ECON102 Macroeconomics
Unit 1 Milestone
1Which term below refers to investment and financial flows that have the ability to appreciate or depreciate currency?
Balance of payments
Capital account
Trade deficit
Current account
2Select the example below that is binding.
A price floor above equilibrium
A price floor at equilibrium
A price ceiling at equilibrium
A price ceiling above equilibrium
3Which of the following is a reason to learn about macroeconomics?
Macroeconomics focuses on decisions made at the individual level.
It allows us to understand the decisions that small business owners make.
Understanding the reasons behind economic policy decisions can make us better citizens.
It helps us to predict the prices of individual goods and wages in specific jobs.
4Which of the following terms is the sum of all final goods and services purchased in an economy?
Expenditure approach
GDP growth
Factor market
Resource cost/Income approach
5Which of the statements below is false?
The NBER provides data regarding when recessions start and end.
A recession is a significant decline in economic activity.
Sometimes GDP can shrink quite a bit.
A recession cannot usually be seen in GDP.
ECON102 Macroeconomics
Unit 2 Milestone
1In economic terms, which of the following happened when cupcakes went from being homemade treats to being specialized gourmet goodies with multiple TV shows devoted to them and people waiting in line for them?
A change in the quantity of cupcakes demanded caused movement along the demand curve.
Changes in public tastes created a shift in the demand curve.
As the price of cupcakes rose, so did demand.
Changing tastes created a shift in the supply curve.
2Which graph below correctly illustrates a scenario in which the regular price for a set of four tires is $250, but Erin finds a store that has the tires she needs on sale for $175?
3Which of the following would NOT cause a shift in the supply curve for cheese?
The results of a medical study show that eating too much cheese can lead to premature aging.
A celebrity chef develops a new technique for making cheese that makes it easier to increase output.
The price of feed for the dairy cattle goes up significantly.
Thousands of dairy cattle come down with a mysterious illness and need to be quarantined.
4Jack is willing to pay as much as $1,300 for a new camera but is happy to find one he likes that costs $400.
Select the term below that corresponds to this situation.
Consumer surplus
Producer surplus
Equilibrium
Ceteris paribus
5If the market price of a product happens to be at equilibrium, which of the following will happen next?
Surplus will be created.
Nothing will happen since the market is already clearing.
The price will decrease and consumers will purchase more.
The price will increase and consumers will purchase less of that item.
ECON102 Macroeconomics
Unit 3 Milestone
1Which of the following is an example of medium of exchange?
People invest in gold because it stays stable over time and does not tarnish, rust or deteriorate.
A restaurant lists a price for dinner in gold coins.
People in the Pacific Islands used cowrie shells as a form of payment for the things they wanted.
A chicken farmer who wants a cow needs to find a cattle farmer who wants some chickens.
2Which of the following is true about a fractional reserve banking system?
There are no regulations concerning the portion of reserves banks must hold.
It allows banks to loan out a portion of deposits and therefore create money.
The central bank does not allow for this type of system.
It is likely to fail as most people demand all of their money each day.
3Which of the following is an example of deflation?
Someone owes more on a house than it is worth.
Prices are increasing, so the purchasing power of the currency is falling.
People revert back to a barter economy.
Economic instability destroys the value of the currency.
4If the MPC is 0.75 and the government increases spending by $100 billion, the effect this change has on the economy will be which of the following?
There will be an increase of $100 billion in economic activity.
There will be an increase of $133.3 billion throughout the economy.
There will be an increase of $400 billion in economic activity.
There will be an increase of $75 billion in economic activity.
5Which of the following is false about budget deficits?
They are financed with tax revenue or new debt.
They represent the difference between tax revenue and government expenditures.
They typically happen when using contractionary fiscal policy.
They can affect long run RGDP.
ECON102 Macroeconomics
Unit 4 Milestone
Which of the following is a clear example of sustainable economic growth?
An energy company develops new drilling technology that makes it possible to access petroleum even deeper than what is currently possible.
A machine is developed that can harvest fruits and vegetables at double the speed.
Hydroponic technology makes it possible to grow more fruits and vegetables on a smaller piece of land.
