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___ 3. Which of the following would directly affect GDP? a. Aunt Lucille receives her Social Security check b. Aunt Lucille spends all day Saturday cleaning her house c. Aunt Lucille’s house is destroyed by a tornado d. None of the above ___ 4. Which of the following statements is false? a. Investment does not include new residential housing b. Consumption is the largest component of GDP c. Government purchases does not include transfer payments d. Net exports equals exports minus imports ___ 5. When total output is measured as the sum of all payments to resource owners, the result is: a. Gross Domestic Product b. National Income c. Gross National Product d. Gross Resource Product ___ 6. Of Arizona, Colorado, Kansas, and North Dakota, the state with the highest per capita personal income in 2013 was: a. Arizona b. Colorado c. Kansas d. North Dakota ___ 7. Of Georgia, Oklahoma, South Dakota, and Virginia, the state with the lowest per capita personal income in 2013 was: a. Georgia b. Oklahoma c. South Dakota d. Virginia ___ 8. Nominal GDP may increase: a. if there is an increase in the price level b. if there is an increase in production c. even if Real GDP decreases d. All of the above ___ 9. In 1950, GDP was $300B and the GDP deflator was 13.7. In 1951, GDP was $347B and the GDP deflator was 14.7. Real GDP for 1951, adjusted to the 1950 price level, would be. a. $294B b. $323B c. $340B d. $367B ___ 10. Using the same information as question 9., what was Real GDP for 1950, adjusted to the 1951 price level? a. $272B b. $294B c. $322B d. $367B FOR REVIEW ONLY - NOT FOR DISTRIBUTION 5 - 11 Measuring Total Output: GDP
___ 11. The phase of the business cycle when Real GDP is increasing is called: a. Trough b. Peak c. Expansion d. Contraction ___ 12. Comparisons of GDP between developed countries and less developed countries will tend to overstate the difference in standard of living because: a. GDP does not include nonmarket production b. Nonmarket production is typically a larger share of total output in developed countries than in less developed countries c. Both of the above d. Neither of the above ___ 13. In which of the following years was the inflation rate the highest? a. 1933 b. 1975 c. 1980 d. 2008 ___ 14. In which of the following years was the unemployment rate the lowest? a. 1930 b. 1967 c. 1973 d. 2007 ___ 15. In which of the following years was the Real GDP growth rate the highest? a. 1966 b. 1973 c. 1984 d. 2010 ___ 16. Referring to the table on page 5-8, between 1990 and 2000: a. Nominal GDP in the U.S. increased by 56% b. Real GDP in the U.S. increased by 40% c Both of the above d. Neither of the above ___ 17. On a simple circular flow diagram: a. firms provide resources b. firms pay for resources by making resource payments c. Both of the above d. Neither of the above Problems: 1. Explain what an intermediate good is and why intermediate goods are excluded from GDP. FOR REVIEW ONLY - NOT FOR DISTRIBUTION Measuring Total Output: GDP 5 - 12
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PRINCIPLES OF ECONOMICS JEFF HOLT S
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Principles of Economics, 6th Editio
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16. Study Guide for Chapter 7 17. C
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11. Appendix: Book Review - “The
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20. Appendix: The NCAA Cartel 21. S
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Introduction: A Brief History of U.
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In the twentieth century, per capit
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Appendix: The 35 Largest National E
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Multiple Choice: ___ 1. The Jamesto
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2. Describe the economic cost of th
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Chapter 1 Scarcity and Choices The
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Example 5B: At the end of 1982, the
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Example 11: When Cindy quits her jo
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consequences may result in failure
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An upward sloping curve (as in Exam
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In making decisions, humans tend to
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5. ______________________ _________
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___ 13. If the value of one variabl
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Y Point X Y A 0 1 B 3 3 C 6 5 D 9 7
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Chapter 2 Trade and Economic System
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Example 4B: The following quantitie
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1. An increase in the quantity of r
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3. For whom to produce? This is det
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The graph below illustrates the shi
Page 50 and 51: The two primary economic systems ar
Page 52 and 53: ___ 12. The capitalist vision sees
Page 54 and 55: ___ 25. According to the book “Ca
Page 56 and 57: Chapter 3 Demand, Supply, and Equil
Page 58 and 59: . For inferior goods, income and de
Page 60 and 61: The same information can be placed
Page 62 and 63: Not only does a free market elimina
Page 64 and 65: $7 - 6 - 5 - S 3 S1 S 2 Price 4 - 3
Page 66 and 67: Example 17: The graph below illustr
Page 68 and 69: Questions for Chapter 3 Fill-in-the
Page 70 and 71: ___ 12. Assuming a market originall
Page 72 and 73: $8 - 7 - 6 - 5 - Price 4 - 3 - 2 -
