ECN 211 Final (Exams 1, 2, 3) ASU Douglas - Assignment Essays

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economics

ECN 211 Final (Exams 1, 2, 3) ASU Douglas

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Posted on 
March 13th, 2023
Home economics ECN 211 Final (Exams 1, 2, 3) ASU Douglas
question
Which of the following is included in GDP?
A. recreational marijuana purchased from a drug dealer by a college student?
B. Recreational marijuana purchased and consumber by a man in his attic.
C. medical marijuana purchased from a government-run pharmacy by a glaucoma patient.
D. All of the above
answer
C. medical marijuana purchased from a government-run pharmacy by a glaucoma patient.
question
you know a candy bar cost five cents in 1962. You also know the CPI for 1962 and the CPI today. Which of the following would you use to compute the price?
A. five cents today's CPI- five cents CPI in 1962
B.Five cents *(1962 CPI/ Today's CPI)
C. five cents * (Today's CPI/ 1962 CPI)
D. five cents * (today's CPI - 1962 CPI)/1962 CPI
answer
C. five cents * (Today's CPI/ 1962 CPI)
question
Discouraged workers are included in...
A. Frictional Unemployment
B.The number of unemployed
C. the labor force
D. none of the above
answer
D. none of the above
question
when a country has a comparative advantage in producing a certain good,
A. The country should produce just enough of that good for its own consumption.
B. the country should import that good.
C. The country's opportunity cost of that good is high relative to other countries' opportunity costs of the same good.
D. None of the above
answer
D. None of the above
question
The unemployment rate is computed as the number of unemployed
A. times the labor-force participation rate, all times 100.
B. divided by the adult population, all times 100
C. divided by the number of employed, all times 100
D. Divided by the labor force, all times 100.
answer
C. divided by the number of employed, all times 100
question
In the economy of Talikastan in 2015, exports were $500, GDP was $6400, Government Purchases were $1700, Imports were $400, and investment was $1800. What was Talikastan's consumption in 2015?
A. $2000
B. $3800
C. $2800
D. $3000
answer
A. $2000
question
Sheri, a U.S. Citizen, works only in Germany. The value she adds to the production in Germany is included..
A. in German GDP, but is not included in U.S. GDP
B. in U.S. GDP, but is not included in German GDP
C. in both German GDP and U.S. GDP.
D. in neither German GDP nor U.S. GDP.
answer
A. in German GDP, but is not included in U.S. GDP
question
Transfer payments are:
A. not included in GDP because they are not payments for currently produced goods or services.
B. Included in GDP because they eventually will be spent on consumption.
C. Included in GDP because they represent income to individuals.
D. not included in GDP because taxes will have to be raised to pay for them.
answer
A. not included in GDP because they are not payments for currently produced goods or services.
question
Cyclical unemployment refers to
A. Changes in unemployment due to changes in natural rate of unemployment.
B. The portion of unemployment created by job search.
C. The portion of unemployment created by wages set above the equilibrium level.
D. short-run fluctuations around the natural rate of unemployment.
answer
D. short-run fluctuations around the natural rate of unemployment.
question
The CPI is more commonly used as a gauge of inflation than the GDP deflator is because
A. the GDP inflator cannot be used to gauge inflation.
B. the CPI is calculated more often than the GDP deflator is
C. the CPI is easier to measure
D. the CPI better reflects the good and services bought by consumers.
answer
D. the CPI better reflects the good and services bought by consumers.
question
consider 2 labor markets in which jobs are equally attractive in all respects other than the wage rate. All workers are equally able to do either job. Initially, both labor markets are perfectly competitive. If a union organizes workers in one of the markets, then the wage rates will tend to
A. rise for the union jobs and fall for the nonunion jobs
B. Rise in both markets
C. Fall in both markets
D. rise for the union jobs, but remain unchanged for the nonunion jobs.
answer
A. rise for the union jobs and fall for the nonunion jobs
question
A tire manufacturer produces 400 tires valued at $20 each. Three hundred tires are sold to a tire shop, which then sells them to households for $50 each. The remaining tires are unsold and are added to the tire manufacturer's inventory. How much is added to GDP.
A. $13,000
B. $15,000
C. $17,000
D. $8000
answer
C. $17,000
question
Ms. Lane borrowed $1,000 from her bank for one year at an interest rate of 10 percent. During that year, the price level went up by 15 percent. Which of following statements is correct.
A. Ms. Lane will repay the bank fewer dollars than she initially borrowed.
B. Ms. Lane's repayment will give the bank the same purchasing power that it originally loaned her.
C. Ms. Lane's repayment will give the bank greater purchasing power than it originally loaned her.
D. Ms. Lane's repayment will give the bank less purchasing power than it originally loaned her.
answer
D. Ms. Lane's repayment will give the bank less purchasing power than it originally loaned her.
question
Christopher is an unpaid, stay-at-home father who works as a volunteer at the local Habitat for Humanity chapter. Currenty, Christopher is not looking for a paid jobs. The Bureau of Labor Statistics counts Christopher as
A. in the labor force but not employed.
B. Unemployed but not in the labor force.
C. Neither in the labor force nor unemployed.
D. Unemployed and in the labor force.
answer
C. Neither in the labor force nor unemployed.
question
Because every transaction has a buyer and a seller,
A. Firms' profits are necessarily zero in a simple circular-flow diagram.
B. The number of firms must be equal to the number of households in a simple circular-flow diagram.
C. Every transaction contributes equally to an economy's income and to its expenditure.
D. GDP is more closely associated with an economy's income than it is with an economy's expenditure.
answer
C. Every transaction contributes equally to an economy's income and to its expenditure.
question
If 2010 is the base year, then the inflation rate in 2015 equals:
A. [(CPI in 2015 - CPI in 2014)/CPI in 2010]*100
B.[(CPI in 2015 - CPI in 201)/CPI in 2010]*100
C.[(CPI in 2015 - CPI in 2010)/CPI in 2014]*100
D.[(CPI in 2015 - CPI in 2014)/CPI in 2014]*100
answer
D.[(CPI in 2015 - CPI in 2014)/CPI in 2014]*100
question
Hours needed to make 1 unit of:
...................Cheese...|...Wine
England: 1 | 4
France: 5 | 2

