Econ 222 final questions - Assignment Essays

question

the phrase "no such thing as a free lunch" means

answer

people must face tradeoffs

question

central planning refers to

answer

government guiding economic activity. today many countries that had this system have abandoned it

question

which of the following observations was made famous by adam smith in his book The Wealth of Nations

answer

households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes

question

prices usually reflect

answer

both the value of a good to society and the cost to society of making the good

question

in economics, capital refers to

answer

buildings and machines used in the production process

question

when an economy is operating inside its PPF, we know

answer

there are unused resources or inefficiencies in the economy

question

Regan grows flowers and makes ceramic vases. Jason also grows flowers and makes ceramic vases, but Regan is better at producing both. In this case, trade could

answer

benefit both Regan and Jason

question

the most obvious benefit of specialization and trade is that they allow us to

answer

consume more goods than we otherwise would be able to consume

question

in a market economy,

answer

supply and demand determine prices and prices in turn allocate the economy's scarce resources

question

what will happen in the artichoke market now if buyers expect higher artichoke prices in the near future?

answer

the demand for artichokes will increase

question

gross domestic product measures

answer

income and expenditure

question

GDP is defined as the

answer

value of all final goods and services produced within a country in a given period of time

question

which of the following is included in the investment component of GDP?

answer

spending on new business equipment such as power tools but not spending on stocks and bonds

question

transfer payments are

answer

not included in GDP because they are not payments for currently produced goods or services

question

changes in nominal GDP reflect

answer

both changes in prices and changes in the amounts being produced

question

if in some year nominal GDP was $20 billion and the GDP deflator was 50, what was real GDP?

answer

$40 billion

question

to decrease the money supply, the Fed can

answer

sell government bonds or increase the discount rate

question

monetary neutrality means that a change in the money supply

answer

does not change real GDP. most economists think this is a good description of the economy in the long run but not the short run

question

wealth is redistributed to creditors from debtors when inflation is

answer

unexpectedly high

question

if the US has exports of $1.5 trillion and imports of $2.2 trillion, then the US

answer

buys more from overseas than it sells overseas; it has a trade deficit

question

if US residents purchase $500 billion of foreign assets and foreigners purchase $1300 billion of US assets

answer

US capital net outflow is -$800 billion; capital is flowing into the US

question

suppose that real interest rates in the US rise relative to real interest rates in other countries. this increase would make foreginers

answer

more willing to purchase US bonds, so US net capital outflow would fall

question

many things that society values, such as good health, high quality education, ... are not measured in GDP. it follows that

answer

GDP is still a useful measure of society's welfare because it measures a nation's ability to purchase the inputs that can be used to help produce the things that contribute to welfare

question

international studies of the relationship between GDP per person and the quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

answer

longer life expectancy and a higher percentage of the population that is literate

question

the price index was 220 in one year and 260 in the next year. what was the inflation rate?

answer

18.2%

question

the problems with using the consumer price index as a measure of the cost of living are important because

answer

many gov. programs use the CPI to adjust for changes in the overall level of prices

question

if the CPI was 104 in 1967 and is 390 today, then $10 in 1967 purchased the same amount of goods and services as

answer

$37.50 purchases today

question

which of the following is not correct?

answer

the consumer price index is used to measure the quantity of goods and services that the economy is producing

question

which of the following areas of study typifies macro as opposed to micro?

answer

the effect on the economy of changes in the nation's unemployment rate

question

which of the following claims is consistent with the views of mainstream economists?

answer

if we increase the rate of inflation from 3% to 6%, then the rate of unemployment will temporarily fall

question

the US has a trade surplus. which of the following is correct?

answer

capital is flowing out of the US and S>I

question

you are staying in London over the summer and you have a number of dollars with you. if the dollar depreciates relative to the British pound

answer

the dollar would buy more pounds. the depreciation would encourage you to buy more British goods and services

question

during the recession, the economy experiences

answer

falling employment and income

question

investment is a

answer

small part of real GDP, yet it accounts for a large share of the fluctuation in real GDP

question

other things the same, a decrease in the price level makes consumers feel

answer

less wealthy, so the quantity of goods and services demanded falls

question

suppose a stock market boom makes people feel wealthier. the increase in wealth would make people to desire

answer

increased consumption, which shifts the aggregate demand curve right

question

when taxes increase, consumption

answer

decreases, so aggregate supply shifts left

question

a nation's standard of living is best measured by its

answer

real GDP per person

question

the one variable that stands out as the most significant explanation of large variations in living standards around the world is

answer

productivity

question

which of the following items plays a role in determining productivity: natural resources, technological knowledge, physical capital

answer

all of the above

question

other things the same, a country that increases its saving rate increases

answer

its future productivity and future real GDP

question

the price of imported oil rises. if the gov wanted to stabilize output, which of the following would it do?

