Macro Test One Study Guide

10. Suppose the civilian non-institutional population equals 200,000; there are 102,500 employed persons and 20,000 unemployed persons. How many persons are not in the labor force? a. 122,500 b. 77,500 c. 63,500 d. 107,500

B

11. Refer to Exhibit 6-2. How many persons are not in the labor force in year 1? a. 25 million b. 50 million c. 75 million d. 175 million e. 200 million

B

14. Refer to Exhibit 6-2. The labor force participation rate in year 1 is a. 12 1/2 percent. b. 80 percent. c. 87 1/2 percent. d. 70 percent. e. 10 percent.

B

15. Refer to Exhibit 6-2. The employment rate in year 1 is a. 12 1/2 percent. b. 70 percent. c. 87 1/2 percent. d. 30 percent. e. 10 percent.

B

17. In an economy with a population of 100 million persons, 50 million hold civilian jobs and 20 million are not working but are looking for a job. The number of persons in the civilian labor force is a. 50 million. b. 70 million. c. 170 million. d. 180 million..

B

18. In an economy with 100 million people, 70 million hold civilian jobs and 19 million are not working but are looking for jobs. The unemployment rate is a. 12.86% b. 21.35%. c. 9.19%. d. 27.14%. e. 2.87%

B

36. Increases in import spending _____________________, ceteris paribus. a. raise GDP b. lower GDP c. are always equal to decreases in exports d. may raise or lower GDP

B

37. Look at the following data: personal income = $4,900 billion; personal taxes = $900 billion; transfer payments = $980 billion. What is disposable income? a. $3,200 billion b. $4,000 billion c. $4,980 billion d. $1,880 billion e. There is not enough information to answer the question.

B

38. If the demand for a good increases by more than the supply of the good increases, then the good's equilibrium price will __________ and its equilibrium quantity will __________. a. rise; fall b. rise; rise c. fall; fall d. fall; rise

B

4. In year 1 the CPI is 140, and in year 2 the CPI is 160. From year 1 to year 2, Chiang's salary rises from $42,000 to $49,000, and Marta's salary rises from $55,000 to $60,000. Who is "more than keeping up with inflation"? a. Marta b. Chiang c. both Marta and Chiang d. neither Marta nor Chiang

B

40. If the demand for a good rises by more than the supply of the good falls, then the good's equilibrium price will __________ and its equilibrium quantity will __________. a. rise; fall b. rise; rise c. fall; fall d. fall; rise

B

41. Refer to Exhibit 8-1. If we assume that the unemployment rate and Real GDP are inversely related, which of the points on this graph is most likely representative of the lowest unemployment rate? a. A b. B c. C d. D

B

43. Refer to Exhibit 8-1. Assume that the economy is originally in equilibrium at point A. If foreign real national income rises, at which point is the economy most likely to end up in the short run? a. A b. B c. C d. D e. A change in foreign real national income would have no impact on the domestic economy.

B

47. If investment changes because of a change in a factor other than the price level, then the a. economy moves from one point on an AD curve to another point on the same curve. b. AD curve shifts. c. economy moves from one point on a short-run aggregate supply (SRAS) curve to another point on the same curve. d. SRAS curve shifts. e. none of the above

B

50. Individuals' expectations of lower future prices is a a. rightward shifter of the AD curve. b. leftward shifter of the AD curve. c. reason for moving up along a given AD curve. d. reason for moving down along a given AD curve.

B

57. A rise in foreign real national income tends to raise U.S. __________, shifting the U.S. AD curve to the __________. a. exports; left b. exports; right c. imports; left d. imports; right

B

6. The movie "Return of the Jedi" earned $264 million in 1983 when it was released. The CPI in 1983 was 97.8 and the CPI in 2012 was 226.665. Approximately how much did the movie earn in 2012 dollars? a. $590 million b. $612 million c. $2.12 million d. $123 million e. $150 million

B

16. Refer to Exhibit 6-2. How many persons are unemployed in year 2? a. 200 million b. 50 million c. 75 million d. 175 million e. 100 million

E

12. Refer to Exhibit 6-2. How many unemployed persons are there in year 1? a. 25 million b. 50 million c. 75 million d. 175 million e. 200 million

A

13. Refer to Exhibit 6-2. The unemployment rate in year 1 is a. 12 1/2 percent. b. 70 percent. c. 87 1/2 percent. d. 30 percent. e. 10 percent.

