Macro

Who is NOT included in the labor force by the Bureau of Labor Statistics? A) Calvin, who is on temporary layoff B) Michael, who has retired and is not looking for work C) Lauren, who does not have a job, but has applied for several in the last week D) None of the above is correct

B

When the Federal Reserve conducts open-market operations to increase the money supply, it a. redeems Federal Reserve notes. b. buys government bonds from the public. c. raises the discount rate. d. decreases its lending to member banks.

B

The future value of a deposit in a savings account will be larger a. the longer a person waits to withdraw the funds. b. the higher the interest rate is. c. the larger the initial deposit is. d. All of the above are correct.

D

Two years ago Lenny put some money into an account. He earned 6 percent interest on this account and now he has about $1,000. About how much did Lenny deposit into his account two years ago? Select one: a. about $860 b. about $870 c. about $889990 d. about $890

D

Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills is called Select one: a. the natural rate of unemployment. b. cyclical unemployment. c. structural unemployment. d. frictional unemployment.

D

You put $75 in the bank one year ago and forgot about it. The bank sends you a notice that you now have $81 in your account. What interest rate did you earn? Select one: a. 5 percent b. 6 percent c. 7 percent d. 8 percent

D

wage quantity demanded quantity supplied $7 9,000 14,000 $6 12,000 12,000 $5 15,000 10,000 Refer to Labor Market Data. If the government imposed a minimum wage of $7, what would unemployment be? Select one: a. 0 b. 2,000 c. 3,000 d. 5,000

D

The introduction of a union into an industry a. raises wages and employment in that industry. b. lowers wages and employment in that industry. c. lowers wages and raises employment in that industry. d. raises wages and lowers employment in that industry.

D

Who of the following would be included in the Bureau of Labor Statistics "unemployed" category? A) Julie, who is on temporary layoff B) Andrew, who worked only 15 hours last week C) Ellen, who neither has a job nor is looking for one D) None of the above is correct

A) Julie, who is on temporary layoff

. Unions contribute to a. frictional but not structural unemployment. b. structural but not frictional unemployment. c. both frictional and structural unemployment. d. neither frictional nor structural unemployment.

B

If you put $125 into an account that paid 3.25 percent interest, then how much money would you have in the account after 20 years? Select one: a. $285.83 b. $236.98 c. $202.04 d. $145.65

B

Labor Data for Aridia Year 2010 2011 2012 Adult population 2000 3000 3200 Number of employed 1400 1300 1600 Number of unemployed 200 600 200 Refer to Table 1. The labor force of Aridia in 2010 was Select one: a. 1400. b. 1600. c. 1800. d. 2000.

B

The Bureau of Labor Statistics reported in 2005 that there were 50.40 million people over age 25 whose highest level of education was some college or an associate degree, 33.86 million of whom were employed and 1.27 million of whom were unemployed. What were the labor-force participation rate and the unemployment rate for this group? Select one: a. 69.7% and 2.5% b. 69.7% and 3.6% c. 67.2% and 2.5% d. 67.2% and 3.6%

B

From the standpoint of the economy as a whole, the role of insurance is a. to entice risk-loving people to become risk averse. b. to promote the phenomenon of adverse selection. c. not to eliminate the risks inherent in life, but to spread them around more efficiently. d. not to spread risks, but to eliminate them for individual policy holders.

C

Greg's Tasty Ice Cream is considering building a new ice cream factory that costs $8.3 million. The company accountants believe that, not accounting for interest costs, building the factory will increase profits by $5 million the first year, $4 million the second year and have no value thereafter. Greg's Tasty Ice Cream should build the factory if the interest rate is Select one: a. 3% but not if it is 4%. b. 4% but not if it is 5%. c. 5% but not if it is 6%. d. 6% but not if it is 7%.

C

Labor Data for Aridia Year 2010 2011 2012 Adult population 2000 3000 3200 Number of employed 1400 1300 1600 Number of unemployed 200 600 200 Refer to Table 1. The labor-force participation rate of Aridia in 2010 was Select one: a. 70%. b. 77.8%. c. 80%. d. 87.5%.

C

Meredith recently graduated from college but has not yet started working. To be counted as unemployed she A) does not have to have looked for work B) must have looked for work no more than a week ago C) must have looked for work no more than 4 weeks ago

C

The theory of efficiency wages provides a possible explanation as to why a. workers form unions. b. firms should try to reduce surpluses of labor. c. firms may be inclined to keep their workers' wages above the equilibrium level. d. firms may be inclined to keep their workers' wages below the equilibrium level.

