Econ in class quiz questions

Because baby boomers are retiring, investing in firms that produce goods and services for senior citizens is definitely a sure road to riches. T or F

False

(Table: Consumer Price Index) Refer to the CPI values in the table for the years 2005 to 2010. What was the approximate inflation rate over the period 2009 to 2010?

1.68%

Figure: Labor Market) Refer to the figure. If this market is initially in equilibrium when a $10 minimum wage is imposed, the quantity of labor employed will fall by:

20

(Table: Consumer Price Index) Refer to the CPI values in the table for the years 2005 to 2010. In which year was the inflation rate the highest?

2008

A country has 50 million people, 30 million of whom are adults. Of the adults, 5 million are not interested in working, another 5 million are interested in working but have given up looking for work, and 5 million are still looking for work. Of those who do have jobs, 5 million are working part time but would like to work full time, and the remaining 10 million are working full time. What is this country's unemployment rate?

25%

(Table: Employment, Unemployment, and Labor Force Participation) Refer to the table. What is the unemployment rate of the country in 2009?

3.9%

(Figure: Loanable Funds Market) Refer to the figure of the loanable funds market. The equilibrium interest rate in this market is:

4.5%

A real return of 10% per year means that a $10,000 investment will grow to $20,000 in:

7 years

A small country has an aggregate production function given by Y = AK1/2. What would need to happen to the aggregate production function to represent an advance in technology?

A would need to increase

A decrease in the inflation rate from 10% to 3% implies that disinflation has occurred. T or F

True

According to the Fisher effect, a 5% decrease in the expected inflation rate results in:

a 5% decrease in the nominal interest rate.

A binding interest rate ceiling creates _____ savings.

a shortage of

According to Nobel laureate Milton Friedman, "inflation is _____."

always and everywhere a monetary phenomenon

A mutual fund is:

an investment fund that pools money from many investors and invests that money in the stocks of many firms.

A decrease in investment demand:

decreases both the amount saved and the interest rate

An unemployed person is one who:

does not have a job but is actively looking for one.

A passive fund is a fund that:

invests in the companies that constitute a broad market index.

A major problem with inflation is that after it starts:

it is difficult to stop without experiencing high unemployment.

A bond is a(n):

liability for the issuer.

According to the efficient markets hypothesis, stock prices:

reflect all publicly available information about the stock market.

An initial public offering is:

the first time a corporation sells stock to the public in order to raise capital.