econ final
BLS employees then visit 23,000 stores across 87 cities to record the prices every 6 months to update the CPI. True False
false
In most countries, political stability has little to do with economic growth. A. True
false
Inflation focuses on individual prices and not the price level as a whole. True False
false
Inflation occurs when prices in an economy rise as a whole (deflation is when they stay constant). True Your answer is not correct. False
false
RGDP in the US declined at an annualized rate by about 31% in the second quarter, 2020. It then increases at an annualized rate by about 33% in the third quarter. Thus, the US RGDP has increases slightly over the 2nd and 3rd quarters of 2020. True Your answer is not correct. False
false
The Bureau of Economic Analysis (BEA) is part of the Department of Labor. True False
false
Currently, in the basket of good created by the BLS for the CPI, there are about 100 different types of goods and servies placed into 8 major categories. True False
false
Complete the following table to indicate what effect a decrease in each of the consumption components will have on consumption. A decrease in... will (increase/decrease) consumption. the price level increase consumption. household wealth decrease consumption. expected future income decrease consumption. current disposable income decrease consumption. the interest rate increase consumption.
The level of total investment by firms in new machinery and equipment helps to determine how rapidly the economy grows. This is a macroeconomic issue. However, to understand how much new machinery and equipment firms decide to purchase, one must analyze the incentives individual firms face, which is a microeconomic issue.
macroeconomic microeconomic
A simple economy produces two goods, Bread and Software. Price and quantity data are as follows: In Year 2, nominal GDP is equal to: $67734.38 and real GDP is $33906.25 (enter both responses rounded to the nearest penny).
see google doc
Assume you were given the following demand for loanable funds equation: Q = 122 - 2i Where, Q is the quantity of loanable funds demanded and i is the interest rate. Where would this line cross the horizontal (the x) axis? Where would this line cross the vertical (the y) axis?
122 61
Below is a list of years and their annual average CPI values. Use these data to answer the following questions. Year 1960 1980 2000 2020 CPI Value 29.6 82.4 172.2 258.811 Assume that the price of a product was $20.93 in 1960, what would the value of the product be when converted to values in 2020? Ans: $
183
Suppose an economy is given by the following: Population = 279 million Labor force = 178 million The number of people employed = 169.1 million The number of people unemployed = 8.9 million Given the information above, the unemployment rate is 5%.
5%
The fictitious country of Nittany Nation saw it's GDP per-capita increase from $35573 in 2014 to $37452 in 2015. What was the growth rate in 2015? The fictitious country of Nittany Nation saw it's GDP per-capita increase from $6874 in 1970 to $37452 in 2015. What was the average annual growth rate over this time?
5.28% 3.84% see google doc
Assume the base year is the year 2000. Suppose the you were given the following CPI values across a number of years: Year CPI Value 2015 157.1 2016 170.8 2017 181.8 2018 199.9 What is the inflation rate in 2017? Ans: 6.44%
6.44 see google doc
A Penn State football fan with a Saquon Barkley football card wants to trade it for a Michael Jordan basketball card, but everyone the fan knows who has a basketball card doesn't want a football card. Economists characterize this problem as a failure of the A. principle of a double coincidence of wants. Your answer is correct. B. commodity money at work. C. market clearing mechanism. D. fiat money cration.
A
GDP is an imperfect measure of economic well-being because it fails to measure what types of production? A. Household production and the underground economy. Your answer is correct. B. Business investment and foreign production. C. Household production and foreign production. D. Foreign production and the government sector.
A
Scarcity means that resources are ______ and our wants as a society are _______. A. limited; unlimited Your answer is correct. B. unlimited; limited C. limited; limited D. unlimited; unlimited
A
Which of the following was not one of the three biggiest in macroeconomics talked about in the Canvas readings? A. employment B. money Your answer is correct. C. output & production D. prices
B
Suppose that you are available to go to work but have not looked for a job for at least the last four weeks because you believe that there aren't any jobs available. You would be counted as A. a discouraged worker. Your answer is correct. B. part of the labor force. C. unemployed. D. underemployed.
A
The difference between the nominal interest rate and the real interest rate is A. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate minus the inflation rate. Your answer is correct. B. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate plus the inflation rate. C. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate divided by the inflation rate. D. the real interest rate is the stated interest rate whereas the nominal interest rate is the real interest rate minus the inflation rate.
A
The unemployment rate A. shows the percentage of the labor force that is considered unemployed. Your answer is correct. B. is the amount of people in the population that are not working. C. is the amount of the labor force that is not working. D. shows the percentage of the population that is considered unemployed.
A
Transfer payments are not included in GDP calculations because A. transfer payments are simply transfers of income from one group to another and not a purchase of a new good or service. Your answer is correct. B. transfer payments come from taxes and government expenditures so they are already included in government purchases. C. transfer payments do not include movements of income between countries so they should only be included in foreign country GDPs. D. None of the above because transfer payments are included in GDP.
A
We refer to data on the economy as: A. economic indicators Your answer is correct. B. economic collections C. economic secrets D. economic pieces
A
Which of the following equals the amount of public saving? A. Government tax revenue minus the sum of government purchases and transfer payments to households. Your answer is correct. B. Government transfer payments to household minus the sum of government tax revenue and government purchases. C. The sum of government purchases and government tax revenue, minus transfer payments to households. D. The sum of government tax revenue, government purchases, and government transfer payments to households.
