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Macro - Exam 1
Terms in this set (81)
The primary concern of economics is the study of
How best to allocate scarce resources among competing uses
Which of the following statements is consistent with central planning?
Gov't planners play the dominant role in deciding how resources are allocated
Which of the following illustrates a macroeconomic question?
Are increasing wage demands by workers contributing to price inflation?
In the circular flow model of the market system, business firms
Sell products and buy resources
The simple circular flow model shows that workers and capital-owners offer their services to firms through the
In the circular flow model, households earn their incomes in the
Which of the following exemplifies a microeconomic question?
Will a new type of electronic reader or tablet increase the number of buyers?
As a consequence of the problem of scarcity
Individuals have to make choices from among alternatives
Macroeconomics approaches the study of economics from the viewpoint of
The entire economy
The problems of aggregate inflation and unemployment are
Major topics of macroeconomics
Identify which of the following scenarios is likely to shift the demand for wheat bread to the right (may select more than one answer)
-The population of Arizona grows by 20%
-A drought in Kansas makes people believe that the price of wheat bread will increase in a couple of months
-As people become more health conscious, they discover the benefits of whole wheat as a part of their diet
Use the following graph for the milk market to answer the question below : In this market, the equilibrium price is
1.50 (assignment 1)
Use the following graph for the milk market to answer the question below : In this market, the equilibrium quantity is
28 (assignment 1)
Use the following graph for the milk market to answer the question below : Determine whether there is a surplus or a shortage at a price of $2.00 per gallons, and determine the size of the surplus or shortage. At this price there will be a _______ of ______ gallons of milk.
Surplus; 10 (assignment 1)
Evaluate the set of events below. Determine how the events will impact their respective markets.
In examining the market for personal computers, a technological improvement reduced the cost of production. The effect of the event will be an ______ in _____.
As a result, the equilibrium price will ________ and the equilibrium quantity will ______.
Which of the following is a positive economic statement?
If the price of gasoline rises, a similar quantity of it will be bought
The following graph is the production possibilities curve of a nation:
The opportunity cost of the fourth unit of bread is
4 units of drill presses (Ch 2 quiz)
One major part of the opportunity cost of one's decision to go to college after high-school graduation is the
Full-time job that one could have gotten instead of going to college
Which of the following is the best synonym for "marginal" in economics?
A person should consume more of something when its marginal
Benefits exceeds its marginal cost
If the production possibilities curve is a straight line, then the
law of constant opportunity costs applies
A point or combination that is on the production possibilities curve is
Attainable and effective
Use the following table to answer the question below:
Dave's opportunity cost of producing 1 pound of green beans is _____ pound(s) of corn
2 (Ch 2 quiz)
Use the following figure to answer the question below:
Jane's opportunity cost of producing 1 pound of corn is ______ pound(s) of green beans
1 (Ch 2 quiz)
Use the following table to answer the question below:
Who has the comparative advantage in the production of green beans?
Jane (Ch 2 quiz)
As a result of a decrease in the price of gasoline, consumers can afford to buy more gasoline for more driving trips. This is an illustration of
The income effect
All else held constant, an increase in the price of tablets will result in a
movement up and to the left along the demand curve for tablets
Use the following graph of the demand for steak to answer the question below:
Refer to the above diagram and assume that steak is a normal good. Which of the following would shift the demand for the steak from D1 to D3?
A decrease in consumers incomes (Ch 3 quiz)
Which would be a likely cause of an increase in the demand for pizza?
A health report showing eating pizza reduces stress
An increase in the price of product B leads to an increase in the demand for product C. This indicates that product B and C are
Use the figure below to answer the following question:
An increase in price, all else held constant, would cause a change from
Point 3 to point 4 (Ch 3 quiz)
Use the figure below to answer the following question:
The figure above shows three supply curves for wheat. Which of the following would cause the supply of wheat to shift from S1 to S2?
A subsidy for what production
If a tax is placed on the production of good X, this will shift the
Supply curve for X to the left
An improvement in production technology will
Shift the supply curve to the right
Which of the following will shift the supply curve for USB flash drives to the right?
An increase in the number of sellers
Use the following diagram for the corn market to answer the question below:
If the price in this market is $4 per bushel, there will be a
Surplus, and the price will tend to fall (Ch 3 quiz)
Use the following graph for the market for beef to answer the question below:
Refer to the graph, which shows that the demand for beef shifted from D1 and D2. The change in equilibrium from E1 to E2 is most likely to result from a(n)
Decrease in consumer incomes (Ch 3 quiz)
Assume that the graphs show a competitive market for the product stated in the question:
Select the graph above that best shows the change in the market for leather coats when leather coats become more fashionable among young consumers.
