Econ macro-Final

When tax revenues minus outlays is

i. positive, the government has a budget surplus.

ii. negative, the government has a budget deficit.

iii. zero, the government has a balanced budget.

A. i only

B. i and ii only

C. iii only

D. ii and iii only

E. i, ii, and iii

E. i, ii, and iii

The items included in the CPI are

A. goods and services consumed by the typical urban household.

B. final goods produced in the United States.

C. final goods and services produced in the United States.

D. only goods and services produced within the current year and consumed by the typical household.

E. goods but not services consumed by the typical urban household

A. goods and services consumed by the typical urban household.

Gross Domestic Product measures the

A. market value of the final goods and services produced in a given year within a country.

B. market value of the final goods and services consumed by households in a given year within a country.

C. quantity of the goods and services produced in a given year, listed item by item, within a country.

D. income of the business sector within a country.

E. measures the market value of the domestic labor in a given year within a country.

A. market value of the final goods and services produced in a given year within a country.

f New Zealand is operating at potential GDP, which of the following is true?

i) New Zealand only has frictional and structural unemployment.

ii) There is no inflation in New Zealand.

iii) New Zealand has positive net exports.

A. i, ii and iii.

B. ii only.

C. i only.

D. i and iii.

E. i and ii

C. i only.

The reference base period that the BLS uses to measure the CPI is

A. 1993 1995.−

B. 1998 2000.−

C. 1982 1984.−

D. 2005.

E. 1967 1969.

C. 1982 1984.−

Imports are defined as the goods and services that we

A. produce abroad using U.S. owned factories and then consume in the United States.

B. partially produce in both the United States and another country.

C. buy from other countries.

D. produce and consume in the United States.

E. sell to other countries

C. buy from other countries.

Suppose you can earn 5 percent on your savings account if you deposit $500 in it. The inflation rate is 3 percent. The opportunity cost of holding the $500 as money rather than in your savings account is

A. $525.

B. $100.

C. $30.

D. $25.

E. $80

D. $25.

Which of the following is a consumption good or service?

A. the Starship, Space X's proposed human-carrying rocket

B. a United Parcel Service truck delivering Christmas gifts

C. a personal computer purchased in order to play games at home

D. a satellite dish installed by Cox Cable to download programs that are then distributed through its cable system

E. a United Airline ticket counter

C. a personal computer purchased in order to play games at home

Scarcity requires that we

A. make choices about what goods and services to produce.

B. produce efficiently.

C. learn to limit our wants.

D. have the most rapid economic growth possible.

E. have unlimited resources.

A. make choices about what goods and services to produce.

The United States exports

A. goods only.

B. services only.

C. goods and services.

D. only agricultural products and high tech goods.−

E. manufactured goods only.

C. goods and services.

Often people trying to withdraw money from their bank must wait in line, which reflects a ________ allocation method.

A. command

B. majority rule

C. market price

D. contest

E. first come, first served

E. first come, first served

During a recession, there is a ________ the short run Phillips curve, while during an expansion there is a ________ the short run Phillips curve.

A. rightward shift of; leftward shift of

B. leftward shift of; rightward shift of

C. upward movement along; downward movement along

D. movement closer to; movement further from

E. downward movement along; upward movement along

E. downward movement along; upward movement along

Because human wants are insatiable and unlimited while available resources are limited, people are said to face the problem of

A. scarcity.

B. macroeconomics.

C. microeconomics.

D. social interest versus self interest.−

E. why to produce

A. scarcity.

While moving along a production possibilities frontier, the amount of labor ________, the amount of capital ________, and the level of technology ________.

A. varies; is fixed; is fixed

B. is fixed; is fixed; varies

C. is fixed; is fixed; is fixed

D. varies; is fixed; varies

E. varies; varies; varies

C. is fixed; is fixed; is fixed

The difference between the nominal interest rate and the real interest rate is the

A. GDP growth rate.

B. price level.

C. inflation rate.

D. unemployment rate.

E. money growth rate minus the growth rate of real GDP.

C. inflation rate.

The FOMC is the

A. report the Fed gives to Congress twice a year.

B. group within the Fed that makes monetary policy.

C. report that summarizes the economy across Fed districts.

D. name of the meeting the Fed has with Congress twice a year.

E. interest rate the Fed most directly influences

B. group within the Fed that makes monetary policy.

The labor force is the

A. working age population minus the number of unemployed people.−

B. number of employed people minus the number of unemployed people.

C. number of employed people in the working age population.−

D. total population divided by the number of employed people.

E. number of employed people plus the number of unemployed people

E. number of employed people plus the number of unemployed people

A university has a speakers series each semester. Students line up early in order to get a limited number of free tickets to hear the speaker's program. The seats are allocated using the _____ method.