# of units produced in 40 hours
...................Cheese...|...Wine
England: 40 | 10
France: 8 | 20

Assume England and France each has a total of 40 labor hours available. If each country divides its time equally between the production of cheese and wine, the total production is
A. 24 units of cheese and 15 units of wine
B. 8 units of cheese and 10 units of wine
C. 40 units of cheese and 10 units of wine
D. 48 units of cheese and 30 units of wine
answer
A. 24 units of cheese and 15 units of wine
question
Assume Aruba and Iceland can switch between coolers and producing ratios at a constant rate.
...................Labor Hours need to make 1
................... Cooler | Radio
Aruba: 2 | 5
Iceland: 1 | 4

A. radios and import coolers
B. Neither good and import both goods.
C. both goods and import neither.
D. Coolers and import radios
answer
A. radios and import coolers
question
If the nominal interest rate is 5% and the rate of inflation is 9%, then the real interest rate is
A. -0.44 %
B. -4%
C. 4%
D. 14%
answer
B. -4%
question
Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

A. probably changed measured GDP, but in an uncertain direction; the direction of the change depends on the difference in the quality of the cleaning that has resulted.
B. caused measured GDP to rise.
C. Not caused any change in measured GDP
D. Caused measured GDP to fall.
answer
B. caused measured GDP to rise.
question
GDP is equal to

A. Y
B. the market value of final goods and services produced within a country in a given period of time.
C. C + I + G + NX
D. All of the above are correct
answer
D. All of the above are correct
question
Wholesome Wheat Bakery buys $10.00 worth of flour from Mikes' Mill and uses the flour to make bread. Wholesome Wheat sells the bread to the public for $22.00. Taking these two transactions into account, what is the effect on GDP?

A. GDP increases by $32.00
B. GDP increases by $12.00
C. GDP increases by $10.00
D. GDP increases by $22.00
answer
D. GDP increases by $22.00
question
Suppose Susan can wash three windows per hour, or she can iron six shirts per hour. Paul can wash two windows per hour or he can iron five shirts per hour.
A. Susan has an absolute advantage over Paul in washing windows.
B. Susan has a comparative advantage over Paul in washing windows.
C. Paul has a comparative advantage over Susan in ironing shirts.
D. All of the above are correct.
answer
D. All of the above are correct.
question
The labor force equals the

A. Number of people employed plus the number of people unemployed plus teenagers between 14 and 16 who work atleast 10 hours a week.
B. adult population
C. number people employed plus the number of people unemployed.
D. Number of people employed.
answer
C. number people employed plus the number of people unemployed.
question
Suppose a gardner produces both tomatoes and squash in his garden. If the opportunity cost of one bushel of squash is 2/5 bushel of tomatoes, then the opportunity cost of 1 bushel of tomatoes is
A. 5 bushels of squash
B. 2 bushels of squash
C. 5/2 bushels of squash
D. 2/5 bushels of squash
answer
C. 5/2 bushels of squash
question
the GDP deflator is the ratio of:

A. Nominal GDP to the inflation rate multiplied by 100
B. nominal GDP to real GDP multiplied by 100
C. Real GDP to the inflation rate multiplied by 100
D. real GDP to nominal GDP multiplied by 100
answer
B. nominal GDP to real GDP multiplied by 100
question
GDP is not a perfect measure of well-being; For example,
A. GDP fails to account for the quality of the environment.
B. GDP places too much emphasis on the value of leisure
C. GDP incorporates a large number of non-market goods and services that are of little value to society.
D. All of the above
answer
A. GDP fails to account for the quality of the environment.
question
The interest rate at which the Federal Reserve Banks lend to commercial banks is called:
A. Short-term rate
B. Discount rate
C. prime rate
D. federal funds rate
answer
B. Discount rate
question
In recent years, the Fed has communicated changes in its monetary policy by announcing changes in its policy targets for the:
A. growth of the money supply
B. prime interest rate
C. U.S. dollar-foreign currency exchange rate.
D. Federal Funds rate.
answer
D. Federal Funds rate.
question
In an effort to avoid recession, the government implements a tax rebate program , effectively cutting taxes for households. We would expect this to:
A. increase aggregate demand
B. reduce aggregate supply.
C. affect neither aggregate supply nor aggregate demand.
D. reduce aggregate demand
answer
A. increase aggregate demand
question
Which of the following actions by the Fed would cause the money supply to increase?
A. Sales of government bonds to the public.
B. An increase in the discount rate
C. Purchases of government bonds from banks
D. An increase in the reserve requirement
answer
C. Purchases of government bonds from banks
question
If you use cash to purchase a used Honda Civic, you are using money primarily as:
A. a unit of account
B. a store of value
C. an economic investment
D. a medium of exchange
answer
D. a medium of exchange
question
The investment demand curve suggests:
A. That an increase in business taxes will tend to stimulate investment spending.
B. that changes in the real interest rate will not affect the amount invested.
C. there is a direct relationship between the real rate of interest and the level of investment spending.
D. there is an inverse relationship between the real rate of interest and the level of investment spending.
answer
D. there is an inverse relationship between the real rate of interest and the level of investment spending.
question
refer to the diagram, in which Qr is the full-employment output. An expansionary fiscal policy would be most appropriate if the economy's present aggregate demand curve were at
A. A0
B. A3
C. A2
D. A1
answer
A. A0
question
refer to the diagrams. the numbers in the parentheses after the AD1, AD2, and AD3 labels indicate the levels of investment spending associated with each curve. All figures are in billions. If aggregate demand is AD3, and the monetary authorities desire to reduce it to AD2, the should:
A. Decrease the interest rate from 3% to 9%.
B. Increase the money supply from $100 to $120
C. Increase the interest rate from 3% to 9%
D. Decrease the money supply from $120 to $100
answer
D. Decrease the money supply from $120 to $100
question
The public Debt is the amount of money that:
A. the federal govt. owes to holders of U.S. securities (Bonds)
B. State and local governments owe to the federal government.
C. Americans owe to foreigners.
D. the federal govt. owes to taxpayers.
answer
A. the federal govt. owes to holders of U.S. securities (Bonds)
question
Suppose the ABC banks has excess reserves of $4,000 and outstanding checkable deposits of $80,000. If the reserved requirement is 25%, what is he size of the actual reserves?
A. $84,000
B. $24,000
C. $20,000
D. $16,000

Note: Actual reserve= required+excess reserves.
answer
B. $24,000
question
If the MPC in an economy is .9, government could shift the aggregate demand curve rightward by $40 billion by:
A. increasing taxes by $4 billion
B. increasing govt. spending by $4 billion
C. Increasing govt. spending by $40 billion
D. decreasing taxes by $4 billion
answer
B. increasing govt. spending by $4 billion
question
In an aggregate demand-aggregate supply diagram, equal decreases in government spending and taxes will:
A. Shift the AD curve to the left.
B. Not affect the AD curve.
C. Increase the equilibrium GDP.
D. Shift the AD curve to the right.
answer
A. Shift the AD curve to the left.
question
Which one of the following is true about the U.S. Federal Reserve System?
A. The Open Market Committee is smaller in size than the Federal Reserve Board.
B. There are 14 members of the Federal Reserve Board.
C. There are 12 regional Federal Reserve Banks.
D. The head of the U.S. Treasury also chairs the Federal Reserve Board.
answer
C. There are 12 regional Federal Reserve Banks.
question
Suppose the federal govt. had budget deficits of $40 billion in year 1, and $50 billion in year 2. But had a budget surplus of $20 billion in year 3 and $50 billion in year 4.Also assume that it used its budget surplus' to pay down the public debt. At the end of these four years, the federal Govt.'s public debt would have.
A. Decreased by $20 billion
B. Increased by $20 billion
C. Increased by $90 billion
D. decreased by $70 billion
answer
B. Increased by $20 billion
question
The amount that a commercial bank can lend is determined by its:
A. excess reserves.
B. outstanding loans.
C. Required reserves.
D. outstanding checkable deposits
answer
A. excess reserves.
question
In the diagram, the economy's relevant aggregate demand and long-run aggregate supply curves, respectively, are lines:
A. 2 and 3
B. 2 and 4
C. 4 and 2
D. 4 and 1
answer
D. 4 and 1
question
Which of the following best describes the built-in stabilizers as the function in the United States?
A. Personal and corporate income tax collections automatically fall and transferes and subsidies automatically rise as GDP.
B.The size of the multiplier varies inversly with the level of GDP.
C. Personal and Corporate income tax collections automatically rise and transfers and subsidies automatically decline as GDP rises.
D. Personal and corporate income tax collections and transfers and subsidies all automatically vary inversely with the level of GDP.
answer
C. Personal and Corporate income tax collections automatically rise and transfers and subsidies automatically decline as GDP rises.
question
In a certain year the aggregate amount demanded at the existing price level consists of $100 billion of consumption, $40 billion of investment, $10 billion of net exports, and $20 billion of government purchases. Full-employment GDP is $200 billion. To obtain full employment under these conditions, the government should;

A. Decrease government expenditures.
B. Encourage personal saving by increasing rate on govt. bonds.
C. discourage private investment by increasing corporate income taxes.
D. Reduce tax rates and/or increase government spending
answer
D. Reduce tax rates and/or increase government spending
question
Which of the following best describes the cause-effect chain of restrictive monetary policy?

