question

In economic terminology, a normal good is a good

answer

for which demand increases when income increases

question

an increase in supply will occur when

answer

the supply curve shifts downward to the right

question

Suppose you are told that the equilibrium price of gasoline has increased, while the equilibrium quantity of gasoline has fallen. You are also told that either the demand changed or the supply changed, but not both. What must have occurred?

answer

supply decreased

question

in the automobile industry, workers have just negotiated a new contract giving workers a large raise. There has also been an increase in the number of licensed drivers who are in the market for a new car. In the market for new automobiles, the effects tat there changes will have on the equilibrium price and quantity are:

answer

price will increase, and quantity will decrease

question

in every economic system, choices must be made because resources

answer

are limited, but human desires and wants are unlimited

question

market failure takes place when

answer

market transactions lead to underproduction or overprodcution of a good

question

What will not cause a shift in the supply of jeans?

answer

a decrease in the prices of jeans

question

Annie had a job as a human resource manager of a restaurant chain that went out of business due to a downturn in the economy. This is an example of:

answer

cyclical emplyment

question

an increase in demand occurs when

answer

the demand curve shifts to the right

question

Bob's assembly line job has been replaced by robots, and Bob lacks abilities and skills required to attain other jobs. He is considered:

answer

structurally unemployed

question

if two goods, J and K, are complements, then what statement is false?

answer

an increase in the price of J causes the demand for K to rise

question

a price floor set below the equilibrium price will cause which of the following

answer

NOT an increase in demand, a shortage, or a surplus AKA NONE OF THE ABOVE

question

Fred recently lost his job as a teller at the bank. the bank explained hat they were replacing Frank and others with ATM machines. Fred falls into a category of unemployment known as:

answer

structural unemployment

question

with respect to the market clearing price and the equilibrium quantity of good X, increases in the demand for and the supply of good X will definitely:

answer

increase the equilibrium quantity of good C bu have an uncertain impact on the market clearing price of X

question

suppose the prices of cheese rises. (cheese is an ingredient of pizza) In the market for pizza, one would expect that

answer

the supply of pizza would decrease, and price would rise

question

macroeconomics deals with

answer

aggregates within the economy

question

comparative advantage is the ability to

answer

perform an activity at a lower opportunity cost

question

a decrease in demand and an increase in supply will lead to

answer

an unambiguous decrease in price, but the effect on quantity is indeterminate

question

suppose that demand for tablets increases, and simultaneously, the supply of tablets increases. which of the following would you conclude definitely will occur in the market for tablets

answer

the equilibrium quantity will rise

question

the value added method of calculating GDP means

answer

adding up the difference between the sale price and the value of intermediate goods of each product at every stage of production

question

of the following, which is the least likely to be an example of substitute goods? -beef and chicken -beer and pretzels -tea and coffee -margarine and butter

answer

beer and pretzels

question

sugar is an input used to produce cereal. Suppose that the price of sugar rises. as a result:

answer

the supply curve for sugar will shift to the right

question

which of the following will cause a movement along the supply curve for oil? -government subsidies to oil producers in Wyoming -an increase in the number of oil-producing firms -a change in the price of oil -new technology to drill oil underwater in the Gulf of Mexico

answer

new technology to drill oil underwater in the Gulf of mexico

question

Collin has lost his job with a telemarketing company, which has moved its operations to India. Collin is considered:

answer

structurally unemployed

question

in a market system, ____ provide signals about whether resources are relatively scarce or abundant

answer

prices

question

if equilibrium price falls and the equilibrium quantity of the good purchased decreases, what has happened to either the supply curve or to the demand curve?

answer

demand decreased

question

a decrease in demand and a decrease in supply will lead to

answer

an unambiguous decrease in quantity, but the effect on price is inderterminate

question

other things being constant, the only way to move along a given supply curve for a product is for

answer

the product's relative price to change

question

suppose there is a simultaneous increase in the demand for wheat and increase in the supply of wheat. which of the following will occur as a result of these simultaneous events? -the market clearing price may rise, fall, or stay the same, but the equilibrium quantity will rise -the market clearing price will fall,but the equilibrium quantity may rise, fall, or stay the same -both the market clearing price and equilibrium quantity will rise -the market clearing price will fall, but the equilibrium quantity will rise

answer

the market clearing price may rise, fall, or stay the same, but the equilibrium quantity will rise

question

if consumers expect that the price of pretzels will decrease next week, what would happen today?

