Macroeconomics Final
"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is:
$44
What is a chart that shows all possible combinations a country can produce of two different goods. It shows the trade off of producing more of one good over another one.
A Productions Possibility Frontier
What could cause the supply of oil to shift to the left
A hurricane hits Texas causes oil producers to close for a couple of weeks
Who wrote: "The Wealth of the Nations"?
Adam Smith
Why is there scarcity?
Because our unlimited wants exceed our limited resources
If a window gets broken and somebody says, 'do not fret, this creates wealth because it creates a job for the glass maker'. What is that an example of:
Broken Window Fallacy
Ethiopia has a GDP of $8 billion (measured in U.S. dollars) and a population of 55 million. Costa Rica has a GDP of $9 billion (measured in U.S. dollars) and a population of 4 million. Calculate per capita GDP for each country.
Ethiopia = $145.00 Costa Rica = $2250.00
In the circular flow model looking at just firms and households. Do physical goods and money flow in the same direction?
False
Is the product market(goods market) and the factor market(AKA resource market) the same thing?
False
A nation's prosperity is sometimes measured in terms of ___________.
GDP per capita
When discussing economic growth, it is often useful to focus on ____________, to avoid studying changes in the size of GDP that represent only having more people in the economy, and focus on those increases in GDP which represent an actual rise in the standard of living on a per person basis.
GDP per capita
If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that:
Goods X and Y are complement goods.
Which of the following best describes the relationship between economic growth and literacy?
Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education.
What name is given to the index based on the prices of exported or imported merchandise?
International Price Index
Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happen to the unemployment rate?
It would fall.
Scarcity means:
Limited resources
Which one looks at the big picture
Macroeconomics
A surplus happens when
Market price is above market equilibrium
Most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.
Market-oriented economy
_____________________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s.
The Industrial Revolution
If there is an increase in the supply of a good, AKA an up shift of supply. What happens to demand?
There is a movement down along the demand curve.
Steel mill wage costs increase by 18 percent over a year. What is the likely economic effect on the market for steel?
There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel.
Choose the correct statement concerning natural disasters.
They create jobs, but destroy wealth
Increased investment alone will guarantee economic growth.
This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology.
Demand for a good goes up. Because of this the price of the good rise.
True
If measuring opportunity cost on a budget constraint line. Can the opportunity cost be less than one? Can it be one-half a good?
True
Is the budget constraint a visual of the opportunity cost between two goods?
True
The demand curve has a negative slope
True
What does a budget constraint show?
Various combinations of goods or services an individual can purchase with their income.
After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is:
a shift of the demand curve for beef to the left.
If imports exceed exports, as in recent years, then __________ exists.
a trade deficit
Frictional unemployment occurs when:
a worker decides to quit one job to seek a different job.
The _________________ argument points out that if an employer reacts to poor business conditions by reducing pay for all workers, then the best workers, with the best employment alternatives at other firms, are the most likely to leave and the least-attractive workers, with fewer employment alternatives, are more likely to stay.
adverse selection of wage cuts
In macroeconomics, the connection from inputs to outputs for the entire economy is called _______________.
an aggregate production function
To compare the GDP of two different countries with different currencies, it is necessary to use _________________________.
an exchange rate
Which of the following results in a rightward shift of the market demand curve for labor?
an increase in demand for the firm's product
Which of the following will not result in a rightward shift of the market supply curve for labor?
an increase in labor productivity
Which of the following factors contribute to economic growth?
an increase in the proportion of the population that is college educated
Which of the following will not result in a leftward shift of the market demand curve for labor?
an increase in the wage rate
Specialization
can lead to an increase in overall production.
Which of the following is not included in GDP?
cash income paid to a day laborer that is not reported to the tax authorities
Economic models like the _____________________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories.
circular flow diagram
The demand measure of GDP accounting adds together:
consumption, investment, government purchases, and trade balance
A forestry worker who is out of work because of the temporarily low demand for wood products associated with a recession is defined as:
cyclically unemployed.
