ECO 102 Macroeconomics Unit 4 Challenge 1 and 2 Sophia Course

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Unit 4 Challenge 1 and 2

Challenge 1

Using the graph, which of the following statements is true?

Public policy should be aimed at increasing AD.

Level of output can be sustained indefinitely.

Prices will decrease until the cycle reaches equilibrium.

The economy could correct itself naturally through prices rising.

Using the graph, which of the following statements is true?

On the business cycle, this graph would be near a peak.

The economy is fully employed.

Producers are using resources faster than they're being replaced.

The economy is producing at a real GDP less than the LRAS.

Using the graph, which of the following statements is true?

The economy is producing the maximum amount possible given current resources.

The economy is producing at a real GDP greater than the LRAS.

The level of output cannot be sustained indefinitely.

The unemployment rates are falling.

Which of the following, regarding contractionary policy, is true?

Raises interest rates

Creates demand for goods and services through government expenditures

Entices banks to make loans

Influenced by the multiplier effect

Which of the following statements regarding expansionary monetary policy is FALSE?

It increases the money supply.

It decreases consumer willingness to purchase goods, ceteris paribus.

It makes AD shift to the right.

It encourages job creation in the economy.

Government expenditures create demand for goods and services.

This is known as __________ and will cause AD to shift to the __________.

contractionary fiscal policy; right

expansionary monetary policy; left

expansionary fiscal policy; right

contractionary monetary policy; left

During the 1970s, some economists argued that the cause of the woes of the economy were due to __________.

brain drain due to ineffective education and training

supply shock due to issues with the supply of oil

increase in unemployment, as women entered the labor force

low taxes and a government surplus that should have been spent on social programs

Which of the following is a reason why monetary policy might NOT be helpful in resolving an economic crisis?

Changes in interest rates can only affect unemployment, doing little to curb inflation.

At high levels of unemployment, expansionary policy will increase economic growth.

Businesses may have invested in capital based on predictions of future revenues that might not turn out to be profitable.

Monetary policy can sometimes affect the economy too quickly, as people respond overnight to changes in interest rates.

When the government borrows money, some economists claim it leads to __________.

lower interest rates

crowding out

decrease in the demand for money

increase in the money supply

Which of the following describes what will happen if the euro becomes weak in relation to other currency?

European consumers will increase their purchases of foreign products.

Foreign consumers will find European products more expensive.

Consumer behavior will not change.

Foreign consumers will increase their purchases of European products.

Which of the following is true regarding the relationship between international trade and AD?

A recession in the U.S. could lead to a reduction in imports.

If the U.S. economy is doing well, AD in other countries will decrease.

Chinese economic policies have resulted in a lower standard of living in the U.S.

An increase in exports will have a negative effect on AD.

Which of the following describes what will happen to international trade when the dollar is weak?

A decrease in the amount of goods Americans can buy abroad

A negative effect on GDP in the U.S.

A decrease in net exports for the U.S.

An increase in the U.S. standard of living

A trade deficit occurs when __________.

imports are greater than exports

exports are greater than imports

tax revenues are less than government expenditures

tax revenues are greater than government expenditures

China has a __________ with the United States, meaning that it exports more than it imports.

trade surplus

floating rate

trade deficit

trader barrier

The United States currently has a trade deficit with China, meaning that the ________ has a negative balance.

current account

balance of payments

capital account

trade barrier

Which of the following, relating to comparative advantage, is true?

It occurs when a country has a lower opportunity cost for production of a good than its trading partner.

It will always belong to the country with the absolute advantage in production of a good.

It is the best rationale for quotas and import taxes.

It occurs when a country's production of a good is less efficient that its trading partner's.

Which conclusions can be reached about China based on the information in the graph shown here?

China has a comparative advantage in the area of clothing.

China has an absolute advantage in the area of petroleum products.

China has to give up more petroleum products to produce clothing.

China has a comparative advantage in the area of petroleum products.

Which of the following is true regarding absolute advantage, given the information above?

Country A has an absolute advantage in producing clothing.

Country A has an absolute advantage in producing both clothing and computers.

Country A has an absolute advantage in producing computers.

Country B has an absolute advantage in producing both clothing and computers.

