Econ Final
As the _____________ complement for high-skill labor becomes cheaper, the demand curve for high-skill labor will shift to the right. a. technology b. low-skill labor c. market d. lower wage
a
On the supply side of the GDP, Structures account for around __________ of U.S. GDP. a. 7% b. 17% c. 37% d. 57%
a
Question 12 The ________________ refers to the gap that can exist between what a nation's _____________, and a nation's ____________________. a. balance of trade; producers sell abroad; imports b. merchandise trade balance; exports; imports c. trade surplus; exported services; imported goods d. trade deficit; producers purchase abroad; exports
a
Question 32 The outputs and prices of goods and services in Country X are shown in the table above. Assuming that 2018 is the base year, calculate each of the following. 1. Calculate: i. The nominal GDP in 2018 ii. The nominal GDP in 2019 iii. The real GDP in 2018 iv. The real GDP in 2019 2. Where did the economy grow because of production? (Choose 1 industry and explain) 3. Where did the economy experience inflation? (Choose 1 industry and explain)
1. Calculations i. (5x10)+(10x20)+(15x5) = 325 nominal GDP in 2019 ii. (7x15)+(12x20)+(16x15) = 585 nominal GDP in 2019 iii. 325 real GDP because 2018 is the base year. iv. (5x15)+(10x20)+(15x15) = 500 real GDP in 2019 2. The economy grew due to increased production in the wheat industry. The real value of the wheat market independent of beef and cattle can show this. In 2018 the real value of wheat was 50 (5x10) while in 2019 the real value of wheat was 75 (5x15). Because the real value of wheat increased, we know that the economy grew because of increased production and not just inflation. 3. The economy experienced inflation in the beef industry. Because the real value of the beef industry stayed at 200 in 2018 and 2019, we know that the growth in the industry was solely due to inflation and not increased production.
How do statisticians and economists measure GDP? Specifically, what is the formula used? Describe the component parts of the equation.
1. GDP can be measured either by demand or supply. The formula used to calculate GDP on the demand side is GDP = C+I+G+(X-M). 2. The "C" in the equation for GDP represents consumption, which is how much consumers spend. Consumption is the largest component on the demand side of GDP. "I" is investment, which is also business spending and the character "G" stand for government spending. In this equation (X-M) is the trade balance, which Is exports (X) minus imports (M).
A nation can achieve higher economic growth if: a. it devotes more resources to research and development. b. the productivity of labor declines c. taxes are imposed on investment in capital. d. more resources are allocated to consumption goods.
a
Clem Oatley could grow wheat and barley. He could grow 75 bushels of wheat or 125 bushels of barley using the same resources on an acre of his land. The price of wheat is $2.00 per bushel and the price of barley $ 0.80. Show the benefits to Clem from specialization. What should he specialize in? Explain.
Clem Oatley should specialize in growing wheat. Although Clem is capable of producing more bushels of barley using the same amount of resources, it costs $1.20 less per bushel. Because of this, he could make $150.00 on wheat and just $100.00 on barley. Although he can produce more barley, Clem Oatley would be better off financially producing wheat. The benefit Clem would receive by specializing in wheat is the $50.00 more he makes by doing so.
Would you rather have $100 in the future or $100 today? Why might the value change?
I would rather have 100 dollars today. This is because the real value of the $100 is more now than in the future because of inflation. Although the nominal value in both instances is the same ($100), inflation decreases the buying power of money over time so the $100 in the future would not be worth as much as the $100 now.
Shifting Supply and Demand: For this scenario, explain how you think the following situations would affect the indicated market. Draw a properly labeled graph as part of your answer, showing what happens to equilibrium price and quantity in the market. Be sure to upload your graphs to the assignment so they can be graded!
The increased price of wood could cause a supply issue. Because wood is a key component of new homes, the increased price of wood would cause the quantity of houses produced to decrease. This would increase the equilibrium price and decrease the equilibrium quantity of houses as shown by E1.
