question
Which of the following is NOT part of the first big economic question?
- What goods and services are produced?
- For whom are goods and services produced?
- Why do incentives affect only marginal costs?
- How are goods and services produced?
- What goods and services are produced?
- For whom are goods and services produced?
- Why do incentives affect only marginal costs?
- How are goods and services produced?
answer
Why do incentives affect only marginal costs?
question
Which of the following statements are CORRECT?
I. The "highest-valued alternative given up to get something" is the opportunity cost.
II. Wealthy economies don't experience opportunity costs.
III. Scarcity creates opportunity costs.
- I only
- I and II
- I and III
- I, II, and III
I. The "highest-valued alternative given up to get something" is the opportunity cost.
II. Wealthy economies don't experience opportunity costs.
III. Scarcity creates opportunity costs.
- I only
- I and II
- I and III
- I, II, and III
answer
I and III
question
Marginal cost is the opportunity cost
- of a good or service divided by the number of units produced.
- of a good or service that exceeds its benefit.
- that your activity imposes on someone else.
- that arises from producing one more unit of a good or service.
- of a good or service divided by the number of units produced.
- of a good or service that exceeds its benefit.
- that your activity imposes on someone else.
- that arises from producing one more unit of a good or service.
answer
that arises from producing one more unit of a good or service.
question
Economic growth is the result of all of the following EXCEPT
- technological change.
- capital accumulation.
- investment in human capital.
- opportunity cost.
- technological change.
- capital accumulation.
- investment in human capital.
- opportunity cost.
answer
opportunity cost.
question
A person has a comparative advantage in an activity whenever he or she
- can do the activity in less time than anyone else.
- can perform the activity at a lower opportunity cost than anyone else.
- has an absolute advantage in the activity.
- can do everything better than anyone else.
- can do the activity in less time than anyone else.
- can perform the activity at a lower opportunity cost than anyone else.
- has an absolute advantage in the activity.
- can do everything better than anyone else.
answer
can perform the activity at a lower opportunity cost than anyone else.
question
Markets
- facilitate trade.
- All of the above answers are correct.
- coordinate price information between buyers and sellers.
- allow traders to enjoy gains from trade.
- facilitate trade.
- All of the above answers are correct.
- coordinate price information between buyers and sellers.
- allow traders to enjoy gains from trade.
answer
All of the above answers are correct.
question
The relative price of a good is
- equal to the money price of a good.
- an opportunity cost.
- equal to the price of that good divided by the price of that good in the base year.
- what you get paid for babysitting your cousin.
- equal to the money price of a good.
- an opportunity cost.
- equal to the price of that good divided by the price of that good in the base year.
- what you get paid for babysitting your cousin.
answer
an opportunity cost.
question
The "law of demand" states that changes in
- the demand for a good are inversely related to changes in its price.
- the quantity demanded of a good are inversely related to changes in its price.
- the quantity demanded of a good are not related to changes in the quantity supplied.
- demand are inversely related to changes in supply.
- the demand for a good are inversely related to changes in its price.
- the quantity demanded of a good are inversely related to changes in its price.
- the quantity demanded of a good are not related to changes in the quantity supplied.
- demand are inversely related to changes in supply.
answer
the quantity demanded of a good are inversely related to changes in its price.
question
A fall in the price of a good causes producers to reduce the quantity of the good they are willing to produce. This fact illustrates
- a change in supply.
- the law of supply.
- the nature of an inferior good.
- the law of demand.
- a change in supply.
- the law of supply.
- the nature of an inferior good.
- the law of demand.
answer
the law of supply.
question
The above figure shows the market for pizza. Which figure shows the effect of a decrease in the price of a
hamburger, which for consumers is a substitute for pizza?
- Figures B and C
- Figure A
- Figure B
- Figure D
hamburger, which for consumers is a substitute for pizza?
- Figures B and C
- Figure A
- Figure B
- Figure D
answer
Figure B
question
Gross domestic product is the total ________ produced within a country in a given time period.
- market value of all goods and services
- market value of all final and intermediate goods and services
- amount of final and intermediate goods and services
- market value of all final goods and services
- market value of all goods and services
- market value of all final and intermediate goods and services
- amount of final and intermediate goods and services
- market value of all final goods and services
answer
market value of all final goods and services
question
In the circular flow of income
- households sell goods and services while firms sell factors.
