Contreras Macroeconomics Exam 2 - Auburn

If unions were formed in more industries, the supply of labor in other industries would

increase, causing employment in other industries to rise.

Other things the same, an increase in wages above their equilibrium level

increases structural unemployment and increases the natural rate of unemployment.

Refer to Figure 23-1. Which of the following pairs correctly identify X and Z?

markets for factors of production and markets for goods and services

Jai Li just lost her job, and she has not yet started looking for a new one. The Bureau of Labor Statistics counts Jai Li as

neither in the labor force nor unemployed.

Consider the following three items of spending by the government: (i) the federal government pays a $500 unemployment benefit to an unemployed person; (ii) the federal government makes a $2,000 salary payment to a Navy lieutenant; (iii) the city of Bozeman, Montana makes a $10,000 payment to ABC Lighting Company for street lights in Bozeman. Which of these payments contributes directly to government purchases in the national income accounts?

only items (ii) and (iii)

The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 10 bushels of peaches and 15 bushels of pecans. If 2013 is the base year, then the CPI for 2012 was

213.6

Other things the same, which of the following would increase productivity?

An increase in either human or physical capital

Which of the following is correct?

Nominal and real interest rates do not always move together.

Which of the following is an example of human capital?

The things you have learned this semester

Assuming constant returns to scale, if two countries are otherwise the same, the one that is poorer grows faster.

True

In countries where women are discriminated against, policies that increase the likelihood of career success and educational opportunities for women are likely to decrease the birth rate.

True

A 2009 Chevrolet model has more horsepower than the 2008 version and it is included in the BLS basket of goods. BLS attempts to account for this change in the market basket by

adjusting the price of the good to account for the quality change

Refer to Figure 25-1. The curve becomes flatter as the amount of capital per worker increases because of

diminishing returns to capital.

Since the 1940's U.S. union membership has

fallen. This decline should have reduced structural unemployment.

The Bureau of Labor Statistics defines the unemployment rate as the percentage of

the labor force that is unemployed.

Suppose the typical household spends $3,500 on goods and services during the month of January, and $4,300 on the same goods and services in February. Using January as the base period, what is the consumer price index for February?

122.9

Jake loaned Elwood $5,000 for one year at a nominal interest rate of 10 percent. After Elwood repaid the loan in full, Jake complained that he could buy 4 percent fewer goods with the money Elwood gave him than he could before he loaned Elwood the $5,000. From this, we can conclude that the rate of inflation during the year was

14 percent

Jackie, a Canadian citizen, works only in the United States. The value of the output she produces is

included in U.S. GDP, but it is not included in U.S. GNP.

Suppose Japanese-based Toshiba Corporation builds and operates a new computer factory in the United States. Future production from such an investment will

increase U.S. GDP more than it increases U.S. GNP.

Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. In 2012, the basket's cost was $50; in 2014, the basket's cost was $52; and in 2016, the basket's cost was $54.60. The value of the CPI in 2014 was

102.0

The Bureau of Labor Statistics counts a member of a surveyed household as an adult if that person is at least

16 years old.

If in some year nominal GDP was $10 trillion and real GDP was $4 trillion, what was the GDP deflator?

250.

Between October 2014 and October 2015, the CPI in Canada rose from 120 to 124 and the CPI in Mexico rose from 210 to 229.1. What were the inflation rates for Canada and Mexico over this one-year period?

3.3 percent for Canada and 9.1 percent for Mexico

A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown below. The base year is 2015 . Refer to Table 23-10. What was this country's real GDP in 2016?

$10,950

Arlo is offered a job in Des Moines, where the CPI is 60, and a job in New York, where the CPI is 125. Arlo's job offer in Des Moines is for $48,000. How much does the New York job have to pay in order for the two salaries to represent the same purchasing power?

$100,000

In the economy of Talikastan in 2015, exports were $200, GDP was $2000, government purchases were $200, imports were $270, and investment was $500. What was Talikastan's consumption in 2015?

$1370

If in some year nominal GDP was $18 billion and the GDP deflator was 120, what was real GDP?

$15 billion.

Suppose a country has government expenditures of $3,500, taxes of $2,200, consumption of $9,000, exports of $2,500, imports of $2,700, transfer payments of $750, capital depreciation of $800, and investment of $3,000. GDP equals

$15,300.

A dairy buys $50,000 worth of milk and spend $5,000 on cartons and utilities. It sells the cartons of milk to a grocery store for $60,000 that then sells all of the cartons to consumers for $65,000. How much do these actions add to GDP?

$65,000

From 2009 to 2010, the CPI for education increased from 279.3 to 281.8. What was the inflation rate for education between 2009 and 2010?

0.9%

Economists generally believe that inward-oriented policies are more likely to foster growth than outward-oriented policies.

False

Foreign direct investment and domestic investment have the same effect on all measures of economic prosperity.

False

Productivity can be computed as the number of hours worked divided by output.

False

The same size decrease in the amount of capital stock per worker will cause output per worker to fall by more in a country with a relatively high level of capital per worker than in a country with a relatively low level of capital per worker.

False

Darin grows and sells marijuana to Jennifer. Thomas is an organic farmer who sells broccoli to Jennifer. Marijuana is an illegal good and broccoli is a legal good. Assume that if Jennifer marries either, they give her what they use to sell her. Which of the following statements is consistent with the way GDP is computed?

GDP will fall if Jennifer marries Thomas but not if she marries Darin.

Which of the following statements is correct?

Human capital per worker is a determinant of productivity.

Each day Sue works 8 hours and produces 7 units of goods and services. Mary works 10 hours each day and produces 10 units of goods and services. It follows that

Mary's productivity is higher than Sue's.