A
Which of the following is the correct formula for calculating the unemployment rate? A. Number of unemployed/Labor force×100 Your answer is correct. B. Labor force/Working−age population×100 C. Both of the formulas are used to calculate the unemployment rate. D. Neither formula is used to calculate the unemployment rate.
A
Which of the following statements regarding net exports is not correct? A. Net exports are typically one of the largest components of aggregate expenditure. Your answer is correct. B. Net exports are directly impacted by decisions made by consumers outside the domestic economy. C. Net exports are the one component of aggregate expenditure that can have a negative value. D. Net exports consist of exports minus imports.
A
In determining whether to borrow funds, firms compare the rate of return they expect to make on an investment with A. the interest rate they must pay to borrow the necessary funds. Your answer is correct. B. the initial cost of the investment. C. the total amount of profit they expect to make from the investment. D. the revenue expected from the investment. Which of the following factors determines the supply of loanable funds? A. the willingness of households and governments to save Your answer is correct. B. changes in the interest rate, which cause firms to undertake more or fewer investment projects C. the number of financial intermediaries available D. the quantity of stocks and bonds issued by firms Holding all else constant, a federal government budget deficit will A. decrease the supply of loanable funds and increase the equilibrium real interest rate. This is the correct answer. B. increase the demand for loanable funds and increase the equilibrium real interest rate. C. increase the supply of loanable funds and decrease the equilibrium real interest rate. Your answer is not correct. D. decrease the supply of loanable funds and decrease the equilibrium real interest rate.
A A A
Economic growth models predicts that the A. level of per capita GDP in poor countries will increase faster than rich countries and the poor nations will catch up with the rich nations. Your answer is correct. B. level of per capita GDP in poor countries will decrease over time and the poor nations will not be able to catch up with the rich nations. C. level of per capita GDP in rich countries will increase so fast that it will be difficult for poor countries with low income per capita to ever catch up with the rich countries. D. rich countries will have stagnant growth and will catch up with the poor countries, so that there will be a convergence toward a "poverty trap." Have poor countries been catching up to rich countries? A. There has been catch-up among all poor countries. B. There has been no catch-up by any of the poor countries. C. The rich countries are getting poorer and going down to the level of poor countries. D. There has been catch-up by some poor but industrialized countries.
A D
When the economy is at full employment, which types of unemployment remain? A. frictional and structural Your answer is correct. B. cyclical and structural C. frictional and cyclical D. None of the above. Full employment means that there is no unemployment, so the unemployment rate would be zero. The "normal" underlying level of unemployment in the economy is A. the sum of structural unemployment and frictional unemployment. B. the natural rate of unemployment. C. the full-employment rate of unemployment. D. All of the above.
A D
The graph below shows three production functions. PFo shows the current production function for the economy, and capital per worker is currently (K/L)o; thus ouput per worker is (Y/L)o. Suppose that there is a decrease in capital per worker. Which of the points on the graph could show the new capital per worker and output per worker? A. 4 This is the correct answer. B. 3 C. 2 D.
A see google doc
All of the following are problems in measuring the unemployment rate except that A. people on active military service are included as unemployed. Your answer is correct. B. discouraged workers are not included in the labor force. C. part-time workers are included as employed. D. lack of verification of people's responses in the household survey. When there are workers that drop out of the labor force, the official BLS measure of the unemployment rate understates the true degree of unemployment.
A understates
Suppose the fixed interest rate on a loan is 5.75% and the rate of inflation is expected to be 4.25%. The real interest rate is 1.5%. Suppose now that instead of 4.25%, the inflation rate unexpectedly reaches 5.5%. Who gains and who loses from this unanticipated inflation? (Mark all that apply.) A. Lenders lose from a lower real interest rate. Your answer is correct. B. Borrowers lose from a lower real interest rate. C. Borrowers gain from a lower real interest rate. Your answer is correct. D. Lenders gain from a lower real interest rate.
A,C
A politician makes the following argument: "The economy would operate more efficiently if frictional unemployment were eliminated. Therefore, a goal of government policy should be to reduce the frictional rate of unemployment to the lowest possible level." Eliminating all frictional unemployment A. will not be good for the economy since the presence of frictional unemployment decreases job creation. B. will not be good for the economy since the presence of frictional unemployment increases economic efficiency. Your answer is correct. C. will be good for the economy because the total unemployment will fall. D. will be good for the economy since the presence of frictional unemployment increases job destruction.
B
An important conclusion to draw from the circular-flow diagram is that A. the value of total income equals the value of GDP, but does not equal the value of expenditures. B. we can measure GDP by calculating the total value of expenditures on final goods and services, or we can measure GDP by calculating the value of total income. Your answer is correct. C. personal consumption expenditures are equal to the value of GDP. D. the total value of expenditures equals the value of GDP, but does not equal the value of income.
B
Gross Domestic Product (GDP) is A. the value of all expenditures made by households and firms in a country during a period of time. B. the market value of all final goods and services produced in a country during a period of time. Your answer is correct. C. the amount of income generated from wages, rents, and profits in a country during a period of time. D. the quantity of all final goods and services produced in a country during a period of time.
