Econ 2105 All Quizzes
Which of the following causes shifts in the IS curve? Financial shocks occur. The real interest rate decreases. Spending shocks occur. The real interest rate increases.
Spending shocks occur.
Which of the following is a narrow indicator? The stock price for JPMorgan Chase & Co. The consumer price index Real GDI Non-farm payrolls
The stock price for JPMorgan Chase & Co.
An equilibrium price is: the price that prevails when there is a shortage. the price that prevails when quantity supplied is less than quantity demanded. determined by the intersection of the demand and supply curves. the price that occurs when there is a surplus.
determined by the intersection of the demand and supply curves.
What is Uganda's real GDP if its nominal GDP is $27.5 billion (in current US$), and the GDP deflator is 163.4? $12.4 billion $27.5 billion $44.9 billion $16.8 billion
$16.8 billion
In 1995, when the consumer price index was 152.38, women earned a median income of $12,130 per year. If the consumer price index in 2015 was 236.99, how much was $12,130 in 2015 dollars? $12,130 $7,799 $16,259 $18,865
$18,865
Suppose a labor market is described by the demand equation, Qd = 60 - 2w, and the supply equation, Qs = -10 + w, where Qd is the quantity demanded of labor (in Million), Qs is the quantity supplied of labor (in Million), and w is the wage (in dollars). What is the equilibrium wage in this labor market? $70 $60 $33.33 $23.33
$23.33
In 2010, Canada's GDP was approximately $1,357 billion, and its population was about 34.12 million. What was Canada's approximate GDP per person in 2010? $46,060 $39,770 $3,980 $26,246
$39,770
Kevin Williamson goes to a local coffee shop and orders a medium-sized latte. His willingness to pay for that latte is $6. The price of the latte is $2. The cost to the coffee shop to produce the latte is $1. How much economic surplus does Kevin gain when he purchases the latte? $1 $6 $2 $4
$4
In 1971, the cost of a four-year college degree from a public university was about $1,410. The consumer price index was 40.48 in January 1971. If the current consumer price index is 251.1, what is the approximate cost of the four-year degree in current dollars? $227 $8,746 $9,422 $1,410
$8,746
The aggregate production function Y = f(L, H, K) shows that economic growth can occur if: (i) human capital increases. (ii) labor productivity falls. (iii) the capital stock in the country depreciates. (iv) the depreciation rate increases. (i) and (iv) (iii) only (i) only (i), (ii), (iii), and (iv)
(i) only
Which of the following would be considered in a cost-benefit analysis to decide if a person should cycle to work or ride the subway? (i) The air pollution that the cyclist has to breathe. (ii) The cost of subway tickets. (iii) The time it takes to cycle to work versus the time it takes to ride the subway to work. (iv) The cost per gallon of gasoline. (i), (ii), and (iv) (i), (ii), (iii) and (iv) (i), (iii) and (iv) (i), (ii) and (iii)
(i), (ii) and (iii)
Refer to the diagram of the circular flow of income. The key lessons from this diagram are that: (i) all flows of resources are matched by flows of money. (ii) the market value of total output must be equal to total spending. (iii) total spending must equal total income. (iv) all inputs are provided by businesses. (i), (ii), and (iii) (i), (ii), (iii), and (iv) (ii) and (iii) (i) and (iv)
(i), (ii), and (iii)
Which of the following five scenarios illustrate markets in action? (i) You rent a book at the university bookstore. (ii) You bargain at a street stall. (iii) You mow your own lawn. (iv) You get a manicure at a nail salon.(v) You grow your own vegetables and consume them yourself. (iii) and (v) (i), (ii), and (iii) (i), (iii), and (v) (i), (ii), and (iv)
(i), (ii), and (iv)
Which of the following are correct about fixed costs? (i) They do not change with the level of production in the short run. (ii) They include variable costs. (iii) They are present even when the firm is producing zero units. (iv) They are irrelevant to marginal cost. (ii) and (iv) (i), (ii), and (iii) (i), (iii), and (iv) (i), (ii), (iii), and (iv)
(i), (iii), and (iv)
Which of the following is (are) included in investment? (i) military spending (ii) the purchase of an aircraft by a domestic airline (iii) the purchase of $45,000 worth of bonds (iv) the purchase of $32,000 worth of stock (v) social security payments (vi) the construction of a highway by the federal government (i) and (vi) (ii), (iii), and (iv) (ii) only (i), (ii), (v), and (vi)
(ii) only
Which of the following changes could create a more positive output gap? (i) The U.S. dollar appreciates. (ii) The U.S. dollar depreciates. (iii) Trading partners reduce tariffs on U.S. exports. (iv) Monetary policy actions boost the economy. (ii), (iii), and (iv) (i) only (ii) only (iv) only
(ii), (iii), and (iv)
You purchase a certificate of deposit that earns an advertised rate of 1.75% interest per year. What is your real rate of return if the actual inflation rate is 1.9%? 0.15% 3.65% -0.15% 1.75%
-0.15%
Forecasts expect inflation to be 2%. Actual inflation ends up being 1.75%. Holding all else equal, if there is no supply-side change in the economy, these statistics indicate inflation is ____ less than expected. 1.75% 2.0% 0.25% 3.75%
0.25%
If expected inflation is 2%, and actual inflation is 2.8%, then unexpected inflation is: 0.8%. 2.8%. 4.8%. 2.0%.
