MACROECO Final
Good Price in 2015 Price in 2016 A $2.10 $2.25 B $5.10 $5.80 C $3.05 $2.90 Joe buys 10 units of good A, 5 units of good B, and 10 units of good C. Fred buys 10 units of good A, 10 units of good B, and 5 units of good C. Which of these two people feels like the inflation rate is higher?
Fred
How do each of the following affect an individual's net worth? You own a house and the appraised value increases by 10% ________ You pay off all of your credit card debt using money from your savings account ___________
Increase there is no change
Which of the following variables does not affect demand directly?
Input prices
Given the information in the table below, at a price of $8, there will be an ____ equal to ____ units in this market. Price Quantity Demanded Quantity Supplied $5 80 20 $6 70. 40 $7. 60. 60 $8. 50 80 $9. 40. 100
excess supply, 30
If you want to measure the opportunity cost of an activity you should include
explicit plus implicit costs
In a closed economy we assume:
imports and exports are equal to zero.
When people decide to reduce their consumption spending, this causes national saving to ____ and the equilibrium interest rate to ____ in a closed economy.
increase : decrease
The supply curve illustrates the idea that firms
increase the quantity supplied of a good when the price of the good rises.
A factual claim about how the world actually works
is a positive statement
A country should specialize in producing the goods for which
it has a comparative advantage
For a given question to be considered an economic question, it must involve
making a decision under scarcity
There are 45 unemployed people and 297 employed people. What is the unemployment rate? Enter a number (measured in percentage terms) rounded to two decimal places. Do not enter a % sign.
13.16
Three goods are produced and consumed in an economy during years 1 and 2. The table shows prices (P1 and P2) for each good and the quantities produced (Q1 and Q2) for each good. The base year is year 1. Good P1 Q1 P2 Q2 Milk (gallons). $4 30 $4.20 36 Chicken (pounds) $2 20 $2.40 25 Onions (bags) $3 10 $2.70 15 Nominal GDP in year 1 is $_____ and nominal GDP in year 2 is $____ . Real GDP in year 1 is $_____ and real GDP in year 2 is $_____ .
190 251.70 190 239
The price of gas in 1987 was $1.2 per gallon and in 2006 it was $2.05. The price index in 1987 was 116 and in 2006 it was 203. Based on this information, calculate the 1987 real price of gas measured in 2006 dollars. Enter a number rounded to two decimal places.
2.1
Snap and Bolt are two countries that both produce bananas and sugar. In Snap each worker in a one-hour period can produce either 14.98 pounds of bananas or 7.37 pounds of sugar. In Bolt each worker in a one-hour period can produce either 13.32 pounds of bananas or 2.87 pounds of sugar. Suppose both countries have constant opportunity cost of production and decide to specialize and exchange. The country that specializes in sugar is willing to sell 100 pounds of sugar for at least _____ pounds of bananas.
203.28
There are 10 million workers in Canada and each of these workers can produce either 2 cars or 50 bushels of wheat in a year. The opportunity cost of producing a car in Canada is _____ bushels of wheat and the opportunity cost of producing a bushel of wheat in Canada is _____ cars. Suppose Canada completely specializes in wheat production and trades 100 million bushels of wheat in exchange for 6 million cars with the United States. After trade Canada can consume _____ million cars and _____ million bushels of wheat.
25 0.04 6 400
You are going to buy a new computer at a downtown store that is a 25-minute drive each way and has the computer for $828. You earn $19 per hour at your job and will have to take time off to go buy the computer. You can expect to spend 40 minutes in the store making your purchase. What is the implicit cost of buying the computer, measured in dollars?
28.5
If nominal GDP is growing at 6% per year, the inflation rate is 2% per year, and population growth is 1% per year then real GDP per capita is growing at ___ percent per year.
3
Suppose that consumption is $2,200, investment is $350, and government spending is $500. The economy is closed so there are no net exports. Taxes are $425. Based on this information: National saving is $____ Private saving is $____ Government (public) saving is $ ____. Enter whole numbers.
350 425 -75
Bob makes $75,000 per year. If the price index changes from 232.0 to 243.6 then the inflation rate is equal to ____ and his employer should give him a raise equal to ____ in order to keep his real wage constant.
5% : $3,750
Kate can read 20 pages of astronomy in an hour. She can also read 50 pages of philosophy in an hour. She spends 5 hours per day studying. What is Kate's opportunity cost of reading 150 pages of philosophy?
60
George finds he can wash 10 cars and wax 5 cars in one 8-hour shift. In the same 8-hour shift he could wash 8 cars and wax 6 cars. If George has constant opportunity cost and wants to wash 4 cars he can expect to be able to wax ____ cars.
8
There are 28 unemployed people, 192 employed people, and 50 people are capable of working but do not want a job. What is the labor force participation rate? Enter a number (measured in percentage terms) rounded to two decimal places.
81.48
Which of the following best illustrates the concept of diminishing returns?
As additional people are employed, the amount of additional goods produced will diminish.
Which factor does not cause a shift of the supply curve?
a change in consumer preferences
Consider the circular flow model that illustrates the links between firms and households as they interact in the product and factor markets. For each of the transactions below: enter F if the transaction illustrates a flow from a firm to a household enter H if the transaction illustrates a flow from a household to a firm. John works an 8-hour day at his company. Bill spends $100 at the mall. Jane earns $300 from her employer. Brian receives a cup of coffee from the Starbucks employee.
John works an 8-hour day at his company. H Bill spends $100 at the mall. H Jane earns $300 from her employer. F Brian receives a cup of coffee from the Starbucks employee. F
Which of the following can lead to an increase in real output? Check all that apply.
There has been an increase in average labor productivity There are more factories producing goods The labor force increases
Which of the following is a normative statement?
To reduce poverty there should be an increase in the minimum wage.
All else the same, the law of demand states that:
an increase in the price of a good will reduce the quantity demanded of the good.
Which of the following best illustrates the idea of economic growth?
an outward shift of the production possibilities frontier
If the Federal Reserve were to purchase government bonds in the open market, we would expect interest rates in the economy to _______ and therefore spending in the future is likely to _______.
decrease : increase
When corporations issue stock and use the proceeds to purchase equipment we call this _____.
equity financing
All else the same, when interest rates fall,
people tend to borrow more causing the quantity demanded of loanable funds to increase.
In the loanable funds market the supply of funds comes from:
people who have extra income they want to save.
When calculating real GDP we keep ___ fixed and when calculating the cost of living we keep ____ fixed.
prices : quantities
Market equilibrium occurs where
quantity demanded equals quantity supplied.
The scarcity principle applies to
the allocation of all resources.
Assume the GDP deflator falls from 162 to 157. This means that
the average price level has fallen.
The price of a good has gone down. What would be a good explanation of this?
the cost of a key input used to produce the good has declined
A farmer is trying to decide how many gallons of water to apply to his cotton crop. He should apply more water as long as
the marginal benefit of more water is at least as great as the marginal cost of more water
A country's Gross Domestic Product (GDP) is best defined as
the market value of all final goods and services produced during a given year.
When measuring the inflation rate it is best to calculate:
the percentage change in the cost of a fixed basket of goods from month to month.
The opportunity cost of an item is
the value of what must be given up to get the item