A lumber company invents a new machine that can harvest trees even faster than before.
2Which of the following is a socially responsible activity that could include corporate/employee matching contributions?
Environmental management
Corporate governance
Supply chain
Philanthropy
3Determine which statement below regarding economic indicators is FALSE.
Building permits are an example of leading indicators.
Retail sales measure the current outlook for the economy.
CPI measures inflation from the perspective of a consumer.
Consumer confidence can be volatile and inconsistent over time.
4Select the FALSE statement below regarding international environmental regulations.
Externalities accrue to the firm that produces the good in question.
The Copenhagen Consensus is an example of an organization that outlines costs and benefits of different ways to respond to climate change.
Firms over-produce products that impose costs on society.
At a macro level, externalities can lead to global changes.
5Increasing employment of women in living wage occupations is linked with which of the following?
Women working longer hours than men
Occupational segregation and gender wage gaps
The informal sector
A higher standard of living for families
ECON102 Macroeconomics
Final Milestone
1An increase in which of the following will cause a rightward shift of AD?
• Imports
• Exports
• Peg
• International Trade and Aggregate Demand
2Select the statement below that is FALSE regarding corporate social responsibility.
• Philanthropy by a business always benefits the shareholders of the company.
• Corporate governance includes oversight of all production and financial operations.
• Sustainability involves holding the supply chain accountable.
• Producing in ways that are sustainable would be an example of corporate social responsibility.
3Which of the following could cause a shift in the demand curve?
• A change in quantity
• A change in production capacity
• A major shift in supply
• A change in income
4Using the image shown here, which of the following flows from the government to firms?
• Imports
• Wages, interest and transfer payments
• Taxes
• Purchases of goods and services
5GDP would be a poor indication of how well a country is doing economically for which of the scenarios below?
• For a country that is producing significantly in other nations, so there is repatriation of profits outside its borders.•
For a country that has offshore production that is offset by onshore production by foreign nationals
• For a country that has an equal amount of onshore and offshore production
• For a country that has little or no offshore production
ECON102 Macroeconomics
Unit 1 Challenge 1
Macroeconomics would include the study of __________.
a.)household spending
b.)small firms
c.)prices of individual goods
d.)national infrastructures
Which of the following topics can macroeconomics help a person understand?
a.)How to handle your personal finances responsibly
b.)The impact of global trade
c.)What makes a good investment
d.)Decision making on an individual level
In the Circular Flow model, governments __________
a.)act as only consumers of goods and services
b.)consume intermediate goods, before they are taxed
c.)produce some final goods and services
d.)do not interact with firms and households
GDP per capita is often used to measure the ______.
a.)GDP adjusted for inflation
b.)overall GDP growth rate for an economy
c.)gross national product
d.)standard of living
In 2009, the yearly tuition at a state university is $20,000. In 2017, the yearly tuition at the same state university is $31,000.
Using the price of tuition for reference, the inflation rate of the U.S. dollar increased by a factor of __________ in eight years.
a.)1.55
b.)0.35
c.)0.65
d.)1.65
ECON102 Macroeconomics
Unit 1 Challenge 2
Movements along the supply curve are a result of changes in __________.
a.)input prices
b.)price
c.)regulations
d.)resource access
When a good is unit elastic, the absolute value of the elasticity is ___________.
a.)greater than 10
b.)less than one
c.)equal to one
d.)greater than one
In 2007, the government attempted to end inflation by enforcing a price freeze on basic commodities such as corn, sugar and eggs. This led to runs on grocery stores and other places that sold such items, since in some cases the prices were rolled back to almost 50% of what they had been. A shortage occurred because people rushed to stock up on these items as much as they could.