0.8%.
You purchase a certificate of deposit and expect an inflation rate of 1.25% over the next year. Your nominal rate of interest is 2.1%. What is your expected real rate of return? -0.85% 0.85% 1.25% -2.1%
0.85%
In 2017, the total population of Africa was estimated to be about 1,250,000,000 people. This number, in billions, is: 125. 1,250. 12.5. 1.25.
1.25.
If government spending rises by $62 billion and GDP rises by $110 billion, then the multiplier in the economy is approximately: 0.56. 1.12. 1.77. 2.77.
1.77.
Consider the following basket of goods: 50 bottles of milk, 100 avocadoes, 50 apples, and eight pineapples. Suppose that last year, each bottle of milk was $2.50, each avocado was $1.50, each apple was $0.75, and each pineapple was $4. This year, each bottle of milk is $2.50, each avocado is $1.80, each apple is $0.80, and each pineapple is $4.30. What is the inflation rate between last year and this year? -10% -9.09% 8.99% 10.13%
10.13%
What is Sri Lanka's GDP deflator if its nominal GDP is $88.9 billion (in current US$) and the real GDP is $59.34 billion? 136.5 66.7 100 149.8
149.8
Suppose a labor market is described by the demand equation, Qd = 60 - 2w, and the supply equation, Qs = -10 + w, where Qd is the quantity demanded of labor (in Million), Qs is the quantity supplied of labor (in Million), and w is the wage (in dollars). If the government institutes a minimum wage of $25, how many workers will be willing to work in this market? 20,000,000 5,000,000 15,000,000 10,000,000
15,000,000
In May 2019, there were approximately 68,980,000 people in Japan's labor force. About 1,650,000 people were unemployed. What was the unemployment rate? 1.8% 2.4% 6.1% 5.0%
2.4%
In May 2019, Texas reported a civilian labor force of 14,012,711. The number of employed people was 13,516,387. What was the unemployment rate? 4.9% 5.3% 96.5% 3.5%
3.5%
If the risk-free rate is 1.5% and the risk premium is 2%, the MP curve is at: 4%. 3.5%. 2%. 1.5%.
3.5%.
Suppose a labor market is described by the demand equation, Qd = 60 - 2w, and the supply equation, Qs = -10 + w, where Qd is the quantity demanded of labor (in Million), Qs is the quantity supplied of labor (in Million), and w is the wage (in dollars). If the government institutes a minimum wage of $25, how many workers will be unemployed in this market? 10,000,000 5,000,000 15,000,000 20,000,000
5,000,000
Which of the following lists only the factors that would cause a decrease in the supply of an item? A decrease in the number of sellers in the market; a fall in the price of a complement-in-production; an increase in productivity. A rise in the price of a substitute-in-production; a rise in the price of a complement-in-production; an expectation that the price of the item will rise in the future. A fall in input prices; an increase in productivity; a fall in the price of a substitute-in-production. A rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in-production.
A rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in-production.
The figure shows inflation expectations and actual inflation for U.S. consumers over time. Which of the following statements correctly describes the relationship between these rates? Actual inflation and inflation expectations seem to behave independently. Actual inflation tends to follow inflation expectations. Actual inflation and inflation expectations are exactly the same over time. Actual inflation and inflation expectations have an inverse relationship.
Actual inflation tends to follow inflation expectations.
Which of the following scenarios depicts a seller who is following the Rational Rule for Sellers? American Airlines determines the marginal cost of an extra passenger to be $75 and sells a discount seat for $250. Andy's Diner finds that the marginal cost of a fish and chips meal is $7 and lists the item for sale at $6.50. An auto-rickshaw driver in New Delhi, India, calculates a trip to have a marginal cost of 350 rupees and accepts a ride request for 315 rupees. Mindy sets up a lemonade stand and calculates the cost of an additional cup of lemonade at 50 cents, and sells it for 25 cents.
American Airlines determines the marginal cost of an extra passenger to be $75 and sells a discount seat for $250.
Which of the following will fall when the economy is expanding? Applications for unemployment benefits Consumer confidence Business confidence Nonfarm payrolls
Applications for unemployment benefits
Consider the following graphs, which are discussed in the textbook. Focus on the graph that looks at the relationship between GDP per person and infant deaths per 1,000 live births. What can explain this relationship? As real GDP per person rises, maternal and fetal health increase due to better health care, education, sanitation, and nutrition. As real GDP per person rises, infant mortality rises. As life expectancy increases, GDP per person increases at the same rate. Infant mortality declines only when GDP per person is above $25,000 per year.