A. market price

B. command

C. contest

D. sharing equally

E. first-come, first-served

E. first-come, first-served

The curve shown in the figure is the

A. aggregate demand curve.

B. Phillips curve.

C. demand for money curve.

D. potential GDP curve.

E. aggregate supply curve

B. Phillips curve.

When you join the local organic food market and then buy produce each month, money is used as

A. only a unit of account.

B. a store of value and a unit of account.

C. a medium of exchange and a store of value.

D. only a store of value.

E. a medium of exchange and a unit of account

E. a medium of exchange and a unit of account

Potential GDP is

A. the level of output produced when the economy is fully employed.

B. shows that the Okun gap vastly exceeds the Lucas wedge.

C. another name for the Lucas wedge.

D. the same as real GDP.

E. the same as nominal GDP

A. the level of output produced when the economy is fully employed.

Moving along the aggregate supply curve when the price level rises, the

A. quantity supplied does not change because the aggregate supply curve is a vertical line.

B. the aggregate demand curve shifts rightward.

C. the quantity supplied decreases.

D. the aggregate demand curve shifts leftward.

E. the quantity supplied increases

E. the quantity supplied increases

The short run Phillips curve presents a tradeoff because a−

A. higher unemployment rate can be achieved at the cost of a higher inflation rate.

B. higher price level leads to a lower real GDP.

C. lower unemployment rate can be achieved at the cost of a higher inflation rate.

D. lower unemployment rate can be achieved at the cost of a lower inflation rate.

E. higher inflation leads to a higher nominal interest rate

C. lower unemployment rate can be achieved at the cost of a higher inflation rate.

Scarcity exists because

A. the costs of production are high.

B. people take too much leisure time.

C. some individuals have low income.

D. some people make bad economic decisions.

E. human wants exceed the resources available to satisfy them

E. human wants exceed the resources available to satisfy them

Moving along the AS curve, when the price level increases the

A. nominal wage rate rises and there is a decrease in the quantity of real GDP supplied.

B. real wage rate rises and there is an increase in the quantity of real GDP supplied.

C. real wage rate falls and there is an increase in the quantity of real GDP supplied.

D. nominal wage rate falls and there is an increase in the quantity of real GDP supplied.

E. real wage rate rises and there is a decrease in the quantity of real GDP supplied

C. real wage rate falls and there is an increase in the quantity of real GDP supplied.

Scarcity means that

A. wants are greater than what we can produce with our resources.

B. governments must make up for shortages in resources.

C. resources are unlimited.

D. choices made in self interest cannot be the same as those made in the social interest.−

E. what we can produce with our resources is greater than our material wants

A. wants are greater than what we can produce with our resources.

A price ceiling in the market for gasoline that is below the equilibrium price will lead to

A. no change in the market since the price ceiling is below the equilibrium price.

B. the quantity supplied of gasoline exceeding the quantity demanded.

C. the quantity demanded of gasoline exceeding the quantity supplied.

D. a decrease in the supply of gasoline.

E. an increase in the demand for gasoline.

C. the quantity demanded of gasoline exceeding the quantity supplied.

When disposable income increases,

A. the consumption function shifts downward.

B. there is a movement upward along the consumption function but the consumption function does not shift.

C. the consumption function shifts upward.

D. there is no movement along the consumption function and the consumption function does not shift.

E. there is a movement downward along the consumption function but the consumption function does not shift

B. there is a movement upward along the consumption function but the consumption function does not shift.

The following are groups of individuals in the population:

