Macro test 2

Which of the following goods is directly counted in GDP?

A 12 inch subway sandwich purchased by a student

A bond represents... A. The earning of the company B. Part ownership of the company C. A loan to the company D. A type of technology

A loan to the company

Which of the following equations correctly measures GDP in an economy? A) GDP = C + I + G + X B) GDP = C + net I + G + NX C) GDP = C + I + G + NX D) GDP = C + G + I - taxes

GDP = C + I + G + NX

The ________ is a measure of the price level and is calculated by dividing ________ by ________ and multiplying by 100.

GDP deflator; nominal GDP; real GDP

Why is GDP an imperfect measurement of total production in the​ economy?

GDP does not include household production or production from the underground economy.

GDP is not a perfect measure of well-being because

GDP is not adjusted for pollution

What are the three main factors affecting labor productivity growth?

Property rights, Capital, Technological change

Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study? A) Avocado prices rise due to a late frost in California. B) The United Auto Workers sign a contract raising wages and benefits 7% over the next 3 years. C) Real GDP grows by 2.3% in the second quarter. D) Airlines raise ticket prices in response to rising fuel costs.

Real GDP grows by 2.3% in the second quarter.

What are the three Key Services of the Financial System?

Risk sharing, liquidity, information

What do we mean by the separation of ownership from control in large​ corporations?

Shareholders own the​ corporation, but it is controlled by managers.

The percent increase in the CPI from one year to the next is a measure of the a. GDP deflator. b. unemployment rate. c. real interest rate. d. inflation rate.

inflation rate.

Which of the following is not directly counted in GDP? A) investment expenditures B) government purchases C) intermediate goods D) consumer goods

intermediate goods

If the GDP deflator is less than 100, then for that year, nominal GDP ________ real GDP.

is less than

The Bureau of Labor Statistics would categorize a retiree who is not working as A) employed. B) unemployed. C) a discouraged worker. D) out of the labor force.

out of the labor force.

Suppose that shortly after graduating from college you decide to start your own business. Assuming you are starting a small business and realize that you need someone with particular expertise or business skills​, which category of firm are you most likely to​ start?

partnership

Long-run economic growth requires all of the following except A) technological change. B) increases in capital per hour worked. C) government provision of secure property rights. D) political instability.

political instability.

The GDP deflator is the A) difference between real GDP and nominal GDP multiplied by 100. B) difference between nominal GDP and real GDP divided by 100. C) ratio of real GDP to nominal GDP multiplied by 100. D) ratio of nominal GDP to real GDP multiplied by 100.

ratio of nominal GDP to real GDP multiplied by 100.

To examine how the total production of an economy has changed over time, it would be better to examine

real GDP.

The producer price index measures the prices that firms A) pay for imported natural resources that go into the production process. B) receive for the goods and services they export. C) receive for the goods and services they use at all stages of production. D) pay for labor, whether or not the labor is foreign or domestic.

receive for the goods and services they use at all stages of production.

Emma is a road construction worker. During the winter months, Emma finds it more difficult to get work. The unemployment Emma experiences in the winter is

seasonal.

A(n) ​ _____ is a financial security that represents partial ownership of a​ firm, while a​ _____ is a financial security that represents a promise to repay a fixed amount of funds.

stock ; bond

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called

structural unemployment

Unemployment that results because the number of jobs available in some labor markets may be insufficient to give a job to everyone who wants one is called a. the natural rate of unemployment. b. cyclical unemployment. c. structural unemployment. d. frictional unemployment.

structural unemployment

People who lost their jobs as hand-drawn animators because of the popularity of computer-generated 3D animation are examples of persons who are suffering

structural unemployment.

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) seasonal unemployment.

structural unemployment.

What are the three main types of unemployment? A) frictional, seasonal, and cyclical B) temporary, permanent, and volunteer C) cyclical, structural, and temporary D) structural, frictional, and cyclical

structural, frictional, and cyclical

When the labor market is at full employment A) there is only cyclical unemployment in the economy. B) there is only structural unemployment in the economy. C) the unemployment rate is 0%. D) there is no cyclical unemployment in the economy.

there is no cyclical unemployment in the economy.

Real GDP is GDP in a given year A) adjusted only for anticipated inflation. B) adjusted only for unanticipated inflation. C) valued in the prices of that year. D) valued in the prices of the base year.

valued in the prices of the base year.

In calculating GDP, the bureau economics analysis uses the sum of the market value of final goods and services produced. This means that the BEA

values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up.

