macro exam 2

a capital inflow into a country is associated with: A) imports exceeding exports B) a decreased source of funds available for domestic investment C) imports equaling exports D) imports less than exports

A) imports exceeding exports

if the actual unemployment rate is 7% and the natural rate of unemployment is 5%, then the cyclical unemployment rate is: A) 2% B) 5% C) 7% D) 9%

A) 2%

if real GDP doubles in 12 years, its average annual growth rate is approximately: A) 6% B) 5% C) 4% D) 3%

A) 6%

enchante inc., a designer clothing company, buys $400 worth of silk from a silk trader and $30 worth of accessories from accessoriesrus to produce each dress. If the value added by enchante is equal to $200, then according to the value-added approach, the price of the designer dress should be: A) 630 B) 230 C) 200 D) 830

A) 630

in an open economy where government spending was $30 billion, consumption was $70 billion, taxes were $20 billion, and GDP was $100 billion this year, investment spending was $10 billion. as a result, there was: A) a net capital inflow of $10 billion B) capital inflows of $10 billion and capital outflows of $20 billion C) a trade surplus of $20 billion and a financial deficit of $20 billion D) a net capital outflow of $10 billion

A) a net capital inflow of $10 billion

diminishing returns to physical capital implies that when the human capital per worker and the state of technology remain fixed, each successive increase in physical capital leads to: A) a smaller increase in productivity B) a larger increase in productivity C) a decrease in productivity D) negative productivity

A) a smaller increase in productivity

long-run growth is the sustained upward trend in: A) aggregate output per person over several decades B) nominal GDP over time C) interest rates over time D) aggregate output her person over the business cycle

A) aggregate output per person over several decades

if wages grew at a 5% rate last year and average prices grew at a 3% rate, then the average worker is: A) better off B) worse off C) no better or worse off D) unaffected

A) better off

the total income households have after paying taxes and receiving government transfers is called: A) disposable income B) private savings C) aggregate spending D) investment

A) disposable income

"macroeconomics is nothing but a simple aggregation of all the microeconomics parts." do you agree or disagree with this statement? A) don't agree, because there is a lot more to the study of macroeconomics than the sum of its individual microeconomic parts B) agree, because macroeconomics is exactly equal to the sum total of all the microeconomic units C) don't agree, because these two disciplines deal with completely independent issues D) don't agree, because it is microeconomics which is an aggregation of all the macroeconomic parts

A) don't agree, because there is a lot more to the study of macroeconomics than the sum of its individual microeconomic parts

which of the following changes would contribute to a nation's rapid long-run economic growth? A) faster technological change B) faster population growth C) less physical capital per worker D) lower levels of average human capital

A) faster technological progress

anna recently moved to boston in order for her husband joe to begin a new job as an economics professor at harvard. anna is an experienced surgeon who is interviewing with several hospitals in boston. anna is: A) frictionally unemployed B) structurally employed C) cyclically unemployed D) counted as employed, since she is likely to receive a job offer soon

A) frictionally unemployed

which of the following is considered investment spending in macroeconomics? A) gm builds a new plant to manufacture automobiles B) ryan jones buys some gm stock C) ryan jones buys some gm bonds D) ryan jones buys some stocks and bonds

A) gm builds a new plant to manufacture automobiles

which of the following is true? A) inflation means an increase in the overall level of prices B) deflation refers to a decrease in prices only in the energy and transportation sectors C) during inflation most people hold more cash than usual D) inflation was first a problem in the recession of 1929-1933

A) inflation means an increase in the overall level of prices

a business will want a loan when: A) interest rate < (return on project - cost of project) / cost of project B) rate of return < interest rate C) rate of return - interest rate < 0 D) rate of return > (cost of product - interest rate) / interest rate x 100

A) interest rate < (return on project - cost of project) / cost of project

which of the following is most likely a macroeconomics question rather than a microeconomics question? A) is the national unemployment rate rising or falling? B) are consumers buying more bottled water and less fruit juice? C) are salaries for nurses rising or falling? D) should a fav be levied in each ton of carbon a factory emits?

A) is the national unemployment rate rising or falling?

macroeconomics involves the study of the: A) overall behavior of the economy B) individual decision makers in the economy C) different market structures that exist in the economy D) cost and production decisions made by firms

A) overall behavior of the economy

productivity is equal to: A) real GDP divided by the number of workers B) real GDP divided by the population C) the number of workers per machine D) the total output produced

A) real GDP divided by the number of workers

which of the following would most likely be a microeconomic question? A) should i go to business school or take a job? B) what determines the overall salary levels paid to workers in a given year? C) what government policies should be adopted to promote full employment and growth in the economy as a whole? D) what determines the level of output for the economy as a whole?

