ECON 110 - Principles of Macroeconomics: Ultimate Review

(EXAM 1) 45. "The unemployment rate is too high" is an example of a positive economic statement.

False

(HW 11) 19. A cash withdrawal reduces deposits, reserves, and excess reserves in the banking system.

True

(HW 6) 4. The percent increase in the CPI from one year to the next is a measure of the _____.

inflation rate

(EXAM 2) 2. Refer to the table above. S

I don't really feel like finishing this right now, so I might do it later.

(Quiz 3) 10. Durable good is a good that can be used for _____.

more than one period

(HW 9) 8. Which of the following is not one of the three sources of technological change?

Additional amounts of existing capital

(HW 8) 14. Which of the following would encourage economic growth through increases in the capital stock?

All of the above

(HW 10) 9. Which of the following will increase aggregate expenditure in the United States?

An increase in government purchases

(Quiz 2) 8. Which of the following would cause an increase in the supply of cheese?

An increase in the number of firms that produce cheese

(HW 7) 15. Which of the following would increase the unemployment rate?

An increase in unemployment insurance payments

(EXAM 1) 35. _____ a nation's production possibilities frontier represents economic growth.

An outward shift of

(EXAM 1) 18. Which of the following is a microeconomic question?

How does Fiat decide on the price of the 500 Pop model?

(Quiz 6) 10. Which of the following is not a function of the Federal Reserve system, or the "Fed?"

Insuring deposits in the banking system

(HW 10) 10. Refer to Figure above. If the economy is at point L, what will happen?

Inventories have risen above their desired level, and firms decrease production

(HW 10) 3. If aggregate expenditure is less than GDP, how will the economy reach macroeconomic equilibrium?

Inventories will rise, and GDP and employment will decline.

(EXAM 1) 40. Refer to the figure above. Which two arrows in the diagram depict the following transaction: Stanley purchases the novel, "Night of Sorrows" for his summer reading pleasure.

K and G

(HW 5) 14. If the GDP deflator is 142, by how much have prices changed since the base year?

Prices have increased by 42%.

(HW 10) 12. On the 45-degree line diagram, the 45-degree line shows points where real aggregate expenditure equals

Real GDP

(HW 8) 18. An increase in the real interest rate does which of the following?

Reduces consumption spending

(EXAM 1) 25. Refer to the figure above. A technological advancement would be represented by a movement from _____.

S1 to S2

(HW 4) 11. Which of the following is a result of government price controls?

Some people win and some people lose.

(HW 2) 6. For each watch that Switzerland produces, it gives up the opportunity to make 50 pounds of chocolate. Germany can produce 1 watch for every 100 pounds of chocolate it produces. Which of the following is true about the comparative advantage between the two countries?

Switzerland has the comparative advantage in watches.

(HW 8) 10. If government saving is negative, then _____.

T- TR < G

(HW 8) 13. Refer to Figure above. Which of the following is consistent with the graph depicted above?

Taxes are changed so that real interest income is taxed rather than nominal interest income.

(HW 9) 5. If a country's real GDP is rising by 3% per year while its population is rising at 5% per year, which of the following is true?

The country's standard of living is falling

(EXAM 1) 23. In September, buyers of silver expect that the price of silver will rise in October. What happens in the silver market in September, holding all else constant?

The demand curve shifts to the right.

(HW 2) 2. ________ shows that if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good.

The production possibilities frontier model

(HW 6) 12. You earned $30,000 in 2007, and your salary rose to $80,000 in 2016. If the CPI rose from 82 to 202 between 2007 and 2016, which of the following is true?

The purchasing power of your salary increased between 2007 and 2016.

(HW 3) 13. Which of the following is evidence of a shortage of chocolate?

The quantity of chocolate demanded is greater than the quantity supplied.

(Quiz 2) 9. Which of the following is evidence of a shortage of chocolate?

The quantity of chocolate demanded is greater than the quantity supplied.

(HW 11) 4. The statement "This Dell laptop costs $1,200" illustrates which function of money?

Unit of account

(HW 12) 3. Refer to Figure above. A movement from ________ could occur because of an influx of immigrant labor.

X to Y

(Quiz 3) 8. The equation of the GDP components is _____.

Y = C + I + G + NX

(HW 2) 5. Refer to Figure above. A movement from ________ is the result of advancements in plastic production technology.

Y to Z

(HW 12) 5. Which of the following goods is directly counted in GDP?

a 12-inch Subway sandwich purchased by a student

(HW 11) 15. A central bank can help stop a bank panic by _____.

acting as a lender of last resort

(HW 10) 4. An unplanned decrease in inventories results in _____.

actual investment that is less than planned investment

(Quiz 5) 9. Lack of investment in strong education and health care systems _____.

causes a deterioration in human capital and a decline in labor productivity

(Quiz 5) 6. Some economists argue that the higher productivity growth that began in the mid-1990's is based on the development of _____.

information technology

(HW 7) 17. If firms pay what are called "efficiency wages," they pay wages that _____.

motivate workers to increase their productivity

(Quiz 2) 6. A _____ demand curve for shampoo would be caused by a change in the price of shampoo.

movement along the

(HW 7) 3. Suppose the labor force stays constant, and the working-age population stays constant, but a greater number of persons who were unemployed become employed. The labor force participation rate will _____.

remain constant

(EXAM 1) 19. Human capital refers to _____.

