EC225 Test One

Consumption spending is​ $4.5 billion, gross private domestic investment is​ $3 billion, and government purchases are​ $2 billion. If GDP is​ $14 billion, which of the following could be true regarding exports and imports in the​ economy? A. Exports are​ $15 billion, and imports are​ $10.5 billion. B. Exports are​ $6 billion, and imports are​ $8.5 billion. C. Exports are​ $9 billion, and imports are​ $6 billion. D. Exports are​ $4.5 billion, and imports are​ $2 billion.

A. Exports are​ $15 billion, and imports are​ $10.5 billion. 14-3-2-4.5=4.5. 4.5 is difference between 15 and 10.5.

The size of the underground economy would tend to decrease if the government of a country Part 2 A. decreased government regulations on businesses. B. increased business taxes. C. increased income tax rates. D. made over−the−counter drugs illegal.

A. decreased government regulations on businesses.

​Macroeconomics, as opposed to​ microeconomics, includes the study of what determines the level of A. employment in the economy. B. employment in a specific industry. C. output of a specific firm. D. output of a specific industry.

A. employment in the economy.

Most economists believe that the return of​ ________ during the 2007−2009 recession is a key reason why the recession was so severe. A. financial instability B. high interest rates C. rapid inflation D. high tariffs

A. financial instability

Which of the following would be directly counted in GDP in​ 2020? Part 2 A. kitchen cabinets purchased from Home Depot in 2020 to be installed in a house built in 1997 B. kitchen cabinets built in​ 1887, extracted from the 1887​ home, and installed in a farm house built in 1950 C. kitchen cabinets built in​ 1887, extracted from the 1887​ home, and installed in a​ brand-new, country-style home D. none of the above

A. kitchen cabinets purchased from Home Depot in 2020 to be installed in a house built in 1997

During the recession of 2007-​2009, employment by all workers aged 20 and over declined by A. less than 5 percent. B. about 6 percent. C. about 10 percent. D. more than 15 percent.

A. less than 5 percent.

What two factors are the keys to determining labor​ productivity? A. the level of technology and the quantity of capital per hour worked B. the average level of education of the workforce and the price level C. the business cycle and the growth rate of real GDP D. the growth rate of real GDP and the interest rate

A. the level of technology and the quantity of capital per hour worked

What two factors are the keys to determining labor​ productivity? A. the level of technology and the quantity of capital per hour worked B. the business cycle and the growth rate of real GDP C. the growth rate of real GDP and the interest rate D. the average level of education of the workforce and the price level

A. the level of technology and the quantity of capital per hour worked

All else​ equal, if technological change results in a permanent increase in structural​ unemployment, then which of the following would also​ increase? A. the natural rate of unemployment B. seasonal unemployment C. cyclical unemployment D. frictional unemployment

A. the natural rate of unemployment

The circular flow diagram shows that A. the value of total income is equal to the total value of expenditures on final goods and services. B. households spend all their income on goods and services. C. firms pay households​ wages, and households receive transfer payments from firms. D. GDP will be less than the total value of expenditures on final goods and services in the economy.

A. the value of total income is equal to the total value of expenditures on final goods and services.

An increase in the government budget deficit will shift the​ ________ curve for loanable funds to the​ ________ and the equilibrium real interest rate will​ ________. Question content area bottom Part 1 A. ​supply; left; rise B. ​demand; left; fall C. ​demand; right; rise D. ​supply; right; fall

A. ​supply; left; rise

Which of the following equations correctly measures GDP in an​ economy? A. GDP​ = C​ + net I​ + G​ + NX B. GDP​ = C​ + I​ + G​ + NX C. GDP​ = C​ + G​ + I − taxes D. GDP​ = C​ + I​ + G​ + X

B. GDP​ = C​ + I​ + G​ + NX

When Ford increases the production of cars in​ Romania, which of the following​ occurs? A. GDP in the United States rises. B. GNP in the United States rises. C. GNP in Romania rises. D. Both A and C occur.

B. GNP in the United States rises.

When an economy is at its natural rate of​ unemployment, which of the following will be​ true? A. Only structural unemployment as a result of technological change will exist in the economy. B. The unemployment rate will be greater than​ 0%. C. The labor force participation rate will be​ 100%. D. The unemployment rate will be​ 0%.

