final review

Question 1

In the Summer of 2008, consumers indicated that they were less optimistic about the future of the economy. This change in sentiment would likely

Answer 1

increase unemployment

Question 2

liquidity refers to

Answer 2

the ease with which an asset is converted into a medium of exchange

Question 3

Banks differ from other types of businesses because banks:

Answer 3

can create money.

Question 4

Which among the following assets is the most liquid?

Answer 4

deposits that can be withdrawn using ATMs

Question 5

On a bank’s balance sheet, the value of its assets must equal the value of its:

Answer 5

the value of its liabilities plus net worth.

Question 6

The least liquid of the assets listed below is:​

Answer 6

real estate.

Question 7

Which of the following is an asset to a bank?​

Answer 7

Loans

Question 8

An important function of commercial banks is to _____.

Answer 8

make loans

Question 9

Barter is the direct exchange of goods and services for:

Answer 9

other goods and services.

Question 10

Exchange is necessary in an economy if:

Answer 10

labor is specialized.

Question 11

If the CPI in the United States was 150 in 2003 and 160 in 2004, the inflation rate over the year was _____.

Answer 11

7%

Question 12

Inflation is defined as a sustained increase in an economy’s price level.​

Answer 12

true

Feedback
The annual inflation rate is the percentage increase in the average price level from one year to the next. See 7-3: Inflation: Its Measure and Sources

Question 13

The inflation experienced in the United States during the 1970s as a result of OPEC oil price increases is an example of:​

Answer 13

cost-push inflation.​

Question 14

The inflation experienced in the United States during the late 1960s as a result of the spending on the Vietnam War is an example of:

Answer 14

demand-pull inflation.

Question 15

A nation’s real GDP was $250 billion in 2013 and $265 billion in 2014. Its population was 120 million in 2013 and 125 million in 2014. What is its real GDP growth rate in 2014?

Answer 15

6%

Question 16

A nation’s real GDP was $250 billion in 2013 and $265 billion in 2014. Its population was 122 million in 2013 and 125 million in 2014. What is the growth rate of real GDP per capita in 2014?

Answer 16

3.46%

Question 17

Before the Industrial Revolution, living standards in the world

Answer 17

were relatively stagnant for long periods of time.

Question 18

Depreciation refers to a decrease in the value of a durable good caused by:​

Answer 18

wear and tear over time.​

Question 19

If the consumer price index (CPI) is 220 one year and 210 the next, the annual rate of inflation as measured by the CPI is approximately _____.​

Answer 19

-4.6%

Question 20

An increase in unemployment benefits is likely to:​

Answer 20

reduce a person’s incentive to look for work.

Question 21

Consider an economy made up of 100 people who are sixteen years of age and older, 60 of whom hold jobs, 10 of whom are looking for work, and 15 of whom are retired. The number of people in the labor force is _____.

Answer 21

70

Question 22

If the official unemployment rate increases from December to January because the Christmas season is over, we can conclude that _____ is responsible for the increase.​

Answer 22

seasonal unemployment

Question 23

In 2004, Jamal lost his job as a shipbuilder. His shipyard never reopened, and his very specialized skills as a shipbuilder were no longer in demand. Jamal’s unemployment is best classified as _____.​

Answer 23

structural

Question 24

In April 2010, the U.S. economy added 290,000 jobs but the unemployment rate still increased from 9.7 percent to 9.9 percent. Which of the following best explains this situation?​

Answer 24

The number of unemployed workers also increased, but by an even greater percentage.​

Question 25

The unemployment rate measures the:​

Answer 25

percentage of people in the labor force who are unemployed.​

Question 26

Unemployment arising from a mismatch of skills is called:​

Answer 26

structural unemployment

Question 27

Who among the following would not be considered officially unemployed?

Answer 27

Annie, who dropped out of the labor force after a year of job search

Question 28

The explanation for the law of demand begins with:

Answer 28

unlimited wants confronting scarce resources.

Question 29

According to the law of demand, as the price of a good rises, _____.

Answer 29

buyers purchase less of the good because their real income decreases with an increase in price

Question 30

A movement along the demand curve for a good can be attributed to a change in:

Answer 30

the quantity demanded of the good

Question 31

A decrease in the demand for a good generally implies that:

Answer 31

the demand curve for the good has shifted to the left.

Question 32

The table given below shows the quantity supplied and the quantity demanded of a good at different prices. If the market price of the good is $1.20, there will be a

Answer 32

shortage of 60 units

Question 33

In the figure given below, a price floor set at $20.00 will:

Answer 33

have no impact on the equilibrium price and quantity.

Question 34

In considering how to allocate its scarce resources among its various members, a household considers

Answer 34

each member’s abilities. each member’s efforts. each member’s desires. -all of the above

Question 35

In most societies, resources are allocated by

Answer 35

the combined actions of millions of households and firms.

Question 36

Normative statements are

Answer 36

claims about how the world should be.

Question 37

Normative statements describe how the world is, while positive statements prescribe how the world should be.

Answer 37

False

Question 38

Other things equal, an increase in supply causes a decrease in price" is a normative statement, not a positive statement.

Answer 38

False

Question 39

A nation’s real GDP was $250 billion in 2013 and $265 billion in 2014. Its population was 120 million in 2013 and 125 million in 2014. What is its real GDP growth rate in 2014?

Answer 39

6.00%

Question 40

Real GDP per capita is found by

Answer 40

dividing real GDP by population

Question 40

Economic historians identify which invention as a major factor that started the Industrial Revolution in Britain?

Answer 40

steam engine

Question 41

Assume a nation's current production possibilities are represented by the curve AB in the above diagram. Economic growth would best be indicated by a

Answer 41

shift in the curve from AB to CD

Question 42

Which of the following is a measure of economic growth that is most useful for comparing living standards?

Answer 42

increases in real GDP per capita

Question 43

The double coincidence of wants

Answer 43

is required when there is no item in an economy that is widely accepted in exchange for goods and services. is required in an economy that relies on barter. is a hindrance to the allocation of resources when it is required for trade. -All of the above are correct.

Question 44

Which of the following pairs of survivors has a double-coincidence of wants?

Answer 44

Rupert with Rob

Question 45

Money

Answer 45

is the most liquid asset.

Question 46

When we want to measure and record economic value, we use money as the

Answer 46

unit of account.

Question 47

paper dollars

Answer 47

are fiat money and gold coins are commodity money.