Macroeconomics Final

Front 1

What is the opportunity cost of one dozen orchids?

Back 1

2.5 Dozen Roses

Front 2

Which of the following is a normative economic statement?

Back 2

The price of milk is too high

Front 3

Firms

Back 3

sell goods in the product market

Front 4

Households

Back 4

purchases final goods and services in the product market

Front 5

If you are considering buying either an Apple iPad or Samsung Galaxy Tab, and you choose the Samsung only because the price is lower, then you consider

Back 5

the iPad and the Galaxy Tab to be substitutes

Front 6

If the price is $25,

Back 6

there would be a surplus of 300 units

Front 7

Consumers are willing to purchase a product up to the point where

Back 7

the marginal benefit of consuming a product is equal to its price

Front 8

What area represents producer surplus at a price of P2?

Back 8

A+B+C

Front 9

What is the equilibrium hourly wage (W*) and the equilibrium quantity of labor(Q*)?

Back 9

W*=10.50; Q*=590,000

Front 10

if a minimum wage of $9.50 is mandated there will be a

Back 10

shortage of 40,000 units of labor

Front 11

What is the value of consumer surplus after the imposition of the ceiling?

Back 11

$230,000

Front 12

What is the value of the deadweight loss after the imposition of the ceiling?

Back 12

$50,000

Front 13

Who owns a corporation?

Back 13

the stockholders

Front 14

Economists refer to the conflict between the interests of shareholders and the interests of top management as

Back 14

a principal-agent problem

Front 15

A financial security that represnets a promise to repay a fixed amount of funds is a

Back 15

bond

Front 16

Dividends are

Back 16

payments by a corporation to its stockholders

Front 17

If a corporate bond with a face value of $2,000 pays yearly coupon payments of $50, what is the coupon rate?

Back 17

2.5%

Front 18

A tax imposed by a government on imports of a good into a country is called

Back 18

a tariff

Front 19

Domestically produced goods and services sold to other countries are referred to as

Back 19

exports

Front 20

______ is the ability to produce more of a good or service than competitors when using the same amount of resources

Back 20

Absolute advantage

Front 21

Trade that is within a country or between countries is based on the principle of

Back 21

comparative advantage

Front 22

Who has the absolute advantage in picking berries? Who has the absolute advantage in catching fish?

Back 22

Bill has an absolute advantage in pciking ebrries and Rob has an absoulte advantage in catching fish

Front 23

Who has the greater opportunity cost of picking berries?

Back 23

Rob has a greater opportunity cost than Bill for picking berries

Front 24

A quota is

Back 24

a limit placed on the quantity of goods that can be imported into a country

Front 25

A tax imposed by a government on imports of a good into a country is called a

Back 25

tariff

Front 26

Which of the following is not directly counted in GDP?

Back 26

intermediate goods

Front 27

Suppose that a simple economy produces only four goods and services: sweatshirts, dental examinations, coffee drinks, and coffee beans. Assume all the coffee beans are used in the production of the coffee drinks. Using the information in the above table, nomnial GDP for this simple economy equals

Back 27

$8,750

Front 28

What is the largest componet of spending in the United States?

Back 28

consumption spending

Front 29

Real GDP is GDP in a given year

Back 29

valued in the prices of the base year

Front 30

Real GDP for Tyrovia for 2011 using 2005 as the base year equals

Back 30

$690

Front 31

Nominal GDP for Tyrovia in 2011 equals

Back 31

$1,140

Front 32

If nominal GDP is $5 trillion and real GDP is $4 trillion, the GDP deflator

Back 32

125

Front 33

The value of what a U.S.-owned McDonald's produces in South Korea is included in the U.S. _____ and the South Korean ________.

Back 33

GNP; GDP

Front 34

The unemployment rate for this simple economy equals

Back 34

(100/1000)X100

Front 35

The labor force particpation rate for this simple economy equals

Back 35

(1,000/15,000)*100

Front 36

Frictional employment is the result of

Back 36

the search process of matching workers with jobs

Front 37

Structural unemployment is the result of

Back 37

a persisent mismatch between the skills and characteristics of workers and the requirements of the jobs

Front 38

Which of the following prices indices comes closest to measuring the cost of living of the typical household?

Back 38

Consumer price index

Front 39

Assume the market basket for the consumer price index has two products- meats and potatoes- with the following values in 2006 and 2011 for price and quantity: The Consumer Price Index for 2011 equals

Back 39

141

Front 40

Consider the following values of the consumer price index for 1996, 1997, and 1998: The inflation rate for 1997 was equal to

Back 40

2.5 percent

Front 41

If the nomial rate is 6.5% and the inflation rate is 3.0%, what is the real rate of interest?

