Macroeconomics Problem Set and Quiz Review
Analyst 1 suggested that the demand curve for newspapers in Baltimore might have shifted to the right because people were becoming more literate. Think of two other plausible stories that would result in this demand curve shifting to the right.
- the demand curve for newspapers in baltimore would shift to the right if income levels in the area are rising, since we expect newspapers to be a normal good - fewer substitutes for newspapers would shift the curve to the right- perhaps tv broadcasting is shifting away from news programs and toward reality shows
with increases access to wireless technology and lighter weight, the demand for tablet computers has increased substantially. Tablets have also become easier and cheaper to produce as new technology becomes available. When consumers purchase tablet computer the interaction and exchange occurs in the __________ market, while the resources used to produce the tablets are bought and sold in the __________ market.
1. product 2. factor
if the labor force is 50 million and 48 million are employed, then the unemployment rate is
4%
if the labor force is 400 and employment is 350, then the unemployment rate is
5%
what most likely would cause the demand for Dr.Pepper to shift from D0 to D1? Assuming Dr.Pepper is a normal good
a decrease in income, assuming that Dr.Pepper is a normal good
the price of hard drives used in the manufacturing of laptop computers has risen. This will lead to ________ laptop computers
a decrease in the supply of
which of the following would an economist classify as capital
a guitar used by a musician
suppose that you purchased a ticket to a jazz festival for $100 from an online ticket broker. Once you arrived at the festival, you discovered that parking costs you an additional $15. In this situation, the additional $15 you pay for parking is an example of
a marginal cost
an institution which buyers and sellers interact and engage in exchange is
a market
the amount of education that one has in an important factor in the determination of his/her wage rate. This is best described as
a positive statement
what does not constitude an act of "investment" as economists use the term?
a retiree buys 50 shares of stock at $10 a share and then sells the stock at a profit for $20 a share
the marginal rate of transformation is the
a slope of the ppf
the major lesson of the circular flow diagram is that
a total income in the economy must always equal total spending
what is a topic studied in macroeconomics
aggregate behavior of households and industries
which of the following is a topic studied in macroeconomics?
aggregate behavior of households and industries
according to the theory of comparative advantage, specialization and free trade will benefit
all trading parties, even when some are absolutely more efficient producers than others
in a business cycle, a peak represents the end of ____ and trough represents the end of ____
an expansion, a recession
a capital gain is
an increase in the value of an asset over the price initially paid for it
inflation and unemployment
are a focus of macroeconomics
someone has a comparative advantage of a good if they can produce that good
at a lower oppurtunity cost
unemployment means that
at the going wage rate, there are people who want to work but cannot find work
when operting on the PPF, it is because
both full resource employment and production efficiency
the concept of oppurtunity cost
can be applied to analysis of decision making process
the diagram that shows the income received and payments made by each sector of the economy is the
circular flow diagram
if an economy begins to use its resources more efficiently, it will move
closer to its ppf
according to the classical model, unemployment
could not persist because wages would fall to eliminate the excess supply of labor
the portion of a corporations profits that a firm pays out each period to its shareholders is a
dividend
there is a possibility that a national sales tax will be implemented. Many economists argue that items such as food and clothing should be exempt from such a tax because low-income people spend greater percentage of their income on these goods than do high-income individuals. This argument is motivated by concerns over
equity
factors of production are traded in the product market
false
monetary policy includes changing the level of household taxes
false
the ____ can change the quantity of money in the e conomy
federal reserve
because resources are scarce, the oppurtunity cost of investment in capital is
forgone present consumption
in the circular flow of economic activity, there are two kinds of markets in which firms and households interact. In the product market:
goods or services are exchanged
what is the primary difference between income and wealth?
income is a flow variable, wealth is a stock variable
demand curves are derived while holding constant
income, tastes, and the prices of other goods.
a movement from point c to point b on supply curve S2 would be caused by a(n)
increase in the demand for gardenburgers
To bring the economy out of an inflationary period, Keynes argued that the government should .
