AP MAcro Final 4-7

According to Okun's law a 2% decrease in unemployment will result in a

4% increase in real output

frictional unemployment goes up when

A worker quits one job in order to search for another

which of the following groups typically has the highest unemployment rate in the US

Black Females

The formula for calculating GDP is

C+G+I+(X-M)

If you were interested in charting the "nominal price changes" for all goods and services produced, which of the following would be the most appropriate?

CPI

if the price of a MP3 player falls 5% during a period when the level of average prices falls 3% the relative price of MP3 players compared to other goods:

Decrease

WHich of the following types of government spending are included in GDP

Fed state and local spending on goods and services

which of the following is most likely a public good

Flood control on a river

The best measure of the production of total goods and services is

GDP

Transfer payments are a method for addressing

Inequity in the distribution of goods and services

Social demand is equal to

Market demand minus external costs

an example of a final good calculated i the GD for the year would be

New car sold to a consumer

When the size of the labor force increases in the economy then the

PPC shifts outward

Which is an example of progressive tax

Personal Income Tax

the largest source of funding for the federal government is

Personal Income Tax

Which of the following is not an example of good or service that produces external benefits

Pollution

Suppose your friend throws trash on the street rather than in a trash can and claims he is helping the economy because the extra money spent to clean it up with increase the GDP. Your friend is

RIght

A housewife takes over the job of deceased family member in running the family business and hires help to clean house and babysit. as a result the GDP of the economy

Rises by the amount of the workers are paid

In calculating GDP imports are

Subtracted from exports because imports represent the value of production in foreign economies

When an economy experiences a zero inflation rate, which of the following statements are true?

There is no redistribution of income and wealth because of inflation

Market failure includes all of the following except

Transfer payments

COLAs are desired because:

a. The real value of wages can be maintained, since COLAs correct effects of inflation

The reason that policymakers are reluctant to force the economy to a zero inflation rate is that

a. Unacceptable levels of unemployment may arise

If actual inflation is greater than anticipated inflation in an economy:

a. borrowers would experience an increase in real income

when economists refer to GDP they mean

all final goods and services produced in an economy in a year

between 1956 and 1979 greater proportions of teenagers and women entered the labor force causing

an increase in structural unemployment

WHich of the following is not a final good or service

automobile tires purchased by an auto manufacturer

The most desirable inflation rate is:

b. That least affects the behavior of companies, investors, consumers, and workers

Which of the following groups is likely to lose as a result of unanticipated inflation?

b. fixed income groups

If the CPI doesn't adjust for quality improvements, then the CPI tends to

b. overestimate inflation

Which of the following best describe the impact of uncertainty caused by inflation?

c. Investment decisions are more difficult to make because of the uncertain but rising costs.

Suppose you get 5% raise during a year in which the price level rises by 8%. Then over the year your:

c. Real income falls, but nominal income increases

As a result of inflation:

c. Tension between labor and management increases

an example of an intermediate good would be

car engine

the employment act of 1946

committed the government to pursue a goal of maximum employment

in Market economy producers will produce the good and services

consumers demand

Which of the following is not a consequence of inflation?

d. Horizon effect

Which of the following does not characterize consumers or businesses reactions to uncertainties caused by inflation?

d. businesses lengthen their time horizons and plan to build new facilities

Speculation during a time of inflation can cause:

d. the hoarding of resources for future sale

A basic function of national income accounting system is to

identify economic problems

the underground economy of unreported income exists because

illegal activities are often highly profitable

which of the following is not a consequence of unemployment

improved confidence for workers

government intervention in the market

involves an opportunity cost

social well-being of a country

is measured by more than changes in GDP

Which of the following is true concerning the outsourcing of jobs

it allows US firms to become more globally competitive

The most significant difference between GDP and GNP would be

net foreign factor income

When an economy enters a recession the

number discouraged workers rises

which of the following groups would most likely qualify for unemployment benefits

people who lose their jobs due to increased foreign competition and are looking for work

the development of market power by firm is considered to be a market failure because firms with market

power produce less and charge a higher price than what is socially optimal

Real GDP measures changes in

prices

Market failure suggests that the market mechanism left alone will

produce too many PRIVATE goods

The difference between real GDP and nominal GDP is that

real GDP is the value of output measured in prices adjusted for inflation

When are person who worked as a camp counselor all summer seeks employment during the winter the unemployment rate goes up. This situation is an example of

seasonal unemployment

cutbacks in national defense spending during the 1990 caused an increase in

structural unemployment

People become labor force participants when they

take a full time job

the federal government's role in antitrust enforcement is designed to address

the consequence of unemployment

when the market fails which of the following is definitely true

the market delivers a suboptimal outcome

which of the following government programs would be most appropriate to counteract cyclical unemployment

those that stimulate economic growth

the primary function of taxes is to

transfer command over resources from the private sector to the public sector

Public goods tend to be BLANK by producers

under produced

individuals who are working part time but seeking full time employment are classified as

underemployment

the market will sometimes fail to produce society's optimal output for all of the following reasons except

when negative externalities are present, producers, tend to underproduce goods