Econ 202 midterm

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A company produced 8 dishwasher machines in 2010. The company sold 6 in 2010 and added 2 to its inventories. The market value of the dishwasher machines in 2010 was $200 per unit. What is the value of this company's output that will be included in the 2010 GDP?

$1600

A company produced 5 dishwasher machines in 2010. The company sold 6 in 2010 (by selling 1 dishwasher machine from their inventory from last year.) The market value of the dishwasher machines in 2010 was $100 per unit. What is the value of this company's output that will be included in the 2010 GDP?

$500

An economics professor is discussing a measure of inflation over time based on all the components of GDP. Which measure is it?

GDP Deflator

Trade deficit means

Imports higher than exports

According to the Financial Times article "Rise in corporate market power offers clues to feeble wage growth," why high profit margins for companies can worsen inequality in the US?

Those firms with high margins tend to pay less wages according to many studies.

Income Mexican citizens earn in the U.S. counts in

U.S GDP

From the Washington Post article "Seattle's higher minimum wage is actually working just fine," which study findings conform with our WS-PS model regarding the effect of minimum wage hike on employment?

University of Washington 's findings

Which of the following is an example of a final good or service?

a computer purchased by Federal Express to track shipments

Suppose that the US federal allows firms in several industries to merge with each other, which consequently increased monopoly power for those companies. Given this information, we would expect to observe which of the following?

a downward shift in the PS curve

A decrease in the minimum wage will tend to cause which of the following?

a downward shift in the WS curve

A reduction in unemployment benefits will tend to cause which of the following?

a downward shift in the WS curve

For you to be considered out of the labor force, you can be

a full-time volunteer, full-time student, and a full-time retiree.

Suppose the actual unemployment rate increases. This will cause

a movement along the WS and the PS curves.

Which of the following is a good or service counted in GDP at a current year?

a new tire you buy for your personal car

Based on our understanding of the labor market model WS-PS, we know that an increase in the minimum wage will cause

a reduction in equilibrium employment

According to Robert Allen, an economic historian, why industrial revolution took place in England?

a rise in labor cost

According to the Planet Money podcast (see Lesson), besides Simon Kuznets, who else that also made a critique about the concept of GDP? (Hint: his video can be found so easily on Youtube)

Robert Kennedy

According to the Planet Money podcast (see Lesson), who firstly developed the estimation of GDP?

Simon Kuznets

The increased ability of humans to provide light, grow food, and communicate information are all examples of:

Technological progress

When the textbook refers to "history's hockey stick", it is referring to:

The increase in growth of real GDP per capita that many countries have experienced at some point after the 19th century.

Based on our understanding of the labor market model WS-PS, we know that an increase in the minimum wage will cause the results as two answers above. The main reason is

The model assumes that demand or labor demand is constant.

What is GDP per capita?

The total amount of goods and services produced within a country in a year per person.

Okun's Law describes the relationship between GDP growth and the change in unemployment such that when GDP growth is high:

The unemployment rate is falling.

According to the Financial Times article "Rise in corporate market power offers clues to feeble wage growth," what the author thought about the wage growth of 2.7% in 2018 compared to US companies' profit margins?

The wage growth was lower since profit margins kept rising for many years.

From the Washington Post article "Seattle's higher minimum wage is actually working just fine," what researchers from the University of Washington found about an increase in minimum wage in Seattle?

an increase in minimum wage led to a reduction in employment

Based on wage setting behavior, we know that a reduction in the unemployment rate will cause

an increase in the real wage

Based on wage setting behavior, we know that a reduction in the unemployment rate will cause

an increase in the real wage.

Suppose that increased international trade makes product markets more competitive in the U.S. Given this information, we would expect to observe which of the following?

an upward shift in the PS curve

An increase in the minimum wage will tend to cause which of the following?

an upward shift in the WS curve

An increase in unemployment benefits will tend to cause which of the following?

an upward shift in the WS curve

From the Brooking Institute article about a fall in labor force participation, how much the participation rate decreased since the peak in 1990s?

around 5%

Which of the following are most likely classified by economists as consumer durable goods?

automobiles, furniture

According to the Washing Post article (see Lesson), Joel Mokyr, an economic historian, claims that the Chinese bureaucratic system in the past was progressive in some aspects. Why?

because it's a meritocracy since they have an examination.

