Econ Final

The percentage change in the price level from one time period to the next, whether the price level is measured in terms of money or as a price index, will be the _____________. A.)inflation rate b.)price index rate C.)consumer price index D.)producer price Index

A.)inflation rate

As the aggregate price level in an economy rises, ____________________. A.)interest rates increase B.)consumer demand increases C.)exports decrease D.)investment increases

A.)interest rates increase

A nation can achieve higher economic growth if: A.)it devotes more resources to research and development. B.)the productivity of labor declines C.)taxes are imposed on investment in capital. D.)more resources are allocated to consumption goods.

A.)it devotes more resources to research and development.

A university student who is enrolled in school fulltime and not seeking employment is considered: A.)out of the labor force. B.)unemployable, and not counted in official statistics. C.)employed in leisure. D.)underemployed.

A.)out of the labor force.

Reginald looked for work for six months but could not find a job to his liking. He now spends his time at the beach. For purposes of employment he is considered: A.)out of the labor force. B.)unemployed. C.)employed in the underground economy. D.)underemployed.

A.)out of the labor force.

One of the reasons that a rise in the price of a fixed basket of goods over time tends to overstate the rise in a consumer's true cost of living, is: A.)substitution bias B.)attribution bias C.)complimentary bias D.)preference bias

A.)substitution bias

The most commonly cited measure of inflation in the United States is: A.)the Consumer Price Index (CPI). B.)the Deflationary Price Index (DPI) C.)the Cumulative Price Index (CPI) D.)the Inflationary Price Index (IPI)

A.)the Consumer Price Index (CPI).

If a nation's labor force receives a significant influx of young workers: A.)the natural rate of unemployment is likely to increase. B.)the natural rate of unemployment is likely to decrease. C.)the natural rate of unemployment is unlikely to change D.)frictional unemployment will likely decrease to zero.

A.)the natural rate of unemployment is likely to increase.

The most significant real economic cost of high unemployment is: A.)the potential goods and services that might have been produced but weren't. B.)the money cost of retraining persons to obtain new jobs. C.)the lost tax revenue that might have been paid by persons if they had worked. D.)the money cost of unemployment insurance payments to the unemployed.

A.)the potential goods and services that might have been produced but weren't.

Aggregate supply (AS) denotes the relationship between the __________________ that firms choose to produce and sell and the _________________, holding the price of inputs fixed. A.)total quantity; price level for output B.)type of goods; input price of raw materials C.)price of goods; number of employees D.)total inputs; types of goods

A.)total quantity; price level for output

Refer to the graph below. A government creating economic policy in these circumstances should be most concerned about: Price Level and Real National Income A.)unemployment but not inflation. B.)inflation but not unemployment. C.)inflation and unemployment. D.)neither inflation nor unemployment.

A.)unemployment but not inflation.

GDP does not directly include: A.) the value of goods produced domestically and sold abroad. B.)the value of intermediate goods sold during a period. C.)the value of services rendered during a period. D.)the value of final goods and services produced, but not sold, during a period.

B.) the value of intermediate goods sold during a period.

Women composed __________ of the paid workforce in 1900 and 50% of the paid workforce in 2010. A.)2% B.)18% C.)33% D.)60%

B.)18%

If the number of employed persons in a country equals 24 million, the number of unemployed persons equals 8 million, and the number of persons over age 16 in the population equals 40 million, the unemployment rate equals: A.)32%. B.)25%. C.)20%. D.)8%.

B.)25%

In certain African countries like Niger, Tanzania, Nigeria, and Sudan, for example, GDP per capita at the start of the 2000s was still less than $___________. A.)30 B.)300 C.)3000 D.)30,000

B.)300

The U.S. unemployment rate moves up and down as the economy moves in and out of recessions. But over time, the unemployment rate seems to return to a range of ____________. A.)2%-4% B.)4%-6% C.)6%-8% D.)8%-10%

B.)4%-6%

___________ is about two-thirds of the demand side of GDP, but it moves relatively little over time. A.)Government B.)Consumption C.)Investment D.)Services

B.)Consumption

When discussing economic growth, it is often useful to focus on ____________, to avoid studying changes in the size of GDP that represent only having more people in the economy, and focus on those increases in GDP which represent an actual rise in the standard of living on a per person basis. A.)economic growth B.)GDP per capita C.)living standards D.)consumption and expenditures

B.)GDP per capita

Some prominent members of the slow-economic growth country club include a high-income country like _________. A.)Somalia B.)Germany C.)Bolivia D.)Nigeria

B.)Germany

Which of the following is correct? A.)An increase in the quantity of labor always leads to economic growth. B.)Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital. C.)A decrease in the productivity of labor leads to economic growth. D.)Third World countries are rich in human capital.

