Econ Final

(Figure: Inflationary and Recessionary Gaps) Look at the figure Inflationary and Recessionary Gaps. The intersection of SRAS with AD in panel (a) indicates an economy:

a. in a recessionary gap

(Figure: Income-Expenditure Equilibrium) Look at the table Income-Expenditure Equilibrium. If planned investment spending increases autonomously by $100, real GDP will:

a. increase by $250

(Figure: Crowding Out) Look at the figure Crowding Out. If the demand for loanable funds curve shifts to the right, the result will be a(n) _____ in the interest rate and a(n) _____ in the total amount of borrowing in the funds market.

a. increase; increase

(Figure: Aggregate Supply) Look at the figure Aggregate Supply. If the economy is at point E, nominal wages will _____, and the short-run aggregate supply curve will shift _____ until actual potential is _____ potential output.

a. increase; left; equal to

(Figure: Inflationary and Recessionary Gaps) Look at the figure Inflationary and Recessionary Gaps. Yp in panel (b):

a. is potential output

Potential output:

a. is the level of output that the economy would produce if all prices, including nominal wages, were fully flexible

(Figure: Shifts of the AD-AS Curves) Look at the figure Shifts of the AD-AS Curves. A short run increase in net exports is illustrated by:

a. panel(a)

(Figure: Aggregate Expenditures and Real GDP) Look at the figure Aggregate Expenditures and Real GDP. At a real GDP of $9,000 billion:

a. planned investment is less than actual investment

(Figure: Crowding Out) Look at the figure Crowding Out. The supply of loanable funds curve SLF1 shifts to SLF2 . This shift implies that:

a. private savings has increased

Productivity is equal to:

a. real GDP divided by the number of workers

Technological progress is advanced through:

a. research and development

Structural unemployment:

a. results when there are more job hunters than jobs

Last month Brent lost his job at the auto parts factory because the factory relocated to Asia. Brent has been looking for similar jobs in his town but has found no openings. Brent is best classified as:

a. structurally unemployed

Look at the figure Expanded Circular-Flow Model. How does the government finace its spending?

a. taxes of 150$ plus borrowing of 70$

(Figure: AD-AS) Look at the figure AD-AS. Assume that the economy is in long-run equilibrium. If the Federal Reserve lowers the key interest rate:

a. the aggregate demand curve will shift to AD2

(Figure: Aggregate Expenditures Curve I) Look at the figure Aggregate Expenditures Curve I. Suppose that the consumption function in this economy rises by $100. The result would be a shift in the aggregate expenditures curve:

a. upward of $100

(Figure: Crowding Out) Look at the figure Crowding Out. The demand for loanable funds curve DLF1 will shift to DLF2 when there is:

b. an increase in the government budget deficit

(Figure: Loanable Funds) Look at the figure Loanable Funds. Which of the following might produce a new equilibrium interest rate of 8% and a new equilibrium quantity of loanable funds of $150 billion?

b. businesses become more optimistic about the return on investment spending

The consumption function shifts when:

b. expected disposable income changes

(Figure: Aggregate Expenditures Curve I) Look at the figure Aggregate Expenditures Curve I. Suppose that the government's purchases of goods and services in this economy rise by $100. Real GDP will:

b. increase by $200

(Figure: The Effect of a Minimum Wage) Look at the figure The Effect of a Minimum Wage. Suppose that after some time with a minimum wage of WF, the government abolishes the minimum wage. Employment will:

b. increase to Qe

Physical capital includes:

b. machine tools

(Figure: Shifts of the AD-AS Curves) Look at the figure Shifts of the AD-AS Curves. A short run decrease in investment spending is illustrated by:

b. panel (b)

(Figure: Inflationary and Recessionary Gaps) Look at the figure Inflationary and Recessionary Gaps. The level of income associated with Y1 in panel (b):

b. reveals an inflationary gap compare with Yp

An example of an intermediate good is:

b. steel purchased by aircraft manufacturers

Jim has a part-time job and would prefer to have a full-time job but has been unable to find one. Jim is classified as:

b. underemployed

The short-run aggregate supply curve is positively sloped because:

b. wages are sticky

(Figure: Consumption and Disposable Personal Income) Look at the figure Consumption and Disposable Personal Income. When disposable personal income is $2,000 billion, consumption is _____ billion.

