SS141 Final

What is the problem did trade by barter transactions pose?

Double Coincidence of Wants

Which is not a function of money?

Hyper inflation

The law if supply states that other things remaining the same

If the price of a good increases the quantity supplied increases

An increase in the number of fast food restaurants

Increases the supply of fast food meals.

In year 2007, in Candamica, consumption expenditure was $13 billion, interest, rent, and profit were $1.5 billion, government expenditures on goods and services were $3 billion, net exports of goods and services amounted to $2 billion, and investment was $8 billion. Hence total expenditure was

$26 billion

What are the options of fiscal policy?

All of the above

The income approach measures GDP by summing

C+I+G+NX

Production by Honda, a Japanese firm, in the US is included in _____ GDP and production by Nike Corporation, a US firm, in Vietnam is included in _____ GDP.

US.; Vietnam

The following are all final goods except

a computer used by Intel to design a new computer chip.

The following are all final goods except

a computer used by Intel to design new computer chips.

Which of the following increases the supply of gasoline?

a decrease in the price of a resource used to produce gasoline, such as crude oil.

The calculation of GDP excludes

a family member painting the family home.

The GDP deflator is

a measure of the level of production.

One reason why economist often use models in their analysis is that

a model helps us to understand, explain, and predict economic phenomena in the real world.

Which of the following is a final good or services?

a new replacement muffler installed by Midas Mufflers

A graphical representation which shows the trade-off that occurs when more of one output is obtained at the sacrifice of another is called

a production possibilities curve.

Economic growth is defined as

a sustained expansion of production possibilities.

The labor force includes people who are

actively seeking a job but don't have a job.

To measure GDP by using the income approach, we must add all incomes and then ________ depreciation and ________ net taxes less subsidies.

add; add

The term ceteris paribus means

all other things remaining constant or equal.

The way that a society uses to allocate resources to satisfy human wants is called

an economics system

A fundamental aspect of economics is to

analyze how choices are made.

Economics models

are used to explain how people behave.

The multiplier factor is given by 1 divided by the ______ or similarly 1 divided by 1-MPC.

MPS

Macroeconomics is best defined by which of the following statements?

Macroeconomics is the study of behavior of the economy as a whole.

Which is not a liquid asset?

Money Market Mutual Fund

An increase in the quantity demanded is shown as a

Movement along the demand curve

In recent years, which of the following has been negative?

Net exports of goods and services

Which of the following expenditure components of GDP can be negative or positive?

Net exports of goods and services

The GDP deflator equals

Nominal GDP divided by real GDP multiplied by 100

If you buy a five-year old TV from a friend, the amount you paid for the TV is

Not included in this year's GDP

If the number of companies producing computer memory chips increases then the

Supply of memory chips increases.

Whenever a society forgoes current consumption to invest in capital goods

That society can consume more in the future

The more society consumes today

The less society can consume in the future

Economic growth is defined as equal to the increase in

real GDP

Frictional unemployment is the result of

the normal process of jobs being created and destroyed.

The rule of 70 states that the level of a variable will double in

the number of years equal to 70 divided by the variable's annual growth rate.

Household production, such as baking bread at home, is not included in GDP because it

does not add anything of value to GDP.

Everything else the same, if consumption expenditure increases by $200 billion, then GDP

does not change

Babysitting services the oldest son provides his parents

does not count as real GDP nor nominal GDP

Leisure time is ignored when calculating GDP because leisure time

does not involve a measurable market transaction

investment is defined as the purchase of

the purchase of new capital goods and additions to inventories.

Macroeconomics deals with _______ while microeconomics deals with _________.

economy-wide choices; choices of individuals.

The working age population includes

employed and unemployed people over 16.

The price of cotton clothing falls. As a result,

the quantity demanded of cotton clothing increases

The measurement of GDP makes a distinction between

final goods and services and intermediate goods and services, so that GDP includes final goods and services but excludes intermediate goods and services.

The natural unemployment rate equals the sum of

frictional, seasonal, and structural unemployment.

Bill has graduated with a degree in economics. Through Career Services he submitted his resume to several companies and he will visit them during the next two weeks. Bill is considered

frictionally unemployed

One opportunity cost associated with going to college is

giving up employment possibilities while in college.

The growth rate of real GDP per person equals the

growth rate of real GDP minus the growth rate of the population.

The aggregate supply curve illustrates that the

higher the price level, the greater the quantity of real GDP supplied.

Consumption expenditures are defined as spending on goods and services by

households.

Economics deals with

how individuals allocate scarce resources to satisfy unlimited human wants.

Seasonal unemployment includes people who become unemployed from

the seasonal weather patterns.

Which of the following is included as investment in GDP?

i. cars produced during the year but unsold at the end of the year. ii. new capital equipment produced and purchased during the year.

As measured, GDP omits which of the following

i. illegal sales of goods and services. ii. changes in the amount of leisure time. iii. household production of good and services.

Which of the following are considered factors of production?

i. land ii. labor iii. psychical capital iv. entrpreneurship

Last year the US net exports of goods and services was negative. This fact means that means that year

the value of US exports were less than the value of US imports.

