Macro Exam 1

Real Gross Domestic Product is

the value of total production linked back to the prices of a single year

The "law of supply" is the fact that, when other factors are held constant, when the price of a good rises,

there is a movement up along the supply curve to a larger quantity supplied

When a market is in equilibrium

there is no shortage and no surplus at the equilibrium price

Business cycles are

unpredictable, but always have two phases and two turning points

All of the following are components of the expenditure approach to measuring GDP EXCEPT

a Senator from Iowa being paid the monthly salary

Which of the following shifts the demand curve for peaches?

a decrease in the price of a pound of nectarines, a substitute in consumption for peaches

Which of the following shifts the supply curve for gasoline rightward?

a decrease in the price of a resource used to produce gasoline, such as crude oil

Coffee and sugar are complements. If the supply curve of coffee shifts leftward because of poor weather, then there will be

a decrease in the price of sugar

The price of almond milk falls. Which of the following is a possible cause?

a discovery that almond milk causes diabetes

If Apple, an American corporation, produces I-phones in Vietnam this would

add to Vietnam's GDP but not to U.S. GDP

Oatmeal is a normal good and cold cereal is a substitute for oatmeal. Raisins are a complement for oatmeal. Which of the following increases the demand for oatmeal?

an increase in the price of cold cereal

Changes in which of the following shifts the supply curve of pizzas?

an increase in the price of flour used to produce pizza

A ton of coal purchased by Waverly Utilities to burn to make electricity would be best described as

an intermediate good

The law of demand predicts that, when all factors are held constant,

as the price of an apple rises, the quantity of apples demanded will decrease

Last year in Patagonia imports equaled exports. Patagonia's GDP was $500 million, its consumer expenditure was $380 million, and its investment was $20 million. Patagonia's government expenditure on goods and services were

$100 million

Item Millions of dollars Personal consumption expenditure 80 Government expenditure on goods and services 30 Net taxes 35 Gross private domestic investment 20 Imports of goods and services 10 Exports of goods and services 20 Using the information in the table above, calculate the value of GDP.

$140 million

In Patagonia, if imports are $100 million less than exports, government expenditures are $500 million, consumer expenditures are $1 billion, and gross investment spending is $500 million, then GDP is

$2.1 billion

13) ComponentAmount (billions of d (1pts) Component Amount (billions of dollars) Personal consumption expenditure 3,720 Government expenditure 430 Gross investment 610 Net investment 520 Exports 650 Imports 720 Using the information in the table above, net exports equal

-$70 billion

16) The following data are estimat (1pts) The following data are estimates describing Ireland's economy in 2006 and 2007 (in millions of euros, in constant prices): 2006 2007 Consumption 84,000 89,000 Government expenditure 24,000 26,000 Investment 48,000 48,000 Exports 142,000 151,000 Imports 123,000 128,000 Subsidies 1,800 1,900 Taxes 500 500 In 2007, Ireland's net exports was ________ million euros

23,000

Which of the following is correct about eliminating a market shortage?

As the price rises, the quantity demanded decreases while the quantity supplied increases

GDP equals

C + I + G + (X - M)

In every country, which of the following are equal to one another? I. aggregate production II. aggregate expenditure III. aggregate income

I equals II equals III

Which of the following is TRUE regarding the circular flow diagram? I. "Aggregate income" is the flow of income earned by firms. II. Retained earnings are considered income earned by firms rather than part of households' income. III. The government, households, and firms all have transactions in the goods market.

III only

It is estimated that in 2021, Micronesia had a population of 110 million and Botswana had a population of 190 million. At the same time, Micronesia's GDP was $1 trillion while Bostwana's was $1.31 trillion. These data show that

Micronesia's GDP per person was $9,090 in 2021

If the quantity of pumpkin supplied is 10,000 per year and the quantity of pumpkin demanded is 8,000 per year, there is a ________ in the market and the price will ________.

Surplus; Fall

If the U.S. Surgeon General announces that increased soda consumption could cause heightened anxiety levels among children and adults, what happens to the equilibrium price and quantity of soda?

The equilibrium price falls and the equilibrium quantity decreases

If a market is NOT in equilibrium, then which of the following is likely to occur?

The price will adjust to bring the market to equilibrium.

If the United States sells 200 Jeeps for a total of $400,000 to Germany, while the United States imports 100 VWs for a total of $500,000 from Germany

U.S. GDP decreases because net exports are negative

If a technological advance takes place in the computer industry, then the equilibrium price of a computer will ________ and the equilibrium quantity will ________.

fall; increase

If the demand for hamburgers decreases, the equilibrium price

falls and the equilibrium quantity decreases

We can define the factor market in the circular flow diagram as the place where _______.

firms buy the services of labor, land and capital

If Coke, an American soda company, opens a new manufacturing facility in Mexico and produces soda which are distributed in Central America, then Mexico's GDP ________ and U.S. GDP ________.

increases; does not change

Gross domestic product (GDP) measures the

market value of final goods and services produced in the economy in a given time period

In any year, real GDP

might be greater or less than potential GDP

When an orange becomes cheaper, the substitution effect implies that consumers will,

more of that oranges and less of its substitutes

The law of demand is shown by a

movement along the demand curve

Which of the following is included in government expenditures when measuring GDP?

none of the above

Good A and good B are substitutes in production. The demand for good A increases so that the price of good A rises. The increase in the price of good A shifts the

supply curve of good B leftward

Price (dollars per cellular phone) Quantity demanded (thousands) Quantity supplied (thousands) 100 50 100 80 55 80 50 60 60 20 100 40 Using the data in the above table, at the price of $80 a phone, a

surplus of 25 thousand cellular telephones occurs

A supply curve of apples is an illustration between the quantity of apples supplied and

the price of apples. The supply curve has a positive slope