exam 3 econ

If an unemployed person quits looking for work, then, eventually the unemployment rate a. is unaffected, and the labor-force participation rate decreases. b. and the labor-force participation rate are both unaffected. c. decreases, and the labor-force participation rate is unaffected. d. and the labor-force participation rate both decrease.

and the labor-force participation rate both decrease.

Crowding out occurs when a. investment increases because a budget surplus makes interest rates fall. b. investment declines because a budget deficit makes interest rates fall. c. investment increases because a budget surplus makes interest rates rise. d. investment declines because a budget deficit makes interest rates rise.

investment declines because a budget deficit makes interest rates rise

National saving a. is the total income in the economy that remains after paying for consumption and government purchases. b. is equal to private saving minus public saving. c. is the total income in the economy that remains after paying for consumption. d. is always greater than investment for a closed economy.

is the total income in the economy that remains after paying for consumption and government purchases.

Frictional unemployment results from a. a surplus in the some labor markets. It is often thought to explain relatively short spells of unemployment. b. a surplus in some labor markets. It is often thought to explain relatively long spells of unemployment. c. job searching. It is often thought to explain relatively long spells of unemployment d. job searching. It is often thought to explain relatively short spells of unemployment.

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

Human capital is a. the same thing as labor. b. knowledge and skills that workers have acquired. c. the tools and equipment operated by humans. d. the same thing as technological knowledge.

knowledge and skill that workers have acquired

Lucy quit her job because she was unhappy at work. Genevieve was fired because she frequently surfed the Internet rather than working on her assigned tasks. Who is eligible for unemployment insurance benefits? a. Genevieve but not Lucy b. neither Lucy nor Genevieve c. both Lucy and Genevieve d. Lucy but not Genevieve

neither Lucy nor Genevieve

Cyclical unemployment is caused by a. structural but not frictional unemployment b. frictional and structural unemployment c. frictional but not structural unemployment d. neither frictional nor structural unemployment

neither frictional nor structural unemployment

Each day Sue works 8 hours and produces 7 units of goods and services. Mary works 10 hours each day and produces 10 units of goods and services. It follows that a. Sue's income per hour will be higher than Mary's. b. Sue's income per day will be higher than Mary's. c. Mary's productivity is higher than Sue's. d. Sue's productivity is higher than Mary's

Mary's productivity is higher than Sue's

Financial intermediaries are a. the same as financial markets. b. financial institutions through which savers can indirectly provide funds to borrowers. c. individuals who make profits by buying a stock low and selling it high. d. a more general name for financial assets such as stocks, bonds, and checking accounts.

financial institutions through which savers can indirectly provide funds to borrowers

People who hold well-diversified portfolios of stocks have greatly reduced or eliminated a. firm-specific risk, but still they have reason to worry about their wealth decreasing as a result of recessions. b. market risk, but still they have reason to worry about their wealth decreasing as a result of recessions. c. firm-specific risk, and so they do not need to worry about their wealth decreasing as a result of recessions. d. market risk, and so they do not need to worry about their wealth decreasing as a result of recessions.

firm-specific risk, but still they have reason to worry about their wealth decreasing as a result of recessions.

Refer to Table 28-2. The number of adults not in the labor force of Aridia a. increased from 2010 to 2011 but decreased from 2011 to 2012. b. decreased from 2010 to 2011 but increased from 2011 to 2012. c. decreased both from 2010 to 2011 and from 2011 to 2012. d. increased both from 2010 to 2011 and from 2011 to 2012.

increased both from 2010 to 2011 and from 2011 to 2012.

If a person is risk averse, then as wealth increases, total utility of wealth a. increases at a decreasing rate. b. increases at an increasing rate. c. decreases at a decreasing rate. d. decreases at an increasing rate.

increases at a decreasing rate.

Refer to Scenario 26-1. For this economy, investment amounts to a. $12,000. b. $38,000. c. $18,000. d. $15,000.

$15,000

Refer to Scenario 26-1. For this economy, private saving amounts to a. $15,000. b. $37,000. c. $18,000. d. $22,000.

$18,000

For a closed economy, GDP is $12 trillion, consumption is $7 trillion, taxes net of transfers are $3 trillion and the government runs a deficit of $1 trillion. What are private saving and national saving? a. $2 trillion and $3 trillion, respectively b. $5 trillion and $3 trillion, respectively c. $5 trillion and $1 trillion, respectively d. $2 trillion and $1 trillion, respectively

$2 million and $1 trillion respectively

Four years ago Ollie deposited some money into an account. He earned 5 percent interest on this account and now it has a balance of $303.88. About how much money did Ollie deposit into his account when he opened it? a. $210 b. $240 c. $250 d. $220

$250

Refer to Scenario 26-1. For this economy, consumption amounts to a. $68,000. b. $38,000. c. $60,000. d. $53,000.

