Econ 110 Final study HW 7-9

If an economy is growing at a rate of 2.5% per year, how long will it take the economy to double in size?

70/2.5 = 28 years*

If the number of unemployed workers is 19 million, the number in the working-age population is 500 million, and the unemployment rate is 4%, how many workers are in the labor force?

A) 1 million B) 20 million C) 475 million * D) 481 million

If the number employed is 190 million, the working-age population is 230 million, and the number unemployed is 10 million, then the unemployment rate is

A) 5%. * B) 5.2%. C) 8%. D) 10%.

How does a decrease in government spending affect the aggregate expenditure line?

A) It shifts the aggregate expenditure line upward. B) It shifts the aggregate expenditure line downward. * C) It increases the slope of the aggregate expenditure line. D) It decreases the slope of the aggregate expenditure line.

If inflation in the United States is lower than inflation in other countries, what will be the effect on net exports for the United States?

A) Net exports will rise as U.S. exports increase. * B) Net exports will rise as U.S. imports increase. C) Net exports will decrease as U.S. exports decrease. D) Net exports will decrease as U.S. imports decrease.

Which of the following is a true statement about the multiplier?

A) The multiplier rises as the MPC rises. * B) The smaller the MPC, the larger the multiplier. C) The multiplier is a value between zero and one. D) The multiplier effect does not occur when autonomous expenditure decreases.

In a closed economy, which of the following equations reflects investment? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers)

A) Y - C - G *

Which of the following would increase the unemployment rate?

A) a law making it illegal to work more than 35 hours per week B) a cut in unemployment compensation C) an increase in unemployment insurance payments * D) a decrease in the minimum wage

Which of the following will cause a direct increase in consumption spending?

A) an increase in planned investment B) an increase in government spending C) an increase in disposable income * D) a decrease in net export spending

If the economy is currently in equilibrium at a level of GDP that is below potential GDP, which of the following would move the economy back to potential GDP?

A) an increase in wealth * B) an increase in interest rates C) a decrease in business confidence D) an increase in the value of the dollar relative to other currencies

Labor unions cause unemployment because the union contract wage is set

A) below the market wage, causing a shortage of labor. B) below the market wage, causing a surplus of labor. C) above the market wage, causing a surplus of labor. * D) above the market wage, causing a shortage of labor.

Minimum wage laws cause unemployment because the legal minimum wage is set

A) below the market wage, causing labor demand to be greater than labor supply. B) below the market wage, causing labor demand to be less than labor supply. C) above the market wage, causing labor demand to be greater than labor supply. D) above the market wage, causing labor demand to be less than labor supply. *

All of the following are components of aggregate expenditure except

A) consumption spending. B) net export spending. C) actual investment spending. * D) government spending.

Investment spending ________ during a recession, and ________ during an expansion.

A) declines; increases * B) increases; declines C) increases; increases D) declines; declines

The labor force equals the number of people

A) employed. B) unemployed. C) employed plus unemployed. * D) in the working-age population.

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as

A) employed. B) unemployed. C) not in the labor force. * D) not in the working-age population.

People who lost their jobs as hand-drawn animators because of the popularity of computer-generated 3D animation are examples of persons who are suffering

A) frictional unemployment. B) structural unemployment. * C) cyclical unemployment. D) seasonal unemployment.

The demand for durable goods

A) has decreased over time. B) declines by a greater percentage than does GDP during a recession. * C) declines by a smaller percentage than does GDP during a recession. D) rises by a greater percentage than does GDP during a recession.

The key idea of the aggregate expenditure model is that in any particular year, the level of GDP is determined mainly by

A) investment spending. B) export spending. C) government spending. D) the level of aggregate expenditure. *

On the 45 degree line-diagram, for points that lie above the 45 degree line

A) planned aggregate expenditure is greater than GDP. * B) planned aggregate expenditure is less than GDP. C) planned aggregate expenditure is equal to GDP. D) planned aggregate expenditure is less than aggregate income.

In the aggregate expenditure model, ________ has both an autonomous component and an induced component.

A) planned investment spending B) consumption spending * C) government spending D) net export spending

A good measure of the standard of living is

A) real GDP per capita. * B) nominal GDP per capita. C) total real GDP. D) total nominal GDP.

At macroeconomic equilibrium, total ________ equals total ________.

A) spending; production * B) investment; inventories C) consumption; production D) taxes; transfers

The slope of the consumption function is equal to

A) the change in consumption divided by the change in disposable income. * B) the change in consumption divided by the change in personal income. C) the change in disposable income divided by the change in consumption. D) the change in national income divided by the change in consumption.

Potential GDP refers to

A) the level of GDP attained when all firms are producing at capacity. * B) the level of GDP attained by the country with the highest growth in real GDP in a given year. C) the difference between the highest level of real GDP per quarter and the lowest level of real GDP per quarter within any given year. D) the extent to which real GDP is above or below nominal GDP.

Why might firms pay wages that are above the equilibrium wage in a market?

A) to increase the productivity of their workers * B) to reduce the unemployment rate C) to encourage workers to form labor unions D) to reduce profit

Aggregated Expenditure formula

AE = C + I + G + NX

An increase in the price level in the United States will shift the aggregate expenditure line upward

False

GDP FORMULA

GDP = C + I + G + (X - M)

How to calculate growth rate of GDP

Present - Past / past then x 100 if you want %

If government saving is negative, then

T - TR < G *

Financial markets and financial intermediaries comprise the financial system.

True

If planned aggregate expenditure equals GDP, the economy is in macroeconomic equilibrium.

True

The household survey asks adults about their employment status and is used to compile the monthly unemployment rate.

True *

How to calc marginal propensity to save

by dividing the change in savings by the change in income

how to calculate marginal propensity to consume

is equal to ΔC / ΔY, where ΔC is change in consumption, and ΔY is change in income

What is the name of the organization that defines business cycle peaks and troughs in the United States?

the National Bureau of Economic Research

If aggregate expenditure is more than GDP, then inventories fall and GDP rises.

true