c. $1,200

(Figure: Aggregate Expenditures Curve I) Look at the figure Aggregate Expenditures Curve I. The equilibrium level of real GDP in the aggregate expenditures model shown in this figure is:

c. $1,600

(Figure: Income-Expenditure Equilibrium) Look at the table Income-Expenditure Equilibrium. If planned investment spending increases by $100, income-expenditure equilibrium occurs at real GDP of:

c. $2,250

(Figure: Consumption and Real GDP) Look at the figure Consumption and Real GDP. If real GDP is $4 trillion, consumption is _____ trillion.

c. $3

(Table: Aggregate Spending) Look at the table Aggregate Spending. Suppose the economy has no government spending and no foreign trade. With no taxes or transfers, real GDP equals disposable income (YD). At what level of real GDP will the economy find its income-expenditure equilibrium?

c. $3,500

(Table: Kenya's Economy in 2010) Look at the table Kenya's Economy in 2010. Aggregate output per capita at the beginning of 2010 was:

c. $775

(Figure: Shifts of the AD-AS Curves) Look at the figure Shifts of the AD-AS Curves. An increase in wages in the short run is illustrated by:

d. panel (d)

Planned investment spending depends on all of the following EXCEPT:

d. real GDP

(Figure: AD-AS Model I) Look at the figure AD-AS Model I. If the economy is at point X, there is a(n) _____ gap with _____ unemployment.

d. recessionary; high

(Table: National Income Accounts) Look at the table National Income Accounts. The value of tax revenue is:

a. $1.8 trillion

Look at the figure Expanded Circular-Flow Model. The total flow of funds into and out of households is:

a. $1020

Look at the figure Expanded Circular-Flow Model. What is the value of net exports?

a. $1020

Look at the figure Expanded Circular-Flow Model. The government has a budget:

c. deficit of $70

(Table: National Income Accounts) Look at the table National Income Accounts. The value of net capital inflow is:

b. $0.5 trillion

(Table: Calculating GDP) According to the information in the table Calculating GDP, what is GDP?

b. $12,200

(Figure: Loanable Funds Market) Look at the figure Loanable Funds Market. If the interest rate is 8%, businesses will want to borrow approximately:

b. $2 trillion

Look at the figure Expanded Circular-Flow Model. How much is total government spending?

b. $220

(Table: Kenya's Economy in 2010) Look at the table Kenya's Economy in 2010. Aggregate output at the end of 2010, assuming no changes in the price level, was about:

b. $32.632 billion

(Scenario: The Aggregate Production Function) Look at the scenario The Aggregate Production Function. If real GDP per worker equals $3,200, physical capital per worker equals:

b. $64

(Table: Investment Projects) Look at the table Investment Projects. If the market interest rate is 17%, the amount of investment demanded is:

b. $800

(Table: Population Data for Estill County) Look at the table Population Data for Estill County. What is the unemployment rate?

c. 17%

Long-run economic growth is:

d. higher in countries with a strong rule of law and political stability

All of the following will increase potential output EXCEPT:

a decrease in the aggregate price level

If MPC = 0.9, the multiplier is:

a. 10

(Figure: Loanable Funds) Look at the figure Loanable Funds. Which of the following might produce a new equilibrium interest rate of 8% and a new equilibrium quantity of loanable funds of $75 billion?

a. Capital inflows from foreign citizens decline

(Figure: Loanable Funds) Look at the figure Loanable Funds. Which of the following might produce a new equilibrium interest rate of 4% and a new equilibrium quantity of loanable funds of $75 billion?

a. Profit expectations for business investments become less optimistic

(Figure: AD-AS) Look at the figure AD-AS. Suppose the economy is in an inflationary gap so that SRAS1 intersects AD2 . The size of the gap is equal to:

a. Y1--Yp

(Figure: Inflationary and Recessionary Gaps) Look at the figure Inflationary and Recessionary Gaps. The intersection of AD with SRAS in panel (b) indicates:

a. a short-run equilibrium

(Figure: Income-Expenditure Equilibrium) Look at the table Income-Expenditure Equilibrium. If planned investment spending increases in this economy:

a. aggregate expenditures curve will shift up, increasing the income-expenditure equilibrium.

