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Which of the following correctly identifies the flow of goods and services?
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The growth that arises from capital accumulation requires that society sacrifice consumption of goods and services now in order to enjoy more consumption in the future.
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| Question | Answer |
|---|---|
| Which of the following correctly identifies the flow of goods and services? | C, D, M, and K |
| The growth that arises from capital accumulation requires that society sacrifice consumption of goods and services now in order to enjoy more consumption in the future. | True |
| Bertha bought 10 shares of iSnack stock for $1 per share. In one year, she sold 5 shares for $5 a share. During this year, the price level increased from 140 to 147. What is Bertha's before-tax real capital gain? | $19 |
| Advocates of government-run employment agencies and public-training programs believe they make job search more efficient and that they reduce the inequities of changing job markets. | True |
| Unemployment benefits are _______. | excluded from GDP because they do not reflect the economy's current production |
| As inflation rises, _______. | menu costs and shoeleather costs of inflation increase |
| Under what reserve ratio is a bank unable to create money _______. | 100 percent |
| Jim considers borrowing funds to invest in expanding his auto repair shop. He is less likely to do that if interest rates fall. | False |
| Based on the figure, you know that _______. | Brazil has a comparative advantage in producing eggs, relative to the rest of the world |
| One reason that the Fed's control of the money supply is not precise is because _______. | households' decisions, which are out of the Fed's control, impact the money supply |
| In Canada, real GDP per person was $2,633 in 1870 and $46,705 in 2022. The growth rate was 1.98 percent per year. Which of the following is true? | The growth rate of 1.98 percent per year ignores short-run fluctuations around the long-run trend and represents an average rate of growth for real GDP per person over the period. |
| Suppose that the nominal interest rate is 6.5 percent and the real interest rate is 3 percent. What is the inflation rate? | 3.5 percent |
| The real interest rate is 4 percent, inflation is 2 percent, and the marginal income tax rate is 25 percent. What is after-tax real rate of interest? | 2.5 percent |
| In which year was the GDP deflator highest? | 2021 |
| When a union bargains successfully with employers, in that industry, _______. | the quantity of labor demanded falls and the quantity of labor supplied rises |
| Chandra sells a house built several years ago. The house sells for $300,000, but $20,000 of this is her real estate agents' commission fee. How much does this transaction add to GDP? | 20,000 |
| In the absence of trade, total surplus in Brazil is represented by the area _______. | A+B+C+D+E |
| Which of the following scenarios does not involve the use of commodity money? | The government of the fictional country of Owana orders the use of paper dollars as money |
| Suppose that mortgage rates fell and mortgage lending increased. This can be explained by a rightward shift of the supply curve of loanable funds. | True |
| First Bank of Zogua, a fictional bank, has made a $1 million loan. This loan appears on what part of T-account of the First Bank of Zogua? | Assets |
| Suppose there are a large number of teens who used to work or seek work who now no longer do either, but instead focus on school work to prepare for college and careers. Other things the same, this makes _______. | both the number of people unemployed and the labor force fall |
| The opening of a new American-owned factory in Algeria would tend to increase Algeria's GDP more than it increases Algeria's GNP because some of the income from the factory accrues to people who do not live in Algeria. | True |
| One cost of deflation is ______. | the redistribution of wealth toward creditors and away from debtors |
| From the figure, you can deduce that _______. | Brazil will export eggs if international trade is allowed |
| One key difference between tariffs and quotas is that _______. | tariffs raise revenue for the government, while quotas do not |
| The short-run effects of an increase in the saving rate include a higher growth rate of productivity and a lower growth rate of income. | False |
| Which of the following is not a function of money? | A tool to increase barter |
| When inflation turns out to be higher than expected, wealth is redistributed from lenders to borrowers. | True |
| When trade in eggs is allowed, producer surplus in Brazil _______. | increases by the area B+E+G |
| Which of the following describes the money equilibrium in the long run? | The quantity of money that people want to hold equals the quantity of money supplied by the Fed. |
| Which of the following is the way that net national product is calculated? | Depreciation losses are subtracted from the total income of a nation's citizens. |
| The Fed has decreased the money supply through open market operations. Which of the following has occurred? | Open market sales and bank reserves decrease. |
| In a closed economy GDP is Y= $100,000, government purchases are G = $25,000, and consumption C = $15,000. In this economy, investment amounts to _______. | $60,000 |
| Discouraged workers, as defined by the Bureau of Labor Statistics, are _______. | excluded from both the number of unemployed and the labor force |
| In Japan, real GDP per person was $1,667 in 1890 and $43,279 in 2022. The growth rate was 2.60 percent per year. Which of the following is true? | The growth rate of 2.60 percent per year ignores short-run fluctuations around the long-run trend. |
