Econ Final Study Guide
Mary makes 10 pies and 20 cakes a day and her opportunity cost of producing a cake is 2 pies. Tim makes 20 pies and 10 cakes a day and his opportunity cost of producing a cake is 4 pies. If Mary and Tim specialize in the good in which they have a comparative advantage, ______. A. Mary produces only pies B. Mary produces only cakes while Tim produces only pies C. Tim produces both pies and cakes D. Tim produces only cakes while Mary produces only pies
B. Mary produces only cakes while Tim produces only pies
Which of the following illustrates scarcity ? A. Mary loves watching movies. B. Megan wants to buy a CD that costs $25 but has only $10 to spend. C. I got a new dress from my mother. D. Ron will travel to New York City for Thanksgiving.
B. Megan wants to buy a CD that costs $25 but has only $10 to spend.
Which of the following is an example of a final good or service ? A. Dell buys Intel chips. B. Dan bought a Toyota Camry. C. GM buys Firestone tires. D. PCL construction company buys Lafarge cement.
B. Dan bought a Toyota Camry.
The table shows three possible outcomes for 2020 depending on the level of aggregate demand in that year. Potential GDP is $12 trillion, the natural unemployment rate is percent, and the price level in 2019 is 105. Use Okun's Law to calculate real GDP at each unemployment rate and fill in the right column of table. >>> Answer to 2 decimal places. Price Level Unemployment Rate Real GDP A 110.9 9 __________ B 113 6 __________ C 115.1 5 __________
11.04. 11.76. 12.00
The table shows four possible outcomes for 2020 depending on the level of aggregate demand in that year. Potential GDP is $ trillion, the natural unemployment rate is percent, and the price level in 2019 is 105.115 What is the expected price level and what is the expected inflation rate in 2020? Price (2018=100) Unemployment Rate (% of labor force) A 108 9 B 113 6 C 115 5 D 118 4 >>> Answer to 1 decimal place. The expected price level in 2020 is _____. The expected inflation rate in 2020 is _____ percent a year.
115 9.5
Consumers in a country buy only two goods, pens and CDs. The prices and quantities purchased by urban households are in the table below. The reference base year is 2018. The cost of the CPI market basket in 2019 is A. $3,580. B. $3,588. C. $3,400. D. $3,500. E. $3,508.
B. $3,588.
The table shows three possible outcomes for 2020 depending on the level of aggregate demand in that year. Potential GDP is $ trillion, the natural unemployment rate is percent, and the price level in 2019 is 105.114 Calculate the inflation rate for each possible outcome and fill in the right column of the table. >>> Answer to 1 decimal place. Price Level (2018 = 100) Unemployment Rate Inflation Rate A 108 9 _____________ B 113 6 _____________ C 115 5 _____________
2.9 7.6 9.5
The data in the table below show the consumption by families in a small (poor) economy. Quantity (2018) Price (2018) Price (2019) Salt 2 $1.00 $2.00 Bread 20 $2.50 $3.00 The families consume only salt and bread. The reference base period is 2018. The inflation rate between 2018 and 2019 is A. 23.1 percent. B. 18.8 percent. C. 123.1 percent. D. 52.5 percent. E. 118.8 percent.
A. 23.1 percent.
Which of the following items is not a factor of production? A. A bank loan to a farmer B. An orange grove in Florida C. An oil rig in the Gulf of Mexico D. A ski jump in Utah
A. A bank loan to a farmer
The table shows the production possibilities of an island community. Choose the best statement. A. If this community produces 3 pounds of fish and 22 pit faces a tradeoff. B. Suppose that this community produces 3 pounds of fit faces a tradeoff. C. When this community produces 4 pounds of fish and D. Suppose that this community produces 5 pounds of fit will get a free lunch.
A. If this community produces 3 pounds of fish and 22 pounds of berries, production is efficient but to produce more fish it faces a tradeoff.
Which of the following is an example of government expenditure on goods and services ? A. The White House buying internet services. B. Apple outsourcing the manufacture of iPhones. C. The U.S. government lowering the interest rate. D. The Indian government lowering import tariffs.