B.)Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital.

_________ is calculated by taking _________ and then subtracting the value of how much physical capital is worn out, or reduced in value because of aging, over the course of a year. A.)GNP; NNP B.)NNP; GNP C.)GDP; NNP D.)NNP; GDP

B.)NNP; GNP

_________ is output per hour in the business sector. A.)Net exports B.)Productivity C.)Investment D.)GDP per capita

B.)Productivity

_________ are now the largest single component of the supply side of GDP, representing over half of GDP. A.)Durable goods B.)Services C.)Nondurable goods D.)Structures

B.)Services

_____________________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s. A.)GDP per capita B.)The Industrial Revolution C.)The living standard D.)Investment and inventions

B.)The Industrial Revolution

Frictional unemployment occurs when: A.)there is friction between an employer and employee. B.)a worker decides to quit one job to seek a different job. C.)a large corporation transfers a worker to another city. D.)college students go back to school at the end of the summer.

B.)a worker decides to quit one job to seek a different job.

What distinguishes the real value of a statistic from the nominal value of a statistic? A.)timing of announcement B.)adjusting for inflation C.)adjusting for GDP deflator D.)real interest rate

B.)adjusting for inflation

In macroeconomics, the connection from inputs to outputs for the entire economy is called _______________. A.)a production function B.)an aggregate production function C.)human capital D.)physical capital

B.)an aggregate production function

The rise in unemployment that occurs because of a recession is known as cyclical unemployment, because it is closely tied to the ______________. A.)natural rate of unemployment B.)business cycle C.)supply curve D.)labor supply

B.)business cycle

Which of the following is not included in GDP? A.)the payments for a chiropractor's services B.)cash income paid to a day laborer that is not reported to the tax authorities C.)the replacement of brake pads on your six-year-old vehicle D.)the fees for legal services rendered by your lawyer

B.)cash income paid to a day laborer that is not reported to the tax authorities

When the economy of a country is operating close to its full capacity: A.)the unemployment rate is greater than the natural rate of unemployment. B.)cyclical unemployment is close to zero. C.)unemployment is close to zero. D.)the unemployment rate is less than the natural rate of unemployment.

B.)cyclical unemployment is close to zero.

Another term used to describe negative inflation is: A.)counter inflation B.)deflation C.)hyperinflation D.)GDP deflator

B.)deflation

The definition of market equilibrium states that at the _______________, the quantity of labor demanded by employers will equal the quantity supplied. A.)efficiency wage B.)equilibrium wage C.)sticky wage D.)natural rate of unemployment

B.)equilibrium wage

Some recent economic research has suggested that African countries' economic growth may have been limited by __________________ . A.)population B.)geography and climate C.)government interventionism D.)technological challenges

B.)geography and climate

In the long run, the most important source of increase in a nation's standard of living is a: A.)zero rate of population growth B.)high rate of economic growth. C.)high rate of consumption. D.)high rate of labor force growth.

B.)high rate of economic growth.

Which of the following is most likely to contribute to economic growth as measured by GDP per capita? A.)the imposition of tariffs and quotas on imported goods B.)increased capital formation C.)rapid population growth D.)an increase in marginal tax rates

B.)increased capital formation

A payment is said to be ________________ if it is automatically adjusted for inflation. A.)cross referenced B.)indexed C.)matched D.)maintained

B.)indexed

A lender demands an interest rate in part to compensate for any expected ___________, so that the money that is repaid in the future will have at least as much buying power as the money that was originally loaned. A.)risk premium B.)inflation C.)compound interest D.)opportunity costs

B.)inflation

While one occasionally sees references to inflation over short time periods, the term typically implies a(n)_____________ in prices. A.)ongoing decrease B.)ongoing rise C.)short term rise D.)short term decrease

B.)ongoing rise

The Producer Price Index is based on prices paid for supplies and inputs by: A.)consumers B.)producers of goods and services C.)government D.)the small business sector

B.)producers of goods and services

The __________________ is the nominal interest rate minus the rate of inflation. A.)real GDP B.)real interest rate C.)nominally adjusted D.)annualized interest rate

B.)real interest rate

Which of the following will have the greatest influence on the slope of the demand curve in a single market model? A.)wealth effects B.)substitute goods C.)full employment D.)higher wages

B.)substitute goods

If Keynes' law applies during economic contractions and Say's law applies during economic expansion, how will the three goals of macroeconomics be affected? A.)determinates of total supply for the economy will be traded-off B.)trade-offs and connections may differ in the short run and the long run C.)the economy will face genuine limits to how much can be produced D.)institutional and market structures will connect factors of production

B.)trade-offs and connections may differ in the short run and the long run

In November 2010 the labor force in Siouxtown, was 14,800. There were 14,483 persons employed. The local unemployment rate A.)was 1.2%. B.)was 2.1%. C.)was 5.6%. D.)was 7.1%.

