Final Principles of Macroeconomics
The nominal interest rate equals the real interest rate ________ the inflation rate
plus
Long-run economic growth requires all of the following except
political instability.
Caroline is an artist. She purchases canvases, paints, brushes, and accessories for $75. She sellsone of her original paintings to an art gallery for $1,500, even though an art lover would pay$4,500 for that painting. How much market value does Caroline add?
$1,425
Emily is a writer, and uses her tablet computer to write a 500-page novel that she sells to a publishing company for $500,000. If the publisher prints 1 million copies that sell for $25 each,what is the contribution to GDP of Emily's novel?
$25 million
In 2020, Kendall Ford, an automobile dealership, spent $20,000 on a new car lift for its repairshop, $2,000 on a new copy machine for its sales division, and $600,000 on Ford Motor companystock. Unsold cars and trucks were valued at $400,000 on January 1, 2020 and unsold cars andtrucks were valued at $900,000 on December 31, 2020. What is Kendall Ford's total investment spending in 2020?
$522,000
Based on the information above, what is the level of private saving in the economy?
3 trillion
If real GDP per capita doubles between 2007 and 2022, what is the average annual growth rate ofreal GDP per capita?
4.7%
A country in which a significant fraction of domestic production takes place in foreign-owned factories and facilities is most likely a country where
GDP is much larger than GNP.
Suppose Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry, andhave eight children. Bob stops working for Mary in order to care for the children. What will bethe effect on GDP?
GDP will decrease.
An unemployment insurance program has which of the following effects?
It increases the amount of time spent searching for a job.
Apple assembles most iPhones in China because the lower wages earned by Chinese workers and their experience in electronics manufacturing reduce the costs of assembling iPhones. This is an example of Apple reacting to which of the three key economic ideas?
People respond to economic incentives.
There is a government budget surplus if
T - TR > G.
If the CPI rises from 206.7 to 212.7 between two consecutive years, by how much has the cost ofliving changed between these two years?
The cost of living has increased by 2.9%.
Suppose a negative technological change in the production of disease-resistant wheat caused the price of wheatto rise. Holding everything else constant, how would this affect the market for corn (a substitute for wheat)?
The demand for corn would increase and the equilibrium price of corn would increase.
Which of the following could cause nominal GDP to increase next year, but real GDP todecrease?
The price level rises and the quantity of final goods and services produced falls.
Which of the following is a macroeconomic question?
What determines the growth rate of gross domestic product?
The three fundamental questions that any economy must address are:
What goods and services to produce; how will these goods and services be produced; and who receives them?
Which of the following will shift the demand curve for a good?
a decrease in the price of a complementary good
In 2004, hurricanes damaged a large portion of Florida's orange crop. As a result of this, many orange growers were not able to supply fruit to the market. If, following the hurricane, the price remained at its pre-hurricane level, we would expect to see
a shortage of oranges.
The nominal GDP of the U.S. in 2019 was approximately $21.7 trillion. This means that
all of the above are true.
Assume that potatoes are an inferior good. Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes to decrease?
an increase in consumer income
An increase in the demand for loanable funds will occur if there is
an increase in expected profits from firm investment projects.
When actual inflation is less than expected inflation
borrowers lose and lenders gain.
The period of expansion ends with a ________ and the period of recession ends with a ________.
business cycle peak; business cycle trough
The decision about what goods and services will be produced in a market economy is made by
consumers and firms choosing which goods and services to buy or produce.
The law of demand implies, holding everything else constant, that as the price of gelato
decreases, the quantity of gelato demanded will increase.
Economists spend much of their time
describing how choices are made and analyzing the results of those choices.
Cutting costs at the beginning of a recession tends to make the most sense for a business that produces or provides
durable goods.
n the circular flow diagram, market K represents
factor markets.
The advice to "keep searching, there are plenty of jobs around here for which you are qualified,"would be most appropriate for which of the following types of unemployment?
frictional unemployment
Which of the following is a positive economic statement?
if the price of beef falls, a larger quantity of it will be bought.
Suppose that homemakers are included as employed in the labor force statistics, rather than being counted as out of the labor force. This would
increase the measured labor force participation rate.
Billie's Billiard Barn has seen its business slow down ever since Patti's Ping Pong Parlour opened up across thestreet. Since the opening of Patti's Ping Pong Parlour, the opportunity cost of shooting pool at Billie's BilliardBarn has ________ for Billie's customers who also like to play ping pong.
increased
As women's wages have risen relative to men's wages, the opportunity cost to women of doing housework has________ than has the opportunity cost to men.
increased more
What is the "omitted variable" problem in determining cause and effect?
it is a problem that arises when an economic variable that affects other variables is omitted from analysis and its omission leads to false conclusions about cause and effect.
Which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given working-age population?
labor force participation rate
If a straight line passes through the point x = 24 and y = 8 and also through the point x = 8 and y = 16, the slopeof this line is
negative one-half.
In a closed economy, which of the following components of GDP is not included?
net exports
The measure of production that values production using current prices is called
nominal GDP.
The broadest measure of the price level that includes all final goods and services is
the GDP deflator.
The term "property rights" refers to
the ability to exercise control over one's own resources within the confines of the law.
If cyclical unemployment is eliminated in the economy, then
the economy is considered to be at full employment.
The average price of goods and services in the economy is also known as
the price level.
One would speak of a change in the quantity of a good supplied, rather than a change in supply, if
the price of the good changes.
Suppose in 2020, you purchase a house built in 2014. Which of the following would be included in the gross domestic product for 2020?
the value of the services of the real estate agent
Typically, as an economy begins to emerge from a recessionary phase of the business cycle
unemployment continues to rise.
In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA
values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up.
A decrease in the equilibrium price for a product will result
when there is an increase in supply and a decrease in demand for the product.