macro practice questions

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______ is an example of​ ______.

a volcano; land

measuring expenditure GDP

GDP = C + I + G + (X-M)

When the economy goes into​ recession, the output gap is​ _______.

negative

A discouraged worker​ ______.

has stopped looking for a job because of repeated failure to find one

Structural unemployment is​ _______. An example of structural unemployment is​ _______.

he unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of​ jobs; coal miners who are unemployed because new technology has made other types of energy cheaper and more accessibleThe price level is the​ _____.

What is the law of demand and how do we illustrate​ it? The law of demand states that other things remaining the​ same, the​ _______ the price of a​ good, the​ _______.

higher; smaller is the quantity demanded

The quantity of labor demanded is the number of labor hours​ _______ during a given period. The quantity of labor supplied is the number of labor hours​ _______ during a given period.

hired by all the firms in the​ economy; that all the households in the economy plan to work

The following events occur one at a​ time: ​(i) The price of crude oil rises. ​(ii) The price of a car rises. ​(iii) All speed limits on highways are abolished. ​(iv) Robots cut car production costs. Explain the effect of each of these events on the market for gasoline. The demand for gasoline​ _______. The supply of gasoline​ ______. The quantity of gasoline demanded​ _______. The quantity of gasoline supplied​ _______.

-decreases when the price of a car rises -decreases when the price of crude oil rises -decreases when the price of crude oil rises -increases when the speed limits are abolished

You plan to travel in Europe this summer. If you​ do, you​ won't be able to take your usual summer job that pays ​$9,000 for the​ summer, and you​ won't be able to live at home for free. The cost of transportation is $2,000​, visas cost ​$100​, and living expenses are ​$1,100. What is the opportunity cost of your plan to travel in​ Europe?

12,000 (9,000+ 2,00+ 1,100- 100= 12,000)

Indicate whether each of the following news items is a positive or a normative statement. 1. Upper A ban on smoking will lower the Medicare budget 2. The United States should spend more on the environment and less on space exploration 3.We need more police on inner dash city streets. 4.Cable subscribers are decreasing. Statement 1 is a​ ______ statement, and statement 2 is a​ ______ statement. Statement 3 is a​ ______ statement, and statement 4 is a​ ______ statement.

1. positive 2. normative 3. normative 4. postitive

Aaron plays basketball two nights a week and his current grade in economics is 65 percent. He decides to play basketball for three nights each week and his economics grade falls to 55 percent. The marginal cost to Aaron of playing basketball one more night each week is​ _______.

10 percentage points

If real GDP per person doubles in 20​ years, then the annual growth rate of real GDP per person is​ ______ percent a year.

3.5

Hyperinflation is an inflation rate of​ _____ or higher that grinds the economy to a halt and causes a society to collapse

50 percent a month

Which of the following is an example of an incentive​?

All conference volunteers would be offered free lunch on all three days.

Aqua Springs makes the following four statements about bottled spring water. Which statement best describes the​ firm's quantity supplied in the bottled water​ market?

At a price of​ $1 gallon, we plan to sell​ 2,000 gallons per day.

Jeb makes the following four statements about peanuts. Which statement best describes his quantity demanded in the peanut​ market?

At a price of​ $1 per​ pack, I plan to buy 2 packs of peanuts per week.

Which of the following is an example of investment​?

Continental buying Airbus planes

Which of the following is an example of a final good or service​?

Dan bought a Toyota Camry

Who in the following statements is a discouraged worker​?

Dan is available to work but has not looked for a job in the past eight weeks because of repeated applications but no single offer.

______ is an example of​ ______.

an economics professor; labor

The alternative​ index, which might be least biased is the​ _______.

chained CPI because it uses current and previous period quantities

Choose the correct statement.

Each peak unemployment rate in the recessions of​ 1982, 1990-1991, and 2001 was lower than the previous one.

Choose the correct statement.

Entrepreneurs make business decisions

Choose the correct statement.

Entrepreneurship is the human resource that organizes labor, land, and capital

Which one of the following news headlines definitely concerns the social​ interest?

Food must be labeled with nutrition information

Complete the following​ sentence: ​______ earns​ ______.

Howard Schultz, the head of Starbucks; profit

Which of the following statements describes a change in the quantity supplied and which describes a change in supply​? I Farms are selling less chicken because the price of turkey has increased. II Farms are selling less chicken because the price of chicken has fallen. III Farms are selling more chicken because the price of chicken has risen. IV Farms are selling more chicken because the cost of chicken feed has fallen.

