ECN 202: Midterm Exam
Suppose GDP per capita of Chile increased by 4% between 2012-2013 and the GDP number equals to 12,000 in 2013. What is the GDP per capita in Chile in 2012? a) 11538.46 b) 10879.89 c) 13987.42 d) 14763.22
a) 11538.46
If nominal GDP in 2001 is $18 trillion and real GDP is $15 trillion, the GDP deflator in 2001 is... a) 120 b) 110 c) 100 d) 150
a) 120
Labor force participation rate --> 75% Total population 16 years of age and older --> 200 million Unemployment rate --> 10% What is the total number of people employed? a) 135 million b) 180 million c) 153 million d) 117 million
a) 135 million
Labor force participation rate --> 75% Total population 16 years of age and older --> 200 million Unemployment rate --> 10% What is the total number of people unemployed? a) 15 million b) 17 million c) 13 million d) 20 million
a) 15 million
According to the data, Chinese nominal GDP becomes larger than US nominal GDP approximately in.... a) 2018 b) 2030 c) 1995 d) 2005
a) 2018
If real GDP per capita grows from $10,000 to to $10,500, then the growth rate is: a) 5% b) .05% c) 3% d) 0.5%
a) 5%
From the Washington Post article "Seattle's higher minimum wage is actually working just fine," which studies' findings conform with our Ws-PS model regarding the effect of minimum wage hike on employment? a) University of Washington's findings b) UC Berkley's findings c) both findings d) none of them
a) University of Washington's findings
A decrease in the minimum wage will tend to cause which of the following? a) a downward shift in the WS curve b) an upward shift in the PS curve c) a downward shift in the PS curve d) an upward shift in the Ws curve
a) a downward shift in the WS curve
Suppose that actual employment rate increases. This will cause... a) a downward shift in the WS curve b) an upward shift in the WS curve c) a movement along the WS and PS curves d) an upward shift in the PS curve
a) a movement along the WS and PS curves
According to Robert Allen, an economic historian, why did the Industrial Revolution take place in England? a) a rise in labor cost b) England has more resources from her colonies c) protestant ethic in England is superior to elsewhere d) scientific revolution in England
a) a rise in labor cost
From the Washington Post article "Seattle's higher minimum wage is actually working just fine," what did researchers from the University of Washington find about an increase in minimum wage in Seattle? a) an increase in minimum wage led to a reduction in employment b) no employment effect c) no effect on wages for low-wage workers d) an increase in minimum wage led to an increase in employment
a) an increase in minimum wage led to a reduction in employment
Based on the wage setting behavior, we know that a reduction in the unemployment rate will cause... a) an increase in the real wage b) no change in the real wage c) a reduction in the real wage d) an upward shift of the Ws curve
a) an increase in the real wage
From the Brooking Institute article about a fall in labor force participation, how much has the participation rate decreased since the peak in the 1990s? a) around 5% b) around 15% c) around 1% d) around 30%
a) around 5%
The largest component of the expenditure side of GDP in the United States is: a) consumption b) investment c) government d) net exports
a) consumption
According to Okun's Law, during the 1990s economic boom, we can expect that the unemployment rate should... a) decrease b) increase c) increase faster than the previous period d) be constant
a) decrease
When Okun's Law does NOT hold, it implies that... a) economic growth does not translate into job creation b) labro force participation rate increases c) more people want to join the labor force d) economic boom leads to lower unemployment
a) economic growth does not translate into job creation
The price setting equation is represented by the following: P = (1+m)W. When there is perfect competition (firms have no power), we know that m will equal... a) 1 b) 0 c) 0.5 d) 0.9
b) 0
If 2009 is the base year, the bundle price of goods in 2009 is $500, and the bundle price of goods in 2010 is $700, the 2010 price index is ... a) 60 b) 140 c) 128.6 d) 71.4
b) 140
If the number of people classified as unemployed is 20,000 and the number of people classified as employed is 620,000, what is the unemployment rate? a) 632% b) 3.1% c) 1.6% d) 10.6%
b) 3.1%
Between 2005-2007, GDP per capita of Greece reduced at 5% per year. If GDP per capita equals to $35,000 in 2005, GDP per capita in Greece equals to $................... in 2007. a) 29874.36 b) 31587.5 c) 33250 d) 30087.98
b) 31587.5
The GDP deflator in year 2 is 95 using year 1 as a base year. This means that, on average, the price of goods and services is... A) 105% higher in year 2 than in year 1 b) 5% higher in year 1 than in year 2 c) 105% higher in year 1 than in year 2 d) 5% higher in year 2 than in year 1
b) 5% higher in year 1 than in year 2
If the labor force is 320,000 and the total population 16 years of age or older is 400,000, the labor-force participation rate is... a) 72% b) 80% c) 88% d) 76%
b) 80%
Income Mexican citizens earn in the U.S. counts in... a) both US and Mexican GDP b) U.S. GDP c) none is correct d) Mexican GDP
b) U.S. GDP
