Quiz Q's 217
The incomes of consumers decrease in the market for an inferior good. As a result,
demand increases, equilibrium price rises and equilibrium quantity rises.
When consumers have a longer time to adjust to a change in price,
demand tends to be more elastic.
The cost of equipment that businesses use to produce a product increases in a market. As a result,
supply decreases, equilibrium price rises and equilibrium quantity falls.
n a market, several businesses go bankrupt and stop producing a product. As a result,
supply decreases, equilibrium price rises and equilibrium quantity falls.
Gross domestic product is the sum of
consumption, investment, government purchases, and exports, minus imports
The incomes of consumers increase in the market for an inferior good. As a result,
demand decreases, equilibrium price falls and equilibrium quantity falls
The incomes of consumers decrease in the market for a normal good. As a result,
demand decreases, equilibrium price falls and equilibrium quantity falls.
The elasticity of demand is
the amount that quantity changes in response to a change in price
An annual inflation rate of 4.5% would mean
the average of the prices in the market basket are 4.5% higher this year than last year.
The assumption that businesses are price takers means that
they must set their prices in line with what the market will bear
The natural rate of unemployment appears to be about
5%
If banks are charging an interest rate of 8%, and the expected inflation rate is 2%, the real interest rate is
6%
After you graduate you get a job paying $40,000 per year. Over the following three years a price index rises from 100 to 110. To maintain the purchasing power of your salary, how much must you be paid after three years? (Type your answer as a 5-digit number. Do not use a "$" sign.)
Correct Answer: Correct 44,000
How does nominal GDP differ from real GDP
Nominal GDP is measured in current prices, meaning the prices from the year the GDP is measured, while real GDP is measured in constant prices, meaning the prices from a "base year"
When price rises,
a business can make more profits by increasing production, even if less efficient resources must be used
Inflation is
a rise in the price level from one year to the next
An interest rate is
an added percentage that a borrower must repay a lender in addition to the amount borrowed
In the definition of Gross Domestic Product, the word "value" means
he quantity of each product produced is multiplied by its price, and added to GDP
Discouraged workers are
not counted as unemployed or as part of the labor force, because they have stopped searching for work
Demand is "elastic" if
quantity changes a lot when price changes.
Widgets and gadgets are substitute goods. The price of widgets increases. As a result,
the demand for gadgets increases, equilibrium price rises and equilibrium quantity rises
The population of a town decreases. As a result, in the market for houses,
the demand for houses decreases, equilibrium price falls and equilibrium quantity falls.
The unemployment rate is calculated as
the number of unemployed people as a percentage of the labor force
If there is a shortage in a market
the price is too low, so businesses produce less than consumers want to buy
If nominal GDP declines from one year to the next either
the price level has decreased, or output has decreased, or both
The core rate of inflation excludes
the prices of energy and food because they are especially volatile.
In a market, if the price is higher than the equilibrium price
the quantity supplied exceeds the quantity demanded, so there is a surplus
