Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Macroeconomics > Final Exam > Flashcards

Final Exam Flashcards

1
Q

Any output combination inside a production possibility frontier is associated with unused or underutilized resources. (T/F)

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Human capital refers to the accumulated skills and training that workers possess. (T/F)

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

If the United States lifted the embargo on Cuban products, what would happen in the U.S. market for Cuban cigars?

A

The supply curve would shift to the right.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Sally can make 8 cups of soup per hour or 20 crackers per hour. Harry can make 10 cups of soup per hour or 30 crackers per hour. Can Sally and Harry gain from trade? If so, what is the range of crackers for soup at which they would both find trade advantageous?

A

Yes. More than 2.5 crackers per cup of soup but less than 3 crackers per cup of soup.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Holding everything else constant, an increase in the price of MP3 players will result in

A

decrease in the quantity of MP3 players demanded

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Using the midpoints formula, what would be price elasticity of demand for a gallbladder operation if the number of operations fell from 6,000 to 4,000 per week after its price increased from $6,000 to $10,000?

A

0.80

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Economics promotes which of the following as the way to make the best decision?

A

Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Comparative advantage indicates that:

A

a nation can gain from trade even when it is at an absolute disadvantage in producing all goods.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Which of the following is a macroeconomics question?

A

What determines the minimum wage?

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

A local Krispy Kreme doughnut shop reduced the price of its doughnuts from $4 per dozen to $3.50 per dozen, and as a result, the daily sales increased from 300 to 400 dozen. This indicates that the price elasticity of demand for the doughnuts was:

A

elastic.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Suppose A and B are substitute goods. Other things being equal, the demand curve for A will shift to the right when the price of B goes down. (T/F)

A

False

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

A surplus occurs when the market price is lower than the equilibrium price. (T/F)

A

False

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Normative analysis is concerned with “what ought to be,” while positive analysis is concerned with “what is.”

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Comparative advantage means

A

the ability to produce a good or service at a lower opportunity cost than any other producer.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

If society decides it wants more of one good and all resources are fully utilized, then

A

it has to give up some of another good and incur some opportunity costs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Electric car enthusiasts want to buy more electric cars at a lower price. All of the following events would have this effect except

A

an increase in the price of gasoline.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Allocative efficiency best explains ________, and productive efficiency best explains ________.

A

what will be produced; how something will be produced

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Examining the conditions that could lead to inflation in an economy is an example of microeconomics topic. (T/F)

A

False

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

A ________ demand curve for shampoo would be caused by a change in the price of shampoo.

A

movement along the

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Which of the following is evidence of a shortage of walnuts?

A

The quantity demanded of walnuts is greater than the quantity supplied.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

A production possibilities frontier with a ________ shape indicates increasing opportunity costs as more and more of one good is produced.

A

bowed outward

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Suppose there is no unemployment in the economy and society decides that it wants more of one good. Which of the following statements is true?

A

It will have to give up production and consumption of some other good.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

If the price of peaches, a substitute for plums, increases, the demand for plums will decrease. (T/F)

A

False

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

All economic questions arise from the fact that resources are scarce. (T/F)

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

A decrease in the unemployment rate may be represented as a movement from a point on the production possibilities frontier to a point outside the frontier. (T/F)

A

False

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

If Pete raises his price of muffins from $2 to $3 and his sales revenue increases from $35,000 to $38,000, then:

A

the demand for Pete’s muffins in this range is price inelastic.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

“An increase in the price of gasoline will increase the demand for hybrid vehicles.” This statement is an example of a positive economic statement. (T/F)

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

If a 10 percent cut in price causes a 15 percent increase in sales, then:

A

demand is price elastic in this range.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

A(n) ________ is represented by a leftward shift of the demand curve while a(n) ________ is represented by a movement along a given demand curve.

A

decrease in demand; increase in quantity demanded

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Something is an inferior good if the demand for the good:

A

increases as the consumer’s income decreases.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

An economist estimates that .67 is the price elasticity of demand for disposable diapers. This suggests that disposable diaper producers could:

A

raise the price of disposable diapers to raise more revenue.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

The pair of items that is most likely to have a negative cross-price elasticity of demand is:

A

hot dogs and mustard.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

A 10 percent rise in the price of housing reduces the quantity demanded of housing by 3 percent. We can conclude that the demand for housing is:

A

inelastic.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

In a two good, two-country world, a country has a comparative advantage in any good for which it has a:

A

lower opportunity cost than the other country.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Suppose the price elasticity of demand for fishing lures equals 1 in South Carolina and 0.63 in Alabama. To increase revenue, fishing lure manufacturers should:

A

leave prices unchanged in South Carolina and raise prices in Alabama.

36
Q

An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue.

A

model

37
Q

Two goods, X and Y, are complementary goods if the demand for X:

A

decreases when the price of Y increases.

38
Q

A change in which variable will change the market demand for a product?

A

population

39
Q

A decrease in the labor force shifts the production possibility frontier inwards over time. (T/F)

A

True

40
Q

For each surfboard that Australia produces, it gives up the opportunity to make 25 boomerangs. New Zealand can produce 1 surfboard for every 15 boomerangs it produces. Which of the following is true about the comparative advantage between the two countries?

A

Australia has the comparative advantage in boomerangs.

41
Q

Which of the following will not shift the demand curve for a good?

A

an increase in the price of the good

42
Q

Let D = demand, S = supply, P = equilibrium price, Q= equilibrium quantity. What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged?

