ECON 2020 FINAL EXAM REVIEW (IN CLASS)
A carpenter buys $5,000 worth of lumber from a mill and sells the finished product for $26,000. If he purchased no other inputs, he adds a value of ________ to the production process
$21,000
if an individual borrows $200 at an annual rate of interest of 10%, what is the total amount that he will have to repay after one year?
$220
if the total assets of a bank equals $250,000 and the total liabilities of the bank equal $200,000, stockholders' equity will equal
$50,000
Consider an economy that produces only cell phones. In the year 2012, the economy manufactures 275 cell phones, and each cell phone sells at $200. In the year 2013, the economy manufactures 280 cell phones but the price of each cell phone fails to $180 Refer to scenario above. What is the nominal GDP of the economy in 2012
$55,000
Consider an economy that produces only cell phones. In the year 2012, the economy manufactures 275 cell phones, and each cell phone sells at $200. In the year 2013, the economy manufactures 280 cell phones but the price of each cell phone falls to $180 Using 2012 as the based year, what is the real GDP of the economy in 2013
$56,000
If the nominal interest rate in an economey is 6% and the inflation rate in the economy is 10%, then the real interest rate is:
- 4 %
Demand deposits have a ______________ maturity
0- year
If the natural rate of unemployment in a country is 6% and the unemployment rate in the country is 8%, the cyclical unemployment in the country must be :
2%
2 million full-time workers 1 million part- time workers 1 million people who have been laid off by their employers but are currently looking for employment 1 million children of age fifteen years or less 2 million housewives not looking for jobs What is the number of employed workers in the economy?
3 million
If the number of employed workers in an economy is 8 million, the number of potential workers in the economy is 23 million, and the number of adults not in the labor force is 1 million, the number of unemployed people in the economy will equal:
3 million
Which of the following is likely to shift the labor supply curve to the right, assuming all else equal?
A rise in the immigration of workers in search of better work opportunities
Which of the following is an example of labor income?
Bonus paid to a worker
Which of the following is a part of the potential work force of a country?
Civilian non -institutionalized people aged 16 years and above
Identify the correct statement
Countercyclical fiscal policy stimulates the economy during a recession by shifting the labor demand curve to the right.
Which of the following terms refers to an unusually severe, prolonged recession, typically with an unemployment rate that exceeds 20%?
Depression
Wages in Baltonia are downwardly rigid. Which of the following will happen if a recession occurs in the country?
Employment will fall more than if wages were flexible
Match the GDP calculation approach to the definition Sums up the purchases of the final goods and services by different groups or categories.
Expenditure Approach
Which of the following correctly describes how Keynes viewed countercyclical fiscal policy
Governments should increase spending and reduce taxes during recessions Governments should decrease spending and increase taxes during expansions Both B and C
(Exam 2)Which of the following groups of people will be considered as unemployed?
Housewives who do not have a job but have been actively looking for jobs for the las two months
Which of the following statements is true (the firm)
If a firm deposits a sum of $500 in a bank, the sum is a part of the bank's liability
Which of the following statements is true (interest rate)
If the real interest rate increases, the opportunity cost of current consumption increases
This spending category is subtracted in the expenditure approach to GDP.
Imports
Which of the following is a characteristic of an institution
Institutions place constraints on the behavior of economic agents
The advantage of using real GDP over nominal GDP is that:
It can be compared over time
Which of the following tools does the Fed use to pursue its objectives
It influences short - run and long - run interest rates
Which of the following is a role of the Federal Deposit Insurance Corporation in the United States?
It safeguards deposits held with banks
Which of the following is likely to happen if consumption in an economy falls
Labor demand falls
Suppose nominal GDP increase from $1 billion to $1.1 billion in 2016. Which of the following statements is TRUE (none)
Non of the above is TRUE
Which of the following pairs of goods are likely to be considered complements?
Pens and writing pads
Suppose that an automobile manufacturer can either produce cars or SUVs in a particular plant. When the demand for SUVs increases, this will_______
Shift the supply curve of cars to the left
Which of the following statements is true (tech)
Technological innovation can cause unemployment in a single industry
Which of the following factors of production is least likely to show diminishing marginal product?
Technology
Everything else remaining unchanged, what is likely to happen to the equilibrium real interest rate and quantity of credit if the credit supply curve shifts to the right?
The equilibrium rate of interest will decrease and the quantity of credit will increase
Which of the following statements is true of the number of entrepreneurs in an economy?
The number of entrepreneurs is likely to be higher in an economy with inclusive institutions than in an economy with extractive institutions
What will happen to the demand curve for tea workers if the price of tea increases, assuming all else equal?