$60,000

Refer to Figure 28-3. If unemployment is 2,000 workers, then the minimum wage must be a. $8. b. $5. c. $4. d. $7.

$7

Refer to Figure 28-3. If the government imposes a minimum wage of $4, how many workers will be unemployed? a. 7,000 b. 4,000 c. 0 d. 3,000

0

Refer to Table 28-2. The number of adults not in the labor force of Aridia in 2012 was a. 3,000. b. 200. c. 1,400. d. 1,600.

1,400.

Fourteen years ago William put money in his account at First National Bank. William decides to cash in his account and is told that his money has quadrupled. According to the rule of 70, what rate of interest did Alfred earn? a. 7 percent b. 10 percent c. 14 percent d. 5 percent

10 percent

A barber shop produces 192 haircuts a day. Each barber in the shop works 8 hours per day and produces the same number of haircuts per hour. If the shop's productivity is 2 haircuts per hour of labor, then how many barbers does the shop employ? a. None of the above is correct. b. 16 c. 12 d. 8

12

Refer to Table 28-2. The unemployment rate of Aridia in 2010 was a. 10%. b. 80%. c. 14.3%. d. 12.5%.

12.5%

Refer to Figure 28-3. If the government imposes a minimum wage of $8, then how many workers will be unemployed? a. 3,000 b. 4,000 c. 0 d. 7,000

4,000

Refer to Figure 28-3. At the equilibrium wage, how many workers are employed? a. 1,000 b. 9,000 c. 0 d. 5,000

5,000

Adam and Doug both build birdhouses. Adam works 30 hours a week and produces 15 bird houses. Doug works 20 hours a week and produces 12 bird houses. Which of the following is correct? a. Doug's production and productivity are higher than Adam's. b. Adam's production is higher than Doug's, but Doug's productivity is higher than Adam's. c. Adam's production and productivity are higher than Doug's. d. Doug's production is higher than Adam's, but Adam's productivity is higher than Doug's.

Adams production is higher than doug's but doug's productivity is higher than Adams

Job search a. is one reason economies always experience some unemployment. b. is the process of matching workers with appropriate jobs. c. would not be a problem if all workers and all jobs were the same. d. All of the above are correct.

All of the above are correct.

Country A had a population of 1,000, of whom 600 worked an average of 8 hours a day and had a productivity of 2.5. Country B had a population of 800, of whom 560 worked 8 hours a day and had productivity of 3.0. Country a. A had the higher level of real GDP and Country B had the higher level of real GDP per person b. B had the higher level of real GDP and real GDP per person. c. B had the higher level of real GDP and Country A had the higher level of real GDP per person d. A had the higher level of real GDP and real GDP per person.

B had the higher level of real GDP and real GDP per person

Upland has a population of 15,000, of whom 9,000 work 8 hours a day to produce real output of $342,000. Lowland has a population of 8,000, of whom 7,000 work 7 hours a day to produce real output of $171,500. a. Upland has higher productivity but lower real GDP per person than Lowland. b. Upland has lower productivity and lower real GDP per person than Lowland. c. Upland has lower productivity but higher real GDP per person than Lowland. d. Upland has higher productivity and higher real GDP per person than Lowland.

Upland has higher productivity and higher real GDP per person than Lowland

James offers you $1,000 today or $X in 7 years. If the interest rate is 4.5 percent, then you would prefer to take the $1,000 today if and only if a. X < 1,266.67. b. X < 1,360.86. c. X < 1,188.89. d. X < 1,045.00.

X < 1,360.86.

