Macro Final

Cedar Valley Furniture uses 5 workers, each working 8 hours, to produce 80 rocking chairs. What is the productivity of these workers? 1 hour per chair 2 chairs per hour 80 chairs 10 chairs per hour

2 chairs per hour

In 1931, President Herbert Hoover was paid a salary of $75,000. Government statistics show a consumer price index of 15.2 for 1931 and 237 for 2015. President Hoover's 1931 salary was equivalent to a 2015 salary of about $1,002,694. $1,169,408. $1,247,368. $1,333,188.

$1,247,368

If in some year nominal GDP was $40 billion and the GDP deflator was 50, what was real GDP? $25 billion $4 billion $80 billion $200 billion

$80 billion

If the GDP deflator is 10.22 in 1930 and 9.16 in 1931 what is the inflation rate in 1931? -11.57 -10.37 9.16 1091.37

-10.37

If the real GDP is 977 in 1929 and 892.8 in 1930 what was the growth rate of real GDP for 1930? (2 decimal places)

-9.43%

The price index was 120 in Year 1 and 126 in Year 2. What was the inflation rate? 5.0 percent 6.0 percent 7.2 percent 105 percent

5.0 percent

If the nominal GDP is 76.5 and real GDP is 834.9 in 1931 what is the GDP deflator? 9.16 1091.37 11.5 10.3

9.16

Which of the following changes would not shift the demand curve for a good or service? A change in income. A change in the price of the good or service. A change in expectations about the future price of the good or service. A change in the price of a related good or service

A change in the price of the good or service

Which of the following changes would not shift the supply curve for a good or service? A change in production technology A change in the price of the good or service A change in expectations about the future price of the good or service A change in input prices

A change in the price of the good or service

Which of the following is an example of a capital input? A computer system A share of corporation stock An hour of a worker's time $50,000 loan

A computer system

The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to desirable market outcomes from whose 1776 book? David Ricardo Thorstein Veblen John Maynard Keynes Adam Smith

Adam Smith

Why is GDP per person a measure of standard of living but not a good measure of labor productivity? Because it does not take into account underground labor. Because it has the adult population in the denominator and does not include children. Because it includes production that is not useful to the population. Because it has the population in the denominator and not the number of workers or hours worked.

Because it has the population in the denominator and not the number of workers or hours worked

Which of the following is included in GDP? The market value of rental housing services, but not the market value of owner-occupied housing services The market value of owner-occupied housing services, but not the market value of rental housing services Both the market value of rental housing services and the market value of owner-occupied housing services Neither the market value of owner-occupied housing services nor the market value of rental housing services

Both the market value of rental housing services and the market value of owner-occupied housing services

Which of the following best represents that lessons learned from this section on what is Capitalism? Capitalism is a system in which prices change consumer tastes and cause shifts in demand curves which in turn cause shifts in supply curves, which alter prices even further until a new equilibrium is reached. Capitalism is a system in which large profit-seeking firms take advantage small less-informed consumers in a way such that prices are higher than costs of production and societies scarce resources are used up to create profits that benefit the few at the expense of the many. Capitalism is a system in which changes in consumer tastes and production costs cause shifts in market supply and demand curves which alter prices and alter the allocation of society's resources in production. Capitalism is a system in which social changes are taken into account by the electorate that votes for representative political leaders, who create laws and institutions, so that the correct amount of production takes place in private free-markets and society's resources are allocated in an fair and equitable way.

Capitalism is a system in which changes in consumer tastes and production costs cause shifts in market supply and demand curves which alter prices and alter the allocation of society's resources in production

The production possibilities frontier provides an illustration of the principle that Trade can make everyone better off Governments can sometimes improve market outcomes Economies face trade-offs People respond to incentives

Economies face trade-offs

A society attempts to distribute the benefits of its resources to the members of the society in a fair manner; however, redistributing income from rich to poor reduces the reward for working hard, thereby diminishing the output from one of its most important resources. In other words the society faces a trade off between: Guns and butter Efficiency and equality Inflation and unemployment Work and leisure

Efficiency and equality

The distinction between efficiency and equality can be described as follows: Efficiency refers to maximizing the number of trades among buyers and sellers; equality refers to maximizing the gains from trade among buyers and sellers. Efficiency refers to minimizing the price paid by buyers; equality refers to maximizing the gains from trade among buyers and sellers. Efficiency refers to maximizing the size of the pie; equality refers to producing a pie of a given size at the least possible cost. Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society.

