The marginal benefit Sabrina gets from purchasing a third pair of gloves is...

total benefit of three gloves minus the total benefit of two glove pairs

The principle of monetary neutrality implies that an increase in the money supply will increase

the price level, but not real GDP

Which of the following statements about the term of a bond is correct?

Long-term bond interest rates are usually higher than on short-term bonds

Which of the following statements regarding the Federal Open Market Committee is correct?

All regional Fed presidents attend the meetings, but only five get to vote

For any given year, the CPI is the price of the basket of goods and services in the

given year divided by the price of the basket in the base year, x 100

The unemployment rate is computed as the number of unemployed

divided by the labor force, all times 100

Suppose the U.S. offered a tax credit for firms that built new factories in the U.S. Then the

demand for loanable funds would shift rightward, creating a shortage

In the actual economy, households

divide their income among spending, taxes, and saving

When small changes in price lead to infinite changes in quantity demanded, demand is perfectly

elastic, and the demand curve will be horizontal

Year 2 real GDP=561 billion, population=2.2 million. Year 1 real GDP=500 billion population=2 million

the growth rate of real GDP per person was 2%

The consumer price index is used to

monitor changes in the cost of living over time

When a minimum-wage law forces the wage to remain above the equilibrium level, the result is

a surplus of labor and a shortage of jobs

Collective bargaining refers to

firms colluding to set the wages of employees below equilibrium

In the CPI, goods and services are weighted according to

how much consumers buy of each good or service

Jackie, a Canadian citizen, works only in the United States. The value of the output she produces is

included in U.S. GDP, but it is not included in U.S. GNP

When the government implements programs such as progressive income tax rates, which of the following is likely to occur?

Equality is increased and efficiency is decreased

A couple withdraw $2,500 from savings to purchase $2,500 of traveler's checks. As a result of these changes...

M1 increases by $2,500 and M2 stays the same

If your firm's production function has constant returns, then if you double all your inputs, your firm's output will

double but productivity will not change

If Miguel expects to earn a higher income next month, he may choose to

save less now and spend more of his current income on goods and services

Other things the same, which of the following would increase productivity?

An increase in either human or physical capital

What could explain an increase in equilibrium interest rate and a decrease in equilibrium quantity of loanable funds?

The supply of loanable funds shifted left

In the 1970s, prices rose by 7.8% per year and real GDP increased. Velocity=constant. Use quantity equation. We conclude

money growth must have been greater than the growth of real income

Productivity is the amount of goods and services

produced for each hour of a worker's time linked to nations economic policy

The price elasticity of supply measures how much

the quantity supplied responds to changes in the price of the good

The inflation rate is defined as the

percentage change in the price level from the previous period

Which of the following events could cause an increase in the supply of ceiling fans?

