Macroeconomics 202 UND Exam 2
People are considered employed if they are:
On strike, on vacation, are unpaid family workers
The World Bank defines extreme poverty as a person living on less than:
$1.25 per day.
Nominal GDP in 2006 was $13,458.2 billion. The GDP deflator uses 2000 as the base year. In 2006, the GDP deflator was 116.9. What was the real GDP for 2006?
$11,512.6 billion
What is your new salary if you earned $40,000 last year, the consumer price index went from 120 to 125, and your salary is adjusted by the rate of inflation annually?
$41,666.67
Last year, Megan's salary was $65,000. The consumer price index increased from 109 to 115. If Megan received a cost-of-living adjustment, what would her salary be?
$61,553
If the growth rate in an economy is 3.5%, then its GDP will double in about:
20 years.
If an economy's GDP will double in 15 years, then its growth rate must be about:
4.7%.
In Productovia, aggregate demand increases and aggregate supply decreases. Based on the shifts in these two curves, what is a likely outcome?
inflation
Generally, nations with the _________ economic freedom also have the _________ per capita GDP.
least; lowest
One reason the amount of real output demanded declines when the aggregate price level rises is the resulting reduction in household wealth, called the:
wealth effect.
Which of the following would NOT affect (shift) the short-run aggregate supply curve?
an increase in the price level
The collapse of home values that began in 2008 led to ____ in Americans' saving rates, shifting aggregate demand to the ____.
an increase; left
Which of the following does NOT increase productivity?
an increased money supply
From 1999 to 2002, the Japanese inflation rates were, respectively, -0.3%, -0.6%, -0.7%, and -0.7%. During this time, the Japanese economy underwent:
deflation.
If the cost of a typical market basket in 2019 is 400 and the cost of a typical market basket in 2020 is 390, then during this period the economy is undergoing:
deflation.
Inflation has significant long-run effects on the economy because:
it distorts the price signal and produces incentives for speculation.
In the absence of copyright and patent laws:
it is difficult for innovators to profit from their efforts.
The costs of cyclical unemployment can be minimized by:
keeping the economy on a steady, low-inflationary growth path.
The proportion of additional income that consumers spend is known as the:
marginal propensity to consume.
Human capital refers to:
skills, knowledge, and quality of workers.
Increases in ___________ often lead to economic growth.
technology
What would cause the price level to decrease and employment to increase?
a shift to the right of the SRAS curve
The natural gas deposits found in the United States over the past decade are an example of an increase in:
land and natural resources.
For which growth rate would the Rule of 70 be most accurate?
15%
The Potbelly Pothole Company is undertaking some investment in its plant. Suppose interest rates fall and new technologies increase the return on its investment. What is likely to happen?
The company's demand for investment will rise.
What would cause the price level to rise and employment to increase?
a shift to the right of the aggregate demand curve
The drop in aggregate demand that occurred during the Great Depression caused a drop in real GDP:
and deflation.
The GDP deflator shows that since the mid-1980s, the U.S. economy has had:
disinflation.
The nonaccelerating inflation rate of unemployment is the unemployment rate associated with ____ inflation and ____ unemployment:
low; low
Since the invention of automatic teller machines, many bank tellers have lost their job. This is an example of ______ unemployment.
structural
GDP is $10 trillion in 2001. The GDP deflator is 100 in 2000 and is 110 in 2001. What is real GDP?
9.09 trillion
Which of the following statements regarding the types of unemployment is TRUE?
Frictional unemployment is generally short-term, whereas structural unemployment is often long-term.
Suppose a booming stock market encourages consumption spending to rise dramatically. What would be the most likely long-run impact?
GDP first rises, and then falls back to long-run equilibrium.
Which of the following is NOT generally considered a problem with using the consumer price index to measure consumer prices?
Many federal benefits and income tax rates are indexed to the consumer price index.
During periods of inflation, which of the following events does NOT occur?
People on a fixed income have increased standards of living.
Which of the following statements about the role of social media in promoting economic growth is FALSE?
The advent of social media raised costs for firms, which now must invest in Web pages and information gathering technology to stay competitive.
Which of the following would NOT cause a shift in the aggregate demand curve?
a change in the price level
The current consumer price index is:
a cost-of-goods index.
The collapse of home values that began in 2008 led to ____ in Americans' consumption and _____ in their saving rates.
a decrease; an increase
According to Keynes, what determines the level of employment and income?
aggregate expenditures
Which of the following will shift the short-run aggregate supply curve to the right?
an increase in immigration from other countries
Developing countries can achieve higher productivity per unit of capital because they can use technologies developed by other countries. This is known as the:
catch-up effect.
The 1973 oil shocks created:
cost-push inflation.
The mortgage crisis caused a lot of consumers to stop spending money. The decrease in spending led to a decrease in production. Which type of unemployment resulted?
cyclical
Decreasing the accessibility to college in order to funnel workers into the workforce faster will:
decrease productivity of the economy.
