Deck 30: (AP) Macroeconomics: Part A

Question 1

Which of the following economic questions must any society answer, regardless of its location, size, or political form?

A)Who will consume the services and goods produced?
B)What goods will be produced?
C)What methods of producing goods are appropriate for our society?
D)All of the above

Answer 1

D All of the above.

Question 2

Which of the following terms refers to the market value of all the final goods and services that is produced by an economy within a given period of time?

A)Gross national product
B)Gross domestic product
C)Stagflation
D)Market demand

Answer 2

Gross domestic product

Question 3

When discussing the aggregate expenditure approach, economists generally include four distinct types of spending: investment, government spending, net exports, and ____________.

A)Peak
B)Double counting
C)Consumption
D)Medicare

Answer 3

Consumption

Question 4

Which type of unemployment occurs as a result of a mismatch between the skills of the unemployed population and the type of jobs that are available?

A)Frictional unemployment
B)Structural unemployment
C)Skills unemployment
D)Cyclical unemployment

Question 5

Which broad monetary category would solely liquid forms of money fit into?

A)Narrow money
B)Broad money

Question 6

Which of the following is the overarching, centralized banking authority in the United States?

A)Social Security
B)Bank of America
C)The Federal Reserve
D)The FDIC

Question 7

Which of the following refers to the graphical method of illustrating the complicated economic relationship between consumption and spending?

A)The scarcity and demand curve
B)The supply and demand paradigm
C)The market equilibrium balance
D)The production possibilities curve

Question 8

At its most basic level, economics is considered to be the study of how people deal with ________.

A)Demand
B)Scarcity
C)Surplus
D)Supply

Question 9

From an economist's standpoint, which of the following would be a resource?

A)Labor
B)Entrepreneurship
C)Land
D)All of the above

Question 10

Which of the following is the correct term for the simple act of giving one thing up for another?

A)Opportunity cost
B)Profit motive
C)Trade-off
D)Command

Question 11

Different economies have different ways of answering the basic economic questions, depending upon how they are structured. In which type of economy is the government the primary decision maker?

A)Command economy
B)Traditional economy
C)Market economy
D)None of the above

Question 12

Why does specialization lead to increased output of products?

A)People have the opportunity to try many different jobs
B)People have the opportunity to become increasingly better (and faster) at one particular job
C)People always enjoy their individual jobs.
D)People receive highly specialized training by experts

Question 13

What states that as the price of a product rises, people purchase less of that good, leading to a decrease in demand?

A)Law of supply
B)Command economy
C)Law of demand
D)Law of increasing opportunity costs

Question 14

Although demand changes with a change in price, there are also five general changes that will also lead to a change in demand for people-regardless of whether or not the price changes. Which of the following is one of these changes?

A)Change in the price of other products
B)Change in level of income
C)Change in individual tastes
D)All of the above

Question 15

What is reached when demand and supply are balanced so that both the amount of products sold and the market price are under no pressure to change?

A)Supply and demand curve
B)Market equilibrium
C)The production possibilities curve
D)The opportunity costs

Question 16

Using a credit card to make a purchase is most like which of the following?

A)Using cash for the purchase
B)Having money directly withdrawn from your account
C)Using a check to make the purchase
D)Getting a short term loan from the bank to make the purchase

Question 17

In the case of a recession, which of the following might the Fed do to counter the financial situation?

A)Increase taxes
B)Decrease taxes
C)Increase government spending
D)Purchase bonds

Question 18

What is the depreciation of the dollar most likely to do?

A)Increase imports
B)Decrease imports
C)Increase exports
D)Decrease exports

Question 19

Which of the following would be considered a liability on a bank's balance sheet?

A)Deposits
B)Loans
C)The bank's required reserves
D)Any excess reserves

Question 20

Which of the following happens as a result of stagflation?

A)The Phillips curve experiences a shift to the left
B)The Phillips curve experiences a shift to the right
C)Unemployment increases
D)Both B and D

Question 21

What is the correct formula for the money multiplier?

