Eco Test2

Increases in corruption cause economic growth to: A) increase. B) decrease. C) remain unchanged. D) become impossible.

B

Structural unemployment is: A) caused by the ordinary difficulties of matching employee to employer. B) caused by long-lasting shocks or changes in permanent features of an economy. C) unemployment correlated with the business cycle. D) natural unemployment.

B

(Figure: Economic Growth in Major World Regions) Refer to the figure, which shows real GDP per capita over time in different regions of the world. The chart shows that living standards in different regions began to _____ at the beginning of the nineteenth century. A) diverge B) converge C) equalize D) fall

A

(Table: Wheat and Corn) Consider a country that produces only wheat and corn. Based on the data in the table, the growth rate of real GDP from 2007 to 2008 (in 2005 dollars) is: A) 8.3%. B) 15.7%. C) 25.2%. D) 27%.

A

A developing country could buy (or be given) _____ and _____ more easily than _____. A) technological knowledge; physical capital; human capital B) physical capital; human capital; technological knowledge C) human capital; technological knowledge; physical capital D) human capital; work experience; technological knowledge

A

An increase in unemployment benefits tends to: A) lower the incentive to search for a job and raise structural unemployment. B) lower the incentive to search for a job and lower structural unemployment. C) raise the incentive to search for a job and raise structural unemployment. D) raise the incentive to search for a job and lower structural unemployment.

A

Discouraged workers are workers who have: A) given up looking for work but would still like a job. B) given up looking for work and are not available for work. C) not given up looking for work but are not available for work. D) not given up looking for work and still would like a job.

A

From 1950 to 1970 Japan's growth rate was: A) high and positive. B) low and positive. C) approximately zero. D) negative.

A

GDP calculations account for: A) medical services. B) leisure. C) pollution. D) the distribution of income.

A

High-income economies generally have _____ that incentivize individuals' self-interest by using _____. A) institutions; profit-seeking motives B) government mandates; legal penalties C) central planners; profit-seeking motives D) institutions; legal penalties

A

If a country's real GDP per capita in 1950 was $10,000, and it grew to $20,000 by year 2000, then the country's annual growth rate during this period would have been approximately: A) 1.4%. B) 1.8%. C) 2%. D) 2.2%.

A

If minimum wages are higher relative to the median wage, then minimum wage will affect: A) more people and create more unemployment. B) more people and create less unemployment. C) fewer people and create more unemployment. D) fewer people and create less unemployment.

A

If the wage demands of workers are high relative to the prices of products,: A) cyclical unemployment will be higher. B) cyclical unemployment will be lower. C) frictional unemployment will be lower. D) structural unemployment will be higher.

A

In a nonrecession year, the majority of U.S. unemployment is: A) frictional. B) structural. C) cyclical. D) recurrent.

A

In the national spending approach, investment spending involves the acquisition of which of the following? A) capital goods B) stocks and bonds C) money D) any of a number of financial instruments

A

In the past 100 years, there has been a decline in the use of unpaid child labor on family farms. Therefore: A) changes in GDP overstate the true increase in production over the past 100 years. B) changes in GDP understate the true increase in production over the past 100 years. C) there has been no change in GDP over the past 100 years. D) there has been no change in production over the past 100 years.

A

Increasing the amount of physical capital tends to _____ output per hour of workers and _____ the value of workers. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase

A

Intermediate goods are goods: A) used to produce other goods. B) consumed or held in personal inventories. C) used up in the production process. D) that cannot be exported.

A

The largest spending component of GDP in the United States is: A) consumption. B) investment. C) government spending. D) net exports.

A

The value of goods exported from the U.S. to other countries is included in GDP for: A) the United States. B) the country that purchases the goods. C) both the United States and the country that produces the goods. D) no country.

A

The value of production by a U.S. worker employed by a firm located in Canada is included in: A) Canada's GDP only. B) U.S. GDP only. C) GDP for both Canada and the United States. D) neither country's GDP.