answer

demand today for pretzels would decrease

question

macroeconomics might study which of the following? -determinants of the prices of rare goods (e.g., diamonds) -the causes of domestic unemployment -decision making undertaken by households -decision making undertaken by firms

answer

the causes of domestic unemployment

question

in a small country, the population equals 5,000. There are 4,000 people in the labor force and 3,000 people are unemployed. the unemployment rate equals:

answer

0.25

question

if other factors remain unchanged, technological progress in producing goof X definitely will lead to

answer

a decrease in the market clearing price of good X and an increase in the equilibrium quantity of good X

question

assuming coffee and cola are substitutions, if the price of coffee rises

answer

the demand curve for cola will shift to the right

question

if both the demand for and the supply of computers are increasing, which of the following statements is true? -the price of a computer will be the same in the future as it is now -the consumer should wait and buy a computer later since the price will be lower in the future -the consumer should buy a computer now since the price will be higher in the future -it is impossible to know, given only this information, whether the prices of computers will go up or down in the future

answer

it is impossible to know, given only this information, whether the prices of computers will go up or down in the future

question

the assumption that "other things are constant" is also known as

answer

ceteris paribus assumption

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you should decide to go to a movie

answer

if the marginal benefit of the movie exceeds its marginal cost

question

the assertion that "there is no free lunch" means that

answer

all production involves the use of scarce resources and thus the sacrifice of alternative goods

question

in deciding whether to study for an economic quiz or go to a movie, one is confronted by the idea(s) of:

answer

scarcity and opportunity costs

question

macroeconomics approaches the study of economics from the viewpoint of

answer

the entire economy

question

the production possibilities curve illustrates the basic principle that:

answer

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

question

which of the following will not produce an outward shift of the production possibilities curve? -the improvement of a society's technological knowledge -an increase in the quantity of a society's labor force -the reduction of unemployment -an upgrading of the quality of a nation's human resources

answer

the reduction of unemployment

question

if the production possibilities curve is a straight line:

answer

economic resources are perfectly substitutable between the production of the two products

question

a nation's production possibilities curve is bowed out from the origin because:

answer

resources are not equally efficient in producing every good

question

assume an economy is operating at some point on its production possibilities curve, which shows civilian and military goods. if the output of military goods is increased, the output of civilian goods:

answer

must be decreased

question

Deltonia produces both consumer and capital goods. other things equal, if Deltonia redues the percentage of its output devoted to capital goods, then:

answer

its rate of growth will decline

question

specialization in production is economically beneficial primarily because it:

answer

permits the production of a larger output with fixed amounts of resources

question

the market system's answer to the fundamental question "who will get the goods and services?" is essentially:

answer

"Those willing and able to pay for them"

question

the market system's answer to the fundamental question "how will the system promote progress?" is essentially:

answer

"through the profit potential that encourages development of new technology"

question

in terms of the circular flow diagram, households make expenditures in the ___ market and receive income through the ___ market.

answer

product, resource

question

the relationship between quantity supplied and price is ___ and the relationship between quantity demanded and price is ___.

answer

direct (positive), inverse (negative)

question

if the demand curve for product B shifts to the right as the price of product A declines, then:

answer

A and B are complementary goods

question

which of the following is most likely to be an inferior good? -steak -ocean cruises -fur coats -used clothing

answer

used clothing

question

if L and M are complementary goods, an increase in the price of L will result in:

answer

a decrease in the sales of M

question

which of the following will cause the demand curve for product A to shift to the left? -an increase in money income if A is a normal good -an increase in money income if A is an inferior good -a decrease in the price of complementary product C -population growth that causes an expansion in the number of persons consuming A

answer

an increase in money income if A is an inferior good

question

assume the demand curve for product X shifts to the right. this might be caused by:

answer

a decline in income if X is an inferior good

question

when an economist says that the demand for a product has increased, this means that:

answer

consumers are now willing to purchase more of this product at each possible price

question

the supply curve shows the relationship between

answer

price and quantity supplied

question

a leftward shift of a product supply curve might be caused by:

answer

some firms leaving an industry

question

other things equal, if the price of a key resource used to produce X falls, the:

answer

product supply curve of X will shift to the right

question

a government subsidy to the producers of a product:

answer

increases product supply

question

if a product is in surplus supply, its price:

answer

is above the equilibrium level

question

which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity? -an increase in supply -a decrease in demand -a decrease in supply -an increase in demand

answer

an increase in supply

question

which of the following statements is correct? -if demand decreases and supply increases, equilibrium price will rise -if demand increases and supply decreases, equilibrium price will fall -if supply increases and demand decreases, equilibrium price will fall -if supply declines and demand remains constant, equilibrium price will fall

