Macro Econ Final
One reason the total sum of the income categories does not equal GDP is that A) GDP values goods and services at market prices and the income approach values them at factor cost. B) GDP values goods and services at retail prices and the income approach values them at wholesale cost C) taxes are generally larger than subsidies and the depreciation of capital is negligible D) GDP does not include depreciation, which is part of the income categories E) people do not spend all their income, so the value of consumption expenditure is less than the value of wages.
GDP values goods and services at market prices and the income approach values them at factor cost.
Which of the following transactions take place in factor markets? A) Henry receives a commission from his employer for selling a new automobile B) Jakes purchases 1000 shares of stock in the Wal-Mart Corporation through his online trading account C) Sam enters the winning bid on a grand piano at a local auction D) Justin receives $30 in exchange for mowing his neighbor's lawn E) Lucille receives a $500 check from the U.S. Social Security Administration
Henry receives a commission from his employer for selling a new automobile
Going skiing will cost Adam $80 a day. He also loses $40 per day in wages because he has to take time off from work. Adam still decides to go skiing A) His decision is rational if Adam's marginal benefit of spending a day skiing is greater than his marginal cost. B) The $80 price of skiing is not an opportunity cost and so did not affect Adam's decision. C) He loses a total of $120 per day, so his decision is irrational D) Adam's lost $40 per day in wages is not an opportunity cost and so did not affect his decision E) Adam is making a decision that is in the social interest.
His decision is rational if Adam's marginal benefit of spending a day skiing is greater than his marginal cost
Terri is enrolled in her first economics course. She is requires to give a presentation about the circular flow. Which of the following statements should she include in her presentation? A) Households choose the amount of the factors of production to provide the firms. B) Firms choose the amount of the factors of production to provide households. C) Households receive wages for the amount of entrepreneurship they provide firms D) Firms pay wages for the amount of entrepreneurship they provide households E) The flows of goods and services and payments for the goods and services flow in the same direction
Households choose the amount of the factors of production to provide the firms.
The base year is 2012. A country only produces Blu-ray players. The price of a Blu-ray player in 2012 was $100. The price of a Blu-ray player was $90 in 2013. The quantity of Blu-ray players produced in 2012 was 10,000 units and in 2013 was 10,500 units. Real GDP in 2012 equals A) $900,000 B) $945,000 C) $1,000,000 D) $1,050,000 E) an amount that cannot be determined without information amount real GDP in 2007
$1,000,000
During last year a country produced 20,000 pizzas and 10,000 hamburgers and nothing else. The pizzas sold for $10.00 each and the hamburgers for $3.00 each. Nominal GDP was A) $230,000 B) $70,000 C) $460,000 D) $390,000 E) $360,000
$230,000
Suppose that business firms spend $500 million on new capital equipment this year. Of this $500 million, $300 million was spent on domestically produced capital and $200 million was spend on foreign- produced capital. All else equal, these transactions contribute _________ to GDP A) $0 B) $200 million C) $300 million D) $500 million E) $800 million
$300 million
Which of the following is a positive statement? A) An increase in college tuition is not fair to students B) A recession leads to higher enrollments at universities C) University bookstore prices are too high D) Parking tickets on campus impose an excessive fee. E) The school needs more parking for students
A recession leads to higher enrollments at universities
Which of the following would be included in Germany's GNP? A) the production of BMW's (made by a German-based company) in South Carolina B) The production of Michelin tires made in Germany by a French company and then sold directly to French consumers C) the production of BMW's in Germany D) the production of Michelin tires made in France by a French company and then sold to BMW in Germany for use in BMW cars E) Answers A and C are correct
Answers A and C are correct
Production by Honda, a Japanese firm, in the United States is included in ________ GDP and production by Nike Corporation, a U.S. firm, in Vietnam is included in _______ GDP. A) Japanese; U.S. B) U.S.; Vietnamese C) U.S.; U.S. D) Japanese; Vietnamese E) U.S AND Japanese; U.S. AND Vietnamese
U.S.; Vietnamese
An item that is purchased to increase businesses' productive resources is A) an export B) a government good C) a capital good D) a consumption good E) a productive good
a capital good
Which of the following shift the supply curve of rutabagas (a rutabaga is a potato-like vegetable) A) an increase in the price of rutabagas B) an exceptionally cold summer that killed much of the rutabaga crop C) a fall in the price of fertilizer used to grow rutabagas D) Both answers A and C shift the supply curve of rutabagas rightward E) Both answers A and B shift the supply curve of rutabagas rightward
a fall in the price of fertilizer used to grow rutabagas
Which of the following is a consumption good or service? A) a personal computer purchased in order to play games at home B) a United Airline ticket counter C) the Endeavor space shuttle D) A united Parcel Service truck delivering Christmas gifts E) a satellite dish installed by Cox Cable to download programs that are then distributed through its cable system