Which of the following countries benefited significantly from the catch-up effect in the last half of the twentieth century?

South Korea

Assume an economy experienced a positive rate of inflation between 2003 and 2004 and again between 2004 and 2005. However, the inflation rate was lower between 2004 and 2005 than it was between 2003 and 2004. Which of the following scenarios is consistent with this assumption.

The CPI was 100 in 2003, 120 in 2004, and 135 in 2005

Which of the following is not a contention of advocates of unions?

The introduction of a union benefits all workers in a firm.

Like physical capital, human capital is a produced factor of production.

True

Other things the same, an economy's factors of production are likely to be used more effectively if there is an economywide respect for property rights.

True

Other things the same, another unit of capital will increase output by more in a poor country than in a rich country.

True

A U.S. grocery chain purchases olive oil from Tunisia and sells it to U.S. consumers. In which of the following is this transaction included?

U.S. consumption and U.S. imports

If a U.S. citizen buys a dress made in Nepal by a Nepalese firm, then

U.S. consumption increases, U.S. net exports decrease, and U.S. GDP is unaffected.

A Minnesota farmer buys a new tractor made in Iowa by a German company. As a result,

U.S. investment and GDP increase, but German GDP is unaffected.

If a U.S. citizen buys a television made in Korea by a Korean firm, then

U.S. net exports decrease and U.S. GDP is unaffected.

An organization that tries to encourage the flow of investment from advanced countries to poor countries is the

World Bank

The reported unemployment rate should be viewed as

a useful but imperfect measure of joblessness.

Matilda just graduated from college. In order to devote all her efforts to college, she didn't hold a job. She is going to tour around the country on her motorcycle for a month before she starts looking for work. Other things the same, the unemployment rate

and the labor-force participation rate are both unaffected.

If an unemployed person quits looking for work, then, eventually the unemployment rate

and the labor-force participation rate both decrease.

In determining living standards, productivity plays a key role for

both nations and individuals.

For the purpose of calculating GDP, investment is spending on

capital equipment, inventories, and structures, including household purchases of new housing.

In the calculation of the CPI, tea is given greater weight than beer if

consumers buy more tea than beer

The deviation of unemployment from its natural rate is called

cyclical unemployment.

Some individuals would like to have a job, but they have given up looking for a job after an unsuccessful search. These individuals are called

discouraged workers, and they are not classified by the Bureau of Labor Statistics as unemployed.

To be counted as "employed" in the U.S. labor force statistics, a person

does not have to be working for pay if they are working for a family business and does not have to be working full time

GDP includes the value of all

final goods and services produced within a country using primarily market prices to measure the value of goods and services.

You know that a candy bar cost five cents in 1962. You also know the CPI for 1962 and the CPI for today. Which of the following would you use to compute the price of the candy bar in today's prices?

five cents (today's CPI / 1962 CPI)

In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the largest?

food & beverages

In the early 1900s, Henry Ford introduced a

high-wage policy, and this policy produced many of the effects predicted by efficiency-wage theory.

The Bureau of Labor Statistics classifies people who would like to work but have given up looking for a job as

out of the labor force. If they were classified as unemployed, the reported unemployment rate would be larger.

More generous unemployment insurance would

raise frictional unemployment.

Unions

raise the wages of unionized workers and raise unemployment.

A professional gambler moves from a state where gambling is illegal to a state where gambling is legal. Most of his income was, and continues to be, from gambling. His move

raises GDP.

A recession has traditionally been defined as a period during which

real GDP declines for two consecutive quarters.

Workers waiting for jobs to open up is most closely associated with

structural unemployment.

Samantha goes to the grocery store to make her monthly purchase of ginger ale. As she enters the soft drink section, she notices that the price of ginger ale has increased 15 percent, so she decides to buy some peppermint tea instead. To which problem in the construction of the CPI is this situation most relevant?

substitution bias

One problem with the consumer price index stems from the fact that, over time, consumers tend to buy larger quantities of goods that have become relatively less expensive and smaller quantities of goods that have become relatively more expensive. The problem is called

substitution bias.

An understanding of the best ways to produce goods and services is called

technology

Estimates of the values of which of the following non-market goods or services are included in GDP?

the rental value of owner-occupied homes but not unpaid housework.

If net exports is a negative number for a particular year, then

the value of foreign goods purchased exceeded the value of goods sold to foreigners during the year.

The labor-force participation rate measures the percentage of the

total adult population that is in the labor force.

Which of the following does not help reduce frictional unemployment?

unemployment insurance

Michelle bought word-processing software in 2009 for $75. Michelle's cousin, Barry, bought an upgrade of the same software in 2010 for $75. To which problem in the construction of the CPI is this situation most relevant?

unmeasured quality change

Last year real GDP per person in the imaginary nation of Olympus was 4,250. The year before it was 4,100. By about what percentage did Olympian real GDP per person grow during the period?

3.7 percent

The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 10 bushels of peaches and 15 bushels of pecans. If 2012 is the base year, then the inflation rate in 2013 was

4.4 percent

If the nominal interest rate is 4.2 percent and the rate of inflation is -0.5, then the real interest rate is

4.7 percent

In 1972, one could buy model rocket engines for $1.50 each. If those same engines cost $2.50 today, then which pair of CPIs would make the engine prices in today's dollars the same for both years?

90 in 1972 and 150 today

Suppose today's CPI is 134.85, and suppose one must spend $580 today to purchase the same basket of goods and services that could be bought for $400 in 1989. Then the CPI in 1989 was

93.00