The number of sellers of ceiling fans increases

the resources that owners have put into the bank

studbud

Macroeconomics Final

120 termsStudBud Administration7 plays

College level intro to Macroeconomics

Flashcards120 cardsFPractice quizPHost liveL

Questions 120

Answers

1
The income that households and noncorporate businesses receive is called
disposable personal income
personal income
net national product
national income
2
The marginal benefit Sabrina gets from purchasing a third pair of gloves is...
total benefit of four glove pair minus total benefit of three glove pairs
total benefit of three gloves minus the total benefit of two glove pairs
the same as total benefit she gets from purchasing three pairs of gloves
more than the marginal cost of purchasing the third pair of gloves
3
An increase in the marginal cost of an activity means that people will no longer engage in any of that activity
True
False
4
Unemployment because it takes time for workers to search for the jobs that best suit their tastes and skills is called
cyclical unemployment
frictional unemployment
structural unemployment
the natural rate of unemployment
5
The principle of monetary neutrality implies that an increase in the money supply will increase
the price level, but not real GDP
neither the price level nor real GDP
real GDP, but not the price level
real GDP and the price level
6
Classical Dichotomy nominal variables=heavily influenced by money Q and money=irrelevant to understanding real variables
False
True
7
U.S. Treasury bills aren't included in M1 or M2
True
False
8
The equipment and structures available to produce goods and services are called
physical capital
technology
the production function.
human capital
9
Real GDP per person of Olympus was 4,250. The year before it was 4,100. What percentage did GDP per person grow?
2.5%
4.3%
1.6%
3.7%
10
Which of the following statements about the term of a bond is correct?
Term refers to characteristics of a bond including rate and tax treatment
It is determined entirely by sales commission the buyer of the bond paid
Long-term bond interest rates are usually higher than on short-term bonds
The term of a bond is determined entirely by its credit risk
11
Which of the following statements regarding the Federal Open Market Committee is correct?
Regional Fed presidents may neither attend nor vote the meetings
All regional Fed presidents attend the meetings, but only five get to vote
All regional Fed presidents attend and vote at the meeting
Only the five voting regional Fed presidents attend the meetings
12
For any given year, the CPI is the price of the basket of goods and services in the
previous year divided by the price of the basket in the given year, x 100
given year divided by the price of the basket in the base year, x 100
base year divided by the price of the basket in the given year, x 100
given year divided by the price of the basket in the previous year, x 100
13
In a system of 100-percent-reserve banking, banks influence the supply of money
True
False
14
The unemployment rate is computed as the number of unemployed
divided by the labor force, all times 100
divided by the number of employed, all times 100
divided by the adult population, all times 100
times the labor-force participation rate, all times 100
15
The Bureau of Labor Statistics produces data on unemployment, types of employment, length of average workweek, and more
True
False
16
Suppose the U.S. offered a tax credit for firms that built new factories in the U.S. Then the
demand for loanable funds would shift rightward, creating a surplus
supply of loanable funds would shift rightward, creating a shortage
demand for loanable funds would shift rightward, creating a shortage
supply of loanable funds would shift rightward, creating a surplus
17
In the actual economy, households
divide their income among spending, taxes, and saving
buy all goods and services produced in the economy.
spend all of their income
save all of their income
18
A decrease in the price of pizza will shift the supply curve for pizza to the left.
True
False
19
Which of the following best represents fiat money?
Monopoly Money
The euro
Baseball cards
The gold bar
20
When small changes in price lead to infinite changes in quantity demanded, demand is perfectly
inelastic, and the demand curve will be horizontal
elastic, and the demand curve will be horizontal
inelastic, and the demand curve will be vertical.
elastic, and the demand curve will be vertical
21
Year 2 real GDP=561 billion, population=2.2 million. Year 1 real GDP=500 billion population=2 million
the growth rate of real GDP per person was 4%
the growth rate of real GDP per person was 10%
the growth rate of real GDP per person was 12%
the growth rate of real GDP per person was 2%
22
The consumer price index is used to
monitor changes in the cost of living over time
monitor changes in the stock market
monitor changes in the level of real GDP over time
monitor changes in the level of wholesale prices in the economy
23
When a minimum-wage law forces the wage to remain above the equilibrium level, the result is
a surplus of labor and a shortage of jobs
a shortage of labor and a surplus of jobs
both surplus of labor and a surplus of jobs
both a shortage of labor and a shortage of jobs
24
When a relevant variable that is not named on either axis changes,
