Macroeconomics Final
when the interest rate rises, bond values A) fall B) rise C) are uncharged because the interest rate paid on a bond is fixed D) will either increase or decrease depending on the type of bond
A - fall
Policies designed to affect the quantity of money are A) monetary policies B) fiscal policies C) supply side or growth policies D) government spending policies
A - monetary policies
If interest rates are positive, one dollar today is worth A)more than a dollar a year from now B)the same as a dollar a year from now C)less than a dollar a year from now D) nothing
A - more than a dollar a year from now
Firms can finance capital spending by doing all of the following EXCEPT A) paying dividends B)selling stock in the company C)borrowing from a bank D)issuing bonds
A - paying dividends
when the ______ increases, then potential output increases A) long-run aggregate demand B) long-run aggregate supply C) short-run aggregate demand D) short-run aggregate supply
B - long-run aggregate supply
the study of how the individual parts of the economy make decisions and interact in markets
microeconomics
makes prescriptions about the way the economy should work
normative economics
the branch of economic analysis that describes the way the economy actually works
positive economics
the amount of a good that buyers are willing and able to purchase at one specific price
quantity demanded
with a fixed amount of capital 300 workers produce 9,000 cars. The average labor productivity is A)0.03 B)3 C)27 D)30
A - 0.03
If receipts of factor income from the rest of the world exceed payments of factor income to the rest of the world, then A) GNP is greater than GDP B) GNP equals NNP C) GDP equals GNP D) GDP is greater than GNP
A - GNP is greater than GDP
the government wants to encourage consumer spending through cutting income taxes. this is an example of A) a fiscal policy B) a monetary policy C) a supply-side policy D) an incomes policy
A - a fiscal policy
the study of macroeconomics A) is a way of analyzing decision-making processes caused by scarcity; B) a very narrow endeavor; C) focuses on how a business should function; D) is concerned with proving that capitalism is better than socialism
A - a way of analyzing decision-making processes caused by scarcity
A decrease in demand for cameras would likely be caused by A) an increase in the price of a complementary good B)an increase in the price of a substitute good C)a decrease in the price of cameras D)an increase in the price of cameras
A - an increase in the price of complementary good
4) The point at which a recession ends and the expansion begins is called the:A) business cycle trough.B) downturn.C) business cycle peak.D) lag.
A - business cycle trough
with trade, a country may A) consume outside its production possibility frontier B)consume inside its production possibility frontier C) find that its production possibility frontier will shift outward D)avoid opportunity costs
A - consume outside its production possibility frontier
Without the government or the foreign sector in the income-expenditure model, planned aggregate expenditure equals A) consumption plus planned investment. B) consumption plus inventory adjustment. C) consumption minus planned investment. D) consumption plus actual investment.
A - consumption plus planned investment.
In input or factor markets, A) households supply resources; B)firms supply goods C)households demand goods; D) consumers purchase products
A - households supply resources
Which of the following is (are) true?A) inflation means an increase in the overall level of prices.B) deflation refers to a decrease in prices only in the energy and transportation sectors.C) duringinflation most people hold more cash than usual.D) inflation was a problem during the Great Depression.
A - inflation means an increase in the overall level of price
Scarcity in economics means A) not having sufficient resources to produce all the goods and services we want B) the wants of people are limited C) there must be poor people in rich companies D) shortages exist in nearly all markets
A - not having sufficient resources to produce all the goods and services we want
In which of the following conditions is the inflation rate likely to fall and the unemployment rate likely to rise? A) recession B) boon C) hyperinflation D) stagflation
A - recession
Recently, the government considered adding an excise tax on CDs that can be used to record music and CD players that can record discs. If this tax was enacted, we would expect A) that consumers would pay a higher price and producers would sell fewer of these Cds and CD players than before the tax B) there to be no effect on consumption or the prices paid by consumers of these CDs and CD players. C) hatconsumers would pay a lower price and producers would receive a higher price for these CDs and CD players than before the tax. D) there to be an increase in economic activity due to the tax.