Which of the following is an example of a final good or service? a) coffee beans Starbucks purchases to make coffee b) a computer purchased by Federal Express to track shipments c) lumbar purchased by a construction company to be used in building houses d) wheat a bakery purchases to make bread
b) a computer purchased by Federal Express to track shipments
Which of the following is a good or service counted in GDP at a current year? a) used tires bought by a used car dealer to put on a car on his lot b) a new tire you buy for your personal car c) a used tire you buy for your personal car d) used tires Ford buys to put on a car
b) a new tire you buy for your personal car
For you to be considered out of the labor force, you can be... a) a full-time retiree b) all are correct c) a full-time volunteer d) a full-time student
b) all are correct
Suppose that increased international trade makes product markets more competitive in the U.S. Given this information, we would expect to observe which of the following? a) an upward shift in the WS curve b) an upward shift in the PS curve c) a downward shift in the PS curve d) a downward shift in the WS curve
b) an upward shift in the PS curve
An increase in the minimum wage will tend to cause which of the following? a) a downward shift in the WS curve b) an upward shift in the WS curve c) an upward shift in the PS curve d) a downward shift in the PS curve
b) an upward shift in the WS curve
Diane lost her job and immediately started looking for another job. As a result the... a) unemployment rate remains constant b) unemployment rate increases c) labor force increases d) labor force decreases
b) unemployment rate increases
The price setting equation is represented by the following: P = (1+m)W. When firms have very high market power, m would equal to... a) 0.1 b) 0.5 c) 0.9 d) 0
c) 0.9
Between 2000-2002, GDP per capita of Spain grew at 2% per year. If GDP per capita equals to $25,000 in 2000, GDP per capita in Spain equals to $................... in 2002. a) 26000 b) 27000 c) 26010 d) 25500
c) 26010
The GDP deflator in year 2 is 110 and the GDP deflator in year 3 is 118. The rate of inflation between years 2 and 3 is... a) 4.55% b) 8% c) 7.27% d) 18%
c) 7.27%
According to the Washing Post article (see Lesson), Joel Mokyr, an economic historian, thinks that scientists before the Industrial Revolution began to apply scientific knowledge to crack problems. This is what he called...... a) applied science b) age of ambition c) Industrial Enlightenment d) Scientific Revolution
c) Industrial Enlightenment
According to the Planet Money podcast (see lesson), besides Simon Kuznets, who else also made a critique about the concept of GDP? a) harry Truman b) John F. Kennedy c) Robert Kennedy d) Lyndon Johnson
c) Robert Kennedy
According to the Planet Money podcast (see lesson), who firstly developed the estimation of GDP? a) John Maynard Keynes b) Milton Friedman c) Simon Kuznets d) William Petty
c) Simon Kuznets
A reduction in unemployment benefits will tend to cause which of the following? a) an upward shift in the PS curve b) an upward shift in the WS curve c) a downward shift in the WS curve d) a downward shift in the PS curve
c) a downward shift in the WS curve
Based on our understanding of the labor market model Ws-PS, we know that an increase in the minimum wage will cause... a) an increase in the equilibrium real wage b) a reduction in the equilibrium real wage c) a reduction in equilibrium employment d) all are correct
c) a reduction in the equilibrium employment
Based on wage setting behavior, we know that a reduction in the unemployment rate will cause... a) a reduction in the real wage b) an upward shift in the WS curve c) an increase in the real wage d) no change in the real wage
c) an increase in the real wage
Okun's Law is an empirical observation that shows that the change in the ________ falls when __________ is faster a) unemployment rate; GDP growth b) GDP growth; inflation c) inflation; unemployment rate d) unemployment rate; GDP
unemployment rate; GDP growth
According to the Financial Times article "Rise in corporate market power offers clues to feeble wage growth," what is the relationship between the market power and innovation found by the IMF? a) forms with high market power, due to concentrated companies, tend to invest less b) firms with high market power, due to concentrated companies, tend to invest more c) in 1980s, firms with high power invested more. now it becomes otherwise d) no correlation between market power and investment
a) firms with high market power, due to concentrated companies, tend to invest less
Consumption is the purchase of goods and services by: a) households b) business firms c) foreign buyers d) government
a) households
Cheryl graduated from college a month ago and is now without work. She accepted a job that will start next month. Today, Cheryl is... a) in the labor force b) employed c) a discouraged worker d) not in the labor force
a) in the labor force
From the Washington Post article "Seattle's higher minimum wage is actually working just fine," what did researchers from the UC Berkley find about the effects of minimum wage hike? a) no employment effect b) an increase in employment c) a decrease in wages d) a decrease in output
a) no employment effect
The _________ is set by the firm in dollars while the ________ describes how much the wage can buy for the worker. a) nominal wage; real wage b) real wage; nominal wage c) nominal wage; employment rent d) employment rent; real wage
