Question 1

Which of the following is an example of a capital good?

Accepted Answer

A new industrial robot purchased by a car manufacturer

Question 2

Suppose you decide to spend two hours working at a part-time job instead of going to a concert. What is the opportunity cost of your decision?

Accepted Answer

The enjoyment you would have received from attending the concert

Question 3

In the circular flow model, which of the following best describes the role of households in the factor market?

Accepted Answer

They supply labor and other resources to firms

Question 4

Which of the following statements is a normative statement?

Accepted Answer

The government should increase the minimum wage to reduce poverty.

Question 5

According to the law of demand, if the price of a product increases, what happens to the quantity demanded, ceteris paribus?

Accepted Answer

It decreases

Question 6

Which of the following would cause a movement along the demand curve for coffee?

Accepted Answer

A decrease in the price of coffee

Question 7

If the price of peanut butter rises and, as a result, the demand for jelly falls, what is the relationship between peanut butter and jelly?

Accepted Answer

They are complements

Question 8

Which of the following would shift the supply curve for smartphones to the right?

Accepted Answer

A technological advancement in smartphone production

Question 9

Suppose the market price of a product is above the equilibrium price. What will result?

Accepted Answer

A surplus, causing the price to fall

Question 10

If both the demand and supply curves for a product shift to the right, what can you say about the equilibrium quantity?

Accepted Answer

It will increase

Question 11

Which of the following is included in the calculation of a country's GDP using the expenditure approach?

Accepted Answer

Government spending on new highways

Question 12

Which of the following is NOT counted in GDP?

Accepted Answer

The value of illegal drug sales

Question 13

A bakery buys flour for $$100 and uses it to bake bread that it sells for 300. $$What is the value added to GDP from the bread?

Accepted Answer

$300

Question 14

Given the following data for a country in 2022: Consumption = $$500, Investment = 200$$, Government Purchases = $$300, Exports = 100$$, Imports = $150. What is the GDP using the expenditure approach?

Accepted Answer

$950

Question 15

Which of the following best describes the difference between nominal GDP and real GDP?

Accepted Answer

Nominal GDP is measured in current prices, while real GDP is measured in constant prices

Question 16

If nominal GDP increases from one year to the next, which of the following must be true?

Accepted Answer

Either prices, output, or both have increased

Question 17

Suppose in 2020, the nominal GDP of a country is $1,000 and the GDP deflator (base year 2015) is 125. What is the real GDP in 2020?

Accepted Answer

$800

Question 18

Which of the following is a limitation of GDP as a measure of economic well-being?

Accepted Answer

It does not account for the value of household production

Question 19

If GDP fails to account for the value of environmental degradation, what is the likely effect on measured GDP?

Accepted Answer

GDP will be overestimated

Question 20

Which of the following is a positive statement?

Accepted Answer

An increase in taxes will reduce consumer spending.

Macroeconomics Midterm 1 Study Notes: Goods, Markets, Economic Systems, Supply & Demand, and GDP

Study Guide - Practice Questions

Study Guide - Flashcards