Clicker Question Review 12 07 2011 Chapter 2 1 Alex values a car at 4000 and Jen values a car at 9000 Alex sells the car to Jen for 7000 what does each gain Alex gains 3000 and Jen gains 2000 2 When private ownership of a resource is clearly defined and enforced the private owner has a strong incentive to use the resource wisely and to consider seriously the wishes of others when deciding how to employ the resource 3 In Lebos the government allows private ownership of pigs but not of cows If the demand for pork and beef both permanently increase in the long run we would expect the population of pigs to rise and the population of cows to fall 4 Using a ppc a technological advance that increases the amount of output for the same amount of inputs would be illustrated as an outward shift of the curve 5 Opportunity costs differ among nations primarily because nations have different endowments of land labor skills capital and technology Chapter 3 1 In economics the demand for a good refers to the amount of the good people Are willing to buy at various prices 2 When economists say the quantity demanded of a product has increased they mean the price of the product has fallen and consequently consumers are buying more of it 3 When economists say the demand for a product has decreased they mean the demand curve has shifted to the left 4 Ceteris paribus an increase in the price of a good will cause quantity supply of the good to increase 5 When economists say the supply of a product has increase they mean supply curve has shifted to the right 6 Which of the following statements are true with a shortage quantity demanded exceeds quantity supplied and with a surplus quantity supplied exceeds quantity demanded and price will be pushed up price will be pushed down 7 If there is a decrease in demand for laptop computers we would expect both the price and quantity sold to decrease 8 Which of the following would reduce the price of dvd players and increase the quantity sold An increase in the supply of dvd players 9 If there is a simultaneously an increase in demand and an increase in supply we would expect an increase in eq price and an increase in eq quantity a decrease in eq price and an increase in eq quantity 10 Adam Smith s invisible hand principle stresses the tendency of the competitive market prices to direct self interested individuals into activities that enhance the economic welfare of society Chapter 7 1 A business produced 10 million worth of goods in 2005 but sold only 9 million Is the 1 million increase in inventory counted as part of the 2005 GDP Yes because these inventories are part of the output of the economy of 2005 2 George lived in a home that was newly constructed in 2005 In 2005 he paid 200 000 for the brand new house He sold the house in 2006 for 225 000 Which of the following statements is correct regarding the sale of the house The 2006 sale affected neither 2005 or 2006 GDP 3 Which of the four is the largest component of GDP Consumption 4 If a used car dealer purchases a use car for 3 000 refurbishes it and sells it for 8 000 the dealer contributes value added equal to 5 000 and consequently 5 000 is added to GDP 5 An American owned McDonald s opens in Russia How would the net revenue earned by this restaurant affect the GDP and GNP of the United States GNP would rise and GDP would remain unchanged 6 If the GDP deflator in 2006 was 130 compared to a value of 100 during the 1996 base year this would indicate that The general level of prices during 2006 was 30 higher than during 1996 False Chapter 8 1 A person not working is considered unemployed 2 Mary is a homemaker Last week she was busy with her normal household chores She is not a member of the labor force 3 Which of the following would be officially classified as unemployed A laid off construction worker waiting to return to a previous job 4 Which of the following is a positive effect on job search and the unemployment that often accompanies it It permits individuals to better match their skills and preferences with the requirements of a job 5 Full employment is the situation in which the economy operates at an unemployment rate equal to the sum of Structural and frictional 6 Actual GDP will be below potential GDP during a recession 7 Suppose you receive a 3 increase in your nominal wage Over the year inflation ran about 6 Which of the following is true Your real wage fell Chapter 9 1 For an economy aggregate demand equals consumption plus investment plus government purchases plus exports minus imports 2 In the context of aggregate supply the short run is defined as the period during which some prices are set by contracts and cannot be adjusted 3 In the context of aggregate supply the long run is defined as the period during which individuals have sufficient time to modify their behavior in response to price changes 4 Which of the following statements are true At point 1 actual GDP is less than potential GDP At point 1 actual unemployment is greater than the natural rate of unemployment At point 3 actual GDP is greater then potential GDP At point 3 actual unemployment is less than the natural rate of unemployment 5 Other things equal an increase in resource prices will increase the cost of producing goods and services which will lead to a higher price level 6 Which of the following is the most accurate statement about real and nominal interest rates Real interest rates can be either positive or negative but nominal interest rates must be positive 7 If the dollar price of the English pound goes from 1 75 to 1 50 then The dollar has appreciated against the pound The pound has depreciated against the dollar 8 If the dollar price of the English pound goes from 1 75 to 2 00 then Americans will find English goods more expensive The English will find American goods cheaper Chapter 10 1 If Asian economies suffer a serious economic slump Us net exports will fall AD will shift to the left US unemployment will rise 2 Which of the following will most likely increase aggregate demand A lower real interest rate 3 If an improvement in the quality of education in the US increase the productivity of labor this will increase SRAS increase LRAS 4 Other things constant an increase in resource prices will decrease short run aggregate supply 5 Which of the following will most likely occur as the result of an unanticipated increase in aggregate demand An increase in output and a move to a higher price level 6 Which of the following