the curve is unaffected since only variables on the axis affect the curve
the curve will rotate clockwise
The curve will shift
there will be a movement along the curve
25
A marginal change is a small incremental adjustment to an existing plan of action.
False
True
26
Collective bargaining refers to
firms colluding to set the wages of employees below equilibrium
setting the same wage for all employees to prevent conflict among workers
the process where the government sets exemptions from the minimum wage law
the process by which unions and firms agree on the terms of employment
27
In the CPI, goods and services are weighted according to
how much consumers buy of each good or service
the extent to which the government regards a good or service as a necessity
the number of firms that produce and sell each good or service
how long a market has existed for each good or service
28
Jackie, a Canadian citizen, works only in the United States. The value of the output she produces is
ncluded in both U.S. GDP and U.S. GNP
included in neither U.S. GDP nor U.S. GNP
included in U.S. GDP, but it is not included in U.S. GNP
included in U.S. GNP, but it is not included in U.S. GDP
29
If a decrease in income increases the demand for a good, then the good is
an inferior good
a complementary good
a substitute good
a normal good
30
When opening a print shop you need to buy printers, computers, furniture, and similar items. These expenditures are
business consumption expenditures
personal saving
investment in human capital
capital investment
31
When the government implements programs such as progressive income tax rates, which of the following is likely to occur?
Equality is increased and efficiency is increased
Equality is decreased and efficiency is decreased
Equality is decreased and efficiency is increase
Equality is increased and efficiency is decreased
32
A barber gives a plumber a haircut in exchange for the plumber fixing the barber's leaky faucet. This is a Barter.
True
False
33
A couple withdraw $2,500 from savings to purchase $2,500 of traveler's checks. As a result of these changes...
M1 increases by $2,500 and M2 decreases by $2,500
M1 and M2 stay the same
M1 increases by $2,500 and M2 stays the same
M1 decreases by $2,500 and M2 increases by $2,500
34
Assumptions can simplify the complex world and make it easier to understand
True
False
35
The nominal interest rate is 6 percent and the real interest rate is 2.5 percent. What is the inflation rate?
2.4%
3.9%
2.6%
3.5%
36
Macroeconomic statistics tell us about a particular household, firm, or market
True
False
37
If your firm's production function has constant returns, then if you double all your inputs, your firm's output will
more than double but productivity will not change
double but productivity will not change
more than double and productivity will rise
double and productivity will rise
38
The adage, "There ain't no such thing as a free lunch," means
the cost of living is always increasing.
even people on welfare have to pay for food.
All costs are included in the price of a product.
people face tradeoffs.
39
The natural rate of unemployment includes
frictional unemployment
structural unemployment
Both
Neither
40
If Miguel expects to earn a higher income next month, he may choose to
move along his current demand curves for goods and services
save more now and spend less of his current income on goods and services
decrease his current demand for goods and services
save less now and spend more of his current income on goods and services
41
Other things the same, which of the following would increase productivity?
An increase in either human or physical capital
Neither an increase in human capital nor an increase in physical capital
An increase in physical capital but not an increase in human capital
An increase in human capital but not an increase in physical capital
42
Cyclical unemployment refers to short-run fluctuations around the natural rate of unemployment
True
False
43
What could explain an increase in equilibrium interest rate and a decrease in equilibrium quantity of loanable funds?
The demand for loanable funds shifted left
The supply of loanable funds shifted right
The supply of loanable funds shifted left
The demand for loanable funds shifted right
44
In the 1970s, prices rose by 7.8% per year and real GDP increased. Velocity=constant. Use quantity equation. We conclude
prices fell during the 1970s
money growth must have been less than the growth of real income
Output fell during the 1970s
money growth must have been greater than the growth of real income
45
Productivity is the amount of goods and services
an economy produces. It is not linked to a nation's economic policies.
an economy produces. It is linked to a nation's economic policies.
produced for each hour workers time, not linked to nation's economic policy
produced for each hour of a worker's time linked to nations economic policy
46
The price elasticity of supply measures how much
sellers respond to changes in technology.
the quantity supplied responds to changes in the price of the good
the price of the good responds to changes in supply
the quantity supplied responds to changes in input prices
47
The inflation rate is defined as the
rice level in an economy
change in the price level from one period to the next
percentage change in the price level from the previous period
