ECN 104 Chapter 1: Appendix
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Question 1
Which of the following describes the relationship between the change in inventories and aggregate expenditure?
A. | Aggregate expenditure equals the change in inventories minus GDP. |
B. | The change in inventories equals GDP divided by aggregate expenditures. |
C. | Aggregate expenditures equals GDP divided by the change in inventories. |
D. | Aggregate expenditures equals GDP minus the change in inventories. |
E. | The change in inventories equals GDP multiplied by aggregate expenditure. |
1 points
Question 2
Suppose the marginal propensity to consume is 0.80 and taxes decrease by $10 billion. Which of the following is true?
A. | Disposable income and consumption fall by $10 billion |
B. | Disposable income and consumption rise by $10 billion |
C. | Disposable income rises by $10 billion and consumption rises by $8 billion |
D. | Disposable income falls by $10 billion and consumption falls by $8 billion |
E. | Disposable income rises by $10 billion and consumption falls by $8 billion |
1 points
Question 3
If aggregate expenditure at a particular level of income is less than output,
A. | output will increase |
B. | output will decrease |
C. | output will remain the same |
D. | output will rise slightly and then level off |
E. | we cannot determine what will happen to output |
1 points
Question 4
The consumption function
A. | illustrates the relationship between real disposable income and real consumption spending |
B. | illustrates the relationship between the price level and real consumption spending |
C. | is the relationship between productivity and real consumption spending |
D. | shows how real consumption increases when real disposable income decreases |
E. | illustrates the relationship between real consumption spending and employment |
1 points
Question 5
The focus of the short-run macro model is on the role of
A. | spending in explaining economic fluctuations |
B. | labor in explaining economic fluctuations |
C. | financial markets in explaining economic fluctuations |
D. | output in explaining economic fluctuations |
E. | resources in explaining economic fluctuations. |
1 points
Question 6
If the output level is such that the aggregate expenditure line lies below the 45-degree line, which of the following is true?
A. | Aggregate expenditure is greater than output, so inventories will increase and output will be raised. |
B. | Aggregate expenditure is greater than output, so inventories will decrease and output will be increased. |
C. | Aggregate expenditure is less than output, so inventories will decrease and output will be raised. |
D. | Aggregate expenditure is less than output, so inventories will increase and output will be lowered. |
E. | Aggregate expenditure is greater than output, so inventories will increase and output will be lowered. |
1 points
Question 7
If the marginal propensity to consume is 0.7, the expenditure multiplier is
A. | 7.0 |
B. | 0.7 |
C. | 3.0 |
D. | 3.3 |
E. | not determinable without additional information. |
1 points
Question 8
Aggregate expenditure is the sum of
A. | all types of spending by households and firms |
B. | spending and savings by households |
C. | spending by households and governments on final goods and services |
D. | spending by households, government, firms, and foreigners on final goods and services |
E. | all spending and saving by households, firms, and governments |
1 points
Question 9
If the marginal propensity to consume is 0.5 and disposable income increases by $10,000, by how much will consumption spending increase?
A. | $10,000 |
B. | $500 |
C. | $50 |
D. | $5,000 |
E. | $9,524 |
1 points
Question 10
When real consumption expenditure is plotted against real disposable income the resulting relationship is
A. | very weak. |
B. | virtually flat . |
C. | positive and very close to linear. |
D. | negative and very close to linear. |
1 an imperfect market, individual firms
A.are always able to set the price of their product. |
B.are able to influence the price of their product. |
C.have no influence over the price of their product. |
D.take the market price as given. 1 Which of the following is NOT characteristic of a market economy?
2 In a competitive market, the price of the product is
3 Which of the following firms participates in a competitive market?
4 In an imperfect market, individual firms
5 Which of the following firms operates as a monopoly?
6 According to the law of demand, what is the relationship between price and quantity demanded?
7 Refer to the following graph. The demand curve slopes downward because
8 A change in which of the following will cause a change in the quantity demanded of coffee?
9 Suppose that burgers and fries are complements in consumption. If the price of fries increases
10 Suppose that Coca Cola and Pepsi are substitutes in consumption. If the price of Coca Cola decreases, then
11 According to the law of supply, what is the relationship between price and quantity supplied?
12 Refer to the graph below. The supply curve is _______________ driven by the law of supply.
13 A change in which of the following will cause a change in the quantity supplied of coffee?
14 Which of the following will cause a rightward shift in the supply curve for tobacco?
15 Flour is a factor of production of cupcakes. How will an increase in the price of flour affect the market for cupcakes?
