Macroeconomics Final: All Previous Tests
A depression is A. a severe recession. B. a sustained economic upturn. C. another word for a bull market. D. the period of time following a peak in the business cycle.
A. a severe recession.
Foreign Recession. Suppose a foreign country experiences a recession and buys less goods throughout the world including the United States. This will lead to a ??? of the U.S. aggregate demand curve.
leftward shift of
The ???-run aggregate supply curve is a ??? aggregate supply curve that reflects the idea that in the ??? run, output is determined solely by the factors of production and technology.
long, vertical, long
An economic ??? is used to explore the choices people make and the consequences of those choices.
model
A change in a variable measured on an axis of a graph causes a ??? the curve, while a change in a relevant variable that is not measured on an axis causes a ??? the curve.
movement along, shift in
In a market system, ??? provide individuals the information they need to make decisions because they provide signals about the relative ??? of a product and help an economy respond.
prices, scarcity
If the reserve ratio is 0.10 and a deposit of $150 is placed into a bank, that bank can lend out ???
$135 0.10 (150) = 135
If the required reserve ratio is 0.20, and there is a cash withdrawal of $7,000, there would be a total decrease in checking account balances of ??? throughout all of the banks.
-$35,000 0.20 (-$7,000) = -$35,000
If the multiplier for taxes is −1.30 and taxes are increased by $120 billion, calculate the amount by which the demand curve will ultimately shift. Shift of the demand curve = ??? billion.
-156 because...-1.30 (120) = -156
Suppose you belong to a tennis club that has a monthly fee of $60 and a charge of $5 per hour to play tennis. Number of hours of Tennis: 5 , Monthly club bill: $85 Number of hours of Tennis: 10, Monthly club bill: ??? Number of hours of Tennis: 15, Monthly club bill: ??? Number of hours of Tennis: 20, Monthly club bill: ??? b. The slope of the line plotting the relationship between the hours of tennis and the monthly club bill is ??? c. Suppose you start with 10 hours of tennis and then decide to increase your tennis time by 2 hour(s). By how much will your monthly bill increase? d. Suppose you start with 10 hours and then decide to spend an additional $40 on tennis. How many additional hours can you get?
10 hours, monthly club bill: $110 15 hours, monthly club bill: $130 20 hours, monthly club bill: $160 $5.00(hours) + 60 = monthly club bill b. $5, rise/run costs $5.00 for every additional hour c. $10, 2 additional hours x $5.00 = $10.00 d. 8 hours, $40 / $5 per hour = 8 hours
The following is a chart of sales for used cars at ACME Used Cars over the last 6 weeks: Week 1: 27 Week 2: 17 Week 3: 38 Week 4: 22 Week 5 25 Week 6: 31 During week 2, a severe thunderstorm caused a power outage in much of the area. As a result, between weeks 1 and 2, sales declined by ??? During week 3, ACME Used Cars had the 'Sale of the Century' where all cars were marked down 10% in price. As a result, between weeks 2 and 3, sales increased by ???
37% 17 - 27 = -10 --> 10/27 = -.37(100) = -37 123.5% 38 - 17 = 21 --> 21/17 = 1.235(100) = 123.5%
If the MPC is 0.75, then the multiplier is equal to ??? If the government increases its purchases of goods and services by $21 million, GDP will increase by ??? million
4 1 - .75 = .25 / 1 = 4 $84 million 4 ($21) = $84
Use the following information to answer the next several questions: Scenario 1: Imagine that an economy produces two goods, flashlights and fishing lures. In 2015, the economy produced 70 flashlights and 40 fishing lures, and the prices of flashlights and fishing lures were $5 and $12, respectively. In 2016, the economy produced 85 flashlights and 50 fishing lures, and the prices of flashlights and fishing lures were $7 and $15, respectively. Based on the information in Scenario 1, real GDP grew by about ________ percent from 2015 to 2016. A. 23 B. 31 C. 62 D. 162
A. 23 2015 products with 2016 prices (70 x 7) + (40 x 15) = 1090 2016 products with 2016 prices (85 x 7) + (50 x 15) = 1345 (1345 / 1090) x 100 = 123.3 (123.3 - 100 / 100) x 100 = 23%
Deflation is illustrated by inflation changing from A. 3% to −0.3%. B. 5% to 3%. C. 0.1% to 1%. D. 3% to 5%.
A. 3% to −0.3%.
Refer to Figure 15.1. At point b A. GDP is above potential output. B. unemployment is above the natural rate. C. the economy is in long−run equilibrium. D. GDP is below potential output.
A. GDP is above potential output. - point shows more output at a lesser price
Which of the following statements is true? A. The higher interest rates are, the lower the quantity of money demanded. B. The lower interest rates are, the lower the quantity of money demanded. C. The higher interest rates are, the higher the quantity of money demanded. D. Interest rates and the quantity demanded of money are not predictably related.
A. The higher interest rates are, the lower the quantity of money demanded.
Which of the following does NOT shift the aggregate demand curve? A. a decrease in the price level B. a decrease in taxes C. an increase in GDP in Japan D. an increase in the supply of money
A. a decrease in the price level
If Republicans are primarily concerned with controlling inflation and Democrats are primarily concerned with controlling unemployment, then Republicans would tend to focus on ________ economic policies and Democrats would tend to focus on ________ economic policies. A. contractionary; expansionary B. contractionary; contractionary C. expansionary; expansionary D. expansionary; contractionary
A. contractionary; expansionary
A decrease in spending on new homes will, other things equal, A. decrease aggregate demand. B. increase aggregate demand. C. increase aggregate supply. D. decrease aggregate supply.
A. decrease aggregate demand.
Raising Interest Rates on Reserves. If a central bank raised the interest rates it paid on reserves, the supply of money would A. decrease. B. increase. C. stay the same.
A. decrease.
When the Fed increases the money supply, it leads to A. lower interest rates and increased investment spending. B. higher interest rates and decreased investment spending. C. higher interest rates and increased investment spending. D. lower interest rates and decreased investment spending.
A. lower interest rates and increased investment spending.
The Federal Reserve can influence long-term interest rates by A. managing the expectations of short-term interest rates. B. mandating long-term interest rates according to regulation. C. manipulating futures markets. D. bailing out failing companies.
A. managing the expectations of short-term interest rates.
The short-run aggregate supply curve shows the short-run relationship between the A. price level and the willingness of firms to supply output to the economy. B. consumption level and the price level. C. price level and quantity supplied in one market. D. price level and total demand in the entire economy. Evidence about the behavior of prices in the economy suggests that changes in aggregate demand have a relatively ??? effect on prices within a few quarters so that the short-run aggregate supply curve is relatively ???. Thus, shifts in aggregate demand lead to ??? changes in output, but ??? changes in price.
