Macro Economics Final

Suppose that net exports are -$200 billion and exports are $900 billion. What are imports? $500 billion $1,100 billion $200 billion $700 billion There is not enough information to answer this question.

$1,100 billion

George can produce 30 jars of jam or 15 videos in an hour with his resources while Amy can produce 15 jars of jam or 30 videos. Preston, your roommate, claims that George has the comparative advantage in the production of videos. True False

F

Required reserves are a set percentage of total reserves that must be held in cash in a bank's vault or in the bank's reserve account at the Fed. True False

F

The sum of the unemployment rate and the labor force participation rate always equals 100 percent. True False

F

Which of the following does GDP omit? Jack purchases $2,300 worth of stock in company X. Bob mows his lawn and washes and irons his shirts. Helen receives $4,000 a year in Social Security payments. a and b a, b, and c

a, b, and c

Saying "the marginal costs are lower than the marginal benefits" is the same as saying the additional costs are greater than the additional benefits. the costs minus the benefits equal the net costs. the additional benefits are greater than the additional costs. the benefits are greater than the costs. the total costs are lower than the average benefits.

the additional benefits are greater than the additional costs.

When foreign income rises, U.S. aggregate demand and aggregate supply will be unaffected. supply will shift to the left. demand will shift to the left. demand will shift to the right. supply will shift to the right.

demand will shift to the right.

The three ways of measuring Gross Domestic Product are the __________ approach, the ________ approach and the __________ approach. expenditure; income; value-added expenditure; national product; circular flow real gross domestic product; nominal gross domestic product; gross national product net national product; personal income; disposable income national product; income; net national product

expenditure; income; value-added

Net exports equals exports divided by imports. the sum of exports and imports. exports minus imports. exports during the year. none of the above

exports minus imports.

If demand decreases by a greater amount than supply increases, then equilibrium price __________ and equilibrium quantity __________. falls, rises rises, falls falls, falls rises, rises

falls, falls

Which of the following is counted in GDP? the trading of 100 shares of Microsoft stock the services of a real estate broker government transfer payments the sale of a used car none of the above

the services of a real estate broker

"Entrepreneurship" is the talent for organizing the use of land, labor and capital, among other things. skill in influencing government regulators and legislators. accumulated technical knowledge in using labor and capital. knowledge of the particular natural resources to be found in a given area.

the talent for organizing the use of land, labor and capital, among other things.

Suppose that nondurable goods spending is $200 billion, durable goods spending is $400 billion, new residential housing spending is $500 billion, and spending on services is $700 billion. What does consumption equal? $1,800 billion There is not enough information to answer this question. $1,100 billion $1,300 billion $600 billion

$1,300 billion

A bank has $10,000 in excess reserves and the required reserve ratio is 20 percent. This means the bank could have __________ in checkable deposit liabilities and __________ in total reserves. $80,000, $10,000 $50,000, $25,000 $100,000, $30,000 $100,000, $20,000

$100,000, $30,000

Suppose there are five goods in the economy, A-E. The current-year quantity of each is 10A, 20B, 30C, 40D, and 50E. Current-year prices are $1 for each unit of A, $2 for each unit of B, $3 for each unit of C, $4 for each unit of D, and $5 for each unit of E. Base-year prices are $1 for each good. Real GDP in the current year equals $180. $100. $550. $150. $130.

$150.

Suppose there are five goods in the economy, A-E. The current-year quantity of each is 10A, 20B, 30C, 40D, and 50E. Current-year prices are $1 for each unit of A, $2 for each unit of B, $3 for each unit of C, $4 for each unit of D, and $5 for each unit of E. Base-year prices are $1 for each good. Real GDP in the current year equals _________ and (nominal) GDP equals _________. $550; $150 $130; $530 $150; $550 $530; $130 none of the above

$150; $550

Ninth National Bank holds $200 million in checkable deposits and $18,000,000 in total reserves. With a required reserve ratio of 8 percent, how much in excess reserves is Ninth National holding? $218,000,000 $2,000,000 $17,440,000 $16,000,000 $1,440,000

$2,000,000

A bank has $50,000 in excess reserves and the required reserve ratio is 10 percent. This means the bank could have __________ in checkable deposit liabilities and __________ in (total) reserves. $250,000; $75,000 $50,000; $25,000 $500,000; $90,000 $100,000; $20,000

$250,000; $75,000

Suppose the total market value of all final goods and services produced this year in economy X is $4 million. Of the $4 million worth of goods, $3 million is sold and $1 million is held in inventory. For this year, the GDP for economy X is $4 million. $3 million. $1 million. $7 million. none of the above

$4 million.