A

U.S. farms today produce _____ output using _____ land as they did in 1950. A) more; less B) about the same; less C) more; about the same amount of D) about the same; about the same amount of

A

What population categories go into the formula for the unemployment rate? A) unemployed and employed B) civilian, military, and unemployed C) adults not in labor force, employed, and unemployed D) unemployed, employed, and discouraged workers

A

When the Communist Party took over China, "The Great Leap Forward" was instituted as a system to encourage the growth of agricultural production in China. Yet, during this time, millions of people starved to death. Why did this occur? A) Farmers' self-interest was not aligned with social interest. B) The land and its output were controlled by a few wealthy individuals. C) The farmers violated government policy. D) The farmers were being jailed.

A

Which approach measures GDP by adding together consumption, investment, government purchases, and net exports? A) the national spending approach B) the factor income approach C) the product approach D) the value-added approach

A

Which of the following would be most effective in reducing "free riding" in a communal farming system? A) assigning property rights B) increasing supervision of workers C) increasing penalties for low production D) increasing physical capital

A

Programmers produce a large amount of software on an unpaid, open-source basis. As a result: A) GDP double-counts some software production. B) GDP undercounts some software production. C) no software should be counted in GDP. D) GDP is a good measure of software productivity.

B

Which statement best describes the economic growth patterns in the world since World War II? A) Japan and South Korea experienced rapid growth while Argentina and Nigeria experienced slow growth. B) Japan and South Korea experienced slow growth while Argentina and Nigeria experienced rapid growth. C) Most countries in the world experienced rapid growth. D) Most countries in the world except the United States experienced no growth at all.

A

(Table: Components of GDP) Use the data in this table to calculate GDP. A) $11,171 billion B) $14,055 billion C) $15,945 billion D) $19,519 billion

B

(Table: Three-Good Economy I) Suppose an economy produces only the three final goods shown in the table. The table gives information on the quantities produced and the prices of goods sold in 2008 and 2009. If prices in 2008 are used to calculate real GDP, what is the real GDP in 2008? A) $20,134 B) $21,134 C) $25,260 D) $26,260

B

(Table: Three-Good Economy II) Suppose an economy produces only the three final goods shown in the table. The table gives information on the quantities produced and the prices of goods sold in 2008 and 2009. What is the growth rate of real GDP in 2009 if 2009 prices are used in the calculation of real GDP? A) -3.71% B) -2.94% C) -1.97% D) 1.00%

B

A worker who works past retirement age but loses retirement benefits: A) is practicing consumption smoothing. B) is essentially being taxed for working. C) usually has a greater net gain from working. D) has a higher incentive to keep working.

B

At an annual growth rate of 0.7%, approximately how long does it take for real GDP per capita to increase from $30,000 to $60,000 in a country? A) 50 years B) 100 years C) 200 years D) 400 years

B

Birmingham Steel sells steel to Winston Golf Club Manufacturers for $300,000. Winston sells its golf clubs to Academy Sports for $1,000,000. Academy Sports sells Winston golf clubs for $1,500,000. How much is added to GDP? A) $1,000,000 B) $1,500,000 C) $2,500,000 D) $2,800,000

B

If a country's nominal GDP increases by 5% between two years while its GDP deflator increases by 4%, the country's real GDP: A) increases by 9%. B) increases by 1%. C) decreases by 1%. D) decreases by 9%.

B

If real GDP per capita in the United States is currently $50,000 and grows at 2.5% per year, it will take approximately how many years to reach $200,000? A) 28 years B) 56 years C) 84 years D) 112 years

B

If the adult population of a country is 200 million, 100 million are employed, and 10 million are unemployed, this country's unemployment rate is: A) 5%. B) 9.1%. C) 10%. D) 11%.

B

If the median wage is $9 in country X and $8 in country Y and both countries have similar elasticities of labor supply and demand, then a minimum wage of $4 in both countries will tend to: A) make unemployment higher in country X than in country Y. B) make unemployment higher in country Y than in country X. C) make unemployment the same in both countries. D) have no effect in either country.

B

The GDP deflator is _____ multiplied by 100. A) real GDP divided by nominal GDP B) nominal GDP divided by real GDP C) real GDP divided by the population D) nominal GDP divided by the population.

B

The labor force is made up of: A) institutionalized people, the military, and employed workers. B) employed and unemployed workers. C) unemployed workers, employed workers, and students over 16 years of age. D) all adult noninstitutionalized civilians.

