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Because the dK line is drawn as a straight line, then the Solow Model assumes that:
A) the depreciation rate in the economy is constant.
B) the total depreciation in the economy is constant.
C) the total depreciation in the economy is zero.
D) the higher the level of capital, the lower the amount of total depreciation.
If GDP is ________ potential output, adjustment to the long-run equilibrium requires
that output falls and prices ________.
A) above; rise
B) above; fall
C) below; rise
D) below; fall
________ occurs when a firm is shifting part of its production to another country.
A) Outsourcing
B) Importing
C) Exporting
D) All of the above are correct.
The effort used to coordinate the factors of production and produce goods and services
is called:
A) entrepreneurship.
B) capital accumulation.
C) land ownership.
D) land.
If the population of Country A is 400 and the real GDP per capita of Country A is
$200,000, then the GDP in country A is:
A) $500.
B) $50.
C) $80,000,000.
D) $8,000,000.
Which of the following is a country whose economy shrank between the 1960s and
2001?
A) Sierra Leone
B) the United States
C) Mexico
D) Canada
Nations that borrow from abroad to support current investment will
A) always be better off in the future.
B) always sacrifice future consumption.
C) be better off in the future if the investments are profitable.
D) sacrifice future consumption only if the investments are profitable.
Refer to Application 1, "Using Value Added to Measure the True Size of
Wal-Mart," to answer the following questions:
From Application 1, Wal-Mart's 2008 value added was roughly equal to the GDP of
________, the ________ largest economy in the world.
A) Japan; 2nd
B) Belgium; 28th
C) Indonesia; 23rd
D) Bulgaria; 56th
Deciding how a society's products are distributed among its citizens answers the
economic question of
A) who consumes the products produced.
B) what products will be produced.
C) where will the products be consumed.
D) how will the products be produced.
Peaches and cream are complements. When the price of peaches rises and the price of
raw milk (used to make cream) rises:
A) the equilibrium price of cream rises and the equilibrium quantity of cream might rise
or fall.
B) the equilibrium price of cream falls and the equilibrium quantity of cream might rise
or fall.
C) the equilibrium price of cream falls and the equilibrium quantity of cream rises.
D) the equilibrium quantity of cream falls and the equilibrium price of cream might rise
or fall.
Producer A has a comparative advantage over Producer B if, in producing a good:
A) A can produce more of the good than B can in a given time period.
B) A has a lower opportunity cost of producing the good than does B.
C) A has to trade off more than B does to produce the good.
D) A has a higher opportunity cost of producing the good than does B.
When the share of government spending in GDP increased in the United States during
World War II,
A) consumption's share of GDP fell.
B) consumption's share of GDP increased.
C) government spending was crowded out.
D) investment's share of GDP increased.
Scenario 1: Imagine that an economy produces two goods, flashlights and fishing lures.
In 2011, the economy produced 70 flashlights and 40 fishing lures, and the prices of
flashlights and fishing lures were $5 and $12, respectively. In 2012, the economy
produced 85 flashlights and 50 fishing lures, and the prices of flashlights and fishing
lures were $7 and $15, respectively.Based on the information in Scenario 1, nominal
GDP in 2011 in this economy was
A) $830.
B) $1,025.
C) $1,090.
D) $1,345.
Which of the following activities does NOT diversify risk?
A) writing earthquake insurance policies for the entire Western United States
B) writing hurricane insurance policies only in Florida
C) investing in real estate in various states across the United States.
D) purchasing the stock of a variety of different companies
The velocity of money measures:
A) the number of times a typical dollar changes hands in a year.
B) the ratio of deposits to money supply.
C) the number of times the Fed increases money supply in a year.
D) the relationship between money supply and money demand.
