ECON 200 Ch. 7, 8, 9 Connect Questions

______ start new economic enterprises, while ______ run the enterprises on a day-to-day basis. a. Entrepreneurs; managers b. Managers; entrepreneurs c. Managers; laborers d. Entrepreneurs; laborers

a. Entrepreneurs; managers

Which of the following does NOT help explain why the Chinese save at much higher rates than Americans? a. Longstanding traditions in Chinese culture celebrate savings as a virtue. b. Economic growth has been significantly higher in China than in the U.S. c. Uncertainty about the future may be perceived as higher in China than in the U.S. d. China has a much less comprehensive social safety net than the U.S.

a. Longstanding traditions in Chinese culture celebrate savings as a virtue.

How would each of the following likely affect the real wage and employment of unskilled workers on an automobile plant assembly line? - A sharp increase in the price of gas causes many commuters to switch to mass transit. a. The real wage and employment decrease. b. The real wage and employment increase. c. The real wage increases and employment decreases. d. The real wage decreases and employment increases.

a. The real wage and employment decrease.

How would each of the following likely affect the real wage and employment of unskilled workers on an automobile plant assembly line? - Robots are introduced to most basic assembly-line tasks. a. The real wage and employment decrease. b. The real wage increases and employment decreases. c. The real wage decreases and employment increases. d. The real wage and employment increase.

a. The real wage and employment decrease.

How would each of the following likely affect the real wage and employment of unskilled workers on an automobile plant assembly line? - Demand for the type of car made by the plant increases. a. The real wage and employment increase. b. The real wage and employment decrease. c. The real wage increases and employment decreases. d. The real wage decreases and employment increases.

a. The real wage and employment increase.

The most important factor for long run economic growth is a. average labor productivity. b. share of population employed. c. real output per person. d. per capita GDP.

a. average labor productivity.

Physical capital is the a. factories and machinery used to produce other goods and services. b. talents, training, and education of workers. c. financial resources available for investment. d. physical labor of workers.

a. factories and machinery used to produce other goods and services.

Other things equal, the combination of a ______ saving rate and a ______ real interest rate will result in the largest accumulation of wealth over time. a. high; high b. high; low c. high; zero d. low; high

a. high; high

Y/POP = Y/N × N/POP is an a. identity that holds true for all economies. b. identity that holds true for certain values. c. equation that only holds true for developing nations. d. equation that only holds true for less developed countries.

a. identity that holds true for all economies.

Ellie and Vince are a married couple, both with college degrees and jobs. How would you expect each of the following events to affect the amount they save each month? a. Ellie learns she is pregnant. Saving will___ b. Vince reads in the paper about possible layoffs in his industry. Saving will___ c. Vince had hoped that his parents would lend financial assistance toward the couple's planned purchase of a house, but he learns that they can't afford it. Saving will___ d. Ellie announces that she would like to go to law school in the next few years. Saving will___ e. A boom in the stock market greatly increases the value of the couple's retirement funds. Saving will___ f. Vince and Ellie agree that they would like to leave a substantial amount to local charities in their wills. Saving will___

a. increase b. increase c. increase d. increase e. decrease f. increase

Holding other factors constant, if fewer workers in the economy decide to participate in the labor force, then the real wages of workers will ______ and employment of workers will _____. a. increase; decrease b. decrease; decrease c. not change; decrease d. increase; increase

a. increase; decrease

Real wages increased in industrialized countries in the 20th century because the demand for labor a. increased more rapidly than the supply of labor increased. b. increased more slowly than the supply of labor increased. c. increased, while the supply of labor decreased. d. decreased, while the supply of labor increased.

a. increased more rapidly than the supply of labor increased.

