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Study Guide Midterm #1

by: Olga Lukashina

Study Guide Midterm #1 ECON 1b

Olga Lukashina
Principles of Macroeconomics
Bagher Modjtahedi

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Study Guide for Midterm #1
Principles of Macroeconomics
Bagher Modjtahedi
Study Guide
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This 7 page Study Guide was uploaded by Olga Lukashina on Wednesday October 14, 2015. The Study Guide belongs to ECON 1b at University of California - Davis taught by Bagher Modjtahedi in Fall 2015. Since its upload, it has received 218 views. For similar materials see Principles of Macroeconomics in Economcs at University of California - Davis.


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Date Created: 10/14/15
Study Guide Midterm 1 Fill in the Blank 1 Production factors include and 2 The study of decidsions made by one decisionmaking unit and economic conditions prevailing in one particular market or industry is known as 3 is the difference between what the rm recieved from a sale and the production cost 4 A is any entity that uses the services of production factors to produce and supply products to consumers to make money 5 A collection of rms that produce an identical product is called aan 6 The study of the behavior of aggregate economic variables such as the level of output general price level and overall employment is known as 7 The amount of all the goods and services produced by the domestic factors of production in a country is called 8 A long term increase in Real GDP is known as 9 The amount of all the goods and services that can be produced at full employment is called 10 is when supply of labor is greater than the demand of labor Multiple Choice 1 A mechanism that brings buyers and sellers of goods together is called A rm B industry C household D market 2 What do economists call anything that has value that brings bene t in the future A asset B pro t C bene t Dcapital gain 3 Which of the following is FALSE about the Great Depression A Prices declined by 35 B Asset values increased C Long and deep recession D Income and manufacturing down by nearly 70 4Which of the following is excluded from the GDP A Goods sold in the current year B Goods produced in the current year C Exports D Capital Gains 5 What are the units of labor A number of people B money C person hours D labor production 6 Which of the following will cause a demand curve to shift to the left A Capital is a compliment B Technology is laborusing C Capital is a substitute D Income effect 7 Which of the following is true about Historical Data of the United States in the long run over the years A We have witnessed an economic decline B United States39 unemployment rate is 0 C There is long term growth in the Real GDP D Potential GDP is no where near the Real GDP 8 Which of these is included in the Labor Force A members of armed forces B elderly C students D unemployed TRUE 0R FALSE 1 quotHouseholdsquot and quotSuppliers of Laborquot are typically the same person 2 Fallacy of Composition and Macroeconomic Interactions are two problems that are aggregate in nature and cannot be analyzed by Microeconomic tools 3 Positive statements involve value judgments 4 After the Great Depression policy makers were faced with two related problems Theory and Standard of Living 5 Simon Kuznets developed Gross Domestic Product 6 Standard of living refers to the qualities of goods and services we consume 7 Stock Variable needs a time frame in order to be measured 8 Consumer Price Index is an indicator of the cost of living and is used to calculate de ation 9 If there is an increase in population or participation rate the labor force will increase and shift the labor curve to the left 10 When Real GDP is below the Potential GDP we have unemployment Short Answer 1 At the time of the Great Depression policy makers were faced with which two related problems 2 What is the definition of GDP 3 Why do we multiply objects by their price in the GDP calculation 4 What is excluded from GDP 5 Why is Nominal GDP useless 6 What is Consumer Price Index 7 Why does the Marginal Product of Labor decrease when a rm hires more employees 8 Describe changes that will cause shifts in the demand curve 9 What will cause the change in supply of labor 10 If real wage remains constant what will happen to nominal wage and price 11 What is the de nition of Potential GDP 12 What does a positive GDP Gap mean l3Why do we exclude members of armed forces from the labor force 14 What causes natural unemployment 15 Describe Okun39s Law and what is calculates 16 What problem do Discouraged workers cause for politicians 17 What is the Cost of Unemployment 18 What are the bene ts of Unemployment Explain what this graph represents How can you calculate MPL with this graph Why is the graph curved Output Labor What is the relationship between these two graphs Who are they different and howare they similar WP WP Demand for MPL Labor Labor Labor Look at this Graph and Anser the Questions Below WP DL SL v Labor 1 What does the red dot in the center represent 2 What does the yaxis represent 3 What is happening at the Orange line Is there excess supply or demand What does that mean for the economy 4 What is happening at the Green Line Is there excess supply or demand What does this mean for the economy 5 How do you calculate real wage 6 What happens to the economy if the real wage goes up 7 What happens to the economy if the real wage goes down 8 In order to keep the real wage constant what happens to nominal wage and price Are the following statements true or false a It is possible for the price level to increase while the rate of in ation is constant b It is possible for the price level to decrease while the rate of in ation is constant c It is possible for the price level to stay constant while the rate of in ation is positive d It is not possible for both the price level and the in ation rate to be constant e It is possible for the price level to increase while the rate of in ation is decreasing Matching 1 Human effort measured in personhours A Recession 2 Statements that don39t make judgements B Capital Gain about the outcome of any event C Positive Statement 3 Groups of goods that are produced but D Shoe Leather Cost not sold as nal goods E Labor 4 An index that is intended to measure the F MPL average of the prices of all the goods and G Inventory Increase services included in the GDP H Consumer Price Index 5 Pro t made from buying a good at a low I Frictional Unemployment price and then selling it for a higher price J Lenders 6 The nominal bene t from hiring another unit of labor 7 A period over which Real GDP is declining 8 Type of unemployment that is due to the fact that it takes a while to nd a job 9 Group of people who suffer from a higher than expected in ation 10 Costs that people incur while trying to protect the value of their money against in ation


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