Macro Exam 2

Suppose the United States eliminates high tariffs on German bicycles. As a result, we would expect

employment to decrease in the U.S. bicycle industry

Data from the registrar's office at Gigantic State University indicate that over the past 20 years tuition and enrollment have both increased. From this information we can conclude that

factors such as school-age population, incomes, and preferences for education have increased over the 20-year period

When a nation starts opening up to international trade, it will see falling prices for

goods that it imports

The production possibilities curve illustrates the basic principle that

if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.

A market is in equilibrium

if the amount producers want to sell is equal to the amount consumers want to buy

In the real world, specialization is rarely complete because

nations normally experience increasing opportunity costs in producing more of the product in which they are specializing

A tariff is a

tax

The industrial Revolution and modern economic growth resulted in

the average human lifespan more than doubling

Which of the following is not a determinant of demand for laptop computers?

the cost of inputs for producing laptop computers

Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good (from the buyer's perspective) will

increase equilibrium price and quantity

Which of the following arguments for trade protection contends that new domestic industries need support to establish themselves and survive?

the infant industry argument

A production possibilites curve shows

the maximum amounts of two goods that can be produced, assuming the full use of available resources

The fact that the slope of the production possibilities curve becomes steeper as we move down along the curve indicates that

the principle of increasing opportunity costs is relevant

In a two-nation world, comparative advantage in the production of a particular product means that one nation can produce

the product at a lower domestic opportunity cost than the other nation.

Human Capital refers to

the skills and knowledge that enable a worker to be productive

At the equilibrium price,

there are no pressures on price to either rise or fall

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that

wage rates and labor productivity are directly related

Real per capita GDP

was much more equal across nations in 1820 than it is today

Before the Industrial Revolution, living standards in the world

were relatively stagnant for long periods of time

A headline reads, "Lumber Prices Up Sharply." In a competitive market, this situation would lead to a(n)

increase in the price of new homes and decrease in quantity

Which of the following is a measure of economic growth that is most useful for comparing living standards?

increases in real GDP per capita

When tariffs on imported products are removed by a nation, it will result in

lower prices and higher quantities consumed in that nation

Which of the following institutional structures is most likely to promote growth?

a well-enforced system of patents and copyrights

Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity?

an increase in supply

Which of the following is a likely result of imposing tariffs to increase domestic employment?

an increase in the possibility of retaliatory tariffs

Economic growth can be portrayed as

an outward shift of the production possibilities curve

Which of the following does not correctly characterize modern economic growth?

It has not affected the average lifespan of human beings

In order for mutually beneficial trade to occur between two otherwise isolated nations

each nation must be able to produce at least one good relatively cheaper than the other

Differences in production efficiencies among nations in producing a particular good result from

All of these; different levels of technological knowledge, different endowments of fertile soil, different amounts of skilled labor.

When a fruit or vegetable (such as strawberries or lentils) is in season, the demand for it will increase as it becomes cheaper.

False

Toothpaste and toothbrushes are substitute goods

False

Which of the following statements is true about the alleged benefits and adverse effects of trade barriers?

The alleged benefits like "saved jobs" are limited to a narrow sector of the economy and clearly seen by the general public, while the adverse effects tend to be obscure and dispersed.

Research studies indicate that

U.S. consumers lose more from tariffs than U.S. producers gain

Countries engaged in international trade specialize in production based on

comparative advantage

The principle concept behind comparative advantage is that a nation should

concentrate production on those products for which it has the lowest domestic opportunity cost

A news story states that "DVDs lose their appeal as consumers switch to online streaming for movies." In a competitive market for DVDs, this situation would lead to a(n)

decrease in the price and the quantity sold of DVDs

(Consider This) Suppose that coffee growers sell 200 million pounds of coffee beans at $2 per pound in 2015 and 240 million pounds for $3 per pound in 2016. Based on this information, we can conclude that the

demand for coffee beans has increased

Strong property rights are important for modern economic growth because

people are more likely to invest if they don't fear that others can take their returns on investment without compensation

All of the following would affect the position of the supply curve for cranberries, except the

popularity of cranberry drinks

If the supply of a product decreases and the demand for that product simultaneously increases, then equilibrium

price must rise, but equilibrium quantity may rise, fall, or remain unchanged.

A nation's infrastructure refers to

public capital goods such as highways and sanitation systems

A nation's production possibilities curve is bowed out from the origin because

resources are not generally equally efficient in producing every good

A production possibilites curve illustrates

scarcity

Economic historians identify which invention as a major factor that started the Industrial Revolution in Britain?

steam engine

(Consider This) Suppose that salsa manufacturers sell 2 million bottles at $3.50 in one year and 3 million bottles at $3 in the next year. Based on this information, we can conclude that the

supply of salsa has increased