B. The unemployment rate will be greater than​ 0%.

Refer to the Article Summary. An increase in the growth rate of labor​ productivity, as occurred in​ 2019, will likely result in A. an increase in nominal wages and a decrease in the inflation rate. B. an increase in the​ country's potential GDP growth rate. C. a decrease in the​ country's potential GDP growth rate. D. a decrease in real wages and a decrease in the inflation rate.

B. an increase in the​ country's potential GDP growth rate.

The total amount of physical capital available in a country is know as the​ country's Part 2 A. labor productivity. B. capital stock. C. savings. D. investment.

B. capital stock.

Actual real GDP will be above potential GDP if A. firms are producing below capacity. B. firms are producing above capacity. C. firms are producing at capacity. D. inflation is rising.

B. firms are producing above capacity.

Which of the following would most likely suffer the least from the costs of​ inflation? A. an investor that has to pay higher taxes because of the inflation B. persons whose incomes rise more rapidly than inflation C. persons on fixed incomes D. firms that have to devote more time and labor to raising prices

B. persons whose incomes rise more rapidly than inflation

By offering training to workers whose firms laid them off because of competition from foreign​ firms, the federal government is attempting to A. frictional unemployment. B. structural unemployment. C. seasonal unemployment. D. cyclical unemployment.

B. structural unemployment.

A lumberjack loses his job because timber cutting restrictions are imposed by the EPA to protect the spotted owl habitat. This lumberjack would be A. cyclically unemployed. B. structurally unemployed. C. seasonally unemployed. D. frictionally unemployed.

B. structurally unemployed.

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

B. the economy is at less than full employment.

The CPI in 1990 was​ 131, and the CPI in 2010 was 218. If you earned a salary of​ $40,000 in​ 1990, what would be a salary with equivalent purchasing power in​ 2010? A. ​$45,977 B. ​$66,565 C. ​$87,200 D. ​$143,486

B. ​$66,565 218/131 x 40000

When the economy reaches a trough in a business​ cycle, which of the following will​ occur? A. Income and production will​ rise, but employment will continue to fall. B. ​Income, production, and employment will begin to rise. C. Employment​ rises, but income and production will continue to fall. D. ​Income, production, and employment will continue to fall.

B. ​Income, production, and employment will begin to rise.

Inflation that is​ ________ than what is expected benefits​ ________ and hurts​ ________. Question content area bottom A. ​less; borrowers; lenders B. ​less; lenders; borrowers C. ​greater; lenders; borrowers D. ​greater; lenders; no one

B. ​less; lenders; borrowers

If GDP grows at a rate of​ 3% per​ year, approximately how long will it take for GDP to double in​ size? A. 12 years B. 21 years C. 23 years D. 35 years

C. 23 years 70/3

If the number of unemployed workers is 19​ million, the number in the working−age population is 500​ million, and the unemployment rate is​ 4%, how many workers are in the labor​ force? Part 1 A. 1 million B. 20 million C. 475 million D. 481 million

C. 475 million 19/.04

Which of the following transactions would be included in the official calculation of​ GDP? A. Firestone sells​ $2 million worth of tires to General Motors. B. A student buys a used textbook at the bookstore. C. You buy a new iPod. D. You wash and wax your​ father's car as a favor to him.

C. You buy a new iPod.

Which of the following is an example of a worker experiencing cyclical​ unemployment? A. a lifeguard who was hired during the summer season is laid off after summer is over B. a worker who changes jobs to move closer to her family C. a freightliner employee that got laid off because of the recession of 2007−2009 D. an assembly line worker who loses his job because of automation

C. a freightliner employee that got laid off because of the recession of 2007−2009

Suppose that at the beginning of a loan​ contract, the real interest rate is​ 4% and expected inflation is currently​ 6%. If actual inflation turns out to be​ 7% over the loan contract​ period, then A. borrowers lose​ 3%. B. lenders gain​ 3%. C. borrowers gain​ 1%. D. lenders gain​ 1%.

