The law of supply states that, other things equal, as the price of a good goes
up, the quantity supplied goes up
What would happen to a graph (market being computers) when there is cheaper memory chips, (which is an input for making computers) put on the computer market?
Supply would shift to the right
What would happen to the graph (market being corn) when there is a poor corn harvest?
Supply would shift to the left
Which of the following explains the increase in demand for a college education in the U.S.?
A) Income in the US has risen
Compared to last year, fewer oranges are being purchased and the selling price has decreased. This could have been caused by
a decrease in demand
When applied to labor markets the law of supply suggests that
an increase in the wages earned by nurses will cause the quantity of nurses:
supplied to increase
demand to increase
a decrease in the wages earned by nurses will cause the quantity of nurses
supplied to increase
demand to increase
an increase in the wages earned by nurses will cause the quantity of nurses supplied to increase
Which of the following would likely result in an increase in the demand of beef?
D) an increase in family incomes, assuming beef is a normal good
In 2004 wall street journal headline stated, "carbs and fats and trends in snacking all conspire against oreo and others." Which of the following best describes the likely effect of this trend on the oreo market
demand shifted to the left leading to a decline in equilibrium price and quantity.
The explanation for the law of demand involves
consumers ability to substitute different goods
which of the following is not held constant as you move along the demand curve
B) the price of that good
the supply of leather jackets would be expected to ncrease as a result of
a decrease in the cost of producing leather jackets
Given that diesel cars get much better gas mileage than the typical car, an increase in the price of gasoline would be expected to
decrease the demand for gasoline
If you observe a market where quantity demanded doesnt equal quantity supplied a logical conclusion is that
social and political forces are likely to exist in that market
if the price of chicken rises and the price of beef does not rise consumers will respond by
subsitituting beef for chicken
if both buyers and sellers expect the price of a commodity to rise in the future, it is likely that equilibrium
price will rise with little change in equilibrium quantity
when the wage rate paid to labor is above equilibrium the
number of workers seeking jobs exceeds the number of jobs available
if supply and demand both shift to the right equilibrium quantity
rises, but the equilibrium price may rise, fall or stay the same
Honey and jam are subsitute products. If the price of honey increases the demand for
jam will increase causing the price of jam to increase as well
Which of the following would best explain a decrease in the supply of squash?
A) an increase in the price of other vegetables
there are many more subsitutes for good a than for good b.
What happens to the demand curve?
the demand curve for good a likely will be flatter
The current recession has resulted in a large number of individuals who have quit looking for work and are classified as discouraged workers. These people
are not counted as being in the labor force
Given the current unemployment rate of 9.5 percent, what is the economy's potential output?
The economy is beneath potential output
In 1969, the US CPI was 37 and in 2006 it was 201.6. By what percent did prices increase in the US between 1969 and 2006?
Keeping total employment and the number in the population constant, an increase in the number of people available and looking for work will do what to labor force participation?
increase the labor force participation rate but decrease the employment-population ratio.
People who work part-time, or have a full-time job that doesn't use all their skills are included in:
Use the following info to calculate the unemployment rate. Civilian population, 300 million; people incapable of working, 25 million; people not looking for work, 75 million; and unemployed workers 8 million
With respect to the unemployment problem, classical economists generally take the position that:
individuals should be responsible for finding their own jobs
If an economist says that real wages have fallen in the past year, what has most likely happened?
Inflation has risen more rapidly than money wages
Which of the following is a statement keynesians would likely make?
All unemployment is frictional unemployment
If a person isn't working thats his or her choice
Structural and cyclical unemployment are more common than frictional unemployment
The unemployment rate overstates actual unemployment
C. Structural and Cyclical unemployment are more common than fricitional
Policies that affect work, capital accumulation, and technological change are primarily relevant to:
long-run growth framework
If nominal output is 4.4 tril and the GDP deflator is 110 then real output is
4.4T/110 x 100
The lowest sustainable rate of unemployment that policy makers believe is achievable under existing conditions is:
called target rate of unemployment
A price index in its base year:
is always equal to 100
John has received a 3% pay increase but the rate of inclation is 6%. Economists would tell John that his real wge has:
fallen by 3%
Which of the following would not be called unemployed?
