Econ Exam 2 (chap 4, 8

Suppose an economy is given by the​ following: Population​ = 299 million Labor force​ = 136 million The number of people employed​ = 127.8 million The number of people unemployed​ = 8.2 million Given the information​ above, the unemployment rate is _____

6.03%

Briefly explain whether you agree with the following​ statement: ​"A lower price in a market always increases economic efficiency in that​ market." A. I​ disagree, because economic efficiency declines if price falls below the market equilibrium. Your answer is correct. B. I​ agree, because the resulting increase in consumer surplus will more than offset the decline in producer surplus. C. I​ agree, because falling prices for their products will inspire firms to operate as efficiently as possible. D. I​ disagree, because shortages will​ result, thereby encouraging firms to be shoddy in how they operate and in what they produce.

A

Coffee beans purchased by a coffee shop A. Intermediate Good B. Final Good C. Neither

A

Disposable personal income is equal to A. personal income minus personal tax payments. B. the income households have to​ consume, save, and pay taxes. C. personal income minus Social Security payments. D. personal income minus government transfer payments plus personal tax payments.

A

Identify the best measurement of total output in the US economy. A. Microeconomics B. Macroeconomics

A

In an economy with rising​ prices, compared to the base​ year, A. nominal GDP is larger than real GDP in years after the base year. B. nominal GDP is equal to real GDP in years after the base year. C. nominal GDP is larger than real GDP in years before the base year. D. nominal GDP is equal to real GDP in years before the base year.

A

One major component of GDP that can be negative is A. net exports. B. investment. C. consumption. D. government expenditures.

A

The business cycle exists because A. total production experiences periods of increases and periods of decreases. B. exports and imports do not always increase and decrease at the same rate which causes cyclical movements in net exports. C. the price level tends to increase over some periods and decrease over others. D. there are changes in the level of government​ expenditures, sometimes they increase and sometimes they decrease.

A

The difference between the nominal interest rate and the real interest rate is A. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate minus the inflation rate. B. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate plus the inflation rate. C. the real interest rate is the stated interest rate whereas the nominal interest rate is the real interest rate minus the inflation rate. D. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate divided by the inflation rate.

A

The most efficient market structure is perfect competition. A. Microeconomics B. Macroeconomics

A

The total value of commodity A produced in Country X increased from​ $500,000 in 2011 to​ $700,000 in 2012. According to​ Laura, a student of​ economics, the share of commodity A in real GDP of 2012 should be higher than that of 2011. Which of the​ following, if​ true, would strengthen​ Laura's argument? A. The average price level in the economy remained stable over the two years. B. The quantity of commodity A produced in 2011 was higher than in 2012. C. The total amount of inputs used in the production of commodity A was higher in 2011 than in 2012. D. The scale of production in 2012 was smaller than in 2011. E. Only a fraction of commodity A produced in 2012 was consumed in the same year.

A

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called A. structural unemployment. B. cyclical unemployment. C. seasonal unemployment. D. frictional unemployment.

A

Unemployment rates are Part 2 A. lower for college graduates than for people without a high school​ degree, and vary greatly among ethnic groups. B. lower for college graduates than for people without a high school​ degree, and vary little among ethnic groups. C. lower for people without a high school degree than for college​ graduates, and vary little among ethnic groups. D. lower for people without a high school degree than for college​ graduates, and vary greatly among ethnic groups.

A

When there are part−time workers , the official BLS measure of the unemployment rate ____ the true degree of unemployment A. understates B. overstates

A

Workers who lose their jobs because of a recession are experiencing A. cyclical unemployment. B. seasonal unemployment. C. frictional unemployment. D. structural unemployment.

A

A new home purchased by a family A. Intermediate Good B. Final Good C. Neither

B

A new​ pick-up truck purchased by a consumer A. Intermediate Good B. Final Good C. Neither

B

A price ceiling is a legally determined __________ price that sellers may charge. A price floor is a legally determined _________ price that sellers may receive. A. minimum, minimum B. maximum, minimum C. minimum, maximum D. maximum, maximum

B

How does the price of corn change if the price of wheat​ increase? A. Microeconomics B. Macroeconomics

B

How does the size of a​ country's GDP affect the quality of life of the​ country's people? Part 2 A. ​Generally, the more goods and services people​ have, the worse off they are. B. ​Generally, the more goods and services people​ have, the better off they are. Your answer is correct. C. There is an inverse relationship between GDP and quality of life. D. When GDP is​ high, production from the underground​ economy, and therefore the crime​ rate, is high.

B

How will an increase in government spending impact the inflation​ rate? A. Microeconomics B. Macroeconomics

B

Suppose that the inflation rateLOADING... turns out to be much lower than most people expected. In that​ case, Part 2 A. a lender will lose from the situation while a borrower will gain. B. a borrower will lose from the situation while a lender will gain. C. both borrower and lender will lose in this situation. D. both borrower and lender will gain from the situation.

