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If the nominal interest rate is 5% and the rate of inflation is 9%, then the real interest rate is A. - 0.44 % B. - 4% C. 4% D. 14% ---------CORRECT ANSWER-----------------B. - 4% Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has A. probably changed measured GDP, but in an uncertain direction; the direction of the change depends on the difference in the quality of the cleaning that has resulted. B. caused measured GDP to rise. C. Not caused any change in measured GDP D. Caused measured GDP to fall. ---------CORRECT ANSWER-----------------B. caused measured GDP to rise.
GDP is equal to A. Y B. the market value of final goods and services produced within a country in a given period of time. C. C + I + G + NX D. All of the above are correct ---------CORRECT ANSWER-----------------D. All of the above are correct Wholesome Wheat Bakery buys $10.00 worth of flour from Mikes' Mill and uses the flour to make bread. Wholesome Wheat sells the bread to the public for $22.00. Taking these two transactions into account, what is the effect on GDP? A. GDP increases by $32. B. GDP increases by $12. C. GDP increases by $10. D. GDP increases by $22.00 ---------CORRECT ANSWER-----------------D. GDP increases by $22. Suppose Susan can wash three windows per hour, or she can iron six shirts per hour. Paul can wash two windows per hour or he can iron five shirts per hour. A. Susan has an absolute advantage over Paul in washing windows. B. Susan has a comparative advantage over Paul in washing windows. C. Paul has a comparative advantage over Susan in ironing shirts.
A. $
B. $
C. $
D. $3000 ---------CORRECT ANSWER-----------------A. $
Sheri, a U.S. Citizen, works only in Germany. The value she adds to the production in Germany is included.. A. in German GDP, but is not included in U.S. GDP B. in U.S. GDP, but is not included in German GDP C. in both German GDP and U.S. GDP. D. in neither German GDP nor U.S. GDP. ---------CORRECT ANSWER-----------------A. in German GDP, but is not included in U.S. GDP Transfer payments are: A. not included in GDP because they are not payments for currently produced goods or services. B. Included in GDP because they eventually will be spent on consumption. C. Included in GDP because they represent income to individuals. D. not included in GDP because taxes will have to be raised to pay for them. --------
- CORRECT ANSWER-----------------A. not included in GDP because they are not payments for currently produced goods or services. Cyclical unemployment refers to
A. Changes in unemployment due to changes in natural rate of unemployment. B. The portion of unemployment created by job search. C. The portion of unemployment created by wages set above the equilibrium level. D. short-run fluctuations around the natural rate of unemployment. --------- CORRECT ANSWER-----------------D. short-run fluctuations around the natural rate of unemployment. The CPI is more commonly used as a gauge of inflation than the GDP deflator is because A. the GDP inflator cannot be used to gauge inflation. B. the CPI is calculated more often than the GDP deflator is C. the CPI is easier to measure D. the CPI better reflects the good and services bought by consumers. --------- CORRECT ANSWER-----------------D. the CPI better reflects the good and services bought by consumers. Consider 2 labor markets in which jobs are equally attractive in all respects other than the wage rate. All workers are equally able to do either job. Initially, both labor markets are perfectly competitive. If a union organizes workers in one of the markets, then the wage rates will tend to A. rise for the union jobs and fall for the nonunion jobs B. Rise in both markets C. Fall in both markets
Christopher is an unpaid, stay-at-home father who works as a volunteer at the local Habitat for Humanity chapter. Currenty, Christopher is not looking for a paid jobs. The Bureau of Labor Statistics counts Christopher as A. in the labor force but not employed. B. Unemployed but not in the labor force. C. Neither in the labor force nor unemployed. D. Unemployed and in the labor force. ---------CORRECT ANSWER-----------------C. Neither in the labor force nor unemployed. Because every transaction has a buyer and a seller, A. Firms' profits are necessarily zero in a simple circular-flow diagram. B. The number of firms must be equal to the number of households in a simple circular-flow diagram. C. Every transaction contributes equally to an economy's income and to its expenditure. D. GDP is more closely associated with an economy's income than it is with an economy's expenditure. ---------CORRECT ANSWER-----------------C. Every transaction contributes equally to an economy's income and to its expenditure. The Opportunity Cost of an item is ---------CORRECT ANSWER-----------------What you give up to get that item
Total Output in an economy increases when each person specializes because ------ ---CORRECT ANSWER-----------------Each person spends more time producing that product in which he or she has a comparative advantage The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good ---------CORRECT ANSWER----------------- Has an absolute advantage in the production of that good The quantity demanded of a good is the amount that buyers are ---------CORRECT ANSWER-----------------Willing and able to purchase The market demand curve ---------CORRECT ANSWER-----------------Represents the sum of the quantities demanded by all the buyers at each price of the good. The quantity supplied of a good is ---------CORRECT ANSWER-----------------The amount sellers are willing and able to produce What causes equilibrium price to fall ---------CORRECT ANSWER----------------- Demand increase and Supply decrease Demand and supply both decrease Demand decrease and Supply increase
