(Answered) Final Exams ECON 1580 Introduction to Economics Latest Fall 2023

Final Exams ECON 1580 Introduction to Economics Question 1 If the price of chocolate-covered peanuts increases and the demand for strawberry licorice twists increases, this indicates that these two goods are: a. unrelated goods. b. superior goods. c. inferior goods. d. substitute goods. Question 2 A decrease in the demand facing a monopoly firm would _______ quantity and _______ price. The demand is inelastic. a. increase; increase b. increase; decrease c. decrease; increase d. decrease; decrease Question 3 Economic growth can be represented by: a. an increasing equilibrium output level b. a rightward shift of an economy's short-run aggregate supply curve. c. a rightward shift of an economy's long-run aggregate demand curve. d. a rightward shift of an economy's long-run aggregate supply curve. Question 4 A firm's total output times the price at which it sells that output is: a. net revenue. b. total revenue. c. average revenue. d. marginal revenue. Question 5 Suppose a bank has $10,000 in deposits and $1,000 in reserves. The required reserve ratio is 5%. Which of the following occurs if the required reserve ratio is increased to 10%? a. The bank's required reserves will decrease to $500. b. The bank's excess reserves will increase to $1,000. c. The bank's required reserves will increase to $1,000. d. The bank's ability to create loans increases by 5%. Question 6 In this exhibit (Consumer Equilibrium 3), assume that you are consuming the combination of goods at point K. Given budget constraint FL, utility can be increased by moving to point: a. F. b. G. c. H.d. I. Question 7 If the federal budget is initially balanced and government expenditures remain constant, then an increase in GDP will _________ tax revenues and create a budget _________. a. increase; surplus b. increase; deficit c. decrease; surplus d. decrease; deficit Question 8 In 1984, the Department of Justice reached an agreement with AT&T that: a. allowed AT&T to continue to provide local telecommunications service to established customers but prevented it from accepting any new customers. b. allowed the so-called Baby Bells to provide long-distance service to their local customers. c. separated AT&T from the regional Bell operating companies. d. led to significant degrees of competition and the reduction of monopoly power in local markets with most of the change coming within 10 years after the agreement. Question 9 An important determinant of the price elasticity of demand is the: a. time period. b. price of related goods. c. level of technology. d. quantity of the good supplied. Question 10 For a factor of production to be called capital it must: a. be produced. b. occur in the natural environment. c. be a part of human skill. d. be a result of a stock issue. Question 11 The congressional act that established the U.S. central banking system in 1913 was the: a. Federal Reserve Act. b. Gramm-Rudman Act. c. Employment Act. d. Humphrey-Hawkins Act. Question 12 The second of the three ranges of production is characterized by _______ marginal returns. a. increasing b. constant c. diminishing d. negative Question 13 Profit computed using explicit costs as the only measure of costs is:a. explicit profit. b. accounting profit. c. implicit profit. d. economic profit. Question 14 The branch of economics that examines the impact of choices on aggregates in the economy is: a. positive economics. b. normative economics. c. macroeconomics. d. microeconomics. Question 15 Generational accounting: a. is a method of assessing the impact of fiscal policy lags from one generation to another. b. measures the number of generations it takes to pay off the national debt at a given point in time. c. evaluates the impact of current fiscal policies on different generations in the economy, including future generations. d. is an accounting method that defers to the future, the cost of any government policy the rewards of which will be reaped in the future. Question 16 Which of the following statements is true about velocity? a. In the short run, velocity varies but in the long run, velocity is relatively constant. b. In the short run, velocity is relatively constant but in the long run, velocity varies. c. Velocity is relatively constant in the short run and in the long run. d. Velocity fluctuates with fluctuations in economic activity and changes in the growth rate of money supply. Question 17 This exhibit (Table 6-4), shows some output and income data for Manna Land. What is the value of Manna Land's net foreign income? a. –$100 billion b. $1,100 billion c. $100 billion d. $200 billion Question 18 Using the aggregate demand-aggregate supply model, predict what happens in the short run when there is a general decrease in raw materials cost. a. The aggregate supply curve shifts right; the aggregate demand curve is not affected; price level decreases; real GDP increases.b. The aggregate supply curve shifts left; the aggregate demand curve is not affected; price level increases; real GDP decreases. c. The aggregate demand curve shifts right; the aggregate supply curve is not affected; price level and real GDP increase. d. The aggregate demand curve shifts left; the aggregate supply curve is not affected; price level and real GDP decrease. Question 19 The income effect of a price change is described by which of the following statements? a. When the price of a good falls, consumers have an implicit increase in income and can now buy more of the good. b. When the price of a good falls, consumers will now substitute this lower priced good for more higher priced goods. c. The income effect is the relative change in the amount of a good consumed when the price of another good changes. d. The income effect shows how a change in income at a given price will affect the quantity of a good purchased. Question 20 The slope of the total product curve is: a. fixed product. b. average product. c. marginal product. d. implicit product. Question 21 Suppose that the price elasticity of demand for grapefruit is -2.8. The introduction of a new variety that is cheaper to grow should cause consumer expenditures for grapefruit to: a. rise. b. fall. c. remain unchanged. d. it is not possible to answer with the information given. Question 22 All other things unchanged, a tax on a product that leads to an increase in the cost of production would: a. lead to an increase in supply. b. lead to a decrease in demand. c. result in an increased price. d. lead to a decrease in supply. Question 23 Which of the following exemplifies the outlet bias in the computation of the CPI? a. Roxanna refuses to shop at factory outlet stores because she says that the layouts of the stores are too chaotic and therefore is too time-consuming. b. Yu-Jen does most of her family's shopping at Costco instead of Safeway because the prices at Costco are more competitive. c. Katie prefers to buy her groceries at Whole Foods because they carry a wide selection of organic produce.d. Diana does her holiday shopping when she travels to China to take advantage of the