Practice Final Econ, Macro Exam 2 (HW 7), Econ Test 2, MACRO MIDTERM, Macroeconomics Exam 1, Quiz 7, Economics Chapter 16, Chapter 5, 14,15,16 (Mid-Term), Chapter 12 Macro Review Questions, Economics Homework, Macro Test 2, ch 17, Chapter 17 Macroeco...

Suppose you withdraw $500 from your checking account deposit and bury it in a jar in your back yard. If the required reserve ratio is 10%, checking account deposits in the banking system as whole could drop up to a maximum of

$5,000

In 2011, Kendall Ford, an automotive dealership, spent $20,000 on a new car lift for its repair shop, $2,000 on a new company machine for its sales division, and $600,000 on Ford Motor company stock. Unsold cars and trucks were valued $400,000 on January 1, 2013 and unsold cars and trucks were valued at $900,000 on December 31, 2013. What is Kendall Ford's total investment spending in 2013?

$522,000

Suppose your grandfather earned a salary of $12,000 in 1964. If the CPI is 31 in 1964 and 219 in 2013, then the value of your grandfather's salary in 2013 dollars is approx

$84,775

Total population 20,000 Working-age population 15,000 Employment 1,000 Unemployment 100 Consider the data above for a simple economy. Refer to Table 9-1. The labor force participation rate for this simple economy equals

(1,100/15,000) × 100

Suppose the working-age population of a fictional economy falls into the following categories: 90 are retired or homemakers; 60 have full-time employment; 20 have part-time employment; 20 do not have employment, but are actively looking for employment; and 10 would like employment but do not have employment and are not actively looking for employment. The official unemployment rate as calculated by the U.S. Bureau of Labor would equal

(20/100) × 100.

According to the "Rule of 70", how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%

14 years

According to the quantity theory of money, if the money supply grows at 20% and real GDP grows at 5% then the inflation rate will be

15%

Suppose the working age population of a frictional economy falls into the following categories: 90 are retired or homemakers; 60 have full time employment; 20 have part time employment; 20 do not have employment, but are actively looking for employment: and 10 would like employment but do not have employment and are not actively looking for employment. The official unemployment rate as calculated by the US Bureau of Labor would equal

20/100(100)

If you invest 10,000 in a bond that earns 8% interest per year, how many years will it take to double your money?

8 years and 9 months

11) 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.

A

13) If cyclical unemployment is eliminated in the economy, then A) the economy is considered to be at full employment. B) the unemployment rate is below the natural rate of unemployment. C) the unemployment rate is above the natural rate of unemployment. D) the economy is at less than full employment.

A

6) If the BLS counted persons that are on active military service in the totals for employment, the labor force, or the working-age population, this would A) decrease the measured unemployment rate. B) decrease the measured labor force participation rate. C) decrease the number of persons in the labor force. D) decrease the number of persons in the working-age population.

A

9) An advantage of the establishment survey over the household survey of the labor market is that the establishment survey A) is based on actual payrolls, rather than on unverified answers. B) includes the number of self-employed persons. C) includes persons employed at newly opened firms. D) provides an estimate of the number of persons unemployed

A

Which of the following goods is directly counted in GDP

A 12 inch subway sandwich purchased by a student

Total population 20,000 Working-age population 15,000 Employment 1,000 Unemployment 100 4) Refer to Table above. The labor force participation rate for this simple economy equals A) (1,000/1,100) × 100. B) (1,000/15,000) × 100. C) (1,100/15,000) × 100. D) (1,100/20,000) × 100.

C

Scott is a woodworker and charges $125 an hour for his time manufacturing custom made wood products. For his wife's birthday, he designs and creates an intricate birdseye maple jewelry box takes him 15 hours to complete. By how much and in what direction does GDP change as a result of his efforts?

GDP is not affected by Scott's production of the jewelry box

which of the following is true regarding productivity slowdown in the United States during the mid-1970s?

High oil prices raised the costs of doing business for markets worldwide, and reduced the output worldwide

What impact might an increase in the budget deficit have on interest rate and exchange rates?

Interest rates and exchange rates increase

During the recession phase of the business cycle

Interest rates are usually falling

Jack just received a promotion at work and now works 50 hours per week instead of 35. As a result,

Neither the unemployment rate nor the labor force participation rate changed

Between 2013 and 2014, if an economy's exports rise by $8 billion and its imports fall by $8 billion, by how much will GDP change between the two years, all else equal?

Net exports will increase GDP by $16 billion

Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP. Which of the following will occur because of the automatic mechanism adjusting to the economy back to the potential GDP?