The demand for loanable funds is _____ sloping because _____ respond to lower interest rates by _____ their quantity demanded of loanable funds.

a. downward; investors; increasing

An upward shift in the aggregate consumption function can be caused by:

a. expectations of higher incomes

(Figure: Aggregate Expenditures Curve I) Look at the figure Aggregate Expenditures Curve I. Suppose that the consumption function in this economy rises by $100. The result will be a _____ increase in the equilibrium level of real GDP.

b. $200

(Table: Aggregate Spending) Look at the table Aggregate Spending. Suppose the economy has no government spending and no foreign trade. With no taxes or transfers, real GDP equals disposable income (YD). The income-expenditure equilibrium real GDP is found at _____. If planned investment fell to $300, the new income-expenditure equilibrium real GDP would fall to _____.

b. $3,500; $2000

(Figure: Consumption and Real GDP) Look at the figure Consumption and Real GDP. If real GDP is $8 trillion, consumption is _____ trillion and savings is _____ trillion.

b. $5; $3

(Figure: Consumption and Real GDP) Look at the figure Consumption and Real GDP. If real GDP is $12 trillion, consumption is _____ trillion.

b. $7

(Figure: Consumption and Disposable Personal Income) Look at the figure Consumption and Disposable Personal Income. When disposable personal income is $1,200 billion, consumption is _____ billion.

b. $800

(Figure: Aggregate Expenditures Curve I) Look at the figure Aggregate Expenditures Curve I. The slope of the aggregate expenditures curve in this figure is:

b. 0.5

(Figure: Consumption and Real GDP) Look at the figure Consumption and Real GDP. The marginal propensity to consume is:

b. 0.5

(Figure: Consumption and Disposable Personal Income) Look at the figure Consumption and Disposable Personal Income. The slope of the consumption function

b. 0.50

(Figure: Aggregate Expenditures Curve I) Look at the figure Aggregate Expenditures Curve I. The multiplier in the aggregate expenditures model shown in this figure is:

b. 2

(Figure: Aggregate Supply) Look at the figure Aggregate Supply. If the economy is at point E:

b. actual output is more than potential output

(Figure: Income-Expenditure Equilibrium) Look at the table Income-Expenditure Equilibrium. If investment spending decreases in this economy, then the:

b. aggregate expenditures curve will shift down, decreasing the income-expenditure equilibrium

(Table: Population Data for Estill County) Look at the table Population Data for Estill County. If marginally attached workers are included in the labor force and in the unemployment rate, the unemployment rate in this economy is:

c. 23.1%

(Figure: AD-AS) Look at the figure AD-AS. Suppose that initially the economy is at long-run equilibrium. If the government cuts taxes, _____ will shift to the _____.

c. SRAS; right

(Figure: Aggregate Expenditures and Real GDP) Look at the figure Aggregate Expenditures and Real GDP. If the level of real GDP equals $9,000 billion and there are no changes in the consumption function or in planned investment, then real GDP will _____in the next period.

c. fall

(Figure: AD-AS Model I) Look at the figure AD-AS Model I. If the economy is at point X, nominal wages _____, and the _____ curve shifts _____ until the economy reaches long-run equilibrium.

c. fall; short-run aggregate supply; right

(Figure: Aggregate Supply) Look at the figure Aggregate Supply. At point F, potential output is _____ than actual output and unemployment is _____.

c. higher; high

A $50 million increase in investment spending will eventually cause equilibrium real GDP to:

c. increase by more than $50 million

(Figure: Crowding Out) If the supply of loanable funds curve shifts to the right, the result will be a(n) _____ in the total amount of borrowing and a(n) _____ in the interest rate.

c. increase; decrease

(Figure: Consumption and Real GDP) Look at the figure Consumption and Real GDP. The slope of the consumption function is called the:

c. marginal propensity to consume

(Figure: Shifts of the AD-AS Curves) Look at the figure Shifts of the AD-AS Curves. A decrease in wages in the short run is illustrated by:

c. panel (c)

The supply of loanable funds is _____ sloping because _____ respond to lower interest rates by _____ their quantity supplied of loanable funds.

