ECO 2013 Study Guide - Quiz Guide: Mozzarella, Gdp Deflator, Pepperoni
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Question 26 pts
Which of the following is not a reason why specialization and trade are beneficial to society?
Specialization fosters learning by doing, thus lowering the unit-costs of products | |
Firms and workers become less dependent on others for producing goods and services |
The total output of economic goods may be increased even without any increase in resources | |
Scarce resources are utilized more efficiently by exploiting differences among them |
Question 27 pts
Laissez-faire capitalism limits the government's economic functions to the following, except:
Protecting private property rights | |
Establishing a legal environment to enforce contracts among individuals |
Setting prices of individual goods and services | |
Preventing individuals and firms from coercing others |
Question 28 pts
A production system where various workers concentrate on different specialized tasks to contribute towards a whole product is referred to as:
Roundabout production | |
A coincidence of wants |
Freedom of enterprise | |
Division of labor |
Question 29 pts
The market system is said to be characterized by "consumer sovereignty." This is because:
A sovereign government determines which consumer goods will be produced | |
Firms must match their production decisions to the consumers' choices |
The prices of consumer goods are regulated by a sovereign government | |
Consumer goods are considered to be more important than capital goods |
Question 30 pts
Consumers express self-interest when they:
Seek the lowest price for a product | |
Reduce business losses |
Exclude others in their thinking | |
Collect economic profits |
Question 311 pts
Refer to the above graph with three demand curves. An "increase in quantity demanded" would be illustrated by a change from:
Point 5 to point 1 | |
Point 4 to point 1 |
Point 2 to point 5 | |
Point 4 to point 6 |
Question 32 pts
The table below shows the weekly demand for hamburger in a market where there are just three buyers.
Refer to the above table. At a price of $6, the weekly market quantity demanded for hamburger is:
17 | |
23 |
24 | |
18 |
Question 33pts
If farmers withhold some of their current corn harvest from the market because they anticipate a higher price of corn in the near future, then this would cause a(n):
Movement up along the current supply curve of corn | |
Movement down along the current supply curve of corn |
Leftward shift in the current supply of corn | |
Rightward shift in the current supply of corn |
Question 34 pts
Which of the following will not cause the supply curve to shift?
A technological change in the production of the good | |
A change in the prices of other goods that producers could be producing |
A change in the costs of resources needed to produce the good | |
A change in the price of the good |
Question 35 pts
All of the following would affect the position of the supply curve for cranberries, except the:
Price of agricultural land for cranberries | |
Cost of fertilizers for cranberry production |
Popularity of cranberry drinks | |
Development of a new pest control for cranberries |
Question 36 pts
When high-school and college graduates apply for jobs in the labor markets,
Job applicants and employers are both "buyers". | |
Job applicants are the "sellers" while employers are the "buyers". |
Job applicants and employers are both "sellers". | |
Job applicants are the "buyers" while employers are the "sellers". |
Question 37 pts
Refer to the figure above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S2?
A decrease in consumer incomes, assuming corn is a normal good | |
The development of a more effective insecticide against corn rootworm |
An increase in the price of fertilizer | |
A change in consumer tastes away from cornbread |
Question 38 pts
Which is of the following statements is correct?
If demand increases, then price will decrease | |
If demand decreases, then price will decrease |
If price decreases, then demand will decrease | |
If price increases, then demand will decrease |
Question 39 pts
Which would be a likely cause of an increase in the demand for pizza?
A decrease in the price of hamburger sandwiches | |
A health report showing eating pizza reduces stress |
A reduced desire for take-out and fast-food dining | |
A decrease in the prices of cheese, pepperoni, and mushrooms |
Question 40 pts
A market for a product reaches equilibrium when:
Price falls further after there is a shortage | |
The price rises further after there is a surplus |
Buyers intend to buy a quantity equal to the quantity that sellers intend to sell | |
The actual quantity bought by buyers equals actual quantity sold by sellers |
Question 41 pts
A higher price reduces the quantity demanded for a product because:
Individuals can afford less of the product and will switch to substitutes | |
The financial assets of individuals increase |
Individuals will buy more of the product and less of its substitutes | |
The purchasing power of individuals increases |
Question 42 pts
The idea of the Law of Demand, as applied to electric cars, assumes which of the following to be constant?
