Macro Unit 3 Quizzes (Ch. 11, 12, 17)

What is Uganda's real GDP if its nominal GDP is $27.5 billion (in current US$), and the GDP deflator is 163.4? $44.9 billion $16.8 billion $27.5 billion $12.4 billion

$16.8 billion 27.5/163.4

In 1995, when the consumer price index was 152.38, women earned a median income of $12,130 per year. If the consumer price index in 2015 was 236.99, how much was $12,130 in 2015 dollars? $18,865 $16,259 $7,799 $12,130

$18,865

Suppose a labor market is described by the demand equation, Qd = 60 - 2w, and the supply equation, Qs = -10 + w, where Qd is the quantity demanded of labor (in Million), Qs is the quantity supplied of labor (in Million), and w is the wage (in dollars). What is the equilibrium wage in this labor market? $60 $23.33 $33.33 $70

$23.33

Suppose that the consumer price index in Eastlandia rises from 150 to 159 over the past year, and that the city sets its car registration prices so that real prices stay the same. If the cost to register a car was $50 last year, how much would it cost this year, in nominal terms? $53 $56 $50 $59

$53

In 1971, the cost of a four-year college degree from a public university was about $1,410. The consumer price index was 40.48 in January 1971. If the current consumer price index is 251.1, what is the approximate cost of the four-year degree in current dollars? $227 $8,746 $1,410 $9,422

$8,746

You purchase a certificate of deposit that earns an advertised rate of 1.75% interest per year. What is your real rate of return if the actual inflation rate is 1.9%? 0.15% -0.15% 3.65% 1.75%

-0.15%

Refer to the following table. What was the approximate output gap in 1998? 3% -5.5% 1.2% -1.2%

-1.2%

Refer to the following table. What was the approximate output gap in 1974? 3.3% -6.5% 2.1% 6.1%

-6.5% (100-107)/107

You purchase a certificate of deposit and expect an inflation rate of 1.25% over the next year. Your nominal rate of interest is 2.1%. What is your expected real rate of return? -0.85% 1.25% -2.1% 0.85%

0.85%

Refer to the following table. What was the approximate output gap in 1999? -3.6% 1.9% 1.2% 3%

1.9%

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% 8.99% -9.09% 10.13%

10.13%

What is Sri Lanka's GDP deflator if its nominal GDP is $88.9 billion (in current US$) and the real GDP is $59.34 billion? 66.7 136.5 149.8 100

149.8

Suppose a labor market is described by the demand equation, Qd = 60 - 2w, and the supply equation, Qs = -10 + w, where Qd is the quantity demanded of labor (in Million), Qs is the quantity supplied of labor (in Million), and w is the wage (in dollars). If the government institutes a minimum wage of $25, how many workers will be willing to work in this market? 15,000,000 20,000,000 5,000,000 10,000,000

15,000,000

The table shows statistics for three Canadian cities at several different points in time. What was the number of unemployed people (in thousands) in Montreal in January 2009? 171.4 2,059.7 181.6 1,878.1

181.6

The table shows statistics for three Canadian cities at several different points in time. What was the number of people (in thousands) in Montreal's labor force in January 2005? 1,831.7 2,003.1 2,888.8 171.4

2,003.1

In May 2019, there were approximately 68,980,000 people in Japan's labor force. About 1,650,000 people were unemployed. What was the unemployment rate? 6.1% 5.0% 1.8% 2.4%

2.4%

The table shows statistics for three Canadian cities at several different points in time. What was the number of unemployed people (in thousands) in Toronto in January 2019? 234.2 3,639.5 3,405.3 250.9

234.2

The table shows consumer price index data for the United States. Based on this information, what is the rate of inflation in 2006? 1.64% 3.22% 2.87% 3.81%

3.22%

In May 2019, Texas reported a civilian labor force of 14,012,711. The number of employed people was 13,516,387. What was the unemployment rate? 5.3% 3.5% 96.5% 4.9%

3.5%

What was the unemployment rate in January 2014? 3.3% 2.8% 3.7% 3%

3.7%

Suppose a labor market is described by the demand equation, Qd = 60 - 2w, and the supply equation, Qs = -10 + w, where Qd is the quantity demanded of labor (in Million), Qs is the quantity supplied of labor (in Million), and w is the wage (in dollars). If the government institutes a minimum wage of $25, how many workers will be unemployed in this market? 5,000,000 20,000,000 10,000,000 15,000,000

