ECON 202 Exam 2

Number of officially unemployed Americans is now close to: A) 10 million B) 15 million C) 20 million D) 25 million

A) 10 million

The US spending on defense is approximately: A) 5% of the GDP B) 15% of the GDP C) 25% of the GDP D) 35% of the GDP

A) 5% of the GDP

The level of unemployment in the US at present is closet to" A) 6% B) 7% C) 8% D) 10%

A) 6%

The lowest paid president of the US, in real terms, was/is: A) Clinton B) Bush junior C) Bush senior D) Washington E) Obama

A) Clinton

In which of the following countries has economic growth been sufficiently strong in recent history to propel that country from being among the poorest in the world to being among the richest in the world? A) South Korea B) Senegal C) India D) Indonesia

A) South Korea

A stock index is A) an average proof a group of stock prices B) an average group of stick yields C) a measure of the risk relative to the profitability of corporations D) a report in a newspaper or other media outlet on the price of the stock and earnings of the corporations that issued the stock

A) an average proof a group of stock prices

When birth rates in a country are less than the death rates other things being equal it leads to: A) decrease in labor force B) increase in labor force C) neither increases or decreases in labor force D) impossible to say

A) decrease in labor force

The key of sign of economic growth is a(n) A) increase in the level of nominal GDP B) increase in the level of real GDP C) increase in the level of unemployment D) increase in the level of inflation

A) increase in the level of nominal GDP

When a country saves a larger portion of its GDP, it will have: A) more capital and higher productivity B) more capital and lower productivity C) less capital and higher productivity D) less capital and lower productivity

A) more capital and higher productivity

If ten years ago the price of a movie ticket was $5 and the average hourly wage was $10, and today the price of a movie ticket is $8 and the average hourly wage was $20, then: A) movies are now relatively cheaper in terms of work hours B) movies are now relatively more expensive in terms of work hours C) the relative price of movies has remained constant D) workers now need to work longer hours to earn one more movie ticket

A) movies are now relatively cheaper in terms of work hours

Other things the same, a higher interest rate induces people to: A) save more, so the supply of loanable funds slopes upward B) save less, so the supply of loanable funds slopes downward C) invest more, so the supply of loanable funds slopes upward D) invest less, so the supply of loanable funds downward

A) save more, so the supply of loanable funds slopes upward

Technological change or the effects of automation cause: A) structural unemployment B) cyclical unemployment C) seasonal unemployment D) frictional unemployment

A) structural unemployment

In the current debate about the new minimum wage for Louisville the proposed level for 2017 is A) $9.15 B) $10.10 C) $12.50 D) $15.00

B) $10.10

The largest six banks in the US in terms of assets include (in any order): A) US bank, Citi, Chase B) Chase, Bank of America, Citi C) Bank of America, Chase, PNC D) PNC, Citi, Bank of America

B) Chase, Bank of America, Citi

Which of the following is a correct way to measure productivity? A) Divide the number of hours worked by the quantity of output B) Divide the quantity of output by the number of hours worked C) Determine how much output is produced in a given time D) Determine how much time it takes to produce a unit of output

B) Divide the quantity of output by the number of hours worked

If you were to start a business delivering, you might need to purchase cell phones, bicycles, desks, and chairs A) these purchases are called capital investment. If you raise the funds to purchase them from others you are a saver B) These purchases are called capital investment. If you raise the funds to purchase them from others you are a borrower C) These purchases are called consumption. If you raise the funds to purchase them from others you are a saver D) These purchases are called consumption. If you raise funds to purchase them from others you are a borrower

B) These purchases are called capital investment. If you raise the finds to purchase them from others you are a borrower

The level of national debt of the US as of today is computed as the accumulated sum of: A) all federal deficits since 1776 plus all debt repayments since 1776 B) all federal deficits since 1776 minus all debt repayments since 1776 C) all federal deficits since 1776 plus all surpluses and minus all debt repayments since 1876 D) all federal deficits since 1776 minus all surpluses and plus all repayments since 1976

B) all federal deficits since 1776 minus all debt repayments since 1776

The largest component of aggregate demand is A) investment spending B) consumer spending C) government spending D) total imports

B) consumer spending

Richard loses his job at the railroad due to a downturn in general business conditions. He is experiencing A. structural unemployment. B. cyclical unemployment. C. seasonal unemployment. D. frictional unemployment.

B) cyclical unemployment

The shortfall between actual real GDP and potential GDP: A) decreases as the unemployment rate rises B) increases as the unemployment rate rises C) increases as the employment rate rises D) decreases as the labor force increases

B) increases as the unemployment rate rises

In periods of generally rising prices: A) real GDP will grow faster than nominal B) nominal GDP will grow slower than real GDP C) real GDP will grow slower than nominal GDP D) real GDP and nominal GDP will grow at the same rate

B) nominal GDP will grow slower than real GDP

A nation's standard of living is best measured by its: A) real GDP B) real GDP per person C) nominal GDP D) nominal GDP per person

B) real GDP per person

Investment spending tends to increase when: A) the real rate of interests rises B) the real rate of interest falls C) businesses become more pessimistic D) expectations become more negative

B) the real rate of interest falls

Which of the following is human capital? A) a student loan B) understanding how to use a company's accounting software C) training videos for new corporate employees D) all of the above are correct

B) understanding how to use a company's accounting software

Older people often reminisce about the "good old days" when prices were much lower. This is misplaced nostalgia primarily because in the "good old days," A) prices were not really that low B) wages were much lower also C) higher wages for employed and lower number of job offered D) lower wages for employed and higher number of job offered

B) wages were much lower also

For the 2014 fiscal year the level of the federal deficit on the US was close to: A) $1000 bln B) $800 bln C) $500 bln D) $400