a personal computer purchased in order to play games at home
If the economy is in equilibrium with real GDP less than potential GDP, there is ____________ gap, and a fiscal policy that __________ is appropriate. A) an inflationary; increases aggregate demand B) an inflationary; decreases aggregate demand C) a recessionary; increases aggregate demand D) a recessionary; decreases aggregate demand E) a recessionary; increases potential GDP
a recessionary; increases aggregate demand
When the government imposes a price ceiling on a product below the equilibrium price, the government creates A) a shortage B) a surplus C) equilibrium in the market D) a shortage only if the quantity demanded is less than the quantity supplied E) a surplus if the quantity supplies is less than the quantity demanded
a shortage
Undistributed profits ________ counted as part of GDP because __________ A) are not; household are not paid by the firms B) are; they can be used to buy other goods C) are; they are considered income paid to households and loaned back to firms D) are not; they are considered an intermediate good E) are; firms are required to pay corporate income taxes
are; they are considered income paid to households and loaned back to firms
(Exam 1, Q6) The figure above shows the production possibilities frontier for a country. A combination of 2 million gallons of milk and 2 million gallons of ice cream A) unattainable B) attainable and production efficient C) attainable and production inefficient D) unattainable and production efficient E) More information is needed to determine if the point is attainable or not
attainable and production inefficient
A point on the production possibilities frontier reflects an A) attainable point with full employment of all resources B) attainable point without full employment of all resources C) unattainable point with full employment of all resources D) unattainable point without full employment of all resources E) None of the above answers are correct
attainable point with full employment of all resources
If the marginal benefit of getting a college degree rises, rational people will A) attend college in greater numbers. B) drop out of college. C) not change their behavior. D) require that college get easier. E) raise the marginal cost of attending college.
attend college in greater numbers.
Which of the following statements are correct i The Federal Reserve's monetary policy must be approved by the President of the United States. ii The federal Reserve Board of Directors meets approximately every six months to review the state of the economy and determine monetary policy iii The Federal Reserve has determined it will use the monetary base as its policy instrument A) i an ii B) ii only C) i only D) iii only E) None of the above answers is correct
None of the above answers is correct
In stores, it is common to find seasonal products marked down when the season ends. What explains this behavior? A) The law of demand is being used to increase the quantity demanded B) The store is trying to increase it customers' demand for the product C) The store manager must be trying to drive away customers by selling low quality products D) The store is trying to increase its customers' income by increasing their purchasing power. E) The store is trying to sell the goods and realizes that they are substitutes for other good whose prices have risen
The law of demand is being used to increase the quantity demanded
Milk can be used to produce cheese or butter. If the price of a pound of butter rises, what happens to the supply of cheese? A) The supply of cheese increases B) The supply of cheese decreases C) The supply of cheese stays the same and there is no change in the quantity supplied of cheese D) The supply of cheese stays the same and there is a decrease in the quantity supplied of cheese E) The supply of cheese could increase, decrease, or stay the same depending on what happens to the supply of butter
The supply of cheese decreases
if the real GDP exceed potential GDP, to move the economy to potential GDP the fed A) raises the federal finds rate to increase potential GDP but not real GDP B) lowers the federal funds rate to decrease real GDP but not potential GDP C) raises the federal funds rate to decrease real GDP but not potential GDP D) lowers the federal funds rate to increase potential GDP and potential GDP E) raises the federal finds rate to decrease both real GDP and potential GDP
raises the federal funds rate to decrease real GDP but not potential GDP
Suppose the economy is in an equilibrium in which real GDP is less than potential GDP. To increase real GDP, the government can use a fiscal stimulus of A) increasing taxes only B) decreasing government expenditures only C) decreasing taxes and/or increasing government expenditure D) decreasing government expenditure and simultaneously increasing taxes E) increasing the quantity of money
decreasing taxes and/or increasing government expenditure
The government collects tax revenues of $100 million and has $105 million outlays. The budget balance is a A) surplus of $5 million B) deficit of $5 million C) surplus of $105 million D) deficit of $105 million E) surplus of $100 million and a deficit of $105 million
deficit of $5 million
Suppose a 23-year old graduate student is looking for a full-time job but has to take a part-time job instead. He or she will be categorized in the Current Population Survey as ___________ when calculating unemployment rate A) unemployed B) employed C) not i the labor force D) a discouraged worker E) underemployed