5,000,000

The table shows statistics for three Canadian cities at several different points in time. What was the unemployment rate in Montreal in January 2019? 93.8% 6.2% 8.8% 5.4%

6.2%

If a bundle of goods used to calculate the consumer price index rises from $80 to $86 over a one-year period, what is the inflation rate for that year? 6.0% 10% 7.5% 6.9%

7.5%

Which of the following forms of money would best represent fiat money? A rare baseball card given to a landlord in place of rent. Silver quarters made prior to 1965. A $20 bill printed in 2015. An hour-long golf lesson given in exchange for an hour of tutoring in economics.

A $20 bill printed in 2015.

Which of the following will fall when the economy is expanding? Consumer confidence Business confidence Nonfarm payrolls Applications for unemployment benefits

Applications for unemployment benefits

The hypothetical data in the table below displays the percentage that unemployment benefits replace take-home pay for workers in different countries. Which country would you expect to have the lowest long-term unemployment rate? Belgium Australia Finland Italy

Australia

Which of the following shows the medium of exchange function of money? Daniela goes to the store and purchases roses with U.S. dollars. Mena saves his money in a certificate of deposit at the bank. Darius goes window shopping. Wilma wants to sell her old car, and she values it at $2,400.

Daniela goes to the store and purchases roses with U.S. dollars.

Which of the following correctly shows the steps needed to calculate the inflation rate? Find out what people typically buy, collect the prices from the stores where people shop, tally up the cost of the basket of goods and services, and calculate the inflation rate. Find the total value of the basket of goods and services, assess quality changes from one period to the next, and measure the inflation rate. Collect prices from the stores where people shop, assess the substitution that people make from low inflation to high inflation products, and calculate the difference in the prices that people pay. Tally up the cost of the basket of goods and services, subtract the value of goods and services that are no longer counted in the basket, and then calculate the inflation rate.

Find out what people typically buy, collect the prices from the stores where people shop, tally up the cost of the basket of goods and services, and calculate the inflation rate.

If an economy has a positive output gap of 1.5%, this means: inflation is 1.5% above the long-run rate of inflation. GDP is 1.5% below potential GDP. GDP is 1.5% above potential GDP. unemployment is 1.5% above the natural rate of unemployment.

GDP is 1.5% above potential GDP.

Which of the following will probably rise when the economy is in a recession? Initial unemployment claims Real GDP growth Real retail sales Employment

Initial unemployment claims

Which of the following correctly describes the business cycle? It refers to ups and downs in business revenue during expansions and recessions. It refers to excess unemployment during recessionary periods. It is the fluctuations of GDP around the potential output. It is the constant rise in GDP over time.

It is the fluctuations of GDP around the potential output.

You have four friends. Which of your friends can be described as "cyclically unemployed"? Martha, who is a full-time stay-at-home parent Keele, who lost her job after her company lost a lot of customers during an economic downturn Regan, who is in a nursing home Arthur, who quit his job to look for a better job

Keele, who lost her job after her company lost a lot of customers during an economic downturn

There is much debate about whether the U.S. government should eliminate the penny from circulation and instead round all prices to the nearest 5 cents for everyday cash transactions. Which function of money does a penny not serve well? Medium of exchange Unit of account Store of value The penny does not serve any of the functions of money well.

Medium of exchange pennies are seldom used to purchase items and so don't function well as a medium of exchange.

Refer to the data dashboard shown. Which indicator is a cross-check on GDP? Business confidence Employment cost index Stock prices: S&P 500 Real GDI

Real GDI

Which economic indicator tells you about the future expected profits of businesses? Nonfarm payrolls Initial unemployment claims S&P 500 Consumer price index

S&P 500

Which of the following is a narrow indicator? Non-farm payrolls Real GDI The consumer price index The stock price for JPMorgan Chase & Co.

The stock price for JPMorgan Chase & Co.

