macro exam 2

people who are not currently employed, but say they want a job, are counted as unemployed only if they.. have previously held a job are actively seeking employment are willing to accept a reasonable offer are between 16 and 65 years of age are willing to accept any offer of employment

are actively seeking employment

Inflation increases purchasing power because wages typically rise with the prices of goods. True False

false

Economic growth is normally measured by the growth in a country's: labor force. physical capital. real GDP. net exports.

real GDP

When a recession ends, _____ participants in an economy feel a recovery is in place. some wealthy all no

some

An economy with extensive natural resources that are easy to exploit and are marketable has an asset that is useful in achieving higher rates of growth. True False

true

To be considered unemployed, one must not be working and must have actively looked for work in the past 4 weeks. This definition _____ the unemployment rate. overstates understates exaggerates accurately captures

understates

Determine if the people in the example have benefited - i.e., are winners - or have been harmed - i.e., are losers - by unexpected inflation. -The United States federal government, which had almost $15 trillion in debt in 2011

winner

Suppose you received a 3 percent increase in your nominal wage. Over the year, inflation ran about 6 percent. Which of the following is true? your nominal wage fell although your nominal wage fell, your real wage increased your real wage fell both nominal and real wage decreased both nominal and real wages increased

your real wage fell

Use the information, calculate the Consumer Price Index (CPI) in the current year. Place your answer in the space provided. Product. Quantity in market basket. Price in base year Price in current year Bread. 10 $1.00 $1.50 Milk 5 $1.00 $2.00 Gum 50 $0.20 $0.50

CPI=200

which of the following people would count as unemployed? a retired naval officer a full time student in high school a father of preschool children who does not want to work an inner city teenager who has given up looking for work after a year of trying a downhill ski instructor who looks for work during the summer

a downhill ski instructor who looks for work during the summer

What items are included in the calculation of GDP using the income approach? -employee compensation, gross private domestic investment, government spending, and net exports. -employee compensation, proprietors' income, corporate profits, rental income, and net interest. -profits, personal consumption expenditures, domestic investment, and government purchases. -personal consumption expenditures, gross private domestic investment, government purchases, and net exports.

employee compensation, proprietors' income, corporate profits, rental income, and net interest.

As economies grow in size, it is easier to grow at a high rate. True False

false

Classify each example as either relating to human capital, physical capital, or technology. more people graduate from culinary school

human capital

Classify each example as either relating to human capital, physical capital, or technology. the number of college graduates increases

human capital

In the absence of copyright and patent laws: the quality of goods and services consumed by purchasers improves. innovators can invent more,because they don't have to spend resources navigating the legal system it is difficult for innovators to profit from their efforts the profits of writors and inventors rise

it is difficult for innovators to profit from their efforts

Bill Loney does not have a job nor does he intend to look for one. -employed -unemployed -out of the labor force

out of the labor forcee

Select the best definition of labor productivity Output per worker and output per capita Ouput per worker and capital per worker Output per capita Capital per worker Output per worker

output per worker

A good measure of a country's standard of living is _____: per‑capita GDP. total employment. net exports. total GDP.

per‑capita GDP

Gross Domestic Product includes final goods and services, but not intermediate goods because intermediate goods are not part of investment spending. the value of the intermediate goods is already included in the value of the final goods the value of the intermediate goods is already included as inventory investment intermediate goods are only produced by government intermediate goods are not current production

the value of the intermediate goods is already included in the value of the final goods

What is the single most important factor influencing economic growth for an economy? government regulation of big businesses reducing the capital-to-labor ratio increased productivity population growth

increased productivity

which of the following is NOT a factor in production function? labor technology money capital

money

country a(GDP= 1.5 trillion) population=100 million country b(GDP=5 trillion) population= 400 million What is the GDP per capita for Country B?

$12500

2002 apple quantity=150 banana quantity=30 apple price=$0.80 banana price=$1.00 using exhibit one, what is the real GDP in 2001 using 2002 prices?

$130

country a(GDP= 1.5 trillion) population=100 million country b(GDP=5 trillion) population= 400 million What is the GDP per capita for Country A?

$15000

2001 apple quantity=100 banana quantity=50 apple price=$1.00 banana price=$1.50 using exhibit one what is the nominal GDP in 2001?

