econ exam: ch. 5, 6, 10, 7

45.3% and 8.1%

1. The Bureau of Labor Statistics reported in 2005 that there were 28.19 million people over age 25 who had no high school degree or its equivalent, 11.73 million of whom were employed and 1.04 million of whom were unemployed. What were the labor-force participation rate and the unemployment rate for this group?

The consumer price index is used to measure the quantity of goods and services that the economy is producing.

1. Which of the following is not correct?

b. With a growth rate of about 2 percent per year, average income per person doubles about every 60 years.

1. Which of the following is not correct?

market prices

1.Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP makes use of

GDP would definitely increase because GDP excludes environmental quality.

10. Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct?

$22,000

2. James owns two houses. He rents one house to the Johnson family for $10,000 per year. He lives in the other house. If he were to rent the house in which he lives, he could earn $12,000 per year in rent. How much do the housing services provided by the two houses contribute to GDP?

a. real GDP per person grew faster in Mapoli than in Romeria.

2. Over the last ten years productivity grew faster in Mapoli than in Romeria while the population and total hours worked remained the same in both countries. It follows that

has to spend more dollars to maintain the same standard of living.

2. When the consumer price index rises, the typical family

b. private goods and proprietary knowledge.

3. Apple founder Steve Jobs received patents on many of his ideas. While the patents existed, his ideas were

the economy's overall price level is rising.

3. Economists use the term inflation to describe a situation in which

caused measured GDP to rise.

3. Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

(CPI2015-CPI2010)/CPI2010 x100

4. If 2010 is the base year, then the inflation rate in 2015 equals

a. either an increase in human capital or an increase in physical capital

4. Other things the same, which of the following could explain an increase in productivity?

$57,000

4. Suppose there are only two firms in an economy: Cowhide, Inc. produces leather and sells it to Couches, Inc., which produces and sells leather furniture. With each $1,000 worth of leather that it buys from Cowhide, Inc., Couches, Inc. produces a couch and sells it for $2,600. Neither firm had any inventory at the beginning of 2015. During that year, Cowhide produced enough leather for 25 couches. Couches, Inc. bought 80% of that leather for $20,000 and promised to buy the remaining 20% for $5,000 in 2016. Couches, Inc. produced 20 couches during 2015 and sold each one during that year for $2,600. What was the economy's GDP for 2015?

6%

5. If the consumer price index was 100 in the base year and 106 in the following year, then the inflation rate was

a. the knowledge he learned on the job, but not the tools he uses

5. Ralph is a plumber. Which of the following are included in his human capital?

would not be included in GDP because they are transfer payments.

5. To encourage formation of small businesses, the government could provide subsidies; these subsidies

John is frictionally unemployed, and Curtis is structurally unemployed

6. John is a stockbroker. He has had several job offers, but he has turned them down because he thinks he can find a firm that better matches his tastes and skills. Curtis has looked for work as an accountant for some time. While the demand for accountants does not appear to be falling, there seems to be more people applying than jobs available.

5.0 percent deflation between the first and second years, and 3.0 percent deflation between the second and third years.

6. The price index was 150 in the first year, 142.5 in the second year, and 138.2 in the third year. The economy experienced

U.S. consumption increases by $100, U.S. net exports decrease by $100, and U.S. GDP does not change.

6. When an American household purchases a bottle of Italian wine for $100,

a. The United States had a higher growth rate before 1900 than after. b. After World War II the United States had lower growth rates than war-ravaged European countries. c. Although the United States has a relatively high level of output per person, its growth rate is rather modest compared to some countries.

6. Which of the following is consistent with the catch-up effect?

$1,208,421

7. Babe Ruth's 1931 salary was $80,000. Government statistics show a consumer price index of 15.2 for 1931 and 229.6 for 2012. Ruth's 1931 salary was equivalent to a 2012 salary of about

nominal GDP but not real GDP.

7. If the prices of all goods and services produced in the economy rose while the quantity of all goods and services stayed the same, which would rise?

both frictional unemployment and the natural rate of unemployment

7. In the 1990's Ireland made unemployment benefits less generous. This change would likely have reduced

c. The poor country has poorly developed property rights.

7. Some poor countries appear to be falling behind rather than catching up with rich countries. Which of the following could explain the failure of a poor county to catch up?

$10 trillion.

8. If in some year real GDP was $5 trillion and the GDP deflator was 200, what was nominal GDP?

$40.00 purchased in 1975.

8. If the CPI was 90 in 1975 and is 225 today, then $100 today purchases the same amount of goods and services as

a. the number of employed 650 b. the number of unemployed 150 c. the labor force 800 d. the unemployment rate 18.7%

8. The population of Ectenia is 1000 people: 500 work full-time, 150 work half-time but would prefer to work full-time, 150 are looking for a job, 100 would like to work but are so discouraged they have given up looking, 50 are not interested in working because they are full-time students, and 50 are retired. Find

the value of leisure, the value of goods and services produced at home, the quality of the environment.