Discouraged workers are A) workers who have a part time job but want a full time job. B) workers who find their current jobs unfulfilling and are considering a job change. C) workers who have consistently been looking for work for more than 4 weeks. D) workers who have stopped looking for work because they believe there are no jobs for them.

workers who have stopped looking for work because they believe there are no jobs for them.

. In a closed economy, private saving is equal to which of the following? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers) A) Y - C - T B) Y - G - T C) Y - G - T + TR D) Y + TR - C - T

Y + TR - C - T

In a closed economy, which of the following equations reflects investment? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers) A) Y - C - G B) Y - C - T C) Y - T + TR D) C + G -T

Y - C - G

Which of the following is an example of human capital? A) a computer B) a factory building C) a college education D) a software program

a college education

Which of the following policies would reduce structural unemployment? A) an increase in the minimum wage B) a job retraining program C) implementing an unemployment insurance policy D) building an online job database that helps workers find jobs

a job retraining program

The formula for calculating the CPI is

(Expenditures in the current year/Expenditures in the base year) × 100

The GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is A) 5% higher in year 2 than in year 1. B) 105% higher in year 2 than in year 1. C) 5% higher in year 1 than in year 2. D) 105% higher in year 1 than in year 2.

5% higher in year 2 than in year 1.

Which of the following is not directly counted in GDP?

Intermediate goods

In a closed economy, what is the relationship between saving and investment? A) Saving is greater than investment. B) Investment is greater than saving. C) Investment is equal to saving. D) Investment may be greater or smaller than saving.

Investment is equal to saving.

What are the four categories of​ income?

Wages, Interest,​ Rent, and Profit.

Structural unemployment is the result of A) a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs. B) the search process of matching workers with jobs. C) the ups and downs in inflation. D) a slowdown in the economy.

a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs.

What term do economists use to refer to the conflict between the interests of shareholders and the interests of top​ management? A. a​ principal-agent problem B. corporate governance C. gold plating D. capture theory

a principal-agent problem

Cyclical unemployment is the result of

a slowdown in the economy.

Labor unions cause unemployment because the union contract wage is set

above the market wage, causing a surplus of labor.

Minimum wage laws cause unemployment because the legal minimum wage is set A) below the market wage, causing labor demand to be greater than labor supply. B) below the market wage, causing labor demand to be less than labor supply. C) above the market wage, causing labor demand to be greater than labor supply. D) above the market wage, causing labor demand to be less than labor supply.

above the market wage, causing labor demand to be less than labor supply.

Which of the following is not a financial intermediaries? a. banks b. mutual funds c. pension funds d. airlines

airlines

The nominal GDP of the U.S. in 2016 was approximately $18.6 trillion. This means that A) the value of output in 2016 was around $18.6 trillion. B) total income in 2016 was around $18.6 trillion. C) total spending in 2016 was around $18.6 trillion. D) all of the above are true.

all of the above are true.

The natural rate of unemployment is the

amount of unemployment that the economy normally experiences

In 2016, Ford Motor Company's sales were rising. These events were caused by A) an economic recession. B) an economic expansion. C) an increase in advertising. D) improving quality of service.

an economic expansion.

An underground economy involves all of the following except A. avoiding tax payment on the earned income. B. trying to avoid government regulations. C. dealing in illegal goods and​ services, such as drugs or prostitution. D. buying and selling of goods and services by obtaining a permit from the government.

buying and selling of goods and services by obtaining a permit from the government

What is the largest component of spending in the United States?

consumption spending

What is the largest component of spending in the United States? A) consumption spending B) investment spending C) government purchases D) net investment spending

consumption spending

To calculate GDP by the expenditure method, one must add A) wages, rents, interest, and profits. B) consumption spending, investment spending, government purchases, and net exports. C) consumption spending, investment spending, government purchases, and exports. D) labor, natural resources, entrepreneurship, and capital.

consumption spending, investment spending, government purchases, and net exports.

Four major categories of expenditure

consumption, investment, government purchases, and net exports

Workers who lose their jobs because of a recession are experiencing

cyclical unemployment.

If you have trouble finding a job because of a slowdown in the overall economy, we would say that you are A) frictionally unemployed. B) structurally unemployed. C) cyclically unemployed. D) seasonally unemployed.

cyclically unemployed.

Since 1948, the labor force participation rate for adult men has ________ and for adult women has ________.

decreased; increased

Which of the following terms refers to a flow of funds from savers to firms through financial markets?

direct finance

The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector

do not pay taxes to the government.