$175

Given the following hypothetical data where C = $3,000; I = $1,200; G = $2,000; X − M = −$500; depreciation = $200; transfer payments = $800, net domestic product is _____. $5700 $6900 $6400 $5500 $6200

$5500

A wholesale nursery purchases six dozen gladiolus bulbs for $5. The nursery sells the six dozen resulting flowers to a wholesale florist for $10. The wholesale florist delivers the flowers to a retail florist for $15. The flowers are sold by the retail florist for $75 to the bereaved Jones family to use at great-grandfather Jones's wake. What is the value added by the retail florist? $10 $15 $25 $60 $75

$60

Suppose that the GDP of California increases by 6.0% each year. How long will it take for the GDP of California to double? Round your answer to one digit after the decimal. duration for California's GDP to double:

11.7 years

Consider the information about the economy of Pakistan. Note that the currency of Pakistan is the rupee. The government purchases: 3.00trillions of rupees. Individuals consume: 9.80 trillions of rupees. Individuals save: 5.29trillions of rupees. Businesses invest: 1.60 trillions of rupees. Foreigners spend: 0.65 trillions of rupees to purchase Pakistani firms. Pakistan imports: 2.31rillions of rupees. Pakistan exports: 1.26 trillions of rupees. Calculate Pakistan's GDP. Assume that the values are all current and no conversions need to be made. Give your answer in terms of trillions of rupees, and round to two decimals.

13.35 trillion

if the growth rate in an economy is 3.5%, then its GDP will double in about: 3.5 years 20 years 70 years 245 years

20 years

After a financial crisis hits the country of Arcadia, 9 million people become unemployed. If 35 million individuals are lucky enough to keep their jobs, what is the unemployment rate? Please specify your answer to two decimal places. what is the unemployment rate?

20.45%

If the CPI is 200 one year and 206 the next year, the annual rate of inflation as measured by the CPI is approximately 103 percent 1 percent 3 percent 6 percent 206 percent

3 percent

Suppose that the GDP of Oregon today is exactly twice what it was 22 years ago. What was the average annual growth for Oregon over this time period? Round your answer to one digit after the decimal. average annual growth for Oregon:

3.2% each year

if the inflation rate is 4 percent and the nominal interest rate is 9 percent, the real interest rate is.... 13 percent -5 percent -13 percent 9 percent 5 percent

5 percent

Assuming the total population is 150 million, the labor force is 100 million, and 94 million workers are employed, the unemployment rate is: 4 percent 8 percent 6 percent 10 percent 15 percent

6 percent

Consider an economy made up of 100 people, 50 of whom hold jobs, 10 of whom are looking for work, and 15 of whom are retired. The labor force participation rate is... 100 percent 60 percent 50 percent 40 percent 10 percent

60 percent

Last year, the consumer price index was 115 while the consumer price index for this year is 125. The rate of inflation is 9.2%. 8.7%. 10.8%. 8%.

8.7%

Which of the statements is the best description of inflation? -An increase in the overall price level has occurred. -The price of all goods and services have increased proportionately. -Real GDP is rising. -The price of all goods and services in the economy are increasing. -The prices of only consumer goods are increasing.

An increase in the overall price level has occurred

country a(GDP= 1.5 trillion) population=100 million country b(GDP=5 trillion) population= 400 million Which country has the largest average GDP per capita? Country A Country B

Country A

Net domestic product measures -GDP minus depreciation. -GDP plus income payments from the rest of the world minus income payments to the rest of the world. -national income plus income payments from the rest of the world minus income payments to the rest of the world. -C + I + G + (X - M).

GDP minus depreciation

Use the following data to calculate GDP: consumption = $2,000; gross investment = $600; government purchases = $500; net exports = -$40; transfer payments = $340 .GDP = $2,720 GDP = $3,060 GDP = $3,140 GDP = $3,400 GDP cannot be determined due to insufficient data

GDP=$3060

Honda's assembly and sale of cars in the U.S. -Included in U.S. GDP -Not included in U.S. GDP

Included in U.S. GDP

Old Navy purchases mannequins to display clothes -Included in U.S. GDP -Not included in U.S. GDP

Included in U.S. GDP

What is the difference between real and nominal gross domestic product (GDP)? -Nominal GDP is measured in dollars, whereas real GDP is measured in terms of some consumption commodity, such as tons of coal, available in the economy right now. -Nominal GDP is measured in dollars, whereas real GDP is a comparison to all other nation's production. -Nominal GDP is another name of net domestic product, or NDP. -Nominal GDP for a given year is measured in dollars of that year, whereas real GDP is measured in dollars of some base year. -There is no difference between real and nominal GDP. Real GDP measures the expenditure of a nation, whereas nominal GDP measures the income accounts that make up those expenditure measures.

