1. The law of supply states that, other things equal, as the price of a good goes
    up, the quantity supplied goes up
  2. 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
  3. What would happen to the graph (market being corn) when there is a poor corn harvest?
    Supply would shift to the left
  4. Which of the following explains the increase in demand for a college education in the U.S.?

    A) Income in the US has risen
  5. 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
  6. 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
  7. 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
  8. 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.
  9. The explanation for the law of demand involves
    consumers ability to substitute different goods
  10. which of the following is not held constant as you move along the demand curve

    B) the price of that good
  11. the supply of leather jackets would be expected to ncrease as a result of
    a decrease in the cost of producing leather jackets
  12. 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
  13. 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
  14. if the price of chicken rises and the price of beef does not rise consumers will respond by
    subsitituting beef for chicken
  15. 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
  16. when the wage rate paid to labor is above equilibrium the
    number of workers seeking jobs exceeds the number of jobs available
  17. if supply and demand both shift to the right equilibrium quantity
    rises, but the equilibrium price may rise, fall or stay the same
  18. 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
  19. Which of the following would best explain a decrease in the supply of squash?

    A) an increase in the price of other vegetables
  20. 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
  21. 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
  22. Given the current unemployment rate of 9.5 percent, what is the economy's potential output?
    The economy is beneath potential output
  23. 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?
  24. 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.
  25. People who work part-time, or have a full-time job that doesn't use all their skills are included in:
  26. 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
  27. With respect to the unemployment problem, classical economists generally take the position that:
    individuals should be responsible for finding their own jobs
  28. 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
  29. 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
  30. Policies that affect work, capital accumulation, and technological change are primarily relevant to:
    long-run growth framework
  31. If nominal output is 4.4 tril and the GDP deflator is 110 then real output is
    4 tril

    4.4T/110 x 100
  32. The lowest sustainable rate of unemployment that policy makers believe is achievable under existing conditions is:
    called target rate of unemployment
  33. A price index in its base year:
    is always equal to 100
  34. 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%
  35. 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
  36. Under pure capitalism the main deterrent of unemployment is:
    fear of hunger
  37. 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
  38. Long-run growth framework focuses on factors affecting
    incentives to produce
  39. Clark, middle-aged bachelor, quit his job to look for a better job. The Bureau of Labor Stats counts clark as:
  40. 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
  41. Real GDP is desinged to measure
    change in nations output over time
  42. Does national income accounting have a category capturing the effects of depreciation
    Yes, Capital Consumption Allowance
  43. Aggregate income includes all except

    A) transfer payments
  44. 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
  45. the distinction between consumption and investment is
    somewhat arbitrary since investment inclued housing investment, which does not increase future productive capacity
  46. 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?
    6.2 tril

  47. 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
  48. If real GDP has increased by 3% and nominal GDP has increase by 5%, then
    net factor income is 2%
  49. Net domestic product equals:
    consumption + investment + govern purchases + net exports - depreciation
  50. 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
  51. 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
  52. 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.
  53. 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
  54. If a firm's cost of materials is 100$ and its sales are $500 its VALUE ADDED is
  55. In what category is the purchase of a computer by a business in national income accounting?
    Investment Spending
  56. If you decide not to spend 1000$ you earned at your summer job but to buy shares in microsoft, in economics this action would be classified as
  57. 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
  58. Calculate GDP using this info:

    Consumption 5100
    INvestment 1100
    Transfer Payments 1050
    Government puchases 1400
    Exports 850
    mports 950
    Net foreign factor income 20
  59. If US imports of goods and services exceed exports US
    GDP is less than the sum of consumption, investment and gov. purchases
  60. 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.
  61. Land would have constrained per capita growth in the 1800 if
    changes in techonolgy and capital stock had not occured
  62. 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
  63. unlike classical growth theory, new growth theory emphasizes the importance of
  64. 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
  65. Economic growth thru the market has
    helped both rich and poor
  66. 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%
  67. 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
  68. In early 20th century US South was poor relative to North. During the century the gap in percapita income narrowed, Why
    common institutional enviorment
  69. 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
  70. What tends to inhibit growth?
    Governemnt approval of all economic activity
  71. Production is characterized by
    increasing returns to scale
  72. Investment relates to capital in the following way
    Causes an increase in capital overtime.
  73. A concern about long-term economic growth was important in economnics
    from time of AdamSmith and WealthofNations
  74. 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
  75. Economic growth causes
    production possibility curve to shift out
  76. which of the following is least likely to increase potential output?
    increased aggregate demand
  77. 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
  78. Economic growth
    has relatively large effect on living standards over long periods of time
  79. 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
  80. Study of economic growth focuses on factors that cause an
    economy's production possibility curve to shift out
Card Set
Supply and Demand