A - that consumers would pay a higher price and producers would sell fewer of these CDs and CD players than before the tax
Economists study A)the actions, interactions, and consequences that emerge when people face scarcity B) the choices people make, but not the consequences of their choices C)the consequences of people's choices, but not the choices themselves D)theories and ignore all the facts E) data rather than people
A - the actions, interactions, and consequences that emerge when people face scarcity
if the minimum wage is a binding price floor, then A) the number of workers who want to work will be greater than the number of jobs available B) the equilibrium wage will increase C) there will be a job for everyone who is willing to work D) business owners will hire more workers
A - the number of workers who want to work will be greater than the number of jobs available
which of the following is NOT a topic studied in Macroeconomics A) the price of Dell computers B) the inflation rate C) gross domestic product D) the unemployment rate
A - the price of Dell computers
Which of the following is NOT included in 2013s GDP A) the value of a motor that is used in the production of a lawn mower B) the value of a motorcycle produced in the united states and exported to Japan C) the commission earned by a headhunter when she locates a job for a client D) the profit earned in 2013 from selling a stock that you purchased in 2008
A - the value of a motor that is used in the production of a lawn mower
3) Keynesian economics argues for:A) the active role of the government in the economy.B) the self-regulating power of free markets.C) the long run.D) the idea of letting a recession run its course to bring down the high cost of living.
A the active role of the government in the economy
If the market price of coffee is $3 per pound but the government will not allow coffee growers to charge more than $2 per pound of coffee, which of the following will happen? A)there will be a shortage of coffee B)supply must eventually increase so that the market will come into equilibrium at a price of $2.50 C)the market will be in equilibrium at a price of $2 D) demand must eventually decrease so that the market will come into equilibrium at a price of $2.50
A- there will be a shortage of coffee
The jackson tool company manufactures only tools. in 2012 Jackson tools manufactures 20,000 tools, but sold 21,000 tools. In 2012 Jackson Tools' change in inventory was A)-2000tools B)-1000tools C)1000 tools D)3000tools
B - -1000 tools
if the price index in period 2 is 109 and the price index in period 3 is 125, the rate of inflation between period 2 and period 3 is A)16% B)14.7% C)9% D)8.7%
B - 14.7%
The government should extend the duration of unemployment benefits to those workers who lost their jobs due to outsourcing. This statement is best described as A) an example of marginalism; B) a normative statement; C) an example of the fallacy of composition; D) a positive statement
B - a normative statement
without the government or the foreign sector in the income-expenditure model, planned aggregate expenditure equals A) consumption minus planned investment B) consumption plus planned investment C)consumption plus inventory adjustment D)consumption plus actual investment
B - consumption plus planned investment
Which of the following is a true statement A) economic theory assumes that people are selfish B) economic theory does not assume that people are more interested in money compared to love, wisdom, or honor C) Economic theory assumes that people choose those actions from among the options that they think will yield them the largest disadvantage D) none of the above
B - economic theory does not assume that people are more interested in money compared to love, wisdom, or honor
one of the ways rent control is inefficient is that it leads to A) higher quality apartments B) high opportunity costs associated with wasted time C) markets that maximize total surplus D) the construction of more apartments
B - high opportunity costs associated with wasted time
Inventory can be counted as investment because:A) inventory is an intermediate good used for future production.B) inventory produces a future stream of sales.C) inventory is free.D) inventory is tax deductible.