Gross domestic product in the economy is measured by the A) total number of goods and services produced in the economy. B) dollar value of all final goods and services produced in the economy. C) total number of goods produced in the economy. D) total number of services produced in the economy.

dollar value of all final goods and services produced in the economy

The underground economy can be described as A) production of intermediate goods and services. B) economic production that includes mining. C) economic activity that is hidden from the government to avoid taxes or because the activity is illegal. D) production of infrastructure that spurs growth in the rest of the economy.

economic activity that is hidden from the government to avoid taxes or because the activity is illegal.

The labor force equals the number of people

employed plus unemployed.

The labor force equals the number of people A) employed. B) unemployed. C) employed plus unemployed. D) in the working-age population.

employed plus unemployed.

The natural rate of unemployment is the amount of unemployment A) associated with the business cycle. B) equal to frictional plus structural unemployment. C) that exists when the economy goes into recession. D) that exists when the economy is in an expansion.

equal to frictional plus structural unemployment.

In the circular flow model, the value of total income for an economy ____ the value of total production

equals

In the circular flow model, the value of total income for an economy ________ the value of total production.

equals

In the circular flow model, the value of total production for an economy ________ the value of total expenditures on final goods and services.

equals

A firms ___ cost is monetary whereas its ___ cost is its non monetary opportunity cost

explicit ; implicit

Establishing a state employment agency that speeds up the process of matching unemployed workers with unfilled jobs is an attempt to lower

frictional unemployment.

The​ short-term unemployment that arises from the process of matching workers with jobs is called

frictional unemployment.

Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes is called

frictional unemployment.

If Samantha quits her job voluntarily and actively searches for other work, then she is considered

frictionally unemployed

If Samantha quits her job voluntarily and actively searches for other work, then she is considered A) structurally unemployed. B) frictionally unemployed. C) cyclically unemployed. D) not to be unemployed.

frictionally unemployed

A student who just graduated from college but has not found a job would most likely be A) frictionally unemployed. B) structurally unemployed. C) cyclically unemployed. D) seasonally unemployed.

frictionally unemployed.

Which of the following would decrease the unemployment rate?

government aid to retrain unemployed workers

During the Great Depression, cyclical unemployment increased as the recession continued. This increase in cyclical unemployment A) increased the natural rate of unemployment. B) decreased the natural rate of unemployment. C) had no effect on the natural rate of unemployment. D) could have increased or decreased the natural rate of unemployment.

had no effect on the natural rate of unemployment.

In the circular flow diagram, ________ supply the factors of production, and ________ goods and services.

households ; buy

During a business cycle expansion, total production ____ and total employment ____

increases ; increases

During a business cycle expansion, total production ________ and total employment ________. A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases

increases ; increases

Legalizing all forms of illegal activities

increases GDP and reduces the size of the underground economy.

The unemployment rate equals the number of unemployed divided by the ________, all times 100.

labor force

. In a closed economy, which of the following components of GDP is not included? A) investment B) government spending C) net exports D) consumption

net exports

The measure of production that values production using current prices is called A) value-added GDP. B) nominal GDP. C) real GDP. D) underground GDP.

nominal GDP.

If Jose is 22-years old, is available to work but does not have a job and made no specific efforts to find a job for the previous month, Jose is classified in the Current Population Survey as

not in the labor force

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as A) employed. B) unemployed. C) not in the labor force. D) not in the working-age population.

not in the labor force.

Some countries have larger underground economies than do other​ countries, because

of government policies that are retarding economic growth.

Structural unemployment is the result of

technology changes or foreign competition.

In 2016, Ford's sales were rising, but in early 2017, Ford's sales declined. Ford and the U.S. automobile industry were experiencing the effects of A) inflation. B) the underground economy. C) the business cycle. D) depreciation.

the business cycle.

The most widely used measure of inflation is based on which of the following price indices?

the consumer price index

The "underground economy" is also referred to as

the informal sector.

What is the potential GDP?

the level of real GDP attained when all firms are operating at capacity.

We say that the economy is at full employment if the unemployment rate is equal to A) zero. B) the natural rate of unemployment. C) the amount of cyclical unemployment. D) the sum of frictional and cyclical unemployment. E) the sum of structural and cyclical unemployment.

the natural rate of unemployment.

The rule of 70 states that

the number of years it takes an economy to double in size is 70 divided by the growth rate.

Frictional unemployment is the result of

the process of matching workers with jobs.

Labor productivity refers to a. the quantity of labor in the U.S. b. the quantity of goods and services that can be produced by one worker or by one hour of work. c. the quantity of unemployed labor in U.S. d. the lack of capital

the quantity of goods and services that can be produced by one worker or by one hour of work.

Gross domestic product is calculated by summing up

the total market value of final goods and services produced in the economy during a period of time.

According to the text, economists consider full employment to occur when

the unemployment rate consists of only frictional and structural unemployment.