A country is on its aggregate production the real wage will fall and the economy will move up

A country is on its aggregate production… the real wage will fall and the economy will move up

A firm decides to finance expansion by offering investors ownership in its firm, with the owners entitled to a share of the firm’s profits. The firm’s expansion is financed by_______. Issuing stock

A person is frictionally unemployed, if the unemployment arises from people searching for a better job.

A share of Apple stock cost $82.58 and gives $5.36 of Apple profit to its owner. The interest rate on this share 6.5 percent

A star athlete can afford a garage full of exotic cars while other people can only afford to take a city bus for transportation. This is most directly an example of an economy answering the _______ question. For whom.

A n increase in labor productivity ___ … and ___ increase the demand

C alonia is a small open economy and is currently an international borrower. Suppose that there is no Ricardo-Barro effect. If the government increases its budget deficit, Investment in Colonia will not change

C hina’s net export are positive, so________. Other countries borrow from China to pay for some of the goods they purchase from China

C hoose incorrect statement… real GDP whenever…

C omparing aggregate expenditure and aggregate incomes shows that ____. They are equal.

D uring the 1990s, the prices of SUVs rose and each year more were purchased. This event suggests that _______. There must have been a rightward shift of the demand curve for SUVs.

D uring the financial crisis in 2007 and 2008 financial institutions believe that default risk was higher. As a result, the supply of loan able funds ________ and the real interest rate ________. Decreased; rose

D uring the past 20 years, the prices of prescription drugs, relative to the prices of other goods, have risen, yet Americans buy more prescription drugs than ever. This might occur because _______. With higher incomes and more older Americans, the demand curve for prescription drugs has shifted rightward.

E rin owns a Saving Bond. Initially, the bond is worth $5000 and it pays $500 of interest of each year. The value of the bond rises in the bond market to $7500. What is the new interest rate on the bond? 6.67 percent a year

I f a U.S. firm buys a new industrial sewing machine from a company located in China, then ___. Both I and II

I. U.S. net exports decrease

II. U.S. investment increases

I f in a town 100 people are unemployed, 1,000 are employed and the working age population is 1,400, then the labor force participation rate in this town is 78,6 percent.

I f net taxes exceed government expenditure, the government sector has a budget________and government saving is________. Surplus, positive

I n 2000, the price of a Cadillac DTS was 45,000$. In 2008, the price was 53,000. While both models had similar features, the 2008 model also had GPS and new technology that allows improved gas mileage and safer driving. If the Cadillac DTS were included in the CPI basket. It would create an upward bias in the CPI as a result of quality change bias.

I n 2007 Nike reduced the price of its running shoes by 20 percent. As a result, the substitution effect caused. People to switch from Adidas shoes and buy more Nikes.

I n 2008, 200 000 gas grills were demanded at a price of $500. In 2009, more than 200 000 gas grills were demanded at the same price. This increase could be the result any of the following EXCEPT _______ an increase in the supply of gas grills;

I n 2008, Australia had a government budget surplus of $21.7 billion. This budget surplus _______ loanable funds and________. Increased the supply of; lowered the real interest rate.

I n 2008, the average price of a Big Mac was $2.87 when energy accounted for 54 cents of the total cost (Wired magazine, November 2008). The price of energy fell in late 2008, so there was _______ in the supply of Big Macs, which resulted in a _______ in their price. An increase; fall.

I n 2009, the price of a used Toyota. Prius increased. The most likely cause of this change was _______. A change in preferences in favor of more fuel-efficient cars;

I n 2011, Jim purchased a 2007 Ford Fiesta from his neighbor for his son, a 1993 “one owner” Toyota Camry for his wife, a 2011 new GM Chevy for himself, and sold his 1993 Dodge Caravan to his nephew. Which, if any, of these transactions will be included in GDP in 2011? Only the purchase of the GM Chevy

I n a market, at the equilibrium price, neither buyers nor sellers can do business at a better price;

I n every economic system, choices must be made because resources are _______ and our wants are _______. Limited; unlimited;

I n India… classical growth theory

I n the circular flow model ___. III only

I. Aggregate income is the flow of income earned by firms

II. Retained earnings are considered income earned by firms rather than part of households’ income

III. The government, households, and firms operate in the financial market

I n the last decades, China economic growth 10%... fewer than 14 years

I nflation in Vietnam rose to 27 percent in July 2008. As a result, people cut back on spending and looked for second jobs. Rumors of further price increases caused panic buying of fuel and rice. Vietnam shelved its plans for economic development and some said that they are losing confidence in the ability of the government to manage the economy. The story provides an example of how inflation diverts resources from production.

