MACRO Exam 1

If a country has a population of 1,000 people, an area of 100 square miles, and a GDP of $5 million, then its GDP per capita is: A. $500. B. $5,000. C. $50,000. D. $5 million.

$5,000

Monetary and fiscal policy are tools to reduce the severity of recessions. A. True B. False

true

A person without a job who is actively seeking and available for work is considered: A. employed. B. unemployed. C. underemployed. D. marginally attached.

unemployed

Consider an economy that produces only DVDs and DVD players. If 10 DVDs are sold at $20 each and 5 DVD players are sold at $100 each, then nominal GDP is: A. $100. B. $700. C. $1,100. D. $900.

$700

According to the information in Table: GDP. GDP in the table is: A. $94 billion. B. $188 billion. C. $168 billion. D. $139 billion.

$94 billion

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 who are unemployed and seeking employment, then the number of discouraged workers is _____ million. A. 25 B. 15 C. 10 D. 5

10

Suppose that, in year 1, an economy produces 100 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year, the economy produces 110 golf balls that sell for $3.25 each and 80 pizzas that sell for $9 each. The growth rate of nominal GDP from year 1 to year 2 is _____%. A. 10 B. 7.8 C. 19.7 D. 8.8

19.7

A survey reveals that, on a small island, 100 people have jobs, 25 people are not working but are looking for jobs, and 45 people are neither working nor looking for work. The unemployment rate on the island is: A. 12.5%. B. 20%. C. 25%. D. 50%.

20%

If the consumer price index is 180 in year 1 and 190 in year 2, the inflation rate between year 1 and year 2 is about: A. 5.26%. B. 5.56%. C. 6.5%. D. 10%.

5.56%

If real GDP doubles in 12 years, its average annual growth rate is approximately: A. 6%. B. 5%. C. 4%. D. 3%.

6%

One factor that raises the natural rate of unemployment is: A. a population boom that increases the number of young workers joining the labor force. B. the loss of labor union membership across industries. C. the loss of retirement funds so that more people in the baby-boom generation continue to work past the typical retirement age. D. the use of new technology in the workplace that increases labor productivity.

a population boom that increases the number of young workers joining the labor force.

Which item does NOT qualify as physical capital? A. a shovel B. a factory C. a tractor D. mineral deposits

a shovel

Fiscal and monetary policies: A. have no role in macroeconomic policies. B. have been used by the government for over 250 years. C. are most effective in microeconomic settings. D. are used to correct for short-term economic fluctuations.

are used to correct for short-term economic fluctuations

Growth accounting enables us to: A. calculate how long it takes the economy to grow. B. calculate the effects of technological progress on economic growth. C. compare growth rates across countries. D. better calculate real GDP per capita.

calculate the effects of technological progress on economic growth

Real GDP is nominal GDP adjusted for: A. double counting. B. changes in prices. C. population. D. imports.

changes in prices

Gross domestic product is defined as: A. consumer spending + government purchases of goods and services + financial spending + exports - imports. B. consumer spending + government transfers + investment spending + exports - imports. C. disposable income + taxes + investment spending + exports + imports. D. consumer spending + government purchases of goods and services + investment spending + exports - imports.

consumer spending + government purchases of goods and services + investment spending +exports - imports

The aggregate production function exhibits _____ returns to _____ capital. A. increasing; physical B. decreasing; physical C. constant; physical D. increasing; financial

decreasing; physical

Frictional unemployment is a special type of structural unemployment. A. True B. False

false

High rates of savings and investment and a lack of consumption spending have contributed to the recent stagnant economic growth in Latin America. A. True B. False

false

If the United States exports $500 of goods and services and imports $700 of goods and services, net exports are $1,200. A. True B. False

false

Which change would contribute to a nation's rapid long-run economic growth? A. faster technological progress B. faster population growth C. less physical capital per worker D. lower levels of average human capital

faster technological progress

Use of fiscal policy involves changes in: A. interest rates. B. government spending. C. the quantity of money. D. the quantity of money and interest rates.

government spending

Which factor may lead to lower productivity because of a lack of incentives? A. a stable political system B. protection of property rights C. government subsidies D. public education

government subsidies

In the U.S. economy, the circular-flow diagram does NOT illustrate: A. growing income inequality. B. flows of money. C. flows of goods and services. D. the purchase and sale of factors of production.

growing Income Inequality

Which question is the MOST appropriate to the study of MACROECONOMICS? A. How does the aggregate price level affect overall consumer spending? B. How does the level of interest rates affect Delta's decision to buy a new airplane? C. How much will Sony charge for the new game system to be introduced later this year? D. What determines whether Wachovia opens a new office in Beijing?

how does the aggregate price level affect overall consumer spending.

