Macroeconomics Exam 2 Launchpad HW

Which of the following are most likely harmed during an inflationary period? a.Lenders b. Borrowers

a. Lenders

Which of the following would the BLS define as a discouraged worker? a. Mary, who was laid off last year and who was looking for a full-time job until last month b. Quinton, who has a doctorate in chemistry, but works full time as a taxi driver c. Susan, who has been unemployed for the past three years and is looking for a part-time job d. Robert, a retired teacher, who works full time as a greeter at a discount store

a. Mary, who was laid off last year and who was looking for a full-time job until last month

Assume that the price index in 2002 is 1.24 (124) and the price index in 2012 is 1.55 (155). If the nominal price of gasoline in 2002 is $2.54, what is the price calculated in 2012 dollars? a. $3.18 b. $2.79 c. $2.85 d. $3.78

a. $3.18

If the price level in 2018 is 150 and it rises to 165 in 2019, what is the rate of inflation between 2018 and 2019? a. 10% b. 15% c. 165% d. 9%

a. 10%

If nominal GDP in 2007 is $5.43 (in trillions) and in 2008 the level of nominal GDP rises to $6.11 (in trillions), what is the growth rate of nominal GDP? a. 12.5% b. -12.5% c. -11.1% d. 11.1%

a. 12.5%

If real GDP per capita in a country was $14,000 in year 1 and $14,420 in year 2, then the economic growth rate for this country from year 1 to year 2 was: a. 3% b. 1% c. 2% d. 4%

a. 3%

If the adult population of a country is 200 million, 100 million are employed, and 10 million are unemployed, this country's unemployment rate is: a. 9.1%. b. 10%. c. 5%. d. 11%.

a. 9.1%.

During an inflationary period, citizens on a fixed income benefit greatly since their real income increases. a. False b. True

a. False

Which of the following is the best example of cyclical unemployment? a. Peter, a highly skilled construction worker, lost his job when the recession began. He is looking for work, but demand in the construction industry is still low. b. Heather recently graduated with her doctorate in economics. She is searching for a job that matches her skills. c. Allison, a recent high school graduate with high aspirations, is seeking a job as the CEO of a Fortune 500 company. d. John is a house painter in northern Michigan. During the winter months, John is unemployed.

a. Peter, a highly skilled construction worker, lost his job when the recession began. He is looking for work, but demand in the construction industry is still low.

Why did so many Chinese farmers and workers starve under "The Great Leap Forward"? a. The incentive to work hard was low since the rewards were so minimal b. A long, severe drought drastically decreased agricultural production c. the number of workers on communes was reduced d. The Chinese people did not know how to farm in certain geographic areas

a. The incentive to work hard was low since the rewards were so minimal

If you earned $10-an-hour in 2005 when the CPI was 100, and you earn $11-an-hour today when the CPI is 120, then your real wage rate has _____ since 2005. a. decreased b. increased 20% c. remained the same d. increased 10%

a. decreased

The primary reason we think of inflation as bad even when wages rise with it is that it: a. distorts the information delivered by prices. b. increases the velocity of money. c. makes things more expensive for consumers. d. leads to lower real wages.

a. distorts the information delivered by prices.

A cost or benefit of an economic activity that has an impact on an individual's well-being, even though the individual was not directly involved in the activity, is known as a(n) a. externality b. free-rider c. public good d. capital loss

a. externality

When we examine data from different countries, higher money growth has consistently been associated with: a. higher inflation. b. deflation. c. hyperinflation. d. disinflation.

a. higher inflation.

Assume the government takes steps to reduce the pollution caused by an oil refinery. As a result of the government action, what would we likely see in regards to supply and demand? a. leftward shift of supply, higher price and lower quantity b. rightward shift of supply, lower price and higher quantity c. leftward shift of supply, lower price and higher quantity d. rightward shift of supply, higher price, and lower quantity

a. leftward shift of supply, higher price and lower quantity

Increases in real GDP are considered the best measure of increases in living standards, because they measure: a. only increases in production. b. only increases in the cost of living. c. both increases in prices and increases in production. d. only increases in prices.

a. only increases in production.

Most economists prefer _____ as the best indicator of current economic performance. a. real GDP growth b. the GDP deflator c. nominal GDP growth d. consumer spending

a. real GDP growth

When workers lose their jobs and become officially unemployed, the number of people in the labor force: a. remains constant. b. increases. c. decreases. d. becomes difficult to predict.

a. remains constant.

Physical Capital is the a. stock of tools, including machines, structures, and equipment, used to produce output b. financial resources available to business owners c. knowledge about how the world works that is used to produce goods and services d. productive knowledge and skills that workers acquire through education, training and experience

a. stock of tools, including machines, structures, and equipment, used to produce output

The velocity of money is: a. the average number of times a dollar is spent on final goods and services. b. the rate at which money can be printed. c. how fast the inflation rate is rising. d. how fast the price level is rising.

a. the average number of times a dollar is spent on final goods and services.

