macro midterm

Consider the data shown in the table. Assume that the economy produces only textbooks. What is the nominal GDP for last year?

$250,000

Dale is a stay-at-home-parent whose typical day consists of getting the kids ready for school, doing the laundry, cooking three meals, and cleaning the house. How are Dale's home activities counted in GDP?

They are not counted.

If you see that inflation between last year and this year is 3%, this means that:

on average, prices went up across the economy by 3%.

Money illusion is the:

tendency to focus on nominal values instead of inflation-adjusted values.

Use the table to answer the question. What is the equilibrium price in this market?

$9

Based on the following statistics, how much are net exports?

-$0.575 trillion

Refer to the following table. What was the approximate output gap in 1998?

-1.2%

Refer to the following table. What was the approximate output gap in 1974?

-6.5%

You purchase a certificate of deposit and expect an inflation rate of 1.25% over the next year. Your nominal rate of interest is 2.1%. What is your expected real rate of return?

0.85%

According to Okun's rule of thumb, for every 1% fall in the actual output below potential output, the unemployment rate:

rises by 0.5%.

The table shows statistics for three Canadian cities at several different points in time. What was the number of people (in thousands) in Montreal's labor force in January 2005?

2,003.1

The United Kingdom plans to end the use of gas-powered and diesel-powered cars by the year 2040. At the same time, car manufacturers, such as General Motors and Nissan, are increasing the number of electric car models they produce. Based on this information, which of the following statements is/are correct?(i) If the supply of new electric cars is greater than the demand for new electric cars, then the price of electric cars will fall in the future.(ii) The demand for gasoline will fall in the future.(iii) The demand for electricity will rise in the future.(iv) The demand for diesel will rise in the future.

(i), (ii), and (iii)

Consider the following basket of goods: 50 bottles of milk, 100 avocadoes, 50 apples, and eight pineapples. Suppose that last year, each bottle of milk was $2.50, each avocado was $1.50, each apple was $0.75, and each pineapple was $4. This year, each bottle of milk is $2.50, each avocado is $1.80, each apple is $0.80, and each pineapple is $4.30. What is the inflation rate between last year and this year?

10.13%

Consider the data in the table. The price of gasoline is $3.99 per gallon at the gas station. If Rexhall Fuel Supplies is a rational seller, how many gallons of gasoline should this seller be willing to sell?

20 million gallons per week

The table shows statistics for three Canadian cities at several different points in time. What was the number of unemployed people (in thousands) in Toronto in January 2019?

234.2

The table shows consumer price index data for the United States. Based on this information, what is the rate of inflation in 2006?

3.22%

You purchase a certificate of deposit and expect an inflation rate of 1.5% over the next year. Your nominal rate of interest is 2.25%. What is your expected real rate of return?

0.75%

The higher the minimum wage, as compared to the equilibrium wage, the:

higher the structural unemployment rate.

The equilibrium unemployment rate is also known as the _____ unemployment rate.

long-run

The opportunity costs of attending college include the:

potential income that could be earned working.

A shortage occurs when:

quantity demanded exceeds quantity supplied.

Which of the following graphs shows what will happen to the supply curve for luxury SUVs, if economists predict an increase in demand for these vehicles?

Graph D

What is Uganda's real GDP if its nominal GDP is $27.5 billion (in current US$), and the GDP deflator is 163.4?

$16.8 billion

In order to be considered unemployed, a person must:(i) be part of the working-age population.(ii) be actively looking for work.(iii) not have been self-employed.(iv) must be noninstitutionalized.

(i), (ii), and (iv)

Which of the following five scenarios illustrate markets in action? (i) You rent a book at the university bookstore.(ii) You bargain at a street stall.(iii) You mow your own lawn.(iv) You get a manicure at a nail salon.(v) You grow your own vegetables and consume them yourself.

(i), (ii), and (iv)

The table shows consumer price index data for the United Kingdom. Based on this information, what is the rate of inflation in 2016?

1%

In 2017, the total population of Africa was estimated to be about 1,250,000,000 people. This number, in billions, is:

1.25.

In May 2019, there were approximately 68,980,000 people in Japan's labor force. About 1,650,000 people were unemployed. What was the unemployment rate?

2.4%

Which of the following will probably rise when the economy is in a recession?

Initial unemployment claims

Which of the following correctly describes the business cycle?

It is the fluctuations of GDP around the potential output.