A basic principle of economics is that a country's standard of living depends on its a. quantity of physical capital. b. ability to produce goods and services. c. ability to thrive economically without having to interact with other countries. d. abundance of natural resources.

ability to produce goods and services

According to the rule of 70, if the interest rate is 5 percent, how long will it take for the value of a savings account to double? a. about 6.3 years b. about 3.5 years c. about 12 years d. about 14 years

about 14 years

A mutual fund a. is a financial institution that stands between savers and borrowers. b. is a financial intermediary. c. allows people with small amounts of money to diversify their holdings. d. All of the above are correct.

all of the above are correct

A person who is counted as "unemployed" by the Bureau of Labor Statistics a. is also in the labor force. b. must have recently looked for work or be on temporary layoff. c. must be at least 16 years old. d. All of the above are correct.

all of the above are correct

Natural resources a. are inputs provided by nature. b. include land, rivers, and mineral deposits. c. take two forms: renewable and nonrenewable. d. All of the above are correct.

all of the above i s correct

A creditor of a corporation holds a. stocks sold by the corporation. If the corporation experiences financial difficulties bond holders are paid before stock holders. b. bonds sold by the corporation. If the corporation experiences financial difficulties stock holders are paid before bond holders. c. bonds sold by the corporation. If the corporation experiences financial difficulties bond holders are paid before stock holders. d. stocks sold by the corporation. If the corporation experiences financial difficulties stock holders are paid before bond holders.

bonds sold by the corporation. If the corporation experiences financial difficulties bond holders are paid before stock holders.

Refer to Scenario 26-1. This economy's government is running a a. budget surplus of $3,000. b. budget surplus of $12,000. c. budget deficit of $12,000. d. budget deficit of $3,000.

budget deficit of $3,000

Refer to Table 28-2. The labor-force participation rate of Aridia a. decreased both from 2010 to 2011 and from 2011 to 2012. b. increased from 2010 to 2011 but decreased from 2011 to 2012. c. decreased from 2010 to 2011 but increased from 2011 to 2012. d. increased both from 2010 to 2011 and from 2011 to 2012.

decreased both from 2010 to 2011 and from 2011 to 2012.

A closed economy a. does not trade with other economies. b. is centrally-planned. c. does not allow financial intermediation. d. All of the above are correct.

does not trade with other economies

The logic behind the catch-up effect is that a. workers in countries with low incomes will work more hours than workers in countries with high incomes. b. the capital stock in rich countries deteriorates at a higher rate because it already has a lot of capital. c. new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital. d. None of the above is correct.

new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital.

A manufacturing company is thinking about building a new factory. The factory, if built, will yield the company $300 million in 7 years, and it would cost $220 million today to build. The company will decide to build the factory if the interest rate is a. no less than 4.53 percent. b. no greater than 5.81 percent. c. no greater than 4.53 percent. d. no less than 5.81 percent

no greater than 4.53 percent.

Diversification reduces a. neither market or firm-specific risk. b. only firm-specific risk. c. both market and firm-specific risk. d. only market risk.

only firm-specific risk.

Apple founder Steve Jobs received patents on many of his ideas. While the patents existed, his ideas were a. public goods and proprietary knowledge. b. public goods but not proprietary knowledge. c. private goods and proprietary knowledge. d. private goods but not proprietary knowledge.

private goods and proprietary knowledge.

For an imaginary closed economy, T = $5,000; S = $11,000; C = $48,000; and the government is running a budget surplus of $1,000. Then a. private saving = $10,000 and GDP = $55,000. b. private saving = $10,000 and GDP = $63,000. c. private saving = $12,000 and GDP = $69,000. d. private saving = $12,000 and GDP = $67,000.

private saving = $10,000 and GDP = $63,000.

A nation's standard of living is best measured by its a. nominal GDP per person. b. real GDP per person. c. nominal GDP. d. real GDP.

real GDP per person

A nation's standard of living is best measured by its a.nominal GDP per person. b.nominal GDP. c.real GDP per person. d.real GDP.

real GDP per person

A measure of the volatility of a variable is its a. standard deviation. b. present value. c. future value. d. return.

standard deviation

The field of finance primarily studies a. how society manages its scarce resources. b. the implications of time and risk for allocating resources over time. c. how society can reduce market risk. d. firms' decisions concerning how much to produce and what price to charge.

the implications of time and risk for allocating resources over time.

Assuming diminishing returns a. 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. b. the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, rich countries should grow faster than poor ones. c. the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, poor countries should grow faster than rich ones. d. the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, rich countries should grow faster than poor ones.

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

For a risk averse person, a. the pleasure of winning $1,000 on a bet exceeds the pain of losing $1,000 on a bet. b. the pain of losing $1,000 on a bet exceeds the pleasure of winning $1,000 on a bet. c. the utility function gets steeper as wealth increases. d. the utility function exhibits the property of increasing marginal utility.

the pain of losing $1,000 on a bet exceeds the pleasure of winning $1,000 on a bet.