employed
Goods produced in the United States and sold in other countries are called A) exports B) imports C)foreign goods D) capital goods E) capital account goods
exports
When the governments expenditures exceed it tax revenues, the budget A) has a deficit and the national debt is increasing B) is balanced and the national debt is increasing C) has a surplus and the national debt is increasing D) has a deficit and the national debt is decreasing E) None of the above because by law the governments expenditures cannot exceed its tax
has a deficit and the national debt is increasing
Which of the following statements is true about a competitive market? A competitive market A) must have a physical location B) includes markets for goods and services but not for inputs C) has so many buyers and sellers that no one can influence the price D) has one seller competing to sell his or her product E) has a handful of sellers but always has many buyers
has so many buyers and sellers that no one can influence the price
Constructing the CPI involves which of the following stages? i conducting the monthly price survey ii converting the CPI to an international index iii selecting CPI market basket A) i only B) ii only C) iii only D) i an iii E) i, ii, and iii
i an iii
Which of the following is directly included in the U.S GDP for 2013 i a 2013 Cadillac Escalade produced and sold as a new car in the United States in 2031 ii tires produced in the United States, purchases by General Motors, and installed on a new Cadillac Escalade sold in 2013 iii General Motors cars produced in Canada because General Motors is an American corporation A) i only B) ii only C) i and ii D) ii and iii E) i, ii, and iii
i only
Economic growth depends upon which of the following ? i. Improving the quality of labor ii. Technological advancement iii. Increasing the amount of capital A) i only B) ii only C) iii only D) i and iii E) i, ii, and iii
i, ii, and iii
Transfer payments include i social security benefits ii medicare and medicaid benefits iii unemployment benefits A) i only B) ii only C) iii only D) i, ii, and iii E) i and iii only
i, ii, and iii
When measuring GDP by the income approach, wage income includes i health-care insurance paid for by the firm for its employees ii Social Security contributions made by the firm iii wages paid during a workers vacation A) i, ii, and iii B) i and ii only C) i only D) ii only E) ii and iii only
i, ii, and iii
A minimum wage leads to greater unemployment A) always B) if the minimum wage os greater than the equilibrium wage C) if the minimum wage is less than the equilibrium wage D) if the minimum wage is below the poverty level E) only if is functions as a price cap.
if the minimum wage os greater than the equilibrium wage
An export good is a good produced A) in the United stated and sold to foreigners living in the United States B) by foreigners in the United States and purchased by U.S. households C) in another country and purchased by U.S. residents D) in the United States and sold in other countries E) in another country and purchased by foreigners not residing in the United States.
in the United States and sold in other countries
The category of "rent: in the income approach to GDP A) includes the money paid to rent apartments only B) includes the money paid to rent machinery only C) includes the money paid to use land and other rented inputs D) does not have any connection to owner-occupied housing E) includes only the imputed rent for owner-occupied housing
includes the money paid to use land and other rented inputs
(Exam 3, Q20) An economy is at a short-run equilibrium as illustrated in the above figure. An appropriate FISCAL policy option to move the economy to full employment is to A) increase government expenditure and move the economy to a full-employment equilibrium at point a B) increase tax rates and move the economy to a full-employment equilibrium at point c C) increase government expenditure and move the economy to a full-employment equilibrium at point b D) increase tax rates and move the economy to a full-employment equilibrium at point b E) lower the interest rate by increasing the quantity of money and move the economy to a full-employment equilibrium at point b
increase government expenditure and move the economy to a full-employment equilibrium at point b
To eliminate a recessionary gap, the government can _________ government expenditures on good and services or __________ taxes A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease E) increase; not change
increase; decrease
During 2009, General Motors announced that it would close its Saturn facilities in the United States because of the foreign competition it faced. This corporate move A) increased structural unemployment B) increased avoidable unemployment C) increased cyclical unemployment D) had no impact on unemployment E) decreased frictional unemployment
increased structural unemployment
Scarcity A) is the inability to satisfy all our wants B) leads to higher prices C) applies only to people living in poverty D) is not something that affects very rich people E) used to exist everywhere but has been eliminated in advanced economies
is the inability to satisfy all our wants
As an economy grows, A) its PPF shifts outward. B) it can eliminate scarcity. C) the opportunity cost of production will approach 0. D) the opportunity cost of production will increase. E) its PPF does not shift; instead, the production point moves from inside the PPF to be closer to the PPF.
its PPF shifts outward.