Question 4 Which of the following will strongly influence a nation's level of trade? a. size of its economy, its geographic location, and its history of trade b. size of its government, its history of trade, and its geographic location c. government trade policy, its history of trade, and the size of its economy d. ratio of exports to GDP, balance of trade, and government trade policy
a
Question 6 From a macroeconomic perspective, if GDP economic indicators show a decline of 10% or more in a single year, then which of the following outcomes is most likely to result? a. deep economic recession b. influx of foreign capital c. lessening of foreign aid d. merchandise trade surplus
a
Question 8 Which of the following would most likely be included in the negative side of the current account balance a. money earned by Canadian firms in the U.S. b. money spent by Canadian tourists in the U.S. c. returns paid to U.S. investors in Southeast Asia d. European aid sent to the U.S. to fund the Iraq war
a
Which of the following is not counted as a part of GDP? a. the purchase of 100 shares of AT&T stock by your grandfather. b. the purchase of a snow plow by the city of Minneapolis. c. the unsold additions to inventory at an appliances store d. the purchase of a loaf of bread by a consumer
a
Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."
a. The statement is correct.
In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers.
a. division of labor
The circular flow diagram of economic activity is a model of the
a. flow of goods, services, and payments between households and firms.
Which of the following best describes a fiscal policy tool? a. government spending b. bank lending c. financial capital markets d. household spending
a. government spending
Which of the government policies below is most unlikely to encourage per capita economic growth? a. high taxes on companies that spend a lot on capital formation b. the use of tax revenues for investment and capital formation c. special subsidies for capital-intensive forms of production d. promotion of education and training programs for workers
a. high taxes on companies that spend a lot on capital formation
In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.
a. market-oriented economy
The demand curve for a typical good has a(n) ------- slope because ----------------
a. negative slope because some consumers switch to other goods as the price rises.
Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be.
a. normative statement
A demand curve shows the relationship between price and _________________ on a graph.
a. quantity demanded
The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options.
a. sunk costs
The opportunity cost of attending university is likely to include all except which of the following? a. the cost of haircuts received during the school term b. the income you forgo in order to attend classes c. tuition fees d. the cost of required textbooks
a. the cost of haircuts received during the school term U1
Macroeconomic topics do not usually include: a. the profit maximizing decisions of an individual manufacturer. b. the rate of inflation. c. the rate of unemployment. d. economic growth.
a. the profit maximizing decisions of an individual manufacturer. U1
GDP does not directly include: a. the value of goods produced domestically and sold abroad. b. the value of intermediate goods sold during a period. c. the value of services rendered during a period. d. the value of final goods and services produced, but not sold, during a period.
b
In macroeconomics, the connection from inputs to outputs for the entire economy is called _______________. a. a production function b. an aggregate production function c. human capital d. physical capital
b
Question 10 If a country's current account balance is zero and the financial payments flowing in and out of the country's economy are equal, then which of the following must be a true statement? a. it has an overall or net inflow of financial investment b. it is not an overall or a net investor in other countries c. it has an overall or net outflow of financial investment d. its government is not indebted to other governments
b
Question 13 The two main sources for the supply of capital in the U.S. economy are: a. private sector investment and government borrowing when spending is higher than tax revenues. b. domestic savings from individuals and firms and inflows of financial capital from foreign investors. c. domestic savings from individuals and firms and government borrowing to make up a tax shortfall. d. domestic private sector borrowing and inflows of financial capital from foreign investors.
b
Question 14 An economy with a larger involvement in foreign trade: a. is more likely to suffer a larger trade imbalance. b. may measure its exports as a share of GDP. c. has a substantial trade imbalance. d. has an underlying trade imbalance.