increase taxes and/or decrease government spending
suppose the economy suffers a high rate of unemployment. according to keynesian economists, the government should increase employment by
increasing government spending
if the demand for sardines increases as income decreases, sardines are a(n)
inferior good
according to the classical economists, the economy
is self correcting
Mike purchased a 1968 Chevy Corvette in 2006 for $30,000 and a year later he sold it for $36,000. Due to these transactions
mike earned a capital gain of $6000
what is not a resource as the term is used by economists
money
the government should extend the duration of unemployment benfits to those workers who lost their jobs due to outsourcing. This statement is best described as
normative statement
in the goods and services market, households
only demand
suppose you are deciding to spend your tax rebate check on a new iPod or a new digital camera. you are dealing with the concept of
oppurtunity costs
better insurance benefits increase the incentive of some individuals to work. This statement is best described as
positive statement
Whenever the Democrats gain control of the Congress, spending on social programs increases; whenever Republicans gain control of the Congress, spending on defense increases. Hence, we know the next party in control will do. This statement is an example of the
post hoc, ergo propter hoc fallacy
the economy was expanding during all the year that I was a student, but as soon as I graduated, the economy contracted. Therefore, the labor market waited until I started looking for a job to contract. This statement is an example of the
post hoc, ergo propter hoc fallacy
the basic coordinating mechanism in a free market system is
price
the mechanism that normally coordinates what goes on in an economy is the
price system
an efficient market is a market in which
profit oppurtunities are eliminated almost instantaneously
capital, as economists use the term
refers to things that have already been produced that are in turn used to produce other goods and services
the reason that oppurtunity costs arise is that
resources are scarce
the cocept of oppurtunity cost is based on the principle of
scarcity
the term business cucle refers to the
short term ups and downs in the level of economic activity
the term business cycle refers to the
short-term ups and downs in the level of economic activity
the damand for corn has increased in May without any change in supply. Eight months later there still has been no change in corn prices. This is an example of a
sticky price
prices that do not always adjust rapidly to maintain equality between quantity supplied and quantity demanded are
sticky prices
suppose the demand for books goes down when the price of video games goes down. We can say that these two goods are
substitues
a decrease in the price of mushrooms (an input for gardenburgers) will cause a movement from point b on supply curve S2 to
supply curve S2
in a laissez-faire economy ______ what gets produced, how it is produced, and who gets it
the behavior of buyers and sellers determines
when operating inside the PPF, it is because
the economys resources are being used inefficiently
according to keynes, the level of employment is determined by
the level of aggregate demand for goods and services
the trend of the economy is
the long run growth path of the economy
what is the best definition of economics?
the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided
A frozen food manufacturer can produce either pizzas or calzones. As the result of an increase in the price of calzones, the firm produces more calzones and fewer pizzas. An economist would explain this by saying
there has been an increase in the quantity supplied of calzones and a decrease in the supply of pizza
an increase in wage rate of steel workers will reduce the supply of steel
true
comparative advantage refers to the ability to produce at a lower oppurtunity cost than a computer
true
contractionary fiscal policy includes raising taxes
true
it has become conventional to classify an economic downturn as a recession when aggregate output declines for
two consecutive quarters
what is an assumption used by classical economists?
wages adjust both upward and downward
which of the following is an assumption used by Classical economists?
wages adjust both upward and downward - flexible
What is a normative question?
what should be
if your tuitiion is $5000 this semester, your books cost $600, you can only work 20 rather than 40 hours per week during the 15 weeks you are taking classes and you make $15 per hour, and your room and board is $3000 this semester, then your oppurtunity cost of attending college this semester is
$10100
if your tuition is $25k and your books cost $1.5K, you can only work 20 rather than 40 hours per week during the 15 weeks you are taking classes and you make $15 an hour, and your room and board is $7.5K this semester, then your oppurtunity cost of attending college this semester is
$31K