I and IV are changes in supply and II and III are changes in the quantity supplied.

Which of the following statements about the market for chicken describes a change in the quantity demanded and which describes a change in demand​? I People are buying less chicken because the price of beef has fallen. II People are buying less chicken because the price of chicken has increased. III People are buying more chicken because the price of chicken has fallen. IV The cost of chicken feed has increased.

I is a change in demand and II and III are changes in the quantity demanded.

Which of the following statements is about a normal good​, which is about an inferior good​, which is about​ both, and which is about​ neither? I With incomes falling in the​ recession, people are buying more chicken. II People are buying more beef now that incomes have increased. III People are buying more chicken because the price of chicken has fallen. IV With higher​ incomes, people are switching from chicken to beef.

I is​ inferior, II is​ normal, III is​ neither, and IV is both

Which of the following illustrates a tradeoff​?

I will study for my exam instead of going to a movie tonight

Which of the following statements by Aqua Springs demonstrates that the​ firm's selling plans obey the law of supply​?

If the price of bottled water falls and all the other influences on our selling plans remain the​ same, we will cut back on production and lay off some workers

Which of the following illustrates scarcity​?

Megan wants to buy a CD that costs​ $25 but has only​ $10 to spend.

Explain the influences on the pace of labor productivity growth. Choose the correct statement.

Most technologies are embodied in physical capital.

Which of the following news headlines does not deal with​ scarcity?

Netflix stock soars to a new high

Which of the following statements illustrates structural unemployment​?

Outsourcing resulted in many job losses in the mid 2000s.

The core inflation rate is the annual percentage change in the​ _____ price index​ _____ the prices of food and energy.

PCE; excluding

Which of the following examples describes microeconomics​?

People prefer buying iPhones over Nokia phones.

Which of the following is an example of consumption expenditure​?

Rachel buying a TV

Which of the following statements illustrates frictional unemployment​?

Robin is quitting his current job to find another that has better prospects.

Which of the following is an example of an intermediate good or service​?

Samsung buys compressors for manufacturing refrigerators.

Which of the following is an example of government expenditure on goods and services​?

The White House buying internet services.

Why would a corn farmer grow​ soybeans?

Soybeans and corn can be grown with the same​ resources, so they are substitutes in production.

Which of the following examples describes macroeconomics​?

The U.S. unemployment rate has increased by 0.4 percent.

Which of the following statements by Tom demonstrates that his buying plans obey the law of demand​?

The only thing​ that's changed is the price of​ textbooks: they've become more expensive and now​ I'm not buying as many. Your answer is correct.

Pam, Pru, and Pat are deciding how they will celebrate the New Year. Pam prefers to go on a​ cruise, is happy to go to​ Hawaii, but does not want to go skiing. Pru prefers to go​ skiing, is happy to go to​ Hawaii, but does not want to go on a cruise. Pat prefers to go to Hawaii or to take a​ cruise, but does not want to go skiing. Their decision is to go to Hawaii. What is the opportunity cost of the trip to Hawaii for each of​ them?

The opportunity cost for Pam and Pat is a cruise and for Pru it is skiing.

Choose the correct statement.

The opportunity cost of something is the​ highest-valued alternative that must be given up to get it.

Dairies make​ low-fat milk from​ full-cream milk. In the process of making​ low-fat milk, the dairies produce​ cream, which is made into ice cream. In the market for​ low-fat milk, which of the following events illustrates the law of​ supply?

The price of​ low-fat milk rises.

Which of the following is the opportunity cost of attending a ball​ game?

The things you would have bought with what you spent on the ticket and bus fare getting to the game plus the things you would alternatively have done with your time.

Which of the following news headlines does not illustrate the potential for conflict between​ self-interest and the social​ interest?

Toyota offers retirement incentive to 2,00 U.S. employees

The broader measure of unemployment that includes discouraged workers is​ _______.

U-4

The inflation rate is calculated as ​ _________.

