Econ Quiz 3

If the actual inflation rate is less than the expected inflation rate, then: A) the lenders gain and the borrowers lose. B) the borrowers gain and the lenders lose. C) everyone benefits from the inflation. D) everyone is worse off from unexpected inflation.

A

Unemployment Rate Equation

(# unemployed/labor force)*100

A budget surplus would exist when which of the following occurs? A) Taxes are greater than government spending. B) Taxes are less than government spending. C) Taxes are less than government spending plus investment. D) Investment is less than government spending less taxes.

A

According to the "savings-investment spending identity": A) savings = investment spending B) government spending = tax receipts C) total income = consumption spending + savings D) savings = investment spending + consumption spending

A

All of the following are factors that drive productivity growth EXCEPT: A) growth convergence. B) physical capital. C) technological progress. D) human capital.

A

Diminishing returns to physical capital implies that, when human capital per worker and the state of technology remain fixed, each successive increase in physical capital leads to: A) a smaller increase in productivity. B) a larger increase in productivity. C) a decrease in productivity. D) negative productivity.

A

The key measure used to track economic growth is: A) real GDP per capita B) nominal GDP C) real GDP D) nominal GDP per capita

A

Unemployment that is due to the time workers spend in job search is considered: A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) natural unemploymen

A

Alex expects the inflation rate to be 4%. If Alex borrows money at a nominal interest rate of 5%, his real interest rate is: A) greater than the nominal interest rate. B) less than the nominal interest rate. C) equal to the nominal interest rate. D) negative.

B

Human capital refers to: A) output per worker. B) the education and knowledge embodied in the workforce. C) society's investment in capital goods. D) people working with capital goods.

B

Net capital inflows equal: A) national savings. B) imports minus exports. C) consumption. D) consumption plus government spending.

B

The best currently available measure of the standard of living in a country is: A) the nominal GDP per capita. B) the real GDP per capita. C) the unemployment rate. D) the growth rate of productivity.

B

The invention of ATM machines reduced: A) menu costs of inflation. B) shoe-leather costs of inflation. C) unit-of-account costs of inflation. D) seignorage.

B

When the economy is in full employment: A) unemployment is zero. B) only cyclical unemployment is zero. C) only frictional unemployment is zero. D) the natural rate of unemployment is zero

B

Crowding out is a phenomenon: A) where an increase in government's budget surplus decreases the overall investment spending. B) where overproduction in the goods market leads to a sharp drop in the aggregate price level. C) where an increase in government's budget deficit causes the overall investment spending to fall. D) where an increase in imports causes the overall domestic production to fall.

C

The National Bureau of Economic Research announced that the U.S. economy had been in a recession in 2008. As a result, the type of unemployment that is on the rise is known as: A) frictional unemployment. B) natural unemployment. C) cyclical unemployment. D) structural unemployment.

C

The most important driver for economic growth appears to be: A) increases in physical capital. B) increases in human capital. C) technological progress. D) Jeff Gordon.

C

The savings-investment spending identity says that savings and investment spending are: A) always equal because private savings match government savings. B) equal as long as there is no trade surplus or deficit. C) always equal for the economy as a whole. D) equal as long as there is not government budget deficit or surplus.

C

The supply of loanable funds is _____ sloping because _____ respond to lower interest rates by _____ their quantity supplied of loanable funds. A) upward; savers; increasing B) upward; investors; decreasing C) upward; savers; decreasing D) downward; investors; increasing

C

Today more than ________ of the world's population lives in countries poorer than the United States was a century ago. A) one fifth B) one third C) one half D) two fifths

C

Which of the following is an example of investment spending? A) The owner of a Domino's Pizza store has employed two students to deliver pizzas. B) The manager of a local Domino's Pizza store has taken some cash to the bank to make a deposit. C) A local Domino's Pizza store has purchased a new pizza oven. D) The owner of the Domino's Pizza store has used some of her salary to buy shares of stock in the Domino's corporation.

C

You have gone to the bank to borrow money for one year. The nominal rate is 7.5%. The real rate of interest is 4%. Over the course of the year, overall prices increased by 4%. This rate of inflation hurt the _____ because the actual rate of inflation was _____ than the anticipated rate of inflation. A) borrower; lower B) borrower; higher C) lender; higher D) lender; lower

C

If real GDP grows at an annual rate of 1%, it will double in approximately _______ years. A) 11 B) 23 C) 35 D) 70

D

Structural unemployment consists of people who are unemployed due to: A) temporary changes in jobs. B) an excess in the quantity of labor demanded over the quantity of labor supplied. C) the time it takes for employers and workers to find each other. D) more people seeking jobs in a labor market than there are jobs available at the current wage rate.

D

Transactions costs are: A) the return to the entrepreneur. B) the return to moving a product to market. C) the expenses of producing a product. D) the expenses of negotiating and executing a deal.

D

Which of the following is NOT one of the three tasks of a financial system? A) transactions costs reduction B) risk management C) provide liquidity D) determining fiscal policy

D

Which of the following is considered an act of investing in a physical asset? A) purchasing shares of stock in IBM B) selling shares of stock in IBM C) buying a bond issued by IBM D) buying a new factory that produces IBM handheld devices

D

Both binding minimum wages and union wages may cause structural unemployment. A) True B) False

True