Government Exam #3

Consider an economy that only produces two goods: DVD players and DVDs. Last year, 10 DVDs were sold at $20 each and 5 DVD players were sold at $100 each. This year, 15 DVDs were sold at $10 each and 10 DVD players were sold at $50 each. Real GDP this year (while using last year as the base yearI is which of the following?

$1,300

If a country has a working-age population of 200 million, 135 million people with jobs, 10 million people who were looking for a job but have given up, and 5 million people unemployed but seeking employment, then its number of discouraged workers is:

10 million

If a country has a working age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its unemployment rate is:

10%

If the unemployment rate is 10% and the labor force is 130 million, the number of unemployed persons is:

13 million

If a country has a working age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its labor force is:

150 million

If the actual unemployment rate is 7% and the cyclical unemployment rate is 2%, then the natural unemployment rate is:

5%

If the labor force is 100 million and 5 million are unemployed but actively seeking work, then the unemployment rate is

5%

France has an adult population of 100 million. 60% of France's population is employed but 10% of the people are unemployed. The Labor Force Participation rate in France is:

70%

Which of the following is an example of consumption spending that would be counted toward GDP this year?

Aaron bought a calculator for his brother

Real GDP is nominal GDP adjusted for:

Changes in Prices

Deviations from the actual rate of unemployment away from the natural rate of unemployment is called:

Cyclically Unemployment

Value added in national income accounts refers to the:

Difference in the final price and the value of inputs purchased

Nominal GDP has been adjusted for changes in prices over time.

False

T/F The unemployment rate is calculated by the following: (Unemployed / Population) x 100

False

Anna recently moved to Boston so her husband Joe could begin a new job as an economics professor at Harvard. Anna is an experienced surgeon who is currently interviewing with several different hospitals in Boston. Anna is currently:

Frictionally Unemployed

Last week Suzanne quit her job as a copy-writer at an advertising agency. She has spent the past few days browsing the help-wanted ads, but has not found anything that matches her skills. Suzanne is best classified as:

Frictionally Unemployed

Suppose a consumer buys a frozen cheese pizza at the grocery store at a price of $10. The frozen pizza company sold the pizza to the store for $5. The frozen pizza company purchased the pizza dough and tomato sauce from a food processing company at a price of $2 and bought the cheese from a dairy at a price of $1. How much as GDP increased?

$10

Consider an economy that only produces two goods: DVDs and DVD players. Last year, 10 DVDs were sold at $20 each and 5 DVD players were sold at $100 each. This year, 15 DVDs were sold at $10 each and 10 DVD players were sold at $50 each. What is the Nominal GDP this year?

$650

Consider an economy that only produces two goods: Pizza and Calzones. If 10 calzones are sold at $20 each and 5 pizzas are sold at $100 each, what is Nominal GDP?

$700

Labor Unions that are effective at achieving wage results:

Higher than the equilibrium wage rate may also result in structural unemployment

Which of the following represents an outflow of funds from a domestic economy?

Imports

Suppose that nominal GDP is $1000 in 2006 and nominal GDP is $1500 in 2007. If the overall price level _________ between 2006 and 2007, we could say that real GDP ________________.

Increased by 50%; stayed constant

Real GDP is the same as:

Inflation adjusted GDP

Structural changes in an economy as well as changes in consumer tastes are reasons for:

Job creation and job destruction

The combination of frictional and structural rates of unemployment is called the:

Natural rate of unemployment

In general, for the US, the relationship between unemployment and real economic growth is:

Negative

GDP is the sum of:

Personal Consumption, Investment, Government Purchases, and Net Exports

If the price level in the economy and nominal wages both doubled, then the real wages would:

Remain unchanged

Transfer payments:

Represent a redistribution of funds from one individual to another individual in the economy

The circular flow diagram illustrates how firms ________________ goods and services and _________________ factors of production.

Sell; Buy

Sam is 55 years old and has been a steel worker for 30 years. He is unemployed because the steel plant in his town closed and moved to Mexico. Sam is experiencing:

Structural Unemployment

If a worker is unemployed due to an increase in the minimum wage, that worker is:

Structurally Unemployed

Net Exports are calculated by:

Subtracting imports from exports

The unemployment rate is defined as:

The percent of the labor force that is unemployed

Gross Domestic Product or GDP is:

The total dollar value of final goods and services produced in the economy in a given time period.

The Labor Force is defined as:

The total of the persons employed and unemployed

Real GDP is:

The value of the production of all final goods and services adjusted for price changes

Double counting would occur if:

Used goods were included in the GDP calculation

Efficiency wages encourage:

Workers to retain their current job