Macroeconomics Leveling Course - Quiz Questions Only Flashcards
The law of demand states that price and quantity demanded are
inversely related, ceteris paribus.
One major reason for the law of demand is that ___.
People will substitute higher priced goods for lower priced goods.
A demand schedule is a numerical tabulation of ___.
prices and quantities demanded.
As the price of good X rises, the demand for good Y falls. Therefore the goods are ___.
Compliments
The law of supply states that price and quantity supplied are
directly related, ceteris paribus.
An advance in technology causes
a rightward shift in the supply curve.
On a supply-and-demand diagram, quantity demanded equals quantity supplied
only at the single equilibrium price.
An “increase in demand” means that
the demand curve has shifted to the right.
A market is said to be in disequilibrium if
it exhibits either a surplus or a shortage.
A price ceiling is a government-mandated
maximum price above which legal trades cannot be made.
Jake is an excellent barber. However, all customers who come to him for a haircut must buy a bottle of shampoo. This type of arrangement is known as
a tie-in sale.
One of the effects of a price floor (set above equilibrium price) is
a surplus.
section 2
Section 2
College and universities use such things as grade point averages and standardized test scores as
non-price rationing devices.
Which of the following statements is false?
In the market for kidneys (for transplants) the legal price is the equilibrium price.
When congestion occurs on the freeway (because of a shortage of freeway space), the economist would say that it is because
the price of driving on the freeway is below the equilibrium price.
The demand for seats in 10 a.m. classes at the university is higher than the demand for seats in 8 a.m. classes. The supply is fixed. If the university prices classes at the price required to achieve equilibrium at 10 a.m., there will be
a surplus at 8 a.m.
Suppose that there are two laws proposed for eviction notices. Plan A requires landlords to give a renter 30 days to vacate an apartment once he has served an eviction notice. Under Plan B, he has 60 days to vacate an apartment once he has been served an eviction notice. It follows that landlords will find
Plan B more expensive than Plan A.
Residents of cities with a reputation for good weather
pay a higher price for housing because the demand for housing is higher.
If the minimum wage law sets a wage floor above the equilibrium wage in the unskilled labor market,
the minimum wage will create a surplus of labor.
An effective minimum wage law can be expected to
reduce the hours worked for some unskilled workers.
In the market for a given product, when a price floor is set above the equilibrium price, the result will be
a deadweight loss.
Suppose that the supply curve for housing is steeper in city X than in city Y. For an equal increase in demand for housing in each city, houses prices will _____ in city ______.
rise more; X than in city Y.
section 3
section 3
One measure of the inflation rate is the
percentage change in the CPI of adjacent years.
The base year is the year
that serves as a reference point or benchmark.
The civilian non-institutional population can be broken down into two groups:
persons not in the labor force and persons in the labor force.
The employment rate equals the number of
employed persons divided by the civilian non-institutional population.
A person is unemployed if he
is a member of the civilian labor force, out of work, and actively seeking work.
Unemployment that arises as a result of the time it takes for unemployed people to locate a job utilizing their transferable skills is called _______ employment.
frictional
The unemployment due to changes in the types of skills employers require is called _____ employment.
structural
“Full employment” is said to exist when the unemployment rate equals
the natural employment rate.
A(n) _______ is a person who was previously employed, hasn’t worked for some time, and is currently reentering the labor force.
reentrant
The value of the consumer price index (CPI) is always equal to _____ in the base year.
100
Beginning in July 2002, the Bureau of Labor Statistics started releasing an alternative price index called a _______ CPI which ________ incorporate substitutions made in the market basket.
chained, does
Section 4
Section 4
Gross Domestic Product (GDP) is the total market value of all
the final goods and services produced within a country’s borders
The best reason economists take only final goods and services into account when calculating GDP is that
they want to avoid the problem of double counting.
Macroeconomists define consumption as
purchases by the household sector.
The largest component of national income is
compensation of employees.
Capital consumption allowance refers to
capital goods being used up in production through natural wear, obsolescence, and accidental destruction.
Net domestic product (NDP) is the total value of
all final goods and services produced within a country’s borders in a year minus capital consumption allowance.
Personal income is
the amount of income that individuals actually receive.
Real GDP equals
a and c.
the sum of all the current-year quantities times their base-year prices.
GDP divided by the chain-weighted price index times 100.
Real GDP is always measured in
base-year dollars.
“Economic growth” has occurred if the
Real GDP this year exceeds the Real GDP of last year.
The typical U.S. business cycle, measured peak to peak, lasts approximately
four to five years.
Which of the following is counted in GDP?
The services of a real estate broker.
section 5
section 5
An aggregate demand (AD) curve shows the
real output (Real GDP) people are willing and able to buy at different price levels, ceteris paribus.
As the price level rises, ceteris paribus, people holding some of their wealth in monetary form become
less wealthy and they buy less.
Greater wealth makes _____ people willing to spend the national income, causing _____ the economy’s AD curve.
more; a rightward shift of
Business optimism about future sales tends to _____ investment expenditures, shifting the AD curve to the _______.
increase; right
A decrease in business taxes, by _____ the expected profitability of investment projects, shifts the AD curve to the _______.
raising; right
An appreciation of the U.S. dollar tends to _____ U.S. net exports and shift the U.S. AD curve to the ______.
lower; left
The short-run aggregate supply curve is
upward sloping.
If the price level remains constant but the wage rate increases, then there will be _______ in production and the SRAS curve will shift _______.
a decrease; leftward
Which of the following is an example of an adverse supply shock?
a, b, and c.
- A nationwide drought lasting for many months.
- an outbreak of war among several of the Middle Eastern oil-producing countries.
- An influenza virus that affects 50% of the labor force for two weeks.
An increase in labor productivity shifts the
SRAS curve rightward.
Short-run equilibrium exists
where the AD curve intersects the short-run aggregate supply (SRAS) curve.
______ identifies the level of Real GDP the economy produces when all economy-wide adjustments have taken place and there are no misperceptions on the part of workers.
Long-run equilibrium