B - inventory produces a future stream of sales
Bob is unemployed if he A) has looked for a job for two months and then quit looking. B) is temporarily laid off. C) is not looking for a job. D) A and C are correct
B - is temporarily laid off
The aggregate demand curve shows a _______ relationship between ________ and aggregate output ___________. A) negative; the price level; supplied B) negative; the price level; demanded C) positive; the price level; demanded D)positive, the interest rate; demanded
B - negative; the price level; demanded
structural unemployment is the A) unemployment that results when people become discouraged about their chances of finding a job so they stop looking for work B) portion of unemployment that is due to changes in the structure of the economy that result in a significant loss of jobs in certain industries C) portion of unemployment that is due to the normal working of the labor market. D)unemployment that occurs during recessions and depressions
B - portion of unemployment that is due to changes in the structure of the economy that result in a significant loss of jobs in certain industries
the concept of trade-offs would become irrelevant if A) poverty were eliminated; B) scarcity were eliminated; C) we were dealing with a very simple, one-person economy; D) capital were eliminated
B - scarcity were eliminated
profits earned in the United States by foreign-owned companies are included in A) the U.S. GNP but not GDP B) the US GDP but not GNP C) both the US GDP and GNP D) neither the US GDP nor GNP
B - the us GDP but not GNP
zoe's grandparents are excited about finally paying off their mortgage, because, as they say, "Our cost of housing is now zero" zoe should explain to them the economic principle of: A)marginal analysis:if the additional cost of housing is zero, then their additional benefit is also zero B)opportunity cost: by living in the house they are giving up the opportuntiy to sell the house, buy a smaller one, and pocket the difference C)efficiency: if their cost of housing is now zero they should let Zoe move in without charging her any rent. Zoe is better off, and her grandparents arent hurt. D) equity:it is unfair that some people are still paying off their mortgage
B) opportunity cost: by living in the house they are giving up the opportunity to sell the house, buy a smaller one, and pocket the difference
A company produced 8 dishwasher machines in 2012. The company sold 6 in 2012 and added 2 to its inventories. The market value of the dishwasher machines in 2012 was $200 per unit. What is the value of this company's output that will be included in the 2012 GDP A) $400 B) $1400 C)$1600 D)$2000
C - $1600
Suppose the required reserve ratio is 20%. A $40 million cash deposit will, at most, allow an expansion of the money supply to A)$20million. B)$80million. C)$200million. D)$800million.
C - $200 million
if the labor force is 500 and employment is 450, then the unemployed rate is A) 100%, B) 90%, C) 10%, D) 0%
C - 10%
Which of the following will NOT cause a shift in the demand curve for compact discs? A)a change in income B)a change in the price of downloadable online music C)a change in the price of compact discs D) a change in wealth
C - a change in the price of compact discs
What is likely to happen if there is an increase in exports?A) a decrease in the nominal GDPB) a decrease in the real GDPC) a decrease in the unemployment rateD) a decrease in the inflation rate
C - a decrease in the unemployment rate
A price floor is A) the difference between the initial equilibrium price and the equilibrium price after a decrease in supply B) the minimum price that consumers are willing to pay for a good. C) a minimum price set by government that sellers must charge for a good. D) a maximum price set by government that sellers may charge for a good.
C - a minimum price set by government that sellers must charge for a good
The time it takes for a new economic policy to affect behavior in the economy is A)a recognition lag B)an implementation lag C)a response lag D)none of the above
C - a response lag
which of these is true: A) history has shown that an economic system can last only if guided by a central economic plan B) a society will fall into social chaos without an authoritative central plan C) a society does not need an authoritative central plan to generate economic order and cooperation D) both B and C are true
C - a society does not need an authoritative central plan to generate economic order and cooperation
Country A would have an absolute advantage compared to country B in the production of corn if A) corn sells for a higher price in Country A than in Country B B) corn can be produced at a lower cost in terms of other goofs that it could be in County B C)country a uses fewer resources to produce corn than Country B does D) the demand for corn is higher in country a than in country b
C - country A uses fewer resources to produce corn than Country B does
if the GDP deflator is greater than 100, then A) nominal GDP is lower than real GDP B) nominal GDP equals real GDP C) prices decreased by more than half between the current and the base years D)nominal GDP is greater than real GDP
D - nominal GDP is greater than real GDP
which of the following is NOT an opportunity cost of attending college? A) the income you could have earned if you didn't attend college B) the tuition you pay C) the alternative uses of the time you spend studying D) the cost of the food that you consume while you are attending college
D - the cost of the food that you consume while you are attending college
macroeconomic policies became more influenced by Keynes' theories starting with A) the period of high unemployment and high inflation in the 1970s B) the period of high infation in the early 1980s C) the OPEC recession D) the Great Depression
D - the great depression
the discount rate is A) the interest rate commercial banks charge each other for borrowing funds B) the interest rate commercial banks charge their new customers C) the interest rate commercial banks charge their most creditworthy customers D) the interest rate the Fed charges commercial banks for borrowing funds
D - the interest rate the fed charges commercial banks for borrowing funds
unemployment implies that in the labor market A) there are too few workers for the jobs available B) there is an excess demand for labor C) quantity demanded of labor exceeds quantity supplied D) there is an excess supply of labor
D - there is an excess supply of labor
If someone has a comparative advantage is growing pineapples A) they also have an absolute advantage in growing pineapples; B) pineapples are the only product they can grow C) they can grow more pineapples using the same resources than other pineapple growers D) they can grow pineapples at a lower opportunity cost than other pineapple growers
D - they can grow pineapples at a lower opportunity cost than other pineapple growers
1) Which of the following would NOT be classified as a macroeconomic question?A) How many people are employed in the economy as a whole?B) What determines the overall level of prices in the economy as a whole?C) What determines the overall trade in goods, services and financial assets between the U.S. and the rest of the world?D) What determines the cost to a university or college of offering a new course?