Refer to the data dashboard shown. Which indicator is a cross-check on GDP?

Real GDI

Which of the following is a broad indicator?

Real gross domestic income

Which economic indicator tells you about the future expected profits of businesses?

S&P 500

There are four suppliers in the packed meals market. The quantity of packed meals that each one is willing to supply per week at various prices is provided in the accompanying table. What is the change in the market supply for packed meals when the price falls from $6.25 per meal to $6.00 per meal?

The quantity supplied in the market falls by 149,000.

There are four suppliers in the packed meals market. The quantity of packed meals that each one is willing to supply per week at various prices is provided in the accompanying table. What is the change in the market supply for packed meals when the price rises from $6.25 per meal to $6.50 per meal?

The quantity supplied in the market rises by 152,000.

the movement from point W to point P represents:

a decrease in demand.

During the Great Recession, the United States Congress increased the length of time that unemployment benefits could be received from 52 weeks to 99 weeks. This change caused:

an increase in the costs for the government.

Hyperinflation is:

extremely high rates of inflation

When there is a shortage of highly skilled workers in a particular region:

highly skilled workers can negotiate higher salaries.

The principle that your best choice depends on your other choices, the choices others make, developments in other markets, and expectations about the future is known as the _____ principle.

interdependence

Consider the graph of the labor market shown here. If the government mandates a minimum wage of $25, there is a labor:

surplus of 6,000 workers.

Use the figure to answer the question. Which of the following events would lead to a shift of the supply curve from Old supply to New supply?

technological advance in production techniques

When plotting a supply curve

the quantity supplied goes on the horizontal axis.

An example of a leading indicator is:

the stock market.

A downward-sloping demand curve implies:

there is an inverse relationship between price and quantity demanded

Diana is a student studying economics and currently working on her class schedule for next semester. She decides to enroll in a course on economic data analysis because she knows that data analysis is a highly sought-after skill from employers in her career field. Weighing what may affect her in the future opportunities demonstrated dependency:

through time.

Which of the following is an example of transfer payments?

unemployment benefits

Variable costs are the costs that

vary with the quantity of output produced.

Dependencies between your own choices reflect the fact that:

you have limited resources.

The table shows statistics for three Canadian cities at several different points in time. What was the number of unemployed people (in thousands) in Montreal in January 2009?

181.6

What is the equilibrium quantity in this market? 240 units

300 units

The table shows consumer price index data for the United States. Based on this information, what is the rate of inflation in 1991?

4.22%

A coffee shop opens next to an existing coffee shop. Which of the following graphs shows the effect of this new coffee shop on the market supply curve for coffee in this area?

Graph A

Which of the following graphs illustrates what we expect to see in the market for printing paper if the price of printing paper rises?

Graph C

Which economic indicator tells you how fast wages and benefits are rising?

The employment cost index

Which of the following is NOT a factor that can shift supply?

The market price of a product.

In the graph, the movement from point J to point K must have been caused by:

a fall in the price of the item.

Consider these four graphs of the labor market, showing four different minimum wage levels. Which graph(s) shows a wage level where there is no unemployment?

graph B

Which of the following is an example of a durable good?

your new car

Refer to the data dashboard shown. Which indicator tells you how fast wages and benefits are rising?

Employment cost index

If an economy has a positive output gap of 1.5%, this means:

GDP is 1.5% above potential GDP.

A normal good is:

a good for which higher income causes an increase in demand.

A seller at a farmer's market wants $10 for a bag of 10 apples. You think his price is too high, so you counter with an offer of $6 for the bag. The seller then offers you a much smaller bag of five apples for $6. You bargain again, and the seller lets you buy the 10 apples for $8. This scenario is an example of:

a market in action.

Henry Ford's $5 per day wage is an example of:

an efficiency wage.

The Great Moderation refers to the:

decreased volatility of the U.S. economy.

Which of the following is a scaled number?

government budget deficit as a percentage of GDP

Jonathan Mendez is deciding whether to study for his economics exam at a café down the street or go to a concert a few cities over. The time spent commuting to the concert is ____ in his opportunity cost calculations and represents a _____ cost.

included; nonfinancial

Consider the labor market shown here. If an efficiency wage of $14 is instituted in this market, the number of workers willing to work will:

increase by 2,000.

Below is U.S. economic data for 2018. What was total spending?

