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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?
·       a.)
Public policy should be aimed at increasing AD.
·       b.)
Level of output can be sustained indefinitely.
·       c.)
Prices will decrease until the cycle reaches equilibrium.
·       d.)
The economy could correct itself naturally through prices rising.
Using the graph, which of the following statements is true?
·       a.)
On the business cycle, this graph would be near a peak.
·       b.)
The economy is fully employed.
·       c.)
Producers are using resources faster than they're being replaced.
·       d.)
The economy is producing at a real GDP less than the LRAS.
Using the graph, which of the following statements is true?
·       a.)
The economy is producing the maximum amount possible given current resources.
·       b.)
The economy is producing at a real GDP greater than the LRAS.
·       c.)
The level of output cannot be sustained indefinitely.
·       d.)
The unemployment rates are falling.
Which of the following, regarding contractionary policy, is true?
·       a.)
Raises interest rates
·       b.)
Creates demand for goods and services through government expenditures
·       c.)
Entices banks to make loans
·       d.)
Influenced by the multiplier effect
Which of the following statements regarding expansionary monetary policy is FALSE?
·       a.)
It increases the money supply.
·       b.)
It decreases consumer willingness to purchase goods, ceteris paribus.
·       c.)
It makes AD shift to the right.
·       d.)
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 __________.
·       a.)
contractionary fiscal policy; right
·       b.)
expansionary monetary policy; left
·       c.)
expansionary fiscal policy; right
·       d.)
contractionary monetary policy; left
During the 1970s, some economists argued that the cause of the woes of the economy were due to __________.
·       a.)
brain drain due to ineffective education and training
·       b.)
supply shock due to issues with the supply of oil
·       c.)
increase in unemployment, as women entered the labor force
·       d.)
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?
·       a.)
Changes in interest rates can only affect unemployment, doing little to curb inflation.
·       b.)
At high levels of unemployment, expansionary policy will increase economic growth.
·       c.)
Businesses may have invested in capital based on predictions of future revenues that might not turn out to be profitable.
·       d.)
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 __________.
·       a.)
lower interest rates
·       b.)
crowding out
·       c.)
decrease in the demand for money
·       d.)
increase in the money supply
Which of the following describes what will happen if the euro becomes weak in relation to other currency?
·       a.)
European consumers will increase their purchases of foreign products.
·       b.)
Foreign consumers will find European products more expensive.
·       c.)
Consumer behavior will not change.
·       d.)
Foreign consumers will increase their purchases of European products.
Which of the following is true regarding the relationship between international trade and AD?
·       a.)
A recession in the U.S. could lead to a reduction in imports.
·       b.)
If the U.S. economy is doing well, AD in other countries will decrease.
·       c.)
Chinese economic policies have resulted in a lower standard of living in the U.S.
·       d.)
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.)
A decrease in the amount of goods Americans can buy abroad
·       b.)
A negative effect on GDP in the U.S.
·       c.)
A decrease in net exports for the U.S.
·       d.)
An increase in the U.S. standard of living
A trade deficit occurs when __________.
·       a.)
imports are greater than exports
·       b.)
exports are greater than imports
·       c.)
tax revenues are less than government expenditures
·       d.)
tax revenues are greater than government expenditures
China has a __________ with the United States, meaning that it exports more than it imports.
·       a.)
trade surplus
·       b.)
floating rate
·       c.)
trade deficit
·       d.)
trader barrier
The United States currently has a trade deficit with China, meaning that the ________ has a negative balance.
·       a.)
current account
·       b.)
balance of payments
·       c.)
capital account
·       d.)
trade barrier
Which of the following, relating to comparative advantage, is true?
·       a.)
It occurs when a country has a lower opportunity cost for production of a good than its trading partner.
·       b.)
It will always belong to the country with the absolute advantage in production of a good.
·       c.)
It is the best rationale for quotas and import taxes.
·       d.)
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?
·       a.)
China has a comparative advantage in the area of clothing.
·       b.)
China has an absolute advantage in the area of petroleum products.
·       c.)
China has to give up more petroleum products to produce clothing.
·       d.)
China has a comparative advantage in the area of petroleum products.
Which of the following is true regarding absolute advantage, given the information above?
·       a.)
Country A has an absolute advantage in producing clothing.
·       b.)
Country A has an absolute advantage in producing both clothing and computers.
·       c.)
Country A has an absolute advantage in producing computers.
·       d.)
Country B has an absolute advantage in producing both clothing and computers.
Which of the following represents the advantages of using trade barriers?
·       a.)
They can be useful during economic downturns.
·       b.)
They are not involved in a political process so the time to implement them is minimal.
·       c.)
They are most useful when the economy is at full employment.
·       d.)
They create greater competition among businesses.
Which statement regarding trade barriers is FALSE?
·       a.)
​Comparative advantage can favor one country over another in the production of a good.
·       b.)
Taxes and subsidies are examples of trade barriers.
