Econ 2

Which type of unemployment do economists attempt to resolve using economic policy?

cyclical unemployment

When the increase in prices goes from 5% to 2%, this is referred to as:

disinflation.

If Chuck gets laid off from a high paying job and temporarily works as an Uber driver, he is considered:

employed.

Which of the following groups benefits from an unanticipated rise in the inflation rate?

homeowners with fixed-rate mortgages

Generally, which group of people has the highest marginal propensity to consume?

low-income people

If you spend $100 and the MPC is 0.9, how much spending will this $100 generate in the economy?

$1,000

lf MPC - 0.d, what is the spending multiplier?

2.5

A guitar is produced in California using $100 in raw materials and sells for $300 in a guitar shop. Each guitar that is produced contributes to U.S. GDP.

$300

If the price index is 200, how much did a $12 pizza (today) cost in the base year?

$6.00

In the following PPF, between which two points would long-run growth be represented?

CtoD

An example of a less tangible component of a country's infrastructure is:

property rights.

consumption line in an aggregate expenditures model?

0.4

Which of the following items would NOT be included in "Investment" in the GDP calculation?

100 shares of a company stock

If an economy is growing at 10%, how long will it take for $1,000 to turn into $4,000?

14 years

Suppose the town of Treeville has a population of 200, of which 120 are in the labor force. Of those in the labor force, 100 are employed and 20 are unemployed. The unemployment rate in Treeville is

17%

Use the production function: output = A • (L + K + H + N). If there are two units of land, two units of human capital, three units of natural resources, five units of physical capital, and technology value of three, what is the output that can be produced?

36

If frictional unemployment is 2%, structural unemployment is 3%, and cyclical unemployment is 4%, the natural rate of unemployment is:

5%.

What does the "paradox of thrift" say?

An economy that saves too much can end up with lower total savings.

How does the spending multiplier compare between a $1,000 increase in government spending and a $1,000 decrease in tanes collected?

An increase in government spending has a greater spending multiplier than an equivalent tax decrease.

What are the components of aggregate expenditures?

C + 1 + G + (X — M)

Which of the following would likely NOT cause inflation?

Consumer confidence falls due to global economic concerns.

The official unemployment rate as commonly reported by the Department of Labor each month does not include people who:

are underemployed.

Which of the following persons is considered unemployed?

Emily has not worked for two months, but still applies for jobs every week.

Which of the following is true about hyperinflation?

Financial assets in a hyperinflated currency quickly become worthless.

The concept of diminishing returns to capital would suggest that an additional unit of capital would be most productive in which of the following countries?

Honduras, which has 20 units of capital per worker

Which of the following is not true regarding the informal economy?

Informal market activities do not contribute to the standard of living of citizens.

What information does the National Bureau of Economic Research use to declare that a recession has begun?

It focuses on turning points in key economic indicators.

Which of the following persons is considered part of the labor force?

Joe, a senior in high school who works part-time on weekends at the ice cream shop

What is the main claim of the aggregate expenditures model?

Spending will generate income, which allows for more spending.

A business cycle recovery that doesn't reach its long-term trend can lead to:

a double-dip recession.

Which of the following reasons does not contribute to a higher level of unemployment?

a reduction in union bargaining activities

What does the 45-degree line in the Aggregate Expenditures model represent?

all consumption and no saving

Which of the following is NOT considered an example of one of the four main factors of production?

cash bonds

Which effect best explains why Ethiopia (a poor country) is able to achieve a high growth rate while Japan (a rich country) struggles with low growth?

catch-up effect

Which of the following combinations would result in the most economic freedom?

free trade, competitive markets, and limited regulations

If a country experiences a rise in prices bu produces the same quantity of output as inthe previous year, its nominal GDP will and its real GDP will

increase; be unchanged

What is the single most important factor influencing economic growth for an economy?

increased productivity

Which of the following is NOT an example of an intellectual property right?

land deed

Which of the following components is not used to measure GDP using the income approach?

net exports

Which of the following sequences is in the correct order according to the business cycle?

peak; recession; trough; recovery

What is the best measure of economic growth and standards of living in a country?

real GDP per capita

For which of the following situations would the yield curve most likely predict that a recession will occur?

short-term interest rate = 4%; long-term interest rate = 3%

Frictional unemployment is:

short-term unemployment associated with people who are switching jobs.

Vanessa was laid off as a photo lab technician because of the lack of customers. She then found a job at a movie rental store, but was again laid off one month later when the store shut down. Janessa's bad luck staying employed is most likely due to:

structural unemployment.

Which factor of production enhances the productive capacity of all other resources in the production function?

technology

Which of the following factors would be captured in total factor productivity?

the impact of a hurricane

Which of the following would not be included in official GDP measures?

the lost wages from taking time off work due to bad air pollution

Which of the following is NOT an effective tool used by government to promote economic growth?

trade barriers to protect domestic industries

lf real GDP increased from $10 billion to $11 billion from the first quarter of 2016 to the first quarter of 2017, but had increased by 4% from the fourth quarter of 2016 to the first quarter of 2017, the BEA would report first quarter of 2017 GDP growth as

using the year-over-year method and using the annualized method. 10%; 16%