Rising high school graduation rates are an example of an increase in: A. technological progress. B. human capital. C. population stock. D. fertility rates.

human capital

Which item CANNOT properly be called a part of infrastructure? A. power lines B. roads and bridges C. human capital D. seaports

human capital

Purchases of foreign-produced goods and services are: A. net exports. B. exports. C. imports. D. transfer payments.

imports

Shoe-leather costs are the: A. effect of inflation on the prices of food, clothes, and other necessities. B. increased cost of transactions due to inflation. C. high price of leather goods. D. effect of inflation on transportation costs.

increased cost of transactions due to inflation

The topics studied in macroeconomics include: A. inflation. B. monopolies. C. spillovers, such as pollution. D. mergers.

inflation

In contrast to the conclusions drawn from microeconomics, many economists argue that in macroeconomics, government: A. control of rent prices increases overall economic activity. B. intervention in markets usually leaves society as a whole worse off. C. taxation of goods and services does not cause a deadweight loss of economic welfare. D. intervention in markets can prevent or reduce the effects of adverse events on the macroeconomy.

intervention in markets can prevent or reduce the effects of adverse events on the macroeconomy.

Which statement about gross domestic product is FALSE? A. It is aggregate output. B. It is the total production of final goods and services. C. It grows during an expansion. D. It is the total production of all final and intermediate goods and services.

it is the total production of all final and intermediate goods and services

If the actual inflation rate is less than the expected inflation rate: A. lenders gain and borrowers lose. B. borrowers gain and lenders lose. C. everyone benefits. D. everyone is worse off.

lenders gain and borrowers lose

If the economy grew at 3% this year and average prices increased _____, people would be better off this year than last year. A. by 3% B. faster than 3% C. less than 3% D. faster than 10%

less than 3%

Which transaction is included in a current year's GDP as investment spending? A. ABC company purchased 10,000 shares of IBM stock. B. Ronnie bought a new BMW. C. Anton purchased his friend's condo. D. Maggie bought a play-gym set for her day-care business.

maggie bought a play-gym set for her day-care business

A change in the level of overall spending in the economy due to a change in the interest rate, brought about by a change in the quantity of money, is an example of _____ policy. A. monetary B. fiscal C. free-market D. trickle-down

monetary

Employment is the total: A. labor force. B. population of working age. C. number of people actively working, either full time or part time. D. number of people not unemployed.

number of people actively working, either full time or part time

The inflation rate is the: A. price level in the current year minus the price level in the previous year. B. price level in the current year plus the price level in the previous year. C. percentage change in the price level from one year to the next. D. price level in the current year multiplied by the price level in the previous year.

percentage change in the price level from one year to the next

A key input for measuring economic growth is: A. the size of the government's budget. B. real GDP per capita. C. life expectancy. D. the Dow Jones stock market index.

real GDP per capita

A period of falling real GDP is a(n)________ in the business cycle: A. peak. B. trough. C. expansion. D. recession.

recession

In a typical business cycle, the peak is immediately followed by the: A. recession. B. trough. C. expansion. D. depression.

recession

All else equal, a nation that has a high rate of _____ will have a high rate of _____ and therefore a high growth rate of _____ capital. A. investment; savings; human B. savings; investment; natural C. savings; investment; physical D. savings; consumption; physical

savings; investment; physical

Efficiency wages are: A. market equilibrium wages. B. set above equilibrium wages to act as an incentive for better performance. C. set below the equilibrium wage to increase profits. D. allowed to be below minimum wage.

set above equilibrium wages to act as an incentive for better performance

Economic growth in sub-Saharan Africa has been dismal. Which factor is NOT a reason for Africa's problem? A. stable governments B. government corruption C. a lack of property rights D. a lack of infrastructure

stable governments

If a worker becomes unemployed because of an increase in the minimum wage, that worker is: A. frictionally unemployed. B. structurally unemployed. C. cyclically unemployed. D. engaged in a job search.

structurally unemployed

Macroeconomics focuses on: A. the economy as a whole. B. individual decisions. C. wages. D. the allocation of scarce resources.

the economy as a whole

Which statement is TRUE? A. The number of people not working but who have looked for work in the past year is equal to the number of unemployed people. B. The labor force is the total number of people working plus those who are unemployed. C. The unemployment rate is the number of people unemployed expressed as a percentage of the population. D. The labor force is the same as the population.

the labor force is the total number of people working plus the who are unemployed

Increases in human capital will promote economic growth. A. True B. False

true

A trade surplus occurs: A. during economic contractions only. B. when the value of imports exceeds the value of exports. C. when the value of imports is less than the value exports. D. when unemployment is rising.

when the value of imports isles than the value exports

Which country had the LOWEST growth rate of real GDP per capita between 1980 and 2015? A. Ireland B. France C. Argentina D. Zimbabwe

zimbabwe