the accumulated skills and training that workers have

(HW 10) 6. The slope of the consumption function is equal to _____.

the change in consumption divided by the change in disposable income

(Quiz 2) 7. If the price of propane-fueled gas grills was to decrease, then _____.

the demand of propane would increase

(HW 11) 10. Net worth is _____.

the difference between a firm's assets and liabilities

(HW 7) 12. If cyclical unemployment is eliminated in the economy, then _____.

the economy is considered to be at full employment

(HW 5) 16. The output of Mexican citizens who work in Texas would be included in the _____.

the gross national product (GNP) of Mexico

(HW 3) 1. A demand curve shows the relationship between _____.

the price of a product and the quantity of the product demanded

(HW 3) 2. By drawing a demand curve with price on the vertical axis and quantity on the horizontal axis, economists assume that the most important determinant of the demand for a good is _____.

the price of the good

(HW 9) 17. Globalization refers to _____.

the process of countries becoming more open to foreign trade and investment

(EXAM 1) 44. All economic questions arise from the fact that resources are scarce.

True

(HW 2) 13. Published in 1776, ________ was written by Adam Smith.

"An Inquiry into the Nature and Causes of the Wealth of Nations"

(HW 5) 9. Refer to Table above. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals _____.

$1,600

(HW 1) 4. Lionel's Lawn Care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, and he charges $25 for this service. For a total price of $40, Lionel will also trim shrubs, a service that adds an additional $10 to the total cost of the standard package. What is Lionel's marginal cost of adding the shrub-trimming service to the standard package?

$10

(HW 10) 13. Refer to Figure above. Suppose that investment spending increases by $10 million, shifting up the aggregate expenditure line and GDP increases from GDP1 to GDP2. If the MPC is 0.9, then what is the change in GDP?

$100 million

(EXAM 1) 9. Brett buys a new cell phone for $100. He receives consumer surplus of $80 from the purchase. How much does Brett value his cell phone?

$180

(EXAM 1) 7. Refer to the figure above. How much tax is paid by producers?

$2

(HW 4) 14. Refer to Figure above. How much of the tax is paid by producers?

$2

(HW 1) 5. Eva runs a small bakery in the village of Roggerli. She is debating whether she should extend her hours of operation. Eva figures that her sales revenue will depend on the number of additional hours the bakery is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $12 per hour. Refer to Table above. What is Eva's marginal benefit if she decides to stay open for two hours instead of one hour?

$25

(HW 8) 9. Refer to the scenario above. Based on the information above, what is the level of private saving in the economy?

$3 trillion

(EXAM 1) 8. Refer to the figure above. What is the value of producer surplus after the imposition of the price floor?

$3,000

(HW 4) 13. Figure above shows the market for cigarettes. The government plans to impose a per-unit tax in this market. Refer to Figure above. What is the size of the per-unit tax?

$5

(HW 4) 9. Refer to Figure above. What is the value of the deadweight loss after the imposition of the price floor?

$600

(HW 11) 7. Imagine that Kristy deposits $10,000 of currency into her checking account deposit at Bank A and that the required reserve ratio is 20%. As a result of Kristy's deposit, Bank A can make a maximum loan of _____.

$8,000

(HW 10) 7. Refer to Table above. Given the consumption schedule in the table above, the marginal propensity to save is _____.

0.1

(HW 11) 12. If the required reserve ratio is RR, the simple deposit multiplier is defined as _____.

1/(RR)

(HW 12) 16. Using the quantity equation, if the velocity of money grows at 5 percent, the money supply grows at 10 percent, and real GDP grows at 4 percent, then the inflation rate will be _____.

11%

(HW 6) 3. Refer to Table above. Assume the market basket for the consumer price index has three products — Cokes, hamburgers, and CDs — with the following values in 2011 and 2016 for price and quantity: The Consumer Price Index for 2016 equals _____.

121

(HW 12) 2. Refer to Figure above. Suppose Vidalia is currently producing 20 dozen orchids per period. How many roses is it also producing, assuming that resources are fully utilized?

150 dozen roses

(Quiz 5) 1. Significant economic growth did not begin in the world until _____.

1750 A.D.

(HW 2) 3. Figure above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. Refer to Figure above. What is the opportunity cost of one dozen orchids?

2.5 dozen roses

(HW 6) 5. Consider the following values of the consumer price index for 1996, 1997, and 1998: The inflation rate for 1997 was equal to _____.

2.5%

(HW 8) 3. If real GDP grows by 3% in 2014, 3.2% in 2015, and 2.5% in 2016, what is the average annual growth rate of real GDP?

2.9%

(HW 9) 12. A patent grants an inventor exclusive rights to a product for how long?

20 years

(Quiz 5) 5. A patent grants an inventor exclusive rights to a product for how long?

20 years

(HW 5) 11. Refer to Table above. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The base year used in calculating real GDP is _____.

2016 (Real GDP = Nominal GDP)

(EXAM 1) 32. Carmelita can perform either a combination of 35 manicures and 70 pedicures or a combination of 50 manicures and 45 pedicures. If she now performs 35 manicures and 70 pedicures, what is the opportunity cost of performing an additional 15 manicures?

25 pedicures

(HW 6) 14. Imagine that you borrow $1,000 for one year and at the end of the year you repay the $1,000 plus $100 of interest. If the inflation rate was 7%, what was the real interest rate you paid?