b
Question 2 An economics professor is discussing a measure of trade that involves a comparison of exports and imports of goods for the year just ended. What name is given to this measurement? a. export trade balance b. merchandise trade balance c. import trade balance d. current account balance
b
Question 25 _________ are now the largest single component of the supply side of GDP, representing over half of GDP. a. Durable goods b. Services. c. Nondurable goods d. Structures
b
Question 26 Which of the following is not included in GDP? a. the payments for a chiropractor's services b. cash income paid to a day laborer that is not reported to the tax authorities c. the replacement of brake pads on your six-year-old vehicle d. the fees for legal services rendered by your lawyer
b
Question 27 If imports exceed exports, as in recent years, then __________ exists. a. a trade surplus b. a trade deficit c. a trade imbalance d. trade disequilibrium
b
Question 29 In 1990, the GDP of Canada was $680 billion as measured in Canadian dollars, and the exchange rate was that $1 Canadian was worth 85 U.S. cents. In 2000, the GDP of Canada was $1000 billion as measured in Canadian dollars, and the exchange rate was that $1 Canadian was worth 69 U.S. cents. By what percentage did the GDP of Canada increase from 1990 to 2000 in Canadian dollars? a. 19.4% b. 47% c. 68% d. 147%
b
Question 8 Some prominent members of the slow-economic growth country club include a high-income country like _________. a. Somalia b. Germany c. Bolivia d. Nigeria
b
Question 9 In 2010, a country imported goods worth $500 billion and exported goods worth $443 billion. It exported services worth $248 billion and imported services worth $330 billion. Payments on investments abroad totaled $199 billion, while returns paid on foreign investments were $125 billion. Unilateral transfers from the country to other nations amounted to $94 billion. What was the country's current account balance for 2010? a. $70 billion b. $159 billion c. $142 billion d. $65 billion
b
Some recent economic research has suggested that African countries' economic growth may have been limited by __________________ . a. population b. geography and climate c. government interventionism d. technological challenges
b
The demand measure of GDP accounting adds together: a. wages and salaries, rent, interest, and profit. b. consumption, investment, government purchases, and trade balance. c. consumption, government purchases, wages and salaries, and trade balance. d. consumption, interest, government purchases, and trade balance.
b
To achieve a high standard of living, a nation should: a. increase the tax deduction for child dependents. b. promote economic growth. c. use less capital and more labor in the production process. d. increase welfare payments to the poor.
b
When discussing economic growth, it is often useful to focus on ____________, to avoid studying changes in the size of GDP that represent only having more people in the economy, and focus on those increases in GDP which represent an actual rise in the standard of living on a per person basis. a. economic growth b. GDP per capita. c. living standards d. consumption and expenditures
b
Which of the following is correct? a. An increase in the quantity of labor always leads to economic growth. b. Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital.. c. A decrease in the productivity of labor leads to economic growth. d. Third World countries are rich in human capital.
b
Which of the following best characterizes the circular flow of income?
b. Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.
In countries like _____________ the command economy predominates.
b. Cuba and North Korea
In a discussion of economics, which of the following would exert the most influence on an individual firm's decision to hire workers? a. wage levels b. the macroeconomy c. the firm's income d. household income
b. Macro economy
The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options. a. marginal utility b. sunk costs c. marginal analysis d. budget constraints
b. Sunk Costs
Which of the following best denotes the reason for the existence of substantial black markets? a. a market-oriented economy b. a command economy. c. government laws and rules d. the microeconomy
b. a command economy U1
Which of the following would most likely shift the production possibilities curve inward? a. an increase in the number of hours factories are in use b. a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time c. an increase in the production of capital goods d. technological progress
b. a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time u1
Any given demand or supply curve is based on the ceteris paribus assumption that ___________________.
b. all else is held equal
Specialization can:
b. can lead to an increase in overall production.
Scarcity implies that
b. it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.
_________________ refers to the total number of units that are purchased at that price.
b. quantity demanded
If new manufacturers enter the computer industry, then (ceteris paribus):
b. the supply curve shifts to the right.