A

S decreases, D no change, P increases, Q decreases

43
Q

For a person to have a comparative advantage in producing a product, she must be able to produce that product at a lower opportunity cost than her competitors. (T/F)

A

True

44
Q

The labor force includes

A

employed workers and persons who are officially unemployed.

45
Q

Unemployment describes the condition where

A

a person cannot get a job but is willing to work and is actively seeking work.

46
Q

The phrase “too much money chasing too few goods” best describes

A

demand-pull inflation.

47
Q

Which of the following transactions would be included in GDP?

A

Peter buys a newly constructed house.

48
Q

Suppose the nominal annual interest rate on a two-year loan is 8 percent and lenders expect inflation to be 5 percent in each of the two years. The annual real rate of interest is

A

3 percent.

49
Q

A college graduate using the summer following graduation to search for a job would best be classified as

A

frictionally unemployed.

50
Q

At an annual growth rate of 7 percent, real GDP will double in about

A

10 years.

51
Q

The inflation rate measures the percentage growth rate of

A

the CPI from one year to the next.

52
Q

In which of the following cases would real income rise?

A

Nominal income rises by 2 percent, and the price level remains unchanged.

53
Q

Unemployment involving a mismatch of the skills of unemployed workers and the skills required for available jobs is called

A

structural unemployment.

54
Q

Susie has lost her job in a Vermont textile plant because of import competition. She intends to take a short course in electronics and move to Oregon, where she anticipates that a new job will be available. We can say that Susie is faced with

A

structural unemployment.

55
Q

Which of the following countries would economists say definitively is achieving modern economic growth?

A

Nigeria experiences a 2.7 percent increase in real GDP per person.

56
Q

With no inflation, a bank would be willing to lend a business firm $5 million at an annual interest rate of 6 percent. But if the rate of inflation was anticipated to be 4 percent, the bank would most likely charge the firm an annual interest rate of

A

10 percent.

57
Q

Why are economists concerned about inflation?

A

Inflation lowers the standard of living for people whose income does not increase as fast as the price level.

58
Q

Kara voluntarily quit her job as an insurance agent to return to school full time to earn an MBA degree. With degree in hand, she is now searching for a position in management. Kara presently is

A

frictionally unemployed.

59
Q

Money spent on the purchase of a new house is included in the GDP as a part of

A

gross domestic private investment

60
Q

Recently, a teachers’ union argued that the standard of living of teachers working for the school district was falling. The negotiating team for the school board replied that this was not true because the teachers had received significant increases in nominal income through collective bargaining. Could the union statement be correct?

A

Yes, because real income may fall if price increases are proportionately greater than the increases in nominal income.

61
Q

Official unemployment statistics

A

understate unemployment because discouraged workers are not counted as unemployed.

62
Q

Gross private domestic investment exceeds depreciation in an economy that experiences expanding production capacity.

A

The annual rate of inflation can be found by subtracting

63
Q

In calculating GDP, governmental transfer payments, such as Social Security or unemployment compensation, are

A

not counted.

64
Q

Real gross domestic product

A

will increase if the level of output increases.

65
Q

Which of the following best measures improvements in the standard of living of a nation?

A

growth of real GDP per capita

66
Q

Suppose that inventories are rising. We can expect that, in the future,

A

real GDP will likely decrease.

67
Q

The largest component of total expenditures in the United States is

A

consumption.

68
Q

A nation’s gross domestic product (GDP)

A

can be found by summing C + Ig + G + Xn

69
Q

A recession is a decline in

A

eal GDP that lasts six months or longer.

70
Q

Harry’s Pepperoni Pizza Parlor produced 10,000 large pepperoni pizzas last year that sold for $10 each. This year Harry’s again produced 10,000 large pepperoni pizzas (identical to last year’s pizzas) but sold them for $12 each. Based on this information, we can conclude that Harry’s production of large pepperoni pizzas

A

increased nominal GDP from last year, but real GDP was unaffected.

71
Q

Suppose there are 5 million unemployed workers seeking jobs. After a period of time, 1 million of them become discouraged over their job prospects and cease to look for work. As a result of this, all else equal, the official unemployment rate would

A

decline.

72
Q

A nation’s gross domestic product (GDP)

A

is the dollar value of all final output produced within the borders of the nation during a specific period of time.

73
Q

Which of the following is the best example of economic investment?

A

Apple builds a new plant to manufacture iPads

74
Q

Between 1980 and 2000, the price level approximately doubled. The average annual rate of inflation over this 20-year period was about

A

3.5%

75
Q

When economists refer to “investment,” they are describing a situation where

A

resources are devoted to increasing future output.

76
Q

Inflation is defined as

A

an increase in the overall level of prices.

77
Q

The industries or sectors of the economy in which business cycle fluctuations tend to affect output most are

A

capital goods and durable consumer goods.

78
Q

The phase of the business cycle in which real GDP declines is called

A

a recession.

79
Q

Real GDP measures the

A

value of final goods and services produced within the borders of a country, corrected for price changes.

80
Q

National income accountants can avoid multiple counting by

A

only counting final goods.

81
Q

The natural rate of unemployment is

A

that rate of unemployment occurring when the economy is at its potential output.

82
Q

Inflation initiated by increases in wages or other resource prices is labeled

A

cost-push inflation.

83
Q

Macroeconomics is mostly focused on

A

the economy as a whole

84
Q

If the consumer price index falls from 120 to 116 in a particular year, the economy has experienced

A

deflation of 3.33 percent.

85
Q

If the prices of all goods and services rose, but the quantity produced remained unchanged, what would happen to nominal and real GDP?

A

Nominal GDP would rise, but real GDP would be unchanged.

Macroeconomics (7 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions