ECON- test 3

Suppose a labor market is described by the demand equation, Qd = 80 - 2w, and the supply equation,Qs = -10 + w, where Qd is the quantity demanded of labor (in Million), Qs is the quantity supplied of labor(in Million), and w is the wage (in dollars). What is the equilibrium wage? [Round to the nearest dollar.]

$30

A

(Figure: Market for Furniture) Which graph shows what will happen in the market for furniture if an excess supply of timber drives down wood prices? A.) graph A B.) graph B C.) graph C D.) graph D

Suppose a labor market is described by the demand equation, Qd = 80 - 2w, and the supply equation, Qs = -10 + w, where Qd is the quantity demanded of labor (in Million), Qs is the quantity supplied of labor(in Million), and w is the wage (in dollars). If the government institutes a minimum wage of $35, how many workers will be employed in this market?

10 million

Suppose a labor market is described by the demand equation, Qd = 80 - 2w, and the supply equation,Qs = -10 + w, where Qd is the quantity demanded of labor (in Million), Qs is the quantity supplied of labor(in Million), and w is the wage (in dollars). If the government institutes a minimum wage of $35, how many workers will be unemployed?

15 million

Suppose a labor market is described by the demand equation, Qd = 80 - 2w, and the supply equation, Qs = -10 + w, where Qd is the quantity demanded of labor (in Million), Qs is the quantity supplied of labor (in Million), and w is the wage (in dollars). What is the equilibrium quantity of labor?

20 million

Suppose a labor market is described by the demand equation, Qd = 80 - 2w, and the supply equation,Qs = -10 + w, where Qd is the quantity demanded of labor (in Million), Qs is the quantity supplied of labor(in Million), and w is the wage (in dollars). If the government institutes a minimum wage of $25, how many workers will be willing to work in this market?

20 million

Suppose a labor market is described by the demand equation, Qd = 80 - 2w, and the supply equation,Qs = -10 + w, where Qd is the quantity demanded of labor (in Million), Qs is the quantity supplied of labor(in Million), and w is the wage (in dollars). If the government institutes a minimum wage of $35, how many workers will be willing to work in this market?

25 million

Aiden recently graduated from college without a job.He hasn't started looking for one yet, but he plans to start searching for a job next month after he has moved back to his family's house and had time to catch up with his friends.Aiden is considered A. employed. B. unemployed. C. not in the labor force.

A

Boris just finished an economics degree and wants tolive in Washington, D.C., where there are many jobopenings matching his skills and education. He moves to D.C. without a job and crashes on a friend's couch while looking for one.Boris is considered A. frictionally unemployed. B. structurally unemployed. C. cyclically unemployed

A

Chelsea was a manager at a vinyl records store who recently quit because she felt the recent popularity of vinyl is a current fad that will eventually fade away.She is now actively looking for a job in the hospitality industry. Chelsea is considered: A. frictionally unemployed. B. cyclically unemployed. C. not in the labor force. D. structurally unemployed

A

During 2000 and 2001, nominal GDP in the United States grew by 3.2%, and the rate of inflation was 2.2%. What was the growth rate of real GDP between the two years? a. 1% b. 2.2% c. 4.4% d. 5.4%

A

If C = $1,000, I = $500, G = $800, X = $400, and M = $600, what is the value of GDP? a. $2,100 b. $2,300 c. $3,300 d. $2,500

A

If Greenville's GDP doubled over 5 years, what was the approximate annual growth rate (using the rule of 70)? a. 14% b. 9% c. 20% d. 5%

A

If the price of a bundle of goods used to calculate the consumer price index rises from $80 to $86over a one-year period, what is the inflation rate for that year? A. 7.5% B. 10% C. 6.0% D. 6.9%

A

In 2004, Canada's GDP was approximately $1.13 trillion, and its population was about 32 million. What was Canada's approximate GDP per person in 2004? a. $43,500 b. $35,290 c. $3,530 d. $36,160

A

In an effort to balance the budget, the federal government reduced its spending on the military. A. IS curve shift to the left. B. IS curve shift to the right. C. MP curve shift up. D. MP curve shift down.

A

Indeed.com improves its algorithms so that job seekers can more easily find jobs that match their skills. This will likely reduce A. frictional unemployment. B. structural unemployment. C. cyclical unemployment.

A

Javier is a department manager at a big box store. Over the last month, sales have slumped, and he has lots of inventory going unsold. Now it's time to put in his orders to restock for next month. How will his suppliers respond to his decision in the previous question? A. They will cut back on production. B. They will produce according to their initial demand estimates. C. They will not be affected. D. They will expand their output.

A

Macroeconomic equilibrium is currently at a real interest rate of 2%, and actual output is 5% above potential output. Worried about looming inflation, the Fed wishes to close the gap, so it will A. increase the federal funds rate. B. decrease the federal funds rate.

A

Nerida Kyle could either commute to work via Uber or purchase a new car. The average cost of her one-way Uber trip is $15. Nerida works five days a week for 50 weeks a year. Based solely on avoiding the cost of an Uber, Nerida should purchase a car if the cost of the car is _____ than _____ per week. A. less; $150 B. less; $75 C. greater; $150 D. greater; $75

A

Rapid growth in poorer countries leads to: a. convergence in real GDP per person between poorer countries and richer countries. b. divergence in real GDP per person between poorer countries and richer countries. c. inadequate enforcement of property rights. d. higher dependency ratios.

A

Suppose that the consumer price index in Richland rises from 150 to 159 over the past year, and that the city sets its car registration prices so that real prices stay the same. If the cost to register a car was $50 last year, how much would it cost this year, in nominal terms? A. $53 B. $59 C. $50 D. $56

A

Suppose you were being paid $50 per hour for a monthly salary of about $8,000. You got a raise for$52.5 per hour for a monthly salary of $8,400. If the CPI price level increased from 300 to 315, what was the increase in your real wage (in %)? A. 0.0% B. 2.5% C. 5.0% D. 10.0%

A

The economy is in a recession, so the government reduces taxes. This causes the IS curve to A. shift to the right. B. shift to the left.

A

The price of coffee at a local coffee shop is $2.50. Cheryl is willing to pay $8 for her first cup of coffee each day. The marginal benefit to her of each additional cup of coffee falls by $2. How many cups of coffee should Cheryl purchase? a) Three b) Two c) one d) Four

A

The town of Fincastle has 250 working-age adults, of whom 200 are employed and 25 are unemployed.The labor force participation rate is A. 90%. B. 11%. C. 80%. D. 10%.

A

________________ is the point at which the economy will come to rest. This occurs at the point where the level of output equals aggregate expenditure. A. Equilibrium GDP B. Potential GDP C. The Output Gap

A

Box office take for Star Wars was $307M in 1977.The CPI was 60.6 in 1977. It is 271.0 in 2021. What is the value of the box office take in 2021dollars? A. $307M B. $937M C. $1,373M D. $1,071M

C

Box office take for The Force Awakens was $937M in 2015. The CPI was 237.0 in 2015. It is 271.0 in 2021. What is the value of the box office take in 2021 dollars? A. $307M B. $937M C. $1,373M D. $1,071M

C

A popular teacher hands out candy bars to her students as an incentive for good behavior. If students choose to, they could then trade one candy bar for a sheet of stickers or two candy bars to skip a quiz. In this classroom, the teacher is using candy bars as a form of: A. barter. B. commodity money. C. fiat money. D. yummy money.

B

As consumer confidence boomed, people became more willing to buy cars, appliances, and furniture A. IS curve shift to the left. B. IS curve shift to the right. C. MP curve shift up. D. MP curve shift down.

B

Consumers are increasingly optimistic about the future of the economy, so you predict that the A. IS curve will shift to the left. B. IS curve will shift to the right. C. MP curve will shift up. D. MP curve will shift down.

B

Fuel efficiency regulations reduce the use of steel in automobile production and increase the use of lighter materials such as aluminum. Also, increased import restrictions are imposed that limit the amount of steel that can be imported into the U.S. As a result, in the market for steel in the U.S., the effects on equilibrium quantity and price are A. quantity rises, price is indeterminate. B. quantity falls, price is indeterminate. C. quantity is indeterminate, price rises. D. quantity is indeterminate, price falls. E. None of these answers is correct.

B

If an economy has a positive output gap of 3%, this means: A. unemployment is 3% above the natural rate of unemployment. B. GDP is 3% above potential GDP. C. inflation is 3% above the long-run rate of inflation. D. GDP is 3% below potential GDP.

B

If the economy had a real GDP of $16 trillion and a nominal GDP of $18 trillion, what would be the value of the GDP deflator? A. 88.89 B. 112.5 C. 2 D. 0.113

B

In 2006, the government offered a 30% tax credit for the installation of solar power systems. How did this affect the economy? A. IS curve shift to the left. B. IS curve shift to the right. C. MP curve shift up. D. MP curve shift down

B

In October 2019, inflation expectations in the United States fell to 2.5%, down from 2.8% in September 2019. If nothing else changes in the economy, you would expect actual inflation to A. remain constant. B. fall. C. rise.

B

In early 2008, the government was worried that the economy was underperforming. In an effort to prevent a recession, the federal government gave households tax rebates—effectively sending them checks of up to $1,200. How did this affect the economy? A. IS curve shift to the left. B. IS curve shift to the right. C. MP curve shift up. D. MP curve shift down.

B

Javier is a department manager at a big box store. Over the last month, sales have slumped, and he has lots of inventory going unsold. Now it's time to put in his orders to restock for next month. How, if at all, should Javier adjust his orders for new products? A. Javier should place his orders according to his initial estimates. B. The inventory buildup is not an equilibrium. Javier should respond by cutting back on his orders. C. Javier should wait and see what happens next month, and if his inventory runs out, then he can place an order

B

Macroeconomic equilibrium is currently at a real interest rate of 5%, and actual output is 8% below potential output. The Fed wishes to close the gap, so it will A. increase the federal funds rate. B. decrease the federal funds rate.

B

Suppose Robert got a loan in 1999 for $10,000. IfRobert agreed to a 5% nominal interest rate over the next 10 years and the economy experienced an inflation rate of 3%, what would Robert's real interest rate be? A. 8% B. 2% C. -2% D. 5%

B

Suppose that an economy is overheating. You would expect to see the unemployment rate: A. rise above the equilibrium unemployment rate. B. fall below the equilibrium unemployment rate. C. be equal to the equilibrium unemployment rate. D. be zero.

B

Suppose that the CPI in 2013 was 250 and theCPI in 2014 was 260. What is the rate of inflation in this economy? A. 3.8% B. 4.0% C. 10.0% D. 96.2%

B

Suppose the real interest rate is 5% and the output gap is 0%. If the real interest rate falls from 5% to 3%, A. the output gap becomes negative. B. the output gap becomes positive. C. the output gap remains at 0%

B

The U.S. government provides a research and development tax credit. How can this policy encourage economic growth? A. Firms get tax credits for sourcing inputs locally, and this encourages local economic growth. B. It encourages firms to engage in innovation and creative practices, which lead to technological advances that spur economic growth. C. It supports firms in their efforts to produce environmentally friendly products and services. D. Firms are encouraged to reuse existing capital, and this leads to a more efficient use of existing capital.

B

The economy is currently in macroeconomic equilibrium. Consumers become less confident in the economic outlook and decrease their consumption spending. Businesses will A. increase production. B. decrease production.

B

The output gap is currently zero, and inflation is 2%, where it has been for several years. The government announces an unexpected stimulus package that is expected to increase next year's output gap to 3% above potential output. What is your forecast for inflation after the stimulus? A. It will remain at 2%. B. It will rise above 2%. C. It will fall below 2%

B

The town of Fincastle has 250 working-age adults, of whom 200 are employed and 25 are unemployed.The unemployment rate is A. 90%. B. 11%. C. 80%. D. 10%

B

You are a buyer at an auto factory that is facing rising input costs. You manager asks you to determine if your competitors are also experiencing rising input prices. Which measure of prices should you use? A. CPI B. PPI C. core inflation D. GDP deflator

B

You predict that the output gap will decline from 1%to -1%. If the current unemployment rate is 3.5%,you predict the unemployment rate to A. fall to 2.5%. B. rise to 4.5%. C. stay at 3.5%. D. rise to 5.5%.

B

_________________ is the economy's highest sustainable level of production, and it's determined by available inputs. A. Equilibrium GDP B. Potential GDP C. The Output Gap

B

According to Okun's rule of thumb, for every 1% fall in the actual output below potential output, the unemployment rate: A. rises by 1%. B. falls by 1%. C. rises by 0.5%. D. falls by 0.5%

C

From 2015 to 2016, the overall price level rose from 200to 220. Over the same period, tuition rates at the local community college rose from $100 to $115 per credit hour. What can be concluded from the rise in tuition relative to overall inflation? A. Tuition rates increased at the same rate as inflation. B. Tuition rates increased at a slower rate than inflation. C. Tuition rates increased at a faster rate than inflation. D. Tuition rates and inflation cannot be compared with the numbers given

C

If the real interest rate falls from 5% to 3%, A. the IS curve shifts to the right. B. the IS curve shifts to the left. C. we move to the right along the IS curve. D. we move to the left along the IS curve.

C

In September 2008, the world's financial system froze. Even though the Federal Reserve maintained its interest rate at 2%, the grim reality was that if businesses needed to borrow, they had to pay much higher interest rates. How did this affect the economy? A. IS curve shift to the left. B. IS curve shift to the right. C. MP curve shift up. D. MP curve shift down

C

In the third quarter of 2019, real potential output was$18,964 billion while real GDP was $19,121 billion.What is the output gap? A. $157 billion B. -$157 billion C. 0.83% D. -0.83%

C

Netanya owns a consulting business. During a severe downturn in the economy, she has to fire several of her analysts. Netanya's analysts are considered A. frictionally unemployed. B. structurally unemployed. C. cyclically unemployed.

C

Policy makers decide to increase the federal minimum wage to $15 per hour immediately. If the output gap does not change, you expect inflation to A. fall. B. not change. C. rise.

C

The U.S. president unexpectantly announces a tariff on aluminum and steel. You believe that A. inflation expectations will rise. B. demand-pull inflation will rise. C. cost-push inflation will rise.

C

Which of the following persons would be considered employed? A. Sam, a 12 year old who helps his mom stock shelves at her gift shop. B. Ron, a recently enrolled full-time college student in hopes of finding a well-paying job. C. Jennifer, a teacher who is on two-month maternity leave but will return to work. D. All of the above persons are considered employed

C

Which of the following would represent the fastest annual growth of GDP per capita? a. An increase in real GDP of 6% and population growth of 4%. b. An increase in real GDP of 2% and population decline of 1%. c. An increase in real GDP of 5% and population growth of 1%. d. An increase in real GDP per capita of 3%.

C

risk premium is 1.5%. The real interest rate is A. 2%. B. 4.5%. C. 5.0%. D. 6.0%.

C

14,000 apartments

Consider the following data from the market demand and supply for apartments. What is the equilibrium quantity in this market?

An economy's potential output level is: A. the output when unemployment is zero. B. equivalent of the GDP at current market value. C. the level at which no resources are available in the economy. D. the output that is possible when all resources are fully employed at their sustainable levels.

D

Charles McCoy is a manager at a coffee shop and is making hiring decisions. With one worker, he can make 15 drinks that sell for $3 on average in a single hour. With a second worker, he can make an additional 12 drinks in a single hour. The marginal product of each additional worker decreases by three drinks with each additional hire. Assuming that workers are paid $12 per hour and work eight hours, how many employces should Charles hire for each hour? a) six b) Four c) Three d) Five

D

Diana is a student studying economics and currently working on her class schedule for next semester. She decides to enroll in a course on economic data analysis because she knows that data analysis is a highly sought- after skill from employers in her career field. Weighing what may affect her in the future opportunities demonstrated dependency: A. between college courses. B. between people or businesses in the same market. C. between markets. D. through time.

D

If the village of Happyville has 150 residents, of which 50 are children, 95 are working, and 5 are actively seeking work, the unemployment rate is:The unemployment rate is A. 3.3%. B. 36.7%. C. 33.3%. D. 5%.

D

Instead of the consumer price index, theFederal Reserve uses the _____, which allows for substitution because it is not based on a fixed basket of goods. A. GDP deflator B. core inflation C. producer price index (PPI) D. personal consumption expenditure (PCE)deflator

D

Suppose that due to a poor economy, 1 million workers lost their jobs, causing the unemployment rate to increase to 10%. After a few months of searching, 300,000 of these unemployed workers give up looking for work. How would the decision by these 300,000 people affect the unemployment rate, all else equal? A. There is not enough information to answer this question. B. The unemployment rate would remain unchanged. C. The unemployment rate would increase. D. The unemployment rate would decrease

D

Suppose the consumer basket was set to include one rent payment and four sets of groceries. In January, rent was on average $1,100 a month and a set of groceries was$95. In February, the rent was on average $1,200 and groceries were $90 a set. What was the inflation rate fromJanuary to February? A. 9.09% B. 5.55% C. 7.94% D. 5.41%

D

The business cycle refers to the: A. rise and fall of business revenues over time. B. long-term trends in economic growth. C. increases in GDP above potential GDP. D. short-term fluctuations in economic activity.