[(CPI this year − CPI last ​year)÷ CPI last ​year] ×100

Consider the influences on selling​ plans, and whether the influence changes supply.

a change in the price of rubber balls changes the quantity supplied of rubber balls

The source of the growth slowdown was​ _______.

a combination of a slowdown in the growth of work hours and a slowdown in the growth of labor productivity

A business cycle is​ _______.

a periodic but irregular​ up-and-down movement of total production and other measures of economic activity

According to classical growth​ theory, the growth of real GDP per person stops when​ _______.

a population explosion eventually occurs and real GDP per person returns to the subsistence level

GDP is calculated by​ _________.

adding indirect taxes less subsidies and depreciation to total income

A final good is​ _______. An example of a final good is​ _______.

an item that is bought by its final user during a specified time​ period; bread sold to a consumer

An intermediate good is ​ _________. An example of an intermediate good is​ _______.

an item that is produced by one​ firm, bought by another​ firm, and used as a component of a final good or​ service; wheat sold to a baker to make bread

The growth rate is the​ _____ of a variable​ - the change in the level expressed as a percentage of the initial level.

annual percentage change

The natural unemployment rate is the unemployment rate when the economy is​ _____.

at full employment

Labor market equilibrium occurs​ _______.

at the real wage rate at which the quantity of labor demanded equals the quantity of labor supplied

The figure shows the production possibilities frontier for a firm that produces pet food. Complete the following sentences. Point A is​ ______ and point B is​ ______.

attainable; unatainablt

The price level is the​ _____.

average change in prices

The Consumer Price Index is a measure of the​ _____ of the prices paid by​ _____ consumers for a fixed market basket of consumption goods and services.

average; urban

Cyclical unemployment is the fluctuating unemployment over the business cycle that increases during​ _____ and decreases during​ _____.

a​ recession; an expansion

What are the alternative measures of the price level and how do they address the problem of the bias in the​ CPI? The four price indexes that are alternatives to the CPI are​ ______.

chained​ CPI, personal consumption expenditure​ deflator, GDP​ deflator, and core PCE

Gross domestic product and gross investment are measured​ ______. Net domestic product and net investment are measured​ ______.

before the depreciation of​ capital; after the depreciation of capital

Rational choice is a choice that uses the available resources to​ _____ of the person making the choice.

best achieve the objective

The law of demand applies to food because when the price of food​ rises, there is​ ______.

both a substitution effect and an income effect

The total amount spent​ _____ is called gross investment.

both buying new capital and replacing depreciated capital

The production possibilities frontier is the boundary between the combinations of goods and services that​ _____, given the available factors of production and the state of technology.

can be produced and the combinations that cannot be produced

Production efficiency is a situation in which the economy is getting all that it can from its resources and​ _____ produce more of one good or service without producing​ _____ of something else.

cannot; less

The natural unemployment rate​ _______.

changes as frictions and structural change occur in the economy

Operators of private dog parks in your city decide to eliminate their fees and allow dog owners to exercise their dogs in the parks at no charge.in the parks at no charge. This statement means that the incentive to exercise dogs at the dog park ​______. The operators decision is a ​ _______ decision.

changes; microeconomics

The income approach to measuring GDP sums together​ ______, which equals net domestic income at factor cost.

compensation of​ employees, net​ interest, rental​ income, corporate​ profits, and​ proprietors' income

A substitute is a good that is​ _____ another​ good, and a complement is a good that is​ _____ another good.

consumed in place​ of; consumed together with

The expenditure approach to measuring GDP sums together​ ______, and the largest component is​ ______.

consumption​ expenditure, investment, government expenditure on goods and​ services, and net​ exports; consumption expenditure

Growth rates are calculated in a similar manner for all variables. Real GDP growth rate​ = [(Real GDP in​ ______ year− Real GDP in​ ______ ​year)divided by ÷ Real GDP in​ ______ year ​] × 100.

current; previous; previous

In June 2015​, the U.S. unemployment rate was 5.2 percent. In June 2017​, the unemployment rate was 4.4 percent. Predict what happened to unemployment between June 2015 and June 2017​, if the labor force was constant. If the labor force remained constant between June 2015 and June 2017​, then the number unemployed​ _______.

decreased

Dairies make​ low-fat milk from​ full-cream milk, and in the process they produce​ cream, which is made into ice cream. Explain the effect of the following events on the supply of​ low-fat milk. If the wage rate of dairy workers​ rises, the supply of​ low-fat milk​ _______.

decreases because the cost of producing​ low-fat milk increases

An increase in the price of a hot dog ​_______.