C. borrowers gain​ 1%.

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

C. building an on−line job database that helps workers find jobs

If you have trouble finding a job because of a slowdown in the overall​ economy, we would say that you are A. structurally unemployed. B. frictionally unemployed. C. cyclically unemployed. D. seasonally unemployed.

C. cyclically unemployed.

Which of the following would decrease the unemployment​ rate? A. an increase in labor union membership B. an increase in the efficiency wage C. government aid to retrain unemployed workers D. an increase in the minimum wage

C. government aid to retrain unemployed workers

When the economy enters a recessionary phase of the business​ cycle, unemployment tends to A. decrease. B. be unchanged. C. increase. D. change in the same direction as the rate of inflation.

C. increase.

​India's rapid growth can be explained by A. investment in human capital from 1947 through 2019. B. the movement of workers from the agricultural sector to the manufacturing sector. C. reduced regulations and​ market-based reforms. D. an increase in labor force participation.

C. reduced regulations and​ market-based reforms.

Suppose that the labor movement has a revival in the U.S. and the majority of workers join labor unions. As a result we would expect A. no change in the unemployment rate or labor force participation rate. B. the labor force participation rate to fall. C. the unemployment rate to rise. D. the unemployment rate to fall.

C. the unemployment rate to rise.

If the number of unemployed workers is 19​ million, the number in the working−age population is 500​ million, and the unemployment rate is​ 4%, what is the labor force participation​ rate? A. ​4.75% B. ​7.8% C. ​95% D. ​96.2%

C. ​95% 1-/.04 = 475 475/500 = .95

According to the National Bureau of Economic​ Research, the United States experienced​ ________ recessions since 1950. A. 7 B. 15 C. 4 D. 10

D. 10

If nominal GDP is​ $5 trillion and real GDP is​ $4 trillion, the GDP deflator is A. 80. B. 800. C. 12.5. D. 125.

D. 125. 5/4 x 100

Which of the following is likely to increase measured​ GDP? A. Tax rates increase and more people attempt to underreport their income for tax purposes. B. The do−it−yourself craze becomes increasingly popular and more people decide to improve their own homes. C. A greater number of women decide to stay at home and provide day care for their children under age 5. D. Marijuana becomes legal to grow and sell.

D. Marijuana becomes legal to grow and sell.

Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists​ study? A. The United Auto Workers sign a contract raising wages and benefits​ 7% over the next 3 years. B. Avocado prices rise due to a late frost in California. C. Airlines raise ticket prices in response to rising fuel costs. D. Real GDP grows by​ 2.3% in the second quarter.

D. Real GDP grows by​ 2.3% in the second quarter.

Sarah is a full−time student who is not looking for work. What kind of unemployment is Sarah​ experiencing? Question content area bottom A. frictional B. structural C. cyclical D. Sarah is not experiencing unemployment of any​ kind, because she is not currently part of the labor force.

D. Sarah is not experiencing unemployment of any​ kind, because she is not currently part of the labor force.

From 1950 − ​2007, recessions in the United States A. became more severe than before 1950. B. were about as severe as they were before 1950. C. did not occur. D. became less severe than before 1950.

D. became less severe than before 1950.

The increased generosity of unemployment insurance programs in Canada as compared to the U.S. should A. raise the duration of unemployment in the U.S. B. decrease the duration of unemployment in Canada as compared to the U.S. C. have no impact on the duration of unemployment in Canada. D. increase the duration of unemployment in Canada as compared to the U.S.

D. increase the duration of unemployment in Canada as compared to the U.S.

A​ full-time student who is not working is categorized as Part 2 A. a discouraged worker. B. unemployed. C. frictionally unemployed. D. not in the labor force.

D. not in the labor force.

If the GDP deflator rises from 185 to​ 190, what is the rate of inflation between the two​ years? Question content area bottom Part 1 A. ​270% B. ​50% C. ​5% D. ​2.7%

D. ​2.7%

Since​ 1950, expansions in the United States have become​ ________, while recessions have become​ ________. A. ​shorter; shorter B. ​shorter; longer C. ​longer; longer D. ​longer; shorter

D. ​longer; shorter