ECO 102 Macroeconomics Unit 1 Milestone 1 Sophia Course

1

 

According to a circular flow diagram, which of the following flows FROM government TO households?

 

Taxes

 

Profits, dividends and rent

 

Wages, interest and transfer payments

 

Purchase of goods and services

 

Circular Flow Diagram

2

Which statement below about economics is false?

 

Economics is part of the humanities because it studies human decision-making.

 

Macroeconomics studies the application of economics across an economy.

 

Most questions about economics address the central banking system and financial economics.

 

Microeconomics studies decision-making at the individual level.

 

What is Economics?

3

Select the statement below that is true for BOTH supply AND demand.

 

Considers the economy from the consumer's point of view

 

Considers the economy from the producer's point of view

 

Considers price and quantity combinations, with everything else held constant

 

Usually depicted as an upward sloping curve

 

Supply and Demand

4

Which statement below is false regarding the circular flow diagram?

 

A household is an initial holder of resources in an economy.

 

It is a simple model that gives a big picture view of economic activity.

 

It is a common mision that the circular flow diagram and GDP are related.

 

It depicts interaction between the three main parties in the economy.

 

Circular Flow Diagram

5

Which of the following kinds of unemployment is Naomi experiencing if she has a degree in a field that is experiencing a great deal of growth at the moment but is having a difficult time finding work because she just moved to a new city and does not know anyone yet?

 

Frictional

 

Seasonal

 

Cyclical

 

Structural

 

Unemployment/Full Employment - Frictional / Structural / Cyclical

6

Which definition below corresponds to economic indicators?

 

Data that indicates past, present and future activity

 

Exchange transactions that occur across nations

 

The movement of money in and out of a country or other entity

 

The movement of the market through periods of expansion and recession, peaks and troughs

 

Why Study Macroeconomics?

7

Which statement below is true about aggregate demand?

 

In the long run, it is indicated by a vertical line.

 

It represents the amount the economy can produce at different price levels.

 

It slopes downward due to wealth efffect.

 

It slopes upward due to the interest rate effect.

 

Aggregate Supply and Aggregate Demand

8

Which of the following is the point in the business cycle that marks the lowest period of growth in GDP for a specific period?

 

Expansion

 

Trough

 

Recession

 

Peak

 

Business Cycles - Expansionary/Recessionary (NBER)

9

Which statement below about the exchange rate is FALSE?

 

Exchange rates are subject to the economic volatility of the countries involved.

 

Forms of notation for exchange rates can vary from country to country.

 

It is possible to predict precisely what the exchange rate between two countries will be.

 

An exchange rate is the value of one currency in terms of another.

 

Foreign Exchange and Currency

10

Select the statement below that corresponds to the business cycle.

 

The process of expansion and contraction of the GDP

 

Happens between recessions and expansions

 

Shows only the periods of economic decline

 

Happens between expansions and recessions

 

Business Cycles - Expansionary/Recessionary (NBER)

11

Which of the following is the most significant tool the government can use to reduce the severity of business cycles?

 

Debt reduction

 

Social security

 

Public goods

 

Spending

 

Role of the Government/Government Spending/Transfer Payments

12

If the base currency is 1 and the price currency is 3.4, which of the following is the exchange rate?

 

0.25

 

0.29

 

0.34

 

0.35

 

Foreign Exchange and Currency

13

If the price of a gallon of gasoline in California was $0.99 in 1997 and is currently $3.69, prices have increased by which factor below?

 

3.73

 

.27

 

.72

 

-3.73

 

Nominal GDP versus Real GDP

14

Which of the following are examples of unit elasticity?

 

A real estate agent whose services have an income elasticity of 1.25

 

A house with an income elasticity of 1

 

An interior designer whose services have an income elasticity of 2.5

 

A day laborer whose services have an income elasticity of -1.75

 

Elasticity

15

Which term below refers to investment and financial flows that have the ability to appreciate or depreciate currency?

 

Capital account

 

Current account

 

Balance of payments

 

Trade deficit

 

International Trade

16

Which statement below is true of price floors?

 

They lead to surpluses.

 

Rent control is an example of a price floor.

