ECON 2301 Exam 1

Refer to the table above. Assume that an economy produces only lemonade and cookies. If 2013 is the base year, real GDP in 2014 was:

$420

Economists frequently use GDP per capita to reflect:

differences in living standards across countries.

Which of the following actions would reduce frictional unemployment?

holding job fairs

A central and fundamental theme in economics is that:

people have unlimited wants but limited means (resources) to satisfy them

Refer to the table above. According to the information in the table, what is GDP?

$12,200

Assume that the real GDP of the United States is approximately $12 trillion and the population of the United States is approximately 300 million. What is per capita real GDP?

$40,000

Refer to the table above. Assume that an economy produces only lemonade and cookies. Nominal GDP in 2013 was:

$400.

Refer to the table above. Assume that an economy produces only lemonade and cookies. Nominal GDP in 2014 was:

$445

There are 15 million people living in Marketstan, of whom 9 million are working and 1 million are actively looking for work. What is the size of Marketstan's labor force?

10 million

There are 15 million people living in Marketstan, of whom 9 million are working and 1 million are actively looking for work. What is Marketstan's unemployment rate?

10%

Suppose an economist breaks the unemployment rate into the following components: frictional (2%), structural (1%), and cyclical (4%). Based on these estimates, the natural rate of unemployment is:

3%

The GDP deflator of a country in the base year was 100 and it is 130 in the current year. This implies that the prices of final goods and services produced in the country have increased by

30%

If the price level in 2016 is 140 and it falls to 133 in 2017, what has the economy experienced between 2016 and 2017?

5% deflation

"When OPEC increases the supply of oil to the market, the price of gasoline falls." This is an example of

A positive statement

Real GDP does not show the state of economic welfare in a country in part because GDP omits I. household production. II. leisure time available. III. the quality of the environment.

I, II and III

Which transaction will be included in the official measurement of GDP?

Sean bought a new truck.

Suppose you are forced to take a pay cut of 5% when the economy is experiencing overall deflation of 5%. If in response ti your pay cut you also reduce your consumption by 5%, then economists would say:

Your are exhibiting money illusion

The key to being counted as unemployed by the Bureau of Labor Statistics is to be:

actively seeking work.

Alternating periods of macroeconomic expansion and contraction are known as:

business cycles

Economists tend to believe that to change people's behavior you must:

change their incentives

Thinking in economic terms, when Mary Sweet-Tooth is deciding whether to eat another brownie, she:

compares the benefits and costs of eating another brownie

When the Bureau of Labor Statistics calculates the consumer price index, it assumes that:

consumers do not substitute cheaper goods for goods when prices have risen.

Suppose that anticipated inflation is 4% for the coming year, with loan contracts set at 7% with the expectation of a 3% return after inflation. If the actual inflation rate at the end of the year is 2%:

creditors gain at the expense of borrowers.

Lexie works Monday to Friday 4 P.M. to 6 P.M. in the after-school program at a local elementary school. She began looking for a full-time job last week and has already scheduled three job interviews. According to the Bureau of Labor Statistics, Lexie is:

employed

When a recession gets under way:

firms start to lay off workers to reduce costs.

If Frito Lay, an American snack company, opens a new manufacturing facility in Mexico and produces snacks which are distributed in South America, then Mexico's GDP _______ and U.S. GDP _______.

increases; does not change

Refer to the article above. These choices add to the fluctuations seen in the _______ as workers leave the labor force given their unsuccessful job searches.

labor force participation rate

If the state government allocated additional spending on education programs, the opportunity cost is:

measured in terms of the best alternative uses for that money

Jordan Meadows lost his job as an airline pilot and has not been able to find another job a a pilot. Since he is old enough to be eligible for his pension, he decides to retire and devote himself to caring for his elderly parents. According to the Bureau of Labor Statistics, Jordan is:

not in the labor force.

Janet is receiving a 5% pay raise. If the rate of inflation is 2%, then Janet's purchasing power is:

rising.

Since the invention of automatic teller machines, many bank tellers have lost their jobs. This is an example of ______ unemployment.

structural

What event was a major influence on the development of macroeconomics?

the Great Depression

Unemployment rates are usually higher in Europe than they are in the United States because:

unemployment benefits are more generous in Europe than they are in the United States.