·       c.)
There is much disagreement as to whether trade barriers are good or bad.
·       d.)
Most economists believe trade barriers should only be used at full employment.
Critics of trade barriers argue that trade barriers __________.
·       a.)
are only good at full employment
·       b.)
are politically too easy to remove when the economy recovers
·       c.)
help a domestic economy be more productive
·       d.)
reduce the domestic incentive for production efficiency
Which statement refers to a practice or situation that is NOT economically sustainable?
·       a.)
Producing more by using more inputs
·       b.)
Economy at less than full employment
·       c.)
New inventions increase productivity with same amount of raw material
·       d.)
Current level of output can be maintained indefinitely
Which statement regarding sustainable economic growth is true?
·       a.)
New production techniques can cause the level of sustainable output to increase.
·       b.)
Economic output is sustainable if it is caused by expansionary governmental policies.
·       c.)
Overuse of current resources without planning for future needs is sustainable.
·       d.)
Sustainable sources of growth shift the AD curve to the left.
Which statement is true regarding sustainable economic growth?
·       a.)
It does not factor in the cost of production based waste.
·       b.)
It emphasizes the importance of current consumption over future consumption.
·       c.)
It is not affected by developments in technology.
·       d.)
It considers the impact over time due to natural resource depletion.
Which of the following statements best describes the EPA economic justice initiative?
·       a.)
This is part of the United Nations Framework Convention on Climate Change.
·       b.)
This organization has taken a more vocal position in recent years that carbon emissions must be reduced.
·       c.)
This consists of a panel of leading economists who conduct research on climate change policy.
·       d.)
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?
·       a.)
Conference of Parties
·       b.)
Kyoto Protocol
·       c.)
United Nations Intergovernmental Panel on Climate Change
·       d.)
Copenhagen Consensus
Which of the following legally binds its member nations to meet emissions reduction targets on a national level?
·       a.)
The Kyoto Protocol
·       b.)
The United Nations Intergovernmental Panel on Climate Change
·       c.)
The Environmental Protection Agency's "Economic Justice" initiative
·       d.)
The Copenhagen Consensus
Which statement is NOT an example of corporate social responsibility?
·       a.)
Assessing all stages of the supply chain for their environmental impact
·       b.)
Creating a corporate endowment
·       c.)
Emphasizing the importance of short term profits
·       d.)
Establishing a sustainability committee at a corporation
Which of the following statements is true regarding corporate social responsibility (CSR)?
·       a.)
CSR is monitored by the United Nations.
·       b.)
Corporate governance includes volunteer time and corporate employee matching contributions.
·       c.)
CSR refers to practices that firms take to voluntarily engage in actions such as philanthropy.
·       d.)
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?
·       a.)
Socially responsible investing
·       b.)
Corporate governance
·       c.)
Environmental management
·       d.)
Philanthropy
Challenge 2
Which of the following statements regarding economic indicators is FALSE?
·       a.)
Most indicators provide a snapshot view of the economy.
·       b.)
Stock market performance is a leading indicator.
·       c.)
Lagging indicators provides us with a look at what just happened in our economy.
·       d.)
Macroeconomic indicators are 100% accurate all of the time.
How does macroeconomic analysis utilize economic indicators?
·       a.)
Uses coincident indicators only in policy making
·       b.)
Considers leading indicators the most comprehensive
·       c.)
Looks to lagging indicators as the best source of information
·       d.)
Uses multiple indicators due to the complexity of the economy
What do economic indicators provide?
·       a.)
A view of the whole economy at a specific point in time
·       b.)
A look into specific industries only
·       c.)
The ability to predict with certainty what will happen next in the economy
·       d.)
Data that can be used for decades to come, as indicators are slow to change
Which of the following describes real GDP?
·       a.)
Is the best measure of per capita standard of living
·       b.)
Considers the nominal prices of goods/services
·       c.)
Adjusted for inflation to show growth in output
·       d.)
Shows changes in prices of goods based on inflation
GDP measures change in _________.
·       a.)
general well-being
·       b.)
economic growth
·       c.)
wealth distribution
·       d.)
standard of living
Which of the following statements regarding GDP is true?
·       a.)
GDP is a strong indicator of general population well-being.
·       b.)
GDP is not a good indicator of wealth distribution.
·       c.)
When comparing GDP from different time periods, price level is not a factor.
·       d.)
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 __________.
·       a.)
intermediate goods
·       b.)
exported goods
·       c.)
final goods
·       d.)
crude goods
The CPI and PPI are measured by __________
·       a.)
the Bureau of Labor Statistics
·       b.)
the Internal Revenue Service
·       c.)
the Congressional Budget Committee
·       d.)
a compilation of state assessments made each month
Which of the following is true regarding the Consumer Price Index (CPI)?
·       a.)
Changes monthly as consumer spending changes
·       b.)
Includes measures of intermediate goods
·       c.)
