Econ Midterm 2

The country of Yokovia does not trade with any other country. Its GDP is $20 billion. Its government collects $2 billion in taxes. Consumption equals $15 billion and investment equals $2 billion. What is public saving in Yokovia, and what is the value of the goods and services purchased by the government of Yokovia?

-$1 billion and $3 billion.

For a closed economy, GDP is $12 trillion, consumption is $7 trillion, taxes net of transfers are $3 trillion and the government runs a budget deficit of $1 trillion. In this economy, the value of public savings is ___ trillion, the value of private savings is ___ trillion, and investment equals ___trillion.

-1,2,1

2020 Adult Civilian Population in Meditor Males not in labor force45 millionFemales not in labor force55 millionMales unemployed5 millionFemales unemployed5 millionMales employed85 millionFemales employed65 million In 2020, in Meditor, the female labor-force participation rate is _____% and the female unemployment rate is _____%.

56,7.14

Meredith is looking for work as a computer programmer. Although her prospects are good, she has not yet taken a job. Julie is looking for work in a steel mill. Every time she shows up for an interview, there are more people looking for work than there are openings. Someone waiting in line with her tells her it has been that way for a long time.

Meredith is frictionally unemployed, and Julie is structurally unemployed.

Alexis and Tara both mine salt. Alexis mines 300 pounds in 30 hours. Tara mines 450 pounds in 40 hours. Which of the following is correct?

Tara's productivity is greater than Alexis's. This difference could be explained by Tara having more physical capital than Alexis.

Tatiana is waiting to be recalled to a job from which she was laid off. Ivan was fired but has not looked for work during the last two months. Who does the Bureau of Labor Statistics count as "unemployed"?

Tatiana but not Ivan.

Which of the following restrictions implies that private saving exceeds investment for a closed economy?

The economy's government is running a budget deficit.

Which of the following is an example of physical capital?

The equipment in a factory.

Which of the following events could explain an increase in interest rates together with an increase in investment?

The government institutes an investment tax credit

In Japan, real GDP per person was $1,667 in 1890 and $43,279 in 2017. The growth rate was 2.60% per year. Which of the following is true?

The growth rate of 2.60% per year ignores short-run fluctuations around the long-run trend.

You are thinking of buying a bond from Bluestone Corporation. You know that this bond is short term and you know that Bluestone's business ventures are risky and uncertain. You then consider another bond with a longer term to maturity issued by a company with good prospects and an established reputation. Which of the following is correct?

The shorter term would tend to make the interest rate on the bond issued by Bluestone lower, while the higher risk would tend to make the interest rate higher.

Workland has a population of 10,000, of whom 7,000 work 8 hours a day to produce a total of 224,000 final goods. Laborland has a population of 5,000, of whom 3,000 work 7 hours a day to produce a total of 105,000 final goods.

Workland has lower productivity but higher real GDP per person than Laborland.

Some persons are counted as out of the labor force because they have made no serious or recent effort to look for work. However, some of these individuals may want to work even though they are too discouraged to make a serious effort to look for work. If these individuals were counted as unemployed instead of out of the labor force, then

both the unemployment rate and labor-force participation rate would be higher.

The deviation of unemployment from its natural rate is called

cyclical unemployment.

The demand for online streaming services increased considerably in 2020. Several companies like Zoom and Netflix decided to expand their operations, which, in the market for loanable funds, would cause a shift of the ______ curve to the ______ , resulting in a(n) ______ on the interest rates and a(n) increase on private investment.

demand, right, increase

Suppose that an American opens and operates a candy factory in Finland. This is an example of foreign direct investment , and future production from such an investment will increase Finnish GNP more than the Finnish GDP .

foreign direct investment

In 2020 during the COVID-19 economic crisis, the government increased the duration and amount of unemployment benefits. We would expect this measure to

increase the natural rate of unemployment., reduce the hardship of unemployment.

Suppose that neither food-service workers nor retail salespeople are unionized. Now suppose that food-service workers form a union. When the food-service workers unionize, wages ["increase", "decrease"] and employment ["decreases", "increases"] in the food-service industry. As a consequence, the ["demand", "supply"] of labor in the retail industry increases , resulting in ["higher", "lower"] wages and ["lower", "higher"] employment in the retail industry.

increase, decrease, supply, increase, lower, higher

Michael decides to hire some additional workers for his roofing company. The equilibrium wage is $17 per hour. Efficiency wage theory suggests that it is reasonable for Michael to offer

more than $17 per hour in order to attract a better pool of applicants.

Samantha learns that Walmart is selling stock in order to finance the acquisition of TikTok and decides to buy some of those stocks. Samantha becomes a _____ of Walmart Corporation and she is part of the ____ of loanable funds.

partial owner, supply

If Canada goes from a large budget deficit to a small budget deficit, we would expect this decrease in the budget deficit to shift the _______ curve of loanable funds to the _______, causing a(n) _______ on the interest rates and a(n) _______ on private investment.

supply, right,decrease,increase

If at some interest rate desired investment is $700 billion, desired private saving is $600 billion, and there is a budget surplus of $300 billion, there is a _________ in the market for loanable funds, and we can expect interest rates to ________.

surplus, decrease

The downside of pursuing a policy that increases saving and investment is

that current consumption of goods and services decreases.

Other things the same, a decrease in the interest rate

would decrease the quantity of loanable funds supplied.