Final Exam Practice Test Flashcards
You can either spend $100 on a new economics textbook or a new CD player. If you choose to buy the new economics textbook, the opportunity cost is:
the new CD player
Which of the following statements is a positive statement? Which is a normative statement?
X. The federal minimum wage is increasing to $6.50 an hour. Y. The minimum wage should be high enough that families will not live in poverty. Z: A higher minimum wage typically increases the unemployment rate for teenagers.
C. X is positive; Y is normative; Z is positive
A period of falling real gross domestic product is an indicator of a(n):
recession.
If nominal wages have risen by 50% over a ten-year period and aggregate prices have increased by 40% in that same period, then we can safely conclude that the real wages of the workers have:
increased by about 10%.
When overall price levels rise over time, this is referred to as:
inflation
Based on the “Guns and Butter” Figure 3-1, points A, B, E, and F:
indicate combinations of guns and butter that society can produce using all of its factors efficiently.
If Farmer Sam MacDonald can produce 200 pounds of cabbages and 0 pounds of potatoes or 0 pounds of cabbages and 100 pounds of potatoes and faces a linear production possibility curve for his farm, the opportunity cost of producing an additional pound of potatoes is ________ pound(s) of cabbage.
2
The law of demand states that, other things equal:
as the price increases, the quantity demanded will decrease.
If goods A and B are substitutes, a decrease in the price of good B will:
decrease the demand for good A.
If people demand more of product A when the price of B falls, then A and B are:
complements
Which of the following is likely to cause a rightward shift in the demand for home-delivered pizza?
A.
a higher price of pepperoni
B.
a lower price of pizza
C.
a larger population
D.
a lower price of fast-food hamburgers
E.
a lower price of pepperoni
a larger population
Suppose oranges and clementines are considered to be substitutes. Holding everything else constant, if the price of oranges increases, then the:
demand for clementines will increase.
Use the “Supply of Coconuts” Figure 6-1. If the prices of inputs (e.g., labor, fertilizer, and fuel) used to produce and transport coconuts are increasing, then the movement in the model could be:
C to A.
A shift to the left of a supply curve is caused by:
an increase in the cost of an input.
Changes in government spending and taxes in an effort to change overall spending in an economy is:
fiscal policy.
Which of the following will result in an increased price of milk?
A.
an increase in the number of milk suppliers
B.
a shift to the right of the demand curve for milk
C.
a shift to the right of the supply curve for milk
D.
an increase in the production technology of milk suppliers.
E.
a decrease in the number of milk buyers
a shift to the right of the demand curve for milk
Assume that corn is an input in the production of beef but not in the production of pork. Further, beef and pork are substitutes. A decrease in the price of corn will:
increase the supply of beef and decrease the demand for pork.
Many public utilities burn oil to generate electricity. If the price of oil increases, we would expect there to be:
a shift to the left in the supply curve of electricity and a higher price for electricity.
The government imposes a price ceiling below the equilibrium price. The price ceiling will cause:
a shortage of the good.
Rent controls set a price ceiling below the equilibrium price and therefore:
quantity demanded exceeds the quantity supplied.
Which one of the following transactions is included in a current year’s GDP as investment spending?
A.
ABC company purchased 10,000 shares of IBM stock.
B.
Anton purchased his friend’s condo.
C.
Melanie bought a new washing machine for her condominium.
D.
Maggie bought a play-gym set for her day-care business.
E.
Ronnie bought a new BMW.
Maggie bought a play-gym set for her day-care business.
Which of the following would NOT be a part of GDP?
used car sales
Which of the following is included in GDP this year?
A.
Social Security payments from the U.S. government to retired people
B.
the purchase of a 1965 Ford Mustang
C.
the purchase of 100 shares of Microsoft stock
D.
the purchase of a ticket to a Rolling Stones concert this year.
E.
the purchase of used golf clubs.
the purchase of a ticket to a Rolling Stones concert this year.
Real GDP is nominal GDP adjusted for:
changes in price
To be counted as unemployed, one must:
be out of work and be actively looking for a job.
If a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its unemployment rate is:
10%
Which of the following would describe a person who is counted as unemployed by the government?
I. Stan does not have a job but is actively seeking employment.
II. Beverly has a part-time job but would prefer a full-time job.
III. Moesha does not have a job because she recently retired.
I only.
Anna recently moved to Boston in order for her husband Joe to begin a new job as an economics professor at Harvard. Anna is an experienced surgeon who is currently interviewing with several different hospitals in Boston. Anna is currently:
frictionally unemployed.
Sam, who is 55 years old and has been a steel worker for 30 years, is unemployed because the steel plant in his town closed and moved to Mexico. Sam is experiencing:
structural unemployment.
Use the “Shift of the Aggregate Demand Curve” Figure 17-2. A movement from point Con AD2 to point A on AD1 may have been the result of :
A.
a higher aggregate price level.
B.
lower interest rates.
C.
an increase in investment demand due to optimistic GDP forecasts.
D.
a decrease in investment due to higher interest rates.
E.
decreases in the taxes paid by businesses.
D.
a decrease in investment due to higher interest rates.
Use the “Shifts of the AD–AS Curves” Figure 19-1. In the short run, a decrease in investment is illustrated by:
Panel (B).
Use the “Inflationary and Recessionary Gaps” Figure 19-3. In Panel (a), the intersection of SRAS with AD indicates:
A.
an economy experiencing a recessionary gap.
Use the “Policy Alternatives” Figure 19-5. In Panel (a), suppose that the initial equilibrium is at real GDP level Y1 and price level P2. At real GDP level Y1 there is:
B.
a recessionary gap.
Use the “AD–AS” Figure 19-8. Suppose that initially the economy is at long-run equilibrium. Then the government decides to cut taxes, as a result
E.
AD will shift to the right.
Use the “AD–AS” Figure 20-9. Consider an economy that is producing an output level of Y1. Then the economy is in:
C.
an inflationary gap and contractionary fiscal policy can remove the gap.
Use the “Changes in the Money Supply” Figure 31-2. If the supply of money shifts from S1 to S2, the Fed must have _______ government bonds in the open market.
bought