A. A decrease in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP
B. A decrease in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP.
C. An increase in the money supply will lower the interest rate, decrease investment spending, and increase aggregate demand and GDP.
D. An increase in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP.
answer
A. A decrease in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP
question
Multiplier effect means that:
A. a decline in the MPC can cause GDP to rise by several times that amount.
B. A change in consumption can cause a larger increase in investment.
C. An increase in investment can cause GDP to change by a larger amount.
D. Consumption is typically several times as large as saving.
answer
C. An increase in investment can cause GDP to change by a larger amount.
question
in the diagram, a shift from AS1 to AS2 might be caused by:
A. an increase in business taxes.
B. an increase in the prices of important resources
C. A decrease in the price of domestic resources.
D. Stricter government regulations.
answer
C. A decrease in the price of domestic resources.
question
The money demand curve is down sloping because:
A. The opportunity cost of holding money increases as the interest rate rises.
B. the opportunity cost of holding money declines as the interest rate rises.
C. bond prices rise as interest rates rise
D. it is more attractive to hold money at high interest rates than at low interest rates.
answer
A. The opportunity cost of holding money increases as the interest rate rises.
question
Stabilizing fiscal policy calls for:
A. deficits during recessions and surpluses during periods of demand-pull inflation.
B. deficits during both recessions and periods of demand-pull inflation.
C. Surpluses during both recessions and periods of demand-pull inflation.
D. surpluses during recessions and deficits during periods of demand-pull inflation.
answer
A. deficits during recessions and surpluses during periods of demand-pull inflation.
question
during a recession the economy experiences
A. rising income and falling unemployment
B. rising income and unemployment
C. falling income and rising unemployment
D. falling income and unemployment
answer
C. falling income and rising unemployment
question
he sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if
A.the price level is higher than expected making production less profitable.
B. .the price level is higher than expected making production more profitable.
C.the price level is lower than expected making production more profitable.
D. the price level is lower than expected making production less profitable.
answer
B. .the price level is higher than expected making production more profitable.
question
Long-run aggregate supply curve shifts right if
A. the capital stock decreases
B. the price level rises
C. the price level falls
D. the capital stock increases
answer
D. the capital stock increases
question
The wealth effect, interest-rate effect, and exchange-rate effect are all explanations for
A. the slope of long-run aggregate supply
B. the slope of short-run aggregate supply
C.the slope of the aggregate-demand curve
D.everything that makes the aggregate demand curve shift.
answer
D.everything that makes the aggregate demand curve shift.
question
The opportunity cost of an item is
A. the number of hours needed to earn money to buy the item.
B. what you give up to get that item
C. usually less than the dollar value of the item
D. the dollar value of the item
answer
B. what you give up to get that item
question
Total output in an economy increases when each person specializes because:
A. there is less competition for the same resources.
B. each person spends more time producing the product in which he or she has a comparative advantage.
C. a wider variety of products will be produced within each country due ti specialization.
D. Government necessarily plays a larger role in the economy due to specialization.
answer
B. each person spends more time producing the product in which he or she has a comparative advantage.
question
3. The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good,
a. has a low opportunity cost of producing that good, relative to the opportunity costs of other producers.
b. has a comparative advantage in the production of that good.
c. has an absolute advantage in the production of that good.
d. should be the only producer of that good.
answer
c. has an absolute advantage in the production of that good.
question
The quantity demanded of a good is the amount that buyers are a. willing to purchase.
b. willing and able to purchase.
c. willing, able, and need to purchase.
d. able to purchase.
answer
b. willing and able to purchase.
question
5. The market demand curve
a. is found by vertically adding the individual demand curves.
b. slopes upward.
c. represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good.
d. represents the sum of the quantities demanded by all the buyers at each price of the good.
answer
d. represents the sum of the quantities demanded by all the buyers at each price of the good.
question
The quantity supplied of a good is the amount that
a. buyers are willing and able to purchase.
b. sellers are able to produce.
c. buyers and sellers agree will be brought to market.
d. sellers are willing and able to sell.
answer
d. sellers are willing and able to sell.
question
7. Which of the following events must cause equilibrium price to fall?
a. demand increases and supply decreases
b. demand and supply both decrease
c. demand decreases and supply increases
d. demand and supply both increase
answer
c. demand decreases and supply increases
question
GDP is defined as the
a. value of all goods and services produced within a country in a given period of time.
b. value of all goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.
c. value of all final goods and services produced within a country in a given period of time.
d. value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.
answer
c. value of all final goods and services produced within a country in a given period of time.
question
Changes in nominal GDP reflect
a. only changes in prices.
b. only changes in the amounts being produced.
c. both changes in prices and changes in the amounts being produced.
d. neither changes in prices nor changes in the amounts being produced.
answer
c. both changes in prices and changes in the amounts being produced.
question
12. The consumer price index is used to
a. monitor changes in the level of wholesale prices in the economy.
b. monitor changes in the cost of living over time.
c. monitor changes in the level of real GDP over time.
d. monitor changes in the stock market.
answer
b. monitor changes in the cost of living over time.
question
16. Productivity is defined as the quantity of
a. labor required to produce a nation's GDP.
b. labor required to produce one unit of goods and services.
c. goods and services produced from each unit of labor input.
d. goods and services produced per unit of time.
answer
c. goods and services produced from each unit of labor input.
question
17. All else equal, if there are diminishing returns, then which of the following is true if a country increases its capital by one unit?
a. Output will rise by more than it did when the previous unit was added.
b. Output will rise but by less than it did when the previous unit was added.
c. Output will fall by more than it did when the previous unit was added.
d. Output will fall but by less then it did when the previous unit was added.
answer
b. Output will rise but by less than it did when the previous unit was added.
question