B

The portion of women in the workforce has nearly doubled since 1950. As a result, fewer mothers are providing services inside the home. How has this trend affected GDP? A) This trend has had no predictable effect on GDP. B) The GDP in 1950 is underestimated relative to today. C) The GDP in 1950 is overestimated relative to today. D) The share of GDP attributable to women has declined.

B

What is the term for workers who have given up looking for a job but would still like one? A) jobless workers B) discouraged workers C) laid off workers D) discarded workers

B

When people consume more leisure: A) the hours in the workweek will increase. B) the nation's GDP will decrease as a result of fewer hours worked. C) the nation's GDP will increase as a result of the value of leisure. D) the nation's GDP will not be affected.

B

Which are immediate causes of the wealth of nations? A) institutions and incentives B) technical knowledge and human capital C) customs, practices, and social norms D) property rights and honest government

B

Which best describes the growth process from its ultimate to its immediate causes? A) incentives institutions factors of production real GDP per capita B) institutions incentives factors of production real GDP per capita C) factors of production incentives institutions real GDP per capita D) factors of production institutions incentives real GDP per capita

B

Which doctrine indicates that an employee may quit and an employer may fire an employee at any time for any reason? A) laissez faire B) employment-at-will C) rational ignorance D) equal pay for equal work

B

Which of the following would NOT be included in the calculation of GDP as a government purchase? A) military payrolls B) distribution of food stamps C) purchase of 100 new C-5A aircraft D) hiring 1,000 workers to build a new interstate roadway

B

Which statement is TRUE for the Great Leap Forward period in China? A) Technological advance was strong because of the hard work of farmers. B) A lack of private property rights provided no incentive for farmers to be productive. C) Communal property in agricultural land helped align farmers' self-interest with the social interest. D) Collective property rights failed to improve farming productivity because of the existence of private property rights.

B

(Figure: Economic Growth in Major World Regions) Refer to the figure, which shows real GDP per capita over time in different regions of the world. The chart shows that: A) all regions of the world eventually achieved significant growth. B) some regions of the world have always experienced growth. C) significant growth has occurred in some regions only since 1950. D) all regions of the world remain poor today.

C

(Figure: Labor Market) Refer to the figure. What is the number of people who are employed at the market wage? How many people end up unemployed due to the implementation of a $10 minimum wage? A) 40; 20 B) 40; 40 C) 60; 40 D) 60; 20

C

(Table: Data from Europia) Based on the data in the table, what is interest income in the economy of Europia? A) $-1,800 B) $2,000 C) $2,800 D) $3,000

C

(Table: iPhones) This table shows data for a country producing only iPhones. Based on the GDP deflator, the increase in prices between 2000 and 2010 was: A) 1%. B) 9.9%. C) 10%. D) 110%.

C

A country has a population of 160 million. Thirty million of its people are under the age of 16 and 10% of the population is either in the military or institutionalized. Seventy million people have jobs, and five million are looking for work. What is the labor force participation rate in this country? A) 52% B) 62% C) 66% D) 70%

C

A nominal variable is one that: A) uses prices at the time of sale. B) uses the cost of production. C) has not been adjusted for inflation. D) includes a correction for inflation.

C

According to the text, we can understand the "wealth of nations" best by examining: A) how natural resources are distributed around the world. B) the extent to which governments support the domestic markets. C) the laws and regulations that affect people's incentives to work and invest. D) the amount of technological knowledge obtained from other countries.

C

Agricultural productivity in China sharply declined during its experiment with communal farming. This was primarily a result of: A) a decade-long drought in China. B) the transition to open markets in China. C) a lack of property rights for farm land. D) political instability.

C

Economies more open to foreign trade are more efficient in production partly because: A) more open economies tend to receive more foreign aid. B) foreign producers are more productive than domestic producers. C) economies of scale occur in larger markets. D) property rights are less important in a more open economy.

C

Economies more open to foreign trade are more efficient in production partly because: A) more open economies tend to receive more foreign aid. B) foreign producers are more productive than domestic producers. C) free trade opens a country up to new ideas and innovation. D) property rights are less important in a more open economy.

