ECON 1100 Chapter 4: Chapter 4.docx

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4 May 2015

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Microeconomics: study of how households and firms make choices, how they interact in markets and how the government. Gross domestic product (gdp) measures total production: gross domestic product (gdp): measures total production. The market value of all final goods and services produced in a geographic area (country during a period of time, typically one year: gdp data is released every 3 months. If we included the value of the car seats we a good/service that is an input into another good or service such as car seats would be double counting. Gdp includes only current production: gdp includes only production that takes place during the indicated time period, gdp doesn"t include the values of used goods (ex: reselling a textbook) Calculating gdp: step 1; determine which goods and services listed in the table should be included in the calculation of gdp: we need to calculate the value of all the final goods and services listed.

Related Questions

Q17. The term "recession" refers to a
a. period of decline in real GDP over two consecutive quarters
b. fall in the general level of real wages over two consecutive quarters
c. fall in the CPI over two consecutive quarters
d. fall in the rate of increase of real per capita GDP

Q18. Cost changes generally lag behind price changes during the business cycle.
a. true
b. false

Q19. Measuring the intensity of the business cycle requires
a. adding seasonal variations to cyclical fluctuations
b. adding seasonal variations and random fluctuations to cyclical changes
c. eliminating seasonal variations and identifiable random forces from the data
d. multiplying the trend by the cyclical fluctuations

Q20. During the contraction phase of the business cycle,
a. prices fall relative to costs, reducing profit margins
b. costs fall relative to prices, reducing profit margins
c. prices fall relative to costs, increasing profit margins
d. costs fall relative to prices, increasing profit margins

Q21. The aggregate supply curve is
a. a curve showing the quantities of total output that business will purchase for investment at various price levels
b. a curve showing the quantities of total output that will be offered for sale at various price levels
c. a curve showing the quantities of goods and services that households will provide at various price levels
d. one point on the aggregate expenditure curve

Q22. The aggregate demand curve is the sum of individual demand curves in the economy.
a. true
b. false

Q23. The classical economic doctrine held that the normal equilibrium position of the economy was one of
a. rising interest rates
b. some unemployment
c. rising prices
d. full employment

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1. Fiscal policy attempts to affect the level of overall spendingin the economy by changes in:
A) the interest rate.
B) the money supply.
C) banking regulations.
D) taxes and spending.

2. Economists have identified several consecutive months of fallingemployment and forecasts for the next few months are for more ofthe same. At what point in the business cycle is the economyapparently located?
A) recession
B) expansion
C) business cycle peak
D) business cycle trough

3. The onset of the Great Depression:
A) was not a shock to anyone since most economists predicted theâroaring 20sâ were bound to end in disaster.
B) created a disagreement between the Hoover administration andconventional economists because Hoover wanted the government tointervene much more quickly than most others.
C) came as a considerable shock to the conventional wisdom ofeconomics at that time and opened the door for critiques ofmainstream thought by economists like JM Keynes.
D) was in 1918 at the end of World War I.

4. When economists measure economic growth, they often use:
A) the inflation rate.
B) the unemployment rate.
C) nominal GDP.
D) real GDP.

5. In a typical business cycle, the business cycle peak isimmediately followed by the:
A) recession.
B) business cycle trough.
C) expansion.
D) depression.

6. Suppose an economy experiences rising total output accompaniedby increasing employment, this is generally known as:
A) stagflation.
B) recession.
C) inflation.
D) expansion.

7. Controlling interest rates is an example of:
A) fiscal policy.
B) tax policy.
C) monetary policy.
D) exchange rate policy.

8. The alternation between recessions and expansions is known asthe:
A) unemployment rate.
B) long-run economic growth.
C) business cycle.
D) macroeconomy.

9. A recession in America is typically associated with:
A) a falling unemployment rate.
B) a decrease in the number of people living in poverty.
C) a decrease in the percentage of Americans with healthinsurance.
D) an increase in corporate profits.

10. The purpose of macroeconomic policy is to:
A) bring unemployment closer to the natural rate.
B) reduce the severity of recessions.
C) rein in excessively strong expansions.
D) bring unemployment closer to the natural rate and to reduce theseverity of recessions.

11. The trade balance is the difference between the value ofthe:
A) trade deficit and the budget deficit.
B) goods and services that one country sells to other countries andthe value of the goods and services it buys in return.
C) exchange rates of two countries that are engaged ininternational trade.
D) national debt and the foreign debt.

12. Increasing the total amount of available productive resourcesis the focus of __________.
A) macroeconomics
B) fiscal policy
C) monetary policy
D) microeconomics

13. The point on a business cycle when real GDP stops rising andbegins falling is a(n):
A) peak.
B) trough.
C) expansion.
D) recession.