Construction worker laid off because of a slowdown in house building
Young mother on welfare because her husband left and she stays home
Recent high school graduate who quit job and is looking for better
A recent college graduate who has not found job
Under pure capitalism the main deterrent of unemployment is:
fear of hunger
Which of the followin statement is what a classical economist would say:
Most unemployemnt is frictional
Frictional unemployment is only a small part of total unemployment
Unemployment rate underestimates true extent of unemployment
Society owes a person a job commensurate with his or her training
Most unemployment is frictional
Long-run growth framework focuses on factors affecting
incentives to produce
Clark, middle-aged bachelor, quit his job to look for a better job. The Bureau of Labor Stats counts clark as:
Target rate of unemployment can be affected by all of the following except the
Level of output
Populations age structure
social and institutional structure
relationship between inflation and unempolyment
level of output
Real GDP is desinged to measure
change in nations output over time
Does national income accounting have a category capturing the effects of depreciation
Yes, Capital Consumption Allowance
Aggregate income includes all except
A) transfer payments
If an economy produces 100 pencils valued at 25 cents a piece and 500 sheets of ruled paper at 1 cent a piece, using GDP as measure of output
Pencils are weight as being 25time smore importnat than ruled paper
the distinction between consumption and investment is
somewhat arbitrary since investment inclued housing investment, which does not increase future productive capacity
Using following info what is economy's net domestic product?
consumption 4.2 tril; investment 1.3 tril; government purchases 1.5 tril; depreciation 0.4 tril and GDP is 6.6 tril?
Which is not part of US GDP?
Payments for insurance policy on old BMW sold by US
Value of BMW imported from Germany
Value of BMW produced in US
Commissions earned by BMW in US
Value imported from Germany
If real GDP has increased by 3% and nominal GDP has increase by 5%, then
net factor income is 2%
Net domestic product equals:
consumption + investment + govern purchases + net exports - depreciation
Which of the following is an example of an intermediate product:
pari of skis sold by sporting goods retailer to skier
share of IBM stock
Lumber produced by Cascade and sold to builder
antique car sold to highest bidder
lumber produced by boise cascade and sold to a builder of houses
GDP is 7 tril. If consumption is 3.5 tril, investment is 1.4 tril and govern purchases are 2.1 tril then:
exporst are equal to imports
consumption + investment + gov purchases
In 1996, Boskin Commission report found that past estimates of inflation overstated actual infaltion by about 1.1 percent. Assuming that the findings of commission are accurate:
only real GDP was higher than previously thought.
In 2004, US net exports were more than -600 bil, a record low. Assuming all other components remained the same as a consequence:
US GDP was 600 bil lower than it would have beein if net exports had equaled zero
If a firm's cost of materials is 100$ and its sales are $500 its VALUE ADDED is
In what category is the purchase of a computer by a business in national income accounting?
If you decide not to spend 1000$ you earned at your summer job but to buy shares in microsoft, in economics this action would be classified as
The difference between GDP and GNP is GDP
measures economic activity that occurs within country while GNP measures economic activity of all people and buisnesses OF a country
Calculate GDP using this info:
Transfer Payments 1050
Government puchases 1400
Net foreign factor income 20
If US imports of goods and services exceed exports US
GDP is less than the sum of consumption, investment and gov. purchases
To calculate GDP
weight the output of each final good and service produced in an economy in a year by its price in that year and then sum the result.
Land would have constrained per capita growth in the 1800 if
changes in techonolgy and capital stock had not occured
According to convergence hypothesis
countries with higher per capita incomes hsould eventually grow slower than countries with lower per capita incomes and similar institutional structures
unlike classical growth theory, new growth theory emphasizes the importance of
At the end of WWII when Korea was split into 2, NOrth and South had similar per cpaita incomes. In the years since their per capita incomes have diverged. How can this divergence be best explained in reference to convergence hypothesis?
The convergence hypothesis assuems that countries have similar institutional structures, an assumption clearly violated in the case of KOrea
Economic growth thru the market has
helped both rich and poor
If increaseing returns to scale exist, then an increase in output of exactly 3% is most likely to be produced by increase in all inputs of less than 3%
If technological agglomeration increases in poor countries, we might expect that convergence in per captia income levels across rich and poor countries will
take less time to acheive
In early 20th century US South was poor relative to North. During the century the gap in percapita income narrowed, Why
common institutional enviorment
Over last three decades, the Chinese govern. has adopted a series of market oriented reforms that have shifted control of many parts of chinese economy from gov. officials to market forces. These reforms have most likely stimulated chinas growth for which reason?
They have provided individuals with greater incentive to be efficient
What tends to inhibit growth?
Governemnt approval of all economic activity
Production is characterized by
increasing returns to scale
Investment relates to capital in the following way
Causes an increase in capital overtime.
A concern about long-term economic growth was important in economnics
from time of AdamSmith and WealthofNations
What effect would we expect in market for loanable funds if some people discover a new buisn. opportunity that requires investment
demand will shift right and supply will not change
Economic growth causes
production possibility curve to shift out
which of the following is least likely to increase potential output?
increased aggregate demand
Steven has suggested that Scrooge, was not really so bad. What is he saying would happen in the market for loanable funds if all misers sold their assets and gave away money?
supply would shift left, causing investment to fall
has relatively large effect on living standards over long periods of time
Economists are confident that the marginal product of labor is higher in the US than it is in China
China has a larger number of people relative to land and capital
Study of economic growth focuses on factors that cause an
economy's production possibility curve to shift out