9. GDP does not reflect

a. Total adult population 246 mil b. Labor force 155 mil c. Labor force participation rate 62.9% d. Unemployment rate 6.56%

9. The Bureau of Labor Statistics (BLS) announced that in January 2014, of all adult Americans, 145,092,000 were employed, 10,192,000 were unemployed, and 91,630,000 were not in the labor force. Find

the first but not the second

A U.S. firm produces nail guns in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the nail guns to a U.S. construction company. In which quarter(s) is (are) GDP higher?

$500,000

A U.S.-owned automobile factory uses $100,000 worth of parts purchased from foreign countries along with U.S. inputs to produce 30 cars worth $20,000 each. Twenty of these cars are sold and 10 are left in inventory. How much did these actions add to GDP?

123.4

A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown below. The base year is 2015 . Refer to Table 23-10. What was this country's GDP deflator in 2017?

$10,950

A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown below. The base year is 2015 . Refer to Table 23-10. What was this country's real GDP in 2016?

$1200

A painter pays $500 for paint he uses to repaint a house. He then presents a bill for $1200 that covers his time and expenses to the homeowner. How much do these transactions add to GDP?

higher caloric intake. This increase in height is associated with higher productivity.

According to research by Robert Fogel, people in Britain grew taller because of

Alexis's productivity is greater than Tara's. This difference could be explained by Alexis having more physical capital than Tara

Alexis and Tara both mine salt. Alexis mines 300 pounds in 20 hours. Tara mines 400 pounds in 40 hours. Which of the following is correct?

the increase in output was greater last year than this year

All else equal, if there are diminishing returns, then if a country raised its capital by 100 units last year and by 100 units this year,

brings with it more scientists, inventors, and engineers

An increase in a country's population may contribute to the rate of technological progress because a larger population

both the GDP deflator and the consumer price index.

An increase in the price of dairy products produced domestically will be reflected in

the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, poor countries should grow faster than rich ones.

Assuming diminishing returns

housing.

By far the largest category of goods and services in the CPI basket is

output in country A increases by less than in country B

Country A and country B are the same except country A currently has more capital. Assuming diminishing returns, if both countries increase their capital by 100 units and other factors that determine output are unchanged, then

neither frictional nor structural unemployment

Cyclical unemployment is caused by

none of the above

Discouraged workers are included in a. number of unemployed b. labor force c. frictional unemployment d. none of the above

126.1

For an imaginary economy, the value of the consumer price index was 138.75 in 2016, and the inflation rate was 10 percent between 2015 and 2016. The consumer price index in 2015 was

sectoral shifts are always happening

Frictional unemployment is inevitable because

job searching. It is often thought to explain relatively short spells of unemployment

Frictional unemployment results from

240

GDP deflator for 2013

$40,950

Harry spent $39,000 in 2009 and $42,000 in 2014 on goods and services. The consumer price index was 220 for 2009 and 231 for 2014. Harry's 2009 spending in 2014 dollars is about

the knowledge and skills that workers have acquired

Human capital is

foreign direct investment. The factory will make a bigger impact on South Korea's GDP than on its GNP.

If a Japanese company opens a new factory in South Korea, it makes

neither real GDP per person nor productivity

If a country increases its saving rate, which of the following permanently grow at a higher rate?

87.5

If in some year nominal GDP was $28 trillion and real GDP was $32 trillion, what was the GDP deflator?

$25.51 purchases today.

If the CPI was 127 in 1972 and is 324 today, then $10 in 1972 purchased the same amount of goods and services as

the costs of the remodeling materials and the increase in rent, but not the price of the house

In early 2010 Molly paid $200,000 for a house built in 2000. She spent $30,000 on new materials to remodel the house. Although Molly lived in the house after she remodeled it, its rental value rose. Which of the following contributed to real GDP in 2010?

$1500

In the economy of Talikastan in 2015, consumption was $3000, GDP was $5500, government purchases were $1000, imports were $1000, and investment was $1000. What were Talikastan's exports in 2015?

neither in the labor force nor unemployed

Jai Li just lost her job, and she has not yet started looking for a new one. The Bureau of Labor Statistics counts Jai Li as

international trade, but not to Japan's domestic quantities of natural resources

Japan's status as a rich nation is attributable to

Jenna and Mary are both frictionally unemployed

Jenna is searching for a job that suits her tastes about where to live. Mary is looking for a job that makes best use of her skills.

a. allow countries to take advantage of gains from trade. b. have generally led to high growth for the countries that pursued them. c. receive widespread support from economists.

Outward oriented policies

1200

Pancakes and waffles A. What was the nominal GDP in 2013?

the quantity of physical capital doubles; the number of workers doubles; and human capital, natural resources, and technology remain constant

Refer to Figure 25-1. Choose a point anywhere on the curve and call it point A. If the economy is at point A in 2011, then it will definitely remain at point A in 2012 if, between 2011 and 2012,

Returns to capital become increasingly smaller as the amount of capital per worker increases.

Refer to Figure 25-1. The shape of the curve is consistent with which of the following statements about the economy to which the curve applies? Select one:

1400

Refer to Table 28-2. The number of adults not in the labor force of Aridia in 2012 was

31.6%

Refer to Table 28-2. The unemployment rate of Aridia in 2011 was

11,000

Refer to Table 28-3. How many people were employed in Baltivia in 2009?

