ECON 101 TEST REVIEW QUESTIONS
WITH CORRECT DETAILED ANSWERS
A price floor creates a situation in which one party wins and another party loses, and the
gains for the winner are equal to the losses for the loser. - Answer-false
A price floor set above the equilibrium price will - Answer-result in a surplus of the good.
In order for a price floor to have an impact on a market it must be set below the
equilibrium price. - Answer-false
Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of
$15. The number of units that would be exchanged in this market would be - Answer-
150, since that is the equilibrium quantity and the price ceiling is above the equilibrium
price.
Refer to Exhibit 4-3. If price P1 is a price ceiling, then - Answer-both b and c.
Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price
floor and receive one. This price floor is set at PF. What is the size of the consumers'
surplus at PF? - Answer-area 1
Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price
floor and receive one. This price floor is set at PF. What has happened to the
consumers' surplus as a result of the imposition of the price floor? - Answer-consumers'
surplus has gone down by (area 2 + 4)
Jake is an excellent barber. However, all customers who come to him for a haircut must
buy a bottle of shampoo. This type of arrangement is known as - Answer-a tie-in sale.
There is currently a price ceiling in the market for transplanted kidneys, which has
helped to create a shortage of transplanted kidneys. - Answer-true
If the minimum wage law sets a price floor above the equilibrium wage in the market for
unskilled labor, then the - Answer-minimum wage will create a surplus of unskilled labor.
The civilian non-institutional population can be broken down into two groups: - Answer-
persons not in the labor force and persons in the labor force.
The answer is "a person employed in the civilian labor force who quits his or her job."
The question is: - Answer-Who is a job leaver?
,The difference between the existing unemployment rate and the natural unemployment
rate is defined is the __________ unemployment rate. - Answer-cyclical
Refer to Exhibit 6-3. Prices changed by ___________ percent between year 1 and year
2. - Answer--1.6
A common measure of inflation is the percentage change in the CPI of adjacent years. -
Answer-true
Marta, who was previously employed, hasn't worked for some time because she was
raising her children. When Marta reenters the labor force, the Bureau of Labor Statistics
would categorize her as - Answer-a reentrant.
Refer to Exhibit 6-1. Prices rose by __________ percent from Year 4 to Year 5. -
Answer-3.90
In an economy with a population of 300 million persons, 130 million hold civilian jobs
and 8 million are not working but are looking for jobs. The unemployment rate is -
Answer-5.8 percent
Refer to Exhibit 6-1. Prices rose by approximately __________ percent from Year 1 to
Year 5. - Answer-10.6
When the unemployment rate is equal to the natural unemployment rate, full
employment exists. - Answer-true
The cyclical unemployment rate can never be negative. - Answer-false
"Full employment" is said to exist when the actual unemployment rate is zero. - Answer-
false
The employment rate equals the number of - Answer-employed persons divided by the
civilian non-institutional population.
The cyclical unemployment rate is defined as the __________ unemployment rates. -
Answer-difference between the existing (actual) and the natural
Refer to Exhibit 6-2. The unemployment rate in year 1 is - Answer-12 1/2 percent.
One measure of the inflation rate is the - Answer-percentage change in the CPI of
adjacent years.
The CPI is based on a representative group of goods called the market basket. -
Answer-true
, Suppose the market basket consists of 400X, 150Y, and 220Z. Current-year prices are
$1.50 for each unit of X, $0.50 for each unit of Y, and $4.60 for each unit of Z. Base-
year prices are $1.00 for each unit of X, Y, and Z. Approximately what is the value of the
CPI in the current year? - Answer-219
Refer to Exhibit 6-1. Prices rose by __________ percent from Year 1 to Year 2. -
Answer-1.38
In an economy with 200 million people, 140 million hold civilian jobs and 9 million are
not working but are looking for jobs. The unemployment rate is - Answer-6.0%
Which of the following is omitted from GDP calculations? - Answer-all of the above
Which of the following would not be included in the calculation of this year's GDP? -
Answer-a headlight bulb purchased by Ford Motor Co. from a supplier
Refer to Exhibit 7-4. Did Country A experience a recession (based on the standard
definition) in 2019? - Answer-Yes, because its Real GDP declined during two
consecutive quarters in 2019.
Suppose that nondurable goods spending is $200 billion, durable goods spending is
$400 billion, new residential housing spending is $500 billion, and spending on services
is $700 billion. What does consumption equal? - Answer-$1,300 billion
Which of the following statements is true? - Answer-a, b, and c
Purchases of new residential housing are considered investment, for purposes of
computing GDP. - Answer-true
Refer to Exhibit 7-2. GDP in 2019 is - Answer-$86
Refer to Exhibit 7-5. What was Country Z's economic growth rate between year 2 and
year 3? - Answer--3.0%
In 1820, the country with the highest per capita GDP was - Answer-the Netherlands.
Look at the following data: consumption = $715 billion; exports = $50 billion; imports =
$83 billion; inventory investment = $125 billion; fixed investment = $400 billion;
government purchases = $300 billion. GDP is equal to - Answer-$1,507 billion.
An example of income received but not earned is - Answer-government transfer
payments.
In the calculation of national income, dividends paid to stockholders are part of -
Answer-corporate profits.
