Test 2 Review

The effects of inflation may include which of the following? Multiple answers possible. -A redistribution of wealth and income -Borrowers gaining at the expense of lenders -Lower incentives to save -Lower purchasing power

-A redistribution of wealth and income -Borrowers gaining at the expense of lenders -Lower incentives to save -Lower purchasing power

Which of the following may contribute to cost-push inflation? Multiple answers possible. -Higher minimum wage laws -Increasing resource costs -Wage-price spiral -Monopoly power

-Higher minimum wage laws -Increasing resource costs -Wage-price spiral -Monopoly power

Which of the following may contribute to demand-pull inflation? Multiple answers possible. -Gas prices rising -Higher minimum wage laws -Federal Reserve printing more money -Government taxing cigarettes -Unions fighting for higher wages

-Higher minimum wage laws -Federal Reserve printing more money -Unions fighting for higher wages

GDP does not measure which of the following when it comes to economic answers may be possible. -Leisure -The quality of Steven Manley's ridiculously brilliant lectures -The underground economy -Daycare services performed by the daycare downtown

-Leisure -The quality of Steven Manley's ridiculously brilliant lectures -The underground economy

Which of the following are NOT counted in GDP? (May include multiple answers) -Resold products -Illegal goods and services -Inferior quality products -Intermediate goods -Unreported income -Financial products

-Resold products -Illegal goods and services -Intermediate goods -Unreported income -Financial products

Total unemployment is 5%. Frictional unemployment is 2.3% and the economy is at full employment. What is cyclical unemployment? Round to 1 decimal place and no percent sign needed.

0

If the CPI was 140 in 1998 and rose to 154 by 2001, then the inflation rate over that time period was __%.

10

The labor force is 300 million, there are 270 million employed people. 20 million have stopped looking for work. All of these people are working-age non-institutionalized adults. What is the unemployment rate? No percent sign needed.

10

If the "current" year and the "base" year are the same year, the price index will equal ____.

100

What is the amount of taxes paid for 2014 for $65,000 of taxable income for a single person? (rounded to the nearest dollar and NO dollar sign $ or comma needed)

12106

Steven Manley buys cake mix for $5, bakes a delicious German Chocolate cake, sells it to a market down the street for $22, and then the market sells it for $38. How much value did Steven Manley add? No dollar sign needed.

17

What is the average tax rate for 2014 for $65,000 of taxable income for a single to 2 decimal places and NO % sign needed.

18.63

The US implemented a federal income tax in ___. - 1776 - 1836 - 1913 - 1944

1913

Total unemployment is 5%. Frictional unemployment is 2.3% and the economy is at full employment. What is structural unemployment? Round to 1 decimal place and no percent sign needed.

2.7

What is the marginal tax rate for 2014 for $65,000 of taxable income for a single person?

25

How high did unemployment reach in the Great Depression? - 5% - 10% - 25% - 45%

25%

Steven Manley buys cake mix for $5, bakes a delicious German Chocolate cake, sells it to a market down the street for $22, and then the market sells it for $38. How much did GDP increase through the whole process? No dollar sign needed.

38

The top 1% of American income-earners pay ____ of all federal income taxes. - 1% - 20% - 35% - 40%

40%

The labor force is 300 million, there are 270 million employed people. 20 million have stopped looking for work. The population consists of working-age non-institutionalized adults. What is the labor force participation rate? Round to 2 decimal places and no percent sign needed.

93.33

The highest top marginal tax rate in US history was ___. - 7% - 28% - 39.6% - 70% - 94%

94%

An example of a public good is __________. - A hamburger - A restaurant - A street light - A basketball arena

A street light

The role of government concerning public goods is: -Force the manufacturer to produce the public good for free -Take over the company that manufactures the public good -Agree to a contract with the manufacturer and pay for the construction of the public good -Forbid the construction of the public good

Agree to a contract with the manufacturer and pay for the construction of the public good

Raising the minimum wage can lead to: - Demand-pull inflation - Secular deflation - Cost-push inflation - Both cost-push and demand-pull inflation

Both cost-push and demand-pull inflation

If the externality is __________ it is a third-party _________. - A) Positive; benefit - B) Negative; cost - C) Positive; cost - D) Negative; benefit - Both options A and B are correct