1. Individuals who are under 16

2. Individuals in institutional care

3. Individual in the armed forces

4. Individuals working for pay at a fulltime job

5. Individuals who are employed

6. Individuals not employed but were available for work and were looking for work

7. Individuals not employed and looking for work

Using the table above, the Current Population Survey classifies the group of individuals who are left after subtracting from the total population groups 1, 2, 3, 4, 5, and 6 as

A. not in the labor force.

B. discouraged workers.

C. the labor force.

D. employed.

E. unemployed

A. not in the labor force.

The relationship between the nominal interest rate, the real interest rate, and the inflation rate is that the

A. real interest rate is equal to the nominal interest rate multiplied by the inflation rate.

B. nominal interest rate is equal to the real interest rate divided by the inflation rate.

C. real interest rate is equal to the nominal interest rate plus the inflation rate.

D. nominal interest rate is equal to the real interest rate minus the inflation rate.

E. nominal interest rate is equal to the real interest rate plus the inflation rate

E. nominal interest rate is equal to the real interest rate plus the inflation rate

During which years did the country have a budget surplus?

A. 2015 and 2016

B. 2019 only

C. 2018 only

D. 2017 and 2019

E. all except 2018

A. 2015 and 2016

A price ceiling in the market for fuel oil that is below the equilibrium price will

A. lead to the quantity demanded of fuel oil exceeding the quantity supplied.

B. decrease the demand for fuel oil.

C. lead to the quantity supplied of fuel oil exceeding the quantity demanded.

D. increase the supply of fuel oil.

E. have no effect in the market for fuel oil

A. lead to the quantity demanded of fuel oil exceeding the quantity supplied.

Suppose India wants to measure how much the standard of living has changed over the last decade. Which piece of data should India use?

A. real GDP.

B. population.

C. inflation.

D. wages.

E. real GDP per person

E. real GDP per person

Drivers in Atlanta can choose to use toll lanes on I 75. The toll changes during the day depending on congestion and traffic flow. Toll lane resources are determined using the _____ method.

A. sharing equally

B. market price

C. contest

D. command

E. first-come, first-served

B. market price

The law of demand implies that, other things remaining the same,

A. as income increases, the quantity of cheeseburgers demanded increases.

B. as the price of a cheeseburger rises, the quantity of cheeseburgers demanded increases.

C. as the price of a cheeseburger rises, the quantity of cheeseburgers demanded decreases.

D. as the demand for cheeseburgers increases, the price of a cheeseburger falls.

E. as more people demand cheeseburgers, the quantity demanded increases.

C. as the price of a cheeseburger rises, the quantity of cheeseburgers demanded decreases.

In stores, it is common to find seasonal products marked down when the season ends. What explains this behavior?

A. The store is trying to increase its consumer's incomes by increasing their purchasing power.

B. The law of demand is being used to increase the quantity demanded.

C. The store manager must be trying to drive away customers by selling low quality products.

D. The store is trying to increase its customers' demand for the product.

E. The store is trying to sell the goods and realizes that they are substitutes for other goods

whose prices have risen

B. The law of demand is being used to increase the quantity demanded.

In 2010, the U.S. government had tax revenues of $2,703 billion and outlays were $3,973 billion. The budget ________.

A. surplus was $1,270 billion

B. was balanced because every dollar the government spends it must raise

C. deficit was $3,973 billion

D. deficit was $1,270 billion

E. surplus was $2,703 billion

D. deficit was $1,270 billion

Along a short run Phillips curve, the−

A. short run cost of lower inflation is higher interest rates.−

B. short run benefit of lower unemployment is lower inflation.−

C. long run cost of lower inflation is higher unemployment.−

D. short run cost of lower unemployment is higher inflation.−

E. short run cost of higher inflation is a higher real interest rate

D. short run cost of lower unemployment is higher inflation.−

If the current account balance is $100 billion, net interest = $0, net transfers = $0, then−

A. imports are greater than exports.

B. the capital account balance must be +$100 billion.

C. there was an increase in net foreign assets.

D. the country is loaning abroad.

E. exports are greater than imports

A. imports are greater than exports.

The capital account is the record of

A. the nation's imports and exports of capital goods.

B. changes in the government's holdings of foreign currency.

C. payments for imports, receipts for exports, net interest, and net transfers.

D. a nation's international trading, borrowing, and lending.

E. foreign investment in the nation minus the nation's investment abroad

E. foreign investment in the nation minus the nation's investment abroad

Goods and services that the United States sells to other nations are called

A. bartered goods.

B. imports.

C. world goods.

D. exports.

E. exchanges

D. exports.

The real interest rate equals the

A. inflation rate—nominal interest rate.

B. nominal interest rate .÷ inflation rate

C. (nominal interest rate×inflation rate)/100.

D. (nominal interest rate .÷inflation rate) ×100.

E. nominal interest rate− inflation rate

E. nominal interest rate-inflation rate

As disposable income ________ planned consumption expenditure ________.