16 Refer to the following image. When a market is in equilibrium, which of the following is true?
17 Refer to the following figure. At a price of $15, this market is experiencing a(n)
18 Refer to the following figure. At a price of $5, this market is experiencing
19 Suppose pasta salad is a normal good. If the price of pasta (a major ingredient in pasta salad) increases and income also increases, the
20. What must happen to the market price in order for a shortage to be eliminated?
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Question 1
The law of demand states that there is a direct relationship between supply and demand.
True
False
4 points
Question 2
Equilibrium is a state of balance between supply and demand.
True
False
4 points
Question 3
Goods are scarce for both rich and poor.
True
False
4 points
Question 4
"The big corporations in this country, like ExxonMobil and GM, have deep pockets and need to be hiring more people." This is a positive statement about economic policy.
True
False
4 points
Question 5
The law of supply states that there is a direct relationship between price and quantity demanded.
True
False
4 points
Question 6
In the circular flow model, firms own economic resources, and householdsbuy the manufactured products and services.
True
False
4 points
Question 7
Households play a dual role of providing the factors of production whilepurchasing the goods and services of firms.
True
False
4 points
Question 8
Opportunity cost is the lowest valued benefit that must be sacrificed asthe result of choosing an alternative.
True
False
4 points
Question 9
Scarcity denotes that our desire for a good exceeds the amount that isfreely available from nature.
True
False
4 points
Question 10
Economics is a social science concerned with satisfying man's unlimitedwants with limited resources.
True
False
4 points
Question 11
Joint output of individuals or nations will be maximized when goods areexchanged between parties in accordance with the law of"comparative advantage".
True
False
4 points
Question 12
The production possibilities frontier assumes that the level of technologyvaries when applying the model.
True
False
4 points
Question 13
Excess demand in the market will cause the price of a product to decline.
True
False
4 points
Question 14
Demand is measured on the vertical axis and supply on the horizontalaxis.
True
False
4 points
Question 15
A change in quantity demanded is a movement along the same demandcurve.
True
False
4 points
Question 16
As globalization and world trade proliferates, individual markets withincountries' economies become more competitive.
True
False
4 points
Question 17
Which growth theory compares a subsistence real wage rate to the actual real wage rate?
Classical growth theory | ||
Inflation growth theory | ||
Neoclassical growth theory | ||
New growth theory |
4 points
Question 18
Suppose the working age population in Tiny Town is 100 people. If 25 of these people are NOT in the labor force, the ________ equals ________.
unemployment rate; 25/100 Ã 100 | ||
employment rate; 25/75 Ã 100 | ||
labor force; 75 | ||
labor force; 25/100 Ã 100 |
4 points
Question 19
Suppose there is a rise in the real wage rate. As a result, the quantity of labor demanded:
increases. | ||
decreases. | ||
does not change because there is no change in the money wage rate. | ||
increases only if the price level also decreases. |
4 points
Question 20
GDP can be computed as the sum of:
all sales that have taken place in an economy over a period of time. | ||
the total expenditures of consumers and business over a period of time. | ||
the total expenditures of consumption, investment, and government expenditure on goods and services over a period of time. | ||
the total expenditures of consumption, investment, government expenditure on goods and services, and net exports over a period of time. |
4 points
Question 21
The real wage rate equals:
(100 x (money wage rate/price level) | ||
(100 x (price level/money wage rate) | ||
(money wage rate x (price level) | ||
(money wage + (number of hours worked/(price level) |
4 points
Question 22
If the CPI was 121.5 at the end of 2007 and 138.3 at the end of 2008, the inflation rate over these two years was:
10.2 percent. | ||
13.8 percent. | ||
12.2 percent. | ||
16.8 percent. |
4 points
Question 23
A movement along the production function is the result of a change in:
the quantity of labor. | ||
technology. | ||
capital. | ||
interest rates. |
4 points
Question 24
All of the following are part of fiscal policy EXCEPT:
setting tax rates. | ||
setting government spending. | ||
choosing the size of the government deficit. | ||
controlling the money supply. |
4 points
Question 25
Along a production possibilities frontier for real GDP and the quantity of leisure time, as leisure time increases, real GDP:
decreases. | ||
increases. | ||
stays the same. | ||
could increase, decrease or stay the same. |