A nation's prosperity is sometimes measured in terms of ___________. a. GNP b. GDP c. GDP per capita d. economic output
c
An economy's rate of productivity growth is closely linked to the growth rate of its ______________, although the two aren't identical. a. GNP b. output c. GDP per capita d. technology
c
As the __________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left. a. high-skill labor b. lower wage c. technology d. market
c
Of the world's population of 6.7 billion people, _________ are scraping by on incomes that average less than $2 per day. a. 260 million b. 2.6 billion c. 5 billion d. 6.2 billion
c
On the demand side of GDP, consumption by _____________ is the largest component of GDP, accounting for about two-thirds of the GDP in any year. a. services b. businesses c. households d. government
c
Question 28 Which of the following is included in the calculated Gross Domestic Product? a. Farmer Freddie sells his second tractor to his son. b. Suzanne buys a love seat and chair for $85 at the yard sale on the corner. c. A local ice cream store sells $17,000 worth of cones and sundaes on July 1. d. Mr. Farkle buys a used lawn mower from his neighbor, Mr. Sparkle.
c
Question 3 From a macroeconomic perspective, an economic transaction in the form of a financial investment is synonymous with which of the following? a. a productive economic asset b. trade resulting from unilateral transfers c. trade in the financial capital market d. a stream of payments leaving the country
c
Question 7 The extent to which a national economy is involved in global trade: a. is not very strongly related to the issue of whether the economy has a substantial trade imbalance. b. is not very strongly related to the underlying economic meaning of trade imbalances. c. is not very strongly related to either a or b above. d. is very strongly related to both a and b above.
c
The nominal value of any economic statistic refers to the number that is actually announced at that time, while the ________________ refers to the statistic after it has been adjusted for inflation. a. empirical value b. adjusted value c. real value d. net value
c
The value of what businesses provide to other businesses is captured in the final products at the end of the __________ chain. a. service b. value c. production d. supply
c
Refer to Table 2-1. A student has only a few hours to prepare for two different exams tomorrow morning. The above table shows alternative possible exam outcomes with three alternative uses of the student's time. The opportunity cost of scoring an 84 on the history exam rather than 76 is:
c. 7 points on the economics exam
Which of the following statements most likely lies within the realm of macroeconomics? a. An increase in the price of automobiles will lead to a decrease in the quantity of automobiles demanded. b. Due to process innovations in computer chip manufacturing, the market supply of computers increased. c. Due to an economic recession, manufacturing firms began implementing layoffs of their workforces. d. Anticipating that the benefits would outweigh costs involved, an undergraduate student purchases the course textbook.
c. Due to an economic recession, manufacturing firms began implementing layoffs of their workforces.
_____________ - a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines.
c. Economies of scale
_____________ - a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines. a. Skill b. Specialization c. Economies of scale d. Division of labor
c. Economies of scale
______________ are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling.
c. Price floors
Which of the following will not result in a rightward shift of the market supply curve for labor? a. a decrease in non-wage income b. an increase in the working-age population c. an increase in labor productivity d. an increase in immigration
c. an increase in labor productivity
The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good.
c. budget constraint
The law of ____________________________ explains why people and societies rarely make all-or-nothing choices.
c. diminishing marginal utility
In the ______________, households receive goods and services and pay firms for them.
c. goods and services market
Improvements in the productivity of labor will tend to: a. decrease wages. b. decrease the supply of labor. c. increase wages. d. increase the supply of labor.
c. increase wages.
If the demand for software engineers __________ slower than does supply, then wages of software engineers will __________.
c. increases; fall
In the ____________, households work and receive payment from firms.
c. labor market
Economists refer to the relationship that a higher price leads to a lower quantity demanded as the _____________.
c. law of demand
As a person receives more of a good, the _______________ from each additional unit of the good declines.
c. marginal utility
The marginal benefit of a slice of pizza is the:
c. maximum amount that a consumer is willing to pay for the slice.
The basic difference between macroeconomics and microeconomics is that: a. microeconomics looks at the forest (aggregate markets) while macroeconomics looks at the trees (individual markets). b. macroeconomics is concerned with groups of individuals while microeconomics is concerned with single countries. c. microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets). d. macroeconomics is concerned with generalization while microeconomics is concerned with specialization.
c. microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets).