In the saving and investment market of a closed economy, as real interest rates rise, the quantity saved _______ and the quantity invested ________. a. increases; decreases b. increases; stays the same c. stays the same; decreases d. decreases; increases

a. increases; decreases

In a closed economy's saving and investment market, demand is represented by the ________ curve, and supply by the _________ curve. a. investment; saving b. interest; money c. tax; spending d. saving; investment

a. investment; saving

Sang's current income is $100 more per month than his current consumption needs. He decides to use the $100 to reduce his credit card debt. As a result, his a. liabilities will decrease, and his wealth will increase. b. liabilities and his wealth will decrease. c. assets will decrease, and his wealth will increase. d. assets and his wealth will increase.

a. liabilities will decrease, and his wealth will increase.

Saving by households and businesses is called ______ saving. a. private b. public c. national d. aggregate

a. private

Current income minus spending on current needs equals a. saving. b. wealth. c. transfers. d. investment.

a. saving.

Public saving is positive when a. there is a government budget surplus. b. after-tax income of households and businesses is less than consumption expenditures. c. the government's budget is balanced. d. after-tax income of households and businesses is greater than consumption expenditures.

a. there is a government budget surplus.

Real GDP per person in Canada was $7,377 in 1950. Over the next 48 years it grew at a compound annual rate of 2.0 percent. If instead real GDP per person had grown at an average compound annual rate 2.5 percent, then real GDP per capita in Canada in 1998 would have been approximately ______ larger. a. $1,770 b. $5,049 c. $9,370 d. $24,130

b. $5,049

Incomes of low-, middle-, and high-income American households grew at about the same rate during which period? a. 1929-1941 b. 1945-1975 c. 1975-1998 d. 1998-2018

b. 1945-1975

Mike and Tom debone chicken breasts for Ted's Chicken Co. Mike is new and can only debone 60 chicken breasts per hour by hand, while Tom's experience allows him to debone 120 chicken breasts per hour by hand. Ted buys one new machine that can debone 100 chicken breasts per hour. Both Mike and Tom work the same 40 hours per week, but one of them is assigned to operate the machine instead of deboning the chicken breasts by hand. To obtain maximum average hourly productivity, ______ is assigned to use the machine and their combined average hourly productivity as a team is ______ chicken breasts. a. Mike; 80 b. Mike; 110 c. Tom; 80 d. Tom; 110

b. Mike; 110

What is NOT a reason for governments to fund education? a. More educated people earn more and pay higher taxes. b. More educated people can afford to live in bigger houses. c. More educated people are more likely to contribute to technological development. d. The democratic political system relies on an educated citizenry to operate effectively.

b. More educated people can afford to live in bigger houses.

What happens in the labor market when employers are optimistic about the economy? a. The labor supply curve shifts left. b. The labor demand curve shifts right. c. The labor supply curve shifts right. d. The labor demand curve shifts left.

b. The labor demand curve shifts right.

Would you expect the availability of IRAs to increase the amount that households save in light of: (1) the response of saving to changes in the real interest rate? a. Yes, the government matches the IRA savings making it very attractive. b. Yes, a higher real return seems to increase saving modestly. c. No, there is little increase in real returns from an IRA. d. No, people prefer much higher investment returns in the stock market.

b. Yes, a higher real return seems to increase saving modestly.

Would you expect the availability of IRAs to increase the amount that households save in light of: (2) psychological theories of saving? a. Yes, because people know they are better off when they save. b. Yes, because the funds cannot be withdrawn from an IRA prior to retirement, people are not tempted to withdraw these savings. c. No, because people can always find other ways to invest their money more profitably. d. No, because people don't want their money tied up.

b. Yes, because the funds cannot be withdrawn from an IRA prior to retirement, people are not tempted to withdraw these savings.

If an economy maintains a small rate of growth for a long period of time, then the size of the economy a. can only increase by a small amount. b. can increase by a large amount. c. can never double. d. will stay nearly constant.

b. can increase by a large amount.

When the market is pessimistic in its expectations about the future economy, the real interest rate a. definitely increases. b. definitely decreases. c. does not change. d. is unknown.

b. definitely decreases.

The labor supply curve is positively sloped because the higher the real wages the a. higher the quantity of labor demanded. b. higher the quantity of labor supplied. c. lower the quantity of labor demanded. d. lower the quantity of labor supplied.

b. higher the quantity of labor supplied.