Efficiency refers to maximizing the size of the pie equality refers to distributing the pie fairly among members of society

Which of the following is true? Efficiency refers to the size of the economic pie; equality refers to how the pie is divided Government policies usually improve upon equality and efficiency As long as the economic pie continually gets larger, no one will have to go hungry Efficiency and equality can both be achieved if the economic pie is cut into equal pieces

Efficiency refers to the size of the economic pie; equality refers to how the pie is divided

What is a society said to be when it is getting the most that it can out of its scarce resources? Equitable Efficient Normal Marginal

Efficient

Lily does not currently have a job, but she has applied for several jobs in the previous week. Ellie is an unpaid stay-at-home mom who has not searched for work in recent years. Who does the Bureau of Labor Statistics count as "not in the labor force"? Lily but not Ellie Ellie but not Lily Both Lily and Ellie Neither Lily nor Ellie

Ellie but not Lily

GDP can measure either the total income of everyone in the economy or the total expenditure on the economy's output of goods and services, but GDP cannot measure both at the same time. True or false?

False

Investment in human capital has opportunity costs, but investment in physical capital does not. True/False

False

The steps involved in calculating the consumer price index and the inflation rate, in order, are as follows: Choose a base year, update the basket, find the prices, estimate the basket's cost, compute the index, and compute the inflation rate. Choose a base year, fix the basket, find the prices, compute the inflation rate, compute the basket's cost, and compute the index. Fix the basket, find the prices, compute the basket's cost, choose a base year and compute the index, and compute the inflation rate. Fix the basket, find the prices, compute the inflation rate, compute the basket's cost, and choose a base year and compute the index.

Fix the basket find the prices compute the basket's cost choose a base year and compute the index and compute the inflation rate

Many things that society values, such as good health, high-quality education, enjoyable recreation opportunities, and desirable moral attributes of the population, are not measured as part of GDP. It follows that GDP is not a useful measure of society's welfare. GDP is still a useful measure of society's welfare because providing these other attributes is the responsibility of government. GDP is still a useful measure of society's welfare because it measures a nation's ability to purchase the inputs that can be used to help produce the things that contribute to welfare. GDP is still the best measure of society's welfare because these other values cannot actually be measured.

GDP is still a useful measure of society's welfare because it measures a nation's ability to purchase the inputs that can be used to help produce the things that contribute to welfare

The "invisible hand" ability to coordinate the decisions firms and households in the economy can be hindered by Government actions that distort prices Increases competition in markets Enforcement of property rights Too much attention paid to efficiency

Government actions that distort prices

Assume Leo buys coffee beans in a competitive market. It follows that Leo has a limited number of sellers from which to buy coffee beans. Leo will negotiate with sellers whenever he buys coffee beans. Leo cannot influence the price of coffee beans even if he buys a large quantity of them. Leo will have to spend a lot of time comparing the different prices of coffee bean suppliers. Question 13

Leo cannot influence the price of coffee beans even if he buys a large quantity of them

Joe and Jim purchase vegetables at a grocery store, but Jim also grows vegetables in his backyard. Regarding these two practices, which of the following statements is correct? Only Joe's grocery store purchases are included in GDP. Only Joe's and Jim's grocery store purchases are included in GDP. Joe's and Jim's grocery store purchases are included in GDP. The vegetables from Jim's backyard garden are included at their market value. Joe's and Jim's grocery store purchases are included in GDP. The vegetables from Jim's backyard garden are included at their market value, if Jim provides this information.

Only Joe's and Jim's grocery purchases are included in GDP

Scarcity is the fundamental problem of economics and exists because of the fact that Most economies' production methods are not very good In most economies wealthy people consume disproportionate quantities of goods and services Governments restrict production of too many goods and services Resources are limited

Resources are limited

In what sense is the equilibrium price and quantity of supply and demand for a particular product considered to be a "socially optimal" result? That point maximizes both the total revenue for firms and the quantity supplied of the product. That point maximizes the sum of consumer and producer surplus, which is the combined total welfare of buyers and sellers. That point minimizes costs and maximizes feasible output of the good. That point minimizes the level of welfare payments to those in need.

That point maximizes the sum of consumer and producer surplus which is the combined total welfare of buyers and sellers

Which of the following would shift the supply of Atlanta Falcon football jerseys to the left? The Atlanta Falcons make it to the Super Bowl. The price of the jerseys increases by $15. New sewing machine technology requires less time to produce a jersey. The cost of the fabric used to make the jerseys increases.

The cost of the fabric used to make the jerseys increases

If the production possibilities frontier increases for books but not smart phones, which of the following events would explain the shift of the PPF? The economy's citizens developed an enhanced taste for books. The economy experienced a technological advancement in the production of books. More capital became available in the economy. More labor became available in the economy.

