Eco test 2

The table describes hypothetical employment statistics for a country in a given year labor force full-time. involuntary part time discouraged workers 174 million 8 million 6 million based on the information what is the unemployment rate? Enter your answer as percentage rounded to one decimal

2.2 = umemployed / labor force * 100 =((Labor force - employed )/ labor force ) * 100 ((186 million - 182 million) / 186 million) * 100

Year Consumer price Index 1 80 2 (base year) 100 3 105 4 125 5 150 23. (Ref 19-3 Table: The Consumer Price Index) Use Table: The Consumer Price Index. The approximate rate of inflation in year 2 is:

d. 25%.

24. Which statement regarding the consumer price index is FALSE?

d. CPI changes only in the base year, every five to seven years.

38. (Ref 24-2 Figure: Loanable Funds) Use Figure: Loanable Funds. Which scenario might produce a new equilibrium interest rate of 5% and a new equilibrium quantity of loanable funds of $150 billion?a. Consumption as a fraction of disposable income increases.

d. There is an increase in capital inflows from other nations.

26. Which example is considered to be investing in a physical asset?

d. buying a new factory that produces IBM handheld devices

39. If in an open economy a country imports more than it exports and the government budget deficit increases, interest rates will _____ and the amount of borrowing will _____.

d. change unpredictably; increase

65. In the long run, nominal wages are:

d. flexible, because contracts and informal agreements are renegotiated in the long run.

10. Discouraged workers:

d. have given up looking for a job

57. Aggregate demand will NOT increase when:

d. interest rates increase.

32. In a closed economy government spending was $30 billion, consumption was $70 billion, taxes were $20 billion, and GDP was $110 billion this year. Investment spending was $10 billion. As a result:

d. private savings were $20 billion.

15. An example of the frictionally unemployed is a(n):

d. real estate agent who leaves a job in Texas and searches for a similar, higher-paying job in California.

33. Capital inflow equals:

d. the total inflow of foreign funds minus the total outflow of domestic funds.

6. Aggregate output is:

d. the total quantity of final goods and services produced by an economy.

17. Structural unemployment consists of people who are unemployed because of:

d. there being more job hunters than there are jobs.

Anna Conda is in the Amazon on a vacation her part-time job as a herpetologist at the Toronto Zoo Bill Loney does not have a job nor does he intends to look for one Brighton Early is a student. He has no job outside of the home but spends fice hours each week on yard work. He is happy with his situation and is not looking for more work Bonnie Ann Clyde has not had any work for six months despite filling out at least eight job applications each day

employed out of the labor force out of the labor force unemployed

31. One difference between a closed and an open economy is that:

a. in the latter, foreign savings complement domestic savings in financing investment spending.

62. The short run in macroeconomic analysis is a period:

a. in which many production costs can be taken as fixed.

41. (Ref 24-8 Figure: The Market for Loanable Funds II) Use Figure: The Market for Loanable Funds II. A decrease in savings by the private sector will shift the supply of loanable funds to the _____ and _____ the interest rate.

a. left; increase

25. The GDP deflator for a given year is 100 times _____ GDP for that year _____ GDP for that year

a. nominal; divided by real

20. Cyclical unemployment:

a. rises during a recession.

11. Periods of recession are likely to be marked by:

a. rising unemployment.

35. Domestic savings and foreign savings are:

a. sources of funds for investment spending.

64. If nominal wages fall, then the short-run aggregate _____ curve shifts to the _____.

a. supply; right

29. A budget surplus exists when:

a. taxes are greater than government spending.

4. The most important use of GDP is as a measure of:

a. the size of the economy.

To help increase investment spending, the government can:

lower taxes on the returns from savings so that total savings increase and the interest rate falls

Which of the choices is mostly directly related to cyclical unemployment

recessions

which of the choices is most directly related to cyclical unemployment

recessions

A reason that does not explain why frictional unemployment exists is

the minimum wage

Which definition best describes real GDP?

the production of goods and services valued at constant prices

When the economy is doing well, a significant share of unemployment is frictional

true

GDP is $12 trillion this year in a closed economy. Consumption is $8 trillion and government spending is $2 trillion. Taxes are $0.5 trillion. How much is national savings

$2 trillion

Year nominal gdp price population 2011. $3,000. 100. 5 2014. $8,000. 200. 10 1. Use Table: Per Capita GDP. The growth rate of nominal GDP from 2011 to 2014 was _____%. 2. Use Table: Per Capita GDP. The growth rate of real GDP from 2011 to 2014 was: 3. Use Table: Per Capita GDP. The growth rate of per capita real GDP from 2011 to 2014 was:

1. d 166.7 2. d 33%. 3. d -33%.

Peanut butter Jelly price in 2012. $1.00. $2.00 price in 2013. $1.10. $2.25 price in 2014. $1.20 $2.50 Suppose a market basket consists fo 20 jars of peanut butter and 10 jars of jelly. If 2012 is the base year, what is the rate of inflation between 2012 and 2013?

11.25%

After the financial crisis that hits the country of Barbaria in 2012, a total of 7 million people are unemployed. If 55 million individuals are lucky enough to keep their job, what is the unemployment rate?

