Macro Economics Midterm

Which is NOT a basic economic question that societies must answer?

Why are these goods and services being produced?

Entrepreneurs receive profits for their efforts primarily because they...

combine land, labor, and capital to produce goods and services and assume the risks associated with business.

when goods are produced at the lowest possible cost, an economy is said to have achieved;

production efficiency

Economics is BEST defined as the study of how?

resources are apportioned to satisfy human wants.

The National Activity Index was developed by:

the Federal Reserve Bank of Chicago.

A business cycle is:

the periodic fluctuation of economic activity.

During a typical economic recovery:

unemployment decreases.

If personal consumption is $100, investment is $25, government purchases total $25, imports equal $20, and exports equal $10, then GDP equals:

$140

Last year, Marian earned $25,000, paid $2,000 in taxes, and saved $5,000. Marian's personal income was _____, her disposable personal income was _____, and her consumption spending was _____.

$25,000; $23,000; $18,000

The economy is least likely to be heading into a recession when the National Activity Index equals: A) -0.98. B) -0.33. C) 0.81. D) 0.55.

.81

The National Bureau of Economic Research: A) consists of elected officials from the U.S. Senate. B) is a government agency that dates business cycles in the United States. C) is a nonprofit research organization that only determines when recessions begin. D) is a nonprofit research organization that dates business cycles in the United States.

D) is a nonprofit research organization that dates business cycle in the United States

5. _____ is how well resources are used and allocated. A) Scarcity B) Equity C) Efficiency D) Choice

Efficiency

When Mr. Wilson worked full time, he paid a service to have his house cleaned twice a month. Now that he is retired, Mr. Wilson does his own cleaning. What is the effect on GDP?

GDP falls as a result of this change.

If, in the past, you have always painted your own house but now you hire a painting contractor to do the work, what effect does this have on GDP?

GDP rises as a result of this change.

Which statement is an example of a normative question? A) What are the long-term effects of unemployment? B) How do interest rates influence employment? C) How should a society achieve full employment? D) How do unemployment rates differ among nations?

How should a society achieve full employment?

Which of the following describes the informal economy?

It is largely unmeasured.

Which one of the following transactions would be included in the national income and product accounts? A) John pays Maria in cash for tutoring him in economics but Maria does not report this income. B) Residents of a city can take home the vegetables they grow in a community garden in exchange for working in the garden. C) Jaslyn is paid for her work as a coordinator at a women's shelter. D) A community group prepares a meal for the homeless on Thanksgiving Day.

Jaslyn is paid for her work as coordinator at a women's shelter.

2. Which of the following is NOT an example of gross private domestic investment? A) a household's purchase of shares of Google stock B) a change in business inventories C) the construction of new residential housing D) the construction of a new hotel

a household's purchase of shares of Google stock

According to the circular flow model, the value of the household sector and the value of the business sector will:

always be equal.

Paying a salesperson more for increased sales is an example of;

an incentive

Production levels to the left of the production possibilities frontier are

attainable but inefficient.

A production possibilities frontier with increasing opportunity costs is:

bowed.

Everything else the same, if investment expenditures rise by $300 billion and imports increase by $300 billion, then GDP:

does not change

When the National Activity Index is at zero, the economy is growing at _____ rates. Negative values imply _____ trends. Positive values imply that growth is _____ the long-term trend.

historical; slowing; faster than

In the national income and product accounts system, the two main approaches to measuring the size of the economy are:

income and expenditures.

Which of the following is NOT an example of an improvement to human capital?

increasing the number of machines available to workers

The value of cars that the Ford Motor Company produces in a German plant:

is a part of U.S. GNP.

What would be a possible opportunity cost of you going to a doctor for a check-up?

lost income due to not being at work for those hours

A theory composed of a number of assumptions and facts boiled down to their basic relevant elements is called a

model

Employers give stock options to full-time employees who have been on the job more than three years. This is an example of:

people following incentives.

The national income and product accounts provide:

the ability to track business cycles.

Because people make decisions at the margin, when deciding whether to purchase a second car, they would therefore compare: A) the additional benefits expected from a second car with the additional costs of the second car. B) the dollar cost of having two cars with the potential income the two cars may generate. C) the additional benefits expected from a second car with the total cost of the two cars. D) None of the answers is correct.

the additional benefits expected from a second car with the additional costs of the second car

A simple circular flow diagram shows that the factors of production are:

traded in the market for goods and services.

Unemployment tends to be highest during the _____ stage of the business cycle while there is a greater risk of high demand leading to inflation during the _____ stage of the business cycle.

trough; peak

Because of scarcity we ; a) resources are limitless b)wants are limited c) choices are unlimited d) we face tradeoffs in nearly every choice we make

D