Exam one

Which of the following is an expenditure included in the aggregate expenditure approach to calculating real GDP?

Exports

If the nominal exchange rate between the American dollar and the Canadian dollar is 0.95 Canadian dollars per American dollar, how many American dollars are required to buy a product that costs 5.50 in Canadian dollars?

$5.79

Suppose an economy produced two goods, automobiles and trains. In 2019, the economy produced 200 automobiles and 25 trains. In 2019, the price of an automobile was $15,000 and the price of a train was $200,000. In 2020, the economy produced 225 automobiles and 28 trains. In 2020, the price of an automobile in 2020 was $18,000 and the price of a train was $205,000. Using 2019 as a base year, what was the real GDP in 2020?

$8,975,000

Suppose an economy produced two goods, automobiles and trains. In 2019, the economy produced 100 automobiles and 28 trains. In 2019, the price of an automobile was $8,000 and the price of a train was $300,000. In 2020, the economy produced 105 automobiles and 30 trains. In 2020, the price of an automobile in 2020 was $9,000 and the price of a train was $300,000. Using 2019 as a base year, what was the GDP Deflator in 2020?

101.07

You're traveling in Ireland and are thinking about buying a new digital camera. You've decided you'd be willing to pay $125 for a new camera, but cameras in Ireland are all priced in euros. If the exchange rate is 0.85 euros per dollar, what's the highest price in euros you'd be willing to pay for a camera?

106.25 euros

Suppose that a decrease in construction projects in the Euro area results in a decrease in demand in Europe for Chinese-produced steel. All else remaining equal, this should lead to which of the following?

A decrease in demand for Chinese Yuan.

Suppose legal barriers in the United States are reduced to allow more imports of electronic consumer goods produced in Japan. All else remaining equal, this should lead to which of the following?

An increase in supply of U.S. dollars

The law of increasing opportunity costs leads to what feature of the PPF graph?

Bowed-outward shape

Suppose there is a hurricane that destroys portions of Florida orange groves. Which of the following statements is not correct regarding the result in the market for Florida oranges:

Buyers would not be willing to buy as much as before at each relevant price.

Which of the following is a measure of the aggregate price level?

Consumer price index

Which of the following is a flow variable?

Government budget deficit

Which of the following would be the best measure of economic growth?

Growth of real GDP

A purchase of a new automobile by a financial services business for their employees to use to visit and serve clients is an example of what type of expenditure in the aggregate expenditure equation for GDP?

Investment

What would most likely happen to the equilibrium price and quantity in the market for a product if the price of an input used to produce the product decreased, the price of a substitute good (for consumers) increased, some suppliers decided to enter the market, and health officials announced that consuming the product lowers the risk of heart disease?

Quantity will increase and the effect on price is ambiguous (uncertain).

Suppose a consumer saves part of their income and puts it in a financial asset to earn interest. What macroeconomic variable does this represent?

Savings

What is the definition of a marginally attached worker?

Someone not currently looking for work, but would accept a job if offered one.

Which of the following people are not considered unemployed

Someone who was working, but chose to retire and left their job.

Suppose China reduces trade barriers that allow its citizens to import more products from Europe and with lower taxes / tariffs. As a result,

The Chinese Yuan will depreciate against the Euro.

Suppose there is a hot summer drought that leads to smaller harvest yields for agricultural products. Which of the following would happen to a PPF that included an agricultural product on each of its axes?

The PPF would shift inward.

Suppose improvements in broadband internet technology make businesses more productive, leading to more production than before. Which of the following happens to the production possibilities curve as a result?

The PPF would shift outward.

Currency traders expect the dollar to appreciate. What impact will this have on equilibrium in the foreign exchange market?

The dollar will appreciate, and the change in the equilibrium quantity of dollars exchanged cannot be determined.

Suppose an efficient economy moves rightward along the PPF. Which of the following statements is true?

The economy is producing more of one good and gave up some production of another good.

Suppose that the incomes of buyers in a particular market for a normal good decline and there is also a reduction in input prices for producers. What would we expect to occur in this market?

The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous (uncertain).

Which of the following would cause the supply curve of a product to shift to the right?

There is a decrease in the suppliers' costs.

Suppose there is a decrease in interest rates in Europe and Japan, but the decrease in interest rates is smaller in Japan. Which of the following would happen in the foreign exchange market between Euros and Japanese Yen as a result?

There will be an increase in demand for Japanese Yen and a decrease in demand for Euros

Labor (drivers) is an important input in the production of transportation services provided by Uber, Lyft, and similar services. If new government regulations were to increase the labor costs for Uber, Lyft, and others, the result would be

a decrease in the supply of such services.

If a shortage (excess demand) exists in a market we know that the existing price is

below equilibrium price and quantity demanded is greater than quantity supplied.

Two goods are substitutes if a decrease in the price of one good

decreases the demand for the other good.

The production possibilities frontier model shows that

if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good

When quantity demanded decreases at every possible price, we know that the demand curve has

shifted to the left.

The law of demand represents the

negative relationship between the price of a good and the quantity demanded of that good.

A technological advance in the production of a good or service will shift the

supply curve to the right.

Suppose Euro-area countries reduce trade barriers that allow its citizens to import more products from China and with lower taxes / tariffs. As a result,

the Chinese Yuan will appreciate against the Euro.

Suppose incomes rise in the United States, but do not change in Europe. As a result, Americans demand more products produced in the United States and in Europe. As a result,

the U.S. dollar will depreciate relative to the Euro

The attainable production points on a production possibility curve are

the points along and inside the production possibility frontier.

Without an increase in the supplies of factors of production, how can a nation achieve economic growth?

through technological advancement which enables more output with the same quantity of resources