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Macroeconomics 210 Midterm Review Flashcards | StudBud
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Macroeconomics 210 Midterm Review
Macroeconomics 210 Midterm Review
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#Macro #210 #College
Flashcards
114 cards
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Practice quiz
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Questions
114
Answers
1
Which of the following is
NOT
true about exclusions to GDP?
Unreported underground market transactions are not recorded
Intermediate goods are not included in GDP
Cash values of financial instruments not included in GDP
Nonreported, under the table, cash payments not counted
2
Which type of good is most likely to be provided by the government?
Goods produced by private firms
Private Good
Public Good
Publicly held private good
3
Which of the following correctly defines the definition of Marginal?
In incremental change resulting in the Stock Market Crash
The amount of money in a certain area
An incremental change resulting in the PPF shifting forward
An incremental change resulting in buying one unit of sth
4
What is the most common form of ownership in the United States?
Geico
Partnership
Sole Proprietorship
Corporation
5
What effect does an increase in total output of both goods have on the PPF?
It shifts the PPF outward
It has no effect on the position of the PPF
It has no effect on the position of the PPF
It shifts the PPF downward
6
Which of the following is correct about disposable income?
Calculated by dividing GDP by Per Capita Income
Income remaining after taxes are excluded & payments added
Left over after taxes and debt is added to GDP
7
Which of the following is
NOT
included in GDP?
Goods sold to producers as input into making a final good.
Real estate.
Planes, trains and automobiles.
Refined goods.
8
Which of the following is
NOT
true? (> less than and < more than)
Both can be resolved by changing to the equilibrium price
A shortage when quantity demanded is = quantity supplied.
A shortage when quantity demanded > the quantity supplied
A surplus when the quantity demanded is > quantity supplied.
9
What does an increase in the economy's ability to produce goods and services do?
Shift the PPF outward
The PPF remains constant
Shift the PPF inward
10
What is Capital Deepening?
Holding large amounts low return & highly safe instruments
Increase in the quantity of capital available to each worker
When investors focus more than 75% of total funds in a stock
11
Intermediate goods are not counted in the GDP
False
True
12
A change in the price of a good changes what?
MUST KNOW
Demand
Quantity supplied
Quantity demanded
Supply
13
Total Population=400.People working=80. People not working =20 Calculate the Unemployment Rate.
100+80/(400-100)= 45%
20/(80+20)= 20%
20/(400-100)= 7.5%
100/400=25%
14
What is frictional unemployment?
Occurs because job seekers & employers need time to connect
Many workers lack the skills demanded by employers
Associated with economic contractions and recessions.
15
Which of the following is
NOT
included in GDP?
Equipment purchased by consumers.
Gas and oil.
Tools sold to consumer to use at home.
Tools sold to manufacturer to produce final goods.
16
The CPI overstates the true level of inflation.
False
True
17
This type of inflation occurs when Aggregate Supply contracts & Aggregate Demand holds steady
Cost push
Nominal inflation
Cost pull
18
If an rise in price of Good A causes an rise in demand for Good B, then they are substitutes.
False
True
19
Which of the following will
NOT
change the supply of lead pencils?
The cost of wood.
The price of pencils.
The cost of production of pencils.
The cost of lead.
20
Refers to government choosing the industries of the future - special taxes and subsidies
Industrial Policy
Government policy
Whole Term Policy
Full term policy
21
Which of the following is true about Public Goods?
Nonpayers cannot be excluded
Rival and Exclusive
Produced by a sector and firm
The amount consumed by one part is not available to others
22
Which of the following is
NOT
true about price floors?
Price floors result in a surplus
Price floors result in shortages, which hurts producers.
Minimum wage is a price floor
Price floors mandated by government on behalf of producers.
23
What's true about the top 1% of income earners?
They pay over 1/3 of all tax revenues
They pay 1% of all incomes taxes.
They pay less in taxes than the bottom 1% of wage earners.
They pay the same amount of taxes as their secretaries.
24
Unemployment Rate calculated by dividing those unemployed but seeking work by total labor force
False
True
25
What is the effect of greater spending on gov. and private sector Research & living standards?
Improvements in quality of capital - rises living standards
R&D spending lowers productivity - lowers living standards
No significant effect
26
Price ceilings benefit all consumers
True
False
27
What
public
goods should government provide?
Rival and exclusive
Non-rival and non-exclusive
28
Which of the following is
NOT
true about Gross Domestic Product (GDP)?