Which transaction will be included in GDP? a. the purchase of a real estate agent's services b. the purchase of a used bicycle on Ebay c. the purchase of 1,000 shares of IBM stock d. the purchase of a home built in 1957

a. the purchase of a real estate agent's services

The presence of discouraged workers causes the measured unemployment rate to be: a. understated. b. correctly stated. c. overstated. d. either overstated, understated, or correctly stated.

a. understated.

In the case of a positive externality, such as education, we essentially are saying that a. we want more of it b. we want less of it c. we want government to pay for all of it d. we want none of it

a. we want more of it

2000-100- $100 2010- 90- $110 (Table: iPhones) This table shows data for a country producing only iPhones. Its real GDP in 2010 (in 2000 dollars) is: a. $9,900. b. $9,000. c. $10,800. d. $10,000.

b. $9,000.

In 2010, real GDP was $13.2 trillion and nominal GDP was $14.6 trillion. What was the GDP deflator for that year? a. 90.4 b. 110.6 c. 140 d. 192.7

b. 110.6

At an average growth rate of 4%, approximately how long would it take for an economy to double its GDP a. 70 years b. 17.5 years c. 25 years d. 50 years

b. 17.5 years

What decade brought an exceptionally large number of women into the labor force? a. 1960s b. 1970s c. 1950s d. 1990s

b. 1970s

According to the rule of 70, a country with an annual growth rate of 10% will double its GDP per capita in a. 70 years b. 7 years c. less than 1 year d. 10 years

b. 7 years

In the base year, nominal GDP is always greater than real GDP. a. True b. False

b. False

A real price is: a. a decrease in the average level of the price of a good. b. a price that has been corrected for inflation. c. an increase in the average level of the price of a good. d. the average number of times a dollar is spent on final goods and services in a year.

b. a price that has been corrected for inflation.

Which of the following is NOT part of natural unemployment? a. frictional unemployment b. cyclical unemployment c. structural unemployment d. frictional and structural

b. cyclical unemployment

What is the term for workers who have given up looking for a job but would still like one? a. jobless workers b. discouraged workers c. laid off workers d. discarded workers

b. discouraged workers

Under communal property, effort is: a. divorced from payment, so there is great incentive to work. b. divorced from payment, so there is little incentive to work. c. rewarded with payment, so there is little incentive to work. d. rewarded with payment, so there is great incentive to work.

b. divorced from payment, so there is little incentive to work.

Which of the following is (are) NOT an institution of economic growth a. a dependable legal system b. free-riding behavior c. property rights d. competitive and open markets

b. free-riding behavior

Which of the following would be considered economic functions of government? a. deciding which states may impose a state income tax b. providing a legal system, allocating public goods, and stabilizing the economy c. deciding what to produce it, and for whom it is produced for

b. providing a legal system, allocating public goods, and stabilizing the economy

Which of the following is considered investment according to the national spending approach? a. spending $1,000 on college tuition b. spending $1,000 on a new piece of farming equipment c. buying $1,000 worth of stocks and bonds d. depositing $1,000 into a savings account

b. spending $1,000 on a new piece of farming equipment

The average number of times a dollar is spent on final goods and services during a year is the: a. quantity theory of money. b. velocity of money. c. money supply. d. consumption rate.

b. velocity of money.

Birmingham Steel sells steel to Winston Golf Club Manufacturers for $300,000. Winston sells its golf clubs to Academy Sports for $1,000,000. Academy Sports sells Winston golf clubs for $1,500,000. How much is added to GDP? a. $2,500,000 b. $1,000,000 c. $1,500,000 d. $2,800,000

c. $1,500,000

In 2010, nominal GDP was $14.6 trillion and the GDP deflator was 110.6. What was real GDP for that year? a. $14.3 trillion b. $12.1 trillion c. $13.2 trillion d. $16.1 trillion

c. $13.2 trillion

The value of a car produced and sold in 2000 and sold again to a second owner in 2008 would be included in GDP for: a. 2008 only. b. either 2000 or 2008, but not both. c. 2000 only. d. both 2000 and 2008

c. 2000 only

GDP in the United States was $14,119 billion in 2009, and grew to $14,660.4 billion in 2010. This represents an annual growth rate of: a. 3.7% b. 1.04% c. 3.8% d. $541.4 billion

c. 3.8%

If the adult population of a country is 200 million, 100 million are employed, and 10 million are unemployed, this country's labor force participation rate is: a. 50%. b. 5%. c. 55%. d. 9%.

c. 55%.