As real GDP per person rises, maternal and fetal health increase due to better health care, education, sanitation, and nutrition.
You purchase a new car (produced this year) for $38,000. After six months, you sell the car for $31,500. How much does GDP rise because of these two transactions? GDP rises by $31,500. GDP rises by $38,000. GDP rises by $69,500. GDP rises by $6,500.
GDP rises by $38,000.
Which of the following cause shifts in the MP curve? spending shocks changes in tax rates financial shocks changes in tariffs
financial shocks
Which of the following shows the medium of exchange function of money? Mena saves his money in a certificate of deposit at the bank. Darius goes window shopping. Daniela goes to the store and purchases roses with U.S. dollars. Wilma wants to sell her old car, and she values it at $2,400.
Daniela goes to the store and purchases roses with U.S. dollars.
A bakery hires a baker who can make 15 cakes per day. The bakery then decides to hire a second baker who will use the kitchen at the same time as the first baker. The bakery finds that the second baker can produce only an additional nine cakes per day. What concept does this scenario illustrate? Diminishing marginal product The opportunity cost principle The cost-benefit principle The marginal principle
Diminishing marginal product
Which of the following correctly shows the steps needed to calculate the inflation rate? Tally up the cost of the basket of goods and services, subtract the value of goods and services that are no longer counted in the basket, and then calculate the inflation rate. Find out what people typically buy, collect the prices from the stores where people shop, tally up the cost of the basket of goods and services, and calculate the inflation rate. Collect prices from the stores where people shop, assess the substitution that people make from low inflation to high inflation products, and calculate the difference in the prices that people pay. Find the total value of the basket of goods and services, assess quality changes from one period to the next, and measure the inflation rate.
Find out what people typically buy, collect the prices from the stores where people shop, tally up the cost of the basket of goods and services, and calculate the inflation rate.
If an economy has a positive output gap of 1.5%, this means: GDP is 1.5% above potential GDP. inflation is 1.5% above the long-run rate of inflation. unemployment is 1.5% above the natural rate of unemployment. GDP is 1.5% below potential GDP.
GDP is 1.5% above potential GDP.
What is the difference between spending from a microeconomic standpoint versus spending from a macroeconomic standpoint? In microeconomics, spending refers to expenditure on consumer goods only, whereas in macroeconomics, spending refers to business expenditures only. In microeconomics, spending refers to spending by you, or your family, or your company, whereas in macroeconomics, spending refers to the spending by all consumers, all businesses, and the government in the economy. In microeconomics, spending refers to one individual's spending, whereas in macroeconomics, spending refers to government expenditure. In microeconomics, spending refers to domestic spending, whereas in macroeconomics, spending refers to foreign spending.
In microeconomics, spending refers to spending by you, or your family, or your company, whereas in macroeconomics, spending refers to the spending by all consumers, all businesses, and the government in the economy.
What is quantity supplied? It is a graph that plots how much a seller produces at different points in time. It is a graph that plots the quantities of an item that a seller plans to sell at different prices. It is the amount of an item that a buyer is willing to buy at a particular price. It is the amount of an item that a seller is willing to sell at a particular price.
It is the amount of an item that a seller is willing to sell at a particular price.
Which of the following will probably rise when the economy is in a recession? Employment Real retail sales Real GDP growth Initial unemployment claims
Initial unemployment claims
Which of the following correctly describes the business cycle? It refers to excess unemployment during recessionary periods. It is the constant rise in GDP over time. It refers to ups and downs in business revenue during expansions and recessions. It is the fluctuations of GDP around the potential output.
It is the fluctuations of GDP around the potential output.
How is the economic surplus generated by a decision calculated? It is the sum of benefits arising from the decision. It is the sum of costs arising from the decision. It is the total benefits minus total costs arising from the decision. It is the total benefits plus total costs arising from the decision.
It is the total benefits minus total costs arising from the decision.
Which of the following scenarios illustrates the law of demand? Kathleen eats more steak when the price is low, and less when the price is high. A research company finds that the more expensive a particular brand of a designer handbag, the more that consumers are willing to purchase the brand. Francis does not care about the price of coffee at the coffee shop - he must buy two cappuccinos every day, regardless of the price. John likes to drink spring water. At $2 he buys four bottles of water, and at $1.50 he still buys four bottles of water.
Kathleen eats more steak when the price is low, and less when the price is high.
You have four friends. Which of your friends can be described as "cyclically unemployed"? Martha, who is a full-time stay-at-home parent Regan, who is in a nursing home Keele, who lost her job after her company lost a lot of customers during an economic downturn Arthur, who quit his job to look for a better job
Keele, who lost her job after her company lost a lot of customers during an economic downturn
How do interest rates affect investment in the economy? Higher interest rates lower the cost of borrowing for firms, and so firms save more in banks. Lower interest rates lower the cost of borrowing for firms, and so investment rises. Lower interest rates lower the after-tax profit for firms, and thus investment falls. Higher interest rates increase government expenditure and thus raise investment.