Shows the inflation rate for all goods in an economy
·       d.)
Shows the change in prices for a market basket of goods
A marginalized worker is ________.
·       a.)
one who is underemployed
·       b.)
always part of the nonfarm payroll statistic
·       c.)
one who has given up looking for work
·       d.)
considered part of the labor force
Which of the following statements about the unemployment rate is true?
·       a.)
There is no margin of error involved with the unemployment rate.
·       b.)
The unemployment rate is a leading indicator.
·       c.)
The unemployment rate is measured by the General Services Administration.
·       d.)
The unemployment rate is determined through a survey process.
The Nonfarm Payroll is __________.
·       a.)
the amount of money earned by workers outside of the farming sector
·       b.)
the labor force that is looking for work outside the farming sector
·       c.)
the number of people employed outside of the farming sector
·       d.)
the number of people unemployed outside of the farming sector
Which of the following descriptions related to retail sales is true?
·       a.)
Excludes growth of new stores in a chain and are conducted yearly
·       b.)
Includes growth of new stores in a chain and are conducted weekly
·       c.)
Includes growth of new stores in a chain and are conducted yearly
·       d.)
Excludes growth of new stores in a chain and are conducted weekly
Retail sales are measured by __________.
·       a.)
self reporting by all retail outlets with over 10 employees
·       b.)
the Bureau of Labor Statistics
·       c.)
the Census Bureau
·       d.)
self-reporting from chains of over 40 stores
Which of the following is true if retail sales are increasing?
·       a.)
One can expect interest rates to fall.
·       b.)
One can expect imports to decrease.
·       c.)
One can expect the economy to grow.
·       d.)
One can expect unemployment to increase.
Which of the following describes how consumer confidence is measured?
·       a.)
Measured in the time period between the next six and 12 months
·       b.)
Measured in the time period between the present and next six months
·       c.)
Measured in the time period between the present and next 12 months
·       d.)
Measured in the time period between the past six months and the present
Which of the following related to consumer confidence is FALSE?
·       a.)
Collected and evaluated by the Conference Board
·       b.)
A type of coincident indicator
·       c.)
Highly responsive to the influence of media and marketing
·       d.)
Measures growth in an economy by looking at how well stores perform from one year to the next
Consumer Confidence is __________.
·       a.)
immune to time lags
·       b.)
not sensitive to the media reports
·       c.)
a comprehensive indicator and good predictor of the economy
·       d.)
sensitive to marketing campaigns
What would the Gini coefficient be if one person retains all of the income in a country?
·       a.)
0
·       b.)
-1
·       c.)
50
·       d.)
1
What would the Gini coefficient be if a country's income distribution is relatively equal?
·       a.)
Close to 1
·       b.)
Close to zero
·       c.)
Close to 10
·       d.)
A negative integer
Given the above graph, the Gini coefficient would be _________.
·       a.)
a negative integer
·       b.)
close to 50
·       c.)
close to zero
·       d.)
close to one
Which statements is true about GDP?
·       a.)
GDP is lower than GNP with countries that have a great deal of production happening in other nations.
·       b.)
GDP is always a good indicator of the economic health of a country.
·       c.)
GDP measures the production of a country’s citizens no matter where they are located.
·       d.)
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?
·       a.)
It is impossible to predict, given different tax rates in different countries.
·       b.)
GDP and GNP are fairly equal.
·       c.)
GDP is much larger than GNP.
·       d.)
GNP is much larger than GDP.
Which of the following statements is true when GDP is much lower than GNP?
·       a.)
Foreign direct investment is more significant than production abroad.
·       b.)
There may be a lot of overseas production by residents.
·       c.)
The economy is strong.
·       d.)
The economy is in a trade deficit position.
Which of the following is generally a trait of countries that are developing or underdeveloped?
·       a.)
Lower birth rate
·       b.)
Lower gender bias in employment
·       c.)
Greater life expectancy
·       d.)
Greater income disparity
If a country were to begin experiencing a higher level of poverty, which of the following might also increase?
·       a.)
Mortality rate
·       b.)
Infant live birth rate
·       c.)
Literacy rate
·       d.)
Employment rate
Which of the following is generally evidence of a country's higher standard of living?
·       a.)
Gender bias in employment increasing
·       b.)
Infant mortality increasing
·       c.)
Birth rate increasing
·       d.)
Life expectancy increasing
As women have become increasingly employed, which of the following has decreased?
·       a.)
The labor force
·       b.)
Birth rates
·       c.)
Standards of living
·       d.)
Economic development
Which of the following is often associated with an increasing employment rate of women in living wage occupations?
·       a.)
Less access to education
·       b.)
Fewer resources for children
·       c.)
Increased population growth
·       d.)
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?
·       a.)
It is associated with access and availability of jobs.
·       b.)
It matches the Gini coefficient.
·       c.)
It is used to calculate GDP.
·       d.)
It shows a country's level of education attainment.
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