24. The classical dichotomy refers to the idea that the supply of money
a. is irrelevant for understanding the determinants of nominal and real variables.
b. determines nominal variables, but not real variables.
c. determines real variables, but not nominal variables.
d. is a determinant of both real and nominal variables.
answer
b. determines nominal variables, but not real variables.
question
34. Monetary policy is determined by
a. the president and Congress and involves changing government spending and taxation.
b. the president and Congress and involves changing the money supply.
c. the Federal Reserve and involves changing government spending and taxation.
d. the Federal Reserve and involves changing the money supply.
answer
d. the Federal Reserve and involves changing the money supply.
question
35. Fiscal policy is determined by
a. the president and Congress and involves changing government spending and taxation.
b. the president and Congress and involves changing the money supply.
c. the Federal Reserve and involves changing government spending and taxation.
d. the Federal Reserve and involves changing the money supply.
answer
a. the president and Congress and involves changing government spending and taxation.
1 of 69
question
Which of the following is included in GDP?
A. recreational marijuana purchased from a drug dealer by a college student?
B. Recreational marijuana purchased and consumber by a man in his attic.
C. medical marijuana purchased from a government-run pharmacy by a glaucoma patient.
D. All of the above
answer
C. medical marijuana purchased from a government-run pharmacy by a glaucoma patient.
question
you know a candy bar cost five cents in 1962. You also know the CPI for 1962 and the CPI today. Which of the following would you use to compute the price?
A. five cents today's CPI- five cents CPI in 1962
B.Five cents *(1962 CPI/ Today's CPI)
C. five cents * (Today's CPI/ 1962 CPI)
D. five cents * (today's CPI - 1962 CPI)/1962 CPI
answer
C. five cents * (Today's CPI/ 1962 CPI)
question
Discouraged workers are included in...
A. Frictional Unemployment
B.The number of unemployed
C. the labor force
D. none of the above
answer
D. none of the above
question
when a country has a comparative advantage in producing a certain good,
A. The country should produce just enough of that good for its own consumption.
B. the country should import that good.
C. The country's opportunity cost of that good is high relative to other countries' opportunity costs of the same good.
D. None of the above
answer
D. None of the above
question
The unemployment rate is computed as the number of unemployed
A. times the labor-force participation rate, all times 100.
B. divided by the adult population, all times 100
C. divided by the number of employed, all times 100
D. Divided by the labor force, all times 100.
answer
C. divided by the number of employed, all times 100
question
In the economy of Talikastan in 2015, exports were $500, GDP was $6400, Government Purchases were $1700, Imports were $400, and investment was $1800. What was Talikastan's consumption in 2015?
A. $2000
B. $3800
C. $2800
D. $3000
answer
A. $2000
question
Sheri, a U.S. Citizen, works only in Germany. The value she adds to the production in Germany is included..
A. in German GDP, but is not included in U.S. GDP
B. in U.S. GDP, but is not included in German GDP
C. in both German GDP and U.S. GDP.
D. in neither German GDP nor U.S. GDP.
answer
A. in German GDP, but is not included in U.S. GDP
question
Transfer payments are:
A. not included in GDP because they are not payments for currently produced goods or services.
B. Included in GDP because they eventually will be spent on consumption.
C. Included in GDP because they represent income to individuals.
D. not included in GDP because taxes will have to be raised to pay for them.
answer
A. not included in GDP because they are not payments for currently produced goods or services.
question
Cyclical unemployment refers to
A. Changes in unemployment due to changes in natural rate of unemployment.
B. The portion of unemployment created by job search.
C. The portion of unemployment created by wages set above the equilibrium level.
D. short-run fluctuations around the natural rate of unemployment.
answer
D. short-run fluctuations around the natural rate of unemployment.
question
The CPI is more commonly used as a gauge of inflation than the GDP deflator is because
A. the GDP inflator cannot be used to gauge inflation.
B. the CPI is calculated more often than the GDP deflator is
C. the CPI is easier to measure
D. the CPI better reflects the good and services bought by consumers.
answer
D. the CPI better reflects the good and services bought by consumers.
question
consider 2 labor markets in which jobs are equally attractive in all respects other than the wage rate. All workers are equally able to do either job. Initially, both labor markets are perfectly competitive. If a union organizes workers in one of the markets, then the wage rates will tend to
A. rise for the union jobs and fall for the nonunion jobs
B. Rise in both markets
C. Fall in both markets
D. rise for the union jobs, but remain unchanged for the nonunion jobs.
answer
A. rise for the union jobs and fall for the nonunion jobs
question
A tire manufacturer produces 400 tires valued at $20 each. Three hundred tires are sold to a tire shop, which then sells them to households for $50 each. The remaining tires are unsold and are added to the tire manufacturer's inventory. How much is added to GDP.
A. $13,000
B. $15,000
C. $17,000
D. $8000
answer
C. $17,000
question
Ms. Lane borrowed $1,000 from her bank for one year at an interest rate of 10 percent. During that year, the price level went up by 15 percent. Which of following statements is correct.
A. Ms. Lane will repay the bank fewer dollars than she initially borrowed.
B. Ms. Lane's repayment will give the bank the same purchasing power that it originally loaned her.
C. Ms. Lane's repayment will give the bank greater purchasing power than it originally loaned her.
D. Ms. Lane's repayment will give the bank less purchasing power than it originally loaned her.
answer
D. Ms. Lane's repayment will give the bank less purchasing power than it originally loaned her.
question
Christopher is an unpaid, stay-at-home father who works as a volunteer at the local Habitat for Humanity chapter. Currenty, Christopher is not looking for a paid jobs. The Bureau of Labor Statistics counts Christopher as
A. in the labor force but not employed.
B. Unemployed but not in the labor force.
C. Neither in the labor force nor unemployed.
D. Unemployed and in the labor force.
answer
C. Neither in the labor force nor unemployed.
question
Because every transaction has a buyer and a seller,
A. Firms' profits are necessarily zero in a simple circular-flow diagram.
B. The number of firms must be equal to the number of households in a simple circular-flow diagram.
C. Every transaction contributes equally to an economy's income and to its expenditure.
D. GDP is more closely associated with an economy's income than it is with an economy's expenditure.
answer
C. Every transaction contributes equally to an economy's income and to its expenditure.
question
If 2010 is the base year, then the inflation rate in 2015 equals:
A. [(CPI in 2015 - CPI in 2014)/CPI in 2010]*100
B.[(CPI in 2015 - CPI in 201)/CPI in 2010]*100
C.[(CPI in 2015 - CPI in 2010)/CPI in 2014]*100
D.[(CPI in 2015 - CPI in 2014)/CPI in 2014]*100
answer
D.[(CPI in 2015 - CPI in 2014)/CPI in 2014]*100
question
Hours needed to make 1 unit of:
...................Cheese...|...Wine
England: 1 | 4
France: 5 | 2