B

The unemployment rate A. shows the percentage of the population that is considered unemployed. B. shows the percentage of the labor force that is considered unemployed. C. is the amount of people in the population that are not working. D. is the amount of the labor force that is not working.

B

The​ short-term unemployment that arises from the process of matching workers with jobs is called A. cyclical unemployment. B. frictional unemployment. C. structural unemployment. D. seasonal unemployment.

B

When examining the​ circular-flow diagram, A. households are the only group in the economy that can save or borrow. B. households can use some of their income to purchase goods from foreigners as imports. C. government expenditures must equal the amount of taxes collected. D. foreign households need to borrow in order to purchase goods in the form of exports.

B

Which equation represents the relationship between GDP and the four major expenditure​ components? A. Y​ = C​ + I​ + G​ - NX B. Y=C+I+G+NX C.Y=(C+I)−(G+NX) D. Y=(C+I)(G+NX) E. Y=C(I+G+NX)

B

Why is GDP an imperfect measurement of total production in the​ economy? Part 2 A. The official measure of GDP does not include intermediate goods and services. B. GDP does not include household production or production from the underground economy. C. The BEA does not include the value of new houses in GDP. D. GDP measures total income paid to the factors of​ production, not production.

B

A recession occurs when an economy experiences a period in which there is A. an increase in total employment. B. a decrease in the inflation rate. C. a decrease in total production. D. a negative amount of net exports.

C

Gross Domestic Product​ (GDP) is best defined​ as: A. the total value of all intermediate and final goods and services produced in a country during a period of time B. the total amount of income earned by the citizens of a​ country, including those living in foreign nations C. the market value of all final goods and services produced in a country during a given period of time D. the total value of all goods that exist within a country in a given period of time E. the total quantity of goods and services porodcued in a country during a given period of time

C

If the economy is experiencing​ deflation, Part 2 A. high nominal interest rates inflict serious losses on both household and business borrowers. B. the nominal interest rate will be equal to the real interest rate. C. the nominal interest rate will be lower than the real interest rate. D. the nominal interest rate will be higher than the real interest rate.

C

One share of Google stock A. Intermediate Good B. Final Good C. Neither

C

Since the late​ 1940s, the overall labor force participation rate Part 2 A. has risen because the decline in the labor force participation rate of adult women has been more than offset by the increase in the labor force participation rate of adult men. B. has fallen because the increase in the labor force participation rate of adult women has been more than offset by the decline in the labor force participation rate of adult men. C. has risen because the decline in the labor force participation rate of adult men has been more than offset by the increase in the labor force participation rate of adult women. D. has fallen because the increase in the labor force participation rate of adult men has been more than offset by the decline in the labor force participation rate of adult women.

C

Suppose that the total population of the United States is 324 million and the​ working-age population is 258.7 million. The​ working-age population is divided into those in the labor force​ (162.5 million) and those not in the labor force​ (96.2 million). The labor force is divided into the employed​ (156.6 million) and the unemployed​ (5.8 million). Those not in the labor force are divided into those not available for work​ (91.3 million) and those available for work​ (4.9 million).​ Finally, those available for work but not in the labor force are divided into discouraged workers​ (0.5 million) and those currently not working for other reasons​ (4.4 million). What is the unemployment rate in this economy​ (Round to the nearest two decimal​ places)? A. ​2.88% B. ​3.24% C. ​3.57% D. ​3.70% E. ​5.00%

C

The business cycle exists because A. exports and imports do not always increase and decrease at the same rate which causes cyclical movements in net exports. B. there are changes in the level of government​ expenditures, sometimes they increase and sometimes they decrease. C. total production experiences periods of increases and periods of decreases. D. the price level tends to increase over some periods and decrease over others.

C

The difference between a nominal variable and a real variable is that Part 2 A. real variables are calculated in​ current-year prices and the nominal variables are measured in dollars of the base year to adjust for the effects of inflation. B. real variables are divided by the price index and multiplied by 100 to obtain nominal variables. C. nominal variables are calculated in​ current-year prices and the real variables are measured in dollars of the base year for the price index to correct the effects of inflation. D. nominal variables are economic variables that are adjusted for​ inflation, whereas real variables are valued in​ today's dollars.

C

The figure shows the values of the components of GDP for the year 2018. Based on the data​ shown, which of the following statements regarding the components of GDP is​ false? A.Net exports are​ negative, which reduces GDP. B. Imports are greater than exports. C. Consumer spending on services is less than the sum of spending on durable and nondurable goods. D. Consumption accounts for 68.1 percent of​ GDP, far more than any of the other components.

C

The​ working-age population in Concordia was estimated to be 6.5 million in a certain year. The​ country's labor department announced that the total number of unemployed people in the country had gone up to​ 460,000 during this year​ while, the total number of people out of the labor force decreased to​ 2,000,000. Oscar​ Lewis, a student of labor economics believes that the labor department data is flawed. Which of the​ following, if​ true, would strengthen the argument that the data overstates​ unemployment? A. The​ country's presidential elections held once in five years are due this year. B. The​ government's macroeconomic study reveals that unemployment levels are likely to come down over the next one year. C. A large proportion of employment is in the unorganized​ sector, which is unaccounted for in the labor bureau data. D. The labor bureau in Concordia does not include the​ country's armed forces personnel in its​ working-age population. E. The data does not cover the thousands of Concordians who work in other countries.

