Economics 2152A/B Lecture Notes - Lecture 3: Constant Capital, Economic Equilibrium, Structural Unemployment
Document Summary
Get access
Related Documents
Related Questions
Question 3
According to Joseph Schumpeter, the theory of creative destruction describes a process by which
A | some new products unleash a gale of destruction that drive other new products out of the market. | |
B | new products unleash a gale of destruction that drives old products out of the market. | |
C | new products are created by the destruction of capital. | |
D | the creation of new products never involves the destruction of old products. |
Question 4
Which of the following countries had the highest GDP per capita in 2012?
A Qatar | ||
B | United States | |
C | Japan | |
D | Norway |
Question 5
________ save a ________ of their income. This ________ capital in their economy and raises economic growth.
A | Developing countries; large proportion; decreases | |
B | Developing countries; small proportion; increases | |
C | High-income countries; large proportion; increases | |
D | High-income countries; small proportion; increases |
Question 6
The demand for loanable funds is determined by the willingness of ________ to borrow money to engage in new investment projects.
A
A | government | |
B | households | |
C | banks | |
D | firms |
Question 7
The U.S. economy has been more stable since 1950.
True
False
Question 8
When the economy reaches a trough in a business cycle, which of the following will occur?
A | Income, production, and employment will continue to fall. | |
B | Income, production, and employment will begin to rise. | |
C | Income and production will rise, but employment will continue to fall. | |
D | Employment rises, but income and production will continue to fall. |
Question 9
In a closed economy, what is the relationship between saving and investment?
A | Saving is greater than investment. | |
B | Investment is greater than saving. | |
C | Investment is equal to saving. | |
D | Investment may be greater or smaller than saving. |
Question 10
The per-worker production function shows the relationship between ________ per hour worked and ________ per hour worked, holding ________ constant.
A | labor; real GDP; technology | |
B | capital; real GDP; technology | |
C | labor; capital; real GDP | |
D | capital; labor; real GDP |
Question 11
New growth theory states that increases in ________ capital will result in ________ at the ________ level.
A | knowledge; increasing returns to scale; firm | |
B | physical; decreasing returns to scale; firm | |
C | knowledge; decreasing returns to scale; economy | |
D | knowledge; increasing returns to scale; economy |
Question 12
Which of the following is not a reason why the Industrial Revolution occurred when and where it did?
A | The British government was committed to upholding private property rights. | |
B | The British government was able to eliminate arbitrary increases in taxes. | |
C | The British government was able to more easily seize wealth. | |
D | Institutional changes by the British government helped protect wealth. |
Question 13
Growth in real GDP per capita for the world economy was greatest during
A | the seventeenth century. | |
B | the eighteenth century. | |
C | the nineteenth century. | |
D | the twentieth century. |
Question 14
Which of the following is a normative statement about economic growth?
A | Economic growth is associated with higher labor productivity growth. | |
B | Economic growth increases GDP per capita. | |
C | Economic growth hurts developing countries. | |
D | Foreign direct investment stimulates economic growth. |
Question 15
The effect of a recession on a company like Whirlpool Corporation is such that
A | sales decline more sharply for Whirlpool as compared to firms that do not produce durable goods. | |
B | profits fall less sharply as compared to firms that do not produce durable goods. | |
C | the decline in sales is more short-lived as compared to firms that do not produce durable goods. | |
D | there is no difference in the impact of the recession on its profits as compared to firms that do not produce durable goods. |
Question 16
For the recessions in the United States since the 1950s,
A | cyclical unemployment has been non-existent. | |
B | unemployment rises on average by about 1.2 percentage points 12 months after a recession begins. | |
C | unemployment falls on average by 2 percentage points 12 months after a recession begins. | |
D | unemployment rises on average about 5 percentage points 12 months after a recession begins. |
Question 17
You are an economic advisor to the president. You are asked to recommend a policy to promote long-term economic growth in the economy. Which of the following policies would you choose?
A | a reduction in sales taxes | |
B | an investment tax credit | |
C | a reduction in taxes on luxury yachts | |
D | All of these |
Question 18
In comparison to a government that runs a balanced budget, when the government runs a budget deficit,
A | the equilibrium interest rate will fall. | |
B | business investment will fall. | |
C | household savings will fall. | |
D | None of these |
Question 19
If labor productivity growth slows down in a country, this means that the growth rate in ________ has declined.