B
In calculating GDP, which levels of government spending are included in government purchases? A. spending by the federal government and some state governments, but not local governments B. spending by federal, state, and local governments Your answer is correct. C. spending by governments only on national security, social welfare, and other national programs D. spending by the federal government only
B
Look carefully at the following list. a. The coins in your pocket. b. The funds in your checking account. c. The funds in your savings account. d. The traveler's check that you have left over from a trip. e. Your Citibank Platinum MasterCard. Which of the things above are NOT included in the M1LOADING... definition of the money supply? A. b & e B. c & e Your answer is correct. C. a & b D. d & e
B
Suppose John Q. Worker is currently unemployed. Each day, John Q. Worker spends the entire day searching available job openings for an appropriate position given his set of skills, abilities, and interests. If someone asks John Q. what he does for work, he tells them that he is currently "in-between jobs." Which of the following best classifies John Q.'s unemployment status? A. Seasonally unemployed B. Frictionally unemployed Your answer is correct. C. Cyclically unemployed D. Structurally unemployed
B
Suppose that the inflation rate turns out to be much lower than most people expected. In that case, A. both borrower and lender will lose in this situation. B. a borrower will lose from the situation while a lender will gain. Your answer is correct. C. both borrower and lender will gain from the situation. D. a lender will lose from the situation while a borrower will gain.
B
The financial system of a country is important for long-run economic growth because A. people can increase their wealth very quickly under a healthy financial system. B. firms need the financial system to acquire funds from households. Your answer is correct. C. most firms rely on their own retained earnings and do not use the financial system. D. firms that use the financial system predominantly are being reckless.
B
What are the four major components of expenditures in GDP? A. Consumption, Investment, Government Purchases, and Non-Durable Expenditures B. Consumption, Investment, Government Purchases, and Net Exports Your answer is correct. C. Consumption, Intermediate Goods, Government Purchases, and New Expenditures D. Consumption, Intermediate Goods, Goods and Services, and Net Exports
B
When aggregate expenditure is equal to GDP, A. inventories fall, and GDP and employment increase. B. inventories are unchanged, and the economy is in macroeconomic equilibrium. Your answer is correct. C. inventories rise, and GDP and employment decrease. D.
B
When you see the term per-capita reported on a statistic that just means: A. the data have been divided by the amount of money to get it per-dollar B. the data have been divided by population to get it per-person Your answer is correct. C. the data have been divided by total capital to get it per-machine D. none of the above are correct.
B
Which groups tend to have above-average unemployment rates, and which groups tend to have below-average unemployment rates? Consider the following choices. Which one is not accurate? A. Black adults have above-average unemployment rates. B. Black teenagers as a group have lower unemployment rates than white teenagers. Your answer is correct. C. White adults have below-average unemployment rates. D. Generally, teenagers as a group have higher unemployment rates than adults.
B
Which of the following is considered to be a problem in using GDP as a measure of national well-being? A. Items included in U.S. GDP are valued in current dollars. B. GDP is not adjusted for changes in the environment. Your answer is correct. C. GDP does not include products that you produce for yourself. D.
B
What is the rule of 70? The rule of 70 A. is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to quadruple. B. is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to double. Your answer is correct. C. is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to increase by two hundred percent. D. states when an individual can be eligible for full social security benefits. If real GDP per capita grows at a rate of 2.8 percent per year, it will take 25 years to double.
B 25
What index is used to measure the average prices paid by a typical family? An average of the prices of the goods and services purchased by a typical family is the: A. aggregate price level index. B. consumer price index (CPI). This is the correct answer. C. inflation rate index. D. producer price index (PPI). Suppose the economy's consumer price index (CPI) in 2008 was 189 and the CPI in 2009 was 200. The inflation rate over the period from 2008-2009 was equal to 5.8%.
B 5.8%
The three types of unemployment are A. voluntary, structural, and cyclical unemployment. B. frictional, structural, and cyclical unemploment. Your answer is correct. C. full, frictional, and involuntary unemployment. D. natural, unnatural, and cyclical unemployment. The type of unemployment most likely to result in hardship for the people who are unemployed is A. structural because this type of unemployment requires retraining to acquire new job skills. Your answer is correct. B. cyclical and frictional because these two types are closely related. C. frictional because people need to find a new job in the labor market. D. cyclical because people have to wait for a recession to end.
B A
During which period did the country experience zero inflation? A. 1995 to 2000. B. 2000 to 2005. Your answer is correct. C. 1990 to 1995. D. 2005 to 2010. During which period did the country experience an increasing rate of inflation? A. 1995 to 2000. B. 1990 to 1995. Your answer is correct. C. 2000 to 2005. D. 2005 to 2010. During which period did the country experience a slow down in inflation, although the inflation rate remained positive? (This situation is called "disinflation.") A. 2000 to 2005. B. 1995 to 2000. Your answer is correct. C. 2005 to 2010. D. 1990 to 1995. During which period did the country experience deflation? A. 1990 to 1995. B. 2005 to 2010. Your answer is correct. C. 2000 to 2005.
