Economics 11 Exam 1
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Economics is most importantly concerned with _______________.
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studying how we allocate scarce resources to satisfy unlimited wants
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The central question in economics is how to ___________________.
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make the best use of scarce resources to satisfy our unlimited wants
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The problem of scarcity _________________.
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exists because resources are limited relative to wants
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Which of the following statements most likely lies within the realm of macroeconomics?
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Due to an economic recession, manufacturing firms began implementing layoffs of their workforces. Anticipating that the benefits would outweigh costs involved, an undergraduate student purchases the course textbook.
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Macroeconomics topics do not generally include ____________.
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the production decisions of individual firms
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Measuring the rate of inflation is primarily a concern of ________________.
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macroeconomics
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Economists use the term "ceteris paribus" to indicate that ___________________.
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other things are assumed to remain constant
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Which of the following is a statement of positive economics?
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If the overall unemployment rate is 6%, black unemployment rates will exceed 12%
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Which of the following is not a factor of production?
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cash
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Entrepreneurship is ___________________.
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the resource the organizes the other facts of production in order to produce good and/or servicces
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Assume that Meat Farm sells Burger King one pound of meat for $5 and that BK sells the customers five hamburgers made from that one pound of meat for unit price of $6. In this case, the GDP that is computed by value-added method is:
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$30
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If GDP is $7,000 billion, consumption is $2,800 billion, net exports are $1,200 billion, government purchase is $700 billion, then investment is:
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$2,300 billion
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Economics may be defined as _____________________.
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the study of the behavior of people and institutions in the production, distribution, and consumption of scarce resources
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Macroeconomics is concerned with _______________.
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the aggregate or total levels of income, employment, and output
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The production possibility curve illustrates the basic principle ________________
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if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced
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Which of the following would be most likely to shift the production possibility curve to the left?
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A decline in the side of the population and labor force
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Which of the following problems would now be an example of a macroeconomics issue?
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The marginal utility
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Points which lie inside the production possibilities curve are _________________.
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Attainable but inefficient
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The amount of the other product that must be forgone to produce a unit of another product.
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Opportunity cost
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A point which lies outside of the production possibilities curve is said to be _____________.
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Unattainable
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Illustrates the different combinations of two foods that can be produced with the existing factors of production and the current state of technology.
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Production possibilities curve
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In the circular flow model, the factor market does not portray ________________.
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A flow of monetary values that represents costs to the households but incomes to the firms
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What are the four assumptions for a given production possibilities frontier?
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Full employment, fixed resources, fixed technology, two goods
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What is the law of increasing opportunity cost?
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...
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The dollar value of total annual output of final goods and services produced within the boundaries of the United States, whether by Americans or foreigners.
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GDP (the sum of all the dollar value of output produced by American & Foreign firms in Domestic USA)
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The dollar value of total annual output of final goods and services produced by Americans, whether they are located in the United States or abroad.
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GNP (the sum all the dollar value of output produced by American Firms)
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How is GDP computed?
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Circular flow of GDP
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Formula for Per Capita GDP
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GDP divided by Population
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What is absolute advantage?
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...
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What is comparative advantage?
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The ability to produce output with lower opportunity cost
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What is the formula for GDP?
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C + I + G + NE Consumption + Gross Investment + Government Purchases + Net Exports
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What is the forumula for gross investment?
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Gross investment = net investment + depreciation
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What is the formula for Net Exports?
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Net Exports = Exports - Imports
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What is the formula for GNP?
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GNP = GDP - Payments of factor income to the rest of the world + Receipts of factor income from the rest of the world
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What is the formula for National Income?
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National Income = GNP - Depreciation - Indirect Business Tax
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What is the formula for Nominal GDP?
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(Each unit price of good 1 x Output of good 1) + (Each unit price of good 2 x Output of good 2)
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What is the formula for Real GDP?
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Real GDP = Multiply base year prices to each years output
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What is the formula for GDP deflator (GDP Price Index)?
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(Nominal GDP / Real GDP) * 100
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How do you find the % change of prices between 2 years?
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1. Find the difference of the two years 2. (Difference / Starting value) * 100 = %
