ECON 2300 FINAL

What are the two characteristics that differentiate private goods from public goods?

rivalry and excludability

GDP equals aggregate expenditure and equals aggregate income

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Policies that promote equity, generally result in economic inefficiencies

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An increase in the price of good C will decrease the demand for complementary good D

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A candidate for political office announces the following policies which, he says, economics clearly demonstrates will lead to higher output in the long run: 1. Increase immigration from abroad 2. Make trade more open between the US and other countries.

1 and 2 both shift long-run aggregate supply right.

If the consumer price index was 96 in 2012, 100 in 2013, and 102 in 2014, then the base year must be

2013

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the US. Which pairs of GDP growth rates and unemployment rates is realistic?

3 percent, 5 percent

When the price of widgets is 81, the quantity demanded of widgets is 27 and the quantity supplied of widgets is 70. What is the surplus on this market?

43

Which of the following is the best example of private good?

A can of Diet Pepsi

According to the AD-AS model, in the long run a decrease in the money supply leads to:

A decrease in the price level, but does not change real GDP

Industrial machinery is an example of

A factor of production that in the past was an output from the production process

A payment made by the government to private producers of roads and libraries would be an example of

A subsidy

A basic principle of economics is that a country's standard of living depends on its

Ability to produce goods and services

The fact that people who know they are risky drivers are more likely to buy auto insurance reflects

Adverse selection

Bob is looking for work after school, but everywhere he fills out an application, the managers say they always have a lot more applications than open positions. Tom has a law degree. Several firms have made him offers, but he thinks he might be able to find a firm where his talents could be put to better use.

Bob is structurally unemployed, and Tom is frictionally unemployed.

An US firm buys a new industrial sewing machine from a company located in France. Which of the following is TRUE? 1 US net exports decrease 2 US investment increases

Both 1 and 2

Which of the following is a source of frictional unemployment?

Changes in the composition of demand among industries or regions

An example of someone bearing the burden of a NEGATIVE externality would be

Taylor living downwind from a smelly feedlot where pigs are raised

Which of the following is a social science?

Economics

If a substitute good is easy to find, then demand for a good is

Elastic

When the percentage change in the quantity demanded exceeds the percentage change in price, the demand is

Elastic

Productivity

Explains most of the differences in the standard of living across countries

By far the largest category of goods and services in the CPI basket is

Housing

Perry accumulated a lot of mathematical skills while in high school, college, and graduate school. Economists include these skills as part of Perry's

Human capital

An increase in consumer income will:

Increase equilibrium price and quantity if the product is a normal good.

Economist would predict that, other things the same, the more generous unemployment compensation a country has, the

Longer the duration of each spell of unemployment and the higher the unemployment rate

If a salesperson is paid by the volume of sales her or she makes, then the

Moral hazard problem is diminished

A country reported nominal GDP of $115 billion in 2010 and $125 billion in 2009. It also reported a GDP deflator of 85 in 2010 and 100 in 2009. Between 2009 and 2010,

Real output rose and the price level fell

An economic expansion caused by a shift in aggregate demand causes prices to

Rise in the short run, and rise even more in the long run

The planned economic system is most often associated with

Socialist economies

A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth. The first is to decrease barriers to trade. The second is to restrict foreign portfolio investment. Which of these policies do most economists say promote growth?

The first but not the second

All else equals, if there are diminishing returns, then if a country raised its capital by 100 units last years and by 100 units this year,

The increase in output was greater last year than this year

Price elasticity off demand represents

The percentage change in quantity demanded in response to a 1% change in price

A spurious correlation between two variables X and Y implies that

X and Y are not casually related

If banks and speculators in the US decided to exchange US dollars for foreign currencies of other countries, but foreigners do not desire to increase their holdings of US dollars, then US net exports would:

rise and aggregate demand would shift right