MacroEconomics Exam 1
If Europe has a large increase in income, what will happen in the United States?
The aggregate demand curve will shift to the right.
The collapse of home values began in 2008 led to __________ in Americans' saving rates, shifting aggregate demand to the ______.
decreasing; left
If the cost of a typical market in 2019 is 400 and the cost of a typical market basket in 2020 is 390, then during this period the economy is undergoing:
deflation
Too much spending will cause:
demand-pull inflation
Workers who want work but been frustrated by inability to find work and have stopped searching are known as:
discouraged workers.
The advantages of automatic stabilizers over discretionary fiscal policy is that automatic stabilizers:
do not require overt action by policymakers.
Fiat money:
does not necessarily have any intrinsic value but has been declared by a government to be money.
When the government enforces contracts between two parties, it is acting in its role to promote economic growth by:
ensuring a stable legal system.
The concept of scarcity:
exists in all societies.
Individuals' willingness to pay umbrellas is MOST likely ______ on a ______ day.
higher; rainy
Price help consumers decide all of the following, EXCEPT:
how much of a product to produce.
Liquidity refers to:
how quickly, easily, and reliably an asset can be converted into a medium of exchange.
Efficiency within economics focuses on:
how well resources are used and allocated.
The price of feed corn would be included in the:
producer price index
All of the following cause a shift in the demand curve, EXCEPT:
technology
_________________ is the amount by which annual government spending exceeds tax revenues.
The budget deficit
What are the primary functions of money?
unit of account. medium of exchange, store value.
Government expenditures include _________ and _______ but NOT _______.
wages and salaries; the purchase of products and services; transfers
If your income is $35,000 and the average propensity to save is 0.46, what is consumption?
$18,900
A sheep ranch produces $30 worth of wool. A suit manufacture produces $60 worth of suits. A retail outlet sells a suit to a customers for $180. the change in the GDP would be:
$180
A lawyer can argue a case in court for one hour and make $300. She could alternatively use that hour of time to type a legal brief in her office. What is the opportunity cost of her typing the legal brief?
$300 since that is the amount she could have made made by arguing a case in court.
If the growth rate in an economy is 2%, its GDP will double in about:
35 years.
Approximately what share of U.S. GDP is consumption?
70%
People are considered employed if they are:
All of the above are considered employed. on strike, on vacation, unpaid family workers.
Which of the following statements is FALSE?
Economic growth always leads to a more equitable distribution of income.
Who developed the theory of comparative advantage?
David Ricardo
When Mr. Wilson worked full time, he paid a cleaning service to have his house cleaned twice a month. Now that he is retired, Mr. Wilson does his own cleaning. What is the affect on GDP?
GDP is unaffected by this change.
Jennifer just got news that she is getting a5% raise. However, the Bureau of labor statistic just reported that prices are rising by 7%.
Jennifer is losing purchasing power by 2%.
Jose is putting money for college in a savings account. The bank makes the money available to business borrowers. In essence:
Jose is supplying loanable funds for business investments.
In the United States, what three entities must agree on spending and taxation policies?
The President, The House of Representatives and the senate
Disposable income is equal to:
Y-T.
Which of the following situations would MOST likely lead to an import of copper?
a comparative advantage in the production of copper by other nations
The Great Depression was primarily the result of:
a decrease in aggregate demand.
If a producer does Not face increasing opportunity cost, ten the production possibilities frontier is:
a straight downward-sloped curve.
When government spending rises:
aggregate demand rises.
According to Keynes, what determines the level of employment and income?
agregate expanditures
The fractional reserve banking system:
all of the above.makes, helps, requires.
The GDP deflater for the base year is:
always equal to 100.
Which of the following institution is NOT an example of our nation's infrastructure?
buildings of General Electric
The basic idea opportunity cost is that:
buyers mis opportunities to find better bargains.
If a nation selects a product mix focused on __________ goods, the production possibilities frontier will expand at a greater rate than if the nation produced mostly __________ goods.
capital; consumption
Government intervention in the market is helpful when:
consumers are forced to buy from just one firm.
The largest component of GDP is:
consumption expenditure.
All of the following are true for inflation EXCEPT that:
debtors are hurt during inflationary time because the amount they pay creditors back increases .
Which of the following is NOT an element of expansionary fiscal policy?
expanding immigration
Improvements in technology:
explains most of the economic growth in recent decades.
Which of the following is NOT a problem in using GDP to measure standard of living?
failure to include the value of investments in human capital
Supply-side fiscal policies include all of the following EXCEPT:
increase transfer payments.
As GDP increases, tax revenues __________ and transfers payments,_________.
increase; decline
Which of the following is Not an example of an improvement to human capital?
increasing the number of machines available to workers
The largest source of federal government revenues is:
individual income taxes.
A market demand curve:
is the horizontal summation of individual demands.
Physical capital includes:
manufactured products that are used to produce other goods and services.
A laissez-faire approach to the question of "how to produce" would be found in a:
market economy.
Which of the following is Not an economic factor of production?
money
If the U.S. aggregate price level falls:
net exports rise
Scarcity refers to the fact that:
one most make choices given the resources limitations he or she faces.
A shift in the demand curve is caused by a change in:
one of the determinants of demand.
Checking account balances are
part of M1 and part of M2.
An increase in technology:
shifts the PPF curve outward.
Which of the following activities would NOT qualify a person as being in the labor force?
reading help wanted ads
Economics models must:
rely on the ceteris paribus assumption
Barter:
satisfies the double coincidence of wants if an exchange takes pace.
The feds board of governors consist of _____ members who are appointed bt the _______ and confirmed by the ________.
seven; President; Senate
Economics is a:
social science
GDP can be found either by adding up all of the _______ or all of the ________ in the economy.
spending; income
People make decisions on the margin. Therefore, when deciding whether to purchase a second car, they would compare:
the additional benefits expect from second car with additional costs of the second car.
Cyclical unemployment occurs when:
the economy slows down and workers are laid off.
On-the-job training can lead to and increase in:
the quality of the labor force.
As the real interest rate falls:
the quantity demanded of loanable funds rises.
The public debt is the:
total accumulation of past deficits less surplus.
A simple circular flow diagram shows that the factors of production are:
traded in the market for goods and services.
Microeconomics is concerned with issues such as:
which job to take.
A point a nation's productions possibilities frontier indicates:
that resources are fully utilized i producing a given combination of goods and services.
Electricity is essential in the production of aluminum, If electricity prices increase:
the supply curve for aluminum shift leftward.