In contrast to goods and services markets, _____________ are rare in labor markets, because rules that prevent people from earning income are not politically popular.
c. price ceilings
A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will:
c. shift to the right, decreasing the price of the drug
If labor demand is downward sloping and labor supply is upward sloping, then when labor demand rises faster than labor supply, it is expected that real wages __________.
c. will increase
Increased investment alone will guarantee economic growth. a. This is a true statement, because growth occurs only with savings. b. This is a true statement, because money is the only resource needed for growth. c. This is a false statement, because an economy must rely on capital injections from abroad. d. This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology.
d
Investment in human capital: a. is of minor importance to economic growth. b. can be acquired through on-the-job training. c. is an important source of economic growth. d. is characterized by both b) and c).
d
Question 11 Which of the following would most likely be included in the positive side of the U.S. current account balance? a. U.S. foreign aid sent to as disaster relief to Haiti b. interest payments to foreign investors invested in the U.S. c. money spent by U.S. tourists in Europe d. money earned by U.S. firms in Europe
d
Question 24 Which of the following is included in GDP calculations? a. sales revenue received from a yard sale b. cash income received by a self-employed landscaper that is not reported to the IRS c. a crisp $50 bill received on your birthday d. the university tuition paid to enroll in a course
d
Question 30 In 1980 Denmark had a GDP of $70 billion (measured in U.S. dollars) and a population of 5.1 million. In 2000, Denmark had a GDP of $160 billion (measured in U.S. dollars) s and a population of 5.3 million. By what percentage did Denmark's GDP per capita rise between 1980 and 2000? a. 45.4% b. 219% c. 128% d. 120%
d
Question 5 Under what circumstances would it most likely be considered beneficial for a government to be a large borrower of foreign investment capital? a. never as there is no economic merit in a policy of running trade deficits b. if the inflow of capital is absorbed by greater government borrowing c. when borrowing larger amounts is based on unconventional macroeconomic wisdo d. when those funds are invested in a way that sustains economic growth over time
d
The Czech Republic has a GDP of 2,000 billion koruny. The exchange rate is 20 koruny per U.S. dollar. The Czech population is 20 million. Calculate the per capita GDP of the Czech Republic in U.S. dollars. a. $5 b. $100,000 c. $500 d. $5000
d
Which of the following did not result in economic growth? a. Installing a network of irrigation ditches and pumping stations in order to grow fruits and vegetables in parts of southern California. b. The invention of a threshing machine for harvesting grains. c. Increased government funding of post-secondary education. d. Many citizens emigrating from Zimbabwe when a politically repressive regime took office.
d
Which of the following factors contribute to economic growth? a. an increase in the average wage rate paid to workers b. an increase in the standard of living c. a decrease in the productivity of labor d. an increase in the proportion of the population that is college educated
d
"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is:
d. $44
Which of the following statements most likely lies within the realm of microeconomics? a. Unemployment rises during a recession and falls during an expansion. b. An increase in government spending will increase the aggregate demand for goods and services in the economy. c. A rapid acceleration of the supply of money may create inflation. d. An increase in labor costs will increase the additional cost of producing another bus.
d. An increase in labor costs will increase the additional cost of producing another bus.
In the circular flow diagram model: a. households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses. b. businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households. c. households receive revenue for selling goods and services to businesses, and use that revenue to buy inputs from businesses. d. Both (a) and (b) are correct.
d. Both (a) and (b) are correct.
If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that:
d. Goods X and Y are complement goods.
Which of the following is most likely a topic of discussion in macroeconomics? a. an increase in the price of a hamburger b. a decrease in the production of DVD players by a consumer electronics company c. an increase in the wage rate paid to automobile workers d. a decrease in the unemployment rate
d. a decrease in the unemployment rate
The nature of demand indicates that as the price of a good increases: a. suppliers wish to sell less of it. b. more of it is produced. c. more of it is desired. d. buyers desire to purchase less of it.
d. buyers desire to purchase less of it.
Other things being equal, a __________ supply of workers tends to __________ real wages.
d. larger; decrease
Most real-world choices aren't about getting all of one thing or another, instead, most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good.
d. marginal analysis
When quantity demanded decreases in response to a change in price: a. the demand curve shifts to the right. b. the demand curve shifts to the left. c. there is a movement down along the demand curve. d. there is a movement up along the demand curve.
d. there is a movement up along the demand curve.