In the market for good X there are three buyers, Adam, Bill, and Carolyn. Adam buys 3 units of good X at $4, Bill buys 7 units of good X at $4, and Carolyn buys 8 units of good X at $4. A point on the market demand curve consists of the following price-quantity combination: $4, 10 $4, 18 $4, 15 $5, 8 none of the above

$4, 18

Look at the following data: GDP = $7,920 billion; investment = $2,100 billion; exports = $300 billion; government purchases = $1,450 billion; consumption = $4,500 billion. What does import spending equal? $430 billion $474 billion $374 billion $274 billion $200 billion

$430 billion

Consider the following data: currency (held outside banks) = $354 billion, checkable deposits = $250 billion, traveler's checks = $4 billion, small-denomination time deposits = $200 billion, savings deposits = $100 billion, retail money market mutual funds = $160 billion. M1 equals __________ billion and M2 equals __________ billion. $608; $1,068 $708; $1,038 $708; $948 $694; $1,038 none of the above

$608; $1,068

Bank A has $75,000 in total reserves, and zero excess reserves. The required reserve ratio is 12 percent. Bank A has checkable deposits of $84,000. $6,250,000. $62,500. $840,000. $625,000.

$625,000.

Suppose that the price index in 1999 was 170 and your salary was $44,000. Suppose in 2016 the consumer price index will be 290. What salary will you have to earn in 2016 in order to equal your 1999 real income? $77,647 $75,059 $66,000 $83,209

$75,059

Consider two points on the PPF: point A, at which there are 50 oranges and 100 apricots, and point B, at which there are 51 oranges and 98 apricots. If the economy is currently at point B, the opportunity cost of moving to point A is 98 apricots. 3 oranges. 1 orange. 2 apricots.

1 orange.

The economy can produce 15X and 15Y, 10X and 20Y, 5X and 25Y, or 0X and 30Y. It follows that the opportunity cost of 1X is ___Y. 4.0 5.0 2.5 1.0 none of the above

1.0

A market basket is made up of three goods, 10X, 12Y, and 18Z. The prices in the base year are $1.20, $2.10, and $3.25, respectively. The prices in the current year are $1.44, $2.23, and $3.88. What is the approximate consumer price index in the current year? 110 103 96 111 116

116

In an economy with a population of 100 million persons, 42 million hold civilian jobs and 6 million are not working but are looking for a job. The unemployment rate is 87.5%. 6%. There is not enough information to answer this question. 14.29%. 12.5%.

12.5%.

In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight-hour day, John can produce either 8 loaves of bread or 8 pounds of butter. The opportunity cost of producing 1 pound of butter is 1/3 hour for Andy and 1 hour for John. 1 hour for Andy and 1 hour for John. 3 loaves of bread for Andy and 1 loaf of bread for John. 1/3 loaves of bread for Andy and 1 loaf of bread for John. none of the above

3 loaves of bread for Andy and 1 loaf of bread for John.

Which of the following will cause the demand curve for burgers to shift to the right? The price of burgers decreases. The price of burger buns increases. The price of burgers increases. The price of steak decreases. A study is published by the National Association for Burger Research that says eating burgers can reduce the risk for bad acne.

A study is published by the National Association for Burger Research that says eating burgers can reduce the risk for bad acne.

Which of the following would cause an upward movement along the aggregate demand curve? There is an increase in the expected price level. The value of the dollar increases. There is an increase in expected income. An increase in housing prices increases the value of real wealth. An increase in the price level.

An increase in the price level.

Which of the following statements is false? M1 is a component of M2. Retail money market mutual funds are part of M2, but institutional money market mutual funds are not. Money reduces the transaction costs of making exchanges. Currency is money, but money is more than just currency. Credit cards are money since they are widely accepted for purposes of exchange.