3%

(HW 6) 13. If the nominal rate of interest is 6.5% and the inflation rate is 3.0%, what is the real rate of interest?

3.5%

(EXAM 1) 13. Eva runs a small bakery in the village of Roggerli. She is debating whether she should extend her hours of operation Eva figures that her sales revenue will depend on the number of additional hours the bakery is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $12 per hour. Refer to the table above. Using marginal analysis, how many hours should Eva extend her bakery's hours of operation?

4 hours

(HW 1) 7. The Stogie Shop, a cigar store in the mall, sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each. What is the opportunity cost of buying a hand-rolled cigar?

4 machine-made cigars

(HW 12) 11. If real GDP per capita doubles between 2005 and 2020, what is the average annual growth rate of real GDP per capita?

4.7%

(HW 8) 2. If real GDP per capita doubles between 2005 and 2020, what is the average annual growth rate of real GDP per capita?

4.7%

(HW 7) 10. If the number of unemployed workers is 19 million, the number in the working-age population is 500 million, and the unemployment rate is 4%, how many workers are in the labor force?

475 million

(HW 6) 15. If you want to earn a real interest rate of 3% on money you lend, and you expect that inflation will be 2%, what nominal rate of interest will you charge?

5%

(HW 9) 3. If real GDP per capita in the United States is $8,000 in 2016, and if real GDP per capita is $12,000 in 2026, what is the average annual percent change in the growth rate of GDP per capita between 2016 and 2026?

5%

(EXAM 1) 33. Refer to the figure above. If Vidalia choose to produce 60 dozen orchids, how many roses can she produce to maximize production?

50 dozen roses

(HW 3) 10. Refer to Figure above. At a price of $25, how many units will be sold?

500

(HW 12) 8. If the number of unemployed workers is 200 million, the number of employed workers is 300 million, and the working-age population is 800 million, what is the labor force participation rate?

62.5%

(HW 12) 10. Imagine that you borrow $5,000 for one year and at the end of the year you repay the $5,000 plus $600 of interest. If the inflation rate was 4%, what was the real interest rate you paid?

8%

(HW 5) 15. Refer to Table above. Given the information above, calculate the rate of increase in the price level from 2017 to 2018.

8.6%

(HW 3) 3. A change in which variable will change the market demand for a product?

Expected future prices

(HW 7) 9. If the number employed is 190 million, the number unemployed is 10 million, and the working-age population is 250 million, then the labor force participation rate is _____.

80%

(HW 3) 14. Which of the following would cause both the equilibrium price and equilibrium quantity of barley (assume that barley is an inferior good) to increase?

A decrease in consumer income

(HW 3) 7. Refer to Figure above. An increase in the price of the product would be represented by a movement from _____.

A to B

(Quiz 5) 3. Refer to the figure above. Technological change is illustrated in the per-worker production function in the figure above by a movement from _____.

B to A

(HW 9) 10. Refer to Figure below. Technological change is illustrated in the per-worker production function in the figure above by a movement from _____.

B to C

(HW 4) 8. Refer to Figure above. Suppose that instead of a price ceiling, the government imposed a price floor of R1. What area represents the deadweight loss after the imposition of the price floor?

C + E

(HW 5) 6. Mathematically, GDP equals _____.

C + I + G + NX

(HW 6) 11. Which of the following describes the accuracy of the Consumer Price Index?

Changes in the CPI overstate the true rate of inflation.

(EXAM 1) 37. Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?

Consume a combination of goods that lies outside its own production possibilities frontier

(HW 1) 3. Economics promotes which of the following as the way to make the best decision?

Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost.

(EXAM 1) 38. Refer to the figure above. Which country has a comparative advantage in the production of pineapples?

Costa Rica

(HW 2) 7. Refer to Figure above. Which country has a comparative advantage in the production of pineapples?

Costa Rica

(HW 2) 14. Which of the following countries does not come close to the free market benchmark?

Cuba

(HW 4) 7. Refer to Figure above. What is the area that represents the portion of producer surplus transferred to consumers as a result of the rent ceiling?

D

(HW 3) 5. Refer to Figure above. An increase in the price of a complement would be represented by a movement from _____.

D2 to D1

(HW 1) 13. Which of the following is part of an economic model?

Data

(HW 8) 16. Which of the following is not one of the key services provided by the financial system?

Decreasing taxes

(EXAM 1) 39. Which of the following statements about an entrepreneur is true?

Develops the vision for the firm and funds the producing unit

(HW 7) 8. Which of the following causes the unemployment rate to understate the true extent of joblessness?

Discouraged workers are not counted as unemployed.

(HW 9) 1. The Industrial Revolution began in _____.

England around 1750

(HW 5) 2. The value of which of the following items would NOT be included in GDP?

Fabric purchased by a shirt factory

(EXAM 1) 42. Deadweight loss refers to a loss in revenue resulting from producers having to reduce their selling price to remain competitive.

False

(EXAM 1) 43. If a tax is imposed on a product, the buyer will always bear the entire burden of the tax.

False

(EXAM 1) 46. An inferior good is a good for which the quantity demanded increases as the price decreases, holding everything else constant.

False

(EXAM 1) 47. A decrease in the number of firms in a market will cause supply to increase.

False

(EXAM 1) 50. The idea underlying Adam Smith's "invisible hand" is that people tend to behave in ways that go unnoticed in society.

