ap macro test ?s

in year 2004, in Candamica, consumption expenditures 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

d. $26 billion

the formula for the CPI is 100 times

d. (cost of CPI market basket at current period prices/ cost of CPI market basket at base period prices)

suppose the price of leather used to produce shoes increases. as a result, there is ___ in the supply of shoes and the supply curve of shoes ____

d. a decrease; shifts leftward

which of the following could lead the production possibilities frontier to shift inward?

d. an earthquake that destroys several major factories

real GDP is all final goods and services produced in a year within a country valued at

d. base year prices

Mike has just been laid off following six months of slow sales at his firm associated with a recession in the economy. Mike is

d. cyclically unemployed

which of the following best describes comparative advantage

d. forgoing the fewest units of one product to produce a unit of another product

which of the following statements is correct about potential GDP? i. actual real GDP equals potential GDP when the economy is at full employment ii. real GDP can be less than potential GDP iii. when real GDP equals potential GDP, it also equals nominal GDP

d. i and ii

which of the following is correct? i. a surplus puts downward pressure on the price of a good ii. a shortage puts upward pressure on the price of a good iii. there is no surplus or shortage at equilibrium

d. i,ii, and iii

the benefit someone gets from consuming one more glass of lemonade is known as the

d. marginal benefit

what typically happens to benefits as the amount of an activity is increased

d. marginal benefit decreases

having an absolute advantage

d. means being able to produce more of each product than the trading partner

which of the following statement is correct

d. nominal and real GDP can change either in the same direction or the opposite direction

in economics, there are two types of statements. One describes what is; the other describes what ought to be. These statements are

d. positive and normative

the phrase " a change in demand" most directly implies a

d. shift of the demand curve

if the number of sellers decreases, then the supply curve ___ and the supply____

d. shifts leftward, decreases

suppose that last year, the price of strawberries was $2 and the price of milk was $1. This year, the price of milk is $2 and the price of strawberries is $1. Which of the following statements is true>

d. the CPI might increase or decrease depending on the quantities in the CPI market basket

when measuring GDP,

d. the expenditures on goods and services by all levels of government are included

the consumer price index market basket contains

d. the goods and services purchased by an average urban householf

investment is defined as the purchase of

d. the purchase of new capital goods and additions to inventories

when cyclical unemployment is zero,

d. the unemployment rate equals the natural unemployment rate

which of the following is true

d. to be classified as employed, you must work at least 1 hour per week at a paid job or 15 hours or more as unpaid workers in your family business

the u.s. produces large amounts of software. based on this observation, it is possible to state that the U.s. has decided that "software" is part of the answer to which economic question?

d. what goods and services are produced?

positive statements are about

d. what is

Hank requires 1 hour to cut the grass and 3 hours to clean the house. His sister Holly require 1 hour to cut the grass and 4 hours to clean the house. Which of the following statements is true?

e. Holly has a comparative advantage in cutting the grass

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 goods and services

e. i, ii, and iii

economic growth depends upon which of the following i. improving the quality of labor ii. technological advancement iii. increasing the amount of capital

e. i,ii, and iii

of the following, the largest expenditure category of the federal government is

e. social security

you have chosen to take a trip during spring break. if you had not gone, you would either have worked at a temporary job or studied for exams. the opportunity cost of your trip is

e. we cannot determine what the opportunity cost is without knowledge of what alternative would be preferred

the unemployment rate equals

a. (number of people unemployed/ labor force) x 100

in the reference base period the CPI is equal to

a. 100

Scott and Cindy both produce only pizza and tacos. In one hour, Scott can produce 20 pizzas or 40 tacos. In one hour, Cindy can produce 30 pizzas or 40 tacos. Cindy's opportunity cost of producing 1 taco is

a. 3/4 of a pizza

the Colorado ski shop sold 60 ski jackets to a Belgium company's headquarters located in Paris, France. the ski jackets are a

a. US export

the largest share of total production in the u.s. is

a. consumption goods and services

which of the following directly attributes people's standard of living

a. consumption goods and services

the decisions of firms and households are

a. coordinated by markets

a reduction in unemployment compensation will

a. decrease the amount of frictional unemployment

economists try to isolate the effect of one variable at a time. they do so by

a. holding all other relevant factors the same

scarcity exists because

a. human wants exceed the resources available to satisfy them

teenagers drink more soda than other age groups. if the number of teenagers increases, everything else remaining the same,

a. market demand for soda increases

the production possibilities frontier illustrates the

a. maximum combinations of goods and services that can be produced

to be considered unemployed, a worker must have had

a. no employment during the week before the survey and be actively looking for a job

structural unemployment is the result of

a. technological change or foreign competition

in stores, it is common to find products marked as "On Sale" at a lower that usual price. What explains this behavior

a. the law of demand is being used to increase the quantity demanded

the GDP deflator measures

a. the price level

the fact of increasing opportunity cost when moving on the PPF means that

a. to increase the production of one product requires larger and larger sacrifices of the other good

when ford decides to produce more hybrid cars that run on both gas and electricity. it directly answers the ____ question

a. what

which of the following is an example of a sunk cost

a.after you start watching a movie, the $8 you paid for the ticket

the change in the purchasing power of an hour of work is measured by the

b real wage

if the CPI is 172. 4 in one year and is 176.2 in the next year, then the inflation rate equals