C

Which of the following games might a risk-averse person play? a. a game where she has a 50 percent chance of winning $1 and a 50 percent chance of losing $1 b. a game where she has a 50 percent chance of winning $100 and a 50 percent chance of losing $100 c. a game where she has a 60 percent chance of winning $1 and a 40 percent chance of losing $1 d. a game where she has a 40 percent chance of winning $1 and a 60 percent chance of losing $1

C

Yoyo's Frozen Yogurt, Inc. is thinking of building a new warehouse. They believe that this will give them $50,000 of additional revenue at the end of one year, $60,000 additional revenue at the end of two years, and $70,000 in additional revenue at the end of three years. If the interest rate is 5 percent, Yoyo would be willing to pay Select one: a. $140,000, but not $150,000. b. $150,000, but not $160,000. c. $160,000, but not $170,000. d. $170,000, but not $180,000.

C

A judge requires Harry to make a payment to Sally. The judge says that Harry can pay her either $10,000 today or $11,000 two years from today. Of the following interest rates, which is the lowest one at which Harry would be better off paying $11,000 two years from today? Select one: a. 2 percent b. 3 percent c. 4 percent d. 5 percent

D

Edgar is working part-time. Diane is on temporary layoff. who is included in the Bureau of Labor Statistics "employed" category?

Only Edgar

Which of the is NOT one of the categories into which the Bureau of Labor Statistics places each adult of each surveyed household

underemployed

Unemployment numbers reported by the Bureau of Labor Statistics are reported based on a a. monthly survey of about 60,000 households b. monthly survey of about 6,000 households c. weekly survey of about 60,000 households d. weekly survey of about 6,000 households

A

The efficient markets hypothesis says that beating the market consistently is Select one: a. impossible. Many studies find that beating the market is, at best, extremely difficult. b. impossible. Many studies find that beating the market is relatively easy. c. relatively easy. Many studies find that beating the market is, at best, extremely difficult. d. relatively easy. Many studies find that beating the market is relatively easy.

A

. Who in the adult population is counted as employed in U.S. labor statistics? a. people who are temporarily absent from their job and people who work without pay in a family member's business b. people who are temporarily absent from their job but not people who work without pay in a family member's business c. people who work without pay in a family member's business but not people who are temporarily absent from their job d. neither people who are temporarily absent from their job nor people who work without pay in a family member's business

A

Below is some hypothetical data on the labor market. wage quantity demanded quantity supplied $7 9,000 14,000 $6 12,000 12,000 $5 15,000 10,000 Refer to Labor Market Data. If the government imposed a minimum wage of $5, what would unemployment be? Select one: a. 0 b. 2,000 c. 3,000 d. 5,000

A

Economists have developed models of risk aversion using the concept of a. utility and the associated assumption of diminishing marginal utility. b. utility and the associated assumption of increasing marginal utility. c. income and the associated assumption of diminishing marginal wealth. d. income and the associated assumption of increasing marginal wealth.

A

Figure 1 Refer to Figure 1. If the government imposes a minimum wage of $4, then how many workers will be unemployed? Select one: a. 0 b. 3000 c. 4000 d. 7000

A

Frictional unemployment results from Select one: a. job searching. It is often thought to explain relatively short spells of unemployment. b. job searching. It is often thought to explain relatively long spells of unemployment c. a surplus in the some labor markets. It is often thought to explain relatively short spells of unemployment. d. a surplus in some labor markets. It is often thought to explain relatively long spells of unemployment.

A

If the efficient market hypothesis is correct, then a. index funds should typically beat managed funds, and usually do. b. index fund should typically beat managed funds, but usually do not. c. mutual funds should typically beat index funds, and usually do. d. mutual funds should typically beat index funds, but usually do not.

A

In June 2009 the BLS reported an adult population of 234.9 million, unemployment of 12.4 million, and employment of 141.6 million. Based on these numbers the labor force participation rate was a. 154/234.9. b. 141.6/234.9. c. 141.6/154. d. None of the above are correct.

A

Jenna is searching for a job that suits her tastes about where to live. Mary is looking for a job that makes best use of her skills. Select one: a. Jenna and Mary are both frictionally unemployed. b. Jenna and Mary are both structurally unemployed. c. Jenna is frictionally unemployed, and Mary is structurally unemployed. d. Jenna is structurally unemployed, and Mary is frictionally unemployed.

A

Person Status Allen Unpaid stay at home dad. Has not looked for a job in several years. Ben College president. Allison Part-time welder. Actively looking for full time work. Brittany Self-employed full-time wedding singer. Cathy Full-time physician's assistant. Calvin Retired finance professor. Last applied for work 10 weeks ago. Diane Laid-off fork-lift operator expecting to be recalled. David Works for a bicycle store. Age 70. Evelyn Manager of health food store. Eli Museum guard. Was not at work last week due to illness. Flora Has never been employed. Looked for a job last week. Frank Fired from job as an investment banker. Last looked for work three weeks ago. Refer to Sample Population. How many in the sample are in the labor force? Select one: a. 10 b. 9 c. 8 d. None of the above is correct

A

Tami knows that people in her family die young, and so she buys life insurance. Preston knows he is a reckless driver and so he applies for automobile insurance. a. These are both examples of adverse selection. b. These are both examples of moral hazard. c. The first example illustrates adverse selection, and the second illustrates moral hazard. d. The first example illustrates moral hazard, and the second illustrates adverse selection.