answer

if supply increases and demand decreases, equilibrium price will fall

question

if the supply and demand curves for a product both decrease, then equilibrium:

answer

quantity must decline, but equilibrium price may either rise, fall, or remain unchanged

question

an unusually large crop of coffee beans might:

answer

increase the supply of coffee

question

if the aggregate income of households is $300 billion, consumption is $210 billion, and personal taxes are $60 billion, then personal saving:

answer

is $30 billion

question

when externalities cause substantial positive benefits for third parties, a competitive market:

answer

under-allocates resources to the production of the good

question

suppose a product creates substantial negative externalities. if government adopts a policy that forces producers to pay these costs, the:

answer

output of the product will decrease

question

according to the concept of comparative advantage, a good should be produced in that nation where:

answer

its domestic opportunity cost is least

question

if the exchange rate changes from $1=2 euros to $1=3 euros:

answer

the dollar has appreciated in value

question

depreciation of the dollar will:

answer

increase the prices of U.S. imports, but decrease the prices of U.S. ecports

question

import quotas are:

answer

maximum limits on the quantity or total value of specific products imported to a nation

question

Joe sold sold coins for $1000 that he bought a year ago for $1000. he says, "at least i didn't lose any money on my financial investment." His economist friend points out that if effect he did lose money, because he could have received a 3 percent return on the $1000 if he had bought a bank certificate of deposit instead of the coins. the economist's analysis in this case incorporates the idea of:

answer

normative economics

question

when entering a building, Sam diverts his path to through an open door rather than make the physical effort to open the closed door that is directly in his path. this is an example of:

answer

irrational behavior

question

which of the following is associated with macroeconomics? -an examination of the incomes of Harvard business School graduates -an empirical investigation of the general price level and unemployment rates since 1990 -a study of the trend of pecan prices since the Second World War -a case study of pricing and production in the textbook industry

answer

a study of the trend of pecan prices sine the second world war

question

macroeconomics can be best described as:

answer

study of how supply and demand determine prices in individual markets

question

which of the following is a micro-economic statement? -the real domestic output increased by 2.5 percent last year -unemployment was 6.8 percent of the labor force last year -the price of personal computers declined last year -the general price level increased by 4 percent last year

answer

unemployment was 6.8 percent of the labor force last year

question

a production possibilities curve shows:

answer

the maximum amounts of two goods that can be produced assuming the full use of available resources

question

the negative slope of the production possibilities curve is a graphical way of indicating that:

answer

to produce more of one product we must do with less of another

question

an economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles.this prediction is based on the assumption that:

answer

there are few goods that are substitutes for bicycles

question

a rightward shift in the demand curve for product C might be caused by:

answer

a decrease in income if C is a normal good

question

if two goods are complements

answer

they are necessarily inferior goods

question

other thins equal, if the price of a key resource used to produce product X falls, the

answer

product demand curve of x will shift to the right

question

which of the following statements is correct? -if demand increases and supply decreases, equilibrium prices will fall -if supply increases and demand decreases, equilibrium prices will fall -if demand decreases and supply increases, equilibrium prices will rise -if supply declines and demand remains constant, equilibrium price will fall

answer

if supply increases and demand decreases, equilibrium prices will fall

question

if the supply and demand curves for a product both decrease, the equilibrium:

answer

quantity and equilibrium price must both decline

question

one can say with certainty that equilibrium price will decline when supply:

answer

and demand both increase

question

assume a drought in the great plains reduces the supply of wheat. noting that wheat is a basic ingredient in the production of bread and that potatoes are a consumer substitute for bread, we would expect the price of wheat to:

answer

fall, the supply of bread to increase, and the demand for potatoes to increase

question

a government subsidy to the producers of a product

answer

increases product supply

question

a surplus of a product will arise when price is

answer

above equilibrium with the result that quantity supplied exceeds quantity demanded

question

non-tariff barriers are:

answer

licensing requirements, unreasonable quality standards, and the like designed to impede imports

question

a nation's true gain from international trade is:

answer

an overall increase in output obtained through specialization and exchange

question

a nation's GDP:

answer

is the dollar value of the total output produced within the borders of the nation

question

final goods and services refer to:

answer

goods and services purchased by ultimate users, rather than for resale or further processing

question

economic growth is best defined as increase in:

answer

either real GDP or real GDP per capita

question

during a severe recession, we would expect output to fall the most in:

answer

the construction industry

question

the phase of the business cycle in which real GDP declines is called:

answer

a recession

question

the united states' economy is considered to be at full employment when:

answer

about 4-5 percent of the labor force is unemployed

question

the investment demand curve will shift to the right as the result of:

answer

businesses becoming more optimistic about the future business conditions

question

suppose that the level of GDP increased by $100 billion in a private closed economy where the marginal propensity to consume is 0.5. aggregate expenditures must have increase by:

answer

$50 billion

question

assume the consumption schedule for a private closed economy is C=40+0.75Y, where C is consumption and Y is a gross domestic product. the multiplier for this economy is:

answer

4

question

assume the saving schedule for a private closed economy is S=-20+0.2Y, where S is saving and Y is gross domestic product. the multiplier for this economy is:

answer

5

question

other things equal, if $100 billion of government purchases (G) is added to private sending (C+Ig+Xn), GDP will:

answer

increase by more than $100 billion

question

suppose government finds it can increase the equilibrium real GDP is $45 billion by increasing government purchases by $18 billion. on the basis of this information we can say that the:

answer

MPS in this economy is .4

question

if government increases it purchases by $15 billion and the MPC is 2/3, then we would expect the equilibrium GDP to:

answer

increase by $45 billion

question

an increase in investment will shift the AD curve to the:

answer

right by a multiple of the change in investment

question

if investment increases by $10 billion and the economy's MPC is .8, the aggregate demand curve will shift

answer

rightward by $50 billion at each price level

question

graphically, demand-pull inflation is shown as a:

answer

rightward shift of the AD curve along an up-sloping AS curve

question

graphically, cost-push inflation is shown as a:

answer

leftward shift of AS curve

question

discretionary fiscal policy refers to:

answer

changes in taxes and government expenditures made by Congress to stabilize the economy

question

in a certain year the aggregate amount demanded at the existing price level consists of $100 billion of consumption, $40 billion of investment, $10 billion of net exports, and $20 billion of government purchases. full-employment GDP is $120 billion. to obtain price level stability under these conditions the government should:

answer

increase tax rates and/or reduce government spending

question

an appropriate fiscal policy for a severe recession is:

answer

a decrease in tax rates

question

suppose that in an economy with a MPC of .5 the government wanted to shift the aggregate demand curve rightward by $80 billion at each price level to expand real GDP.it could:

answer

increase government spending by $40 billion

question

suppose there are 5 million unemployed workers seeking jobs.after a period of time, 1 million o them become discouraged over their job prospects and cease to look for work. as a result of this, the official unemployment rate would:

answer

decline

question

a college graduate using the summer following graduation to search for a ob would best be classified as:

answer

a part of frictional unemployment

question

the type of unemployment associated with recessions is called:

answer

cyclical unemployment

question

demand-pull inflation

answer

occurs when total spending in the economy is excessive

question

inflation initiated by increases in wages or other resource prices is labeled:

answer

cost-push inflation

question

if trent's MPC is .80, this means that he will

answer

spend eight-tenths of any increase in his disposable income

question

(advanced analysis) if the equation C=20+.6Y, where c is consumption and Y is disposable income, were graphed:

answer

the vertical intercept would be +20 and the slope would be +.6

question

dissaving means:

answer

that households are spending more than their current incomes

question

the greater is the marginal propensity to consumer, the:

answer

smaller is the marginal propensity to save

question

if an unintended increase in business inventories occurs at some level of GDP, then GDP:

answer

is too high for equilibrium

question

assume that in a private closed economy consumption is $240 billion and investment is $50 billion, both at the $280 billion level of domestic output. thus:

answer

unplanned decreases in inventories of $10 billion will occur

question

if government increases its purchases by $15 billion and the MPC is 2/3, then we would expect the equilibrium GDP to:

answer

increase by $45 billion

question

discretionary fiscal policy will stabilize the economy most when:

answer

deficits are incurred during recessions and surpluses during inflations

question

suppose that the economy is in the midst of a recession. which of the following would most likely end the recession and stimulate output growth? -a congressional proposal to incur a federal surplus to be used for the retirement of public debt -a reduction in agricultural subsidies and veterans' benefits -a postponement of a highway construction program -a reduction in federal tax rates on personal and corporate income

answer

a reduction in federal tax rates in personal and corporate income

question

assume that aggregate demand in the economy is excessive, causing demand-pull inflation. which of the following would be most in accord with appropriate government fiscal policy? -an increase in federal income tax rates -an increase in the size of income tax exemptions for each dependent -passage of legislation providing for the construction of 8,000 new school buildings -an increase in soil conservation subsidies to farmers

answer

an increase in federal income tax rates

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