False

(HW 1) 17. As population declines, scarcity eventually disappears.

False

(HW 1) 18. When voluntary exchange takes place, only one party gains from the exchange.

False

(HW 10) 17. Aggregate expenditure includes consumption spending, unplanned investment spending, government purchases, and net exports.

False

(HW 10) 18. An increase in the price level in the United States will reduce imports and increase exports.

False

(HW 10) 19. When net exports equal zero, the economy is in macroeconomic equilibrium.

False

(HW 11) 17. Economies cannot function without money.

False

(HW 11) 18. Liquidity increases as we move from the M1 to the M2 definition of the money supply.

False

(HW 12) 17. If it costs Hobie $900 to produce 5 lamps and $1,200 to produce 6 lamps, then the difference of $300 is the marginal cost of producing the 5th lamp.

False

(HW 12) 18. If consumers believe the price of tablet computers will increase in the future, this will cause the demand for tablet computers to decrease now.

False

(HW 12) 19. Producer surplus is the difference between the highest price someone is willing to pay and the price he actually pays.

False

(HW 12) 20. Paying efficiency wages are a way for a company to cut costs and become more efficient, and are therefore lower than market wages.

False

(HW 2) 17. Any output combination along a production possibility frontier is associated with overused or unattainable resources.

False

(HW 2) 18. The basis for trade is absolute advantage, not comparative advantage.

False

(HW 3) 17. A decrease in the number of firms in a market will cause supply to increase.

False

(HW 3) 18. In response to a shortage, the market price of a good will rise. As the price rises, the demand will decrease and supply will increase until equilibrium is reached.

False

(HW 3) 19. A surplus occurs when the market price is lower than the equilibrium price.

False

(HW 4) 18. The difference between consumer surplus and producer surplus in a market is equal to the deadweight loss.

False

(HW 4) 19. Rent control is an example of a price floor.

False

(HW 4) 20. If a tax is imposed on a product, the buyer will always bear the entire burden of the tax.

False

(HW 5) 17. If Gladys sells her 2003 Jeep Cherokee for $3,500 in 2018, the sale of her car contributes $3,500 to 2018 GDP.

False

(HW 5) 19. Nominal GDP measures the value of all final goods and services at base-year prices.

False

(HW 5) 20. Transfer payments are subtracted from national income to get to personal income.

False

(HW 6) 18. The inflation rate measures the average prices of goods and services in the economy.

False

(HW 6) 19. If the CPI falls from 142 to 140 between two consecutive years, this implies that prices fell by 2% between those two years.

False

(HW 7) 19. Eliminating frictional unemployment would be good for the economy.

False

(HW 7) 20. Efficiency wage is another name for the minimum wage.

False

(HW 9) 18. Most of the countries of Africa are considered newly industrializing countries.

False

(HW 9) 19. According to new growth theory, firms accumulate the efficient level of both physical and knowledge capital.

False

(HW 10) 2. In a small economy in 2016, aggregate expenditure was $800 million while GDP that year was $850 million. Which of the following can explain the difference between aggregate expenditure and GDP that year?

Firms investment in inventories was greater than anticipated in 2016.

(HW 9) 15. Which of the following accurately describes growth rates in the United States from 1900 to the present?

Growth rates rose until the 1970s, slowed until the 1990s, rose again until 2005, and then slowed again to the present.

(HW 10) 11. Refer to Figure above. If the U.S. economy is currently at point N, which of the following could cause it to move to point K?

Households expect future income to decline

(HW 8) 15. ________ is the ease with which a financial security can be exchanged for money.

Liquidity

(Quiz 6) 4. The Federal Reserve's narrowest definition of the money supply is _____.

M1

(HW 11) 5. The M2 measure of the money supply equals _____.

M1 plus savings account balances plus small-denomination time deposits plus noninstitutional money market fund shares

(EXAM 1) 12. _____ involves undertaking an activity until its marginal benefits equal marginal costs.

Marginal analysis

(HW 5) 8. What is the difference between gross domestic product (GDP) and net domestic product (NDP)?

NDP = GDP - Depreciation of capital

(HW 12) 6. Between 2017 and 2018, if an economy's exports rise by $8 billion and its imports fall by $8 billion, by how much will GDP change between the two years, all else equal?

Net exports will increase GDP by $16 billion

(EXAM 1) 27. Refer to the figure above. Assume that the graphs in this figure represent the demand and supply curves for laptop computers. Which panel best describes what happens in this market when the price of computer hard drives falls?

Panel (a)

(HW 3) 15. Refer to Figure above. Assume that the graphs in this figure represent the demand and supply curves for laptop computers. Which panel best describes what happens in this market when the price of computer hard drives falls?

Panel (a)

(Quiz 6) 3. A car dealer sells you a car today in exchange for money in the future. This illustrates which function of money?

Standard of deferred payment

(Quiz 6) 2. Which of the following functions of money would be violated in inflation were high?

Store of value

(HW 8) 12. Refer to Figure above. Which of the following is consistent with the graph depicted above?

Technological change increases the profitability of new investment.

(HW 2) 12. Which of the following is an example of spending on factors of production in the circular flow model?

The "Lucky Ducky" casino buys a new craps table for the casino floor.

(HW 12) 13. Which of the following is not a reason why the Industrial Revolution occurred when and where it did?

The British government was able to more easily seize wealth.

(HW 8) 17. What is the name of the organization that defines business cycle peaks and troughs in the United States?

The National Bureau of Economic Research

(HW 4) 10. Increases in the minimum wage are intended to raise the incomes of low-income workers. Many economists favor a different policy to achieve this goal, a policy that avoids the deadweight losses that result from the minimum wage. What is this policy?

The earned income tax credit

(EXAM 1) 28. Refer to the figure above. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and S1 (point A). If the price of motorcycle engines increases, and the wages of motorcycle workers increase, how will the equilibrium point change?

The equilibrium point will move from A to B.

(HW 1) 10. Which of the following is a normative economic statement?

The price of milk is too high.

(EXAM 1) 31. _____ shows that if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good.

The production possibilities frontier

(HW 3) 9. The decline in the popularity of clothing made from animal fur has enticed large department stores like J. C. Penney and Sears to discontinue sales of animal-fur products. How does discontinuing sales of these products by J.C. Penney and Sears affect the animal-fur clothing market?

The supply curve for animal-fur clothing shifts to the left.

(HW 3) 8. In April, market analysts predict that the price of titanium will fall in May. What happens in the titanium market in April, holding everything else constant?

The supply curve shifts to the right

(EXAM 1) 24. If the United States lifts the embargo on Cuban products, what will happen in the U.S. market for Cuban cigars?

The supply curve will shift to the right.

(HW 3) 12. Which of the following describes a characteristic of a perfectly competitive market?

There are many buyers and sellers

(Quiz 2) 10. Which of the following describes a characteristic of a perfectly competitive market?

There are many buyers and sellers.

(EXAM 1) 41. The total amount of consumer surplus in a market is equal to the area below the market demand curve and above the market price.

True

(EXAM 1) 48. On a production possibilities frontier, opportunity cost is represented by the slope of the production possibilities frontier.

True

(EXAM 1) 49. If a country produces only two goods, then it is not possible to have comparative advantage in the production of both those goods.

True

(HW 1) 19. Examining the conditions that could lead to economic growth is an example of a macroeconomic topic.

True

(HW 1) 20. "The distribution of income should be determined by the government" is an example of a normative economic statement.

True

(HW 10) 20. A rising price level decreases consumption by decreasing the real value of household wealth.

True

(HW 11) 20. The Fed can change the money supply more quickly by using open market operations as compared to discount policy.

True

(HW 2) 19. If a country produces only two goods, it is possible to have an absolute advantage in the production of both goods.

True

(HW 2) 20. In a free market there are virtually no restrictions, or at best few restrictions, on how a good or service can be produced or sold.

True

(HW 3) 20. If the population increases and input prices increase, the equilibrium price of a product will definitely increase.

True

(HW 4) 17. The total amount of consumer surplus in a market is equal to the area below the market demand curve and above the market price.

True

(HW 5) 18. If income is unequally distributed in an economy, increases in GDP may not raise well-being in an economy.

True

(HW 6) 20. The costs to firms of changing prices are called menu costs.

True

(HW 7) 18. The household survey asks adults about their employment status and is used to compile the monthly unemployment rate.

True

(HW 9) 20. The productivity slowdown experience in the United States from the mid-1970s to the mid-1990s occurred in all high-income countries.

True

(HW 7) 5. Which of the following explains the changes in the U.S. adult male labor force participation rate since 1948?

Younger men are remaining in school longer as compared to the past.

(HW 7) 2. The Bureau of Labor Statistics would categorize a retiree who is not working as _____.

out of the labor force

(HW 11) 3. A major source of inefficiency in barter economies is that they require _____.

a double coincidence of wants in exchange

(EXAM 1) 11. The term "market" in economics refers to _____.

a group of buyers and sellers of a product and the arrangement by which they come together to trade

(EXAM 1) 36. The recession of 2007-2009 would most likely be represented in a product possibilities frontier graph by _____.

a point inside the frontier

(HW 3) 11. Refer to Figure above. If the current market price is $25, the market will achieve equilibrium by _____.

a price decrease, decreasing the quantity supplied and increasing the quantity demanded

(HW 8) 11. If consumers decide to be more thrifty and save more out of their income, then this will cause _____.

a shift in the supply curve for loanable funds to the right

(HW 11) 8. Banks can continue to make loans until their _____.

actual reserves equal their required reserves

(Quiz 4) 3. Labor force participation rate measures the percentage of _____ in the labor force.

adult population

(HW 10) 16. The ________ illustrates the relationship between the price level and the quantity of planned aggregate expenditure, holding constant all other factors that affect aggregate expenditure.

aggregate demand curve

(HW 12) 14. A decrease in consumer confidence can put your job at risk if _____.

aggregate expenditures fall

(HW 1) 9. When every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it, ________ occurs.

allocative efficiency

(HW 11) 2. Money is _____.

an asset that people are willing to accept in exchange for goods and services

(HW 4) 16. When the marginal benefit equals the marginal cost of the last unit sold in a competitive market, _____.

an economically efficient level of output is produced

(Quiz 2) 3. An outward shift of a nation's production possibilities frontier can occur due to _____.

an increase in the labor force

(HW 11) 1. In economics, money is defined as _____.

any asset people generally accept in exchange for goods and services

(HW 4) 6. A black market is a market where buying and selling take place _____.

at prices that violate government price regulations

(EXAM 1) 15. Productive efficiency is achieved when firms produce goods and services _____.