From 2015 to 2016, the overall price level rose from 200 to 220. Over the same period, tuition rates at the local community college rose from $100 to $115 per credit hour. What can be concluded from the rise in tuition relative to overall inflation? Tuition rates increased at the same rate as inflation. Tuition rates increased at a slower rate than inflation. Tuition rates increased at a faster rate than inflation. Tuition rates and inflation cannot be compared with the numbers given.

Tuition rates increased at a faster rate than inflation.

In which situation is the real value of 1 unit of currency the highest? a Big Mac that costs 4 pounds in London a Big Mac that costs 450 yen in Tokyo a Big Mac that costs $4.75 in New York City a Big Mac that costs 7 Swiss Francs in Zurich

a Big Mac that costs 4 pounds in London

Suppose that Georgiania was a thriving empire in its golden age. Business was booming and it was the center of international trade under the leadership of Emperor Raphael III. His empire's pride and joy was the trading of green and black tea, and he decreed that their entire economy should be built around it. However, in the mid 1800s, Georgiania experienced a severe economic downturn when the other nations of the world created an embargo on tea from Georgiania, which led to civil strife due to thousands of workers being laid off. A downward fluctuation in the economy like this is known as the invisible hand. market failure. a recession. economic growth.

a recession.

In 2008, the rate of inflation was 2%, which then rose to 3% in 2009 before falling back to 2% in 2010. Between 2008 and 2009, the economy experienced _____ and between 2009 and 2010, the economy experienced _____. a) inflation; disinflation b) inflation; deflation c) disinflation; inflation d) disinflation; deflation

a) inflation; disinflation

Which of the statements is the best description of a business cycle? the relationship between the returns on Treasury securities and the time to maturity alternating periods of increasing and decreasing economic output a calendar year divided into four quarters, each containing three months the time it takes a firm to convert raw materials into a final good or service

alternating periods of increasing and decreasing economic output

Henry Ford's $5 per day wage is an example of: an efficiency wage. a government regulated wage. a minimum wage law. an equilibrium wage.

an efficiency wage.

Suppose that the CPI in 2013 was 250 and the CPI in 2014 was 260. What is the rate of inflation in this economy? a) 3.8% b) 4.0% c) 10.0% d) 96.2%

b) 4.0%

A popular teacher hands out candy bars to her students as an incentive for good behavior. If students choose to, they could then trade one candy bar for a sheet of stickers or two candy bars to skip a quiz. In this classroom, the teacher is using candy bars as a form of: a) barter. b) commodity money. c) fiat money. d) yummy money.

b) commodity money.

Which of the following might cause the real value of money to rise in an economy? a) The government prints $1 million in new bills to finance its spending. b) The average price of food items rise by 20%. c) The price of houses and apartment rentals falls by 30%. d) Other countries in the world demand less of this money.

c) The price of houses and apartment rentals falls by 30%.

The Great Moderation refers to the: stable level of inflation in the United States. increase in globalization. decreased volatility of the U.S. economy. longstanding effect of the Great Recession.

decreased volatility of the U.S. economy.

Hyperinflation is: inflation that occurs when the economy is in a recession. very high rates of economic growth. extremely high rates of inflation. a period of high money growth in an economy.

extremely high rates of inflation.

Consider these four graphs of the labor market, showing four different minimum wage levels. Which graph(s) shows a wage level where there is no unemployment? graphs A and D graph B graphs B and C graphs A and C graph D

graphs B and C

The higher the minimum wage, as compared to the equilibrium wage, the: lower the natural rate of unemployment. lower the structural unemployment rate. higher the cyclical unemployment rate. higher the structural unemployment rate.

higher the structural unemployment rate.

Consider the labor market shown here. If an efficiency wage of $14 is instituted in this market, the number of workers willing to work will: decrease by 4,000. increase by 4,000. increase by 2,000. decrease by 2,000.

increase by 2,000.

If the inflation rate was 1% in 2014, 3% in 2015, and 2% in 2016, this economy experienced ____ from 2014 to 2015, and ____ from 2015 to 2016. disinflation; deflation inflation; deflation disinflation; inflation inflation; disinflation

inflation; disinflation (Since inflation was positive throughout the three-year period, the economy experienced no deflation.)

The natural unemployment rate is also known as the _____ unemployment rate. long-run cyclical structural frictional

long-run

Menu costs are the: marginal costs of adjusting prices. total costs of producing goods and services. variety of costs that cause producers to change their prices. costs of producing restaurant meals.

marginal costs of adjusting prices.