A. price level and the willingness of firms to supply output to the economy. small, flat, large, small
Which of the following is not a key function of the Federal Reserve? A. printing currency B. conducting monetary policy C. providing a system of check collection and clearing D. holding reserves from banks and other depository institutions
A. printing currency
Keynes expressed doubts that that the economy would A. recover from a major recession without active policy. B. ever return to full−employment. C. recover from the effects of higher prices. D. ever move away from full−employment.
A. recover from a major recession without active policy.
As a result of an increase in the personal income tax rate, consumers are likely to A. spend less. B. earn more money. C. spend more. D. save more.
A. spend less.
Lack of Credit and Aggregate Demand and Supply. In the 2008 recession, both firms and households had limited access to credit. This could be both a negative shock to aggregate demand and a negative shock to aggregate supply because when consumers spend less, A. the aggregate demand decreases; and the aggregate supply will fall as borrowing costs increase. B. the aggregate supply decreases; and the government will spend less decreasing the aggregate supply. C. the aggregate supply decreases; and the aggregate demand will fall as borrowing costs increase. D. the aggregate demand decreases; and the government will spend less decreasing the aggregate supply.
A. the aggregate demand decreases; and the aggregate supply will fall as borrowing costs increase.
In the long run A. the economy operates at full employment. B. increases in government spending do not affect other uses of output. C. increases in the money supply increase the level of output. D. prices are sticky.
A. the economy operates at full employment.
The most basic measure of money in the United States is called A. M2 and is the sum of currency in the hands of the public, demand deposits, savings deposits, and one year certificates of deposit. B. M1 and is the sum of currency in the hands of the public, demand deposits, other checkable deposits, and traveler's checks. C. M2 and is the sum of currency in the hands of the public, demand deposits, other checkable deposits, and traveler's checks. D. M1 and is the sum of currency in the hands of the public, demand deposits, savings deposits, and one year certificates of deposit.
B. M1 and is the sum of currency in the hands of the public, demand deposits, other checkable deposits, and traveler's checks.
Refer to Figure 7.1. In equilibrium, the real wage is ________ and the amount of labor employed is ________. A. Z; C B. Y; B C. X; C D. Y; C
B. Y; B - even amount right and up
Setting the Interest Rate on Reserves. If the Fed set an interest rate on reserves close to the market interest rate on commercial loans, A. banks would have more incentive to make loans. B. banks would have little incentive to make loans. C. banks would have more incentive to borrow funds. D. banks would be unnecessary.
B. banks would have little incentive to make loans.
What are the components of gross domestic product (GDP) in a closed economy? A. consumption, government spending, net exports B. consumption, investment, government spending C. investment, government spending, imports D. consumption, investment, exports
B. consumption, investment, government spending
Contractionary policies are government policies that A. increase aggregate supply. B. decrease aggregate demand. C. increase aggregate demand. D. decrease aggregate supply.
B. decrease aggregate demand.
During a recession, policymakers should A identify the sectors of the economy that are the weakest and spend less there. B. either increase government spending or cut taxes. C. either decrease government spending or increase taxes. D. determine the right policy based on the status of the deficit.
B. either increase government spending or cut taxes.
A White House proposal to increase infrastructure spending on roads, rail lines and runways is an example of A. contractionary fiscal policy. B. expansionary fiscal policy. C. automatic stabilization. D. insourcing policies.
B. expansionary fiscal policy.
The current United States currency system is A. gold standard. B. fiat money. C. commodity money. D. liquid money.
B. fiat money.
In a financial crisis like those that occurred in 2001 and 2008, the Fed can A. use contractionary policy to offset expansionary fiscal policy and prevent inflation. B. help stabilize the economy by adjusting its policies and relationships with banks. C. coordinate with central banks in other countries to weaken their economies. D. keep interest rates a bit higher to prevent deflation.
B. help stabilize the economy by adjusting its policies and relationships with banks.
When the economy slows down and national income falls, the government will have ________ tax revenues to fund programs. A. more B. less C. a rapid increase in D. about the same
B. less
We measure the opportunity cost of holding money with: A. money demand. B. the interest rate. C. currency. D. liquidity.
B. the interest rate.
Which of the following will decrease the supply of money? A. Purchasing bonds. B. Decreasing the discount rate. C. Increasing reserve requirements. D. Decreasing the federal funds rate.
C. Increasing reserve requirements.
Which of the following is not a factor of production? A. Human capital. B. Land. C. Money. D. Entrepreneurship.
C. Money.
Which of the following is one of the primary sources of federal government revenue? A. The corporate income tax. B. The capital gains tax. C. The social insurance tax. D. The tax on dividends.
C. The social insurance tax.
What is the reason that stabilization policies do not have an immediate effect on an economy? A. Imports come into the country too fast. B. Exports often are not shipped fast enough. C. There is a time lag for policies to take effect. D. Consumers are slow to catch up on spending.
C. There is a time lag for policies to take effect.
Refer to Figure 15.2. Adjustment from a short−run equilibrium to the long−run equilibrium is represented by a movement from point ________ to point ________. A. b;c B. c;d C. c;b D. b;e
C. c;b
Given the uncertainty of market economies, most governments A. require its citizens to buy private insurance for health and cars. B. require its citizens to buy private insurance for home, life, and cars. C. fund a "social safety net" that provides for citizens who fare poorly in markets. D. require its citizens to buy employment insurance.
C. fund a "social safety net" that provides for citizens who fare poorly in markets.
A decrease in the personal income tax rate ________ disposable income which ________ consumption. A. decreases; increases B. increases; decreases C. increases; increases D. decreases; decreases
C. increases; increases
The Federal Open Market Committee (FOMC) votes on: A. the reserve requirement. B. the discount rate. C. monetary policy. D. discount loans.
C. monetary policy.
Which of the following sources of revenue is used to fund government spending? A. corporate contributions B. interest C. taxation D. political party contributions
C. taxation
The Federal Reserve might engage in open market sales of bonds if A. unemployment increased. B. the economy's growth slowed. C. there is rapid inflation. D. real GDP decreased in the last quarter.
C. there is rapid inflation.
The Fed can supply funds to the markets in the case of a financial panic because A. panic raises interest rates. B. they control the Treasury. C. they are the lender of last resort. D. more funds are demanded.
C. they are the lender of last resort.
Refer to Figure 4.1, which shows Molly's and Ryan's individual demand curves for compact discs per month. Assuming Molly and Ryan are the only consumers in the market, if the market quantity demanded is 5, the price must be A. $3. B. $6. C. $9. D. $12.