B.)was 2.1%.

India has a GDP of 23,000 billion Indian rupees, and a population of 1.1 billion. The exchange rate is 50 rupees per U.S. dollar. Calculate the GDP per capita of India as measured in U.S. dollars. A.)$20.90 B.)$20,909 C.)$418 D.)$4.18

C.)$418

Middle-income countries, which include much of Latin America, Eastern Europe, and some countries in East Asia, have per capita GDP in the range of ___________. A.)$60 to $120 B.)$600 to $1200 C.)$6,000 to $12,000 D.)$60,000 to $120,000

C.)$6,000 to $12,000

Once every __________, the Census Bureau does a comprehensive survey of housing and residential finance. A.)month B.)5 years C.)10 years D.)20 years

C.)10 years

Through good economic years and bad, many European economies had unemployment rates hovering near _________ since the 1970s A.)1% B)5% C.)10% D.)20%

C.)10%

The unemployment rate in a town in which 65,400 persons are employed and 11,000 are unemployed equals: A.)20.2 %. B.)16.8%. C.)14.4%. D.)11%.

C.)14.4%.

A country will roughly double its GDP in twenty years if its annual growth rate is: A.)2 percent. B.)7.5 percent. C.)3.5 percent. D.)2.5 percent.

C.)3.5 percent.

The following table shows the aggregate supply and demand data for a country. If input prices decrease and AS shifts to the right by 3,000 units at each price level. What will the new price equal? A.)600 B.)800 C.)300 D.)400

C.)300

Consumption in the United States is about ____________ of GDP, and it moves relatively little over time. A.)10% B.)33% C.)68% D.)90%

C.)68%

The following table shows the aggregate supply and demand data for a country. What is the equilibrium output? A.)8,000 B.)4,000 C.)7,000 D.)9,000

C.)7,000

Which of the following is included in the calculated Gross Domestic Product? A.)Farmer Freddie sells his second tractor to his son. B.)Suzanne buys a love seat and chair for $85 at the yard sale on the corner. C.)A local ice cream store sells $17,000 worth of cones and sundaes on July 1. D.)Mr. Farkle buys a used lawn mower from his neighbor, Mr. Sparkle.

C.)A local ice cream store sells $17,000 worth of cones and sundaes on July 1.

An economy's rate of productivity growth is closely linked to the growth rate of its ______________, although the two aren't identical. A.)GNP b.)output C.)GDP per capita D.)technology

C.)GDP per capita

Which of the following best describes the relationship between economic growth and literacy? A.)As the economy grows, literacy declines because it becomes less and less useful in a developed economy. B.)Increased literacy initially stimulates economic growth by raising labor productivity, but as the economy grows and the opportunity cost of education rises, literacy declines. C.)Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education. D.)There is no correlation between economic growth and literacy.

C.)Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education.

Which of the following are most likely classified by economists as consumer durable goods? A.)food, clothing B.)drugs, toys, magazines, books C.)automobiles, furniture D.)stocks, bonds

C.)automobiles, furniture

Melanie decided to save 20% of her annual earnings for 10 years so she would have a down payment for a house. After 5 years, what change in the economy would cause an increase in the purchasing power of the funds she has managed to save? A.)recession B.)depression C.)deflation D.)stagflation

C.)deflation

Changes in the price level of the different components of aggregate demand are reflected in the AD/ASAD/AS macroeconomic model by a ________________________. A.)flatter top portion of AD curve B.)longer distance to equilibrium point C.)downward sloping AD curve D.)shorter distance to equilibrium point

C.)downward sloping AD curve

Final goods or services used to compute GDP refer to: A.)the sum of all wages paid to laborers. B.)the factors of production used to produce output. C.)goods and services purchased by the ultimate users. D.)the value of outstanding shares of stock of manufacturing firms.

C.)goods and services purchased by the ultimate users.