A

Which of the following best illustrates the unit of account function of money? a. You list prices for candy sold on your Web site, www.sweettooth.com, in dollars. b. You pay for your WNBA tickets with dollars. c. You keep $10 in your backpack for emergencies. d. None of the above is correct.

A

Which of the following is correct concerning stock market irrationality? a. Bubbles could arise, in part, because the price that people pay for stock depends on what they think someone else will pay for it in the future. b. Economists almost all agree that the evidence for stock market irrationality is convincing and the departures from rational pricing are important. c. Some evidence for the existence of market irrationality is that informed and presumably rational managers of mutual funds generally beat the market. d. All of the above are correct.

A

Which of the following is the correct way to compute the future value of $1 put into an account that earns 5 percent interest for 16 years? Select one: a. $1(1 + .05)16 b. $1(1 + .05 16) 16 c. $1(1 + .05 16) d. $1(1 + 16/.05)16

A

Your financial advisor tells you that if you earn the historical rate of return on a certain mutual fund, then in three years your $20,000 will grow to $23,152.50. What rate of interest does your financial advisor expect you to earn? Select one: a. 5 percent b. 6 percent c. 7 percent d. 8 percent

A

At an annual interest rate of 10 percent, about how many years will it take $100 to double in value? Select one: a. 5 b. 7 c. 9 d. 11

B

Diversification of a portfolio Select one: a. can eliminate market risk, but it cannot eliminate firm-specific risk. b. can eliminate firm-specific risk, but it cannot eliminate market risk. c. increases the portfolio's standard deviation. d. is not necessary for a person who is risk averse.

B

Fundamental analysis shows that stock in Cedar Valley Furniture Corporation has a price that exceeds its present value. Select one: a. This stock is overvalued; you should consider adding it to your portfolio. b. This stock is overvalued; you shouldn't consider adding it to your portfolio. c. This stock is undervalued; you should consider adding it to your portfolio. d. This stock is undervalued; you shouldn't consider adding it to your portfolio.

B

If a person is risk averse, then as wealth increases, total utility of wealth Select one: a. increases at an increasing rate. b. increases at a decreasing rate. c. decreases at an increasing rate. d. decreases at a decreasing rate.

B

If all workers and all jobs were the same such that all workers were equally well suited for all jobs, then there would be no a. cyclical unemployment. b. frictional unemployment. c. natural rate of unemployment. d. structural unemployment.

B

If the efficient markets hypothesis is correct, then a. the number of shares of stock offered for sale exceeds the number of shares of stock that people want to buy. b. the stock market is informationally efficient. c. stock prices never follow a random walk. d. All of the above are correct.

B

If the interest rate is 7.5 percent, then what is the present value of $4,000 to be received in 6 years? a. $2,420.68 b. $2,591.85 c. $2,996.33 d. $3,040.63

B

Labor Data for Aridia Year 2010 2011 2012 Adult population 2000 3000 3200 Number of employed 1400 1300 1600 Number of unemployed 200 600 200 Refer to Table 1. The unemployment rate of Aridia in 2010 was Select one: a. 10%. b. 12.5%. c. 14.3%. d. 80%.

B

Suppose you are deciding whether to buy a particular bond. If you buy the bond and hold it for 4 years, then at that time you will receive a payment of $10,000. If the interest rate is 6 percent, you will buy the bond if its price today is no greater than Select one: a. $8,225.06. b. $7,920.94. c. $7,672.58. d. $6,998.98.

B

Suppose you will receive $500 at some point in the future. If the annual interest rate is 7.5 percent, then the present value of the $500 is Select one: a. $411.26 if the $500 is to be received in 5 years and $338.95 if the $500 is to be received in 10 years. b. $348.28 if the $500 is to be received in 5 years and $242.60 if the $500 is to be received in 10 years. c. $291.11 if the $500 is to be received in 5 years and $272.89 if the $500 is to be received in 10 years. d. $291.11 if the $500 is to be received in 5 years and $236.49 if the $500 is to be received in 10 years.

B

The field of finance primarily studies Select one: a. how society manages its scarce resources. b. the implications of time and risk for allocating resources over time. c. firms' decisions concerning how much to produce and what price to charge. d. how society can reduce market risk.

