Susie grows corn in her backyard garden to feed her family. The corn she grows is not
counted in GDP because
a. it was not produced for the marketplace
b. it is an intermediate good that Susie will process further before feeding her family
c. goods produced using land are not included in GDP
d. the corn has low value
e. it reduces the amount of corn she will buy at the store
A micro economist might study which of the following?
a. how inflation changes over time for several countries
b. how money supply aggregates are measured
c. economic growth in less-developed countries in Africa
d. the relationship between aggregate income and aggregate personal consumption
e. why wages for females are lower than for males in a particular labor market
Which of the following goods and services would be excluded from the CPI?
a. Legal services
b. Used cars
c. French wines sold in the U.S.
d. Restaurant meals
e. Shares of stock in U.S. corporations
Which of the following would be classified as consumption spending?
a. A family’s purchase of a new home
b. A family’s purchase of a used car
c. A family’s payment for a child’s hospitalization
d. A family’s purchase of Microsoft stock
e. A family’s purchase of a swing set for their home day-care business
Which of the following is true in the classical model?
a. A spontaneous increase in spending can cause an increase in output and employment.
b. An increase in output and employment can cause a decrease in spending.
c. A spontaneous decrease in spending can cause an increase in output and employment.
d. An increase in output and employment can cause an increase in spending.
e. A spontaneous decrease in spending can cause a decrease in output and an increase in
employment.
Economists view shifts of supply and demand as
a. unusual events that call for government intervention
b. unusual events resulting from the failure of the price to fall
c. normal and frequent events
d. normal and frequents events that do not affect equilibrium prices
e. normal and frequent events that result from government intervention
Using dollar values to calculate GDP is advantageous because
a. people can most easily understand dollar amounts
b. it employs a common unit of measurement for very different things
c. less valuable goods count the same as more valuable goods
d. other methods of calculating production are not as intuitively clear
e. money is a universal yardstick for measurement
Which factors led to the large rise in the government’s budget deficit in the early 1980s?
a. The Clinton Administration’s health care program
b. A cutback in military spending
c. An income tax increase
d. A build up in military spending
e. A large and unprecedented economic expansion.
Which of the following explains why individuals must make choices?
a. competition among firms
b. scarcity of resources
c. inflation
d. changes in the money supply
e. conflict between positive and normative economic statements
Which of the following are equivalent terms?
a. The absence of structural unemployment and the absence of cyclical unemployment
b. Normal employment and the absence of structural unemployment
c. Full employment and the absence of cyclical unemployment
d. Normal employment and the absence of frictional unemployment
e. Null employment and the absence of frictional unemployment.
If the unit cost of output for a car is $8000 and the price is $10,000, what is the firms’
markup over cost?
a. 125.0 percent
b. 25.0 percent
c. 80.0 percent
d. 11.1 percent
e. 20.0 percent.
What key observation did the classical model attempt to explain?
a. the economy performs well in the short run, but not so well in the long run
b. business cycles are the most important economic problem
c. over the short run, the economy performs rather poorly
d. markets do not clear without government intervention
e. over the long run, the economy performs rather well
Deleveraging is the process of reducing leverage, and therefore reducing the risk to
capital from any further declines in asset prices.
According to the classical model, total employment will increase when
a. the birth rate increases
b. the government creates more jobs
c. the labor force increases
d. individuals receive more education
e. there is a recession
In the 2000s, government budget deficits became larger as a percent of GDP.
Saving and taxes are considered leakages from the spending stream.