at the lowest cost

(HW 6) 2. The consumer price index is the _____.

average of the prices of the goods and services purchased by a typical urban family of four

(Quiz 6) 1. Economies where goods and services are traded directly for other goods and services are called _____ economies.

barter

(EXAM 1) 16. Voluntary exchange increases economic efficiency _____.

because neither the buyer nor the seller would agree to trade unless they both benefit

(HW 3) 16. Assume that both the demand curve and the supply curve for DVD players shift to the left but the demand curve shifts more than the supply curve. As a result _____.

both the equilibrium price and quantity of DVD players will decrease

(EXAM 1) 30. Assume that both the demand curve and the supply curve for DVD players shift to the left but the demand curve shifts more than the supply curve. As a result, _____.

both the equilibrium price and quantity will decrease

(EXAM 1) 34. A production possibilities frontier with a _____ shape indicates increasing opportunity cost as more and more of one good is produced.

bowed outward

(HW 4) 12. Tax incidence is the actual division of the _____.

burden of the tax between buyers and sellers in a market

(EXAM 1) 17. All _____ economies have been political dictatorships.

centrally planned

(HW 1) 16. All ________ economies have been political dictatorships.

centrally planned

(HW 2) 9. The resource income earned by those who supply labor services is called _____.

wages and salaries

(HW 6) 7. The substitution bias in the consumer price index refers to the idea that consumers ________ the quantity of products they buy in response to price, and the CPI does not reflect this and ________ the cost of the market basket.

change; overestimates

(HW 12) 1. Economics is the study of the ________ people make to attain their goals, given their ________ resources.

choices; scarce

(HW 11) 14. To increase the money supply, the Federal Reserve could _____.

conduct an open market purchase of Treasury securities

(HW 4) 15. In a competitive market when there is no deadweight loss _____.

consumer surplus plus producer surplus is maximized

(HW 1) 14. The decision about what goods and services will be produced in a market economy is made by _____.

consumers and firms choosing which goods and services to buy or produce

(EXAM 1) 14. In a market economy, who decides what goods and services will be produced?

consumers and producers

(HW 5) 7. he largest category of expenditures in U.S. GDP is _____.

consumption expenditures

(Quiz 4) 4. All modern dynamic economies are subject to _____ of a job.

creative destruction

(Quiz 4) 7. The BLS produces data on unemployment from a regular survey of households called the _____.

current population survey

(Quiz 3) 1. The GDP deflator is a ratio of _____ prices.

current to fixed

(Quiz 4) 5. Deviation of unemployment from natural rate is _____ rate of unemployment.

cyclical

(HW 9) 4. Over the past 50 years, deaths among children have _____.

declined in nearly all countries, including most low-income countries

(HW 12) 7. If the BLS counted persons that are on active military service in the totals for employment, the labor force, and the working-age population, this would _____.

decrease the measured unemployment rate

(EXAM 1) 10. In a competitive market, the _____ curve shows the marginal benefit received by consumers and the _____ curve shows the marginal cost to producers.

demand; supply

(Quiz 6) 7. The required reserves of a bank equal its _____ the required reserves ratio.

deposits multiplied by

(HW 5) 3. Adjustments for business inventory of product or inputs that are accumulated or sold during a year helps to ensure the accuracy of GDP by ensuring that GDP _____.

includes all of the time period's production

(HW 5) 5. Earned income plus unearned income minus taxes is a measure called _____.

disposable personal income

(Quiz 4) 1. Labor force is _____ workers in an economy.

employed + unemployed

(HW 10) 14. The ratio of the increase in ________ to the increase in ________ is called the multiplier.

equilibrium real GDP; autonomous expenditure

(HW 10) 8. During a(n) ________ many firms experience increased profits, which increases ________ and investment spending.

expansion; cash flow

(EXAM 1) 21. A change in which variable will change the market demand for a product?

expected future prices

(Quiz 3) 2. Net export is calculated as _____.

exports - imports

(HW 2) 8. If a vineyard wants to raise funds to purchase a new bottling machine, it does so in the _____.

factor market

(Quiz 2) 4. If a vineyard wants to raise funds to purchase a new bottling machine, it does so in the _____.

factor market

(HW 2) 11. Refer to Figure above. In the circular flow diagram, market K represents _____.

factor markets

(HW 8) 19. The demand for loanable funds is determined by the willingness of ________ to borrow money to engage in new investment projects.

firms

(HW 9) 13. Creative destruction means that _____.

firms develop new products that replace old products in the economy, thereby encouraging economic growth

(Quiz 5) 7. The purchase or building by a corporation of a facility in a foreign country is called _____.

foreign direct investment

(HW 9) 14. Because knowledge capital is nonexcludable and nonrival, firms have an incentive to ________ the research and development of other firms.

free ride on

(HW 7) 11. A student who just graduated from college but has not found a job would most likely be _____.

frictionally unemployed

(Quiz 5) 8. From 1990-2016, productivity growth in the United States was _____ the growth rates of other high-income countries.

greater than

(HW 12) 15. Commodity money _____.

has value independent of its use as money

(HW 4) 1. The difference between the ________ for a good and the ________ is called consumer surplus.

highest price a consumer is willing to pay; price the consumer actually pays

(HW 5) 12. Nominal GDP will increase _____.

if either the price level or the quantity of goods and services produced rises

(HW 3) 4. The ________ effect of a price change refers to the impact of a change in the price of a good on a consumer's purchasing power.

income

(HW 5) 10. A sharp increase in the number of medical errors increases the number of lawyers hired to determine medical malpractice settlements. This will _____.

increase GDP and decrease well-being in the economy

(HW 2) 16. When a celebrity has the desire to have his image protected following his death, this is best described as an example of the protection of _____.

intellectual property

(Quiz 3) 3. New houses are included in the _____ component of GDP.

investment

(HW 1) 15. The cost incurred from the production of an additional unit of a product _____.

is a marginal cost to the firm

(HW 7) 6. An advantage of the establishment survey over the household survey of the labor market is that the establishment survey _____.

is based on actual payrolls, rather than on unverified answers.