B B B B
Economic growth will A. not be affected because the key to economic growth is capital accumulation whether there are diminishing returns or not. B. slow down or stop if more capital per hour is used because of diminishing returns to capital. Your answer is correct. C. not be sustained if developing countries stop accumulating capital because of diminishing returns to capital. D. be faster if more capital per hour is used because of increasing returns to capital. Some economies are able to maintain high growth rates despite diminishing returns to capital by using A. a larger proportion of capital, thereby making their production capital intensive, so the sheer volume of capital protects them from diminishing returns to capital. B. a labor-intensive technology because labor, unlike capital, is not subject to diminishing returns. C. better or enhanced technology, along with accumulating capital; these economies are growing because technology, unlike capital, is subject to increasing returns. Your answer is correct. D. a newer production method that, if used properly, produces increasing returns to capital.
B C
Endogenous growth theory (the Romer model) states that A. growth in labor productivity is a significant factor in bringing about long-run growth in real GDP per capita. B. firms will add to an economy's stock of knowledge capital by engaging in research and development or by contributing to technological change. Your answer is correct. C. firms will add to an economy's stock of physical capital leading to increases in real GDP but at a increasing rate. D. knowledge capital is subject to decreasing returns at the level of the whole economy but increasing returns at the firm level. Romer's growth theorydiffers from Solow since A. the new growth theory focuses on technological change and the quantity of capital available to workers whereas the Solow growth theory states that accumulation of knowledge capital is a key determinant of economic growth. B. the new growth theory says that physical capital is nonrival and nonexcludable and the Solow growth theory states that knowledge capital is nonrival and nonexcludable and is a key determinant of economic growth. C. the Solow growth theory focuses on technological change and the quantity of capital available to workers whereas the new growth theory states that accumulation of knowledge capital is a key determinant of economic growth. Your answer is correct. D. the Solow growth theory says that the rate of technological change is influenced by how individuals and firms respond to economic incentives, whereas the new growth theory leaves technological change unexplained.
B C
A way to achieve more economic growth is by increasing the knowledge capital of firms. Suppose policymakers wanted to assist in this increase. Which of the following policies would not help? A. The government could increase resources spent on assisting companies to enforce their patents. B. The government could reduce corporate tax rates for service and retail companies. Your answer is correct. C. The government could increase the amount of scholarships to allow more people to gain additional training and college education. D. The government could increase the level of funding for research grants to develop additional basic research. When reading about endogenous growth theory you will likely run into physical capital being referred to as ideas and knowledge capital being referred to as objects. True False
B False
A company lowered the prices of its products, expecting an increase in demand and sales by at least 10 percent. However, sales increased by only 4 percent. Which of the following, if true, can explain this outcome? A. The company sells its products online through multiple web sites to lower its operating costs. Your answer is not correct. B. Most consumers feel that, on average, the company's products have better features than what rival firms offer. C. The government increased personal income tax rates earlier this year. This is the correct answer. D. Almost 30 percent of the company's output is exported. E. The company launched a new product this year.
C
The real interest rate A. is equal to the inflation rate minus the nominal interest rate. B. is the interest rate that is quoted on a financial debt and a firm's assets. C. is the interest rate that adjusts GDP for changes in prices. D. is equal to the nominal interest rate minus the inflation rate. Your answer is correct. Suppose an economy has an inflation rate of 3.7% and a bank makes a loan with an interest rate of 5.1%. In this case, the real interest rate is 1.4%.
D 1.4%
Briefly explain whether you agree or disagree with the following statement: "I don't believe the government price statistics. The CPI for 2018 was 215, but I know that the inflation ratecouldn't have been as high as 115 percent in 2018." A. Agree. A CPI of 215 is a 115% increase in the price level from the base year. The inflation rate in 2018 is 115%. B. Agree. A CPI of 215 is a 115% increase from 100, which is impossible. C. Disagree. The inflation rate is the percentage increase in the price level from the previous year, not the base year. This is the correct answer. D. Disagree. The inflation rate is always the same as the natural rate of unemployment, which is about 5%.
C
Business cycles are A. all roughly the same in duration and severity. B. alternating periods of smoothly expanding and contracting economic activity, which are usually illustrated using movements in nominal GDP. C. alternating periods of expanding and contracting economic activity, which are usually illustrated using movements in real GDP. Your answer is correct. D. alternating periods in which real GDP increases in an expansion to a business cycle trough and then decreases in a recession to a business cycle peak.
C
If production steadily increases year over year, which of the following must be true? A. Nominal GDP will always increase year over year. B. Nominal GDP is higher than real GDP in years before the base year. C. Real GDP will always increase year over year. This is the correct answer. D. Real GDP is higher than nominal GDP in years after the base year. E. None of these are correct
C
If the GDP deflator in 2015 has a value of 97.0, then A. prices have increased 9.7 percent between the base year and 2015 B. the inflation rate in 2015 is 3 percent. C. prices have decreased 3 percent between the base year and 2015 Your answer is correct. D. the inflation rate in 2015 is -3 percent.
C
In the circular-flow diagram, who supplies factors of production in exchange for income? A. firms B. the government C. households Your answer is correct. D. All of the above.
C
Indicate whether the following statement is true or false and why. "A wage rising slower than the rate of inflation is actually falling." A. True. If wages are increasing slower than the average price of goods and services, purchasing power increases. B. False. A higher wage increases purchasing power regardless of inflation. C. True. If wages are increasing slower than the average price of goods and services, purchasing power falls. Your answer is correct. D. False. A higher wage decreases purchasing power regardless of inflation.