D. $12. - market demand is overall 5, Molly can sell 3 for $12 while Ryan can sell the remaining 2 for $12 as well
Minimum wage per hour 1974: $2.00 2015: $7.25 Weekly income from minimum wage 1974: $80.00 2015: $290.00 Cost of a standard basket of goods 1974: $47.00 2015: $236.00 Number of baskets per week 1974: 1.70 2015: 1.23 The nominal value of the minimum wage in 2015 was: A. $2.00 per hour. B. $3.63 per hour. C. $5.62 per hour. D. $7.25 per hour.
D. $7.25 per hour.
Personal Debt and Tax Cuts. Suppose you had a large unpaid balance on your credit card and were paying a high rate of interest. You then received a one-time tax rebate from the government and decided to pay down the balance on your credit card. If there were many others like you in the economy, would the tax cut be an effective stimulus? A. Yes, since debt reduction will increase credit card use. B. No, since debt reduction can lower interest rates. C. Yes, since most people use credit cards for purchases. D. No, since debt reduction would not stimulate consumption.
D. No, since debt reduction would not stimulate consumption.
Which of the following would cause a decrease in aggregate demand? A. a rise in wages B. an increase in the price level C. an increase in the money supply D. a fall in investor confidence
D. a fall in investor confidence
In the diagram to the right, the economy is currently at point A. President Donald Trump lowered taxes in 2018. The Congress also increased government spending that year. Ceteris paribus, these actions are represented by: A. a shift of the aggregate demand curve from AD2 to AD1 (C to A). B. a movement from point A to point B. C. a movement from point B to point A. D. a shift of the aggregate demand curve from AD1 to AD2 (A to C).
D. a shift of the aggregate demand curve from AD1 to AD2 (A to C).
Figure 9.1 shows three aggregate demand curves. A movement from point b to point c could be caused by a(n) A. decrease in government spending. B. increase in the money supply. C. decrease in taxes. D. decrease in the price level.
D. decrease in the price level.
If prices are sticky A. economic activity will be coordinated efficiently. B. prices will quickly adjust to changes in demand. C. quantity supplied will always equal quantity demand. D. economic activity will not be coordinated efficiently.
D. economic activity will not be coordinated efficiently.
Suppose GDP ________ the level of potential output. We would expect to see ________ unemployment, rising wages, and rising prices. A. is below; low B. exceeds; high C. is below; high D. exceeds; low
D. exceeds; low
A White House proposal to lower business taxes by increasing tax deductions is an example of A. contractionary fiscal policy. B. progressive taxation. C. automatic stabilization. D. expansionary fiscal policy.
D. expansionary fiscal policy.
Banks trade reserves with one another in the: A. capital market. B. money market. C. discount market. D. federal funds market.
D. federal funds market.
Banks create money by A. printing money which is then deposited into banks. B. making loans which decreases deposits because the required reserve ratio is a fraction of loans. C. lending from bank to bank. D. making loans which increases deposits because the required reserve ratio is a fraction of deposits.
D. making loans which increases deposits because the required reserve ratio is a fraction of deposits.
Stabilization policies are policies designed to A. keep output constant. B. keep prices constant. C. increase trade. D. move the economy closer to potential output.
D. move the economy closer to potential output.
The time it takes for a policy to actually work is known as A. fiscal policy. B. crowding out. C. inside lags. D. outside lags.
D. outside lags.
If an economy is below full employment or potential output, over time, the short-run aggregate supply curve will shift A. leftward as prices and wages rise. B. rightward as prices and wages rise. C. leftward as prices and wages fall. D. rightward as prices and wages fall.
D. rightward as prices and wages fall.
Credit Cards. Credit cards are not considered part of the money supply because: A. they make it easier to conduct business. B. they represent a store of value. C. they are a unit of account. D. they are a loan which you have to use money to pay for later.
D. they are a loan which you have to use money to pay for later.
The aggregate demand curve is downward sloping because of the A. wealth effect, the investment effect, and the international trade effect. B. consumption effect, the interest rate effect, and the international trade effect. C. wealth effect, the interest rate effect, and the inflation effect. D. wealth effect, the interest rate effect, and the international trade effect.
D. wealth effect, the interest rate effect, and the international trade effect.
Fiscal Multiplier and Thrifty Consumers. Suppose that the government gave each U.S. legal resident $10 but everyone decided to save the money and not spend it. In this case, the fiscal multiplier would be A. one tenth. B. ten. C. one. D. zero.
D. zero.
True or False As the price of a product falls, the demand for the product increases, ceteris paribus.
False
True or False: Changes in government purchases affect aggregate demand only indirectly through consumption spending.
False
True or False: Deposits in checking accounts are not included in the definition of money because they are not a very liquid asset
False
True or False: When the economy operates at full employment, an increase in government spending must crowd out consumption
False
True or False: Economic advisers who fear that the economy is growing too rapidly would recommend that the government decrease spending and/or increase taxes.
True
True or False: Higher employment taxes lead to lower levels of employment.
True
True or False: Stabilization policies are actions taken to bring the economy closer to full employment.
True
A Chinese Experiment. In 2000, the Chinese government mandated three one-week holidays throughout the year to stimulate consumer spending. The idea was that these extended vacations would induce the Chinese to spend more of their earnings while on vacation. The Chinese government believed that the mandated holidays would shift the ??? curve to the ???, thus stimulating the Chinese economy.
aggregate demand, right
Understanding Japanese Fiscal Policy. Japan's finance ministry agreed to income tax cuts to combat a decade-long recession in the 1990s, but only if national sales taxes were increased several years later. Assume that the economy is currently in a recession, operating at a point below full employment. The short-run effect of the income tax cuts will shift the ??? curve to the ???, ??? prices and ??? output. Which of the following best explains why the Finance Ministry required an increase in sales taxes several years later? A. In the future, a sales tax increase will be required to further stimulate the economy. B. The lower income tax rates are likely to cause a recession in the future. C. It is not possible to have permanently lower income tax rates without some other tax increasing. D. After the economy returns to full employment, the lower income tax rate may be inflationary.
aggregate demand, right, increasing, increasing D. After the economy returns to full employment, the lower income tax rate may be inflationary.