a) nominal wage; real wage
If real GDP in 2010 using 2009 prices is higher than nominal GDP of 2010, then... a) prices in 2010 are lower than prices in the base year b) nominal GDP in 2010 equals nominal GDP in 2009 c) real GDP in 2010 is larger than real GDP in 2009 d) prices in 2010 are higher than prices in the base year
a) prices in 2010 are lower than prices in the base year
The GDP deflator is the... a) ratio of nominal GDP to real GDP multiplied by 100 b) difference between nominal GD and real GDP multiplied by 100 c) difference between real GDP and nominal GDP multiplied by 100 d) ratio of real GDP to nominal GDP multiplied by 100
a) ratio of nominal GDP to real GDP multiplied by 100
With the real wage on the vertical axis and employment (N) on the horizontal axis, we know that... a) the WS curve is upward sloping b) the PS curve is upward sloping c) the PS curve is downward sloping d) the WS curve is downward sloping
a) the WS curve is upward sloping
In the wage-setting relation, the nominal wage tends to decrease when... a) the unemployment rate increases b) all are correct c) the price level increases d) the minimum wage increases
a) the unemployment rate increases
Okun's Law describes the relationship between GDP growth and the change in unemployment such that when GDP growth is high: a) the unemployment rate is falling b) the unemployment rate is unrelated to GDP growth c) the unemployment rate is rising d) the unemployment rate stays the same
a) the unemployment rate is falling
In the wage-setting relation, the nominal wage tends to decrease when... a) unemployment benefits decrease b) the unemployment rate decreases c) the price level increases d) the minimum wage increases
a) unemployment benefits decrease
According to the Washing Post article (see Lesson), Joel Mokyr, an economic historian, claims that the Chinese bureaucratic system in the past was progressive in some aspects. Why? a) because only the emperor could choose who can work as civil servants. b) because it's a meritocracy since they have an examination. c) because only sons or nephews could rise to power. d) because every civil servant was sent to Europe to learn the new system.
b) because it's a meritocracy since they have an examination
Lisa spends most of her time taking care of her home and children, but she helps in her husband's computer software business all day on Friday, Saturday, and Sunday. Lisa is counted as ... a) not in labor force b) emplyed c) not considered in active population d) unemployed
b) employed
According to the Financial Times article "Rise in corporate market power offers clues to feeble wage growth," what is the markup rate? a) input costs b) how much they charge above their cost c) companies' loss d) nominal wage
b) how much they charge above their cost
According to Okun's Law, in the midst of economic recession, such as in 2008-2009, we can expect that the unemployment rate should... a) be constant b) increase c) decrease d) decrease at a slower rate
b) increase
According to the Financial Times article "Rise in corporate market power offers clues to feeble wage growth," what did De Loecker and Eeckhout find about the markups between 1980 and 2016? a) decline around 50% b) increase almost 50% c) constant d) increase just 10%
b) increase almost 50%
From the Brooking Institute article about a fall in labor force participation, what does the prime-age women participation rate look like before the 1990s? a) there was no data b) it increased c) it was constant d) it decreased
b) it increased
If the GDP deflator is greater than 100, then a) prices decreased by more than half between the current and the base years b) nominal GDP is greater than real GDP c) nominal GDP is lower than real GDP d) nominal GDP equals real GDP
b) nominal GDP is greater than real GDP
Investment (I) includes: a) the amount spent on purchases of art b) the amount spent on new factories and machinery c) the amount spent on stocks and bonds d) the amount spent on consumer goods that last more than one year
b) the amount spent on new factories and machinery
Based on our understanding of the labor market model Ws-PS, we know that an increase in the minimum wage will cause the results as two answers above. The main reason is... a) the model assumes that employment is always constant b) the model assumes that demand or labor demand is constant c) the model assumes that supply of labor is constant d) the model assumes that real wage is constant
b) the model assumes that demand or labor demand is constant
Which of the following is an example of an intermediate good? a) lumber you buy to build a house for your dog b) the pizza sauce you purchase to make pizzas to sell for a fund-raiser for an organization you belong to c) the dough you buy to fix yourself a pizza for dinner d) the chocolate you buy to make yourself some cookies
b) the pizza sauce you purchase to make pizzas to sell for a fund-raiser for an organization you belong to
What is GDP per capita? a) the change of output over a year b) the total amount of goods and services produced within a country in a year per person c) the total amount of goods and services produced within a country in a year d) the amount of services in the US
b) the total amount of goods and services produced within a country in a year per person