Lower interest rates lower the cost of borrowing for firms, and so investment rises.
What is the difference between microeconomics and macroeconomics? Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of the economy as a whole. Microeconomics focuses only on the forces of individual demand and individual supply, whereas macroeconomics focuses only on policy making for the economy. Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of government policies. Microeconomics is the study of the economy as a whole, whereas macroeconomics is the study of individual decisions in specific markets.
Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of the economy as a whole.
Which of the following countries enjoyed significant catch-up economic growth in the second half of the twentieth century? South Korea Spain United States Argentina
South Korea
Refer to the data dashboard shown. Which indicator is a cross-check on GDP? Business confidence Real GDI Employment cost index Stock prices: S&P 500
Real GDI
Which economic indicator tells you about the future expected profits of businesses? Consumer price index Nonfarm payrolls Initial unemployment claims S&P 500
S&P 500
The government passes a new investment tax credit initiative. Which input in the production function changes, and what is the effect on economic growth in the country? The capital stock decreases, and economic growth is negatively affected. Technological advance occurs, but there is no effect on economic growth. The capital stock increases, and economic growth is positively affected. Human capital is enhanced, and economic growth is positively affected.
The capital stock increases, and economic growth is positively affected.
Which of the following is NOT a factor that can shift supply? The price of a substitute-in-production. The expected future price of a product. The market price of a product. The price of a complement-in-production.
The market price of a product.
Which principle tells you that the true cost of something is the next best alternative you have to give up to get it? The opportunity cost principle. The interdependence principle. The marginal principle The cost-benefit principle.
The opportunity cost principle.
You eat M&Ms every day. When you go to the store to buy some, you find that M&Ms are more expensive than they were last month. Which of the following could explain why M&Ms are more expensive? Consumers are now purchasing fewer M&Ms compared to other types of chocolates. A new robot has been installed at the Mars chocolate company that reduces the time needed to produce M&Ms by half. The supply of cacao beans, used to produce chocolate, has fallen around the world. A new study finds that the benefits of eating chocolate are not as great as previously thought.
The supply of cacao beans, used to produce chocolate, has fallen around the world.
You're shopping online, and you place an item in your virtual cart. Two days later, you return to the virtual cart to check out and find that the item is now more expensive. Assuming that the market is competitive, what could explain the price increase? There is a shortage of the item. There is a surplus of the item. New sellers are offering the same product. There is decreased demand for the item.
There is a shortage of the item.
Dale is a stay-at-home-parent whose typical day consists of getting the kids ready for school, doing the laundry, cooking three meals, and cleaning the house. How are Dale's home activities counted in GDP? They are counted at market value. They are counted by assigning a value that is equivalent to what it would have taken to pay a housekeeper to perform the same tasks. They are not counted. They are counted by subtracting Dale's opportunity cost in terms of lost income.
They are not counted.
Why are supply curves typically upward-sloping? They slope upward because sellers demand more when prices are lower. They slope upward due to the law of demand. They slope upward because sellers prefer to sell more when prices are lower. They slope upward because higher prices lead individual businesses to supply a larger quantity and more businesses are willing to supply goods and services.
They slope upward because higher prices lead individual businesses to supply a larger quantity and more businesses are willing to supply goods and services.
The aggregate production function is represented as: K = f(L, H, Y). Y = f(L, H, K). L = f(Y, H, K). H = f(L, Y, K).
Y = f(L, H, K).
Suppose that you have a pumpkin stall at a farmer's market, and the Halloween season arrives. You know that your customers will want to buy many pumpkins to decorate their houses and make pumpkin pies. Which of the following is a likely result of this scenario? You can charge a higher price per pumpkin. You will wind up with many unsold pumpkins. You will take fewer pumpkins to the market to sell. You will be able to sell only the highest-quality pumpkins.
You can charge a higher price per pumpkin.
A normal good is: a good which is normally purchased by many consumers. a good for which higher income causes an increase in demand. a good which is only purchased by high-income consumers. a good for which higher income causes a decrease in demand.
a good for which higher income causes an increase in demand.
A seller at a farmer's market wants $10 for a bag of 10 apples. You think his price is too high, so you counter with an offer of $6 for the bag. The seller then offers you a much smaller bag of five apples for $6. You bargain again, and the seller lets you buy the 10 apples for $8. This scenario is an example of: a centrally planned market. a shortage. a market in action. perfect competition.
a market in action.
Southeast Asian countries experience high temperatures and high humidity during the monsoon seasons. This makes working conditions difficult. Because air conditioners are expensive and consume a lot of electricity, an alternative air cooler called an Eco-cooler was invented. This device does not use electricity, is made from readily available soda bottles, and works by funneling air into a room. This scenario is an example of: a rise in productivity causing an increase in technology. the development of human capital. a decrease in the labor force participation rate in Southeast Asian countries. a technological innovation that can increase labor productivity and thus increase economic growth.
a technological innovation that can increase labor productivity and thus increase economic growth.