Tax Refunds and Consumer Spending. In 1999, the Internal Revenue Service began to mail out refund checks because of changes in the tax law in 1998. Assuming that taxpayers did know that they would receive refunds and, as consumers, based their spending decisions on their permanent incomes, the result of the refund would be ??? in consumption expenditure.
an increase
Banks consider loans they make to be ???. If a customer brings in $2,000 to deposit into a checking account, it is ??? for the bank. If a customer enters the bank and secures a $2,000 personal loan, it is ??? for the bank.
assets, a liability, an asset
Money solves the problem of double coincidence of wants that would regularly occur under a system of ???
barter
The Fed provides a system of check collection and ???
clearing
Four social inventions that support markets are ??? which specify the terms of exchange; ??? which reduces the risk of entrepreneurs; ???which increase the profitability of inventions; and ??? rules, which provide potential investors with reliable information about the financial performance of firms.
contracts, insurance, patents, accounting
A decrease in government spending will ??? interest rates in the long run.
decrease
Understanding M1 and M2. If you write a check from your checking account to your money market account, M1 will ??? and M2 will ???
decrease, remain the same
Suppose the equilibrium price of accordians recently increased while the equilibrium quantity decreased. These changes were caused by a(n) ??? in ???
decrease, supply
When using the marginal principle to explore the decision of how many movie sequels to produce, the marginal benefit of movies in a series ??? while the marginal cost ??? Sequels should be made so long as the marginal benefit of the sequel ??? the marginal cost of the sequel.
decreases, increases, exceeds
A budget ??? is the amount by which government spending exceeds revenues in a given year. A budget ??? is the amount by which government revenues exceed government expenditures in a given year.
deficit, surplus
An increase in the supply of money will cause acountry's currency to ???
depreciate
If a bank directly receives a loan from the Federal Reserve, it is offered at the ??? rate.
discount
Economists emphasize that one of the necessary conditions for the classical model to work is that wages and prices must be ??? Over ??? periods of time, wages and prices are not fully flexible, so ???insights are important. However, over ??? periods of time, wages and prices do adjust and the insights of ??? are more relevant.
flexible, short, Keynes' Model, longer, the Classic Model
If interest rates decrease, the present value of a fixed payment in the future will
increase
Purchasing Long-Term Government Bonds. If the Fed purchased long-term government bonds held by the public, then the supply of money would ???
increase
If the Fed purchased long-term government bonds held by the public, then the supply of money would ??? An open market sale of bonds by the Fed would A. decrease the money supply, shift the money supply curve to the left, and raise interest rates. B. decrease the money supply, shift the money supply curve to the left, and reduce interest rates. C. increase the money supply, shift the money supply curve to the right, and raise interest rates. D. increase the money supply, shift the money supply curve to the right, and reduce interest rates.
increase A. decrease the money supply, shift the money supply curve to the left, and raise interest rates.
To increase aggregate demand, a government can either ??? spending or ??? taxes
increase, decrease
Consider an increase in the supply of labor. This shifts the ??? curve to the ??? As a result of this shift, the equilibrium quantity of labor ??? and output ??? The real wage ???
labor supply, right increases, increases decreases
The ??? interest rate is the interest rate quoted in the market. The ???interest rate is the the nominal interest rate minus the inflation rate.
nominal, real
The price of the product is ??? when drawing a market supply curve. Wages paid to workers are ??? when drawing a market supply curve. The price of materials used in production is ??? when drawing a market supply curve. Taxes paid by producers are ??? when drawing a market supply curve. The quantity of the good produced is ??? when drawing a market supply curve.
not held fixed held fixed held fixed held fixed not held fixed
Suppose the Federal Reserve buys $100 million of government bonds owned by Goldman Sachs. This type of transaction is called an ??? After this transaction, A. Goldman Sachs will have $100 million of excess reserves to loan, decreasing the money supply. B. Goldman Sachs will have $100 million of excess reserves to loan, increasing the money supply. C. the Federal Reserve will have $100 million of excess reserves to loan, increasing the money supply. D. the Federal Reserve will have $100 million of excess reserves to loan, decreasing the money supply.
open market purchase B. Goldman Sachs will have $100 million of excess reserves to loan, increasing the money supply.
The date that a recession starts is called the ???
peak
The short run in macroeconomics is the time period over which ??? to economic conditions.
prices do not adjust
The States and Balanced Budgets. In the U.S., virtually all states have requirements that they either plan for or maintain a balanced budget. If the national economy experiences a recession, states should ??? their spending and perhaps also ??? their taxes to balance their budgets.
reduce, increase
A decrease in material costs will shift afirm's short-run aggregate supply curve to the ???
right
Opening Markets to Trade. One of the normal objectives of U.S. trade negotiations with other countries is to open their markets to trade. If this process is successful, the U.S. aggregate demand curve will shift to the ???
right
An expansionary fiscal policy shifts the aggregate demand curve to the ???, ??? prices, and ??? real GDP.
right, raises, increases
To decrease the supply of money, the Fed should ??? bonds.
sell
Reducing Payroll Taxes as a Stimulus Policy. One part of President Obama's stimulus policy was to reduce payroll taxes paid by individuals. The theory is that this would put more money in the hands of workers and lead to higher spending. For this policy to work, it assumes that workers will ??? any additional income, thereby ??? aggregate demand.
spend, increasing
Using a New Base Year to Calculate Real GDP and Inflation. Using the data from the table below, answer the following questions using 2012 prices. Quantities Produced 2011: CDs- 100 Price per CD- $20 Tennis Racket- 210 Price per Tennis Racket- $105 2012: CDs- 130 Price per CD- $25 Tennis Racket- 225 Price per Tennis Racket- $130 a. Real GDP in 2011 using 2012 prices is ??? b. Real GDP in 2012 using 2012 prices is ??? c. Real GDP grew by ??? percent. d. The price index for GDP for 2012 using 2012 as the base year is ??? e. Prices increased by ??? percent
$29,800 - calculate how profit for CDs plus profit for Tennis Rackets using 2011 production and 2012 prices: (100 x $25) + (210 x $130) = $29,800 $32,500 - find this by calculating how profit for CDs plus profit for Tennis Rackets with 2012's numbers: (130 x $25) + (225 x $130) = $32,500 9.06 % - calculate by solving for the difference in part "b" and "a" divided by "a" multiplied by 100 (32,500 - 29,800 / 29,800) x 100 = 9.06 % 100 - price index for 2012 is the nominal GDP in 2012 divided by real GDP in 2012 and multiply that by 100 (32900 / 329000) x 100 = 100 23.93 % - To get the price change, calculate the difference in the GDP deflator between 2011 and 2012 and divide by the GDP deflator in 2011. - deflator between 2011 and 2012 is the nominal GDP in 2012 (found in part b) divided by real GDP in 2012 (using 2012 products and 2011 prices) and multiply that by 100 Then subtract that by the GDP deflator in 2011, multiplied and divided by 100. (remember initial GDP is always 100) (130 x $20) + (225 x $105) = $26,225 (32,500 / 26,225) x 100 = 123.93 (123.93 - 100 / 100) x 100 = 23.93
Compute the new values for the percentage changes 1,000 with a 8% change = ??? 500 with a 12% change = ??? 200 with a 25% change = ???