price level minus the price level from the previous period
48
If the consumer price index was 96 in Year 1, 100 in Year 2, and 102 in Year 3, then the base year must be
Year 2
Base Year cannot be determined from the given information
Year 3
Year 1
49
Which of the following events could cause an increase in the supply of ceiling fans?
There is an increase in price of air conditioners and fans are a substitute
The average temperature rises over time
The number of sellers of ceiling fans increases
There is an increase in the price of the motor that powers ceiling fans
50
Bank Capital is
the reserves of the bank
the resources that owners have put into the bank
the machinery, structures, and equipment of the bank
the bank's total assets
51
The price of a stock will rise if the
supply of the stock rises
demand for the stock falls
demand for the stock rises
managers of a stock exchange decide the price should be higher
52
Which of the following is not a characteristic of a perfectly competitive market?
Different sellers sell identical products
Sellers must accept the price the market determines
There is no free entry or exit
There are many sellers.
53
The existence of money leads to
a higher standard of living, but not to greater specialization
greater specialization in production but not to a higher standard of living
Neither
Both
54
The price level is a real variable.
False
True
55
Market failure refers to a situation in which the market does not allocate resources efficiently.
True
False
56
You drive 800 miles on a vacation, an attraction is 15 miles further. What is the cost of visiting the attraction?
neither the cost of driving the first 800 miles nor the next 15 miles.
the cost of driving the next 15 miles, but not the first 800 miles.
both the cost of driving the first 800 miles and the next 15 miles.
the cost of driving the first 800 miles, but not the cost of next 15 miles.
57
Gwen is an unpaid worker in her family's restaurant. The Bureau of Labor Statistics counts Gwen as
a discouraged worker
employed and in the labor force
a marginally attached worker
unemployed and in the labor force
58
An understanding of the best ways to produce goods and services is called
productivity
physical capital
human capital
technology
59
Assume that a 4% income increase results in a 2% increase in Qd. The income elasticity of demand for the good is
positive, and the good is a normal good
negative, and the good is a normal good
negative, and the good is an inferior good
positive, and the good is an inferior good
60
Which of the following is the correct formula for calculating the consumer price index?
(price basket of goods and services: current year/price in base year)× 100
(pricebasket of goods and services: base year/price in current year) x 100
[(CPI in Year 1 − CPI in Year 2)/CPI in Year 2] × 100
[(basket: current year − basket price: base year)/price: base year] x 100
61
The higher cost of a diamond compared to a cup of water (a necessity) is an example of irrational behavior.
True
False
62
An increase in the minimum wage above the equilibrium wage
reduces structural unemployment
reduces frictional unemployment
increases frictional unemployment
increases structural unemployment
63
If the real interest rate is 6% and the price level is falling at a rate of 2%, what is the nominal interest rate?
6%
4%
8%
2%
64
The Federal Reserve has 12 regional banks. The Board of Governors has up to 7 members who serve 14-year terms.
True
False
65
Economists make assumptions to...
minimize the likelihood that some of the problem is being overlooked
mimic the methodologies employed by other scientists
minimize the number of experiments that yield no useful data
focus their thinking on the essence of the problem at hand.
66
Changes in information technology and unemployment insurance reduce unemployment. Which affects frictional unemployment?
Neither changes in information technology nor in unemployment insurance
Both the changes in information technology and unemployment insurance
Only the changes in unemployment insurance
Only the changes in information technology
67
Suppose that demand for a good increases and supply of the good decreases. What would happen in the market for the good?
Equilibrium price increases and impact on equilibrium quantity is ambiguous
Equilibrium price decreases and impact on equilibrium quantity is ambiguous
Equilibrium quantity decreases, impact on equilibrium quantity is ambiguous
Equilibrium quantity increases, impact on equilibrium quantity is ambiguous
68
The price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price.
True
False
69
Year 1=base. Year 1=basket's cost was $50; Year 2=basket's cost was $52; Year 3=basket's cost was $55. Year 3 CPI value?
90.9
110
105
104
70
Which of the following would not increase in response to a decrease in the price of ironing boards?
The quantity of irons demanded at each possible price of irons
The quantity of irons supplied at each possible price of irons
The equilibrium price of irons
The equilibrium quantity of irons
71
Since economists cannot use natural experiments offered by history, they must use laboratory experiments instead
False
True
72
Goods with close substitutes tend to have more elastic demands than do goods without close substitutes
True
False
73
Productivity is defined as the quantity of goods and services produced from each unit of labor input
True
