercial property B. the price of a new screen printing machine used in t-shirt production C. the price of an energy drink that you just put in your shopping basket D. the price of a new self-driving tractor-trailer
C. the price of an energy drink that you just put in your shopping basket
Charlie is willing to pay $10 for a t-shirt that is priced at $9. If Charlie buys the t-shirt, then his consumer surplus is $19. $0.90. $90. $1.
D. $1
Which of the following represents the most contractionary fiscal policy? a $30 billion tax cut a $30 billion increase in government spending a $30 billion tax increase a $30 billion decrease in government spending
D. $30 billion decrease in government spending
Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4. The level of productivity is 20. 10. 5. 2.
D. 2
In the diagram, the economy's short-run AS curve is line _________, and its long-run AS curve is line _________. 1; 3 2; 4 3; 4 2; 1
D. 2;1
Which of the following will be determined in the resource market? The price of a A. pair of jeans. B. new snowboard. C. concert ticket. D. Boeing 787 plane.
D. Boeing 787 plane
Examples of command economies are A. the United States and Japan. B. Sweden and Norway. C. Mexico and Brazil. D. Cuba and North Korea.
D. Cuba and North Korea.
Money functions as a store of value. a unit of account. a medium of exchange. a store of value, a unit of account, and a medium of exchange.
D. a store of value, a unit of account, and a medium of exchange
The $2.2 trillion CARES Act was designed to A. boost aggregate expenditures. B. reduce the recessionary gap. C. increase real GDP and employment. D. All of these choices are correct.
D. all the choices are correct
Economic resources are also called free gifts of nature. consumption goods. units of money capital. factors of production.
D. factors of production
Government purchases include A. federal government expenditures, but not state and local government expenditures. B. state and local government expenditures, but not federal government expenditures. C. just state expenditures, not federal or local government expenditures. D. federal, state, and local government expenditures.
D. federal, state, and local government expenditures.
A price floor means that A. inflation is severe in this particular market. B. sellers are artificially restricting supply to raise price. C. government is imposing a maximum legal price that is typically below the equilibrium price. D. government is imposing a minimum legal price that is typically above the equilibrium price.
D. government is imposing a minimum legal price that is typically above the equilibrium price.
The main characteristics of a modern market system include all of the following except A. entrepreneurs are free to obtain and use resources to produce goods and services. B. consumers are free to buy the goods and services that their budgets allow. C. economic power is diffused by competition among economic units. D. government is restricted to national defense and does not intervene at all in various markets.
D. government is restricted to national defense and does not intervene at all in various markets.
The payment made for the use of (borrowed) money is liquidity. token money. near money. interest.
D. interest
All of the following are private goods or services except a coffee drink from your favorite coffee shop. your laptop. concert tickets. light beams projected from lighthouses.
D. light beams projected from lighthouses
Which of the following is a land resource? a farmer an oil drilling rig a machine for detecting earthquakes natural gas
D. natural gas
An increase in the excise tax on gasoline A. has no effect on the price of gasoline since the seller pays the tax. B. raises the price of cars by shifting the demand curve right. C. lowers the price of gasoline by shifting the supply curve right. D. raises the price of gasoline by shifting the supply curve left.
D. raises the price of gasoline by shifting the supply curve left.
The supply curve in a market is vertical instead of upsloping whenever A. all buyers are willing to pay only one price for the item. B. sellers have no flexibility in setting the price of the item. C. buyers want to buy a fixed quantity regardless of price. D. sellers have a fixed quantity of the item for sale.
D. sellers have a fixed quantity of the item for sale.
Which of the following is a capital resource? A. a computer programmer B. a corporate bond issued by a computer manufacturer C. silicon (sand) used to make computer chips D. software used by a firm
D. software used by a firm
The highly influential book by Adam Smith, who brought up the "invisible-hand" notion, is titled A. Freakonomics. B. The Principles of Economics. C. The Age of the Economist. D. The Wealth of Nations.
D. the wealth of nations
Which of the following is the best synonym for "marginal" in economics? A. scarce B. additional C. basic D. minor
b. additional.
Copyrights and trademarks are examples of A. capital goods. B. human capital. C. property rights. D. public goods.
c. property rights
GDP tends to A. overstate economic welfare because it does not include certain nonmarket activities such as the productive work of housewives. B. understate economic welfare because it includes expenditures undertaken to offset or correct pollution. C. understate economic welfare because it does not take into account increases in leisure. D. overstate economic welfare because it does not reflect improvements in product quality.
c. understate economic welfare because it does not take into account increases in leisure.
A positive statement is concerned primarily with A. some goal that is desirable to society. B. what should be. C. what is. D. the formulation of economic policy.
c. what is
Refer to the provided table. The consumer surplus is $18 for consumer A. B. C. D.
customer B
Expansionary fiscal policy is so named because it A. involves an expansion of the nation's money supply. B. necessarily expands the size of government. C. is aimed at achieving greater price stability. D. is designed to expand real GDP.
d) is designed to expand real GDP.
Command systems are also known as A. market systems. B. pure capitalism. C. laissez-faire capitalism. D. communism.
d. communism
The minimum acceptable price for a product that producer Sam is willing to receive is $15. The price he could get for the product in the market is $18. How much is Sam's producer surplus? $3 $33 $45 $270
A. $3
Which of the following fiscal policy changes would be the most expansionary? a $40 billion increase in government spending a $20 billion tax cut and $20 billion increase in government spending a $10 billion tax cut and $30 billion increase in government spending a $40 billion tax cut
A. $40 billion increase in government spending
In this market, a surplus of 21 units would exist at a price of A. $50. B. $45. C. $30. D. none of these answers are correct.
A. $50
You are given the following information about the economy: the nominal interest rate = 8 percent, and the real rate of interest = 6 percent. The inflation premium is 2 percent. 6 percent. 8 percent. 14 percent.
A. 2 percent
Using the table above, what if the city government could enforce a rent control law that sets the maximum rent that could be charged at $1,000? How many units would actually be rented? A. 3,000 apartments B. 3,600 apartments C. 4,200 apartments D. 4,800 apartments
A. 3,000 apartments