1080, 1000(.08) = 80 + 1,000 = 1,800 560, 500(.12) = 60 + 500 = 560 250, 200(.25) = 50 + 200 = 250
Diminishing Returns and the Marginal Principle.Molly's Espresso Shop has become busy, and the more hours Ted works, the more espressos Molly can sell. The price of espressos is $2 and Ted's hourly wage is $11. What are the marginal benefits for an additional hour from 4 to 5? 4 hours for Ted and he has sold 184 5 hours for Ted and he has sold 190 6 hours for Ted and he has sold 193 If Molly applies the marginal principle, how many hours should Ted work?
5 hours of work: $12 190 - 184 = 6 --> $2.00(6) = $12.00 5 hours this is because any time past 5 hours, the marginal price will be less than his hourly wage 193 - 190 = 3 --> $2.00(3) = $6.00 < $11.00
Production Possibilities Curve. Consider a nation that produces baseball mitts and soccer balls. The following table shows the possible combinations of the two products. Baseball mitts (millions) : Soccer balls (millions) 0 : 30 2 : 24 4 : 18 6 : 10 8 : 0 The opportunity cost of the first 2 million baseball mitts is ??? million soccer balls and the opportunity cost of the third 2 million baseball mitts is ??? million soccer balls. Suppose the technology for producing baseball mitts improves, meaning that fewer resources are needed for each baseball mitt. In contrast, the technology for producing soccer balls does not change. The technological improvement in production of baseball mitts will A. increase the output of both baseball mitts and soccer balls. B. only increase the output of baseball mitts. C. have no effect on the output of baseball mitts and soccer balls. D. only increase the output of soccer balls.
6 million 30 million soccer - 24 million soccer = 6 million 8 million 18 million soccer - 10 million soccer = 8 million B. only increase the output of baseball mitts.
Compute the percentage changes for the following 100 to 108, percent change? 50 to 51, percent change? 10 to 12.5, percent change?
8%, 108 - 100 = 8/100 = .08(100) = 8 2%, 51 - 50 = 1/50 = .02(100) = 2 25%, 12.5 - 10 = 2.5/10 = .25(100) = 25
The following table lists the basket of goods in the Consumer Price Index (Assume 2014 is the base year.) Sunglasses: 2014 Quantity: 8, 2014 Price: $9.00 2015 Quantity: 10, 2015 Price: $11.00 2016 Quantity: 7, 2016 Price: $10.00 Toothpaste: 2014 Quantity: 15, 2014 Price: $3.00 2015 Quantity: 18, 2015 Price: $4.00 2016 Quantity: 15, 2016 Price: $4.00 Ferrets: 2014 Quantity: 6, 2014 Price: $12.00 2015 Quantity: 4, 2015 Price: $15.00 2016 Quantity: 9, 2016 Price: $18.00 Using the information in Table 6.2, the inflation rate from 2015 to 2016 is about A. 4 percent. B. 5 percent. C. 17 percent. D. 31 percent.
A. 4 percent. Calculate CPI for 2015 and 2016 CPI = price of goods in year / price in base year 2015: (10 x $11)+(18 x $4)+(4 x $15) / (8 x $9)+(15 x $3)+(6 x $12) = (242 / 189) x 100 = 128 2016: (7 x $10)+(15 x $4)+(9 x $18) / 189 = (292/189) x 100 = 154.5 (154.5 - 128) / 128 x 100 = ???????
The value of all final goods and services produced during a given time period measures a nation's A. gross domestic product. B. consumer price index. C. net exports. D. net national product.
A. gross domestic product.
We say that a person has a comparative advantage in producing a particular product if he or she A. has a lower opportunity cost than another person. B. has a lower cost than the other person. C. can produce at least as much as the other person. D. can produce more than another person.
A. has a lower opportunity cost than another person.
In which system are decisions made by thousands of people who have information about resources, production technology and consumer desires? A. market system B. centrally planned system C. command system D. socialist system
A. market system
In a market system, self−interest motivates most people to A. provide products for other people. B. rely on government central planning. C. avoid paying insurance premiums. D. remain self−sufficient.
A. provide products for other people.
The unemployment rate A. rises during recessions and falls during booms. B. tends to remain the same in booms and recessions. C. rises during booms and falls during recessions. D. rises during times of rapid economic growth and falls during times of slow economic growth.
A. rises during recessions and falls during booms.
According to Adam Smith, people are motivated by A. self-interest. B. group-interest. C. human instinct. D. public policy.
A. self-interest.
Which of the following uses of tax revenues collected by the government leads to increased capital deepening in the United States? A. subsidizing airport construction in Seattle B. providing food to a nation suffering from a famine C. foreign aid given to Mexico to build new schools D. higher salaries for members of Congress
A. subsidizing airport construction in Seattle
If the government or large firms employ workers and scientists to advance the frontiers of knowledge in basic sciences, their work can lead to A. technological progress in the long run. B. full employment for trading partners. C. higher wages and lower interest rates. D. deflation.
A. technological progress in the long run.
Assume that coffee and tea are substitutes. When the price of coffee increases A. the demand for tea increases. B. the supply of tea decreases. C. the supply of tea increases. D. the demand for tea decreases.
A. the demand for tea increases
The aggregate demand curve shows the relationship between A. the level of prices and the quantity of real GDP demanded. B. price and elasticity. C. interest rates and investment. D. price and quantity. The aggregate demand curve ???, indicating that the quantity of aggregate demand ??? as the price level in the economy falls.
A. the level of prices and the quantity of real GDP demanded. slopes downward, increases
Business cycles are A. used to describe fluctuations in GDP. B. a description of the time required to bring a new product to market. C. movements in stock prices. D. the transfer of executives between firms.
A. used to describe fluctuations in GDP.
Employment status of the working age population of Metropolis is approximately: Employed full−time: 4,200 Employed part−time: 700 Not employed and looking for work: 300 Not employed and not looking for work: 200 Suppose that 50 percent of the part−time workers of Metropolis are looking for full−time jobs. Given the data in Table 6.1, if these workers were counted as not employed and looking for work, the unemployment rate of Metropolis would be approximately A. 6 percent. B. 13 percent. C. 16 percent. D. 21 percent.
