Test 4: Chapters 6,7,8 (Macro Economics)

A person whose skills do not match available job openings is considered frictionally unemployed.

False

An increase in the interest rate will increase the demand for loanable funds.

False

An increase in the supply of loanable funds, other things constant, will increase the interest rate.

False

Technological change creates long-term hardships for workers with specialized skills.

False

If real gross domestic product (GDP) in a particular year is $5,000 trillion and nominal gross domestic product (GDP) in that same year is $4,000 trillion, then the:

GDP price index is 80.

What percentage of the U.S. adult population had a degree in 2015?

NOT 39%

If the United States made the sale of a legal drug illegal, GDP would _____

Not change

Suppose there is a 3 percent increase in the nominal wages of workers in an economy. The annual rate of inflation in the economy is about 6 percent. Which of the following is true?

Real wages would fall by about 3 percent.

If an increase in capital per worker leads to increased output per worker, but by decreasing amounts as capital increases, the per-worker production function _____

The answer is NOT that it has an increasing slope

During one month, the U.S. economy added 290,000 jobs and the unemployment rate still increased from 9.7 percent to 9.9 percent. Which of the following best explains this situation?

The size of the labor force shrunk.

Which of the following actions will decrease the gross domestic product (GDP)?

Tom gets fired for being late often after his alarm clock breaks

An increase in the production of capital goods and a reduction in the production of consumer goods would most likely lead to a faster rate of future economic growth.

True

Chain-weighted indexes have less bias compared to fixed-weight indexes.

True

Gross domestic product (GDP) understates total economic activity because it ignores household production of goods and services.

True

The most important factor in determining a nation's standard of living in the long run is the productivity of its resources.

True

Which of the following factors of production is likely to be most productive?

a certified doctor work ing in a well-equipped hospital

Refer to Exhibit 8.2, which shows three different per-worker production functions: PF1, PF2, and PF3. If PF1 is the initial per-worker production function for a farm, which of the following reflects an increase in the number of tractors per worker in the farm?

a movement from point C to point D

Which of the following does not contribute to an economy's standard of living in the long run?

a reduction in productivity

Which of the following is true of basic research?

Basic research is the search for knowledge that does not aim to answer a specific question.

Table 6.3 Refer to Table 6.3, which shows the current and base-year prices of different goods in a market basket. The consumer price index (CPI) for the base year is _____

100%

In 2014, what percentage of the unemployed received benefits?

27 percent

If the consumer price index (CPI) is 200 one year and 206 the next year, the annual rate of inflation as measured by the CPI is approximately _____.

3 percent

Refer to Table 7.1, which shows data for males and females over 16 years old in the island of Palma. What is the adult male population?

42 million

Consider an economy made up of 100 people who are sixteen years of age and older, 60 of whom hold jobs, 10 of whom are looking for work, and 15 of whom are retired. The number of people in the labor force is _____

70

If 2016 is the base year and the price index in 2017 is 109, then prices in 2017 are _____ than prices in 2016.

9 percent higher

Which of the following is likely to cause a decrease in labor productivity?

an increase in student achievement scores

Capital deepening refers to _____

an increase in the amount of capital per worker.

Which of the following would increase labor productivity?

an increase in the education level of per unit of labor

Typically, how is inflation measured?

annually

Research that seeks answers to particular questions or to apply scientific discoveries to develop specific products is known as _____

applied research.

An increase in the interest rate, other things constant, will _____

decrease the quantity of loanable funds demanded.

A reduction in the rate of inflation is called _____

disinflation

If the CPI is 200, then the price level has _____ since the base year.

doubled

Which of the following is an example of an injection into the circular flow of income and expenditure?

government spending

The impact of computers on U.S. productivity growth _____

has been dramatic, contributing to significant growth during the early years of the 21st century.

If the economy is experiencing extremely high increases in the price level, it is called _____

hyperinflation

The unemployment rate will increase whenever there is a(n) _____

increase in the number of unemployed persons relative to the size of the labor force.

A decrease in the interest rate, other things constant, will _____

increase the quantity of loanable funds demanded.

If the economy is experiencing a sustained increase in the price level, it is called:

inflation

If a nation moves upward along its per-worker production function relating output per worker to capital per worker, then _____

labor productivity rises.

Which of the following is a reason behind the low standards of living in developing countries?

low levels of human and physical capital per worker

Problems with CPI do not include _____

not adjusting for the fact that households shift away from goods that have become more costly.

The consumer price index (CPI) _____ inflation because it includes an item in the market basket only after the product becomes _____.

overstates; widely used

The production possibilities frontier of an economy is based on the assumption that the _____

patent laws applicable in the economy are constant during a given year.

Over the last 40 years, R&D spending in the United States, as a percent of GDP, has _____

remained constant.

Real gross domestic product (GDP) shows _____

the dollar value of GDP in a particular year measured in base-year prices.

Which approach adds up earnings during the year by those who produce all that output?

the income approach

Unanticipated inflation penalizes _____

those who are saving.

If 2016 is the base year and the price index in 2017 is 100, prices in 2017 are _____ than prices in 2016.

unchanged

An individual with a Ph.D. in physics who can find employment only in a pizza parlor would be considered _____

underemployed

If a firm hires labor for $8,000, pays rent of $4,000, buys raw materials for $13,000 from another firm, earns profits of $1,200, and sells its output for $31,000, the value added by the firm is _____

$18,000.

Which of the following formulas is correct for disposable income?

DI = C + S

The search for knowledge without regard to how that knowledge will be used is known as _____

basic research

An increase in the amount of capital per worker is known as _____

capital deepening.

Depreciation refers to _____

capital worn out during the production process.