The economy experienced a technological advancement in the production of books

Out of the following economic statistics, which is the best measure of economic standard of living? The level of nominal GDP The growth rate of real GDP The level of nominal GDP per capita The level of real GDP per capita

The level of real GDP per capita

Which of the following is not a direct determinant of the demand for a particular good? The prices of related goods Income Tastes The prices of the inputs used to produce the good

The prices of the inputs used to produce the good

Which of the following is included in the calculation of GDP? The purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the country. The purchase of a new edition of a foreign textbook that was produced in a different nation. The purchase of ink and paper supplies by a textbook company for the production of new textbooks. The purchase of a used textbook from a friend who took the same class last year.

The purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the country

A country that made its courts less corrupt and its government more stable would likely see its standard of living rise. True/False

True

A production possibilities frontier will be bowed outward if some of the economy's resources are better suited to producing more one good than another True or false?

True

Production possibilities frontiers can be used to illustrate scarcity, trade offs, opportunity cost, efficiency, unemployment, technological advances, and economic growth True or false?

True

The production possibilities frontier shows the opportunity cost of one good as measured in terms of the other good True or false?

True

When a market price is below the equilibrium price, the quantity of the good demanded exceeds the quantity supplied and market forces will tend to push the price higher. True/false

True

Over the long run, the ____________ is the most important determinant of the average wage level in any economy. income of the wealthy. value of output per hour of work. increases in the minimum wage law.

Value of output per hour of work

Consider a nominal GDP of 750 and a GDP Deflator of 120 in a particular year. Then a nominal GDP of 825 and a GDP deflator of 130 in the following year. What was real growth between the two years? about 4.14% about 3.33% about 2.67% about 1.54%

about 1.54%

Which of the following is a determinant of economic growth? physical capital human capital technological knowledge all of the above

all of the above

Which of the following would cause the equilibrium price to rise in a market? a rightward shift in demand a leftward shift in supply a rightward shift in demand combined with a leftward shift in supply. all of the above

all of the above

Which of the following would cause the price of eggs to rise? New research that shows that protein from eggs is the most healthy kind of protein. A new government free-breakfast program at all universities across the country. an avian flu killing a large portion of the chickens in an economy. all of the above

all of the above

If an allocation of resources is efficient, then consumer surplus is maximized. producer surplus is maximized. all potential gains from trade among buyers and sellers are being realized. the allocation achieves equality as well.

all potential gains from trade among buyers and sellers are being realized

If muffins and bagels are substitutes, a higher price for bagels would result in: an increase in the demand for bagels and a decrease in demand for muffins. a decrease in the demand for bagels, but not a decrease in the quantity demanded of bagels. an increase in the demand for muffins and a higher price for muffins. a decrease in the demand and a lower price for muffins.

an increase in the demand for muffins and a higher price for muffins

What could cause a simple supply curve to shift to the left for chocolate cake? an increase in the number of commercial bakers. an improvement in oven technology. an increase in the price of flour. a decrease in the price of chocolate cake.

an increase in the price of flour

Economic Growth is depicted in the Production Possibilities Frontier diagram as: an inward shift of the PPF. an outward shift of the PPF a leveling of the slope of the PPF None of the above. Economic Growth is not discussed within the context of the PPF diagram.

an outward shift of the PPF

Expenditures on a nation's domestic production are less than its domestic production. are equal to its domestic production. are greater than its domestic production. could be less than, equal to, or greater than its domestic production.

are equal to its domestic production

GDP per person tells us the income and expenditure of the richest person in the economy. poorest person in the economy. average person in the economy. entire economy.

average person in the economy

A price floor above the equilibrium for wages is binding and creates a labor shortage. binding and creates unemployment. nonbinding and creates a labor shortage. nonbinding and creates neither a labor shortage nor unemployment.

binding and creates unemployment

For understanding this course and macroeconomics in general, which of the following means the same thing as the word "investment?" saving capital formation diversification gambling

capital formation

In the circular-flow diagram, profit flows from households to firms. labor flows from households to firms. services flow from households to firms. goods flow from households to firms.

labor flows from households to firms

Changes in real GDP reflect changes in prices. changes in the amount of production. changes in both prices and the amount of production. neither changes in prices nor changes in the amounts being produced.

changes in the amount of production

Making rational decisions at the margin means that people: Make those decisions that do not impose a marginal cost Evaluate how easily a decision can be reversed if problems arise Compare the marginal costs and marginal benefits of each decision Always calculate the dollar costs for each decision

compare the marginal costs and marginal benefits of each decision

Real GDP is the yearly production of final goods and services valued at: current prices. constant prices. expected future prices. the ratio of current prices to constant prices.

