ECON 102 test 2 ?s & answers

a worker classified as frictionally unemployed is one who is:

unemployed while looking for a job that demands his or her skills

natural unemployment equals ___________ unemployment plus ___________ unemployment

frictional;structural

all the following are financial assets EXCEPT:

gold coins

Roads, telephone lines, power facilities, and schools are examples of a nation's

infrastructure

Real GDP is $8,000, autonomous consumption is $500, and planned investment spending is $200. The marginal propensity to consume is 0.8. Look at the scenario Income-Expenditure Equilibrium. How much is unplanned inventory investment?

$900

if planned aggregate spending rises by $10 billion and the marginal propensity to consume is 0.75, then equilibrium real GDP changes by:

(1/1-MPC)x aggregate spending : (1/1-0.75)x10 = $40 billion

expenditure multiplier formula

1/(1-MPC)

If the slope of the aggregate expenditures curve is 0.8, the multiplier is:

1/1-0.8 = 5

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 unemployed and seeking employment, then the number of discouraged workers is:

10 m illion

south korea has real gdp per capita of $25,000, while England has a real GDP per capita of $50,000. If a real GDP per capita in South Korea grows 7% and England's real GDP per capita grows at 3.5%, how long will it take for real GDP per capita in the two nations to converge?

20 years for 25000 to reach 50000

A capital inflow into a country is associated with:

Imports exceeding exports

Real GDP is $8,000, autonomous consumption is $500, and planned investment spending is $200. The marginal propensity to consume is 0.8. Look at the scenario Income-Expenditure Equilibrium.What is consumption fn?

C= 500 +0.8 xYD; C= Auto.Cons. +MPC x YD

the primary purpose of financial intermediaries is to transform funds gathered from savers into financial assets: T/F

True

According to the convergence hypothesis, the poorest countries have the fastest growth rate of real GDP per capita. T/F

True

if there is a decrease in the interest rate below 8%, _____________ quantity of loanable funds will be demanded.

a larger

Crowding out is a phenomenon in which:

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

the term liquidity means that the:

asset is readily convertible to cash without much loss of value.

Look at the figure Aggregate Expenditures and RGDP. If the level of RGDP equals $9,000 billion & there are no changes in the consumption fn or in planned investment, then RGDP will ________ in the next period.

fall

the main reason South Korea has grown so rapidly is that because it was so poor:

it could skip forward, or leapfrog, to use new-generation technology as it developed.

labor force participation rate=

labor force/adult(working age) population x 100

In an open economy GDP is $12 trillion this year. Consumption is $8trillion, and gov. spending is $2 trillion. Taxes are $0.5 trillion. Exports are $1 trillion, & imports are $3 trillion. S=I, how much is national savings?

nat'l savings= GDP-C-G, which is $2 trillion

At real GDP of 9,000 billion & Aggregate expenditures per year @ 9,000 billion:

planned investment is less than actual investment

GDP is the value of consumption spending_________ investment spending_________ government purchases________ the value of exports_________ spending on imports.

plus;plus;plus; minus

In an open economy GDP is $12 trillion this year. Consumption is $8trillion, and gov. spending is $2 trillion. Taxes are $0.5 trillion. Exports are $1 trillion, & imports are $3 trillion. S=I, how much is private savings?

private savings= GDP-Tax-Consumption, which is 12-0.5-8= $3.5 trillion

productivity is equal to:

real GDP divided by the number of workers.

An increase in taxes on savings and investment income will shift __________ to the ___________ and ____________ the interest rate.

supply; left; increase

Which of the following situations is likely to increase the natural rate of unemployment?

the entrance of many new people in the labor force.