Midterm Exam

A  AS; right

B  AD; left

C  AS; left

D  AD; right

A  longer distance to equilibrium point

B  shorter distance to equilibrium point

C  downward sloping AD curve

D  flatter top portion of AD curve

A  interest rate effect; encouraging; discouraging

B  wealth effect; encouraging; discouraging

C  foreign price effect; discouraging; encouraging

D  employment effect; discouraging; encouraging

A  the rise in domestic investment will mean a higher trade deficit.

B  the rise in domestic investment will mean a higher trade surplus.

C  the trade deficit will decline sharply.

D  government borrowing will increase sharply.

A  foreign capital imports; less than the supply of domestic capital available

B  foreign financial capital imports; equal to supply of domestic capital available

C  financial capital supplied; equal the quantity of capital financial demanded

D  foreign aid supplied; be lower than the quantity of domestic aid demanded

A  current account balance; goods, services, international income flows, and foreign aid.

B  current account balance; telecommunications, computers, finance, law, and advertising.

C  current trade balance; finance, law, and software product design.

D  current trade balance; foreign aid announced by the government.

A  surplus of $300

B  deficit of $300

C  deficit of $1300

D  surplus of $1300

A  a trade surplus exists if there is a net outflow of capital excluding foreign borrowing and lending

B  a trade surplus exists if there is a net inflow of capital excluding foreign borrowing and lending

C  a trade surplus means that there is a net outflow of capital

D  a trade surplus means that there is a net inflow of capital

A  70.61%

B  18.34%

C  151.48%

D  38.58%

A  inflation ceiling guarantees

B  wage protection clauses

C  cost of living adjustments

D  inflation protection plans

A  transportation and insurance

B  recreation

C  apparel and accessories

D  entertainment

A  ongoing decrease

B  short term rise

C  short term decrease

D  ongoing rise

A  COLA plus 1.6%

B  COLA plus 2.4%

C  COLA plus 2.2%

D  COLA plus 1.9%

A  16.8%.

B  14.4%.

C  20.2 %.

D  11%.

A  frictional unemployment

B  cyclical unemployment

C  cyclical employment

D  seasonal unemployment

A  It would not change.

B  It would change, but the effect cannot be predicted.

C  It would increase.

D  It would fall.

A  labor unions strike for higher wages.

B  the business cycle enters an expansionary phase.

C  the agriculture sector completes the cycle of planting, cultivating, and harvesting the nation’s food supply.

D  business activity in the macroeconomy declines.

A  10%

B  5%

C  20%

D  1%

A  7.1%

B  5.6%.

C  5.3%.

D  6.0%.

A  many people who claim to be unemployed actually work in the underground economy.

B  people falsely claim that they are actively seeking work in order to receive unemployment benefits.

C  many part-time employees would like to work fulltime, but are unable to get the additional work.

D  either B) or C) occurs.

A  more resources are allocated to consumption goods.

B  taxes are imposed on investment in capital.

C  the productivity of labor declines

D  it devotes more resources to research and development.

A  the quantity of available resources

B  the level of government spending

C  technological change

D  the quality of available resources

A  6.2 billion

B  2.6 billion

C  260 million

D  5 billion

A  double

B  one-fourth

C  one-half

D  triple

A  a production function

B  an aggregate production function

C  human capital

D  physical capital

A  use less capital and more labor in the production process.

B  promote economic growth.

C  increase welfare payments to the poor.

D  increase the tax deduction for child dependents.

A  1%

B  20%

C  10%

D  0.5%

A  contraction, recession, expansion, boom

B  expansion, peak, recession, trough

C  expansion, trough, recession, peak

D  trough, expansion, recession, peak

A  the value of goods produced domestically and sold abroad.

B  the value of services rendered during a period.

C  the value of intermediate goods sold during a period.

D  the value of final goods and services produced, but not sold, during a period.

A  the amount spent on purchases of art.

B  the amount spent on consumer goods that last more than one year.

C  the amount spent on new factories and machinery.

D  the amount spent on stocks and bonds.

A  A depression is a recession that is mild and relatively brief.

B  The timing of business fluctuations is regular and therefore easily predictable.

C  The expansions and contractions of real world business cycles last varying lengths of time and often differ in magnitude.

D  During the contractionary phase of the business cycle, the rate of unemployment is generally quite low.

A  sales revenue received from a yard sale

B  the university tuition paid to enroll in a course

C  cash income received by a self-employed landscaper that is not reported to the IRS

D  a crisp $50 bill received on your birthday

A  NNP; GDP

B  GNP; NNP

C  NNP; GNP

D  GDP; NNP

A  price, quantity demanded

B  quantity supplied, quantity demanded

C  quantity demanded, price

D  price, quantity supplied

A  a shift of the demand curve for beef to the left.

B  a shift of the demand curve for beef to the right.

C  no change; only the supply curve for beef is likely to be affected.

D  a movement down along the demand curve for beef to the right.

A  will buy at various prices.

B  will buy at alternative income levels.

C  need to achieve a minimum standard of living.

D  would like to have if the good were free.

A  allocative efficiency

B  the production possibilities frontier

C  scarcity

D  utility

A  a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time

B  an increase in the number of hours factories are in use

C  technological progress

D  an increase in the production of capital goods

A  can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of the action.

B  is a subjective valuation that can be determined only by the individual who chooses the action.

C  can be objectively determined only by economists.

D  can be determined by adding up the bills incurred as a result of the action.

A  deciding to never purchase a coat made with animal skins or furs

B  acquiring the information relevant to a choice before making that choice

C  choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.

D  measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake

A  consumers are too poor to afford the goods and services available.

B  it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.

C  consumers would be willing to purchase the same quantity of a good at a higher price.

D  at the current market price, consumers are willing to purchase more of a good than suppliers are willing to produce.

A  is narrower in scope than microeconomics.

B  is concerned with the expansion of a small business into a large corporation.

C  is concerned with the expansion and contraction of the overall economy.

D  analyzes mergers and acquisitions between firms.

A  savings market

B  financial investment market

C  financial capital market

D  labor market

A  business

B  household

C  government

D  capital market

A  Skill

B  Division of labor

C  Economies of scale

D  Specialization

A  macroeconomics is concerned with groups of individuals while microeconomics is concerned with single countries.

B  microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets).

C  microeconomics looks at the forest (aggregate markets) while macroeconomics looks at the trees (individual markets).

D  macroeconomics is concerned with generalization while microeconomics is concerned with specialization.

A  household savings

B  taxes

C  government spending

D  interest rates