Econ Mid-Term

If supply increases and at the same time demand decreases, equilibrium price:

decreases and equilibrium quantity is indeterminate.

A point to the right of the production possibilities frontier is:

unattainable.

Production levels to the left of the PPF are:

attainable but inefficient.

An economic recovery that produces too few jobs to significantly reduce the unemployment rate is known as a(n):

jobless recovery.

The following action will NOT shift a PPF curve outward

shifting preferences of consumers to cheaper products.

If a product becomes obsolete and the workers who produced that product will need additional training to find new jobs, then they are experiencing:

structural unemployment.

When economists refer to a "market demand" curve, we know that it represents:

the horizontal summation of individual demand curves.

If bagels and doughnuts are substitute goods, then which of the following is likely to occur if the price of bagels is reduced?

The demand curve for doughnuts will shift to the left.

Which of the following is NOT correct about markets?

They require a physical location for transactions to take place.

Alternating periods of macroeconomic expansion and contraction are known as

business cycles.

If a pizza parlor uses an oven in its production process, the oven is an example of which factor of production?

capital

If a nation selects a product mix focused on ___________ goods, the production possibilities frontier will expand at a greater rate than if the nation produced mostly ___________ goods.

capital; consumption

Suppose a loaf of bread goes through the following stages of production, with the values noted at the end of each stage: Stage Value 1. Farmer's wheat $0.65 2. Miller's flour $1.20 3. Baker's bread $1.80 4. Grocer's bread $2.65 The sale of the loaf of bread adds _______ to GDP.

$2.65

Jill has an escalator clause in her labor contract that gives her a raise commensurate with the consumer price index (CPI). Last year she earned $40,000 and the CPI was 100. If the CPI this year is 110, her new salary is:

$44,000.

If nominal GDP in 2014 is $20,000 billion while real GDP is $16,000 billion, then the GDP deflator in 2014 is:

125

If the Surgeon General announced that wearing baseball caps will eliminate dandruff, then, ceteris paribus, the: Question 19 options:

equilibrium price of baseball caps would increase.

Inflation is a:

general rise in prices.

Which of the following items is NOT included in the GDP deflator?

imported mangoes

GDP includes outputs produced _____ but it does not include outputs produced _____.

inside the United States by foreign citizens; outside the United States by U.S. citizens

If the demand for iPhones rises as incomes increase, then the iPhone is a(n):

normal good.

_____ unemployment includes workers who voluntarily quit their jobs to search for better positions.

Frictional

Which ONE of the following transactions would be included in the national income and product accounts?

Jaslyn is paid for her work as the volunteer coordinator for a women's shelter.

The high point of a business cycle is called the:

Peak

_____ is an index of the average prices for all goods and services in the economy, the broadest measure of inflation.

The GDP deflator

The largest component of GDP is: Question options:

consumption expenditure.

Ceteris paribus, a decrease in the number of businesses selling pizza will cause a(n):

increase in the equilibrium price of pizza.

The ________ shows the combination of two goods that are possible for a society to produce at full employment.

production possibilities frontier

Which phase of the business cycle occurs immediately before a trough?

recession

There are 15 million people living in Marketstan, of whom 9 million are working and 1 million are actively looking for work. What is Marketstan's unemployment rate?

10%

Suppose the market basket of goods and services cost $3,500 in 1996 but today costs $4,250. Using 1996 as the base year, the consumer price index for today is:

121.4.

Suppose the Bureau of Labor Statistics collects the data presented in the following table: Year Cost of Basket 2010 $200 2011 $230 2012 $250 If 2010 is the base year, then the consumer price index for 2012 is: Question options:

125

An economy has a population of 226,500. Of them, 12,500 are unemployed and actively seeking work, and 35,000 have given up looking for a job. Also, 28,000 people work part-time, and 151,000 people work full-time. This economy's unemployment rate is _______. (Round the percentage to one decimal place; for example, 0.0436 is 4.4%.)

6.5%

When an economy is producing the mix of goods and service MOST desired by society, that economy is considered to be:

Allocative efficiency

The demand for gasoline is rising. Which of the following statements describes a possible cause?

Consumers expect prices to rise in the near future.

_____ is a measure of the change in average prices paid by urban consumers for a typical market basket of goods and services.

The consumer price index

List the THREE basic economic questions which every society must answer

What goods and services should be produced? How should these goods and services be produced? Who consumes these goods and services?

A criticism of the National Bureau of Economic Research's business cycle dating committee is that it:

dates peaks and troughs only after the fact.