# of units produced in 40 hours
...................Cheese...|...Wine
England: 40 | 10
France: 8 | 20

Assume England and France each has a total of 40 labor hours available. If each country divides its time equally between the production of cheese and wine, the total production is
A. 24 units of cheese and 15 units of wine
B. 8 units of cheese and 10 units of wine
C. 40 units of cheese and 10 units of wine
D. 48 units of cheese and 30 units of wine
answer
A. 24 units of cheese and 15 units of wine
question
Assume Aruba and Iceland can switch between coolers and producing ratios at a constant rate.
...................Labor Hours need to make 1
................... Cooler | Radio
Aruba: 2 | 5
Iceland: 1 | 4

A. radios and import coolers
B. Neither good and import both goods.
C. both goods and import neither.
D. Coolers and import radios
answer
A. radios and import coolers
question
If the nominal interest rate is 5% and the rate of inflation is 9%, then the real interest rate is
A. -0.44 %
B. -4%
C. 4%
D. 14%
answer
B. -4%
question
Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

A. probably changed measured GDP, but in an uncertain direction; the direction of the change depends on the difference in the quality of the cleaning that has resulted.
B. caused measured GDP to rise.
C. Not caused any change in measured GDP
D. Caused measured GDP to fall.
answer
B. caused measured GDP to rise.
question
GDP is equal to

A. Y
B. the market value of final goods and services produced within a country in a given period of time.
C. C + I + G + NX
D. All of the above are correct
answer
D. All of the above are correct
question
Wholesome Wheat Bakery buys $10.00 worth of flour from Mikes' Mill and uses the flour to make bread. Wholesome Wheat sells the bread to the public for $22.00. Taking these two transactions into account, what is the effect on GDP?

A. GDP increases by $32.00
B. GDP increases by $12.00
C. GDP increases by $10.00
D. GDP increases by $22.00
answer
D. GDP increases by $22.00
question
Suppose Susan can wash three windows per hour, or she can iron six shirts per hour. Paul can wash two windows per hour or he can iron five shirts per hour.
A. Susan has an absolute advantage over Paul in washing windows.
B. Susan has a comparative advantage over Paul in washing windows.
C. Paul has a comparative advantage over Susan in ironing shirts.
D. All of the above are correct.
answer
D. All of the above are correct.
question
The labor force equals the

A. Number of people employed plus the number of people unemployed plus teenagers between 14 and 16 who work atleast 10 hours a week.
B. adult population
C. number people employed plus the number of people unemployed.
D. Number of people employed.
answer
C. number people employed plus the number of people unemployed.
question
Suppose a gardner produces both tomatoes and squash in his garden. If the opportunity cost of one bushel of squash is 2/5 bushel of tomatoes, then the opportunity cost of 1 bushel of tomatoes is
A. 5 bushels of squash
B. 2 bushels of squash
C. 5/2 bushels of squash
D. 2/5 bushels of squash
answer
C. 5/2 bushels of squash
question
the GDP deflator is the ratio of:

A. Nominal GDP to the inflation rate multiplied by 100
B. nominal GDP to real GDP multiplied by 100
C. Real GDP to the inflation rate multiplied by 100
D. real GDP to nominal GDP multiplied by 100
answer
B. nominal GDP to real GDP multiplied by 100
question
GDP is not a perfect measure of well-being; For example,
A. GDP fails to account for the quality of the environment.
B. GDP places too much emphasis on the value of leisure
C. GDP incorporates a large number of non-market goods and services that are of little value to society.
D. All of the above
answer
A. GDP fails to account for the quality of the environment.
question
The interest rate at which the Federal Reserve Banks lend to commercial banks is called:
A. Short-term rate
B. Discount rate
C. prime rate
D. federal funds rate
answer
B. Discount rate
question
In recent years, the Fed has communicated changes in its monetary policy by announcing changes in its policy targets for the:
A. growth of the money supply
B. prime interest rate
C. U.S. dollar-foreign currency exchange rate.
D. Federal Funds rate.
answer
D. Federal Funds rate.
question
In an effort to avoid recession, the government implements a tax rebate program , effectively cutting taxes for households. We would expect this to:
A. increase aggregate demand
B. reduce aggregate supply.
C. affect neither aggregate supply nor aggregate demand.
D. reduce aggregate demand
answer
A. increase aggregate demand
question
Which of the following actions by the Fed would cause the money supply to increase?
A. Sales of government bonds to the public.
B. An increase in the discount rate
C. Purchases of government bonds from banks
D. An increase in the reserve requirement
answer
C. Purchases of government bonds from banks
question
If you use cash to purchase a used Honda Civic, you are using money primarily as:
A. a unit of account
B. a store of value
C. an economic investment
D. a medium of exchange
answer
D. a medium of exchange
question
The investment demand curve suggests:
A. That an increase in business taxes will tend to stimulate investment spending.
B. that changes in the real interest rate will not affect the amount invested.
C. there is a direct relationship between the real rate of interest and the level of investment spending.
D. there is an inverse relationship between the real rate of interest and the level of investment spending.
answer
D. there is an inverse relationship between the real rate of interest and the level of investment spending.
question
refer to the diagram, in which Qr is the full-employment output. An expansionary fiscal policy would be most appropriate if the economy's present aggregate demand curve were at
A. A0
B. A3
C. A2
D. A1
answer
A. A0
question
refer to the diagrams. the numbers in the parentheses after the AD1, AD2, and AD3 labels indicate the levels of investment spending associated with each curve. All figures are in billions. If aggregate demand is AD3, and the monetary authorities desire to reduce it to AD2, the should:
A. Decrease the interest rate from 3% to 9%.
B. Increase the money supply from $100 to $120
C. Increase the interest rate from 3% to 9%
D. Decrease the money supply from $120 to $100
answer
D. Decrease the money supply from $120 to $100
question
The public Debt is the amount of money that:
A. the federal govt. owes to holders of U.S. securities (Bonds)
B. State and local governments owe to the federal government.
C. Americans owe to foreigners.
D. the federal govt. owes to taxpayers.
answer
A. the federal govt. owes to holders of U.S. securities (Bonds)
question
Suppose the ABC banks has excess reserves of $4,000 and outstanding checkable deposits of $80,000. If the reserved requirement is 25%, what is he size of the actual reserves?
A. $84,000
B. $24,000
C. $20,000
D. $16,000

