Econ exam 1 2 and 3

U.S. productivity growth is thought to have rebounded in 1995-2000 largely as a result of:

advances in information and communication technology.

substitution bias in the CPI refers to the failure of statisticians to:

allow for the possibility that consumers switch from products whose prices are rising.

hyperinflation is:

an extremely High rate if inflation

an increase in both the equilibrium price and the equilibrium quantity of DVD players is best explained by:

an increase in the demand for DVD players

When a U.S. oil company purchases oil from Saudi Arabia and the Saudi Arabian firm uses the proceeds from the sale to buy transportation services from the U.S., U.S. net exports ______ and the capital inflow to the United States ______.

are unchanged; is unchanged

he components of M2 that are not also in M1:

are usable for making payments, but at a greater cost or inconvenience than currency or checks.

Capital income in the U.S. equals approximately ______ of GDP.

around one third

the great divergence in incomes across regions and countries around the world began:

around the time of the industrial revolution in the late 1800s.

is a country's economic decisions are made by an individual or small number of individuals, then it has a

centralized economy.

macro theory suggests that healthcare is best thought of as a

complement so spending should increase over time if income rises

a nations central bank:

controls the nations monetary policy

economice is best defiende as the Study of

how people make choices in the face of scarcity and the implicaciones of those choices for Society as a whole

Who from among the following would be classified as unemployed?

Jack Little, a 21 year old new college graduate actively looking for his first job.

Jay owns a classic car he purchased for $50,000. At a car rally a knowledgeable classic car enthusiast offers him $75,000 for the car. Based on this information:

Jay has experienced a $25,000 capital gain.

An open-market purchase of government securities by the Fed will:

increase bank reserves, and the money supply will increase.

holding other factors constant, a technological improvement that increases the marginal product of capital will:

increase investment

the supply curve illustrates that firms

increase the quantity of a supplied of a good when its price rises

the demand curve illustrates the fact that consumers tend to purchase

more of a good as its price falls.

The U.S. trade deficit has been mainly caused by:

a low rate of national saving.

Organizing production, obtaining financing, assigning workers to jobs, and dealing with suppliers are among the ways that ______ increases average labor productivity.

a manager

When a baker exchanges a pie for dollars, this is an example of dollars serving as: A. barter.

a medium of exchange.

Total taxes minus transfer payments minus government interest payments is called:

net taxes.

"privatization of government owned industries is a more desirable way to operate and economy" is a _______ statements about ______ policy

normative; structural

Involuntary part-time workers are:

not counted as part of the main measure of the unemployed.

All of the following are nominal quantities except the:

number of custom houses built in one month in Norman.

Inflation ______ the signals sent by price changes to demanders and suppliers of goods and services.

obscures

A person 16 years or older who does not work and does not look for work, such as a student, is officially classified as: A. employed

out of the labor force.

The marginal product of labor is the additional:

output produced by one more worker.

The rate of return that financial investors require to hold a risky asset minus the rate of return on a safe asset is called the:

risk premium.

As the rate of inflation increases, the increased cost to a consumer of more frequent trips to their bank, Wells Fargo, to make cash withdrawals represents an increase in the:

shoe leather costs of inflation.

Health and safety regulations in the labor market:

should be evaluated by comparing their costs to their benefits.

Technological change that affects the marginal products of high-skilled and low-skilled workers differently is called ______ technological change.

skill-biased

the degree to which people have access to goods and services that make their lives easier, healthier, safer, and more enjoyable, is called the

standard of living

Matt has decided to purchase his textbooks for the semester. his options are to purchase the books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. last week he drove to campus to buy a concert ticket because they offered a 25% off regular price of $16. the benefit to Matt of buying his books at the university book store instead of online are

$5

If a pizza maker pays $1 for tomatoes, $1 for cheese, $2 for sausage, and sells the pizza made with these ingredients for $7, then each pizza sold contributes how much to GDP?

$7

suppose that the total production of an economy consists of 10 oranges and 5 candy bars, each orange sells for $0.20, and each candy bar sells for $1.00. what is the market value of production in this economy?

$7.00

Rick and Morty are the only two cashiers employed at a retail store. Each of them works the same 40 hours per week. By manually entering the price of each product purchased into the cash register, Rick can check out 20 customers and Morty can check out 30 customers per hour. The store owner replaces the old cash registers with new ones that automatically scan product prices into the register. With the new cash registers, Rick and Morty can each check out 60 customers per hour. Their average labor productivity as a team before the new cash registers were introduced was ______ customers per hour and ______ customers per hour after the new machines were installed.

25; 60

Which of the following is an example of a capital good?

A metal-stamping machine used to produce cars sold to an automaker

Which of the following should lead to an improved allocation of a nation's existing human capital?