decreases the quantity of hot dogs demanded and results in a movement up along the demand curve for a hot dog

An increase in the population​ ______ the real wage rate and​ ______ the equilibrium quantity of labor.

decreases; increases

An economic model​ ______. An example of a model is​ ______.

describes some aspect of the economic world and includes only those features needed for the purpose a roadmap

Real GDP per person is real GDP

divided by the population

If the price of​ low-fat milk​ rises, the supply of​ low-fat milk​ _______.

does not change because the relationship between price and quantity supplied does not change

This PPF​ ______ illustrate scarcity because​ ______.

does; the firm cannot produce points outside the frontier and as the firm moves along the PPF​, it cannot produce more dog biscuits without producing less cat food

A person is in the labor force if that person is​ _______.

either employed or unemployed

Which of the following pairs does not match? a. land; rent b. capital; interest c. entrepreneurship; rent d. labor; wages

entrepreneurship; rent

The phases of the business cycle are​ _______. The turning points of the business cycle are​ _______.

expansion and​ recession; peak and trough

Economic growth is the _______.

expansion of production possibilities

Net exports of goods and services is the value of​ _____ of goods and services​ _____ the value of​ _____ of goods and services.

exports; minus; imports

"As more people buy bicycles​, the demand for bicycle helmets will increase and the price of a helmet will decrease. The fall in the price of a bicycle helmet will decrease the supply of bicycle helmets​." This statement is​ ______ because​ ______.

false; an increase in demand for bicycle helmets does not decrease the price of a bicycle helmet and a decrease in the price of a bicycle helmet does not decrease the supply of bicycle helmets

In​ 2016, the price of corn fell and some corn farmers will switch from growing corn in 2017 to growing soybeans. Does this fact illustrate the law of demand or the law of​ supply? As the price of corn fell in​ 2016, _________.

farmers planned to decrease the quantity of corn supplied in 2017. This fact illustrates the law of supply.

Real GDP is the value of​ ______. Potential GDP is ​ ______.

final goods and services produced in a given year when valued at the prices of a reference base​ year; the maximum level of real GDP that can be produced while avoiding shortages of​ labor, capital,​ land, and entrepreneurial ability that would bring rising inflation

Gross domestic product ​(GDP​) is the market value of all the​ _____ goods and services produced​ _____ a country in a given time period.

final; within

GDP equals aggregate income and also equals aggregate expenditure because​ _______.

firms pay out as incomes​ (aggregate income) everything they receive from the sale of their output​ (aggregate expenditure)

Describe the trends and fluctuations in the U.S.​ employment-to-population ratio and the labor force participation rate from 1980 to 2017. The​ employment-to-population ratio​ _______

followed an upward trend before 2000 and then followed a downward trend

​"Health dash care professionals and drug companies say Medicaid drug rebates should be available to everyone in need​" involves a​_______ question.

for whom

For each news item​ below, indicate whether it involves a what​, how​, or for whom question. ​"Oscar stars' swag dash bags may be taxable​" involves a​ ______ question. ​"Microsoft announces new operating system​" involves a​ ______ question.

for whom; what

The benefit of something is the​ _____. Benefit is determined by preferences​ - by what a person​ _____ and the intensity of those feelings.

gain or pleasure it brings; likes and dislikes

A tradeoff is​ _______.

giving up one thing to get somethings else

The aggregate production function is the relationship that tells us​ ______, when all other influences on production remain the same.

how real GDP changes as the quantity of labor changes

A person is not in the labor force if they are​ _____

in the​ working-age population but neither employed nor unemployed

As the average income in China continues to​ increase, explain how the following will​ change: a. The demand for beef b. The demand for rice As the average income in China continues to​ increase, we would expect the demand for beef to​ _______ and the demand for rice to​ _______.

increase if beef is a normal​ good; decrease if rice is an inferior good

In June 2015​, the U.S. unemployment rate was 5.2 percent. In June 2017​, the unemployment rate was 4.4 percent. Predict what happened to the labor force between June 2015 and June 2017 if unemployment was constant. If unemployment remained constant between June 2015 and June 2017​, then the labor force​ ______.

increased

The equilibrium quantity of golf clubs ​_______.

increases

If the price of cream​ rises, the supply of​ low-fat milk​ _______.

increases because cream and​ low-fat milk are complements in production

Potential GDP​ ______ and potential GDP per hour of labor​ ______.

increases; decreases

An increase in labor productivity​ ______ the real wage rate and​ ______ the equilibrium quantity of labor.

increases; increases

The price of a music dash streaming subscription falls. What is the effect on the price and quantity of​ smartphones? The equilibrium quantity of smartphones​ _______ and the equilibrium price​ _______.

increases; rises

What does the demand curve tell us about the price that consumers are willing to​ pay? A demand curve​ _______.

is a marginal benefit curve

economics ________ .

is a subject that studies how we cope with scarcity.

