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ECO100Y5 Study Guide - Final Guide: Gross Domestic Product, Net Domestic Product, Xm Satellite Radio

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greenjackal905
14 Sep 2016
School
UTM
Department
Economics
Course
ECO100Y5
Professor
Lee Bailey

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ECO100Y5 Full Course Notes
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ECO100Y5 Full Course Notes
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Document Summary

Purchase of goods and services and capital sales to businesses must be netted out. 50: proper contribution = 50, bread is the final product (brought by consumers). Real vs. nominal: real: figures adjusted for average price increases and inflation, nominal: figures not adjusted for average price increases and inflation. Price index: helps determine whether increases in gdp is prices or production. Gross national product: concentrates on who owns the assets tracing where profits goes. Output/gdp gap: potential gdp vs. actual gdp, employment vs. unemployment. There is always frictional unemployment (between jobs): definition of unemployment differ country to country, us: not active = not in labour force, canada: no jot = unemployment. Assumptions: only c and i g, x, m = 0, no inflation nominal = real, more output until yf (full employment gdp). Households and consumption: c = c(income, assets/wealth, interest rate). This rate is called the marginal propensity to consume (mpc).

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Related Questions

1. Which of the following groups of countries are all advanced economies?

   

Hong Kong, Japan, France, and the United Kingdom
   

Italy, the United States, China, and Russia
   

Singapore, Russia, France, and Chad
   

Australia, Brazil, and the United States

QUESTION 2

1. The most people live in ________ economies and the fewest people live in ________ economies.

   

developing; emerging market
   

advanced; emerging market
   

emerging market; developing
   

advanced; developing

QUESTION 3

1. Households and firms in the U.S. economy interact with those in the rest of the world in the ________ market and the ________ market.

   

goods; financial
   

government; goods
   

goods; factor
   

financial; factor

QUESTION 4

1. As a factor of production, oil reserves are counted as

   

labor.
   

capital.
   

entrepreneurship.
   

land.

QUESTION 5

1. ________ the owners of the factors of production, while ________ what amounts of those factors to hire.

   

Households are; the government determines
   

Firms are; households that determine
   

The government is; firms determine
   

Households are; firms that determine

QUESTION 6

1. The emerging market economies are

   

the nations that are currently agricultural in nature.
   

most of the nations of Western Europe.
   

the largest grouping including the nations of China and India.
   

in the transition from state-owned production to free markets.

QUESTION 7

1. In the United States, the productive factor that, as a group, receives the largest fraction of the nation's total income was

   

consumption of goods and services.
   

entrepreneurship.
   

capital.
   

labor.

QUESTION 8

1. Items bought by individuals to provide personal enjoyment are termed

   

personal goods.
   

consumption of goods.
   

consumption or investment goods.
   

standard goods.

QUESTION 9

1. In the advanced economies, ________ of the factories use advanced capital equipment and in the developing economies ________ of the factories use advanced capital equipment

   

virtually all; none
   

some; some
   

virtually all; virtually all
   

virtually all; some

QUESTION 10

1. The productive resource that includes all the "gifts of nature" is called

   

land.
   

labor.
   

entrepreneurship.
   

capital.

QUESTION 11

1. What would be an example of government good?

   

Donald Trump purchases furniture for his office.
   

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

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

Jake buys an iPhone.

QUESTION 12

1. The world population is approximately ________ people.

   

2 trillion
   

680 million
   

6.8 billion
   

6.8 million

QUESTION 13

1. Computers and insurance coverage produced in the United States and sold to people in other nations are categorized as

   

U.S. exports of goods and services.
   

U.S. government goods and services.
   

foreign capital goods.
   

U.S. consumer goods and services.

QUESTION 14

1. Of the following, the federal government obtains most revenue from

   

corporate income taxes.
   

excise taxes.
   

sales taxes.
   

social security taxes.

QUESTION 15

1. Items bought by businesses to help produce other goods and services are called

   

capital goods.
   

government goods and services.
   

consumption of goods and services.
   

exports of goods and services.

QUESTION 16

1. The majority of the income earned in the United States is paid in

   

profit.
   

interest.
   

rent.
   

wages.

QUESTION 17

1. Dan missed class the day the professor covered the circular flow model. Dan asked his friend Joan to explain markets to him. Joan correctly stated that a market

   

must include a written contract between buyers and sellers.
   

requires a physical location for buyers and sellers to get together.
   

is only a place to purchase groceries.
   

is an arrangement that brings buyers and sellers together.