Population 380mil(2009) 400mil (2010) Adults in labor force 255mil(2009) 260mil(2010) Adults not in labor force 78mil(2009) 80mil(2010) Employed workers 245mil(2009) 247mil(2010) (Table: Employment, Unemployment, and Labor Force Participation) Refer to the table. What is the labor force participation rate of this country in 2010? a. 93% b. 72% c. 76% d. 85%

c. 76%

If the average price level rises from 120 in year 1 to 130 in year 2, the inflation rate between years 1 and 2 will be: a. 10% b. 9.23$ c. 8.33 % d. 7.69%

c. 8.33%

2000- 100- $100 2010- 90- $110 (Table: iPhones) This table shows data for a country producing only iPhones. Its nominal GDP in 2010 is: a. $10,000. b. $10,800. c. $9,900. d. $9,000.

c. 9,900

Which of the following is counted as part of GDP a. Bob mows his lawn b. Helen takes a day off to clean her house c. A state government hires workers to repave the streets d. The government sends a social security check to a retiree

c. a state government hires workers to repave the streets

In the national spending approach, investment spending involves the acquisition of which of the following? a. any of a number of financial instruments b. stocks and bonds c. capital goods d. money

c. capital goods

What are the components of the national spending approach to splitting GDP? a. wages, rent, interest, and profit b. private investment, sale of new and used goods, net exports, and transfer payments c. consumption, investment goods, government purchases, and net exports d. consumption expenditures, transfer payments, and government investment

c. consumption, investment goods, government purchases, and net exports

Which of the following items provided by the government is most likely to be a public good? a. postal service b. tax collection c. flood control d. highway tolls

c. flood control

Someone who recently moved to Florida because of its warmer climate will need to spend some time looking for a new job. This is an example of: a. structural unemployment. b. cyclical unemployment. c. frictional unemployment. d. underemployment.

c. frictional unemployment.

Hyperinflation refers to the case in which inflation: a. is extremely unpredictable. b. remains relatively constant. c. is extremely high. d. is extremely low.

c. is extremely high.

A negative externality most likely occurs when a market _______ resources into a specific area. a. underallocates b. fails to allocate c. overallocates d. transfers

c. overallocates

A FedEx truck is an example of a. technical knowledge b. production technology c. physical capital d. human capital

c. physical capital

Data from countries around the world suggest that "health and wealth" (measured by infant survival rates and real GDP per capita) are: a. unrelated b. negatively related c. positively related d. constant

c. positively related

Human Capital is the a. knowledge about how the world works that is used to produce goods and services b. same thing as the overall population c. productive knowledge and skills that workers acquire through education, training and experience d. stock of tools, including machines, structures and equipment, used by workers to produce output

c. productive knowledge and skills that workers acquire through education, training and experience

Minimum wage laws and unions tend to: a. raise wages and lower unemployment. b. lower wages and lower unemployment. c. raise wages and raise unemployment. d. lower wages and raise unemployment.

c. raise wages and raise unemployment.

To compare levels of production from different years, the appropriate measure to use is: a. GDP-GNP. b. nominal GDP. c. real GNP. d. the GDP deflator.

c. real GNP

Frictional unemployment is best defined as: a. long-term unemployment caused by changing features of an economy. b. unemployment caused by cyclical conditions of an economy. c. short-term unemployment caused by difficulties of matching employees to employers. d. a normal level of unemployment caused by high wages.

c. short-term unemployment caused by difficulties of matching employees to employers

Over the past few decades, the U.S. economy has switched from a primarily manufacturing economy to a service economy. Many individuals working in manufacturing positions lost their jobs, and many new jobs opened up in services. For those who lost jobs in manufacturing, this is an example of: a. frictional unemployment. b. industry unemployment. c. structural unemployment. d. cyclical unemployment.

c. structural unemployment.

A worker repairing VHS cassette-tape players was laid off because most of his customers have started using DVD players. This worker is now: a. cyclically unemployed. b. a discouraged worker. c. structurally unemployed. d. frictionally unemployed.

c. structurally unemployed.

Consumption: $875.5 Investment $415.5 Wages and Salaries: $794.8 Rent $300.2 Profit $391 Government Purchases $380 Interest $345 Exports $520 Imports $360 (Table: Economic Data) Based on the data in the table, what is the GDP for this economy, based on the national spending approach? a. $2,120.5 b. $2,551 c. $2,191 d. $1,831

d. 1,831

If the current price of a market basket of goods is $800 and the base year price for the same basket is $600, what is the value of the price index? a. 150 b. 120 c. 175 d. 133

d. 133

If you had to predict the U.S. inflation rate for next year and decided that a good way to make that prediction would be to simply use the average inflation rate over the past 10 years, what would be your prediction for U.S. inflation next year? a. 1.1% b. 4.0% c. 5.2% d. 2.4%

