Econ Final
Which of the following graphs shows the correct effect on the consumption function when taxes increase in the economy? Figure B Figure D Figure C Figure A
figure C; shifts down
A downward-sloping demand curve implies: there is no relationship between price and quantity demanded. there is a positive relationship between price and quantity demanded. buyers are willing to buy less when prices are lower. there is an inverse relationship between price and quantity demanded.
there is an inverse relationship between price and quantity demanded.
Fish farmers find that a form of bacteria is negatively affecting the reproductive capability of the fish in the fish farms. Which graph depicts what will happen in the market for farmed fish?
(Graph C) Old Supply Line shifts to the left; causing higher prices, lower quantity
Below is U.S. economic data for 2017. What was total spending? $22.45 trillion $20.67 trillion $20.10 trillion $19.52 trillion
$19.52 trillion
Refer to the table shown here. What is the level of aggregate expenditure in the economy? $136 billion $327.2 billion $318.8 billion $323 billion
$327.2 billion
(Figure: Market for High-End Meals) What will happen to the demand for upscale restaurants, if an economy goes into recession and unemployment rises?
( Graph C) Old demand shifts to the left.
At what price does this market experience a surplus of 100 units? $50 $60 $30 $40
($60) Quantity Supplied - Quantity Demanded
Which of the following represents a current account deficit? T - G Y - C - T C + I + G -NX
-NX
In 2007, the United States recorded real GDP growth of approximately -2.6% and nominal GDP growth of -1.8%. What was the inflation rate in 2007? -0.8% 4.4% 0.8% -4.4%
0.8%
In 1986, the United States recorded real GDP growth of 3.5% and nominal GDP growth of 5.5%. What was the inflation rate in 1945? -2% 9% 3.5% 2%
2%
(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of engines is $800, buyers and sellers will make exchanges at a price of _____ because sellers will refuse to sell for _____ than the world price. $800; more $600; less $600; more $800; less
800; less
Refer to the data dashboard shown. Which indicator tells you what managers are planning? Consumer confidence Business confidence Inflation Unemployment rate
Business Confidence
Consider your decision to attend class in college or skip it. Which of the four core principles of economics applies to the notion that attending class today will require you to give up time and energy to pay attention, but in doing so you will gain a better understanding of the material? Marginal principle Cost-benefit principle Interdependence principle Opportunity cost principle
Cost-benefit principle
Which of the following figures shows the correct shift in the market for the Japanese yen if Japanese interest rates decrease?
Decreased in Demand (shift left); Increased supply (shift right)
Consider your decision to attend class in college or skip it. Which of the four core principles of economics applies to the notion that each additional class you attend helps increase your likelihood of mastering the material? Cost-benefit principle Interdependence principle Opportunity cost principle Marginal principle
Marginal principle
Which of the following is an investment? Cameron saves $400 in his savings account. Mary buys $4,000 worth of Alibaba stock. Marios builds a new house. Dale purchases a house that was built in 1940.
Marios builds a new house.
The permanent income hypothesis implies that young consumers with no savings and low income will fund permanent consumption by: borrowing. dissaving. saving. not paying taxes.
borrowing.
The ceiling for the federal funds rate is set by the: discount rate. president of the country. repurchase agreements and interest on excess reserves. open market trading desk.
discount rate.
The concept of equity focuses on: profit. efficiency. the level of economic surplus. fairness.
fairness
Government spending adds directly to GDP through _____ and indirectly through _____. government purchases; military spending higher interest rates; crowding out government purchases; transfer payments transfer payments; government purchases
government purchases; transfer payments
Based on Okun's rule of thumb, if you forecast that the output gap will decline from -2% to -4%, the unemployment rate will: fall by 1%. fall by 2%. rise by 2%. rise by 1%.