A. increases; increases

B. increases; decreases

C. decreases; remains the same, since it is autonomous expenditure

D. decreases; increases

E. increases; changes only if net taxes also change

A. increases; increases

The working — age population consists of all the people in the population

A. aged 16 and over.

B. aged 21 and over who are not in jail, hospital, or an institution or in the U.S. Armed Forces.

C. who are employed plus the unemployed people.

D. aged 16 to 65.

E. aged 16 and over who are not in jail, hospital, or an institution or in the U.S. Armed Forces

E. aged 16 and over who are not in jail, hospital, or an institution or in the U.S. Armed Forces

Which of the following describes the law of demand? When other things remain the same, as

A. the price of peanut butter increases, the quantity demanded of jelly decreases.

B. more people decide to eat pizza, the demand for pizza increases.

C. the price of gas falls, the quantity demanded of gas increases.

D. your income increases, you'll buy more hamburgers.

E. the quantity demanded of bread increases, the price of bread falls

C. the price of gas falls, the quantity demanded of gas increases.

The total production within an economy is measured as

A. Gross Domestic Product.

B. Annual Production Value.

C. Total Domestic Output.

D. Total Annual Output.

E. Gross Home Product.

A. Gross Domestic Product.

When a price ceiling below the equilibrium price is imposed on a good, production of the good

A. does not change.

B. either increases or decreases depending on whether the supply of the good increases or

decreases when the price ceiling is imposed.

C. increases.

D. is frozen at the pre ceiling level.

E. decreases.

E. decreases.

A measure of a country's production is its

A. general daily product.

B. gross total output.

C. gross domestic product.

D. gross daily production.

E. general domestic production

C. gross domestic product.

When disposable income is zero, consumption expenditure is

A. equal to autonomous consumption.

B. negative.

C. also zero.

D. equal to induced consumption expenditure.

E. None of the above answers is correct

A. equal to autonomous consumption.

If the current account balance is negative, net interest is $100 billion and net transfer is —$100 billion, then

A. real GDP exceeds potential GDP.

B. imports exceed exports.

C. exports exceed imports.

D. the official settlements account must be positive.

E. the official settlements account must be negative

B. imports exceed exports.

Which of the following statements are correct?

i. The Federal Reserve's monetary policy must be approved by the President of the United States .

ii. The Federal Reserve Board of Directors meets approximately every six months to review the state of the economy and determine monetary policy.

iii. The Federal Reserve has determined it will use the monetary base as its policy instrument.

A. i only

B. i and ii

C. ii only

D. iii only

E. None of the above answers is correct

E. None of the above answers is correct

University of Colorado reserves 5,000 free tickets to each home football game for students. Students must stand in line to receive their ticket. Football tickets are allocated through which method?

A. First come, first served

B. Personal characteristics

C. Market price

D. Sharing equally

E. Force

A. First come, first served

Gross Domestic Product is the market value of all ________ produced within a country in a given period of time.

A. intermediate goods

B. final goods

C. final goods and services

D. final services

E. intermediate services

C. final goods and services

The production possibilities frontier is the

A. minimum output that can be produced when resources are used inefficiently.

B. boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced when technology is changing.

C. maximum output that can be produced at an opportunity cost of zero.

D. maximum opportunity cost combinations of goods and services.

E. boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology

E. boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology

In growth theory, the change in a country's standard of living is measured by the change in

A. employment.

B. real GDP per person.

C. wages per person.

D. real GDP.

E. the nation's capital stock

B. real GDP per person.

Gross Domestic Product is equal to the market value of all the final goods and services ________ in a given period of time.

