Economics 202 exam 2

why do some people think unions are good?

- check firms power - protects workers - make firms respond to worker concerns

the worlds richest countries, such as the united states and germany, have income per person that is about ___ times the income per person in the worlds poorest countries, such as Pakistan and Indian

10

In a closed economy national savings equals

Private saving plus public saving

What is not true about the US labor force participation rate between 1950 in 2000

The overall participation rate combining men and women remain constant over the period

Institutions that help to match one person's saving with another person's investment are collectively called the

financial system

What if you are a waitress at a restaurant that shut down? You'd like to work but are not looking because there is no indoor dining at this time. The BLS count you as

not in labor force force

If a popular TV show on personal finance convinces Americans to save more for retirement the _______ curve for loanable funds would shift driving the equilibrium interest-rate _________

supply; down

If the price of Italian shoes imported into the United States increases, then

the consumer price index will increase, but the GDP deflator will not increase.

Suppose that in the current year the government borrow some money to pay the interest on its existing debt of $22 trillion at an interest rate of 1% and also incurs 200 billion in new duck what is the deficit this year and billions of dollars

(the amount of borrowing this year) this value should be equal to 1 percent of 20 trillion = 200 billion + 200 billion (new debt) 400 billion

What can explain why some countries have not experienced relatively high growth rates in real GDP per capita despite relatively low initial levels of real GDP per capita

- Countries that are relatively poor have a difficult Time generating savings, and many have not welcomed foreign investment - Countries that are relatively poor are more likely to experience wars and revolutions - Many of these developing countries do not have a functioning court system that can effectively enforce laws

an upward bias in the CPI would mean that it tends to overstate the rate of inflation. all of the following may create upward bias

- New products that appear overtime are not immediately included in the CPI market basket - Consumers tend to substitute away from products who's prices are increasing relatively rapidly - The BLS may be slow to take a count of consumers shopping for many items online to get better prices

in comparisons of GDP per capita across countries

- Over long periods of time small differences in growth rates can make a big difference in levels of GDP per capita - A nation with a very low GDP per capita has the potential to grow relatively quickly due to the catch-up affect - Differences in the quality of economic institutions for example enforcement of property rights and the rule of law can contribute to differences in GDP levels and economic growth

Efficiency wages

- efficiency wages involve paying more than is necessary To acquire ones work force - If many firms pay efficiency wages they can be a source of a structural unemployment - It may make sense for a firm to pay an efficiency wage in order to increase worker loyalty and commitment

why do some people think unions are bad ?

- they are a type of cartel - can produce unemployment making unionized firms inefficient

Approximately what percent of US workers are directly affected by the minimum wage

1%

false statements about labor force participation

1. Male and female labor force participation were both increasing in the 1970s 2. Except for the period of the great recession female labor force participation continue to rise until 2020 3.Prior to the pandemic labor force participation among those aged 25 to 54 returned to where it was in 2001

The population of Ectenia is 100 people: 40 work full-time, 20 work half-time but would prefer to work full-time, 10 are looking for a job, 10 would like to work but are so discouraged they have given up looking, 10 are not interested in working because they are full-time students, and 10 are retired. What is the number of unemployed?

10

Suppose that GDP is $20 trillion and government that is also 20,000,000,000,001% of GDP is government debt?

100%

In the United States, unionized workers are paid about _____ Percent more than similar nonunion workers

15%

suppose that you made $15/hour on a 40 hour per week job and ordinarily your replacement rate would be 50% what is your replacement rate if we add $600 per week to your benefit

150% making 600 a week with a 50% replacement rate = 300 dollars add 600 which makes it 900 so the replacement rate is 150% of their normal income

Over the past century, real GDP per person in the United States has grown about _____ percent per year, which means it doubles about every _____ years.

2-35

The total number of jobs is down about 9.5 million since February 2020. The 379,000 jobs added in February 2021 is a large number by historical standards. If we continue to add 379,000 Jobs every month how many more months will it take before we match the number of jobs we had in February 2020

25

Using the numbers in the preceding question what is the size of the labor force

70

Which of the following policy actions would unambiguously reduce the supply of loanable funds and crowd out investment

A decrease in taxes together with an increase in government spending

What will result in an increase in labor productivity

An improvement in technology

A right word shift in the demand for loanable funds will occur if there is

An increase in expected profits from firm investment projects

When the Japanese car maker Toyota expands one of its car factories in the United States, what is the likely impact of this event on the gross domestic product and gross national product of the United States?

GDP shows a larger increase than GNP.

I'm mad about the same goods and services this year as last year but he has experienced 10% inflation this means that

His bundle of goods and services cost 10% more in dollars of this year than last year

The main policy goal of unemployment insurance is to reduce the

Income uncertainty that workers face

And a competitive labor market an increase in the minimum wage results in a ________ in the quantity of labor supplied and a _____ In the quantity of labor demanded

Increase; decrease

From 2008 to 2012, In the aftermath of the financial crisis, the ratio of government that to GDP in the United States

Increased markedly

The source of the supply for a loanable funds

Is saving and the source of the demand for loanable funds is investment

A bond tends to pay a higher interest rate if it is

Issued by a corporation of dubious credit quality

The minimum wage leads to unemployment because

It leads to a larger quantity of labor supplied than demanded

Over the past century, ____ has experienced particularly strong growth, and _____ has experienced particularly weak growth

Japan - The UK

Labor force participation rate went from 59% in 1962 to 67% in 2001 is substantial difference why do you suppose that was?

