Macro Unit 1 Questions and Answers 100% Pass

Macro Unit 1 Questions and Answers 100% Pass Macroeconomics would include the study of national infrastructures Which of the following statements describes macroeconomics? It looks at the overall ups and downs of the economy. Microeconomics involves decisions made by firms and households Studying macroeconomics helps us learn about the value and limitations of __________, which occurs across nations, typically involving foreign exchange transactions. global trade Macroeconomists look at __________ to study the overall health of the economy. economic indicators Which of the following topics can macroeconomics help a person understand? In the Circular Flow model, what do firms purchase? Labor from households In the Circular Flow model, governments produce some final goods and services In the Circular Flow diagram, households purchase final goods and services GDP per capita is often used to measure the standard of living GDP is best described as the value of economic activity that takes place in a country in a given year Which statement below is NOT true about GDP? It includes value from leisure. In 2009, the yearly tuition at a state university is $20,000. In 2017, the yearly tuition at the same state university is $31,000.Using the price of tuition for reference, the inflation rate of the U.S. dollar increased by a factor of __________ in eight years. 1.55 In 2010, the average cost of a house in France is 126,000 euros. In 2018, the average cost is 154,000 euros.Using the price of the average house for reference, the inflation rate of the Euro increased by a factor of __________ in eight years. 1.22 In January 2008, a bag of rice cost five million Zimbabwean dollars. Several months later, the same bag of rice cost 250 million Zimbabwean dollars.Using the price of rice for reference, the inflation rate of the Zimbabwean dollar increased by a factor of __________ in just a few months. 50 When GDP growth is at its maximum, given current resources, the business cycle is said to be in which phase? Peak A _________ is a decline in economic activity that lasts more than a few months and is visible in _________. recession; real GDP The business cycle period in which the economy shows growth is the expansion If a central banking authority lowers interest rates in order to encourage more borrowing, which of the following combinations describes this type of policy? Expansionary monetary Which of the following policies is implemented when the economy is growing too quickly? A tax increase by the government If the government takes on a program of increased spending and tax cuts, which combination below correctly describes these policies? Expansionary fiscal Multiple theories exist about the proper role/functions of government.Many suggest that the government should promote __________, which is funded through ___________. income redistribution; progressive taxation Which of the following choices is a form of government sponsored automatic stabilizers in the U.S.? Progressive income tax Almost all of the theories regarding the proper role of government suggest that it should provide __________ such as national defense. One of the most important tools the government can use to stabilize the economy is __________. public goods; spending When quantity supplied and quantity demanded are the same, a market is said to be in __________. equilibrium An increase in income, and thus consumption, would cause which of the following to occur? The demand curve to shift to the right Movements along the supply curve are a result of changes in __________. price If income elasticity is positive, but less than one, this good is considered to be a __________. normal good When a good is unit elastic, the absolute value of the elasticity is ___________. equal to one Cross-price elasticity refers to changes in demand that happen due to changes in price of related goods.If this value is negative for two goods or services, then they are __________.If this value is positive, then they are __________. complementary; substitutes Minimum wage is a type of __________ that enforces a lower limit on wages. When these occur, they create a __________ of labor, because there are more people who want to be paid at this rate than there are firms that are willing to pay them. price floor; surplus In 2007, the government attempted to end inflation by enforcing a price freeze on basic commodities such as corn, sugar and eggs. This led to runs on grocery stores and other places that sold such items, since in some cases the prices were rolled back to almost 50% of what they had been. A shortage occurred because people rushed to stock up on these items as much as they could. In this example, the freeze on prices is known as a government enforced __________, with businesses forbidden to charge more than the price set by the government. These government enforced price constraints are binding because they are lower than the __________. price ceiling; equilibrium price If a price floor is set below the equilibrium price (P) above, which of the following will occur? Nothing, as this price floor would not be binding. If demand is inelastic, the _________ will bear more of the burden of the tax. consumer What happens on a graph for a good when a tax is imposed? The supply curve shifts to the left. When the government pays money to encourage production, this is known as a __________. subsidy The value of an item in monetary terms at a specific point in time is the __________. price When prices increase over time, this is known as __________. inflation The price for borrowing money is known as the __________. interest rate Which of the following examples corresponds with frictional unemployment? This type of unemployment occurs when college students graduate and look for full time work. Unemployment as a result of people's skills not matching those needed for jobs in a changing economy is known as __________ unemployment. structural Jim can't find a job because the store where he was manager just closed due to a recession.What type of unemployment does this represent? Cyclical Which of the following is a reason why the aggregate demand curve slopes downward? Interest rate effect Which of the following statements corresponds with the wealth effect? As the price level falls, people feel as if they have more money and purchase more goods. When a domestic currency depreciates, what happens to the purchases of imports and exports? Imports decrease and exports increase. Which of the following is true regarding exchange rates? Exchange rates are influenced by the market and subject to volatility. Which of the following is true regarding exchange rates? It is subject to the stability in one country as compared to another. If the demand for a country's currency increases, what happens to the currency? It will appreciate. Investment and financial activity is shown on a country's __________. capital account Select the true statement about international trade. A country that has a current account trade deficit will have a currency that depreciates over time, all else equal. When the Current Account and the Capital Account are added together, __________. the sum will be zero