Suppose energy prices spike. In the short run, output will ____; in the long run, output will _____from its starting point.
decrease; remain unchanged
Which of the following is NOT a source of productivity growth?
decreasing the capital-to-labor ratio
Other things equal, if a recession gets worse, the number of discouraged workers __________, and the number of those in the labor force
increases; decreases
To have long-term economic growth, the production function suggests:
increasing the availability of technology, capital, and labor.
If actual unemployment is at its natural rate:
inflation is very low.
Cost-push inflation occurs because of a shift to the:
left of the short-run aggregate supply curve.
Developed nations tend to have:
limited labor supplies but lots of capital.
The catch-up effect tends to:
low down over time.
Which of the following technologies most strongly affected the growth in U.S. productivity in recent decades?
microcomputers
Most economists believe that the consumer price index ______ the rate of inflation.
overstates
When Main Street Bank buys new automatic teller machines, the quantity of _____ in the economy increases.
physical capital
Which of the following items is NOT an example of investment in human capital?
policy of universal education
The relationship between economic freedom and per capita GDP is:
positive.
The aggregate demand curve displays:
real GDP demanded at various price levels.
If oil prices decrease, the short-run aggregate supply curve shifts _____ and output supplied will be _____.
right; increased
Other things equal, when the U.S. aggregate price level falls, U.S. exports _______ and U.S. imports _
rise; fall
Cost-push inflation occurs when:
rising resource costs reduce short-run aggregate supply.
The aggregate demand curve:
shows the amount of real GDP that will be demanded at each possible price level.
A production function:
shows the output that is produced using different combinations of inputs combined with existing technology.
In the United States, our principal measure of inflation is:
the consumer price index.
The actual price level is determined by:
the intersection of short-run aggregate supply and demand.
The idea that new spending creates more new spending is known as:
the multiplier effect.
A change in _____ will cause a change in the quantity demanded of real GDP.
the price level
On-the-job training can lead to an increase in:
the quality of the labor force.
There are 15 million people living in Marketstan, of whom 9 million are working and 1 million are actively looking for work. What is the size of Marketstan's labor force?
10 million
If the nominal GDP is $13 trillion for a given year and the GDP deflator for that year is 115, then the real GDP is:
13 Trillion
If the market power of firms increases, what happens in the AD/AS model?
Aggregate supply shifts left.
Retirees and creditors:
Are hurt by inflation because their purchasing power drops.
Measuring changes in a fixed basket of goods to asses changes in price is a ________ method
Cost of goods index
_____ occurs when a negative supply shock hits the economy, shifting the short-run aggregate supply curve leftward.
Cost-push inflation
Lexie works Monday to Friday from 4 P.M. to 6 P.M. in the after-school program at a local elementary school. She began looking for a full-time job last week and has already scheduled three job interviews. According to the Bureau of Labor Statistics, Lexie is:
Employed
_____ unemployment includes workers who voluntarily quit their jobs to search for better positions.
Frictional
Which statement about long-run economic growth is TRUE?
It is likely to occur when the capacity to produce goods and services increases.
Improvements in production capacity will:
Shift the PPF outward.
Which is NOT an example of infrastructure?
Walmart stores
Whispering Valley Furniture employs five workers working eight hours each to produce 80 rocking chairs. Rocky Gap Furniture employs 10 workers working eight hours each to produce 100 rocking chairs. Which company's workers are more productive?
Whispering Valley Furniture's workers are more productive.
Infrastructure is:
a country's public capital.
The key to being counted as unemployed by the Bureau of Labor Statistics is to be:
actively seeking work.
Increases in ___________ often lead to economic growth.
capital
The more time a free market economy has to adjust to price changes, the:
closer GDP gets to the natural rate of output.
In the United States, the Census Bureau computes the unemployment rate from:
data on applications for unemployment compensation.
The government decides to subsidize the development of a new communications network. It is acting in its role to promote economic growth by:
enhancing physical and human capital.
In the Keynesian model, the price level is ___________; in the aggregate demand and supply model, the price level is _
fixed; flexible
Which is NOT consistent with the level of output in the long run?
high inflation
If a country has a low capital-to-labor ratio, then it tends to have:
high labor productivity but low wages.
The higher the productivity of a nation, the:
higher is its standard of living.
Which of the following factors is NOT a component of aggregate demand?
income
When the price of a given product declines, the consumer's spendable income rises because it takes less income to purchase the same quantity. This is called the:
income effect.
Dave brags to his dad that his $45,000 starting salary as a computer programmer is much higher than his dad's $28,000 starting salary some years ago. If the consumer price index the year Dave begins work is 180.5 and the year his dad started work it was 110.8, Dave is:
mistaken. Adjusting for price changes, his salary is less than his dad's salary.
Which of the following is NOT a factor in the production function?
money
Jordan Meadows lost his job as an airline pilot and has not been able to find another job as a pilot. Since he is old enough to be eligible for his pension, he decides to retire and devote himself to caring for his elderly parents, According to the Bureau of Labor Statistics, Jordan is:
not in the labor force.