Midterm Exam

A  AD; left

B  AS; left

C  AD; right

D  AS; right

A  downward sloping AD curve

B  flatter top portion of AD curve

C  shorter distance to equilibrium point

D  longer distance to equilibrium point

A  wealth effect; encouraging; discouraging

B  foreign price effect; discouraging; encouraging

C  employment effect; discouraging; encouraging

D  interest rate effect; encouraging; discouraging

A  government borrowing will increase sharply.

B  the trade deficit will decline sharply.

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

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

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

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

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

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

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

A  surplus of $1300

B  deficit of $1300

C  surplus of $300

D  deficit of $300

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

B  a trade surplus exists if there is a net outflow 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  18.34%

B  151.48%

C  38.58%

D  70.61%

A  inflation ceiling guarantees

B  wage protection clauses

C  cost of living adjustments

D  inflation protection plans

A  entertainment

B  recreation

C  apparel and accessories

D  transportation and insurance

A  ongoing decrease

B  ongoing rise

C  short term rise

D  short term decrease

A  COLA plus 1.6%

B  COLA plus 2.2%

C  COLA plus 2.4%

D  COLA plus 1.9%

A  16.8%.

B  11%.

C  20.2 %.

D  14.4%.

A  frictional unemployment

B  seasonal unemployment

C  cyclical employment

D  cyclical 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  the business cycle enters an expansionary phase.

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  business activity in the macroeconomy declines.

A  20%

B  10%

C  1%

D  5%

A  5.6%.

B  6.0%.

C  5.3%.

D  7.1%

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

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

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

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 quality of available resources

C  the level of government spending

D  technological change

A  2.6 billion

B  5 billion

C  6.2 billion

D  260 million

A  double

B  triple

C  one-fourth

D  one-half

A  human capital

B  a production function

C  an aggregate production function

D  physical capital

A  promote economic growth.

B  increase welfare payments to the poor.

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

D  increase the tax deduction for child dependents.

A  10%

B  0.5%

C  20%

D  1%

A  contraction, recession, expansion, boom

B  expansion, trough, recession, peak

C  trough, expansion, recession, peak

D  expansion, peak, recession, trough

A  the value of services rendered during a period.

B  the value of intermediate goods sold during a period.

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

D  the value of goods produced domestically and sold abroad.

A  the amount spent on stocks and bonds.

B  the amount spent on purchases of art.

C  the amount spent on new factories and machinery.

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

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

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

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

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

A  sales revenue received from a yard sale

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

C  the university tuition paid to enroll in a course

D  a crisp $50 bill received on your birthday

A  GDP; NNP

B  NNP; GDP

C  GNP; NNP

D  NNP; GNP

A  quantity supplied, quantity demanded

B  price, quantity supplied

C  quantity demanded, price

D  price, quantity demanded

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

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

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

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

A  will buy at various prices.

B  would like to have if the good were free.

C  need to achieve a minimum standard of living.

D  will buy at alternative income levels.

A  utility

B  the production possibilities frontier

C  scarcity

D  allocative efficiency

A  an increase in the production of capital goods

B  technological progress

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

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

A  can be objectively determined only by economists.

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

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

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

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  acquiring the information relevant to a choice before making that choice

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

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

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

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

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

A  is narrower in scope than microeconomics.

B  analyzes mergers and acquisitions between firms.

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

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

A  labor market

B  financial investment market

C  savings market

D  financial capital market

A  government

B  household

C  capital market

D  business

A  Economies of scale

B  Division of labor

C  Specialization

D  Skill

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

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

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

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

A  government spending

B  interest rates

C  household savings

D  taxes