Chapter 8 and 9 Practice

Human capital refers to: A) output per worker. B) the education and knowledge embodied in the workforce. C) society's investment in capital goods. D) people working with capital goods.

B`

Diminishing returns to physical capital implies that, when human capital per worker and the state of technology remain fixed, each successive increase in physical capital leads to: A) a smaller increase in productivity. B) a larger increase in productivity. C) a decrease in productivity. D) negative productivity.

A

All of the following are factors that drive productivity growth EXCEPT: A) growth convergence. B) physical capital. C) technological progress. D) human capital.

A

If the actual inflation rate is less than the expected inflation rate, then: A) the lenders gain and the borrowers lose. B) the borrowers gain and the lenders lose. C) everyone benefits from the inflation. D) everyone is worse off from unexpected inflation.

A

The key measure used to track economic growth is: A) real GDP per capita B) nominal GDP C) real GDP D) nominal GDP per capita

A

Unemployment that is due to the time workers spend in job search is considered: A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) natural unemployment

A

A survey reveals that on a small island 40 people have jobs, 10 people are looking for jobs, and 30 people are neither working nor looking for work. The unemployment rate on the island is: A) 12.5%. B) 20.0%. C) 25.0%. D) 50.0%.

B

Alex expects the inflation rate to be 4%. If Alex borrows money at a nominal interest rate of 5%, his real interest rate is: A) greater than the nominal interest rate. B) less than the nominal interest rate. C) equal to the nominal interest rate. D) negative.

B

All of the following are examples of government policies aimed at promoting economic growth EXCEPT: A) building infrastructure and providing public goods. B) implementing a monetary policy that increases inflation. C) subsidizing education. D) providing political stability and protecting property rights.

B

The best currently available measure of the standard of living in a country is: A) the nominal GDP per capita. B) the real GDP per capita. C) the unemployment rate. D) the growth rate of productivity

B

The invention of ATM machines reduced: A) menu costs of inflation. B) shoe-leather costs of inflation. C) unit-of-account costs of inflation. D) seignorage.

B

The labor supply curve is positively sloped because: A) more people are willing to work at lower wages than at higher wages. B) more people are willing to work at higher wages than at lower wages. C) employers are willing to hire more people at lower wages. D) employers are willing to hire more people at higher wages.

B

The rule of 70 indicates that a 6% annual increase in the potential level of real GDP would lead to the potential output doubling in _______ years. A) 6 B) 12 C) 24 D) 30

B

When the economy is in full employment, A) unemployment is zero. B) only cyclical unemployment is zero. C) only frictional unemployment is zero. D) the natural rate of unemployment is zero.

B

Which of the following is likely to lead to a large number of discouraged workers? A) when the economy is expanding B) when the availability of jobs falls C) when the economy is experiencing inflation D) when the economy is experiencing deflation

B

If real GDP grows at an average rate of 3% per year, it will double in approximately _______ years. A) less than 10 B) 20 C) 23 D) 36

C

Sally works twenty hours a week for an accounting firm. She would like to work full time and expects that she will in the future. Sally is a(n): A) discouraged worker B) unemployed worker C) underemployed worker D) full time worker

C

The National Bureau of Economic Research announced that the U.S. economy had been in a recession in 2008. As a result, the type of unemployment that is on the rise is known as: A) frictional unemployment. B) natural unemployment. C) cyclical unemployment. D) structural unemployment.

C

The labor demand curve is negatively sloped because: A) more people are willing to work at lower wages than at higher wages. B) more people are willing to work at higher wages than at lower wages. C) employers are willing to hire more people at lower wages. D) employers are willing to hire more people at higher wages.

C

The most important driver for economic growth appears to be: A) increases in physical capital. B) increases in human capital. C) technological progress. D) Jeff Gordon.

C

Today more than ________ of the world's population lives in countries poorer than the United States was a century ago. A) one fifth B) one third C) one half D) two fifths

C

You have gone to the bank to borrow money for one year. The nominal rate is 7.5%. The real rate of interest is 4%. Over the course of the year, overall prices increased by 4%. This rate of inflation hurt the _____ because the actual rate of inflation was _____ than the anticipated rate of inflation. A) borrower; lower B) borrower; higher C) lender; higher D) lender; lower

C

According to the text, productivity is driven by all of the following below EXCEPT: A) physical capital. B) human capital. C) technological progress. D) natural resources.

D

If real GDP grows at an annual rate of 1%, it will double in approximately _______ years. A) 11 B) 23 C) 35 D) 70

D

Structural unemployment consists of people who are unemployed due to: A) temporary changes in jobs. B) an excess in the quantity of labor demanded over the quantity of labor supplied. C) the time it takes for employers and workers to find each other. D) more people seeking jobs in a labor market than there are jobs available at the current wage rate.

D

Both binding minimum wages and union wages may cause structural unemployment. A) True B) False

True