The IS curve is constructed by: adding up the level of aggregate expenditure at each real interest rate. adding up consumption and investment and plotting these two expenditure levels to income. plotting savings at each real interest rate. adding consumption and savings at each real interest rate.
adding up the level of aggregate expenditure at each real interest rate.
Quantity demanded is on the horizontal axis when you plot a demand curve and shows the: amount of a good that a seller is willing to sell at a particular price. amount of a good that a person is willing to buy at each price. amount of a good that a person actually buys at the market price. amount where opportunity cost is equal to the marginal benefit.
amount of a good that a person is willing to buy at each price.
Henry Ford's $5 per day wage is an example of: an equilibrium wage. an efficiency wage. a government regulated wage. a minimum wage law.
an efficiency wage.
A rise in nominal wages represents: an increase in production costs. a right shift of supply for firms. a decrease in production costs. an increase in employment.
an increase in production costs.
Graphically, shortages will always occur: at the equilibrium price. when the quantity supplied exceeds the quantity demanded. at prices below the equilibrium price. at prices above the equilibrium price.
at prices below the equilibrium price.
Joshua Murphy is planning on studying late into the night for his economics exam. How many cups of coffee should he buy tonight? Joshua should keep buying coffee throughout the evening until the marginal: benefit of purchasing one more coffee is positive. cost of purchasing one more coffee is positive. benefit of purchasing one more coffee is less than the marginal cost. benefit of purchasing one more coffee equals the marginal cost.
benefit of purchasing one more coffee equals the marginal cost.
Kathleen Alvarado is binge-watching her favorite show on Netflix. She is attempting to decide how many more episodes to watch. Kathleen should continue watching episodes as long as the marginal: benefit of watching another episode is less than the marginal cost. benefit of watching another episode exceeds the marginal cost. cost of watching another episode is positive. benefit of watching another episode is positive.
benefit of watching another episode exceeds the marginal cost.
The key to using the cost-benefit principle is to think about _____ aspects of a decision. neither financial nor nonfinancial only nonfinancial both financial and nonfinancial only financial
both financial and nonfinancial
In a voluntary economic transaction between a buyer and a seller, _____ can earn economic surplus from the transaction. neither the buyer nor the seller only the seller both the buyer and the seller only the buyer
both the buyer and the seller
The moral of the story of the Solow growth model is that: technological advance cannot sustain continuous economic growth. human capital growth does not lead to economic growth. capital accumulation is the key to sustained economic growth. capital accumulation alone cannot lead to sustainable economic growth.
capital accumulation alone cannot lead to sustainable economic growth.
Which of the following cause(s) shifts in the MP curve? changes in monetary policy consumer pessimism spending shocks business optimism
changes in monetary policy
If a bakery buys a second oven, hires a second baker, buys double the number of ingredients, doubles the size of the bakery, and then produces double the number of cakes, then the bakery is experiencing: increasing returns to scale. constant returns to scale. an increase in labor productivity. technological advancement.
constant returns to scale.
Suppose rubber prices rise in international markets. For countries that import rubber, this scenario would lead to: a positive supply shock. an increase in potential output. cost-push inflation. demand-pull inflation.
cost-push inflation.
The cost-benefit principle states that _____ are the incentives that shape decisions. incomes framing effects opportunity costs costs and benefits
costs and benefits
The Great Moderation refers to the: longstanding effect of the Great Recession. increase in globalization. decreased volatility of the U.S. economy. stable level of inflation in the United States.
decreased volatility of the U.S. economy.
When there is a shortage of highly skilled workers in a particular region, the: supply of jobs for highly skilled workers increases. demand for highly skilled workers increases. demand for skills education increases. demand for skills education decreases.
demand for skills education increases.
If the U.S. government lowers personal income tax rates: investment decreases, and this leads to a left shift in the IS curve. disposable income increases, and this leads to an increase in consumption and a right shift of the IS curve. government expenditure rises, and this leads to a right shift of the IS curve. government expenditure falls, and this leads to a left shift of the IS curve.
disposable income increases, and this leads to an increase in consumption and a right shift of the IS curve.
According to the marginal principle, keep increasing quantity until the marginal benefit of an additional item is _____ the marginal cost of an additional item. equal to less than greater than or less than greater than
equal to
Demand-pull inflation is inflation resulting from: excess demand. a surplus. insufficient demand. excess supply.
excess demand.
Planned investment is the: expenditure on goods and services by consumers. expenditure on capital goods by businesses. planned purchases of stocks and bonds by consumers. use of electricity and water by factories.
expenditure on capital goods by businesses.
The risk premium is the: extra rise in interest rates when the Federal Reserve identifies an output gap. federal funds rate. risk-free rate of interest. extra interest charged by lenders to account for risk.
extra interest charged by lenders to account for risk.