A | labor force participation | |
B | the quantity of goods or services that can be produced by one hour of work | |
C | the working-age population | |
D | nominal GDP |
Question 20
Policies to promote growth by increasing saving and investment work through
A | decreasing the supply of loanable funds, lowering the interest rate, raising the level of investment in physical capital. | |
B | increasing the supply of loanable funds, increasing the interest rate, raising the level of investment in physical capital. | |
C | increasing the supply of loanable funds, lowering the interest rate, lowering the level of investment in physical capital. | |
D | increasing the supply of loanable funds, lowering the interest rate, raising the level of investment in physical capital. |
QUESTION 1
Assume there are two basic goods produced in a nation, consumer goods and capital goods. The production possibilities graph for these two goods is bowed out from the origin. This reason for this shape of the graph is because of:
A. | the other-things-equal assumption. | |
B. | the law of increasing opportunity costs. | |
C. | diminishing marginal utility. | |
D. | present choices and future possibilities. |
1 points
QUESTION 2
From an economic perspective, when a student decides to attend another year of college, the student has concluded that the:
A. | marginal costs of attending college are reduced by the availability of grants and subsidies. | |
B. | marginal benefits of attending college have increased because the future is brighter. | |
C. | marginal benefits of attending college are greater than the marginal costs. | |
D. | marginal costs of attending college have decreased to make college affordable. |
1 points
QUESTION 3
A person observes that as consumer prices fall, economic growth increases. The person concludes that fall consumer prices leads to economic growth. This conclusion would be an example of:
A. | confusing correlation with causation. | |
B. | the fallacy of composition. | |
C. | trade-offs among economic goals. | |
D. | the other-things-equal assumption. |
1 points
QUESTION 4
The problem of unlimited wants and limited income is known as
A. | the scientific method. | |
B. | unequal wealth distribution. | |
C. | normative economics. | |
D. | the economizing problem. |
1 points
QUESTION 5
A point outside the production possibilities curve is:
A. | unattainable without economic growth. | |
B. | attainable and the economy is efficient. | |
C. | unattainable without inflation. | |
D. | attainable, but the economy is inefficient. |
1 points
QUESTION 6
Which one of the following would be an example of loaded terminology?
A. | market forces | |
B. | tentative hypothesis | |
C. | entrepreneurial functions | |
D. | creeping socialism |
1 points
QUESTION 7
Suppose there are two economies, Alpha and Beta, both of which have the same production possibilities curves. If Beta devotes more resources to produce investment goods than consumer goods as compared to Alpha, then in the future:
A. | Alpha will not be able to achieve full employment. | |
B. | Beta will not be able to achieve full employment. | |
C. | Alpha will experience greater economic growth than Beta. | |
D. | Beta will experience greater economic growth than Alpha. |
1 points
QUESTION 8
Macroeconomics, as opposed to microeconomics, is concerned with
A. | individual businesses. | |
B. | new computer technology. | |
C. | the stock market. | |
D. | the economy as a whole. |
1 points
QUESTION 9
Which one of the following is an example of a positive economic statement?
A. | The size of the Federal government should be reduced. | |
B. | Midwest states affected by drought should be given more federal disaster aid. | |
C. | Education and income are highly correlated. | |
D. | The minimum wage for workers should be raised to help low-income workers. |
1 points
QUESTION 10
Economics is primarily concerned with
A. | interactions between the government and market participants. | |
B. | how scarce resources are used. | |
C. | the production and distribution of capital goods. | |
D. | how income is divided among individuals. |
1 points
QUESTION 11
The production possibilities table below shows the hypothetical relationship between the production of guns (national defense) and butter (social goods) in an economy.
A B C D E
Guns 0 4 7 9 10
Butter 4 3 2 1 0
If the economy is producing at alternative C, what is the opportunity cost of producing another unit of butter?
