Econ Reveiw

Refer to the above data. Equilibrium price will be: A) $4. B) $3. C) $2. D) $1.

$2

Refer to the above table. If the economy is producing at production alternative C, the opportunity cost of the tenth unit of consumer goods will be: A) 4 units of capital goods. C) 3 units of capital goods. B) 2 units of capital goods. D) 1/3 of a unit of capital goods.

1/3 of the units capital

If the nominal interest rate is 18 percent and the real interest rate is 6 percent, the inflation rate is: A) 18 percent. B) 24 percent. C) 12 percent. D) 6 percent.

12 percent

Refer to the above information. The unemployment rate in Bralone is: A) 2.5 percent. B) 3.2 percent. C) 5.0 percent. D) 6.9 percent.

6.9

Assume the natural rate of unemployment in the U.S. economy is 5 percent and the actual rate of unemployment is 9 percent. According to Okun's law, the negative GDP gap as a percent of potential GDP is: A) 4 percent. B) 8 percent. C) 10 percent. D) 2 percent.

8 percent

Which of the following is correct? A) APC + APS = 1. B) APC + MPS = 1. C) APS + MPC = 1. D) APS + MPS = 1.

APC + APS =1

If two goods are complements: A) they are consumed independently. B) an increase in the price of one will increase the demand for the other. C) a decrease in the price of one will increase the demand for the other. D) they are necessarily inferior goods.

a decrease in the price of one will increase the demand for the other

Which of the following is a final good or service? A) diesel fuel bought for a delivery truck B) fertilizer purchased by a farm supplier C) a haircut D) Chevrolet windows purchased by a General Motors assembly plant

a haircut

Economists use the term demand to refer to: A) a particular price-quantity combination on a stable demand curve. B) the total amount spent on a particular commodity over a stipulated time period. C) an upsloping line on a graph that relates consumer purchases and product price. D) a schedule of various combinations of market prices and amounts demanded.

a schedule of various combinations of market prices and amounts demanded

Which of the following explains why the aggregate demand schedule is downward sloping: A) the real-balances effect C) the foreign purchases effect B) the interest-rate effect D) all of the above

all of the above

The multiplier effect means that: A) consumption is typically several times as large as saving. B) a change in consumption can cause a larger increase in investment. C) an increase in investment can cause GDP to change by a larger amount. D) a decline in the MPC can cause GDP to rise by several times that amount.

an increase in investment can cause GDP to change by a larger amount

During a severe recession, we would expect output to fall the most in: A) the health-care industry. B) the clothing industry. C) agriculture. D) the construction industry.

construction

Which of the above diagrams illustrate(s) the effect of an increase in automobile worker wages on the market for automobiles? A) A only B) B only C) C only D) D only

d only

The aggregate demand curve is: A) vertical if full employment exists. B) horizontal when there is considerable unemployment in the economy. C) downsloping because of the interest-rate, real-balances, and foreign purchases effects. D) downsloping because production costs decrease as real output rises.

downsloping because of the interest-rate, real-balances, and foreign purchases effects.

Economic growth is best defined as an increase in: A) either real GDP or real GDP per capita. C) total consumption expenditures. B) nominal GDP. D) wealth in the economy.

either real GDP or real GDp per captia

Economist also call resources: A) free gifts of nature. B) consumption goods. C) units of money capital. D) factors of production.

factors of production

Refer to the above data. If the price in this market was $4: A) the market would clear; quantity demanded would equal quantity supplied. B) buyers would want to purchase more wheat than is currently being supplied. C) farmers would not be able to sell all their wheat. D) there would be a shortage of wheat.

farmers would not be able to sell all their wheat

Gross domestic product (GDP) measures and reports output: A) as an index number. B) in percentage terms. C) in dollar amounts. D) in quantities of physical units (for example, pounds, gallons, and bushels).

in dollar amounts

The determinants of aggregate supply: A) are consumption, investment, government, and net export spending. B) explain why real domestic output and the price level are directly related. C) explain the three distinct ranges of the aggregate supply curve. D) include resource prices and resource productivity.

include resource prices and resource productivity

An economist who favored expanded government would recommend: A) tax cuts during recession and reductions in government spending during inflation. B) tax increases during recession and tax cuts during inflation. C) tax cuts during recession and tax increases during inflation. D) increases in government spending during recession and tax increases during inflation.

increases in government spending during recession and tax increases during inflation

GDP can be calculated by summing: A) consumption, investment, government purchases, exports, and imports. B) investment, government purchases, consumption, and net exports. C) consumption, investment, wages, and rents. D) consumption, investment, government purchases, and imports.

