princ. of Macro final Exam
The table contains information about Pfizer's stock. How much is Pfizer, as a company, worth? current price 36.22 open 35.86 div yeild 3.89% mkt cap. 200.33 bil
$200.33 billion.
Total consumption is $1,400 when income is $1,600, and total consumption increases to $1,900 when income is at $2,400. What is the marginal propensity to consume? 0.83 1.6 0.37 0.63
0.63
The table shows the salary of a worker in Germany. The level of saving in 2016 is: year real income. real consumption 2016. 38,000. 20,900 2017. 40,000. 22,000 2018. 42,000 23,100
17,100
What is social insurance?
It is government-provided financial funding to households to compensate for bad outcomes such as unemployment, illness, disability, or outliving their savings.
What is quantity supplied?
It is the amount of an item that a seller is willing to sell at a particular price.
What is the difference between microeconomics and macroeconomics?
Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of the economy as a whole.
How is monetary policy different from fiscal policy?
Monetary policy adjusts interest rates, whereas fiscal policy adjusts government spending and taxes.
When faced with a quantity decision, the economic surplus is always maximized by following the...
Rational Rule.
Which of the following is a social insurance program in the United States? Medicaid Social Security housing assistance earned income tax credit
Social Security
What happens to the equilibrium price and quantity when demand increases and simultaneously supply decreases, and the relative size of the shifts is not known?
The equilibrium price rises, and the change in the equilibrium quantity is ambiguous.
Which principle tells you that the true cost of something is the next best alternative you have to give up to get it?
The opportunity cost principle.
The aggregate production function is represented as: Y = f(L, H, K). K = f(L, H, Y). L = f(Y, H, K). H = f(L, Y, K).
Y = f(L, H, K).
Deposit insurance is:
a guarantee that you will get your money back, even if the bank collapses.
A production function is: - the amount of money generated from selling outputs. - a method through which inputs can be turned into outputs, given the available resources. - a method by which outputs can be recycled to produce inputs. - the sum of total production possibilities, if resources were unlimited.
a method through which inputs can be turned into outputs, given the available resources.
When quantity demanded exceeds quantity supplied, _____ exists.
a shortage
An excise tax is a tax on:
a specific product
In a market graph, consumer surplus is the area: - between the demand curve and the supply curve. - above the price. - below the demand curve. - above the price and below the demand curve.
above the price and below the demand curve.
On a market graph, producer surplus is the area that is: above the demand curve. below the demand curve. above the demand curve and below the supply curve. above the supply curve and below the price.
above the supply curve and below the price.
The working age population includes people who are:
age 16 or older who are not in the military or institutionalized.
A trade cost is:
an extra cost incurred as a result of buying or selling a good abroad rather than domestically.
(Figure: Graph) Refer to the graph to answer the question. In the graph, the movement from point M to point Q represents (M switches to new line above)
an increase in demand.
(Figure: Graph) Refer to the graph to answer the question. The movement from point M to point N represents: (moves down on the line)
an increase in quantity demanded.
Market failure occurs when market forces lead to: high price. high quantity. an inefficient outcome. a marginal benefit that is equal to marginal cos
an inefficient outcome.
Sunk costs are costs that...
are incurred in the past and cannot be reversed.
The consumer price index is an index that tracks the:
average price that consumers pay over time for a representative basket of goods and services.
The cost-benefit principle states that a decision should be pursued only if the...
benefits are greater than the costs.
Specialization will increase output when it is based on: who can produce at the least comparative cost. absolute advantage. who can produce the fastest. comparative advantage.
comparative advantage.
The "market value" of a good or service refers to the:
current dollar value of that good or service.
Frictional unemployment is unemployment:
due to the time it takes for employers to search for workers and for workers to search for jobs.
Positive analysis is based on identifying _____ and _____.
facts; relationships
The concept of equity focuses on:
fairness
A "final" good or service is one that is:
finished and ready for the final user.
To maximize production, people should? focus on the task in which they have an absolute advantage. focus on the task in which they have a comparative advantage. learn all the skills so that they can perform any task needed. focus on improving their weakest skills.
focus on the task in which they have a comparative advantage.