Page 74 and 75: Chapter 4 Inflation and Unemploymen
Page 76 and 77: Computing the Rate of Inflation The
Page 78 and 79: Full Employment Though unemployment
Page 80 and 81: 3. Cyclical unemployment - due to d
Page 82 and 83: During the Great Depression, the ec
Page 84 and 85: Appendix: Think Like an Economist -
Page 86 and 87: Answer questions 8. and 9. based on
Page 88 and 89: ___ 25. The extension of unemployme
Page 90 and 91: Chapter 5 Measuring Total Output: G
Page 92 and 93: 5. Leisure. Leisure time is by defi
Page 94 and 95: The U.S. is a high per capita GDP c
Page 96 and 97: Example 17: In “An International
Page 98 and 99: The simple circular flow diagram be
Page 102 and 103: 2. Explain what nonproduction trans
Page 104 and 105: Chapter 6 The Aggregate Market The
Page 106 and 107: Example 2C: Assume the same facts a
Page 108 and 109: Example 5B: The price of crude oil
Page 110 and 111: Price Level Real GDP SRAS AD 2 AD 1
Page 112 and 113: Appendix: Why the Aggregate Demand
Page 114 and 115: ___ 3. DEF Company can invest in ne
Page 116 and 117: 2. List and explain the two factors
Page 118 and 119: Chapter 7 Classical Economic Theory
Page 120 and 121: Notice that the investment demand c
Page 122 and 123: Long-Run Equilibrium If Real GDP is
Page 124 and 125: Example 6B: When the economy is in
Page 126 and 127: Laissez-faire If the economy is sel
Page 128 and 129: ___ 5. According to Say’s Law: a.
Page 130 and 131: 3. On the graph below, draw an aggr
Page 132 and 133: Chapter 8 Keynesian Economic Theory
Page 134 and 135: Example 2B: The graph below illustr
Page 136 and 137: Example 5: Assume that the table be
Page 138 and 139: Notice on the graph on the previous
Page 140 and 141: According to Keynesian theory, a ch
Page 142 and 143: “The General Theory” also inclu
Page 144 and 145: ___ 8. If the consumption function
Page 146 and 147: 3. If the MPC is .667, and investme
Page 148 and 149: Chapter 9 Fiscal Policy The basic e
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Keynesian Fiscal Policy Theory and
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Example 5A: The federal government
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The Laffer Curve What will happen t
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Appendix: The Importance of Incenti
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___ 4. A decrease in government exp
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2. Explain what automatic stabilize
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Chapter 10 Money, Money Creation, a
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Example 4B: The castaways on Gillig
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Looking at the balance sheet below,
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Demand-side One-shot Inflation Exam
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4. Inflation increases uncertainty
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life; it came into existence not by
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calculated by using the potential d
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___ 12. If the required-reserve rat
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4. Referring to the balance sheet f
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Chapter 11 The Federal Reserve Syst
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5. After Bank X sells the $300,000
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Low Mortgage Interest Rates Mortgag
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Relaxed Standards for Mortgage Loan
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The Bursting of the Housing Bubble
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On February 17, 2009, the federal g
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Fed policies caused short-term inte
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___ 10. The Fed’s most important
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___ 25. In response to the recessio
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Chapter 12 Monetary Policy The basi
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2. A change in aggregate demand (AD
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Monetarist Transmission Mechanism C
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3. Borrowers do not have to seek ou
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Appendix: Book Review - “The Age
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Questions for Chapter 12 Fill-in-th
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___ 16. The primary source of incom
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7. According to Alan Greenspan, wha
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Chapter 13 Taxes, Deficits, and the
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Example 5: In 2015, Taxpayer A had
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of $5 and a quantity of 10 units. T
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The complexity of the tax law also
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the current government spending and
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cut of 1964. The top rate was lower
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___ 6. Federal excise taxes: a. are
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3. How would eliminating the loopho
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Chapter 14 Economic Growth The basi
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2. Labor. Labor can contribute to e
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estricting international trade (e.g
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An improvement in technology (e.g.