QUESTION 18

1. The United States possesses a large amount of human capital. As a result of this fact, in the United States, there is a

   

highly skilled and educated labor force.
   

a large number of kind and generous humans.
   

a large number of people and a great deal of land.
   

a large amount of machinery and equipment.

QUESTION 19

1. Which of the following correctly lists the categories of factors of production?

   

labor, machines, buildings, capital, and entrepreneurship
   

land, buildings, capital, and entrepreneurship
   

land, labor, capital, and entrepreneurship
   

forests, fish, buildings, capital, and entrepreneurship

QUESTION 20

1. Which of the following correctly lists the categories of factors of production?

   

capital, money, and labor
   

hardware, software, land, and money
   

land, labor, capital, and entrepreneurship
   

machines, buildings, land, and money

QUESTION 21

1. In the United States, the poorest 20 percent of households receive roughly ________ percent of total income.

   

10
   

3
   

15
   

20

QUESTION 22

1. What would be an example of a consumption service?

   

Jake buys an iPhone.
   

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

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

Rhianna gets a haircut.

QUESTION 23

1. The total value of capital in the United States is around

   

$47 trillion.
   

$10 trillion.
   

$100 trillion.
   

$79 trillion.

QUESTION 24

1. An export good is a good produced

   

by foreigners in the United States and purchased by U.S. households.
   

in another country and purchased by U.S. residents.
   

in the United States and sold to foreigners living in the United States.
   

in the United States and sold in other countries.

QUESTION 25

1. ________ paid for the use of land; ________ paid for the services of labor; and ________ paid for the use of capital.

   

Interest is; wages are; profit is
   

Rent is; wages are; interest is
   

Rent is; interest is; wages are
   

Mortgages are; interest is; wages are

1. Which of the following groups of countries are all advanced economies?

   

Hong Kong, Japan, France, and the United Kingdom
   

Italy, the United States, China, and Russia
   

Singapore, Russia, France, and Chad
   

Australia, Brazil, and the United States

QUESTION 2

1. The most people live in ________ economies and the fewest people live in ________ economies.

   

developing; emerging market
   

advanced; emerging market
   

emerging market; developing
   

advanced; developing

QUESTION 3

1. Households and firms in the U.S. economy interact with those in the rest of the world in the ________ market and the ________ market.

   

goods; financial
   

government; goods
   

goods; factor
   

financial; factor

QUESTION 4

1. As a factor of production, oil reserves are counted as

   

labor.
   

capital.
   

entrepreneurship.
   

land.

QUESTION 5

1. ________ the owners of the factors of production, while ________ what amounts of those factors to hire.

   

Households are; the government determines
   

Firms are; households determine
   

The government is; firms determine
   

Households are; firms determine

QUESTION 6

1. The emerging market economies are

   

the nations that are currently agricultural in nature.
   

most of the nations of Western Europe.
   

the largest grouping including the nations of China and India.
   

in the transition from state-owned production to free markets.

QUESTION 7

1. In the United States, the productive factor that, as a group, receives the largest fraction of the nation's total income was

   

consumption of goods and services.
   

entrepreneurship.
   

capital.
   

labor.

QUESTION 8

1. Items bought by individuals to provide personal enjoyment are termed

   

personal goods.
   

consumption of goods.
   

consumption or investment goods.
   

standard goods.

QUESTION 9

1. In the advanced economies, ________ of the factories use advanced capital equipment and in the developing economies ________ of the factories use advanced capital equipment

   

virtually all; none
   

some; some
   

virtually all; virtually all
   

virtually all; some

QUESTION 10

1. The productive resource that includes all the "gifts of nature" is called

   

land.
   

labor.
   

entrepreneurship.
   

capital.

QUESTION 11

1. What would be an example of government good?

   

Donald Trump purchases furniture for his office.
   

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

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

Jake buys an iPhone.

QUESTION 12

1. The world population is approximately ________ people.

   

2 trillion
   

680 million
   

6.8 billion
   

6.8 million

QUESTION 13

1. Computers and insurance coverage produced in the United States and sold to people in other nations are categorized as

   

U.S. exports of goods and services.
   

U.S. government goods and services.
   

foreign capital goods.
   

U.S. consumer goods and services.

QUESTION 14

1. Of the following, the federal government obtains most revenue from

   

corporate income taxes.
   

excise taxes.
   

sales taxes.
   

social security taxes.