C
Macroeconomics is the study of A. why the U.S. has spent so much money on wars and government surveillance of its own citizens. B. the economy on a state-by-state basis, covering areas affected by the Commerce Clause. C. the economy as a whole, including topics such as inflation, unemployment, and economic growth. Your answer is correct. D. how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices.
C
Microeconomics is the study of A. how individuals and firms act altruistically to better society. B. how individuals make good decisions for themselves but hurt society. C. how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices. Your answer is correct. D. the economy as a whole, including topics such as inflation, unemployment, and economic growth.
C
Read the following statement and indicate where you agree or disagree. "During times when individuals and investors buy many shares of stock, investment will be high and, in turn, GDP will be as well" A. Disagree: While GDP will be high in this case, it is the result of an increase in consumer expenditure on stocks, not investment spending. B. Agree: GDP = C + I + G + NX. Therefore, as "I" (Investment) increases, GDP increases. C. Disagree: Investment as a component of GDP refers to the purchase of physical and human capital and inventory, not stock purchases. Your answer is correct. D. Agree: When investment is high, people must have more money to spend. Therefore, GDP increases.
C
Which of the following is included in the economist's definition of investment? A. the purchase of a share of stock B. the purchase of a rare coin or a deposit in a savings account C. the purchase of new machines, factories, or houses Your answer is correct. D. All of the above.
C
which of the following is not an explanation for why firms keep inventories? A. Inventories allow firms a place to store excess production if they incorrectly estimate the quantity that consumers wish to purchase. B. Because customers do not purchase goods at regular intervals, inventories allow firms to have goods in stock when customers want to buy. C. Because goods are produced in quantities that match the exact amounts consumers want to purchase at a given time. Your answer is correct. D. Firms keep inventories in order to provide customers with a wider selection of choices.
C
At the macro-economy level, A. physical capital exhibits increasing returns and knowledge capital exhibits decreasing returns. B. both knowledge capital and physical capital exhibit decreasing returns. C. knowledge capital exhibits increasing returns and physical capital exhibits decreasing returns. Your answer is correct. D. both knowledge capital and physical capital exhibit increasing returns. At the firm level, A. both knowledge capital and physical capital exhibit decreasing returns. Your answer is correct. B. both knowledge capital and physical capital exhibit increasing returns. C. physical capital exhibits increasing returns and knowledge capital exhibits decreasing returns. D. knowledge capital exhibits increasing returns and physical capital exhibits decreasing returns.
C A
Consider the per-worker production function graph. If there is an increase in capital per hour worked, holding technology constant, then A. there is a movement from A to C. B. there is a movement from B to D. C. there is a movement from A to B. Your answer is correct. D. there is a movement from D to C. If there is an increase in technology, holding constant the quantity of capital per hour worked, then A. there is a movement from A to C. Your answer is correct. B. there is a movement from C to D. C. there is a movement from A to B. D. there is a movement from D to B.
C A see google doc
Based on these numbers, can you determine which city had the most expensive homes in December 2020? A. New York B. Dallas C. It is not possible to determine this with the information provided. Your answer is correct. D. San Diego E.
c
An article in the Wall Street Journal notes, "Productivity improvements are a key ingredient for the U.S. economy to maintain a 3% growth rate, a goal of the Trump administration." Source: Eric Morath, "U.S. Worker Productivity Advances at Best Rate since 2010," Wall Street Journal, May 2, 2019. a. What economic variable was the Trump administration hoping would grow at a rate of 3 percent per year? A. Nominal GDP B. Real income C. Real GDP Your answer is correct. D. Saving rate b. What is the connection between productivity growth and growth in the variable you identified in part (a)? Productivity refers to ____________, and increases in productivity are a key determinant of this variable's growth rate. A. the ability of workers to produce a good or service at the lowest possible cost B. the quantity of goods and services that can be produced per worker or per hour of work Your answer is correct. C. the amount of income that can be earned per worker or per hour of work D. the quantity of capital available to workers per hour of work
C B
What are the four main determinants of investment? A. Disposable income, interest rates, taxes and cash flow. B. Expectations of future profitability, interest rates, exchange rate and cash flow. C. Expectations of future profitability, interest rates, taxes and cash flow. Your answer is correct. D. Expectations of future profitability, interest rates, disposable income and cash flow. How would an increase in interest rates affect investment? A. Real investment spending remains unchanged. B. Real investment spending may increase, decrease or remain the same depending on the rate of inflation. C. Real investment spending declines. Your answer is correct. D. Real investment spending increases.
C C
Capital can be differentiated between physical capital and human capital. Human capital is A. the energy use to bring together the factors of production to produce goods and services. B. the new developments in machinery and software. C. the knowledge and skills workers acquire from education and training or from their life experiences Your answer is correct. D. the goods manufactured to produce other goods and services. Which of the following is the best example of human capital? A. a manager devotes more spending to research and development B. a worker pays less taxes C. a manager buys workers more personal computers D. a worker gets a college degree
C D
The natural rate of unemployment is A. the sum of cyclical unemployment and frictional unemployment. B. the sum of structural unemployment and cyclical unemployment. C. the sum of structural unemployment and frictional unemployment. Your answer is correct. D. the sum of seasonal unemployment and cyclical unemployment. When the economy is at full employment, unemployment is equal to A. normal rate of unemployment −abnormal rate of unemployment. B. cyclical unemployment −seasonal unemployment. C. zero. D. the natural rate of unemployment.
