Econ #2

The Boeing Company buys $3 million worth of steel, $2.5 million worth of computer hardware and software, and $1 million worth of mechanical tools to manufacture a certain model of aircraft. Boeing sells this particular model of aircraft at $10 million. The value added by Boeing is equal to:

A. $3.5 million

Enchante Inc., a designer clothing company, buys $400 worth of silk from a silk trader and $30 worth of accessories from AccessoriesRuS to produce each dress. If the value added by Enchante is equal to $200, then according to the value-added approach, the price of the designer dress should be:

A. $630

*Table: Population Data for Estill County* Use the accompanying table, which summarizes the labor market status of the resident of Estill County. How many people are in the labor force in the county?

A. 6,000

Which of the following would most likely be a microeconomic question?

A. Should i go to business school or take a job?

The short-run alternation between economic downturns and recessions, then economic upturns and expansions is known as the

A. business cycle

Menu costs of inflation are the

A. costs associated with money being a less reliable unit of measurement

Disposable income equals:

A. income plus government transfers minus taxes

The money spent on domestically produced final goods and services:

A. is called GDP

The natural rate of unemployment:

A. is composed of frictional, structural, and cyclical unemployment

Periods in which output and employment are falling are known as

A. recessions

When there is deflation in the economy

A. the general price level falls

A survey reveals that on a small island 40 people have jobs, 20 people are looking for jobs, and 30 people are neither working nor looking for work. The unemployment rate on the island is

B. 20%

To be counted as unemployed, one must

B. be out of work and be actively looking for a job

Private savings is equal to

B. disposable income less consumption

To be classified as unemployed, a person must be:

B. not working and actively looking for a job in the last four weeks

A transfer payment is a payment for

B. which no services were rendered during the current year

*Expanded Circular-Flow Model* What is GDP in this economy?

C. $1,000

*Table: Consumer Price Index* According to the accompanying table, the inflation rate between 2011 and 2012 is

C. 1.4%

In 2011, 10 million people did not have a job but were actively looking for employment and 85 million people had either a full-time or a part-time job. Based on this information, the unemployment rate in 2011 was:

C. 10.5%

*Table: Labor Force Data* Using the data from the accompanying table, suppose the labor force participation rate is 70%. The labor force is equal to:

C. 105 million

*Circular-Flow Model* If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of that box), which of the following is likely to happen if there is an increase in exports?

C. a decrease in the unemployment rate

Goods and services sold to people in other countries are known as

C. exports

Purchases of foreign-produced goods and services are:

C. imports

An expansion is a period in which

C. output rises

Cyclical unemployment is the result of

C. the business cycle

*Table: Pizza Economy ii)* Based on the accompanying table, GDP in this economy is:

D. $16,000

*Circular-Flow Model* What is the GDP in this economy?

D. $600

If a country has a working-age population of 200 million, 120 million people with jobs, and 30 million people unemployed and seeking employment, then its unemployment rate is:

D. 20%

*Expanded Circular-Flow Model* Which of the following is a type of market in the economy?

D. Financial

The topics studied in macroeconomics include

D. Inflation, unemployment, and economic growth

Which of the following would NOT be classified as a macroeconomic question?

D. What determines the cost to a university or college offering a new course?

The national accounts keep track of everything except:

D. exchange rates

In contrast to the conclusion drawn from microeconomics, many economists would argue that in macroeconomics government:

D. intervention in markets can prevent or reduce the effects of adverse events on the macroeconomy

Recessions are periods when

D. output and employment are falling