answer

increase gov. expenditures or increase the money supply

question

which of the following policies would be advocated by someone who wants the gov to follow an active stabilization policy when the economy is experiencing severe unemployment?

answer

increase government expenditures

question

critics of stabilization policy argue that: a)the impact of policy may last longer than the problem it was designed to offset b)there is a lag between the time policy is passed and the time policy has an impact on the economy c)policy can be a source of, instead of a cure for, economic fluctuations

answer

all of the above

question

during recessions, automatic stabilizers tend to make the government's budget

answer

move toward deficit

question

economists would predict that, other things the same, the more generous unemployment compensation a country has,

answer

the longer the duration of each spell of unemployment, and the higher the unemployment rate

question

an increase in the minimum wage

answer

increases the quantity demanded of labor but decreases the quantity of labor supplied

question

when a union bargains successfully with employers, in that industry

answer

wages and unemployment increase

question

Money: a) makes trade easier b) is more efficient than barter c) allows for greater specialization

answer

all of the above

question

the set of items that serve as media of exchange clearly includes

answer

demand deposits

question

the agency responsible for regulating the money supply in the US is

answer

the Federal Reserve

question

when a bank loans out $1,000 the money supply

answer

increases

question

some poor countries appear to be falling behind rather than catching up with rich countries. which of the following could explain the failure of the poor country to catch up?

answer

he country has poorly developed property rights

question

the primary economic function of the financial system is to

answer

match one person's savings with another person's investments

question

if a reform of the tax laws encourages greater saving, the result would be

answer

lower interest rates and greater investment

question

Josh is a full time college student who is not working or looking for a job. The Bureau of Labor Statistics counts Josh as

answer

neither in the labor force nor unemployed

question

the deviation of unemployments from its natural rate is called

answer

cyclical unemployment

question

some individuals would like to have a job but they have given up looking for a job after an unsuccessful search. these individuals are called

answer

discouraged workers, and they are not classified by the Bureau of Labor statistics as unemployed

question

taxes on labor encourage all of the following except

answer

workers to work overtime

question

an increase in the size of a tax is most likely to increase tax revenue in a market with

answer

inelastic demand and inelastic supply

question

as the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on, the

answer

tax revenue increases at first, but it eventually peaks and then decreases

question

the long-run effect of an increase in government spending is to raise

answer

the price level and leave real output unchanged

question

which of the following would cause stagflation?

answer

rising oil prices

question

people choose to hold a smaller quantity of money if

answer

the interest rate rises, which causes the opportunity cost of holding money to raise

question

recessions in China and India would cause

answer

the US price level and real GDP to fall

question

the sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if

answer

the price level is higher than expected making production more profitable

question

a tax on sellers of coffee will increase the price of coffee paid by buyers,

answer

decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee

question

if a tax is imposed on a market with inelastic supply and elastic demand, then

answer

sellers will bear most of the burden of the tax

question

a result of welfare economics is that the equilibrium price of a product is considered to be the best price because it

answer

maximizes the combined welfare of buyers and sellers

question

which of the following shifts long-run aggregate supply right?

answer

an increase in both the physical capital stock and human capital stock

question

other things the same, if the long run aggregate supply curve shifts right, prices

answer

and output both increase

question

other things the same, continued increases in the money supply lead to

answer

continued increases in real GDP but not continued increases in the price level

question

the multiplier effect

answer

amplifies the effects of an increase in government expenditures, while the crowding-out effect diminishes the effects

question

which of the following statements is true?
a)based on the available evidence, the existence of well established and well enforced property rights appears to be associated with an enhanced standard of living
b)property rights give people the ability to exercise authority over the resources they own
c)in an economy wide sense, property rights are an important prerequisite for the price system to work