Labor force participation by women increased greatly

Ms. Lane borrowed $1,000 from her bank for one year at an interest rate of 10 percent. During that year, the price level went up by 15 percent. Which of the following statements is correct?

Ms. Lane's repayment will give the bank less purchasing power than it originally loaned her.

In many European nations, unions

Play a much larger role than they do in the United States

What is true about economic growth? Economic theory predicts

Poor countries can grow faster than rich countries in South Korea and China are examples, but for many poor countries it has not been true

If the government collects more in tax revenue then it spends and households consume more than they got in after tax income, then

Private saving is negative but public saving is positive

If the supply for loanable funds shift to the left and the equilibrium interest rate

Rises in the quantity of loanable funds falls

Carly wants to buy And operate an ice cream truck but doesn't have the financial resources to start the business. She borrows $20,000 from her friend Freddie to whom she promises and interest rate of 7% and gets another 30,000 from her friend Sam to whom she promises a third of her profits what best describes the situation.

Sam is a stockholder, and Freddie is a bondholder.

One unintended consequence of unemployment insurance is that it reduces the

Search effort of the unemployed

And understanding of the best ways to produce goods and services is called

Technology

One of the differences between the GDP deflator in the consumer price index is

The GDP deflator reflects prices for all goods and services produced domestically and the consumer price index reflects prices for a representative basket of goods and services bought by consumers

In a closed economy, if investment is larger than private saving

The government must have a budget surplus because in a closed economy investment always equals national saving. National saving is private saving plus public saving so if investment is larger than private saving public saving must be positive this means a budget surplus

Starting from this equilibrium what happens if government increases its borrowing by 20 billion

The interest rate rises and private borrowing falls

What could explain a decrease in the equilibrium interest-rate and an increase in the equilibrium quantity of loanable funds

The supply of loanable funds shifted rightward.

According to this theory that saving incentives can shift supply saving me incentives can lead to more investment because

They lead to a lower interest-rate any movement on the demand curve

Of the alternative measures of unemployment including which group as unemployed at the most to the unemployment rate

U6 : part time who want full time

The main advantage of mutual funds is that they provide

an easy way to hold a diverse portfolio

The level of real GDP per person

and the growth rate of real GDP per person vary widely across countries.

which of the following includes everyone in the adult population that the Bureau of Labor Statistics counts as "unemployed"?

anyone who is not employed, available to work, has looked for work in past 4 weeks, and anyone who is on temporary layoff from a job and is waiting to be recalled

President Bigego is running for re-election against Senator Pander. Bigego proclaims that more people are working now than when he took office. Pander says that the unemployment rate is higher now than when Bigego took office. You conclude that

both of them could be telling the truth if the labor force grew faster than employment.

When the consumer price index falls, the typical family

can spend fewer dollars to maintain the same standard of living

If the business community becomes more optimistic about the profitability of capital, the ________ curve for loanable funds would shift, driving the equilibrium interest rate ________.

demand, up

The traditional view of the production process is that capital is subject to

diminishing returns, so that other things the same, real GDP in poor countries should grow at a faster rate than in rich countries.

What if you want full-time work but your employer can only give you 10 hours a week so you take it? The BLS counts you as

employed

when a firm pays an efficiency wage, it may

find that it's workers quit less frequently

according to the theory of efficiency wages

firms may find it profitable to pay above equilibrium wages

A closed economy house income of $1000, government spending of $200, taxes of $150, and investment of $250, what is private saving

government spending + investment - taxes

Because capital is subject to diminishing returns, higher saving and investment does not lead to higher

growth in the long run

increases in the amount of human capital in the economy tend to ______ real incomes because they increase to _______ of labor

increase; productivity

Amazon buys $100 million in products from a Chinese manufacturer to add it to its warehouse inventories is that saving investing or neither

investing

Other things the same, a country that increases its saving rate increases

its future productivity and future real GDP

minimum wage laws

may create an excess supply of labor at the legal minimum wage

Rapid population growth

may depress economic prosperity by reducing the amount of capital which each worker has to work with

Suppose the GDP also girls by 3% this year considering the new values of the day end of GDP dinner of GDP ratio has ______ compared to what it was initially

new debt = 20.4 trillion new GDP = 20.6 trillion so debt to GDP ratio decreased

most economists are _____ that natural resources will eventually limit economic growth. as evidence, they note that the prices of most natural resources, adjusted for overall inflation, have tended to ______ over time

not concerned, fall

An increase in the governments budget surplus means public saving is

positive and increasing

Thomas Robert Malthus believed that population growth would

put stress on the economy's ability to produce food, dooming humans to remain in poverty.

In some countries it is time consuming and costly to establish ownership of property. Reforms to reduce these costs would likely

raise real GDP and productivity

A rapid increase in the number of workers, other things the same, is likely in the short term to

raise real GDP, but decrease real GDP per person.

an increase in the budget deficit caused by an increase in government spending

result in a shift to the left in the supply curve for loanable funds

If you buy $1000 in stock of Walmart are you saving or investing

saving

National saving is

the total income in the economy that remains after paying for consumption and government purchases

True or false the labor force participation rate is always higher than the employment population ratio

true