 

If they are above the equilibrium, they are non-binding.

 

They generate shortages.

 

Surplus and Constraints

17

Which of the following policy types can promote growth when the economy is showing signs of slowing?

 

Monetary policy

 

Neither

 

Both

 

Fiscal policy

 

Monetary Policy/Fiscal Policy

18

The producer or supplier will bear more of the burden of a tax than the consumer if demand is which of the following?

 

Greater than supply

 

Inelastic

 

Perfectly inelastic

 

Elastic

 

Tax/Subsidy

19

Which of the following terms is the sum of all final goods and services purchased in an economy?

 

GDP growth

 

Resource cost/Income approach

 

Expenditure approach

 

Factor market

 

Economic Growth (GDP)

1

If the base currency is 1 and the price currency is 3.4, which of the following is the exchange rate?

 

0.34

 

0.35

 

0.29

 

0.25

 

Foreign Exchange and Currency

2

Which statement below is true of price floors?

 

If they are above the equilibrium, they are non-binding.

 

They generate shortages.

 

Rent control is an example of a price floor.

 

They lead to surpluses.

 

Surplus and Constraints

3

Which one of the following is NOT an automatic stabilizer?

 

The countercyclical approach

 

The TANF program

 

Unemployment insurance

 

Social Security

 

Role of the Government/Government Spending/Transfer Payments

4

 

 

Using the image shown here, which of the following flows from the government to firms?  

 

Wages, interest and transfer payments

 

Purchases of goods and services

 

Taxes

 

Imports

 

Circular Flow Diagram

5

If the government would like to maintain the same growth trajectory for the economy, which of the policy types below should it implement?

 

Monetary policy

 

Contractionary policy

 

Expansionary policy

 

Neutral policy

 

Monetary Policy/Fiscal Policy

6

Which statement below regarding expansions is true?

 

They happen when GDP reaches its highest point.

 

They happen when GDP reaches its lowest point.

 

They occur when the economy is experiencing GDP growth.

 

They occur during times of high rates of unemployment.

 

Business Cycles - Expansionary/Recessionary (NBER)

7

Government can change markets through all of the following except__________.

 

awarding large business contracts

 

awarding subsidies

 

enacting regulations

 

changing the tax rate

 

Circular Flow Diagram

8

Select the income elasticity that corresponds to a normal good.

 

Income elasticity is -1.

 

Income elasticity is positive and less than 1.

 

Income elasticity is zero.

 

Income elasticity is negative and less than -1.

 

Elasticity

9

Which of the following kinds of unemployment is Naomi experiencing if she has a degree in a field that is experiencing a great deal of growth at the moment but is having a difficult time finding work because she just moved to a new city and does not know anyone yet?

 

Seasonal

 

Cyclical

 

Frictional

 

Structural

 

Unemployment/Full Employment - Frictional / Structural / Cyclical

10

Which of the following could cause a shift in the demand curve?

 

A change in income

 

A major shift in supply

 

A change in production capacity

 

A change in quantity

 

Supply and Demand

11

Which statement below is true about aggregate demand?

 

It slopes upward due to the interest rate effect.

 

In the long run, it is indicated by a vertical line.

 

It slopes downward due to wealth efffect.

 

It represents the amount the economy can produce at different price levels.

 

Aggregate Supply and Aggregate Demand

12

Which of the statements below is false?

 

Sometimes GDP can shrink quite a bit.

 

A recession is a significant decline in economic activity.

 

A recession cannot usually be seen in GDP.

 

The NBER provides data regarding when recessions start and end.

 

Business Cycles - Expansionary/Recessionary (NBER)

13

The consumer will bear more of the burden of a tax if demand is which of the following?

 

Unit elastic

 

Perfectly elastic

 

Elastic

 

Inelastic

 

Tax/Subsidy

14

Which of the following terms is a relative value of one currency in terms of another?

 

Price currency

 

Exchange rate

 

Base currency

 

Currency

 

Foreign Exchange and Currency

15

Which term below refers to investment and financial flows that have the ability to appreciate or depreciate currency?

 

Capital account

 

Trade deficit

 

Current account

 

Balance of payments

 

International Trade

16

Which of the following is NOT true about economics?