A. The White House buying internet services.
With free trade, the United States exports soybean to China and imports clothing from China. The winners from this trade are _______ and the losers are _______. A. U.S. buyers of clothing; U.S. clothing producers B. Chinese buyers of soybean; Chinese clothing producers C. Chinese buyers of clothing; Chinese growers of soybean D. U.S. buyers of soybean; U.S. growers of soybean
A. U.S. buyers of clothing; U.S. clothing producers
The table shows the production possibilities of an island community. Choose the best statement. A. When the islanders discover a better way of catching B. When a drought hits the island, its PPF shifts outward C. When islanders reduce the time they spend gathering D. If the islanders decide to spend more time gathering they face a tradeoff.
A. When the islanders discover a better way of catching fish, the island's PPF shifts outward.
The Fed's operational goals include _______. A. a core inflation rate of 2 percent a year and an output gap as small as possible B. maximum growth of stock prices and a low core inflation rate C. an economic growth rate of 3 percent a year and an unemployment rate equal to the natural unemployment rate D. a strong U.S. dollar on foreign exchange markets and a positive output gap
A. a core inflation rate of 2 percent a year and an output gap as small as possible
The fundamental force driving international trade is comparative _______. A. advantage: the country with the lower opportunity cost of production exports the good B. advantage: a country exports those goods that have high prices C. cost: a country trades with other countries that produce cheaper goods D. abundance: the country that produces more than it needs exports the good
A. advantage: the country with the lower opportunity cost of production exports the good
According to the data in the table above, A. as measured by real GDP per person, the standard of living remained the same between year 1 and year 2. B. the standard of living improved between year 1 and year 2. C. the standard of living worsened between year 1 and year 2. D. real GDP grew more rapidly than population between year 1 and year 2. E. real GDP grew more slowly than population between year 1 and year 2.
A. as measured by real GDP per person, the standard of living remained the same between year 1 and year 2.
A commercial bank's reserves are equal to the amount of A. currency in the bank's vault plus its reserve account at a Federal Reserve Bank. B. the bank's loans. C. the bank's government securities. D. the bank's deposits. E. only its currency in its vault.
A. currency in the bank's vault plus its reserve account at a Federal Reserve Bank.
When the government lowers the income tax rate, _______. A. employment increases and potential GDP increases B. employment does not change but labor productivity falls C. both labor productivity and potential GDP increase D. labor productivity rises and employment decreases
A. employment increases and potential GDP increases
The demand for a good decreases by 10 percent and the supply of the good decreases by 8 percent. Does the price of the good rise or fall? Why? The price of the good _______ because _______. A. falls; demand decreases by more than supply decreases and when demand decreases the price falls B. either rises or falls; demand decreases and supply decreases C. falls; when demand decreases or supply decreases the price falls D. rises; when demand decreases or supply decreases the price rises E. rises; demand decreases by more than supply decreases and when demand decreases the price rises
A. falls; demand decreases by more than supply decreases and when demand decreases the price falls
Suppose the real interest rate increases from 4 percent to 6 percent. As a result, A. firms decrease the quantity demanded of loanable funds. B. governments decrease their demand for loanable funds. C. governments decrease the quantity supplied of loanable funds. D. firms increase their demand for loanable funds. E. governments increase the supply of loanable funds.
A. firms decrease the quantity demanded of loanable funds.
Other things remaining the same, as the real interest rate increases A. firms will borrow less funds. B. firms will borrow more funds. C. firms' demand for funds will not change. D. the demand for loanable funds curve shifts leftward. E. firms will purchase new capital with its own funds instead of taking a loan.
A. firms will borrow less funds.
In an economy with no income taxes or imports, the expenditure multiplier is A. greater than 1 if the MPC is less than 1. B. less than 1 only if the MPC is less than 1. C. greater than 1 only if the MPC is greater than 1. D. equal to 1 if the MPC is greater than 1. E. always less than 1 no matter what the size of the MPC.
A. greater than 1 if the MPC is less than 1.
If New Zealand is operating at potential GDP, which of the following is true? i) New Zealand only has frictional and structural unemployment. ii) There is no inflation in New Zealand. iii) New Zealand has positive net exports. A. i only. B. i and iii. C. i and ii. D. i, ii and iii. E. ii only.