The main goals of monetary policy include all of the following EXCEPT A) keeping the long-term nominal interest rate equal to the real interest rate plus the inflation rate B) keeping the inflation rate low C) keeping the unemployment rate close to the natural unemployment rate D) attaining the maximum sustainable growth of potential GDP E) keeping the long-term interest rate at a modern level
keeping the long-term nominal interest rate equal to the real interest rate plus the inflation rate
The Federal Reserve monetary policy goals of maximum employment means A) a zero percent unemployment rate B) a zero percent natural unemployment rate C) aiming for an amount of employment that exceeds full employment D) keeping the unemployment rate close to the natural unemployment rate E) cyclical unemployment should not necessarily be minimized
keeping the unemployment rate close to the natural unemployment rate
In the United States, the productive factor that, as a group, receives the largest fraction of the nation's total income is A) labor B) capital C) consumption goods and services D) entrepreneurship E) land
labor
To compare the price of a loaf of bread produced in 1993 with the price of a loaf produced in this year, you should compare the value of the bread in A) real prices B) nominal prices C) real quantity D) nominal quantity E) CPI quantity
real prices
Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result, the equilibrium price , and the equilibrium quantity . A) rises; increases B) rises; does not change C) falls; does not change D) falls; decreases E) falls; increases
rises; increases
If a market begins in equilibrium and then the demand curve shifts leftward, a A) shortage is created, which is eliminated by a fall in price B) a shortage is created, which is eliminated by a rise in price C) surplus is created, which is eliminated by a fall in price D) surplus is created, which is eliminated by a rise in price E) surplus is created, which is eliminated by the supply curve shifting leftward.
surplus is created, which is eliminated by a fall in price
If the federal government has a budget surplus, then it is definitely the case that A) tax revenues exceed government outlays B) tax revenues and government outlays are equal C) tax revenues are falling and government outlays are rising D) government outlays exceed tax revenues E) tax revenues are rising and government outlays are falling
tax revenues exceed government outlays
Control of monetary policy rests with A) Congress B) the President C) the Federal Reserve D) the Comptroller of the Currency E) the U.S. Treasury
the Federal Reserve
The personal distribution of income measures which of the following? A) how federal tax revenues are related to the type of businesses that employs the taxpayers B) the distribution of earnings by the factors of production C) proportion of income generates by the four types of expenditures on goods and services D) the distribution of income among households E) the distribution of income among nations
the distribution of income among households
Congress and the President passes a national health care policy. This is an example of A) the government using economic tools to make policy decisions B) answering the "how" question C) increasing the marginal cost of health care D) increasing the marginal benefit of health care E) normative versus positive economics
the government using economic tools to make policy decisions
When the FOMC raises the federal funds rate, almost immediately _________, and a few weeks later the _________. A) short-term interest rates rise; quantity of money and supply of loanable funds decrease B) long-term interest rates rise; quantity of money and supply of loanable funds decrease C) short-term interest rates fall; quantity of money and supply of loanable funds decrease D) long-term interest rates rise; quantity of money and supply of loanable funds increase E) short-term interest rates fall; quantity of money and supply of loanable funds increase
short-term interest rates rise; quantity of money and supply of loanable funds decrease
Because of a sharp increase in the price of gasoline, the demand for Sports Utility vehicles (SUVs) has decreased. So, the high price of gasoline leads to a A) leftward shift of the demand curve for SUVs AND the supply curve of SUVs B) leftward shift of the demand curve for the SUVs and no shift in the supply curve of SUVs C) leftward shift of the demand curve for SUVs and a rightward shift of the supply curve of SUVs D) leftward shift of the supply curve of SUVs and no shift in the demand curve for SUVs E) rightward shift of the supply curve of SUVs and no shift in the demand curve for SUVs
leftward shift of the demand curve for the SUVs and no shift in the supply curve of SUVs
If a decision is made and it is the best choice for society, the decision is said to be A) a valid economic choice B) made in self-interest C) made in social interest D) consistent with scarcity E) a want-maximizing choice
made in social interest
The production possibilities frontier illustrates the A) maximum combinations of goods and services that can be produced B) resources the economy possess, but not its level of technology. C) goods and services that people want D) limits to people's wants E) amount of each good that people want to buy
maximum combinations of goods and services that can be produced