- households demand goods and services that are supplied by firms, while supplying factors that are
demanded by firms.
- households demand goods and services that are supplied by firms, and the firms demand factors that are
supplied by intermediate firms.
- households buy goods and services while firms sell goods and services. Firms obtain labor from
households, capital from government, and raw materials from other firms.
- households sell goods and services while firms sell factors.
- households demand goods and services that are supplied by firms, while supplying factors that are
demanded by firms.
- households demand goods and services that are supplied by firms, and the firms demand factors that are
supplied by intermediate firms.
- households buy goods and services while firms sell goods and services. Firms obtain labor from
households, capital from government, and raw materials from other firms.
answer
households demand goods and services that are supplied by firms, while supplying factors that are
demanded by firms.
demanded by firms.
question
GDP using the expenditure approach equals the sum of personal consumption expenditures plus
- gross private investment plus government expenditure on goods and services minus imports of goods
and services.
- gross private investment plus government expenditure on goods and services.
- gross private investment.
- gross private investment plus government expenditure on goods and services plus net exports of goods
and services.
- gross private investment plus government expenditure on goods and services minus imports of goods
and services.
- gross private investment plus government expenditure on goods and services.
- gross private investment.
- gross private investment plus government expenditure on goods and services plus net exports of goods
and services.
answer
gross private investment plus government expenditure on goods and services plus net exports of goods
and services.
and services.
question
Real GDP is
- the value of total production of all the nation's farms, factories, shops and offices measured at the prices
of the year it was produced.
- the value of total production of all the nation's farms, factories, shops and offices measured in the prices
of a single year.
- the value of total production when the unemployment rate is 6 percent.
- an increase in the average level of prices.
- the value of total production of all the nation's farms, factories, shops and offices measured at the prices
of the year it was produced.
- the value of total production of all the nation's farms, factories, shops and offices measured in the prices
of a single year.
- the value of total production when the unemployment rate is 6 percent.
- an increase in the average level of prices.
answer
the value of total production of all the nation's farms, factories, shops and offices measured in the prices
of a single year.
of a single year.
question
The unemployment rate equals
- [(number of people unemployed)÷ (non-institutionalized working age population) ]× 100.
- [(number of people unemployed + discouraged workers)÷ (working age population)] × 100.
- [(number of people unemployed)÷ (labor force)] × 100.
- (number of people unemployed÷ number of people age 16 and over) × 100.
- [(number of people unemployed)÷ (non-institutionalized working age population) ]× 100.
- [(number of people unemployed + discouraged workers)÷ (working age population)] × 100.
- [(number of people unemployed)÷ (labor force)] × 100.
- (number of people unemployed÷ number of people age 16 and over) × 100.
answer
[(number of people unemployed)÷ (labor force)] × 100.
question
Full employment occurs when
- cyclical and frictional unemployment are zero.
- cyclical unemployment is zero.
- frictional unemployment is zero.
- structural unemployment is zero.
- cyclical and frictional unemployment are zero.
- cyclical unemployment is zero.
- frictional unemployment is zero.
- structural unemployment is zero.
answer
cyclical unemployment is zero.
question
The consumer price index (CPI)
- compares the cost in the current period to the cost in a reference base period of a basket of goods typically
consumed in the base period.
- measures the increase in the prices of the goods included in GDP.
- compares the cost of the typical basket of goods consumed in period 1 to the cost of a basket of goods
typically consumed in period 2.
- is the ratio of the average price of a typical basket of goods to the cost of producing those goods.
- compares the cost in the current period to the cost in a reference base period of a basket of goods typically
consumed in the base period.
- measures the increase in the prices of the goods included in GDP.
- compares the cost of the typical basket of goods consumed in period 1 to the cost of a basket of goods
typically consumed in period 2.
- is the ratio of the average price of a typical basket of goods to the cost of producing those goods.
answer
compares the cost in the current period to the cost in a reference base period of a basket of goods typically
consumed in the base period.
consumed in the base period.
question
Suppose the CPI last year is 121 and the CPI this year is 137. The CORRECT method to calculate the inflation
rate is
- [(137 - 121)/100] x 100 = 16.