A. i only.
Oil soars to new record over $135 In the summer of 2008, the price of crude oil hit a record high above $135 a barrel. OPEC reported that there was no shortage of oil and that speculators had forced the price up. Source: BBC News, May 22, 2008 How can the price of oil rise even though there is no shortage of oil? The price of oil rises if speculators ______ the demand for oil or speculators ______ the supply of oil. A. increase; decrease B. decrease; decrease C. decrease; increase D. increase; increase
A. increase; decrease
The table shows the production possibilities of an island community. This community's opportunity cost of producing 1 pound of fish ______. A. increases as the quantity of fish caught increases B. is the increase in the quantity of berries gathered as t C. is 10 pounds of berries if the quantity of fish increase D. increases as the quantity of berries gathered increase
A. increases as the quantity of fish caught increases
U.S. national debt _______ when the federal government's _______. A. increases; outlays exceed tax revenue B. decreases; tax revenue rises faster than outlays C. increases; tax revenue rises faster than outlays D. decreases; outlays exceed tax revenue
A. increases; outlays exceed tax revenue
China's official reserves have ballooned, fueled by strong foreign investment and large trade surpluses. China is a net _______ and a _______ nation. A. lender; creditor B. borrower; creditor C. borrower; debtor D. lender; borrowing
A. lender; creditor
The largest category of commercial banks' assets is A. loans. B. checkable deposits. C. reserves. D. securities. E. currency.
A. loans.
Other things remaining the same, the ________ the real interest rate, the ________. A. lower; greater the quantity of loanable funds demanded B. higher; greater the demand for loanable funds C. lower; greater the quantity of loanable funds supplied D. lower; greater the demand for loanable fundsE. higher; greater the quantity of loanable funds demanded
A. lower; greater the quantity of loanable funds demanded
Discretionary fiscal policy to stimulate the economy includes _______. A. lowering the tax rate paid by households with middle incomes B. the fall in tax revenue as the economy goes into recession C. raising the tax on gasoline D. the rise in tax revenue collected from businesses as their profits increase
A. lowering the tax rate paid by households with middle incomes
Automatic fiscal policy _______. A. operates as the economy moves along its business cycle B. is weak unless the government cuts its outlays to reduce the deficit C. requires an action of the government D. reduces the deficit as the economy goes into recession
A. operates as the economy moves along its business cycle
Net exports equal the _______. A. private sector balance plus the government sector balance B. private sector balance plus the government's budget deficit C. government sector balance minus the private sector balance D. private sector balance minus the government sector balance
A. private sector balance plus the government sector balance
The U.S. tariff on paper _______ the U.S. price of paper, _______ U.S. production of paper and _______ the U.S. gains from trade. A. raises; increases; decreases B. raises; increases; increases C. doesn't change; increases; increases D. doesn't change; doesn't change; decreases
A. raises; increases; decreases
The supply of U.S. dollars in the foreign exchange market increases if _______. A. the U.S. interest rate differential decreases B. the value of U.S. imports increases C. the U.S. dollar depreciates against other currencies D. the U.S. dollar is expected to appreciate against other currencies in the future
A. the U.S. interest rate differential decreases
Potential GDP is A. the level of output produced when the economy is fully employed. B. the same as nominal GDP. C. another name for the Lucas wedge. D. the same as real GDP. E. shows that the Okun gap vastly exceeds the Lucas wedge.
A. the level of output produced when the economy is fully employed.
Oil soars to new record over $135 In the summer of 2008, the price of crude oil hit a record high above $135 a barrel. OPEC reported that there was no shortage of oil and that speculators had forced the price up. Source: BBC News, May 22, 2008 If a shortage of oil does occur, what does that imply about price adjustments and the role of price as a regulator in the market for oil? If a shortage did occur in the market for oil, it would imply that ______. A. the price is prevented from regulating buying and selling plans B. the market for oil needs government regulation C. the market for oil is a competitive market D. the demand for oil was greater than expected
A. the price is prevented from regulating buying and selling plans
Category Number of People (millions) Population 280 Working-age pop. 210 Labor force 150 Employed 135 Unemployed 15 Based on the above table, the unemployment rate is A. 7.1 percent. B. 10 percent. C. 11.1 percent D. 8.6 percent. E. 5.4 percent.
