MACRO TEST 1 -Multiple Choice
If nominal GDP was $11,500 Billion in 2003 and the price level in 2003 was 111.6, then real GDP would have been approximately...
$10,305 Billion ($11,500/111.6) x 100
If a nation has a population of 100 million, a labor force of 60 million, and GDP of $200 billion, then GDP per capita must be...
$2,000.00 (GDP/Population)
The equilibrium price and quantity in Figure 3.2 are, respectively, Supply and Demand.....
$9 and 30 units
The best definition of GDP is ...
A dollar measure of final output produced during a given time period.
Economic growth would best be represented by a...
A shift outward of the production possibilities curve.
In terms of the production possibilities curve, inefficiency is represented by...
All points inside the curve
Which of the following is an example of an external cost?
Automobile exhaust fumes, because pollution harms parties not directly involved in the use of a good. Clean air benefits everyone.
A nation'd GDP is calculated...
C + I + G + (X-M)
Resources are directed from one industry to another by...
Changes in market prices
Government intervention may be appropriate to correct market outcomes because of...
Externalities. Because they cause market failure, which establishes a basis for government intervention.
According to the law of increasing opportunity costs,
In order to produce additional units of a particular good, it is necessary for society to sacrifice increasingly larger amounts of alternative goods.
The social well being of a country ...
Is measured by more than changes in real GDP
Market failure implies that the market mechanism...
Leads the economy to the wrong mix of output
When the invisible hand does not produce optimal outcomes for the economy, there is evidence of...
Market failure.
National income accounting is defined as the...
Measurement of aggregate economic activity.
According to economists, which of the following is NOT a factor of production?
Money, because it does not directly do anything. It allows you to go out and purchase factors of production.
Goods that have spillover are overproduced because...
Most businesses are more concerned about profits that how the environment is affected.
The market...
On it's own may not always provide the optimal mix of goods and services.
Given that resources are scarce..
Opportunity costs are experienced whenever choices are made.
Using Figure 4.1 suppose that point C represents the best possible mix or optimal level of output for this society. If the market fails and produces a suboptimal mix of the output, then it could produce at...
Point A, B, D, or E
Using Figure 1.3 and PP1, an increase in the capacity to produce can be represented by a movement from...
Point C to point F -Economic growth shifts the production possibilities curve away from the origin, so more of both goods can be produced.
The alternative combinations of final goods and services that can be produced with all available resources and technology are the...
Production possibilities
The optimal mix of output may NOT be produced by an economy because of the existence of...
Public Goods
The four specific sources of market failure are...
Public goods, market power, externalities, and inequity
The optimal mix of output is the most desirable combination of output attainable with existing...
Resources, technology, and social values.
A point on a nation's production possibilities curve represents...
The full employment of resources to achieve a particular combination of goods and services. Being on the curve is efficient because we are getting the most we can out of our resources.
Which of the following produces external beliefs?
The inoculation of college students against the flu, because it helps protect the entire community from the flu.
All of the following count as unreported income except....
The money you pay a private tutor who works for Tutors Inc.
The fundamental problem of economics is...
The scarcity of resources relative to human wants.
The market mechanism may best be defined as...
The use of market prices and sales to signal desired output.
Using Figure 1.3 and PP1, at point A...
There is inefficient use of available resources.
Using Figure 4.1, suppose that point B represents the optimal mix of output for a society. If market forces cause society to produce at point C, then...
There is market failure
If the actual market price were fixed at $6 per unit in Figure 3.2, Supply and Demand...
There would be a shortage of 20 units
If the actual market price were fixed at $15 per unit it Figure 3.2, Supply and Demand.....
There would be a surplus of 40 units
Which of the following is the best example of a government effort to address market failure in relation to the FOR WHOM to product question?
Transfer payments, because the tax-and-transfer system is the principal mechanism for redistributing incomes.
Real GDP is the...
Value of final output produced in a given period measured in constant prices.
per capita GDP is...
the GDP divided by the total population
When calculating GDP, consumption make up approximately...
two thirds of the total output