11.29 (7 mill / (7 mill + 55 mill)) * 100%

2010 2011 nominal GDP 400. 500 Real GDP 360 480 Calculate the GDP deflator for 2010

111

Labor force 280,000 Unemployed. 44,500 Frictional 23,500 Structural 11,000 cyclical 10,000 Calculate the natural rate of unemployment

12.32 ((unemployed - cyclical) / labor force) * 100 ((44500 - 10000) / 280000) * 100

Use the table to answer the questions Country. GDP Population Country A. $7 trillion. 350 million Country B. $1.25 trillion. 50 million What is the GDP per person for country A? What is the GDP per person for Country B? Which country has the largest average GDP per person?

20,000 20,000 = (7 trillion/350 million) 25,000 25,000 = (1.25 trillion/50 million) Country B

it is graduation time in a small island nation. There are a total number of 17,028 graduating from college and are actively, looking for work. The college graduates are not included in the current employment measures for the country, which are given in the table. answer the related questions taking into account the college graduates and the information table # of employed 335,915 # of unemployed 15,483 Total population over 16 515,999 What is the size of the labor force? How many people are now out of the labor force? What is the unemployment rate? round the answer to two places after the decimal What is the total labor force participation rate? Round the answer to two places after the decimal

368,426 new total of unemployed = old total of unemployed + new college grads looking for work 32511 = 15483 + 17028 labor force = employed + unemployed =335,915 + 32,511 147,573 out of labor force = total pop. over 16 - labor force =515999 - 368426 8.8243% (32511 / 368426) * 100 71.4005% (368426 / 515999) * 100

Consider a simple economy that produces two goods: tacos and hot dogs. The table shows the economy's production over several years. Calculate the real GDP for 2007 as the base year yea r $ of T # of T $ of HD # of HD 2005. 6.00. 2. 3.00. 2 2006. 8.00. 2 5.00 4 2007. 9.00. 3 8.00 9

45 GDP 2007 = (3 * 6.00) + (9 * 3.00) = 45.00

The Table describes hypothetical employment statistics in the United States in a given year. The labor force is the sum of those that are employed plus unemployed labor force 155 million Full-time workers and 140 million voluntary part-time workers Underemployed workers. 7 million Discouraged workers. 5 million based on the information, what is the unemployment rate?

5.2 ((155 - (140 + 7)) / 155) * 100

which of the following is true of an open economy?

GDP = C+I+G+X+IM

Which source(s) provide funding for private investment spending? I savings of owners of a family business II profits of a large corporation III borrowing

I, II, and III

Capital inflow into a country is associated with

Imports exceeding exports

16. Economists generally agree that sufficiently high minimum wage laws:

a. cause unemployment.

Which of the factors would decrease the rate of frictional unemployment?

The advent of the internet, which makes finding available jobs easier

How do economics in Canada determine when a recession begins and when it ends

Two consecutive quarters of contraction of GDP indicate a recession, and two consecutive quarters of growth indicate a recovery

14. People who are changing jobs are counted in _____ unemployment.

a. frictional

13. Scenario: Employment in XeniaXenia has 10,000 people. Of this population, 1,000 residents are below age 16, and 2,000 have given up looking for work. Currently, 500 people are unemployed but are actively looking for work; 2,500 work part time, and the rest are fully employed.What is the unemployment rate?

a. 7.14%

58. Refer to Figure: Shift of the Aggregate Demand Curve. A movement from AD1 to AD2 may have been the result of:

a. an increase in government spending.

59. When the aggregate price level falls, the purchasing power of assets rises, which leads to:

a. an increase in the quantity of aggregate output demanded.

45. In the loanable funds market, borrowers:

are not affected by changes in the inflation rate.c. are best represented by the demand for loanable funds.

48. If disposable income increases by $5 billion and consumer spending increases by $4 billion, the marginal propensity to consume equals:

b. 0.8.

(Table: Population Data for Estill County) Look at the table Population Data for Estill County. DEMOGRAPGHIC # OF REDIDENTS employed 5,000 Umemployed 1,000 not working due to disability. 200 not working due to retirement. 700 unemployment and not looking. 500 for work due to discourgement over job prospects Under the age of 16 2,000 Total popualtion 9,400 12. What is the labor force participation rate?

b. 81%

40. (Ref 24-7 Figure: The Market for Loanable Funds with Government Borrowing) Use Figure: The Market for Loanable Funds with Government Borrowing. After an increase in government borrowing, the new equilibrium interest rate will rise from 6% to _____% and the amount of private savings will _____.

b. 8; rise

60. Which of the following policies will shift the AD curve to the LEFT?

b. The government raises tax rates.

28. GDP is $12 trillion this year in a closed economy. Consumption is $8 trillion and government spending is $2 trillion. Taxes are $0.5 trillion. What is the government budget balance?

b. a deficit of $1.5 trillion

51. If the multiplier is 4 and autonomous government spending decreases by $100 billion, real GDP will:

b. decrease by $400 billion.