In this example, the freeze on prices is known as a government enforced __________, with businesses forbidden to charge more than the price set by the government. These government enforced price constraints are binding because they are lower than the __________.
a.)price floor; equilibrium price
b.)price ceiling; equilibrium price
c.)price floor; price ceiling
d.)price ceiling; price floor
When the government pays money to encourage production, this is known as a __________.
a.)revenue stream
b.)subsidy
c.)tax incidence
d.)transfer payment
The price for borrowing money is known as the __________.
a.)time deposit
b.)deposit rate
c.)interest rate
d.)exchange rate
ECON102 Macroeconomics
Unit 2 Challenge 1
Using the above graph, which of the following statements is FALSE relating to the Law of Demand?
a.)When price decreases, the quantity demanded will always increase by the same amount.
b.)A movement along the demand curve is due to a change in price.
c.)A reduction in price will result in an increase in quantity.
d.)The Law of Demand expresses a negative relationship between quantity on the X axis and price on the Y axis.
During the 18th Century, as troubles with Britain escalated, American colonists stopped drinking British tea, and instead started drinking coffee.
This is an example of which factor of demand?
a.)Change in the price of the good
b.)Change in price of a substitute
c.)Change in taste/preference
d.)Change in the price of a complement
Why does a supply curve slope upward?
a.)Because there is an inverse relationship between price and quantity supplied.
b.)Because costs of production eventually decrease.
c.)Because as prices increase, opportunity cost of producing goods decrease.
d.)Because as prices increase, producers are willing and able to supply more.
Which of the following causes a shift in supply to the left?
a.)An increase in technology
b.)A decrease in the price of inputs
c.)A natural disaster that destroys farms and factories
d.)Education that leads to a more skilled workforce
Kate is willing to pay $12,000 a year in college tuition, but the market price for the courses she wants to take is only $8,000 a year.
Her consumer surplus will be _________ over the course of one year.
a.)$8,000
b.)$20,000
c.)$12,000
d.)$4,000
ECON102 Macroeconomics
Unit 2 Challenge 2
In order to be effective, a price ceiling must be set __________.
a.)below the current equilibrium price
b.)at the market clearing price
c.)above the current equilibrium price
d.)at the highest possible price for the market
When are consumer and producer surplus maximized?
a.)When a price floor is imposed
b.)When a price ceiling is imposed
c.)When deadweight loss is highest
d.)At equilibrium
The goal of a subsidy is to __________.
a.)encourage production of a good
b.)avoid deadweight loss
c.)raise revenue for the government
d.)discourage consumption of a good
Which of the statements about aggregate demand is true?
a.)As the price level falls, consumers purchase more.
b.)The price level falls, so RGDP does as well.
c.)There is a direct relationship between price level and RGDP that consumers purchase.
d.)The price level increases, so firms produce more goods.
ECON102 Macroeconomics
Unit 3 Challenge 1
When store owners quote prices in terms of dollars, money is acting as a __________.
a.)store of value
b.)medium of exchange
c.)commodity
d.)unit of account
Which of the following choices is a reason why gold became a form of currency?
a.)It has little practical value.
b.)It is almost impossible to counterfeit.
c.)It contributes to inflation.
d.)It is the most liquid form of money.
What is the central issue that causes bank runs and panics?
a.)Banks fail to pay interest to their depositors
b.)Banks print more money than they have gold in their vaults
c.)Banks withhold deposits from creditors
d.)Banks do not loan out enough funds to stimulate the economy
Some of the founding fathers were initially against a Central Bank because __________.
a.)different states wanted their own currency
b.)they couldn't agree which branch of government would control a Central Bank
c.)the 'Continental' currency had already been issued
d.)the control of the English bank over the colonies
Which of the following describes a way that central banks strengthened the value of currency?
a.)People deposited paper money instead of gold in banks.
b.)Traders made a living by exchanging currency between cities.
c.)Over time, the banking system becomes less reliant on the gold standard.
d.)Banks lent out more money than is kept in reserves.
ECON102 Macroeconomics
Unit 3 Challenge 2
Which of the following statements regarding different types of money is true?
a.)There are five main categories of money, based on liquidity.
b.)Time deposits belong in the least liquid category of money.
c.)A checking account is a form of M0.
d.)Different types of money all have the same level of liquidity.