$20.58 trillion

Based on the following statistics, how much is consumption?

$6.49 trillion

Which of the following shows the medium of exchange function of money?

Daniela goes to the store and purchases roses with U.S. dollars.

In 2010, Canada's GDP was approximately $1,357 billion, and its population was about 34.12 million. What was Canada's approximate GDP per person in 2010?

$39,770

In 1971, the cost of a four-year college degree from a public university was about $1,410. The consumer price index was 40.48 in January 1971. If the current consumer price index is 251.1, what is the approximate cost of the four-year degree in current dollars?

$8,746

Which of the following would be considered in a cost-benefit analysis to decide if a person should cycle to work or ride the subway? (i) The air pollution that the cyclist has to breathe.(ii) The cost of subway tickets.(iii) The time it takes to cycle to work versus the time it takes to ride the subway to work.(iv) The cost per gallon of gasoline.

(i), (ii) and (iii)

You purchase a certificate of deposit that earns an advertised rate of 1.75% interest per year. What is your real rate of return if the actual inflation rate is 1.9%?

-0.15%

The table contains the monthly demand for soda cans for four students. If these four students make up the entire market, what is the total monthly market demand for soda at $1.50 per can?

148 cans

Which of the following will fall when the economy is expanding?

Applications for unemployment benefits

A minimum wage that is above the equilibrium wage is

an example of a price floor.

Kathleen Alvarado is binge-watching her favorite show on Netflix. She is attempting to decide how many more episodes to watch. Kathleen should continue watching episodes as long as the marginal:

benefit of watching another episode exceeds the marginal cost.

When there is a shortage of highly skilled workers in a particular region, the:

demand for skills education increases

Menu costs are the:

marginal costs of adjusting prices.

The __________ suggests, decisions about quantities are best made incrementally.

marginal principle

Which of the following lists the functions of money?

medium of exchange, store of value, and unit of account

An economy's potential output level is:

the output that is possible when all resources are fully employed.

Which of the following are correct about fixed costs? (i) They do not change with the level of production in the short run.(ii) They include variable costs.(iii) They are present even when the firm is producing zero units.(iv) They are irrelevant to marginal cost.

(i), (iii), and (iv)

Consider the data shown in the table. Assume that the economy produces only textbooks. What is the growth rate of real GDP between the two years using last year as the base year?

5%

A bakery hires a baker who can make 15 cakes per day. The bakery then decides to hire a second baker who will use the kitchen at the same time as the first baker. The bakery finds that the second baker can produce only an additional nine cakes per day. What concept does this scenario illustrate?

Diminishing marginal product

You purchase a new car (produced this year) for $38,000. After six months, you sell the car for $31,500. How much does GDP rise because of these two transactions?

GDP rises by $38,000.

How is the economic surplus generated by a decision calculated?

It is the total benefits minus total costs arising from the decision.

Suppose that you have a pumpkin stall at a farmer's market, and the Halloween season arrives. You know that your customers will want to buy many pumpkins to decorate their houses and make pumpkin pies. Which of the following is a likely result of this scenario?

You can charge a higher price per pumpkin.

Quantity demanded is on the horizontal axis when you plot a demand curve and shows the:

amount of a good that a person is willing to buy at each price.

(Figure: Graph) Refer to the graph to answer the question. The movement from point M to point N represents:

an increase in quantity demanded.

Graphically, shortages will always occur:

at prices below the equilibrium price.

As a result of technological innovation, automated water pumps are being installed on the farms of Kenyan tomato farmers. As a result of the increased use of automated water pumps, the equilibrium price of tomatoes will:

fall, due to a rise in supply.

The Rational Rule for Sellers says that a seller should sell one more unit of an item if the price is:

greater than or equal to the marginal cost.

Diminishing marginal benefit:

is when buying an additional item yields a smaller marginal benefit than the previous item.

A rational buyer will:

keep buying a product until marginal benefit equals price.

Nerida Kyle could either commute to work via Uber or purchase a new car. The average cost of her one-way Uber trip is $15. Nerida works five days a week for 50 weeks a year. Based solely on avoiding the cost of an Uber, Nerida should purchase a car if the cost of the car is _____ than _____ per week.

less; $150

Take a look at Spice King Burgers' supply curve for burgers. How many burgers will they supply at a market price of $1.50 per burger?