Consider a production possibility frontier with jeans on the vertical axis and shoes on the horizontal axis. As the country moves along the frontier closer to the horizontal axis, A) more jeans are produced B) the country eventually chooses an unattainable point C) free lunches occur D) more tradeoffs occur E) more shoes are produced
more shoes are produced
The United Auto Workers bargained for higher wages and more benefits for autoworkers. As a result of the higher wages and increased benefits, i. the quantity of new automobiles supplies decreases ii. the supply of new automobiles decreases iii. the supply of new automobiles increases. A) only i B) only ii C) only iii D) both i and ii E) Neither i, ii, nor iii is correct
only ii
The value of the best thing that a person must give up when making a decision is known as the___________ cost A) direct B) benefit C) opportunity D) explicit E) sunk
opportunity
Real GDP measures the value of goods and services produced in a given year valued using A) base year prices B) prices that prevail the same year C) no prices D) future prices E) real rather than nominal prices
base year prices
Gross Domestic Product is equal to the market value of all the final goods and services __________ in a given period of time A) produced within a country B) consumed within a country C) consumed by the citizens of a country D) produced by the citizens of a country E) produced and consumed within a country
produced within a country
Items that are purchased by individuals for their own enjoyment are called A) consumption goods and services B) capital goods C) government goods and services D) exports of goods and services E) private goods
consumption goods and services
Which type of unemployment arises when changed in technology or international competition change the skills needed to perform jobs or change the location of jobs? A) cyclical B) fluctuating C) structural D) frictional E) skill-set
structural
The "law of demand" refers to the fact that, other things remaining the same, when the price of a good rises, A) the demand cure shifts rightward B) the demand curve shifts leftward C) there is a movement down along the demand curve to a larger quantity demanded. D) there is a movement up along the demand curve to a smaller quantity demanded E) the demand curve shifts rightward and there is a movement up along the demand curve to a smaller quantity demanded.
there is a movement up along the demand curve to a smaller quantity demanded
(Exam 2, Q6) The above figure shows the market for game say t-shirts. If the price of t-shirts is $8, then A) there is a shortage and the price of t-shirts will rise B) there is a surplus and the price of t-shirts will rise C) the market is in equilibrium D) there is a shortage and the price of t-shirts will fall E) there is a surplus and the price of t-shirts will fall
there is a shortage and the price of t-shirts will rise
Which of the following is true? A) to be classified as employed, you must be a full-time worker at a paid job B) to be classified as employed, you must work at least 20 hours per week at a paid job C) Part-time workers are all those who work less than 40 hours per week D) to be classified as employed, you must work at least 1 hour per week at a paid job or 15 hours or more asa an unpaid worker in you family business E) if you are not working and turn down a job offer in the previous week, you are no longer classified as unemployed
to be classified as employed, you must work at least 1 hour per week at a paid job or 15 hours or more asa an unpaid worker in you family business
(Exam 1, Q5) The figure above shows the production possibilities frontier for a country. A combination of 4 million gallons of milk and 4 million gallons of ice cream is A) unattainable B) attainable and production efficient C) attainable and production inefficient D) unattainable and production efficient E) More information is needed to determine if the point is attainable or not
unattainable
When Ford decides to increase production of hybrid cars, it directly answers A) what B) how C) for whom D) where E) why
what
Proponents of cuts in income tax rates argue that when income tax rates are cut, workers have an incentive to increase their work hours. This argument is based on the assumption that A) workers are irrational B) workers make decisions based on the marginal benefit of each hour worked compared to the marginal cost of work. C) the opportunity cost of work is negative D) the marginal cost of each additional work hour is not important to most workers E) workers make decisions based on the social interest
workers make decisions based on the marginal benefit of each hour worked compared to the marginal cost of work.
In a small, agricultural nation, consumers buy only steak and potatoes. In 2009, the base year, the typical consumer spent $5 on potatoes and $100 on steak. The price of potatoes is $1, and the price of steak is $2 in 2009. In 2009, the price of potatoes is $2 and the price of steak is $1. The CPI for 2010 is A) 80 B) 125 C) 100 D) 120 E) 25 percent
100
(Exam 3, Q13) Using the table above, the unemployment rate is A) 11.2 percent B) 6.3 percent C) 4.2 percent D) 10 percent E) 5.8 percent
4.2 percent
(Exam 3, Q14) Using the table above, the labor participation rate is A) 67 percent B) 48 percent C) 75 percent D) 83 percent E) 40 percent
75 percent