Both options A and B are correct

Think about the Laffer Curve. If the tax rate is currently to the right of the optimal tax rate, rate increase will: - Lead to more tax revenue - Cause a decline in job creation, investment, and in incentives to work more - Lead to lower tax revenue - Both options B and C are correct

Both options B and C are correct

Inflation hurts ______, especially _____. -Brilliant people; Steven Manley -Young people; macroeconomics students -Everyone; low-income earners -Everyone; high-income earners

Everyone; low-income earners

Buying Facebook stock contributes to the Investment component of GDP in the formula: GDP= C+I+G+NX. - True - False

False

GDP accounts for the aggregate of all goods and services produced by Americans regardless location. - True - False

False

Steven Manley decided to paint his ultra cool house. This contributes to GDP for this year. - True - False

False

The Bush tax cuts of last decade cut taxes for rich people only. - True - False

False

The last surplus in the US occurred in the 1980s. - True - False

False

The relationship between tax rates and tax revenue can be shown through the marginal productivity curve. - True - False

False

The top tax bracket was 10% when the US first implemented a federal income tax. - True - False

False

The sales tax is technically a ____ type of tax, even though it may not function that way in reality. - Progressive - Regressive - Flat - Stupid

Flat

The recovery following the Great Recession: -Is one of the best in US history -Has consistently has 5% GDP growth -Is considered by many to be the worst recovery in US history -None of the above

Is considered by many to be the worst recovery in US history

Currently, the labor force participation rate: -Is the highest it has been since the late 1970's -Has been consistent since the late 1970's -Is the highest it has been since the late 1930's -Is the lowest it has been since the late 1970's

Is the lowest it has been since the late 1970's

Why can the unemployment rate be misleading? -The government workers at the BLS -It doesn't account for disabled kids not working -It doesn't account for discouraged workers and underemployed people -It's not calculated by Steven Manley. Therefore, it is probably inaccurate.

It doesn't account for discouraged workers and underemployed people

The ____ tax rate is the tax rate that applies to the last dollar you earn. - Average - Marginal - Effective - Optimal

Marginal

A public good is _______ in consumption and _________. -Rival; exclusionary -Rival; non-exclusionary -Non-rival; exclusionary -Non-rival; non-exclusionary

Non-rival; non-exclusionary

If GDP was $16,931,956 in 2013 and is now $17,437,778 in 2015, the GDP has grown ____ during that time. - 50.58% - 0.029% - 4.5% - None of the above

None of the above

In the video from class, who cut taxes and said that lowering tax rates could eventually increase revenue? - Ronald Reagan - George W Bush - Barack Obama - None of the above

None of the above

The most important determinant of income is usually ____. -Race -Gender -Minimum wage -None of the above

None of the above

An external cost is a cost of producing a product that is: -Not borne by the producer but borne by other people -Borne by the producer -Borne by the government - Borne equally by the consumer and the government

Not borne by the producer but borne by other people

A good example of a negative externality is _________. -Elementary school -Rain -Pollution -An inoculation program

Pollution

A private good is _______ in consumption and _________. - Rival; exclusionary - Rival; non-exclusionary - Non-rival; exclusionary - Non-rival; non-exclusionary

Rival; exclusionary

Which of the following does not count in the unemployment rate? - Frictional unemployment - Structural unemployment - Cyclical unemployment - Seasonal unemployment

Seasonal unemployment

Americans spend most of their income on _____. - Taxes - Durable goods - Non-durable goods - Services

Services

What was the big problem during the recessions in the mid 1970s and early 1980s? - Too much oil - Supply - Ron Burgandy - Stagflation

Stagflation

When was the next-worst recession prior to the Great Recession? - The "Dot com" recession around 9/11 - The small recession in 1991-92 - The recession in 1987 - The recession at the beginning of the 1980s

The recession at the beginning of the 1980s

Which of the following is not a principal role of government? -To own and supply resources for production -To make society function smoothly and efficiently -To pass laws to govern our conduct -To adjudicate and solve conflict -To provide assistance to needy members of society

To provide assistance to needy members of society

Lowering tax rates can sometimes lead to an increase in tax revenue. - True - False

True

The lowest 50% of income-earners in America are responsible for paying 3% of all federal income taxes. - True - False

True

Government regulation of production in a polluting industry: -Will have no affect on the amount of pollution -Will increase the market price of the product being produced -Will increase the market quantity of the product being produced -None of the above

Will increase the market price of the product being produced