- [(121-137)/121] × 100 = -13.2.
- [(137 - 121)/137] x 100 = 11.7.
- [(137 - 121)/121] × 100 = 13.2.
rate is
- [(137 - 121)/100] x 100 = 16.
- [(121-137)/121] × 100 = -13.2.
- [(137 - 121)/137] x 100 = 11.7.
- [(137 - 121)/121] × 100 = 13.2.
answer
[(137 - 121)/121] × 100 = 13.2.
question
Over the past 100 years real GDP per person in the United States, on average, has
- increased by about 2 percent per year.
- increased by about 10 percent per year.
- increased by about 5 percent per year.
- decreased by about 5 percent per year.
- increased by about 2 percent per year.
- increased by about 10 percent per year.
- increased by about 5 percent per year.
- decreased by about 5 percent per year.
answer
increased by about 2 percent per year.
question
Full employment corresponds to
- labor demand being greater than labor supply and actual GDP being equal to potential GDP.
- being at the point where the marginal product of labor equals zero.
- equilibrium in the labor market, with actual GDP being equal to potential GDP.
- equilibrium in the labor market, and actual GDP
- labor demand being greater than labor supply and actual GDP being equal to potential GDP.
- being at the point where the marginal product of labor equals zero.
- equilibrium in the labor market, with actual GDP being equal to potential GDP.
- equilibrium in the labor market, and actual GDP
answer
equilibrium in the labor market, with actual GDP being equal to potential GDP.
question
As labor increases, there is a
- movement along the aggregate production function and real GDP will decrease less with each additional
increase in labor.
- shift of the aggregate production function, but no movement along it.
- movement along the aggregate production function, but no shift in it.
- movement along the aggregate production function and real GDP will increase less with each additional
increase in labor.
- movement along the aggregate production function and real GDP will decrease less with each additional
increase in labor.
- shift of the aggregate production function, but no movement along it.
- movement along the aggregate production function, but no shift in it.
- movement along the aggregate production function and real GDP will increase less with each additional
increase in labor.
answer
movement along the aggregate production function and real GDP will increase less with each additional
increase in labor.
increase in labor.
question
All of the following contribute to labor productivity growth EXCEPT
- human capital growth.
- technological advancements.
- physical capital growth.
- increased immigration.
- human capital growth.
- technological advancements.
- physical capital growth.
- increased immigration.
answer
increased immigration.
question
Neoclassical growth theory predicts that
- advances in technology increase the productivity of capital, which leads to an increase in investment and
rising real GDP per person.
- advances in technology are a result of discoveries motivated by the pursuit of profits.
- growth in real GDP can continue indefinitely.
- growth in real GDP can increase without any increase in investment.
- advances in technology increase the productivity of capital, which leads to an increase in investment and
rising real GDP per person.
- advances in technology are a result of discoveries motivated by the pursuit of profits.
- growth in real GDP can continue indefinitely.
- growth in real GDP can increase without any increase in investment.
answer
advances in technology increase the productivity of capital, which leads to an increase in investment and
rising real GDP per person.
rising real GDP per person.
question
The term "capital," as used in macroeconomics, refers to
- investment.
- financial wealth.
- the plant, equipment, buildings, and inventories of raw materials and semi-finished goods.
- the sum of investment and government
- investment.
- financial wealth.
- the plant, equipment, buildings, and inventories of raw materials and semi-finished goods.
- the sum of investment and government
answer
the plant, equipment, buildings, and inventories of raw materials and semi-finished goods.
question
In the above figure, an increase in the expected profit will result in a movement from point E to
- point F.
- point G.
- point H.
- point I.
- point F.
- point G.
- point H.
- point I.
answer
point F.
question
The term "crowding out" relates to the decrease in
- consumption expenditure from an increase in investment.
- private investment from a government budget deficit.
- the real interest rate from a government budget deficit.
- saving from an increase in disposable income.
- consumption expenditure from an increase in investment.
- private investment from a government budget deficit.
- the real interest rate from a government budget deficit.
- saving from an increase in disposable income.
answer
private investment from a government budget deficit.
question
M1 is a measure of
- liquidity and in which the most liquid asset is money.
- money and includes both currency and checking deposits.
- money and includes both savings deposits and currency.