answer

all of the above

question

which of the following is correct?
a)technological progress has allowed us to substitute renewable resources for some nonrenewable resources
b)once adjustment is made for inflation, the prices of most natural resources have been about steady or falling
c)technological progress has made once crucial natural resources less necessary

answer

all of the above

question

if the nominal interest rate is 6% and the rate of inflation is 10%, then the real interest rate is

answer

-4%

question

if the CPI rises, the number of dollars needed to buy a representative basket of goods

answer

increases, and so the value of money falls

1 of 77

question

the phrase "no such thing as a free lunch" means

answer

people must face tradeoffs

question

central planning refers to

answer

government guiding economic activity. today many countries that had this system have abandoned it

question

which of the following observations was made famous by adam smith in his book The Wealth of Nations

answer

households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes

question

prices usually reflect

answer

both the value of a good to society and the cost to society of making the good

question

in economics, capital refers to

answer

buildings and machines used in the production process

question

when an economy is operating inside its PPF, we know

answer

there are unused resources or inefficiencies in the economy

question

Regan grows flowers and makes ceramic vases. Jason also grows flowers and makes ceramic vases, but Regan is better at producing both. In this case, trade could

answer

benefit both Regan and Jason

question

the most obvious benefit of specialization and trade is that they allow us to

answer

consume more goods than we otherwise would be able to consume

question

in a market economy,

answer

supply and demand determine prices and prices in turn allocate the economy's scarce resources

question

what will happen in the artichoke market now if buyers expect higher artichoke prices in the near future?

answer

the demand for artichokes will increase

question

gross domestic product measures

answer

income and expenditure

question

GDP is defined as the

answer

value of all final goods and services produced within a country in a given period of time

question

which of the following is included in the investment component of GDP?

answer

spending on new business equipment such as power tools but not spending on stocks and bonds

question

transfer payments are

answer

not included in GDP because they are not payments for currently produced goods or services

question

changes in nominal GDP reflect

answer

both changes in prices and changes in the amounts being produced

question

if in some year nominal GDP was $20 billion and the GDP deflator was 50, what was real GDP?

answer

$40 billion

question

to decrease the money supply, the Fed can

answer

sell government bonds or increase the discount rate

question

monetary neutrality means that a change in the money supply

answer

does not change real GDP. most economists think this is a good description of the economy in the long run but not the short run

question

wealth is redistributed to creditors from debtors when inflation is

answer

unexpectedly high

question

if the US has exports of $1.5 trillion and imports of $2.2 trillion, then the US

answer

buys more from overseas than it sells overseas; it has a trade deficit

question

if US residents purchase $500 billion of foreign assets and foreigners purchase $1300 billion of US assets

answer

US capital net outflow is -$800 billion; capital is flowing into the US

question

suppose that real interest rates in the US rise relative to real interest rates in other countries. this increase would make foreginers

answer

more willing to purchase US bonds, so US net capital outflow would fall

question

many things that society values, such as good health, high quality education, ... are not measured in GDP. it follows that

answer

GDP is still a useful measure of society's welfare because it measures a nation's ability to purchase the inputs that can be used to help produce the things that contribute to welfare

question

international studies of the relationship between GDP per person and the quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

answer

longer life expectancy and a higher percentage of the population that is literate

question

the price index was 220 in one year and 260 in the next year. what was the inflation rate?

answer

18.2%

question

the problems with using the consumer price index as a measure of the cost of living are important because

answer

many gov. programs use the CPI to adjust for changes in the overall level of prices

question

if the CPI was 104 in 1967 and is 390 today, then $10 in 1967 purchased the same amount of goods and services as

answer

$37.50 purchases today

question

which of the following is not correct?

answer

the consumer price index is used to measure the quantity of goods and services that the economy is producing

question

which of the following areas of study typifies macro as opposed to micro?

answer

the effect on the economy of changes in the nation's unemployment rate

question

which of the following claims is consistent with the views of mainstream economists?

answer

if we increase the rate of inflation from 3% to 6%, then the rate of unemployment will temporarily fall

question

the US has a trade surplus. which of the following is correct?

