Macro Midterm 1 Fall 2015

A quota a) makes domestic consumers worse off b) makes both domestic producers and consumers better off c) makes everyone worse off d) makes domestic producers worse off

a) makes domestic consumers worse off

If the number employed is 190 million, the working age population is 230 million, and the number unemployed is 10 million, then the unemployment rate is a) 5% b) 5.2% c) 8% d) 10%

a) 5%

In the circular flow model, the value of total production for an economy _______ the value of total expenditures on final goods and services. a) equals b) is less than c) is greater than d) may be greater than or less than

a) equals

The best measure of the income households actually have available to spend is a) personal income b) disposable personal income c) national income d) net national income

b) disposable personal income

The unemployment rate equals the number of unemployed divided by the ______, all time 100. a) number of employed b) labor force c) working age population d) total population

b) labor force

EXTRA CREDIT: Based on the t-shirt story video, what was the biggest advance in international trade? a) enforcement of intellectual property rights b) shipping containers c) reduction in international conflicts-end of WWII d) the fall of the Soviet Union

b) shipping containers

Imagine that you borrow $1,000 for one year and at the end of the year you repay that $1,000 plus $100 of interest. If the inflation rate was 7%, what was the real interest rate you paid? a) 17 percent b) 10 percent c) 7 percent d) 3 percent

d) 3 percent

Rob=20 Berries, 80 Fish Bill=30 Berries, 60 Fish Rob and Bill spent their week-long vacation on a desert island where they had to find and make their own food. Rob and Bill spent one day each fishing and picking berries. The table lists the pounds of output Rob and Bill produced. Use the table above to select the statement that accurately interprets the data in the table. a) Bill has comparative advantage in catching fish b) Rob has comparative advantage in picking berries c) Rob has comparative advantage in catching fish and picking berries d) Bill has a comparative advantage in picking berries

d) Bill has a comparative advantage in picking berries

An outward shift of a nation's production possibilities frontier can occur due to a) a reduction in unemployment b) a natural disaster like a hurricane or bad earthquake c) a change in the amounts of one good desired d) an increase in the labor force

d) an increase in the labor force

A demand curve shows the relationship between a) the price of a product and the quantity of the product demanded b) the amount of a product sellers are willing to sell at a particular price and the amount consumers are willing to buy at that price c) the quantity that consumers are willing and able to buy and the quantity that sellers are willing and able to offer d) the price of a product and the demand for the product

a) the price of a product and the quantity of the product demanded

EXTRA CREDIT: What did the Fed decide to do at its meeting last Thursday? a) to maintain the current interest rate target b) to increase the current interest rate target c) to decrease the current interest rate target d) to increase the current inflation rate target

a) to maintain the current interest rate target

Scarcity refers to the situation in which a) unlimited wants exceeds limited resources b) unlimited resources exceed limited wants c) a country's population is larger than its resource base d) a nation's poverty level increases faster than its population

a) unlimited wants exceeds limited resources

The production possibilities frontier shows a) the various products that can be produced now and in the future b) the maximum attainable combinations of two products that may be produced in a particular time period with available resources c) what an equitable distribution of products among citizens would be d) what people want firms to produce in a particular time period

b) the maximum attainable combinations of two products that may be produced in a particular time period with available resources

Which of the following could cause nominal GDP to decrease, but real GDP to increase? a) the price level rises and the quantity of final goods and services produced rises b) the price level falls and the quantity of final goods and services produced rises c) the price level rises and the quantity of final goods and services produced falls d) the price level falls and the quantity of final goods and services produced falls

b) the price level falls and the quantity of final goods and services produced rises

Which of the following generates efficiency in a market economy a) national government intervention b) voluntary exchange between buyers and sellers c) United Nations rules for competition d) equity

b) voluntary exchange between buyers and sellers

Nominal GDP 2012=$10,000 Real GDP 2012=$9,500 Nominal GDP 2013=$12,000 Real GDP 2013=$10,500 Refer to the table above. Given the information above, calculate the GDP deflator in 2012. a) 87 b) 95 c) 105 d) 114

c) 105

The GDP deflator is a measure of the a) total production of the economy adjusted for inflation b) total production of the economy unadjusted for inflation c) average level of prices of final goods and services in the economy d) average level of prices of intermediate goods and services in the economy

c) average level of prices of final goods and services in the economy

Which of the following is not directly counted in GDP? a) investment expenditures b) government purchases c) intermediate goods d) consumer goods

c) intermediate goods

Firms a) have no influence on the circular flow in a market economy b) purchase resources in the product market c) sell goods in the product market d) sell resources in the factor market

c) sell goods in the product market

If in the market for apples the supply has decreased then a) the supply curve for apples has shifted to the right b) there has been a movement upwards along the supply curve for apples c) the supply curve for apples has shifted to the left d) there has been a movement downwards along the supply curve for apples

c) the supply curve for apples has shifted to the left

Which of the following is a true statement about real and nominal GDP? a) if nominal GDP increases from one year to the next, we know that production of goods and services has risen b) nominal GDP is a better measure than real GDP in comparing changes in production of goods and services year after year c) increases in average prices do not affect the calculation of nominal GDP d) if real GDP increases from one year to the next, the production of goods and services has risen

d) if real GDP increases from one year to the next, the production of goods and services has risen

The percent increase in the CPI from one year to the next is a measure of the a) GDP deflator b) unemployment rate c) real interest rate d) inflation rate

d) inflation rate

Economists assume that rational people a) never use all available information as they act to achieve their goals b) undertake activities that benefit others and hurt themselves c) only weigh the benefits and costs of the most desirable alternative actions d) respond to economic incentives

d) respond to economic incentives

Whenever a buyer and a seller agree to trade, both must believe they will be made better off a) unless the buyer resides ina different country than the seller resides in. International trade may make the buyer or seller worse off. b) unless one party is richer than the other c) only if the buyer and seller live in countries with market economies d) whether the buyer and seller live in the same city or different countries

d) whether the buyer and seller live in the same city or different countries