Credit cards are money since they are widely accepted for purposes of exchange.

If you buy a book of U.S. postage stamps to use to send overdue notices to the clients of your independent credit counseling firm, the purchase is considered part of X M G C I

I

In year 1 the CPI is 140, and in year 2 the CPI is 154. From year 1 to year 2, Marcy's salary rises from $43,000 to $48,000, and Daphne's salary rises from $65,000 to $70,000. Who is "more than keeping up with inflation"? both Marcy and Daphne neither Marcy nor Daphne Marcy Daphne

Marcy

Michael can produce the following combinations of X and Y: 10X and 10Y, 5X and 15Y, and 0X and 20Y. Vernon can produce the following combinations of X and Y: 100X and 20Y, 50X and 30Y, or 0X and 40Y. It follows that Neither Michael nor Vernon has a comparative advantage in producing X. Michael has the comparative advantage in producing Y and Vernon has the comparative advantage in producing X. Michael has the comparative advantage in producing X and Vernon has the comparative advantage in producing Y. There is not enough information to answer the question. Neither Michael nor Vernon has a comparative advantage in producing Y.

Michael has the comparative advantage in producing Y and Vernon has the comparative advantage in producing X.

Which of the following statements is false? In a barter economy, there is no good that serves as a unit of account. Money functions as a medium of exchange, unit of account, and store of value. There are higher transaction costs of making exchanges in a barter economy than in a money economy. Money is the only good that can (or does) serve as a store of value.

Money is the only good that can (or does) serve as a store of value.

After Sushmita lost her job, she found that she was going to the movies less often. How would she describe this to an economist? Movies are an inferior good and, as my income decreased, my demand curve shifted to the right. Movies are a normal good and, as my income decreased, my demand curve shifted to the left. Movies are an inferior good and, as my income decreased, my demand curve shifted to the right. Movies are a normal good and, as my income decreased, my demand curve shifted to the right. Attending movies is a necessity.

Movies are a normal good and, as my income decreased, my demand curve shifted to the left.

Because discouraged workers are not considered unemployed, the unemployment rate may be biased downward. True False

T

The law of increasing opportunity cost helps to explain why PPF's are typically bowed-outward. True False

T

When the unemployment rate is equal to the natural unemployment rate, full employment exists. True False

T

Which of the following is a normative macroeconomics statement? The local government ought to spend more on recreational facilities. Ford Motor Company's new advertising campaign ended up hurting General Motors' sales. The central bank should increase the nation's money supply. The increase in the nation's money supply helped push the nation's unemployment rate down in the short run.

The central bank should increase the nation's money supply.

Suppose that good X is one of the more heavily subsidized industries in the United States. Suppose further that as a result of intense lobbying from health-related concerns, Congress repeals the subsidies on good X. Which of the following scenarios would likely occur? The supply curve for good X would shift leftward, since it would now cost more to produce each level of output. The supply curve for good X would shift rightward, as it would now be cheaper to produce each level of output. There would be no shift in the supply curve for good X; subsidies don't affect output. There would be a movement along the supply curve for good X, but the supply curve would not shift.

The supply curve for good X would shift leftward, since it would now cost more to produce each level of output.

If the workers of a firm successfully negotiate an increase in wages, which of the following is most likely to happen? The demand curve for the product the firm produces shifts rightward. The demand curve for the product the firm produces shifts leftward. The supply curve of the product the firm produces shifts leftward. The supply curve of the product the firm produces shifts rightward.

The supply curve of the product the firm produces shifts leftward.

Suppose that nondurable goods spending is $200 billion, durable goods spending is $400 billion, new residential housing spending is $500 billion, and spending on services is $700 billion. What does investment equal? $600 billion $1,800 billion $500 billion $1,100 billion There is not enough information to answer this question.

There is not enough information to answer this question

If M1 is $1,200 billion, currency held outside banks is $400 billion, and traveler's checks is $10 billion, then small-denomination time deposits equal $790 billion. $800 billion. $1,190 billion. There is not information to answer the question. $390 billion.

There is not information to answer the question.