c. upward; savers; decreasing

(Table: Aggregate Spending) Look at the table Aggregate Spending. Suppose the economy has no government spending and no foreign trade. With no taxes or transfers, real GDP equals disposable income (YD). If real GDP is $2,500, what is the level of unplanned inventory investment?

d. -$200

(Figure: Loanable Funds) Look at the figure Loanable Funds. Which of the following might produce a new equilibrium interest rate of 5% and a new equilibrium quantity of loanable funds of $150 billion?

d. There is an increase in capital inflows from other nations

(Figure: Macroeconomic Equilibrium) Look at the figure Macroeconomic Equilibrium. Curve 1 refers to _____, curve 2 refers to _____, and curve 3 refers to _____.

d. aggregate demand; long-run aggregate supply; short-run aggregate supply

Changes in aggregate demand can be caused by changes in:

d. government spending

(Figure: AD-AS Model I) Look at the figure AD-AS Model I. If the economy is at point X, the appropriate fiscal policy is to:

decrease taxes and increase government spending

(Figure: AD-AS Model I) Look at the figure AD-AS Model I. If the economy is at point X, the appropriate monetary policy is to:

increase the money supply and decrease interest rates

In the long run, the economy is:

self-correcting, as prices of goods that are sticky in the short run become very flexible in the long run and thus move the economy to full employment

(Figure: The Effect of a Minimum Wage) Look at the figure The Effect of a Minimum Wage. Suppose the labor market is in equilibrium at E when the government imposes a minimum wage of WF. The quantity of labor supplied may_____, resulting in structural unemployment.

c. increase to Qs

Cyclical unemployment is the result of:

c. the business cycle

(Table: National Income Accounts) Look at the table National Income Accounts. The value of national savings is:

d. $1.6 trillion

(Scenario: Closed Economy S = I) Look at the scenario Closed Economy S = I. How much is investment spending?

d. $2 trillion

(Scenario: Closed Economy S = I) Look at the scenario Closed Economy S = I. How much is national saving?

d. $2 trillion

(Table: Investment Projects) Look at the table Investment Projects. If the market interest rate is 13%, the amount of planned investment spending is:

d. $2,000

(Figure: Technological Progress and Productivity Growth) Look at the figure Technological Progress and Productivity Growth. Which of the following changes in real GDP is most likely to have resulted from an increase in foreign investment spending?

d. both A to B and B to C

Look at the figure Expanded Circular-Flow Model. Which of the following is NOT a sector of the economy shown in the circular flow model?

d. factor markets

Look at the figure Expanded Circular-Flow Model. Which of the following is a type of market?

d. financial

Natural resources are:

d. less reliable indicators of productivity today than they were a century ago

The formula for the rule of 70, where n is number of years and r is growth rate, is expressed as:

d. n * r = 70

(Table: Investment Projects) Look at the table Investment Projects. If the market interest rate declines from 15% to 13%, then the amount of investment demanded will increase by:

a. $200

Boeing buys $3 million worth of steel, $2.5 million worth of computer hardware and software, and $1 million worth of mechanical tools to manufacture a certain model of aircraft. Boeing sells this particular model at $10 million. The value added by Boeing is equal to:

a. $3.5 million

(Scenario: The Aggregate Production Function) Look at the scenario The Aggregate Production Function. If K / L = $81, then real GDP per worker is:

a. $4,050

Suppose that in year 1 an economy produces 100 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year the economy produces 110 golf balls that sell for $3.25 each and 80 pizzas that sell for $9 each. The value of nominal GDP in years 1 and 2 respectively is:

a. $900 and $1,077.50

(Table: GDP) GDP in the table is:

a. $94 billion

(Scenario: Productivity) Look at the scenario Productivity. How much has technological progress contributed to productivity growth?

a. 1.4%

Table: The Consumer Price Index) Look at the table The Consumer Price Index. The approximate rate of inflation in year 3 is:

a. 5%

(Table: Population Data for Estill County) Look at the table Population Data for Estill County. How many people are in the labor force?

a. 6000

(Figure: Technological Progress and Productivity Growth) Look at the figure Technological Progress and Productivity Growth. If there is an increase in physical capital per worker (all other factors remaining unchanged), it is best indicated by a move from:

a. A to B

(Figure: Technological Progress and Productivity Growth) Look at the figure Technological Progress and Productivity Growth. Which of the following changes in real GDP is most likely to have resulted from an increase in domestic savings?