b. (176.2- 172.4)/ 172.4 x 100

if your nominal income is $65,000 and your real income in base year prices is $50,000, what is the CPI

b. 130

which of the following is a final good or service

b. a new replacement muffler installed by Midas mufflers

GDP is measured by

b. adding the market value of total final production

an example of the new goods bias in the calculation of CPI is a price increase in

b. an MP3 player relative to a Walkman

making choices on margin means

b. comparing all relevant alternatives systematically and incrementally

in the stock market, the price of a share of stock might fall one day and rise the next. this fluctuation indicates that

b. either demand or supply changed from one day to the next

based on the consumer expenditure survey, the largest fraction of an average urban household budget is spent on

b. housing

capital (not human capital) is the productive resource that

b. includes machinery and tools

"During 2005, the higher price of gasoline led to a decrease in demand for gasoline." Holding other things constant, this statement is

b. incorrect, because as the price increases, the quantity demanded decreases, not the demand

to help unscramble cause and effect, economists

b. must us the ceteris parabis assumption

the United Auto workers bargained for higher wages and more benefits for autoworkers. as a result, of the higher wages and increased benefits i. the quantity of new automobiles supplied decreases ii. the supply of new automobiles decreases iii. the supply of new automobiles increases

b. only ii

potential GDP is the level of

b. real GDP that the economy could produce at full employment

the question of "how are goods and services produced?" most closely addresses which of the following issues?

b. should ford use expensive industrial robots or inexpensive Mexican autoworkers to produce SUVs?

to achieve gains from trade, a country

b. specializes in the producing a good in which it has a lower opportunity cost

if the demand for used cars decreases after the price of a new car falls, used cars and new cars are

b. substitute goods

potential GDP is

b. the amount of real GDP that the economy would produce if it were at full employment

the functional distribution of income measures which of the following

b. the distribution of earnings by the factors of production

for rock concerts, the admission price is set by the promoter. If scalpers are able to sell their tickets for more than the admission price, then

b. the equilibrium price to the concert muse be more than the set admission price

in the circular flow model,

b. the government buys goods and services from firms

if the price is below the equilibrium price,

b. there is a shortage

suppose the CPI in 1983 is 100 and the CPI this year is 172. these values for the CPI mean that

b. typically, a good whose price was $100 in 1983 had a price of $172 this year

the economic choices made by individuals, businesses, and governments and the interactions of those choices answer which three major economic ?'s ?

b. what? how? and for whom?

during 2005, net domestic product at factor cost equals $3,300 billion. Indirect taxes minus subsidies equals $200 billion, depreciation equals $800 billion, the statistical discrepancy equals zero, and net operating surplus equals $150 billion. The country's GDP using the income approach equals

c $4,300 billion

Gross Domestic Product equals

c. Y= C + I+ G+ NX

which of the following results in a rightward shift of the supply curve of rutabagas?

c. a fall in the price of fertilizer used to grow rutabagas

by donating $1000 to the salvation army, caroline reduces her taxable income. To caroline, the reduction in her taxable income is

c. an incentive

because the CPI overstates inflation

c. as time passes, the government outlays are increased by more than necessary to compensate for inflation

choose which statement is most correct

c. at times, real GDP can exceed potential GDP

the CPI is the measure of the

c. average prices paid by consumers for a fixed basket of goods and services

a slope is measure as the

c. change in the value of variable on the y-axis divided by the change in the value of the variable on the x-axis

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

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

if the demand and supply both increase equally, then the equilibrium price____ and the equilibrium quantity____

c. does not change; increases

to increase its economic growth, a nation should

c. encourage education because that increases the quality of labor

the US possesses a large amount of human capital . as a result of this fact, in the US there is a

c. highly skilled and educated labor force

an increase in nominal GDP could result from an increase in i. production ii. prices iii. taxes and subsidies

c. i and ii

real GDP can increase if the i. quantities of goods and services produced decrease and prices fall by a smaller percentage ii. quantities of goods and services produced decrease and prices fall by a larger percentage iii. quantities of goods and services produced decrease and prices do not change iv. quantities of goods and service produced increase

c. iv only

the CPI overstates inflation because the average consumer buys

c. less of those goods whose relative price has risen

the cost of a one-unit increase in an activity is called the

c. marginal cost

which of the following is true

c. most people live in countries that have average income levels below the world average

a common political statement in the u.s. is that we must strengthen social security. this statement is an example of

c. normative statement

if you make dinner for yourself

c. only the market value of ingredients that you purchased this year is added to GDP

payments to the factors of production are

c. rent, wages, interest, and profit or loss

which of the following in NOT a normative economic statement

c. teenagers are responsible for most driving fatalities

in 1983, Pablo earned $100 per week at his job. In 1994, Pablo earned $130 per week. If the CPI in 1983 was 100 and the CPI in 1994 was 142 then

c. the 1994 wage measured in 1983 dollars is $91.55

an opportunity cost is

c. the benefits of the highest-valued alternative forgone

the opportunity cost of a decision is measured in terms of

c. the next best thing given up

the labor force consists of

c. the number of people in the working-age population who are employed and unemployed

the law of demand refers to how

c. the quantity demanded changes when the price of the good changes

correlation means

c. the values of two variables move in a predictable and related way

which of the following is a macroeconomic topic

c. why did production and jobs expand rapidly in 2004