SS141 Final
What is the problem did trade by barter transactions pose?
Double Coincidence of Wants
Which is not a function of money?
Hyper inflation
The law if supply states that other things remaining the same
If the price of a good increases the quantity supplied increases
An increase in the number of fast food restaurants
Increases the supply of fast food meals.
In year 2007, in Candamica, consumption expenditure was $13 billion, interest, rent, and profit were $1.5 billion, government expenditures on goods and services were $3 billion, net exports of goods and services amounted to $2 billion, and investment was $8 billion. Hence total expenditure was
$26 billion
What are the options of fiscal policy?
All of the above
The income approach measures GDP by summing
C+I+G+NX
Production by Honda, a Japanese firm, in the US is included in _____ GDP and production by Nike Corporation, a US firm, in Vietnam is included in _____ GDP.
US.; Vietnam
The following are all final goods except
a computer used by Intel to design a new computer chip.
The following are all final goods except
a computer used by Intel to design new computer chips.
Which of the following increases the supply of gasoline?
a decrease in the price of a resource used to produce gasoline, such as crude oil.
The calculation of GDP excludes
a family member painting the family home.
The GDP deflator is
a measure of the level of production.
One reason why economist often use models in their analysis is that
a model helps us to understand, explain, and predict economic phenomena in the real world.
Which of the following is a final good or services?
a new replacement muffler installed by Midas Mufflers
A graphical representation which shows the trade-off that occurs when more of one output is obtained at the sacrifice of another is called
a production possibilities curve.
Economic growth is defined as
a sustained expansion of production possibilities.
The labor force includes people who are
actively seeking a job but don't have a job.
To measure GDP by using the income approach, we must add all incomes and then ________ depreciation and ________ net taxes less subsidies.
add; add
The term ceteris paribus means
all other things remaining constant or equal.
The way that a society uses to allocate resources to satisfy human wants is called
an economics system
A fundamental aspect of economics is to
analyze how choices are made.
Economics models
are used to explain how people behave.
The multiplier factor is given by 1 divided by the ______ or similarly 1 divided by 1-MPC.
MPS
Macroeconomics is best defined by which of the following statements?
Macroeconomics is the study of behavior of the economy as a whole.
Which is not a liquid asset?
Money Market Mutual Fund
An increase in the quantity demanded is shown as a
Movement along the demand curve
In recent years, which of the following has been negative?
Net exports of goods and services
Which of the following expenditure components of GDP can be negative or positive?
Net exports of goods and services
The GDP deflator equals
Nominal GDP divided by real GDP multiplied by 100
If you buy a five-year old TV from a friend, the amount you paid for the TV is
Not included in this year's GDP
If the number of companies producing computer memory chips increases then the
Supply of memory chips increases.
Whenever a society forgoes current consumption to invest in capital goods
That society can consume more in the future
The more society consumes today
The less society can consume in the future
Economic growth is defined as equal to the increase in
real GDP
Frictional unemployment is the result of
the normal process of jobs being created and destroyed.
The rule of 70 states that the level of a variable will double in
the number of years equal to 70 divided by the variable's annual growth rate.
Household production, such as baking bread at home, is not included in GDP because it
does not add anything of value to GDP.
Everything else the same, if consumption expenditure increases by $200 billion, then GDP
does not change
Babysitting services the oldest son provides his parents
does not count as real GDP nor nominal GDP
Leisure time is ignored when calculating GDP because leisure time
does not involve a measurable market transaction
investment is defined as the purchase of
the purchase of new capital goods and additions to inventories.
Macroeconomics deals with _______ while microeconomics deals with _________.
economy-wide choices; choices of individuals.
The working age population includes
employed and unemployed people over 16.
The price of cotton clothing falls. As a result,
the quantity demanded of cotton clothing increases
The measurement of GDP makes a distinction between
final goods and services and intermediate goods and services, so that GDP includes final goods and services but excludes intermediate goods and services.
The natural unemployment rate equals the sum of
frictional, seasonal, and structural unemployment.
Bill has graduated with a degree in economics. Through Career Services he submitted his resume to several companies and he will visit them during the next two weeks. Bill is considered
frictionally unemployed
One opportunity cost associated with going to college is
giving up employment possibilities while in college.
The growth rate of real GDP per person equals the
growth rate of real GDP minus the growth rate of the population.
The aggregate supply curve illustrates that the
higher the price level, the greater the quantity of real GDP supplied.
Consumption expenditures are defined as spending on goods and services by
households.
Economics deals with
how individuals allocate scarce resources to satisfy unlimited human wants.
Seasonal unemployment includes people who become unemployed from
the seasonal weather patterns.
Which of the following is included as investment in GDP?
i. cars produced during the year but unsold at the end of the year. ii. new capital equipment produced and purchased during the year.
As measured, GDP omits which of the following
i. illegal sales of goods and services. ii. changes in the amount of leisure time. iii. household production of good and services.
Which of the following are considered factors of production?
i. land ii. labor iii. psychical capital iv. entrpreneurship
Last year the US net exports of goods and services was negative. This fact means that means that year
the value of US exports were less than the value of US imports.