- money and includes both savings deposits and money market mutual funds.
- liquidity and in which the most liquid asset is money.
- money and includes both currency and checking deposits.
- money and includes both savings deposits and currency.
- money and includes both savings deposits and money market mutual funds.
answer
money and includes both currency and checking deposits.
question
The main policy-making body of the Federal Reserve System is the
- Board of Governors.
- Federal Reserve Banks.
- member commercial banks.
- Federal Open Market Committee.
- Board of Governors.
- Federal Reserve Banks.
- member commercial banks.
- Federal Open Market Committee.
answer
Federal Open Market Committee.
question
Banks create money whenever they
- lend excess reserves to a borrower.
- receive monthly payments on their loans.
- receive interest on existing loans.
- accept a deposit.
- lend excess reserves to a borrower.
- receive monthly payments on their loans.
- receive interest on existing loans.
- accept a deposit.
answer
lend excess reserves to a borrower.
question
If the interest rate is above the equilibrium interest rate, then
- people will sell bonds and the interest rate will fall.
- people will buy bonds and the interest rate will fall.
- the quantity of money demanded exceeds the quantity supplied.
- there is an excess demand for money.
- people will sell bonds and the interest rate will fall.
- people will buy bonds and the interest rate will fall.
- the quantity of money demanded exceeds the quantity supplied.
- there is an excess demand for money.
answer
people will buy bonds and the interest rate will
question
In the figure above, the economy is at point A when the price level rises to 120. Money wage rates and other
resource prices remain constant. Firms are willing to supply output equal to
- $15.5 trillion.
- $16.0 trillion.
- $16.5 trillion.
- None of the above answers is correct.
resource prices remain constant. Firms are willing to supply output equal to
- $15.5 trillion.
- $16.0 trillion.
- $16.5 trillion.
- None of the above answers is correct.
answer
$16.5 trillion.
question
The AD curve slopes
- downward due to the wealth and price effects.
- upward due to the wealth and substitution effects.
- downward due to the wealth and substitution effects.
- upward due to the price and substitution effects.
- downward due to the wealth and price effects.
- upward due to the wealth and substitution effects.
- downward due to the wealth and substitution effects.
- upward due to the price and substitution effects.
answer
downward due to the wealth and substitution effects.
question
In the above figure, point A represents
- a recessionary gap.
- a full-employment equilibrium.
- an inflationary gap.
- an increase in aggregate demand.
- a recessionary gap.
- a full-employment equilibrium.
- an inflationary gap.
- an increase in aggregate demand.
answer
a recessionary gap.
question
________ economists believe that active help from fiscal and monetary policy is needed to insure that the economy is operating at full employment.
- Monetarist
- Keynesian
- All
- Classical
- Monetarist
- Keynesian
- All
- Classical
answer
Keynesian
question
In the very short term, planned investment ________ when GDP changes and planned consumption expenditure ________ when GDP changes.
- does not change; does not change
- changes; does not change
- changes; changes.
- does not change; changes
- does not change; does not change
- changes; does not change
- changes; changes.
- does not change; changes
answer
does not change; changes
question
In the above figure, when disposable income is $12 trillion , induced consumption equals
- $12 trillion.
- $8 trillion.
- $4 trillion.
- $16 trillion.
- $12 trillion.
- $8 trillion.
- $4 trillion.
- $16 trillion.
answer
$8 trillion.
question
According to the data in the above table, what is the marginal propensity to consume?
- 100
- 1
- 0.75
- 75
- 100
- 1
- 0.75
- 75
answer
0.75
question
The figure shows Tropical Isle's aggregate planned expenditure curve. When aggregate planned expenditure is $4 trillion, aggregate planned expenditure is ________ than real GDP, firms' inventories ________, and firms
________ their production.
- greater; increase; decrease
- less; decrease; increase
- less, increase; decrease
- greater, decrease; increase
________ their production.
- greater; increase; decrease
- less; decrease; increase
- less, increase; decrease
- greater, decrease; increase
answer
less, increase; decrease
question
Equilibrium real GDP is $500 billion, government expenditures are $80 billion, the MPC = 0.9, and there are no income taxes or imports. Suppose that government expenditures increase to $100 billion. If the price level is
constant, after the increase in government expenditures, equilibrium real GDP will be
- $520 billion.