Graph 1 (Ch 3 quiz)
A headline reads "Lumber Prices Up Sharply". In a competitive market, this situation would lead to a(n)
Increase in the price of new homes and decrease in quantity
A television station reports that the price of coffee has increase but the quantity traded in the market has decreased. This situation would be cause by a(n)
Decrease in supply
A decrease in demand and an increase in supply will
Decrease price and affect the equilibrium quantity in an indeterminate way
In recent years the cost of producing wines in the US has increase largely due to rising rents for vineyards. At the same time, more and more Americans prefer wine over beer. Which of the following best explains the effect of these events in the wine market?
The supply curve has shifted to the left and the demand curve has shifted to the right. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity
Hurricane Katrina damaged a large portion of oil refining and pipeline capacity in the Gulf coast states. In the market for gasoline,
The supply curve shifted to the left resulting in an increase in the equilibrium price
Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve. As a result
Both the equilibrium price and quantity of MP3 players will increase
A successful marketing campaign will increase the demand for Red Bull. This will ______ the equilibrium price and ______ the equilibrium quantity of Red Bull
Determine whether each of the following examples would be included in Gross Domestic Product (GDP).
A. When Judy went to the grocery store yesterday, she bought three pounds of potatoes. Judy's purchase of potatoes :
B. Ford Motor Company buys four tires to put on a new Ford Mustang. The purchase of the tires :
C. The U.S. Air Force purchases two fighter jets from Boeing. The purchase of the two fighter jets :
D. When Joey had his birthday last week, his grandmother sent him a $100 bill that he could spend. Joey's birthday gift of $100 :
A. would be included in GDP as a consumption expenditure
B. would not be included in GDP
C. would be included in GDP as a gov't purchase
D. would not be included in GDP
What is the value of nominal GDP for Lowlands in year 1?
What is the value of nominal GDP for Lowlands in year 2?
$1,825;$2,520 (Assignment 2)
If nominal GDP is $5 trillion and the GDP deflator is 125, the real GDP is ______ trillion
4 (Assignment 2)
The country with a higher real GDP must have a higher real GDP per capita
Suppose U.S. nominal GDP increases from one year to the next year. Given the preceding statement, we can definitely conclude that U.S. production of goods and services increased.
Although GDP is a reasonably good measure of a nation's output, it does not necessarily include all transactions and production for that nation.
Which of the following activities are either not accounted for or are measured inaccurately in calculations of GDP for the U.S? Check all that apply
- The value produced by doing your own laundry
-The costs of overfishing and other overly intensive uses of resources
The purchase of a computer by a person for household use would be counted in what category of GDP?
The purchase is always counted as consumption
Real GDP refers to
GDP data that has been adjusted for changes in the price level
One could argue that GDP is not a good measure of the standard of living in a nation because it
Does not account for the size of population
One common measure of the "standard of living" in a nation is
Real GDP per capita
One year nominal GDP was $286 billion and the price index was 88. Real GDP that year was
GDP understates the amount of economic production in the U.S. because it excludes
Work performed by households for their own benefit
GDP does not include which of the following activities?
Couples remodeling their own homes (with their own labor)
GDP excludes most nonmarket transactions. Therefore, GDP tends to
Underestimate the amount of production in the economy
The service a homeowner performs when she mows her yard is not included in GDP because
This is a nonmarket transaction
The sale of a used automobile would not be included in GDP of the current year because it is
Not current production
Gov't purchases in national income accounts would include payments for
Salaries for current U.S. military officers
Which of the following answer choices best describes a consumption expenditure category in the national income accounting?
Automobiles for personal use, but not newly constructed houses
Transfer payments are
Excluded when calculating GDP because they do not reflect current production
To avoid multiple counting in national income accounts,
Only final goods and services should be counted
Net exports is a positive number when a nation
Exports more goods and services than it imports
In the expenditures approach of national income accounting, C, I, and G include expenditures for
Domestically-produced, as well as imported, goods and services
Which of the following is not an example of a final good or service (from the perspective of the national income accounts)?
Seedlings and saplings purchased for resale by Wendy's Garden Center
To calculate real GDP
multiply the quantities of final goods and services produced in an economy in a year by their prices in a base year and then sum the values
Which of the following best defines real GDP?
Real GDP is defined as the total dollar value of final goods and services produced within a country in one year after adjustment for inflation
Which of the following would fall in the investment component of GDP?
The amount spent on new factories
Which of the following scenarios is an example of an investment in physical captial?
A firm purchases new equipment for a manufacturing process
The application of new technologies to the production process will increase
Which of the following will not increase a notion's real GDP?
Average price level
Real GDP per capita is a
Better measurement of the physical environment than output
In the long run, if the production of all goods increases for a society (there is economic growth), it will cause the production frontier to
The key variable in determining changes in a country's standard of living is the
Long-run rate of economic growth
Which of the following is a measure of economic growth that is most useful for comparing changes in standards of living?
Increases in real GDP per capita
If a nation's real GDP increases from 100 billion to 106 billion and its population jumps from 200 million to 212 million, its real GDP per capita will
Human capital is
The talents, training, and education of workers
Which of the following scenarios is an example of an investment in human capital?
A firm pays for workers to take college classes
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