Midterm Exam

A  AS; right

B  AS; left

C  AD; left

D  AD; right

A  downward sloping AD curve

B  shorter distance to equilibrium point

C  longer distance to equilibrium point

D  flatter top portion of AD curve

A  employment effect; discouraging; encouraging

B  wealth effect; encouraging; discouraging

C  foreign price effect; discouraging; encouraging

D  interest rate effect; encouraging; discouraging

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

B  the trade deficit will decline sharply.

C  government borrowing will increase sharply.

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

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

B  foreign capital imports; less than the 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 trade balance; foreign aid announced by the government.

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

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

A  deficit of $1300

B  surplus of $300

C  deficit of $300

D  surplus of $1300

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

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

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

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

A  70.61%

B  18.34%

C  151.48%

D  38.58%

A  inflation ceiling guarantees

B  inflation protection plans

C  wage protection clauses

D  cost of living adjustments

A  entertainment

B  recreation

C  transportation and insurance

D  apparel and accessories

A  short term decrease

B  ongoing decrease

C  short term rise

D  ongoing rise

A  COLA plus 1.6%

B  COLA plus 2.4%

C  COLA plus 2.2%

D  COLA plus 1.9%

A  14.4%.

B  11%.

C  20.2 %.

D  16.8%.

A  cyclical unemployment

B  cyclical employment

C  seasonal unemployment

D  frictional unemployment

A  It would increase.

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

C  It would not change.

D  It would fall.

A  business activity in the macroeconomy declines.

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

C  labor unions strike for higher wages.

D  the business cycle enters an expansionary phase.

A  5%

B  20%

C  10%

D  1%

A  5.6%.

B  5.3%.

C  6.0%.

D  7.1%

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

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

C  either B) or C) occurs.

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

A  the productivity of labor declines

B  it devotes more resources to research and development.

C  more resources are allocated to consumption goods.

D  taxes are imposed on investment in capital.

A  the quality of available resources

B  the quantity of available resources

C  technological change

D  the level of government spending

A  260 million

B  5 billion

C  6.2 billion

D  2.6 billion

A  triple

B  double

C  one-fourth

D  one-half

A  a production function

B  an aggregate production function

C  human capital

D  physical capital

A  increase the tax deduction for child dependents.

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

C  promote economic growth.

D  increase welfare payments to the poor.

A  0.5%

B  20%

C  1%

D  10%

A  expansion, peak, recession, trough

B  contraction, recession, expansion, boom

C  trough, expansion, recession, peak

D  expansion, trough, recession, peak

A  the value of intermediate goods sold during a period.

B  the value of services rendered during a period.

C  the value of goods produced domestically and sold abroad.

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

A  the amount spent on stocks and bonds.

B  the amount spent on new factories and machinery.

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

D  the amount spent on purchases of art.

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

B  a crisp $50 bill received on your birthday

C  sales revenue received from a yard sale

D  the university tuition paid to enroll in a course

A  NNP; GDP

B  GDP; NNP

C  GNP; NNP

D  NNP; GNP

A  price, quantity supplied

B  price, quantity demanded

C  quantity demanded, price

D  quantity supplied, quantity demanded

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

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

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

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

A  would like to have if the good were free.

B  will buy at various prices.

C  will buy at alternative income levels.

D  need to achieve a minimum standard of living.

A  utility

B  the production possibilities frontier

C  scarcity

D  allocative efficiency

A  an increase in the production of capital goods

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

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

D  technological progress

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

B  can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of 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  acquiring the information relevant to a choice before making that choice

B  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.

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

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

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

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

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

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

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

B  analyzes mergers and acquisitions between firms.

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

D  is narrower in scope than microeconomics.

A  financial investment market

B  labor market

C  financial capital market

D  savings market

A  government

B  business

C  household

D  capital market

A  Specialization

B  Skill

C  Division of labor

D  Economies of scale

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

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

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

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

A  government spending

B  taxes

C  household savings

D  interest rates