C

Economists call private spending on the tools, plant, and equipment used to produce future output: A) net exports. B) government purchases. C) investment. D) consumption.

C

For most of recorded human history, real GDP per capita has: A) increased at a rapid rate. B) increased at a modest rate. C) remained about the same. D) decreased at a modest rate.

C

Honest government _____ economic growth. A) impedes B) has no effect upon C) fuels D) has an indeterminate effect upon

C

If a country produced nothing but 20 smartphones and 10 Blu-ray players in 2011, priced at $100 per smartphone and $200 per Blu-ray player, its GDP in 2011 would be: A) $1,000. B) $2,000. C) $4,000. D) $5,000.

C

In the national spending approach, consumption expenditures refer to: A) government and private spending on final goods and services. B) private spending during all stages of production of goods and services. C) private spending on all final goods and services. D) private spending on tools, plants, and equipment used for future production.

C

Over the past 200 years, economic growth in the United States has been: A) among the slowest in the world. B) the fastest in the world. C) slow and consistent. D) volatile.

C

Suppose economies A and B have the same initial level of GDP per capita at $15,000, and each economy begins with a constant growth rate of 1% per year. (Neither country has good institutions for economic growth at first.) Then Country A enters an era of political stability, establishes property rights, and installs incentives for entrepreneurship. Country A's economic growth rate consequently improves to 5%. Assuming population growth rates remain unaffected, how much longer will it take Country B to double its per capita GDP level compared to Country A? A) 70 years B) 14 years C) 56 years D) 28 years

C

The correlation between infant mortality and real GDP per capita is: A) zero. B) positive. C) negative. D) unpredictable.

C

The percentage of adults in the labor force is the: A) unemployment rate. B) employment rate. C) labor force participation rate. D) work force participation rate.

C

Unemployment correlated with the business cycle is called: A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) seasonal unemployment.

C

Which is considered an immediate cause of economic growth? A) good incentives B) the extent of government support in free markets C) physical capital D) good luck

C

Which of the following is NOT a reason why unemployment rises during recessions? A) because of labor reallocation among affected industries in response to real economic shocks B) because wages do not fall as fast as prices C) because of increases in aggregate demand D) firms cannot afford to employ as many workers

C

(Table: GDP Data) Using the GDP data in the table, how much did nominal GDP grow between 1995 and 2000? A) -14.5% B) 16% C) 13.63% D) 31.8%

D

(Table: Three-Good Economy I) Suppose an economy produces only the three final goods shown in the table. The table gives information on the quantities produced and price of goods sold in 2008 and 2009. What is the nominal GDP in 2009? A) $20,134 B) $21,134 C) $26,260 D) $31,400

D

A minimum wage is: A) an employment protection law. B) a labor market price ceiling. C) the equilibrium wage in an unskilled labor market. D) a labor market price floor.

D

A real variable is one that: A) uses prices at the time of sale. B) uses the cost of production. C) has not been adjusted for inflation. D) includes a correction for inflation.

D

Active labor market policies: A) cause riots in France. B) enforce collective bargaining over wages, benefits, and working conditions. C) state that an employee may quit and an employer may fire an employee at any time and for any reason. D) focus on getting unemployed workers back to work.

D

Countries that have high per capita GDP tend to have: A) high levels of physical capital per worker. B) high levels of human capital per worker. C) high levels of technology per worker. D) high levels of all three factors of production.

D

Countries with high GDP per capita tend to have a lot of: A) physical capital per worker. B) human capital per worker. C) technological knowledge per worker. D) physical capital, human capital, and technological knowledge per worker.

D

Creative destruction occurs at the level of the: A) firm. B) industry. C) entire economy. D) firm, industry, and entire economy.

D

Discouraged workers are counted as part of the: A) labor force. B) unemployed. C) employed. D) adult population.

D

Females started entering the labor force, and particularly professional schools, in increasing numbers beginning around: A) 1940. B) 1950. C) 1960. D) 1970.

D

For most of recorded human history, long-run economic growth was: A) much higher than it has been in recent decades. B) the same as it is today. C) the highest during the Dark Ages. D) almost nonexistent.

