ECON 2006 Exam 1, ECON 2006 Exam 2

Refer to the following statistics. Based on these statistics, the level of business investment is Inventories: $12 million Housing: $400 million Equipment: $500 million Business structures: $350 million Intellectual property: $700 million

$1,550 million.

Below is U.S. economic data for 2017. What was total spending?

$19.52 trillion

In 1979, when the consumer price index was 72.58, men earned a median income of $11,779 per year. If the consumer price index in 2015 was 236.99, how much was $11,779 in 2015 dollars?

$38,461

What is Belgium's real GDP if its nominal GDP is $532 billion (in current US$) and the GDP deflator is 119.9?

$443.7 billion

The table below shows data for Central African Republic (CAR). What was this country's real GDP per person in 2010?

$487.95

The efficient market hypothesis states that:

at any point in time, stock prices reflect all publicly available information.

A carpenter's shop doubles in size, buys twice the wood, hires a second carpenter, buys a second lathe, and then manages to produce 230% more furniture than it did before. The carpenter's shop is experiencing:

increasing returns to scale.

The government begins to provide free primary school education. Which input in the production function changes, and what is the effect on economic growth in the country?

See Ex 1 Review Vid

How does money illusion cause nominal wage rigidity?

Since workers focus on nominal earnings and thus resent wage cuts, employers often choose to hold nominal wages constant rather than lower them.

At what price does this market experience a surplus of 140 units?

$13

Refer to the diagram of the circular flow of income. The key lessons from this diagram are that:(i) all flows of resources are matched by flows of money.(ii) the market value of total output must be equal to total spending.(iii) total spending must equal total income.(iv) all inputs are provided by businesses.

(i), (ii), and (iii)

You purchase a certificate of deposit that pays an advertised rate of 2.25% interest per year. What is your real rate of return if the actual inflation rate is 1.65%?

0.6%

Consider the following basket of goods: 50 bottles of milk, 100 avocadoes, 50 apples, and eight pineapples. Suppose that last year, each bottle of milk was $2.50, each avocado was $1.50, each apple was $0.75, and each pineapple was $4. This year, each bottle of milk is $2.50, each avocado is $1.80, each apple is $0.80, and each pineapple is $4.30. What is the inflation rate between last year and this year?

10.13%

The table shows Canada's labor force characteristics. How many people were employed in Canada in May 2019?

19,056,800

In 1945, the United States recorded real GDP growth of -1% and nominal GDP growth of 1.6%. What was the inflation rate in 1945?

2.6%

According to the rule of 70, if GDP per person is growing at a rate of roughly 3.4%, approximately how many years will it take for average income to double?

21 years

Refer to the following table that shows monthly data for Japan. What was the unemployment rate in December 2016?

3%

Consider the graph of the labor market shown here. At the wage rate of $15, the number of unemployed people in this market is:

4,000.

A new tannery opens in town. Although the tannery brings many new jobs, it is also dumping waste into the river. What shortcoming of GDP measurement does this reflect?

Environmental degradation is not counted.

You just bought two used textbooks for $25 each. How much does GDP change because of your purchase?

GDP does not change.

In 2018, Hurricane Michael hit Florida and destroyed some shrimp wholesale facilities. Which graph correctly depicts the effect of the hurricane on the equilibrium price and quantity in the shrimp market?

Graph C

Which of following people can be classified as frictionally unemployed?

Nancy, who is currently unemployed, lives in a town where telecommunications are poor, and cannot find proper information on available jobs

What happens to the equilibrium price and quantity when demand increases and simultaneously supply decreases, and the relative size of the shifts is not known?

The equilibrium price rises, and the change in the equilibrium quantity is ambiguous.

Rapid growth in poorer countries leads to:

convergence in real GDP per person between poorer countries and richer countries.

Devina lost her job a while ago when the economy entered a recession. She no longer believes she can get a job and has lost hope of employment. She has several friends in the same scenario. They have all stopped looking for work. This scenario describes:

discouraged workers.

Holding other things equal, the _____ the time period that saving earns interest in the bank, the _____ the future value of that saving.

longer; greater

The figure shows three different production functions. The law of diminishing returns can be seen in which of the following movements in the figure?

point C to point D C is in center middle line, D is to the right on the same line

When the holiday season arrives this year, people prefer to buy gifts online. Which graph depicts how the market of parcel delivery services change during this holiday season?

Graph A - Demand line is shifted to the right and price dot is higher on supply line

Mark earns $3,800 in the current period. His consumption in this same period is $4,100. Which of the following is true?

His dissaving is $300.

Which of the following people can be described as "structurally unemployed"? (i) Mola is trained as a textile worker but is currently unemployed. He wants to work in the textile industry, which is unionized. Wages are high, but firms in this industry cannot offer jobs at lower wages due to the union requirements. Therefore, no jobs are available (ii) Agnes believes that she can get a better job in Alaska. Therefore, she quits her job in West Virginia and is looking for a job in Alaska. (iii) Pratt has just retired after working for 40 years in a candle-making factory.(iv) The minimum wage has just been raised, and Philomena finds that fewer jobs are available in the fast-food industry. She is unable to find a job.(v) Cary will graduate in two months, after being a full-time student for the past four years. She wants to find a job in the investment banking sector.

Mola and Philomena