a. A to B

(Figure: The Effect of a Minimum Wage) Look at the figure The Effect of a Minimum Wage. Suppose the labor market is in equilibrium at E when the government imposes a minimum wage of WF. Structural unemployment will equal:

a. Qs--Qd

In an open economy government spending was $30 billion, consumption was $70 billion, taxes were $20 billion, GDP was $100 billion, and investment spending was $10 billion. As a result, there was:

a. a net capital inflow of $10 billion

People who are changing jobs are counted in _____ unemployment.

a. frictional

Unemployment that is due to the time workers spend in job search is _____ unemployment.

a. frictional

Suppose that in year 1 an economy produces 100 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year the economy produces 110 golf balls that sell for $3.25 each and 80 pizzas that sell for $9 each. Using year 1 as the base year, real GDP in year 2 is:

b. $970

(Table: Kenya's Economy in 2010) Look at the table Kenya's Economy in 2010. During 2010, assuming no changes in the price level, aggregate output per capita in Kenya grew at a rate of:

b. 2.6%

(Scenario: Productivity) Look at the scenario Productivity. How fast has physical capital per worker grown?

b. 4%

(Table: Kenya's Economy in 2010) Look at the table Kenya's Economy in 2010. The population at the end of 2010 was about:

b. 41 million

(Scenario: Productivity) Look at the scenario Productivity. How much has technological progress contributed as a percentage of productivity growth?

b. 47%

(Scenario: Productivity) Look at the scenario Productivity. How much has growing physical capital per worker contributed as a percentage of total productivity growth?

b. 53%

(Table: Population Data for Estill County) Look at the table Population Data for Estill County. If marginally attached workers are included, the labor force in Estill County is:

b. 6500

Suppose that in year 1 an economy produces 100 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year the economy produces 110 golf balls that sell for $3.25 each and 80 pizzas that sell for $9 each. Using year 1 as the base year, the growth rate of real GDP from year 1 to year 2 is:

b. 7.8%

(Figure: The Market for Loanable Funds with Government Borrowing) Look at the figure The Market for Loanable Funds with Government Borrowing. After an increase in government borrowing, the new equilibrium interest rate will rise from 6% to _____ and the amount of private savings will _____.

b. 8%; rise

(Table: Population Data for Estill County) Look at the table Population Data for Estill County. What is the labor force participation rate?

b. 81%

(Figure: Technological Progress and Productivity Growth) Look at the figure Technological Progress and Productivity Growth. Which of the following changes in real GDP is most likely to have resulted from an increase in the quality (as well as quantity) of public health measures?

b. B to C

(Scenario: Closed Economy S = I) Look at the scenario Closed Economy S = I. What is the government budget balance?

b. a deficit of $1.5 trillion

A shift away from taxing asset income and toward taxing consumption would lead to:

b. a larger supply of loanable funds, a lower interest rate, and more investment spending

The Arcadia Entertainment Co. produced 20,000 DVDs of the movie Thor in 2011. Only 4,000 copies remained unsold at the end of 2011. As a result:

b. all 20,000 DVDs will be included in GDP in 2011, 16,000 as consumption expenditure and 4,000 as investment expenditure

Look at the figure Expanded Circular-Flow Model. What is GDP?

c. $1000

Look at the figure Expanded Circular-Flow Model. The total flow of funds into and out of the rest of the world is:

c. $160

(Table: National Income Accounts) Look at the table National Income Accounts. The value of investment spending is:

c. $2.1 trillion

(Table: National Income Accounts) Look at the table National Income Accounts. The value of private savings is:

c. $2.8 trillion

(Scenario: Closed Economy S = I) Look at the scenario Closed Economy S = I. How much is private saving?

c. $3.5 trillion

(Figure: Loanable Funds Market) Look at the figure Loanable Funds Market. If the interest rate is 8%, people will want to save approximately:

c. $4 trillion

In 2011, consumption spending is $7,000, government purchases of goods and services is $2,000, and investment spending is $1,500. If GDP for 2011 is $10,300, exports are _____ and imports are _____.

c. $600; $800

(Table: Kenya's Economy in 2010) Look at the table Kenya's Economy in 2010. Aggregate output per capita at the end of 2010, assuming no changes in the price level,

c. $795

Look at the figure Expanded Circular-Flow Model. What is the value of disposable income?