GDP is the market value of all FINAL goods and services
Average median income per medianiated household.
Real GDP is GDP after removing the effects of price changes.
Measures the value of a country's prod. of goods & services.
29
A measure on the cost of a fixed basket of goods and services
CPI
MCP
GDP
PPF
30
Which of the following is
NOT
true? Read Carefully.
Demand only changes when all quantities demanded change
Increase in the price decreases quantity demanded
Decrease in the price increases quantity demanded
Change in the price will change the demand (shift the curve)
31
What measure is determined by the intersection of Aggregate Demand and Aggregate Supply?
Price Level
National Output
NPP
GDP
32
John is choosing between a concert, buying jeans, & a basketball. What is his opportunity cost?
The difference between the concert and the jeans
The basketball
Jeans
Going to the concert
33
Which of the following is
NOT
true about Aggregate Demand? (Rel. = Relationship)
Rel. between the econ's price level and quantity demanded
Increase in price of walnuts will lower demand for walnuts
34
What causes the quantity supplied of a good to rise?
Increase in input costs for that good.
Increase in consumer preference for that good.
Increase in the market price of the good.
Decrease in input costs for that good.
35
Bob can make 2 pizzas & Tom can make 5 pizzas and fries. Who has the comparative advantage?
Tom
Bob
36
Which is true about the partnership form of business organization?
Formed by subsidiaries of preferred stock companies
Partnerships are the least common business form
Most common business form
Generate over 90% of all proprietary revenue
37
Positive economic statements...
Are always a good thing
Are someone's opinion
Are not always true
Can be proven true or false with facts and statistics
38
Results from changes in tastes, technology and taxes. Actually a sign of a healthy economy.
Divisional
Structural
Fractional
Seasonal
39
Which of the following strategies is most likely to boost productivity in an automobile plant?
More advanced robots, equipment, and tools.
Greater enforcement of time-off policies.
More visits by the CEO.
A 10% pay raise.
40
Which of the following is
NOT
an example of Capital?
Physical assets
An incremental change
Machines
Factories
41
Which of the following is correct about Aggregate Expenditure? (4 components?)
Cons., net taxes, investment, gov. borrowing & net revenues.
Revenues, investment, government spending and net deficits
Consumption, investment, government spending & net exports
Consumption, taxes, government spending and net revenue
42
What is stagflation?
Unemployment falls and inflation rises
Unemployment and inflation both fall
Unemployment rises and inflation falls
Unemployment and inflation both rise
43
What is
NOT
true about Micro and Macroeconomics?
Macro looks at the entire economy, not at individual markets
Micro studies the phenomenon of individual choice in markets
Micro how prices and quantities sold are determ. in markets
44
Which of the following is
NOT
included in Gross Domestic Product of the United States?
New homes.
Goods built with robots.
Cars built in South Korea by Ford and General Motors.
Cars built in United States by Toyota, Nissan and BMW.
45
Private Goods are when sellers have the right to exclude those who don't pay
False
True
46
Even if resources are constant, technology always makes a PPF shift in an increase (outwards)
False
True
47
Which is
NOT
true about quotas and tariffs?
Benefit self interested producers who lobby the government
A quota is the limit of the goods imported or exported
A quota is one fourth of a dollar
A tariff is a tax placed on imports
48
Which of the following is correct about U.S. Gross Domestic Product?
Includes value of Japanese cars made in the United States.
Includes GDP of all foreign countries.
Excludes value of Japanese production in U.S.
49
Which of the following statements is
NOT
true about the PPF?
To produce more of one good, one good has to be sacrificed
Anything between the x and y axis is not attainable
An increase in economic growth causes a shift outward
A straight line represents constant opportunity costs
50
Which of the following is
NOT
correct about the Labor Force? (In. = included)
Parent who chooses to stay home to care for children not in.
Does NOT include adults who are not actively seeking a job
Refers to adults who are either working or seeking work.
Includes every adult that can read and should be working.
51
Most responsible for increasing labor productivity- attitude and devotion of the average worker
True
False
52
Cost Push inflation is caused by increases in prices of...
Most consumer goods
Tariffs
Increase of consumer income
Materials in firms
53
The market value of all FINAL goods and services produced within the borders of a country
Gross Average Output
National Output Production
Gross Domestic Product
Refined Domestic Output
54
Aggregate Demand will fall if.. (imp. = imports exp. = exports)
Consumption, investment, and gov. holds steady (imp. > exp.)