A)(Required reserve ratio)/(total variable cost)
B)[1 (required reserve ratio)]/(marginal cost)
C)[1-(MPC)]/required reserve ratio
D)1/(required reserve ratio)

Question 22

What is the correct term for a sustained decrease in the general price level within an economy?

A)Money illusion
B)Depreciation
C)Inflation
D)Deflation

Question 23

What tool does the government use in order to gauge inflation?

A)Inflation index
B)Market increase/decrease cost
C)The Consumer Price Index
D)The money illusion

Question 24

Which classical economist argued that investment demand does not depend so much upon interest rates, but rather about the expectations about the prosperity of the economy?

A)Say
B)Keynes
C)Fisher
D)Phillips

Question 25

The definition of the budget deficit is basically the difference between government spending and __________ in one year.

A)Donations
B)Loans from other governments
C)Investments
D)Tax collections

Question 26

Think about making deposits at a commercial bank. If that bank has no excess reserves and the requirement is 20 percent, how much money would be created in new loans from all banks after this bank gets a deposit of $15,000?

A)$60,000
B)$10,000
C)$20,000
D)$30,000

Question 27

Which of the following is an example of fiat money?

A)Dollar bills
B)Gold
C)Silver
D)Eggs or milk that is used for bartering

Question 28

Fae would spend $75 per week even if she did not have a steady income. As it stands, her weekly income is $1,000. If Fae's marginal propensity to consume is 0.8, how much does Fae save per week?

A)$75
B)$925
C)$125
D)$0

Question 29

What happens to the equilibrium price and quantity of oranges if the demand for oranges increases, but the supply of oranges decreases?

A)The price and quantity will both increase
B)The price and quantity will both decrease
C)The price will increase, but the quantity will decrease
D)The price will increase, but it cannot be determined what will happen to the quantity.

Question 30

When looking at the phases of a business cycle, the highest point is called a ________ and the lowest point is called a __________.

A)Trough; peak
B)Peak; trough
C)Economic fluctuations; circular flow
D)Hyperinflation; depression

Question 31

Julia is currently on maternity leave from her position at La Gourmande Francaise. Is Julia considered to be employed or unemployed?

A)Employed
B)Unemployed

Question 32

What are goods that are used together called?

A)Substitutes
B)Complements
C)Pairs
D)Supplies

Question 33

When government spending (G) goes up, does the aggregate demand curve (AD) shift? If so, which way?

A)No
B)Yes. The curve shifts to the left.
C)Yes. The curve shifts to the right.
D)It is impossible to tell given the information.

Question 34

What does MPC stand for?

A)Multiplier of personal consumption
B)Mean of personal contributions
C)Monies due to private contractors
D)Marginal propensity to consume

Question 35

If the MPC is 0.7, what is the marginal propensity to save?

A))5
B))1
C))3
D)None of the above

Question 36

If the MPC is 0.8, then what is the tax multiplier?

A)-2
B)-7
C)-4
D)0

Question 37

__________ is the ease with which an asset, typically money, can be converted into spendable form.

A)Speculation
B)Accountability
C)Liquidity
D)Motive

Question 38

How do economists compare how rich or poor different nations are?

A)By measuring per capita GDP
B)By measuring GNP
C)By looking at the total GDP
D)By dividing GDP by the nation's area in square miles

Question 39

What does a country have if the total value of its commodity exports is greater than the value of its imports?

A)Trade deficit
B)Statistical discrepancy
C)Trade surplus
D)Fixed exchange

Question 40

What is the correct term for the price of a country's domestic currency in terms of a given foreign currency?

A)Demand for dollars
B)Statistical discrepancy
C)Trade rate
D)Exchange rate

Question 41

Which of the following terms refers to a special tax that is imposed on goods imported from other countries?

A)Embargo
B)Import quotas
C)Fixed exchange
D)Tariff

Question 42

What is the system in the United States in which only a portion of total deposits is reserved and the rest is lent out?

A)Liquidity
B)Fractional reserve banking system
C)Central bank policy
D)Open market operations

Question 43

Economics is the study of how people:

A)Allocate societal resources by purchasing goods and services
B)Gain access to local and foreign markets
C)Produce goods and services at the lowest production costs
D)Make profits and reduce unemployment

Question 44

What is the main difference between the two sub disciplines in economics: microeconomics and macroeconomics?

