Macroeconomics Professor Knight Exam 2: Pearson Quiz Questions
If real GDP per person doubles in 20 years, then the annual growth rate of real GDP per person is ______ percent a year.
3.5
What is investment?
The purchase of new plant, equipment, and buildings and the additions to inventory
A government budget deficit
raises the real interest rate, increases private saving, and decreases investment
Although imperfect, which of the following is used as a measure of the standard of living?
real GDP/population
Which of the following is an example of investment? A. a student increasing his human capital by attending college Your answer is not correct. B. a person's annual medical checkup C.the purchase of new teapots by Aunt Pittypat's Tearoom This is the correct answer. D. a person depositing $ 100 a week to her savings account
C.
Which of the following statements is a discouraged worker? A. Ned is available to work and has been sending job applications whenever he sees any suitable opportunity. B. Rachel does not find her current job profile interesting and is looking for alternate opportunities. C. Dan is available to work but has not looked for a job in the past eight weeks because of repeated applications but no single offer. D. Nick is changing his job because he has had differences with his co-workers in his current company.
C.
Choose the correct statement. A. Changes in relative prices lead consumers to change the items they buy, and the CPI reflects this substitution. B. When the quality of a good improves over time, the CPI does not include the portion of the price rise attributable to the higher quality in its calculation. C. The CPI calculation assumes that everyone shops at discount stores and no one shops at convenience stores. D. When relative prices change and people substitute to the lower priced good comma the CPI ignores the substitution and the CPI overstates inflation.
D.
Which of the following statements illustrates structural unemployment? A. Jen quit her current job and found another one with a better pay scale. B. Many women quit jobs to raise their kids. C. Dell laid off many employees when the company's profits dropped during the recession. D. Outsourcing resulted in many job losses in the mid 2000s.
D.
If real GDP and aggregate expenditure are less than equilibrium expenditure, what happens to firms? inventories? How do firms change their production? And what happens to real GDP?
Firms' inventories decrease so they increase production, and real GDP increases.
An increase in the population _______ the real wage rate and ________ the equilibrium quantity of labor
decreases; increases
_____ is an example of U.S. consumption expenditure.
Your purchase of a flight on American Airlines
The inflation rate is calculated as ____
[(CPI this year - CPI last year)/ CPI last year] x 100
Real GDP growth rate=
[(Real GDP in current year- Real GDP in previous year)/ Real GDP in previous year] x 100
Cyclical unemployment is the fluctuating unemployment over the business cycle that increases during _______ and decreases during
a recession; an expansion
A final good is
an item that is bought by its final user during a specified time period
An intermediate good is _______
an item that is produced by one firm, bought by another firm, and used as a component of a final good or service
If a government has a budget deficit, it must
borrow in the loanable funds market
Goods and services such as environmental quality, leisure time, and household production are not included in GDP because they are not
bought in markets.
An example of a final good is
bread sold to a consumer
Which components of aggregate expenditure are influenced by real GDP?
consumption expenditure and imports
In October 2009, the U.S. unemployment rate was 10.0 percent. In October 2011, the unemployment rate was 8.9 percent. Predict what happened to unemployment between October 2009 and October 2011, if the labor force was constant. If the labor force remained constant between October 2009 and October 2011, then the number unemployed _______.
decreased
An example of an intermediate good is
wheat sold to a baker to make more bread
Household production, such as baking bread at home, is not included in GDP because it
does not involve a market transaction
Use the Rule of 70 to calculate the growth rate that leads to a doubling of real GDP per person in 20 years. The Rule of 70 states that the number of years it takes for the level of any variable to ______ is approximately ______.
double; 70 divided by the annual percentage growth rate of the variable
A person is in the labor force if that person is _____
either employed or unemployment
Students who leave school in the spring and look for work are one source of _______
frictional unemployment
The ________ , the greater is the amount that a household decides to save.
greater a household's disposable income and the smaller a household's expected future income
Depreciation
gross investment - net investment
What are the two broad sources of potential GDP growth?
growth of the supply of labor and the growth of labor productivity
For a government to add to the supply of loanable funds, it must
have a budget surplus
As measured, GDP omits which of the following?
illegal sales of goods and services, changes in the amount of leisure time and household production of goods and services
A person is not in the labor force if they are ______
in the working-age population but neither employed or unemployed
The multiplier means that an increase in investment results in _______ aggregate expenditure that is _________ the increase in investment
increase; larger than
In June 2015, the U.S. unemployment rate was 5.2 percent. In June 2017, the unemployment rate was 4.4 percent. Predict what happened to the labor force between June 2015 and June 2017 if unemployment was constant. If unemployment remained constant between June 2015 and June 2017, then the labor force ______.
increased
A government budget deficit _______ the demand for loanable funds.
increases
The government budget surplus _______ the supply of loanable funds.
increases
Potential GDP ________ and potential GDP per hour of labor ________
increases: decreases
The firm that printed your textbook bought the paper from XYZ Paper Mills. This purchase of paper ______ part of GDP because the paper is ______ good.
is not; an intermediate
The three main types of markets for financial capital are
loan markets, bond markets, and stock markets
A government budget surplus _______
lowers the real interest rate, decreases private saving, and increases investment
An increase in income taxes _________, everything else remaining the same.
makes the multiplier smaller
The multiplier is greater than 1 because the change in autonomous expenditure leads to
more induced expenditure
The firm that printed your textbook bought the paper from XYZ Paper Mills. The value of the paper is counted in GDP as ______.
part of the value of the textbook
If real GDP and aggregate expenditure are greater than equilibrium expenditure, what happens to firms? inventories? How do firms change their production? And what happens to real GDP? Firms' inventories increase
so they decrease production, and real GDP decreases
The loanable funds market is
the aggregate of all the individual financial markets
Economic growth is
the expansion of production possibilities
When the CPI rises slowly,
the inflation rate is low
If we count marginally attached workers as unemployed ______.
the labor force participation rate rises
Gross domestic product is _____
the market value of all final goods and services produced within a country in a given time period.
The four main ways in which CPI is an upward-biased measure of the price level are through
the new goods bias, the quality change bias, the commodity substitution bias, and the outlet substitution bias
An unemployed person _______
wants work, has made specific efforts to find a job within the previous four weeks, or is waiting to be called back to a job from which he or she has been laid off, or is waiting to start a job within 30 days