C D
Which of the following is not a main determinant of net exports? A. The exchange rate between the dollar and other currencies. B. The price level in the United States relative to price levels in other countries. C. Expectations of future profitability in the United States. This is the correct answer. D. The growth rate of GDP in the United States relative to the growth rates of GDP in other countries. Your answer is not correct. How would an increase in the growth rate of GDP in Canada and Mexico affect U.S. net exports? An increase in the growth rate of GDP in Canada and Mexico will A. have no effect on U.S. net exports. B. decrease U.S. net exports by increasing exports to these countries. C. increase U.S. net exports by decreasing imports from these countries. D. increase U.S. net exports by increasing exports to these countries.
C D
The statement, "A burrito at the student center on campus is only $5!" represents money's function as A. a store of value. B. a medium of exchange. C. a unit of account. Your answer is correct. D. a standard of deferred payment. When a local restaurant accepts your $20 bill when you purchase a to-go order of pasta, the $20 bill serves as: A. a standard of deferred payment. B. a unit of account. C. a store of value. D. a medium of exchange. Your answer is correct. Your university gives you an education each year in exchange for money in the future through student loans. This illustrates which function of money? A. a unit of account. B. a medium of exchange. C. a store of value. D. a standard of deferred payment. Your answer is correct. If whole avocados were used as a society's money, which of the following functions would be the hardest to satisfy? A. a store of value. Your answer is correct. B. a standard of deferred payment. C. a unit of account. D. a medium of exchange.
C D D A
When we talk about economic growth (increases in real GDP per capita), we can break it down into two sources: inputs and productivity. Which of the follow statements is true? A. The Romer model focuses on the "try harder" strategy. B. The Solow model focuses on the "try better" strategy. C. One way to increase productivity is to improve allocative efficiency. Your answer is correct. D. We can think of inputs and the "try better" strategy Both Robert Solow and Paul Romer won Nobel Prizes for their work. True Your answer is correct. False
C True
Refer to the graph. According to the economic concept of catch-up which of the following is CORRECT? A. Poorer countries should grow more slowly and will be at point B. B. Richer countries should grow more slowly and will be at point A. C. Poorer countries should grow more quickly and will be at point A. Your answer is correct. D. Richer countries should grow more quickly and will be at point B.
C google
A government that collects more in taxes than it spends experiences A. an increase in the national debt. B. a budget deficit. C. a budget balance. D. a budget surplus.
D
Credit cards are A. included in both the M1 and the M2 definitions of the money supply. B. included in the M1 definition of the money supply, but not in the M2 definition. C. included in the M2 definition of the money supply, but not in the M1 definition. D. included in neither the M1 definition of the money supply nor in the M2 definition.
D
Even if GDP included these types of production, why would it still be an imperfect measure of economic well-being? A. GDP is not adjusted for pollution and it does not account for unequal income distribution. B. GDP is not adjusted for crime or other social problems. C. The value of leisure is not included in GDP. D. All of the above. Your answer is correct. E. A and C only.
D
The inflation rate is equal to: A. the difference in the price level over the past year. B. the difference in the price level over the past month. C. the percentage change in the price level over the past year. Your answer is correct. D. the percentage change in the price level of the past month.
c
Firms care about their after-tax rate of return on investment projects. The graph on the right represents the market for loanable funds. The initial demand and supply curves are D1and S1, respectively. Use the line drawing tool to shift the demand and or supply curve to illustrate the effect of an increase in business taxes. (For simplicity, assume no change in the federal budget deficit or budget surplus). Properly label this new line. Carefully follow the instructions above, and only draw the required objects. Use the graph to the right to answer the following questions. When business taxes increase, the equilibrium interest rate decreases and the equilibrium quantity of loanable funds decreases. What will be the effect of an increase in business taxes on the quantity of investment by firms and the economy's capital stock in the future? A. The quantity of investment will increase and the economy's future capital stock will decrease. B. The quantity of investment will increase and the economy's future capital stock will increase. C. The quantity of investment will decrease and the economy's future capital stock will increase. Your answer is not correct. D. The quantity of investment will decrease and the economy's future capital stock will decrease.
D
If production and prices steadily increase year over year, which of the following must be true? A. Nominal GDP is higher than real GDP in years after the base year. B. Real GDP will always increase year over year. C. Nominal GDP will always increase year over year. D. All of these are correct Your answer is correct. E. None of these are correct
D
Real GDP per capita is often used as a measure of general well-being. While increases in real GDP often do lead to increases in the well-being of the population, why is real GDP not a perfect measure of well-being? A. The value of leisure is not included. B. The costs of pollution are not included. C. GDP does not include crime rates or income distribution. D. All of the above.
D
The labor force participation rate is calculated by A. the percentage of the labor force that is in the working-age population or Working−age populationLabor force×100. B. the percentage of the employed workers that is in the labor force or EmployedLabor force×100. C. the percentage of the retired population that is in the labor force or Retired peopleLabor force×100. D. the percentage of the working-age population that is in the labor force or Labor forceWorking−age population×100.
D
The main way economists measure output and production is through: A. Gross National Product (GNP) B. The unemployment rate (U-3) C. Consumer Price Index (CPI) D. Gross Domestic Product (GDP)
D
The prices of homes changed the most during this year in A. Dallas. B. New York. C. San Diego. D. Phoenix.
