Macro Pt. 2
If the university president valued a parking space close to the administration building at $500 and paid $30 for a parking permit, he would receive consumer surplus equal to:
$470 $500-$300=$470
Refer to the figure. When the demand curve shifts from D0 to D1 to the left upward, the equilibrium price rises to:
$8 and the equilibrium quantity rises to 140
If the price level in 2018 is 150 and it rises to 165 in 2019, what is the rate of inflation between 2018 and 2019
10% 165-150/150x100=10
Graph At a price of $200, consumer surplus is :
10,000 (400-200)x100/2=10,000
If $100 is saved at an annual interest rate of 10% the return in one year will be
110
GDP Data 2000 GDP in 2000 dollars -------11.6 trillion 1995 GDP in 2000 dollars -------10 trillion 1995 GDP in 1995 dollars --------8.8 trillion Using the GDP data in the table, how much did nominal GDP grow between 1995 and 2000
31.8% (11.6-8.8)/8.8x100=31.8
Labor Data Adult population----200million Labor Force-----150million Employed persons--138.75 mill Discourage workers--10.5mill According to the accompanying labor data, the unemployment rate is:`
7.5% Unemployment/labor force x100 10.5/138.75x100=7.5
Crowding out occurs because the government increases the demand for loanable funds, drives up interest rates, and causes
consumption and investment to fall
An increase in the price you pay for a haircut will
contribute to GDP as a purchase of a service
As the baby boomers retire, the united states labor force participation rate will
decrease
If the demand for loanable funds decreases, the quantity of loanable funds exchange will:
decrease
In the accompanying figure, if the demand for loanable finds increase from DLF to D1LF and the supply of loanable funds remain to SLF, the equilibrium interest rate will:
increase to i1 (DLF shifts upward to the right to DLF1)
If the supply of loanable finds increases and the demand for loanable funds
increases, decrease, or remain the same
Which of the following is NOT a role of commercial banks
issue government bonds
The buyer of a bond is a
lender
Which is NOT an example of physical capita
money
Using the national spending approach to measuring GDP, if john buys 100 shares of Netflix stock, it is included in GDP as part of:
nothing; it is not included as part of GDP
The supply curve:
shows how much sellers are willing and able to sell at different prices
the law of demand suggest a ________ relationship between price and ________.
Positive ; quantity supplied
Which of the following can be defined as savings according to economics
Sandra purchases a certificate of deposit from a bank
A dependable legal system and competitive open markets help to:
Shape incentives that induce economic growth
According to economists, when the food and drug administration raises to approval requirements for new drugs:
Society potentially loses a new drug approval
The relationship between trade and specialization is best characterized as followed
Trade increases specialization, which in turn increases the demand for trade
True or False Growing tomatoes in your back yard and making salsa for a super bowl party you are hosting will NOT be reflected in GDP
True
True or False The national spending approach and the factor income approach are equivalent ways of measuring GDP because every dollar spent in the economy is ultimately received as income by someone
True
True or False The national spending approach classifies all the spending in a nation as consumption, investment, government purchases, or net export
True
True or False: GDP is the market value of all final goods and serves produced within a country in a year
True
GDP provides a measure of:
Various types of legally earned income
Suppose ford does not have enough cash on hand to pay for the factory upfront and therefore will need to borrow. Will a rise in interest rates make it less likely that ford will build the factory
Yes, because Ford's out of pocket cost of borrowing to finance the investment project has risen
For a price floor to prevent market forces from finding the equilibrium price, it must be set
above the equilibrium price, causing a market surplus
Discouraged workers are counted as part of the
adult population
In the market for fertilizer , an:
advance in technology will increase the supply of fertilizer
According to the quantity theory of money, money growth in the long run
affects inflation only
Countries with high per capita GDP have institutions that make it in people's self-interest to invest in:
all of the factors of production
which of the following would be the most likely to cause an increase in the demand for loanable funds
an increase in government borrowing
Non-market production is not counted in GDP because these activities:
are not priced
Which of the following is the best example of frictional unemployment
Heather recently graduated with her doctorate in economics. She is searching for a job that matches her skills
Compares to the United States, unemployment rates in Western Europe tend to be
Higher because of more labor regulations
Supply Shift In the figure, a movement from S1 to S2 toward the right downward represents
An increase in supply
Adam Smith's metaphor of the "invisible hand" refers to the notion that:
Behavior based on self interest can lead to an overall benefit to society.
When two people voluntarily trade with each other:
Both of them will be better off
Most investment spending is carried out by
Businesses
Increase in the minimum wage most likely lead to:
Higher unemployment
Stock shares represent ________ and bonds represent _________
Corporate ownerships; corporate debt
When workers lose their jobs and become officially unemployed, the labor force participation rate:
remains constant
True or False GDP is an accurate measure of both the standard of living and the distribution of income within a country
False
True or False In a Large class, each student's opportunity cost of taking an exam is likely to be the same
False
True or False Spending on goods imported into the United States would be included in U.S. GNP, but not in the U.S. GDP.