Suppose that 1983 is the base year for the Consumer Price Index (CPI) and in 2019 the CPI is 254. What does this "254" mean? What cost $100 in 1983 on average cost 254 times as much in 2019. What cost $100 in 1983 on average cost $154 more in 2019. What cost $100 in 1983 on average cost 100/254 (or 0.39) times as much in 2019. What cost $100 in 1983 on average cost $254 more in 2019.

What cost $100 in 1983 on average cost $154 more in 2019.

A savings account functions as a unit of account. a store of value. a medium of exchange. none of the above

a store of value.

Which of the following statements is true? Demand is different than quantity demanded. A demand schedule is the numerical tabulation of the law of demand. A demand curve is the graphical representation of the direct relationship between price and quantity demanded. a and b a, b, and c

a and b

If peanuts were widely accepted for purposes of exchange, then: peanuts would be money. peanuts would be less valuable than they are currently. we would observe people using peanuts to purchase cars. a and c a and b

a and c

The supply of leather jackets would be expected to increase as a result of: a decrease in the cost of producing leather jackets. the expectation that the price of leather jackets will rise in the future. an increase in the popularity of leather jackets. an increase in the price of leather jackets.

a decrease in the cost of producing leather jackets.

Consider the following combinations of guns and butter that can be produced: 0 guns, 20,000 units of butter; 5,000 guns, 15,000 units of butter; 10,000 guns, 10,000 units of butter; 15,000 guns, 5,000 units of butter; 20,000 guns, 0 units of butter. The PPF between guns and butter is an upward-sloping straight line. a downward-sloping straight line. It is impossible to answer this question without knowing which good would be plotted on the vertical axis. a downward-sloping bowed-out curve.

a downward-sloping straight line.

The aggregate demand curve slopes downward because as price rises, consumers substitute cheaper goods for more expensive goods. a higher price level increases exports. a higher price level increases purchasing power. all demand curves slope downward. a higher price level reduces wealth.

a higher price level reduces wealth.

In order to be classified as unemployed, a person must be not working, have been actively looking for work within the past four weeks, and currently be available for work. and currently be available for work, regardless of whether one is actively looking for work or not. and be waiting to be called back to work from a temporary layoff. and actively looking for work within the past year. a or c

a or c

Total reserves are equal to required reserves plus excess reserves. equal to vault cash plus bank deposits at the Federal Reserve an asset to banks. both b and c all of the above

all of the above

Microeconomics is the branch of economics that deals with the production side of the economy, exclusively. highly aggregated markets or the entire economy. the buying side of the economy, exclusively. human behavior and choices as they relate to relatively small units --- an individual, a firm, an industry.

an individual, a firm, an industry.

Which set of prices would you expect to see (posted, quoted) in a barter economy? 1 horse = 10 pieces of gold; 1 kettle = 1 piece of gold 1 horse = 10 kettles; 1 kettle = 1/10 horse 1 horse = $200; 1 kettle = $20 1 horse = 10 kettles; 1 kettle = 10 apples; 1 apple = 1 orange b and d

b and d

If reserves equal $29 million and vault cash equals $29 million, it follows that currency in the hands of the public equals $29 million. excess reserves equal $10 million. There is not enough information to answer the question. bank deposits at the Federal Reserve equal $29 million. bank deposits at the Federal Reserve equal $0.

bank deposits at the Federal Reserve equal $0.

Suppose the civilian non-institutional population equals 100,000 persons; the civilian labor force equals 75,000 persons; there are 70,000 employed persons and 5,000 unemployed persons. If 5,000 persons who are currently "not in the labor force" decide to join the civilian labor force, and 3,000 of them are unemployed, then the unemployment rate falls and the employment rate rises. both the unemployment and the employment rate fall. both the unemployment and the employment rate rise. the unemployment rate rises and the employment rate falls.

both the unemployment and the employment rate rise.

Aggregate demand is determined by adding up the spending of: Domestic consumers and firms that buy goods and services produced in the United States. Consumers, firms, the government, and foreigners that buy goods and services produced in the United States. Domestic consumers who buy goods and services produced in the United States. Domestic and foreign consumers who buy goods and services produced in the United States. Domestic and foreign consumers and firms that buy goods and services produced in the United States.

consumers, firms, the government, and foreigners that buy goods and services produced in the United States.