Which of the following statements about real and nominal interest rates is correct ---------CORRECT ANSWER-----------------When the inflation rate is positive, the nominal interest rate is necessarily greater than the real interest rate Sue was an accountant in 1944 and earned 12,000 That year Her son Josh earns 210,000 in 2013 The Price index in 1944 was 17.6 and 218.4 in 2013 Sue's income amounts to what percentage of josh's ---------CORRECT ANSWER------ -----------70. During a certain year, the CPI increased from 120 to 132 and the purchasing power of a bank account increased by 4% For that year ---------CORRECT ANSWER- ----------------Nominal interest rate was 14 % Productivity is defined as the quantity of ---------CORRECT ANSWER----------------- Goods and services produced from each unit of labor output All else equal, If there are diminishing returns, then which of the following is true if a country increases its capital by one unit ---------CORRECT ANSWER----------------- Output will rise but by less than it did when the previous unit was added
A Bond buyer is ---------CORRECT ANSWER-----------------Saver. Long term bonds have more risk than short term bonds The source of the supply of loanable funds ---------CORRECT ANSWER----------------- Is saving and the source of demand for loanable funds is investment Economist equate money with ---------CORRECT ANSWER-----------------Assets people use regularly to buy goods and services Dollar bills, Paintings and emerald necklaces are ---------CORRECT ANSWER---------- -------Stores of value An Open market purchase ---------CORRECT ANSWER-----------------Increase the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public The Fed Reserve ---------CORRECT ANSWER-----------------Is responsible for conduction the nations monetary policy and it plays a role in regulating banks
An economic expansion is caused by a shift in aggregate demand causes prices to ---------CORRECT ANSWER-----------------Rise in the short run and rise even more in the long run Which of the following would cause prices and real GDP to rise in the short run --- ------CORRECT ANSWER-----------------Aggregate demand shifts right In the short run an increase in the costs of production makes ---------CORRECT ANSWER-----------------Output fall and prices rise Which of the following shifts aggregate demand to the left ---------CORRECT ANSWER-----------------Stock prices fall for some reason other than a change in the price level Monetary policy is determined by ---------CORRECT ANSWER-----------------The federal reserve and involves changing money supply Fiscal policy is determined by ---------CORRECT ANSWER-----------------The president and congress and involves changing gov spending and taxation
People choose to hold a larger quantity of money if ---------CORRECT ANSWER------ -----------The interest rate falls,which causes the opportunity cost of holding money to fall Which of the following events would shift money demand to the right --------- CORRECT ANSWER-----------------an increase in the price level When the Fed decreases the money supply we expect ---------CORRECT ANSWER--- --------------interest rates to rise and stock prices to fall An increase in gov purchases will ---------CORRECT ANSWER-----------------Shift aggregate demand to the right Suppose the MPS is 0. In the gov increases its spending by 30 billion How much does the aggregated demand shift to the right? If taxes decrease by 30 billion How far does aggregate demand shift to the right? ---------CORRECT ANSWER------- ----------300 Billion and 270 billion
The law of the demand states that if price rises, quantity demanded does what? -- -------CORRECT ANSWER-----------------Decreases We would expect demand for cars to increase if... ---------CORRECT ANSWER-------- ---------The price of gasoline falls. As income increases, consumers purchase more cars. Cars what type of good? ----- ----CORRECT ANSWER-----------------Normal goods Supply curves show the relationship between price and quantity demanded. Assuming the law of supply holds, supply curves are what? ---------CORRECT ANSWER-----------------Upward sloping Which causes a leftward shift in the supply curve for apples? ---------CORRECT ANSWER-----------------An increase in the price of labor An increase in the equilibrium price of coffee could be caused by ---------CORRECT ANSWER-----------------A decrease in supply of coffee.
What is Consumer surplus? ---------CORRECT ANSWER-----------------The amount a buyer is willing to pay for a good less the amount the buyer actually pays. When is a market is efficient? ---------CORRECT ANSWER-----------------The sum of consumer and producer surplus is maximized. What is Producer surplus? ---------CORRECT ANSWER-----------------The difference between the price producers collect and the minimum price required to bring goods to market. Rent control is an example of what? ---------CORRECT ANSWER-----------------A price ceiling A price ceiling on a coffee would likely cause what? ---------CORRECT ANSWER------ -----------A shortage of coffee What is minimum wage an example of? ---------CORRECT ANSWER-----------------A price floor In the labor market, suppliers of labor are ---------CORRECT ANSWER----------------- Households
What does GDP include? ---------CORRECT ANSWER-----------------Government purchases of equipment used to build roads. What measure of GDP is adjusted for changing prices? ---------CORRECT ANSWER-- ---------------Real GDP What is the Real Interest Rate? ---------CORRECT ANSWER-----------------The nominal interest rate minus the inflation rate. The inflation rate is measured as ---------CORRECT ANSWER-----------------The percent change in a price index from one year to the next. What is true about the CPI? ---------CORRECT ANSWER-----------------The goods included in the CPI ''basket'' are fixed over time. If the economy is assumed to be closed than what? ---------CORRECT ANSWER------ -----------net exports = 0
What is Public Saving? ---------CORRECT ANSWER-----------------Tax revenue plus government expenditures A budget surplus occurs when what happens? ---------CORRECT ANSWER------------- ----Tax revenue exceeds government expenditures. What is the primary driver of economic growth? ---------CORRECT ANSWER---------- -------Productivity What is a measure of productivity? ---------CORRECT ANSWER-----------------Real GDP per worker T/F: Over the past 100 years, all economies have grown at roughly the same rate. ---------CORRECT ANSWER-----------------FALSE What would most likely lead to a decrease in the quantity of capital per worker in the long-run? ---------CORRECT ANSWER-----------------A decrease in the share of income saved by households.