A

20. The unemployment due to changes in the types of skills employers require is called __________ unemployment. a. structural b. cyclical c. natural d. frictional

A

31. Is it possible for a country with a relatively large GDP to have a relatively small per-capita GDP? a. Yes, since the country with a relatively large GDP could also have a relatively large population. b. No, since countries with a relatively large GDP (such as the United States and Japan also have a relatively high per-capita GDP. c. Yes, but only under the condition that the country "produces" relatively more "bads" than other countries. d. Yes, since government transfer payments may be exorbitantly high in the country with the relatively high GDP. e. There is not enough information to answer this question.

A

33. Look at the following data: durable goods = $200 billion; nondurable goods = $350 billion; services = $600 billion; fixed investment + inventory investment = $200 billion; government purchases = $400 billion; exports = $30 billion; imports = $79 billion. GDP is equal to a. $1,701 billion. b. $1,201 billion. c. $1,859 billion. d. $1,010 billion. e. There is not enough information to answer the question.

A

35. Look at the following data: GDP = $11,920 billion; investment = $2,100 billion; exports = $500 billion; government purchases = $1,450 billion; consumption = $8,500 billion. What does import spending equal? a. $630 billion b. $370 billion c. $1,320 billion d. $430 billion e. $474 billion

A

45. Part of the story of the interest rate effect is that a lower price level causes __________ in the demand for credit, which then causes the interest rate to __________. a. a decrease; fall b. a decrease; rise c. an increase; fall d. an increase; rise

A

48. If consumption changes because of a change in the price level, then the a. economy moves from one point on an AD curve to another point on the same curve. b. AD curve shifts. c. economy moves from one point on a SRAS curve to another point on the same curve. d. SRAS curve shifts. e. none of the above

A

58. Refer to Exhibit 7-1. What is the value of gross domestic product? a. $6,962 b. $5,731 c. $3,072 d. $6,382 e. $2,637

A

60. Suppose the real exchange rate of 105 Japanese yen to the dollar changes to 115 yen to the dollar. In this situation, the dollar has _________________, making Japanese goods __________ expensive for Americans. a. appreciated; less b. appreciated; more c. depreciated; less d. depreciated; more

A

62. Refer to Exhibit 7-1. What is the value of personal income? a. $4,252 b. $4,388 c. $5,072 d. $3,996 e. $4,207

A

1. The CPI was 238 in one year and 244 the following year. How much did prices rise between these two years? a. 2.46 percent b. 5.50 percent c. 2.52 percent d. 0.03 percent

C

21. The unemployment rate equals the a. number of employed persons divided by the number of unemployed persons. b. number of unemployed persons divided by the civilian non-institutional population. c. number of unemployed persons divided by the civilian labor force. d. sum of unemployed persons and discouraged workers divided by the civilian labor force.

C

23. The cyclical unemployment rate is defined as the __________ unemployment rates. a. sum of the structural and the frictional b. difference between the structural and the frictional c.difference between the existing (actual and the natural) d. sum of the natural and the frictional

C

25. Real GDP is always measured in a. cheaper dollars. b. quality of goods produced. c. base-year dollars. d. nominal dollars. e. current dollars.