B. 13 percent.
The following table lists the basket of goods in the Consumer Price Index (Assume 2014 is the base year.) Sunglasses: 2014 Quantity: 8, 2014 Price: $9.00 2015 Quantity: 10, 2015 Price: $11.00 2016 Quantity: 7, 2016 Price: $10.00 Toothpaste: 2014 Quantity: 15, 2014 Price: $3.00 2015 Quantity: 18, 2015 Price: $4.00 2016 Quantity: 15, 2016 Price: $4.00 Ferrets: 2014 Quantity: 6, 2014 Price: $12.00 2015 Quantity: 4, 2015 Price: $15.00 2016 Quantity: 9, 2016 Price: $18.00 Using the information in Table 6.2, the percent increase in prices over the two year period from 2014 to 2016 is approximately A. 26 percent. B. 31 percent. C. 38 percent. D. 98 percent.
B. 31 percent. use 2014 products and 2016 prices (8 x $10) + (15 x $4) + (6 x $18) = 248 use 2014 products and 2014 prices (8 x $9) + (15 x $3) + (6 x $12) = 189 (248 / 189) x 100 = 131.2 (131.2 - 100 / 100) x 100 = 31%
In June 2012, the U.S. labor force consisted of 142,415,000 employed and 12,749,000 unemployed. The U.S. unemployment rate for June 2012 was about A. 7.4 percent. B. 8.2 percent. C. 9.0 percent. D. 11.2 percent.
B. 8.2 percent.
What does the Latin expression ceteris paribus mean? A. Resources are limited. B. Other things being held fixed. C. Seize the day. D. A measure of something that can take on different values.
B. Other things being held fixed.
When a business asks how much its sales would increase if another employee is hired, it is considering which of the following? A. Using an incentive B. Thinking at the margin C. Making an assumption D. Ceteris paribus
B. Thinking at the margin
The production possibilities curve illustrates the notion of opportunity cost because A. points inside the production possibilities curve are inefficient. B. as more of one good is produced, less of the other can be produced. C. if there are more resources, the curve will shift. D. points outside the production possibilities curve are unattainable.
B. as more of one good is produced, less of the other can be produced.
Financial intermediaries reduce the risk to savers through A. liquidity. B. diversification. C. deposit insurance. D. retained earnings. Financial intermediaries also ??? the costs of negotiation by pooling the funds of savers to make loans to individual borrowers and ??? liquidity because households do not normally withdraw their money at the same time.
B. diversification. reduce, provide
The opportunity cost of a college degree includes the A. the costs of food, housing, books, tuition that a student could have purchased. B. goods that a student cannot purchase because of spending on books and tuition and the foregone income that could have been earned while in college. C. goods that a student cannot purchase because of spending on books, tuition, food, and housing and the foregone income that could have been earned while in college. D. the cost of college, the foregone income while in college, and the inability to go to another college.
B. goods that a student cannot purchase because of spending on books and tuition and the foregone income that could have been earned while in college.
Savers demand lower rates of interest from investors when they face A. lower risk, lower liquidity or smaller costs of negotiation. B. lower risk, higher liquidity or smaller costs of negotiation. C. higher risk, higher liquidity or smaller costs of negotiation. D. lower risk, higher liquidity or larger costs of negotiation.
B. lower risk, higher liquidity or smaller costs of negotiation.
The slope of a curve measures: A. the length of the curve. B. the change in the vertical variable in response to the change in the horizontal variable. C. only the change in the vertical variable. D. only the change in the horizontal variable.
B. the change in the vertical variable in response to the change in the horizontal variable.
Suppose that consumers expect that the price of a product will increase in the future. The result is that A. the current demand for the product decreases. B. the current demand for the product increases. C. the current supply of the product decreases. D. the current supply of the product increases.
B. the current demand for the product increases.
You have an hour between your economics and math classes. What is the opportunity cost of that time if you use it to complete your math homework instead of your economics homework? A. the math homework you chose to complete B. the economics homework you could have completed C. the cost of your calculator and math textbook D. zero, because it doesn't cost any money to do your math homework
B. the economics homework you could have completed
The labor force participation rate shows A. the percentage of the labor force that has a job. B. the percentage of the relevant population that is in the labor force. C. the percentage of the labor force that is unemployed. D. the percentage of the relevant population that is employed.
B. the percentage of the relevant population that is in the labor force.
When there is a change in the quantity demanded it means that A. the hours the customer can buy products each day have increased. B. the quantity a consumer is willing to buy changes when the price changes. C. the selling price of the products has not changed. D. the number of products in inventory have increased.
B. the quantity a consumer is willing to buy changes when the price changes.
Adjustments in ________ take the economy from the short−run equilibrium to the long−run equilibrium. A. imports and exports B. wages and prices C. the multiplier D. interest rates
B. wages and prices
The market supply curve is positively sloped because a higher price A. will ensure higher profits as the cost of production decreases. B. will encourage firms with higher costs to enter the market. C. is needed to satisfy the higher market demand. D. is associated with the higher revenue earned.
B. will encourage firms with higher costs to enter the market.
Why is it that when an additional worker is hired in a facility, the principle of diminishing returns applies? A. Each worker has less hours within the facility. B. Each worker has more space within the facility. C. Each worker has less space within the facility. D. Each worker has more pressure within the facility.
C. Each worker has less space within the facility.
High Prices and Inflation. Critically evaluate the following statement: "Tokyo is an expensive place to live. They must have a high inflation rate in Japan." A. False. Tokyo and Japan do not face the same prices. B. False. The inflation rate tends to overstate the cost of living. C. False. Inflation measures price changes, not price levels. D. True. If Tokyo is expensive, then Japan's inflation rate will be high.
C. False. Inflation measures price changes, not price levels.
To cut back on expenses, Lindsey decides to eliminate her maid service that costs her $50 per week and do it herself. Annual gross domestic product (GDP) would change by A. −$50. B. $50. C. $0. D. −$2,600.
D. −$2,600. 52 weeks in a year ($50) = 2,600
The following table shows the quantities of corn supplied and demanded at different price levels. Price per ton: $60 - Quantity Supplied: 80 - Quantity Demanded: 140 Price per ton: $70 - Quantity Supplied: 90 - Quantity Demanded: 120 Price per ton: $80 - Quantity Supplied: 100 - Quantity Demanded: 100 Which of the following statements accurately describe this corn market? (Check all that apply) A. The quantity of corn demanded increases with an increase in price per ton. B. The corn supply curve is negatively sloped. C. The quantity of corn supplied increases with an increase in price per ton. D. The corn demand curve is negatively sloped. The equilibrium price of corn is ??? and the equilibrium quantity is ??? tons. At a price of $70 there is excess ??? equal to ??? tons.
C. The quantity of corn supplied increases with an increase in price per ton. D. The corn demand curve is negatively sloped. Find where supply = demand $80, 100 tons Find which is higher at $70, then subtract the two demand, 30
Which of the following is not an element of the economic way of thinking? A. Use assumptions to simplify complex behavior. B. Rational people respond to incentives. C. Use normative statements. D. Thinking at the margin.