A) should i go to business school or take a job?

which of the following is false? when there is an increase in: A) the government budget deficit, the total amount of borrowing falls B) private savings, the interest rate decreases C) government budget deficit, the private investment is crowded out D) private savings, the total amount of borrowing increases

A) the government budget deficit, the total amount of borrowing falls

supposed that the nominal rate of interest is 7% and the inflation rate is 3%. the real rate of interest is equal to: A) 3% B) 4% C) 10% D) 7%

B) 4%

the economist whose writings in the 1930s concluded that the cause of an economic depression is in adequate spending was: A) Herbert Hoover B) John Maynard Keynesian C) Andrew Mellon D) Joseph Schumpeter

B) John Maynard Keynesian

economists mostly agree that the problem of climate change should involve government action in the form of market-based incentives such as: A) tax rebates to those helping the environment B) a reduction in the personal income tax for being green C) a carbon tax or a cap and trade system D) a reduction in the price of green cars and appliances

B) a reduction in the personal income tax for being green

economies with higher growth rates tend to be those that have: A) large amounts of natural resources B) a stable government that protects property rights C) high levels of government regulation D) a large defense budget

B) a stable government that protects property rights

value added in national income accounts refers to the: A) value added by labor to the production process B) difference between the final price and the value of inputs purchased C) difference in profits at various stages of production D) value of all the inputs used by the final producer

B) difference between the final price and the value of inputs purchased

goods that are produced domestically but sold abroad are: A) imports B) exports C) part of domestic consumption D) investment

B) exports

when the unemployment rate is very low, most of the unemployment rate tends to be: A) cyclical B) frictionally C) seasonal D) structural

B) frictional

roads, telephone lines, power facilities, and schools are examples of a nation's A) technostructure B) infrastructure C) physiostructure D) sociostructure

B) infrastructure

in a closed economy, all investment spending must come from: A) government B) national savings C) foreign savings D) government, domestic savings, and foreign savings

B) national savings

among the public goods important for economic growth is (are): A) publicly held companies like Ford B) political stability C) public regulation of businesses D) low taxes

B) political stability

a key statistic to measure economic growth is: A) the size of the government's budget B) real GDP per capita C) life expectancy D) the dow jones stock market index

B) real GDP per capita

human capital refers to: A) output per worker B) the education and knowledge embodied in the workforce C) society's investment in capital goods D) people working with capital goods

B) the education and knowledge embodied in the workforce

which of the following statements is true? A) the number of people not working but who have looked for work in the past year are unemployed B) the labor force is the total number of people working plus those who are unemployed C) the unemployment rate is the number of people unemployed expressed as a percentage of the population D) the labor force is the same as the population

B) the labor force is the total number of people working plus those who are unemployed

the altercation between recessions and expansions is known as the: A) unemployment rate B) long-run economic growth C) business cycle D) macroeconomy

C) business cycle

menu costs of inflation are the: A) costs associated with money being a less reliable unit of measurement B) costs of transactions associated with avoiding the inflation tax C) costs associated with businesses changing prices D) revenue the government gets from printing money

C) costs associated with businesses changing prices

the official unemployment rate ignores: A) people with professional jobs B) people who work on commission C) discouraged workers who have given up looking for a job D) people with professional jobs, people who work on commission, and discouraged workers who have given up looking for a job

C) discouraged workers who have given up looking for a job

an increase in the demand for loanable funds would most likely be caused by a(n): A) increase in the market interest rate B) increase in business tax rates C) increase in the amount of expected business opportunities D) decrease in the amount of expected business opportunities

C) increase in the amount of expected business opportunities

in the paradox of thrift: A) firms that are pessimistic about the future lay off the most saving-conscientious workers B) when families and businesses are feeling pessimistic about the future, they spend more today C) increased savings by individuals increases their changes of becoming unemployed D) profligate behavior during economic tough times has large negative consequences for society

C) increased savings by individuals increases their changes of becoming unemployed

which of the following is one reason for latin america's lack of economic growth since 1920? A) the governments spent too much money on education B) latin american industries could not compete with all of the imported products C) savings and investment spending have been low because government policies have led to inflation, bank failures, and other disruptions D) latin america has very few natural resources

C) savings and investment spending have been low because government policies have led to inflation, bank failures, and other disruptions

the topics studied in macroeconomics include: A) the price of a motorcycle B) the wages of engineers C) the average price level in the economy D) how much ice cream consumers buy

C) the average price level in the economy

the widely held view that the government should take an active role in the macroeconomy dates to: A) the civil war B) world war i C) the great depression D) the vietnam war