If the reserve requirement of a bank is 50%, then the multiplier effect will be ________ and $100 in M1 will increase the money supply by ________.
a.)0.5; $50
b.)2; $200
c.)2; $50
d.)0.5; $200
Which statement is NOT true regarding the way that the Federal Reserve controls the money supply?
a.)The Fed gives bondholders cash in exchange for securities (bonds).
b.)The U.S. Treasury sends the money it prints directly into circulation.
c.)Money that is printed by the Bureau of Printing and Engraving is turned over to the Fed.
d.)If the Fed wants to reduce the money supply, it sells bonds and shreds the money it receives.
Fed member banks enter the federal funds market in order to __________.
a.)meet reserve requirements
b.)boost profits
c.)increase the interest rate they can charge on loans
d.)increase their size and importance
Why would banks need to borrow directly from the Fed?
a.)To meet monthly deposit target goals
b.)To purchase Federal Treasury bonds on the open market
c.)To meet the reserve requirement
d.)To increase the interest rate they can charge to lenders
ECON102 Macroeconomics
Unit 3 Challenge 3
In the GDP model, investment (I) could be considered all of the following EXCEPT __________.
a.)the building of a new factory
b.)the purchase of a stock
c.)the purchase of a new restaurant
d.)the increase in capital resources
Which of the following is an example of expansionary policy?
a.)Decreasing the salaries of government workers
b.)Government cuts in spending
c.)Decrease in investment
d.)Decrease in taxes
The Phillips Curve shows the trade-off between __________.
a.)price level and GDP
b.)inflation and unemployment
c.)tax rates and government revenue
d.)labor and leisure
Government securities that are issued for a time period between one and 10 years are known as __________.
a.)commodity money
b.)notes
c.)bills
d.)bonds
Economic growth is measured by the __________.
a.)percent increase in nominal GDP over time
b.)GDP, adjusted for inflation over time
c.)growth in the skilled labor force
d.)changes in the unemployment rate over time
ECON102 Macroeconomics
Unit 4 Challenge 1
Using the graph, which of the following statements is true?
a.)The level of output cannot be sustained indefinitely.
b.)The economy is producing the maximum amount possible given current resources.
c.)The unemployment rates are falling.
d.)The economy is producing at a real GDP greater than the LRAS.
Government expenditures create demand for goods and services.
This is known as __________ and will cause AD to shift to the __________.
a.)contractionary monetary policy; left
b.)contractionary fiscal policy; right
c.)expansionary monetary policy; left
d.)expansionary fiscal policy; right
During the 1970s, some economists argued that the cause of the woes of the economy were due to __________.
a.)brain drain due to ineffective education and training
b.)low taxes and a government surplus that should have been spent on social programs
c.)increase in unemployment, as women entered the labor force
d.)supply shock due to issues with the supply of oil
Which of the following describes what will happen to international trade when the dollar is weak?
a.)A negative effect on GDP in the U.S.
b.)An increase in the U.S. standard of living
c.)A decrease in net exports for the U.S.
d.)A decrease in the amount of goods Americans can buy abroad
China has a __________ with the United States, meaning that it exports more than it imports.
a.)trader barrier
b.)trade deficit
c.)trade surplus
d.)floating rate
ECON102 Macroeconomics
Unit 4 Challenge 2
How does macroeconomic analysis utilize economic indicators?
a.)Looks to lagging indicators as the best source of information
b.)Uses multiple indicators due to the complexity of the economy
c.)Considers leading indicators the most comprehensive
d.)Uses coincident indicators only in policy making
Which of the following describes real GDP?
a.)Adjusted for inflation to show growth in output
b.)Considers the nominal prices of goods/services
c.)Shows changes in prices of goods based on inflation
d.)Is the best measure of per capita standard of living
The CPI and PPI are measured by __________
a.)the Congressional Budget Committee
b.)the Bureau of Labor Statistics
c.)the Internal Revenue Service
d.)a compilation of state assessments made each month
A marginalized worker is ________.
a.)considered part of the labor force
b.)always part of the nonfarm payroll statistic
c.)one who has given up looking for work
d.)one who is underemployed
Which of the following is true if retail sales are increasing?
a.)One can expect unemployment to increase.
b.)One can expect interest rates to fall.
c.)One can expect imports to decrease.
d.)One can expect the economy to grow.