Sort-run aggregate supply will shift to the right.

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

Structural unemployment

19) The natural rate of unemployment consists of frictional unemployment plus structural unemployment.

T

In a closed economy, public saving is equal to which of the following?

T-G-TR

German luxury car exports were hurt in 2009 as a result of the recession. How would this decrease in exports have affected Germany's aggregate demand curve

The aggregate demand curve would have shifted to the left

If the balance of the current account in the U.S. is -$900 billion then what is true?

The balance of the financial account is positive

Given the information above, what can we say has happened in the economy from 2012 to 2013

The price level has risen

A decrease in the aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?

The price level will fall, and the level of GDP will be unaffected

You earned $30,000 in 2000, and your salary rose to $80,000 in 2013. If the CPI rose from 82 to 202 between 2000 and 2013, which of the following is true?

The purchasing power of your salary increased between 2000 and 2013

Home Depot sells new and used doors to contractors who build new homes. Home depot also sells new and used doors to homeowners. Which of the following would be counted in GDP?

The sale of a new door to homeowner

What an economy is at its natural rate of unemployment, which of the following will be true?

The unemployment rate will be greater than 0%

If Californians increase their purchase of Italian wine, assuming all else remains constant, this will ____ of the U.S

decrease the balance of trade

If a country passes a labor law limiting the number of hours per week, GDP would be (BLANK) and leisure would (BLANK)

decrease, increase

An INCREASE in the price level results in a(n) _________ in the quantity of real GDP demanded because ______

decrease; higher price level reduces consumption, investment, and net exports

The required reserves of a bank equal its ______ the required reserve ratio.

deposits multiplied by

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to understates the extent of joblessness.

discourage workers

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to understate the true extent of joblessness?

discouraged workers

The labor force equals the number of people

employed plus unemployed.

Ways a country could promote long-run economic growth

enacting stronger laws to protect property rights, increasing vaccinations against infectious diseases, undergoing political reform to decrease corruption

The long-run aggregate supply curve will shift to the right if the economy

experiences technological change

The purchase by and individual or firm of stock or bonds issued in another country is called

foreign portfolio investment

An increase in the demand for American-made goods will

increase the demand for dollars on the foreign exchange market

Suppose that homemakers are included as employed in the labor force statistics, rather than being counted as out of the labor force. This would

increase the measured labor force participation rate.

If a person withdraws $500 from their savings account and puts it in their checking account, then M1 will _______ and M2 will_______-

increase; not change

An increase in investment causes the price level to (BLANK) in the short run and (BLANK) in the long run.

increase;increase further

If real GDP in a small country in 2012 is $8 billion and real GDP in the same country in 2013 is $8.3 billion, the growing rate of real GDP between 2012 and 2013

is 3.75%

The long-run aggregate supply curve

is vertical

Which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given working-age population?

labor force participation rate

The quantity of goods and services that can be produced by one worker or by one hour of work is referred to as

labor productivity

The automatic mechanism (BLANK) the price level in the case of (BLANK) and (BLANK) the price level in the case of (BLANK)

lowers, recession, raises, expansion

The period of time fro 1,000,000 B.C. to 1300 A.D. was a period of

no sustained economic growth

If real GDP increases we know for sure that

output has risen

The short run aggregate supply curve has a(n) _____ slope because as prices of ______ rise, prices of _____ rise more slowly

positive; final goods and services; inputs

During the expansion phase of the business cycle

production increases

During the expansion phase of the business cycle what eventually increases?

production, income, and employment

A good measure of the standard of living is

real GDP per capita

Workers expect inflation rate to rise from 3% to 5% next year. As a result this should

shift the short-run aggregate supply curve to the left.

If whole tomatoes were money, which of the following functions of money would be the hardest for tomatoes to satisfy?

store of value

When the price of gasoline rises, some consumers begin riding their bikes more frequently or riding the bus instead of driving their cars. The fact that the CPI does not fully account for such changes in consumer behavior is called

substitution bias

An increase in the government budget surplus will shift the (BLANK) curve for loanable funds to the (BLANK) and the equilibrium real interest rate will (BLANK)

supply, right, fall

The seven members of the Board of Governors of the Fed are appointed by

the President

Suppose the government launches a successful advertising campaign that convinces workers with high school degrees to quit their jobs and become full time college students. This would cause

the labor force participation rate to decrease

Workers and firms both expect that prices will be 2.5% higher next year than they are this year. As a result,

the short-run aggregate supply curve will shift to the left as wages increase.

