Macroeconomics Exam 1 Review from Quiz 1

. In economics the true cost of making a choice is the value of what must be given up. A. True B. False

As a student, one of the costs of sleeping in rather than going to class is likely to be a lower grade in the class. A. True B. False

Government controls over market prices frequently "backfire." A. True B. False

It is impossible for both nations to gain when trading with one other. A. True B. False

In her calculation of the cost of going to college, an economist would include the amount of forgone earnings over the years spent at college. A. True B. False

Lower inflation rates are usually correlated with lower unemployment rates A. True B. False

Attempts by the government to reduce the rate of inflation often result in higher unemployment in the short run. A. True B. False

Abstraction ignores many details in order to focus on the most important elements of a problem. A. True B. False

In economics, abstraction from reality is necessary because of the complexity of the real world. A. True B. False

Economic problems are made manageable by stripping away some of the unnecessary details. A. True B. False

A vertical line always has a slope of one. A. True B. False

A horizontal line always has a slope of one. A. True B. False

A line that slopes downward from left to right has a positive slope. A. True B. False

Slope will vary along a curve (as opposed to a straight line). A. True B. False

GDP is a measure of the total output of an economy. A. True B. False

Government production accounts for about half of all GDP in the United States. A. True B. False

The U.S. economy is relatively closed in terms of economic activity related to exports and imports. A. True B. False

An open economy is one in which exports and imports constitute a large share of GDP. A. True B. False

The United States is an example of a mixed economy. A. True B. False

A recession is a period of time in which the total output of the economy falls. A. True B. False

Unemployment in the United States varies considerably over time. A. True B. False

The majority of American workers are employed in the service sector of the economy. A. True B. False

To an economist, the cost of a college education A. Includes the income that the student could have earned during the time spent in college. B. Can be measured solely by the dollar cost of tuition, books, and other fees. C. Includes only the cost of schooling, not the cost of housing and food. D. Excludes financial aid in computation of the cost of schooling.

Consider the following information regarding a person's decision to go to college: college tuition is $20,000 per year, room and board is $10,000 per year, and books and materials are $2,000 per year. Suppose that instead of going to college this person could have earned $18,000 working in a store. An economist would calculate the cost of going to college as A. $20,000 B. $30,000 C. $32,000 D. $50,000 E. $18,000

Suppose Tammy grew up on a farm and is very good at plowing. In addition suppose she is a popular country singer who earns $4,000 per performance. If her husband Bob can plow (but not as well as Tammy) but he can't carry a tune, then it would be most efficient if A. Tammy did both the plowing and the singing. B. Tammy specialized in plowing and Bob in singing. C. Bob did both the plowing and singing. D. Tammy specialized in singing and Bob in plowing. E. They both plowed and sang.

If a government enacts a rent control to protect apartment tenants, the result is likely going to be A. An increase in rents with a surplus of apartments. B. An increase in rents with a shortage of apartments. C. A decrease in rents with a surplus of apartments. D. A decrease in rents with a shortage of apartments.

The slope of a curved line differs from that of a straight line in that A. The numerical value of the slope of a straight line is different at every point, but is the same at every point for a curved line. B. The numerical value of the slope of a straight line is always higher than the numerical value of the slope of a curved line. C. The numerical value of the slope of a curved line is different at every point, but is the same at every point for a straight line. D. The numerical value of the slope of a curved line is an irrational number, but the numerical value of the slope of a straight line is always a rational number. E. Straight lines are more realistic, but curved lines are not descriptively accurate for the real world.

A line that rises at a 45 degree angle has a slope of A. 0.45 B. 1 C. 45 D. 1/45

If movement along a graph causes the value on the vertical axis to rise by 5 units and the value on the horizontal axis to fall by 10 units, the slope of the function is A. 5. B. -.5 C. -2 D. -72

The slope of a curved line at a particular point is A. Always greater than the slope of a straight line at the same point. B. Always smaller than the slope of a straight line at the same point. C. Defined as the slope of the straight line representing the average values for the entire curve. D. Defined as the slope of the straight line that is tangent to the curve at that point.

Which of the following is the best definition of openness? A. The average of imports expressed as a share of GDP. B. The average of goods traded in markets expressed as a share of GDP. C. The average of imports and exports expressed as a share of GDP. D. The average trade balance expressed as a share of GDP. E. The average of exports expressed as a share of GDP.

Which of the following is the most closed economy? A. The Netherlands B. The United States C. Germany D. Russia E. Canada

Economic fluctuations are defined as A. Alternating periods of significant GDP growth and decline. B. Events only encountered in developing countries. C. Periods of stable economic growth D. Alternating periods of unemployment falling above and below zero.

One of the most important changes in the composition of the labor force in the United States has been A. The major increase in the number of women who work outside the home. B. The drop in the number of men who only work part-time. C. The steady decline in the number of women who work. D. The increase in the ratio of male workers to female workers. E. The major increase in the number of men who work away from the home or farm.

Consumer spending accounts for what share of GDP? A. 20% B. 40% C. 70% D. 90%

Along with changes in the level of economic activity, measured by GDP, what other economic variable tends to rise and fall as a consequence? A. Precipitation B. Regulation C. Circulation D. Unemployment

Why does unemployment tend to change when the level of output changes? A. Persons wish to buy things, and if output falls, people need to work less to earn the income to buy the smaller output. B. Labor is an input, and if output falls, employers need fewer workers to make it, so the employment falls. C. When output rises, persons are more interested in buying, and will work more to earn the income to buy things. D. Persons face the option of buying or working, so that when they do more of one, the other necessarily falls. E. When companies replace workers with machines, output rises, and people take time off from work to buy before returning to employment.

Most American workers A. Are employed in the goods-producing sector. B. Are employed by government. C. Are employed in the service-producing sector. D. Are employed in the agricultural sector.

The role of government in a market economy includes all of the following except A. Providing services such as national defense. B. Collecting taxes. C. Extensive ownership of productive resources D. Making and enforcing laws.

The largest single portion of the federal budget is devoted to A. National defense. B. Medicare and Medicaid. C. Social Security and unemployment compensation D. Education. E. Interest payments on the national debt