On the demand side of GDP, consumption by _____________ is the largest component of GDP, accounting for about two-thirds of the GDP in any year. A.)services B.)businesses C.)households D.)government

C.)households

The effect of substitution bias is that the rise in the price of a fixed basket of goods over time tends to ___________________ the rise in a consumer's true cost of living, because it doesn't take into account that the person can substitute between goods according to changes in their relative prices. A.)stabilize B.)understate C.)overstate d.)reduce

C.)overstate

Over the long run, ____________ per hour is the most important determinant of the average wage level in any economy. A.)demand B.)dollars C.)productivity D.)supply

C.)productivity

Which of the following is an example of one of the major categories in the overall CPI? A.)apparel and accessories B.)entertainment C.)recreation D.)transportation and insurance

C.)recreation

Aggregate supply curves are ________________________ for low levels of output, and ____________________________ for high levels of output A.)relatively flat; remain flat B.)relatively steep; remain steep C.)relatively flat; relatively steep D.)relatively steep; relatively flat

C.)relatively flat; relatively steep

Since the late 1950s, economists have performed Ògrowth accountingÓ studies in the United States. These have determined that ________________ is typically the most important contributor to U.S. economic growth. A.)human capital B.)physical capital C.)technology D.)a market orientation

C.)technology

Potential GDP in the U.S. will be unaffected by ____________________. A.)technology B.)the amount of capital available C.)the unemployment rate D.)government institutions

C.)the unemployment rate

The _________________ means that a higher price level leads to lower real wealth. A.)employment effect B.)interest rate effect C.)wealth effect D.)foreign price effect

C.)wealth effect

Alex wants to measure the nominal 1998 GDP of $993 billion in 2008 dollars. From the data he gathered, he knows the deflator for 1998 is 30 and for 2008, it is 74, and that real interest in those years was 6.23% and 3.21% respectively. If he avoids making a misleading calculation, what will the value be? A.)$430 billion B.)$835 billion C.)$2,063 billion D.)$2,449 billion

D.)$2,449 billion

The Czech Republic has a GDP of 2,000 billion koruny. The exchange rate is 20 koruny per U.S. dollar. The Czech population is 20 million. Calculate the per capita GDP of the Czech Republic in U.S. dollars. A.)$5 B.)$100,000 C.)$500 D.)$5000

D.)$5000

The following table shows the initial aggregate supply and demand data for a country. If input prices rise and AS shifts to the left by 2,000 units at each price level, what output level will equal the new equilibrium price? A.)6000 B.)2000 C.)8000 D.)7000

D.)7000

When an economy's output increases and the price level decreases, the _________ curve has shifted to the ____________. A.)AS; left B.)AD; left C.)AD; right D.)AS; right

D.)AS; right

The GDP deflator is a price index that includes the following components of GDP: A.)Consumption B.)Consumption plus Investment but not Exports C.)Consumption, Investment plus Exports minus Imports D.)Consumption, Investment, Government plus Exports minus Imports

D.)Consumption, Investment, Government plus Exports minus Imports

_______________, which can be approximated by the growth of gross domestic product, ultimately determines the prevailing standard of living in a country. A.)Trade balance B.)Inflation C.)Education D.)Economic growth

D.)Economic growth

An economics professor is discussing a measure of inflation over time based on a basket of goods comprised of all the components of GDP. Which measure is it? A.)Consumer Price Index B.)GDP Price Index C.)Consumer GDP D.)GDP Deflator

D.)GDP Deflator

Which of the following did not result in economic growth? A.)Installing a network of irrigation ditches and pumping stations in order to grow fruits and vegetables in parts of southern California. B.)The invention of a threshing machine for harvesting grains. C.)Increased government funding of post-secondary education. D.)Many citizens emigrating from Zimbabwe when a politically repressive regime took office.

D.)Many citizens emigrating from Zimbabwe when a politically repressive regime took office.

Referring to the below diagram, which of the following is a true statement? Price Level and Real National Income A.)Macroeconomic policy will be needed to address rising inflation. B.)There is sufficient aggregate demand to cause inflationary pressures. C.)The equilibrium in the economy is at a level of output above full employment. D.)There is insufficient aggregate demand to reach full employment.

D.)There is insufficient aggregate demand to reach full employment.

Increased investment alone will guarantee economic growth. A.)This is a true statement, because growth occurs only with savings. B.)This is a true statement, because money is the only resource needed for growth. C.)This is a false statement, because an economy must rely on capital injections from abroad. D.)This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology.

D.)This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology.

Which of the following factors contribute to economic growth? A.)an increase in the average wage rate paid to workers B.)an increase in the standard of living C.)a decrease in the productivity of labor D.)an increase in the proportion of the population that is college educated

D.)an increase in the proportion of the population that is college educated

Cyclical unemployment arises when: A.)the agriculture sector completes the cycle of planting, cultivating, and harvesting the nation's food supply. B.)labor unions strike for higher wages. C.)the business cycle enters an expansionary phase. D.)business activity in the macroeconomy declines.

