ECON 01 TEST 4

When news reports state that the cost of living has changed they are usually referring to a change in the CPI. a. true b. false

a. true

Business firms make which of the following two types of investment? a. foreign investment and domestic investment b. fixed investment and capital investment c. investment in stocks and investment in bonds d. investment in new capital goods and investment in used capital goods to replace "worn-out" capital goods e. fixed investment and inventory investment

e. fixed investment and inventory investment

A __________ is a person who was employed in the civilian labor force and was either fired or laid off. a. new entrant b. reentrant c. job leaver d. job fixer e. none of the above

e. none of the above

Which of the following is true of inflation? a. It is an increase in the general price level of goods and services. b. The purchasing power of money increases as the result of inflation. c. Inflation is similar to interest payments on future money income, such as pensions and receipts from outstanding loans. d. Inflation has no effect on real resources.

a. It is an increase in the general price level of goods and services.

Which of the following illustrates double counting? a. The total market value of the steel used to produce a car and the total market value of the car itself are summed. b. The total market value of tennis rackets and the total market value of tennis balls are summed. c. The total market value of picture frames and the total market value of camera film are summed. d. The total market value of eyeglasses and the total market value of carpet are summed. e. b and c

a. The total market value of the steel used to produce a car and the total market value of the car itself are summed.

If a person did at least one hour of work as a paid employee during the survey week, how is she classified? a. as an employed person b. as not in the labor force c. as an unemployed person d. none of the above

a. as an employed person

To macroeconomists, investment is mainly the purchases of goods and services a. by businesses. b. to hold as wealth, such as gold coins or art. c. to hold as wealth, such as stocks and bonds. d. in the period previous to the period being studied.

a. by businesses.

The type of unemployment caused by changes in the business cycle is a. cyclical unemployment. b. natural unemployment. c. frictional unemployment. d. structural unemployment.

a. cyclical unemployment.

A plumber who quits his job in San Diego and moves to Orlando where additional plumbers are needed is said to be __________ unemployed a. frictionally b. structurally c. cyclically d. underemployed

a. frictionally

U.S. imports are a. not added to U.S. GDP because they are produced abroad b. added to U.S. GDP because they are consumed domestically c. added to U.S. GDP because they represent an increase in inventories d. added to U.S. GDP as government purchases because the government decides what goods may be imported e. "not added to U.S. GDP because they are intermediate goods "

a. not added to U.S. GDP because they are produced abroad

The CPI is based on a representative group of goods called the market basket. a. true b. false

a. true

The civilian labor force includes those individuals who are a. unemployed and looking for work. b. staying home to care for other family members. c. attending school and not working at a job. d. retired.

a. unemployed and looking for work.

Look at the following data: The frictional unemployment rate is 3 percent, the natural unemployment rate is 6.5 percent, and the cyclical unemployment rate is 2.4 percent. The structural unemployment rate is __________ percent and the actual unemployment rate (in this economy) is __________ percent. a. 3; 8.9 b. 3.5; 8.9 c. 3.5; 9.5 d. 5.4; 2.4 e. none of the above

b. 3.5; 8.9

Which of the following transactions would be included in this year's GDP for the United States? a. Deion sends $100 to a hotel in Costa Rica as a deposit for his vacation. b. Deion buys a travel guide written by a Costa Rican woman living in the United States. c. Deion buys a shirt while on vacation in Costa Rica. d. Deion spends money in an American-owned restaurant in Costa Rica.

b. Deion buys a travel guide written by a Costa Rican woman living in the United States.

If U.S. net exports are negative, a. U.S. consumers are spending less on foreign goods than foreign consumers are spending on U.S. goods b. U.S. consumers are spending more on foreign goods than foreign consumers are spending on U.S. goods c. the government must promote imports to balance international trade d. U.S. consumers are spending more on foreign goods than they are spending on U.S. goods e. U.S. disposable income is low

b. U.S. consumers are spending more on foreign goods than foreign consumers are spending on U.S. goods

Is it possible for the economy to be at full employment and still have some people who are unemployed? a. No, full employment means that no one is unemployed. b. Yes, since full employment exists if the economy is operating at the natural unemployment rate and there is always some natural unemployment. c. Yes, since full employment exists if the economy is operating at the frictional unemployment rate and there is always some frictional unemployment. d. Yes, since full employment equals the sum of the cyclical unemployment rate and the natural unemployment rate, and there is always some cyclical unemployment. e. none of the above

b. Yes, since full employment exists if the economy is operating at the natural unemployment rate and there is always some natural unemployment.

"Full employment" is said to exist when the actual unemployment rate is zero a. true b. false

b. false

If the cyclical unemployment rate is negative, then the __________ a. natural unemployment rate is less than the actual unemployment rate in the economy. b. natural unemployment rate is greater than the actual unemployment rate in the economy. c. structural unemployment rate is greater than the frictional unemployment rate. d. structural unemployment rate is less than the frictional unemployment rate. e. a and d

b. natural unemployment rate is greater than the actual unemployment rate in the economy.