False
74
Which of the following is an example of an efficiency wage?
A high wage paid to a college grad for a high-skill job
A wage below the minimum wage but supplemented by customer tips
An above-equilibrium wage offered to attract a more talented applicant pool
A high wage paid to compensate for dangerous work such as coal mining
75
Sectoral shifts in demand for output
do not affect demand for labor
increase unemployment due to job search
immediately reduce unemployment
create structural unemployment
76
When conducting an open-market purchase, the Fed
sells government bonds, and in so doing increases the money supply
buys government bonds, and in so doing increases the money supply
buys government bonds, and in so doing decreases the money supply
sells government bonds, and in so doing decreases the money supply
77
Chloe's college raises the cost of room and board. This increase raises Chloe's opportunity cost of attending college...
If she would pay more for room and board by not attending her college
only if the amount she would to pay for room and board outside was constant
78
If an economy's GDP falls, then it must be the case that the economy's
income and expenditure both fall
income and saving both fall
income falls and expenditure rises
income falls and saving rises.
79
The natural rate of unemployment is constant over time.
False
True
80
Mina spends 3 hours working overtime rather than going to the park with friends. Her opportunity cost of working is...
The money minus enjoyment she would have received from going to the park
nothing since she gets less enjoyment from the park than money from working
The enjoyment she would have received had she gone to the park
The money she earns working
81
Elena has 4 options on which to spend her $100 dollars, options A-D. She picks B what is the decision's opportunity cost
The value to Elena of Options A, C, and D combined
$100
The value to Elena of the option chosen had Option B not been available
The average of the values to Elena of Options A, C, and D
82
The Federal Reserve increases the interest rate on bank deposits, so banks hold more reserves, the reserve ratio rises
False
True
83
Duties of the Council of Economic Advisers include
advising the president and writing annual Economic Report of the President
implementing the president's tax policies
managing of the nation's money supply
managing the Social Security program
84
Inflation measures the increase in the quantity of goods and services produced from each hour of a worker’s time.
False
True
85
Which of the following is not correct?
In an ideal labor market, wages would ensure all workers are fully employed
Most people who become unemployed will soon find jobs
some workers have no jobs, even when the overall economy is doing well
The unemployment rate occasionally falls to zero
86
An increase in the overall level of prices in an economy is referred to as...
the substitution effect
inflation
the income effect
deflation
87
The scientific method is the dispassionate development and testing of theories about how the world works
False
True
88
An increase in the government's budget surplus means public saving is
negative and increasing
negative and decreasing
positive and decreasing
positive and increasing
89
The economy's two most important financial markets are
financial markets and financial institutions
banks and the stock market
the bond market and the stock market
the investment market and the saving market
90
The amount of unemployment varies
little over time and across countries
substantially over time and across countries
91
The economy of Mainland uses gold as its money. If the government discovers a large reserve of gold on their land the
demand for money increases, the value of money rises, and prices rise
demand for money decreases, the value of money falls, and prices fall
supply of money decreases, the value of money rises, and prices fall
supply of money increases, the value of money falls, and prices rise
92
National saving is
the total income in the economy that remains after paying for consumption
equal to private saving minus public saving
Total income in economy remaining after paying consumption & gov purchases
always greater than investment for a closed economy
93
The inflation rate you are likely to hear on the nightly news is calculated from the
Dow Jones Industrial Average
unemployment rate
CPI
GDP deflator
94
In the circular-flow diagram, which item flows from households to firms through the markets for goods and services?
Dollars paid to land, labor, and capital
Goods and services
Wages, rent, and profit
Dollars spent on goods and services
95
The price index was 120 in Year 1 and 126 in Year 2. What was the inflation rate?
5%
105%
6%
7.2%
96
Which list ranks assets from most to least liquid?
Fine art, currency, stocks
Currency, stocks, fine art
Currency, fine art, stocks
Fine art, stocks, currency
97
Supply of cheese is inelastic, bread is elastic. Both are normal goods. Demand decreases by 10%. Equilibrium price will
decrease in both the aged cheddar cheese and bread markets
increase in the aged cheddar cheese market and decrease in the bread market
increase in both the aged cheddar cheese and bread markets
decrease in the aged cheddar cheese market and increase in the bread market
98
The overriding reason why households and societies face many decisions is that...