Note: Actual reserve= required+excess reserves.
answer
B. $24,000
question
If the MPC in an economy is .9, government could shift the aggregate demand curve rightward by $40 billion by:
A. increasing taxes by $4 billion
B. increasing govt. spending by $4 billion
C. Increasing govt. spending by $40 billion
D. decreasing taxes by $4 billion
answer
B. increasing govt. spending by $4 billion
question
In an aggregate demand-aggregate supply diagram, equal decreases in government spending and taxes will:
A. Shift the AD curve to the left.
B. Not affect the AD curve.
C. Increase the equilibrium GDP.
D. Shift the AD curve to the right.
answer
A. Shift the AD curve to the left.
question
Which one of the following is true about the U.S. Federal Reserve System?
A. The Open Market Committee is smaller in size than the Federal Reserve Board.
B. There are 14 members of the Federal Reserve Board.
C. There are 12 regional Federal Reserve Banks.
D. The head of the U.S. Treasury also chairs the Federal Reserve Board.
answer
C. There are 12 regional Federal Reserve Banks.
question
Suppose the federal govt. had budget deficits of $40 billion in year 1, and $50 billion in year 2. But had a budget surplus of $20 billion in year 3 and $50 billion in year 4.Also assume that it used its budget surplus' to pay down the public debt. At the end of these four years, the federal Govt.'s public debt would have.
A. Decreased by $20 billion
B. Increased by $20 billion
C. Increased by $90 billion
D. decreased by $70 billion
answer
B. Increased by $20 billion
question
The amount that a commercial bank can lend is determined by its:
A. excess reserves.
B. outstanding loans.
C. Required reserves.
D. outstanding checkable deposits
answer
A. excess reserves.
question
In the diagram, the economy's relevant aggregate demand and long-run aggregate supply curves, respectively, are lines:
A. 2 and 3
B. 2 and 4
C. 4 and 2
D. 4 and 1
answer
D. 4 and 1
question
Which of the following best describes the built-in stabilizers as the function in the United States?
A. Personal and corporate income tax collections automatically fall and transferes and subsidies automatically rise as GDP.
B.The size of the multiplier varies inversly with the level of GDP.
C. Personal and Corporate income tax collections automatically rise and transfers and subsidies automatically decline as GDP rises.
D. Personal and corporate income tax collections and transfers and subsidies all automatically vary inversely with the level of GDP.
answer
C. Personal and Corporate income tax collections automatically rise and transfers and subsidies automatically decline as GDP rises.
question
In a certain year the aggregate amount demanded at the existing price level consists of $100 billion of consumption, $40 billion of investment, $10 billion of net exports, and $20 billion of government purchases. Full-employment GDP is $200 billion. To obtain full employment under these conditions, the government should;

A. Decrease government expenditures.
B. Encourage personal saving by increasing rate on govt. bonds.
C. discourage private investment by increasing corporate income taxes.
D. Reduce tax rates and/or increase government spending
answer
D. Reduce tax rates and/or increase government spending
question
Which of the following best describes the cause-effect chain of restrictive monetary policy?