In many large retail stores, price markdowns are now determined by computer. The "middle managers" who used to make these decisions personally became __________ unemployed. a. frictionally b. structurally c. naturally d. cyclically

b. structurally

Which of the following is counted in GDP? a. the purchase of 100 shares of Microsoft stock b. the services of a real estate broker c. government transfer payments d. the sale of a used car e. none of the above

b. the services of a real estate broker

Which of the following would be included in this year's GDP? a. the value of a used car, at its sale price b. the value of a new domestic automobile, at its sale price c. a sale of Microsoft stock from one individual to another d. the face value of a life insurance policy paid to a woman at the death of her husband

b. the value of a new domestic automobile, at its sale price

Underground activities are not counted in GDP because a. some underground activities are illegal and the government doesn't want to place, for instance, drug dealers on an equal footing with small businesses. b. there are no written records of underground activities. c. of a decision made in the 1930s and no one has gotten around to changing it yet. d. although it is possible to accurately measure underground activities, it is harder than measuring above-ground activities because with the latter, one doesn't have to dig as deep.

b. there are no written records of underground activities.

How would the Bureau of Labor Statistics classify a person who is not working and refuses an offer of employment in order to keep looking for a better job? a. not in the labor force b. unemployed c. employed d. a discouraged worker

b. unemployed

A person in the civilian labor force falls into one of two categories: a. a person who works in a service industry or a person who works in a manufacturing industry. b. unemployed or employed. c. disemployed or unemployed. d. a self-employed worker or a non-self-employed worker.

b. unemployed or employed.

Which of the following transactions would be included in this year's GDP for the United States? a. Jennifer buys a rug imported from Mexico. b. Melissa buys stock in an American textile company. c. Jennifer purchases a table over the Internet from a North Carolina furniture manufacturer. d. Melissa purchases a table over the Internet from a Mexican manufacturer.

c. Jennifer purchases a table over the Internet from a North Carolina furniture manufacturer.

If a person worked at least 15 hours per week as an "unpaid" worker on a family farm, how is she classified? a. as not in the labor force b. as an unemployed person c. as an employed person d. none of the above

c. as an employed person

The cyclical unemployment rate is defined as the __________ unemployment rates. a. sum of the structural and the frictional b. difference between the structural and the frictional c. difference between the existing (actual) and the natural d. sum of the natural and the frictional

c. difference between the existing (actual) and the natural

Net exports equals a. exports divided by imports. b. the sum of exports and imports. c. exports minus imports. d. exports during the year. e. none of the above

c. exports minus imports.

A(n) __________ is a person who was previously employed, hasn't worked for some time, and is currently reentering the labor force. a. discouraged worker b. entrant c. reentrant d. job loser e. job leaver

c. reentrant

Economists usually use the term "recession" to refer to a. any slowdown in the growth of real GDP. b. zero real GDP growth. c. two or more consecutive quarters of declining real GDP. d. a reduction in nominal GDP lasting more than six months.

c. two or more consecutive quarters of declining real GDP.

Macroeconomists define consumption as a. purchases by the business sector. b. wearing away and breakdown of capital goods. c. the difference between imports and exports. d. "purchases by the household sector. "

d. "purchases by the household sector.

"Economic growth" has occurred if the a. inflation rate between this year and last year is zero or less. b. GDP this year exceeds the Real GDP this year. c. unemployment rate this year is above the natural rate of unemployment. d. Real GDP this year exceeds the Real GDP of last year.

d. Real GDP this year exceeds the Real GDP of last year.

The answer is "a person employed in the civilian labor force who quits his or her job." The question is: a. Who is a job loser? b. Who is an entrant? c. Who is a reentrant? d. Who is a job leaver? e. "Who is a discouraged worker?

d. Who is a job leaver?

When the expenditure approach is used to measure GDP, the major components of GDP are a. consumption, investment, indirect business taxes, and depreciation. b. employee compensation, rents, interest, self-employment income, and corporate profits. c. employee compensation, corporate profits, depreciation, and indirect business taxes. d. consumption, investment, government consumption and gross investment, and net exports.

d. consumption, investment, government consumption and gross investment, and net exports.

Unemployment caused by people voluntarily quitting work in order to seek more attractive employment is called a. the natural rate of unemployment. b. full employment. c. cyclical unemployment. d. frictional unemployment. e. structural unemployment.

d. frictional unemployment.

Jones lost his job in industry A, but he has skills that can be transferred to industry B (which is currently hiring). Smith lost a job in industry C, but his skills cannot be transferred to industry B or to any other industry. Jones is __________ unemployed and Smith is __________ unemployed. a. structurally; frictionally b. structurally; structurally c. frictionally; frictionally d. frictionally; structurally

d. frictionally; structurally

When individuals are unemployed because they lack the qualifications to fill available jobs, this is called a. frictional unemployment. b. natural unemployment. c. cyclical unemployment. d. structural unemployment.

d. structural unemployment.

The base year is the year a. in which prices are unstable. b. in which prices are lowest. c. in which prices are highest. d. that serves as a reference point or benchmark. e. in which nominal output is largest.

d. that serves as a reference point or benchmark.

Gross domestic product is a. the market value of all goods and services exchanged within a country during a time period. b. the market value of all domestic assets, regardless of whether they are owned by citizens or foreigners. c. the compensation received during a period for labor services plus interest, rents, and corporate profits. d. the market value of final goods and services produced within a country during a time period.

d. the market value of final goods and services produced within a country during a time period.

"Full employment" is said to exist when the unemployment rate equals a. zero. b. the cyclical unemployment rate. c. the structural unemployment rate. d. the natural unemployment rate.

d. the natural unemployment rate.