Macroeconomics quiz 1

The shift from Db to Da in the market for potato chips could be caused by

a decrease in income, assuming that potato chips are a normal good.

Countries with low GDP per person tend to have

higher rates of infant mortality.

The "invisible hand" refers to

how the decisions of households and firms lead to desirable market outcomes.

If pasta is an inferior good, then the demand curve shifts to the ________ when ________ rises.

left, consumers' income

In 1931, President Herbert Hoover was paid a salary of $75,000. Government statistics show a consumer price index of 15.2 for 1931 and 237 for 2015. President Hoover's 1931 salary was equivalent to a 2015 salary of about

$1,169,408

Salaries of government workers - $1,422 Government expenditures on public works - $553

$1,975

Nate collected Social Security payments of $220 a month in Year 1. If the price index rose from 90 to 108 between Year 1 and Year 2, then his Social Security payments for Year 2 should have been

$264

If in some year nominal GDP was $20 billion and the GDP deflator was 50, what was real GDP?

$40 billion

Foreign purchases of domestically produced goods - $88 Domestic purchases of foreign goods - $120

-$32

what is the real interest rate year 1 2 3 CPI 233.0 236.7 237.0 Normal interest rate 2.4 2.5 2.1

2.0%

What are the GDP deflator and the inflation rate for 1931? year 1929 1930 1931 1932 nominal GDP 103.6 91.2 76.5 58.7 real GDP 977 892.8 834.9 725.8

9.16, -10.3

Efficient production is represented by which point(s)?

A,B

Which of the following would shift the demand curve for gasoline to the right?

An increase in consumer income, assuming gasoline is a normal good

What would happen to the equilibrium price and quantity of lattés if consumers' incomes rise and lattés are a normal good?

Both the equilibrium price and quantity would increase

Which of the following statements does not apply to a market economy?

Government policies are the primary forces that guide the decisions of firms and households.

Which of the following movements would illustrate the effect in the market for chocolate chip cookies of an improved high-speed mixer that allows bakers to produce cookies in less time?

Point A to Point B

Footville's Production PossibilitiesShoesSocks 800 600 400 200 0 0 400 700 900 1,000

The opportunity cost of an additional 200 shoes increases as more shoes are produced.

Which of the following is included in the calculation of GDP?

The purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the country.

The term market failure refers to

a situation in which the market on its own fails to allocate resources efficiently.

If the government were to intervene in a market economy and fix the price of visiting a health care provider below the market price, then we would expect, relative to the market outcome,

an increase in the number of visits people want to make and a decrease in the number of visits health care providers want to provide.

Real GDP is the yearly production of final goods and services valued at

constant prices

If these are the only four buyers in the market, then when the price increases from $1.00 to $1.50, the market quantity demanded 1.00: 14, 10, 2, 5 1.50: 12, 8, 0, 4

decreased by 7 units

The property of society getting the most it can from its scarce resources is called

efficiency

The law of demand states that, other things equal, when the price of a good

falls, the quantity demanded of the good rises

Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has

increased measured GDP by the value added by the restaurant's preparation and serving of the meals.

The adage, "There ain't no such thing as a free lunch," means

people face tradeoffs.

When the government redistributes income from the wealthy to the poor,

people work less and produce fewer goods and services

the inflation rate was year 1 2 3 price of meat 3 1 4 price of a toy 2 7 5

positive in year 2 and positive in year 3

Fundamentally, economics deals with

scarcity

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300, the airline should

sell the ticket because the marginal benefit exceeds the marginal cost.