According to NPR Planet Money: The price of lettuce in Brooklyn, why does the BLS never call the restaurants or stores to check the prices, or look up the prices on the internet? a) it's their rule to visit the store to see the real stuff b) to make a phone call is against their protocol c) because they really want to check very specific items that most store owners do not have time to help them with d) the stores they at are not listed on the internet
c) because they really want to check very specific items that most store owners do not have time to help them with
According to the Washington Post article (see lesson), Joel Mokyr, an economic historian, thinks that the Industrial Revolution did not happen in China because the Chinese state... a) did not have a rise in labor cost b) did not have many colonies like Britain c) could solidify power and prioritize security over progress d) was weak compared to European countries
c) could solidify power and prioritize security over progress
From the Brooking Institute article about a fall in labor force participation, what do the prime-age men and women participation rate look like since the 2000s? a) constant b) increasing c) declining d) fluctuating
c) declining
According to NPR Planet Money: The price of lettuce in Brooklyn, what does the headline Consumer Price Index (CP) include? a) oil b) everything from the market excluding food and oil c) everything from the market d) food
c) everything from the market
According to NPR Planet Money: The price of lettuce in Brooklyn, what does the core Consumer Price Index (CPI) include? a) everything from the market b) oil c) everything from the market excluding food and oil d) food
c) everything from the market excluding food and oil
Private property, markets, and firms are the key ________ shared by all capitalist economies
c) institutions
From the Brooking Institute article about a fall in labor force participation, what does the prime-age men participation rate look like before the 1990s? a) it was constant b) we cannot tell about the numbers c) it decreased d) it increased
c) it decreased
Based on our understanding of the labor market model Ws-PS, we know that an increase in the minimum wage will cause... a) a decrease in equilibrium employment b) an increase in equilibrium employment c) no change in equilibrium real wage d) all are correct
c) no change in equilibrium real wage
Based on price setting behavior, we know that a reduction in the unemployment rate will cause... a) an increase in the real wage b) a reduction in the real wage c) no change in the real wage d) an upward shift of the PS curve
c) no change in the real wage
From the Washington Post article "Seattle's higher minimum wage is actually working just fine," is the minimum wage increase considered to be an increase in nominal wage or real wage? a) both nominal and real wage b) none is correct c) nominal wage d) real wage
c) nominal wage
In a price-setting relation, there is a _______ relationship between real wage and employment a) positive b) negative c) non-existent d) perfectly inelastic
c) non-existent
Suppose the actual employment rate increases. This will cause the PS curve... a) an upward shift b) a downward shift c) say constant (move along the curve) d) steeper
c) stay constant (move along the curve)
The increased ability of humans to provide light, grow food, and communicate information are all examples of a) specialization b) capitalism c) technological progress d) the Industrial Revolution
c) technological progress
With the real wage on the vertical axis and employment (N) on the horizontal axis, we know that... a) the WS is vertical b) the PS is vertical c) the PS is horizontal d) the Ws is horizontal
c) the PS is horizontal
The number of people unemployed equals... a) the number of people employed minus the labor force b) the labor force plus the number of people employed c) the labor force minus the number of people employed d) the number of people employed divided by the labor force
c) the labor force minus the number of people employed
Inflation is an increase in... a) real gross national product b) the average income level c) the overall price level d) the price of one item
c) the overall price level
According to the Planet Money podcast (see lesson), what is the main reason why countries need to have GDP numbers since the 1950s? a) they need to calculate if they can sustain higher inflation b) they need to use it as a measure for exports c) they ned to show to the IMF or World Bank in order to apply to foreign aid d) the numbers are used to calculate if the countries can go to another war
c) they ned to show them to the IMF or World Bank in order to apply to foreign aid
Suppose that the US federal allowed firms in several industries to merge with each other, which consequently increased monopoly power for those companies. Given this information, we would expect to observe which of the following? a) an upward shift in the PS curve b) a downward shift in the WS curve c) an upward shift in the WS curve d) a downward shift in the PS curve
d) a downward shift in the PS curve
According to the Financial Times article "Rise in corporate market power offers clues to feeble wage growth," why can high profit margins for companies worsen inequality in the US? a) their managers took all the dividends and stocks and invested in other countries b) those companies left the country and paid no taxes c) those firms with high margins tend to play less wages according to many studies d) housing markets besides those companies tend to be increasing and created the housing bubbles