A. produced by the citizens of a country

B. consumed by the citizens of a country

C. produced and consumed within a country

D. consumed within a country

E. produced within a country

E. produced within a country

The government collects tax revenue of $100 million and has $105 million in outlays. The budget balance is a

A. surplus of $100 million and a deficit of $105 million.

B. deficit of $5 million.

C. surplus of $105 million.

D. deficit of $105 million.

E. surplus of $5 million

B. deficit of $5 million.

The value of the CPI for the reference base period is always

A. 100.

B. 1.

C. 50.

D. 0.

E. None of the above, because the value of the CPI is not always the same for all reference base periods.

A. 100.

Monetary policy decisions are made by the

A. Federal Reserve Economic Committee.

B. U.S. Mint.

C. Federal Open Market Committee.

D. Council of Economic Advisors.

E. Congress of the United States

C. Federal Open Market Committee.

The ________ the ________ is the quantity of real GDP supplied.

A. higher the price level; greater

B. lower the supply of labor; greater

C. lower aggregate demand; greater

D. greater the demand for labor; smaller

E. lower the price level; greater

A. higher the price level; greater

Potential GDP is

A. the level of output produced when the economy is fully employed.

B. another name for nominal GDP.

C. another name for real GDP.

D. equal to the maximum amount of goods and services that can be produced at any given time.

E. a measure of the short term fluctuations in real GDP.

A. the level of output produced when the economy is fully employed.

Items that are purchased by individuals for their own enjoyment are called

A. consumption goods and services.

B. exports of goods and services.

C. government goods and services.

D. private goods.

E. capital goods

A. consumption goods and services.

The short run Phillips curve is another way of looking at−

A. the natural rate of unemployment.

B. Okun's law as applied to aggregate demand.

C. aggregate demand.

D. potential GDP.

E. aggregate supply

E. aggregate supply

Barter requires the

A. use of commodity money as a medium of payment.

B. the triple non coincidence of wants.−

C. use of fiat money as a medium of exchange.

D. use of money as a unit of account.

E. exchange of goods and services directly for other goods and services

E. exchange of goods and services directly for other goods and services

Using the data in the table above, the growth rate of real GDP has

A. increased from year to year.

B. remained constant from year to year.

C. increased more rapidly from year to year.

D. slowed from year to year.

E. probably changed, but more information is needed about the price level to determine by how much it has changed.

A. increased from year to year.

Net investment equals

A. gross investment minus depreciation.

B. depreciation plus gross investment.

C. gross financial capital minus stock dividends.

D. depreciation minus gross investment.

E. gross investment minus interest payments

A. gross investment minus depreciation.

The production possibilities frontier is the boundary between the

A. affordable and unaffordable combinations of production.

B. attainable and unattainable combinations of goods and services.

C. goods and services that the economy can produce.

D. rational and irrational choices facing a society.

E. wanted and unwanted combinations of goods and services

B. attainable and unattainable combinations of goods and services.

An increase in the price level leads to

A. a downward movement along the aggregate supply curve.

B. a rightward shift of the aggregate supply curve.

C. neither a movement along the aggregate supply curve nor a shift of the aggregate supply curve.

D. a leftward shift of the aggregate supply curve.

E. an upward movement along the aggregate supply curve.

E. an upward movement along the aggregate supply curve.

The reference base period for the CPI has an index number of ________ and is currently _______.

A. 0; 2006-2008

B. 1; 2014-2016

C. 100; 1982-1984

D. 100; 2010-2012

E. 100; 2014-2016

C. 100; 1982-1984

What would be an example of consumption service?

A. Donald Trump purchases furniture for his office.

B. Rhianna gets a haircut.

C. Antonio, the manager of the local Taco Hut, purchases a new deep fryer.

D. Jake buys an iPhone.

E. The local driver's license office purchases a new digital camera and printer

B. Rhianna gets a haircut.

The slope of the aggregate supply curve shows that the ________ the price level, the ________.