D

GDP is calculated by: A) adding the quantities of all goods and services in an economy. B) adding the prices of all goods and services in an economy. C) dividing the quantity of all goods and services by their prices and adding together the results. D) multiplying the quantity of all goods and services by their prices and adding together the results.

D

If U.S. per capita GDP is $50,000 and grows at 5% per year, what will U.S. per capita GDP be in 70 years? A) $400,000 B) $800,000 C) $1.2 million D) $1.6 million

D

If the adult population of a country is 200 million, 100 million are employed, and 10 million are unemployed, this country's labor force participation rate is: A) 5%. B) 9%. C) 50%. D) 55%.

D

Property rights encourage: A) saving. B) investment in physical capital. C) investment in human capital. D) saving and investment in both physical and human capital.

D

Suppose a doctor spends half of the year in the United States and the other half in Canada and works in both places. How does his production get allocated between U.S. and Canadian GDP? A) Half of the doctor's income counts toward U.S. GDP and half toward Canadian GDP. B) The full income is counted in the GDP of the country in which the doctor is a permanent resident. C) The full income gets counted in both U.S. GDP and Canadian GDP. D) The value of the services produced in the United States gets counted in U.S. GDP and the value of the services produced in Canada gets counted in Canadian GDP.

D

The market value of all final goods and services produced within a given country in a year divided by the country's population is: A) GNP. B) GNP per capita. C) GDP. D) GDP per capita.

D

The most important factor that contributed to China's rapid growth at the end of the 1970s and early 1980s was: A) improvements in physical capital. B) increases in human capital. C) advances in technology. D) institutional reforms.

D

Using the national spending approach to measuring GDP, if Tyler buys 50 shares of Apple stock, it is included in GDP as part of: A) consumption. B) investment. C) government purchases. D) nothing; it is not included as part of GDP.

D

Wealthier countries have: A) more conflicts, such as riots and civil wars. B) higher infant mortality rates. C) fewer educational opportunities. D) more material goods.

D

Which country had a growth miracle beginning in the late 1970s? A) United States B) Japan C) North Korea D) China

D

Which of the following activities is counted as part of U.S. GDP? A) John purchases a counterfeit DVD. B) Joe watches a free video on YouTube. C) Jake takes a vacation at a Caribbean resort. D) Jeff stays in a hotel in Colorado while on a skiing trip.

D

Which of the following individuals can be counted as unemployed? A) Hannah and Harold, who are serving time for armed robbery B) Jason and Jill, who have not looked for work for the last 2 years C) Stewart and Susan, who are currently housed in a mental institution D) Jean, who left her job to search for a higher-paying position

D

Which of the following is NOT true of structural unemployment? A) It is persistent over time. B) It is long-term in duration. C) It results from industry restructuring. D) It results from scarcity of information.

D

Which of the following is TRUE of the effects of employment protection laws? A) They make labor markets more flexible in adjusting for changes in market conditions. B) They reduce the duration of unemployment. C) They reduce the unemployment rates among young and minority workers. D) They create employment security for workers with a job.

D

Which of the following is considered unemployed? A) Jason, a full-time college student, is looking for a part-time job. B) Julie, a full-time housewife, is searching for a part-time position. C) Joe, a retired college professor, does community volunteer work. D) John, on temporary layoff from his work, awaits recall.

D

Which of the following represents the factor income approach to splitting GDP? A) GDP = wages + profit. B) GDP = wages + rent + interest. C) GDP = wages + rent + profit. D) GDP = wages + rent + interest + profit.

D

Which of the following tends to increase unemployment? A) unemployment benefits B) minimum wages C) labor unions D) unemployment benefits, minimum wages, and labor unions

D

Which of the following would be considered unemployed? A) Mark, laid off from his job as a bricklayer, returned to school full-time. B) Sarah, a stay-at-home mom who earned nearly $80,000 per year in her previous job. C) Tim, a 13-year-old high school student, is looking for a part-time job. D) Janice, a senior in college, started job hunting early in the hope that she would have secured a job by the time she graduates in May.

D

Which of the following would be included in 2011's GDP? A) the resale of a house built in 2005 B) the sale of bonds C) the sale of stocks D) the real estate agent's commission on the resale of a house built in 2005

D