rise by 1%
If government expenditure rises by $40 billion and the multiplier in the economy is 2.5, then real GDP_____, and the IS curve shifts to the_____. falls by $40 billion; left rises by $40 billion; right rises by $100 billion; right rises by $16 billion; right
rises by $100 billion; right
If the government runs a budget surplus, then the _____ loanable funds shifts to the _____. demand for; right supply of; right demand for; left supply of; left
supply of; right
When choosing a new interest rate, the neutral interest rate is an important starting point for the Federal Reserve because it is the rate at which: there is no unemployment in the economy. there is macroeconomic equilibrium. potential GDP has reached its maximum point. the economy is neither underperforming nor in an inflationary gap.
there is no unemployment in the economy.
These days people prefer electric vehicles over gasoline-powered vehicles. Which graph shows what will happen in the gasoline-powered vehicle market as a result of this?
(Graph D) Old Demand shifts to the left; causing prices and quantity to drop
Consider the following basket of goods: 50 hamburgers, 10 textbooks, eight T-shirts, and 100 bottles of water. Suppose that in 2015, each hamburger was $3.50, each textbook was $89.99, each T-shirt was $14, and each bottle of water was $1.50. In 2016, each hamburger was $3.60, each textbook was $95, each T-shirt was $13, and each bottle of water was $1.65. What was the approximate inflation rate in 2016? 4.4% 4.7% 4% -4.7%
4.7%
(Figure: Market for TVs 2) Suppose that the world price of TVs is $400, and the government imposes a $100 tariff. According to the figure, domestic consumers purchase _____ units from domestic producers and _____ units from foreign producers after the tariff. 20,000; 60,000 40,000; 30,000 60,000; 20,000 30,000; 40,000
40,000;30,000
The table shows statistics for three Canadian cities at several different points in time. What was the unemployment rate in Vancouver in January 2019? 5.9% 6.2% 6.6% 5.2%
5.2%
Which of the following lists only factors that would cause an increase in the supply of an item? A rise in the price of a substitute-in-production; an increase in the price of a complement-in-production; an expectation that the price of the item will increase in the future. A decrease in input prices; a technological innovation; a fall in the price of a substitute-in-production. A decrease in the number of sellers in the market; a fall in the price of a complement-in-production; a technological setback. An increase in input prices; a decrease in the number of sellers in the market; an increase in the price of a substitute-in-production.
A decrease in input prices; a technological innovation; a fall in the price of a substitute-in-production.
If you see a newspaper headline that says "Banks shut doors — depositors scrambling to get their money back," this is an example of _____ shock. a spending a financial a supply an interest rate
A financial
According to diminishing marginal utility, which of the following people would gain the lowest marginal benefit from an extra $100 of income? Shawna, a single mother of three young children with an annual household income of $19,000 Ariana, an actress with an annual household income of $1,500,000 Chin, a single person with an annual household income of $20,000 Devin, head of a three-person household with an annual household income of $120,000
Ariana, an actress with an annual household income of $1,500,000
Which of the following stages of the business cycle is most preferable when you graduate from college and begin looking for a job? Expansion Trough Contraction Recession
Expansion
Which of the following is NOT one of the three questions that should guide discussions and policies related to the redistribution of income that were presented in the chapter? How large are the benefits of redistributing income to those who most benefit from it? How fair is this redistribution? How long will it take to redistribute income? How large are the costs of redistribution of income?
How long will it take to redistribute income?
In the IS-MP analysis in the Fed model, a rise in investment will shift the: MP curve up. IS curve to the right. IS curve to the left. MP curve down.
IS curve to the right.
In many parts of the world, mobile health clinics travel to villages to treat patients, teach about good nutrition and hygiene, and carry out immunizations. How does this contribute to economic growth? It leads to a convergence in real GDP per person. It creates technological advancement in these villages. It encourages capital accumulation in these villages. It helps maintain a healthy population, which leads to development of the labor resource.
It helps maintain a healthy population, which leads to development of the labor resource.