B

The value of a stock is based on the Select one: a. present values of the dividend stream and final price. As a result, the value of a stock rises when interest rates rise. b. present values of the dividend stream and final price. As a result, the value of a stock falls when interest rates rise. c. future values of the dividend stream and final price. As a result, the value of a stock rises when interest rates rises. d. future values of the dividend stream and final price. As a result, the value of a stock falls when interest rates rise.

B

At an annual interest rate of 14 percent, about how many years will it take $100 to double in value? a. 3 b. 4 c. 5 d. 7

C

Cleo promises to pay Jacques $1,000 in two years. If the interest rate is 6 percent, how much is this future payment worth today? Select one: a. $883.60 b. $887.97 c. $890.00 d. None of the above are correct to the nearest cent.

C

Demand deposits are included in a. M1 but not M2. b. M2 but not M1. c. M1 and M2. d. neither M1 nor M2.

C

Efficiency wages contribute to a. frictional unemployment and the natural rate of unemployment. b. frictional unemployment but not the natural rate of unemployment. c. structural unemployment and the natural rate of unemployment. d. structural unemployment but not the natural rate of unemployment.

C

From time to time, the demand for workers has risen in one region of the United States and fallen in another. This illustrates a. frictional unemployment created by efficiency wages. b. structural unemployment created by efficiency wages. c. frictional unemployment created by sectoral shifts. d. structural unemployment created by sectoral shifts.

C

If the reserve ratio is 8 percent, an additional $1,000 of reserves can increase the money supply by a. $6,400 b. $8,000 c. $12,500 d. $20,000

C

Person Status Allen Unpaid stay at home dad. Has not looked for a job in several years. Ben College president (job title). Allison Part-time welder. Actively looking for full time work. Brittany Self-employed full-time wedding singer. Cathy Full-time physician's assistant. Calvin Retired finance professor. Last applied for work 10 weeks ago. Diane Laid-off fork-lift operator expecting to be recalled. David Works for a bicycle store. Age 70. Evelyn Manager of health food store. Eli Museum guard. Was not at work last week due to illness. Flora Has never been employed. Looked for a job last week. Frank Fired from job as an investment banker. Last looked for work three weeks ago. Refer to Sample Population. How many in the sample are unemployed? Select one: a. 5 b. 4 c. 3 Correct d. None of the above is correct.

C

Table 1 Bank of Tampa Assets Liabilities Reserves $100 Deposits $1,000 Loans $900 Refer to Table 1. If the Bank of Tampa has loaned out all the money it wants given its deposits, then its reserve ratio is a. 1% b. 5% c. 10% d. 20%

C

The possibility of speculative bubbles in the stock market arises in part because Select one: a. stock prices may not depend at all on psychological factors. b. fundamental analysis may be the correct way to evaluate the value of stocks. c. future streams of dividend payments are very hard to estimate. d. the value of shares of stock depends not only on the future stream of dividend payments but also on the price at which the stock will be sold.

C

Which of the following methods of picking stocks is not consistent with fundamental analysis? Select one: a. doing research such as thoroughly reading and analyzing companies' annual reports b. choosing mutual funds that are managed by individuals with good reputations c. viewing individual stock prices as unpredictable d. relying upon the advice of Wall Street analysts

C

Compounding refers directly to a. finding the present value of a future sum of money. b. finding the future value of a present sum of money. c. changes in the interest rate over time on a bank account or a similar savings vehicle. d. interest being earned on previously-earned interest.

D

In June 2009 the BLS reported a U.S. foreign-born population of 35.3 million. Of these, 22.7 million were employed and 1.4 million were unemployed. Based on these numbers what were the unemployment rate and the labor-force participation rate of the foreign-born U.S. population? a. 1.4/35.3 and 22.7/35.3 b. 1.4/35.3 and 24.1/35.3 c. 1.4/24.1 and 22.7/24.1 d. None of the above are correct.

D

Jai Li just lost her job, and she hasn't yet started looking for a new one. The Bureau of Labor Statistics counts Jai Li as A)unemployed and in the labor force B) unemployed, but not in the labor force C) in the labor force, but not unemployed D) neither in the labor force nor unemployed

D

Minimum wages create unemployment in markets where they create a a. shortage of labor. Unemployment of this type is called frictional. b. shortage of labor. Unemployment of this type is called structural. c. surplus of labor. Unemployment of this type is called frictional. d. surplus of labor. Unemployment of this type is called structural.

D

The Bureau of Labor Statistics produces data on unemployment and other aspects of the labor market from a regular survey of households, called the a. Census. b. Labor Survey. c. Survey of Economic Indicators. d. Current Population Survey.

D

The financial system a. involves bank accounts, mortgages, stock prices, and many other items. b. involves decisions and actions undertaken by people at a point in time that affect their lives in the future. c. coordinates the economy's saving and investment. d. All of the above are correct.

D

Unemployment Data are collected

Through a regular survey of about 60,000 households.