- $700 billion.
- $580 billion.
- $600 billion.
constant, after the increase in government expenditures, equilibrium real GDP will be
- $520 billion.
- $700 billion.
- $580 billion.
- $600 billion.
answer
$700 billion.
question
When autonomous expenditure changes, the horizontal distance by which the aggregate demand curve shifts
- depends on the size of the multiplier.
- is determined by the inverse of the multiplier.
- depends on the size of the wealth effect.
- is increased by the existence of automatic stabilizers.
- depends on the size of the multiplier.
- is determined by the inverse of the multiplier.
- depends on the size of the wealth effect.
- is increased by the existence of automatic stabilizers.
answer
depends on the size of the multiplier.
question
In the Keynesian business cycle theory, business cycles begin with changes in
- inflation expectations.
- the public's expectations about Fed policies.
- business confidence.
- consumer sentiment.
- inflation expectations.
- the public's expectations about Fed policies.
- business confidence.
- consumer sentiment.
answer
business confidence.
question
In the above, which figure shows the start of a cost-push inflation?
- Figure A
- Figure B
- Figure C
- Figure D
- Figure A
- Figure B
- Figure C
- Figure D
answer
Figure C
question
The short-run Phillips curve intersects the long-run Phillips curve at the
- natural inflation rate.
- natural interest rate.
- nominal interest rate.
- expected inflation rate.
- natural inflation rate.
- natural interest rate.
- nominal interest rate.
- expected inflation rate.
answer
The short-run Phillips curve intersects the long-run Phillips curve at the
- natural inflation rate.
- natural interest rate.
- nominal interest rate.
- expected inflation rate.
- natural inflation rate.
- natural interest rate.
- nominal interest rate.
- expected inflation rate.
question
Fiscal policy involves
- decreasing the role of the Federal Reserve in the everyday life of the economy.
- the use of tax and money policies by government to influence the level of interest rates.
- the use of interest rates to influence the level of GDP.
- the use of tax and spending policies by the government.
- decreasing the role of the Federal Reserve in the everyday life of the economy.
- the use of tax and money policies by government to influence the level of interest rates.
- the use of interest rates to influence the level of GDP.
- the use of tax and spending policies by the government.
answer
the use of tax and spending policies by the government.
question
Generational accounting shows that the present value of the government's commitments to pay benefits are
________ the present value of its taxes.
- less than
- equal to
- greater than
________ the present value of its taxes.
- less than
- equal to
- greater than
answer
greater than
question
Economic data for a mythical economy in the years 2012-2016 are summarized in the figure above. Assume
that the spending formulas and tax schedules are identical for all years. When the economy is at less than full employment, the government has a
- budget surplus.
- balanced budget.
- budget deficit.
- procyclical policy.
that the spending formulas and tax schedules are identical for all years. When the economy is at less than full employment, the government has a
- budget surplus.
- balanced budget.
- budget deficit.
- procyclical policy.
answer
budget deficit.
question
In the above figure, if the economy is initially at point D and government expenditure increases, the economy
will
- stay at point D.
- move to point B.
- move to point C.
- move to point A.
will
- stay at point D.
- move to point B.
- move to point C.
- move to point A.
answer
move to point C.
question
The key aim of monetary policy is to
- change tax rates to boost saving.
- change tax rates to boost investment.
- change government spending to spur innovation.
- maintain price stability.
- change tax rates to boost saving.
- change tax rates to boost investment.
- change government spending to spur innovation.
- maintain price stability.
answer
maintain price stability.
question
To lower the federal funds rate, the Federal Reserve should
- raise the Treasury bill rate.
- raise the exchange rate.
- buy government securities.
- decrease bank reserves.
- raise the Treasury bill rate.
- raise the exchange rate.
- buy government securities.
- decrease bank reserves.
answer
buy government securities.
question
In the above figure, suppose that the economy is at point B. Which of the following policy options for the Fed
will move the economy toward its LAS?
- decrease the government's budget deficit
- lower the federal funds rate
- decrease taxes
- raise the federal funds rate
will move the economy toward its LAS?
- decrease the government's budget deficit
- lower the federal funds rate
- decrease taxes
- raise the federal funds rate
answer
raise the federal funds rate
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