49. The marginal propensity to consume plus the marginal propensity to save must:

b. equal 1

37. A business will want to borrow to undertake an investment project when the rate of return on that project is _____ rate.

b. higher than the interest

61. The short-run aggregate supply curve slopes upward because a _____ aggregate price level leads to _____.

b. higher; higher output, since most production costs are fixed in the short run

30. The savings-investment spending identity says that:

b. savings and investment spending are always equal for the economy as a whole.

27. Physical capital is purchased through investment spending, which in turn is MOSTLY financed out of:

b. savings.

43. All other things unchanged, a general increase in government borrowing will typically:

b. shift the loanable funds demand curve to the right and increase interest rates.

66. Potential output is the level of real GDP that:

b. the economy would produce if all prices, including nominal wages, were fully flexible.

52. If the multiplier is 4, the marginal propensity to consume is:

c. 0.75.

9. If a country has a working-age population of 200 million, 135 million people with jobs, 10 million people who were looking for a job but have given up, and 5 million people who are unemployed and seeking employment, then its labor force is _____ million.

c. 140

22. Suppose that, in the base period, a college student buys 20 gallons of gasoline at $2 per gallon, 2 CDs for $13 each, and 4 movie tickets for $7 each. In the next month, the price of gasoline is $2.25 per gallon, CDs cost $12.50 each, and the price of a movie ticket is $7.50. The change in the price level from the first to the second month is:

c. 6.4%.

18. (Ref 17-1 Figure: The Minimum Wage) Use Figure: The Minimum Wage. Which point on the x-axis is a binding minimum wage?

c. P3

63. Which factor will increase short-run aggregate supply?

c. a large decrease in the price of oil

44. Crowding out is a phenomenon in which:

c. an increase in the government's budget deficit reduces overall investment spending.

70. A movement along the short-run AS curve occurs, holding everything else constant, when there is a:

c. change in the aggregate price level.

21. The National Bureau of Economic Research announced that the U.S. economic recession that began in December of 2007 hit a trough in June of 2009. During that period, which type of unemployment increased for sure?

c. cyclical

55. A decrease in the supply of money shifts the aggregate _____ curve to the _____.

c. demand; left

19. The natural rate of unemployment is:

c. equal to the sum of frictional and structural unemployment.

68. Producing an aggregate output level that is higher than potential output is possible only if nominal wages:

c. haven't yet fully adjusted upward.

69. Refer to Figure: Aggregate Supply. At point F, potential output is _____ than actual output and unemployment is _____.

c. higher; high

50. A $50 million increase in investment spending will eventually cause equilibrium real GDP to:

c. increase by more than $50 million.

42. An expectation that perceived business opportunities will increase will generally cause a(n) _____ for loanable funds.

c. increase in the demand

56. If the Fed decreases the quantity of money in circulation, interest rates _____, investment spending _____, and the aggregate demand curve shifts to the _____.

c. increase; decreases; left

5. An increase in the value of nominal GDP over time:

c. may be due to an increase in prices, in the production of goods and services, or both.

8. You are a college student and NOT working or looking for work. You are:

c. not part of the labor force.

53. The aggregate demand curve shows the relationship between the aggregate price level and (the) aggregate:

c. quantity of output demanded by households, businesses, the government, and the rest of the world.

47. The marginal propensity to consume equals the:

c. ratio of the change in consumer spending to the change in aggregate disposable income.

54. Suppose that consumer expectations improve. The aggregate demand curve will undergo a:

c. shift to the right.

67. A general decrease in wages will result primarily in the _____ curve shifting to the _____.

c. short-run aggregate supply; right

36. If private savings increase, the _____ loanable funds will _____, interest rates will _____, and the amount of borrowing will _____.

c. supply of; increase; decrease; increase

Brock Lee used to work at Much 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 are simply was not enough work to keep Brock Lee on the payroll at Munch n' Munchies Which term describes Brock's type of unemployment?

cyclical unemployment

When the economy is at full employment, ____ is zero.

cyclical unemployment

Table: National Income Accounts Trillions GDP 15.9 Consumption 11.3 Governmental spending 3.0 Exports 2.2 Imports 2.7 Budget balance -1.2 34. (Ref 23-2 Table: National Income Accounts) Use Table: National Income Accounts. The value of national savings is:

d. $1.6 trillion.

46. Suppose that the marginal propensity to consume is 0.8 and investment spending increases by $100 billion. The increase in real GDP is:

d. $500 billion, composed of $100 billion in investment spending and $400 billion in consumption.

7. If a country has a working-age population of 200 million, 120 million people with jobs, and 30 million people unemployed and seeking employment, then its unemployment rate is:

d. 20%.

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 yet found one. Which term describes Beau's type of unemployment

frictional unemployment

If more women enter or reenter the labor force, that natural rate of unemployment is likely to

increase

Domestic savings and foreign savings are

sources of funds for investment spending

Anna Prentice has worked for years fixing broken typewriters. She is laid off from her as 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 unemployment

If a worker becomes unemployed because of an increase in the minimum wage, that worker is:

structurally unemployed

suppose that immigration laws are relaxed and many workers from other nations enter the U.S. labor force. The ___ labor will ___

supply of; increase

The budget balance equals:

taxes minus government spending

National savings is the sum of private savings and

the budget balance