d. 2.4%

A country has 50 million people, 30 million of whom are adults. Of the adults, 5 million are not interested in working, another 5 million are interested in working but have given up looking for work, and 5 million are still looking for work. Of those who do have jobs, 5 million are working part time but would like to work full time, and the remaining 10 million are working full time. How many people in this country are in the labor force? a. 15 million b. 25 million c. 30 million d. 20 million

d. 20 million

If nominal GDP is $500 in the base year and $750 in the current year, what is the percentage change in Real GDP if the appropriate index is 1.12? a. 25% b.. 50% c. 12% d. 34%

d. 34%

Population 380mil(2009) 400mil (2010) Adults in labor force 255mil(2009) 260mil(2010) Adults not in labor force 78mil(2009) 80mil(2010) Employed workers 245mil(2009) 247mil(2010) (Table: Employment, Unemployment, and Labor Force Participation) Refer to the table. What is the employment rate of the country in 2009? a. 97% b. 95% c. 98% d. 96%

d. 96%

Which of the following would NOT be included in GDP for the United States a. Chrysler manufacturing cars in the United States that are not sold during the production year b. Toyota, a Japanese car company, producing cars in the United States c. an immigrant from Mexico working legally in the United States as a nanny for a U.S. family d. Matt purchasing an antique desk for his new home office

d. Matt purchasing an antique desk for his new home office

Which of the following statements highlights the difference between the CPI (consumer price index) and the GDP deflator? a. The CPI measures the average prices of retail goods and services, whereas the GDP deflator measures the average prices of wholesale goods. b. The CPI measures the average prices of all final goods and services purchased by consumers, whereas the GDP deflator measures the average prices of all inputs used in the economy. c. The CPI measures the average prices of inputs in the production process, whereas the GDP deflator measures the average prices of goods and services purchased by consumers. d. The CPI measures the average prices of goods and services consumed by typical consumers, whereas the GDP deflator measures the average prices of all goods and services in the economy.

d. The CPI measures the average prices of goods and services consumed by typical consumers, whereas the GDP deflator measures the average prices of all goods and services in the economy.

Inflation is: a. the average number of times a dollar is spent on final goods and services in a year. b. a decrease in the average level of prices. c. when people mistake changes in nominal prices for changes in real prices. d. an increase in the average level of prices.

d. an increase in the average level of prices.

Which of the following is NOT a kind of institution that encourages investment and the efficient organization of resources? a. a dependable legal system b. private property rights c. political stability d. closed markets

d. closed markets

The largest spending component of GDP in the United States is: a. government spending. b. investment. c. net exports. d. consumption.

d. consumption

Unemployment correlated with the business cycle is called: a seasonal unemployment. b. frictional unemployment. c. structural unemployment. d. cyclical unemployment.

d. cyclical unemployment.

If, in an economic panic, people decide to hold their money rather than spend it, the velocity of money will: a. remain relatively constant. b. increase. c. become unpredictable. d. decrease.

d. decrease.

The labor force is made up of: a. institutionalized people, the military, and employed workers. b. unemployed workers, employed workers, and students over 16 years of age. c. all adult noninstitutionalized civilians. d. employed and unemployed workers.

d. employed and unemployed workers.

Gross Domestic product is the market value of all: a. goods and services produced within a country in a year b. goods and services sold within a country in a year c. final goods and services produced by a country's permanent residents, wherever located, in a year d. final goods and services produced within a country in a year

d. final goods and services produced within a country in a year

Someone who consumes a resource without working or contributing to the resource's upkeep is called a(n) a. double rider b. easy rider c. outlaw d. free rider

d. free rider

Property rights that are not well-defined encourage: a. high rates of economic growth. b. an unequal distribution of wealth. c. protection of natural resources. d. free riders.

d. free riders

Compared to the United States, unemployment rates in Western Europe tend to be: a. lower because of fewer labor regulations. b. lower because of more labor regulations. c. higher because of fewer labor regulations. d. higher because of more labor regulations.

d. higher because of more labor regulations.

Nobel Prize-winning economist Milton Friedman says, "Inflation is always and everywhere a _____." a. velocity phenomenon b. risky phenomenon c. growth phenomenon d. monetary phenomenon

d. monetary phenomenon

Good institutions: a. result in growth rates approximately equal to those in countries with poor institutions. b. matter only if the country has a large amount of both physical and human capital. c. distribute wealth evenly across the economy. d. reward those who create value and increase efficiency with higher profits.

d. reward those who create value and increase efficiency with higher profits.

The persistent, long-term unemployment caused by long-lasting shocks or permanent features of an economy is called: a. cyclical unemployment. b. frictional unemployment. c. seasonal unemployment. d. structural unemployment.

d. structural unemployment.

Money payments made by government to individuals for which no services or goods are concurrently rendered are known as a. merit payments b. black market payments c. earned income payments d. transfer payments

d. transfer payments