Nominal GDP for a given year is measured in dollars of that year, whereas real GDP is measured in dollars of some base year.

Using the Rule of 70, if Slowland's GDP grows at 2% per year and Speedyland's GDP grows at 5% per year, how much quicker will Speedyland double its GDP compared to Slowland? Speedyland will double its GDP 3 years quicker than Slowland. Speedyland will double its GDP 21 years quicker than Slowland. Speedyland will double its GDP 14 years quicker than Slowland. Speedyland will double its GDP 35 years quicker than Slowland.

Speedyland will double its GDP 21 years quicker than Slowland

A frequently used measure of inflation is the: consumer price index. federal funds rate. purchasing managers' index. marginal tax rate.

consumer price index

Which item is NOT an example of investment in human capital? on-the-job training policy of universal education acquisition of obsolete skills apprenticeship

acquisition of obsolete skills

Which of the statements is the best description of a business cycle? -a calendar year divided into four quarters, each containing three months -the relationship between the returns on Treasury securities and the time to maturity -the time it takes a firm to convert raw materials into a final good or service -alternating periods of increasing and decreasing economic output

alternating periods of increasing and decreasing economic output

The benefits of economic growth in a country include a(n): reduction in the life expectancy of the country's population. increase in the birth rate in the country. better standard of living for the country's citizens. decrease in the foreign investment to the country.

better standard of living for the country's citizens

Cyclical unemployment occurs when: employees voluntarily leave a job to seek a better one. technological developments superannuate the products of certain companies, causing the firms to fail. employees voluntarily take time off between jobs. demand is insufficient to keep businesses fully operating.

demand is insufficient to keep businesses fully operating

Anna Conda is currently on a hiking vacation in the Amazon jungle from her part‑time job as a herpetologist at the San Diego Zoo. -employed -unemployed -out of the labor force

employed

Net exports equal -all of the goods and services produced minus exports. -exports minus imports. -all of the goods and services produced plus imports. -exports plus imports.

exports minus imports

Goods and services such as _____ are included in the calculation of GDP. final goods raw materials used goods intermediate goods

final goods

Which action would reduce frictional unemployment? holding job fairs retraining workers subsidizing obsolete technologies taming the business cycle

holding job fairs

Classify each example as either relating to human capital, physical capital, or technology. a doctor's knowledge about a new cancer treatment

human capital

inflation can be caused by increases in aggregate demand only increases in aggregate supply only decreases in aggregate supply only increases in aggregate supply or decreases in aggregate demand increases in aggregate demand or decreases in aggregate supply

increases in aggregate demand or decreases in aggregate supply

All of these are considered sources of long-run growth EXCEPT increases in demand. increases in productivity. increases in capital. improvements in technology.

increases in demand

Investment in human capital is important because it is required by employees. improves morale. lowers the total wage bill. increases labor productivity.

increases labor productivity

Economic growth allows countries to: enhance the country's reputation as a good place to live. provide citizens with less need to work as wealth is redistributed. reduce their reliance on good education due to growth in wealth. invest for the future, providing the basis for additional growth.

invest for the future, providing the basis for additional growth

Determine if the people in the example have benefited - i.e., are winners - or have been harmed - i.e., are losers - by unexpected inflation Third National, a bank that loaned many people money for home purchases

loser

physical capital includes the ability to take physical resources and use them in creative ways to produce goods and services. the talents of people land and raw resources that come from land manufactured products that are used to produce other goods and services.

manufactured products that are used to produce other goods and services.

The goals of macroeconomic policy are to: -eliminate short-term fluctuations in the economy and sustain high economic growth. -minimize the effects of recessions and ensure that the economy grows over time. -ensure that the economy doesn't become depressed and wages remain high. -increase employment and grow incomes.

minimize the effects of recessions and ensure that the economy grows over time

The rule of 70 estimates the: number of years it takes a value to double given a variable growth rate. number of years it takes a value to double given a consistent growth rate. number of years it takes a value to triple given a variable growth rate. number of years it takes a value to triple given a consistent growth rate.

number of years it takes a value to double given a consistent growth rate.