Which of the following values is an example of a nonmarket transaction NOT included in the national income and product accounts?

mowing your own lawn

The sum of all income, including wages, salaries and benefits, profits, rental income, and interest, is called:

national income.

GDP can be found either by adding up all of the __________ or all of the __________ in the economy. Question options:

spending; income

Wheat is the main input in the production of flour. If the price of wheat increases, all else equal, we would expect the:

supply of flour to decrease.

A point on a nation's production possibilities frontier indicates:

that resources are fully utilized in producing a given combination of goods and services.

Which of the following would be MOST likely to cause the production possibilities frontier to shift to the left?

a decrease in the size of the labor force

What is considered a labor resource?

an apprentice

What is an example of a final good?

bacon purchased at a grocery store

Entrepreneurs

combine land, labor, and capital to produce goods and services and assume the risks associated with running businesses.

In using the income approach to GDP, the largest category is:

compensation of employees.

The unemployment rate is defined as the ________ divided by the ________.

number unemployed; number in the labor force

If the number of tomato growers in the market increases, the supply:

of tomatoes increases.

A production possibilities frontier will have a curved or "bowed out" shape if:

opportunity costs are increasing.

A production possibilities frontier with constant opportunity cost is considered:

Striaght-Line

When quantity demanded in a market equals quantity supplied, then the:

market is in equilibrium.

According to the table, when using the expenditure approach, GDP is: Category Billions Proprietors' income $300 Capital consumption allowance 440 Federal government purchases of goods and services 200 Compensation of employees 800 Personal consumption expenditures 950 Corporate profits 90 Exports 60 Gross private domestic investment 500 Rental income 30 State and local government purchases of goods and services 150 Net interest 100 Federal government deficit 250 Imports 90

1,770 billion

If personal consumption is $100, investment is $25, government purchases total $25, imports equal $20, and exports equal $10, then GDP equals: Question 10 options:

140 GDP = C + G + I + (NX)

Last year the consumer price index (CPI) was 115 and this year's CPI is 125. The rate of inflation is:

8.7%.

_____ is an overall decline in prices throughout the economy.

Deflation

The event that stimulated the U.S. government's commitment to tracking the economy's health through a national income accounting system was the:

Great Depression.

Natural resources such as copper deposits are:

Land

Institutions that bring buyers and sellers together so they can interact and transact with each other are called:

Markets

A ________ occurs when price is above market equilibrium.

Surplus

Land as productive resource include.

Water, Mineral Deposits, and oil

A country's GDP is inside the frontier of the production possibility frontier. This could happen because of:

a recession

In economics, the term "capital" refers to

actual manufactured products used in the production process.

Which of the following will NOT cause the supply curve for kayaks to shift to the left?

an decrease in the price of a kayak

Which of the following MOST likely to cause the production possibilities frontier to shift to the right?

an increase in technology

Workers who want to work but have been frustrated by the inability to find work and have stopped searching are known as: Question options:

discouraged workers

Everything else the same, if investment expenditures rise by $300 billion and imports increase by $300 billion, then GDP:

does not change.

Capital includes all of the following, EXCEPT:

dollar bills in a bank vault.

Lexie works Monday to Friday from 4 P.M. to 6 P.M. in the after-school program at a local elementary school. She began looking for a full-time job last week and has already scheduled three job interviews. According to the Bureau of Labor Statistics, Lexie is:

employed

Suppose that an artist prices his painting at $150, but it remains unsold. We can conclude that the price of $150 is too:

high for this painting and it should be lowered.

Willingness-to-pay is the:

highest value that a consumer believes a good or service is worth.

Which of the following groups benefits from an unanticipated rise in the inflation rate?

homeowners with fixed-rate mortgages

Jordan Meadows lost his job as an airline pilot and has not been able to find another job as a pilot. Since he is old enough to be eligible for his pension, he decides to retire and devote himself to caring for his elderly parents, According to the Bureau of Labor Statistics, Jordan is:

not in the labor force

Most economists believe that the consumer price index ______ the rate of inflation.

overstates

Which of the following items is NOT included in gross private domestic investment?

purchases of common stock

When production technology improves, supply increases and the equilibrium:

quantity rises, and the equilibrium price falls.

The law of supply states that as prices ____, the quantity _____.

rise; supplied rises

The maximum amount of a product that sellers are willing and able to provide for sale over some period at various prices, ceteris paribus, is called:

supply.

A benefit of using GDP per capita instead of GDP is that it:

takes into account the size of the population when measuring the value of the goods and services a country produces.

According to the law of demand, people buy more of a good when:

the price falls.