Hyperinflation is: inflation that occurs when the economy is in a recession. a period of high money growth in an economy. very high rates of economic growth. extremely high rates of inflation
extremely high rates of inflation
As a result of technological innovation, automated water pumps are being installed on the farms of Kenyan tomato farmers. As a result of the increased use of automated water pumps, the equilibrium price of tomatoes will: fall, due to a fall in demand. fall, due to a rise in supply. rise, due to a rise in demand. rise, due to a fall in supply.
fall, due to a rise in supply.
You are considering whether you should go out to dinner at a restaurant with your friend. The meal is expected to cost you $50, you typically leave a 20% tip, and a round-trip Uber ride will cost you $15. You value the restaurant meal at $30 and the time spent with your friend at $50. You should ____ to dinner with your friend because the benefit of doing so is _____ than the cost. go; greater not go; less go; less not go; greater
go; greater
Which of the following is a scaled number? government budget deficit as a percentage of GDP total tax revenues in the economy the country's national debt the sum of all incomes earned in the economy
government budget deficit as a percentage of GDP
You are driving to see your grandparents when you get caught in traffic caused by construction on the interstate. The construction is an example of: planned investment. government expenditure. consumption. exports.
government expenditure.
The Rational Rule for Sellers says that a seller should sell one more unit of an item if the price is: less than the marginal cost. greater than or equal to the marginal cost. greater than or equal to the marginal benefit. less than the marginal benefit.
greater than or equal to the marginal cost.
The higher the minimum wage, as compared to the equilibrium wage, the: lower the natural rate of unemployment. higher the cyclical unemployment rate. lower the structural unemployment rate. higher the structural unemployment rate.
higher the structural unemployment rate.
When there is a shortage of highly skilled workers in a particular region: unemployment rises among highly skilled workers. highly skilled workers can negotiate higher salaries. there is a corresponding surplus of low-skilled workers in the region. the incomes of highly skilled workers fall.
highly skilled workers can negotiate higher salaries.
The interdependence principle: is the same as the cost-benefit principle. implies that consumers depend on each other to make purchase decisions in the market. implies that buyers decisions are affected by many factors other than the price of an item. refers to the marginal benefit of consuming additional units of an item.
implies that buyers decisions are affected by many factors other than the price of an item.
Jonathan Mendez is deciding whether to study for his economics exam at a café down the street or go to a concert a few cities over. The time spent commuting to the concert is ____ in his opportunity cost calculations and represents a _____ cost. not included; financial included; financial not included; sunk included; nonfinancial
included; nonfinancial
When you get hired for a well-paying job, you will most likely view older used cars as inferior goods. normal goods. complementary goods. substitute goods.
inferior goods.
In the long run, inflation is determined by: the business cycle. inflation expectations. the unemployment rate. the level of output relative to potential output.
inflation expectations.
Forecasts expect inflation to be 2%. Actual inflation ends up being 1.75%. Holding all else equal, if there is no supply-side change in the economy, these statistics indicate there is: excess demand. currency depreciation. insufficient demand. demand-pull inflation.
insufficient demand.
The principle that your best choice depends on your other choices, the choices others make, developments in other markets, and expectations about the future is known as the _____ principle. opportunity cost marginal interdependence cost-benefit
interdependence
A rational buyer will: buy the product only when the marginal benefit of consuming the product is twice as much as the price of the product. buy a product until the marginal benefit of consuming the product is less than the price of the product. not consider costs versus benefits when purchasing a product. keep buying a product until marginal benefit equals price.
keep buying a product until marginal benefit equals price.
Nerida Kyle could either commute to work via Uber or purchase a new car. The average cost of her one-way Uber trip is $15. Nerida works five days a week for 50 weeks a year. Based solely on avoiding the cost of an Uber, Nerida should purchase a car if the cost of the car is _____ than _____ per week. greater; $150 less; $150 greater; $75 less; $75
less; $150
A good proxy for the risk-free interest rate is the interest rate on a: loan to a member of the public who has a good credit rating. loan to the U.S. government. corporate bond. junk bond.
loan to the U.S. government.
The natural unemployment rate is also known as the _____ unemployment rate. frictional structural long-run cyclical
long-run
The higher the opportunity cost of consumption, the: more to the right the economy is along the IS curve. higher the investment in the economy. lower the aggregate expenditures. higher the consumption.
lower the aggregate expenditures.
The intersection of the IS curve and the MP curve determine: the federal funds rate. the largest output gap. macroeconomic equilibrium. the risk-free interest rate in the economy.
macroeconomic equilibrium.
Menu costs are the: marginal costs of adjusting prices. variety of costs that cause producers to change their prices. costs of producing restaurant meals. total costs of producing goods and services.
marginal costs of adjusting prices.
