Macroeconomics Exam 1 Answers

Suppose the town of Treeville has a population of 200, of which 120 are in the labor force. Of those in the labor force, 100 are employed and 20 are unemployed. The unemployment rate in Treeville is ____

17%

A guitar is produced in California using 100$ in raw materials and sells for 300$ in a guitar shop. Each guitar that is produced contributes ___ to U.S. GDP

300$

If frictional unemployment is 2%, structural unemployment is 3%, and cyclical unemployment is 4%, the natural rate of unemployment is:

5%

If the price is index is 200, how much did a 12$ pizza (today) cost in the base year?

6.00$

A business cycle recovery that doesn't reach its long-term trend can lead to:

A double-dip recession

Which type of unemployment do economists attempt to resolve using economic policy?

Cyclical unemployment

When the increase in prices goes from 5% to 2%, this is referred to as:

Disinflation

Which of the following persons is considered unemployed?

Emily has not worked for two months, but still applies for jobs every week

If Chuck gets laid off from a high paying job and temporarily works as an Uber driver, he is considered

Employed

Which of the following is true about hyperinflation

Financial assets in a hyperinflated currency quickly become worthless

Which of the following groups benefits from an unanticipated rise in the inflation rate?

Homeowners with fixed-rate mortgages

If a country experiences a rise in prices but produces the same quantity of output as in the previous year, its nominal GDP will ___ and its real GDP will ____

Increase; be unchanged

Which of the following is not true regarding the informal economy?

Informal market activities do not contribute to the standard of living of citizens

Which statement about chained consumer price index for urban consumers (C-CPI-U) is TRUE?

It does a better job in approximating a cost-of-living index than the CPI

What information does the National Bureau of Economic Research use to declare that a recession has begun?

It focuses on turning points in key economic indicators

Which of the following persons is considered part of the labor force?

Joe, a senior in high school who works part-time on weekends at the ice cream shop

What component of U.S. GDP is usually negative in boom years?

Net Exports

GNP includes output produced ____ but it does not include output produced ____

Outside the United States by U.S. citizens; inside the United States by foreign citizens

To avoid double-counting output in GDP measures, ___are excluded in GDP

Raw Materials

Frictional unemployment is:

Short-term unemployment associated with people who are switching jobs

Janessa was laid off as a photo lab technician because of the lack of customers. She then found a job at a movie rental store, but was again laid off one month later when the store shut down. Janessa's bad luck staying employed is most likely due to:

Structural Unemployment

Which of the following would be an example of a nonmarket activity?

Taking care of one's elderly parents in one's own home

Which of the following events has significantly influenced the development of macroeconomic ideas?

The Great Depression

Which of the following would not be included in official GDP measures?

The lost wages from taking time off work due to bad air pollution

To solve the double counting problem, economists include only final goods and services in the summing of gross domestic product

True