200 unit

If a store runs a sale on a product to clear out its stock, we can conclude that:

there was a surplus of the product in the store

An equilibrium in a market occurs:

when quantity supplied equals quantity demanded

An underemployed person is one who is:

working but whose skills are not fully utilized.

Consider the data shown in the table. Assume that the economy produces only barrels of oil. What is the real GDP for this year using last year as the base year?

$4,980,000

Refer to the diagram of the circular flow of income. The key lessons from this diagram are that:(i) all flows of resources are matched by flows of money.(ii) the market value of total output must be equal to total spending.(iii) total spending must equal total income.(iv) all inputs are provided by businesses.

(i), (ii), and (iii)

In a voluntary economic transaction between a buyer and a seller, _____ can earn economic surplus from the transaction.

both the buyer and the seller

What is Sri Lanka's GDP deflator if its nominal GDP is $88.9 billion (in current US$) and the real GDP is $59.34 billion?

149.8

Refer to the following table that shows monthly data for Japan. What was the unemployment rate in January 2014?

3.7%

Suppose that an economy is in a recession. You would expect to see the unemployment rate:

rise above the equilibrium unemployment rate.

The real interest rate is the:

nominal interest rate minus the rate of inflation.

Refer to the following table. What was the approximate output gap in 1999?

1.9%

In 1995, when the consumer price index was 152.38, women earned a median income of $12,130 per year. If the consumer price index in 2015 was 236.99, how much was $12,130 in 2015 dollars?

$18,865

Consider the data shown in the table. Assume that the economy produces only frozen fish. What is the real GDP for last year using this year as the base year?

$191,625

Suppose a labor market is described by the demand equation, Qd = 60 - 2w, and the supply equation, Qs = -10 + w, where Qd is the quantity demanded of labor, Qs is the quantity supplied of labor, and w is the wage (in dollars). If the government institutes a minimum wage of $25, how many workers will be willing to work in this market?

15,000,000

In May 2019, Texas reported a civilian labor force of 14,012,711. The number of employed people was 13,516,387. What was the unemployment rate?

3.5%

Which of the following correctly shows the steps needed to calculate the inflation rate?

Find out what people typically buy, collect the prices from the stores where people shop, tally up the cost of the basket of goods and services, and calculate the inflation rate.

Which principle tells you that the true cost of something is the next best alternative you have to give up to get it?

The opportunity cost principle.

Which of the following is a narrow indicator?

The stock price for JPMorgan Chase & Co.

An equilibrium price is:

determined by the intersection of the demand and supply curves.

According to the marginal principle, keep increasing quantity until the marginal benefit of an additional item is _____ the marginal cost of an additional item.

equal to

You are considering whether you should go out to dinner at a restaurant with your friend. The meal is expected to cost you $50, you typically leave a 20% tip, and a round-trip Uber ride will cost you $15. You value the restaurant meal at $30 and the time spent with your friend at $50. You should ____ to dinner with your friend because the benefit of doing so is _____ than the cost.

go; greater

The interdependence principle:

implies that buyers decisions are affected by many factors other than the price of an item.

When you get hired for a well-paying job, you will most likely view older used cars as

inferior goods.

A market consists of ten similar suppliers that are making the same supply decisions. To find the market supply of these ten suppliers, you:

multiply the individual supply of one of the suppliers by ten.

If you see that the consumer price index this year is lower than the consumer price index last year, this means that:

on average, prices went down across the economy.

When you calculate marginal costs, they should include:

only variable costs.

Decisions should reflect the _____ costs, rather than just the _____ costs.

opportunity; financial

Refer to the diagram of the circular flow of income. Based on the diagram, the arrow going FROM box 2 to box 1 must be:

output bought by households.

The four stages of the business cycle are:

peak, recession, trough, and expansion.

The GDP deflator is an index that tracks the:

price of all goods and services produced domestically.

Graphically, the equilibrium quantity can be identified as the:

quantity corresponding to the intersection of the demand and supply curves

Based on Okun's rule of thumb, if you forecast that the output gap will decline from 0% to -3%, the unemployment rate will:

rise by 1.5%.

An individual demand curve is a graph:

that plots the quantity of an item that someone plans to buy, at each price.

Paint and paintbrushes are complements. If the price of paint rises, we can expect:

the demand for paintbrushes to decrease.