c) those firms with high margins tend to pay less wages according to many studies
The GDP deflator in year 2 is 110 using year 1 as a base year. This means that, on average, the price of goods and services is... a) 110% higher in year 1 than in year 2 b) 110% higher in year 2 than in year 1 c) 5% higher in year 1 than in year 2 d) 10% higher in year 2 than in year 1
d) 10% higher in year 2 than in year 1
If 2009 is the base year, the bundle price of goods in 2009 is $500, and the bundle price of goods in 2010 is $700, the inflation rate between 2009 and 2010 is... a) 9% b) 16% c) 20% d) 40%
d) 40%
The GDP per capital of China was $10,000 in 2017 and $10,500 in 2018. The growth rate of GDP between 2017 and 2018 was equal to.... a) 50% b) 0.05% c) 0.5% d) 5%
d) 5%
According to the Planet Money podcast (see lesson), who's the first US president that mentioned the concept of GDP on the radio? a) Herbert Hoover b) Theodore Roosevelt c) Harry Truman d) Franklin D. Roosevelt
d) Franklin D. Roosevelt
An economics professor is discussing a measure of inflation over time based on all the components of GDP. Which measure is it? a) GDP Price Index b) Consumer GDP c) Consumer Price Index d) GDP Deflator
d) GDP deflator
Suppose that increased international trade makes product markets more competitive in the U.S. Given this information, we would expect to observe which of the following? a) a downward shift in the WS curve b) an upward shift in the WS curve c) a downward shift in the PS curve d) an upward shift in the PS curve
d) an upward shift in the PS curve
An increase in unemployment benefits will tend to cause which of the following? a) a downward shift in the PS curve b) an upward shift in the PS curve c) a downward shift in the WS curve d) an upward shift in the WS curve
d) an upward shift in the WS curve
Which of the following are most likely classified by economists as consumer durable goods? a) food, clothing b) stocks, bonds c) drugs, toys, magazines, books d) automobiles, furniture
d) automobiles, furniture
James is a high school student. James works as a part-time employee after school at a fast restaurant. James is categorized as... a) not in labor force b) not in active population c) unemployed d) employed
d) employed
Labor force participation rate --> 75% Total population 16 years of age and older --> 200 million Unemployment rate --> 10% What is the labor force? a) equals 130 million b) cannot be determined from this information c) equals 170 million d) equals 150 million
d) equals 150 million
Nominal GDP measures the value of all goods and services... a) in constant dollars b) in fixed dollars c) without inflation d) in current dollars
d) in current dollars
Real GDP is gross domestic product measured... a) in current dollars b) at a constant output level but at current prices c) as the difference between the current year's GDP and last year's GDP d) in the prices of a base year
d) in the prices of a base year
According to the Planet Money podcast (see lesson), what is the former name of the economy estimation before it became known as GDP? a) inflation b) gross national product c) net income d) national income
d) national income
Based on price setting behavior, we know that a reduction in the unemployment rate will cause... a) an increase in the real wage b) an upward shift of the PS curve c) a reduction in the real wage d) no change in the real wage
d) no change in the real wage
Katherine has been thinking about looking for work in the past four weeks, but there was no specific effort she has made. Katherine is counted as... a) employed b) not in active population c) unemployed d) not in labor force
d) not in labor force
In the wage setting relation, there is a ________ relationship between real wage and employment a) negative b) non-existent c) perfectly elastic d) positive
d) positive
When the textbook refers to "history's hockey stick," it is referring to... a) the increase in money that followed the Great Recession beginning in 2008 b) Bobby Orr's hockey stick from the 1972 Stanley Cup c) the increase in population that began in the 17th century d) the increase in growth of real GDP per capita that many countries have experienced at some point after the 19th century
d) the increase in growth of real GDP per capita that many countries have experiences at some point after the 19th century
Which of the following is not counted as a part of GDP? a) the purchase of a now plough by the city of Minneapolis b) the purchase of a loaf of bread by a consumer c) the unsold additions to inventory at an appliances store d) the purchase of 100 shares of AT&T stock by your grandfather
d) the purchase of 100 shares of AT&T stock by your grandfather
According to the Financial Times article "Rise in corporate market power offers clues to feeble wage growth," what does the author think about the wage growth of 2.7% in 2018 compared to US companies' profit margins? a) both have been falling for years b) both are stable for many decades c) the wage growth was higher since wage growth outperformed companies' profit margins for many years d) the wage growth was lower since profit margins kept rising for many years
d) the wage growth was lower since profit margins kept rising for many years