Back 41

3.5%

Front 42

The quantity of goods and services that can be produced by one worker or by one hour of work is referred to as

Back 42

labor productivity

Front 43

Human capital refers to which of the following?

Back 43

the accumlated knowledge and skills workers acquire from education and training or from their life experiences

Front 44

Based on this information, what is the level of private saving in the economy

Back 44

$4 trillion

Front 45

Based on the information, what is the level of public saving?

Back 45

negative $1 trillion (a defict of $1 trillion)

Front 46

Under which circumstance would the government be running a deficit?

Back 46

C=$5 trillion

T= $5 trillion

TR= $1 trillion

Front 47

Borrowers are ________ of loanable funds, and lenders are ____________ of loanable funds.

Back 47

demanders; suppliers

Front 48

If frims sell exactly what they expected to sell, all of the following will be true except

Back 48

aggregate expenditure will be equal to GDP

Front 49

What is the largest component of aggregate expenditure?

Back 49

consumption expenditures

Front 50

Givne the consuption schedule in the table above, the marginal propensity to consume is

Back 50

0.9

Front 51

Given the consumption schedule in the table above, the amrginal propensity to save is

Back 51

0.1

Front 52

Suppose that investment spending increases by $10 million, shifting up the aggreate expenditure line and GDP increases from GDP1 to GDP2. If the MPC is 0.9, then what is the change in GDP?

Back 52

$100 million

Front 53

If an increase in investment spending of $50 million results in a $400 million increase in equilibrium real GDp, then

Back 53

the multiplier is 8

Front 54

Monetary policy refers to the actions the

Back 54

Federal Reserve takes to manage the money supply and interest rates to pursue its macroeconomic policy objectives

Front 55

The Federal Reserve System's four monetary policy goals are

Back 55

price stability, high employment, economic growth, and stability of financial markets and institutions

Front 56

The Rederal Reserve's two main_____________________________ are the money supply and the interest rate.

Back 56

monetary policy targets

Front 57

The money demand curve has a

Back 57

negative slope because an increase in the interest rate decreases the quantity of money demanded

Front 58

An increase in the interest rate causes

Back 58

a movemnet down along the money demand curve

Front 59

In the figure, the money demand curve would move from MDI to MD2 if

Back 59

real GDP increased

Front 60

USing the money demand and money supply model, an open market sale of Treasury securities by the Federal Reserve would cause the equilibrium interest rate to

Back 60

increase

Front 61

The ability of the Federal Reserve to use monetary policy to affect economic variables such as real GDP ultimately depends upon its abiloty to affect

Back 61

real interest rates

Front 62

A decrease in interest rates can __________ the demand for stocks become relativley ___________ attractive investments as compared to bonds.

Back 62

decrease; more

Front 63

An increase in the interest rate should _______demand for dollars and the value of the dollar, and net exports should ___________.

Back 63

increase; decrease

Front 64

Expansionary monetary policy refers to the __________ to increase real GDP.

Back 64

Federal Reserve's increasing the money supply and decreasing interest rates

Front 65

Suppose the economy is in a recession and the Fed pursues an expansionary monetary policy. Using the static AD-AS model in the figure above, this would be depicted as a movement from

Back 65

A to B

Front 66

Suppose the Fed lowers its targe for the federal funds rate. Using the static AD-AS model, this situation would be depicted as move from

Back 66

A to B

Front 67

Fiscal policy refers to changes in

Back 67

federal taxes and purchases that are intended to achieve marcoeconomic policy objectives

Front 68

Which of the following would be classified as fiscal policy?

Back 68

The federal government cuts taxes to stimulate the economy

Front 69

Which of the following is an objective of fiscal policy?

Back 69

high rates of economic growth

Front 70

Automatic stabilizers refer to

Back 70

governments spending and taxes that automatically increase or decrease along with the business cycle

Front 71

Federal government purchases, as a percentage of GDP.

Back 71

have risen since the early 1950's

Front 72

The three categories of federal government expenditures, in addition to government purchases, are

Back 72

interest on the national debt, grants to state and locla govenrments, and transfer payments

Front 73

Congress and the president carry out fiscal policy through changes in

Back 73

government purchases and taxes

Front 74

Fiscal policy is determined by

Back 74

Congress and the president

Front 75

Expansionary fiscal policy involves

Back 75

increasing government purchases or decreasing taxes

Front 76

GDP Formula

Back 76

Y=C+I+G+NX

Front 77

Private Savings

Back 77

S=Y-C-T+TR

Front 78

Public Savings

Back 78

S=T-TR-G