The cyclical unemployment rate is defined as the __________ unemployment rates. difference between the structural and the frictional difference between the existing (actual) and the natural sum of the natural and the frictional sum of the structural and the frictional

difference between the existing (actual) and the natural

Your neighbor has knowledge of economics and you would like her to share it with you. You own a car, a CD player and a new pair of running shoes. You wish to make a trade, but the neighbor does not want what you have. The problem can be stated as follows: You are not satisfying the terms of a common denominator. rule of transaction costs. double coincidence of wants. law of marketability.

double coincidence of wants.

Which of the following illustrates the law of demand? a. Jorge buys fewer pencils at $2 per pencil than at $1 per pencil, ceteris paribus. b. Chen buys more ice cream at $4 per half-gallon than at $3 per half gallon, ceteris paribus. c. Karissa buys fewer sweaters at $50 each than at $35 each, ceteris paribus. d. a, b, and c e. a and c

e. a and c

If it is impossible to produce more of one good without getting less of another, then the economy is operating at less than peak performance. at technological inferiority. efficiently. inefficiently.

efficiently.

If it is impossible to produce more of one good without getting less of another, then the economy is operating at less than peak performance. inefficiently. efficiently. at technological inferiority

efficiently.

Because money __________________, people are _________________ likely to specialize in their work in a money economy. is a unit of account; more is a store of value; less eliminates the double coincidence of wants; more eliminates the need for holdings of precious metals; more

eliminates the double coincidence of wants; more

Suppose farmers can use their land to grow either wheat or corn. The law of supply predicts that an increase in the market price of wheat will cause: farmers to substitute wheat for the production of corn. farmers to raise the production of wheat and corn. farmers to substitute corn for the production of wheat. farmers to lower the production of corn and wheat.

farmers to substitute wheat for the production of corn.

Government purchases consist of the total dollar amount(s) spent by the state and local governments. federal government only. federal, state, and local governments. state governments only. local governments only.

federal, state, and local governments.

Gross Domestic Product (GDP) is the total market value of all: final goods and services produced annually within a country's borders. intermediate goods and services produced annually within a country's borders. final goods and services produced every year in and outside a country's borders. final and intermediate goods and services produced annually within a country's borders.

final goods and services produced annually within a country's borders.

Business firms make which of the following two types of investment? foreign investment and domestic investment fixed investment and inventory investment fixed investment and capital investment investment in stocks and investment in bonds investment in new capital goods and investment in used capital goods to replace "worn-out" capital goods

fixed investment and inventory investment

The student whose study habits are illustrated here is currently studying for 2 hours she should: Cut back on the number of hours she is studying because the marginal benefit of studying for 2 hours is less than the marginal cost of doing so. Increase the number of hours she is studying because the marginal benefit of studying for 2 hours is less than the marginal cost of doing so. Cut back on the number of hours she is studying because the marginal benefit of studying for 2 hours is greater than the marginal cost of doing so. Increase the number of hours she is studying because the marginal benefit of studying for 2 hours is greater than the marginal cost of doing so

increase the number of hours she is studying because the marginal benefit of studying for 2 hours is greater than the marginal cost of doing so

You read a study that predicts that rising oil prices projected for this summer are certain to fuel inflation. Having taken an economics class, due to this expected change in prices, you predict that spending today will ________ and aggregate demand today will ________. decrease; decrease increase; decrease be unaffected; be unaffected decrease; increase increase; increase

increase; increase

An economy exhibits productive efficiency if it produces maximum output with given resources and technology. more than enough food to feed everyone. enough output so that no one lives in poverty. more goods and services in each successive year.

maximum output with given resources and technology.

A person has a comparative advantage in the production of a good when s/he can produce the product at a(n) ________ opportunity cost compared to another person. equal increasing lower higher

lower

To an economist, money is a synonym for which of the following? income credit wealth salary none of the above

none of the above

One major reason for the law of demand is that a higher price never reduces quantity demanded by enough to lower total revenue. people substitute relatively lower-priced goods for relatively higher-priced goods. people are willing to produce more units at a higher price. one price changing requires at least one other price to change in the opposite direction.

people substitute relatively lower-priced goods for relatively higher-priced goods.