False
True or False: Two people can benefit from trade if they both live in the same country, but not if they live in different countries
False
In a non-recession year, the majority of U.S. unemployment is
Frictional
Which of the following represents the factor income approach to splitting GDP
GDP=Wages+rent+interest+profit
Which of the following is a case of cyclical unemployment
Garrett lost his job after the company closed during last year's recession
Savings is:
Income that is not spent on consumption goods
Suppose a doctor spends half of the year in the United States and the other half in Canada and works in both places. How does his production get allocated between U.S. and the Canadian GNP
It depends on whether the doctor is a permanent resident of the United States or Canada
Suppose now that Ford has enough cash on hand to pay for the factory upfront. Will a rise in interest rate make it less likely that ford will build the factory
No, because ford doesn't have to borrow to finance the investment project
Why does South Korea have a higher level of real GDP per capita than North Korea
South Korea's a better system of incentives than North Korea
In the national spending approach, government purchases include..
Spending by all levels of government, not including transfer payments.
The production possibility frontier shows:
The combination of output that an economy can produce given its productivity and supply of inputs
Which financing method for transporting prisoners from point A to B will result in the greatest number of prisoners surviving the trip? Assume there are 50 prisoners being transported.
The ships captain is paid $100 by the government for every live prisoners that is unloaded at point B
Which if the following is NOT a reason firms and individuals borrow
They desire to have equal income and spending every period
Which of the following is NOT a characteristic of stocks that are sold are initial public offerings
They represent ownership of government-run enterprise only
Real GDP per capita is calculated as the total real GDP divided by the:
Total population
Financial intermediation can break down as a result of
bank panics
Individual savings contributes to:
both the supply of loanable funds and the demand for loanable funds
Economist call the maximum legal price a price ceiling because the price
cannot legally go higher than the ceiling
If the price of swimming pools decreases, we would expect the demand for:
chlorine, a compliment good to decrease.
If 2015 prices are used in the calculation of real GDP, then nominal GDP will be ______ real GDP in 2015
equal to
The loanable funds market is the market where
equilibrium rates are determined by the actions of the borrowers and lenders.
True or False In a recession, the actual rate of unemployment in an economy is equal to its natural rate of unemployment
false
which of the following institutions channels loanable funds from savers to borrowers
financial intermediaries
According to the consumption-smoothing theory, people with a longer life expectancy
have a higher savings rate in their lifetimes than those with shorter life expectancy.
Countries that have high per capita GDP tend to have
high levels of all three factors of production
Countries in Western Europe have:
higher minimum wages, higher median wages and higher unemployment than the United States
Economists assume that people respond to
incentives
In several cities around the country, schools are paying cash awards to the students who do well on english and math tests . This practice highlights the idea of:
incentives- the rewards and penalties that motivate behavior
If the demand for loanable funds increases, interest rates will
increase
If the demand for loanable funds increases, the quantity of loanable funds exchange will:
increase
When the unemployment rate rises, college enrollment tends to:
rise
Fluctuation in income cause most people to
save
Property rights are important institutions for encouraging investment because:
people won't invest if they feel their property is at risk and that they may not realize a return on their investment
A Fedex truck is an example of
physical capital
Which variable does not shift the demand curve
price of the good itself
Real GDP is calculated using
prices at the time of sale
When government freeze bank accounts, they fail to:
provide secure property rights
The enormous variety of goods and services that consume each day can be attributed mainly to:
specialization
Over the past few decades, the U.S. economy has switched from primarily manufacturing economy to a service economy. Many individuals working in manufacturing positions lost their jobs, and many new jobs opened up in services. For those who lost jobs in manufacturing, this is an example of:
structural unemployment
The shift toward more of a service economy and less of a manufacturing economy in the United States has caused an increase in:
structural unemployment
When individuals become more willing to save, the:
supply of savings shifts outward
The velocity of money is:
the average number of times a dollar is spent on final goods and services in a year
If the government raises taxes on investment returns, then;
the demand for loanable funds will decrease and the equilibrium interest rate will decrease
Time preference is
the desire to have goods and services sooner rather than later (all other things being equal)
When GDP per capita goes up by 10 percent
the distribution of the increase in income may vary
The law of demand states that:
the lower the price, the greater the quantity demanded
The lifecycle theory of savings predicts individuals will save during
the middle years of life
A change in which factor would shift the supply curve
the production technology
A demand curve indicates that:
the quantity demand of a good is higher when its prices is lower
The presence of discouraged workers causes the measures unemployment rate to be
understated
What population categories go into the formula for the unemployment rates
unemployed and employed
Which of the following is NOT considered a government purchase
unemployment checks
The savings supply curve is
upward sloping