There will be rightward shift in the demand curve for tea workers
Other things remaining the same, a right shift in the supply curve will lead to:
a decrease in the equilibrium price and an increase in the equilibrium quantity
Which of the following will lead to a decrease in the gross domestic product of a country?
a decrease in the expenditure incurred by the government
Assuming all else equal, a decrease in the real interest rate will cause:
a downward movement along the credit demand curve
The impact of a decrease in the wage rate on labor supply will be represented by ___________, assuming all else equal.
a downward movement along the labor supply curve
Assuming all else equal, if the price of fuel and energy increases, ________________
a firm's labor demand curve shifts to the left
Which of the following is likely to lead to an increase in the quantity supplied of steel?
a rise in the market price of steel
John makes it a point to save a portion of his salary every month. Assuming all else equal, if the real interest rate increases, it is likely to cause:
an upward movement along John's credit supply curve
The federal funds market refers to the market where:
banks obtain loans of reserves from each other
The process by which the stock of equipment and structures available to an economy is increased by investment is referred to as:
capital accumulation
A sudden fall in housing prices in Potentia has lowered the confidence of households. Assuming all else equal, this is likely to lead to a(n)
decline in current consumption
Workers who are unemployed but are not actively looking for jobs are referred to as:
discourage workers
What would be the effect of the following two changes in the market for wheat? Consumers think a gluten0free diet is healthier and eat less bread. The price of corn, which can be grown on the same fields as wheat, increases
equilibrium price is indeterminate, quantity decreases
The aim of development aid is basically to:
eradicate poverty
If people expect the Fed to adopt a(n) _______ for several years, the long - run real interest rate will remain _______
expansionary monetary policy; low
When institutions do not protect private property rights, do not uphold contracts, interfere with the working of markets and instead erect significant barriers into businesses and occupations, they are referred to as:
extractive economic institutions
Frictional unemployment exists because:
firms and workers have imperfect information about each other and the state of the economy
(Exam 3)In the case of banks, "living wills" spell out:
how a bank would sell its assets and pay of its creditors in the event of shutdown.
A Chinese worker started working in the U.S. and earned income of $10,000 during a certain year. this will lead to a(n) ___________ in the same year.
increase in the GDP of U.S
If the real interest rate is equal to the nominal interest rate in an economy:
inflation must be zero in the economy
A researcher claims that the standards of law and order are the basis of the economic prosperity of a certain country. This argument is based on the:
institutions hypothesis
Creative destruction:
is more likely in an economy with inclusive institutions
The value of a worker's marginal product:
is the additional revenue that the worker brings in to the firm
An asset is liquid if:
it can be easily converted into cash without loss of value
Excessive dependence on cheaper foreign imports can cause a (n) _________ in certain sectors of the economy
leftward shift in the domestic labor demand curve
Any change that causes a decrease in the demand in the demand for labor at a given wage rate will be represented by a (n) __________________ assuming all else equal
leftward shift in the labor demand curve
The demand for a particular brand of shoes decreased due to a change in consumers' tastes and preferences. This will lead to a(n) ------------ assuming all else equal
leftward shift of the firm's labor demand curve
Claims that economic agents have against banks are known as:
liabilities
Borrowed funds that are to be repaid in a year or more are referred to as:
long - term debt
If the geography hypothesis holds, then:
poorer countries are permanently disadvantaged
The causes of prosperity that link high levels of prosperity to high levels of inputs of production, without explaining why the levels of those inputs are high, are referred to as:
proximate causes of prosperity
The model that states that individuals develop their inflation expectations after considering all the available information is referred to as the:
rational expectations model
When: consumers are feeling more confident about the future and are less fearful of losing their jobs, this will likely cause a(N)
right shift in the market demand for all goods.
All else equal, an increase in government borrowing is likely to cause a(n)
rightward shift of the credit demand curve
If the Fed wants to increase the federal funds rate through open market operations, it _______
sells bonds
An expected increase in the market price of oil in the coming year is likely to:
shift the supply curve of oil to the left in the current year
Assuming all else equal, if a firm decides to pay more dividends and lowers the amount of retained earnings it holds, it will cause:
the current credit supply curve of the firm to shift to the left.
The savings rate designates:
the fraction of income that households save
A short - run change in _______ is referred to as a business cycle
the growth rate of output
In an economy, investment is most likely to be dependent on:
the long- run real interest rate
At the equilibrium rate of interest:
the quantity of credit demanded equals the quantity of credit supplied
If the quantity of credit supplied in a market exceeds the quantity of credit demanded in the market:
the real rate of interest tends to fall.
If at a given wage, the quantity supplied of labor exceeds the quantity demanded of labor:
the wage rate will fall
When an asset is used as a universal yardstick that is used for expressing the worth of different goods and services, it is serving the function of a ___________
unit of account
The ratio of nominal GDP to money supply is referred to as:
velocity
Unemployment normally arises when:
wages are above the market clearing wage level