Price of electric cars | |
How much sellers are charging customers for electric cars |
Price of gasoline cars | |
Quantity of electric cars demanded by buyers |
Question 43 pts
Use the following graph of the demand for coffee:
Refer to the above diagram of three demand curves for coffee. An increase in the price of coffee, other factors constant, would cause a:
Movement from point a to point b | |
Movement from point b to point a |
Shift from D1 to D2 | |
Shift from D1 to D3 |
Question 44 pts
Which of the following factors will decrease the current demand for a product?
A decrease in the current price of a complementary product | |
A decrease in the current price of a substitute product |
An increase in the current price of a substitute product | |
An expected increase in the future price of the product |
Question 45pts
In competitive markets, a surplus or shortage will:
Cause shifts in the demand and supply curves that tend to eliminate the surplus or shortage | |
Cause changes in the quantities demanded and supplied that tend to intensify the surplus or shortage |
Cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage | |
Never exist because the markets are always at equilibrium |
Question 46 pts
Which of the following would cause a leftward shift in the supply curve for car washes?
A decrease in taxes on car washes | |
An increase in the price of car washing equipment |
A decrease in the price of water | |
An increase in the number of cars in the city |
Question 47pts
The market system automatically corrects a surplus condition in a competitive market by:
Raising the price of the commodity in question while decreasing the quantity demanded | |
Raising the price of the commodity in question while increasing the quantity demanded |
Reducing the price of the commodity in question while increasing the quantity demanded | |
Reducing the price of the commodity in question while decreasing the quantity demanded |
Question 48 pts
A leftward shift of the supply curve for oil in the United States is most likely to result from:
A decrease in the world price of oil | |
An increase in the costs of exploration and drilling for oil |
An increase in the subsidy for oil exploration and drilling | |
A decrease in the fees that oil companies must pay for drilling licenses |
Question 49 pts
A fall in the price of milk, used in the production of ice cream, will:
Decrease the supply of ice cream | |
Have no effect on the supply of ice cream |
Increase the supply of ice cream | |
Cause a movement along the supply curve of ice cream |
Question 50 pts
Refer to the above graph, which shows the market for beef where demand shifted from D1 and D2. The change in equilibrium from E1 to E2 is most likely to result from:
An increase in the cost of cattle feed | |
A decrease in consumer incomes |
A decrease in the tax on beef products | |
An increase in the price of pork |
Q1. The total resource cost of goods and services produced by the U. S. economy is known as a. real GDP b. personal income c. national wealth d. national income Q2. The difference between GDP and final sales equals a. depreciation b. exports c. imports d. net inventory change Q3. Current disposable income can be adjusted for price changes and population changes to yield real per capita disposable income. a. true b. false Q4. If a lawn service mows your grass, it is included in the GDP. a. true b. false Q5. In national income accounting, grain fed to a hog at a commercial hog farm is considered a(n) a. final good b. intermediate good c. consumer good d. capital consumption allowance Q6. Imports constitute a minus figure in national income accounting. a. true b. false Q7. The total value added in the production of a final good a. exceeds the price of the final good b. equals the price of the final good c. exceeds the total payments made to owners of productive resources used in the production d. both (b) and (c) Q8. The GDP is reported on a monthly basis by the Department of Commerce. a. true b. false Q9. Transfer payments are added to NI in the process of determining personal income. a. true b. false Q10. U.S. gross domestic product is converted to U.S. gross national product by a. adding the value of output produced by U.S.-owned resources in foreign countries b. subtracting the value of output produced by U.S.-owned resources in foreign countries c. subtracting the value of output produced in the United States by foreign-owned resources d. both (a) and (c) Q11. Final sales are always larger than the GDP. a. true b. false Q12. Because of the value of things produced inside households, (building your own desk, mowing your own lawn, etc.) a. the GDP value is automatically adjusted upward to reflect this b. the GDP value is automatically adjusted downward to reflect this c. Official GDP is surely smaller than true total output d. Official GDP is surely larger than true total output Q13. A government surplus may trigger a decline in the money supply. a. true b. false Q14. Real wages are determined by multiplying money wages by the CPI. a. true b. false Q15. The more volatile the inflation rate, the weaker the money supply as a standard of deferred payment. a. true b. false Q16. An increase in the money supply always causes an increase in the price level. a. true b. false Q17. Your nominal wages rose during the same period from $200 a week to $260. By how much did your real