Multiple choice Midterm #2 review macroecon

10. If all workers and all jobs were the same such that all workers were equally well suited for all jobs, then there would be no a. cyclical unemployment. b. frictional unemployment. c. natural rate of unemployment. d. structural unemployment.

b

22. A bank's reserve ratio is 10 percent and the bank has $5,000 in deposits. Its reserves amount to a. $50. b. $500. c. $4,500. d. $4,950.

b

23. If the reserve ratio is 4 percent, then $81,250 of new money can be generated by a. $325 of new reserves. b. $3,250 of new reserves. c. $20,312.50 of new reserves. d. $2,031,250 of new reserves.

b

24. The most common method employed by the Fed to increase the money supply is the a. sale of U.S. government bonds. b. purchase of U.S. government bonds. c. sale of gold. d. increase of the federal debt ceiling.

b

4. "When workers have a relatively small quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity by a relatively large amount." This statement a. is an assertion that production functions have the property of constant returns to scale. b. is consistent with the view that capital is subject to diminishing returns. c. is inconsistent with the view that it is easier for a country to grow fast if it starts out relatively poor. d. All of the above are correct.

b

7. Who is not included in the labor force by the Bureau of Labor Statistics? a. Anita, who is on temporary layoff b. Lauren, who has retired and is not looking for work c. Raymond, who does not have a job but has applied for several in the last week d. None of the above is correct.

b

8. The adult population in the town of Shelbyville is 150 thousand. If 100 thousand people are employed and 20 thousand are unemployed, then the labor force participation rate is approximately a. 67%. b. 80%. c. 16%. d. 13%.

b

1. Which of the following is not correct? a. Countries that have had higher output growth per person have typically done so without higher productivity growth. b. A country's standard of living and its productivity are closely related. c. Productivity refers to output produced per hour of work. d. Increases in productivity can be used to increase output or leisure.

a

11. Unemployment insurance a. reduces search effort which raises unemployment. b. reduces search effort which lowers unemployment. c. increases search effort which raises unemployment. d. increases search effort which decreases unemployment.

a

13. Below is data about the labor market in the city of Productionville. W QD QS $8 6,000 16,000 $7 9,000 14,000 $6 12,000 12,000 $5 15,000 10,000 $4 18,000 8,000 If the local government imposed a minimum wage of $4 in Productionville, how many people would be unemployed? a. 0 b. 2,000 c. 3,000 d. 10,000

a

14. Labor unions a. raise wages in unionized industries. b. create labor shortages in non-unionized industries. c. play a larger role in the current U.S. economy than in European countries such as Norway and Sweden. d. prefer to operate in states with right-to-work laws.

a

16. Paying efficiency wages means that wages are a. above equilibrium, and profits are higher than otherwise. b. above equilibrium, and profits are lower than otherwise. c. below equilibrium, and profits are higher than otherwise. d. below equilibrium, and profits are lower than otherwise.

a

17. Which of the following lists is included in what economists call "money"? a. cash b. cash and stocks and bonds c. cash and stocks and bonds and real estate d. cash and stocks and bonds and real estate and all other assets

a

21. In a system of 100-percent-reserve banking, a. banks do not make loans. b. currency is the only form of money. c. deposits are banks' only assets. d. All of the above are correct.

a

25. When the Fed purchases $1000 worth of government bonds from the public, the U.S. money supply eventually increases by a. more than $1000. b. exactly $1000. c. less than $1000. d. None of the above are correct.

a

5. Which of the following is an example of the "brain drain?" a. A country's most highly educated workers emigrate to rich countries. b. A country has such a poor educational system that human capital falls over time. c. The population of a country grows so fast that the educational system can't keep up. d. A country steals patented technology from another country.

a

The population of Ectenia is 100 people: 40 work full-time, 20 work half-time but would prefer to work full-time, 10 are looking for a job, 10 would like to work but are so discouraged they have given up looking, 10 are not interested in working because they are full-time students, and 10 are retired. What is the number of unemployed? a. 10 b. 20 c. 30 d. 40

a

15. When a union raises the wage above the equilibrium level, it a. reduces both the quantity of labor supplied and the quantity of labor demanded. b. reduces the quantity of labor supplied and raises the quantity of labor demanded. c. raises the quantity of labor supplied and reduces the quantity of labor demanded. d. raises both the quantity of labor supplied and the quantity of labor demanded.

c

18. Dollar bills, rare paintings, and emerald necklaces are all a. media of exchange. b. units of account. c. stores of value. d. All of the above are correct.

c

19. An important function of the U.S. Federal Reserve is to a. set the debt ceiling. b. fund Congressional spending. c. control the supply of money. d. mint coins.

c

2. Phoenix furniture uses 12 workers, each working eight hours, to produce 192 rocking chairs. What is Phoenix's productivity? a. 192 rocking chairs b. 24 rocking chairs per hour c. 2 rocking chairs per hour d. 2 hours per rocking chair

c

3. When a society decides to increase its quantity of physical capital, the society a. can avoid the usual need to face trade-offs. b. is apparently not very concerned about its rate of economic growth in the future. c. is in effect deciding to consume fewer goods and services in the present. d. is in effect deciding to save less of its current income in the present.

c

Because capital is subject to diminishing returns, higher saving and investment does not lead to higher a. income in the long run. b. income in the short run. c. growth in the long run. d. growth in the short run.

c

The money supply includes all of the following EXCEPT a. metal coins b. paper currency c. lines of credit accessible with credit cards d. bank balances accessible with debit cards

c

12. Minimum-wage laws a. reduce unemployment. b. cause labor shortages, which further raise wages above equilibrium. c. affect highly-educated workers more than high school dropouts. d. None of the above is correct.

d

20. An open-market sale a. increases the number of dollars and the number of bonds in the hands of the public. b. increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public. c. decreases the number of dollars and the number of bonds in the hands of the public. d. decreases the number of dollars in the hands of the public and increases the number of bonds in the hands of the public.

d

6. The Bureau of Labor Statistics places people in the "employed" category if they a. are temporarily absent from their jobs. b. are self-employed. c. work without pay in a family member's business. d. All of the above are correct.

d

9. Job search a. is one reason economies always experience some unemployment. b. is the process of matching workers with appropriate jobs. c. would not be a problem if all workers and all jobs were the same. d. All of the above are correct.

d