Which of the following represents the advantages of using trade barriers?

They can be useful during economic downturns.

They are not involved in a political process so the time to implement them is minimal.

They are most useful when the economy is at full employment.

They create greater competition among businesses.

Which statement regarding trade barriers is FALSE?

​Comparative advantage can favor one country over another in the production of a good.

Taxes and subsidies are examples of trade barriers.

There is much disagreement as to whether trade barriers are good or bad.

Most economists believe trade barriers should only be used at full employment.

Critics of trade barriers argue that trade barriers __________.

are only good at full employment

are politically too easy to remove when the economy recovers

help a domestic economy be more productive

reduce the domestic incentive for production efficiency

Which statement refers to a practice or situation that is NOT economically sustainable?

Producing more by using more inputs

Economy at less than full employment

New inventions increase productivity with same amount of raw material

Current level of output can be maintained indefinitely

Which statement regarding sustainable economic growth is true?

New production techniques can cause the level of sustainable output to increase.

Economic output is sustainable if it is caused by expansionary governmental policies.

Overuse of current resources without planning for future needs is sustainable.

Sustainable sources of growth shift the AD curve to the left.

Which statement is true regarding sustainable economic growth?

It does not factor in the cost of production based waste.

It emphasizes the importance of current consumption over future consumption.

It is not affected by developments in technology.

It considers the impact over time due to natural resource depletion.

Which of the following statements best describes the EPA economic justice initiative?

This is part of the United Nations Framework Convention on Climate Change.

This organization has taken a more vocal position in recent years that carbon emissions must be reduced.

This consists of a panel of leading economists who conduct research on climate change policy.

This is a form of regulation intended to reduce the negative effect of externalities.

Which of the following is a nonprofit organization of economists who conduct cost/benefit analyzes on policies that address global issues?

Conference of Parties

Kyoto Protocol

United Nations Intergovernmental Panel on Climate Change

Copenhagen Consensus

Which of the following legally binds its member nations to meet emissions reduction targets on a national level?

The Kyoto Protocol

The United Nations Intergovernmental Panel on Climate Change

The Environmental Protection Agency's "Economic Justice" initiative

The Copenhagen Consensus

Which statement is NOT an example of corporate social responsibility?

Assessing all stages of the supply chain for their environmental impact

Creating a corporate endowment

Emphasizing the importance of short term profits

Establishing a sustainability committee at a corporation

Which of the following statements is true regarding corporate social responsibility (CSR)?

CSR is monitored by the United Nations.

Corporate governance includes volunteer time and corporate employee matching contributions.

CSR refers to practices that firms take to voluntarily engage in actions such as philanthropy.

CSR Is managed by state and federal governments.

Which of the following involves assessing all costs of production, including at a firm's production site and along the entire supply chain?

Socially responsible investing

Corporate governance

Environmental management

Philanthropy

Challenge 2

Which of the following statements regarding economic indicators is FALSE?

Most indicators provide a snapshot view of the economy.

Stock market performance is a leading indicator.

Lagging indicators provides us with a look at what just happened in our economy.

Macroeconomic indicators are 100% accurate all of the time.

How does macroeconomic analysis utilize economic indicators?

Uses coincident indicators only in policy making

Considers leading indicators the most comprehensive

Looks to lagging indicators as the best source of information

Uses multiple indicators due to the complexity of the economy

What do economic indicators provide?

A view of the whole economy at a specific point in time

A look into specific industries only

The ability to predict with certainty what will happen next in the economy

Data that can be used for decades to come, as indicators are slow to change

Which of the following describes real GDP?

Is the best measure of per capita standard of living

Considers the nominal prices of goods/services

Adjusted for inflation to show growth in output

Shows changes in prices of goods based on inflation

GDP measures change in _________.

general well-being

economic growth

wealth distribution

standard of living

Which of the following statements regarding GDP is true?

GDP is a strong indicator of general population well-being.

GDP is not a good indicator of wealth distribution.

When comparing GDP from different time periods, price level is not a factor.

GDP counts the value of all goods and services at all stages of production.

