MACROECONMICS FINAL SCC Barb Neuwerth

Which of the following illustrates a macroeconomic question?

Are increasing wage demands by workers contributing to price inflation?

Of the following answer choices, which correctly describes a category of consumption expenditure counted in the national income accounts?

consumer durable goods, consumer nondurable goods, and services

Suppose the price of product X increases. We would expect this price increase to

decrease the demand for complementary good Y and increase the demand for substitute product Z.

An increase in the reserve requirement

decreases the money supply by decreasing excess reserves and decreasing the monetary multiplier.

In an effort to avoid recession, the government implements a tax rebate program, effectively cutting taxes for households. We would expect this to

increase aggregate demand.

A headline reads "Lumber Prices Up Sharply." In a competitive market, this situation would lead to a(n)

increase in the price of new homes and decrease in quantity.

A higher price reduces the quantity of a product demanded because

individuals will buy less of the product and more of its substitutes.

Which of the following is not included in personal consumption?

purchases of new construction by consumers

When the reserve requirement is increased, the excess reserves of member banks are

reduced and the multiple by which the commercial banking system can lend is reduced.

All else held constant, if farmers receive a subsidy for their corn, then this would cause a

rightward shift in the current supply of corn.

In deciding whether to study for an economics quiz or go to a movie, one is confronted by the idea(s) of

scarcity and opportunity costs.

The basic truth that underlies the study of economics is the fact that we all face

scarcity.

When a state government chooses to build more roads, the resources used are no longer available for public education programs. This dilemma illustrates the concept of

scarcity.

Which of the following is not an example of a final good or service (from the perspective of the national income accounts)?

seedlings and saplings purchased for resale by Wendy's Garden Center

A television report states: "The Federal Reserve will lower the discount rate for the fourth time this year." This report indicates that the Federal Reserve is most likely trying to

stimulate the economy.

If a tax is placed on the production of good X, this will shift the

supply curve for X to the left.

A tax structure is called progressive when

the average tax rate decreases if income decreases

The income and substitution effects are part of the reason why

the demand curve is downward-sloping.

Macroeconomics approaches the study of economics from the viewpoint of

the entire economy.

Steve went to his favorite hamburger restaurant with $3, expecting to buy a $2 hamburger and a $1 soda. When he arrived he discovered that hamburgers were on sale for $1 each, so Steve bought two hamburgers and a soda. Steve's response to the decrease in the price of hamburgers is best explained by

the income effect.

Which one of the following expressions best states the idea of opportunity cost?

"There is no such thing as a free lunch."

Which of the following is consistent with the law of demand?

An increase in the price of hamburgers causes a decrease in the quantity of hamburgers demanded.

Mia wants to buy a book. The economic perspective suggests that Mia will buy the book if the

The marginal benefit of the book is greater than its marginal cost

One advantage of automatic stabilizers over discretionary fiscal policy is that automatic stabilizers

are not subject to the timing problems of discretionary fiscal policy

A point inside the production possibilities frontier is _______ while a point outside the frontier is ________.

attainable and unattainable

When the Fed acts as a "lender of last resort," like it did in the financial crisis of 2007-2008, it is performing its role of

being the bankers' bank.

A person should consume more of something when its marginal

benefit exceeds its marginal cost.

Checkable deposits are included in

both M1 and M2.

The 12 Federal Reserve Banks can best be characterized as

central banks, banker's banks, and quasi-public banks

Alex works in his own home as a homemaker and full-time caretaker of his children. Officially, he is

not in the labor force

An example of an intermediate good would be

paper and ink bought by a publishing company.

In analyzing human decision and action, economists assume that

people's behavior reflects rational self-interest.

A nation's capital stock was valued at $500 billion at the start of the year and $575 billion at the end. Consumption of private fixed capital in the year was $35 billion. Assuming stable prices, net investment was

$75 billion.

Which of the following statements best describes what occurs when monetary authorities sell government securities?

The size of commercial banks' excess reserves decreases, the money supply decreases, and the interest rates rise, thereby causing a decrease in investment spending and real GDP.

Which of the following is a labor resource?

a computer programmer

One basic difference between "land" and "capital" resources is that land is

a gift of nature while capital is manufactured.

Net exports are negative when

a nation's imports exceed its exports

National income accountants define investment to include

any increase in business inventories.

Transfer payments are

excluded when calculating GDP, because they do not reflect current production.

Changes in the national incomes of our trading partners would directly affect our

exports.

As the economy contracts, tax revenues

fall and transfer payments rise, causing the economy to contract by less than it would in the absence of automatic stabilizers.

National income accounting helps economists and policymakers

follow the long-run course of the economy to assess whether it has grown or stagnated

A federal budget deficit is financed by the

government issuance or sale of Treasury securities.

The main function of the entrepreneur is to

innovate.

The relationship between quantity demanded and price is a(n) _____ relationship.

inverse

In November 2009, Marketopia Motors produced an automobile that was delivered to a local dealership in December 2009. The auto was then sold to Sharon Smith for personal use in February of 2010. Following national income accounting practices, this auto would be counted as part of

investment in 2009 and negative investment in 2010.

The best example of a "frictionally unemployed" worker is one who

is in the process of voluntarily switching jobs.

The upward slope of the supply curve reflects the

law of supply

Which of the following is a land resource?

natural gas

Suppose the total monetary value of all final goods and services produced in a particular country during one year is $500 billion and the total monetary value of final goods and services sold is $450 billion. We can conclude that

nominal GDP in 2010 is $500 billion.

As a result of a decrease in the price of online streaming movies, consumers download more movies online and buy fewer DVDs. This is an illustration of

the substitution effect.

GDP tends to underestimate the productive activity in the economy because it excludes the value of output from

the underground economy.

When the dollar appreciates relative to foreign currencies, it means that

the value of foreign currencies decreased relative to our dollar.

Which of the following most closely relates to the idea of opportunity costs?

trade-offs

Official unemployment statistics

understate unemployment because discouraged workers are not counted as unemployed.

Which of the following is an automatic stabilizer?

unemployment compensation