D - what determines the cost to a university or college of offering a new course
People scalping tickets for the Super Bowl will be successful at selling the tickets for a profit A) only when there is excess supply. B) when prices are too high. C) any time the Super Bowl is popular. D) when the price set by the National Football League is less than the market equilibrium price.
D - when the price set by the NFL is less than the market equilibrium price
which group or organization makes choices A) new york city B) the atlanta braves, C)the microsoft corporation D)the iraqi governement E)none of the above
E - none of the above
The equation for GDP using the expenditure approach is
GDP = C + I + G + EX - IM
according to the law of demand there is ________ relationship between price and quantity demanded
a negative
the producer that has the higher productivity is said to have a(n)
absolute advantage
ceteris paribus
all other things constant assumption
a shift in the demand curve (to the left or right) caused by a change in one or more of the determinants of demand
change in demand
a movement along the demand curve caused by a change in the price of the good
change in quantity demanded
the producer that has the smaller opportunity cost producing something is said to have a(n)
comparative advantage
trade is based on
comparative advantage
the study of choice facing scarcity and its unintended consequences
economics
the study of how people choose to use their scarce resources to attempt to satisfy their unlimited wants
economics
the property of a resource allocation whereby nobody can be made better off without making someone else worse off
efficiency
the property of a resource allocation whereby goods and services are distributed equally or "fairly" among individuals
equity
if wrex can produce more math problems per hour and more book reports per hour than quinn can, then wrex cannot cain from trading math problems and book reports with quinn, true or false
false
the study of economy-wide phenomena that arise from the interactions of individuals in a society
macroeconomics
the sum of all individual demands for a particular good or service
market demand
when less of something is available than what is wanted at the zero price
scarcity
In an economy that uses fiat money, there is no need for double coincidence of wants. true or false
true
the employment rate is the number of people employed divided by the number of people in the labor force, true or false
true
whatever people value
wealth
the branch of economics that examines the functioning of individual industries and the behavior of individual decision-making units is A) normative economics; B) macroeconomics; C) microeconomics; D) positive economics
C - microeconomics
The sum of frictional and structural unemployment is thought of as the A) normal rate of unemployment. B) seasonal rate of unemployment. C) cyclical rate of unemployment. D) natural rate of unemployment.
D - natural rate of unemployment
The speculative demand for money is A) positively related to interest rate B) negatively related to income C) positively related to income D) negatively related to interest rate
D - negatively related to interest rate
Firms react to negative inventory investment by increasing output. True or False
True
the Amazon Kindle and the electronic textbooks available for the kindle are complementary goods. Electronic textbooks and traditional, hard copy textbooks are substitute products. If the price of electronic textbooks for the Kindle decreases A)demand for the kindle decreases, the quantity of electronic textbooks demanded increases, and demand for traditional, hard copy textbooks decreases. B)demand for the Kindle increases, demand for electronic textbooks increases, and demand for traditional, hard copy textbooks decreases. C) demand for the Kindle increases, the quantity of electronic textbooks demanded increases, and demand for traditional, hard copy textbooks decreases. D) the quantity of Kindles demanded increases, demand for electronic textbooks increases, and the quantity of traditional, hard copy textbooks demanded decreases.