B. 10 percent.
Which of the following statements is correct? A. Labor earns wages and entrepreneurship earns bonuses. B. Capital earns interest and labor earns wages. C. Land earns interest and capital earns rent. D. Entrepreneurship earns interest and capital earns profit.
B. Capital earns interest and labor earns wages.
The federal government's major outlay in its budget is _______ and its major source of revenue is _______. A. subsidies to farmers; corporate taxes B. Social Security and other benefits; personal income taxes C. debt interest; sales of government bonds D. expenditure on goods and services; taxes on goods and services
B. Social Security and other benefits; personal income taxes
Which of the following examples describes macroeconomics ? A. Walmart has lowered the price of iPhones before the launch of the new iPhone 5S. B. The U.S. unemployment rate has increased by 0.4 percent. C. Alice Munro won the Nobel Prize in Literature in 2013. D. Thanksgiving is celebrated on the third Thursday of November every year.
B. The U.S. unemployment rate has increased by 0.4 percent.
In the figure above, in the long run what happens if the Fed increases the quantity of money by 5 percent? A. The real interest rate falls and the LRMD curve shifts rightward. B. The value of money falls by 5 percent and there will be a movement down along the LRMD curve. C. The nominal interest rate rises by 5 percent. D. The value of money rises by 5 percent. E. The price level rises by 5 percent and the LRMD shifts leftward.
B. The value of money falls by 5 percent and there will be a movement down along the LRMD curve.
What is human capital? A. A fruit picker B. Your professor's knowledge of the economy C. An auto assembly line robot D. Unskilled labor
B. Your professor's knowledge of the economy
Which of the following shifts the aggregate demand curve leftward?A. a decrease in the price level B. a decrease in government expenditure on goods and services C. a tax cut D. an increase in foreign income E. an increase in the price level
B. a decrease in government expenditure on goods and services
A government expenditure multiplier _______. A. is less than the tax multiplier B. exceeds 1 C. equals 1 D. equals the tax multiplier
B. exceeds 1
The Fed's monetary policy instrument is the _______. A. inflation rate B. federal funds rate C. long-term interest rate D. monetary base
B. federal funds rate
The Fed's "dual mandate" is to achieve _______. A. a stable quantity of money and stable prices B. low inflation and maximum employment C. zero unemployment and a stable means of payment D. a government budget surplus and low interest rates
B. low inflation and maximum employment
In the long run, what determines the value of money? A. equilibrium in the loanable funds market. B. money market equilibrium. C. real GDP. D. the government budget balance.E. international trade.
B. money market equilibrium.
If the Fed increases the quantity of money, in the short run the ________ and in the long run the ________. A. nominal interest rate rises; the price level falls B. nominal interest rate falls; the price level rises C. nominal interest rate falls; the price level falls D. price level rises; the nominal interest rate falls E. nominal interest rate rises; the price level rises
B. nominal interest rate falls; the price level rises
With free trade between the United States and Canada, the United States exports tomatoes and Canada exports maple syrup. U.S. consumers _______. A. of maple syrup lose more than U.S. producers of maple syrup gain B. of maple syrup gain more than U.S. producers of maple syrup lose C. of tomatoes gain and Canadian consumers of maple syrup lose D. of tomatoes gain more than U.S. producers of tomatoes lose
B. of maple syrup gain more than U.S. producers of maple syrup lose
A macroeconomic equilibrium occurs when the A. quantity of real GDP demanded is less than the quantity of real GDP supplied. B. quantity of real GDP demanded equals the quantity of real GDP supplied even if they are not equal to potential GDP C. quantity of real GDP demanded equals the quantity of real GDP supplied and both equal potential GDP. D. quantity of real GDP demanded is greater than the quantity of real GDP supplied. E. None of the above answers is correct.
