Econ 1900 Test 3

Assume that the CPI for 2009 was 124.0 and for 2010 was 130.7. What was the inflation rate between the two years? A) 5.40 percent B) 6.70 percent C) 0.95 percent D) 3.20 percent

A

In order to be officially unemployed, a person must be: A) looking for work in the past four weeks. B) under 55 years old. C) eligible for social security. D) receiving disability payments.

A

Scenario: Growth RatesSuppose that the current real GDP per capita of the United States is $32,000 and its growth rate is 2 percent per year. The real GDP per capita of China is $4000, and its annual growth rate is 7 percent.Reference: Ref 17-3(Scenario: Growth Rates) According to the Scenario: Growth Rates, how long will it take China's real GDP per capita to double? A) 10 years B) 35 years C) 14 years D) 50 years

A

Suppose that roughly 8 million people in the United States were actively seeking jobs but had not found them this month, the same number as last month. Suppose that 2 million of the people who were unemployed last month gave up their search this month and stopped looking for work. What will happen to the unemployment rate this month, all other things unchanged? A) It will fall, because 2 million people are not in the labor force this month and are not counted as unemployed. B) It will rise, because 2 million people are not in the labor force this month and are not counted as unemployed. C) It will be unaffected, because the same number of people are unemployed. D) The unemployment rate will decrease by 25 percent.

A

Suppose the price index in Year 1 is 152 and the price index in Year 2 is 170. What is the inflation rate between Year 1 and Year 2? A) 11.8 percent B) 18.0 percent C) 10.5 percent D) 1.18 percent

A

The unemployment rate is the: A) percent of the labor force that is unemployed. B) average length of time someone is unemployed. C) number of people unemployed. D) ratio of the labor force to the number of people unemployed.

A

Which is an example of an intermediate good? A) tires purchased from Goodyear by General Motors for newly produced electric cars B) a wedding ring purchased by an engineer for his fiancée C) stocks and bonds purchased by a business executive D) a cellular telephone purchased by a college student

A

An increase in the value of nominal GDP over time: A) may be due to a decrease in prices, a decrease in the production of goods and services, or a combination of a decrease in prices and a decrease in aggregate output. B) may be due to an increase in prices, an increase in the production of goods and services, or a combination of an increase in prices and an increase in aggregate output. C) is always due to an increase in the production of goods and services. D) is always due to an increase in prices.

B

Donna was laid off by her employer at the beginning of 2011. She looked for a job for three months, but could not find anything suitable. She then decided to volunteer for a soup kitchen and stopped looking for a job. Donna is considered to be: A) underemployed. B) a discouraged worker. C) a part-time worker. D) unemployed.

B

Manufactured resources such as buildings and machines are known as A) variable inputs. B) physical capital. C) natural resources. D) variable resources.

B

Structural unemployment can be caused by all EXCEPT: A) minimum wages. B) fluctuations in the business cycle. C) efficiency wages. D) labor unions.

B

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

B

If a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its unemployment rate is: A) 67.5 percent. B) 7.5 percent. C) 10 percent. D) 4 percent.

C

If the actual unemployment rate is 7 percent and the natural rate of unemployment is 5 percent, then the cyclical unemployment rate is: A) 7 percent. B) 9 percent. C) 2 percent. D) 5 percent.

C

Investment spending is the process of: A) households setting aside money for savings. B) households purchasing stock in private corporations. C) firms accumulating inventories and buying physical capital to facilitate the production process. D) government paying off its long-term debt.

C

Since 1960 in the United States, the rate of inflation has: A) increased. B) decreased. C) fluctuated. D) remained the same.

C

Suppose a panel of economists predicts that a nation's real GDP per capita will double in approximately 20 years. Based upon the rule of 70, what must be the predicted annual growth rate of real GDP per capita? A) 2.85 percent B) 14 percent C) 3.5 percent D) 140 percent

C

Suppose that Allison has an accounting degree, but she lost her job two months ago when her company merged with another firm. Allison hasn't been able to find another accounting job, so she has taken a part-time job as a sales clerk at a clothing store. As a result the official unemployment rate will: A) increase. B) not change. C) decrease. D) increase temporarily, then fall back to its original level.

C

Suppose the price index in Year 1 is 152 and the price index in Year 2 is 170. What is the inflation rate between Year 1 and Year 2? A) 10.5 percent B) 1.18 percent C) 11.8 percent D) 18.0 percent

C

The distinguishing feature of macroeconomics is that it: A) examines the markets for expensive items. B) evaluates the behavior of large firms. C) studies the behavior of the economy as a whole. D) uses economic theory to explain popular consumer trends.

C

A broad-based downturn, in which employment declines in many industries, is known as a(n): A) declining interval. B) growth reversal. C) expansion. D) recession.

D

A business cycle is a: A) period in which output and employment are rising. B) period in which output and employment are falling. C) very deep and prolonged economic downturn. D) short-run alternation between economic upturns and downturns.

D

A worker classified as frictionally unemployed is one who is: A) discouraged and has dropped out of the labor force. B) laid off during a recession. C) working part-time but would prefer to work full-time. D) unemployed while looking for a job that demands his or her skills.

D

According to the rule of 70, if a country doubles its level of real GDP per capita every 35 years, that country must be growing at an annual rate of: A) 35 percent. B) 70 percent. C) 3.5 percent. D) 2 percent.

D

Goods that are produced domestically but sold abroad are: A) imports. B) investment. C) part of domestic consumption. D) exports.

D

Goods that are produced in a particular period but not sold in that period: A) are treated like exports. B) count as consumption in the next year. C) are classified as purely financial transactions. D) are included in investment.

D