C) $500 bln

The ratio of national debt to the GDP (in the US) is now close to A) 10:1 B) 5:1 C) 1:1 D) 1:5

C) 1:1

Over the last century, US real GDP per person grew at a rate of about A) 2 percent per year, so that it is now 2 times as high as it was a century ago B) 2 percent per year, so that it is now 8 times as high as it was a century ago C) 4 percent per year, so that is now 2 times as high as it was a century ago D) 4 percent per year, so that is now 8 times as high as it was a century ago

C) 4 percent per year, so that is now 2 times as high as it was a century ago

Which of the following is not correct? A) By saving a larger portion of its GDP, a country can raise its output per worker B) Savers supply their money to the financial system with the expectations that they will get it back with interest at a later date C) Financial intermediaries are the only type of financial institution D) the financial system helps match people's saving with other people's borrowing

C) Financial intermediaries are the only type of financial institution

Which of the following statements is correct? A) The total income in the economy that remains after paying for consumption and government purchase is called private saving B) the sum of private saving and national saving C) for a closed economy the sum of private saving and public saving must equal investment D) for a closed economy, the sum of consumption, national saving and taxes must equal GDP

C) for a closed economy the sum of private saving and public saving must equal investment

Which of the following are human capital and physical capital, respectively? A) for a brick layer: her bricks and her tools B) for a gas station: the pumps and the cash register C) for a restaurant: the chef's knowledge about preparing food and the equipment in the kitchen D) for a medical officer: the building and the doctors' knowledge of medicine

C) for a restaurant: the chef's knowledge about preparing food and the equipment in the kitchen

Which of the following lists contains, in this order, natural resources, human capital, and physical capital? A) For a shoe factory: leather, hand tools, the managers' knowledge of shoe making B) For a steel mill: blast furnaces, the workers, iron ore C) for an airline: oil used to make jet furl, the pilots' knowledge of flying, jets D) none of the above is correct

C) for an airline: oil used to make jet furl, the pilots' knowledge of flying, jets

The recent increases in the level of federal minimum wage likely led to: A) higher wages for employed and no change in the number of jobs offered B) higher wages for the employed and higher number of jobs offered C) higher wages for employed and lower number of jobs offered D) lower wages for employed and higher number of jobs offered

C) higher wages for employed and lower number of jobs offered

For a typical US household the top three spending items are (from larger to smaller): A) housing-food-entertainment B) food-housing-transportation C) housing-transportation-food D) transportation-education-house

C) housing-transportation-food

If actual inflation is less than expected rate on inflation, then probably A) the borrower gains at the expense of the lender B) neither the borrower nor the lender gains C) the lender gain at the expense of the borrower D) the purchasing power of the borrower is increased

C) the lender gain at the expense of the borrower

Which of the following is considered human capital? A) the comfortable chair in your dorm room where you read economics text B) the amount you get paid each week to work at the library C) the things you have learned this semester D) any capital goods that require a human to be present to operate

C) the things you have learned this semester

A larger budget deficit A. raises the interest rate and investment. B. reduces the interest rate and investment. C. raises the interest rate and reduces investment. D. reduces the interest rate and raises investment.

C. raises the interest rate and reduces investment.

You and your friend work together for 4 years to produce a total of 12 futons. What is productivity? A) 12 futons B) 24 futons C) 3 futons per hour of labor D) 1.5 futons per hour of labor

D) 1.5 futons per hour of labor

Aggregate demand is the sum of: A) C + I + X B) C + I + G C) C + I + X - IM D) C + I + G (X-IM)

D) C + I + G + (X-IM)

The lowest paid President of the US, in nominal terms, was/is A) Clinton B) Bush junior C) Bush senior D) Washington E) Obama

D) Washington

The identity that shows that total income and total expenditure are equal is A) GDP = Y B) Y = DI + T + NX C) GDP = GNP - NX D) Y = C + I + G + NX

D) Y = C + I + G + NX

Which of the following is an example of a renewable natural resource? A) fish B) soybeans C) wood D) all of the above are correct

D) all of the above are correct

Institutions that help to match one person's saving with another person's investment are collectively called the A) Federal Reserve system B) banking system C) monetary system D) financial system

D) financial system

If one wants to know how the material well-being of the average person has changed over time in a given country, one should look at the A) level of real GDP B) growth rate of nominal GDP C) growth rate of real GDP D) growth rate of real GDP per person

D) growth rate of real GDP per person

The primary economic function of the financial system is to A) keep interest rates low B) provide expert advice to savers and investors C) match one person's consumption expenditures with another person' s capital expenditures D) match one person's saving with another person's investment

D) match one person's saving with another person's investment

Disposable income can be define as: A) national product minus federal and state taxes B) national product plus taxes and transfers C) national product minus indirect taxes D) national product minus taxes plus transfers

D) national product minus taxes plus transfers

Gross private domestic investment (1) in the United States consists of three components: A) stocks, bonds, and mutual funds B) automobiles, trucks, and new houses C) new equipment, new houses, and net exports D) new plant, new equipment, new houses

D) new plant, new equipment, new houses

If the government's expenditures exceeds its recipients it would likely A) keep interest rates low B) provide expert advice to savers and investors C) match one person's consumption expenditures with another person's capital expenditures D) sell bonds directly to the public

D) sell bonds directly to the public

Which of the following is physical capital? A) the strength of workers B) the knowledge of workers C) financial assets like cash and bonds D) the equipment factor in a factory

D) the equipment factor in a factory

The difference between the real rate of interest and nominal rate of interest is: A) the rate of GDP growth B) the income tax rate on income C) the capital gains tax on interest D) the rate of inflation

D) the rate of inflation