14. During a recession, one will often observe:
A) aggregate output rising.
B) unemployment rates will be increasing while aggregate output isfalling.
C) employment rates will be rising.
D) zero unemployment rates.

15. Monetary policy involves:
A) changes in government spending.
B) changes in government tax receipts.
C) changes in the quantity of money.
D) changes in tax rates.

16. The trough of the business cycle:
A) comes right after the expansion phase.
B) comes before the recession phase.
C) is a temporary maximum level of real GDP.
D) is a temporary minimum level of real GDP.

17. Which one of the following statements about the U.S. economy isnot accurate?
A) Since the Second World War, aggregate output grew at a ratelower than the average annual growth rate of population.
B) Since the Second World War, aggregate output grew at a ratehigher than the average annual growth rate of population.
C) Since the Second World War, macroeconomic policy has helped makethe economy more stable.
D) Long-run growth per capita is the key to higher wages and arising standard of living.

18. An economic recovery is all of the following except:
A) economic growth of a sustained nature.
B) a short-run increase in aggregate production in aneconomy.
C) a time of increasing employment.
D) the end of the business cycle.

19. Which of the following would NOT be classified as amacroeconomic question?
A) How many people are employed in the economy as a whole?
B) What determines the overall level of prices in the economy as awhole?
C) What determines the overall trade in goods, services, andfinancial assets between the United States and the rest of theworld?
D) What determines the cost to a university or college of offeringa new course?

20. Which of the following statements regarding price level orinflation is correct?
A) Supply and demand can not explain why a particular good orservice becomes more expensive relative to other goods andservices.
B) Inflation affects only the more advanced countries whereas lessadvanced countries face deflation.
C) Prices of most goods and services remained stable during thegreat depression.
D) In general, when the economy is in recession and jobs are hardto find, inflation tends to fall.

21. If wages grew at a 5% rate last year and average prices grew ata 3% rate, then the average worker is:
A) better off.
B) worse off.
C) no better or worse off.
D) unaffected.

22. In an open economy:
A) the exchange rate is determined by the government.
B) specialization in activities with a comparative advantage is notpossible.
C) trade is only beneficial to the relatively larger economy.
D) there is trade in goods, services, or assets with othercountries.

23. Changes in government spending and taxes in an effort to changeoverall spending in an economy is:
A) fiscal policy.
B) monetary policy.
C) investment.
D) the stock market.

24. If an economy is open, this means that:
A) anyone can immigrate to the country.
B) trading with other countries makes up a portion of itseconomy.
C) it does not trade with other countries.
D) it will experience a drop in its real GDP.

25. Inflation is a situation where:
A) the average price level falls.
B) the average price level increases.
C) the average price level becomes negative.
D) the real price level falls.

26. The topics studied in macroeconomics include:
A) the price of a motorcycle.
B) the wages of engineers.
C) the average price level in the economy.
D) how much ice cream consumers buy.

27. A period of rising real GDP is a(n):
A) peak.
B) trough.
C) expansion.
D) recession.

28. The modern tools of macroeconomic policy are:
A) tax policy and antitrust policy.
B) fiscal policy and monetary policy.
C) monetary policy and exchange rate policy.
D) capital policy and labor policy.

29. A ârubber neckingâ traffic jam is an example of:
A) microeconomics in action.
B) individual behavior that has a large aggregate impact.
C) the paradox of thrift.
D) an outcome smaller than the sum of its parts.

30. The most painful consequence of a recession is:
A) rising unemployment.
B) increasing inflation.
C) increasing aggregate output.
D) higher interest rates.

31. Per capita economic growth is:
A) economic growth per unit of capital.
B) economic growth per person.
C) economic expansion over the business cycle.
D) sustained increase in aggregate output.

32. Keynesian economics stressed:
A) total spending.
B) the self-regulating power of free markets.
C) the long run.
D) that the Depression should run its course to bring down the highcost of living.

33. When an economy's overall production grows faster than itspopulation, this is referred to as:
A) long-run growth per capita.
B) an increase in nominal GDP.
C) deflation.
D) the paradox of thrift.

34. Fiscal policy attempts to affect the overall level of spendingin the economy through:
A) changes in the inflation rate.
B) changes in the quantity of money or the interest rate.
C) changes in tax policy or government spending.
D) discretionary regulation of profits and wages.

35. With regard to the aggregate price level, economists generallybelieve:
A) price stability is a desirable goal.
B) inflation is worse than deflation.
C) deflation is worse than inflation.
D) inflation actually benefits most retired people.