A)Microeconomics studies goods, while macroeconomics studies services.
B)Microeconomics studies individuals, while macroeconomics studies corporations.
C)Microeconomics studies allocation of resources, while macroeconomics studies economies as a whole.
D)Microeconomics studies local markets, while macroeconomics studies international markets.

Question 45

Alchem factories are offered competitive pricing by two competing processors of raw goods. Managers at the factory opt for the first company based on price, despite the second company offering free shipping. The value given up in shipping costs is an example of a(n):

A)Opportunity incentive
B)Substitute cost
C)Substitute incentive
D)Opportunity cost

Question 46

Which of the following basic concepts are illustrated by a Production Possibilities Curve?

A)Efficiency, raw materials, availability, prices
B)Efficiency, opportunity costs, production rate
C)Scarcity, taxation level, prices
D)Scarcity, opportunity costs, prices

Question 47

A Production Possibilities Curve is concave to the origin due to:

A)Overconsumption by consumers
B)Inefficient processes
C)Decreased raw materials availability
D)Increased opportunity costs

Question 48

In a competitive market, the prices of goods and services are determined by ­­­­­­­­­­_________ from consumers and _______ from producers.

A)Demand; supply
B)Supply; opportunity
C)Supply; demand
D)Demand; opportunity

Question 49

In 2007, the nominal Gross Domestic Product (GDP) of a small Asian country was 5% and the real GDP growth was 2%. What was the rate of inflation for this country?

A)-3%
B)10%
C)3%
D)7%

Question 50

A software company manager assigns new roles within an Enterprise Resource Planning project according to recent training and acquired skills. This type of task assignment is referred to as:

A)Generalization
B)Specialization
C)Capitalism
D)Opportunity

Question 51

A country's national economy has shown an 8% growth over the past 4 years. Before that, the economy moved from recession to stagnation over a period of 10 years. What is this economic fluctuation referred to?

A)Business cycle
B)Economic forecast
C)Growth cycle
D)Stagnation cycle

Question 52

To illustrate an economic model such as the one predicting real GDPs, the following are used except:

A)Graphs
B)Tables
C)Equations
D)Case studies

Question 53

All of the following are approaches to calculate a country's GDP except:

A)Product
B)Income
C)Expenditure
D)Imports

Question 54

Gross Domestic Product (GDP) is an index that measures the market value of all goods and products produced within a country in a given year. The correlation between the GDP and the standard of living of an individual in that country at any given time is:

A)Positive
B)Negative
C)Approaching zero
D)Weakly negative

Question 55

In the expenditure methodology in calculating the GDP of a country, the following are variables except:

A)Individual consumption
B)Government spending
C)Savings and loans
D)Gross investment

Question 56

Using the income method of calculating the GDP of a country, the COE refers to:

A)Consumption of exports
B)Compensation of employees
C)Cycle of economics
D)Cost of exports

Question 57

One of the limitations of GDP indices is that they do not take ________ into account.

A)Wealth distribution
B)Gross mixed income
C)Manufacturing base
D)Export deficits

Question 58

In a given economic system, the difference between real GDP and nominal GDP is:

A)Opportunity costs
B)Mixed income
C)Production
D)Inflation

Question 59

Over the past 8 years, the Zimbabwean currency has lost 90% of its value. This is an example of the _________ effects of inflation on a local economy.

A)Retroactive
B)Sliding
C)Positive
D)Negative

Question 60

In a free-market economy, the price of rice following a surplus is likely to:

A)Increase
B)Decrease
C)Remain unchanged
D)Require intervention

Question 61

According to a demand curve, the prices of goods and services are determined given quantities. The following are determinants of consumer demand except:

A)Consumer tastes
B)Availability of substitute goods
C)Distribution of income
D)Market speculation

Question 62

When calculating unemployment figures in a given population, economists count those:

A)Looking for paid work
B)Early retirees seeking extra income
C)Discouraged after long searches
D)Incarcerated in prisons

Question 63

In a small county, the total number of people in the labor force is 15,000. There are currently 12,850 people who are working in paid jobs in both private and public enterprises. What is the unemployment rate in this county?