C

26. Refer to Exhibit 7-2. GDP in 2012 is a. $49. b. $51. c. $86. d. $92. e. not possible to calculate without the CPI.

C

28. If GDP in year 1 is the same dollar amount as the GDP in year 2, does it follow that Real GDP in year 1 is the same as Real GDP in year 2? a.Yes, since prices must necessarily be the same in the two years. b. No, since equal GDP figures do not account for population. c. No, since prices may not be the same in the two years. d. Yes, since equal GDP figures do account for a change in the quality of goods produced in the two years. e. none of the above

C

3. Suppose there are five goods in the economy, A-E. The current-year quantity of each is 10A, 20B, 30C, 40D, and 50E. Current-year prices are $1 for each unit of A, $2 for each unit of B, $3 for each unit of C, $4 for each unit of D, and $5 for each unit of E. Base-year prices are $1 for each good. Real GDP in the current year equals a. $100. b. $130. c. $150. d. $180. e. $550.

C

5. Assume that Ms. Sawyer's salary is $42,000, up from $40,000 last year, while the CPI is 157.5 this year, up from 150 last year. This means that Ms. Sawyer's real income has a. increased. b. decreased. c. stayed the same. d. It depends on which year is the base year.

C

51. An increase in the interest rate __________ purchases of consumer __________. a. increases; durables b. increases; nondurables c. reduces; durables d. reduces; nondurables

C

52. Suppose the real exchange rate of 10 Mexican pesos to the dollar changes to 9 pesos to the dollar. In this situation, the dollar has __________________, making American goods __________ expensive for Mexicans. a. appreciated; less b. appreciated; more c. depreciated; less d. depreciated; more

C

64. An increase in the price of a nonlabor input such as oil will cause a. a movement down the SRAS curve. b. a movement up the SRAS curve. c. a leftward shift in the SRAS curve. d. a rightward shift in the SRAS curve. e. no change regarding the SRAS curve.

C

7. Suppose that the price index in 1999 was 170 and your salary was $44,000. Suppose in 2016 the consumer price index will be 290. What salary will you have to earn in 2016 in order to equal your 1999 real income? a. $66,000 b. $77,647 c. $75,059 d. $83,209

C

8. A market basket is made up of three goods, 10X, 12Y, and 18Z. The prices in the base year are $1.20, $2.10, and $3.25, respectively. The prices in the current year are $1.44, $2.23, and $3.88. What is the approximate consumer price index in the current year? a. 103 b. 111 c. 116 d. 110 e. 96

C

27. Refer to Exhibit 7-2. Assuming that 1990 is the base year, Real GDP in 2012 is a. $49. b. $51. c. $86. d. $92. e. not possible to calculate without the CPI.

D

29. Which of the following goods is an intermediate good? a. lettuce that a restaurant buys to put on sandwiches b. tires that a car company buys to put on the cars it produces c. a television set that Chi-Mai buys to put in her college dorm room d. a and b e. b and c

D

19. Unemployment that arises as a result of the time it takes for unemployed people to locate a job utilizing their transferable skills is called __________ unemployment. a. structural b. cyclical c. natural d. frictional

D

2. Suppose the market basket consists of 100X, 200Y, and 300Z. Current-year prices are $5 for each unit of X, $2 for each unit of Y, and $3 for each unit of Z. Base-year prices are $2 for each unit of X, Y, and Z. What is the approximate CPI in the current year? a. 15 b. 70.20 c. 1,200 d. 150

D

22. The employment rate equals the number of a. employed persons divided by the number of unemployed persons. b. unemployed persons divided by the civilian non-institutional population. c. employed persons divided by the civilian labor force. d. employed persons divided by the civilian non-institutional population. e. none of the above

D

24. "Full employment" is said to exist when the unemployment rate equals a. zero. b. the cyclical unemployment rate. c. the structural unemployment rate. d. the natural unemployment rate.