(EXAM 1) 1. The area above the market supply curve and below the market price is _____.

is equal to the total amount of producer surplus in a market

(HW 4) 3. The area above the market supply curve and below the market price _____.

is equal to the total amount of producer surplus in a market

(HW 5) 13. If the GDP deflator is less than 100, then for that year, nominal GDP ________ real GDP.

is less than

(HW 8) 8. A firm can fund an expansion of its operations by _____.

issuing bonds

(EXAM 1) 6. Because minimum wage is a price floor, _____.

it will create deadweight loss

(HW 7) 4. Which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given working-age population?

labor force participation rate

(HW 8) 4. The quantity of goods and services that can be produced by one worker or by one hour of work is referred to as _____.

labor productivity

(Quiz 3) 9. For a good to be included in the GDP, it must be produced _____.

legally

(HW 6) 6. Your grandfather tells you that he earned $7,000/year in his first job in 1961. You earn $35,000/year in your first job in 2016. You know that average prices have risen steadily since 1961. You earn _____.

less than 5 times as much as your grandfather in terms of real income

(HW 9) 16. The industrialized group of countries has growth rates that are consistent with the findings of the economic growth model. That is, Taiwan, Korea, and Singapore had ________ incomes in 1960 than the United States and Switzerland, and Taiwan, Korea, and Singapore grew ________ than the United States and Switzerland between 1960 and 2010.

lower; more rapidly

(HW 5) 1. GDP is defined as the _____.

market value of all final goods and services produced in a country in a time period

(Quiz 4) 9. One cost of inflation is _____.

menu cost

(HW 1) 11. The branch of economics which studies how households and firms make choices, interact in markets, and how government attempts to influence their choices is called _____.

microeconomics

(EXAM 1) 22. The income effect of a price change results in a _____.

movement along the demand curve due to a change in purchasing power brought about by the price change

(HW 12) 4. The income effect of a price change results in a _____.

movement along the demand curve due to a change in purchasing power brought about by the price change

(EXAM 1) 5. To affect the market outcome, a price floor _____.

must be set above the equilibrium price

(HW 4) 5. To affect the market outcome, a price floor _____.

must be set above the equilibrium price

(Quiz 3) 4. Inflation rate is measured as percentage change in prices from one period to the _____ period.

next

(Quiz 6) 6. Credit cards balances are _____.

not part of the money supply

(Quiz 2) 5. The ability to exercise control over one's own resources within the confines of the law refers to _____.

one's property rights

(HW 2) 1. The concept of ________ is that the economic cost of using a factor of production is the alternative use of that factor that is given up.

opportunity cost

(Quiz 2) 2. The slope of a production possibilities frontier measures the _____ of producing on more unit of a good.

opportunity cost

(Quiz 6) 5. In the United States, currency includes _____.

paper money and coins in circulation

(Quiz 4) 8. The nominal interest rate is real interest rate _____ inflation rate.

plus

(HW 8) 5. Long-run economic growth requires all of the following except _____.

political instability

(Quiz 4) 10. The PPI is the average of prices faced by _____ of goods and serivces.

producers

(HW 1) 6. Every society faces economic trade-offs. This means _____.

producing more of one good means less of another good can be produced

(HW 8) 6. The only way the standard of living of the average person in a country can increase is if ________ increases faster than ________.

production; population

(Quiz 2) 1. In a production possibilities frontier, a point inside the frontier is _____.

productively inefficient

(EXAM 1) 26. If the quantity demanded for a product exceeds the quantity supplied, the market price will rise until _____.

quantity demanded equals quantity supplied. The market price will then equal the equilibrium price

(Quiz 5) 10. Enforcing property rights in an economy will _____.

raise the level of investment

(HW 8) 1. A good measure of the standard of living is _____.

real GDP per capita

(HW 6) 10. The producer price index measures the prices that firms _____.

receive for the goods and services they use at all stages of production

(HW 1) 8. In a market economy, those who are willing and able to buy what is produced _____.

receive the most of what is produced

(HW 11) 11. Suppose the reserve ratio is RR. Then, _____.

required reserves = RR × deposits

(Quiz 3) 7. The GDP is the market value of goods and services produced by _____ of a country.

residents

(HW 1) 2. Economists assume that rational people _____.

respond to economic incentives

(HW 2) 15. A critical function of the government in facilitating the operation of a market economy is

setting up and enforcing property rights

(HW 9) 6. In the long run, ________ differences in economic growth rates result in ________ differences in GDP per capita.

small; large

(Quiz 3) 5. The GDP is not a perfect measure of standard of living because it does not take _____ of increasing production into account.