investment, government purchases, consumption, and net exports

Expansionary fiscal policy is so named because it: A) involves an expansion of the nation's money supply. B) necessarily expands the size of government. C) is aimed at achieving greater price stability. D) is designed to expand real GDP.

is designed to expand real GDP

The economy's long-run aggregate supply curve: A) slopes upward and to the right. C) is horizontal. B) is vertical. D) slopes downward and to the right.

is vertical

Refer to the above diagrams. Other things equal, an interest rate increase will: A) shift curve A to the right and shift curve B upward. B) shift curve A to the left and shift curve B downward. C) leave curve A in place but shift curve B downward. D) leave curve A in place but shfit curve A upward.

leave curve A in place but shift curve B down

The French term "laissez-faire" means: A) "there is no free lunch." B) "let it be." C) "circular flow." D) "public ownership."

let it be

The most important determinant of consumption and saving is the: A) level of bank credit. B) level of income. C) interest rate. D) price level.

level of income

Assume an economy is operating at some point on its production possibilities curve, which shows civilian and military goods. If the output of military goods is increased, the output of civilian goods: A) will remain unchanged. C) must be decreased. B) may be either increased or decreased. D) must also be increased

must be decreased

Environmental pollution is accounted for in: A) GDP. B) PI. C) DI. D) none of the above.

none of the above

Inflation means that: A) all prices are rising, but at different rates. B) all prices are rising and at the same rate. C) prices in the aggregate are rising, although some particular prices may be falling. D) real incomes are rising.

prices in the aggregate are rising, although some particular prices may be falling

The two basic markets shown by the simple circular flow model are: A) capital goods and consumer goods. C) product and resource. B) free and controlled. D) household and business

product and resource

In contrast to investment, consumption is: A) relatively stable. B) relatively unstable. C) measurable. D) unmeasurable.

relatively stable

Specialization in production is important primarily because it: A) results in greater total output. B) allows society to avoid the coincidence-of-wants problem. C) allows society to trade by barter. D) allows society to have fewer capital goods.

results in greater total output

The aggregate supply curve: A) is explained by the interest rate, real-balances, and foreign purchases effects. B) gets steeper as the economy moves from the top of the curve to the bottom of the curve. C) shows the various amounts of real output that businesses will produce at each price level. D) is downsloping because real purchasing power increases as the price level falls.

shows the various amount of real output that businesses will produce at each price level.

Fiscal policy is carried out primarily by: A) the Federal government. C) state governments alone. B) state and local governments working together. D) local governments alone.

the Federal government

When the price of a product falls, the purchasing power of our money income rises and thus permits consumers to purchase more of the product. This statement describes: A) an inferior good. C) the substitution effect. B) the rationing function of prices. D) the income effect.

the income effect

a tax reduction of a specific amount will be more expansionary, the: A) smaller is the economy's MPC. C) smaller is the economy's multiplier. B) larger is the economy's MPC. D) less the economy's built-in stability.

the larger the economy's MPC

Which of the following statements pertains to macroeconomics? A) Because the minimum wage was raised, Mrs. Olsen decided to enter the labor force. B) A decline in the price of soybeans caused farmer Wanek to plant more land in wheat. C) The national productivity rate grew by 2.7 percent last year. D) The Pumpkin Center State Bank increased its interest rate on consumer loans by 1 percentage point.

the national productivity rate grew 2.7 percent last year

Which of the following do national income accountants consider to be investment? A) the purchase of an automobile for private, nonbusiness use B) the purchase of a new house C) the purchase of corporate bonds D) the purchase of gold coins

the purchase of a new house

The investment demand curve portrays an inverse (negative) relationship between: A) investment and real GDP. C) the nominal interest rate and investment. B) the real interest rate and investment. D) the price level and investment.

the real interest rate and investment

Which of the following will not produce an outward shift of the production possibilities curve? A) an upgrading of the quality of a nation's human resources B) the reduction of unemployment C) an increase in the quantity of a society's labor force D) the improvement of a society's technological knowledge

the reduction of unemployment

An economy is enlarging its stock of capital goods: A) when net investment exceeds gross investment. B) when gross investment exceeds replacement investment. C) whenever gross investment is positive. D) when replacement investment exceeds gross investment.

when gross investment exceeds replacement

the division of labor means that:A) labor markets are geographically segmented. C) workers specialize in various production tasks. B) unskilled workers outnumber skilled workers. D) each worker performs a large number of tasks.

workers specialize in various production tasks