constant prices

A decrease in the price of a good will: increase the supply that good. decrease the supply of that good. increase quantity supplied of that good. decrease quantity supplied of that good.

decrease quantity supplied of that good

Giving an additional unit of capital to workers increases output less when there is already plentiful capital because of diminishing returns to labor. diminishing returns to capital. increasing returns to labor. increasing returns to capital.

diminishing returns to capital

Social Security payments are included in GDP because they represent current income. included in GDP because they represent potential consumption. excluded from GDP because they are not private pensions. excluded from GDP because they do not reflect the economy's production. Question 5

excluded from GDP because they do not reflect the economy's production

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell? Price would (be ambiguous/rise/fall), and the effect on quantity would (be ambiguous/rise/fall).

fall be ambiguous

Economists make assumptions to mimic the methodologies employed by other scientists. minimize the number of experiments that yield no useful data. minimize the likelihood that some aspect of the problem at hand is being overlooked. focus their thinking on the essence of the problem at hand.

focus their thinking on the essence of the problem at hand

If an American-based firm opens and operates a new watch factory in Panama, then it is engaging in foreign direct investment. foreign portfolio investment. indirect foreign investment. foreign financial investment.

foreign direct investment

The basic principles of economics suggests that Markets are seldom if ever a good way to organize economic activity Government should become involved in markets when trade between countries is involved Government should become involved in markets when those markets fail to produce efficient or fair outcomes Government should never become involved in markets

government should become involved in markets when those markets fail to produce efficient or fair outcomes

A transfer payments are payments made by consumers, but not in exchange for a tangible product. firms, but not in exchange for capital equipment. foreigners, but not in exchange for a domestically produced good or service. government, but not in exchange for a currently produced good or service.

governments but not in exchange for a currently produced good or service

The catch-up effect suggested that new capital should: have a greater effect in impoverished countries than in wealthier countries. have a greater effect in wealthy countries than in impoverished countries. have little effect on economic growth in either wealthy or impoverished countries. earn the a lower return than older, more established, capital.

have a greater effect in impoverished countries than in wealthier countries

What sector(s) purchase the goods and services produce in an economy? households, but not firms or the government. households and firms, but not the government. households and the government, but not firms. households, firms, and the government.

households firms and the government

GDP measures the value of production. It also equals: income. income + saving. income − government expenditures. income − imports.

income

If an economy's GDP falls, then it must be the case that the economy's income falls and saving rises. income and saving both fall. income falls and expenditure rises. income and expenditure both fall.

income and expenditure both fall

Gross domestic product measures income and expenditures. income but not expenditures. expenditures but not income. neither income nor expenditures.

income and expenditures

In the simple circular-flow diagram, with households and firms, GDP can be computed as the income received by households, in the form of wages, rent and profit. income received by households in the form of wages. payments made by firms for labor. profits received by households.

income received by households in the form of wages rent and profit

Suppose there is an increases in the number of buyers in a market, and at the same time, a technological advancement occurs. What would we expect to happen in the market? Equilibrium price would (be ambiguous/increase/decrease), but the impact on equilibrium quantity would (be ambiguous/increase/decrease).

increase be ambiguous

The CPI differs from the GDP deflator in that the CPI is a price index, while the GDP deflator is an inflation index. substitution bias is not a problem with the CPI, but it is a problem with the GDP deflator. increases in the prices of foreign produced goods that are sold to U.S. consumers show up in the CPI but not in the GDP deflator. increases in the prices of domestically produced goods that are sold to the U.S. government show up in the CPI but not in the GDP deflator.

increases in the prices of foreign produced goods that are sold to US consumers show up in the CPI but not in the GDP deflator

The notion that our ability to conserve natural resources is growing more rapidly than their supplies are dwindling is supported by the fact that inflation-adjusted prices of natural resources are stable or falling over time. inflation-adjusted prices of natural resources are rising over time. the quantity of natural resources does not enter into any production function. most economists do not regard the availability of natural resources as a determinant of productivity.

inflation-adjusted prices of natural resources are stable or falling over time

Prices direct economic activity in a market economy by: Influencing the actions of buyers and sellers Reducing scarcity of the goods and services produced Reducing opportunity cost of goods and services produced Allocating goods and services in the most equitable way.

influencing the actions of buyers and sellers

Another term for factors of production is inputs. output. goods. services.

inputs

In GDP accounting, the value of goods added to a firm inventories are recorded as: Firm consumption Intermediate goods Investment Negative production.