Increasing wage inequality results when international trade leads to ______ wages for workers in exporting industries and ______ wages for workers in importing industries. a. higher; higher b. higher; lower c. lower; no change in d. lower; higher

b. higher; lower

Holding other factors constant, if a change in tax laws discourages people from saving more for retirement, then the real interest rate will ______ and the equilibrium quantity of saving and investment will _____. a. increase; increase b. increase; decrease c. decrease; decrease d. decrease; increase

b. increase; decrease

As the real wage decreases, the quantity of labor demanded ______ and the quantity of labor supplied _______. a. increases; increases b. increases; decreases c. decreases; decreases d. decreases; increases

b. increases; decreases

The real rate of interest measures the ______ of capital investment. a. value of the marginal product b. opportunity cost c. marginal benefit d. relative price

b. opportunity cost

If government spending increases by $1 million while net taxes are unchanged, then a. public saving increases. b. public saving decreases. c. public saving does not change. d. private saving increases.

b. public saving decreases.

In a closed economy's saving and investment market, the prevailing price is the a. real wage rate. b. real interest rate. c. real unemployment rate. d. real GDP.

b. real interest rate.

In the market for saving, the price is the a. relative price. b. real interest rate. c. nominal interest rate. d. inflation rate.

b. real interest rate.

To increase future living standards by pursuing higher current rates of investment spending, an economy must a. allow higher rates of current consumption. b. reduce current rates of consumption spending. c. reduce the current capital stock. d. decrease the amount of future research and development spending.

b. reduce current rates of consumption spending.

Government assistance to workers whose employment prospects have worsened is called a. worker mobility payments. b. transition aid. c. social security. d. the minimum wage.

b. transition aid.

If Y/N equals $3,000/person and N/Pop equals 0.9, then real output per person is a. $9,000/person. b. $3,000/person. c. $2,700/person. d. $3,333/person.

c. $2,700/person.

Which of the following helps explain why the Chinese save at higher rates than Americans? a. Americans have higher incomes per capita than the Chinese. b. Chinese have much higher life expectancy than Americans. c. Americans can buy things on credit more easily than the Chinese. d. Chinese retirees travel much more than American retirees.

c. Americans can buy things on credit more easily than the Chinese.

Why do countries fund education? a. Because education is an essential service. b. Because education benefits the individual directly without benefiting society. c. Because education benefits society in addition to directly benefiting the individual. d. Because education is traded in markets, like food and housing.

c. Because education benefits society in addition to directly benefiting the individual.

Which of the following does NOT help explain recent rapid income growth of top earners? a. Reductions in transportation and shipping costs b. Technologies that enable the most talented people to serve broader markets c. Increased trade barriers d. The communications revolution

c. Increased trade barriers

Lisa owns a beautiful diamond ring she purchased for $2,500. When she has it appraised, she learns that it is now worth $3,000. Based on this information a. Lisa's saving this year has increased by $500. b. Lisa's saving this year has decreased by $500. c. Lisa has experienced a $500 capital gain. d. Lisa's wealth is unchanged.

c. Lisa has experienced a $500 capital gain.

If fashion clothing is a luxury good, how would you expect continued growth in national income to affect observed salary differences between male and female fashion models? a. Salaries of male models would eventually exceed those of female models. b. The differences would decrease. c. The differences would increase. d. The differences would not be affected.

c. The differences would increase.

At the national level, higher saving rates lead to ______ and higher standards of living. a. greater current consumption b. slower growth c. greater investment d. crowding out

c. greater investment

The growth of real GDP per person in the United States between 1960 and 2019 was the result of a. growth in average labor productivity only. b. growth in the share of population employed only. c. growth in both average labor productivity and the share of population employed. d. neither the growth in average labor productivity nor the share of population employed.

c. growth in both average labor productivity and the share of population employed.

