Macro-quiz Part II

Macroeconomists study

• decisions of households and firms.

• the interaction of households and firms.

• economy-wide phenomena.

• regulations on firms and unions.

Which of the following newspaper headlines would be more closely related to what microeconomists study than to what macroeconomists study?

• Unemployment rate rises from 5 percent to 5.5 percent.

• Real GDP grows by 3.1 percent in the third quarter.

• Retail sales at stores show large gains.

• The price of oranges rises after early rains.

Statistics that are of particular interest to macroeconomists

• are widely reported by the media.

• are largely ignored by the media.

• include the equilibrium prices of individual goods and services.

• do not include statistics for countries outside of North America.

Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist?

• the effect of taxes on the prices of airline tickets, the profitability of automobile-manufacturing firms, and employment trends in the food-service industry

• the price of beef, wage differences between genders, and antitrust laws

• how consumers maximize utility, and how prices are established in markets for agricultural products

• the percentage of the labor force that is out of work, and differences in average income from country to country

The basic tools of supply and demand are

• useful only in the analysis of economic behavior in individual markets.

• useful in analyzing the overall economy, but not in analyzing individual markets.

• central to microeconomic analysis, but seldom used in macroeconomic analysis.

• central to macroeconomic analysis as well as to microeconomic analysis.

Which of the following statistics is usually regarded as the best single measure of a society’s economic well-being?

• the unemployment rate

• the inflation rate

• gross domestic product

• the trade deficit

In a simple circular-flow diagram, total income and total expenditure are

• never equal because total income always exceeds total expenditure.

• seldom equal because of the ongoing changes in an economy’s unemployment rate.

• equal only when one dollar is spent on goods for every dollar that is spent on services.

• always equal because every transaction has a buyer and a seller.

A steel company sells some steel to a bicycle company for $100. The bicycle company uses the steel to produce a bicycle, which it sells for $200. Taken together, these two transactions contribute

• $100 to GDP.

• $200 to GDP

• between $200 and $300 to GDP, depending on the profit earned by the bicycle company when it sold the bicycle.

• $300 to GDP.

A Chinese company operates a noodle restaurant in the United States. The profits from this noodle restaurant are included in

• US GNP and China’s GNP.

• US GDP and China’s GDP

• US GDP and China’s GNP.

• US GNP and China’s GDP.

A Korean company operates a fast food restaurant in Japan. Which of the following statements is accurate?

• The value of the goods and services produced by the restaurant is included in both Japan’s and Korea’s GDP.

• One-half of the value of the goods and services produced by the restaurant is included in Japan’s GDP, and the other one-half of the value is included in Korea’s GDP.

• The value of the goods and services produced by the restaurant is included in Japan’s GDP but not in Korea’s GDP.

• The value of the goods and services produced by the restaurant is included in Korea’s GDP but not in Japan’s GDP.