:/
Consumption, investment, and gov. holds steady (exp. > imp.)
55
What causes a decrease in the quantity demanded of a good?
Decline in preference for the good by all buyers.
A increase in the price of the good.
A change in consumer income of massive proportions.
Lack of preference for that good by most high income buyers.
56
If opportunity costs were constant, the PPF would be a straight line.
False
True
57
What accounts for higher wage rates in the US as compared to a very undeveloped country?
Capital Deepening.
Worker willingness to work long and hard hours.
Real Interest Rates.
Better worker attitudes.
58
The bowed shape of the PPF indicates the cost as an increment of the capital.
True
False
59
An increase in the price of a product will decrease the demand for the product.
True
False
60
Which of the following is
NOT
true about factors that change the equilibrium price?
Supply constant & demand rises , the eq. price rises
Both supply & demand rises, certain that the eq. price rises
Supply constant & income rises, the eq. price will rise.
If demand is constant & supply lowers, eq. price rises.
61
Which of the following is the
BEST
example of Industrial Policy?
Japanese company - multinational loans finance car factories
Congress passes legislation to provide loans to new firms
American firm low interest loans-doubling oversea railcars
62
The person/country with comparative analysis should specialize in making that good.
Product Markets
The PPF curve
Specialization
The Law of Comparative Advantage
63
The term "full employment" means..
Everyone over 16 is working full time
Everyone ages 25-65 is working full time
No one needs a job
No cyclical unemployment even with other unemployment types
64
Unemployment Rate is calculated by dividing number of people employed by total adults over 16.
False
True
65
Half of the value of total Intermediate Goods included in GDP because most not resold
False
True
66
For economists, the term "full employment" means that all able bodied adults are employed.
True
False
67
Which is Rival and Exclusive?
Private Goods
Public Goods
68
A shortage exists when the quantity demanded is just equal to the quantity supplied.
False
True
69
Normative analysis..
Can be proven true or false with facts and statistics
Aims to discover how the economy works
Is someone's opinion
70
Which of the following is NOT included in GDP?
Lumber sold to furniture maker.
Nails sold to individual to build a playhouse.
Lumber sold to homeowner to make a dog house.
Final goods sold to consumers.
71
In which direction does the supply curve shift when there is an increase in supply?
Downward to the right.
North by Northwest
Upward to the left.
The supply curve does not shift when supply increases.
72
Which component of Aggregate Expenditures comprises over 70% of Aggregate Expenditures?
Investment
Net exports
Consumption
Government
73
What goods should the government provide?
Rival and exclusive
Non-rival and non-exclusive.
74
This type of inflation results when aggregate demand is increasing faster than supply.
Hyperinflation
Demand push
Supply push pull
Demand pull
75
The CPI measures changes over time in the price of a collection of commonly purchased items
False
True
76
Which of the following is
NOT
correct about GDP per capita? (PC = per capita)
If population grows faster than output PC will rise.
PC is calculated by dividing GDP by the population.
If output grows faster than population, PC will increase.
If population grows faster than output, GDP PC will fall.
77
Which is valued by society unlikely produced by a private sector or firm?
Public Goods
Private Goods
78
Calculated by subtracting the inflation rate from the nominal interest rate
Real interest rate
GDP
CPI
MPC
79
The lower the opportunity cost you have, the more advantage you have
False
True
80
Difference in labor productivity and wage rates between two sets of road building workers?
Better attitudes.
More dedicated American workers who work for 10-12 hours
Harder working Americans.
Quality and extend of productive capital.
81
Which of the following is
NOT
true about what changes demand?
An increase in the price of a product will decrease demand
A change in consumer preferences and tastes
Changes in the prices of substitutes or complements
A change in income changes demand.
82
Demand pull inflation results when aggregate demand is increasing faster than supply
True
False
83
Which shows the total value of all output supplied in relation to the price level?
Gross National Output Production
Gross Domestic Production
Aggregate Supply
National Output
84
The CPI is an alternative measure of GDP
False
True
85
The unemployment rate is the percent of the labor force that is actively seeking work.
False
True
86
Which of the following is
NOT
true?
Price Ceiling-max price that's set less than the eq. price
Price Floor-Gov. makes market price lower than the eq. price
Price Floor-gov set price above eq. price which = surplus
87
Cost Push inflation is caused by increases in prices of major inputs used in production.