B. quantity of real GDP demanded equals the quantity of real GDP supplied even if they are not equal to potential GDP.
Economics is the _____ the choices that individuals, businesses, governments, and entire societies make as they _____, and the influences on those choices, and the arrangements that coordinate them. A. set of personal opinions about; settle disagreements B. social science that studies; cope with scarcity C. social science that studies; settle disagreements D. set of personal opinions about; cope with scarcity
B. social science that studies; cope with scarcity
A net exports deficit will become a surplus if _______. A. the country appreciates its currency B. the government budget deficit is turned into a surplus and the private sector has a surplus C. the private sector surplus adjusts to equal the government sector deficit D. private saving and government saving exceed private investment
B. the government budget deficit is turned into a surplus and the private sector has a surplus
Potential GDP is A. another name for nominal GDP. B. the level of output produced when the economy is fully employed. C. a measure of the short term fluctuations in real GDP. D. another name for real GDP. E. equal to the maximum amount of goods and services that can be produced at any given time.
B. the level of output produced when the economy is fully employed.
If an increase of $10 billion of investment results in an increase in equilibrium expenditure of $40 billion, the expenditure multiplier equals A. $10 billion ÷ $40 billion = 0.25. B. $10 billion × $40 billion = $400 billion. C. $40 billion ÷ $10 billion = 4. D. $10 billion − $40 billion = −$30 billion. E. $40 billion − $10 billion = $30 billion.
C. $40 billion $10 billion = 4.
According to the data in the table above, real GDP grew at a rate of ________ between year 1 and year 2. A. 55 percent B. 50 percent C. 10 percent D. 1 percent E. 5 percent
C. 10 percent
The data in the table below show the consumption by families in a small (poor) economy. Quantity (2018) Price (2018) Price (2019) Salt 2 $1.00 $2.00 Bread 20 $2.50 $3.00 The families consume only salt and bread. The reference base period is 2018. The CPI in 2018 is A. 124. B. 106.2. C. 100. D. 94.2. E. 140.5.
C. 100.
The data in the table below show the consumption by families in a small (poor) economy. Quantity (2018) Price (2018) Price (2019) Salt 2 $1.00 $2.00 Bread 20 $2.50 $3.00 The families consume only salt and bread. The reference base period is 2018. The CPI in 2019 is A. 100. B. 23.1. C. 123.1. D. 118.8. E. 18.8.
C. 123.1.
Based on the above table, the labor force participation rate is A. 53.6 percent. B. 82 percent. C. 71.4 percent. D. 75 percent. E. 64.3 percent.
C. 71.4 percent.
Using the table above, the labor force participation rate is A. 10.0 percent. B. 90.0 percent. C. 83.3 percent. D. 11.1 percent. E. 100 percent.
C. 83.3 percent.
Belgium's real GDP per person is $33,000 and Austria's is $34,700. The population growth rate in Belgium is 0.13 percent and the growth rate of real GDP is 3.0 percent. The population growth rate in Austria is 0.08 percent and the growth rate of real GDP is 3.3 percent. If these growth rates continue, how many years will it take for Belgium's real GDP per person to equal Austria's real GDP per person? A. Just over 23 years B. Just over 24 years C. Belgium's standard of living will never equal Austria's. D. Over 230 yearsE. Just over 21 years
C. Belgium's standard of living will never equal Austria's.
Which of the following describe the "invention" of banking? A. Clergy in the Renaissance created the banking system to help further the growth of the church. B. The United States government founded the Federal Reserve in 1913. C. Goldsmiths in the sixteenth century issued gold receipts which entitled its owners to reclaim their gold on demand. D. Members of the New York Stock Exchange founded the Bank of America in the 1700s. E. The British Empire created a banking system to fund its exploration of the New World.
C. Goldsmiths in the sixteenth century issued gold receipts which entitled its owners to reclaim their gold on demand.
Which of the following is an example of consumption expenditure ?A. United buying Dell PCs. B. Peter buying stocks. C. Rachel buying a TV. D. Mary buying a house.
C. Rachel buying a TV.
Which of the following statements about U.S. production is correct?A. The manufacture of goods represents more than 50 percent of total production. B. Real estate services account for 14.5 percent of the value of total production, larger than any other item of services C. Services represent 78.2 percent of U.S. production by value and that percentage doesn't fluctuate much from year t D. Construction accounts for a larger percentage of total production than does manufacturing.
C. Services represent 78.2 percent of U.S. production by value and that percentage doesn't fluctuate much from year to year.
