Econ 202 Test 2 Word Problems

As chief financial officer you sell newly issued bonds on behalf of your firm. Your firm is a. borrowing directly. b. borrowing indirectly. c. lending directly. d. lending indirectly

a

If the natural rate of unemployment is 5.2 percent and the actual rate of unemployment is 5.7 percent, then by definition there is a. cyclical unemployment amounting to 0.5 percent of the labor force. b. frictional unemployment amounting to 0.5 percent of the labor force. c. structural unemployment amounting to 0.5 percent of the labor force. d. search unemployment amounting to 0.5 percent of the labor force.

a

In June 2009 the Bureau of Labor Statistics reported an adult population of 234.9 million, unemployment of 12.4 million, and employment of 141.6 million. Based on these numbers the labor-force participation rate was a. 154/234.9. b. 141.6/234.9. c. 141.6/154. d. None of the above is correct.

a

Tatiana is waiting to be recalled to a job from which she was laid off. Ivan was fired but has not looked for work during the last two months. Who does the Bureau of Labor Statistics count as "unemployed"? a. Tatiana but not Ivan b. Ivan but not Tatiana c. both Ivan and Tatiana d. neither Ivan nor Tatiana

a

World Wide Delivery Service Corporation develops a way to speed up its deliveries and reduce its costs. We would expect that this would a. raise the demand for existing shares of the stock, causing the price to rise. b. decrease the demand for existing shares of the stock, causing the price to fall. c. raise the supply of the existing shares of stock, causing the price to rise. d. raise the supply of the existing shares of stock, causing the price to fall.

a

1. A national chain of grocery stores wants to finance the construction of several new stores. The firm has limited internal funds, so it likely will a. demand the required funds by buying bonds. b. demand the required funds by selling bonds. c. supply the required funds by buying bonds. d. supply the required funds by selling bonds.

b

1. The economy's two most important financial markets are a. the investment market and the saving market. b. the bond market and the stock market. c. banks and the stock market. d. financial markets and financial institutions.

b

In the late summer of 2005 some regions of the country were suffering from drought. What effect would we expect this to have on the stock of companies such as John Deere that manufacture farm equipment? a. raise the demand for existing shares of the stock, causing the price to rise b. decrease the demand for existing shares of the stock, causing the price to fall c. raise the supply of the existing shares of stock, causing the price to rise d. raise the supply of the existing shares of stock, causing the price to fall

b

Octavia does not currently have a job, but she has applied for several jobs in the previous week. Eve is an unpaid stay-at-home mom who has not searched for work in recent years. Who does the Bureau of Labor Statistics count as "out of the labor force"? a. Octavia but not Eve b. Eve but not Octavia c. both Octavia and Eve d. neither Octavia nor Eve

b

Over the past several decades in the United States, the labor-force participation rate of women has a. increased, and the labor-force participation rate of men has increased. b. increased, and the labor-force participation rate of men has decreased. c. decreased, and the labor-force participation rate of men has increased. d. decreased, and the labor-force participation rate of men has decreased.

b

Skyline Chili wants to finance the purchase of new equipment for its restaurants. The firm has limited internal funds, so Skyline likely will a. demand funds from the financial system by buying bonds. b. demand funds from the financial system by selling bonds. c. supply funds to the financial system by buying bonds. d. supply funds to the financial system by selling bonds.

b

Suppose that some country had an adult population of about 50 million, a labor-force participation rate of 60 percent, and an unemployment rate of 5 percent. How many people were employed? a. 1.5 million b. 28.5 million c. 30 million d. 47.5 million

b

Suppose that the adult population is 4 million, the number of unemployed is 0.25 million, and the labor-force participation rate is 75%. What is the unemployment rate? a. 6.25% b. 8.3% c. 9.1% d. 18.75%

b

To maintain their standard of living, most people rely on a. government assistance. b. their labor earnings. c. their personal savings. d. All of the above are correct.

b

All else equal, when people become more optimistic about a company's future, the a. supply of the stock and the price will both rise. b. supply of the stock and the price will both fall. c. demand for the stock and the price will both rise. d. demand for the stock and the price will both fall.