36. Recessions are periods when:
A) output rises.
B) the aggregate price level rises.
C) the unemployment rate is falling.
D) output and employment are falling.

37. Monetary policy attempts to affect the overall level ofspending in the economy by changes in:
A) taxes.
B) taxes and spending.
C) taxes and interest rates.
D) interest rates and the quantity of money.

38. The basic difference between an economic recession and economicdepression is that:
A) the latter is a shorter economic downturn than the former.
B) during recessions output falls faster than duringdepressions.
C) during depressions employment falls faster than duringrecessions.
D) the former is a longer economic downturn than the latter.

39. The central mission of modern macroeconomics is to prevent_____ from happening again.
A) recessions
B) inflation
C) deflation
D) anything like the Great Depression

40. Fiscal policy refers to:
A) the control of interest rates.
B) the control of government spending and taxations.
C) the control of the quantity of money.
D) the control of interest rates and of government spending.

byzantiumant655

2. Which one of the following statements does not indicate an important difference between traditional economics and ecological economics?

Ecological economics places greater emphasis on the importance of energy resources

Ecological economics places greater emphasis on the carrying capacity of the environment

Ecological economics places greater emphasis on the scale of economic activity

Ecological economics places greater emphasis on the importance of natural laws

Ecological economics places greater emphasis on the flow of goods between households and firms

3. The ability of the environment to absorb and render harmless the by-products of human activity is called ...

Carrying capacity

The sink function

Depletion

Throughput

The source function

4. Which of the following is an example of the source function of the environment?

Trees absorb some of the carbon dioxide emitted by human activity

Wetlands reduce the pollution levels in water

Winds carry air pollution away from a city

Humans harvest fish from the oceans

Bacteria break down discarded wastes

5. Which one of the following relationships is not included in the standard circular flow model?

The flow of goods and services from firms to households

The flow of labor from households to firms

The flow of pollution from firms to households

The flow of money from households to firms

The flow of wages from firms to households

6. What statement below best describes how the environment is incorporated into the standard circular flow model?

The long-term availability of natural resources is considered

The pollution generated by firms and households is considered

The input of solar energy is considered

Natural resources are considered as inputs into the production process

The build-up of waste heat is considered

7. What is the primary external input into the broader ecological circular flow model?

Pollution

Solar energy

Fossil fuels

Geophysical cycles

Factors of production

8. What is the only net output of the broader ecological circular flow model?

Goods and services

Solar energy

Factors of production

Geophysical cycles

Waste heat

9. What is the standard economic technique used to compare present and future benefits and

costs?

Property rights

Microeconomics

Externalities

Macroeconomics

Discounting

10. Human activity is producing changes in which cycle that may lead to significant changes in the global climate?

Carbon cycle

Nitrogen cycle

Water cycle

Phosphorus cycle

Organic cycle

11. The Malthusian hypothesis ...

Has proven to be remarkably accurate

Is irrelevant for studying modern environmental problems

Has continuing implications for the debate on current environmental issues

Applies only to developing countries

Applies only to developed countries

12. What is the key to escaping the Malthusian trap?

Increasing productivity per capita

Increasing population

Increasing natural capital

Increasing population density

Definition of property rights

13. Real GNP per capita is defined as ...

GNP divided by population

GNP adjusted for inflation

GNP adjusted for capital depletion divided by population

GNP adjusted for inflation divided by population

GNP adjusted for depreciation divided by population

14. What two factors do standard economics consider as the most important in explaining productivity increases?

Increasing energy supplies and technological progress

Increasing capital stock and technological progress

Increasing energy supplies and increasing natural resources

Increasing capital stock and increasing energy supplies

Increasing capital stock and increasing natural resources

15. Which one of the following statements about sustainable development is false?

Sustainable development requires all energy to be derived from solar energy

Sustainable development considers the scale of the macro-economy

Sustainable development requires a population level below carrying capacity

Sustainable development combines modern and traditional agricultural techniques

Sustainable development requires some type of population policy

16. Which one of the following statements about sustainable development is false?

Some people have complained that sustainable development is a term devoid of specific content

Some people consider sustainable development just a slightly modified form of traditional economic growth

Sustainable development should provide for human needs without undermining the global ecosystem

Sustainable development would redefine economic goals

Sustainable development will require increased resource consumption

17. Which one of the following is an example of demand-side management?

Building a new nuclear power plant

Increasing oil exploration in the Arctic

Building a new solar energy plant

Replacing incandescent with compact fluorescent light bulbs

Increasing reliance on domestic oil sources rather than imports

18. The standard economic approach to pollution control

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ECON 1100 Chapter 4: Chapter 4.docx

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