| Which of the following describes the effect of a decrease in the money supply? | The money supply curve shifts to the left, the price level decreases causing the value of money to increase. |
| When trade is allowed, _______. | domestic consumers become better off and domestic producers become worse off |
| Bertha lends $1,000 to Danko for 2 years and charges an annual interest rate of 6 percent. Bertha had anticipated the inflation rate of 2 percent, but it actually turned to be 2.5 percent. In two years, as a result of the higher-than-expected inflation, | Danko is better off at the expense of Bertha |
| People who report not being in the labor force but who, in fact, want to work but have given up trying to find a job after an unsuccessful search cause the reported unemployment rate to be higher than otherwise. | False |
| The interest rate at which banks lend reserves to each other overnight is known as _______. | the federal funds rate |
| Sectoral shifts are changes in the demand for workers across industries or regions. | True |
| A factory employs 100 workers, each working 8 hours, to produce 3,200 gadgets. What is productivity at the factory? | 4 gadgets per worker hour |
| Real GDP will decrease _______. | only when production of goods and services decreases |
| If the fictional country of Olar reduces its trade restrictions in conjunction with other countries who also reduce trade restrictions, then Olar has taken what type of approach to free trade? | Multilateral approach |
| Which of the following assets is most liquid? | Money |
| If the government were to decrease the tax rate on interest income, there the equilibrium amount of loanable funds would increase and the equilibrium interest rate would decrease. | True |
| As an alternative to issuing bonds as a means of raising funds, a corporation could _______. | use equity finance |
| Which of the following pairs correctly identify households and firms respectively? | Y and W |
| If real GDP rises and the GDP deflator falls, then it must be that nominal GDP rose. | False |
| Suppose Pora opens its borders to international trade and becomes an importer of cars. As a result _______. | producer surplus decreases and consumer surplus increases in Pora |
| Suppose that neither workers in the paper industry nor workers in the furniture industry are unionized. If workers in the paper industry unionize, the supply of workers in the furniture industry will _______. | rise, reducing the wages of workers in the furniture industry |
| Unemployment data are collected _______. | through a regular survey of about 60,000 households |
| Yona buys used textbooks for $600 and new textbooks for $800 that are made in the U.S. As a result _______. | U.S. consumption purchases increase by $800 and U.S. GDP increases by $800 |
| Which of the following are examples of transfer payments? | Both unemployment benefits and social security payments |
| Ashley owns a home worth $500,000 and owes $100,000 in student loans. If you asked an economist, she would say Ashley has $400,000 worth of money. | False |
| Which of the following countries is a middle-income country, which over the past century had a higher rate of economic growth than the United States? | Mexico |
| What is the M1 money supply? | M1 includes currency, demand deposits at banks, and some other liquid deposits such as the balances in savings accounts. |
| In the late 1800's, Japan was the wealthiest country in the world. | False |
| As the price level increases, _______. | the value of money decreases |
| With no tariffs on energy drinks, the government of Soburg will _______. | import 6 thousand cans |
| By definition, a closed economy _______. | does not trade with other economies |
| When trade is allowed, _______. | Brazilian producers of eggs become better off and Brazilian consumers of eggs become worse off |
| As the price level decreases, _______. | the value of money increases |
| Real GDP is computed using _______. | base-year prices and current quantities |
| The official government unemployment rate (U-3) fails to fully capture labor utilization because it does not capture _______. | discouraged workers |
| Suppose there are a large number of teens who used to work or seek work who now no longer do either, but instead focus on school work to prepare for college and careers. Other things the same, this makes _______. | both the number of people unemployed and the labor force fall |
| Consider the case of Crusoe's economy. Suppose Robinson Crusoe spends two hours to catch four fish. What is his productivity? | 2 fish per hour |
| The interest rate at which banks lend reserves to each other overnight is known as _______ | the federal funds rate |
| From 1870 to 2020, countries with lower levels of real GDP per person than the United States all had growth rates that are lower than that of the United States. | False |
| The economy's bond market is associated with debt finance. | True |
| A perpetuity is distinguished from other bonds in that it _______. | never matures |
| Which of the following is true about the General Agreement on Tariffs and Trade (GATT)? | GATT was initiated in response to high tariffs imposed during the Great Depression of the 1930s. |
| which shows the market for cheese in Germany. With trade, Germany will _______. | import 400 units of cheese |
| When inflation was expected to be high and it turns out to be low, wealth is redistributed from debtors to creditors. | True |
| Which arrow includes the hours an accountant worked? | M |
| An increase in the value of money decreases the price of goods and services measured in terms of money. | True |
| The higher the expected future profitability of a corporation, the higher the demand for that corporation's stock. | True |
| GDP equals _______. | the market value of all final goods and services produced within a country in a given period of time |