C. Use normative statements.
The "Brain Drain" and Incentives for Education. Some economists are concerned about the "brain drain," the phenomenon in which highly educated workers leave developing countries to work in developed countries. Other economists have argued that "brain drain" could create incentives for others in the country to secure increased education and many of the newly educated might not emigrate. Explain why the "brain drain" could lead to increased education among the remaining residents. A. When highly educated workers leave, earnings forgone while in school decrease. B. When highly educated workers leave, the direct out-of-pocket costs of education decrease. C. When highly educated workers leave, more high paying jobs become available. D. All of the above. How would you test this theory? A. Compare the types of jobs in developing countries with and without significant "brain drain." B. Compare wages in developing countries with and without significant "brain drain." C. Compare labor productivity in developing countries with and without significant "brain drain." D. All of the above.
C. When highly educated workers leave, more high paying jobs become available. D. All of the above.
The graph shows an economy in short-run equilibrium. The economy is currently operating A. above full employment. B. at full employment. C. below full employment. D. at its output potential. Unemployment is ??? the natural rate. Wages and prices will have a tendency to ??? As a result, the short-run aggregate supply curve shifts to the ???, reflecting a fall in wages and prices. At full employment, the new short-run aggregate supply curve intersects the long-run aggregate supply curve and aggregate demand curve ???
C. below full employment. above, fall right at the same point
Refer to Figure 4.6, which shows David's and Celeste's individual supply curves for flower arrangements per week. Assuming David and Celeste are the only producers in the market, if the market quantity supplied is 50, the price must be A. $0. B. $10. C. between $10 and $20. D. $30.
C. between $10 and $20.
One role government can play in addressing market failure is to A. facilitate decision making for private goods. B. increase economic uncertainty. C. enforce rules of exchange. D. promote imperfect competition.
C. enforce rules of exchange.
Entrepreneurs play a key role in a market economy by A. producing unusual products that no other firm would produce. B. making sure that market profits stay high while prices stay low. C. entering a very profitable market and driving down the price until there is just enough profit for them to remain in business D. persuading the government to stay out of private markets so they will be free.
C. entering a very profitable market and driving down the price until there is just enough profit for them to remain in business.
What Caused the Higher Gasoline Price? In the last month, the price of gasoline increased substantially and your job is to determine whether the increase is due to a change in demand or a change in supply. a. Which of the following questions would you ask to make your determination? A. Did the equilibrium quantity increase or decrease? B. Did wages paid to oil refinery workers increase? C. Did the price of cars fall substantially? D. All of the above are applicable questions to ask. b. A demand-driven increase in the price of gasoline occurs when demand ???, which shifts the demand curve to the ??? c. A supply-driven increase in the price of gasoline occurs when supply ???, which shifts the supply curve to the ???
D. All of the above are applicable questions to ask. increases, right decreases, left
Solving a Tree Cutting Problem. Consider a hilly neighborhood where large trees provide shade but also block views. When a resident announces plans to cut down several trees to improve her view, her neighbors object and announce plans to block the tree cutting. One week later, the trees are gone, but everyone is happy. Use the principle of voluntary exchange to explain what could have happened. A. The resident paid for a block party for her neighbors. B. The resident paid her neighbors to let her cut down the trees. C. The resident bought her neighbors seedlings to plant in their yards. D. All of the above.
D. All of the above.
Which of the following is an example of the application of economic analysis to real-world job tasks? A. A sales manager can use economics to choose a price for a product. B. A city manager can use economic logic to predict tax revenue and public spending. C. A teacher can use economics to decide how to allocate time between lecturing, small-group discussion, and individual instruction. D. All of the above.
D. All of the above.
Which of the following is an example of technological progress? A. the invention of the air conditioner B. an increase in corn output resulting from genetic engineering C. the invention of LCD televisions D. all of the above
D. all of the above
When the economy is at full employment, A. it is neither in a recession nor a boom. B. it has no cyclical unemployment. C. the unemployment rate is above zero. D. all of the above are correct.
D. all of the above are correct.
Which of the following is not a function of government in the market? A. helping to enforce contracts by maintaining a legal system that punishes people who violate them B. fostering competition through the use of anti-trust policy C. requiring firms to provide information about the features of their products, including warnings about potentially harmful uses of the product D. controlling the entry and exit of firms into a market to ensure that markets are orderly
D. controlling the entry and exit of firms into a market to ensure that markets are orderly
Looking at Both Sides. We can measure the output of an economy by looking at either production or income because A. production and income are the same. B. output and production is the same. C. both are measured in the same units. D. production generates income.
D. production generates income.
When using the marginal principle to analyze emissions standards, the government should make the emissions standard stricter as long as the A. the cost of additional equipment and extra fuel used exceeds savings in health-care costs and recovered work time. B. consumers of cars want this feature. C. the air is cleaner and people with respiratory ailments make fewer visits to doctors and hospitals. D. savings in health-care costs and recovered work time exceeds the cost of additional equipment and extra fuel used.
D. savings in health-care costs and recovered work time exceeds the cost of additional equipment and extra fuel used.
Assume that tortilla chips and salsa are complements. When the price of tortilla chips decreases A. the supply of salsa decreases. B. the demand for tortilla chips decreases. C. the demand for salsa decreases. D. the demand for salsa increases.
D. the demand for salsa increases.
Nations who borrow from abroad to support current consumption A. will always sacrifice current consumption. B. may sacrifice future consumption. C. will always be better off in the future. D. will always sacrifice future consumption.
D. will always sacrifice future consumption.
True or False People will buy more of a normal good when their income decreases.
False
True or False? Governments sometime create an excess demand for a product by setting a maximum price that is less than the equilibrium price, resulting in a permanent excess demand for the product. This is known as a price floor.
False
True or False? If Eddie can produce 40 milk shakes or 20 banana splits in an hour, and Tina can produce 30 milk shakes or 16 banana splits in an hour, then Eddie has a comparative advantage in producing banana splits.
False
Increase in supply: How does the equilibrium price change? How does the equilibrium quantity change? Decrease in demand: How does the equilibrium price change? How does the equilibrium quantity change? Decrease in supply: How does the equilibrium price change? How does the equilibrium quantity change? Increase in demand: How does the equilibrium price change? How does the equilibrium quantity change?
