Economics Exam 2

One bag of coffee beans is sold for $7 to a cafe that uses it to brew coffee which it sells to customers for a total of $22. A second bag of coffee is sold directly to Joan for $7, who uses it to brew coffee for her family every morning. What is the contribution to GDP from the purchases of coffee beans and coffee? a) $29 b) $14 c) $7 d) $15 e) $22

a) $29

The U.S. Unemployment Rate for Sep. 2015 is: a) 5.1 percent. b) 10.7 percent. c) 2.7 percent. d) 7.5 percent. e) 19.7 percent.

a) 5.1 percent.

Oil refiners can refine a barrel of petroleum so that it yields either more home heating oil or more diesel fuel. If the price of diesel fuel falls, there is a) an increase in the supply of home heating oil. b) an increase in the quantity of home heating oil supplied. c) an increase in the demand for home heating oil. d) a decrease in the supply of home heating oil. e) a decrease in the quantity of home heating oil supplied.

a) an increase in the supply of home heating oil.

A market is defined as a) any arrangement that brings buyers and sellers together b) a place where one good is bartered for another c) a physical place where people buy both goods and services d) a physical place where people buy only goods e) a store where people buy physical goods

a) any arrangement that brings buyers and sellers together

During 2008 the supply of gasoline decreased while at the same time the demand for gasoline increased. If the magnitude of the increase in demand was greater than the magnitude of the decrease in supply, then the equilibrium price of gasoline ________ and the equilibrium quantity ________. a) increased; increased b) increased; decreased c) decreased; did not change d) did not change; increased e) increased; did not change

a) increased; increased

Which of the following is likely to be an unreported economic activity? a) tips paid to a taxi driver b) the minimum wage paid to a teenager working at a McDonald's c) the purchase of shares of stock in Walgreen's Pharmacy d) a $250,000 bonus paid to the CEO of a company e) the brokerage fees paid to a broker at Merrill Lynch

a) tips paid to a taxi driver

The reference base period for the CPI has an index number of a) 1. b) 100. c) 10. d) 1,000. e) 0.

b) 100.

Consider the following people: ∙ Chris quits his job as an automobile mechanic to pursue his college education full-time. ∙ Arrelo is temporarily laid off from her technical support job because of a strike by production workers. ∙ Schurita graduated from college in May and is currently looking for a job. ∙ Bo quit his job on September 1 and then, after looking for a new job, will begin his new job on October 1. ∙ Terri retired from his job on May 1. ∙ Vicki works part-time at Bainen Press to help pay her college tuition. According to the scenario above, in which of the following groups are all the people frictionally unemployed? a) Schurita b) Arrelo & Schurita c) Chris & Terri d) Arrelo e) Bo & Vicki

b) Arrelo & Schurita

A country with a real GDP per person similar to real GDP per person in the United States but with limited political freedom is generally considered to have a) an overstated nominal GDP. b) a lower standard of living than the United States. c) a larger Human Development Index because the other country still needs to develop more political freedom. d) the same standard of living as the United States. e) an understated GDP.

b) a lower standard of living than the United States.

Consumers regard Dell computers and Apple computers as substitutes. If the price of a Dell computer increases, the a) demand for Apple computers decreases. b) demand for Apple computers increases. c) demand for Dell computers decreases. d) demand for Dell computers increases. e) supply of Dell computers increases.

b) demand for Apple computers increases

The business cycle has two phases, a) peak and trough. b) recession and expansion. c) expansion and trough. d) expansion and peak. e) recession and trough

b) recession and expansion.

If the demand for a good increases when people's incomes increase, a) the good's demand curve must be slope upward. b) the good is a normal good. c) the good is a substitute good for an inferior good. d) the law of demand is violated. e) the good is an inferior good.

b) the good is a normal good.

If the bank returns $1,020 on the $1,000 deposited for a year during which inflation was 4 percent, the real interest rate is a) 6 percent. b) 16 percent. c) -2 percent. d) 2 percent. e) 10 percent.

c) -2 percent.

If for a given year nominal GDP is $14,000 billion and real GDP is $8,000 billion, then the GDP price index is a) 75 b) 100. c) 175. d) 133. e) 1.33.

c) 175.

As measured, GDP omits which of the following? i. Illegal sales of goods and services ii. Changes in the amount of leisure time iii. Household production of goods and services a) i and iii b) ii and iii c) i, ii, and iii d) i only e) i and ii

c) i, ii, and iii

If the nominal wage is $20.00 in 2011 and the CPI is 202 in 2011, then the real wage in 1982-1984 dollars a) is $30.00. b) is $20.00. c) is $9.90. d) is $14.85. e) cannot be calculated without the past year wage rate.

c) is $9.90.

GDP is best defined as the ________ in a given time period. a) market value of all the goods and services produced within a country b) number of goods and services produced within a country c) market value of the final goods and services produced within a country d) market value of the final goods and services consumed by a nation's citizens e) number of final goods and services produced within a country

c) market value of the final goods and services produced within a country

Consider the following people: ∙ Chris quits his job as an automobile mechanic to pursue his college education full-time. ∙ Arrelo is temporarily laid off from her technical support job because of a strike by production workers. ∙ Schurita graduated from college in May and is currently looking for a job. ∙ Bo quit his job on September 1 and then, after looking for a new job, will begin his new job on October 1. ∙ Terri retired from his job on May 1. ∙ Vicki works part-time at Bainen Press to help pay her college tuition. According to the scenario above, Chris would be classified as a) a discouraged worker. b) an involuntary part-time work. c) not in the labor force because he is a full-time student. d) a voluntary part-time worker. e) unemployed.

c) not in the labor force because he is a full-time

In order to be classified as a recession, a contraction of general economic activity must last at least a) one period. b) one year. c) six months. d) one quarter. e) None of the above because recessions do not have a minimum length.

c) six months.