Enforceable property rights encourage economic growth by encouraging:
investments
Discretionary spending is spending that:
is appropriated by Congress annually.
Diminishing marginal benefit:
is when buying an additional item yields a smaller marginal benefit than the previous item.
Which of the following is an argument for limiting international trade? An increase in international trade may: reduce specialization, which has national security benefits. reduce the amount of outsourcing by domestic firms. lead to anticompetitive practices, such as dumping. lead to economic growth, stemming from specialization.
lead to anticompetitive practices, such as dumping.
Shifts in demand
lead to price and quantity to move in the same direction.
Menu costs are the:
marginal costs of adjusting prices.
The __________ suggests, decisions about quantities are best made incrementally.
marginal principle
GDP is defined as the: - market value of all consumer goods purchased within an economy. - market value of all final goods and services produced within a country in a given year. - value of all intermediate goods produced within a country in a given year. - value of all output produced by businesses within a country in a given year.
market value of all final goods and services produced within a country in a given year
The federal funds rate is the:
nominal interest rate that banks pay on overnight interbank loans.
Holding all else constant, if people eat out more at expensive restaurants when they earn more, then expensive restaurant meals are
normal goods.
The labor force participation rate is the:
percentage of the working age population that is either employed or unemployed.
The Producer Price Index is an index that tracks the:
price that businesses pay over time for the inputs used in the production process.
Forward guidance occurs when the Federal Reserve:
provides information about the future course of monetary policy in order to influence expectations about future interest rates.
An import is a good or service:
purchased from a foreign seller.
An equilibrium price is a price where the
quantity supplied equals the quantity demanded.
A market is a
setting that brings together potential buyers and sellers.
An export is a good or service:
sold to a foreign buyer.
Tax expenditures are:
special deductions, credits, or exemptions that lower your tax obligations.
Which of the following is a source of comparative advantage? small-scale production scarce inputs specialized skills high tariff rates
specialized skills
A government can promote the development of human capital by: placing caps on salaries for teachers. promoting programs that encourage late retirement from work. subsidizing secondary school education. providing savings tax credits.
subsidizing secondary school education.
Due to a decline in demand and popularity, Ford Motor Company is planning to phase out traditional sedans such as 'Fusion' and 'Taurus' to focus on SUVs and trucks. Ford's sedans and trucks/SUVs are
substitutes-in-production.
Mandatory spending is spending that:
supports programs that do not get determined annually but instead are set in law.
When a manager uses comparative advantage to assign tasks in a workplace, then each task is assigned to the worker who is best at doing the task. worker is assigned to the tasks for which he or she has the highest aptitude and efficiency. worker learns how to do all tasks to increase flexibility in assignments. task is assigned to the worker with the lowest opportunity cost for performing the task.
task is assigned to the worker with the lowest opportunity cost for performing the task.
A tariff is a:
tax on imported products
The marginal propensity to consume is: MPC
the change in consumption divided by the change in income.
Intergenerational mobility is the extent to which: children own more personal transportation vehicles (such as cars and motorcycles) than their parents did. the geographic dispersion of families occurs as children pursue economic opportunities. the income of children in a given family varies across the children. the economic status of children is independent of the economic status of their parents.
the economic status of children is independent of the economic status of their parents.
A market's deadweight loss is calculated as: - the economic loss that a firm has when it is not producing its profit-maximizing output. - the loss to consumers when a product malfunctions or fails to meet expectations. - the economic surplus at the efficient quantity minus the economic surplus at the actual quantity. - the price at equilibrium minus the price at actual quantity.
the economic surplus at the efficient quantity minus the economic surplus at the actual quantity.
The law of demand refers to...
the inverse relationship between price and quantity demanded.
What is a reserve requirement?
the minimum amount of reserves that each bank must hold
The law of supply refers to...
the positive relationship between price and quantity supplied.
Fiscal policy works best when it is: (TTT)
timely, targeted, and temporary.
What is the Federal Reserve's mandate?
to ensure maximum employment while maintaining stable prices
The law of diminishing returns states that:
when one input is held constant, while other inputs are increased, eventually output will increase by smaller and smaller amounts.
Human capital refers to:
worker skills and knowledge.
An underemployed person is one who is:
working but whose skills are not fully utilized.