social problems

(HW 10) 5. Examples of assets that are included in household wealth would be _____.

stocks, bonds, and savings accounts

(HW 11) 13. The Federal Reserve was established in 1913 to _____.

stop bank panics by acting as a lender of last resort

(Quiz 6) 9. The Federal Reserve was established in 1913 to _____.

stop bank panics by acting as a lender of last resort

(Quiz 4) 2. Natural rate of unemployment is the sum of _____.

structural + frictional

(HW 7) 13. Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called _____.

structural unemployment

(Quiz 4) 6. The CPI is not a perfect measure of inflation because _____ bias.

substitution

(HW 12) 12. Which of the following is most likely to be able to sustain economic growth in an economy?

technological change

(HW 9) 11. According to new growth theory, _____.

technological change is influenced by economic incentives

(Quiz 5) 4. According to new growth theory, _____.

technological change is influenced by economic incentives

(EXAM 1) 20. The processes used to produce goods and services describes _____.

technology

(HW 1) 12. The processes used to produce goods and services describes _____.

technology

(HW 9) 7. The key factors in raising standards of living in low-income countries have been increases in _____.

technology and knowledge

(Quiz 5) 2. The key factors in raising standards of living in low-income countries have been increases in _____.

technology and knowledge

(HW 7) 1. The unemployment rate is an important economic statistic that can tell us about the health of the economy. If the unemployment rate turns out to be high or higher than anticipated, we would expect _____.

that stock prices are more likely to fall

(HW 9) 2. According to Douglass North, the Industrial Revolution occurred in England because _____.

the British Parliament took control of the government and could credibly commit to upholding property rights.

(HW 11) 16. The seven members of the Board of Governors of the Federal Reserve are appointed by _____.

the President

(HW 8) 7. Potential GDP is defined as _____.

the level of GDP attained when all firms are producing at capacity

(HW 10) 1. The key idea of the aggregate expenditure model is that in any particular year, the level of GDP is determined mainly by _____.

the level of aggregate expenditure

(HW 4) 2. A consumer is willing to purchase a product up to the point where _____.

the marginal benefit is equal to the price of the product

(EXAM 1) 2. The supply curve shows _____.

the marginal cost of producing one more unit of a good or service

(HW 2) 4. Increasing marginal opportunity cost implies that _____.

the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts

(HW 10) 15. All of the following are true statements about the multiplier except _____.

the multiplier is a value between zero and one

(HW 7) 7. The unemployment rate is _____.

the percentage of the labor force that is unemployed

(HW 6) 1. The average price of goods and services in the economy is also known as _____.

the price level

(EXAM 1) 3. Suppliers will be willing to supply a product in all of the following situations except when _____.

the price received is less than the additional cost of producing the product

(EXAM 1) 4. If, in a competitive market, marginal benefit is greater than marginal cost, then _____.

the quantity sold is less than the equilibrium cost

(HW 4) 4. If, in a competitive market, marginal benefit is greater than marginal cost _____.

the quantity sold is less than the equilibrium quantity

(HW 6) 16. The nominal interest rate will be less than the real interest rate when _____.

the rate of inflation is negative

(HW 8) 20. Equilibrium in the loanable funds market determines _____.

the real interest rate

(HW 2) 10. The circular flow model demonstrates _____.

the roles played by households and firms in the market system

(HW 9) 9. When an economy faces diminishing returns, _____.

the slope of the per-worker production function becomes flatter as capital per hour worked increases.

(HW 11) 9. The more excess reserves banks choose to keep, _____.

the smaller the deposit multiplier

(Quiz 6) 8. The more excess reserves banks choose to keep, _____.

the smaller the deposit multiplier

(EXAM 1) 29. Suppose a drought resulted in a major reduction in the California lettuce crop. In the market for lettuce, _____.

the supply curve will shift left resulting in an increase in the equilibrium price

(HW 3) 6. If in the market for bananas the supply curve has shifted to the right, then _____.

the supply of bananas increased

(EXAM 2) 1. Gross domestic product is calculated by summing up _____.

the total market value of all goods and services produced in the economy during a period of time

(HW 7) 16. Suppose that the labor movement has a revival in the United States and the majority of workers join labor unions. As a result we would expect _____.

the unemployment rate to rise

(HW 7) 14. When the labor market is at full employment _____.

there is no cyclical unemployment in the economy

(HW 6) 17. If inflation is positive and is perfectly anticipated, _____.

those that hold paper money lose

(Quiz 3) 6. The government purchases do not include the _____.

transfer payments

(HW 5) 4. A significant part of economic activity in developing nations occurs in the _____ economy, which consists of small businesses that largely are unreported, are unregulated, and lack property rights.

underground

(HW 1) 1. Scarcity refers to the situation in which _____.

unlimited wants exceed limited resources

(HW 12) 9. To reduce the bias in the consumer price index, the Bureau of Labor Statistics _____.

updates the market basket every two years, rather than every 10 years

(HW 6) 9. To reduce the bias in the consumer price index, the Bureau of Labor Statistics _____.

updates the market basket every two years, rather than every 10 years

(HW 6) 8. The consumer price index implicitly assumes that the demand curve for each good and service in the representative market basket is _____.

vertical

(HW 11) 6. If households and firms decide to hold less of their money in checking account deposits and more in currency, then initially, the money supply _____.

will not change