QUESTION 15

1. Items bought by businesses to help produce other goods and services are called

   

capital goods.
   

government goods and services.
   

consumption of goods and services.
   

exports of goods and services.

QUESTION 16

1. The majority of the income earned in the United States is paid in

   

profit.
   

interest.
   

rent.
   

wages.

QUESTION 17

1. Dan missed class the day the professor covered the circular flow model. Dan asked his friend Joan to explain markets to him. Joan correctly stated that a market

   

must include a written contract between buyers and sellers.
   

requires a physical location for buyers and sellers to get together.
   

is only a place to purchase groceries.
   

is an arrangement that brings buyers and sellers together.

QUESTION 18

1. The United States possesses a large amount of human capital. As a result of this fact, in the United States, there is a

   

highly skilled and educated labor force.
   

a large number of kind and generous humans.
   

a large number of people and a great deal of land.
   

a large amount of machinery and equipment.

QUESTION 19

1. Which of the following correctly lists the categories of factors of production?

   

labor, machines, buildings, capital, and entrepreneurship
   

land, buildings, capital, and entrepreneurship
   

land, labor, capital, and entrepreneurship
   

forests, fish, buildings, capital, and entrepreneurship

QUESTION 20

1. Which of the following correctly lists the categories of factors of production?

   

capital, money, and labor
   

hardware, software, land, and money
   

land, labor, capital, and entrepreneurship
   

machines, buildings, land, and money

QUESTION 21

1. In the United States, the poorest 20 percent of households receive roughly ________ percent of total income.

   

10
   

3
   

15
   

20

QUESTION 22

1. What would be an example of a consumption service?

   

Jake buys an iPhone.
   

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

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

Rhianna gets a haircut.

QUESTION 23

1. The total value of capital in the United States is around

   

$47 trillion.
   

$10 trillion.
   

$100 trillion.
   

$79 trillion.

QUESTION 24

1. An export good is a good produced

   

by foreigners in the United States and purchased by U.S. households.
   

in another country and purchased by U.S. residents.
   

in the United States and sold to foreigners living in the United States.
   

in the United States and sold in other countries.

QUESTION 25

1. ________ paid for the use of land; ________ paid for the services of labor; and ________ paid for the use of capital.

   

Interest is; wages are; profit is
   

Rent is; wages are; interest is
   

Rent is; interest is; wages are
   

Mortgages are; interest is; wages are

1. The Houston Chronicle reported that in Houston, the average price of new homes has decreased, while at the same time, the number of new homes sold has increased. This situation could be explained by which one of the following: (draw curves before answering)

  1. An Increase in demand
  2. An Increase in supply
  3. A Decrease in demand
  4. A Decrease in supply

2. In another market, the average price of new homes fell, while at the same time, the number of new homes sold decreased. The situation would best be explained by (Draw the curves before answering)

  1. An Increase in Demand
  2. An Increase in Supply
  3. A Decrease in demand
  4. A Decrease in supply

3. A consumer is said to have achieved maximum total utility when:

  1. Purchases of Good A give the same satisfaction as purchases of Good B.
  2. Purchases of the last dollar spent on Good A give the same satisfaction as purchases of the last dollar spent on Good B.
  3. The average purchases per dollar of Good A give the same satisfaction as the average purchases per dollar of Good B.
  4. The total utility derived from Good A is the same as the marginal utility derived from Good B.

4. You are given the following information about a firm's present output position: MPP (Marginal Physical Product) of Land = 12; MPP of Labor = 16; Price of Land = $2; Price of Labor = $4. With no additional money to spend, this firm should:

5. A firm achieves the least cost in production by substituting factors until

  1. their factor prices are equal
  2. their marginal products are equal to the factor prices
  3. their marginal products are each equal to zero
  4. the ratios of their marginal product equal the ratio of their prices
  5. none of the above

6.The economy is currently on its production possibilities frontier (PPF). A politician says that it is possible to get more of everything--more infrastructure, more schools, more national defense, more spending on social programs, and so on. The politician is

  1. correct if he is assuming a rightward-shifting PPF.
  2. incorrect if he is assuming a rightward-shifting PPF.
  3. correct if he is assuming a PPF that does not change.
  4. none of the above

7. Assume your swimsuit business is at its maximum profit position, and one new change occurs: consumer incomes decrease. If swimsuits are normal goods, the equilibrium price of swimsuits will __________, and the CONSUMER surplus will ________.