D

32. Country A has a higher GDP than country B. What does this mean? a. It means that on a per-capita basis the residents of country A are relatively better off (in terms of the goods and services they have available to them than the residents of country B. b. It means that on a per-capita basis the residents of country A are richer than the residents of country B. c. It means that more goods and services were produced in country A than country B. d. It means that the total market value of the final goods and services produced in country A is greater than the total market value of the final goods and services produced in country B. e. a and d

D

34. Look at the following data: consumption = $915 billion; exports = $40 billion; imports = $33 billion; inventory investment = $123 billion; fixed investment = $500 billion; government purchases = $300 billion. GDP is equal to a. $1,632 billion. b. $1,466 billion. c. $1,911 billion. d. $1,845 billion. e. none of the above

D

39. If the demand for a good falls by less than the supply of the good rises, then the good's equilibrium price will __________ and its equilibrium quantity will __________. a. rise; fall b. rise; rise c. fall; fall d. fall; rise

D

42. Refer to Exhibit 8-1. If we assume that Real GDP and the unemployment rate are inversely related, which of the points on this graph is most likely representative of the highest unemployment rate? a. A b. B c. C d. D

D

44. Refer to Exhibit 8-1. Assume the economy is originally in equilibrium at point A. If wage rates rise, at which point is the economy most likely to end up in the short run? a. A b. B c. C d. D

D

49. Suppose a drop in prices in the stock market makes people feel less financially secure. This would cause __________ the economy's AD curve. a. movement down along b. movement up along c. a rightward shift of d. a leftward shift of

D

53. As the interest rate rises, businesses invest __________ and the AD curve shifts to the __________. a. more; right b. more; left c. less; right d. less; left

D

54. Refer to Exhibit 7-1. Which of the following summations represents GDP using the expenditure approach? a. $4,750 + $751 + $850 + $500 b. $4,750 + $751 + $850 - $331 + $500 c. $4,750 + $751 + $850 + $331 + $500 d. $4,750 + $751 + $850 + $331 + $500 - $320 e. $4,750 + $751 + $850 + $331 + $500 - $320 + $111

D

55. Refer to Exhibit 7-1. Which of the following summations represents net domestic product? a. GDP - $222 b. GDP - $331 c. GDP - $412 d. GDP - $295 e. GDP + $134

D

56. As income taxes rise, disposable income __________, causing __________ the AD curve. a. increases; movement down along b. increases; a rightward shift of c. decreases; movement up along d. decreases; a leftward shift of

D

59. Refer to Exhibit 7-1. What is the value of net domestic product? a. $5,840 b. $5,731 c. $5,650 d. $6,397 e. $6,637

D

65. Refer to Exhibit 7-1. What is the value of disposable income? a. $3,618 b. $4,795 c. $3,727 d. $4,207 e. $4,017

D

66. An increase in labor productivity shifts the a. AD curve rightward. b. AD curve leftward. c. short-run aggregate supply (SRAS) curve leftward. d. SRAS curve rightward. e. none of the above

D

30. Suppose that in year 1 every adult in the country works 40 hours a week and GDP is $6.7 trillion. In year 2 every adult in the country works 45 hours a week and GDP is $7.5 trillion. Which of the following statements is true? a. Per-capita GDP is necessarily higher in year 2 than year 1. b. People are "better off" in year 2 than in year 1 because there are more goods and services in year 2 than year 1. c. Government transfer payments were higher in year 2 than in year 1. d. a and b e. none of the above

E

46. Which of the following factors can shift the AD curve? a. net exports b. government purchases c. consumption d. price level e. a, b, and c

E

61. Refer to Exhibit 7-1. What is the value of national income? a. $4,351 b. $4,252 c. $4,403 d. $2,996 e. $4,542

E

63. A rise in wage rates a. causes the AD curve to shift leftward. b. causes the short-run aggregate supply (SRAS) curve to shift rightward. c. does not affect the present position of the SRAS curve. d. causes the AD curve to shift rightward. e. causes the SRAS curve to shift leftward.

E

9. Smith's income was $50,000 in year 1 and $55,600 in year 2. The CPI was 114 in year 1 and 124 in year 2. What was the approximate percentage change in Smith's real income between the two years? a. -2.2 percent b. +3.4 percent c. -1.7 percent d. +5.6 percent e. +2.2 percent

E