answer

capital is flowing out of the US and S>I

question

you are staying in London over the summer and you have a number of dollars with you. if the dollar depreciates relative to the British pound

answer

the dollar would buy more pounds. the depreciation would encourage you to buy more British goods and services

question

during the recession, the economy experiences

answer

falling employment and income

question

investment is a

answer

small part of real GDP, yet it accounts for a large share of the fluctuation in real GDP

question

other things the same, a decrease in the price level makes consumers feel

answer

less wealthy, so the quantity of goods and services demanded falls

question

suppose a stock market boom makes people feel wealthier. the increase in wealth would make people to desire

answer

increased consumption, which shifts the aggregate demand curve right

question

when taxes increase, consumption

answer

decreases, so aggregate supply shifts left

question

a nation's standard of living is best measured by its

answer

real GDP per person

question

the one variable that stands out as the most significant explanation of large variations in living standards around the world is

answer

productivity

question

which of the following items plays a role in determining productivity: natural resources, technological knowledge, physical capital

answer

all of the above

question

other things the same, a country that increases its saving rate increases

answer

its future productivity and future real GDP

question

the price of imported oil rises. if the gov wanted to stabilize output, which of the following would it do?

answer

increase gov. expenditures or increase the money supply

question

which of the following policies would be advocated by someone who wants the gov to follow an active stabilization policy when the economy is experiencing severe unemployment?

answer

increase government expenditures

question

answer

all of the above

question

during recessions, automatic stabilizers tend to make the government's budget

answer

move toward deficit

question

economists would predict that, other things the same, the more generous unemployment compensation a country has,

answer

the longer the duration of each spell of unemployment, and the higher the unemployment rate

question

an increase in the minimum wage

answer

increases the quantity demanded of labor but decreases the quantity of labor supplied

question

when a union bargains successfully with employers, in that industry

answer

wages and unemployment increase

question

Money: a) makes trade easier b) is more efficient than barter c) allows for greater specialization

answer

all of the above

question

the set of items that serve as media of exchange clearly includes

answer

demand deposits

question

the agency responsible for regulating the money supply in the US is

answer

the Federal Reserve

question

when a bank loans out $1,000 the money supply

answer

increases

question

some poor countries appear to be falling behind rather than catching up with rich countries. which of the following could explain the failure of the poor country to catch up?

answer

he country has poorly developed property rights

question

the primary economic function of the financial system is to

answer

match one person's savings with another person's investments

question

if a reform of the tax laws encourages greater saving, the result would be

answer

lower interest rates and greater investment

question

Josh is a full time college student who is not working or looking for a job. The Bureau of Labor Statistics counts Josh as

answer

neither in the labor force nor unemployed

question

the deviation of unemployments from its natural rate is called

answer

cyclical unemployment

question

some individuals would like to have a job but they have given up looking for a job after an unsuccessful search. these individuals are called

answer

discouraged workers, and they are not classified by the Bureau of Labor statistics as unemployed

question

taxes on labor encourage all of the following except

answer

workers to work overtime

question

an increase in the size of a tax is most likely to increase tax revenue in a market with

answer

inelastic demand and inelastic supply

question

as the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on, the

answer

tax revenue increases at first, but it eventually peaks and then decreases

question

the long-run effect of an increase in government spending is to raise

answer

the price level and leave real output unchanged

question

which of the following would cause stagflation?

answer

rising oil prices

question

people choose to hold a smaller quantity of money if

answer

the interest rate rises, which causes the opportunity cost of holding money to raise

question

recessions in China and India would cause

answer

the US price level and real GDP to fall

question

the sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if

answer

the price level is higher than expected making production more profitable

question

a tax on sellers of coffee will increase the price of coffee paid by buyers,

answer

decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee

question

if a tax is imposed on a market with inelastic supply and elastic demand, then

answer

sellers will bear most of the burden of the tax

question

a result of welfare economics is that the equilibrium price of a product is considered to be the best price because it

answer

maximizes the combined welfare of buyers and sellers

question

which of the following shifts long-run aggregate supply right?

answer

an increase in both the physical capital stock and human capital stock

question

other things the same, if the long run aggregate supply curve shifts right, prices

answer

and output both increase

question

other things the same, continued increases in the money supply lead to

answer

continued increases in real GDP but not continued increases in the price level

question

the multiplier effect

answer

amplifies the effects of an increase in government expenditures, while the crowding-out effect diminishes the effects

question

answer

all of the above

question

answer

all of the above

question

if the nominal interest rate is 6% and the rate of inflation is 10%, then the real interest rate is

answer

-4%

question

if the CPI rises, the number of dollars needed to buy a representative basket of goods

answer

increases, and so the value of money falls

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