Another term used to describe negative inflation is:
deflation
In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers.
division of labor
Which of the following is generally accepted as a valid criticism of the production of useful goods and services?
environmental pollution
The ___________ is the only price where quantity demanded is equal to quantity supplied.
equilibrium price
A business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle are:
expansion, peak, recession, trough
Gross Domestic Product equals $1.2 trillion. If consumption equals $690 billion, investment equals $200 billion, and government spending equals $260 billion, then:
exports exceed imports by $50 billion.
In order to avoid double counting, statisticians just count the __________________.
final goods and services
The circular flow diagram of economic activity is a model of the:
flow of goods, services, and payments between households and firms.
A welder who quits his job and moves from Pittsburgh to Madison to try to get a better welding job is said to be:
frictionally unemployed.
Final goods or services used to compute GDP refer to:
goods and services purchased by the ultimate users.
The effects of inflation are seen in:
goods, services, wages and income levels
Consumption is the purchase of goods and services by:
households.
Improvements in the productivity of labor will tend to:
increase wages
Which of the following is most likely to contribute to economic growth as measured by GDP per capita?
increased capital formation
A payment is said to be ________________ if it is automatically adjusted for inflation.
indexed
When a price, wage, or interest rate is adjusted automatically with inflation, it is said to be __________.
indexed
The percentage change in the price level from one-time period to the next, whether the price level is measured in terms of money is the _____________.
inflation rate
__________ implies that pressure for price increases reaches across _______________markets, not just one.
inflation; most
Which of the following best describes a monetary policy tool?
interest rates
Investment in human capital:
is characterized by both b) and c). (can be acquired through on-the-job training. and is an important source of economic growth.)
A nation can achieve higher economic growth if:
it devotes more resources to research and development.
In the ____________, households work and receive payment from firms.
labor market
Economists refer to the relationship that a higher price leads to a lower quantity demanded as the _____________.
law of demand
When nations desire a healthy macroeconomy, they typically focus on three goals, one of these being:
low inflation
The unemployment rate may underestimate the true extent of unemployment if:
many part-time employees would like to work fulltime, but are unable to get the additional work.
If labor demand is downward sloping and labor supply is upward sloping, then when labor demand rises faster than labor supply, it is expected that real wages __________.
may increase, decrease or stay the same depending on the relative slopes.
The basic difference between macroeconomics and microeconomics is:
microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.
The demand curve for a typical good has a(n):
negative slope because some consumers switch to other goods as the price rises.
Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be.
normative statement
While one occasionally sees references to inflation over short time periods, the term typically implies a(n)_____________ in prices.
ongoing rise
A university student who is enrolled in school fulltime and not seeking employment is considered:
out of the labor force.
The �law of supply� functions in labor markets; that is, a higher __________ for labor leads to a higher quantity of labor supplied.
price
The value of what is produced per worker, or per hour worked, is called ____________.
productivity
To achieve a high standard of living, a nation should:
promote economic growth.
Economists typically measure economic growth by tracking:
real GDP per capita.
The __________________ is the nominal interest rate minus the rate of inflation.
real interest rate
Today the Broken Window Fallacy can be applied to the fear of jobs being lose due to a rise in
robotics
A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will:
shift to the right, decreasing the price of the drug
If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ___________________
shortage or excess demand
As the __________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left.
technology
Investment (I) includes:
the amount spent on new factories and machinery.
Inflation can be calculated in terms of how the overall cost of ___________________ changes over time.
the basket of goods
Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is:
the benefit to his grades from studying for an hour
The opportunity cost of attending university is likely to include all except which of the following?
the cost of haircuts received during the school term
If a nation's labor force receives a significant influx of young workers:
the natural rate of unemployment is likely to increase.
As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good.
the production possibilities frontier
Macroeconomic topics do not usually include:
the profit maximizing decisions of an individual manufacturer.
Which of the following is not counted as a part of GDP?
the purchase of 100 shares of AT&T stock by your grandfather.
When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________.
the quantity demanded of financial capital at any given interest rate will shift to the right.
A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of:
the supply curve.
Which of the following is included in GDP calculations?
the university tuition paid to enroll in a course
GDP is:
the value of all final goods and services produced domestically.
GDP does not directly include:
the value of intermediate goods sold during a period.
The unemployment rate measures:
unemployed workers as a percentage of the labor force.
Frictional unemployment is:
unemployment that is due to normal turnover in the labor market.
Scarcity exists because of:
unlimited wants and limited resources.