Resources are scarce
people, by nature, tend to disagree
incomes fluctuate with business cycles
goods and services are not scarce
99
If the term "loanable funds" changed so government budget deficits would affect the demand for loanable funds then
an increase in budget deficit would cause loanable funds demand to decrease
crowding out would not be a consequence of an increase in budget deficit
a semantic change in how we analyze effects of gov budget deficit occurs
higher interest rates wouldn't be consequence of increase in budget deficit
100
price elasticity supply is 0.6, short run, and 1.4, long run. Demand increase causes price increase 15% Qs will increase
25 percent in the short run and 10.7 percent in the long run
9 percent in the short run and 21 percent in the long run
0.4 percent in the short run and 4.6 percent in the long run
1.7 percent in the short run and 0.7 percent in the long run
101
The labor force equals the number of people employed plus the number of people unemployed
True
False
102
New vitamin that increases the cow's milk production. If the demand for milk is relatively inelastic, the discovery will
lower both price and total revenues
raise price and lower total revenues
lower price and raise total revenues
raise both price and total revenues
103
Proprietary technology is knowledge that is known
mostly by only those in a certain profession
only by the company that discovered it
but only recently discovered
but no longer used much
104
Elasticity of demand is closely related to slope of demand curve. The more responsive buyers are to a price change, the
further to the right the demand curve will sit
flatter the demand curve will be
steeper the demand curve will be
closer to the vertical axis the demand curve will sit
105
Two goods are substitutes when a decrease in the price of one good
increases the demand for the other good
decreases the demand for the other good
increases the quantity demanded of the other good
decreases the quantity demanded of the other good
106
Which of the following is an explanation for the existence of frictional unemployment?
Efficiency wages
Job search
Unions
Minimum-wage laws
107
Japan's status as a rich nation is attributable to
international trade, but not to Japan's quantities of natural resources
Japan's quantities of natural resources, but not to international trade
The fact Japanese productivity has remained nearly constant for 100+ years
The fact Japan downplayed the role of human capital in economic growth
108
Which of the following is an example of a normative, as opposed to a positive, statement?
Requiring government to balance its budget would increase economic growth
A decrease in the minimum wage would decrease unemployment
An increase in the cigarette tax would cause a decrease in smokers
Universal healthcare would be good for U.S. citizens
109
Economists use the term inflation to describe a situation in which
the economy's overall output is rising faster than its overall price level
the economy's overall price level is rising
some prices are rising faster than others
the economy's overall price level is high, but not necessarily rising
110
When a union bargains successfully with employers, in that industry
wages increase and unemployment decreases
wages decrease and unemployment increases
both wages and unemployment increase
both wages and unemployment decrease
111
GDP can measure either total income of everyone in economy or total expenditure economy’s output goods&services not both
False
True
112
Minimum-wage laws are most likely to affect the wages paid to
teenagers
people with advanced technical training
people who are self-employed
union members
113
Frictional unemployment is thought to explain relatively
short spells of unemployment, structural unemployment explains long spells
long spells of unemployment, as is structural unemployment
short spells of unemployment, as is structural unemployment
long spells of unemployment, structural unemployment explains short spells
114
Josh, a full-time college student, is not working or looking for a job. The Bureau of Labor Statistics counts Josh as
not in labor force
employed
marginally attached worker
unemployed
115
Frictional unemployment is inevitable because
sectoral shifts are always happening
there is a federal minimum-wage law in the U.S.
some people do not want to be employed
unions are very popular in the U.S
116
Labor unions
are similar to cartels
prefer to operate in states with right-to-work laws
attract a membership of about 25 percent of current U.S. workers
play a larger role in the current U.S. economy than Norway and Sweden
117
An economy’s income is the same as its expenditure because every transaction has a buyer and a seller
False
True
118
If the law of supply applies to this good, then Q₁ could be
0
100
50
150
119
The use of theory and observation is more difficult in economics than sciences such as physics due to the difficulty in
formulating theories about economic events
analyzing available data
performing an experiment in an economic system
applying mathematical methods to economic analysis
120
Trade between countries tends to...
reduce both competition and specialization
increase competition and reduce specialization
increase both competition and specialization
reduce competition and increase specialization

Macroeconomics Final Flashcards | StudBud