A supply curve that illustrates the law of supply​ _______.

is upward sloping

The substitution effect influences food purchases because when the price of a certain food​ rises, other things remaining the​ same, ______. Consumers​ ______.

its relative price​ rises; purchase more of a different food that is less expensive

The key proposition of new growth theory that makes growth persist is that​ ______ is not subject to diminishing returns.

knowledge capital

A movie star is an example of the factor of production​_______.

labor

Upper A dog trainer is an example of the factor of production​_______.

labor

The unemployment rate is the percentage of the people in the​ _____ who are unemployed.

labor force

Which of the following pairs does not match?

labor; interest

factors of production are grouped into four​ categories, which are​ _______.

land, labor, capital, and entrepreneurship

Real GDP is calculated by​ _______.

summing together the value of the​ year's production using the prices of the reference base year

The quantity supplied of a good or service is​ ______.

measured as an amount per unit of time

Think about the following news items. Which items involve a microeconomic issue and which involve a macroeconomic​ issue? A.Pay to rise for millions as 19 states increase minimum wage B.7 ways streaming music will change in 2017 C.More Americans are satisfied with their standard of living than eight years ago D. Manufacturing production in the U.S. rises for sixth straight month Statement A involves a​ ______ issue. Statement B involves a​ ______ issue. Statement C involves a​ ______ issue. Statement D involves a​ ______ issue.

micro; micro macro; macro

An increase in the demand for golf clubs and an increase in the supply of golf clubs occur together. What is the effect on the price and quantity of golf clubs​? An increaseAn increase in the demand for golf clubs together with an increase in the supply of golf clubs ​______ create a surplus or a shortage of golf clubs at the original price. The equilibrium price of golf clubs ​______.

might; might​ fall, rise, or not change

Economics is used as a policy tool when economists​ _______.

model different economic proposals proposed by government

To disentangle cause and​ effect, economists use economic models and use​ _______ to test the predictions of those models.

natural experiments, statistical investigations, and perform economic experiments

When the unemployment rate is greater than the natural unemployment​ rate, the output gap is​ _______. When the unemployment rate is less than the natural unemployment​ rate, the output gap is​ _______.

negative; positive

The key idea of classical growth theory that leads to the dismal outcome is that​ ______.

no matter how much technological change​ occurs, real GDP per person is always pushed back toward the subsistence level

The labor force is the number of people employed plus the​ _____.

number unemployed

A rational choice is​ _______.

one that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice

The chained CPI _______.

overcomes the sources of bias in the CPI by incorporating substitutions and using current and previous period quantities

The equilibrium price is the best deal available for both buyers and sellers because buyers​ ______ and sellers​ ______.

pay the highest price they are willing to​ pay; receive the lowest price at which they are willing to sell

Some unemployment is unavoidable because​ ______.

people are making transitions through the stages of life and businesses are making transitions

Unemployment arises when​ ______.

people leave their jobs and spend time searching for another job that better suits their abilities

The ​working-age population is the total number of​ _____ aged​ _____ years and over who are not in​ jail, hospital, or some other form of institutional care or in the U.S. Armed Forces.

people; 16

According to new growth​ theory, the growth of real GDP per person​ _______.

persists indefinitely

Once the preconditions for growth are in​ place, the influences on the pace of labour productivity growth are​ _______.

physical capital​ growth, human capital​ growth, and technological advances

The output gap is real GDP minus​ _____ expressed as a percentage of​ _____.

potential​ GDP; potential GDP

The inflation rate is the percentage change in the​ _____ from one year to the next. Deflation is a situation in which the​ _____ is​ _____ and the inflation rate is​ _____.

price​ level; price​ level; falling; negative

A substitute in production is a good that is​ _____ another​ good, and a complement in production is a good that is​ _____ another good.