A)85.7%
B)14.3%
C)87.5%
D)13.4%

Question 64

The following are types of unemployment except:

A)Seasonal
B)Structural
C)Frictional
D)Dynamic

Question 65

Structural rate of unemployment is also referred to as the natural rate of unemployment and it is consistent with aggregate production. The two economists who developed this concept in the 1960s are:

A)Phillips & Phelps
B)Phelps & Adams
C)Friedman & Phelps
D)Phillips & Adams

Question 66

A small Latin American country has been running a trade deficit for the past few years. A trade deficit occurs when:

A)A government exports more than it imports
B)A government imports more than it exports
C)A government imports raw goods only
D)A government exports manufactured goods only

Question 67

Economists postulate that there is a relationship between inflation and unemployment within societies. They state that when the real GDP of a country is high, the actual unemployment rate falls below its natural level. What effect does this have on inflation?

A)It accelerates inflation
B)It decelerates inflation
C)It has an insignificant effect on inflation
D)It depends on the GDP

Question 68

Changes in economic activities that are expressed in price fluctuations are attributed to inflation. All of the following are types of inflation except:

A)Built-in
B)Opportunity-pull
C)Demand-pull
D)Cost-push

Question 69

The United States is facing a large budget deficit that is only expected to increase as new social programs and unemployment benefits are offered to citizens. This budget deficit is more likely to produce a demand-pull inflation when:

A)Outsourcing leads to low employment
B)GDP is higher and unemployment is lower
C)GDP is lower and unemployment is higher
D)Foreign investment is limited to manufacturing

Question 70

An aggregate demand curve is the sum of demand curves from different segments of the economy. Such a curve (Yd) takes into account four different economic indicators, as seen below. What does the "C" stand for in Yd = C + I + G + (X?M)?

A)Consumption
B)Cost
C)Competition
D)Cycle

Question 71

The slope of the aggregate demand (AD) curve is determined and influenced by all of the following except:

A)The interest rate effect
B)The international effect
C)The multiplier effect
D)The local inflation effect

Question 72

With the introduction of government-funded health programs for the elderly and the poor, private health insurers have lost a substantial portion of their insured clients to these programs. The introduction of government-sponsored spending that curbs private investment is referred to as:

A)Squeezing-out
B)Crowding-in
C)Crowding-out
D)Squeezing-in

Question 73

The aggregate quantity of raw and manufactured goods demanded by consumers increases when the:

A)Personal consumption increases
B)Government spending decreases
C)Foreign investment decreases
D)Interest rates remain the same

Question 74

In a short run aggregate supply (SRAS) curve, an upward turn results in the following shift:

A)Decrease in price and output
B)Increase in price and output
C)Increase in price, but no increase in output
D)Increase in output, but no increase in price

Question 75

Germany's manufacturing base has seen an increase in productivity and exports over the past decade. A rightward shift in the aggregate supply curve in this country is most likely due to:

A)A change in price levels
B)An increase in foreign investments
C)A change in government spending
D)A change in imports

Question 76

The short run aggregate supply (SRAS) curve is graphed:

A)As a sloping upward line
B)Is steeper below full employment than above it
C)As a horizontal line
D)With consumer personal income against product quantity

Question 77

In the long run aggregate supply (LRAS), the curve is affected by the following except:

A)Labor
B)Capital
C)Technological capability
D)Trade deficits

Question 78

The medium run aggregate supply (MRAS) is affected by labor, capital availability, technological capability, and wage rate.

A)True
B)False

Question 79

In the circular flow of money through an economy, the following is considered a leakage:

A)Consumer expenditure
B)Bank interest
C)Consumer saving
D)Wages paid to workers

Question 80

The Federal Reserve is a private institution that was authorized by the United States government in the early 20th century to regulate the quantity of money in the economy. The following are the functions of the Federal Reserve except:

A)Lending to other banks
B)Imposing trade tariffs
C)Regulating private banking
D)Controlling the supply of money