Brighton Early is a student. He has no job outside of the home but spends five hours each week mowing the lawn and maintaining his yard. He is happy with his situation and is not looking for more work. -employed -unemployed -out of the labor force

out of the labor force

The _____ of a business cycle occurs when economic output begins to grow after the trough. peak recovery recession depression

recovery

which of the following transactions is not included in the GDP? someone sells drugs in a vacant lot someone sells drugs in a pharmacy a doctor treats a patient for drug addiction a drug addicts spends two months in a drug rehabilitation center the drug addict buys cough medicine

someone sells drugs in a vacant lot

Anna Prentice has worked for years fixing broken typewriters. She is laid off from her job as fewer and fewer people use typewriters. She is looking for work but cannot find a job in her area of specialty. Which term describes Anna's type of unemployment? -structural -cyclical -frictional

structual

frictional unemployment refers to the unemployment that results from a mismatch of skills being in the wrong geographical location taking the time to find the best job seasonal decreases in demand for labor a recession in the economy

taking the time to find the best job

GDP (gross domestic product) is the: -sum of all manufacturing activity and personal consumption taking place in a given year. -market value of all domestic production and total employee earnings for a given year. -total market value of all final goods and services produced in the economy in a given year. -total market value of all nongovernmental goods and services produced in the economy in a given year.

total market value of all final goods and services produced in the economy in a given year

Bonnie Ann Clyde has not had any work at all for six months despite the fact that she has been filling out at least eight job applications each day. -employed -unemployed -out of the labor force

unemployed

If the village of Happyville has 150 residents, of which 50 are children or senior citizens, 95 are working, and 5 are actively seeking work, the unemployment rate is: 5%. 3.3%. 33.3%. 36.7%.

5%

GM's assembly and sale of cars in Mexico -Included in U.S. GDP -Not included in U.S. GDP

Not included in U.S. GDP

Ocean Spray purchases plastic to make bottles -Included in U.S. GDP -Not included in U.S. GDP

Not included in U.S. GDP

resale of used textbooks to college students -Included in U.S. GDP -Not included in U.S. GDP

Not included in U.S. GDP

sale of wheat to Mrs. Baird's Bakery -Included in U.S. GDP -Not included in U.S. GDP

Not included in U.S. GDP

Which of the following is the best example of an investment as defined by economists? a households purchase of 100 shares of apple computer stock a firm's purchase of 100 shares of General Electric stock a firm's purchase of a bond issued by General Mills a firm's purchase of a U.S. savings bond a firm buying personal computers for its secretarial staff

a firm buying personal computers for its secretarial staff

cyclical unemployment results from a mismatch of skills being in the wrong geographical location taking the time to find the best job seasonal decreases in demand for labor a recession in the economy

a recession in the economy

The catch-up effect, which explains why developing economies can grow faster than developed economies, is based on the fact that: -birth rates are higher in developing countries and thus the labor force is also larger than in developed countries. -stock of physical capital is higher in developing countries in comparison to developed countries. -adoption of existing technologies can have a dramatic effect in accelerating in less developed economies; on the other hand, more advanced economies have already realized the benefits of these technologies. -developing countries tend to have a more stable ruling government than developed countries and this helps the former to sustain growth in the long run.

adoption of existing technologies can have a dramatic effect in accelerating in less developed economies; on the other hand, more advanced economies have already realized the benefits of these technologies

Brock Lee used to work at Munch n' Munchies Restaurant serving fun family fare. Business at Munch n' Munchies has been slow because the major employer in town has laid off a large number of people. There simply was not enough work to keep Brock Lee on the payroll at Munch n' Munchies. Which term describes Brock's type of unemployment? -structural -cyclical -frictional

cyclical

Which type of unemployment do policy makers seek to control? cyclical structural seasonal frictional

cyclical

The Rule of 70 measures how long it takes for a value to triple. True False

false

Beau Tye decides to quit his job as a waiter in Pensacola, Florida, in order to pursue his dream of becoming an actor in Hollywood. Acting jobs exist, but he has not yet found one. Which term describes Beau's type of unemployment? -structural -cyclical -frictional

frictional

Your cousin recently graduated from Harvard Law School and has not found a job after looking for one last week. She can be described as structurally unemployed seasonably unemployed not part of the labor force frictionally unemployed a discouraged worker

frictionally unemployed

Inflation is a(n): increase in output. general rise in prices. increase in total economic activity. rise in productivity.

