The opportunity cost of an action is:a. the monetary payment the action required.b. the total time spent by all parties in carrying out the action.c. the value of the best opportunity that must be sacrificed in order to take the action.d. the cost of all alternative actions that could have been taken, added together.
In the context of the production possibilities curve, opportunity cost is measured in:a. dollars paid for the goods.b. the quantity of other goods given up.c. the value of the resources used.d. changing technology.e. units of satisfaction.
The opportunity cost of your college education is:a. c and d.b. d and e.c. the actual dollar cost of your college education.d. your best alternative use of the money you spend for a college education.e. money you could have earned working instead of going to college.
Which of the following expenditures would not be included in GDP? a. Purchase of a new lawnmower.b. Purchase of a silver cup previously sold new in 1950.c. Purchase of a ticket to the latest movie.d. All of these would be counted in GDP.
Gross domestic product (GDP) includes:a. intermediate as well as final goods.b. foreign goods as well as domestically produced goods.c. used goods sold in the current time period.d. only final goods and services.
Payments to households not in exchange for goods and services currently produced are:a. transfer payments.b. government purchases.c. consumption expenditures.d. investment expenditures.
Gross private domestic investment or simply business investment spending (I):a. excludes all investment in the United States by foreign firms.b. includes all capital in the United States.c. includes net additions to the capital stock plus all new corporate stocks and bonds.d. includes business expenditures on new factories, tools, and machinery.
GDP includes:a. the negative attributes from erosion and deforested landscape.b. all quality improvements resulting from higher quality goods replacing inferior goods.c. the cleaning-up expenses associated with pollution.d. the value of leisure time.e. the illegal activities related to the underground economy.
The three components of personal consumption expenditures are:a. durable goods, nondurable goods, and services.b. durable goods, food, and housing.c. durable goods, nondurable goods, and housing.d. durable goods, services, and food.e. durable goods, services, and transportation.
Which one of the following is not a component of GDP, as measured using the expenditure approach?a. Personal consumption.b. Exports.c. Durable goods.d. Government spending.e. Interest.
Economists usually use the term “recession” to refer to:a. any slowdown in the growth of real GDP.b. zero real GDP growth.c. two or more consecutive quarters of declining real GDP.d. a reduction in nominal GDP lasting more than six months.
Which of the following is not a variable in the index of leading indicators?a. Average work week.b. Duration of unemployment.c. Employment claims.d. New businesses.
Which of the following is not a lagging indicator?a. Duration of unemployment.b. Stock prices.c. Outstanding commercial and industrial loans.d. Prime rate.
The presence of discouraged workers may cause:a. the employment rate to be overstated.b. the employment rate to be understated.c. the unemployment rate to be overstated.d. the unemployment rate to be understated.
A criticism of the unemployment rate is that:a. underemployment is measured in the calculation.b. the data includes part-time workers as fully employed.c. discouraged workers are included in the calculation.d. all of these are problems.
The unemployment rate is the percentage of the:a. civilian labor force that is unemployed or working part-time.b. civilian labor force that is unemployed.c. civilian labor force that is unemployed less the number of government workers.d. adult population that is unemployed.e. adult population that is unemployed or looking for a better job.
Find the BLS”s rate of unemployment from the following data: frictional unemployment = 150, structural unemployment = 200, cyclical unemployment = 225, discouraged workers = 25, underemployed workers = 75, fully employed workers = 850, total population = 2,000.a. 17.5 percentb. 23.3 percentc. 24.6 percentd. 28.8 percente. 38.3 percent
Which of the following is true?a. GDP is a “flow” concept.b. The purchase prices of both intermediate goods and final goods are included in GDP.c. GDP measures economic welfare.d. GDP is a measure of changes in the general level of prices.
Which one of the following transactions would be included in GDP?a. Ms. Kim pays $50 for a used picture frame at a neighborhood garage sale.b. Mr. Doe donates $500 to his town”s junior college scholarship fund.c. Ms. Bartolini pays $500 to fix the front end of her car damaged in a recent accident.d. Ms. Smith pays $5,000 to purchase 100 shares of Microsoft stock.
The period of declining growth in real GDP between the peak of the business cycle and the trough iscalled a(n):a. recessionary phase.b. recovery.c. expansionary phase.d. stationary phase.
Which of the following will most likely occur during the recessionary phase of a business cycle?a. Real GDP rises, and the unemployment rate falls.b. Real GDP declines, and the rate of inflation rises.c. The sales of most businesses decline, and the unemployment rate rises.d. Inflation rises, and employment/population ratio falls
The best definition of inflation is a(n):a. temporary increase in prices.b. increase in the price of one important commodity such as food.c. persistent increase in the general level of prices as measured by a price index.d. increase in the purchasing power of the dollar.
Inflation:a. reduces the cost-of-living of the typical worker.b. is measured by changes in the cost of a typical market basket of goods between time periods.c. causes the purchasing power of a dollar to rise.d. has no effect on real income.
Which of the following is true of inflation?a. It is an increase in the general price level of goods and services.b. The purchasing power of money increases as the result of inflation.c. Inflation is similar to interest payments on future money income, such as pensions and receiptsfrom outstanding loans.d. Inflation has no effect on real income.
Suppose the price of banana rises over time and consumers respond by buying fewer bananas. This situation contributes to which bias in the consumer price index?a. Substitution bias.b. Transportation bias.c. Quality bias.d. Indexing bias.
Assume that the real rate of interest is 5 percent and a lender charges a nominal interest rate of 15 percent. If a borrower expects that the rate of inflation next year will be 10 percent and the actual rate of inflation next year is 12 percent:a. neither the borrower nor the lender benefits from inflation.b. both the borrower and the lender lose from inflation.c. the borrower benefits from inflation, while the lender loses from inflation.d. the lender benefits from inflation, while the borrower loses from inflation.
Which of the following statements is true?a. Demand-pull inflation is caused by excess total spending.b. Cost-push inflation is caused by an increase in resource costs.c. If nominal interest rates remain the same and the inflation rate falls, real interest rates increase.d. If real interest rates are negative, lenders incur losses.e. All of the above