False
True
88
What resource is most responsible for increasing labor productivity?
Payroll
Labor
Natural resources
Capital
89
Points inside the PPF curve are..
Not possible with the given resources
Attainable but inefficient
90
Which of the following is an example of opportunity cost?
Buying a toy instead of getting your mom a present
Buying a ladder to fix the leaky roof instead of a blender
Buying a video game instead of a school textbook
Buying a 10,000 chicken nuggets instead of paying your bills
91
Labor is the most common resource and is 70% of total production costs.
True
False
Labor is the least common resource
92
A change in the market price will change the supply of that good
True
False
93
What is structural unemployment?
Many workers lack the skills demanded by employers
Occurs because job seekers & employers need time to connect
Associated with economic contractions and recessions.
94
Which of the following correctly lists the components of Aggregate Expenditure?
Important.
Consumption, GDP, Aggregate Demand and Investment
Consumption, Investment, GDP and Output
Consumption, Investment, Government and Exports
Consumption, Investment, Government and Net Exports
95
The economy is growing & people are more likely to switch to a job that fits their skills.
Seasonal
Structural Dynamic
Frictional
Occasional
96
How does the PPF reflect the Law of Increasing Opportunity Costs?
The PPF curve moves whenever there is a demand
Makes less capital goods
The PPF curve does not move whenever there is a demand
Makes more capital goods
97
What factors contribute to
productivity
?
Anything to improve the capital
Anything resulting in a leftward shift of the PPF
Not a vocabulary word
98
Which of the following is correct about Consumption?
Important.
Always less than gov. because spending can't exceed revenues
Makes up 25% of GDP
Largest category in GDP, more than 2/3 over the last decade
Has never exceeded 50% of GDP
99
Which of the following is
NOT
true about leading economic indicators?
Economic indicators predict near future economic conditions.
Include changes in business investment and big purchases
Say when recession starts, within 30 days
Reduction in stock market prices usually predicts recession.
100
Which is a result of Specialization?
An increase in productivity and output
Workers feel under appreciated and are forced to make goods
A decrease in productivity and output
101
The use of gov. subsidized loans, gov. grants, or other gov. -- IPO
Industrial policy
Quotas
PPF
Price level
102
What's
NOT
correct about how tariffs impact consumers and domestic producers?
Consumers benefit bc they are able to buy cheap imports
Consumers do not benefit because imports are too expensive
103
Which type of unemployment is associated with contractions and recessions?
Structural
Seasonal
Frictional
Cyclical
104
What is the difference between the data in the Supply Schedule of a good and its Supply Curve?
Supply curve always much greater than the supply schedule.
Supply schedule has less at each price in the supply curve.
There is no difference.
Supply schedule has more at each price in the supply curve.
105
Which of the following describes a Resource Market?
Consumers buy goods and services
Firms buy goods and services offered here
Final goods and services are produced here
Firms buy labor, capital, and natural resources
106
A normal good is one in which its demand DECREASES as consumer income increases.
False
True
107
Who is the buyer in Resource Markets?
Consumers
Firms
108
What is opportunity cost?
MUST KNOW
The best alternative given up to buy something else
The opportunity to get to a buy one get one free sale first
The amount of money spent on unimportant things
Tariffs on imported goods
109
Points outside of the PPF curve are...
Attainable but inefficient
Not attainable
110
If the Nominal Interest Rate is 5% and Inflation is 6%, what is the Real Interest Rate?
11%
1%
6% (Six percent)
-1% (Negative 1 percent)
111
Countries with lower capital per worker achieve higher labor productivity rates.
True
False
Higher capital per worker
Lower productivity rates
112
Which are of the following does NOT contribute to understating the true level of unemployment?
Counting part time workers as fully employed
Counting people over 16 who don't have a job but seeking job
People working 20 hours per week not counted as unemployed
Not counting discouraged workers as unemployed
113
Which of the following is false? (Nom. = Nominal and Inf. = inflation)
Real Interest Rate the stated interest rate for inflation
Real Interest Rate stated at the bottom of declaration pages
Nom. Interest Rate 10%, Inf. Rate 4%, Real Interest Rate 6%
114
Which of the following is
NOT
correct?
Supply schedule shows the same data as the supply curve
Demand schedules are table forms of the demand curve data
Change in price changes demand schedule but not demand curve
Demand schedule has the same data as the demand curve