D

The moral of the story of the Solow growth model is that: A. human capital growth does not lead to economic growth. B. capital accumulation is the key to sustained economic growth. C. technological advance cannot sustain continuous economic growth. D. capital accumulation alone cannot lead to sustainable economic growth.

D

When there is a shortage of highly skilled workers in a particular region, the: A. supply of jobs for highly skilled workers increases. B. demand for skills education decreases. C. demand for highly skilled workers increases. D. demand for skills education increases.

D

Which of the following five scenarios illustrate markets in action? (i) You rent a book at the university bookstore. (ii) You bargain at a street stall. (iii) You mow your own lawn. (iv) You get a manicure at a nail salon. (v) You grow your own vegetables and consume them yourself. A. (i), (ii), and (iii) B. (i), (iii), and (v) C. (iii) and (v) D. (i), (ii), and (iv)

D

Which of the following forms of money would best represent fiat money? A. A rare baseball card given to a landlord in place of rent. B. An hour-long golf lesson given in exchange for an hour of tutoring in economics. C. Silver quarters made prior to 1965. D. A $20 bill printed in 2015.

D

Which of the following persons would be considered unemployed? A. Nick, a union member on strike at his factory because he demands better job benefits. B. Beth, laid off from her job as a mechanic, chose to return to school instead of looking for another job. C. Jack, not having worked in eight months, feels hopeless, which is why he does not bother applying for jobs. D. None of the above are considered unemployed

D

Which of the following would be considered in a cost- benefit analysis to decide if a person should cycle to work or ride the subway? (i) The air pollution that the cyclist has to breathe. (ii) The cost of subway tickets. (iii) The time it takes to cycle to work versus the time it takes to ride the subway to work. (iv) The cost per gallon of gasoline. A. (i), (iii) and (iv) B. (i), (ii), (iii) and (iv) C. (i), (ii), and (iv) D. (i), (ii) and (iii)

D

Fuel efficiency regulations reduce the use of steel in automobile production and increase the use of lighter materials such as aluminum. Also, increased import restrictions are imposed that limit the amount of steel that can be imported into the U.S. As a result, in the market for steel in the U.S., the effects on equilibrium quantity and price are A. quantity rises, price falls. B. quantity falls, price falls. C. quantity rises, price rises. D. quantity falls, price rises. E. None of these answers is correct

E

B

In the graph, the movement from point H to point G must have been caused by: A. a rise in the price of the item. B. a fall in the price of the item. C. a decrease in the total supply of the item. D. an increase in the total supply of the item.

C

Refer to the diagram of the circular flow of income. The key lessons from this diagram are that: (i) all flows of resources are matched by flows of money. (ii) the market value of total output must be equal to total spending. (iii) total spending must equal total income. (iv) all inputs are provided by businesses. Review Question 1 a. (i) and (iv) b. (ii) and (iii) c. (i), (ii), and (iii) d. (i), (ii), (iii), and (iv)

B

Refer to the table below that shows data for Panama. What was Panama's economic growth rate between 2000 and 2001? A. 2.26% B. -1.36% C. -0.29% D. 5.23%

C

The movement from point M to point N represents: A. a decrease in demand. B. a decrease in quantity demanded. C. an increase in quantity demanded. D. an increase in demand.

A

The movement from point P to point N represents: A. a decrease in demand. B. a decrease in quantity demanded. C. an increase in quantity demanded. D. an increase in demand.

$1200

Using 2021 as the base year, Real GDP in 2021 was

$1260

Using 2021 as the base year, Real GDP in 2022 was

$1275

Using 2022 as the base year, Real GDP in 2021 was

$1335

Using 2022 as the base year, Real GDP in 2022 was

B

Which of the following explains the shape of the aggregate production function? A. the profit maximization rule B. the law of diminishing returns C. the development of human capital D. the impact of technological

B

Which of the following production functions shows technological advancement?

Aiden recently graduated from college without a job.He hasn't started looking for one yet, but he plans to start searching for a job next month after he has moved back to his family's house and had time to catch up with his friends.Aiden is considered A. employed. B. unemployed. C. not in the labor force.

c

True or false: Only fiat money, as opposed to barter and commodity money, serves all three functions of money (unit of account, medium of exchange, store of value). A. True B. False

false

True or false: Fiat money allows for easier transactions in both, physical and electronic forms, than commodity money does. A. True B. False

true