D
The unemployment rate that includes discouraged workers and people working part-time who would prefer full-time jobs A. is higher than the official unemployment rate, but the difference between the two grows smaller in recessions. Your answer is not correct. B. is lower than the official unemployment rate, but the difference between the two grows smaller in recessions. C. is lower than the official unemployment rate, and the difference between the two grows larger in recessions. D. is higher than the official unemployment rate, and the difference between the two grows larger in recessions.
D
The _________ is the most well-known publisher for data on prices. A. Bureau of Econonomic Analysis (BEA) B. National Bureau of Economic Research (NBER) C. Federal Reserve Economic Database (FRED) D. Bureau of Labor Statistics (BLS)
D
When is the GDP Deflator in a specific year equal to 100? A. When the prices in the specific year are equal to the prices in the base year. B. When nominal GDP in the year is equal to the real GDP in the specific year. C. When the specific year is the base year. D. All of the above are true.
D
Which equation represents the relationship between GDP and the four major expenditure components? A. Y=(C+I)(G+NX) B. Y=(C+I)−(G+NX) C. Y=C(I+G+NX) D.
D
Which of the following does the aggregate expenditure macroeconomic model seek to explain? A. long-run economic growth B. inflation C. cyclical unemployment D. the business cycle
D
Which of the following governmental agencies released the Jobs Report? A. Department of Commerce B. National Bureau of Economic Research C. Bureau of Economic Analaysis D. Bureau of Labor Statistics
D
Which one of the following is not a function of money? A. Medium of exchange. B. Store of value. C. Unit of account. D. Open market operation. Your answer is correct. If something is to be considered as money, it has to fulfill all four functions.
D
Why do economists believe that setting a goal of zero percent unemployment is not feasible or desirable? Creating a goal of zero percent unemployment for an economy is not feasible nor is it desirable because A. the economy always experiences cyclical unemployment even if the economy were operating at the full-employment level of output. B. workers lose jobs due to changes in output of goods and services in the economy. C. many people retire each year and therefore they become unemployed making changes to the unemployment rate. D. the economy needs some short-term unemployment in order to allow for better matching of jobs with workers that possess the proper skill sets.
D
the base interest rate in the US is called the: A. mortgage rate. Your answer is not correct. B. discount rate. C. reverse repurchase rate. D. federal funds rate.
D
Long-run growth in GDP is determined by A. technology, investment, and consumption B. consumption, investment, and government expenditures. C. labor productivity, capital, and government expenditures. D. capital, labor productivity, and technology. Your answer is correct. Technological progress is affected by (check all that apply) A. investment in capital Your answer is correct. B. entrepreneurship Your answer is correct. C. private property rights This is the correct answer. D. population growth E. new software developments
D A,B,C,E
The two articles you had to read regarding the increase/decrease of GDP during last two quarters were on which website? A. Wall Street Journal B. New York Times C. The Economist D. Medium
d
The accumulation of knowledge capital can slow down due to firms underinvesting in research and development. This can then cause slowing of economic growth. Which of the following would be a reason for this to happen? A. research and development are expensive and at the firm level, it is subject to increasing returns. B. they can save that money and invest in capital accumulation, which is much better for growth. C. knowledge capital is both rival and excludable, and no other firms can freely access the research and development of one particular firm. D. knowledge capital is both nonrival and nonexcludable; other firms can freely access the research and development of one particular firm. Your answer is correct. Government policy can increase the accumulation of knowledge capital in all the following ways except by: A. investing in physical capital accumulation. Your answer is correct. B. protecting intellectual property with patents and copyrights. C. subsidizing education. D. subsidizing research and development.
D A
Which of the following is the definition of the new growth theory? A. the economic growth model that was first developed in the 1950s by Robert Solow, an economist at MIT and winner of the Nobel Prize in Economics B. a growth model that focuses on growth in the ratio of capital to labor as the key factor in explaining long-run growth in real GDP per capita C. a model of long-run economic growth that emphasizes that increases in technology are difficult to explain D. a model of long-run economic growth that emphasizes that technological change is influenced by economic incentives Your answer is correct. When are additions to knowledge capital subject to diminishing returns? A. when we look only at their effect on an individual firm Your answer is correct. B. when the additions are due to improved education for workers C. when those additions don't involve advances in basic science D. when we look at their effect on the economy as a whole Which of the following is not a government policy that will increase the accumulation of knowledge capital? A. protecting intellectual property with patents and copyrights B. encouraging the growth of labor unions
D A B
The Romer model suggests that the accumulation of knowledge capital can be slowed because knowledge is both nonrival and nonexcludable. How does the federal government intervene in the market to increase the amount of knowledge capital? A. Public education B. Subsidies C. Patents D. All of the above Your answer is correct. E. A and B only A good is said to be rival if the person or firm owning the good can keep others from using it in some way. True False Your answer is correct.
D false
Use the graph to the right to help determine which of the following statements regarding the labor force participation rates of adult men and women since 1950 is false. A. The overall labor force participation rate is higher today than it was in 1950. B. The labor force participation rate of adult men has declined gradually since 1950. Your answer is not correct. C. The labor force participation rate of adult women has increased significantly since 1950. D. The labor force participation rates of adult men and adult women were equal in 1990.