C - demand for the kindle increases, the quantity of electronic textbooks demanded increases, and demand for traditional hard copy textbooks decreases
Positive economics A) describes opinions and perspectives on how the world should work B) is based on opinion polls C) descries how the world does work D) is the same as normative economics
C - describes how the world does work
the aggregate production function is the mathematical representation of the technological relationship between A) the rate of capital accumulation and national output B) national output and fiscal policy C) fiscal and monetary policy changes and national output D) national output and inputs
C - fiscal and monetary policy changes and national output
if the unemployment rate increases from 10% to 14%, the economy will A)remain on the ppf; B)remain on the origin C)move away from the ppf toward the origin D)move closer to a point on the ppf
C - move away from the ppf toward the origin
the economy can be in equilibrium if, and only if A)actual investment is zero, B)planned investment is greater than actual investment C) planned investment equals actual investment D)planned investment is zero
C - planned investment equals actual investment
if autonomous consumption increases, the size of the multiplier would A)decrease B)either increase or decrease depending on the size of the change in autonomous consumption C)remain constant D)increase
C - remain constant
when the aggregate supply curve is vertical, which of the following is NOT true? A)any increase in the price level will not cause an increase in aggregate output B) the economy is producing the maximum sustainable level of output C) the economy is expanding quickly D) the economy is at capacity
C - the economy is expanding quickly
When Hurricane Andrew passed through Louisiana in the summer of 1992, approximately a quarter of the sugar cane crop was destroyed. Ceteris paribus, A) the demand for sugar decreased, and the price of sugar decreased. B) the demand for sugar increased, and the price of sugar increased. C)the supply of sugar decreased, and the price of sugar increased. D) the supply of sugar decreased, and the price of sugar decreased.
C - the supply of sugar decreased, and the price of sugar increased
Macroeconomics deals with A) bits and pieces of the economy, B) the question of how a business unit should operate profitably, C) the working of the entire economy or large sectors of it D) how individuals make decisions
C - the working of the entire economy or large sectors of it
If the market price of coffee is $3.00 per pound but the government will not allow coffee growers to charge more than $2.00 per pound of coffee, which of the following will happen? A) The market will be in equilibrium at a price of $2.00. B) Supply must eventually increase so that the market will come into equilibrium at a price of $2.50. C) There will be a shortage of coffee. D) Demand must eventually decrease so that the market will come into equilibrium at a price of $2.50.
C - there will be a shortage of coffee
if the price floor is set above the equilibrium price A) quantity demanded will equal quantity supplied B) the floor will be ineffective C) there will be a surplus D) there will be a shortage
C - there will be a surplus
2) In the "paradox of thrift:"A) firms that are pessimistic about the future lay off the most saving-conscentious workers.B) when families and business are feeling pessimistic about the future, they spend more today.C) increased saving by individuals increases their chances of becoming unemployed.D) profligate (extravagant) behavior during economic tough times has large negative consequences for society.
C) increased saving by individuals increases their chances of becoming unemployed.
An example of an ineffective price ceiling would be the government setting the price of wheat at ______ per bushel when the market price is at $5 per bushel A)$2.25 B)$3 C)$4.75 D)$6
D - $6
Florida schools offered cash bonuses to students who scored high on the state's standardized exams. The cash bonuses are an example of which of the following basic economic principles? A) resources are scarce B) the real cost of something is what you must give up to get it C) there are gains from trade D) people respond to incentives
D - People respond to incentives
Gross domestic product measures A) the value of all output in the economy B) the total spending of everyone in the economy C) the total income of everyone in the economy D) all of the above
D - all of the above
Gross domestic product is defined as:A) consumerspending + government purchases + financial spending + exports -imports.B) consumer spending + government transfers + investment spending + exports -imports.C) disposable income + taxes + investment spending + exports + imports.D) consumer spending + government purchases + investment spending + exports -imports.
D - consumer spending + government purchases + investment spending + exports -imports.
Dean borrows $400 from tim. tim wants to make a 10% real return on his money, so they both agree on a 10% interest rate paid next year. Dean and tim did not anticipate any inflation, yet the actual inflation turned out to be 4% next year. In this case, A) tim is better off B) tim will receive more than 10% of real rate of return a year from now C) Dean will pay $56 a year from now on D) Dean is better off
D - dean is better off
Ruby transfers $700 from her saving account to her checking account. This transaction will A) not change M1 and decrease M2. B) decrease both M1 and M2. C) increase both M1 and M2. D) increase M1 and not change M2.
D - increase M1 and not change M2
