EC 211 FIRST TEST

Question 1

As the price of x increases demand for y increases. Then x and y are?

Answer 1

Substituttes

Question 2

As the price of x increases demand for y decreases. Then x and y are?

Answer 2

Complements

Question 3

Pick a factor that will NOT shift the demand curve for chicken…

Answer 3

technology and price of chicken

Question 4

Suppose prices are expected to go up in the future. Then demand today will….

Answer 4

increase

Question 5

Suppose prices are expected to go down in the future. Then demand today will….

Answer 5

decrease

Question 6

Suppose demand increases and supply decreases. How will it affect price and quantity?

Answer 6

Price increase and quantity is unsure

Question 7

Suppose demand increases and supply increases. How will it affect price and quantity?

Answer 7

Quantity increases and price is unsure

Question 8

Suppose demand decreases and supply increases. How will it affect price and quantity?

Answer 8

Price decreases and quantity is unsure

Question 9

Suppose demand decreases and supply decreases. How will it affect price and quantity?

Answer 9

Quantity decreases and price is unsure

Question 10

Suppose resource cost decreases. How will it affect price and quantity?

Answer 10

Price will decrease and quantity will increase

Question 11

Suppose resource cost increases. How will it affect price and quantity?

Answer 11

Price will increase and quantity will decrease

Question 12

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

Answer 12

GDP

Question 13

Should intermediate goods be included?

Answer 13

No because it would be considered double counting.

Question 14

What is the impact of pollution on economic welfare?

Answer 14

it overstates welfare

Question 15

What is substitution bias in CPI?

Answer 15

CPI does not take into account substitution of goods when relative prices change

Question 16

Frictional Unemployment is

Answer 16

Unemployment associated with the changing of jobs in a changing

Question 17

If the number of people unemployed is 100, the number of people employed is 1000 and the working age population is 1400, then unemployment rate is

Answer 17

9.1 percent (100/1100)

Question 18

Suppose the number of discouraged workers is 15 million, the number of unemployed workers is 40 million, the number employed workers 100 million and the population (over 16) is 225 million. Then the labor force participation rate is

Answer 18

62 percent (140/225)

Question 19

Full employment occurs when

Answer 19

Cyclical unemployment is zero

Question 20

When the unemployment rate is below natural unemployment rate,

Answer 20

A real GDP is greater than potential GDP

Question 21

If the price level last year was 220 and this year is 250, what is the inflation rate between two years?

Answer 21

13.6

Question 22

List the principles of macroeconomics

Answer 22

national income
Overall price level
Unemployment

Question 23

the study of choices made by the individuals and society in order to allocate scarce resources to achieve a certain goal

Answer 23

economics

Question 24

analyzes how individuals and businesses make decisions (How much to buy?/How much to produce?)

Answer 24

Microeconomics

Question 25

the value of the best available alternative you are giving up

Answer 25

Opportunity Cost