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The table below shows the economic
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will increase both Real GDP and per
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___ 8. Which of the following is co
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___ 26. The opinion that economic g
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Chapter 15 Less Developed Countries
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Example 8: Countries A, B, C, and D
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Obstacles to Economic Development f
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c. Restrictions on international tr
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Appendix: Book Review - “The Powe
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Example 25: In Brazil, about half t
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Study Guide for Chapter 15 Chapter
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___ 13. Among the counterproductive
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4. List four ways that governments
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Chapter 16 International Trade The
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Other Benefits of Free Internationa
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Example 6: The graph below illustra
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competitive disadvantage. But dumpi
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is only 25% as productive as before
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Smith was skeptical of government a
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___ 4. For Country X, what is the o
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___ 18. Frédéric Bastiat’s “P
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4. On the graph below: (1) What is
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Chapter 17 Elasticity We are often
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Example 4A: What is price elasticit
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Example 5A: Gertie’s Gas and Go i
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Example 10A: When the price of Good
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Example 13B: On the graph below, su
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$7 - 6 - 5 - Price 4 - 3 - 2 - 1 -
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In the long run, would the deadweig
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___ 7. The factors that determine w
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3. a. Which price (or prices) from
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Chapter 18 Utility The basic econom
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Nonetheless, society generally assu
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Example 9: Capital City operates a
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Marginal rate of substitution - the
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The diamond-water paradox is the ob
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Complete the table below to answer
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4. The graph below shows indifferen
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Chapter 19 The Firm The basic econo
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than contributing to team productio
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1. Difficulty in raising large amou
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Corporations also use self-financin
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Example 24: A blacksmith who produc
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For financing needs, proprietorship
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___ 13. Corporations: a. are comple
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5. List two things that the absence
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Chapter 20 Production and Costs The
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In Example 5B, Birdwell finds that
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variable cost initially decreases,
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Quantity TC MC AFC AVC ATC 0 240 X
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If the scale of operation is increa
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average total cost. Average fixed c
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___ 11. Concerning the cost curves:
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5. Complete the following cost tabl
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Chapter 21 Perfect Competition The
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Even though a perfect competitor ca
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Example 6C: This example builds on
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At what price will there be neither
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Appendix: Perfect Competition in th
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Multiple Choice: ___ 1. A perfect c
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___ 17. Perfect competition: a. req
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Answers for Chapter 21 Fill-in-the-
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Chapter 22 Monopoly Of the four mar
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3. Exclusive ownership of an essent
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maximizing quantity (4 units) creat
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$22 - 20 - 18 - 16 - 14 - Deadweigh
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2. Negotiating, beginning at a high
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Legal barriers are created by gover
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___ 8. The slope of the demand curv
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Price Quantity 3. List some of the
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Chapter 23 Monopolistic Competition
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For Percomp (the perfect competitor
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Example 7A: The graph below represe
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Example 9: The Organization of the
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Example 12 illustrates the dilemma
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its current price and quantity. The
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___ 14. Game theory: a. is a method
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Answers for Chapter 23 Fill-in-the-
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Chapter 24 Factor Markets The basic
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$ $240 - 200 - 160 - 120 - 80 - 40
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Since producers will attempt to equ
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2. Differences in nonmoney aspects
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were his strikeouts, walks, and hom
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___ 3. To maximize profits, a produ
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___ 19. According to the book, “M
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Multiple Choice: 1. a. 8. c. 15. d.
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Chapter 25 Labor Unions The primary
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The elasticity of demand for union
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Example 4A: Assume that the graph b
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Notice from the graph in Example 6
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Wage Factory A Quantity of Labor S
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As a cartel, a labor union faces a
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___ 10. For a monopsony: a. there i
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3. The graph below represents a lab
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Chapter 26 Interest, Present Value,
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An increase in expected rates of re
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An asset is valuable because we exp
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Example 13B: General Ordnance prove
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Appendix: Present Value Table One f
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___ 4. An increase in expected rate
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Problems: 1. List and explain the t
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Chapter 27 Market Failure The basic
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External Benefit If a market genera
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Example 2: To encourage the consump
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$100 - 90 - 80 - MSC 70 - $ 60 - 50
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A common good is nonexcludable. Non
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___ 5. What government policy would
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4. Based on the information on the
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Chapter 28 Public Choice and Govern
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Candidates and the Median Voter Mod
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Example 8: According to State and F
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Example 10: When Elvis Presley was
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4. Pessimistic bias. This is the te
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___ 5. An elected official will: a.
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2. If a certain policy will yield s
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Chapter 29 Government Regulation of
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underproduction is the amount that
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micromanagement results in business
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market. They may agree with their c
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Questions for Chapter 29 Fill-in-th
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___ 10. The public interest theory
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4. List the four types of costs imp
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Chapter 30 Agriculture and Health C
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weather may cause bumper crops. Bad
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Security and Rural Investment Act o
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Example 12: From 1960 to 2013, the
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1. NHI would provide universal heal
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d. Insurance providers are not allo
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Answer questions 7. through 10. by
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___ 21. If there were no individual
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Chapter 31 Income Distribution and
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Income is more equally distributed
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over a typical career is the accumu
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Ideal Income Redistribution The ide
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Poverty - a family whose income fal
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Appendix: Income Inequality around
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How is this story an analogy for th
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___ 2. In 2013, the Lowest Income 6
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Problems: 1. Explain the two primar
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Absolute advantage - when one natio
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Fiat money - money by government de
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Nonrivalrous good - a good for whic
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Absolute advantage, 16-9 Absolute e
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“Company town”, 25-6 Comparativ
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Eli Lilly and Company, 22-1 Emergen
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Houston, Texas, 15-10 Human capital
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Market, 3-1, 3-8-9 Market basket, 4
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Political bias, 9-4, 12-7 Political
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Short run production, 20-2-3 Short-
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Upturns, 9-4 USDA, 27-9, 30-1-2, 30
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