When economists talk about growth in the economy, they measure that growth as the

percentage change in real GDP from one period to another

absolute change in nominal GDP from one period to another

percentage change in nominal GDP from one period to another

absolute change in real GDP from one period to another

Which of the following items is counted as part of government purchases?

All (i), (ii), and (iii) are correct

i) The federal government pays the salary of a Navy officer

(ii) The state of Nevada pays a private firm to repair a Nevada state highway

(iii) The city of Las Vegas, Nevada pays a private firm to collect garbage in that city

The real interest rate tells you

how fast the purchasing power of your bank account rises over time

how fast the number of dollars in your bank account rises over time

the number of dollars in your bank account today

the purchasing power of your bank account today

Assume for Namibia that the opportunity cost of each hut is 200 bowls. Then which of these pairs of points could be on Namibia's production possibilities frontier?

(300 huts, 60,000 bowls) and (200 huts, 80,000 bowls)

(200 huts, 30,000 bowls) and (150 huts, 35,000 bowls)

(200 huts, 40,000 bowls) and (150 huts, 30,000 bowls)

(300 huts, 50,000 bowl) and (200 huts, 60,000 bowls)

Refer to Table 3-7. Korea should specialize in the production of

both goods and import neither good

neither good and import both goods

Refer to Table 3-2. Aruba’s opportunity cost of one cooler is

0.4 radio and Iceland’s opportunity cost of one cooler is 0.25 radio

0.4 radio and Iceland’s opportunity cost of one cooler is 4 radios

2.5 radios and Iceland’s opportunity cost of one cooler is 0.25 radio

2.5 radios and Iceland’s opportunity cost of one cooler is 4 radios

Household spending on education is counted in which component or subcomponent of GDP?

consumption of nondurable goods

The consumption component of GDP includes spending on

durable goods, nondurable goods, and services

durable goods and nondurable goods, but not spending on services

durable goods and services, but not spending on nondurable goods

nondurable goods and services, but not spending on durable goods

Gross domestic product is defined as

(iii) the market value of all final goods and services produced within a country in a given period of time.

(i) the quantity of all final goods and services demanded within a country in a given period of time.

(ii) the quantity of all final goods and services supplied within a country in a given period of time.

Refer to Table 3-3. Assume that Zimbabwe and Portugal each has 180 machine minutes available. If each country divides its time equally between the production of toothbrushes and hairbrushes, then total production is

48 toothbrushes and 24 hairbrushes

24 toothbrushes and 12 hairbrushes.

96 toothbrushes and 48 hairbrushes.

720 toothbrushes and 1440 hairbrushes

Which of the following is not correct?

Economists’ opposition to trade restrictions is still based largely on the principle of absolute advantage

Economists are generally united in their support of free trade

The conclusions of Adam Smith and David Ricardo on the gains from trade have held up well over time

David Ricardo argued that Britain should not restrict imports of grain

The economy's inflation rate is the

percentage change in the price level from the previous period

price level in the current period

absolute change in the price level from the previous period

change in the gross domestic product from the previous period

In 1949, Sycamore, Illinois built a hospital for about $500,000. In 1987, the county restored the courthouse for about $1.7 million. A price index for nonresidential construction was 24 in 1949, 108 in 1987, and 126.5 in 2000. According to these numbers, the hospital cost about

$2.6 million in 2000 dollars, which is more than the cost of the courthouse restoration in 2000 dollars

$2.1 million in 2000 dollars, which is less than the cost of the courthouse restoration in 2000 dollars

$2.1 million in 2000 dollars, which is more than the cost of the courthouse restoration in 2000 dollars

$2.6 million in 2000 dollars, which is less than the cost of the courthouse restoration in 2000 dollars

The CPI is more commonly used as a gauge of inflation than the GDP deflator is because

the CPI better reflects the goods and services bought by consumers.

the CPI is calculated more often than the GDP deflator is

the GDP deflator cannot be used to gauge inflation

Given that a country’s real output has increased, in which of the following cases can we be sure that its productivity also has increased?

Both (ii) and (iii) are correct

(i) The total number of hours worked rose.

(ii) The total number of hours worked stayed the same

(iii) The total number of hours worked fell

All else equal, if there are diminishing returns, then which of the following is true if a country increases its capital by one unit?

Output will rise but by less than it did when the previous unit was added.

Output will rise by more than it did when the previous unit was added

Output will fall by more than it did when the previous unit was added.

Output will fall but by less than it did when the previous unit was added

When a country saves a larger portion of its GDP than it did before, it will have

more capital and higher productivity.

more capital and lower productivity

less capital and higher productivity

less capital and lower productivity

People who buy newly issued stock in a corporation such as Crate and Barrel provide

equity finance and so become part owners of Crate and Barrel

debt finance and so become part owners of Crate and Barrel

debt finance and so become creditors of Crate and Barrel

equity finance and so become creditors of Crate and Barrel

Which of the following is correct?