produced in place​ of; produced together with

Domestic product is​ _______. National product is​ _______.

production within a​ country; the value of goods and services produced anywhere in the world by the residents of a nation

PPP is​ _______.

purchasing power parity

A demand curve shows the relation between the​ _____ and​ _____, when all other influences on buying plans remain the same.

quantity demanded of a​ good; its price

A supply curve shows the relationship between the​ ______ and​ _____ when all other influences on selling plans remain the same.

quantity supplied of a​ good; its price

The output gap is the gap between​ _______.

real GDP and potential GDP

To measure the standard of​ living, we use​ _____ .

real GDP per person

Neoclassical growth theory is the proposition that​ _____ grows because technological change induces saving and investment that make​ _____ grow.

real GDP per​ person; capital per hour of labor

Classical growth theory is the view that the growth of​ _____ is temporary and that when it rises above the subsistence​ level, a population explosion​ _____.

real GDP per​ person; eventually brings it back to the subsistence level

New growth theory holds that​ _____ grows because of the choices people make in the pursuit of profit and that growth will​ _____.

real GDP per​ person; persist indefinitely

The demand for labor is the relationship between the quantity of labor demanded and the​ ______. The supply of labor is the relationship between the quantity of labor supplied and the​ ______.

real wage​ rate; real wage rate

When the CPI​ _______.

rises slowly, the inflation rate is low

The​ labor-force participation rate​ _______.

shows a steep downward decrease in 2008 and 2009

A demand curve that illustrates the law of demand​ ______.

shows that the quantity demanded decreases at the price rises

Economics is the​ _____ the choices that​ individuals, businesses,​ governments, and entire societies make as they​ _____, and the influences on those​ choices, and the arrangements that coordinate them.

social science that​ studies; cope with scarcity

Zach is an engineering student who is considering taking an extra course in SpanishSpanish. An incentive that might encourage him to take the SpanishSpanish course is​ _______.

softer grading in Spanish

Which of the following statements are positive​? 1. Most iPods are purchased by teenagers 2. The greatest number of accidents are caused by drunk drivers 3. Drunk drivers should have their licenses suspended for the remainder of their lives 4. Greece is the best place to vacation

statements 1 and 2 are positive

Choose the correct statements. a. There is no relationship between the opportunity cost of producing an additional good measured on the x-axis and the opportunity cost of producing an additional good measured on the y-axis. b. Opportunity cost of a good cannot be accurately measured along a PPF because the PPF shows only two goods. c. Opportunity cost is a ratio. d. The opportunity cost of producing more x, illustrated as a movement between two points on the PPF is equal to the inverse of the opportunity cost of producing more y, illustrated as a movement between the same two points in the nbsp opposite direction.

statements c and d are correct

Choose the statement that is incorrect.

t is never a rational choice to decide to enter the labor force immediately following high school.

According to neoclassical growth​ theory, the fundamental cause of economic growth is​ ______.

technological​ change, which induces saving and investment that make capital per hour of labor grow

According to neoclassical growth​ theory, the growth of real GDP per person stops when​ _______.

technology stops advancing

The growth rate of real GDP per person​ _______.

tells us about changes in the standard of living and the growth rate of real GDP tells us how rapidly the total economy is expanding

A supply curve​ _______.

tells us the lowest price at which someone is willing to sell

Exports of goods and services are items that firms in​ _____ produce and sell to​ _____.

the United​ States; any other country

The factors that might make the natural unemployment rate change include​ _______.

the age distribution of the​ population, the scale of structural​ change, the real wage​ rate, and unemployment benefits

Define the quantity demanded of a good or service. The quantity demanded of a good or service is​ ______.

the amount that consumers plan to buy during a given time period at a particular price

The growth rate of real GDP contributes to an improved standard of living because​ _______.

the average person enjoys more consumption goods and services and more resources are devoted to health​ care, research, and environmental protection

What problems arise from the CPI​ bias? Choose the correct statement.

the bias in the CPI increases government outlays

Economists do jobs that require​ _______.

the collection and analysis of​ data, the ability to predict future​ trends, and study to determine ways of using resources more efficiently

Economic growth is​ _______.

the expansion of production possibilities

Cyclical unemployment is​ _______. An example of cyclical unemployment is​ _______.

the higher than normal unemployment at a business cycle trough and the lower the normal unemployment at a business cycle​ peak; a restaurant worker who loses her job because of a downturn in the economy