A. | 3 units of guns. | |
B. | 1 units of guns. | |
C. | 2 units of guns. | |
D. | 4 units of guns. |
1 points
QUESTION 12
Assume that a consumer can buy only two goods X and Y, and has an income of $120. The price of X is $10 and the price of Y is $20. If the consumer spends all of her money on X and Y, which of the following would be a possible combination:
A. | 4X and 2Y | |
B. | 5X and 3Y | |
C. | 6X and 3Y | |
D. | 8X and 1Y |
1 points
QUESTION 13
In the production possibilities model of an economy, when there is full employment of resources
a nation will be operating at an interior point within its production possibilities curve. | ||
a nation will be operating on the production possibilities curve. | ||
the production possibilities curve will shift outward to the right. | ||
the production possibilies curve will shift inward to the left. |
1 points
QUESTION 14
In economics the concept that there is "no free lunch" means
A. | scarce resources were used to produce these "free" goods so there is an opportunity cost to producing them. | |
B. | consumers are irrational when they ask for a free lunch unless they can make the case that the free lunch benefits business. | |
C. | the marginal cost of the "lunch" is greater than the marginal benefit. | |
D. | businesses could not make a profit if they gave away free goods to consumers. |
1 points
QUESTION 15
Assume that a consumer can only purchase two goods with her income. A straight-line budget constraint indicates that the opportunity cost of obtaining an additional unit of one good is:
A. | negative. | |
B. | constant. | |
C. | increasing. | |
D. | decreasing. |
QUESTION 1
Assume there are two basic goods produced in a nation, consumer goods and capital goods. The production possibilities graph for these two goods is bowed out from the origin. This reason for this shape of the graph is because of:
A. | the other-things-equal assumption. | |
B. | the law of increasing opportunity costs. | |
C. | diminishing marginal utility. | |
D. | present choices and future possibilities. |
1 points
QUESTION 2
From an economic perspective, when a student decides to attend another year of college, the student has concluded that the:
A. | marginal costs of attending college are reduced by the availability of grants and subsidies. | |
B. | marginal benefits of attending college have increased because the future is brighter. | |
C. | marginal benefits of attending college are greater than the marginal costs. | |
D. | marginal costs of attending college have decreased to make college affordable. |
1 points
QUESTION 3
A person observes that as consumer prices fall, economic growth increases. The person concludes that fall consumer prices leads to economic growth. This conclusion would be an example of:
A. | confusing correlation with causation. | |
B. | the fallacy of composition. | |
C. | trade-offs among economic goals. | |
D. | the other-things-equal assumption. |
1 points
QUESTION 4
The problem of unlimited wants and limited income is known as
A. | the scientific method. | |
B. | unequal wealth distribution. | |
C. | normative economics. | |
D. | the economizing problem. |
1 points
QUESTION 5
A point outside the production possibilities curve is:
A. | unattainable without economic growth. | |
B. | attainable and the economy is efficient. | |
C. | unattainable without inflation. | |
D. | attainable, but the economy is inefficient. |
1 points
QUESTION 6
Which one of the following would be an example of loaded terminology?
A. | market forces | |
B. | tentative hypothesis | |
C. | entrepreneurial functions | |
D. | creeping socialism |
1 points
QUESTION 7
Suppose there are two economies, Alpha and Beta, both of which have the same production possibilities curves. If Beta devotes more resources to produce investment goods than consumer goods as compared to Alpha, then in the future:
A. | Alpha will not be able to achieve full employment. | |
B. | Beta will not be able to achieve full employment. | |
C. | Alpha will experience greater economic growth than Beta. | |
D. | Beta will experience greater economic growth than Alpha. |
1 points
QUESTION 8
Macroeconomics, as opposed to microeconomics, is concerned with
A. | individual businesses. | |
B. | new computer technology. | |
C. | the stock market. | |
D. | the economy as a whole. |
1 points
QUESTION 9
Which one of the following is an example of a positive economic statement?
A. | The size of the Federal government should be reduced. | |
B. | Midwest states affected by drought should be given more federal disaster aid. | |
C. | Education and income are highly correlated. | |
D. | The minimum wage for workers should be raised to help low-income workers. |
1 points
QUESTION 10
Economics is primarily concerned with
A. | interactions between the government and market participants. | |
B. | how scarce resources are used. | |
C. | the production and distribution of capital goods. | |
D. | how income is divided among individuals. |
1 points
QUESTION 11
The production possibilities table below shows the hypothetical relationship between the production of guns (national defense) and butter (social goods) in an economy.
A B C D E
Guns 0 4 7 9 10
Butter 4 3 2 1 0
If the economy is producing at alternative C, what is the opportunity cost of producing another unit of butter?
A. | 3 units of guns. | |
B. | 1 units of guns. | |
C. | 2 units of guns. | |
D. | 4 units of guns. |
1 points
QUESTION 12
Assume that a consumer can buy only two goods X and Y, and has an income of $120. The price of X is $10 and the price of Y is $20. If the consumer spends all of her money on X and Y, which of the following would be a possible combination:
A. | 4X and 2Y | |
B. | 5X and 3Y | |
C. | 6X and 3Y | |
D. | 8X and 1Y |
1 points
QUESTION 13
In the production possibilities model of an economy, when there is full employment of resources
a nation will be operating at an interior point within its production possibilities curve. | ||
a nation will be operating on the production possibilities curve. | ||
the production possibilities curve will shift outward to the right. | ||
the production possibilies curve will shift inward to the left. |
1 points
QUESTION 14
In economics the concept that there is "no free lunch" means
A. | scarce resources were used to produce these "free" goods so there is an opportunity cost to producing them. | |
B. | consumers are irrational when they ask for a free lunch unless they can make the case that the free lunch benefits business. | |
C. | the marginal cost of the "lunch" is greater than the marginal benefit. | |
D. | businesses could not make a profit if they gave away free goods to consumers. |
1 points
QUESTION 15
Assume that a consumer can only purchase two goods with her income. A straight-line budget constraint indicates that the opportunity cost of obtaining an additional unit of one good is:
A. | negative. | |
B. | constant. | |
C. | increasing. | |
D. | decreasing. |
Comment