ECON211 Exam 2

If the wage rate is $9 per hour and the price level is 2, then the real wage is:

$4.50

If a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its unemployment rate is:

10%

A business cycle is a:

Short-run shift between economic upturns and downturns.

Structural unemployment CANNOT be caused by:

Granting Social Security benefits to laid-off workers.

The value, at a current market prices, of the final goods and services produced within a country during a particular period is:

Gross domestic product.

Discouraged workers:

Have given up looking for a job.

Inflation:

Is an increase in the overall level of prices.

Cyclical unemployment:

Is the deviation from the natural rate in the actual rate of unemployment.

A price ceiling will not have an immediate effect if:

It is set above the equilibrium price.

A survey reveals that, on a small island, 40 people have jobs, 10 people are not working but are looking for jobs, and 30 people are neither working nor looking for work. The unemployment rate on the island is ______%.

20

In the United States, government spending accounts for approximately ______% of GDP.

20

Which annual rate of inflation is hyperinflation?

2000%

If the actual unemployment rate 7% and the cyclical unemployment rate is 2%, then the natural rate of unemployment is:

5%

In the United States, consumer spending accounts for approximately ______% of GDP.

70

If the cost of a market basket is $150 in year 1 and $200 in year 2, the price index for year 1 using year 2 as a base is:

75

An example of structural unemployment is:

A geologist who is permanently laid off because of an increase in wages won by labor unions.

Efficiency wages are:

Above equilibrium to encourage better performance.

Real GDP per capita is:

An incomplete measure of a country's standard of living.

Menu costs of inflation are the:

Costs associated with businesses changing prices.

Shoe-leather costs are the:

Costs of transactions associated with avoiding the inflation tax.

Intermediate goods are NOT counted in GDP because:

Doing so would result in double counting.

The labor force is considered to be:

Everyone who is employed plus everyone who is unemployed.

Anna recently moved to Boston with her husband Joe, who has a new job as an economics professor at Harvard. Anna is an experienced surgeon who is interviewing with several hospitals in Boston. Anna is:

Frictionally unemployed.

Which example is quantity control?

Limits on the number of red snappers that can be caught in the Gulf of Mexico.

An INCREASE in the number of discouraged workers in the economy tends to:

Lower the official unemployment rate.

A person who is NOT working or looking for work is:

Not counted in the unemployment rate.

You are a college student and NOT working or looking for work. You are:

Not part of the labor force.

Recessions are periods when:

Output and employment are falling in many industries.

An increase in the nation's ______ is generally accepted as a long-run indicator of a rising standard of living.

Output per person

An expansion in a period in which:

Output rises.

Which example is NOT a government transfer?

Payments by the Defense Department for a new weapons system.

Hugo Chavez was the president of Venezuela. Venezuela is a major producer of oil products, which remain a critical component of Venezuela's economy. Suppose President Chavez wanted to increase his popularity with the citizens of Venezuela an enacted a government policy to reduce the price of gasoline sold at state-owned gas stations to 50% of the previous price. This policy is a called a:

Price ceiling.

Suppose that immigration laws are relaxed and many workers from other nations enter the U.S. labor force. The ______ labor will ______.

Supply of; increase

Which factor is NOT included in investment spending in the national income accounts?

The purchase of stocks and bonds by a business.

Suppose that a binding price floor is in place in a particular market. If the market is deregulated and the price floor is removed:

The quality of the good supplied will likely decrease.

In a market basket of goods:

The quantities stay constant and the prices may change.

The MOST important use of GDP is a measure of:

The size of the economy.

Real GDP is:

The value of the production of all final goods and services adjusted for price changes.

If a country sells more goods and services to the rest of the world than it purchases from the other countries, then the country has a:

Trade surplus.

An open economy:

Trades goods and services with other countries.

During a recession:

Unemployment increases and the growth rate of real GDP decreases.

The equation that breaks GDP down by the four sources of aggregate spending is:

GDP = C + I + G + X - IM

Increases in unemployment benefits:

Increase the natural rate of unemployment.

If the consumer price index changes from 120 to 125 between December 2009 and December 2010, the:

Inflation rate for 2010 is 4.2%.

A quota is a:

Quantity restriction.

If deflation occurs and your income is fixed, your real income:

Will go up.

Economists claim that the unemployment rate can understate the true level of unemployment because the ONLY group that is included is:

Workers without jobs who have looked for work in the past four weeks.

Which item would NOT be included in this year's GDP?

Your purchase of your neighbor's 2001 Toyota.