Econ 202 Exam 2

The ______________ argument points out that if an employer reacts to poor business conditions by reducing pay for all workers, then the best workers, with the best employment alternatives at other firms, are the most likely to leave and the least-attractive workers, with fewer employment alternatives, are more likely to stay. A. efficiency wage theory B. relative wage coordination C. adverse selection of wage cuts D. insider-outsider

A

The type of unemployment that occurs because of a recession is called: A. frictional unemployment. B. seasonal unemployment. C. the natural rate of unemployment. D. cyclical unemployment.

A

If a nation's labor force receives a significant influx of young workers: A. the natural rate of unemployment is likely to increase. B. the natural rate of unemployment is likely to decrease. C. frictional unemployment will likely decrease to zero. D. the natural rate of unemployment is unlikely to change

A

A forestry worker who is out of work because of the temporarily low demand for wood products associated with a recession is defined as: A. cyclically unemployed. B. naturally unemployed. C. underemployed. D. frictionally unemployed.

A

A welder who quits his job and moves from Pittsburgh to Madison to try to get a better welding job is said to be: A. frictionally unemployed. B. underemployed. C. structurally unemployed. D. cyclically unemployed.

A

_____________ is a small category that refers to the goods produced by one business that have yet to be sold to consumers, and are either still sitting in warehouses and on store shelves A. Inventories B. Structures C. Services D. Durable Goods

A

Consumption is the purchase of goods and services by: A. Foreign Buyers B. Households C. Government D. Business Firms

B

Final goods or services used to compute GDP refer to: A. the value of outstanding shares of stock of manufacturing firms. B. goods and services purchased by the ultimate users C. the factors of production used to produce output. D. the sum of all wages paid to laborers.

B

In order to avoid double-counting, statisticians just count the A. intermediate goods and services B. final goods and services C. durable goods and nondurable goods D. final inventories

B

Karen chooses to go to university fulltime rather than to work. Karen: A. is part of the labor force and what economists call a discouraged worker. B. is not part of the labor force. C. is part of the labor force, but not actively seeking work. D. is considered employed.

B

The unemployment rate in a town in which 65,400 persons are employed and 11,000 are unemployed equals A. 20.2 %. B. 14.4%. C. 16.8%. D. 11%.

B

When discussing economic growth, it is often useful to focus on ____________, to avoid studying changes in the size of GDP that represent only having more people in the economy, and focus on those increases in GDP which represent an actual rise in the standard of living on a per person basis. A. GDP per capita B. consumption and expenditures C. living standards D. economic growth

B

Which of the following is true? A. A depression is a recession that is mild and relatively brief. B. The expansions and contractions of real world business cycles last varying lengths of time and often differ in magnitude. C. The timing of business fluctuations is regular and therefore easily predictable. D. The timing of business fluctuations is regular and therefore easily predictable.

B

Which of the government policies below is most unlikely to encourage per capita economic growth? A. special subsidies for capital-intensive forms of production B. high taxes on companies that spend a lot on capital formation C. the use of tax revenues for investment and capital formation D. promotion of education and training programs for workers

B

Which of the following is correct? A. An increase in the quantity of labor always leads to economic growth. B. Third World countries are rich in human capital. C. Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital. D. A decrease in the productivity of labour leads to economic growth.

C

GDP is: A. the sum of all currency and coins in circulation B. the value of all final good and services produced anywhere in the world by a nation's firms. C. the value of all final goods and services produced domestically. D. the value of all final goods and services produced by a government.

C

Gross Domestic Product equals $1.2 trillion. If consumption equals $690 billion, investment equals $200 billion, and government spending equals $260 billion, then: A. exports exceed imports by $150 billion B. exports exceed imports by $50 billion. C. imports exceed exports by $50 billion. D. imports exceed exports by $150 billion.

C

In November 2010 the labor force in Siouxtown, was 14,800. There were 14,483 persons employed. The local unemployment rate: A. was 1.2%. B. was 5.6%. C. was 2.1%. D. was 7.1%.

C

The most significant real economic cost of high unemployment is: A. the money cost of unemployment insurance payments to the unemployed. B. the potential goods and services that might have been produced but weren't. C. the lost tax revenue that might have been paid by persons if they had worked. D. the money cost of retraining persons to obtain new jobs.

C

The unemployment rate measures: A. unemployed workers as a percentage of the population age over-sixteen. B. unemployed workers as a percentage of the population C. unemployed workers as a percentage of the labor force. D. the number of people unemployed divided by the number of people employed.

C

To achieve a high standard of living, a nation should: A. use less capital and more labor in the production process. B. increase the tax deduction for child dependents. C. promote economic growth. D. increase welfare payments to the poor.

C

Which of the following is not counted as a part of GDP? A. the unsold additions to inventory at an appliances store B. the purchase of a snow plough by the city of Minneapolis. C. the purchase of 100 shares of AT&T stock by your grandfather. D. the purchase of a loaf of bread by a consumer

C

Which of the following is not included in GDP? A. the replacement of brake pads on your six-year-old vehicle B. the fees for legal services rendered by your lawyer C. cash income paid to a day laborer that is not reported to the tax authorities D. the payments for a chiropractor's services

C

The demand measure of GDP accounting adds together: A. wages and salaries, rent, interest, and profit. B. consumption, government purchases, wages and salaries, and trade balance. C. consumption, interest, government purchases, and trade balance. D. consumption, investment, government purchases, and trade balance.

D

Which of the following are most likely classified by economists as consumer durable goods? A. drugs, toys, magazines, books B. stocks, bonds C. food, clothing D. automobiles, furniture

D

A business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle are: A. contraction, recession, expansion, boom B. trough, expansion, recession, peak C. expansion, trough, recession, peak D. expansion, peak, recession, trough

D

Consumption in the United States is about ___________ of GDP, and it moves relatively little over time. A. 10% B. 90% C. 33% D. 68%

D

Investment (I) includes: A. the amount spent on consumer goods that last more than one year. B. the amount spent on purchases of art. C. the amount spent on stocks and bonds. D. the amount spent on new factories and machinery.

D

Which of the following is included in the calculated Gross Domestic Product? A. Suzanne buys a love seat and chair for $85 at the yard sale on the corner. B. Farmer Freddie sells his second tractor to his son. C. Mr. Farkle buys a used lawn mower from his neighbor, Mr. Sparkle. D. A local ice cream store sells $17,000 worth of cones and sundaes on July 1.

D