Gross domestic product is​ ______.

the market value of all the final goods and services produced within a country in a given time period

The four main ways in which the CPI is an​ upward-biased measure of the price level are through​ _______.

the new goods​ bias, the quality change​ bias, the commodity substitution​ bias, and the outlet substitution bias

Why is the price at which the quantity demanded equals the quantity supplied the equilibrium​ price? The price at which the quantity demanded equals the quantity supplied is the equilibrium price because​ _______.

the plans of producers and consumers are coordinated and there is no influence on the price to change

Why does demand not change when the price of a good changes with no change in the other influences on buying​ plans? Consider the demand for hot dogs. The demand for hot dogs does not change when a change in​ _______ occurs.

the price of a hot dog

The income effect influences food purchases because when the price of a certain food​ rises, other things remaining the​ same, ______. Consumers​ ______.

the price rises relative to​ income; cannot afford to buy all the things they previously​ bought, so they normally buy less of the food that has experienced the price rise

The equilibrium price is the price at which​ _____ and the equilibrium quantity is the​ _____.

the quantity demanded equals the quantity​ supplied; the quantity bought and sold at the equilibrium price

Demand is​ _____ , when all other influences on buying plans remain the same.

the relationship between the quantity demanded of a good and the price of the good

Supply is​ _____, when all other influences on buying plans remain the same.

the relationship between the quantity supplied of a good and the price of the good

Real GDP might be an unreliable indicator of the standard of living because​ ______.

the standard of living depends on many​ factors, some of which are not part of real GDP

The two broad sources of potential GDP growth are growth of​ ______ and growth of​ ______.

the supply of​ labor; labor productivity

The natural unemployment rate is​ _______.

the unemployment rate when the economy is at full employment

Frictional unemployment is​ _______. An example of frictional unemployment is​ _______.

the unemployment that arises from normal labor turnoverlong dash—from people entering and leaving the labor force and from the ongoing creation and destruction of​ jobs; new college graduates looking for work

The amount by which​ _____ is called net investment.

the value of capital

Nominal GDP is​ ______. Real GDP is​ ______.

the value of the final goods and services produced in a given year valued at the prices of that year​; the value of final goods and services produced in a given year when valued at the prices of a reference base year

The unemployment rate is never​ zero, even at full employment because​ ______.

there are always new workers entering the labor market to search for​ work, workers leaving one job to search for another​ job, and workers who have been laid off and are searching for another job

Potential GDP is determined by​ ______.

the​ full-employment quantity of labor

Alternative price indexes can avoid the bias by​ _______

using current and previous period quantities

An unemployed person​ ______.

wants​ work, has made specific efforts to find a job within the previous four​ weeks, or is waiting to be called back to a job from which he or she has been laid​ off, or is waiting to start a new job within 30 days

The graph shows a production possibilities frontier. Complete the following sentence. Production efficiency is achieved at points A​, B​, and C because to increase the production of x as we move from A to B to C​, ​ _______ .

we are giving up the minimum amount of y possible to increase the production of x

When we use PPP we can make valid international comparisons of real GDP because​ ______.

we calculate the value of goods and services produced in two countries using the same prices

The what​, how​, and for whom questions in economics are questions about​ ______.

what goods and services do we​ produce, how do we use the factors of production to produce these​ goods, and who consumes the goods and services that are produced

For each news item​ below, indicate whether it involves a what​, how​, or for whom question. ​"Cancer scientists hail break through treatment​" involves a​ ______ question. ​"Stores use computers to keep their inventory records" involves a​ ______ question.

what; how

Choose the correct statement.

when the relative prices change and people substitute to the lower priced good, the CPI ignores the substitution and the CPI overstates inflation

All of the following are consequences of scarcity faced by people in the United States except deciding​ _______.

whether a tomato is a fruit or a vegetable

The sources of economic growth are​ _______.

work hours growth and labor productivity growth

The range of​ economists' pay is​ _______ and the median level of pay is​ _______.

​$41,226 to​ $124,177; ​$72,279

CPI =

​(Cost of CPI basket at​ current-period prices ÷ Cost of CPI basket at​ base-period ​prices) ×100

A choice on the margin is a choice that is made by comparing all the relevant​ _____ systematically and​ _____. Marginal cost is the​ _____ that arises from one unit​ _____ in an activity. Marginal benefit is the​ _____ that arises from one unit​ _____ in an activity.