An explanation for the low saving rate in the United States consistent with the life-cycle reason for saving includes a. relatively generous government assistance for the elderly and large down payments required for home purchases. b. households spending beyond their means to keep up with community standards. c. highly developed financial systems making it easy to buy homes with down payments under 15 percent. d. large and persistent capital gains.

c. highly developed financial systems making it easy to buy homes with down payments under 15 percent.

A political system that promotes the free and open exchange of ideas a. will not have well-defined property rights. b. slows the development of new technologies and products. c. increases average labor productivity. d. is detrimental to economic growth.

c. increases average labor productivity.

High rates of saving and investing in the private sector promote economic growth by a. increasing human capital. b. improving the social and legal environment. c. increasing physical capital. d. improving technology.

c. increasing physical capital.

Female fashion models are paid significantly more than their male counterparts because a. employers discriminate against male models. b. the market for fashion models is not competitive. c. more money is spent on women's clothing than on men's clothing. d. female models are better looking than male models.

c. more money is spent on women's clothing than on men's clothing.

In the last 50 years, the share of population employed in the U.S. has increased because a. total population has decreased. b. immigrants have left the labor force. c. more women have entered the labor force. d. women have left the labor force.

c. more women have entered the labor force.

In recent decades, slower growth in the demand for labor accompanied by an accelerated growth in the supply of labor in the U.S. explains a. negative real wage growth and double-digit rates of unemployment. b. negative real wage growth and increasing wage inequality. c. negative real wage growth and an increase in the number of people with jobs. d. increasing wage inequality and double-digit rates of unemployment.

c. negative real wage growth and an increase in the number of people with jobs.

The price at which exchange takes place in the labor market is the a. amount of labor services. b. price of goods and services. c. real wage rate. d. labor supply.

c. real wage rate.

The minimum payment you are willing to accept to do a job is your a. nominal wage. b. real wage. c. reservation price. d. value of marginal product.

c. reservation price.

All of the accompanying describe trends in U.S. labor markets except a. growing wage inequality in the United States in recent decades. b. a slowdown in real wage growth since the 1970s. c. substantial growth in the level of employment in the United States since 2000. d. substantial growth in real wages during the last century.

c. substantial growth in the level of employment in the United States since 2000.

The demand for labor increases when the a. real wage increases. b. real wage decreases. c. value of the marginal product of labor increases. d. value of the marginal product of labor decreases.

c. value of the marginal product of labor increases.

If in the economy, business saving equals $240 billion, household saving equals $15 billion, and government saving equals −$150 billion, what is the value of national saving? a. $405 billion b. $255 billion c. $75 billion d. $105 billion

d. $105 billion

Lao and Lamar fill egg cartons with eggs. Lao just started the job and can fill only 25 cartons an hour. Lamar has significant on-the-job experience and can fill 50 cartons an hour. Both Lao and Lamar work 50 hours a week. Lao's average weekly productivity is ______ cartons; Lamar's average weekly productivity is ______ cartons; and as a team their average weekly productivity is ______ cartons. a. 25; 50; 75 b. 25; 50; 37.5 c. 1,000; 2,000; 1,500 d. 1,250; 2,500; 1,875

d. 1,250; 2,500; 1,875

High Tech, Incorported produces plastic chairs that sell for $10 each. The accompanying table provides information about how many plastic chairs can be produced per hour. Number of Workers Chairs Produced Per Hour 0 0 1 10 2 18 3 24 4 28 5 30 For simplicity, assume that labor is the only input. How many workers will be hired if the hourly wage for workers is $30? a. 1 b. 2 c. 3 d. 4

d. 4

How is real output per person calculated? a. Total labor Productivity × population unemployed b. Total labor Productivity × population employed c. Average labor Productivity × Share of population unemployed d. Average labor Productivity × Share of population employed

d. Average labor Productivity × Share of population employed

If changes in social norms increase the demand for men's fashion clothing, how would this affect observed salary differences between male and female fashion models? a. Salaries of male models would eventually exceed those of female models. b. The differences would increase. c. The differences would not be affected. d. The differences would decrease.

d. The differences would decrease.