investment

If a spot is above the production possibilities frontier it is because it is not using all of its resources. it is not using the most efficient production process. it does not have the resources and technology to produce that level of output. consumers don't want that many washers and dryers.

it does not have the resources and technology to produce that level of output

An economy's production of two goods is efficient if all members of society consume equal portions of the goods. the goods are produced using only some of society's available resources. it is impossible to produce more of one good without producing less of the other. the opportunity cost of producing more of one good is zero.

it is impossible to produce more of one good without producing less of the other

A price ceiling below the equilibrium price causes a surplus supply makes it necessary for sellers to provide the good to those who want to buy it using a mechanism other than price. is not binding will increase the price of a good

makes it necessary for sellers to provide the good to those who want to buy it using a mechanism other than price

The logic behind the catch-up effect is that the capital stock in rich countries deteriorates at a higher rate because it already has a lot of capital. None of the above is correct. workers in countries with low incomes will work more hours than workers in countries with high incomes. new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital.

new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital

Which of the following is correct about a a perfectly competitive market: firms tend to cheat customers to make a profit. there are only a few large sellers who undercut smaller businesses. the forces of supply and demand do not apply. no individual buyer or seller has an ability to influence the market price.

no individual buyer or seller has an ability to influence the market price

The labor force equals the number of people employed. number of people employed plus the number of people unemployed. number of people employed plus the number of people unemployed plus teenagers between ages 14 and 16 who work at least 10 hours a week. adult population.

number of people employed plus the number of people unemployed

At equilibrium total surplus is represented by the area (from test 2) Of the right triangle created by supply, equilibrium, and the vertical axis Of the triangle created by demand, equilibrium, and the vertical axis Of the triangle created by supply demand and the vertical axis

of the triangle created by supply demand and vertical axis

Production is possible __ or _____ the production possibility frontier on below on above above below

on below

The equipment and structures available to produce goods and services are called: physical capital. human capital. current assets technology.

physical capital

Productivity is defined as the amount of goods and services: an economy produces per year. an economy produces per person. produced for each hour of operation of a piece of capital equipment. produced for per hour of a worker's labor time.

produced per hour of a worker's labor time

In order to promote growth in living standards, policymakers must protect property rights and maintain political stability. minimize accumulation of factors of production. rise taxes to increase government revenue. promote bureaucracy.

protect property rights and maintain political stability

Is nominal or real GDP a better gauge of economic well-being? ____ GDP

real

The market demand curve is found by vertically adding the individual demand curves. slopes upward. represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good. represents the sum of the quantities demanded by all the buyers in a market at each possible price for a good.

represents the sum of quantities demanded by all buyers in a market at each possible price for a good

Another term for factors of production is resources. output. goods. services.

resources

Efficiency means that Society is conserving resources in order to save for the future Society's goods and services are distributed equally among society's members Society's goods and services are distributed fairly, though not necessarily equally, among society's members Society is getting the most it can from its scarce resources

society is getting the most it can from its scarce resources

One problem with the consumer price index stems from the fact that, over time, consumers tend to buy larger quantities of goods that have become relatively less expensive and smaller quantities of goods that have become relatively more expensive. This problem is called price-change neglect. unmeasured quality change. substitution bias. relative bias.

substitution bias

In most societies, resources are allocated by A single central planner A small number of central planners Those firms that use resources to provide goods and services The combined actions of millions of households and firms

the combined actions of millions of households and firms

If something happens to alter the quantity demanded at all possible prices, this implies that: the demand curve becomes steeper and this is called a change in the quantity demanded. the demand curve becomes flatter and this is called a change in the quantity demanded. the demand curve shifts and this is called a change in demand. we move along the demand curve but it does not shift and this is called a change in demand.

the demand curve shifts and this is called a change in demand

Economists use the phrase "competitive market" to describe a market in which: there is one powerful producer. there exists coalition of consumers who push for consumer rights. there are so many buyers and sellers that each has no power to influence the market price. labor unions fight corporations for higher wages.

there are so many buyers and sellers that each has no power to influence the market price

When price is below equilibrium Quantity supplied equals quantity demanded There is a surplus There is a shortage We do not have enough information

there is a shortage

Economics is the study of how society manages its (Limited/unlimited) wants and (limited/unlimited) resources

unlimited wants and limited resources

GDP is defined as the value of all goods and services produced within a country in a given period of time. value of all goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time. value of all final goods and services produced within a country in a given period of time. value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.

value of all final goods and services produced withing a country in a given period of time

The opportunity cost of an item is The number of hours needed to earn money to buy the item What you give up to get that item Usually less than the dollar value of the item The dollar value of the item

what you give up to get that item