c

Anna recently graduated from college with a degree in electrical engineering, but she has not yet started working. To be counted as "unemployed" she a. does not have to have looked for work. b. must have looked for work no more than a week ago. c. must have looked for work no more than four weeks ago. d. must have looked for work no more than twelve weeks ago.

c

Duane owns his own real estate company. The Bureau of Labor Statistics counts Duane as a. unemployed and in the labor force. b. unemployed and not in the labor force. c. employed and in the labor force. d. employed and not in the labor force.

c

In 2002 mortgage rates fell and mortgage lending increased. Which of the following could explain both of these changes? a. The demand for loanable funds shifted rightward. b. The demand for loanable funds shifted leftward. c. The supply of loanable funds shifted rightward. d. The supply of loanable funds shifted leftward.

c

Jamarcus works part-time as a pizza delivery person in a college town. The Bureau of Labor Statistics counts Jamarcus as a. unemployed and in the labor force. b. unemployed and not in the labor force. c. employed and in the labor force. d. employed and not in the labor force.

c

Over the past several decades, the difference between the labor-force participation rates of men and women in the U.S. has a. gradually increased. b. remained constant. c. gradually decreased. d. been eliminated.

c

People who are unemployed because of job search are best classified as a. cyclically unemployed. b. structurally unemployed. c. frictionally unemployed. d. discouraged workers.

c

The Bureau of Labor Statistics counts discouraged workers as a. employed. Including them as employed makes the unemployment rate lower than otherwise. b. unemployed. Including them as unemployed makes the unemployment rate higher than otherwise. c. out of the labor force. If the were counted as unemployed the unemployment rate would be higher. d. None of the above is correct.

c

The deviation of unemployment from its natural rate is called a. the normal rate of unemployment. b. deviant unemployment. c. cyclical unemployment. d. fluctuating unemployment.

c

The prices of stock traded on exchanges are determined by a. the Corporate Stock Administration. b. the administrators of NASDAQ. c. the supply of, and demand for, the stock. d. All of the above are correct.

c

Which of the following could explain a decrease in the equilibrium interest rate and an increase in the equilibrium quantity of loanable funds? a. The demand for loanable funds shifted rightward. b. The demand for loanable funds shifted leftward. c. The supply of loanable funds shifted rightward. d. The supply of loanable funds shifted leftward.

c

Which of the following would necessarily increase the equilibrium interest rate? a. The demand for and the supply of loanable funds shift right. b. The demand for and the supply of loanable funds shift left. c. The demand for loanable funds shifts right and the supply of loanable funds shifts left. d. The demand for loanable funds shifts left and the supply of loanable funds shifts right.

c

Christopher is an unpaid, stay-at-home father who works as a volunteer at the local Habitat for Humanity chapter. Currently, Christopher is not looking for a paid job. The Bureau of Labor Statistics counts Christopher as a. unemployed and in the labor force. b. unemployed but not in the labor force. c. in the labor force but not unemployed. d. neither in the labor force nor unemployed

d

Discouraged workers are included in a. the number of unemployed. b. frictional unemployment. c. the labor force. d. None of the above is correct

d

In June 2009 the Bureau of Labor Statistics reported an adult population of 234.9 million, a labor force of 154 million and employment of 141.6 million. Based on these numbers the unemployment rate was a. 93.3/234.9. b. 12.4/234.9. c. 93.3/154. d. 12.4/154.

d

Suppose the government finds a major defect in one of a company's products and demands that the product be taken off the market. We would expect that the a. supply of existing shares of the stock and the price will both rise. b. supply of existing shares of the stock and the price will both fall. c. demand for existing shares of the stock and the price will both rise. d. demand for existing shares of the stock and the price will both fall.

d

Two of the economy's most important financial intermediaries are a. suppliers of funds and demanders of funds. b. banks and the bond market. c. the stock market and the bond market. d. banks and mutual funds.

d

Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills is called a. the natural rate of unemployment. b. cyclical unemployment. c. structural unemployment. d. frictional unemployment.

d

Which of the following could explain an increase in the equilibrium interest rate and a decrease in the equilibrium quantity of loanable funds? a. The demand for loanable funds shifted right. b. The demand for loanable funds shifted left. c. The supply of loanable funds shifted right. d. The supply of loanable funds shifted left.

d