The __________ suggests, decisions about quantities are best made incrementally. marginal principle cost-benefit principle interdependence principle opportunity cost principle
marginal principle
Which of the following lists the functions of money? carrier of exchange, unit of account, and measure of inflation store of value, store of interest, and buffer against inflation medium of exchange, measure of inflation, and benchmark of quality medium of exchange, store of value, and unit of account
medium of exchange, store of value, and unit of account
A market consists of ten similar suppliers that are making the same supply decisions. To find the market supply of these ten suppliers, you: take one-tenth of the individual supply of each supplier and add it up. multiply the individual supply of one of the suppliers by ten. find the average quantity produced by the ten suppliers. take the individual supply of one supplier.
multiply the individual supply of one of the suppliers by ten.
The real interest rate is the: nominal interest rate minus the rate of inflation. nominal interest rate plus the rate of inflation. economic growth rate adjusted for the effects of inflation. percentage of the nominal interest that is inflation.
nominal interest rate minus the rate of inflation.
If you see that the consumer price index this year is lower than the consumer price index last year, this means that: on average, prices went down across the economy. the prices of each and every good and service went down. the consumer price index is lower than the producer price index. economic growth also decreased.
on average, prices went down across the economy.
If you see that inflation between last year and this year is 3%, this means that: economic growth is also 3%. the prices of each and every good and service went up by 3%. on average, prices went up across the economy by 3%. the consumer price index rose by 3% more than the producer price index.
on average, prices went up across the economy by 3%.
When you calculate marginal costs, they should include: the market price of the product. only variable costs. both the variable and fixed costs. only fixed costs.
only variable costs.
Decisions should reflect the _____ costs, rather than just the _____ costs. opportunity; nonfinancial nonfinancial; financial opportunity; financial financial; marginal
opportunity; financial
Which of the following encourages the development of new ideas and inventions? capital accumulation negative economic growth government control of resources patents
patents
The four stages of the business cycle are: peak, recession, trough, and expansion. consumption, investment, government expenditure, and net exports. full employment, potential GDP, recessionary gap, and inflationary gap. expansion, growth, contraction, and depression.
peak, recession, trough, and expansion.
The opportunity costs of attending college include the: potential income that could be earned working. effort and hard work. cost of room and board. cost of clothes to wear at school.
potential income that could be earned working.
When plotting a demand curve quantity supplied is on the vertical axis. price is on the horizontal axis. price is on the vertical axis. quantity demanded is on the vertical axis.
price is on the vertical axis.
The GDP deflator is an index that tracks the: highest prices consumers pay over time for imported goods and services. average price that consumers pay over time for a representative basket of goods and services. price that businesses pay over time for the inputs used in the production process. price of all goods and services produced domestically.
price of all goods and services produced domestically.
If managers have an expectation of ongoing inflation, then it is likely that: prices will fall. prices will not change. the cost of inputs will fall. prices will rise.
prices will rise.
Graphically, the equilibrium quantity can be identified as the: maximum quantity that sellers are willing to sell. quantity corresponding to the intersection of the demand curve and the price axis. maximum quantity that buyers are willing to buy. quantity corresponding to the intersection of the demand and supply curves.
quantity corresponding to the intersection of the demand and supply curves.
A shortage occurs when: quantity supplied exceeds quantity demanded. quantity demanded exceeds quantity supplied. there is excess production. when there is insufficient demand.
quantity demanded exceeds quantity supplied.
If government expenditure rises by $27.5 billion and the multiplier in the economy is 2.5, then: real GDP falls by $11 billion, but the IS curve does not shift. real GDP rises by $68.75 billion, and the IS curve shifts to the right. real GDP falls by $55 billion, and the IS curve shifts to the left. real GDP rises by $27.5 billion, and the IS curve shifts to the right.
real GDP rises by $68.75 billion, and the IS curve shifts to the right.
Suppose that an economy is in a recession. You would expect to see the unemployment rate: be zero. rise above the equilibrium unemployment rate. fall below the equilibrium unemployment rate. be equal to the equilibrium unemployment rate.
rise above the equilibrium unemployment rate.
Based on Okun's rule of thumb, if you forecast that the output gap will decline from 0% to -3%, the unemployment rate will: fall by 1.5%. fall by 2%. rise by 1.5%. rise by 3%.
rise by 1.5%.
A constant returns to scale production function means that if all inputs are increased by 75%, this should lead to output: rising by more than 75%. falling by more than 75%. falling by less than 75%. rising by 75%.
rising by 75%.
What kind of data adjustment removes the effect of sales spikes due to the holiday season? annual data nominal data real data seasonally adjusted data
seasonally adjusted data
Insufficient demand leads to a: shortage and rising prices. surplus and falling prices. surplus and rising prices. shortage and falling prices.
surplus and falling prices.
Along the same aggregate production function, the level of _____ is the same. capital economic growth labor technology
technology
Money illusion is the: illusion that one's earnings this year are higher than they were last year. tendency to focus on nominal values instead of inflation-adjusted values. increase in the amount of money that it takes to purchase goods and services when prices rise. inability to understand that prices always rise.
tendency to focus on nominal values instead of inflation-adjusted values.
