Macroeconomics exam2

In 2012, the group with the LOWEST unemployment rate in the United States was:

college graduates and higher.

Inflation is a:

general rise in prices.

The catch-up effect tends to:

slow down over time.

The study of macroeconomics as a specific discipline is due primarily to:

John Maynard Keynes.

The World Bank defines extreme poverty as a person living on less than:

$1.25 per day

Table) According to the table, GDP for 2010 was:

$15,603.1 billion '

GDP can be found either by adding up all of the __________ or all of the __________ in the economy.

spending; income

Which of the following is an example of an economic investment?

building a new sales force training facility

The inflation rate is 4%. Social Security payments automatically rise 4%. This adjustment is authorized by an

c) escalator clause.

If technology is held constant, an increase in capital concurrent with a decrease in labor input causes output to:

c) rise, fall, or stay the same.

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

Everything else the same, if investment expenditures rise by $300 billion and imports increase by $300 billion, then GDP:

does not change.

Frictional unemployment occurs when job openings:

exist, and people are willing to take them, but it takes some time to bring the two together.

One way a stable financial system supports economic growth is that it:

facilitates the movement of capital from savings to investment.

Infrastructure is defined as a country's:

public capital

Janet is receiving a 5% pay raise. If the rate of inflation is 2%, then Janet's purchasing power is:

rising

What is the primary explanation for the rapid growth of the U.S. economy over the last century?

technological progress

What event was a major influence on the development of macroeconomics?

the Great Depression

In general, the higher the capital-to-labor ratio:

the higher the wages.

Which is NOT a main use of the national income and product accounts?

to support the macroeconomic theory of the political party in power

Which is NOT a characteristic of a stable financial system?

unanticipated high inflation

One reasonably objective measure for infrastructure is the Index of Economic Freedom, which incorporates information about freedoms in _____ categories.

10

If the actual growth rate of U.S. GDP was 1.25% from the first quarter to the second quarter, the Bureau of Economic Analysis would report the annualized rate as:

5%

Most of the recessions of the past half century have lasted between:

6 and 18 months.

Which of the following is TRUE about business cycles?

Every cycle is unique.

The event that stimulated the U.S. government's commitment to tracking the economy's health through a national income accounting system was the:

Great Depression

Because of the work of _____ during the late 18th and early 19th centuries, economics became known as the dismal science

Thomas Malthus

The historical evidence shows that:

a country's degree of freedom is related to the level of economic growth.

The National Activity Index:

a weighted average of 85 indicators of economic activity

Which of the following statements about the role of social media in promoting economic growth is FALSE?

a) The advent of social media raised costs for firms, which now must invest in Web pages and information gathering technology to stay competitive.

Retirees and creditors:

are hurt by inflation because their purchasing power is reduced

All of the following are true for inflation EXCEPT that:

creditors do not receive the full amount of the loan because the principle and interest rates are fixed

Which of the following terms describes a situation in which there is a reduction in the rate of inflation from 4% to 3% per year?

disinflation

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

homeowners with fixed-rate mortgages

Which component is the smallest part of U.S. GDP?

net exports

The unemployment rate is defined as the ________ divided by the ________.

number of unemployed/number in the labor force

During the 1970s, when handheld calculators became popular and replaced slide rules in performing computations, workers in the slide rule industry lost their jobs. These workers' unemployment status is:

structural

Saved If a product becomes obsolete and the workers who produced that product will need additional training to find new jobs, then they are experiencing:

structural unemployment

A benefit of using GDP per capita instead of GDP is that it:

takes into account the size of the population when measuring the value of the goods and services a country produces.

Which of the following is a problem in measuring consumer prices?

All

The natural rate of unemployment:

All correct

In the national income and product accounts system the two main approaches to measuring the size of the economy are

income and expenditures

In the national income and product accounts system the two main approaches to measuring the size of the economy are:

income and expenditures.

In the simple circular flow model:

income is equal to spending.

Other things equal, if a recession gets worse, the number of discouraged workers __________, and the number of those in the labor force _____________.

increases, decreases

Protection of property rights is:

independent of a stable legal system

Most economists believe that the consumer price index ______ the rate of inflation.

overstates

n the national income accounts, which of the following is NOT classified as government spending?

payments to Social Security recipients

Roughly half of unemployment normally consists of:

people who lost their job

The relationship between economic freedom and per capita GDP is:

positive

When an economy is going through disinflation:

prices are rising at a slowing pace.