A. higher; smaller is the quantity of real GDP supplied

B. higher; greater is the quantity of real GDP supplied

C. lower; greater is the quantity of real GDP supplied

D. higher; is the quantity of potential GDP supplied

E. lower; is the quantity of potential GDP supplied

B. higher; greater is the quantity of real GDP supplied

A measure of growth in the standard of living is the growth in

A. real GDP.

B. employment.

C. real GDP minus the growth in population.

D. population minus the growth in real GDP.

E. population

C. real GDP minus the growth in population.

Items bought by individuals to provide personal enjoyment are termed

A. pleasure goods.

B. consumption goods.

C. personal goods.

D. standard goods.

E. consumption or investment goods

B. consumption goods.

A city must decide to pay for its workers' pension plan. If the city puts the decision up for a vote by citizens, resource use will be determined by a _____ method.

A. first-come, first-served

B. command

C. force

D. sharing equally

E. majority rule

E. majority rule

Gross investment equals

A. gross financial capital minus depreciation.

B. net investment plus depreciation.

C. gross financial capital plus depreciation.

D. net investment minus depreciation.

E. net investment financial investment

B. net investment plus depreciation.

During the year, suppose a country's total purchases of newly produced capital goods is $2,000 billion, it issues $1,600 billion of stock certificates, and has $500 billion in depreciation. Gross investment in this country equals

A. $4,100 billion.

B. $2,500 billion.

C. $2,100 billion.

D. $3,600 billion.

E. $2,000 billion

E. $2,000 billion

As a household's disposable income increases, its autonomous expenditures ________ and its induced expenditures ________.

A. do not change; increase by an amount equal to the increase in income

B. increase; increase by a smaller amount than the increase in income

C. increase; do not change

D. do not change; increase by a smaller amount than the increase in income

E. decrease; do not change

D. do not change; increase by a smaller amount than the increase in income

Scarcity

A. is the inability to satisfy all our wants.

B. is not something that affects very rich people.

C. leads to higher prices.

D. used to exist everywhere but has been eliminated in advanced economies.

E. applies only to people living in poverty

A. is the inability to satisfy all our wants.

Money performs all of the following functions EXCEPT serving as a

i. medium of exchange.

ii. unit of account.

iii. barter mechanism.

A. i only

B. i and ii

C. ii and iii

D. ii only

E. iii only

E. iii only

If the United States imports goods and services for a total of $45 billion, exports goods and services for a total of $40 billion, records $4 billion as net interest and zero as net transfers, then the U.S. current account balance is

A. -$1 billion.

B. $81 billion.

C. $1 billion.

D. $89 billion.

E. zero.

A. -$1 billion.

What would be an example of consumption good?

A. Donald Trump purchases furniture for his office.

B. Rhianna gets a haircut.

C. Jake buys an iPhone.

D. The local driver's license office purchases a new digital camera and printer.

E. Antonio, the manager of the local Taco Hut, purchases a new deep fryer

C. Jake buys an iPhone.

Net investment equals

A. gross investment minus depreciation.

B. gross investment plus depreciation.

C. capital plus depreciation.

D. new capital plus old capital.

E. the amount of national wealth

A. gross investment minus depreciation.

A production possibilities frontier shows

A. that it is impossible to produce inefficiently.

B. the various combinations of output a nation can produce a certain time, given its available resources and technology.

C. how money can be allocated among two kinds of goods.

D. the limits to future growth of a nation.

E. that if price of one good decreases, the price of the other has to increase.

B. the various combinations of output a nation can produce a certain time, given its available resources and technology.

Goods and services that the United States buys from other nations are called

A. world goods.

B. exports.

C. imports.

D. exchanges.

E. bartered goods

C. imports.

The idea that potential GDP is the sustainable upper limit of production means that

A. the economy is operating environmentally efficiently.

B. real GDP may be temporarily larger than potential GDP, but not permanently.

C. real GDP may be temporarily less than potential GDP.

D. unemployment can only temporarily be zero in a healthy economy.

E. inflation must always occur in a growing economy

B. real GDP may be temporarily larger than potential GDP, but not permanently.

If you buy a television produced in Japan, a

A. service was imported by Japan and exported by the United States.

B. good was exported by Japan and imported by the United States.

C. service was exported by Japan and imported by the United States.

D. good was imported by Japan and by the United States.

E. good was exported by Japan and by the United States

B. good was exported by Japan and imported by the United States.

In the long run, the nominal interest rate is

A. negatively related to the price level.

B. positively related to the price level.

C. positively related to the inflation rate.

D. negatively related to the inflation rate.

E. not related to the price level or the inflation rate.

C. positively related to the inflation rate.

If the working-age population does not change and the number of people in the labor force ________, then ________.