What kind of data adjustment removes the effect of sales spikes due to the holiday season?

seasonally adjusted data

If the frictional rate of unemployment is 1.45%, the structural rate of unemployment is 2.3%, and the total unemployment rate is 6%, then we can conclude that:

the equilibrium rate of unemployment is 3.75%.

Kevin Williamson goes to a local coffee shop and orders a medium-sized latte. His willingness to pay for that latte is $6. The price of the latte is $2. The cost to the coffee shop to produce the latte is $1. How much economic surplus does Kevin gain when he purchases the latte?

$4

You're shopping online, and you place an item in your virtual cart. Two days later, you return to the virtual cart to check out and find that the item is now more expensive. Assuming that the market is competitive, what could explain the price increase?

There is a shortage of the item.

Which of the following lists only the factors that would cause a decrease in the supply of an item? A decrease in the number of sellers in the market; a fall in the price of a complement-in-production; an increase in productivity. A rise in the price of a substitute-in-production; a rise in the price of a complement-in-production; an expectation that the price of the item will rise in the future. A rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in-production. A fall in input prices; an increase in productivity; a fall in the price of a substitute-in-production.

A rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in-production.

Which of the following scenarios depicts a seller who is following the Rational Rule for Sellers?

American Airlines determines the marginal cost of an extra passenger to be $75 and sells a discount seat for $250.

Consider the following graphs, which are discussed in the textbook. Focus on the graph that looks at the relationship between GDP per person and infant deaths per 1,000 live births. What can explain this relationship?

As real GDP per person rises, maternal and fetal health increase due to better health care, education, sanitation, and nutrition.

The city of Vaughan in Ontario, Canada, opened a new subway line that extended the existing subway system between the greater Toronto area and the city of Vaughan. The route previously only had bus service. Which of the following graphs depicts the effect you would expect to see on the demand for bus rides on this route after the introduction of the subway?

Graph A

Dell and Apple are competitors in the computer market. Which graph illustrates the effect of a rise in the price of Dell computers on the demand for Apple computers?

Graph D

What is the difference between spending from a microeconomic standpoint versus spending from a macroeconomic standpoint?

In microeconomics, spending refers to spending by you, or your family, or your company, whereas in macroeconomics, spending refers to the spending by all consumers, all businesses, and the government in the economy.

Which of the following scenarios illustrates the law of demand? Kathleen eats more steak when the price is low, and less when the price is high. Francis does not care about the price of coffee at the coffee shop - he must buy two cappuccinos every day, regardless of the price. John likes to drink spring water. At $2 he buys four bottles of water, and at $1.50 he still buys four bottles of water. A research company finds that the more expensive a particular brand of a designer handbag, the more that consumers are willing to purchase the brand.

Kathleen eats more steak when the price is low, and less when the price is high.

You have four friends. Which of your friends can be described as "cyclically unemployed"?

Keele, who lost her job after her company lost a lot of customers during an economic downturn

The accompanying table provides data for five different oatmeal cookie sellers. Out of the sellers listed, who all are following the law of supply?

Len, Ren, and Jen

You eat M&Ms every day. When you go to the store to buy some, you find that M&Ms are more expensive than they were last month. Which of the following could explain why M&Ms are more expensive?

The supply of cacao beans, used to produce chocolate, has fallen around the world.

Joshua Murphy is planning on studying late into the night for his economics exam. How many cups of coffee should he buy tonight? Joshua should keep buying coffee throughout the evening until the marginal:

benefit of purchasing one more coffee equals the marginal cost.

The key to using the cost-benefit principle is to think about _____ aspects of a decision.

both financial and nonfinancial

the cost-benefit principle states that ________ are the incentives that shape decisions.

costs and benefitst

What is the difference between microeconomics and macroeconomics?

Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of the economy as a whole.

Which of the following is (are) included in investment?(i) military spending(ii) the purchase of an aircraft by a domestic airline(iii) the purchase of $45,000 worth of bonds(iv) the purchase of $32,000 worth of stock(v) social security payments(vi) the construction of a highway by the federal government

(ii) only

The table shows statistics for three Canadian cities at several different points in time. What was the unemployment rate in Montreal in January 2019?

6.2%

Why are supply curves typically upward-sloping?

They slope upward because higher prices lead individual businesses to supply a larger quantity and more businesses are willing to supply goods and services.

When plotting a demand curve

price is on the vertical axis

What is quantity supplied?

It is the amount of an item that a seller is willing to sell at a particular price.