  1. increase, increase
  2. decrease, decrease
  3. increase, decrease
  4. decrease, increase

8. Firms that shuts-down in the short-run still must pay:

  1. Marginal cost
  2. Variable cost
  3. Fixed cost
  4. Total cost

9. The term externalities refer to:

  1. Black-market economic activity.
  2. The impact on markets of imported goods.
  3. The costs and benefits of a market activity borne by a third party.
  4. The inequitable distribution of income.

10. If full external costs are not internalized, firms will tend to allocate more of society's scarce resources to produce than is societally warranted, and if full external benefits are not internalized, firms will allocate less of society's resources to produce than is societally justified. True/False.

11. Joe was very careful about smoking in his home until he bought a fire insurance policy. After buying the policy, he became careless. His attitude is: "I'm insured. What do I care if this place burns down; I'll just collect the money". Joe's attitude is an example of ______________.

12. Megatrust Bank had historically scrutinized loans very carefully and extended them, only to persons whom they considered very creditworthy. They made relatively few loans. However, after the government provided guarantees to sub-prime loans, Megatrust relaxed its standards and increased its loan volume. (And its default rate as well.) This is an example of _______________.

13. In the short-run, if a perfectly competitive firm finds itself operating at a loss, it will

  1. Reduce the size of its plant to lower fixed costs.
  2. Raise the price of its product.
  3. Shut down.
  4. Continue to operate as long as it covers its variable cost.

14. If income today is more equally distributed than it was in 1960, a Lorenz Curve depicting today's distribution would be

  1. More bowed and to the left of the 1960's curve.
  2. More bowed and to the right of the 1960's curve.
  3. Less bowed and to the left of the 1960' curve.
  4. Less bowed and to the right of the 1960's curve.

15. Which of the following statements is true?

  1. As output increases, the average fixed cost becomes smaller and smaller.
  2. Average fixed cost does not change as output increases.
  3. The marginal cost curve intersects the average fixed cost curve at its minimum point.
  4. When marginal cost is greater than average fixed cost, average fixed cost increases.
  5.  

16. A firm in any of the market structures we have studied will maximize its profit (or minimizes its loss) when its

  1. Average costs are at a minimum
  2. Marginal revenue and marginal cost are the same.
  3. Marginal revenue is less than marginal cost.
  4. Marginal revenue is zero.

17. If the demand for a good increase, when the price of other good increases, these goods are

  1. Capital goods
  2. Substitute goods
  3. Complementary goods
  4. Luxury goods

18. Which of the following pairs of products are complementary goods?

  1. mobile phones and laptops
  2. pens and pencils
  3. sugar and artificial sweeteners
  4. radios and television
  5. toothbrushes and toothpaste

19. The amount of a good that is given up to produce another good is:

  1. Scarcity
  2. Specialization
  3. Opportunity cost
  4. Trade
  5. Efficiency

20. The most important characteristic of the equilibrium price is that it:

  1. Guarantees that producers earn a profit.
  2. Increases the quantity demanded.
  3. Clears the market.
  4. Decreases the quantity supplied.

21. Rank the following market structures based on the number of participating firms: From the fewest number of firms to the most number of firms:

  1. Oligopoly
  2. Perfect Competition
  3. Monopoly
  4. Monopolistic Competition

22. If firms in a monopolistically competitive market are earning economic profits which of the following scenarios would best reflect the change facing incumbent firms as the market adjusts to its new equilibrium?

  1. an increase in demand
  2. a decrease in demand
  3. a downward shift in their marginal cost curve
  4. an upward shift in their marginal cost curve


23. If labor in Mexico is less productive than labor in the United States in all areas of production, 

  1. neither nation can benefit from trade
  2. Mexico can benefit from trade but the United States cannot
  3. Mexico will not have a comparative advantage in any good
  4. both nations can benefit from trade

24. Which of the following statements is false?

  1. The typical monopolistically competitive firm could reduce its average total cost if it produced more output.
  2. Monopolistically competitive firms advertise to increase the elasticity of the demand curve they face.
  3. Expensive advertising might help consumers if it is a signal that the product is good.
  4. Brand names acquired at great cost might help consumers by assuring quality.

25. Suppose the state of Wyoming passes a law that increases the tax on cigarettes. As a result, smokers who live in Wyoming start purchasing their cigs in surrounding states. Which of the following principles does this best illustrate:

  1. people respond to incentives
  2. rational people think at the margin
  3. a trademark can make everyone better off
  4. markets are usually a good way to organize economic activity