Net exports of goods and services is defined as equal to
the value of exports of goods and services minus the value of imports of goods and service.
Opportunity cost is
the value of the next-best alternative that must be scarified to satisfy a want.
The potential rewards that are available to an individual if a particular activity is undertaken are known as
incentives.
The category of "rent" in the income approach to GDP
includes the money paid to use land and other rented inputs
When studying individuals' economic behavior, economists assume that
individuals act as if they were rational.
All points inside the production possibilities curve indicate
inefficiency in production.
Bob Funky T-shirt began the year with 1,000 shirts in inventory, produced 10,000 shirts during the year and ended the year with 1,100 shirts in inventory. The 100 shirts added to his inventory will classified as
investment
In comparing the magnitudes of the components of GDP according to the expenditure approach, we see that in the US
investment is about the same size as government expenditure on goods and services
If a wealthy woman marries her butler, quits paying him and does not hire a new butler, then
investment is greater than depreciation
The nation's supply of productive resources increases if
investment is greater than depreciation.
Total income in a country in 2000 is $780 billion. Total expenditure in the country
is $780 billion.
A production point that lies outside the PPC
is currently not attainable.
Depreciation
is the decrease in the value of capital resulting from its use and obsolescence.
The labor force participation rate is the
labor force divided by the working-age population, then multiplied by 100.
The unemployment rate is the number of people unemployed divided by the
labor force, then multiplied by 100.
In growth theory, the standard of living is measured using the growth rate of
real GDP per person.
If the price level increases from 110.0 to 115.0, the quantity of
real GDP supplied will increase.
A point on a production possibilities curve indicates
resources are being used efficiently.
In economics, items that are used to produce goods and services are known as
resources.
In economics, __________ are limited but __________ are unlimited.
resources; wants.
Economists assume people are motivated by
self-interest.
Structural unemployment includes people who become unemployed from
technological changes.
Full employment means that
the cyclical unemployment rate is zero.
A micro-economist would study all of the following issues expect
the effect of a change income taxes on the nation's rate of unemployment.
Scarcity refers to
the inability of society to satisfy all human wants because of limited resources.
The basic economic problem is a situation of
limited resources and unlimited wants.
Economics can be described as the study of how people use ________ resources to satisfy ________ wants.
limited; unlimited
Whenever productive resources are used to make capital goods
society is giving up current consumption
A friend wants to learn how the unemployment rate is calculated and hoe inflation is measured. He asks you which economics course to take and you advise him to enroll in
macroeconomics.
Gross domestic product measures the
market value of the final goods and services produced in a given year with a country.
Aggregate hours of work is calculated by
multiplying the number of people employed by the average hours worked per week by the number of workweeks.
The purchase of stocks and bonds is
not included in GDP as investment
Goods and services such as environmental quality, leisure time, and household production are not included in GDP because they are not
bought in markets.
The purchase of the financial assets, such as stocks and bonds, is not included in GDP because
brokerage firms don't want them to be included.
Recurring upswings and downswings in an economy's real GDP over time are called
business cycles
People respond to incentives
by calculating their individual costs and benefits and determining which is greater.
The conversion of resources into consumer goods or services is called
production.
A five-cent deposit on beer bottles
provides a positive incentive because it rewards people for recycling.
Which of the following would not be directly included in the US GDP in 2009?
the market value of the computer chips produced in 2009 and used by Dell in their latest personal computer
A discouraged worker is
someone who does not have a job and has given up looking.
An employee who is fired from their job because they lack the skills required to accomplish the task, is part of _____________ unemployment.
structural
Cyclical unemployment includes people who become unemployed from
changes in the business cycle.
Which of the following is included in Germany?
china produced by the English owned Wedgewood Company at a factory in Berlin, Germany.
The expenditure approach to measuring GDP is done by using data on only
consumption expenditure, investment, government expenditure on goods and services and net exports of goods and services.
Expenditures on US produced steaks, shoes, and doctor visits are most likely classified as
consumption expenditures.
John has been laid off from his job because of a general downturn in the economy. John's unemployment is best classified as
cyclical
The natural unemployment rate is the unemployment rate that exists when there is no
cyclical unemployment.
The type of unemployment that arises from a decrease in the real GDP is called
cyclical unemployment.
How would you best describe a manufacturing employee who has been fired because he was replaced by a robot and doesn't have the skills necessary to help operate the robot?
structurally unemployed
Microeconomics is defined as that part of economic analysis that
studies individual decision making by households and firms.
Which of the following is likely to be an unreported economics activity?
tips paid to a taxi driver
The problem of economic scarcity applies
to economic systems in all nations, regardless of their development.
Another word for "aggregate" is
total.
An example of household production excluded from GDP is
tree trimming you provide at your parent's home.
In order to measure gross domestic product we can follow
two approaches: the expenditure and income approach
Excluding household and underground production leads to
underestimation of both real GDP and nominal GDP
The issues that an economic system attempts to solve include:
what to produce how to produce items for whom items are produced
The rule of ______ can be used to calculate the number of years that it takes for the level of a variable to ________.
70; double
Which of the following is included in the US GDP for 2006?
A 2006 Grand Am produced and sold as a new car in the US in 2006.