According to NPR Planet Money: The price of lettuce in Brooklyn, why the BLS never called the restaurants or stores to check the prices, or look up the prices on the internet?

because they really want to check very specific items that most store owners do not have time to help them.

In the US, trade surplus could be observed______

before 1980s

From the Brooking Institute article about a fall in labor force participation, what do the prime-age men and women participation rates look like since 2000s?

declining

According to the Okun's Law, during the 1990s economic boom, we can expect that the unemployment rate should _______.

decrease

When the Okun's Law does NOT hold, it implies that __________.

economic growth does not translate into job creation.

James is a high school student. James works as a part-time employee after school at a fast food restaurant. James is categorized as __________

employed

Lisa spends most of her time taking care of her home and children, but she helps in her husband's computer software business all day on Friday, Saturday, and Sunday. Lisa is counted as __________.

employed

According to NPR Planet Money: The price of lettuce in Brooklyn, what does the headline Consumer Price Index (CPI) include?

everything from the market

According to NPR Planet Money: The price of lettuce in Brooklyn, what does the core Consumer Price Index (CPI) include?

everything from the market excluding food and oil

Consumption is the purchase of goods and services by:

households.

According to the Financial Times article "Rise in corporate market power offers clues to feeble wage growth," what is the markup rate?

how much they charge above their cost.

Nominal GDP measures the value of all goods and services

in current dollars.

Cheryl graduated from college a month ago and is now without work. She accepted a job that will start next month. Today, Cheryl is

in the labor force

Real GDP is gross domestic product measured

in the prices of a base year.

According to the Okun's Law, in the midst of economic recession, such as in 2008-2009, we can expect that the unemployment rate should _______.

increase

According to the Financial Times article "Rise in corporate market power offers clues to feeble wage growth," what De Loecker and Eeckhout found about the markups between 1980 and 2016?

increase almost 50%

Shares of personal consumption in GDP has been ________ since 1980s in the US.

increasing

From the Brooking Institute article about a fall in labor force participation, what does the prime-age men participation rate looks like before 1990s?

it decreased

From the Brooking Institute article about a fall in labor force participation, what does the prime-age women participation rate looks like before 1990s?

it increased

Based on our understanding of the labor market model WS-PS, we know that an increase in the minimum wage will cause

no change in equilibrium real wage

Based on price setting behavior, we know that a reduction in the unemployment rate will cause

no change in the real wage

Based on price setting behavior, we know that a reduction in the unemployment rate will cause

no change in the real wage.

From the Washington Post article "Seattle's higher minimum wage is actually working just fine," what researchers from the UC Berkeley found about the effects of minimum wage hike?

no employment effect

If the GDP deflator is greater than 100, then

nominal GDP is greater than real GDP.

From the Washington Post article "Seattle's higher minimum wage is actually working just fine," is the minimum wage increase considered to be an increase in nominal wage or real wage?

nominal wage

The _____________ is set by the firm in dollars while the ___________ describes how much the wage can buy for the worker.

nominal wage; real wage

In a price-setting relation, there is a _________ relationship between real wage and employment.

non-existent

Katherine has been thinking about looking for work in the past four weeks, but there was no specific effort she has made. Katherine is counted as _________.

not in labor force

In the wage setting relation, there is a __________ relationship between real wage and employment.

positive

If real GDP in 2010 using 2009 prices is higher than nominal GDP of 2010, then

prices in 2010 are lower than prices in the base year.

The GDP deflator is the

ratio of nominal GDP to real GDP multiplied by 100.

Suppose the actual employment rate increases. This will cause the PS curve

stay constant (move along the curve)

With the real wage on the vertical axis and employment (N) on the horizontal axis, we know that

the PS is horizontal

With the real wage on the vertical axis and employment (N) on the horizontal axis, we know that

the WS curve is upward sloping.

