MacroEconomics 2301 Exam #1 Practice – Flashcards

You plan to go to school this summer. If you do, you won't be able to take your usual summer job that pays $5,000 for the summer. The cost of tuition is $2,000 and textbooks $100. You live with your family, which covers your living expenses of $1,300. What is your opportunity cost of going to school this summer?

Choose the correct statement or statements: 1. An economic model is tested by comparing its predictions with the facts. 2. Ignoring details in an economic model makes the model inadequate for prediction. 3. An economic model is more complex than the economic world it describes. 4. Economists use natural experiments, statistical investigations, and economic experiments.

______ is an example of U.S. consumption expenditure. A. A week's stay in a New York hotel by a family from Denmark. B. The addition of flowers to a florist's inventory in anticipation of Valentine's Day. C. The payment of unemployment benefits paid to households. D. Your purchase of a Dell computer.

In 2009, U.S. exports were $1,583 billion and imports were $1,975 billion. What was the value of net exports?

Your checking account is an example of ______ good. Biscotti bought by Delta Airlines and served to passengers is an example of _______ good.

Gravel purchased by a firm that produces cement is an example of _____ good. Sugar purchased by Angelo's bakery to make pies and cakes is an example of _____ good.

Formula for net investment

GDP is the _____ in a given time period.

In the circular flow of income, A. households buy goods and services while firms sell goods and services. Firms obtain labor from households, capital from government, and raw materials from other firms. B. households sell goods and services while firms sell factors. C. households demand goods and services that are supplied by firms, while supplying factory that are demanded by firms. D. households demand goods and services that are supplied by firms, and the firms demand factors that are supplied by intermediate firms.

Depreciation is defined as the

Choose the correct statement. A. When nominal GDP increases, real GDP decreases. B. Nominal GDP is the value of the final goods and services produced in a given year valued at the prices of that year. C. We measure the change in production by comparing nominal GDP in one year with nominal GDP in another year. D. Nominal GDP is just a more precise name for real GDP.

A typical business cycle can be described by the sequence ________.

Because pollution reduces economic welfare, on this count real GDP

The money price of a pack of microwave popcorn is $2.00, and the relative price of a pack of microwave popcorn in terms of burritos is 5.00 packs of frozen burritos per pack of microwave popcorn. The money price of a pack of frozen burritos is _____.

The money price of a pizza is $12 per pizza and the money price of a taco is $2 per taco. The relative price of pizza is

The "law of demand" states that, other things remaining the same, the quantity demanded of any good is

The demand curve for a normal good shifts leftward if income ____ or the expected future price _____.

Jeep Cherokees are a normal good. If people's incomes increase, the direct result will be

The price of the steel used to produce car engines increases. How does this price hike affect the demand curve for cars?

For "an increase in the quantity demanded" but not "an increase in demand" to occur, there must be a A. rightward shift of the demand curve B. movement along the demand curve C. rightward shift of the demand curve and a movement along the demand curve D. Both answers B and C are correct

Leather purses and leather shoes are ______. A. substitutes B. substitutes in production C. complements in production D. complements but not substitutes in production

SUVs and pickup trucks are _______. A. complements but not complements in production B. complements or complements in production C. substitutes or substitutes in production D. substitutes but not substitutes in production

Suppose that people find out that eating more fish improves their health, leading them to increase their demand for fish. A a result, the equilibrium price of fish _____ and the equilibrium quantity _____.

Coffee and sugar are complements. If the supply curve of coffee shifts leftward because of poor weather then there will be A. a leftward shift of the demand curve for coffee B. a leftward shift of the supply curve for sugar C. a decrease in the price of sugar D. an increase in the price of sugar

As a result of an increase in the supply of a good, the equilibrium quantity ____ and the equilibrium price ____.

If the demand curve for bottled water shifts rightward and the supply curve of bottled water shifts leftward, the equilibrium A. price of bottled water definitely decreases B. price of a bottled water definitely increases C. quantity of bottled water definitely increases D. quantity of bottled water definitely decreases