C) the great depression

if technology advances: A) GDP per capita declines B) physical capital is less productive C) workers can produce more even with fixed amounts of physical and human capital D) human capital is less useful

C) workers can produce more even with fixed amounts of physical and human capital

Y=

C+I+G+NX

sweden has real GDP per capita of $50,000, while chile has real GDP per capita of $250,000. if real GDP per capita in sweden grows at 2% and chile's real GDP per capita grows at 4%, how long will it take for real GDP per capita in the two nations to converge? A) 10 years B) 20 years C) 25 years D) 35 years

D) 35 years

if real GDP grows at an annual rate of 1%, it will double in approximately: A) 11 B) 23 C) 35 D) 70

D) 70

the rule of 70 states that a variable's approximate doubling time equals: A) 70 times the growth rate B) the growth divided by 70 C) 70 divided by the doubling time D) 70 divided by the growth rate

D) 70 divided by the growth rate

the convergence hypothesis fits the data only when the factors that affect growth are held equal across countries. these factors include all of the following except: A) education B) infrastructure C) favorable policies and institutions D) GDP per capita

D) GDP per capita

which federal agency calculates and reports the official unemployment rate? A) federal reserve bank B) treasury department C) department of health and human services D) bureau of labor statistics

D) bureau of labor statistics

all of the following are costs of inflation except: A) menu costs B) shoe-leather costs C) unit-of-account costs D) efficiency wage costs

D) efficiency wage costs

economists believe that the best way to stimulate investment in physical capital is to encourage: A) higher rates of investment in human capital B) more spending on infrastructure C) the conservation of natural resources D) higher rates of national savings

D) higher rates of national savings

inflation affects people adversely because: A) nominal income falls during inflation B) purchasing power tends to increase during inflation C) budget deficit increases during inflation D) inflation causes money to lose its value over time if the overall price level is rising

D) inflation causes money to lose its value over time if the overall price level is rising

the topics studied in macroeconomics include: A) inflation B) unemployment C) economic growth D) inflation, unemployment, and economic growth

D) inflation, unemployment, and economic growth

the convergence hypothesis states that: A) international differences in real GDP per capita tend to diverge over time B) international differences in real GDP per capita tend to fluctuate over time C) international differences in real GDP per capita remain constant over time D) international differences in real GDP per capita tend to narrow over time

D) international differences in real GDP per capita tend to narrow over time

sam, who is 55 years old and has been a steelworker for 30 years, is unemployed because the steel plant in his town closed and moved to mexico. sam is experiencing: A) cyclical unemployment B) permanent unemployment C) frictionally unemployment D) structural unemployment

D) structural unemployment

cyclical unemployment is characterized as: A) unemployment that occurs when people are between jobs B) a lack of good matches between available jobs and the skills people have C) the normal unemployment around which the actual unemployment rate fluctuates D) the deviation in the actual rate of unemployment away from the natural rate

D) the deviation in the actual rate of unemployment away from the natural rate

the interest rate is 5% in the market for loanable funds. investors wish to borrow $100 million and savers wish to save $125 million at this interest rate. we would expect: A) the interest rate to fall, as there is a shortage of loanable funds B) the interest rate to rise, as there is a surplus of loanable funds C) the interest rate to rise, as there is a shortage of loanable funds D) the interest rate to fall, as there is a surplus of loanable funds

D) the interest rate to fall, as there is a surplus of loanable funds

all of the following are reasons the average worker in the united states today produces more than her or his counterpart a century ago except that: A) the modern worker is better educated B) the modern worker has more physical capital to work with C) the modern worker has better technology to work with D) the modern worker works longer hours

D) the modern worker word longer hours

which of the following is true concerning interest rates? A) the nominal interest can be negative B) the real interest rate cannot be negative C) the real interest rate can only be positive D) the real interest can be zero, positive, or negative

D) the real interest can be zero, positive, or negative

currently, the united states is a net recipient of foreign savings: A) this has never happened before in the united states B) this is bad because we are borrowing money from overseas C) this is bad because we are losing control over our own destiny D) this has been true throughout much of our history

D) this has been true throughout much of our history

an open economy: A) trades only with its neighbors B) trades goods but not services or assets with other countries C) does not trade goods, services, or assets with other countries D) trades goods and services with other countries

D) trades goods and services with other countries

which of the following would not be included in this year's GDP? A) the production of a television show B) the purchase of a new hybrid truck C) the hiring of a new school teacher D) your purchase of your neighbor's house, which was built in 1994?

D) your purchase of your neighbor's house, which was built in 1994?

Sn=

Sp+Sg

Sg=

T-TR-G

Sp=

Y-C-T

S=

Y-T-C

Nx=

exports - imports