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quantity demanded exceeds quantity supplied
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A shortage exists when
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it has a comparative advantage
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A country should specialize in producing the goods for which
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a rightward shift of the demand curve and a rise in the price of textbooks
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Consider the market for physical textbooks. If more students attend college we would expect there to be
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Jane has an absolute advantage in producing pants
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Lenny can produce 3 pairs of pants in an hour and Jane can produce 5 pairs of pants in an hour. It must be the case that
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a decrease in demand for good Y
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Many consumers believe goods X and Y are complements. An increase in the price of good X will cause
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increase supply
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An increase in the number of firms on the industry would
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a rightward shift of the demand curve
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The price of airline tickets rises during the fall because more people fly home for the holidays. This is best represented by:
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a normal good
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The demand curve for good X shifts to the right as consumer income rises. Good X is
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there are more buyers in the market for the good
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The demand curve shifts to the right if:
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the efficient combinations of any two goods that can be produced with given resources
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The production possibilities frontier is used to illustrate
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quantity would increase
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Suppose there is an increase in both the demand and supply for some good. In this case we know for certain that the equilibrium ____ would ____
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the growth rate of real GDP is greater than the growth rate of the population
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The standard of living in a country will increase if
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2.8%
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A country aims to double real GDP per capita in the next 25 years. This means that on average real GDP per capita must grow at ____ per year.
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the growth rate of real GDP
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To assess the overall performance of the economy it is best to use
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purchases of stocks and bonds
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What is not part of the investment spending category of GDP?
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expenditure, income, and value added
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The three approaches to measuring GDP are
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3.8%
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A country aims to double real GDP per capita in the next 25 years. If the rate of population growth in the country is 1% per year then this means that real GDP must grow at ____ per year.
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5.5%
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A country aims to double real GDP per capita in the next 28 years. If the rate of population growth in the country is 1% per year and the inflation rate is 2% per year then this means that nominal GDP must grow at ____ per year.
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counts in the investment spending category of GDP
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Spending on productive inputs such as factories and machines
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wages, interest, rent, and profit
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The categories of income measured by the government are
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the dollar value of exports minus the dollar value of imports
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Net exports is defined as
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decrease, labor supply
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After researching majors that offer the highest starting salary, more students decide to become economics majors. All else the same, we would expect the future wage for economists to ____ due to a shift in _____.
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lower prices and more spending
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Suppose output in the economy is currently below potential GDP. Over the long run, we would expect to see
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increase, increase
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All else the same, a positive demand shock results in a(n) ____ in the price level and a(n) ___ in output in the short run.
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increase, labor demand
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More firms find they need to hire computer programmers to manage their websites and computer systems. In the market for computer programmers in the short run, we would expect the wage for computer programmers to ___ due to a shift in _____.
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decrease, increase
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Companies such as Walmart, Target, and McDonalds have announced they will increase the starting wage for all workers. We would expect that the increase in the starting wage would lead to a(n) ____ in the quantity of workers demanded and a(n) _____ in the quantity of workers supplied.
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real wage
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When firms voluntarily pay higher wages than the market dictates, this creates _____ unemployment.
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deficit, debt
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Each year the government runs a ____ this adds to the national ____.
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the government
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Who is responsible for setting fiscal policy in the economy?
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cyclical unemployment
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Gordon loses his job because sales are slow at his firm, due to a general slowdown in the entire economy. This is an example of ______.
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all the time
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In the economy, unemployment exists
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structural unemployment
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Jane loses her job when the factory in her local area closes. She is unable to find another factory job. This is an example of ______.
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government spending
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When the price level changes we can expect all components of GDP to change except
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frictional unemployment
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Bob quits his job in NY and moves to California. After 2 months he finds a job. This is an example of _____.
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the multiplier
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The amount by which equilibrium output increases when government spending increases is called
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part of the working age population but not part of the labor force
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Mr. Jones loses his job during a recession. After searching for work for over a year, Mr. Jones gives up and decides to retire early. Mr. Jones is now classified as
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decrease in food assistance to low income families
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Which of the following is an example of contractionary fiscal policy?
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decrease, return to potential
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The economy is currently suffering from the effects of a negative supply shock. If the government takes no action, then in the long run we would expect the price level to ____ and output to ______.
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the marginal propensity to consume
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The amount by which consumption increases when income increases is called
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