March 2012, the price of gasoline in the Florida was $3.229 per gallon and the CPI was 210.0 with a base period of 1982 to 1984. What was the real price of gasoline per gallon in base period dollars? a) $1.29 per gallon b) $2.629 per gallon c) $1.00 per gallon d) $1.538 per gallon e) $1.809 per gallon

d) $1.538 per gallon

Which of the following is included in USA's GDP? i. BMWs produced in a German-owned factory in South Carolina ii. the value of the stocks sold on the German stock exchange, the Frankfurt Stock Exchange iii. china produced by the English-owned Wedgewood Company at a factory in Berlin, Germany a) i and ii b) i and iii c) iii only d) i only e) None of the above answers is correct.

d) i only

In 1961, real GDP totaled $575 billion and in 2011 it totaled $1,255 billion. Between 1961 and 2011, the population increased from 20 million to 40 million. Between 1961 and 2011, the standard of living : a) decreased from $125,500 to $28,750. b) increased by over 300 percent. c) increased from $11,500 to $12,550 d) increased by 9 percent. e) increased by about 118 percent.

d) increased by 9 percent.

Full employment occurs when the a) cyclical unemployment rate equals the natural unemployment rate. b) natural unemployment rate equals the frictional unemployment rate. c) structural unemployment rate equals zero. d) unemployment rate equals the natural unemployment rate. e) structural unemployment rate equals the frictional unemployment rate.

d) unemployment rate equals the natural unemployment rate.

Consider the following people: ∙ Chris quits his job as an automobile mechanic to pursue his college education full-time. ∙ Arrelo is temporarily laid off from her technical support job because of a strike by production workers. ∙ Schurita graduated from college in May and is currently looking for a job. ∙ Bo quit his job on September 1 and then, after looking for a new job, will begin his new job on October 1. ∙ Terri retired from his job on May 1. ∙ Vicki works part-time at Bainen Press to help pay her college tuition. According to the scenario above, Vicki would be classified as a) unemployed. b) an involuntary part-time work. c) not in the labor force because she is a full-time student. d) a discouraged worker. e) a voluntary part-time worker.

e) a voluntary part-time worker.

When the unemployment rate is ________ the natural unemployment rate, real GDP is ________ potential GDP. a) the same as; below b) above; the same as c) above; above d) the same as; above e) below; above

e) below; above

Advances in productivity increase supply because they might a) increase the number of firms producing the good. b) increase the price expected in the future. c) raise the prices of resources used to produce the good. d) decrease the number of goods available. e) decrease the cost of production.

e) decrease the cost of production.

When demand decreases and supply decreases by the same amount, the equilibrium quantity ________ and the equilibrium price ________ a) decreases; rises b) decreases; falls c) decreases; might rise, fall, or not change d) does not change; might rise, fall, or not change e) decreases; does not change

e) decreases; does not change

Potential GDP is the level of output produced when the unemployment rate is a) made up of only cyclical unemployment. b) greater than the natural unemployment rate. c) less than the natural unemployment rate. d) zero. e) equal to the natural unemployment rate

e) equal to the natural unemployment rate

According to the CPI basket, the largest item in the households' budgets is a) food. b) apparel. c) transportation. d) education. e) housing.

e) housing

A Discouraged worker i. does not have a job and has not looked for one in the last month. ii. is available and willing to work. iii. must work at least 1 hour per week. a) ii only b) iii only c) i only d) ii and iii e) i and ii

e) i and ii

The law of supply states that, other things remaining the same, a) if the price of a good increases, firms buy less of it. b) demand increases when supply increases. c) as people's income increase, the supply of goods increases. d) if the price of a good increases, the supply increases. e) if the price of a good increases, the quantity supplied increases.

e) if the price of a good increases, the quantity supplied increases.

If real interest rate is higher than nominal interest rate a) inflation rate equals the nominal interest rate. b) inflation rate equals the real interest rate. c) inflation rate is positive. d) inflation rate equals Zero. e) inflation rate is negative.

e) inflation rate is negative.

If average annual tuition at public 4-year colleges was $2,000 in 1991, when the CPI was 125.0, and $8,000 in 2010 when the CPI was 250.0, then the real cost of annual tuition a) fell by 354 percent during that period. b) fell by 158 percent during that period. c) rose by 354 percent during that period. d) rose by 158 percent during that period. e) rose by 100.0 percent during that period.

e) rose by 100.0 percent during that period.

Market demand curves are obtained by a) summing the quantities every consumer is willing to buy at each different price. b) averaging the quantities every consumer is willing to buy at each different price. c) determining the price each consumer is willing to pay for the good and summing those prices across all consumers. d) observing the prices and quantities sold in a market over time and plotting those price-quantity combinations in a graph. e) observing the behavior of an individual consumer in a market.

e) summing the quantities every consumer is willing to buy at each different price

The "quantity demanded" of any good or service is ________ during a specified time period and at a specified price. a) the amount people are willing and able to offer b) the amount people are able to buy c) the amount people are willing to buy because it is the amount sellers are willing to sell d) the amount people are willing to buy e) the amount people are willing and able to buy

e) the amount people are willing and able to buy

In order to obtain the data used to calculate the unemployment rate, the Bureau of Labor Statistics a) uses a survey from 160,000 firms. b) adds together all the reports of layoffs from businesses. c) adds the number of people collecting unemployment insurance from each state. d) adds the state unemployment claims reports. e) uses a survey from 60,000 households

e) uses a survey from 60,000 households