Econ 110 final

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consider the data above (in billions of dollars) for an economy: gross domestic product (in billions of dollars) for this economy equal

$1,200

macroeconomics, as opposed to microeconomics, includes the study of what determines the level of

employment in the economy

in the circular flow model, the value of total production for an economy __________ the value of total expenditures on final goods and services

equals

____________ occurs when economic benefits are distributed fairly

equity

in the circular flow diagram, market k represents

factor markets

Accumulating a greater number of inputs will ensure that an economy will experience economic growth.

false

consumers make all economic decisions in a mixed economy

false

countries without well-developed financial systems are able to sustain high levels of economic growth

false

eliminating frictional unemployment would be good for the economy

false

for most goods and services, the burden of a tax is on the sellers

false

if Blake can pick more cherries in one hour than Cody, then blake has a comparative advantage in cherry picking

false

if nominal GDP is less then real GDP, then the GDP deflator will be greater than 100

false

if the demand curve for a product shifts to the right and the supply curve for the product shifts to the left, equilibrium price and equilibrium quantity will both increase

false

paying efficiency wages are a way for a company to cut costs and become more efficient, and are therefore lower than market wages

false

residential investment includes spending by firms on office buildings

false

the difference between consumer surplus and producer surplus in a market is equal to the deadweight loss

false

the term "market" refers only to trading arrangements that have been approved by the government

false

when the government faces a budget deficit, which usually causes Crowding-in phenomena

false

the basic economic problem of scarcity

has always existed and will continue to exist

which of the following is not an example of a transfer payment

health insurance payments to an army private

labor productivity will increase if the ________ increases and ___________

quantity of capital per hour worked; technology improves

a good measure of the standard of living is

real GDP per capita

in a market economy, those who are willing and able to buy what is produced

receive the most of what is produced

the period between a business cycle peak and a business cycle trough is called

recession

India's rapid growth can be explained by

reduced regulations and market-based reforms

the supply curve for umbrellas

shows the relationship between the price of umbrellas and the quantity of umbrellas supplied

which of the following is a result of government price controls

some people win and some people lose

people who lost their jobs as hand-drawn animators because of the popularity of computer-generated 3D animation are examples of persons who are suffering

structural unemployment

the processes used to produce goods and services describes

technology

comparative advantage means

the ability to produce a good or service at a lower opportunity cost than any other producer

what does the PPI measure

the average of the prices received by producers of goods and services at all stages of the production process

if the price of gasoline increases, what will be the impact in the market for public transportation

the demand curve for public transportation shifts to the right

Liquidity refers to

the ease with which a financial security can be traded for cash.

the graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and S1 (point A). if the price of motorcycle engines increases, the wages of motorcycle workers increase, how will the equilibrium point change?

the equilibrium point will move from A to B

opportunity cost is defined as:

the highest valued alternative that must be given up to engage in an activity

a consumer is willing to purchase a produce up to the point where

the marginal benefit is equal to the price of the product

the production possibilities frontier shows

the maximum attainable combinations of two products that may be produced in a particular time period with available resources

which of the following is a normative economic statement

the price of milk is too high

one would speak of a movement along a supply curve for a good, rather than a change in supply, if

the price of the good changes

the circular flow model demonstrates

the roles played by households and firms in the market system

to calculate GDP using the value-added method, one would add up

the value added by each firm involved in the production of final goods and services

suppose in 2018, you purchase a house built in 2003. which of the following would be included in the gross domestic product of 2018?

the value of the services of the real estate agent

when the labor market is at full unemployment

there is no cyclical unemployment in the economy

if the price is $25

there is surplus of 300 units

without technological advancement, how can a nation achieve economic growth?

through an increase in supplies of factors of production

an increase in the unemployment rate may be represented as a movement from a point on the production possibilities frontier to a point inside the frontier

true

housing is the largest component of the U.S. CPI market basket

true

if consumers believe the price of hybrid vehicles will decrease in the future, this will cause the demand for hybrid vehicles to decrease now

true

if inflation is higher than expected, this helps borrows (by reducing the real interest rate they pay) and hurts lenders (by reducing the real interest rate they receive)

true

if the population increases and input prices increase, the equilibrium price if a product will definitely increase

true

the division of the burden of a tax between buyers and sellers in a market is called tax incidence

true

the household survey asks adults about their employment status and is used to compile the monthly unemployment rate

true

to reduce the bias in the consumer price index, the Bureau of Labor Statistics

updates the market basket every two years, rather than every 10 years

the consumer price index implicitly assumes that the demand curve for each good and service in the representative market basket

vertical

which of the following is a macroeconomic question

what determines the unemployment rate?

brett buys a new cell phone for $100. he receives consumer surplus of $80 from the purchase. how much does Brett value his cell phone?