​alternatives; incrementally; opportunity​ cost; increase; ​benefit; increase

A marginally attached worker is a person who does not have a​ job, is​ _____ and​ _____ to​ work, has​ _____ specific efforts to find a job within the previous​ _____ weeks, but has looked for work sometime in the recent past.

​available; willing; not​ made; four

A smartphone and a text message are​ ______. A text message and an email are​ ______.

​complements; substitutes

Pizza and sausage are​ ______. Wheat and corn are​ ______.

​complements; substitutes

The most important skills needed for an economics job include​ _______.

​critical-thinking skills and math skills

Full employment is when there is no​ _____ unemployment​ or, equivalently, when all the unemployment is​ _____ or​ _____.

​cyclical; frictional; structural

Depreciation is the​ _____ in the value of​ _____ that results from its use and from obsolescence.

​decrease; capital

In January​ 2010, the price of gasoline was​ $2.70 a gallon. By spring​ 2010, the price had increased to​ $3.00 a gallon. Assume that there were no changes in average​ income, population, or any other influence on buying plans. Explain how the rise in the price of gasoline would affect a. The demand for gasoline. b. The quantity of gasoline demanded. Given the law of​ demand, you would expect the rise in the price of gasoline to​ ______ the quantity of gasoline demanded and​ ______ the demand for gasoline.

​decrease; not change

An increase in discouraged workers​ ______ the official unemployment rate and​ ______ the broader measure of unemployment that includes this category

​decreases; does not change

The Rule of 70 is the number of years it takes for the level of any variable to double. It is approximately 70​ _____ by the annual percentage​ _____.

​divided; growth rate of the variable

When a surplus​ arises, the price​ ______ to its​ equilibrium, which​ _______.

​falls; increases the quantity demanded and decreases the quantity supplied

Real GDP is the value of the​ _____ goods and services produced in a given year expressed in terms of the prices in​ _____ year. Nominal GDP is the value of the​ _____ goods and services produced in a given year expressed in terms of the prices of ​ _____ year.

​final; a​ base; ​final; that same

The preconditions for labor productivity growth are​ ______.

​firms, markets, property​ rights, and money

The law of supply states that other things remaining the​ same, the​ _______ the price of a​ good, the​ _______.

​higher; greater is the quantity supplied

Imports of goods and services are items that​ _____ in the United States​ _____ the rest of the world.

​households, firms, and​ governments; buy from

An increase in labor productivity​ _______ potential GDP and​ ______ potential GDP per hour of labor.

​increases; increases

Toyota plans to stop exporting the Lexus RX to North America from​ Japan, building all of the vehicles in North America. The company will invest​ $98.3 million to boost its production capacity. Honda Motor Co. will shift a major chunk of its manufacturing to North America and increase its production capacity by as much as 40 percent ​Source: The Wall Street Journal​, August​ 8, 2012 Explain how​ Toyota's and​ Honda's plans will influence U.S. GDP and its components. Assuming that U.S. consumers buy the same number of Lexus RX models and Hondas regardless of where they are​ built, U.S. GDP​ ______ when Toyota builds the Lexus RX in the United States and Honda increases production in the United States because​ ______.

​increases; net exports and investment increase

Costs Soar for London Olympics The regeneration of East​ London, the site of the 2012 Olympic​ Games, is set to add extra pound£1.5 billion to​ taxpayers' bill. Read the news​ clip, then answer the following question. The cost of regenerating East London​ ______ an opportunity cost of hosting the 2012 Olympic Games​ ______.

​is; if the regeneration of East London would not occur unless London hosted the 2012 Olympics

Net domestic income at factor cost​ _______ indirect taxes less subsidies​ _______ depreciation gives GDP​ (income approach).

​plus; plus

When a shortage​ arises, the price​ ______ to its​ equilibrium, which​ _______.

​rises; decreases the quantity demanded and increases the quantity supplied

Pasta and pizza are​ ______. A video game and a laptop are​ ______.

​substitutes; complements

Which of the following goods are likely substitutes and which are likely​ complements? Coal and oil are​ ______. A skateboard and roller blades are​ ______.

​substitutes; substitutes

The labor force participation rate is the percentage of the​ _____ who are members of the labor force.

​working-age population


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