D.)business activity in the macroeconomy declines.

A business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle are: A.)trough, expansion, recession, peak B.)contraction, recession, expansion, boom C.)expansion, trough, recession, peak D.)expansion, peak, recession, trough

D.)expansion, peak, recession, trough

In the early 1990s extremely high inflation rates of 2500% were common in Russia. During that time, we can say that as a result of those inflation rates, Russia was experiencing ___________________. A.)perpetual inflation B.)ultra inflation C.)hypo inflation D.)hyperinflation

D.)hyperinflation

As the aggregate price level in an economy decreases, A.)investment decreases. B.)consumer demand decreases. C.)interest rates decrease. D.)imports decrease.

D.)imports decrease.

In an AD/AS model: A.)the GDP deflator always slopes upwards. B.)the potential GDP always slopes downwards. C.)the CPI is shown on the vertical axis. D.)real GDP is shown on the horizontal axis.

D.)real GDP is shown on the horizontal axis.

Say's Law argues that a given ____________________ must create an equivalent ________________________ somewhere else in the economy. A.)potential GDP; value of supply B.)total quantity of goods; price level for output C.)natural rate of unemployment; full employment GDP D.)value of supply; value of demand

D.)value of supply; value of demand

The _________________ argument points out that if an employer reacts to poor business conditions by reducing pay for all workers, then the best workers, with the best employment alternatives at other firms, are the most likely to leave and the least-attractive workers, with fewer employment alternatives, are more likely to stay. A.)efficiency wage theory b.)adverse selection of wage cuts C.)equilibrium wage theory D.)employer wage theory

b.)adverse selection of wage cuts

When a price, wage, or interest rate is adjusted automatically with inflation, it is said to be __________. A.)indexed B.)COLAed C.)nominally adjusted D.)semi-indexed

A.)indexed

To compare the GDP of two different countries with different currencies, it is necessary to use _________________________. A.)an exchange rate B.)foreign currency C.)currency rates D.)per capita GDP

A.)an exchange rate

The type of unemployment that occurs because of a recession is called: A.)cyclical unemployment. B.)the natural rate of unemployment. C.)seasonal unemployment. D.)frictional unemployment.

A.)cyclical unemployment.

In the 1970s and 1980s, labor unions commonly negotiated wage contracts that had _______________________ which guaranteed that their wages would keep up with inflation. A.)cost of living adjustments B.)inflation protection plans C.)inflation ceiling guarantees D.)wage protection clauses

A.)cost of living adjustments

During the deep recessions of the early 1980s and of 2007-2009, unemployment reached roughly __________. A.)10% B.)20% C.)30% D.)40%

A.)10%

During the last two centuries, the average rate of growth of GDP per capita in the leading industrialized countries has averaged about _________ per year. A.)2% B.)12% C.)22% D.)32%

A.)2%

During the Great Depression of the 1930s, the unemployment rate reached more than _________ of the labor force. A.)25% B.)45% C.)65% D.)85%

A.)25%

Freelife, New Hampshire has a labor force of 78,567 persons and employment of 74,382. The unemployment rate for the city is: A.)5.3%. B.)5.6%. C.)6.0%. D.)7.1%

A.)5.3%.

On the supply side of the GDP, Structures account for around __________ of U.S. GDP. A.)7% B.)17% C.)37% D.)57%

A.)7%

_____________________ argues that the productivity of workers will increase if they are paid more, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate. A.)Efficiency wage theory B.)Equilibrium wage theory C.)Employee wage theory D.)Employer wage theory

A.)Efficiency wage theory

___________ is a small category that refers to the goods produced by one business that have yet to be sold to consumers, and are either still sitting in warehouses and on store shelves. A.)Inventories B.)Services C.)Structures D.)Durable goods

A.)Inventories

Which of the following is the name used to describe the price index that consists of intermediate goods and finished goods? A.)Producer Price Index B.)Consumer Price Index C.)Employment Cost Index D.)Processing Price Index

A.)Producer Price Index

________________ results when an economy experiences high unemployment and high inflation at the same time. A.)Stagflation B.)Deflation C.)Reflation D.)Recession

A.)Stagflation

Consumption is the purchase of goods and services by: A.)households. B.)government. C.)business firms. D.)foreign buyers.

A.)households.

The effects of inflation are seen in: A.)goods and services only b.)wages and income levels only C.)services and wages only D).goods, services, wages and income levels

D).goods, services, wages and income levels