$180

how much of the tax is paid by buyers

$3

what is the value of the deadweight loss after the imposition of the price floor

$600

suppose your grandfather earned a salary of $12,000 in 1964. if the CPI is 31 in 1964 and 219 in 2018, then the value of your grandfathers salary in 2018 dollars is approximately

$84,775

if the economy is currently producing at point E, what is the opportunity cost of moving to point B?

0 spoons

if Vidalia chooses to produce 40 dozen orchids, how many roses can it produce to maximize production

100 dozen roses

assume the market basket of the consumer price index has two products -meat and potatoes- with the following values in 2013 and 2018 for price and quantity: the consumer price index for 2018 equals

141

consider the following values of the consumer price index for 1996, 1997, and 1998: the inflation rate for 1997 was equal to

2.5 percent

imagine that you borrow $1,000 for one year and at the end of the year you repay the $1,000 plus $100 of interest. if the inflation rate was 7%, what was the real interest rate you paid?

3 percent

using the table above, what is the approximate growth rate of real GDP form 2017 to 2018

3 percent

using marginal analysis, how many hours should Julius extend his shop's hours of operation

4 hours

If real GDP per capita doubles between 2005 and 2020, what is the average annual growth rate of real GDP per capita?

4.7%

if the number of unemployed workers is 19 million, the number in the working-age population is 500 millions, and the unemployment rate is 4%, how many workers are in the labor force?

475 million

at a price of $25, how many units will be sold?

500

given the information above, calculate the rate of increase in the price level from 2017-2018

8.6%

what are represents producer surplus at P2

B+D

which of the following statements is true? Wilma Betty statues 12 14 benches 4 7

Betty has a comparative advantage in making benches and Wilma is making statues

a technological advancement would be represented by a movement from

S1 to S2

if society decides it wants more of one good and __________, then it has to give up some of another good and incur some opportunity costs

all resources are fully utilized

if a decrease in income leads to an increase in the demand for macaroni, than macaroni is

an inferior good

the Bureau of Labor Statistics would categorize a person as ________ if they were temporarily away from their job because they were ill

employed

voluntary exchange increases economic efficiency

because neither the buyer nor the seller would agree to a trade unless they both benefit

in Venezuela, the government attempted to control rising food prices by implementing price ceilings in the market. these price ceilings were set __________ the market price, which resulted in __________ of food

below; shortages

which of the following describes the accuracy of the Consumer Price Index

changes in the CPI overstate the true rate of inflation

which of the following prices indices comes closest to measuring the cost of living of the typical household

consumer price index

the largest component of spending in GDP is...

consumption spending

economics promotes which of the following as the way to make the best decision?

continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost

if the price level rose in three consecutive years form 100 to 120 to 140, then the annual inflation rate over those years would

decrease

consider the following data for a closed economy: Y=$12 trillion, C=$8 trillion, I=$2 trillion, TR=$2 trillion, T=3 trillion. based on the information above, what is the level of public saving

deficit of $1 trillion

which of the following causes the unemployment rate to understate the true extent fo joblessness

discouraged workers are not counted as unemployed

gross domestic product in the economy is measured by the...

dollar value of all final goods and services produced in the economy

a(n) _________ is represented by a rightward shift of the demand curve while a(n) ____________ is represented by a movement along a given demand curve

increase in demand; increase in quantity demanded

the U.S. unemployment insurance program

increases the amount of time the unemployed spend searching for a job

the law of demand implies, holding everything else constant, that as the price of the yogurt

increases, the quantity of yogurt demanded will decrease

gross domestic product understates the total production of final goods and services because of the omission of

intermediate goods

an advantage of the establishment survey over the household survey of the labor market is that the establishment survey

is based on actual payrolls, rather than on unverified answers

because minimum wage is a price floor

it will create a deadweight loss

the quantity of goods and services that can be produced by one worker or by one hour of work is referred to as

labor productivity

which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given working-age population

labour force participation ratio

economic surplus is maximized in a competitive market when

marginal benefit equals marginal cost

the income effect of a price change results in a

movement along the demand curve due to a change in purchasing power brought about by the price change

which of the following is consist with the graph depicted

new government regulations decrease the profitability of new investment

based on the graph of the labor market above, if a minimum wage is set at $5 per hour, which of the following will occur

none of the above will occur (a. the unemployment rate will rise b. the unemployment rate will fall c. the level of unemployment will rise, but the percentage of the labor force unemployed will not change)

real GDP will increase

only if the quantity of final foods and services produced rises

If the production possibilities frontier is linear, then

opportunity costs are constant as most of one good is produced


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