D see google doc
If prices steadily increase year over year, which of the following must be true? A. Nominal GDP is higher than real GDP in years before the base year. B. Real GDP is higher than nominal GDP in years after the base year. C. Real GDP will always increase year over year. D. Nominal GDP will always increase year over year. E. None of these are correct
E
we say that the economy as a whole is in macroeconomic equilibrium if A. total spending equals total production. B. aggregate expenditure equals total production. C. total spending equals GDP. D. aggregate expenditure equals GDP. E. all of the above.
E
he monthly market basket for consumers consists of pizza, t-shirts, and rent. The table below shows market basket quantities and prices for the base year (Year 1) and in the following year.
In Year 1, the CPI for the economy is 100.0 In Year 2, the CPI for this economy is 110.4
The Standard & Poor's/Case-Shiller Home Price Index is one of the leading indicators of housing price trends in the United States. The base year for the index is January 2000. The following table lists index numbers for December 2019 and December 2020 for five cities.
New York: 10.310.3% Miami: 9.29.2% Phoenix: 14.414.4% Dallas: 8.48.4% San Diego: 13.013.0% (see google doc)
Look at the following statements. Choose whether the statement is a microeconomic or a macroeconomic issue. a. The effect of higher cigarette taxes on the quantity of cigarettes sold. b. The effect of higher income taxes on the total amount of consumer spending. c. The reasons for the economies of East Asian countries growing faster than the economies of sub-Saharan African countries. This is a macroeconomic issue. d. The reasons for low rates of profit in the airline industry.
a. This is a microeconomic issue. b. This is a macroeconomic issue. c. This is a macroeconomic issue. d. This is a microeconomic issue.
Consider the following data for the United States: Year Real GDP ($ billion) 2016 17,680.3 2017 18,079.1 The percentage change in real GDP from 2016 to 2017= 2.26%. This percentage change in real GDP is also known as A. profit. B. the economic growth rate. Your answer is correct. C. marginal analysis. D. revenue.
b
Refer to the graph to answer the following questions: a. With the shift in the demand for loanable funds, the equilibrium real interest rate increases and the equilibrium quantity of loanable funds increases. b. The fact that the equilibrium quantity of loanable funds may increase along with an increase in the real rate of interest A. contradicts the law of demand. B. assumes that demand for loanable funds decreases with supply remaining unchanged. C. assumes that demand for loanable funds increases with supply remaining unchanged. Your answer is correct. D. assumes that supply of loanable funds increases with demand remaining unchanged. c. How much would the quantity of loanable funds demanded have increased if the interest rate had remained at i1? A. from 0 to L1 B. from L2 to L3 C. from L1 to L2 D. from L1 to L3 Your answer is correct. d. How much does the quantity of loanable funds supplied increase with the increase in the interest rate from i1 to i2? A. from 0 to L1 B. from L2 to L3 C. from L1 to L3 D. from L1 to L2
b. C c. D d. D see google doc
Based on the table, in Year 2, the value of the GDP deflator is 116.7 (Round your answer to one decimal place.) The inflation rate between Year 1 and Year 2 is 6.1%. (Round your answer to one decimal place.)
see google doc
Calculate the missing values in the table below by using the provided data. (Enter your responses as whole numbers.)
see google doc
Consider the per-worker production function Equal increases in the quantity of capital per hour worked lead to diminishing increases in output per hour worked.
see google doc
Consider the simple economy that produces only three products. Use the information in the following table to calculate the (annual rate of) LOADING... for 2020 as measured by the consumer price index (CPI). Using the information in the table, the CPI for 2019, with 2010 as the base year, is 104.5 The inflation rate for 2020 as measured by the consumer price index (CPI) is 7.75%.
see google doc
Match each of the following scenarios with the appropriate graph of the market for loanable funds. a. An increase in the real interest rate results in little increase in private saving by households. 4 b. A decrease in the real interest rate results in a substantial increase in spending on investment projects by businesses. 1 c. The federal government eliminates 401(k) retirement accounts. 2 d. The federal government reduces the tax on corporate profits (assume no change in the federal budget deficit or budget surplus). 3
see google doc
Refer to the diagram to answer the following: a. The movement from point A to point B represents: more capital per hour worked b. The movement from point B to point C represents: technological change c. The movement from point A to point C represents: technological change and more capital per hour worked
see google doc
Consumption is the largest component of GDP in the US. True Your answer is correct. False
true
GDP doesn't measure many things such as happiness or equality. True Your answer is correct. False
true
In the 3rd quarter, 2020, the US RGDP was reported to increase at a seasonally and inflation-adjusted 33.1% annual rate, a record increase. True This is the correct answer. False
true
The unemployment rate never reaches 0% True Your answer is correct. False
true
When data are seasonally adjusted they are adjusted to remove seasonal variation in the data. True Your answer is correct. False
true
When the BEA reports the GDP data from a quarter, they are reporting what a full year would look like (again, adjusting for both inflation and seasonality effects) if this quarterly production occurred. True Your answer is correct. False
true
Suppose that a simple economy produces only the following four goods and services: shoes, hamburgers, shirts, and cotton. Further, assume that all of the cotton is used in the production of shirts. The Nominal GDP for the year 2021 is
$7,450 see google doc
