# Econ 2301 Exam 1 practice

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 Which of the following is included in the study of macroeconomics? Unemployment in the nation. A straight line or curve representing a relationship between two variables can shift when a factor not included on the vertical axis or horizontal axis changes. True According to marginal analysis, you should spend more time studying economics if the extra benefit from an additional hour of study: outweighs the extra cost. The production possibilities curve shows that: some of one good must be given up to get more of another good in an economy that is operating efficiently. Any point on the production possibilities curve illustrates: maximum production combinations. If an economy is operating at a point inside the production possibilities curve, its resources are not being used efficiently. Economic growth may be represented by a(n): outward shift of a production possibilities curve. The fact that price and quantity demanded are related negatively illustrates the: law of demand. In economics, the demand for a good refers to the amount of the good people: are willing to buy at various prices. Which of the following is true for the law of demand? There is an inverse relationship between the price of a good and the quantity of the good demanded. Which of the following will cause the demand curve for a good to shift to the right? Increase in the price of a substitute good. The law of demand is graphically demonstrated by a(n): downward-sloping demand curve. The law of supply states that: there is a positive relationship between the price of a good and the quantity of it offered for sale by suppliers. If tofu is a normal good, an increase in income will: shift the demand curve for tofu to the right. The demand schedule for a good shows: the specific quantity of the good that people are willing and able to buy at different prices. Which of the following would not cause market demand for a normal good to decline? An increase in the price of a substitute. An increase in the demand for a product means that the: demand curve shifts to the right. Other things being equal, the effect of a decrease in the price of DVDs on the market for DVD players is a(n): rightward shift in the demand curve for DVD players. Which of the following pairs of goods would be considered complementary? Computers and computer software. The supply schedule shows the specific quantity of a good that suppliers are willing and able to: provide at different prices. When economists say the supply of a product has decreased, they mean that: the supply curve has shifted to the left. In supply and demand analysis, a technological improvement in the production of good X causes the: supply curve for X to shift to the right. A shortage of product means a(n): excess demand of the product. How would a decrease in the price of the feed grains used to feed cattle affect the market for beef? The supply of beef would increase, decreasing beef prices. When the price of a good is above its equilibrium price, a: surplus puts downward pressure on the price. The price of a good will rise when: there is a shortage of the good. If the demand for a good decreased, what would be the effect on the equilibrium price and quantity? Price would decrease, and quantity would decrease. An increase in consumers’ incomes will have what effect on the equilibrium in the restaurant meals market? Price will increase, and quantity will increase. Ceteris paribus, an increase in the supply of a good causes which of the following? Lowers the equilibrium price, and increases the quantity bought and sold. A market consequence of a price floor program is that: a surplus of the product will develop. A price floor would be established in cases where the government believed the market equilibrium price would: be too low. A price ceiling that sets the price of a good below market equilibrium will cause: An increase in quantity demanded of the good. A decrease in quantity supplied of the good. A shortage of the good. Gross domestic product is officially measured by adding together the: market value of all final goods and services produced within the borders of a nation. Which of the following would be counted as a final good for inclusion in GDP? A piece of glass bought this year by a consumer to fix a broken window. Which of the following expenditures would not be included in GDP? Purchase of a silver cup previously sold new in 1950. Gross domestic product (GDP) includes: only final goods and services. Income received minus personal taxes is called: disposable personal income Personal consumption expenditures include: all newly produced goods and services bought by households. Which of the following spending is larger for U.S. GDP? State and local government. The largest component of GDP is: personal consumption expenditures. Gross domestic product is a measure of: market value of the output produced during a period. The sum of payments made to resource owners for the use of their resources is: national income. Using the income approach, an estimate of the value of capital worn out producing GDP is: capital consumption allowance or depreciation The income approach to measuring GDP includes: compensation for employees, net interest, rent, net profits, and indirect business taxes and depreciation.

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