The table shows the production possibilities of an island community. Choose the best statement. A. This community has enough resources to produce 2 B. This community can produce 2 pounds of fish and 30 C. This community will waste resources if it produces 2 D. This community cannot produce 2 pounds of fish and
C. This community will waste resources if it produces 2 pounds of fish and 22 pounds of berries.
An increase in the U.S. interest rate relative to other countries will lead to ________ in the supply of dollars and a ________ in the exchange rate. A. no change; rise B. a decrease; fall C. a decrease; rise D. an increase; riseE. an increase; fall
C. a decrease; rise
If the quantity of money supplied ________ the quantity demanded, in the long run the value of money ________. A. equals; equals zero B. exceeds; rises as people buy bonds C. exceeds; falls as people spend their surplus money D. is less than; falls as people spend their surplus money E. is less than; does not change unless the Fed increases the money supply
C. exceeds; falls as people spend their surplus money
Net exports of goods and services is the value of _____ of goods and services _____ the value of _____ of goods and services. A. exports; plus; imports B. exports; times; imports C. exports; minus; imports D. imports; minus; exports
C. exports; minus; imports
When investment increases, the ________ in aggregate demand is ________ the change in investment. A. increase; smaller than B. increase; the same as C. increase; greater than D. decrease; the same as E. decrease; greater than
C. increase; greater than
If investment increases by $100, then the aggregate expenditure model concludes that equilibrium expenditure A. increases by $100. B. increases by less than $100. C. increases by more than $100. D. remains unchanged. E. decreases by $100.
C. increases by more than $100.
The Fed fights inflation by _______. A. decreasing the monetary base, which raises the interest rate and increases saving B. lowering the federal funds rate, which lowers interest rates and decreases aggregate demand C. raising the federal funds rate, which raises interest rates and decreases aggregate demand D. lowering the long-term real interest rate, which increases investment and spurs economic growth
C. raising the federal funds rate, which raises interest rates and decreases aggregate demand
During 1994, Brazil experienced severe frosts, which wiped out many coffee plantations. New plantations in Brazil began to produce coffee beans in 1999.During the early 2000s, countries such as Vietnam started to produce coffee beans and coffee shops such as Starbucks started to spring up across Europe. Consider these events. Why did the price rise during the late 1990s, fall during the early 2000s, and rise again after 2003? The price rose during the late 1990s because the _______. A. demand for coffee increased B. the supply of coffee increased and the demand for coffee decreased C. supply of coffee decreased D. supply of coffee increased E. demand for coffee decreased The price fell during the early 2000s because the ______. The price rose again after 2003 because the ______. A. demand for coffee decreased; demand for coffee decreased further B. supply of coffee increased; supply of coffee increased further C. demand for coffee decreased; supply of coffee decreased D. supply of coffee increased; demand for coffee increased E. supply of coffee increased; supply of coffee decreased
C. supply of coffee decreased D. supply of coffee increased; demand for coffee increased
The quantity of U.S. dollars demanded in the foreign exchange market increases if _______. A. traders expect the future exchange rate to rise B. the value of U.S. imports increases C. the U.S. dollar depreciates against other currencies D. the U.S. interest rate rises relative to those in other countries
C. the U.S. dollar depreciates against other currencies
If autonomous spending decreases, then A. equilibrium expenditure decreases by the same amount. B. the expenditure multiplier means that equilibrium expenditure increases by a larger amount. C. the expenditure multiplier means that equilibrium expenditure decreases by a larger amount. D. equilibrium expenditure does not change. E. the expenditure multiplier means that equilibrium expenditure increases by a smaller amount.
C. the expenditure multiplier means that equilibrium expenditure decreases by a larger amount.
If a firm wants to borrow $10 million and the real interest rate increases from 5 percent to 6 percent, then the cost of the investment has increased by A. $6 million per year. B. $1 million per year. C. $600,000 per year. D. $100,000 per year. E. nothing because the real interest rate is the return the firm will earn on its investment.
D. $100,000 per year.
In the table above, the unemployment rate is A. 12 percent. B. 11 percent. C. 6 percent. D. 10 percent. E. 8 percent.