| Bertha uses all of the following resources to prepare delicious breakfast meals at her café. Which of them is an example of physical capital? | Furniture and appliances |
| Spells of unemployment end with job seekers exiting the labor force about _______. | 1/2 of the time |
| Consider a closed economy with national saving of $3 trillion, consumption of $10 trillion, and government purchases of $4 trillion. What the economy's is GDP? | $17 trillion |
| Rudy has graduated from college and is devoting his time to searching for a job. He has seen plenty of openings but has not yet been offered one that best suits his tastes and skills. Rudy is _______. | frictionally unemployed; frictional unemployment exists even in the long run |
| A national chain of grocery stores with limited internal funds plans to expand by opening several new stores. Which of the following describes how the chain will likely raise the required funds? | Issue bonds |
| The real interest rate is 5 percent, inflation is 3 percent, and the marginal income tax rate is 25 percent. What is after-tax real rate of interest? | 3 percent |
| You are hired by the state to help people find jobs with will be unemployed for a _ time Over the course of a day most of your time will be spent working with people who will be unemployed for a __time | short; long |
| If the amount U.S. citizens earn abroad is larger than the amount foreign citizens working in the U.S. earn, then _______. | U.S. net factor payments from abroad are positive, and GNP is larger than GDP |
| If the money multiplier is 5 and the Fed wants to increase the money supply by $100,000, it could _______. | buy $20,000 worth of bonds |
| The worker health version of the efficiency wage theory is _______. | less relevant for explaining unemployment in developed countries than in less developed countries |
| In the U.S., people are required to pay taxes on real capital gains irrespective of their nominal capital gains. | False |
| The financial system moves the economy's scarce resources from _______. | savers to borrowers |
| The required reserve ratio is 10 percent and First National Bank sells $200 of its short-term securities to the Federal Reserve. This action will initially _______. | increase First National's reserves by $200. Its excess reserves are $1,200 |
| Nominal GDP is a better gauge of economic well-being than real GDP. | False |
| Suppose an economy experiences an increase in its saving rate. The higher saving rate leads to a higher growth rate of productivity in the long run. | False |
| The interest rate at which banks lend reserves to each other overnight is known as _______. | the federal funds rate |
| In 1900, Brazil's real GDP per person was only 73 more than China's From 1900 to 2020 Brazil experienced 2.36 percent economic growth while China had 2.56 percent As a result by the Brazil's real GDP per person was $2476 less than China's This shows __ | small differences in growth rates can result in large dollar differences over time |
| The market value of all final goods and services produced within Urkesh in 2019 is _______. | $400 |
| With trade, Italy will _______. | import 4 thousand bottles of wine |
| which shows the market for cheese in Germany. With trade, Germany will _______. | import 400 units of cheese |
| This country decided to impose a tariff after allowing trade. The tariff causes _______. | a decrease in imports of 400 units |
| When deciding how much to save, people care most about before-tax nominal interest rates. | True |
| Suppose that Bonds A and B have identical characteristics except that Bond A has a term of 10 years and Bond B has a term of 1 year. Which of the following is true about these bonds? | bond A pays a higher interest rate than Bond B. |
| Suppose Zusau opens its borders to international trade and becomes an exporter of shirts. As a result, _______. | producer surplus increases for producers of shirts in Zusau |
| If a bank has just enough reserves to meet the required reserve ratio of 25 percent, and receives a deposit of $800, it has initially experienced a _______. | $600 increase in excess reserves and a $200 increase in required reserves |
| Which of the following must be true if S = (Y - C – G)? | Such an economy is closed. |
| Factors of production include only physical capital such as business structures and business equipment. | False |
| The amount of revenue collected by the Soburg government from the tariff is _______. | $4 thousand |
| Which of the following is a common argument in favor of restricting trade? | The jobs argument |
| Suppose an economy experiences an increase in its saving rate. The higher saving rate leads to a higher growth rate of productivity in the long run. | False |
| Suppose the Fed wishes to decrease the money supply, which of the following open market operations will the Fed conduct to accomplish this goal? | Sells bonds to the public |
| Which of the following is measured by the growth rate of real GDP per person? | Changes in the level of well-being in a country |
| Suppose Canada has outlawed the international trade of maple syrup. The total benefits of buyers and sellers of maple syrup in Canada is _______ | domestic consumer surplus plus domestic producer surplus |
| Right-to-work laws mean that _______. | workers cannot be required to join the union where they work |
| Why do people believe in the inflation fallacy? | People tend to forget that inflation in prices goes hand in hand with inflation in incomes. |
| In a closed economy, GDP is $12 trillion, consumption is $7 trillion, taxes net of transfers are $3 trillion and the government runs a deficit of $1 trillion. What are private saving and national saving? | $2 trillion and $1 trillion, respectively |
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