0

Refer to Table 28-7. If the local government imposed a minimum wage of $5 in Productionville, how many people would be unemployed?

5,000

Refer to Table 28-7. If the local government imposed a minimum wage of $7 in Productionville, how many people would be unemployed?

Ellen's but not Sam's.

Sam, an American citizen, prepares meals for his family at home. Ellen, a Canadian citizen, commutes to the U.S. to help prepare meals at a restaurant in Idaho. Whose value of services preparing meals is included in U.S. GDP?

productivity and real GDP per person increase.

Suppose Turkey increases its saving rate. In the long run

110

Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. In 2012, the basket's cost was $50; in 2014, the basket's cost was $52; and in 2016, the basket's cost was $55. The value of the CPI in 2016 was

gradually raise the level of real GDP per person

Suppose that the U.S. undertakes a policy to increase its saving rate. This policy will likely

8.7%

Table 24-1 The table below lists annual consumer price index and inflation rates for a country over the period 2005-2010. Assume the year 2005 is used as the base year. Refer to Table 24-1. What belongs in space C?

12.5%

Table 24-5 The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys Refer to Table 24-5. If the base year is 2006, then the inflation rate in 2005 was

increased from 2004 to 2005 and increased from 2005 to 2006.

Table 24-5 The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. Refer to Table 24-5. If the base year is 2004, then the CPI

100

Table 24-5 The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. Refer to Table 24-5. If the base year is 2004, then the CPI in 2004 was

increased from 2004 to 2005 and increased from 2005 to 2006.

Table 24-5 The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. Refer to Table 24-5. If the base year is 2006, then the CPI

62.9%

The Bureau of Labor Statistics (BLS) announced that in January 2014, of all non-institutionalized adult Americans, 145,092,000 were employed, 10,192,000 were unemployed, and 91,630,000 were not in the labor force. Labor force participation rate

6.56%

The Bureau of Labor Statistics (BLS) announced that in January 2014, of all non-institutionalized adult Americans, 145,092,000 were employed, 10,192,000 were unemployed, and 91,630,000 were not in the labor force. The unemployment rate is

The 2013 payment is included in 2013 GDP as government purchases, but the 2014 payment is not included in 2014 GDP.

The U.S. government pays an economist at the U.S. Department of Commerce $100,000 in salary in 2013. The economist then retires. In 2014, the government pays him $60,000 in Social Security benefits. Which of the following is correct?

The CPI reflects a fixed basket of goods and services; the GDP deflator reflects current production of goods and services

The consumer price index and the GDP deflator are two alternative measures of the overall price level. Which of the following statements about the two measures is correct?

total adult population that is in the labor force

The labor-force participation rate measures the percentage of the

The number of employed 650 The number of unemployed 150 The labor force 800 The unemployment rate is 18.7%

The population of Ectenia is 1000 people: 500 work full-time, 150 work half-time but would prefer to work full-time, 150 are looking for a job, 100 would like to work but are so discouraged they have given up looking, 50 are not interested in working because they are full-time students, and 50 are retired.

human capital conveys positive externalities.

The return to schooling for society is higher than the return to schooling for the individual if

123.8

The table below pertains to Studious, an economy in which the typical consumer's basket consists of 5 books and 10 calculators. If 2013 is the base year, then the consumer price index was ____in 2014

80.8

The table below pertains to Studious, an economy in which the typical consumer's basket consists of 5 books and 10 calculators. If 2014 is the base year, then the consumer price index was ____ in 2013.

7.7

The table below pertains to Studious, an economy in which the typical consumer's basket consists of 5 books and 10 calculators. Using 2013 as a base year, the inflation rate was____ for 2014.

Prices, including those for movie tickets, have been rising over time.

When ranking movies by nominal box office receipts, what important fact is overlooked?

minimum wage laws, unions, efficiency wages

Which of the following causes of unemployment is associated with a wage rate above the market equilibrium level?

a. The United States had a higher growth rate before 1900 than after. b. After World War II the United States had lower growth rates than war-ravaged European countries. c. Although the United States has a relatively high level of output per person, its growth rate is rather modest compared to some countries

Which of the following is consistent with the catch-up effect?

spending on new business equipment such as power tools but not spending on stocks and bonds

Which of the following is included in the investment component of GDP?

job search

Which of the following is not an explanation for the existence of structural unemployment?

the business cycle

Which of the following is not an explanation for the existence of unemployment in the long run?

Technological knowledge is a determinant of productivity.

Which of the following statements is correct?

. When Ken and Kim were both single, they lived in separate apartments and each paid $800 in rent. Ken and Kim got married in 2015 and they bought a previously unoccupied house that, according to reliable estimates, could be rented for $1,700 per month

Which of the following transactions adds to U.S. GDP for 2015?

500

real GDP in 2013

a. may improve the ability of the economy to match workers with appropriate jobs. b. reduces the job search efforts of the unemployed. c. increases the amount of frictional unemployment in the economy.

unemployment insurance