Suppose, in 2014, you purchased a house built in 2003. Which of the following would be included in the gross domestic product of 2014

the value of the services of the real estate agent

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to overstate the true extent of joblessness?

unemployed persons falsely report themselves to be actively looking for a job

Which of the following are not considered part of government purchases?

welfare benefits

If the nominal rate of interest is 6.5% and the inflation rate 3.0%, what is the real rate of interest?

3.5%

Consider the following values of the consumer price index for 2012 and 2013. The inflation rate for 2011 was equal to

3.9 percent

Which of the following is an example of a worker experiencing frictional unemployment?

A worker quits his job at the post office to find more interesting work

Interest rates in the economy have fallen. How will this affect aggregate demand and equilibrium in the short run?

Aggregate demand will rise, the equilibrium price level will rise, and the equilibrium level of GDP will rise.

Refer to the diagram to the right. Supply curve shifts from s1 to s2. Which of the following is consistent with the diagram

An increase in the proportion of income after net taxes used for consumption

1) The unemployment rate is an important economic statistic that can tell us about the health of the economy. If the unemployment rate turns out to be high or higher than anticipated, we would expect A) it is more likely that an incumbent president will be re-elected. B) that stock prices are more likely to fall. C) that jobs are less difficult to find. D) that investors will be more optimistic about the economy.

B

14) The advice to "retrain" would be most appropriate for which of the following types of unemployment? A) frictional unemployment B) structural unemployment C) cyclical unemployment D) core unemployment

B

3) Suppose that homemakers are included as employed in the labor force statistics, rather than being counted as out of the labor force. This would A) increase the measured unemployment rate. B) increase the measured labor force participation rate. C) decrease the number of persons in the labor force. D) decrease the number of persons in the working-age population.

B

10) Which of the following statements is true about the U.S. economy? A) Each year, many new jobs are created, but few existing jobs are destroyed, and the unemployed find jobs quickly. B) Each year, few new jobs are created, but few existing jobs are destroyed, keeping unemployment low. C) Each year, many new jobs are created and many existing jobs are destroyed. D) Each year few jobs are created, and therefore it takes the unemployed a long time to find a new job.

C

15) Which of the following would increase the unemployment rate? A) a law making it illegal to work more than 35 hours per week B) a cut in unemployment compensation C) an increase in unemployment insurance payments D) a decrease in the minimum wage

C

5) Suppose the labor force stays constant, and the working-age population stays constant, but a greater number of persons who were unemployed become employed. The labor force participation rate will A) increase. B) decrease. C) remain constant. D) not change in a way that can be predicted.

C

8) Since 1948, the labor force participation rate for adult men has ________ and for adult women has ________. A) increased; increased B) increased; decreased C) decreased; increased D) decreased; decreased

C

Which of the following would be the best measure of the cost of living?

Consumer price index

12) Cyclical 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.

D

16) Which of the following policies would reduce frictional unemployment? A) a decrease in the minimum wage B) a job retraining program C) implementing an unemployment insurance policy D) building an on-line job database that helps workers find jobs

D

2) 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.

D

7) Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to overstate the true extent of joblessness? A) inflation B) discouraged workers C) counting people as employed who are working part time, although they would prefer to be working full time D) unemployed persons falsely report themselves to be actively looking for a job

D

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.

D

Last week, six Swedish kronor could purchase on US dollar. This week, it takes eight Swedish Kronor to purchase one US dollar. This change in the value of the dollar will (BLANK) exports from the us to Sweden and (BLANK) us aggregate demand

Decrease, Decrease

18) Counting part-time workers who are looking for full-time work as employed overstates the degree of joblessness in the economy.

F

20) Efficiency wage is another name for the minimum wage.

F

Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP. Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

Short-run aggregate supply will shift to the right

The current account does not include ?

U.S, holdings of foreign assets

If the dollar appreciates against the Mexican peso,

U.S. exports to Mexico become less expensive

Why does the short run aggregate supply curve shift to the right in the long run, following a decrease in aggregate demand?

Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices

The M1 measure of the money supply equals

currency plus checking account balances plus travelers checks

Minimum wage laws cause unemployment because the legal minimum wage is set

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

The normal GDP of the U.S. in 2012 was approx $16.2 trillion. This means that

all of the above are true

If aggregate demand just increased, what may have caused the increase?

an increase in government purchases

To increase the money supply, the Fed could

conduct an open market purchase of Treasury securities

What provides government provisions that would help increase the accumulation of knowledge capital?

copyrights, patents, and education rights

The response of investment spending to an increase in the government budget deficit is called

crowding out