The Producer Price Index (PPI) contains measures of all of the following EXCEPT __________.

intermediate goods

exported goods

final goods

crude goods

The CPI and PPI are measured by  __________

the Bureau of Labor Statistics

the Internal Revenue Service

the Congressional Budget Committee

a compilation of state assessments made each month

Which of the following is true regarding the Consumer Price Index (CPI)?

Changes monthly as consumer spending changes

Includes measures of intermediate goods

Shows the inflation rate for all goods in an economy

Shows the change in prices for a market basket of goods

A marginalized worker is ________.

one who is underemployed

always part of the nonfarm payroll statistic

one who has given up looking for work

considered part of the labor force

Which of the following statements about the unemployment rate is true?

There is no margin of error involved with the unemployment rate.

The unemployment rate is a leading indicator.

The unemployment rate is measured by the General Services Administration.

The unemployment rate is determined through a survey process.

The Nonfarm Payroll is __________.

the amount of money earned by workers outside of the farming sector

the labor force that is looking for work outside the farming sector

the number of people employed outside of the farming sector

the number of people unemployed outside of the farming sector

Which of the following descriptions related to retail sales is true?

Excludes growth of new stores in a chain and are conducted yearly

Includes growth of new stores in a chain and are conducted weekly

Includes growth of new stores in a chain and are conducted yearly

Excludes growth of new stores in a chain and are conducted weekly

Retail sales are measured by __________.

self reporting by all retail outlets with over 10 employees

the Bureau of Labor Statistics

the Census Bureau

self-reporting from chains of over 40 stores

Which of the following is true if retail sales are increasing?

One can expect interest rates to fall.

One can expect imports to decrease.

One can expect the economy to grow.

One can expect unemployment to increase.

Which of the following describes how consumer confidence is measured?

Measured in the time period between the next six and 12 months

Measured in the time period between the present and next six months

Measured in the time period between the present and next 12 months

Measured in the time period between the past six months and the present

Which of the following related to consumer confidence is FALSE?

Collected and evaluated by the Conference Board

A type of coincident indicator

Highly responsive to the influence of media and marketing

Measures growth in an economy by looking at how well stores perform from one year to the next

Consumer Confidence is __________.

immune to time lags

not sensitive to the media reports

a comprehensive indicator and good predictor of the economy

sensitive to marketing campaigns

What would the Gini coefficient be if one person retains all of the income in a country?

0

-1

50

1

What would the Gini coefficient be if a country's income distribution is relatively equal?

Close to 1

Close to zero

Close to 10

A negative integer

Given the above graph, the Gini coefficient would be _________.

a negative integer

close to 50

close to zero

close to one

Which statements is true about GDP?

GDP is lower than GNP with countries that have a great deal of production happening in other nations.

GDP is always a good indicator of the economic health of a country.

GDP measures the production of a country’s citizens no matter where they are located.

GDP will be less than GNP for countries whose nationals do NOT produce in other countries.

Which of the following statements is true when a country's citizens' overseas production is met by domestic production by foreigners?

It is impossible to predict, given different tax rates in different countries.

GDP and GNP are fairly equal.

GDP is much larger than GNP.

GNP is much larger than GDP.

Which of the following statements is true when GDP is much lower than GNP?

Foreign direct investment is more significant than production abroad.

There may be a lot of overseas production by residents.

The economy is strong.

The economy is in a trade deficit position.

Which of the following is generally a trait of countries that are developing or underdeveloped?

Lower birth rate

Lower gender bias in employment

Greater life expectancy

Greater income disparity

If a country were to begin experiencing a higher level of poverty, which of the following might also increase?

Mortality rate

Infant live birth rate

Literacy rate

Employment rate

Which of the following is generally evidence of a country's higher standard of living?

Gender bias in employment increasing

Infant mortality increasing

Birth rate increasing

Life expectancy increasing

As women have become increasingly employed, which of the following has decreased?

The labor force

Birth rates

Standards of living

Economic development

Which of the following is often associated with an increasing employment rate of women in living wage occupations?

Less access to education

Fewer resources for children

Increased population growth

Higher standard of living for families

Which of the following is an example of how macroeconomists use data on labor force participation rates by gender?

It is associated with access and availability of jobs.

It matches the Gini coefficient.

It is used to calculate GDP.

It shows a country's level of education attainment.

 

 

 

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