The civilian non-institutional population can be broken down into two groups: persons working and persons not working. persons working in service jobs and persons working in manufacturing jobs. employed persons and unemployed persons. persons not in the labor force and persons in the labor force.

persons not in the labor force and persons in the labor force.

(Gross private domestic) Investment is equal to all purchases of newly produced capital goods: plus changes in business inventories plus purchases of new residential housing. plus changes in business inventories. minus changes in business inventories. plus fixed investment minus inventory investment.

plus changes in business inventories plus purchases of new residential housing.

When the going rate is $2.00 per hour, Ann wants to babysit 6 hours each week and Pat wants to babysit 4 hours each week. If the rate goes up to $4.00, Ann and Pat both double the number of hours they are willing to babysit each week. Based on this information, a combined supply curve will pass through the points: price = $2.00, quantity supplied = 20 and price = $4.00, quantity supplied = 10. price = $2.00, quantity supplied = 10 and price = $4.00, quantity supplied = 20. price = $2.00, quantity supplied = 4 and price = $4.00, quantity supplied = 6. price = $2.00, quantity supplied = 6 and price = $4.00, quantity supplied = 4.

price = $2.00, quantity supplied = 10 and price = $4.00, quantity supplied = 20.

A simultaneous rise in both aggregate demand and short-run aggregate supply will definitely raise Real GDP, but there is not enough information provided to know how the price level will change. raise the price level, but there is not enough information provided to know how Real GDP will change. raise the price level and lower Real GDP. raise the price level and Real GDP. lower Real GDP, but there is not enough information provided to know how the price level will change.

raise Real GDP, but there is not enough information provided to know how the price level will change.

The unemployment due to changes in the types of skills employers require is called __________ unemployment. frictional cyclical natural structural

structural

An economy is producing its Natural Real GDP when the unemployment rate is equal to the __________ unemployment rate. seasonal sum of the frictional unemployment rate and the structural cyclical frictional structural

sum of the frictional unemployment rate and the structural

If you hadn't gone to dinner with your friends, you would have stayed home and "surfed" the Internet." It follows that the price of having dinner with your friends is more than the price you would have had to pay to surf the Internet. the opportunity cost of having dinner with your friends is lower than the opportunity cost of surfing the Internet. surfing the Internet is the opportunity cost of having dinner with your friends. it is less costly to surf the Internet than to have dinner with your friends.

surfing the Internet is the opportunity cost of having dinner with your friends.

The increased production of lamps comes at constant opportunity costs in terms of bookshelves. This means that it takes more resources to produce a lamp than a bookshelf. that for every lamp produced, a constant number of bookshelves is forfeited. that for every lamp produced, a different number of bookshelves is forfeited. that it takes fewer resources to produce a lamp than a bookshelf.

that for every lamp produced, a constant number of bookshelves is forfeited.

Disposable income is the amount of income that individuals actually receive. another term for personal income. equal to GDP minus the capital consumption allowance. that portion of personal income that can be used for consumption and saving. the sum of all payments to suppliers of the factors of production.

that portion of personal income that can be used for consumption and saving.

Changes in which of the following will not cause the SRAS curve to shift? the wage rate prices of nonlabor inputs the price level productivity All of the above will cause the SRAS curve to shift.

the price level

The best reason economists take only final goods and services into account when calculating GDP is that they want to avoid the problem of final counting. this is the only way things can be done. this is the way things have always been done. they want to avoid the problem of double counting.

they want to avoid the problem of double counting.

The standard definition of "recession" is two or more consecutive quarters of falling Real GDP. a period of negative inflation. the lowest point in a business cycle. a period of a positive frictional unemployment rate.

two or more consecutive quarters of falling Real GDP.

As the price of apples goes up, the demand for apples goes down." The author of this statement implies that demand and price have a direct relationship. uses the word "demand" when he should use the words "quantity demanded." uses the word "demand" when he should use the word "supply." implies that price and demand are unrelated.

uses the word "demand" when he should use the words "quantity demanded."