 

Economics is a social science.

 

It addresses decision-making.

 

Economics can accurately predict what the national economy will do in six months to a year.

 

Other fields have influenced the ever evolving development of economics.

 

What is Economics?

17

If the price of a gallon of gasoline in California was $0.99 in 1997 and is currently $3.69, prices have increased by which factor below?

 

-3.73

 

.27

 

3.73

 

.72

 

Nominal GDP versus Real GDP

18

Which of the following is a reason to learn about macroeconomics?

 

It helps us to predict the prices of individual goods and wages in specific jobs.

 

Macroeconomics focuses on decisions made at the individual level.

 

Understanding the reasons behind economic policy decisions can make us better citizens.

 

It allows us to understand the decisions that small business owners make.

 

Why Study Macroeconomics?

19

Which of the following terms is the sum of the amount of resources used to produce goods and services?

 

GDP growth

 

GDP per capita

 

Income approach

 

Expenditure approach

 

Economic Growth (GDP)

 

Determine which statement below about economics is true.

 

Economics studies decision-making processes.

 

Economics predicts what the market will do in the future.

 

As a field of study, economics is pretty much the same around the world.

 

Macroeconomics studies the decisions of individual consumers and firms.

 

Which of the following will lead to a surplus if implemented?

 

Non-binding price ceiling

 

Non-binding price floor

 

Binding price floor

 

Binding price ceiling

 

The president gives his annual State of the Union speech on television and discusses the loss of manufacturing jobs to China and the need for the United States to create more jobs in order to make up for this.

 

This describes which of the following types of unemployment?

 

Seasonal

 

Cyclical

 

Structural

 

Frictional

 

Which statement below is true regarding aggregate supply?

 

It is influenced by the wealth effect.

 

Two curves represent AS.

 

It is not used that often in macroeconomics.

 

AS has no quantity limit.

Select the statement below that is an example of monetary policy only.

 

It is how the federal government influences the business cycle.

 

It can promote growth when economy is slowing.

 

It influences interest rates and borrowing in the economy.

 

A tool of this policy is government spending.

Which of the following terms is a relative value of one currency in terms of another?

 

Currency

 

Exchange rate

 

Base currency

 

Price currency

Select the statement that corresponds to a shift in the supply curve.

 

The amount of goods and services that may be purchased at a certain moment in time at a specific income level

 

The amount of goods and services that are available at different prices at a certain moment in time

 

A movement that occurs due to factors such as firms having more or less access to resources

 

Occurs when the price for a certain good changes and influences the quantity supplied

 

 

According to the circular flow diagram, which of the following do households purchase from businesses?

 

Factors of production

 

Wages and interest

 

Taxes and subsidies

 

Final goods and services

 

 

 

If one dollar can purchase 0.74 euros, what is the exchange rate when using U.S. dollars as the base currency?

 

1.35

 

0.65

 

0.85

 

1.25

 

Which of the following is true regarding recessions?

 

We cannot see the effects of recession in industrial production.

 

It is a decline in economic activity.

 

It is not present in wholesale-retail sales.

 

It refers to a moment when the economy is expanding rapidly.

 

A house with an elasticity score of 3 would be considered a __________ good, while a house with an elasticity score of 0.5 would be considered a(n) _________ good.

 

normal; inferior

 

normal; luxury

 

luxury; normal

 

luxury; inferior

 

The producer or supplier will bear more of the burden of a tax than the consumer if demand is which of the following?

 

Perfectly inelastic

 

Elastic

 

Greater than supply

 

Inelastic

 

Which of the following terms is a relative value of one currency in terms of another?

 

Price currency

 

Currency

 

Base currency

 

Exchange rate

 

Which of the following make up a country's balance of payments?

 

Supply and trade surplus

 

Trade deficit and demand

 

Capital account and current account

 

Current account and trade deficit

 

If college tuition for one year cost $2,500 in 1976 and $11,000 in 2007, the price has increased by which of the following factors?

 

-4.4

 

44

 

4.4

 

-44

 

 

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Status NEW Posted 07 May 2020 05:05 AM My Price 20.00

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