A. increases; the unemployment rate definitely increases

B. increases; the labor force participation rate increases

C. decreases, the unemployment rate does not change

D. decreases; the unemployment rate definitely decreases

E. decreases; the labor force participation rate increases

B. increases; the labor force participation rate increases

The reference base period for the CPI is

A. whatever the political party that is in control of Congress decides.

B. the period of time the CPI is defined to equal 100.

C. currently 2005.

D. the previous year.

E. currently 1913

B. the period of time the CPI is defined to equal 100.

Gasoline prices increase by 50 percent and other things remain the same. As a result, there is

A. no change in the quantity of gasoline demanded.

B. a decrease in the demand for gasoline.

C. a decrease in the quantity of gasoline demanded.

D. an increase in the demand for gasoline.

E. More information is needed to determine if the demand for gasoline increases or decreases

C. a decrease in the quantity of gasoline demanded.

To measure the change in the standard of living, it is best to use the growth rate

A. of real GDP.

B. of the price level.

C. of real GDP per person.

D. of the population.

E. from the Rule of 70

C. of real GDP per person.

In the United States,

A. the President initializes changes in monetary policy and the Fed approves the changes.

B. Congress must approve monetary policy changes.

C. the Federal Reserve sets monetary policy.

D. Congress initializes changes in monetary policy and the Fed approves the changes.

E. the Federal Reserve sets monetary and fiscal policies.

C. the Federal Reserve sets monetary policy.

Using the table above, the Current Population Survey classifies the group of individuals obtained by adding groups 5 and 6 as

A. the working age population.

B. employed.

C. discouraged workers.

D. the labor force.

E. unemployed

D. the labor force.

The medium of exchange is defined as

A. the exchange of goods and services directly for goods and services.

B. an item that can be stored and hold its value over time.

C. barter.

D. an object that is accepted in return for goods and services.

E. credit cards.

D. an object that is accepted in return for goods and services.

On January 1, Rick's Photo owned $50,000 of equipment. During the year, the value of the equipment fell by $10,000, plus Rick bought $25,000 in new equipment. Rick's company experienced

A. an increase of new capital by $10,000.

B. a change in total financial capital of $15,000.

C. an increase of net investment of $35,000.

D. $10,000 of depreciation.

E. $40,000 of depreciation

D. $10,000 of depreciation.

Suppose an economist stated that Brazil had achieved its potential GDP 2013. This would imply that at this level of real GDP, Brazil experienced

A. a negative Okun Gap.

B. peak in its business cycle in 2013.

C. full employment.

D. inflation equal to zero.

E. unemployment equal to zero

C. full employment.

In 2008, the U.S. current account balance was $706 billion, net interest was +$119 billion, net transfers were $128 billion, and exports were +$1,827 billion. Therefore, imports were ________.

A. +$2,780 billion

B. —$1,112 billion

C. +$1,112 billion

D. —$2,524 billion

E. +$2,524 billion

D. —$2,524 billion

If a price ceiling is set above the equilibrium price, then

A. the price ceiling will generate revenue for the government.

B. there will be a surplus of the good.

C. the price ceiling affects suppliers but not demanders.

D. there will be a shortage of the good.

E. there will be neither a shortage nor a surplus of the good.

E. there will be neither a shortage nor a surplus of the good.

Which of the following statements are correct?

i. Congress does not play a role in making monetary policy decisions.

ii. The FOMC meets eight times a year to make monetary policy decisions.

iii. The President of the United States appoints members of the Board of Governors and the Chairman of the Board of Governors, but the President has little other formal authority over monetary policy.

A. i, ii, and iii

B. i,and ii

C. i and iii

D. ii and iii

E. ii only

A. i, ii, and iii

The law of demand refers to how

A. the quantity demanded changes when the demand for the good changes.

B. the quantity demanded changes when the price of the good changes.

C. demand changes when the prices of substitutes and complements change.

D. the price of the good changes when people's demand for the good changes.

E. demand changes when people's incomes change

B. the quantity demanded changes when the price of the good changes