WITH CORRECT DETAILED ANSWERS
A price floor creates a situation in which one party wins and another party loses, and the
gains for the winner are equal to the losses for the loser. - Answer-false
A price floor set above the equilibrium price will - Answer-result in a surplus of the good.
In order for a price floor to have an impact on a market it must be set below the
equilibrium price. - Answer-false
Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of
$15. The number of units that would be exchanged in this market would be - Answer-
150, since that is the equilibrium quantity and the price ceiling is above the equilibrium
price.
Refer to Exhibit 4-3. If price P1 is a price ceiling, then - Answer-both b and c.
Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price
floor and receive one. This price floor is set at PF. What is the size of the consumers'
surplus at PF? - Answer-area 1
Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price
floor and receive one. This price floor is set at PF. What has happened to the
consumers' surplus as a result of the imposition of the price floor? - Answer-consumers'
surplus has gone down by (area 2 + 4)
Jake is an excellent barber. However, all customers who come to him for a haircut must
buy a bottle of shampoo. This type of arrangement is known as - Answer-a tie-in sale.
There is currently a price ceiling in the market for transplanted kidneys, which has
helped to create a shortage of transplanted kidneys. - Answer-true
If the minimum wage law sets a price floor above the equilibrium wage in the market for
unskilled labor, then the - Answer-minimum wage will create a surplus of unskilled labor.
The civilian non-institutional population can be broken down into two groups: - Answer-
persons not in the labor force and persons in the labor force.
The answer is "a person employed in the civilian labor force who quits his or her job."
The question is: - Answer-Who is a job leaver?
,The difference between the existing unemployment rate and the natural unemployment
rate is defined is the __________ unemployment rate. - Answer-cyclical
Refer to Exhibit 6-3. Prices changed by ___________ percent between year 1 and year
2. - Answer--1.6
A common measure of inflation is the percentage change in the CPI of adjacent years. -
Answer-true
Marta, who was previously employed, hasn't worked for some time because she was
raising her children. When Marta reenters the labor force, the Bureau of Labor Statistics
would categorize her as - Answer-a reentrant.
Refer to Exhibit 6-1. Prices rose by __________ percent from Year 4 to Year 5. -
Answer-3.90
In an economy with a population of 300 million persons, 130 million hold civilian jobs
and 8 million are not working but are looking for jobs. The unemployment rate is -
Answer-5.8 percent
Refer to Exhibit 6-1. Prices rose by approximately __________ percent from Year 1 to
Year 5. - Answer-10.6
When the unemployment rate is equal to the natural unemployment rate, full
employment exists. - Answer-true
The cyclical unemployment rate can never be negative. - Answer-false
"Full employment" is said to exist when the actual unemployment rate is zero. - Answer-
false
The employment rate equals the number of - Answer-employed persons divided by the
civilian non-institutional population.
The cyclical unemployment rate is defined as the __________ unemployment rates. -
Answer-difference between the existing (actual) and the natural
Refer to Exhibit 6-2. The unemployment rate in year 1 is - Answer-12 1/2 percent.
One measure of the inflation rate is the - Answer-percentage change in the CPI of
adjacent years.
The CPI is based on a representative group of goods called the market basket. -
Answer-true
, Suppose the market basket consists of 400X, 150Y, and 220Z. Current-year prices are
$1.50 for each unit of X, $0.50 for each unit of Y, and $4.60 for each unit of Z. Base-
year prices are $1.00 for each unit of X, Y, and Z. Approximately what is the value of the
CPI in the current year? - Answer-219
Refer to Exhibit 6-1. Prices rose by __________ percent from Year 1 to Year 2. -
Answer-1.38
In an economy with 200 million people, 140 million hold civilian jobs and 9 million are
not working but are looking for jobs. The unemployment rate is - Answer-6.0%
Which of the following is omitted from GDP calculations? - Answer-all of the above
Which of the following would not be included in the calculation of this year's GDP? -
Answer-a headlight bulb purchased by Ford Motor Co. from a supplier
Refer to Exhibit 7-4. Did Country A experience a recession (based on the standard
definition) in 2019? - Answer-Yes, because its Real GDP declined during two
consecutive quarters in 2019.
Suppose that nondurable goods spending is $200 billion, durable goods spending is
$400 billion, new residential housing spending is $500 billion, and spending on services
is $700 billion. What does consumption equal? - Answer-$1,300 billion
Which of the following statements is true? - Answer-a, b, and c
Purchases of new residential housing are considered investment, for purposes of
computing GDP. - Answer-true
Refer to Exhibit 7-2. GDP in 2019 is - Answer-$86
Refer to Exhibit 7-5. What was Country Z's economic growth rate between year 2 and
year 3? - Answer--3.0%
In 1820, the country with the highest per capita GDP was - Answer-the Netherlands.
Look at the following data: consumption = $715 billion; exports = $50 billion; imports =
$83 billion; inventory investment = $125 billion; fixed investment = $400 billion;
government purchases = $300 billion. GDP is equal to - Answer-$1,507 billion.
An example of income received but not earned is - Answer-government transfer
payments.
In the calculation of national income, dividends paid to stockholders are part of -
Answer-corporate profits.