general rise in prices

For a good or service to be counted in a given year's gross domestic product (GDP), what four criteria must be met? -have a market value, be a final good or service, be produced within a given country, and be produced independent of any set time frame -have a market value, be a final good or service, be produced within a given country, and be produced within a certain time frame -have a market value, be a final good or service, be produced within a given country or in another country with whom they have established trade relations, and be produced within a certain time frame -have a market value, be an intermediate or final good or service, be produced within a given country, and be produced within a certain time frame

have a market value, be a final good or service, be produced within a given country, and be produced within a certain time frame

Classify each example as either relating to human capital, physical capital, or technology. adult literacy increases

human capital

If the CPI this year is 162 and last year it was 170, what do we know about the inflation rate this year? It is positive. It is negative. It has decreased since last year. It has increased since last year. It is the same as last year.

it is negative

Improvements in factors of production can lead countries to attain a higher rate of economic growth. Such factors include: land, capital, labor, and the government. land, labor, capital, and entrepreneurship. labor, capital, defense services, and entrepreneurship. natural resources, defense services, government, and entrepreneurship.

land, labor, capital, and entrepreneurship

Determine if the people in the example have benefited - i.e., are winners - or have been harmed - i.e., are losers - by unexpected inflation Herb, who keeps his savings in an old coffee can

loser

Determine if the people in the example have benefited - i.e., are winners - or have been harmed - i.e., are losers - by unexpected inflation Karen, a retired school teacher who relies upon her fixed pension to pay for her expenses

loser

An example of frictional unemployment is: part-time workers seeking full-time employment. postal employees losing their job because email has replaced snail mail. new graduates looking for a job but not yet finding work. employees losing their job because of a recession that causes a decline in demand for the product their company produces.

new graduates looking for a job but not yet finding work

A production function shows the -most desired production method for a given level of output. -output that is most highly valued by consumers. -output that is produced using different combinations of technology combined with existing inputs. -output that is produced using different combinations of inputs combined with existing technology.

output that is produced using different combinations of inputs combined with existing technology

Which of the following would be included in GDP? payment of the monthly telephone bill by Mr. Laconic the purchase of corporate stock by Steven Jones the purchase of a used limousine by Harold Abel the value of a pair of mittens your mother knitted for you the $300 George saved because he painted his own garage

payment of the monthly telephone bill by Mr. Laconic

The components of the business cycle are: peak, trough, bottom, and height. start, end, beginning, and middle. consumption, investment, government expenditures, and net exports. peak, recession, trough, and recovery.

peak, recession, trough, and recovery

The components of GDP as measured by the expenditures approach are: -employee compensation, gross private domestic investment, government spending, and net exports. -employee compensation, proprietors' income, corporate profits, rental income, and net interest. -profits, personal consumption expenditures, domestic investment, and government purchases. -personal consumption expenditures, gross private domestic investment, government purchases, and net exports.

personal consumption expenditures, gross private domestic investment, government purchases, and net exports.

Classify each example as either relating to human capital, physical capital, or technology. company cars

physical capital

Classify each example as either relating to human capital, physical capital, or technology. company computers

physical capital

Over time, small differences in economic growth can lead to large differences in wealth because of the: power of compounding. power of linear growth. rule of 70. differences in the value of currency among different nations.

power of compounding

Inflation is considered a tax on savings. This is because the: government increases taxes on savings when inflation is high. growth in savings increases when inflation is present. purchasing power of savings declines as inflation rises. number of savings instruments declines as inflation increases.

purchasing power of savings declines as inflation rises

economic growth is most commonly measured by GDP GDP per capita Genuine progress indicator per capita real GDP per capita

real GDP per capita

Classify each example as either relating to human capital, physical capital, or technology. a new cancer treatment

technology capital

Classify each example as either relating to human capital, physical capital, or technology. new distribution techniques

technology capital

A recession occurs when: the total level of economic output falls for several months. unemployment increases. incomes are increasing. manufacturing output declines.

the total level of economic output falls for several months

Inflation and unemployment are sometimes called the twin evils of the macroeconomy. True False

true

Structural unemployment would result from a furniture manufacturer closing a U.S. plant to make its products in China. True False

true

Determine if the people in the example have benefited - i.e., are winners - or have been harmed - i.e., are losers - by unexpected inflation Joy, who borrowed $40,000 to pay for her college education

winner