C

When the economy is at full​ employment, which types of unemployment​ remain? A. cyclical and structural B. frictional and cyclical C. frictional and structural D. None of the above. Full employment means that there is no​ unemployment, so the unemployment rate would be zero.

C

A recession occurs when an economy experiences a period in which there is A. an increase in total employment. B. a negative amount of net exports. C. a decrease in the inflation rate. D. a decrease in total production.

D

All of the following are problems in measuring the unemployment rate except that A. ​part-time workers are included as employed. B. lack of verification of​ people's responses in the household survey. C. discouraged workers are not included in the labor force. D. people on active military service are included as unemployed.

D

If Americans still worked​ 60-hour weeks, as they did in​ 1890, A. both GDP and the​ well-being of the typical person would be much higher than they are. B. GDP would be lower than it​ is, but the​ well-being of the typical person would be higher. C. both GDP and the​ well-being of the typical person would be lower than they are. D. GDP would be much higher than it​ is, but the​ well-being of the typical person would not necessarily be higher.

D

If inflation is expected to​ increase, A. the nominal interest rate will remain the same. B. the nominal interest rate will decrease. C. the real interest rate will increase. D. the nominal interest rate will increase.

D

Real GDP per capitaLOADING... is often used as a measure of general​ well-being. While increases in real GDP often do lead to increases in the​ well-being of the​ population, why is real GDP not a perfect measure of​ well-being? Part 2 A. GDP does not include crime rates or income distribution. B. The costs of pollution are not included. C. The value of leisure is not included. D. All of the above.

D

Suppose that the total population of the United States is 324 million and the​ working-age population is 258.7 million. The​ working-age population is divided into those in the labor force​ (162.5 million) and those not in the labor force​ (96.2 million). The labor force is divided into the employed​ (156.6 million) and the unemployed​ (5.8 million). Those not in the labor force are divided into those not available for work​ (91.3 million) and those available for work​ (4.9 million).​ Finally, those available for work but not in the labor force are divided into discouraged workers​ (0.5 million) and those currently not working for other reasons​ (4.4 million). What is the labor force participation rate in this economy​ (Round to the nearest one decimal​ place)? A. ​50.2% B. ​59.5% C. ​61.7% D. ​62.8% E. ​64.2%

D

The difference between microeconomics and macroeconomics is A. microeconomics studies how individuals make decisions while macroeconomics studies how government makes decisions. B. macroeconomics studies smaller parts of the economy such as markets and​ individuals, while microeconomics studies the economy as a whole. C. microeconomics studies smaller parts of the economy such as GDP and​ inflation, while macroeconomics studies the economy as a whole. D. microeconomics studies smaller parts of the economy such as markets and​ individuals, while macroeconomics studies the economy as a whole.

D

The price index which is used to measure changes in the cost of living is the Part 2 A. Retail Price Index. B. Producer Price Index​ (PPI). C. GDP Deflator. D. Consumer Price Index​ (CPI).

D

The​ "normal" underlying level of unemployment in the economy is A. the​ full-employment rate of unemployment. B. the sum of structural unemployment and frictional unemployment. C. the natural rate of unemployment. D. All of the above.

D

What are the four major categories of​ expenditure? Part 2 A. ​Wages, interest,​ rent, and profit. B. ​Labor, capital, natural​ resources, and entrepreneurship. C. Final​ goods, intermediate​ goods, production, and income. D. ​Consumption, investment, government​ purchases, and net exports.

D

Which of the following formulas does the Bureau of Labor Statistics use to calculate the unemployment​ rate? Part 2 A. Number of unemployed/Number of employed×100. B. Number in labor force/Number of unemployed×100. C. Number of unemployed/Working−age population×100. D. Number of unemployed/Number in labor force×100

D

Which of the following is not a shortcoming of GDP as a measure of​ well-being? A. GDP does not include the value of leisure. B. GDP is not adjusted for crime and other social problems. C. GDP is not adjusted for the effects of pollution caused by the production of goods and services. D. GDP only counts final goods and services and not intermediate goods.

D

Which of the following statements about prices and inflation is not​ correct? A. Inflation represents a general rise in prices over periods of time. B. The price level measures the average prices of goods and services across the economy. C. The inflation rate shows the percentage change in prices across periods of time. D. Prices generally increase at the same rate across most periods of time.

D

Why is the unemployment​ rate, as measured by the Bureau of Labor​ Statistics, an imperfect measure of the extent of joblessness in the​ economy? Part 2 A. Discouraged workers are not considered unemployed. B. It does not account for inaccurate responses to the Current Population Survey. C. Underemployed people are considered employed. D. It fails to account for illegal activities. E. All of the above.

E