Macro Test 2

Which of the following statements is false?

Exports benefit trading countries because exports create jobs. Imports do not benefit trading countries because they result in a loss of jobs.

The interest payment on a bond is called a face value payment.

False

Which of the following is a true statement about real and nominal GDP

If real GDP increases from one year to the next, we know that production of goods and services has risen.

Madison and Austin own Cafe Ole'. The table above lists the number of empanadas and tacos Madison and Austin can each make in one hour. Select the statement that accurately interprets the data in the table.

Madison has an absolute advantage in making empanadas and tacos.

What do most economists find to be the most persuasive argument in favor of protectionism?

Trade barriers protect infant industries that initially have relatively high costs.

To reduce the principal − agent problem,

boards − of − directors can tie the salaries of top management to the profitability of the firm.

The most severe recession since the Great Depression partially resulted from problems in the market for home mortgages. What has been the U.S. government's response? In response to problems in the market for home mortages, the federal government

brought Fannie Mae and Freddie Mac under direct government control.

All of the following take place in the direct finance market except

deposits from savers are accumulated and loans made to borrowers.

Based on the table to the right, what is personal income for this economy?

2,030 billion

Veruca sells therapeutic bath salts on the Internet. Her annual revenue is $52,000 per year, the explicit costs of her business are $14,000, and the opportunity costs of her business are $17,000 per year. What is her economic profit?

21,000

Real GDP per capita is often used as a measure of general wellbeing. While increases in real GDP often do lead to increases in the wellbeing of the population, why is real GDP not a perfect measure of wellbeing?

All of the above

Nominal GDP will increase

if either the price level or the quantity of goods and services produced rises.

If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded, how many belts will Estonia consume?

50

The components of national income for an economy are represented in the table above. What is the level of personal disposable income for this economy?

980 billion

Which of the following describes the extent of international trade in the U.S. economy?

About 20 percent of U.S. manufacturing jobs depend directly or indirectly on exports.

Assume that Australia has a comparative advantage in producing surfboards and New Zealand imports surfboards from Australia. We can conclude that

Australia has a lower opportunity cost of producing surfboards relative to New Zealand.

If both countries specialize completely by producing only that for which they have a comparative advantage and then trade, what would be the terms of trade that would benefit both countries?

Both countries would benefit from trade if Columbia were to trade 20,000 bananas for 14,000 pineapples with the Philippines.

Torrie is thinking of starting up a small business selling hand − painted wine glasses. She asks her sister, Lisette, if she'd like to join her in setting up a partnership to start the business. What is one disadvantage in joining the partnership that Lisette should consider?

Lisette should realize that, as an owner of the business, she will be personally responsible for the debts of the business.

As a form of business, a sole proprietorship

cannot issue stock.

Home Depot sells new and used doors to contractors who build new homes. Home Depot also sells new and used doors to homeowners. Which of the following would be counted in GDP?

the sale of a new door to homeowner