The country of Eggville uses eggs as its official form of currency. All prices in Eggville are shown in terms of eggs, and residents carry around baskets of eggs to buy goods and services. Residents, however, cannot save eggs because they end up spoiling. Which functions of money do eggs serve? medium of exchange, unit of account, and store of value unit of account and store of value medium of exchange and store of value medium of exchange and unit of account

medium of exchange and unit of account

Which of the following lists the functions of money? medium of exchange, measure of inflation, and benchmark of quality medium of exchange, store of value, and unit of account carrier of exchange, unit of account, and measure of inflation store of value, store of interest, and buffer against inflation

medium of exchange, store of value, and unit of account

The real interest rate is the: economic growth rate adjusted for the effects of inflation. nominal interest rate plus the rate of inflation. percentage of the nominal interest that is inflation. nominal interest rate minus the rate of inflation.

nominal interest rate minus the rate of inflation.

Suppose that the cost of a loaf of bread in Zanadoo is 20 shillings, and this represents a full day's wages for the typical factory worker. The 20 shillings represents a ____ value, whereas the loaf of bread costing a full day's wage represents a ____ value. real; real nominal; nominal nominal; real real; nominal

nominal; real

If you see that the consumer price index this year is lower than the consumer price index last year, this means that: economic growth also decreased. the consumer price index is lower than the producer price index. the prices of each and every good and service went down. on average, prices went down across the economy.

on average, prices went down across the economy.

If you see that inflation between last year and this year is 3%, this means that: the prices of each and every good and service went up by 3%. economic growth is also 3%. the consumer price index rose by 3% more than the producer price index. on average, prices went up across the economy by 3%.

on average, prices went up across the economy by 3%.

The four stages of the business cycle are: full employment, potential GDP, recessionary gap, and inflationary gap. peak, recession, trough, and expansion. expansion, growth, contraction, and depression. consumption, investment, government expenditure, and net exports.

peak, recession, trough, and expansion.

The GDP deflator is an index that tracks the: price that businesses pay over time for the inputs used in the production process. highest prices consumers pay over time for imported goods and services. average price that consumers pay over time for a representative basket of goods and services. price of all goods and services produced domestically.

price of all goods and services produced domestically.

Based on Okun's rule of thumb, if you forecast that the output gap will decline from 0% to -3%, the unemployment rate will: rise by 1.5%. fall by 1.5%. rise by 3%. fall by 2%.

rise by 1.5%.

Suppose that an economy is in a recession. You would expect to see the unemployment rate: be equal to the equilibrium unemployment rate. be zero. fall below the equilibrium unemployment rate. rise above the equilibrium unemployment rate.

rise above the equilibrium unemployment rate.

What kind of data adjustment removes the effect of sales spikes due to the holiday season? seasonally adjusted data annual data real data nominal data

seasonally adjusted data

If the government mandates a minimum wage of $25, there is a labor: surplus of 4,000 workers. shortage of 2,000 workers. surplus of 2,000 workers. surplus of 6,000 workers.

surplus of 6,000 workers.

Money illusion is the: increase in the amount of money that it takes to purchase goods and services when prices rise. inability to understand that prices always rise. tendency to focus on nominal values instead of inflation-adjusted values. illusion that one's earnings this year are higher than they were last year.

tendency to focus on nominal values instead of inflation-adjusted values.

If the frictional rate of unemployment is 1.45%, the structural rate of unemployment is 2.3%, and the total unemployment rate is 6%, then we can conclude that: the economy is experiencing an economic boom. there is 2.25% actual unemployment. the labor force participation rate has fallen significantly. the natural (long-run equilibrium) rate of unemployment is 3.75%.

the natural (long-run equilibrium) rate of unemployment is 3.75%.

An economy's potential output level is: the output that is possible when all resources are fully employed. the level at which no resources are available in the economy. equivalent of the GDP at current market value. the output when unemployment is zero.

the output that is possible when all resources are fully employed.

An underemployed person is one who is: retired or outside of the labor force. working but whose skills are not fully utilized. cyclically unemployed. employed in the underground economy.

working but whose skills are not fully utilized.