The quantity of the commodity being traded in the labor market is the a. size of the population. b. size of the labor force. c. amount of real wages. d. amount of labor services.

d. amount of labor services.

The productivity slowdown of the 1970s occurred a. only in the U.S. b. only in the U.S. and the United Kingdom. c. only in the U.S, the United Kingdom, and Japan. d. around the world.

d. around the world.

If the share of the population employed is unchanged and real output per person increases by 20 percent, then it means that a. total labor productivity increased by 80 percent. b. average labor productivity decreased by 120 percent. c. total labor productivity decreased by 80 percent. d. average labor productivity increased by 20 percent.

d. average labor productivity increased by 20 percent.

The prediction that workers get additional training only when the rewards from the training are expected to exceed the costs of the training (including the opportunity costs) is based on the a. principle of comparative advantage. b. principle of diminishing returns to capital. c. scarcity principle. d. cost-benefit principle.

d. cost-benefit principle.

If there is a floor on wages created by a minimum wage, union contracts, or other factors, then a decline in the marginal productivity of low-skilled workers will ______ the demand for low-skilled workers and ______ the number of unemployed workers. a. increase; increase b. increase; decrease c. decrease; decrease d. decrease; increase

d. decrease; increase

If the labor demand curve shifts to the left, then real wages a. increase; the number of people employed increases. b. increase; the number of people employed decrease. c. decrease; the number of people employed increases. d. decrease; the number of people employed decreases.

d. decrease; the number of people employed decreases.

Capital losses are a. decreases in the flow of investment. b. decreases in the flow of saving. c. the destruction of plant and equipment. d. decreases in the value of existing assets.

d. decreases in the value of existing assets.

Skill-biased technological change increases wage inequality by altering the ______ high-skilled workers relative to low-skilled workers. a. reservation price of b. mobility of c. supply of d. demand for

d. demand for

A worldwide slowdown in productivity growth occurred a. before 1950. b. in the 1950s and 1960s. c. in the 1960s and 1970s. d. in the 1970s and 1980s.

d. in the 1970s and 1980s.

Firms will hire additional workers as long as the wage a. is less than the marginal product of labor. b. equals the marginal product of labor. c. is greater than the marginal product of labor. d. is less than the value of the marginal product of labor.

d. is less than the value of the marginal product of labor.

Structural unemployment is a. the additional unemployment not captured in official statistics resulting from discouraged workers and involuntary part-time workers. b. the extra unemployment that occurs during periods of recession. c. short-term unemployment that is associated with the process of matching workers with jobs. d. long-term and chronic unemployment that exists even when the economy is producing at a normal rate.

d. long-term and chronic unemployment that exists even when the economy is producing at a normal rate.

The labor demand curve is negatively sloped because the higher the real wages the a. higher the quantity of labor supplied. b. lower the quantity of labor supplied. c. higher the quantity of labor demanded. d. lower the quantity of labor demanded.

d. lower the quantity of labor demanded.

The value of the marginal product of new capital increases when the: a. price of new capital goods increases. b. real interest rate increases. c. the price of the good the firm produces decreases. d. productivity of new capital increases.

d. productivity of new capital increases.

When the market is pessimistic in its expectations about the future economy, a. both the saving and investment curves shift to the left. b. both the saving and investment curves shift to the right. c. saving decreases and investment increases. d. saving increases and investment decreases.

d. saving increases and investment decreases.

Advances in information and communication technology are the principal factors cited for the a. slowdown in productivity growth between 1973 and 1995. b. speedup in productivity growth between 1973 and 1995. c. slowdown in productivity growth from 1995-2000. d. speedup in productivity growth from 1995-2000.

d. speedup in productivity growth from 1995-2000.

A closed economy is one that does not a. allow any immigration. b. have a production possibilities curve. c. have a demand and supply framework. d. trade with any other economy.

d. trade with any other economy.