ECON 2105 Exam 2 Quizzes

Which of the following is NOT included in GDP? A. Purchases of stocks and bonds B. Government expenditures C. Consumption expenditure by households D. Investment expenditure by firms

A. Purchases of stocks and bonds

Say the base year for measuring the Consumer Price Index (CPI) is 2000. If the cost of the typical consumer's market basket increased by 4 percent, what is the CPI in 2001? A. 100 B. 104 C. 140 D. 400

B. 104

Which of the following statements is TRUE? A. Nominal GDP is always higher than real GDP. B. Nominal GDP is equal to real GDP in the base year. C. If nominal GDP rises, then real GDP must also rise. D. Real GDP doesn't really matter. Only nominal GDP matters

B. Nominal GDP is equal to real GDP in the base year.

Which of the following would be included in the United States' GDP for 2014? A. The used G.E. mini-fridge you bought on eBay to put in your dorm room B. 50 tons of coal purchased by Georgia Power, which they used to generate electricity C. The 40 cases of Bud Light your fraternity bought for its party last weekend D. The new Samsung LCD television (made in Korea) that you bought yourself with your parents' credit card

C. The 40 cases of Bud Light your fraternity bought for its party last weekend

Which of the following is equal to GDP? A. The sum of the value added of all producers B. The sum of all income paid to factors of production C. The sum of all spending on domestically produced final goods and services D. All of the above

D. All of the above

Say you borrow $1,000 dollars from your friend, and that you promise to pay her back in one year at a nominal interestrate of 5 percent. Over the course of the year, inflation was 2 percent. What was the (approximate) real interest rate on the loan? a. 3 percent b. 5 percent c. 7 percent d. -3 percent

a. 3 percent

In 2020, The People's Democratic Republic of Trump had a population of 400 million and a real GDP of $16 trillion. In 2021, population had grown to 420 million and real GDP had grow to $16.2 trillion. Which of the following is true? a. Real GDP per capita decreased. b. Real GDP per capita increased. c. Real GDP per capita stayed the same. d. None of the above are true.

a. Real GDP per capita decreased.

The point at which an expansion ends and a recession starts is called a business cycle _________, whereas the point at which a recession ends and an expansion starts is called a business cycle ________. a. peak, trough b. trough, peak c. high, low d. start, end

a. peak, trough

According to the Rule of 70, if U.S. real GDP grew at a steady rate of 3.5% over time, about how many years would it take to double? a. 7 b. 20 c. 70 d. 200

b. 20

In Macronesia the population age 16 and older is 100,000 people. The labor force participation rate is 80 percent. If 75,000 people are currently employed, what is the unemployment rate? a. 5 percent b. 6.25 percent c. 20 percent d. 25 percent

b. 6.25 percent

The labor force is ________. a. equal to the entire population b. equal to the sum of employment and unemployment c. equal to the percentage of the population 16 and older d. equal to the number of employed workers

b. equal to the sum of employment and unemployment

The short-run alteration between economic upturns and downturns is called _________. a. a recession b. the business cycle c. an expansion d. Keynesian economics

b. the business cycle

Which of the following is NOT included in the aggregate production function? a. Physical capital b. Human capital c. Financial capital d. Technology

c. Financial capital

The unemployment rate typically _________. a. stays constant over time b. has no relationship with the business cycle c. rises during recessions and falls during expansions d. rises during expansions and falls during recessions

c. rises during recessions and falls during expansions

When families expect a recession, they cut back on spending and save more in preparation. This causes firms to cut back on production, reduce labor, which lowers income and makes the recession even worse than it might have been otherwise. We refer to this as ___________. a. a depression b. the macro-micro disconnect c. the paradox of thrift d. a bubble

c. the paradox of thrift

Across countries, differences in policies and institutions affecting which of the following might lead to differences in the growth rate of GDP per capita? a. Political stability b. Education c. Research and development d. All of the above.

d. All of the above.

Which of the following statements is FALSE? a. A depression is an especially long, severe recession. b. The unemployment rate rises during a recession. c. Output rises during an expansion. d. Fiscal policy uses changes in the quantity of money to alter interest rates and affect overall spending.

d. Fiscal policy uses changes in the quantity of money to alter interest rates and affect overall spending.

Which of the following is a macroeconomic question? a. Why have tuition fees for major colleges and universities risen so much over the past two decades? b. What government policies could be adopted to make it easier for low-income students to attend college? c. How does a person's educational attainment affect their lifetime income? d. What effect does federal education spending have on the aggregate employment and income?

d. What effect does federal education spending have on the aggregate employment and income?

Consider two successive increases in physical capital per worker of $10,000 each. The first results in an increase in real GDP per worker of $15,000, whereas the second results in an increase in real GDP per worker of $12,000. This is representative of __________. a. increasing returns to scale. b. decreasing marginal returns to physical capital. c. diminishing marginal returns to human capital. d. diminishing marginal returns to physical capital.

d. diminishing marginal returns to physical capital.

The government of Macronesia decides to provide greater unemployment benefits to those who cannot find jobs, which reduces their incentive to go out and find work, thus increasing unemployment. This is an example of __________. a. cyclical unemployment b. natural unemployment c. frictional unemployment d. structural unemployment

d. structural unemployment