D. 10 percent.
In the table above, the size of the labor force is A. 34 million. B. 40 million. C. 46 million. D. 42 million. E. 80 million.
D. 42 million.
Which of the following classifications is correct? A. City streets are consumption goods because they wear out with use. B. The coffee maker in the coffee shop at an airport is a consumption good because people buy the coffee it produces C. Stocks are capital goods because when people buy and sell them they make a profit. D. A shopping mall produces retail services and is a capital good.
D. A shopping mall produces retail services and is a capital good.
Which of the following examples describes microeconomics ? A. Germany is a country in Western Europe. B. The Yukon territory of Canada has extreme cold weather. C. The Federal Reserve is increasing interest rates. D. People prefer buying iPhones over Nokia phones.
D. People prefer buying iPhones over Nokia phones.
Which of the following is an example of an intermediate good or service ? A. Sarah bought a Sony HDTV. B. Mike bought Puma shoes. C. United buys Boeing aircrafts. D. Samsung buys compressors for manufacturing refrigerators.
D. Samsung buys compressors for manufacturing refrigerators.
_____ are examples of goods and _____ are examples of services. A. Haircuts; shoes B. Weather forecasts; interest rates C. Donations to flood victims; football games D. Shoes; haircuts
D. Shoes; haircuts
With higher gasoline prices, the demand for ethanol increased. Because ethanol is made from corn, the price of corn rose, which in turn increased the price of bread, chicken, cheese, and the fast-foods that use cheese. As people in China and India become richer, they are eating more beef and chicken and less rice and tofu another source of higher food prices in the United States. — Source: USA TODAY , September 6, 2007 Explain why food prices in the United States will rise as people in India and China become richer and can afford to buy beef and chicken. A. The quantity of food demanded in the United States increases up along the demand curve and the price rises. B. The increase in the demand for food produced in the United States increases the price of food if the demand for U.S C. The quantity of food supplied in the United States increases, the supply curve shifts rightward, and the price rises. D. The demand for food produced in the United States increases, the demand curve shifts rightward, and the price of fo
D. The demand for food produced in the United States increases, the demand curve shifts rightward, and the price of food rises.
A tax cut increases _______. A. aggregate demand but has no effect on aggregate supply B. aggregate supply but has no effect on aggregate demand C. aggregate demand because it increases consumption expenditure and decreases aggregate supply because labor p D. aggregate demand because it increases disposable income and increases aggregate supply because it is an incentive
D. aggregate demand because it increases disposable income and increases aggregate supply because it is an incentive to supply more labor
Needs-tested spending is _______ fiscal policy because it _______. A. automatic; increases when the government's budget deficit falls B. discretionary; increases when tax revenue increases C. discretionary; is determined by economic hardship D. automatic; increases in recession and decreases in expansion
D. automatic; increases in recession and decreases in expansion
If Country A's real GDP is growing at 6 percent per year and Country B's real GDP is growing at 6 percent per year, then the standard of living is A. changing at the same rate in Country A and Country B. B. growing more slowly in Country A. C. higher in Country B. D. changing at the same rate in Country A and Country B only if the rate of population growth is the same in both countries E. growing more rapidly in Country A.
D. changing at the same rate in Country A and Country B only if the rate of population growth is the same in both countries.
The current account balance equals _______. A. the capital and financial account balance minus the official settlements account balance B. net exports plus the official settlements balance C. net exports plus net foreign investment in the United States D. exports minus imports plus net interest and net transfers
D. exports minus imports plus net interest and net transfers
A country will export wheat if, with no international trade, _______. A. its domestic price of wheat exceeds the world price B. other countries have a shortage of wheat C. it produces a surplus of wheat D. its opportunity cost of producing wheat is below the world price
D. its opportunity cost of producing wheat is below the world price
The idea that potential GDP is the sustainable upper limit of production means that A. inflation must always occur in a growing economy. B. unemployment can only temporarily be zero in a healthy economy. C. real GDP may be temporarily less than potential GDP. D. real GDP may be temporarily larger than potential GDP, but not permanently. E. the economy is operating environmentally efficiently.