income rise? a. 30 percent b. 16.7 percent c. 8.33 percent d. 12 percent Q18. In the past 10 years or so, average real wages of U.S. workers in nonagricultural industries have a. increased about 40 percent b. increased slightly c. remained about the same d. declined Q19. If a new cash deposit creates excess reserves of $5,000 and the required reserve ratio is 10 percent, the banking system can increase the money supply by a maximum of a. $50,000 b. $500 c. $5,000 d. $4,500 Q20. The effect of a change in the money supply on economic activity may be offset by a change in velocity. a. true b. false Q21. The current base period for the CPI is a. 1967 b. 1977 c. 1982â1984 d. 1990 Q22. In the circular flow, an increase in the money supply tends to result when a. planned I equals planned S b. planned I is less than planned S c. planned I is greater than planned S d. there is a surplus government budget Q23. COLA is a form of indexation. a. true b. false Q24. The total checkable deposits a bank may have can be determined by dividing its reserves by the reserve requirement. a. true b. false Q25. The Financial Services Modernization Act a. reinforced the Glass Steagall Act b. prevented mergers of banks c. eliminated barriers between banks, brokerage houses, and insurance companies d. eliminated all banking regulations Q26. Each Federal Reserve Bank has its own board of directors. a. true b. false Q27. The most frequently used tool of U.S. monetary policy is a. the discount rate b. the reserve requirement c. open-market operations d. moral suasion Q28. When the Fed conducts open-market operations, it primarily uses a. Treasury bills b. long-term U.S. government bonds c. bonds of publicly traded corporations d. overnight loans of major banks Q29. The Board of Governors of the Federal Reserve System has a. 6 members b. 7 members c. 1 member from each Federal Reserve Bank d. 20 members Q30. If the Fed desires to increase checkable deposits, it may lower the reserve requirement. a. true b. false Q31. The interest rate at which banks borrow excess reserves from each other is known as the a. prime rate b. federal funds rate c. discount rate d. T-bill rate Q32. If member banks need to borrow reserves, they must do so through the discount window. a. true b. false Q33. The Fed Chairman appears before Congress semi-annually to present the Monetary Policy Report. a. true b. false Q34. In terms of the total number of payments, which of the following comprises the largest share? a. cash b. personal checks c. debit cards d. credit cards Q35. By buying government securities, the Federal Open Market Committee adds to member banks' reserves. a. true b. false Q36. More than 50 percent of commercial banks in the United States belong to the Federal Reserve System. a. true b. false Q37. The Federal Reserve System is built around a. 4 regional banks b. 6 regional banks c. 12 district banks d. 1 bank with several branches Q38. The time lags lead monetarists to contend that monetary policy is counterproductive. a. true b. false Q39. The marginal propensity to consume is a. the fraction of an increase in income that would be spent on consumer goods b. the additional desire people have for consumer goods c. the fraction of a person's total income normally spent for consumer goods d. the change in consumption resulting from a $1 change in the price level Q40. The consumption function shows a. how fast the economy is consuming its capital b. that the amount of national income determines the rate at which the economy consumes its resources c. that households' incomes determine how much the households will spend for consumer goods d. the rate at which people actually use up their consumer goods Q41. In the simple Keynesian model, if output exceeds aggregate expenditures, a. there will be no response from businesses b. inventories will decrease and businesses will increase output c. inventories will increase and businesses will increase output d. inventories will increase and businesses will decrease output Q42. If planned construction investment increases by $30 billion and the MPC is two-thirds, total output will increase by a. $30 billion b. $20 billion c. $45 billion d. $90 billion Q43. "A given change in business investment will cause a larger change in equilibrium output." This statement describes an important Keynesian concept called the a. multiplier effect b. marginal propensity to consume c. marginal propensity to invest d. consumption function Q44. In the multiplier formula, 1/MPS equals the multiplier. a. true b. false Q45. The classical economists held that chronic unemployment was likely. a. true b. false Q46. As income increases, the absolute level of planned consumption will increase. a. true b. false Q47. The new classical school contends that government fiscal policy is better than monetary policy in controlling inflation. a. true b. false Q48. Higher price levels are associated with lower aggregate expenditure at every level of income. a. true b. false Q49. Any time that planned leakages exceed planned injections, the economy will expand. a. true b. false Q50. According to the Keynesian model, increased foreign spending for U.S. goods is likely to a. reduce total employment in the United States b. increase total employment in the foreign country c. reduce total output in the United States d. increase total output in the United States |