The financial system channels funds from savers to borrowers

In the national income accounts, investment and private saving refer to the same thing

In a closed economy if national saving is greater than zero, then everyone must be saving

People whose consumption exceeds their income are savers

Suppose that in a closed economy GDP is equal to 11,000, taxes are equal to 2,500 consumption equals 7,500 and government purchases equal 2,000. What are private saving, public saving, and national saving?

(ii) 1,000, 500, and 1,500, respectively

(i) 1,500, 1,000, and 500, respectively

(iii) 500, 1,500, and 1,000, respectively

None of (i), (ii), and (iii) is correct

The labor-force participation rate measures the percentage of the

total adult population that is in the labor force

total adult population that is employed

labor force that is either employed or unemployed

Collective bargaining refers to

the process by which unions and firms agree on the terms of employment

the process by which the government sets exemptions from the minimum wage law

setting the same wage for all employees to prevent conflict among workers

firms colluding to set the wages of employees in order to keep them below equilibrium

The GDP deflator reflects the

current level of prices relative to the level of prices in the base year

level of prices in the base year relative to the current level of prices

level of real output in the base year relative to the current level of real output

current level of real output relative to the level of real output in the base year

The price of domestically produced DVD players increases dramatically, causing a 1 percent increase in the CPI. The price increase will most likely cause the GDP deflator to increase by

None of (i), (ii), and (iii) is correct; this particular price increase will not affect the GDP deflator

Suppose that real GDP grew more in Country A than in Country B last year.

None of (i) and (ii) is correct

(i) Country A must have a higher standard of living than country B

(ii) Country A's productivity must have grown faster than country B's

Which of the following is correct?

The level of real GDP per person is a good gauge of economic prosperity, and the growth rate of real GDP per person is a good gauge of economic progress

Although levels of real GDP per person vary substantially from country to country, the growth rate of real GDP per person is similar across countries

Productivity is not closely linked to government policies

Productivity may be measured by the growth rate of real GDP per person

knowledge and skills that workers acquire through education, training, and experience

stock of equipment and structures that is used to produce goods and services

total number of hours worked in an economy

same thing as technological knowledge

A change in the tax laws that increases the supply of loanable funds will have a bigger effect on investment when

the demand for loanable funds is more elastic and the supply of loanable funds is more inelastic

the demand for loanable funds is more inelastic and the supply of loanable funds is more elastic

both the demand for and supply of loanable funds are more elastic

both the demand for and supply of loanable funds are more inelastic

ECO 121

Business

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

When an economist points out that you and millions of other people are interdependent, he or she is referring to the fact that we all

rely upon the government to provide us with the basic necessities of life.

rely upon one another for the goods and services we consume.

have similar tastes and abilities

are concerned about one another’s well-being

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Refer to Figure 3-3. If Enid must work 0.25 hour to produce each taco, then her production possibilities frontier is based on how many hours of work?

40 hours

100 hours

400 hours

1600 hours

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The opportunity cost of an item is

the number of hours that one must work in order to buy one unit of the item.

what you give up to get that item

always less than the dollar value of the item

always greater than the cost of producing the item

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Refer to Figure 3-4. The opportunity cost of 1 novel for Jordan is

1/3 poem

3 poems

4 poems

12 poems

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Refer to Table 3-9. Barb has an absolute advantage in

both setting up and testing computers and a comparative advantage in setting up computers

both setting up and testing computers and a comparative advantage in testing computers

neither setting up nor testing computers and a comparative advantage in setting up computers

neither setting up nor testing computers and a comparative advantage in testing computers

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Refer to Table 3-11. Varick has a comparative advantage in the production of

wheat

cloth

both goods

neither good

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The value of the housing services provided by the economy's owner-occupied houses is

included in GDP, and the estimated rental values of the houses are used to place a value on these housing services

included in GDP, and the actual mortgage payments made on the houses are used to estimate the value of these rental services

excluded from GDP since these services are not sold in any market

excluded from GDP since the value of these housing services cannot be estimated with any degree of precision

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ECO 121

When an economist points out that you and millions of other people are interdependent, he or she is referring to the fact that we all

Refer to Figure 3-3. If Enid must work 0.25 hour to produce each taco, then her production possibilities frontier is based on how many hours of work?

The opportunity cost of an item is

Refer to Figure 3-4. The opportunity cost of 1 novel for Jordan is

Refer to Table 3-9. Barb has an absolute advantage in

Refer to Table 3-11. Varick has a comparative advantage in the production of

The value of the housing services provided by the economy's owner-occupied houses is

Def01 stands for GDP deflator in year 1. Def02 stands for GDP deflator in year 2. The inflation rate in year 2 equals

When economists talk about growth in the economy, they measure that growth as the

Which of the following items is counted as part of government purchases?

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