Microeconomics 1-5

An economic model makes it easier to understand complex economic problems by doing which of the following?

• Programming all scenarios in a computer program to stimulate the economy

• Making simplifying assumptions

• Using regression analysis in conjuction with large datasets

• Looking for consistents pattern in economies

In the last few years in the u.s., have imports been greater than or less than exports?

• Imports have been greater than exports, resulting in negative net exports

• Imports have been less than exports, resulting in positive net exports

• Imports have been about equal to exports, so next exports were zero

The smallest component as a share of GDP in the U.S. is ____

• consumption

• investment

• government spending

• net exports

Suppose that an economy produces only two final goods, good A and good B. It produces 20,000 units of good A which sells at $4 a unit and 10,000 units of goof B which sells at $4 per unit. Total GDP for the country is:

• $40,000

• $240,000

• $120,000

• $320,000

Inflation is best described as an inrease in average prices over time. The current annual inflation rate of the U.S. measured by the CPI is about:

• -2%, a deflation

• 0%

• between 2 and 3 %

• between 4 and 5%

Inflation measure is ____, while deflation measure is _____.

• the increase in price of a single good; the decrease in price of a single good.

• the increase in price of a typical bundle of goods; the decrease in price of a typical bundle of goods.

• the decrease in price of a typical bundle of goods; the increase in price of a typical bundle fo goods.

In 2018, the economy experienced consumption spending of $5 trillion, investments of $3 trillion, government spending of $1 trillion, imports of $3 trillion, and exports of $4 trillion. What is the economy's GDP in 2018

• 9 trillion

• 10 trillion

• 12 trillion

• 16 trillion

Why is a real GDP per capita a reasonable proxy for the standard of living in an economy?

I. It includes all economic activity, wether on a paid basis, volunteer basis, or household basis.

II. It accounts for the income distribution in an economy

III. It accounts for inflation

IV. It accounts for the population size of an economy

• I AND III

• I,II, AND III

• I,II,III, AND IV

• III AND IV

In 2016, the real GDP of China was about 25 times larger than the real GDP of Norway. Why are standards of living in Norway superior to those in China?

I. Real GDP does not account for inflation, and China has experienced significantly more inflation than Norway.

II. The Norwegian economy is more closely regulated by government than the Chinese economy

III. The Chinese population is more than 25 times larger than the Norwegian population

IV. Real GDP does not account for population size.

• I only

• I and III

• III only

• III and IV

Which of the following does not cause a change in demand?

• Tastes and preferences

• Income

• Prices of related goods - subtitutes and complements

• Price of the good

• The number of potential buyers