Increase in supply: decreases, increases Decrease in demand: decreases, decreases Decrease in supply: increases, decreases Increase in demand: increases, increases
Koppel and Drug Prices. Consider the demand and supply graph shown at right. The initial equilibrium is shown as point 'E'. Ted Koppel's proposed explanation of a decrease in drug prices is indicated by point ??? This is inaccurate, because according to the U.S. Department of Justice, the quantity of drugs consumed actually A. decreased, so the correct point is not shown. B. decreased, so the correct point is C. C. decreased, so the correct point is A. D. increased, so the correct point is B.
Point B C. decreased, so the correct point is A.
Repaying a Car Loan. Suppose you borrow money to buy a car and must repay $20,000 in interest and principal in 5 years. Your current monthly salary is $4,000. a. Complete the following table. Stable: - Monthly Salary: $4,000 - Months of work to repay $20,000 loan: ??? Inflation: prices rise by 25% - Monthly Salary: ??? - Months of work to repay $20,000 loan: ??? Deflation: prices drop by 50% - Monthly Salary: ??? - Months of work to repay $20,000 loan: ??? b. Which environment has the lowest real cost of repaying the loan?
Stable: - Monthly Salary: $4,000 - Months of work to repay $20,000 loan: 5 Inflation: prices rise by 25% - Monthly Salary: $5,000 - Months of work to repay $20,000 loan: 4 Deflation: prices drop by 50% - Monthly Salary: $2,000 - Months of work to repay $20,000 loan: 10 ie. (4,000)(.25) = 1,000 --> 1,000 + 4,000 = 5,000 inflation
Exchange in an Island Economy. Robin and Terry are stranded on a deserted island and consume two products, coconuts and fish. Robin: 2 fish or 9 coconuts Terry: 1 fish or 1 coconut ??? has a comparative advantage fishing, and ??? has a comparative advantage gathering coconuts. Suppose that each person is initially self-sufficient. In a six-day week, Robin produces and consumes 36 coconuts and 4 fish, and Terry produces and consumes 4 coconuts and 2 fish. Now suppose Robin and Terry engage in specialization and exchange, trading 2 coconuts for 1 fish. If Robin and Terry consume the same number of fish as in the self-sufficient outcome, then specialization and exchange allow Robin to consume ??? additional coconuts and Terry to consume ??? additional coconuts.
Terry, Robin give up / make = want the lowest opportunity cost Fishing- R: 9/2 = 4.5 while T: 1/1 = 1.0 Coconut- T: 1/1 = 1.0 while R: 2/9 = 0.2 10 additional coconuts 4 additional coconuts Since Terry will specialize in Fish, and Robin will specialize in Coconuts (due to opportunity cost)... On their own... Terry: 6 days (1 fish) = 6 fish Robin: 6 days (9 coconuts) = 54 coconuts Trading 2 coconuts for 1 fish Think that Terry wants to consume the same amount of fish as when he was self-sufficient: 2 therefore he can only trade 4 of his fish for 8 coconuts Terry after Trade: 8 coconuts (added from trade) Robin after Trade: 46 coconuts (taken away for trade) 8 coconuts (trade) - 4 coconuts (self) = 4 46 coconuts (trade) - 36 coconuts (self) = 10
True or False A decrease in the cost of production will shift the supply curve down and to the right.
True
True or False Free trade leads to more research and development because it promotes larger markets.
True
True or False: The components of aggregate demand and gross domestic product are the same: consumption, investment, government spending and net exports
True
Marginal Airlines. Marginal Airlines runs 10 flights per day at total cost of $60,000, including $35,000 in fixed costs for airport fees and the reservation system and $25,000 for flight crews and food service. a. If an 11th flight would have 25 passengers, each paying $150, would it be sensible to run the flight? b. If the 11th flight would have only 15 passengers, each paying $150, would it be sensible to run the flight?
Yes $150 (25 passengers) = $3,750 $25,000 (service) / 10 flights = $2,500 cost per flight $3,750 > $2,500 No $150 (15 passengers) = $2,250 $2,250 < $2,500
Interpreting the Graph. The graph to the right shows the demand and supply curves for CD players. Use the information to complete the following statements. a. At the market equilibrium (shown by point ???), the price of CD players is ??? and the quantity of CD players is ??? b. At a price of $100, there would be excess ???, so we would expect the price of CD players to ???. c. At any price exceeding the equilibrium price, there would be excess ???, so we would expect the price to ???.
c, $150, 200 demand, increase supply, decrease
In 1990, the average income for an American worker was $1,518 per month. In 2000, the average income for an American worker was $2,632 per month. During this time period, a basket of necessities (food, housing, etc.) increased from $657 per month in 1990 to $1,402 per month in 2000. The real value of income ??? over that 10-year period.
decreased
Consider the market for tickets to a Major League Baseball franchise. The supply curve for tickets is positively sloped and the demand curve for tickets is negatively sloped. To boost attendance, the franchise signed the game's biggest star to a multi-year contract. As a result of signing the game's biggest star, the ??? curve for tickets shifts to the ???, ??? the equilibrium price of tickets.
demand, right, increasing
An increase in the wage for high-school graduates ??? the opportunity cost of college.
increases
An increase in the supply of a product shifts the supply curve to the ??? At the initial price, there will be an excess ??? Producers are willing to sell ??? than consumers are willing to buy and there is ???pressure on the price. The new equilibrium price is ??? the intial price and the new equilibrium quantity is ??? the initial quantity.
right, supply, more, downward, below, above
If individuals who had previously left the labor force returned and began searching for a job, the measured unemployment rate will
rise
??? and ??? are the two factors that determine how the stock of capital changes over time.
saving, depreciation
Karl recently lost his job as a steelworker because steel imports from China are cheaper than American-produced steel. Karl is ???unemployed. Megan recently graduated from college, and she is currently in the job market seeking opportunities. Megan is ??? unemployed.
structurally frictionally
The Oconomowoc Tool Company manufactures wrenches at its plant in Wisconsin. A recent flood has damaged its warehouse facility, and many of the tools inside the warehouse have been lost. As a result of the recent flood damage, the ??? for the Oconomowoc Tool Company shifts to the ???
supply curve, left
The government protects intellectual property rights by enforcing patents on new pharmaceutical drugs. Suppose the government, by enforcing patent laws, prevents a new drug by Merck from being copied by another company and made available at a dramatically reduced price. If you were a current consumer of this new pharmaceutical drug, you would initially be ??? as a result of the government's action. What are the implications for the next generation of pharmaceutical drug users? A. Pharmaceutical companies will have more revenue to cover research and development costs. B. Pharmaceutical companies will no longer face pressure to create, test, and bring to market new drugs. C. Fewer pharmaceutical drugs will be available in the future. D. All of the above.
worse off A. Pharmaceutical companies will have more revenue to cover research and development costs.