D. real GDP may be temporarily larger than potential GDP, but not permanently.
Macroeconomic equilibrium occurs when A. there is no inflation. B. real GDP is equal to potential GDP. C. the economy is fully employed. D. the aggregate quantity demanded is equal to the aggregate quantity supplied. E. the price level equals the potential price level.
D. the aggregate quantity demanded is equal to the aggregate quantity supplied.
A change in any of the following factors EXCEPT ________ shifts the aggregate demand curve. A. the foreign exchange rate B. foreign income C. expectations about the future D. the money wage rate E. monetary and fiscal policy
D. the money wage rate
Consumers in a country buy only two goods, pens and CDs. The prices and quantities purchased by urban households are in the table below. Quantity Price Quantity. Quantity(2018) Price(2018) Quantity(2019) Price(2019) Pens 400 $1.00 400 $1.02 CDs 200 $15.00 200 $15.90 If 2018 is the reference base year, the cost of the CPI market basket in the base year is A. $3,580. B. $3,408. C. $3,500. D. $3,508. E. $3,400.
E. $3,400.
When goldsmiths issued receipts to gold owners, and those gold receipts circulated while gold stayed in the goldsmiths' safes, A. the gold receipts were considered money because they were used as a means of payment. B. an infant banking system developed in sixteenth century Europe. C. money was invented. D. fiat money was created. E. Both A and B are correct.
E. Both A and B are correct.
Which of the following is NOT held as an asset by banks? A. reserves B. loans C. currency in the bank's vaults D. securities E. checkable deposits
E. checkable deposits
If the U.S. interest rate differential falls, then the exchange rate ________. A. definitely rises B. rises only if it was the foreign interest rate that changed C. falls only if it was the U.S. interest rate that changed D. does not changeE. definitely falls
E. definitely falls
Suppose an economist stated that Brazil had achieved its potential GDP 2013. This would imply that at this level of real GDP, Brazil experienced A. unemployment equal to zero. B. a negative Okun Gap. C. inflation equal to zero. D. peak in its business cycle in 2013. E. full employment.
E. full employment.
Increases in autonomous expenditure induce ________ in aggregate expenditure thereby making the multiplier ________. A. further increases; less than one B. a decrease; greater than one C. further increases; unnecessary D. a decrease; less than one E. further increases; greater than one
E. further increases; greater than one
The long run money demand curve shows− A. how the Fed determines the appropriate interest rate. B. the relationship between potential GDP and money demand. C. that the value of money is directly related to the quantity of money demanded. D. the relationship between real GDP and money demand. E. that the value of money influences the quantity of money that households and firms plan to hold.
E. that the value of money influences the quantity of money that households and firms plan to hold.
If the real interest rate rises, A. the demand for loanable funds curve shifts rightward. B. the demand for loanable funds curve shifts leftward. C. the quantity of loanable funds demanded increases. D. there is is movement down along the demand for loanable funds curve. E. the quantity of loanable funds demanded decreases.
E. the quantity of loanable funds demanded decreases.
If Country A's real GDP per person is growing at 6 percent and Country B's real GDP per person is growing at 3 percent, thenA. the standard of living is higher in Country A. B. the standard of living is higher in Country B. C. we cannot say whose standard of living is growing more rapidly without knowing the growth rate of real GDP. D. we cannot say whose standard of living is growing more rapidly without knowing the population growth rate. E. the standard of living is growing more rapidly in Country A.
E. the standard of living is growing more rapidly in Country A.
The table shows four possible outcomes for 2020 depending on the level of aggregate demand in that year. Potential GDP is $ trillion, the natural unemployment rate is percent, and the price level in 2019 is 105. Price level (2018 = 100). Unemployment rate (percentage of labor force) A 108 9 B 113 6 C 115 5 D 118. 4
See graph
The table shows four possible outcomes for 2020 depending on the level of aggregate demand in that year. Potential GDP is $ trillion, the natural unemployment rate is percent, and the price level in 2019 is 105. Price level (2018 = 100) Unemployment rate (percent of labor force) A 108 9 B 113 6 C 115 5 D 118 4 Draw the four points A, B, C, and D that lie on the short-run Phillips curve using the data given in the table. Label them. Draw the short-run Phillips curve for 2020 through these points. Label it SRPC.
See graph