J oy is training to become a chef. The skills she is obtaining from her training and education will increase what type of resource? Human capital.

L aura is a manager for HP. When Laura must decide whether to produce a few additional printers, she is choosing at the margin when she compares. The extra revenue from selling a few additional printers to the extra costs of producing the printers.

L et C represent consumption expenditure, S saving, I investment, G government expenditure on goods and services, and NX net exports of goods and services. Then GDP equals___. C + I + G + NX

M acroeconomic topics include: total, nationwide employment;

P otential GDP will increase if … all of the above

R eal GDP is limited as a measure of the standard of living in part because GDP omits___. l, ll, and lll

I. Household production

II. Leisure time available

III. The quality of the environment

S ince 1990, growth rate of real GDP per person in Hong Kong… been faster than in the US

S ingapore plans… speed economic growth

S tructural unemployment is associated with changes in technology that change required job skills.

S uppose that the price level was: 100 in 2008, 110 in 2009, 120 in 2010, 130 in 2011. During the 2009 through 2011. The inflation rate was positive.

S uppose the working-age population in a town is 100 people. If 25 of these people are NOT in the labor force, then the _____ equals ___. Labor force; 75.

T he concept of tradeoffs concerns all of the following questions EXCEPT: Why should goods and services be produced?

T he cost of inflation to society includes: Both 1 and 2. ( The opportunity costs of resources used by people to protect themselves against inflation. The diversion of productive resources to forecasting inflation)

T he “law of demand” states that changes in _______. The quantity demanded of a good are inversely related to changes in its price.

T he “law of supply” refers to the fact that, all other things remaining the same, when the price of a good rises. There is a movement up along the supply curve to a larger quantity supplied.

T he Miami Dolphins play football in Joe Robbie Stadium which holds 76,500 seats. In 2007, attendance averaged about 70,000 fans per game.

The real interest rate: Both l and ll. (Is the return on capital. E quals the nominal interest rate adjusted for inflation. Is the after-tax interest rate)

This means that the quantity supplied of seats is: 76,500.

T o calculate the unemployment rate, you need to know the number of people unemployed and the number of people in the labor force (1 and 3).

UNESCO reports that governments …. Higher economic growth

W hat we produce during our working time is ___ in GDP and the employment we gain from our leisure time is ___ in GDP. Included; not included

W hen measuring GDP, corporate profits include___. I and II

I. Profits paid as dividends

II. Undistributed profits

III. Income receives by owner and operators of businesses

W hen real GDP is ___ potential GDP the unemployment rate is ___ the natural unemployment rate greater than; less than.

W hen the price is below the equilibrium price, the quantity demanded _______. Exceeds the equilibrium quantity, but the quantity supplied is less than the equilibrium quantity.

W hich of the following are considered factors of production used to produce goods and services? I, II, II and IV

I. Land

II. Labor

III. Capital

IV. Entrepreneurship

W hich of the following are examples of the investment component of GDP? Both l and ll

I. The purchase of production machinery by IBM

II. An increase in the Intel’s inventory of computer chips

W hich of the following are true regarding “positive” statements? II and III

I. They describe what “ought to be”;

II. They describe what is believed about how the world appears;

III. They can be tested as to their truthfulness.

W hich of the following events creates a movement along, but not a shift of, the supply curve for spinach? A rice in the price of spinach.

W hich of the following events shifts the supply curve of gasoline rightward? A decrease in the price of a resource used to produce gasoline, such as crude oil;

W hich of the following is a microeconomic topic? The reasons why Kathy buys less orange juice.

W hich of the following is a normative statement? Next year’s inflation rate will be under 4 percent.

W hich of the following statements are correct? Potential GDP measures the actual production from year to year

W hich of the following items are physical capital? ll and lll

W hich of the following items directly? I and II

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