An individual demand curve is a graph: that plots the quantity of an item that someone plans to buy, at one single price point. that plots the quantity of an item that someone plans to buy, at each price. that plots the quantity of an item that a seller plans to sell, at each price. that plots the market price of a product at different points in time.
that plots the quantity of an item that someone plans to buy, at each price.
Technological advancement is NOT represented by which of the following? the invention of the light bulb the creation of new apps designed to enhance efficiency and reduce wastage in production lines the adoption of an existing technology by new firms the invention of robotic meal preparation
the adoption of an existing technology by new firms
Paint and paintbrushes are complements. If the price of paint rises, we can expect: the quantity demanded of paint to increase. the demand for paintbrushes to decrease. the quantity demanded of paintbrushes to remain unchanged. the demand for paintbrushes to increase.
the demand for paintbrushes to decrease.
If the frictional rate of unemployment is 1.45%, the structural rate of unemployment is 2.3%, and the total unemployment rate is 6%, then we can conclude that: the labor force participation rate has fallen significantly. the economy is experiencing an economic boom. there is 2.25% actual unemployment. the natural (long-run equilibrium) rate of unemployment is 3.75%.
the natural (long-run equilibrium) rate of unemployment is 3.75%.
An economy's potential output level is: equivalent of the GDP at current market value. the output when unemployment is zero. the output that is possible when all resources are fully employed. the level at which no resources are available in the economy.
the output that is possible when all resources are fully employed.
Which definition best describes real GDP? the production of goods and services valued at constant prices the production of goods and services valued at current prices the general change in prices of goods and services from one period to the next the production of goods and services valued at tomorrow's prices
the production of goods and services valued at constant prices
When plotting a supply curve the quantity supplied goes on the horizontal axis. the quantity demanded goes on the vertical axis. the quantity supplied goes on the vertical axis. the price goes on the horizontal axis.
the quantity supplied goes on the horizontal axis.
If a store runs a sale on a product to clear out its stock, we can conclude that: there was a surplus of the product in the store. the demand for the product is larger than the supply of the product. there was a shortage of the product in the store. the product must be very close to its expiration date.
there was a surplus of the product in the store.
What is excess demand? higher equilibrium quantity too much supply for too few buyers too many buyers for too few goods fast-changing consumer preferences
too many buyers for too few goods
Which of the following is an example of transfer payments? government loans military salaries unemployment benefits interest earned on savings in banks
unemployment benefits
Variable costs are the costs that vary with the quantity of output produced. stay fixed with the quantity of output produced. are incurred to build factories and assembly plants. are independent of the amount of output produced.
vary with the quantity of output produced.
An equilibrium in a market occurs: when the quantity supplied equals the quantity demanded. when suppliers have sold all the goods and services that they have produced. at the halfway point on a demand curve. at the halfway point on the price axis.
when the quantity supplied equals the quantity demanded.
Which of the following is an example of a durable good? a soft drink fresh flowers from the florist your haircut your new car
your new car
The United Kingdom plans to end the use of gas-powered and diesel-powered cars by the year 2040. At the same time, car manufacturers, such as General Motors and Nissan, are increasing the number of electric car models they produce. Based on this information, which of the following statements is/are correct? (i) If the supply of new electric cars is greater than the demand for new electric cars, then the price of electric cars will fall in the future. (ii) The demand for gasoline will fall in the future. (iii) The demand for electricity will rise in the future. (iv) The demand for diesel will rise in the future. (i) and (ii) (i), (ii), and (iii) (ii) and (iv) only (i)
(i), (ii), and (iii)
Diminishing marginal benefit: is when buying an additional item yields a smaller marginal benefit than the previous item. is not important in determining a consumer's purchase decision. is when buying an additional item yields a larger marginal benefit than the previous item. is when consumers do not follow the rational rule.
is when buying an additional item yields a smaller marginal benefit than the previous item.
A downward-sloping demand curve implies: buyers are willing to buy less when prices are lower. there is no relationship between price and quantity demanded. there is a positive relationship between price and quantity demanded. there is an inverse relationship between price and quantity demanded.
there is an inverse relationship between price and quantity demanded.
Diana is a student studying economics and currently working on her class schedule for next semester. She decides to enroll in a course on economic data analysis because she knows that data analysis is a highly sought-after skill from employers in her career field. Weighing what may affect her in the future opportunities demonstrated dependency: between markets. between people or businesses in the same market. between college courses. through time.
through time.
An underemployed person is one who is: retired or outside of the labor force. employed in the underground economy. working but whose skills are not fully utilized. cyclically unemployed.
working but whose skills are not fully utilized.
Dependencies between your own choices reflect the fact that: you have limited resources. society has limited resources. resources can be spread across time. resources are spread across varying markets.
you have limited resources.