c. $870

Suppose that in year 1 an economy produces 100 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year the economy produces 110 golf balls that sell for $3.25 each and 80 pizzas that sell for $9 each. The growth rate of nominal GDP from year 1 to year 2 is:

c. 19.7%

(Scenario: Productivity) Look at the scenario Productivity. What is the growth rate of productivity?

c. 3%

(Figure: Productivity) Look at the figure Productivity. An increase in physical capital per worker with everything else remaining unchanged is shown on the diagram as a movement from:

c. A to B

(Figure: Productivity) Look at the figure Productivity. An improvement in technology with everything else remaining unchanged is shown on the diagram as a movement from:

c. B to C

(Figure: Technological Progress and Productivity Growth) Look at the figure Technological Progress and Productivity Growth. Which of the following changes in real GDP is most likely to have resulted from an increase in the quality (as well as quantity) of government spending on education?

c. B to C

(Figure: Technological Progress and Productivity Growth) Look at the figure Technological Progress and Productivity Growth. Which of the following changes in real GDP is most likely to have resulted from a gradual decline in property rights because of excessive government intervention?

c. C to B

(Table: Investment Projects) Look at the table Investment Projects. If the market interest rate is 15%, the last project undertaken is:

c. H

Donna was laid off at the beginning of 2011. She looked for a job for three months but could not find anything suitable. She then decided to volunteer for a soup kitchen and stopped looking for a job. Donna is considered to be:

c. a discouraged worker

Ron quit his job in retail management and moved to Florida with his wife, a physician who opened a new practice there. He was not successful in his job search for the next four months. Ron's unemployment is:

c. frictional

(Table: Investment Projects) Look at the table Investment Projects. If the market interest rate declines from 15% to 11%, then the amount of investment demanded will increase by:

d. $2,200

Look at the figure Expanded Circular-Flow Model. The total flow of funds into and out of financial markets is:

d. $300

(Table: Investment Projects) Look at the table Investment Projects. If the market interest rate is 11%, the amount of investment demanded is:

d. $4000

(Table: Investment Projects) Look at the table Investment Projects. If the market interest rate is 9%, the amount of planned investment spending is:

d. $5,500

Scenario: Productivity) Look at the scenario Productivity. How much has growing physical capital per worker contributed to productivity growth?

d. 1.6%

Table: The Consumer Price Index) Look at the table The Consumer Price Index. The approximate rate of inflation in year 5 is:

d. 20%

Table: The Consumer Price Index) Look at the table The Consumer Price Index. The approximate rate of inflation in year 2 is:

d. 25%

(Figure: Loanable Funds Market) Look at the figure Loanable Funds Market. The equilibrium interest rate and total quantity of lending are:

d. 6% and $3 trillion

The rule of 70 states that a variable's approximate doubling time equals:

d. 70 divided by the growth rate

(Figure: Technological Progress and Productivity Growth) Look at the figure Technological Progress and Productivity Growth. Which of the following changes in real GDP is most likely to have resulted from the deterioration of the nation's infrastructure over time?

d. B to A

(Figure: Technological Progress and Productivity Growth) Look at the figure Technological Progress and Productivity Growth. If there is a significant increase in human capital per worker (all other factors remaining unchanged), it is best indicated by a move from:

d. B to C

(Figure: Technological Progress and Productivity Growth) Look at the figure Technological Progress and Productivity Growth. If there is significant technological progress (all other factors remaining unchanged), it is best indicated by a move from:

d. B to C

(Table: Investment Projects) Look at the table Investment Projects. If the market interest rate is 11%, the last project undertaken is:

d. J

An example of the frictionally unemployed is a(n):

d. real estate agent who leaves a job in Texas and searches for a similar higher-paying job in California

Sam, who is 55 years old and has been a steelworker for 30 years, is unemployed because the steel plant in his town closed and moved to Mexico. Sam is _____ unemployed.

d. structurally

The value of all of the following goods EXCEPT _____ is included in the calculation of aggregate output.

d. the tires on brand-new Volvo station wagons

Which of the following would NOT be included in this year's GDP?

d. your purchase of your neighbor's 2001 Toyata