Investment (I) includes:

the amount spent on new factories and machinery.

The number of people unemployed equals

the labor force minus the number of people employed.

Inflation is an increase in

the overall price level.

Which of the following is an example of an intermediate good?

the pizza sauce you purchase to make pizzas to sell for a fund-raiser for an organization you belong to

Which of the following is not counted as a part of GDP?

the purchase of 100 shares of AT&T stock by your grandfather.

In the wage-setting relation, the nominal wage tends to decrease when

the unemployment rate increases

In the wage-setting relation, the nominal wage tends to decrease when

unemployment benefits decrease.

Diane lost her job and immediately started looking for another job. As a result the

unemployment rate increases.

Okun's Law is an empirical observation that shows that the change in the ___________ falls when __________ is faster.

unemployment rate; GDP growth

The GDP deflator in year 2 is 110 using year 1 as a base year. This means that, on average, the price of goods and services is

10% higher in year 2 than in year 1.

If nominal GDP in 2001 is $18 trillion and real GDP is $15 trillion, the GDP deflator in 2001 is

120

If 2009 is the base year, the bundle price of goods in 2009 is $500, and the bundle price of goods in 2010 is $700, the 2010 consumer price index is

140

If nominal GDP in 2001 is $18 trillion and real GDP is $15 trillion. Suppose we use 2000 as the base year, what is the inflation rate between 2000 and 2001?

20%

Between 2000-2002, GDP per capita of Spain grew at 2% per year. If GDP per capita equals to $25,000 in 2000, GDP per capita in Spain equals to $................... in 2002.

26010

According to the Financial Times article "Rise in corporate market power offers clues to feeble wage growth," what is the relationship between the market power and innovation found by the IMF?

Firms with high market power, due to concentrated companies, tend to invest less.

According to the Planet Money podcast (see Lesson), who's the first US president that mentioned the concept of GDP on the radio?

Franklin D. Roosevelt

The price setting equation is represented by the following: P = (1+m)W. When there is perfect competition (firms have no power), we know that m will equal

0

The price setting equation is represented by the following: P = (1+m)W. When firms have very high market power, m would equal to

0.9

If the number of people classified as unemployed is 20,000 and the number of people classified as employed is 620,000, what is the unemployment rate?

3.1%

Between 2005-2007, GDP per capita of Greece reduced at 5% per year. If GDP per capita equals to $35,000 in 2005, GDP per capita in Greece equals to $................... in 2007.

31587.5

If 2009 is the base year, the bundle price of goods in 2009 is $500, and the bundle price of goods in 2010 is $700, the inflation rate between 2009 and 2010 is

40%

If real GDP per capita grows from $10,000 to to $10,500, then the growth rate is:

5%

The GDP per capital of China was $10,000 in 2017 and $10,500 in 2018. The growth rate of GDP between 2017 and 2018 was equal to...............

5%

The GDP deflator in year 2 is 95 using year 1 as a base year. This means that, on average, the price of goods and services is

5% higher in year 1 than in year 2.

Consumption in the United States is about ____________ of GDP.

68%

The GDP deflator in year 2 is 110 and the GDP deflator in year 3 is 118. The rate of inflation between years 2 and 3 is

7.27%.

If the labor force is 320,000 and the total population 16 years of age or older is 400,000, the labor-force participation rate is

80%

The largest component of the expenditure side of GDP in the United States is:

Consumption

The correct formula to calculate GDP based on its spending components is:

Consumption + Investment + Government Spending + Exports - Imports

According to the Washing Post article (see Lesson), Joel Mokyr, an economic historian, thinks that scientists before the Industrial Revolution began to apply scientific knowledge to crack problems. This is what he called......

Industrial Enlightenment

Private property, markets, and firms are the key __________ shared by all capitalist economies.

Institutions

The most volatile component of GDP in the United States and Europe is

Investment


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