You have four friends. Which of your friends can be described as "structurally unemployed"? Marty, who cannot find a job, though he is willing to accept less than the existing wage Kevin, who does not like the company he works for Kirstie, who was fired for being inefficient at her job Dolly, a recent graduate who is looking for the job that best suits her qualifications
Marty, who cannot find a job, though he is willing to accept less than the existing wage
The use of automated harvesting machines greatly increased productivity in farming. How does this affect the Phillips curve for an economy where agriculture is a significant part of GDP?
Point moves right. unexpected inflation and output gap increase
Barlow and Rusia own a nail salon. A manicure takes Barlow 60 minutes to complete and takes Rusia 45 minutes to complete. Completing a pedicure takes Barlow 45 minutes and takes Rusia 30 minutes. Who has a comparative advantage in pedicures? Rusia because she has a lower opportunity cost. Barlow because he is faster. Rusia because she is faster. Barlow because he has a lower opportunity cost.
Rusia because she has a lower opportunity cost.
The government passes a new initiative to provide a tax credit on research and innovation by firms. What is the impact on the production function, and what is the effect on economic growth in the country? Human capital is enhanced, and economic growth is positively affected. The capital stock increases, and economic growth is positively affected. Technological advancement occurs, and economic growth occurs. The capital stock decreases, and economic growth is negatively affected.
Technological advancement occurs, and economic growth occurs.
Which of the following is correct about a financial instrument and its future value, keeping all other things constant?The lower the interest rate on the instrument, the higher the future value.The longer the time to maturity of the instrument, the lower the future value.The higher the interest rate on the instrument, the higher the future value.The lower the present value of the instrument, the higher the future value.
The higher the interest rate on the instrument, the higher the future value.
Refer to the data dashboard shown. Which of the following is an indicator of excess capacity? Inflation Unemployment rate Consumer confidence Business confidence
Unemployment rate
During the economic downturn of the 1970s, lenders to Latin American countries raised interest rates. This caused Latin American debt to balloon, and these countries were unable to pay their debts. This is an example of: an automatic stabilizer. a debt crisis. crowding out. the interaction between monetary policy and fiscal policy.
a debt crisis.
The accompanying table provides data for five different oatmeal cookie sellers. Out of the sellers listed, who all are following the law of supply?
all other factors being equal, as the price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa. (Len, Ren, and Jen)
When price functions as a signal, it inspires buyers and sellers to change behavior. strengthens a buyer's or seller's position in the market. creates a line of communication between buyers and sellers. aggregates information on the market in one measure.
creates a line of communication between buyers and sellers
Efficient allocation of output requires that: each unit of output will be produced at minimum fixed cost. consumers will each pay a price equal to the marginal benefit received from the good. output will be distributed evenly across consumers and producers. each unit of output will go to the person who will get the highest marginal benefit from it.
each unit of output will go to the person who will get the highest marginal benefit from it.
When goods are allocated in a way that creates the largest economic surplus: output is evenly allocated across firms. production is minimized. the marginal benefit of the last unit bought is the maximum marginal benefit. efficient allocation has been achieved.
efficient allocation has been achieved.
Consider the Phillips curve shown here. In region B: the output gap is negative. inflation equals expected inflation. there is insufficient demand. inflation rises above expected inflation.
inflation rises above expected inflation.
Hand-to-mouth consumers: spend more on luxuries than on necessities. live paycheck to paycheck. engage in a significant amount of spending. have very high levels of consumption
live paycheck to paycheck.
The menu costs of inflation are the: costs of information search with regards to new inflation rates. overall costs of purchasing more inputs at higher prices. marginal costs of adjusting prices. lost interest earnings when holding cash.
marginal costs of adjusting prices.
A speculative bubble occurs when the: price of an asset falls below its fundamental value. price of an asset rises above its fundamental value. asset experiences a sudden fall in price. asset experiences liquidity risk.
rice of an asset rises above its fundamental value.