Net exports of goods and services is defined as equal to

the value of exports of goods and services minus the value of imports of goods and service.

Opportunity cost is

the value of the next-best alternative that must be scarified to satisfy a want.

The potential rewards that are available to an individual if a particular activity is undertaken are known as

incentives.

The category of "rent" in the income approach to GDP

includes the money paid to use land and other rented inputs

When studying individuals' economic behavior, economists assume that

individuals act as if they were rational.

All points inside the production possibilities curve indicate

inefficiency in production.

Bob Funky T-shirt began the year with 1,000 shirts in inventory, produced 10,000 shirts during the year and ended the year with 1,100 shirts in inventory. The 100 shirts added to his inventory will classified as

investment

In comparing the magnitudes of the components of GDP according to the expenditure approach, we see that in the US

investment is about the same size as government expenditure on goods and services

If a wealthy woman marries her butler, quits paying him and does not hire a new butler, then

investment is greater than depreciation

The nation's supply of productive resources increases if

investment is greater than depreciation.

Total income in a country in 2000 is $780 billion. Total expenditure in the country

is $780 billion.

A production point that lies outside the PPC

is currently not attainable.

Depreciation

is the decrease in the value of capital resulting from its use and obsolescence.

The labor force participation rate is the

labor force divided by the working-age population, then multiplied by 100.

The unemployment rate is the number of people unemployed divided by the

labor force, then multiplied by 100.

In growth theory, the standard of living is measured using the growth rate of

real GDP per person.

If the price level increases from 110.0 to 115.0, the quantity of

real GDP supplied will increase.

A point on a production possibilities curve indicates

resources are being used efficiently.

In economics, items that are used to produce goods and services are known as

resources.

In economics, __________ are limited but __________ are unlimited.

resources; wants.

Economists assume people are motivated by

self-interest.

Structural unemployment includes people who become unemployed from

technological changes.

Full employment means that

the cyclical unemployment rate is zero.

A micro-economist would study all of the following issues expect

the effect of a change income taxes on the nation's rate of unemployment.

Scarcity refers to

the inability of society to satisfy all human wants because of limited resources.

The basic economic problem is a situation of

limited resources and unlimited wants.

Economics can be described as the study of how people use ________ resources to satisfy ________ wants.

limited; unlimited

Whenever productive resources are used to make capital goods

society is giving up current consumption

A friend wants to learn how the unemployment rate is calculated and hoe inflation is measured. He asks you which economics course to take and you advise him to enroll in

macroeconomics.

Gross domestic product measures the

market value of the final goods and services produced in a given year with a country.

Aggregate hours of work is calculated by

multiplying the number of people employed by the average hours worked per week by the number of workweeks.

The purchase of stocks and bonds is

not included in GDP as investment

Goods and services such as environmental quality, leisure time, and household production are not included in GDP because they are not

bought in markets.

The purchase of the financial assets, such as stocks and bonds, is not included in GDP because

brokerage firms don't want them to be included.

Recurring upswings and downswings in an economy's real GDP over time are called

business cycles

People respond to incentives

by calculating their individual costs and benefits and determining which is greater.

The conversion of resources into consumer goods or services is called

production.

A five-cent deposit on beer bottles

provides a positive incentive because it rewards people for recycling.

Which of the following would not be directly included in the US GDP in 2009?

the market value of the computer chips produced in 2009 and used by Dell in their latest personal computer

A discouraged worker is

someone who does not have a job and has given up looking.

An employee who is fired from their job because they lack the skills required to accomplish the task, is part of _____________ unemployment.

structural

Cyclical unemployment includes people who become unemployed from

changes in the business cycle.

Which of the following is included in Germany?

china produced by the English owned Wedgewood Company at a factory in Berlin, Germany.

The expenditure approach to measuring GDP is done by using data on only

consumption expenditure, investment, government expenditure on goods and services and net exports of goods and services.

Expenditures on US produced steaks, shoes, and doctor visits are most likely classified as

consumption expenditures.

John has been laid off from his job because of a general downturn in the economy. John's unemployment is best classified as

cyclical

The natural unemployment rate is the unemployment rate that exists when there is no

cyclical unemployment.

The type of unemployment that arises from a decrease in the real GDP is called

cyclical unemployment.

How would you best describe a manufacturing employee who has been fired because he was replaced by a robot and doesn't have the skills necessary to help operate the robot?

structurally unemployed

Microeconomics is defined as that part of economic analysis that

studies individual decision making by households and firms.

Which of the following is likely to be an unreported economics activity?

tips paid to a taxi driver

The problem of economic scarcity applies

to economic systems in all nations, regardless of their development.

Another word for "aggregate" is

total.

An example of household production excluded from GDP is

tree trimming you provide at your parent's home.

In order to measure gross domestic product we can follow

two approaches: the expenditure and income approach

Excluding household and underground production leads to

underestimation of both real GDP and nominal GDP

The issues that an economic system attempts to solve include:

what to produce how to produce items for whom items are produced

The rule of ______ can be used to calculate the number of years that it takes for the level of a variable to ________.

70; double

Which of the following is included in the US GDP for 2006?

A 2006 Grand Am produced and sold as a new car in the US in 2006.