A reduction in barriers to entry to medical school for African Americans.

cooperative advantage can often be used to explain the pattern of specialization between two countries that trade goods. recent research by Berger et al. (2013) showed that for a set of other countries around the world, their imports form the United States, even for goods the us did not have a comparative advantage in, increased after:

CIA operations were undertaken to influence which politicians were in office

Which of the following is an asset of a family?

Checking account balance

The seven Fed governors, the president of the Federal Reserve Bank of New York, and four of the presidents of the other regional Federal Reserve Banks constitute the:

Federal Open Market Committee.

Which of the following is not classified as a final good?

Fresh hatch chilies purchased by Tarahumara, a Norman restaurant

Only goods and services traded in regular markets are counted in GDP. All of the following are challenges and limitations of using GDP as a measure of welfare in society except:

GDP does not correlate with any other macroeconomic measures like health and education

Which of the following transactions would be included in the GDP of the United States?

Honda produces cars in Ohio.

Since World War II, in the United States:

Leisure time has increased, particularly for activities like watching tv and the internet

Steve takes $500 from his paycheck and uses it to purchase U.S. Savings Bonds. Based on this information:

Steve's saving has increased by $500.

If you knew that two countries had the same level of real GDP per person, what additional piece of information would help you determine in which country people had a better standard of living?

The average number of hours worked per week in each country or, lacking that piece of information, the average amount of time spent on leisure activities like video games or reading

"as the price of personal computers continues to fall, demand increases." this headline is inaccurate because:

a falling price of personal computers increases the quantity demanded, not demand.

Long-run increases in living standards, as measured by real GDP per person, are primarily the result of increases in:

average labor productivity.

When an individual deposits currency into a checking account:

bank reserves increase, which allows banks to lend more and increases the money supply.

Saving done for the purpose of leaving an inheritance is called ______ saving.

bequest

an individual has an absolute advantage in producing pizzas if that individual:

can produce more pizzas in a given amount of time than anyone else.

Stockholders receive returns on their financial investment in the form of ______ and _____.

capital gains; dividends

Investment spending includes spending on:

capital goods, residential housing, and changes in inventories.

Profits, rents, interest, and royalties are examples of:

capital income

Purchases of foreign assets by domestic firms or households is called a:

capital inflow

Regular interest payments made to bondholders are called ______ payments.

coupon

The extra unemployment that occurs during periods of recessions is called _____ unemployment.

cyclical

In the United States the real wages of the least-skilled, least educated workers have ______ and the wages of best-educated, highest skilled workers have ______.

declined; increased

capital losses are:

decrease in the value of existing assets

As a result of a war in Syria, refugees are fleeing to Jordan to seek employment and safety. Holding other factors constant, the influx of refugees will ______ the real wage in Jordan and ______ employment in Jordan.

decrease; increase

If workers received a 5 percent wage increase and the rate of inflation was 10 percent, then their real wage:

decreased.

As the real interest rate decreases, the quantity of saving supplied ______ and the quantity of saving demanded ____.

decreases; increases

The process of dividing a nominal quantity by a price index in order to express the quantity in real terms is called:

deflating

Deposit insurance is a system in which the government guarantees that:

depositors will not lose any money even if their bank goes bankrupt.

Liabilities of the commercial banking system include:

deposits

a particularly sever recession is called a(n)

depression

a cost of aggregation is that

details about individual households and firms are lost

People who say that they would like to have a job, but have not made an effort to find a job in the past four weeks because they do not feel like they can find a job, are called ______ workers.

discouraged

The practice of spreading one's wealth over a variety of different financial investments in order to reduce overall risk is called:

diversification.

suppose Mary is willing to pay up to $15,000 for a used ford pickup truck. if she buys one for $12,000 her ______ would be ________.

economic surplus; $3,000

More economic growth is not necessarily better unless the benefits of growth:

exceed the costs of growth.

because people have different opportunity costs for most activities:

exchange can improve welfare, people will have different reservation prices for working, individuals will tend to specialize in certain activities

growth in aggregate output that arises from growth in the set of inputs, not improvements in efficiency is known as:

extensive growth

Firms that extend credit to borrowers using funds from raised from savers are called:

financial intermediaries.

a government is running a budget deficit if

government revenue is less than government spending

the frequency and duration of recessions in the United States since 1900:

has generally decreased over time

according to the principle of increasing opportunity cost, in expanding the production of any good, we would start by utilizing the resources that:

have the lowest opportunity cost

shelly purchases a leather purse for $400. one can infer that

her reservation price was at least $400

a key indicator of the hardship experienced during the Great Depression is the

high rate of unemployment

In the long run, countries with higher rates of money growth usually have:

higher rates of inflation.

if the local slaughterhouse gives off an unpleasant stench, then the equilibrium quantity of meat will be ______ the quantity that maximizes total economic surplus.

higher than

From a macroeconomic perspective, the problem of low household saving has probably been overstated because:

household saving is not related at all to an economy's ability to accumulate new capital.