A. A decrease in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP
B. A decrease in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP.
C. An increase in the money supply will lower the interest rate, decrease investment spending, and increase aggregate demand and GDP.
D. An increase in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP.
answer
A. A decrease in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP
question
Multiplier effect means that:
A. a decline in the MPC can cause GDP to rise by several times that amount.
B. A change in consumption can cause a larger increase in investment.
C. An increase in investment can cause GDP to change by a larger amount.
D. Consumption is typically several times as large as saving.
answer
C. An increase in investment can cause GDP to change by a larger amount.
question
in the diagram, a shift from AS1 to AS2 might be caused by:
A. an increase in business taxes.
B. an increase in the prices of important resources
C. A decrease in the price of domestic resources.
D. Stricter government regulations.
answer
C. A decrease in the price of domestic resources.
question
The money demand curve is down sloping because:
A. The opportunity cost of holding money increases as the interest rate rises.
B. the opportunity cost of holding money declines as the interest rate rises.
C. bond prices rise as interest rates rise
D. it is more attractive to hold money at high interest rates than at low interest rates.
answer
A. The opportunity cost of holding money increases as the interest rate rises.
question
Stabilizing fiscal policy calls for:
A. deficits during recessions and surpluses during periods of demand-pull inflation.
B. deficits during both recessions and periods of demand-pull inflation.
C. Surpluses during both recessions and periods of demand-pull inflation.
D. surpluses during recessions and deficits during periods of demand-pull inflation.
answer
A. deficits during recessions and surpluses during periods of demand-pull inflation.
question
during a recession the economy experiences
A. rising income and falling unemployment
B. rising income and unemployment
C. falling income and rising unemployment
D. falling income and unemployment
answer
C. falling income and rising unemployment
question
he sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if
A.the price level is higher than expected making production less profitable.
B. .the price level is higher than expected making production more profitable.
C.the price level is lower than expected making production more profitable.
D. the price level is lower than expected making production less profitable.
answer
B. .the price level is higher than expected making production more profitable.
question
Long-run aggregate supply curve shifts right if
A. the capital stock decreases
B. the price level rises
C. the price level falls
D. the capital stock increases
answer
D. the capital stock increases
question
The wealth effect, interest-rate effect, and exchange-rate effect are all explanations for
A. the slope of long-run aggregate supply
B. the slope of short-run aggregate supply
C.the slope of the aggregate-demand curve
D.everything that makes the aggregate demand curve shift.
answer
D.everything that makes the aggregate demand curve shift.
question
The opportunity cost of an item is
A. the number of hours needed to earn money to buy the item.
B. what you give up to get that item
C. usually less than the dollar value of the item
D. the dollar value of the item
answer
B. what you give up to get that item
question
Total output in an economy increases when each person specializes because:
A. there is less competition for the same resources.
B. each person spends more time producing the product in which he or she has a comparative advantage.
C. a wider variety of products will be produced within each country due ti specialization.
D. Government necessarily plays a larger role in the economy due to specialization.
answer
B. each person spends more time producing the product in which he or she has a comparative advantage.
question
3. The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good,
a. has a low opportunity cost of producing that good, relative to the opportunity costs of other producers.
b. has a comparative advantage in the production of that good.
c. has an absolute advantage in the production of that good.
d. should be the only producer of that good.
answer
c. has an absolute advantage in the production of that good.
question
The quantity demanded of a good is the amount that buyers are a. willing to purchase.
b. willing and able to purchase.
c. willing, able, and need to purchase.
d. able to purchase.
answer
b. willing and able to purchase.
question
5. The market demand curve
a. is found by vertically adding the individual demand curves.
b. slopes upward.
c. represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good.
d. represents the sum of the quantities demanded by all the buyers at each price of the good.
answer
d. represents the sum of the quantities demanded by all the buyers at each price of the good.
question
The quantity supplied of a good is the amount that
a. buyers are willing and able to purchase.
b. sellers are able to produce.
c. buyers and sellers agree will be brought to market.
d. sellers are willing and able to sell.
answer
d. sellers are willing and able to sell.
question
7. Which of the following events must cause equilibrium price to fall?
a. demand increases and supply decreases
b. demand and supply both decrease
c. demand decreases and supply increases
d. demand and supply both increase
answer
c. demand decreases and supply increases
question
GDP is defined as the
a. value of all goods and services produced within a country in a given period of time.
b. value of all goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.
c. value of all final goods and services produced within a country in a given period of time.
d. value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.
answer
c. value of all final goods and services produced within a country in a given period of time.
question
Changes in nominal GDP reflect
a. only changes in prices.
b. only changes in the amounts being produced.
c. both changes in prices and changes in the amounts being produced.
d. neither changes in prices nor changes in the amounts being produced.
answer
c. both changes in prices and changes in the amounts being produced.
question
12. The consumer price index is used to
a. monitor changes in the level of wholesale prices in the economy.
b. monitor changes in the cost of living over time.
c. monitor changes in the level of real GDP over time.
d. monitor changes in the stock market.
answer
b. monitor changes in the cost of living over time.
question
16. Productivity is defined as the quantity of
a. labor required to produce a nation's GDP.
b. labor required to produce one unit of goods and services.
c. goods and services produced from each unit of labor input.
d. goods and services produced per unit of time.
answer
c. goods and services produced from each unit of labor input.
question
17. All else equal, if there are diminishing returns, then which of the following is true if a country increases its capital by one unit?
a. Output will rise by more than it did when the previous unit was added.
b. Output will rise but by less than it did when the previous unit was added.
c. Output will fall by more than it did when the previous unit was added.
d. Output will fall but by less then it did when the previous unit was added.
answer
b. Output will rise but by less than it did when the previous unit was added.
question
24. The classical dichotomy refers to the idea that the supply of money
a. is irrelevant for understanding the determinants of nominal and real variables.
b. determines nominal variables, but not real variables.
c. determines real variables, but not nominal variables.
d. is a determinant of both real and nominal variables.
answer
b. determines nominal variables, but not real variables.
question
34. Monetary policy is determined by
a. the president and Congress and involves changing government spending and taxation.
b. the president and Congress and involves changing the money supply.
c. the Federal Reserve and involves changing government spending and taxation.
d. the Federal Reserve and involves changing the money supply.
answer
d. the Federal Reserve and involves changing the money supply.
question
35. Fiscal policy is determined by
a. the president and Congress and involves changing government spending and taxation.
b. the president and Congress and involves changing the money supply.
c. the Federal Reserve and involves changing government spending and taxation.
d. the Federal Reserve and involves changing the money supply.
answer
a. the president and Congress and involves changing government spending and taxation.

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