One family earned an income of $28,000 in 1995. Over the next five years, their income increased by 15%, while the CPI increased by 12%. After five years, this family's nominal income ______, and their real income ______.

increased; also increased

if average labor productivity increases while population and the number of employed workers remains constant, then output per person

increases

According to the principle of diminishing returns to labor, if the amount of capital and other inputs are held constant, employing additional workers:

increases output at a decreasing rate.

A government policy that allows retirement savings to accumulate tax-free is an example of a policy to promote economic growth by:

increasing physical capital.

In the United States there is evidence of:

increasing wage inequality.

suppose Colin brews beer and makes cheese. if Colin can increase his production of beer without decreasing his production of cheese, then he is producing at an

inefficient point

if an increase in income leads to a decrease in the demand for ground beef, then ground beef is a(n)

inferior good

The value of unpaid childcare services provided by a stay-at-home dad ______ included in GDP; the value of daycare services purchased from a licensed childcare provider ______ included in GDP.

is not; is

a bond is a

legal promise to repay a debt.

Chris pays $10,000 for a newly issued two-year government bond with a $10,000 face value and a 6 percent coupon rate. One year later, after receiving the first coupon payment, Chris sells the bond. If the current one-year interest rate on government bonds is 7 percent, then the price Chris receives is:

less than $10,000.

structural unemployment is:

long-term and chronic unemployment that exists even when the economy is producing at a normal rate.

Countries with high real GDP tend to have ______ infant mortality rates and ______ literacy rates than countries with low real GDP.

lower; higher

The coupon rate on newly issued bonds is usually ______ for bonds with favorable tax treatment, such as municipal bonds, and ______ for bonds that are very risky, such as junk bonds.

lower; higher

An example of a government policy to provide a framework within which the private sector can operate most productively is:

maintaining a well-functioning legal system.

Gross domestic product (GDP) equals the ______ of final ______ produced within a country during a given period of time.

market value; goods and services

The quantity equation states that:

money times velocity equals nominal GDP.

Suppose manufacturers introduce a new car model to replace a car currently included in the CPI basket of goods. The price of the new car is 10 percent higher than the discontinued model, but the new car has additional safety features and amenities like better light bulbs in its headlamps. In this situation the measured CPI will tend to ______ the "true" rate of inflation as a result of ______ bias.

overstate; quality adjustment

an implicacion of scarcity is that

people must make trade offs

A flow is a measure defined:

per unit of time

Real GDP measures the ______ of production.

physical volume

The costs of investment depend on the ______ and the _______.

price of new capital goods; real interest rate

When economists use market values to aggregate output, they sum the:

price times the quantity of each item produced.

Deflation is a situation in which the:

prices of most goods and services are falling over time.

Decentralized market-based financial systems improve the allocation of saving by:

providing information and risk-sharing services.

International capital flows are:

purchases or sales of real and financial assets across international borders.

inflation is a measure of the ______ of prices; the CPI is a measure of the ______ of prices.

rate of change in the level; current level

If the bank agrees to make a loan at a 7% interest rate and the inflation rate is 3%, then 4% is the ______ rate.

real interest

When unemployment insurance benefits exceed the wages a worker could earn when employed, the worker will have an incentive to:

remain unemployed longer than otherwise.

Because the federal minimum wage is not indexed to inflation, when there is inflation, the nominal minimum wage _____, and the real minimum wage _____.

remains constant; decreases

all else equal, the jobs that are the least likely to be outsourced are those that

require face-to-face communication

The minimum payment you are willing to accept to do a job is your:

reservation price

suppose the residents of metropolis travel to work either by bus or train, if the price of train tickets increases, then

the demand for bus tickets will increase

during times of high unemployment, colleges often observe and increase in enrollment even if tuition remains unchanged. why?

the opportunity cost of attending college is lower when unemployment is high

as coffee becomes more expensive, Joe starts drinking tea instead of coffee. this is called

the substitution effect of a price change

Jen spends her afternoon at the Beach paying $1 to rent a Beach umbrella and $11 for food and drinks rather than spending an equal ammount of money to go to a movie. her opportunity cost if going to the Beach is

the value she places on seeing the movie

Structural unemployment occurs because

there are long-term mismatches between workers skills and jobs available.

when a market is in equilibrium:

there is neither excess demand nor excess supply

Social Security benefits, welfare payments, and farm support payments are examples of:

transfer payments

Intermediate goods and services are ______ production and ______ counted in GDP using the expenditure approach.

used up in the process of; are not

The sum of the value added by all firms equals total:

value of final goods and services.

which of the following is not a flow?

wealth

a price ceiling that is set above equilibrium price:

will have no effect on the market

The movement of workers between jobs, firms, and industries is called:

worker mobility.